Wannita C. ID 5314556
IBM 3711
Comparative Management
Chapter 1 Management
A conceptual and contextual overview
Comparative management is the study of similarities and differences in management practice
in different national and regional settings.
Conceptual and historical perspective
Modern management theory is diffuse and eclectic, a tangle of terminology and conceptual
frameworks, narrow and broad, with roots and branches in diverse disciplines, including the
social sciences, quantitative and technical fields, industrial and business administration.
The Management process (management function)
It is also called as the classical or functional view of management.
Scientific Management
The famous forerunner was Frederick Winslow Taylor who
wrote “the Principles of Scientific Management”. The book
focuses on time and motion studies in pursuit of manufacturing
efficiency. His managerial functions are planning, Training,
selecting, and controlling.
General Management
Henri Fayol, A French general manage, who wrote “General
and industrial Administration” suggested these functions;
planning, organizing, commanding, coordinating, and
controlling. His work represents 14 principles of management,
including chain of command, esprit de corps, discipline, stability
of tenure, equity, and initiative.
Rational bureaucracy
A German social scientist, Max Weber, gave rise to organization
studies as a self-contained discipline. He articulated the value of
more rational-legal organizational structure (bureaucracy).
Formal bureaucracy can bring more efficiency and fairness to the
organization.
** The management functions are not the same as organizational task functions. The
tasks are more institution specific.
Behavioral Contributions to Management Theory
Since management process was much enhanced by social and behavioral theory, these gave
rise to the fields of organization behavior and organization development.
Organization Behavior (OB) – a subset of management theory dealing with
individual and group behavior in the organization. (Personal and group’s values,
skills, and relationship)
Organization Development (OD) – an application of behavioral science methods to
improve organization process; can involve trainers and consultants, improvement of
internal communication.
Wannita C. ID 5314556
IBM 3711
Comparative Management
Hawthorne Study
The experiment is conducted at Hawthorne plant in Illinois by Elton Mayo, an Australian
professor. His work bases on the changing physical condition in workplace whether it has
effect on productivity or not. E.g. Personal attention given.
Management Science
It’s also called operations research. It’s started from British Military application during world
war 2. For illustrate, choosing optimal plant locations, and supply chain. Today we study
management science tools in our quantitative method course.
- Probability analysis
- Queuing
- Correlation analysis
- Regression
- Simulation
- Break0even analysis
- Time series projection
- Linear programming
- Gaming method
- Inventory ordering and control models
Contingency Perspective (Peter Drucker)
The views of management that calls attention to situational factors, both internal and external
to the organization that can influence management process, practice, and performance. It
believes that the most effective management practice depends on context and circumstance.
Chapter 2 The Meanings and Dimensions of Culture
Culture : acquired knowledge that people use to interpret experience and generate social
behavior. This knowledge forms values, creates attitudes, and influences behavior.
Values can be defined as broad preferences concerning appropriate courses of action or
outcomes. As such, values reflect a person’s sense of right and wrong or what “ought” to be.
 Values tend to influence attitudes and behavior (Killing animals)
Wannita C. ID 5314556
IBM 3711
Comparative Management
We only begin to perceive our culture when we are out of it, confronted with another :
Samuel Johnson -> “I understand my country so much better when I stand in
someone else’s”
Characteristics of Culture
• Learned - Culture is not inherited or biologically based; it is acquired by learning and
experience.
• Shared - People are members of groups that share culture; it is not specific to single
individuals.
• Trans-generational - Culture is cumulative, passed down from one generation to the
next.
• Symbolic - Culture is based on the human capacity to symbolize or use one thing to
represent another.
• Patterned - Culture has structure and is integrated; a change in one part will bring
changes in another.
• Adaptive - Culture is based on the human capacity to change or adapt.
Hindu and Nazi Symbols
The word swastika comes from the
Sanskrit word svastik  “su” means “good”
 “asti” means “to exist”
not
Etic and Emic Approaches
 When one begins to analyze other’s cultures from one’s point of view; ‘my way’ –
etic. In business dealings, there will be very low cultural awareness – culture shock,
conflict.
 When one starts to explore and appreciate a culture by its specificities –emic. This
will result in a high level of cultural awareness and sensitivity and successful
cross-cultural dealings.
Important terms
 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: cultural norms, no matter how different, are correct and
moral for the people of those cultures.
Onion Methaphor
The inner is to understand and learn
Why the people behave so.
Wannita C. ID 5314556
IBM 3711
Comparative Management
National Cultural Clustering
 The grouping of cultures based on their relative similarity
 Ronen and Shenkar
 A synthesis of eight earlier studies
 Eight clusters: Near Eastern, Nordic, Germanic, Anglo, Latin
European, Latin American, Far Eastern, and Arab, as well as
Independent.
Ronen and Shenkar’s culture
 Country clusters have geographical,
religious, linguistic or historical ties
which cut across national borders.
 Cultural similarity has an obvious
bearing on patterns of trade and on
the likely success of alliances and
mergers between companies from
those countries. They also ease
adjustment for MNC managers
How US managers and French Mangers see one another
Cultural Differences and Basic Values
 Three diagnostic models to aid the multinational manager:
 Hofstede model of national culture
 7d culture model (Trompenaars)
 Global Leadership an Organizational Behavior Effectiveness (GLOBE) project
Wannita C. ID 5314556
IBM 3711
Comparative Management
Geert’s Hofstede’s dimension od culture
 It is based upon a study of 116,000 IBM employees who work in IBM divisions
throughout the world.
 Hofstede’s survey revealed four underlying dimensions of culture:
 Power Distance
 Uncertainty Avoidance
 Individualism/Collectivism
 Masculinity/Femininity
 Long-Term Orientation (with Michael Bond)
Criticisms of Hofstede
Hofstede has been subject to broad criticism. Among the criticisms:
 The study was developed over three decades ago
 Single company’s data, with a large Multinational Enterprise having a strong
corporate culture.
 Business culture, not values culture, representing a reflection of business culture at
IBM and not national culture of the countries IBM operates within.
 Non-exhaustive, doesn’t identify all the cultural dimensions possible, but just a few.
 Partial geographic coverage, cover only a portion of the world’s cultures and
countries.
 Western bias, which values western business ideals.
Trompenaars’ 7d Cultural Dimensions Model
Builds on traditional anthropological approaches to understanding culture;
whereby “Culture exists because people need to solve basic problems of survival”.
These challenges include:
 How people relate to others;
 How people relate to time;
 How people relate to their environment.
Seven Cultural Dimensions;
Dimensions that deal with relationships include:
 Universalism vs. Particularism
 Collectivism vs. Individualism
 Neutral vs. Affective
 Diffuse vs. Specific
 Achievement vs. Ascription
Dimensions dealing with how a culture manages time & how it deals with the environment:
 Sequential vs. Synchronic
 Internal vs. External
1. ) Universalistic
 The “right way” is based on rules, law, religion.
Particularistic
 Each judgment is based upon personal relationships.
