CROSS CULTURE MANAGEMENT

Despite popular beliefs to the contrary, the single greatest barrier to business success is the one erected by culture E.T. Hall and M.R. Hall Culture is Metaphor Way of seeing and analyzing organization Potential perspective The current fascination with organizational culture began in the 1970s and early 1980s Peters and Waterman (1982) Deal and Kennady (1982) Kanter (1983) Culture is a shared phenomenon, and in the case of organizational culture that sharing takes place at the level of organization. Definitions of culture: Mead (1951) is a body of learned behavior, a collection of beliefs, habits and traditions, shared by a group of people and successfully by people who enter society Hofstede (1984) the collective programme of mind, which distinguishes the members of human group from another culture, in this sense, includes systems of values A shared pattern of behavior (Margaret Mead, 1953) A system of shared meaning or understanding (Claude Levi-Strauss, 1971; Clifford Geertz, 1983) A set of basic assumptions, shared solutions to universal problems... handed down from one generation to another (Edward Schein, 1985) Organizational culture has far reaching consequences for management and all the manner of organizational activity including Change Corporate strategy Financial and other measure of performance

Levels of culture
Sub culture Professional culture Organization or Corporate culture Industry culture National culture Supra-National culture Another popular concept of culture provided by Schein (1985) Core level : Assumption and Beliefs (Invisible, unconscious) Values (Explicit, declared)

Intermediate level: Surface level

: Behaviours (Observable, Manifest)

Structural view of culture (Charles Handy 1989) Power culture: (Small, Entrepreneurial organization) Power lies on the centre of web Informal communication Power source are valued and trusted Power relations are clear Role culture: (Departmentalized organizations) High level bureaucracy Coordination provided by small, elite, senior management Clear function and area of specialization Roles are clarified Provide security for employees Task culture: (Common Matrix organizations) Power lies on intersections Team culture along with autonomy More flexible

Person culture:

(Professional organization) Individuals are paramount Limited formal control Informal communication

CUTURAL WEB

Storie s Ritual s Contro l syste ms The paradi gm structur e

Symb ols Power structur es

Organizational culture: Gives a sense of identity Promotes commitment Enhances stability Makes sense of behavior

Factors affecting culture: Language Legal system Values Education

Political system Religion Culture Influences: Work Patterns Socializing Outside of Work Views of Gender-appropriate Behavior Concepts of Right and Wrong Ways of Handling Problems or Disagreements Interaction between Leaders and Subordinates Communication and Meeting Styles Challenges of Working across Cultures and Borders: Language Barrier Different Expectations about Team Work Building Relationships across cultural differences Business Protocol Achieving an Effective Global-Local Balance Virtual Communication Solving Problems and Conflict resolution Decision Making Meeting Deadlines and following agreements Significance of Cross-Cultural Management and Implications: Not only dos & donts; also to know yourself & others and uncover the why behind the behavior Individuals interacting, not countries Recognizing similarities and differences, then applying appropriate solutions and strategies Soft issues in management People Management Talent development and Retainment

 Cultural know-how as a core competence of a company Cultural and communicative competence as a keycompetence of human capital Factor of effectiveness and competitiveness of the company Localization of products

CULTURAL DIFFERENCES MANAGERS WORK VALUES BASED ON NATIONAL CULTURE Analysis of Managers role: Laurent (1983) Key aspects: Managers attitudes towards hierarchy The willingness to bypass lines of hierarchy Managers relationship with subordinates The importance of managers in the society These four themes were reflected in the following statements The main reason for a hierarchal structure is so that everybody knows who has authority over whom (Statement 1) In order to have efficient work relationship it is often necessary to bypass the hierarchical line (Statement 2)
It is important for managers to have at hand precise answers to most of

the questions that their subordinates may raise about their work (Statement 3) Through their professional activity, managers play an important role in society (Statement 4)

[See hand out Laurents analysis of managers role for the results]

Cross cultural analysis: A Model developed by Geert Hofstede (1984, 1991) (A survey of 1, 16,000 employees in 50 countries) Cultural dimensions:
Power distance (PDI): The social distance between people of

different rank or position Individualism (IDV) members of group : Preference to act as individual instead of

Masculinity/ Femininity (MAS): Degree to which masculinity

prevails over femininity values Masculinity values- Assertiveness, Competitiveness, Result orientation Femininity values-Cooperative, Personal Quality of life, Caring relationship,

Uncertainty avoidance (UAI): Preference for structured rather than

unstructured situations Long term orientation: Emphasize on future as opposed to short term values [See hand out]

Organisational culture in MNCs

Based on three aspects of organizational functioning: The general relationship between the employees and their organization The hierarchical system of authority that defines the roles of managers and subordinates The general views the employee hold about the MNCs purpose, destiny, goals and their places in them Family culture: characterized by a strong emphasis on hierarchy and orientation to the person Example: Turkey, Pakistan, China, Hong Kong, Singapore Eiffel Tower culture: characterized by strong emphasis on hierarchy and orientation to the task

