Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Introduction Culture: “the sum total of the beliefs, rules, techniques, institutions and artifacts that characterize human populations” or “the collective programming of the mind”. Socialization Process: The process of enculturation or the adoption of the behaviour patterns of the surrounding culture.

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited Key Terms Culture Savvy A working knowledge of the cultural variables affecting management decisionsCulture Savvy Cultural Sensitivity or Cultural Empathy An awareness and an honest caring about another individual’s culture.Cultural Sensitivity or Cultural Empathy

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited Culture –The acquired knowledge that people use to interpret experience and generate social behavior –Cultural knowledge forms values, creates attitudes, and influences behavior –Characteristics of culture include: Learned Shared Transgenerational Symbolic Patterned Adaptive

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited Key Terms Culture of a society Comprises the shared values, understandings, assumptions, and goals that are learned from earlier generations, imposed by present members of a society, and passed on to succeeding generations.Culture of a society What would be occasion in Pakistan that you considered cultural?

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited Key Terms Self reference criterion The unconscious reference point of one’s own cultural valuesSelf reference criterion

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Key Terms Parochialism Occurs when a Frenchman, for example, expects those of French origins in another country to automatically fall into patterns of behavior common in FranceParochialism EthnocentrismEthnocentrism Describes the attitude of those who operate from the assumption that their ways of doing things are best – no matter where or under what conditions they are applied

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Elements of culture

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Table 5.1 World population percentages in terms of home region, language and religion Sources:

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Language Language is critical to culture because it is the primary means used to transmit information and ideas. Knowledge of local language can: –permit a clearer understanding of a situation; –provide access to local people; –allows the person to pick up nuances, implied meanings, and other information that is not stated outright.

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Religion Religions influence lifestyles, beliefs, values and attitudes and can have a dramatic effect on the way people in a society act toward each other and towards those in other societies. Religion also influences: –the work habits of people; –the work and social customs (from the days of the week on which people work to their dietary habits); –politics and business.

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Values and attitudes Values: basic convictions that people have regarding what is right and wrong, good and bad, important and unimportant. Attitude: a persistent tendency to feel and behave in a particular way toward some object.

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Customs and manners Customs: common or established practices. Manners: behaviour regarded as appropriate in a particular society.

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Corporate culture Corporate culture is a term used to characterize, how the managers and employees of particular companies tend to behave. Corporate culture is also used by human resource managers and senior management in their attempts to proactively shape the kind of behaviour (“innovative”, “open”, “dynamic”, etc.) they hope to nurture in their organizations. Promoting a distinctive corporate culture is also expected to enhance the sense of community and shared identity that underpins effective organizations.

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 The importance of culture in different business contexts

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Influences of culture on international management Culture influences strategic management in a number of ways: Work attitudes –for example, work ethics, organization commitment, etc. Achievement motivation –the desire to accomplish objectives and achieve success. Time and future –for example: punctuality, decision-making time constraints, time expectations on implementation of plans, etc. Ethics –standards of conduct and morality.

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Culture and strategic management Cross-cultural management issues arise in a number of situations, including: –Within a firm: Work attitudes, achievement motivation, time and future and ethics, etc. –Between firms: M&As, joint ventures, alliances and buyer-supplier relationships. –Between a firm and customers: Dealing with customers. Cf.) Dealing with national institutions.

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 National stereotypes and key dimensions of culture

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Two approaches to culture Two different approaches to looking at culture: the psychic or psychological level, which focuses on the “internalized” norms, attitudes and behaviour of individuals from a particular culture; the institutional level, which looks at national (or group) culture embodied in institutions (government, education, economic institutions as well as in business organizations).

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Geert Hofstede’s four cultural dimensions Power distance: measures the degree to which less powerful members of organizations and institutions accept the fact that power is not distributed equally. Uncertainty avoidance: measures the extent to which people feel threatened by ambiguous situations and have created institutions and beliefs for minimizing or avoiding those uncertainties.

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Individualism vs. collectivism –Individualism: the tendency of people to look after themselves and their immediate family only. –Collectivism: the tendency of people to belong to groups who look after each other in exchange for loyalty. Geert Hofstede’s four cultural dimensions (Continued)

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Masculinity vs. femininity –Masculinity: the degree to which the dominant values of a society are success, money and material goods. –Femininity: the degree to which the dominant values of a society are caring for others and the quality of life. Geert Hofstede’s four cultural dimensions (Continued)

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Figure 5.2 Hofstede’s power distance against individualism for 20 countries Source: Hofstede, G. (1983). The cultural relativity of organizational practices and theories, Journal of International Business Studies, Fall, p. 92. Copyright © Geert Hofstede

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Fons Trompenaars’ seven cultural dimensions 1. Universalism vs. particularism –Universalism: the belief that ideas and practices can be applied everywhere in the world without modification. –Particularism: the belief that circumstances dictate how ideas and practices should be applied and somethings cannot be done the same everywhere.

