1. Impact of Culture What is it? Measures? General management activities
Communication and meaning
International strategy
Multi-cultural management
Entry modes and alliances
HRM (Lincoln Electric)

2. 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

3. Uncertainty Avoidance
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 – results-oriented; performance; assertiveness

4. 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

5. Multicultural Management: Japanese-American Context
Job dissatisfaction
Lack of commitment towards company
Propensity to quit ?
Cultural
Differences

6. 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.”

7. Evidence of a Problem?
“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 middle managers just quit.”

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

9. 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

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

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

12. Culture and Organizations
Organizing demands answers to two questions:
Who has the power to decide what?
What rules or procedures will be followed to attained desired ends?
Power Distance and Uncertainty Avoidance are most important

13. National and Organizational Culture
Low Power Distance
High Power Distance
Autonomy
Need for Authority
Results-oriented
Process-oriented
Low Uncert. Avoid
High Uncert. Avoid
Ambiguity OK
Needs security
Open-system decisions
Closed-system decisions

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

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

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

17. Communication and Meaning (Hall & Hall)
Low
Context
Explicit:
Written/
Spoken
MEANING
Context:
Surroundings/
Non-verbal
High
Context

18. Impact of Culture on Strategy and Entry Mode
Adaptation vs. Standardization
Product
Marketing
HRM
Germany
U.S.
Mexico
Entry
Resources
Control
Risk
Malaysia

19. Entry, 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

20. Impact of Culture on Alliances: A Strategic Option View
External Forces
Equity
Alliance
Internal Forces
Buyout
Dissolution

21. Strategic Option View of Alliances
External Forces
Equity
Alliance
Value
Uncertainty
& Risk
High Market
Value
High UA
High PD
Internal Forces
Buyout
Dissolution

22. Culture and Alliances as Options
Partnership buyouts more likely when:
Initiating firm high PD
Alliance portfolios (U.S. vs. Japan):
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)

23. Alliances and Culture cont.
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

24. Managing Overseas Assignments
High Failure Rates…US Expatriates:
25% are recalled
30-50% under perform
77% get “demoted” after returning
Higher Costs ( %):
Base salary
Housing, school, travel, spousal allowances

25. EXPATS LOCALS PROS CONS Knows company & products Strong links to HQ
Has technical skills lacking in
local market
Knows country, local market
No spouse problem
Cheaper
PROS
Rare
Expensive, spouse problem
High failure rates
Short-sighted focus
Likely to leave upon return
Steep learning curve for high-
tech products
Weak links to HQ
Dual pressures: company AND
country
CONS