2.) Individualism vs. Communitarianism
 Individualism: people as individuals
-Countries with high individualism: great personal responsibility (e.g., Canada, U.S., Japan)
 Communitarianism: people regard selves as part of group
- Value group-related issues; committee decisions; joint responsibility (e.g., Malaysia, Korea)
Wannita C. ID 5314556
IBM 3711
Comparative Management
3.) Neutral vs. Emotional
 Neutral: culture in which emotions not shown
 High neutral countries, people act stoically and maintain composure (e.g.,
Japan and U.K.)
 Emotional: Emotions are expressed openly and naturally
 High emotion cultures: people smile a lot, talk loudly, greet each other with
enthusiasm (e.g., Mexico, Netherlands, Switzerland)
4.) Specific vs. Diffuse
 Specific: large public space shared with others and small private space guarded
closely
 High specific cultures: people open, extroverted; strong separation
work and personal life (e.g., Austria, U.K., U.S.)
 Diffuse: public and private spaces similar size, public space guarded because
shared with private space; people indirect and introverted, work/private life
closely linked (e.g., Venezuela, China, Spain)
5.) Achievement vs. Ascription
 Achievement culture: status based on how well one perform functions
(Austria, Switzerland, U.S.)
 Ascription culture: status based on who or what person is, e.g. father’s status,
age (e.g., Venezuela, China, Indonesia, Thailand)
6.) Time
 Sequential: only one activity at a time; appointments kept strictly, follow
plans as laid out (U.S.)
 Synchronous: multi-task, appointments are approximate, schedules
subordinate to relationships (e.g., France, Mexico)
 Present vs. Future:
 Future more important (Italy, U.S., Germany)
 Present more important (Venezuela, Indonesia)
 All 3 time periods equally important (France, Belgium)
7.) The Environment
 Inner-directed: people believe in control of outcomes (U.S., Switzerland,
Greece, Japan) What happens to me is my own doing.
 Outer-directed: people believe in letting things take own course (China, many
other Asian and Middle Eastern countries) What happens to me is my own
doing.
GLOBE: Global Leadership and Organizational Behavior Effectiveness.
Evaluates nine different cultural attributes using middle managers from 951 organizations in
62 countries.
Wannita C. ID 5314556
IBM 3711
Comparative Management
The 9 Cultural Dimensions of the GLOBE Project:
 Uncertainty avoidance
 Power distance
 Collectivism I: Social collectivism
 Collectivism II: In-group collectivism
 Gender egalitarianism
 Assertiveness
 Future orientation
 Performance orientation
 Humane orientation
Institutional collectivism: The degree to which organizational and institutional practices
encourage collective action.
In-group collectivism: The degree to which individuals in societies reflect collectivist
behavior.
Assertiveness: The degree to which individuals in organizations or societies are assertive in
social relationships.
Gender egalitarianism: The degree to which organizations or society promote gender
equality.
Performance Orientation – refers to the degree to which the society encourages societal
members to innovate, to improve their performance, and to strive for excellence
Humane Orientation – an indication of the extent to which individuals are expected to be
fair, altruistic, caring, and generous
 Need for belongingness and affiliation is emphasized more than material
possessions, self-fulfillment, and pleasure
 Less humane oriented societies are more likely to value self-interest and selfgratification
GLOBE results
 Corresponds generally with those of Hofstede and Trompenaars.
 Different from Hofstede in that many more researchers with varied perspectives were
involved (vs. Hofstede workng alone); studied many companies vs. Hofstede’s IBM.
 GLOBE provides a current comprehensive overview of cultural dimensions that can
be further analyzed for greater insight.
Chapter 3 Managing Across Cultures
Four orientations toward doing things in a particular way:
1. Ethnocentric
2. Polycentric
3. Regio-centric
4. Geocentric
Ethnocentric
- The values and interests of the parent company guide strategic decisions
- Mission is profitability.
- Top down decision making – major decisions are made at headquarters
Wannita C. ID 5314556
IBM 3711
Comparative Management
-
Global strategy, determined at headquarters.
Global product (based on needs of home country)
Home country managers hold key positions everywhere. Profits from subsidiaries are
repatriated (go back) to corporate headquarters
Headquarters makes decisions about budgets, profit targets, and capital investment for
the subsidiaries.
Polycentric
- Strategic decisions are tailored to suit the cultures of the countries where the
company operates.
- Subsidiaries set their own strategic objectives.
- Subsidiaries use national responsiveness strategies (based on local needs).
- Products are based on host country needs.
- Most profits are retained by the subsidiary.
- Subsidiary makes decisions about its budget and capital investment.
- Local citizens are trained for key positions.
Regio-centric
- The firm tries to balance its own interests with the interests of its subsidiaries on a
regional basis.
- Strategy is based on regional integration and national responsiveness.
- Strategic objectives are negotiated between regional headquarters and subsidiaries.
- Regional products, often with local adaptations
- Most profits are retained in the region.
- Capital investment decisions are made on a regional basis.
- Managers are trained for key positions anywhere in the region.
Geocentric
- The company uses a global approach to decision making.
- Mission is profitability and public acceptance.
- Headquarters redistributes profits among subsidiaries to meet capital investment and
budget needs.
- The best managers are developed for key positions anywhere in the world.
- Combines best features of geocentric and polycentric strategies.
- Requires more coordination and communication than other strategies.
- Global product, with local variations
The Globalization Imperative:
– Belief that one worldwide approach to doing business is key to efficiency and
effectiveness.
– However, many factors facilitate the need to develop unique strategies for
different cultures:
 Diversity of worldwide industry standards
 Continual demand by local customers for differentiated products
 Importance of being insider as in case of customer who prefers to “buy
local”
 Difficulty of managing global organizations
Need to allow subsidiaries to use own abilities and talents unconstrained by headquarters
Wannita C. ID 5314556
IBM 3711
Comparative Management
Culture can be expressed through:
Strategies for Managing Across Cultures
 Globalization - the production and distribution of products and services of a
homogeneous type and quality on a worldwide basis
 National responsiveness- the need to understand the different consumer tastes in
segmented regional markets
Cultural Environment
• Sellers must examine the ways consumers in different countries think about and use
products before planning a marketing program.
• Business norms vary from country to country.
• Companies that understand cultural differences can use them to advantage when
positioning products internationally.
Cultural Values in Advertisements
Example :
- American Values
Revolt Jeans Advertisement: Emphasizes power, equality, individuality, freedom, success,
and the importance of knowledge--which are all core American values.
- French Ads
Car Ads: European values emphasize leisure, sensuality, and appreciation for aesthetics- Ford UK vs. US
Small size in UK and big ones in US due to the difference of road structure between the two.
Marketing Mix Adaptation
Difference in culture and preference makes changes or adaptation in product or marketing
important. In India, McDonald’s serves chicken, fish, and vegetable burgers, and the
Maharaja Mac—two all-mutton patties, special sauce, lettuce, cheese, pickles, onions, on a
sesame-seed bun.
