Chapter 2 Culture and Multinational Management Copyright© 2004 Thomson Learning All rights reserved Learning Objectives • Define culture and understand the basic components of culture • Identify instances of cultural stereotyping and ethnocentrism • Understand how various levels of culture influence multinational operations Copyright© 2005 South-Western/Thomson Learning All rights reserved Learning Objectives • Understand the Hofstede and 7d models • Appreciate the complex differences among cultures and use these differences for building better organizations Copyright© 2005 South-Western/Thomson Learning All rights reserved What is Culture? • Pervasive and shared beliefs, norms, values, and symbols that guide everyday life. • Cultural norms: both prescribe and proscribe behaviors • What we should do and what we cannot do. • Cultural values: what is good/beautiful/holy, and what are legitimate goals for life. Copyright© 2005 South-Western/Thomson Learning All rights reserved What is Culture? (cont.) • Cultural beliefs: represent our understandings about what is true. • Cultural symbols, stories, and rituals: communicate the norms, values, and beliefs of a society or a group to its members. • Culture is pervasive in society • Affects all aspects of life • Not all aspects are observable Copyright© 2005 South-Western/Thomson Learning All rights reserved Culture: Front Stage & Back Stage • Front stage of culture: easily observable aspect of culture • e.g., Japanese executive bows or North American robust handshake. • Back stage of culture: only insiders or members of the culture understand other aspects of culture • e.g., Japanese saying “it’s difficult” and twisting head to one side really means it’s impossible. Copyright© 2005 South-Western/Thomson Learning All rights reserved Three Levels of Culture 1. National culture: the dominant culture within the political boundaries of the nation-state. 2. Business culture: norms, values, and beliefs that pertain to business in a culture. 1. Tells people the correct, acceptable ways to conduct business in a society. Copyright© 2005 South-Western/Thomson Learning All rights reserved Three Levels of Culture (cont.) 3. Occupational and organizational culture 3.Occupational culture: the norms, values, beliefs, and expected ways of behaving for people in the same occupational group. 4.Organizational culture: the set of important understandings that members of an organization share. Copyright© 2005 South-Western/Thomson Learning All rights reserved Cultural Differences and Basic Values • Two diagnostic models to aid the multinational manager: 1. Hofstede model of national culture 2. 7d culture model Copyright© 2005 South-Western/Thomson Learning All rights reserved Hofstede’s Model of National Culture • Five dimensions of basic values • Power distance • Uncertainty avoidance • Individualism • Masculinity • Long-term orientation Copyright© 2005 South-Western/Thomson Learning All rights reserved Hofstede’s Model Applied to Organizations and Management • Management practices considered in the discussion of Hofstede’s model include: 1.Human resources management • Management selection • Training • Evaluation and promotion • Remuneration Copyright© 2005 South-Western/Thomson Learning All rights reserved Hofstede’s Model Applied to Organizations and Management (cont.) 2.Leadership styles 3.Motivational assumptions 4.Decision making and organizational design 5.Strategy Copyright© 2005 South-Western/Thomson Learning All rights reserved Power Distance • Power distance concerns how cultures deal with inequality and focuses on • Norms that tell superiors (e.g., bosses) how much they can determine the behavior of their subordinates • Values and beliefs that superiors and subordinates are different kinds of people Copyright© 2005 South-Western/Thomson Learning All rights reserved Power Distance (cont.) • High power distance countries have norms, values, and beliefs such as • Inequality is fundamentally good • Everyone has a place: some are high, some are low • Most people should be dependent on a leader • The powerful are entitled to privileges • The powerful should not hide their power Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.2: Managerial Implications for Power Distance Copyright© 2005 South-Western/Thomson Learning All rights reserved Uncertainty Avoidance • Norms, values, and beliefs regarding tolerance for ambiguity • Conflict should be avoided • Deviant people and ideas should not be tolerated • Laws are very important and should be followed • Experts and authorities are usually correct • Consensus is important Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.3: Managerial Implications of Uncertainty Avoidance Copyright© 2005 South-Western/Thomson Learning All rights reserved Individualism/Collectivism • Focus is on the relationship between the individual and the group • Countries high on individualism have norms, values, and beliefs such as • People are responsible for themselves. • Individual achievement is ideal. • People need not be emotionally dependent on organizations or groups. Copyright© 2005 South-Western/Thomson Learning All rights reserved Individualism/Collectivism • Collectivist countries have norms, values, and beliefs such as • One’s identity is based on group membership. • Group decision making is best. • Groups protect individuals in exchange for their loyalty to the group. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.4: Managerial Implications of Individualism/Collectivism Copyright© 2005 South-Western/Thomson Learning All rights reserved Masculinity • Tendency of a culture to support traditional masculine orientation • High masculinity countries have beliefs such as • Gender roles should be clearly distinguished. • Men are assertive and dominant. • Machismo/exaggerated maleness in men is good. • Men should be decisive. • Work takes priority over other duties. • Advancement, success, and money are important. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.5: Managerial Implications of Masculinity Copyright© 2005 South-Western/Thomson Learning All rights reserved Long-Term Orientation • • • • • • Belief in substantial savings Willingness to invest Acceptance of slow results Persistence to achieve goals Sensitivity to social relationships Pragmatic adaptation Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.6: Managerial Implications of Long-term Orientation Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.7 Hofstede’s Classification of Countries by Clusters Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.7 Hofstede’s Classification of Countries by Clusters Copyright© 2005 South-Western/Thomson Learning All rights reserved 7d Cultural Dimensions Model • Builds on traditional anthropological approaches to understanding culture • Culture exists because people need to solve basic problems of survival • Challenges include • How people relate to others • How people relate to time • How people relate to their environment Copyright© 2005 South-Western/Thomson Learning All rights reserved 7d Cultural Dimensions Model (cont.) • Dimensions that deal with relationships include: • Universalism vs. Particularism • Collectivism vs. Individualism • Neutral vs. Affective • Diffuse vs. Specific • Achievement vs. Ascription Copyright© 2005 South-Western/Thomson Learning All rights reserved 7d Cultural Dimension Model (cont.) • Dimensions dealing with how a culture manages time and how it deals with nature • Sequential vs. Synchronic • Internal vs. External control Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.8: The 7d Model of Culture Copyright© 2005 South-Western/Thomson Learning All rights reserved Universalism vs. Particularism • Pertain to how people treat each other based on rules or personal relationships • Universalistic • Right way is based on abstract principles such as rules, law, religion • Particularistic • Each judgment represents unique situation that can be dealt with based on relationships Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.9: Managerial Implications for Universalism vs Particularism Copyright© 2005 South-Western/Thomson Learning All rights reserved Individualism vs. Collectivism • Similar distinctions to Hofstede’s view • Collectivist societies • People defined by group memberships such as family • Responsibility, achievement, and rewards are group-based • Individualist societies • People trained to be independent • Assume individual responsibility for success or failure Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.10: Managerial Implications of Individualism/Collectivism Copyright© 2005 South-Western/Thomson Learning All rights reserved Neutral vs. Affective • Concerns acceptability of expressing emotions • Neutral • Interactions are objective and detached • Focus is on tasks rather than relationships • Affective • Emotions are appropriate in all situations Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.11: Managerial Implications of Neutral vs. Affective Copyright© 2005 South-Western/Thomson Learning All rights reserved Specific vs. Diffuse • Extent to which an individual’s life is involved in work • Specific • Business segregated from other parts of life • Contracts often delineate relationships • Diffuse • Business relationships encompassing/involving • Private and segregated space is small Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.12: Managerial Implications of Specific vs. Diffuse Copyright© 2005 South-Western/Thomson Learning All rights reserved Achievement vs. Ascription • Manner in which society gives status • Achievement • People earn status based on performance and accomplishments • Ascription • Characteristics or associations define status • E.g., status based on schools or universities Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.13: Managerial Implications of Achievement vs. Ascription Copyright© 2005 South-Western/Thomson Learning All rights reserved Time Orientation • How cultures deal with the past, present, and future • Future-oriented societies, such as the U.S., consider organizational change as necessary and beneficial • Past-oriented societies assume that life is predetermined based on traditions or will of God Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.14: Managerial Implications of Time Horizon Copyright© 2005 South-Western/Thomson Learning All rights reserved Internal vs. External Control • Concerned with beliefs regarding control of one’s fate • Best reflected with how people interact with the environment • Does nature dominate us or do we dominate nature? • In societies where people believe nature dominates them, managers are more fatalistic. Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.15: Managerial Implications of Internal vs. External Control Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.16: 7d Percentile Rankings for Selected Countries Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.16: 7d Percentile Rankings for Selected Countries Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.16: 7d Percentile Rankings for Selected Countries Copyright© 2005 South-Western/Thomson Learning All rights reserved Propensity to Trust • Growing concern with the development of trusting relationships with partners • Differences among cultures in terms of how and when people trust each other • Logic presupposes that individualism should be related to low trust • Individualistic cultures have higher trust relative to collectivist societies Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.17: Levels of General Trust in People Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.17: Levels of General Trust in People Copyright© 2005 South-Western/Thomson Learning All rights reserved Exhibit 2.17: Levels of General Trust in People Copyright© 2005 South-Western/Thomson Learning All rights reserved Caveats and Cautions • Stereotyping: assumes that all people within one culture behave, believe, feel, and act the same. • Ethnocentrism: occurs when people from one culture believe that theirs are the only correct norms, values, and beliefs. • Cultural relativism: all cultures, no matter how different, are correct and moral for the people of those cultures. Copyright© 2005 South-Western/Thomson Learning All rights reserved