International Management and Cross-Cultural Competence Chapter Four International Management and Cross-Cultural Competence

Chapter Objectives Describe the six-step internationalization process and distinguish between a global company and a transnational company. Define the term cultural intelligence, and contrast ethnocentric, polycentric, and geocentric attitudes toward foreign operations. Explain from a cross-cultural perspective the difference between individualistic and collectivist cultures, and identify at least four of the GLOBE cultural dimensions.

Chapter Objectives (cont’d) Discuss Hofstede’s conclusion about the applicability of American management theories in foreign cultures, and the practical significance of the international study of work goals and leadership styles. Summarize the leadership lessons from the GLOBE Project.

Chapter Objectives (cont’d) Identify the four leading reasons why U.S. expatriates fail to complete their assignments, and discuss the nature and importance of cross-cultural training in international management. Summarize the position of North American women on foreign assignments.

International Competition Forces Shrinking the Globe Air travel Modern information technology Corporate globalism International Management The pursuit of organizational objectives in international and cross-cultural settings

The Internationalization Process Stage 1: Licensing Authorizing companies in foreign countries to produce and/or market a given product within a specified territory in return for a fee Stage 2: Exporting Goods produced in one country are sold to customers in foreign countries. Stage 3: Local warehousing and selling Goods produced in one country are shipped to the parent company’s storage and marketing facilities located in overseas countries.

The Internationalization Process (cont’d) Stage 4: Local Assembly and Packaging Components, rather than finished products, are shipped to company-owned foreign facilities for final assembly and sales. Stage 5: Joint Ventures (also Strategic Alliances or Partnerships) A company in one country pools its resources with another foreign company or companies to create and market products and jointly share profits and losses. Stage 6: Direct Foreign Investment The production and marketing of products through a wholly owned subsidiary in a foreign country Involves cross-border mergers

Joint Ventures and Strategic Partnerships Recommendations for Achieving Success Exercise patience: Select and build trust with a partner that produces compatible but not direct competitive products. “Race to learn”: Learn as fast and as much as possible without giving away core technologies and secrets. Play by the book: Establish at the outset ground rules about the rights and responsibilities of all parties.

From Global Companies to Transnational Companies Global Company A multinational venture centrally managed from one country Has global strategies for product design, financing, purchasing, manufacturing, and marketing Transnational Company A global network of productive units with a decentralized authority structure and no distinct national identity Relies on a blend of global and local strategies

Table 4.1: Corporate Giants Worldwide

Toward Greater Global Awareness and Cross-Cultural Competence Travelers: Engage in short-term visits to foreign countries Have limited knowledge of local history, culture, and customs Have limited local language skills Don’t attempt to adapt to the local environment Settlers Take assignments lasting up to five years Have in-depth insights into the host country’s history, customs, and culture Speak the local language well or fluently Are culturally trained to “go native” Cultural intelligence (CQ): The ability to interpret and act in appropriate ways in unfamiliar cultural surroundings

Contrasting Attitudes Toward International Operations Ethnocentric Attitude The view that assumes the home country’s personnel and ways of doing things are best Polycentric Attitude The view that assumes local managers in host countries know best how to run their own operations Geocentric Attitude A world-oriented view that draws upon the best talent from around the world

The Cultural Imperative Culture A population’s taken-for-granted assumptions, values, beliefs, and symbols that foster patterned behavior Societal culture Norms, values, attitudes, role expectations, taboos, symbols, heroes, beliefs, morals, customs, and rituals Are U.S. Corporations Turning the World into a Single “Americanized” Culture? Cultural roots run deep, have profound effects on behavior, and are not easily altered.

The Cultural Imperative (cont’d) High-Context Cultures Cultures in which nonverbal and situational messages convey primary meaning Status of an individual is of tantamount importance in determining relationships. Low-Context Cultures Cultures in which words convey primary meaning Nonverbal messages are secondary to spoken words. The terms of the deal are more important than building a business relationship.