• Advertising (for example)
– French
• Avoid reasoning or logic
• Advertising predominantly emotional, dramatic, symbolic
Wannita C. ID 5314556
IBM 3711
Comparative Management
• Spots viewed as cultural events
– British
• Value laughter above all else
• Typical broad, self-deprecating British commercial amuses by mocking
both advertiser and consumer
– Germans
• Want factual and rational advertising
• Typical German spot features standard family of 2 parents, two
children, and grandmother
How to add value to marketing:
– Tailor advertising message to particular culture
– Stay abreast of local market conditions; don’t assume all markets basically
same
– Know strengths and weaknesses of MNC subsidiaries; provide them assistance
in addressing local demands
– Give subsidiary more autonomy; let it respond to changes in local demand
Parochialism and Simplification
– Parochialism: view world through own eyes and perspectives (monkey and
fish story)
– Simplification: exhibit same orientation toward different cultural groups
Similarities across cultures:
– Not possible to do business the same way in every global location
– Procedures and strategies that work well at home can’t be adopted overseas
without modifications
– Nevertheless, some similarities have been found (Luthans et al.’s study of 66
Russian managers
• Russia and U.S. (for example)
– Traditional management
– Communication
– Human resources
– Networking activities
– OB Mod
Differences across cultures
– Far more differences than similarities are found in cross-cultural research
– Wages, compensation, pay equity, maternity leave
– Importance of criteria used in evaluation of employees
Wannita C. ID 5314556
IBM 3711
Comparative Management
International Human Resource Management
Chapter 4 Cross-Cultural Communication and Negotiation
• Communication: The process of transferring meanings from sender to
receiver.
•
•
On surface appears straightforward
However, a great many problems can result in failure to transfer meanings correctly
Wannita C. ID 5314556
IBM 3711
Comparative Management
Context is information that surrounds a communication and helps convey the
message
• Context plays a key role in explaining many communication differences
• Messages often highly coded and implicit in high-context society (e.g.,
Japan, many Arab countries)
• Messages often explicit and speaker says precisely what s/he means in
low context society (e.g., U.S. and Canada)
High-Context Cultures
• Infer information from context, rather than from content.
• Prefer indirectness, politeness & ambiguity.
• Convey little information explicitly.
• Rely heavily on nonverbal signs.
Low-Context Cultures
• Rely more on content rather than on context.
• Explicitly spell out information.
• Value directness.
• See indirectness as manipulative.
• Value written word more than oral statements.
Verbal communication Style Indirect and Direct Styles
– High-context cultures: messages implicit and indirect; voice
intonation, timing, facial expressions play important roles in
conveying information – close personal network and informal
relationships
– Low-context cultures: people often meet only to accomplish
objectives; since they do not know each other very well, tend to
be direct and focused in communications
Three degrees of communication quantity—elaborating, exacting, succinct
– Elaborating style most popular in high- context cultures with
moderate degree of uncertainty avoidance – lots of talk, repetition,
details
– Exacting style focuses on precision and use of right amount of
words to convey message; more common in low-context, lowuncertainty-avoidance cultures
– Succinct style more common in high-context cultures with
considerable uncertainty avoidance where people say few words
and allow understatements, pauses, and silence to convey meaning.
Wannita C. ID 5314556
IBM 3711
Comparative Management
Contextual and Personal Styles
– Contextual style focuses on speaker and relationship of parties;
often associated with high power distance, collective, high-context
cultures – people choose words according to status in hierarchy
– Personal style focuses on speaker and reduction of barriers
between parties; more popular in low-power-distance,
individualistic, low-context cultures
Affective and Instrumental Styles
– Affective style common in collective, high-context cultures;
characterized by language requiring listener to note what is
said/observe how message is presented; meaning often nonverbal;
requires receiver to use intuitive skills to decipher message
– Instrumental style: goal oriented, focuses on sender who clearly
lets other know what s/he wants other to know; more commonly
found in individualistic, low-context cultures
• Downward Communication
– Transmission of information from manager to subordinate
– Primary purpose of manager-initiated communication is to convey
orders/information
– Managers use this channel for instructions and performance
feedback
– Channel facilitates flow of information to those who need it for
operational purposes
Wannita C. ID 5314556
IBM 3711
Comparative Management
• Upward Communication
From subordinate to superior
– Purposes: provide feedback, ask questions, obtain assistance
– In recent years a call for more upward communication in U.S.
– In Japan, Hong Kong, Singapore upward communication has long
been fact of life
– Outside Asian countries, upward communication not as popular
Less used in Germany and South
Communication Barriers
• Language barriers
– need to speak English/language of HQ- translation problems
• Cultural barriers
– Be careful not to use generalized statements about benefits,
compensation, pay cycles, holidays, policies in worldwide
communication
– Most of world uses metric system so include converted weights and
measures in all communications
– Even in English-speaking countries, words may have different
meanings.
– Letterhead and paper sizes differ worldwide
– Dollars aren’t unique to U.S. Also Australian, Bermudian,
Canadian, Hong Kong, Taiwanese, and New Zealand dollars.
Clarify which dollar.
 Perceptual Barriers
– Perception: a person’s view of reality
– Advertising Messages: countless advertising blunders when words are
misinterpreted by others
– How others see us: May be different than we think
Sex -Depending on the restriction imposed but they are banned in most countries
Nonverbal communication
– Transfer of meaning through means such as body language and use
of physical space
– Chromatics
• Use of color to communicate messages
– Kinesics
• Study of communication through body movement and facial
expression
– Eye contact
– Posture
– Gestures
Wannita C. ID 5314556
IBM 3711
Comparative Management
- Proxemics
– Study of way people use physical space to convey messages
• Intimate distance used for very confidential communications
• Personal distance used for talking with family/close friends
• Social distance used to handle most business transactions
• Public distance used when calling across room or giving talk
to group
Personal Space Categories for Those In the United States
Intimate distance
Personal distance
18’
18’ to 4’
Chronemics: the way time is used in a culture.
– Monochronic time schedule: things done in linear fashion
– Polychronic time schedule: people do several things at same time
and place higher value on personal involvement than on getting
things done on time
• Time orientation
– Latin Americans view time more casually than North Americans
– Swiss strongly emphasize promptness in keeping appointments
– Egyptians usually do not look to the future
Communication effectiveness
• Improve feedback systems
• Language training
• Cultural training
• Flexibility and cooperation
Wannita C. ID 5314556
IBM 3711
Comparative Management
Chapter 5 Organizational culture and Diversification
Organizational culture: shared values and beliefs enabling members to
understand their roles and the norms of the organization, including:
– Observed behavioral regularities, typified by common language,
terminology, rituals
– Norms, reflected by things such as amount of work to do and
degree of cooperation between management and employees
– Dominant values organization advocates and expects participants to
share (e.g., low absenteeism, high efficiency)
– Philosophy set forth regarding how to treat employees and
customers
– Rules dictating do’s and don’ts of employee behavior pertaining to
productivity inter-group cooperation
– Organizational climate as reflected by way participants interact
with each other, treat customers, and feel about how they are
treated by senior level management
Common characteristic of Organizational Culture
Interaction between National and Organizational Culture
National cultural values of employees may significantly impact their
organizational performance
• Cultural values employees bring to workplace are not easily changed by
organization
• In some cases, nationals selected to work for foreign companies may be
atypical of the local/native population.
