OB in the Cross-Cultural Context Why are cross-cultural issues important? Growing impact of global business New markets Demand for global services Low cost manufacturing U.S. management practices not necessarily likely to translate to different cultures Paradox: may be easier to adjust to a very different culture than to a very similar culture

Why International Management? Important to have a global perspective Overseas suppliers or markets Low cost production Emerging markets (Eastern Europe, LDC) E-business has no borders Immigrant labor force even in U.S. Culture critical to global business, yet hardest to understand Based on unspoken values and assumptions Human behavior isn’t logical But, human behavior is very complex

Approaches to International Business Geocentric Use the best methods, no matter what the source Ethnocentric Home country methods are the best Polycentric Host country

Basic Principles of Culture What is logical and important in one culture may seem irrational and unimportant in another In describing cultures, people tend to stress the differences and overlook the similarities Stereotyping may be inevitable for people who lack frequent contact with another culture Cultures are not homogenous; differences exist due to gender, age, socioeconomic status, education Understanding another culture is a journey, not a goal

Barriers to Cross-Cultural Understanding Cultural chauvinism / corporate imperialism / ethnocentrism Stereotypes (positive and negative) The highly successful organization may find it more difficult to adapt

But……. The ethical dilemma Are there common values? Basic idea of social organization, goal orientation Personality structure (Big 5) What about cultural convergence? Cultural evolution Cultural diffusion Immigration and acculturation

What Kinds of Differences Make a Difference? Some specific items: Language Religion Business practices and etiquette Different laws Different customs Culture in general

Language Issues U.S. one of few countries where we don’t learn a second (or a third) language Languages learned in school often do not translate to business usage Do you try? Not in France, not unless you can pronounce it right ! Other countries, yes: it’s a gesture of goodwill But, even if the language is the same, will we understand? (Britspeak)

Languages of The World Source:http://www.infoplease.com/

World Religions Source:http://www.infoplease.com/

Religious Issues Islam: Ramadan fasting 5 daily prayers (15 minutes or so), even at work Modest dress for women (including head scarf) Friday, not Sunday (noon prayers on Fridays)

Legal Issues Sample of Mexican employment laws Individual employment contracts required Strict limits on overtime Unionization by facility Full pay for workers while on strike Discrimination covers political doctrine and social condition

Different Country, Different Customs: Dress and Address “Casual Days” are a U.S. custom Removing one’s shoes Addressing Other People Herr und Frau, not first names in Germany Titles (Dr., Professor, “Assistant Vice President”, etc.) very important everywhere but U.S. Business cards essential in Latin America, Europe, Japan Personal space: much smaller in Latin America, Spain, Italy

Different Country, Different Customs: Time Time fluid in Latin America, Spain, Italy Time off work: Germany, France, Scandinavia: 6 weeks vacation, August in the country Africa: everyone attends funerals (impact of AIDS) Working hours and pace Europe (esp. Germany) isn’t open 24/7 Latin America, Middle East, Japan: take time to establish relationship before getting down to business

Different Country, Different Customs: Eating and Drinking Tea in Japan Coffee in Egypt Vodka in Russia A pint over lunch in the UK Dietary Restrictions: India: no beef Islamic countries: no pork or alcohol

Perceptions of Corruption Higher score = less corrupt Source: Transparency International

Economic Freedom Higher score = less freedom Source: Wall Street Journal

Cultural Dimensions: Hofstede’s Big 4 Based on survey of IBM employees worldwide The dimensions Collectivism - Individualism Power Distance Uncertainty Avoidance Masculinity / Femininity (quality of life) Weaknesses: Does not include LDCs Data 20 years old However, recent research confirms this structure

Change in Cultures Hofstede’s data indicates some shift to individualism, but no change in other dimensions Disneyland phenomenon That is, surface indicators change, but meaning does not But….the case of Hong Kong Management values in Hong Kong intermediate between PRC and U.S. Indication of flexibility / change?

