Culture: What is it? Value system Norms, beliefs, behaviors Common way of thinking Society’s communicable knowledge Society’s characteristics passed on generation by generation

General Issues Differences in culture Measurement Adaptation and Acculturation Similarities in culture

Hofstede’s Dimensions of Culture Power Distance Small - trusting, less formal organizations Large - mistrusting, hierarchical organizations Uncertainty Avoidance Weak - risk is non-threatening; diversity is appreciated Strong - risk averse, diversity is threatening Individualism Collectivist - belonging to groups ideal; group decision making Individualist - individual initiative and achievement; leadership is the ideal Masculinity Feminine - quality of life; people and relationships come first Masculine - performance; money and transactions come first

Communication and Meaning ( Aside from Language) MEANING Explicit: Written/ Spoken Context: Surroundings/ Non-verbal High Context Low Context

Implications for Management INTERPERSONAL Punctuality Interpersonal distance Tempo of business Negotiations Bribery Linear vs. circular communication High vs. low context communication ORGANIZATIONAL Organizational structure Decision making Leadership Adaptation of products HRM policies Entry mode choice Location of value- creating activities

Leadership Perceived levels of power Quality/characteristics of exchange with subordinates Communication patterns Trust (both ways) Delegation of tasks

Organizational Structures/Systems Formality of policies and rules Hierarchical vs. “flat” organizations Mechanistic vs. organic Authoritative vs. consensual decision making HRM systems Accounting systems

Interpersonal Relationships With … Customers Suppliers Subordinates/superiors Co-workers

Motivation and Reward Formation/role of setting goals Achievements Compensation system Job satisfaction Organizational commitment

Principal Research Question: Japanese-American Context Cultural Differences ? Job dissatisfaction Lack of commitment towards company Propensity to quit

Evidence of a Problem? “If Americans ‘fail’ on a project, they are never given another chance. Yet, Americans are rarely explicitly told what their authority is.” “In Japan, formal job descriptions don’t exist. This can lead to role ambiguity in the U.S.” “One source of frustration for Americans is the lack of input in decision making.”

“Our engineers leave because of the constraints placed on innovativeness and flexibility” “I seem to have several bosses, which can be confusing.” “My supervisor doesn’t spend enough time preparing me for this position.” “There’s a lack of open, honest communication.” “I can’t make your meeting, Wally, because two of our section leaders just quit.”

Not ALL bad... “My Japanese boss is the best I ever had.” “The Japanese Vice President’s treatment of people is excellent. I am proud of him and respect him.” “Our company is excellent in terms of communication and human resources.”

Leadership is the Key: “The most necessary training is…how to work with and manage and American workforce.” TMM Executive

Negative Attitudinal Outcomes Culture and the Causal Chain Cultural Differences Intermediate Perceptions SupervisoryBehaviors

Supervisory Behaviors Mentoring –Psycho-social –Career-related Delegation –Authority-specific –Task-related Communication –Effectiveness –Formalization Monitoring –General –Corrective –Intrusive Interpersonal Exchange –Exchange Quality –Acculturating Exchange –Abusive Exchange

Communication Model Procedural Justice Trust Role Ambiguity Role Conflict Job Satisfaction Commitment Low Propensity to Quit Cultural Difference Communication Effectiveness Formalized Communication

Delegation Model Procedural Justice Trust Role Ambiguity Role Conflict Job Satisfaction Commitment Low Propensity to Quit Cultural Difference Authority Delegation Task Delegation

Mentoring Model Procedural Justice Trust Role Ambiguity Role Conflict Job Satisfaction Commitment Low Propensity to Quit Cultural Difference Psycho- social Mentoring Career- related Mentoring Job- related Feedback

Monitoring Model Procedural Justice Trust Role Ambiguity Role Conflict Job Satisfaction Commitment Low Propensity to Quit Cultural Difference Invasive Monitoring General Monitoring Corrective Monitoring

Personal Exchange Model Procedural Justice Trust Role Ambiguity Role Conflict Job Satisfaction Commitment Low Propensity to Quit Cultural Difference Exchange Quality Acculturation Exchange Abusive Exchange

Negative Attitudinal Outcomes How to Address Cultural Problems Cultural Differences … basics commonly understood. Intermediate Perceptions …”teachable”? Supervisory Behaviors … receive scant attention in most training programs most training programs “Chain of causality” often neglected

International Alliances: Strategic Considerations Choice of Entry Mode Resource Pooling –Redundant –Complementary Learning Strategic Options Impact of Culture

International Alliances: Managerial Considerations Contract vs. Equity Structure Learning: –Codifiable vs. Tacit Knowledge –Combinative Capability –Absorptive Capacity Impact of Culture

1984: The NUMMI Alliance GMToyota NUMMI

1986: Application of Knowledge I GMToyota NUMMI TMM-K

1990: Application of Knowledge II GMToyota NUMMI Saturn

1999: The Fuel Cell Alliance GMToyota Alliance

Learning Race(s) GM Toyota Ford DaimlerChrysler Race 1: Market Race 2: Market

Rate of Learning in Alliances Codified vs. tacit knowledge Absorptive capacity Combinative capability Organization of learning

BuyoutDissolution Equity Alliance External Forces Internal Forces Strategic Option View of Alliances

Alliances and Culture Entry: JVs preferred when: –Target country-market culturally different (CD) –Initiating firm high UA Structure: Majority ownership preferred when: –Initiating firm high PD Learning: Equity preferred when: –Initiating firm high PD

Longevity: JVs terminate faster/earlier when: –Partners are culturally different (CD) Mistrust: Suspicions of poor performance when: –Initiating firm high UA Trust: Expectations of good performance when: –Partners are culturally similar Alliances and Culture cont.

Culture and Alliances as Options Partnership buyouts more likely when: –Initiating firm high PD and UA Alliance portfolios: –Japanese hold equity alliances longer –Japanese hold larger number of smaller alliances –Japanese more likely to invest further/acquire partner –Americans more likely to spin off partners (success) –Americans faster to terminate alliance (failure)