1. CHAPTER 2 CULTURE AND INTERNATIONAL MANAGEMENT

2. Culture and International Management
One of the key challenges of doing business internationally is the considerable differences in culture around the world
Subtle but profound things that shape differences in values and behavior in societies
Cultural differences can be seen in a wide variety of everyday things.

3. Learning Objectives
After studying this chapter, you should be able to explain:
Different cultures that exist around the world.
Conceptual models for better understanding the world’s cultures.
The impact of environmental factors on culture.
Distinctive management styles that exist in different countries.

4. Culture and international management
Understanding culture is fundamental to understanding many of the differences in business around the world
Single country business vs. businesses in multiple countries

5. Culture Defined
Culture is the acquired, collective knowledge of a group that people use to interpret experience and actions.
This knowledge influences values, attitudes, and behaviors of those people.
Culture is not genetically-based; it is learned by people and encouraged by societies and governments.
Culture will change as the society undergoes change and new traditions are introduced and inculcated

6. Characteristics of Culture
Learned. Culture is not inherited or biologically based; it is acquired by learning and experience
Shared. People as members of a group, organization, or society share culture; it is not specific to single individual.
Transgenerational. Culture is cumulative, passed down from one generation to the next
Symbolic. Culture is based on human capacity to symbolize or use one thing to represent another
Patterned. Culture has structure and is integrated; a change in one part will bring changes in another
Adaptive. Culture is based on the human capacity to change or adapt, as opposed to the more genetically driven adaptive process of animals.

7. Cultural Differences
Because different cultures exist in the world, an understanding of the impact of culture on behavior is critical to the study of international management
Cultural differences affect a wide range of issues:
Create a great deal of misunderstanding and strife for manager and damage an organization’s reputation in a foreign country for years

8. How is Culture Transmitted
Culture is transmitted through its people both formally and informally.
Informal transmission occurs every day as individuals interact with each other, watch television, or read books.
Formal transmission occurs through efforts to socialize as an individual, such as in schools and government.

9. Culture’s Impact
Culture can impact all aspects of the management of a firm including, but not limited to, strategy, hiring, pay/promotion, organization, evaluating performance, technology transfer, managerial ideology, and even business-government relations.
Communication
Is one of the most critical factors in the success of a business.
Culture has an impact on how communication takes place in an organization, what is communicated, and the manner in which information is communicated.
High-context and low-context cultures exist.

10. Culture’s Impact Communication (cont.)
In high-context cultures, the context in which what is spoken plays a major role in communication and the behavior of individuals. Include those countries in East Asia, India, and Africa
In low-context cultures, the information is very straightforward, and the context has less impact on how such information is likely to be spoken and interpreted. Include most cultures if the developed west, such as the United States, the UK, and Europe
Individuals interpret communication on the basis of one’s own cultural norms.

11. Culture’s impact In high context culture: Communication is less direct
Speech is unhurried and drawn out
Greater emphasis is placed on the context or nonverbal cues and less emphasis is placed in the actual information
Interpretation is looser, which sometimes can be problematic for the listener because answers may indirect and it takes experience in the part of the listener to interpret what was really said
Face is very important: direct, embarrassing questions or statements are to be avoided, or asked in a very discreet way, sometimes via intermediary.

12. Culture’s impact Low context culture:
The primary interest is the information and the context is less importance
The listener wants to get lots of information
Lack of clarity or ambiguity is generally regarded as negative
Interpretation should be unequivocal
Direct and embarrassing questions are often asked; face-saving is not very important

13. Culture’s Impact Problems in dealing with culture
Parochialism is a belief that the only way to do something is the way it’s done in one’s own culture.
The ethnocentric view holds that an individual or a firm believe that their own way of doing things is the best, and will not seek to adapt to local cultural practices.
The polycentric view holds that multinational enterprises should treat each international subsidiary as a separate national entity.

14. Culture’s Impact Common culture mistakes
It is important to understand the protocol and communication aspects of those in a country that you would like to know.
Protocols are rules of how individuals in a business setting are to interact with each other.
Cultural sensitivity is a state of heightened awareness for the values and frames of reference of the host culture.

15. Analyzing Culture Sociology framework
Kluckhohn and Strodtbeck developed a framework called dimensions of value orientation.
This framework examines six dimensions:
Time orientation (past, present, or future)
Space orientation (private, mixed, or public)
Activity orientation (being, thinking, or doing)
Relationship among people (group, hierarchical, or individualistic)
Relations to nature (subjugation, harmony, or mastery)
Basic human nature (evil, mixed, or good)

16. Sociology Framework – dimensions of value orientation
Time Orientation
different cultures place different emphasis on history and tradition.
Example : Americans is less oriented toward history and tradition compared to Asia or the Middle East
Punctuality
Implications on business?
Space Orientation
Whether space is viewed as a public good
Or private good

17. Sociology Framework – dimensions of value orientation
Activity Orientation
How proactive individuals are in society
Individuals in many societies are deterministic and believe little can be done to change fate.
Relationships among people
Group versus individual oriented
Relationship to nature
Role of environment and how society views it.
Basic nature of man
Does culture view workers as employees wanting to do a good job or a people who must be closely monitored?

18. Analyzing Culture Psychological framework
Created by organizational psychologist Geert Hofstede.
Hofstede identified four dimensions: power distance, individualism-collectivism, uncertainty avoidance, and masculinity–femininity (sometimes called production orientation.)
Additionally, Hofstede developed a fifth dimension called Confucian dynamism.