Dominant Culture
Expresses the core values that are shared by a majority of the organization’s
members.
Subcultures
Minicultures within an organization, typically defined by department
designations and geographical separation.
Wannita C. ID 5314556
IBM 3711
Comparative Management
Dimensions of Organizational Culture
Organizational Cultures in MNCs
• Shaped by numerous factors including cultural preferences of leaders and
employees
• Some MNCs have subsidiaries that (aside from logo and reporting
procedures) wouldn’t be easily recognizable as belonging to same MNC
Four steps in integration of organizational cultures resulting from international
expansion via mergers/acquisitions:
• Two groups establish purpose, goals, and focus of merger
• Develop mechanisms to identify most important structures and
manager roles
• Determine who has authority over resources
• Identify expectations of all involved participates and facilitate
communication between departments and individuals
Wannita C. ID 5314556
IBM 3711
Comparative Management
1. Family Culture: Strong emphasis on hierarchy and orientation to
persons
Power oriented, headed by leader regarded as caring parent
Management takes care of employees, ensures they’re treated well, and
have continued employment
Catalyze and multiply energies of personnel or end up supporting leader
who is ineffective and drains energy and loyalties
2. Eiffel Tower:
Strong emphasis on hierarchy and orientation to task
Jobs well defined; coordination from top
Culture narrow at top; broad at base
Relationships specific and status remains with job
Few off-the-job relationships between manager and employee
Formal hierarchy is impersonal and efficient
3. Guided Missile:
Strong emphasis on equality in workplace and in task
Culture oriented to work
Work undertaken by teams or project groups
All team members equal
Treat each other with respect
Egalitarian and task-driven organizational culture
4. Incubator Culture:
Strong emphasis on equality and personal orientation
Organization as incubator for self-expression and self-fulfillment
Little formal structure
Participants confirm, criticize, develop, find resources for, or help
complete development of innovative product or service
Wannita C. ID 5314556
IBM 3711
Comparative Management
How Employees Learn Culture
• Stories
• Rituals
• Material Symbols
• Language
Managing Multiculturalism and Diversity
• Both domestically and internationally, organizations lead workforces with
a variety of cultures consisting of largely diverse populations:
– Women and Men
– Young and Old
– Black, White, Latin, Asian, Arab, Indian
– Many others.
Types of Multiculturalism
• Domestic Multiculturalism
– Multicultural and diverse workforce operating in MNC home
country
– Group Multiculturalism
• Homogenous groups
• Token groups
• Bicultural groups
• Multicultural groups
Understanding the Conditions for Effectiveness
Wannita C. ID 5314556
IBM 3711
Comparative Management
Potential Problems Associated with Diversity
• Perceptual problems
– When cultural diverse groups come together, often bring
preconceived, erroneous stereotypes with them
• Inaccurate biases
• Inaccurate communication
• Attitudinal problems
– May cause lack of cohesion resulting in unit’s inability to take
concerted action or be productive
Advantages of Diversity
• Enhance creativity
• Lead to better decisions
• More effective/productive results
• Prevent groupthink
• Can facilitate highly effective teams under right conditions
Managing Multicultural Teams
• Select team members for task-related abilities, not solely based on
ethnicity
• Team members must recognize and prepare to deal with their differences
• Team leader must help identify/define overall goal
• Mutual respect among members is critical
• Managers must give team positive feedback on process and output
Chapter 6 Ethics and Social Responsibility
Ethics:
– Study of morality and standards of conduct
– Dilemmas arising from conflicts between ethical standards between
countries most evident in employment practices
– Inferring right vs. wrong in legal sense
– Ethics deal with the “oughts” of life
– International business ethics: unique ethical problems faced by
managers operating across national boundaries
– More complex as different cultures do not agree on what one
“ought” to do
Corporate Social Responsibility (CSR):
» Closely related to ethics
» Actions of a firm to benefit society beyond requirements of law and
direct interests of firm
» CSR involves taking voluntary action
Wannita C. ID 5314556
IBM 3711
Comparative Management
» CSR concerns include working conditions in factories and service
centers as well as environmental impacts of corporate activities
Example of company
Some Areas of Ethical and Social Responsibility Concerns for the Multinational
Company
Wannita C. ID 5314556
IBM 3711
Comparative Management
Ethical relativism vs. Ethical universalism
– Ethical relativism: each society’s view of ethics must be
considered legitimate and ethical – when in Rome do as the
Romans
– Ethical universalism: basic moral principles that transcend cultural
and national boundaries
Ethics and Social Responsibility
• Employment and business practices
– Difficult to establish a universal foundation of employment
practices
– Difficult dilemmas in deciding working conditions, expected
consecutive work hours, and labor regulations.
– Offshoring due to differences in labor costs
• Human Rights
– A great deal of subjectivity and culturally biased viewpoints exist
– Some basic rights: life, freedom from slavery or torture, freedom of
opinion and expression, general nondiscriminatory practices
– Human rights violations still rampant globally
Ethics and Social Responsibility Around the World: CHINA
• Workers not well paid
• Often forced to work 12 hours a day, 7 days a week
• Piracy, counterfeiting, industrial spying
• Human rights violations
– Use of prisoner and child labor
Ethics and Social ResponsibilityAround the World: JAPAN
 Political and business scandals:
– Japanese cabinet member have accepted questionable payments and
favors
– Japanese banking system has failed to take corrective actions when
dispersing loans
– Some Japanese firms systematically concealed customer complaints
• Equal opportunity issues
– Refusal to hire women or promote them into management positions
– Hostile work environment
– Traditional role of females and female employees
– Sexual harassment may not be considered a moral issue
Wannita C. ID 5314556
IBM 3711
Comparative Management
Ethics and Social ResponsibilityAround the World: EUROPE
• Equal employment opportunity
– Glass ceiling pervasive throughout the world
– France, Germany, Great Britain have seen increase in number of
women in management, but tend to represent only lower levels
International Business Ethics
– “Corruption”-- kickbacks, cronyism, nepotism, bribes.
• These are corrupting in the West; may or may not be
corrupting elsewhere.
• Other systems can be corrupt, but in different ways.
Corruption
• Kickbacks
– A purchasing agent may receive payments from a supplier in
exchange for a contract.
– This is corrupt because it implies conflict of interest – the case of
Glaxo Smith Kline
• Cronyism
– In most of the world, one lets contracts to one’s friends.
• Guanxi in China.
• Bonds of affection and friendship in Latin America.
• Old-boy networks in Japan and Korea.
• Cronyism is more evident in Asian countries-- honor, loyalty
to friends, sensitivity to needs of associates.
• Nepotism
– Your associates may ask you to employ their relatives.
• This is often unethical in the West due to conflict of interest.
• It is standard practice in many parts of the world.
• The main reason for nepotism is the primacy of the family.
• Bribes
– Definition varies.
• Many view a kickback as a “commission,” not a bribe.
• A thank-you gift may be viewed as gratitude rather than
bribery in many countries.
– Frequency varies.
• In Singapore, no one dares.
• In China and India, it is ubiquitous.