Table 4.3: Nine Cultural Imperatives from the GLOBE Project

Other Sources of Cultural Diversity Individualistic cultures Cultures that emphasize individual rights, roles, and achievements Collectivist cultures Cultures that emphasize duty and loyalty to collective goals

Other Sources of Cultural Diversity (cont’d) Time Monochronic time: A perception of time as a straight line broken into standard units Timely arrivals and keeping appointments are considered important. Polychronic time: A perception of time as flexible, elastic, and multidimensional Appointment schedules are considered approximations and are not kept precisely.

Other Sources of Cultural Diversity (cont’d) Interpersonal space Some cultures prefer a close rather than wide distance between conversing individuals. Language skills Language fluency opens insights into another culture. Religion Religion has many effects on personal and professional activities in many cultures.

Comparative Management Insights The study of how organizational behavior and management practices differ across cultures Made-in-America Management Theories Require Translation Gert Hofstede’s research led him to recommend that American management theories be adapted rather than imposed on other local cultures.

A Cross-Cultural Study of Work Goals Findings’ implications Managers need to adapt the motivation programs to local preferences. An international contingency approach to motivation is called for. Leadership must be adapted to the local culture. Participative leadership is the most applicable style where workers trust their leader. Directive leadership is considered the least appropriate style of leadership.

Figure 4.1: GLOBE Leadership Matrix

Lessons in Leadership from the GLOBE Project Leadership Styles Charismatic/value-based* Team-oriented* Participative Humane-oriented Self-protective International managers need a full repertoire of leadership styles that they can use flexibly in a culturally diverse world. *Greatest cross-cultural applicability

Staffing Foreign Positions Why Is the U.S. Expatriate Failure Rate So High? Ineffective job performance Job offers from other companies Culture shock: Negative feelings triggered by an expectations-reality mismatch Family and personal adjustment problems that arise after arriving in the foreign assignment

Table 4.6: Research Findings on Why U.S. Expatriates Go Home Early

Cross-Cultural Training A guided experience that helps people live and work in foreign cultures Specific Training Techniques Documentary programs familiarize the expatriate with assignment destination. Culture assimilator exposes the expatriate to simulated intercultural incidents and situations. Language instruction builds the expatriate’s conversational skills in a foreign language.

Cross-Cultural Training (cont’d) Specific Training Techniques (cont’d) Sensitivity training provides experiential exercises to teach expatriates to be aware of the impact of their actions on others in another culture. Field experiences provide firsthand exposure to ethnic subcultures that heightens expatriates’ cultural awareness.

Competencies for Successful Cross-Cultural Adaptation Building relationships Valuing people of different cultures Listening and observation Coping with ambiguity Translating complex information Taking action and initiative Managing others Adaptability and flexibility Managing stress

Cross-Cultural Training (cont’d) Is One Technique Better Than Another? A combination of documentary and interpersonal training is the best combination for expatriates. An Integrated Expatriate Staffing System Provide orientation for both expatriate and family. Have family sponsors or assigned mentors available at the foreign assignment. Repatriation is an importance part of the entire foreign assignment experience.

What About North American Women on Foreign Assignments? Women are above-average in being successful in foreign assignments. Strongest barriers to foreign assignments have been self-disqualification and the prejudice of home country managers. Culture is a bigger hurdle than gender: Women on foreign assignments are seen as North Americans first, then as women.

Relying on Local Management Advantages of Using Foreign Nationals They know the language and culture. They do not require huge location expenses. Host governments favor more local control. Disadvantage Local managers may not be attuned to home-office goals and procedures.

Summary The growing global economy makes the study of international management more important than ever. Cultural intelligence (CQ) is an outsider’s ability to “read” a foreign culture as well as the locals do. The forms and meanings of communications are different in high and low context cultures. Comparative management provides insights into how organizational behavior and management practices differ across cultures.

Terms International management Global company Transnational company Cultural intelligence (CQ) Ethnocentric attitude Polycentric attitude Geocentric attitude Culture High-context cultures Low context cultures Individualistic cultures Collectivist cultures Monochronic time Polychronic time Comparative management Culture shock Cross-cultural training