TU-53.

309 Cross-cultural
management
Implications of culture on
organizations, management and
leadership

31.10.2002
Stina Immonen
SI/HUT DIEM 2002
Content
 Advancements of cross-cultural
management studies from the viewpoint
of OB

 Impact of cross-cultural issues on

organizations, teams and individuals

 Research conducted at HUT DIEM

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Advancements in CCM research

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Trends in studies on international
organizational behavior (Adler & Bartholomew 1992)

 Focus has shifted from single country and

comparative research to studies on
international interaction

 Impact of culture on managerial behavior has

been recognized

 Academics and professionals generate

together knowledge relevant to global business

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 Trend one:
The shift to interaction 1/2
 Evolution phases of multinational enterprises

 domestic firms
 cross-cultural management is of minimal interest

 multi-domestic firms
 growing to international markets
 polycentric or regiocentric expansion through developing
structures
 competition in each national market
 need for comparative understanding of cultural differences

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 Trend one:
The shift to interaction 2/2
 multi-national firms
 globally integrating geographically dispersed operations (multiple foreign
subsidiaries)
 minimizing the impact of cultural diversity
 assimilation of cultures into one dominant organizational culture
 comparative and international interaction research needed

 transnational firms
 developing and diffusing innovations
 strategic alliances and partnerships
 local responsiveness and global integration
 using cultural synergy as an advantage
 cross-cultural interaction research

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 Trend two: The recognition of
culture’s importance 1/2
 Multi-domestic and multinational phases have emphasized
cultural influence by the dominant partner
=> managers’ behavior was becoming more similar
(convergence) supported by hierarchies and organizational
structures

 Transnational phase emphasizes networks of equal status

players and minimal national cultural dominance in the
relationships
=> managers’ behavior maintains its dissimilarities
(divergence)

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 Trend two: The recognition of
culture’s importance 2/2
 How do managers learn from each other as equals?
 collaborative learning rather than influence, compromise
and adaptation

 Understanding and managing human dynamics of

global firms
 continuous international interaction within and between
firms as networks of equals
 collaboration and learning of people from different
cultures

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Trend three: The academic/ professional
community discourse

 Interaction between academic and professional

communities stimulates relevant research
 International OB/HRM articles

 Shortens the “cycle time” between changes in

firms’ competitive environment and changes in
scholars’ conceptualizations
 just-in-time research

 Creates a larger body of knowledge of

international organizational behavior
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Conclusions
 Advancements in international business

 Interaction between researchers and

practionnaires

 Increased need of knowledge

have developed CCM research

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 Approaches to study cross-cultural
management
 Foreign national, one country approach
 understanding national cultures
 Comparative international, two or more
countries
 understanding differences between cultures
 International interaction, interaction within and
between organizations that have members from
two or more countries
 understanding the synergy of cultures

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Impact of cross-cultural issues
on organizations

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Cross-cultural issues on organizational
level

 Organizational structure and design

 stage of internationalization and view of
proper management
 method of control and coordination
 international human resource management

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Stages of internationalization
(Dowling et al. 1999)

 Parent-subsidiary companies
 direct control – parent-country nationals as managers
 International division
 ethnocentric approach with local expertise – host-country nationals
as managers
 Global division
 centralization - decentralization
 Matrix
 joint authority of geographical and product divisions, matching the
structure to the decision-making
 Heterarchy, transnationals, networks
 less focus on the structure, more focus on developing the abilities,
behavior and performance of individual managers

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Method of control in multinational
enterprises (Marchan et al. 1996)
 Formal
 Structure
 Reporting systems
 Budgets
 Performance targets
 Informal
 Personal relationships
 Corporate culture

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International human resource
management – three dimensions
(Dowling et al. 1999, Morgan 1986)

 Human resource activities

 Human resource planning, staffing, performance
management, training and development,
compensation and benefits, labor relations
 Countries of operations
 Host country, home country, other country
 Types of employees
 HCNs, PCNs, TCNs

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Models of culture e.g.
 Hofstede’s model (1980, 1997)
 power distance
 collectivism-individualism
 uncertainty avoidance
 masculinity-femininity

 Hall (1976, 1981):

 High and low context communication

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have been used in explaining
differences in
 organizational structures
 decision-making processes
 manager-subordinate relations
 commitment to organization
 etc.

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Examples of cultural classifications and their
influences on management (Rodrigues, 1996)

 Large power distance  Authoritative decision-

making and leadership
styles

 Small power distance  Participative and

consultative styles
 Reliance on informal
 Collectivism
controls, team approach
 Reliance on formal
 Individualism controls
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 Strong uncertainty  Mechanistic
avoidance organization

 Weak uncertainty  Organic organizational

avoidance structures

 Masculinity  Equal employment

opportunities maybe
resisted by males
 Femininity
 Equal employment
opportunities less
resisted

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 High-context
cultures (e.g. Chinese,
Korean, Japanese,
Vietnamese, Arab, Greek,
Spanish culture)
 Business transactions
and negotiations are
slow in pace

 Low-context cultures  Business transactions

(e.g. Italian, English, North
American, Scandinavian,
and negotiations are
Swiss, German culture) fast in pace

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Cross-cultural issues on team level

 Teams
 communication
 leadership

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 Multi-cultural teams

 Definition
 team members are from more than one national culture
 often members represent different organizational/
professional cultures
 Communication
 ”more to do with realizing right responses than sending
the ”right” messages” – cultural awareness and
language to use the verbal and non verbal symbols
 e.g speed of messages, context, information flow, importance of
completion differ accross cultures (Hall & Hall 1989)
 attitude towards conflict and risk
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 Multi-cultural teams

 Leadership
 ”rather to apply different leadership styles than to try to
find synergy between different national cultures”
(Mäkilouko, 2001)
 aims to strengthen motivation and commitment to
organization
 relationship oriented leadership
 task oriented leadership
 degree of empowerment, participation in decision-
making

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 Adapted from Tuckman (1965), Katzenbach & Smith (1993), Montebello (1994) and Jassawal & Sashittal (1999)

Group Efficiency
Stages of Team Development Cycle

Immature Group Fractionated Sharing Group Effective Group Disbanding

- Forming Group - Norming - Performing Group
- Storming * successful performance - Adjourning
* confusion * consensus
* uncertainty * disagreement * flexible task roles
* leadership * openness
* assessing over rules * disagreement
accepted * helpfulness
situation * struggle for * anxiety about
* trust * delusion,
* testing ground leadership separation and
established desillusion,
rules * tension ending
* standards set acceptance
* feeling out * hostility * positive
* new stable
others * clique feeling towards
rules
* defining goals formation leader
* co-operation
* getting * sadness
acquainted * self-
* establishing evaluation
rules

Time

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MC, CF team success factors from AIRBUS case
TEAM LIFE CYCLE

Forming Storming Norming Performing Adjourning

Team Increased Understanding of Trust, transparent Effective utilisation of Evaluation, closing
Development communication and constraints, motivations decisions and actions, skills, reviewing and ceremonies,
Process interaction, setting and interests, defining agreed rules and rewarding, integration disseminating
up goals responsibilities and performance with other teams learning experiences
roles, shared or measurement
individualised leadership
depending on task

Team Social skills and Tolerance towards Tolerance towards Commitment to team, Willingness to learn
knowledge of diversity, negotiation uncertainty, reliance ability to collaborate from team
Qualifications languages skills towards others for synergy experience, and
improve performance

IT Support Network, compatible Effective use of Performance Data archives for

information systems communication media Coherency in IT management and future needs,
Needed and software monitoring systems knowledge
supported
communication management system
for organisational/
project memory

Experiences Formal Teamwork Communication Support from Closing

from the policies for training strategies and team leader meeting
team team member should be standards must and from and
experiment recruiting and provided be mutually partner evaluation
replacement agreed between organisations should be
should be all partners arranged
developed

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Cross-cultural issues on individual level

 Individuals
 expatriation process
 inpatriation process
 repatriation process

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Expatriate performance
 Selection: technical skills, cross-cultural suitability,
family requirements, country-cultural requirements,
language, MNE requirements
 Predeparture training program
 Compensation package
 Task roles and duration of assignment
 Headquarter’s support: employee contract and support
to family
 Host environment: phase of internationalization,
emergent market or mature operation
 Cultural adjustment: “the U-curve”

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Inpatriation
 Host country nationals’ transfers to parent
country
 Breaking down the uniculture
 Influx of inpatriates helps employee identification
with worldwide organization
 Selection as expatriates
 Facilitating subsidiary learning and integration
 Predeparture training programs

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Repatriation process
 Returning to parent country
 preparation for repatriation (often negleted!)
 physical relocation and transition – personalized
assistance and support from parent company
 readjustment
 career anxiety
 devaluing the international experience
 coping with new role demands: crossing corporate
boundary
 loss of status and pay

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Conclusion
 Cross-cultural awareness is needed

 in managing internationalization process on

organizational level

 in managing team processes

 on individual level

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CCM research at HUT DIEM

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 Examples on cross-cultural management
research at HUT DIEM

Research themes
 Culture’s impact on experienced employee well-

being (Järvenpää et al. 1993, 1997, Järvenpää & Immonen, 1996)

 comparison of experienced job content and job stress
between Finnish and US office workers, 1992-93
 impact of organizational and national culture on
management practices and organizational design, 1995-
96, Finnish and US public and private sector
CCM understanding on occupational group,
organizational and industry level by comparative
studies; surveys
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 Examples on cross-cultural management
research at HUT DIEM

Research themes
 Culture’s impact on managerial behavior (Immonen
et al. 1994, Hyttinen & Immonen, 1994, Järvenpää & Immonen, 1996)
 comparison of US and Finnish managers on time
spent on interaction, 1993-94

CCM understanding on amount of interaction in

managers’ work.
Units of analysis: type of work and organization
Comparative studies: structured observation
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 Examples on cross-cultural management
research at HUT DIEM
Research themes
 Management of networked organizations (Immonen
& Järvenpää, 1998, Pinson et al. 2000, Thomas et al. 2000)
 organization culture and leadership in networked
electronics industry, 1998-99
 cross-cultural challenges of de-located product
development, 1998-2000
CCM understanding on geographically dispersed
operations and global integration
Case study approach; documentation, surveys,
interviews, site visits
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 Examples on cross-cultural management
research at HUT DIEM
Research themes
 Challenges of international interaction on global

business, organizational and individual level,

2001- (Teerikangas et.al 2001, Järvenpää & Immonen, 2002)
 Finnish experiences from joint ventures and
acquisitions in Japan and China
 managing global virtual teams
 managing “born-global” companies
CCM understanding on global business and
transnational company level by case studies;
documentation, interviews, site visits
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