– Bribery may or may not be corrupting.
• In South Korea, executives give white envelopes full of cash
to government officials as a normal part of doing business.
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Ethics and Social Responsibility
• Corruption
– Government corruption is a pervasive element in international
business environment
– Scandals in Russia, China, Pakistan, Lesotho, South Africa, Costa
Rica, Egypt and elsewhere
Questionable Payments
• Corruption and bribery can have devastating effects on societies
• Companies routinely use poorer-quality products or materials to cover for
the bribe, thus resulting in inferior products
• To understand the level of corruption in countries, multinational
companies can rely on the Corruption Perception Index (CPI)
• CPI developed by Transparency International, gives an idea of the levels
of perception of corruption within countries
Global Initiatives to Increase Accountability and Limit Corruption
• Foreign Corrupt Practices Act
• International Assistance Partnerships
U.S. Foreign Corrupt Practices Act (FCPA)
• Forbids illegal payments or gifts to officials of foreign governments for
the sake of getting or retaining business
Corruption and Foreign Corrupt Practices Act (FCPA)
• Some evidence that discontinuing bribes does not reduce sales of the
firm’s products or services in that country
• Recent formal agreement by many industrialized nations to outlaw the
practice of bribing foreign government officials
Corruption Index:
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Corporate Social Responsibility (CSR) and Sustainability
• CSR: Action of a firm to benefit society beyond the requirements of the
law and direct interests of the firm (examples of firms’ actions during the
floods in Thailand)
• Sustainability: Development that meets humanity’s needs without
harming future generations.
Sustainability 3-Legged Stool
NGO: Non-governmental organization; private, not-for-profit organization that
seeks to serve society’s interests by focusing on social, political, and economic
issues such as poverty, social justice, education, health and the environment.
• NGOs have grown in number, power, influence
• NGO activism has caused major changes in corporate behavior
• NGO leaders are the most trusted of eight leadership categories
Trust in Leaders
• NGOs in U.S. and globally
– Save the Children
– Oxfam
– CARE
– World Wildlife Fund
– Conservation International
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Corporate Response to Social Obligations
• Agreements and codes of conduct committing MNCs to maintain certain
standards
• Contribute to raising of standard in developing world by exporting higher
standards to local firms in these countries
What are the key issues MNCs face?
 Child labour/forced labour
 Human Rights
 Environment
 Corruption
Corporate Governance
• The System by which business corporations are directed and controlled:
– Distribution of rights and responsibilities
– Stakeholder management
– Spells out rules and procedures
• Many continental European countries are “insider” systems
– Ownership more concentrated
– Shares owned by holding companies, families or banks
• Rules and regulations differ among countries and regions
– U.K. and U.S. systems are “outsider” systems
• Dispersed ownership of equity
• Large number of outside investors
International Assistance
• Governments and corporations increase collaboration to provide
assistance to communities and locales through global partnerships
• Best “investments”
– Controlling and preventing AIDS
– Fighting malnutrition
– Reducing subsidies and trade restrictions
– Controlling malaria (disease prevention)
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Chapter 7 Motivation across culture
Motivation is a psychological process through which unsatisfied wants or needs lead to
drives that are aimed at goals or incentives.
The Motivation Process
Unsatisfied
Tension
Drives
Search behavior
Satisfied needs
Reduction of tension
Two underlying assumptions of motivation
1.) The Universalist Assumption
– Motivation process is universal; all people are motivated to pursue goals they value
but culture influences specific content and goals pursued.
2.) The Assumption of Content and Process
- Content Theories of Motivation:
Theories that explain work motivation in terms of what arouses, energizes, or initiates
employee behavior.
- Process Theories of Motivation:
Theories that explain work motivation by how employee behavior is initiated, redirected, and
halted.
Intrinsic-Extrinsic Need Theory
• Intrinsic Factors are concerned with opportunity for personal growth, development,
and advancement, and deals with the quality of work performed
• Extrinsic Factors are concerned with the context of the workplace, such as level of
pay, working conditions, and fringe benefits
3 Content Views of Motivation
1.) Maslow’s hierarchy of need of Abraham Maslow (1908-1970), forerunner of need
psychology.
• Lower-level needs must be satisfied before higher-level needs become motivators
• A satisfied need that is no longer motivates
• There are more ways to satisfy higher-level than there are ways to satisfy lower-level
needs
International findings:
Haire’s study indicated all needs important to respondents across cultures
• International managers (not rank and file employees) indicated upper-level needs
of particular importance to them
• Findings for 3 selected country clusters (Latin Europe, U.S./U.K., Nordic
Europe) indicated autonomy and self-actualization were most important and least
satisfied needs for respondents
• Asian culture emphasizes needs of society:
• Chinese hierarchy of needs might have four levels ranked from lowest to
highest: Belonging (social); Physiological; Safety; Self-actualization (in
service of society)
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Western
Chinese
2.) Herzberg’s Two-Factor Theory
Hygiene Factors
Motivation Factors
Achievement
Supervisors
Recognition
Working conditions
The work itself
Interpersonal relations
Responsibility
Pay and security
Advancement
and growth
Company policies and
administration
Satisfaction
No satisfaction
Dissatisfaction
No dissatisfaction
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3.) McClleland’s Need Theory
The theories composes of 3 needs :
Need for achievement
• Characters of high achievers :
– They like situations in which they take personal responsibility for finding
solutions to problems
– Tend to be moderate risk-takers rather than high or low risk-takers
– Want concrete feedback on performance
– Often tend to be loners and not team players
• How to Develop High Need for Achievement:
– Obtain feedback on performance and use information to channel efforts into
areas where success is likely
– Emulate people who are successful achievers
– Develop internal desire for success and challenges
– Daydream in positive terms by picturing self as successful in pursuit of
important objectives
Culture of many countries doesn’t support high achievement (feminine, high UAV)
Process views of motivation
Equity theory
- Equity
Outcomes
Inputs
=
Outcomes
Inputs
-
Negative
Equity
Outcomes
Inputs
<
Outcomes
Inputs
-
Positive
Equity
Outcomes
Inputs
>
Outcomes
Inputs
Employees in Asia and Middle East often readily accept inequitable treatment in order to
preserve group harmony
Japanese men and women (and in Latin America) typically receive different pay for doing
same work; due to years of cultural conditioning women may not feel treated inequitably
Goal-setting theory
- Focuses on how individuals set goals and respond to them and the overall impact of
this process on motivation
- Specific areas given attention in this theory:
o Level of participation in goal setting
o Goal difficulty
o Goal specificity
o Importance of objective
o Timely feedback to progress toward goals
In U.S. employee participation in goal setting is motivational; employee participation has no
value for Norwegian employees in this study
Expectancy theory (Victor Vroom)
• Process theory postulates that motivation is influenced by a person’s belief that
– Effort will lead to performance
– Performance will lead to specific outcomes
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– Outcomes will be of value to the individual
– High performance followed by high rewards will lead to high satisfaction
Theory works in cultures with strong internal locus of control.