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited Individualism vs. collectivism: centres on whether individual rights and values are dominant or subordinate to those of the collective society. 3. Neutral culture vs. emotional culture: –Neutral culture: A culture in which emotions are held in check. –Emotional culture: A culture in which emotions are expressed openly and naturally. Fons Trompenaars’ seven cultural dimensions (Continued)

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited Specific vs. Diffuse: measures whether work relationships (e.g. the hierarchical relationship between a senior manager and a subordinate) are workplace ‘specific’ or extend (diffuse) into the social context outside the workplace. 5. Achievement vs. Ascription: measures whether one’s status within organizations is based on merit (“achieved”) or on class, gender, education or age (“ascribed”). Fons Trompenaars’ seven cultural dimensions (Continued)

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited Attitudes toward time –Sequential: cultures that view time in a sequential or linear fashion; order comes from separating activities and commitments. –Synchronic: cultures that view events in parallel over time; order comes from coordinating multiple activities and commitments. Fons Trompenaars’ seven cultural dimensions (Continued)

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited Attitudes toward the environment: measures the emphasis, a particular culture places on people’s relationship with nature and the natural environment. Fons Trompenaars’ seven cultural dimensions (Continued)

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 The GLOBE project’s nine dimensions of culture 1. Assertiveness. 2.Future orientation: A propensity for planning, investing, and delayed gratification. 3.Gender differentiation: The degree to which gender role differences are maximized. 4.Uncertainty avoidance: A reliance on societal norms and procedures to improve predictability, a preference for order, structure and formality. 5.Power distance.

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited Institutional collectivism: individualism vs. collectivism. 7.In-group/family collectivism: A pride in small-group membership, family, close friends etc. 8.Performance orientation: (much like achievement orientation). 9.Humane orientation: An emphasis on fairness, altruism and generosity. The GLOBE project’s nine dimensions of culture (Continued)

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Culture Embodied in National Institutions

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Culture embodied in national institutions Western Pluralism: emphasizes individual competitiveness, commonly represented by separate ventures competing in price-defined markets for success. Command Economies: are centrally planned hierarchies with less individualism and less individual incentive.

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Organic Ordering: refers to the family-centred hierarchies of Asia, Southern Europe and Latin America. Structured Networks: reflect the more equal, structured relationships between companies and with public sector organizations that exist in some countries. Culture embodied in national institutions (Continued)

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Organizational Culture A pattern of basic assumptions - invented, discovered, or developed by a given group as it learns to cope with its problems of external adaptation and internal integration That has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems (Schien, 1985).

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 National and Global Culture Relationship between national and corporate culture is complex: –National culture and other elements in an organization's environment may determine internal organizational culture –Globalization also affects organizational culture

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Henry Ford, founder of the Ford Motor Company said: Getting together is beginning Keeping together is progress Working together is success

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Understanding Organizational Culture Organizations are culture free in some respects, but culture bound in many others (Trice & Beyer, 1993). Global, national, and organizational elements interact to influence organizational culture and behavior.

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 National and Global Culture One can not understand what’s going on inside an organizational culture without understanding what exists outside the boundary. –National culture provides basic assumptions that legitimize and guide organizational behavior. –Industrialization promotes changes in national culture. –Globalization increases awareness of successful practices elsewhere. –Modern communication enhances connections among manufacturers, merchants, financiers, consumers, etc. globally. –MNCs seek consistency and shape organizational culture on a global basis.

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 Culture-Free Approach It argues that technology, policies, rules, organizational structure, and other variables that contribute to efficiency and effectiveness make national culture irrelevant for management. –McDonald’s fast food service –World Disney –IKEA

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 McDonald's Restaurants Pakistan –Types of the restaurant –Food adaptation –Service adaptation –Perceptions of jobs –Workplace culture –Employee commitment U.S. –Fast food life style –Convenience –Temporary jobs –High turnover rate –Standard food items

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 National Vs. Organizational Culture National culture –Broader –More complex –Influence org. culture –Primary and secondary socialization Organizational culture –Narrower –Manageable –Secondary socialization –Subcultures

Alan M Rugman and Simon Collinson, International Business, 5 th Edition, © Pearson Education Limited 2009 What Organizational Culture Does FUNCTIONS Provides an external identity Creates a sense of commitment Acts as source of high reliability Defines an interpretive scheme Acts as a social control mechanism FUNCTIONS Provides an external identity Creates a sense of commitment Acts as source of high reliability Defines an interpretive scheme Acts as a social control mechanism DYSFUNCTIONS Can create barriers to change Can create conflict within the organization Subcultures can change at different rates than other units DYSFUNCTIONS Can create barriers to change Can create conflict within the organization Subcultures can change at different rates than other units