Lecture VII MNC’s Cultural Framework and Managing across Corporate Boundaries (ch. 6)

Cultural Complexity – Contextual variations [E. T Cultural Complexity – Contextual variations [E. T. Hall, The Silent Language, 1973] Low-context culture Explicit More legal paperwork Verbal communication  High-context culture Implicit Nonverbal communication Emphasis on value, social norms Individual’s position in society

High-context culture Implications on MNE’s managerial ideologies, ways of doing business, and cross-cultural negotiations

Cultural Typology of MNC’s Organization Monolithic – Homogeneous, minimum structural integration Plural – Work force includes host nationals (structural integration), but the company doesn’t value its cultural diversity Multicultural – Full structural and informal Integration

Case Study Use the above cultural typology to illustrate the differences among BG’s four strategic orientations of international, multinational, global and transnational companies

Factors influencing cultural diversity Acculturation Method of resolving the difference between the dominant culture and the minority culture through assimilation, pluralism, or separation Structural integration Informal integration Cultural bias Highest in the monolithic organizations; least in the multicultural organizations Intergroup conflicts Conflicts are higher in the plural organizations

Benefits of multiculturalism [Fatehi, 1996] Reduced costs, and better resources allocation Marketing advantage Creativity Problem solving Flexibility .. etc

National Customs and Business customs Coincide – Language Religious effect Political effect Laws Taxes  Differ – Subject matter Degree of technicalities

National Customs and Business customs (Contd..) Business customs change continually. Although highly resistant to change, national customs are transformed by the rapid changes in the business customs

Other cross-cultural issues in international business research Gender role rigidity Hofstede’s cultural dimensions of Individualism/collectivism, Power distance, Uncertainty avoidance,… P-time, M-time cultures

International Negotiation Intracultural models Position –oriented Interest-oriented Fisher and Ury [1981], “principled negotiation” Intercultural models – building the rapport

A 10-point intracultural/intercultural negotiation Strategy (F. L A 10-point intracultural/intercultural negotiation Strategy (F. L. Acuff, 1993) Plan the negotiation Adopt a win-win approach Maintain high standards Use language that is simple and accessible Ask lots of questions, then listen with your eyes and ears Build solid relationships Maintain personal integrity Conserve concessions Be patient Be culturally literate and adapt to the negotiating strategies of the host country environment

Why Strategic Alliances Technology Market Access Pool Capital Capacity Shared Risks – reduced risks An alternative to Merger Test the water before a full-fledged global integration

Strategic Alliances Risks and Costs competitive collaboration – cases in China Speed – easy, but not always the best solution Alliances need not be permanent Flexibility Learning