19. Analyzing Culture Power distance
Extent to which less-powerful members of institutions and organizations accept the unequal distribution of power and submit to authority.
In high power-distance countries, people are more likely to obey the orders of their superiors and often do not value being ‘‘empowered.’’

20. Analyzing Culture Power distance (cont.)
Organizations in low power-distance countries are generally decentralized and have flatter organizational structures.
Organizations in high power-distance countries tend to be more centralized and have tall organizational structures.

21. Analyzing Culture Individualism–collectivism
High-individualistic societies consist of loosely linked individuals who view themselves as largely independent of groups that make their own choices.
Collectivism is the tendency of people to associate with groups, where group members look after each other in exchange for group loyalty.

22. Analyzing Culture Individualism–collectivism (cont.)
In general, wealthy countries tend to have higher individualism scores while poorer countries tend to have higher collectivism scores.

23. Analyzing Culture Uncertainty avoidance
Is the extent to which members of a culture feel threatened by uncertain or unknown situations or by ambiguity in a situation.
The high uncertainty avoidance countries usually depend more on personal connections to conduct business.
Lower uncertainty-avoidance countries depend more on impersonal contracts.

24. Analyzing Culture Uncertainty avoidance (cont.)
Countries with high uncertainty avoidance cultures have a high degree of structure in organizational activities, more written rules, less risk taking by managers, lower labor turnover, and less ambitious employees.
Low uncertainty avoidance societies have less structure in organizational activities, fewer written rules, more risk taking by managers, higher labor turnover, and more ambitious employees.

25. Analyzing Culture Masculine–feminine
The distribution of roles between genders and the more dominant role in a given society.
Countries with a fairly high masculinity index place great importance on earnings, recognition, advancement, challenge, and production.
Countries with a low masculinity index tend to place great importance on cooperation, a friendly atmosphere, and employment security.

26. Analyzing Culture Confucian dynamism
Is also known as long-term orientation.
Identifies if the culture of a region builds on Confucian teachings.
It emphasizes thrift, perseverance, a sense of shame, and following a hierarchy.

27. Integrating Hofstede’s Dimension
Cluster together countries with broad similarities in their cultures
The clustering of the cultural factors into various two-dimensional graphs helps to show how nations can share similar cultural traits.
Understanding of the general cultural orientation can easily understand how to approach business in a particular nation

28. Analyzing Culture Expansive framework
Fons Trompenaars used seven dimensions to differentiate national cultures.
The dimensions are: individualism versus collectivism, time orientation, universalism versus particularism, neutral versus affective, specific versus diffuse, achievement versus ascription, and relationship to nature.

29. Analyzing Culture Expansive framework (cont.)
The dimensions individualism versus collectivism and achievement versus ascription overlap with Hofstede’s masculine- feminine production orientation dimension.
Time orientation and relationship to nature dimensions are similar to the sociology framework of Kluckhohn and Strodtbeck.

30. Analyzing Culture Expansive framework (cont.)
In cultures emphasizing a universalistic orientation, people believe that absolute values such as goodness or truth are applicable to all situations.
In particularistic societies, each situation must be judged separately.
Neutral cultures tend not to show emotion, particularly in public.

31. Analyzing Culture Expansive framework (cont.)
Affective or the more emotional cultures do not discourage the expression of emotion.
The specific versus diffuse dimension focuses on how a culture emphasizes notions of privacy and access to privacy; this dimension is loosely related to Hofstede’s power distance dimension.

32. Analyzing Culture The GLOBE study
Global Leadership and Organizational Behavior Effectiveness
This research sought to examine the interrelationships between societal culture, organizational culture, and organizational leadership.
The research team identified nine different cultural attributes using middle managers from 951 organizations in 62 countries (over 170,000 managers in three industries, i.e. financial services, food processing, and telecommunications)

33. GLOBE researchers adhere to the belief that certain attributes that distinguish one culture from others can be used to predict the most suitable, effective, and acceptable organizational and leader practices within that culture.
The meta-goal of GLOBE – to develop an empirically based theory to describe, understand, and predict the impact of specific cultural variables on leadership and organizational processes and the effectiveness of these processes.

34. The first six items in the GLOBE study were based on Hofstede’s earlier works, with variations in some of Hofstede’s variables.
Uncertainty avoidance
Power distance
Collectivism I: Societal collectivism
Collectivism II: In-group collectivism
Gender egalitarianism
Assertiveness
Future orientation
Performance orientation
Humane orientation

35. Analyzing Culture The GLOBE study (cont.)
Hofstede’s individual group orientation variable was split into two parts—societal collectivism and in-group collectivism.
Hofstede’s masculinity variable was split into two variables - gender egalitarianism and assertiveness.
The seventh cultural item - future orientation concerns the importance placed in the society on delaying of gratification and importance of planning.

36. Analyzing Culture The GLOBE study (cont.)
The eighth cultural dimension - humane orientation concerns the degree to which individuals are rewarded for being fair, caring, and kind to others.
The last dimension - performance orientation concerns the extent to which achievement is a motivator.

37. Analyzing Culture The GLOBE study (cont.)
One contribution of the GLOBE study is the more specific clustering of countries and cultures.
Using such clusters allows individuals to quickly gain insight into what the culture of a nation would be, based on its cluster.