Collectivism - Individualism Identification with group vs. identification as an individual Collective cultures: Think in terms of in-groups and out-groups Life decisions made by group Look after one’s in-group, no matter what Individualistic cultures Concern for self and immediate family Individual privacy Association with level of economic development

Collectivism - Individualism: Where Collective…………...……Individualistic Venezuela Pakistan Taiwan Portugal Greece Brazil India Japan Arab countries Spain Israel Austria Germany Norway France Canada Great Britain U.S.

Power Distance The extent to which a culture accepts that power is distributed unevenly High power distance People have a place in society, high or low Superiors are to be respected Less trust and cooperation Low power distance Equal rights for everyone Hierarchies are established for convenience Power can be judged to be legitimate or not

Power Distance: Where High…………………...……...……Low Philippines Mexico India Brazil Hong Kong France Turkey Pakistan Japan Argentina U.S Canada Australia Germany Sweden Ireland Denmark Israel

Uncertainty Avoidance The extent to which a society feels threatened by ambiguity and uncertainty High uncertainty avoidance Lots of policies, rules, regulations Hard work valued, time is money Acceptance of authority Conflict avoided Low uncertainty avoidance Look to common sense Tolerance, constructive conflict Aggression less accepted

Uncertainty Avoidance: Where High…………………...……...……Low Uruguay Belgium Japan France Mexico Israel Italy Austria Arab countries Germany Switzerland East Africa Canada U.S. India Great Britain Sweden Singapore

Masculinity / Femininity (Quality of Life) The extent to which society values typically “masculine” values, such as assertiveness, and acquisition of things, as opposed to caring for others and quality of life. Masculine cultures Clear gender roles; machismo Live to work Ambition, success valued Feminine cultures Sympathy for the unfortunate Work to live People are important

Masculinity / Femininity: Where High…………………...……...……Low Japan Italy Mexico Ireland U.S. Australia Hong Kong Arab countries Brazil Israel Indonesia France Spain South Korea Portugal Finland Netherlands Sweden

…Plus One Confucian Work Dynamic Based on work done in East Asia by “Chinese Cultural Connection” group Focus on: Long-term Order Thrift Persistence Respect for tradition

Different Dimensions…Same Result Company provided housing, marriage brokers, etc. in Asian countries Feminine concern for people? Taking care of the in-group? Cooperative labor negotiations Japan: collective orientation Netherlands: feminine quality of life Economic growth and development Europe: Protestant Work Ethic (Individualistic, High Power Distance, Masculine) Asia: Confucian Work Dynamic

Do National Borders = Cultural Borders? Multiple cultures Canada Belgium India Culturally homogeneous areas Scandinavia Cultural clusters

Cultural Clusters

General Expatriate Issues: The Sojourners How many are there? Nobody really knows Estimated 350,000 or more (estimate from 1996) Who are they? 87% male Managers Sales, technical, professional What happens? Estimated 25% to 50% of assignments fail Cost…$50,000 and up

Why do Expatriates Fail? Family problems (60%) Inability to adjust Lack of flexibility “Culture shock” Lack of sensitivity to host culture

Culture Shock An emotional and psychological reaction to the confusion, ambiguity, value conflicts and hidden clashes that occur as a result of fundamentally different ways of perceiving the world and interacting socially between cultures. Disequilibrium Stress

Aspects of Adjustment Sociocultural Psychological Social skills needed to operate in different culture Psychological Well-being, satisfaction “Culture shock”

What Can Be Done? Selection procedures Organizational support: before, during, and after assignment Training Few U.S. firms train expatriates (30%) Most European / Asian firms do Different success rates clearly establish value of training

Training for Expatriates Knowledge-based Language Cultural differences Cultural sensitivity General Specific Include spouse and, if possible, family members

Other Support Mechanisms Mentor or buddy systems Trips home Assistance with schooling and other family needs Housing / cost of living differentials Security Safe housing Guards, kidnapping insurance, etc.