Example: Denmark, Germany, Netherlands Guided missile culture: characterized by strong emphasis on equality in the work place and orientation to the task Example: US, UK Incubator culture: characterized by strong emphasis on equality and orientation to the person Example: California, Scotland

Differences in economic cultures

Anglo/American Identity (What makes society stick together) Individual rights contracts Heterogeneity (micro cultures) High-trust contracts Legal institutions Shareholders French and Latin European Social welfare Cultural identity Heterogeneity (micro cultures) Low trust Negotiation State, shareholders Japan National belonging Cultural identity Heterogeneity High trust within groups Banks Cross shareholding

Social capital (How trust is created) Ownership (Who owns enterprises)

Adapted from Lasserre (2007)

Country clusters
Based on: The importance of work goal Need deficiency, fulfillment and job satisfaction Managerial and organsational variables Work role and interpersonal orientation

Country clusters (Ronen and Shenkar, 1985)

Cultural Implications on Management of organization and people

Culture and Individual behavior Culture and Motivation Culture and Leadership Culture and Structure Culture and Communication Culture and Negotiations& Decision making

Managers role:
Organizational Leadership Managing Change Innovating Transferring Knowledge Strategic Planning Negotiating Selling Training & Development Building Global Teamwork Evaluating People Obtaining Information Giving & Receiving Feedback Establishing Credibility Relationship building

Group

Interpersonal

GLOBAL BUSINESS ENVIRONMENT

Global Management: Is the process of developing strategies, designing and operating systems and working with people around the world to ensure sustained competitive advantage. Global situations: Globalism (The borderless world):
Global economic integration- WTO, EU, NAFTA, ASEAN,

TRIAD Lead to world exports of goods& services Difference in regional output growth narrowed

Trade growth including the developing nations Increase in FDI

Information technology (Plugged in): The speed and accuracy of information transmission Availability of competitive information Accuracy of decision making Creation of awareness about consumers Propelling Electronic commerce Electronic linkages- employees, customers, suppliers, partners etc.

Human capital (Global sourcing) Political risk - Nationalization: Forced sale of MNCs - Expropriation: Local Govt seizes& provide inadequate compensation -Macro political: Event that affects all foreign firms business -Micro political: Govt gradual & subtle action against foreign firms

Economic risk - Changes in domestic monetary policy or fiscal policies -Modification of foreign- investment policies

Legal Common law Civil law Islamic law

Technology( Technoglobalism) -E-Business

-E-Commerce

COMMUNICATION ACROSS CULTURE The ability of a manager to effectively communicate across the cultural boundaries will largely determine the success of international business transactions or the output of a culturally diversified work force. Managers communicate: To coordinate, to disseminate, to motivate and to negotiate Sender Meaning Encode Medium Message Receiver Decode Meaning

NOISE

CULTURE Feed back Noise: Anything that serves to undermine the communication of the intended meaning. It is mainly being caused by cultural variables

Verbal communication styles Context plays a key role in explaining many communication differences. Context means information that surrounds a communication and helps to convey message. Context can be classified as: High context: Messages are often highly coded and implicit (Japan, Arab countries) Low context: Message is explicit and the speaker says precisely i.e Explicit (United States, Canada)

Japan High Middle East Latin America Africa Context Mediterranean England France North America Scandinavia Germany Low Switzerland Low Explicitness of communication Source: Deresky (2006) Major characteristics of communication styles based on the above analysis Indirect and direct styles: In high context cultures, messages are implicit and indirect because the emphasis is on personal relationship. In low context cultures, the messages are explicit and direct, because the emphasis is on objectives. Example: In high context culture a person asks, Who will be at this meeting? In low context a person asks, What is the meeting going to be about? Elaborate and Succinct styles: Elaborate style is common in high context cultures that have moderate degree of uncertainty avoidance (Arab nations). High

Exacting style is common in low context, low certainty avoidance cultures (England, Germany, Sweden) Succinct style is common in high context cultures with considerable uncertainty avoidance (Asia) Contextual and Personal styles: Contextual style focuses upon the speaker and relationship of parties and often associated with high power distance, collective, high context cultures (Asian culture) Personal style focuses on speaker and reduction of barriers between the parties and often associated with low power distance, individualistic, low context cultures (USA, Canada, Australia) Affective and Instrumental styles: The Affective style is characterized by the language that requires the listener to carefully note what is being said and observe how the sender is presenting the message. It is common in collective, high context cultures (Middle East, Asia) The Instrumental style is goal oriented and focuses on sender. It is commonly found in individualistic, low context cultures (Switzerland, Denmark, and USA)

Managing cross-cultural communication

Developing cultural sensitivity: what kind of behaviors does the message imply, and how will they be perceived by the receiver? Careful encoding: Selective transmission: Words, pictures, or gestures appropriate to the receivers frame of reference. what medium to choose?

Careful decoding of feedback: Decoding is the process of translating the received symbols into the interpreted message. ACHIEVING COMMUNICATION EFFECTIVENESS Improve feedback systems
Provide language training

Provide cultural training Increase flexibility and cooperation