• Job Design:
– Quality of worklife (QWL) is not the same throughout the world
• Socio-technical Job Designs:
– Objective of these designs to integrate new technology into workplace so
workers accept and use it to increase overall productivity
• Work centrality Importance of work in an individual’s life can provide important
insights into how to motivate human resources in different cultures
– Japan has highest level of work centrality
– Israel has moderately high levels
– U.S. and Belgium have average levels
– Netherlands and Germany have moderately low levels
– Britain has low levels
Japanese Case Impact of overwork on physical condition of Japanese workers
• One-third of working-age population suffers from chronic fatigue
– Japanese prime minister’s office found majority of those surveyed complained
of
– Chronic exhaustion
– Emotional stress
– Abusive conditions in workplace
• Karoshi (“overwork” or “job burnout”) is now recognized as a real social problem
• Stress leads to alcohol consumption
Rewards
• Managers everywhere use rewards to motivate personnel
• Significant differences exist between reward systems that work best in one country
and those that are most effective in another.
• Many cultures base compensation on group membership (collectivist countries)
• Workers in many countries motivated by things other than financial rewards, for
example, time off.
Need for power: the need to have control over the circumstance or status in the society or
workplace.
Need for affiliation : the need to have a harmonious relationship with friends, and gain
acceptance and love from members of the society or workplace.
Chapter 8 Leadership Across Cultures
Leadership is like beauty; it’s hard to define, but you know it when you see it.
-said by Warren Bennis
Leadership is…
The process whereby an individual influences group members in a way that inspires them
to achieve some group goal that he or she has identified as important.
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Philosophical Background: Theories X, Y, and Z
Theory X manager :
A manager who believes that people are basically lazy and that coercion and threats of
punishment often are necessary to get them to work.
Theory Y manager :
A manager who believes that under the right conditions people not only will work hard but
will seek increased responsibility and challenge.
Theory Z manager :
A manager who believes that workers seek opportunities to participate in management and are
motivated by teamwork and responsibility sharing.
Leadership Behaviors and Styles
Authoritarian Leadership
- The use of work-centered behavior designed to ensure task accomplishment.
- One-way downward flow of information and influence from authoritarian leader to
subordinates.
Paternalistic Leadership
- The use of work-centered behavior coupled with a protective employee centered
concern.
- Continual interaction and exchange of information and influence between leader and
subordinates.
Participative Leadership
- The use of both work- or task-centered and people centered approaches to leading
subordinates.
- Continual interaction and exchange of information and influence between leader and
subordinates and subordinates to subordinates.
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The managerial grid
High
Concern of people and relationship
1,9 Management Style
9,9 Management Style
Thoughtful attention to needs of
Work accomplishment is from
people for satisfying relationships
committed people; interdependence
leads to a comfortable friendly
through a “common stake” in
organization atmosphere and work
organization purpose leads to
tempo
relationships of trust and respect
5,5 Management Style
Adequate organization performance
is possible through balancing the
necessity to get out work with
maintaining morale of people at a
satisfactory level
1,1 Management Style
Exertion of minimum effort to get
required work done is appropriate to
sustain organization membership
Low
9,1 Management Style
Efficiency in operations results from
arranging conditions of work that human
elements interface to a minimum degree
High
Concern for products and tasks
Some examples of International Leadership Styles
 In Mexico, everything is a personal matter. To get anything done here, the leader must
be more of an instructor, teacher, and father figure than a boss.
 Malaysians expect their leaders to behave in a manner that is humble, modest, and
dignified.
 Peruvian employees look for decisiveness and authority in their leaders.
 Egyptians treat their leaders as heroes and worship them so long as they remain in
power.
 Chinese leaders are expected to establish and nurture personal relationships,
practice benevolence towards subordinates, be dignified and aloof but sympathetic,
and treat the interests of employees like their own.
 Jaoanese leaders are expected to focus on developing a healthy relationship with
their employees where employees and managers share the same fate. Top managers
must have an ability to manage people by leading them. In addition, symbolic
leadership is also frequently seen in Japan, where an executive or manager will take
public responsibility for the failures or inadequacies of the group or company (as
when a CEO resigns over a corporate scandal).
 Americans are generally ambivalent in their choice of leaders; some like leaders who
empower and encourage their subordinates, while others prefer leaders who are bold,
forceful, confident, and risk-oriented
 The Dutch stress egalitarianism and are skeptical about the value and status of leaders.
Terms like ‘leader’ and ‘manager’ can carry a stigma to the point that Dutch children
will sometimes refuse to tell their schoolmates if their father or mother works as a
manager.
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IBM 3711
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Haire.Ghiselli and Porter’s study of 3641 managers from 14 countries (1966)
European managers tend to use a participative approach. Researchers investigated four
areas relevant to leadership.
The Role of Level, Size, and Age on European Managers’ Attitudes Toward
Leadership
- Higher-level managers (Scandinavia) tend to express more democratic values than
lower-level managers; in other countries, (Germany) the opposite was true
- Company size tends to influence the degree of participative-autocratic attitudes
- Younger managers were more likely to have democratic values when it came to
capacity for leadership (US, Sweden) and initiative and to sharing information and
objectives
Conclusion About European Leadership Practices
- Most European managers tend to reflect more participative and democratic
attitudes – but not in every country
- Organizational level, company size, and age seem to greatly influence attitudes
toward leadership
- Many of the young people in this study now are middle-aged – European
managers in general are highly likely to be more participative than their older
counterparts of the 1960s and 1970s
Japanese Leadership Approaches
- Japan is well known for its paternalistic approach to leadership
- Japanese culture promotes a high safety or security need, which is present among
home country–based employees as well as MNC expatriates
- Japanese managers have much greater belief in the capacity of subordinates for
leadership and initiative than do managers in most other countries – only managers
in Anglo-American countries had stronger feelings in this area
“Getting Americans and Japanese to work together is like mixing hamburger with sushi.”
Atsushi Kagayama
Vice president, Panasonic Corporation, Japan
President, American Kotobuki, USA
Differences Between Japanese and U.S. Leadership Styles
 Except for internal control, large U.S. firms tend to be more democratic than small
ones – the profile is quite different in Japan
 Younger U.S. managers appear to express more democratic attitudes than their older
counterparts on all four leadership dimensions
 Japanese and U.S. managers have a basically different philosophy of managing people
 Another difference between Japanese and U.S. leadership styles is how senior-level
managers process information and learn
 In this Japan, you can’t lay people off very easily. In America, you can
Variety Amplification
Japanese executives are taught and tend to use variety amplification – the creation of
uncertainty and the analysis of many alternatives regarding future action
Variety Reduction
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U.S. executives are taught and tend to use variety reduction – the limiting of
uncertainty and the focusing of action on a limited number of alternatives
Leadership in China
Individualism - Measured by importance of self sufficiency and personal accomplishments.
Collectivissm - Measured by willingness to subordinate personal goals to those of the work
group with an emphasis on sharing and group harmony.
Cinfucianism - Measured by the importance of societal harmony, virtuous interpersonal
behavior, and personal and interpersonal harmony.
 The “New Generation” group (younger Chinese) scored significantly higher on
individualism than did the current and older generation groups
 They also scored significantly lower than the other two groups on collectivism and
Confucianism
 These values appear to reflect the period of relative openness and freedom, often
called the “Social Reform Era,” in which these new managers grew up
 They have had greater exposure to Western societal influences may result in
leadership styles similar to those of Western managers
Leadership in the Middle East
 There may be much greater similarity between Middle Eastern leadership styles and
those of Western countries
 Western management practices are evident in the Arabian Gulf region due to close
business ties between the West and this oil-rich area as well as the increasing
educational attainment, often in Western universities, of Middle Eastern managers
 There is a tendency toward participative leadership styles among young Arab middle
managers, as well as among highly educated managers of all ages
Other differences- tone of voice
 Way in which managers speak to subordinates
- In Anglo-Saxon countries, managers raise their voice to emphasize a point
- In Asian countries, managers generally speak at the same level using self-control that
shows respect for subordinate
- Latin American managers vary their voice tone continually, this shows they are
interested in what they are saying.
- Japanese bosses ‘scolding’ subordinates in public
Transformational, Transactional, and Charismatic Leadership
Idealized Influence
- Transformational leaders are a source of charisma and enjoy the admiration of their
followers.
- They enhance pride, loyalty, and confidence in their people, and align these followers by
providing a common purpose or vision that the latter willingly accept
Inspirational Motivation
- These leaders are extremely effective in articulating their vision, mission, and beliefs in
clear-cut ways, thus providing an easy-to understand sense of purpose regarding what needs
to be done
Intellectual Stimulation
- Transformational leaders are able to get their followers to question old paradigms and to
accept new views of the world regarding how things now need to be done
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Individualized Consideration
- These leaders are able to diagnose and elevate the needs of each of their followers through
individualized consideration, thus furthering the development of these people
Less effective transformational Leaders
Contingent Reward (CR) Leader
- Clarifies what needs to be done, provides psychic and material rewards to those complying
with his or her directives
Active Management-by-Exception (MBE-A) Leader
- Monitors follower performance and takes corrective action when deviations from standards
occurs
Passive Management-by-Exception (MBE-P) Leader
-Takes action or intervenes in situations only when standards are not met.
Laissez-Faire (LF) Leader (worst one)
- Avoids intervening or accepting responsibility for follower actions
Entrepreneurial Leadership and Mindset
Key personal characteristics of entrepreneurs and strong leaders (Richard Branson, Bill
Gates, Mark Zuckerberg)
 They are opportunity seekers and are comfortable with failure, rebounding quickly to
pursue another opportunity
 They are characterized as adventurous, ambitious, energetic, domineering, and selfconfident
** Entrepreneurial leaders operating internationally must possess cultural sensitivity,
international vision, and global mindset to effectively lead their venture through challenges of
doing business in other countries.
Chapter 9 Human Resource Selection and Development Across Cultures
Sources of Human Resources
MNCs can use four basic sources for filling overseas positions:
(1) Home-Country Nationals (Expatriates):
a. Expatriate managers are citizens of the country where the multinational
corporation is headquartered
b. Sometimes called headquarters nationals
c. Most common reason for using home-country nationals (expatriates) is to get the
overseas operation under way
(2) Host-Country Nationals:
a. Local managers hired by the MNC
b. They are familiar with the culture
c. They know the language
d. They are less expensive than home-country personnel
e. Hiring them is good public relations and encouraged by government
(3) Third-Country Nationals:
a. Managers who are citizens of countries other than the country in which the MNC
is headquartered or the one in which the managers are assigned to work by the
MNC
b. These people have the necessary expertise for the job
(4) Inpatriates:
a. Individuals from a host country or a third-country national who are assigned to
work in the home country
b. The use of inpatriates recognizes the need for diversity at the home office
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c. Use of inpats helps MNCs better develop their global core competencies
d. MNCs can subcontract or outsource to take advantage of lower human resource
costs and increase flexibility
Criteria for choosing Managers to do International Assignments
Motivation
 Adaptability
Support of spouse & children
 Independence
Leadership
 Self-reliance
Work experiences with other cultures
 Physical & emotional health
Previous overseas travel
 Age
Knowledge of foreign languages
 Experience
Recent immigration background or heritage
 Education
Ability to integrate with differences in
 Knowledge of local language
business organizations
Success Factors for Expatriate Assignments
• Technical and managerial skills
• Personality traits
• Relational abilities
• Family situation
• International motivation
• Stress tolerance
• Language ability
• Emotional intelligence
Those managers who were best able to deal with their new situation had developed
coping strategies characterized by socio-cultural and psychological adjustments
including:
• Feeling comfortable that their work challenges can be met
• Being able to adjust to their new living conditions
• Learning how to interact well with host-country nationals outside of work
• Feeling reasonably happy and being able to enjoy day-to-day activities
Three phases for applicant for international assignment
Phase 1: Focus on self-evaluation and general awareness includes the following questions:
Is an international assignment really for me?
Does my spouse and family support the decision to go international?
Collect general information on available jobs
Phase 2:
o Conduct a technical skills assessment – Do I have technical skills required for the job?
o Start learning the language, customs, and etiquette of the region you will be posted
o Develop an awareness of the culture and value systems of the geographic area
o Inform your superior of your interest in the international assignment
Phase 3:
o Attend training sessions provided by the company
o Confer with colleagues who have had experience in the assigned region
o Speak with expatriates and foreign nationals about the assigned country
o Visit the host country before the formally scheduled departure (if possible)
Selection Procedures
• Anticipatory Adjustment (pre-departure)
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•
– Training
– Previous experience
In-country Adjustment (after arrival)
– Individual’s ability to adjust effectively
– Ability to maintain a positive outlook, interact well with host nationals, and to
perceive and evaluate the host country’s cultural values and norms correctly
– Clarity of expatriate’s role in the host management team
– Expatriate’s adjustment to the organizational culture
– Non-work matters (social, food, etc)
The relocation transition curve
\
Common Elements of Compensation Packages
Compensating expatriates can be difficult because there are many variables to consider.
Most compensation packages are designed around four common elements:
• Allowances
• Cost-of-Living Allowance (COLA)
• Payment for differences between the home country and the overseas
assignment.
• Designed to provide the expatriate the same standard of living enjoyed
in the home country
• May cover a variety of expenses, including relocation, housing, education,
and hardship
• Incentives
• A growing number of firms have replaced the ongoing premium for
overseas assignments with a one-time, lump-sum premium
• Taxes
• Tax equalization
• An expatriate may have two tax bills for the same pay
•
•
• Host country
• U.S. Internal Revenue Service
• MNCs usually pay the extra tax burden
Base Salary
Benefits
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Components of Expatriate Pay
Base Salary
– Same range as a similar position in the home country
– Paid in either home or local currency
Foreign Service Premium
– Extra pay for work outside their home country
Allowances
– Hardship, housing, cost-of-living and education allowances
Taxation
– Firm pays expatriate’s income tax in the host country
Benefits
– Level of medical and pension benefits same as home
Tailoring the Compensation Packages
• Balance-sheet approach
-The balance-sheet approach provides international employees with a compensation
package that equalizes cost differences between the international assignment and the
same assignment in the home country of the individual or the corporation.
• Complementary approach
– Negotiate to work out an acceptable ad hoc arrangement
• Localization
– Pay the expatriate a salary comparable to local nationals
• Lump sum method
– Give expatriate a lump sum of money
• Cafeteria approach
– Compensation package that gives the individual a series of options
• Regional system
– Set a compensation system for all expatriates who are assigned to a particular
region (Asia, Europe, Latin-America, etc)
Individual and Host Country Viewpoints
• Individual desires
– Why do individuals accept foreign assignments?
– Greater demand for their talents abroad than at home
• Host-country desires
– Whom would it like to see put in managerial positions?
– Accommodating the wishes of HCOs can be difficult:
• They are highly ethnocentric in orientation
• They want local managers to head subsidiaries
• They set such high levels of expectation regarding the desired
characteristics of expatriates that anyone sent by the MNC is unlikely
to measure up
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Reasons for returning to home country
– Most expatriates return home from overseas assignments when their formally
agreed-on tour of duty is over
– Some want their children educated in a home-country school
– Some are not happy in their overseas assignment
– Some return because they failed to do a good job
• Readjustment problems
– “Out of sight, out of mind” syndrome
– Organizational changes
– Technological advances
– Adjusting to the new job back home
•
Transition strategies
– Repatriation Agreements
• Firm agrees with individual how long she or he will be posted overseas
and promises to give the individual, on return, a job that is mutually
acceptable
– Some of the main problems of repatriation include:
• Adjusting to life back home
• Facing a financial package that is not as good as that overseas
• Having less autonomy in the stateside job than in the overseas position
• Not receiving any career counseling from the company
Placement in International Management
• Four basic philosophic positions:
– (1) Ethnocentric MNC
• Stresses nationalism and often puts home-office people in charge of
key international management positions
– (2) Polycentric MNC
• Places local nationals in key positions and allows these managers to
appoint and develop their own people
– (3) Regiocentric MNC
• Relies on local managers from a particular geographic region to
handle operations in and around that area
– (4) Geocentric MNC
• Seeks to integrate diverse regions of the world through a global
approach to decision making
Cross-Cultural Training Programs
• Major types of cross-cultural training programs
(1) Environmental Briefings
• Provide information about things such as geography, climate, housing, and
schools
(2) Cultural Orientation
• Familiarize the individual with cultural institutions and value systems of the
host country
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(3) Cultural Assimilators
• Programmed learning techniques designed to expose members of one culture
to some of the basic concepts, attitudes, role perceptions, customs, and values of
another culture
(4) Language Training
• Provide information about geography, climate, housing, and schools
• Field Experience
– Send participant to the country of assignment to undergo some of the
emotional stress of living and working with people from a different culture
• Sensitivity Training
– Develop attitudinal flexibility
Chapter 10 US Management and Western European Mangement
The US macroenvironment
Executive of power
- Leading the affairs of the state
- Cabinet : president, vice president, and 15 ministers.
Legislative
- Congress : house of representatives (435) and senate (100)
Judiciary
- Pudhing through the laws
- Supreme court (highest judicial body)
Political pluralism accommodates diverse viewpoints and interests.
Adversarial legal framework; more lawyers and lawsuits
Labor union has less power to strike
The economy: US bases on private property and initiative. The market of labor, goods, and
capital in domestic are freer than other nations.
Government involvement in Employee-Employer Relations
Social Security Act of 1935 : retirement income and payroll tax charges.
Fair Labor Standards Act of 1938 : establish the national minimum wages.
Civil Right Act of 1964 : Banned discrimination
Age Discrimination Act of 1967 : Banned force retirement
Occupational Safety and Health Act of 1970 : workplace health and safety rules
Family and Medical Leave Act of 1993 : up to 12 weeks of unpaid personal annual leave for
medical emergencies, newborn children.
Shrinking number and proportion of low-skill manufacturing jobs; growth in knowledge
intensive service sector employment.
American :
- High in individualism
- Less power distance
- High masculinity
- Low in uncertainty avoidance : high in risk taking and changes
- Short term orienteation
- Equal of opportunity than wealth and income.
-
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Desire to be unique
Competence is more important than background at work
High job mobility: weak loyalty in workplace
Less stigma to failure
Optimism
Ethnocentrism
Openness
Friendship forms quick but doesn’t last long
Materialism
Low-context
Impatience
Low threshold for silence
US CEOs profile
- Predominantly male, middle- upper middle class background
- A bit younger than Europe and Japan
- Well educated
- View management as a profession
- Less international experiences
- Highly Paid: tied to performance
Education
98% bechelor’s degree are 21% engineering, 15% economics, 13% business administration,
40% of MBA, and 10% of law.
There’re many coporate universities in US like Caterpillar University,Boeing Leadership
Center, Motorolla University, Hamburger University (McDonald’s), Sears university.
Managerial Mobility
“Job Hopper ” people who change jobs around. High mobility due to high personal
acceptance of change and high individualism, more driven by personal goals than loyalty to
employer.
To become CEOs study fields are
- Operational Management 33%
- Finance 30%
- Marketing 27%
- General Management 8%
US has the highest executive pay because of many cash bonus and stock base incentive
-Annual cap on the tax decutibility
US managerial tendencies
Planning –the plan is broad (long term, strategic)
-More formalized long-range planning
-More recourse to external consultants : many consultant companies are established
-More willingness to accept change: leads to high level of entrepreneurship and mobility
across firm
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IBM 3711
Comparative Management
Controlling
Broad (and transitory) shareholder base (stock equity)
Managers focus more on stockholder value
Numeric performance indicator (ratio)
- Monitor and analyze earning, profitability, productivity, sales, and etc.
- Anything non-quantitative is not important
Short term performance orientation
Near term profit goals can draw attention, bring a new job offer with higher pay and prestige
with a different employer.
Decentralization of authority
Delegation of decision making authority to lower organizational levels
Directing
- Much directness and straighforward in communication
- Aversion for authoritarian leaders
- Motivation mainly from money, ego, gratification.
- Contract agreement are preferred as written agreement
Western European Mangement
Adam Smith’s The wealth of nations explained how the individuals serve the common social
and material goods.  Capitalism market is the best. Free economic system yields a higher
standard of living.
Karl Marx concluded that ordinary workers produced society’s wealth but had been denied
due material rewards. Until the proletariat invariably triumphed, many Marxist saw a need
for socialized (collective) ownership and control of resources.
Systemic Welfare state capitalism coalesced in Western Europe after WW 2 to include
extensive “free”
 Public education
 Health insurance
 Old-age pension
 Unemployment income
 Other social services
The welfare state capitalism has slowed its economic growth and raised questions about longterm affordability from rising median age and more retirees.
Demographic
- Low birth rate
- Rising median age (graying country)
Political and Legal
- Parliamentary democracies
- Close ties between labor unions and political parties
-
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IBM 3711
Comparative Management
Mandatory employees’ involvement in decision making
Economic
- Falling number and proportion of low-skill manufacturing jobs, growth in service
sector jobs.
- