Chapter Four
International
Management and
Cross-Cultural
Competence
Chapter Objectives
• Describe the six-step internationalization process
and distinguish between a global company and a
transnational company.
• Define the term cultural intelligence, and contrast
ethnocentric, polycentric, and geocentric
attitudes toward foreign operations.
• Explain from a cross-cultural perspective the
difference between individualistic and collectivist
cultures, and identify at least four of the GLOBE
cultural dimensions.
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Chapter Objectives (cont’d)
• Discuss Hofstede’s conclusion about the
applicability of American management theories in
foreign cultures, and the practical significance of
the international study of work goals and
leadership styles.
• Summarize the leadership lessons from the
GLOBE Project.
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Chapter Objectives (cont’d)
• Identify the four leading reasons why U.S.
expatriates fail to complete their assignments, and
discuss the nature and importance of crosscultural training in international management.
• Summarize the position of North American women
on foreign assignments.
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International Competition
• Forces Shrinking the Globe
– Air travel
– Modern information technology
– Corporate globalism
• International Management
– The pursuit of organizational objectives in international
and cross-cultural settings
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The Internationalization Process
• Stage 1: Licensing
– Authorizing companies in foreign countries to produce
and/or market a given product within a specified
territory in return for a fee
• Stage 2: Exporting
– Goods produced in one country are sold to customers
in foreign countries.
• Stage 3: Local warehousing and selling
– Goods produced in one country are shipped to the
parent company’s storage and marketing facilities
located in overseas countries.
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The Internationalization Process (cont’d)
• Stage 4: Local Assembly and Packaging
– Components, rather than finished products, are shipped to
company-owned foreign facilities for final assembly and sales.
• Stage 5: Joint Ventures (also Strategic Alliances
or Partnerships)
– A company in one country pools its resources with another foreign
company or companies to create and market products and jointly
share profits and losses.
• Stage 6: Direct Foreign Investment
– The production and marketing of products through a wholly owned
subsidiary in a foreign country
– Involves cross-border mergers
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Joint Ventures and
Strategic Partnerships
• Recommendations for Achieving Success
– Exercise patience: Select and build trust with a partner
that produces compatible but not direct competitive
products.
– “Race to learn”: Learn as fast and as much as possible
without giving away core technologies and secrets.
– Play by the book: Establish at the outset ground rules
about the rights and responsibilities of all parties.
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From Global Companies to
Transnational Companies
• Global Company
– A multinational venture centrally managed from one
country
• Has global strategies for product design, financing, purchasing,
manufacturing, and marketing
• Transnational Company
– A global network of productive units with a
decentralized authority structure and no distinct
national identity
• Relies on a blend of global and local strategies
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Table 4.1: Corporate Giants Worldwide
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Toward Greater Global Awareness
and Cross-Cultural Competence
• Travelers:
– Engage in short-term
visits to foreign
countries
– Have limited
knowledge of local
history, culture, and
customs
– Have limited local
language skills
– Don’t attempt to adapt
to the local
environment
• Settlers
– Take assignments
lasting up to five years
– Have in-depth insights
into the host country’s
history, customs, and
culture
– Speak the local
language well or
fluently
– Are culturally trained to
“go native”
Cultural intelligence (CQ): The ability to interpret and act
in appropriate ways in unfamiliar cultural surroundings
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Contrasting Attitudes Toward
International Operations
• Ethnocentric Attitude
– The view that assumes the home country’s personnel
and ways of doing things are best
• Polycentric Attitude
– The view that assumes local managers in host
countries know best how to run their own operations
• Geocentric Attitude
– A world-oriented view that draws upon the best talent
from around the world
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The Cultural Imperative
• Culture
– A population’s taken-for-granted assumptions, values,
beliefs, and symbols that foster patterned behavior
– Societal culture
• Norms, values, attitudes, role expectations, taboos, symbols,
heroes, beliefs, morals, customs, and rituals
• Are U.S. Corporations Turning the World into a
Single “Americanized” Culture?
– Cultural roots run deep, have profound effects on
behavior, and are not easily altered.
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The Cultural Imperative (cont’d)
• High-Context Cultures
– Cultures in which nonverbal and situational messages
convey primary meaning
• Status of an individual is of tantamount importance in
determining relationships.
• Low-Context Cultures
– Cultures in which words convey primary meaning
• Nonverbal messages are secondary to spoken words.
• The terms of the deal are more important than building a
business relationship.
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Table 4.3: Nine Cultural Imperatives
from the GLOBE Project
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Other Sources of Cultural Diversity
• Individualistic cultures
– Cultures that emphasize individual rights, roles, and
achievements
• Collectivist cultures
– Cultures that emphasize duty and loyalty to collective
goals
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Other Sources of Cultural Diversity
(cont’d)
• Time
– Monochronic time: A perception of time as a straight
line broken into standard units
• Timely arrivals and keeping appointments are considered
important.
– Polychronic time: A perception of time as flexible,
elastic, and multidimensional
• Appointment schedules are considered approximations and are
not kept precisely.
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Other Sources of Cultural Diversity
(cont’d)
• Interpersonal space
– Some cultures prefer a close rather than wide distance
between conversing individuals.
• Language skills
– Language fluency opens insights into another culture.
• Religion
– Religion has many effects on personal and professional
activities in many cultures.
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Comparative
Management Insights
• Comparative Management
– The study of how organizational behavior and
management practices differ across cultures
• Made-in-America Management Theories Require
Translation
– Gert Hofstede’s research led him to recommend that
American management theories be adapted rather than
imposed on other local cultures.
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A Cross-Cultural Study
of Work Goals
• Findings’ implications
– Managers need to adapt the motivation programs to
local preferences.
– An international contingency approach to motivation is
called for.
• Leadership must be adapted to the local culture.
• Participative leadership is the most applicable style where
workers trust their leader.
• Directive leadership is considered the least appropriate style of
leadership.
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Figure 4.1: GLOBE Leadership Matrix
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Lessons in Leadership from
the GLOBE Project
• Leadership Styles
–
–
–
–
–
Charismatic/value-based*
Team-oriented*
Participative
Humane-oriented
Self-protective
• International managers need a full repertoire of
leadership styles that they can use flexibly in a
culturally diverse world.
*Greatest cross-cultural applicability
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Staffing Foreign Positions
• Why Is the U.S. Expatriate Failure Rate So
High?
– Ineffective job performance
– Job offers from other companies
– Culture shock: Negative feelings triggered by
an expectations-reality mismatch
– Family and personal adjustment problems that
arise after arriving in the foreign assignment
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Table 4.6: Research Findings on Why
U.S. Expatriates Go Home Early
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Cross-Cultural Training
• Cross-Cultural Training
– A guided experience that helps people live and work in
foreign cultures
• Specific Training Techniques
– Documentary programs familiarize the expatriate with
assignment destination.
– Culture assimilator exposes the expatriate to simulated
intercultural incidents and situations.
– Language instruction builds the expatriate’s
conversational skills in a foreign language.
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Cross-Cultural Training (cont’d)
• Specific Training Techniques (cont’d)
– Sensitivity training provides experiential
exercises to teach expatriates to be aware of
the impact of their actions on others in another
culture.
– Field experiences provide firsthand exposure to
ethnic subcultures that heightens expatriates’
cultural awareness.
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Competencies for Successful
Cross-Cultural Adaptation
• Building relationships
• Valuing people of
different cultures
• Listening and
observation
• Coping with ambiguity
• Translating complex
information
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• Taking action and
initiative
• Managing others
• Adaptability and
flexibility
• Managing stress
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Cross-Cultural Training (cont’d)
• Is One Technique Better Than Another?
– A combination of documentary and interpersonal
training is the best combination for expatriates.
• An Integrated Expatriate Staffing System
– Provide orientation for both expatriate and family.
– Have family sponsors or assigned mentors available at
the foreign assignment.
– Repatriation is an importance part of the entire foreign
assignment experience.
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What About North American Women
on Foreign Assignments?
• Women are above-average in being successful in
foreign assignments.
• Strongest barriers to foreign assignments have
been self-disqualification and the prejudice of
home country managers.
• Culture is a bigger hurdle than gender: Women on
foreign assignments are seen as North Americans
first, then as women.
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Relying on Local Management
• Advantages of Using Foreign Nationals
– They know the language and culture.
– They do not require huge location expenses.
– Host governments favor more local control.
• Disadvantage
– Local managers may not be attuned to home-office
goals and procedures.
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Summary
• The growing global economy makes the study of
international management more important than
ever.
• Cultural intelligence (CQ) is an outsider’s ability to
“read” a foreign culture as well as the locals do.
• The forms and meanings of communications are
different in high and low context cultures.
• Comparative management provides insights into
how organizational behavior and management
practices differ across cultures.
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Terms
• International
management
• Global company
• Transnational
company
• Cultural intelligence
(CQ)
• Ethnocentric attitude
• Polycentric attitude
• Geocentric attitude
• Culture
• High-context cultures
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•
•
•
•
•
•
Low context cultures
Individualistic cultures
Collectivist cultures
Monochronic time
Polychronic time
Comparative
management
• Culture shock
• Cross-cultural training
Chapter Four | 35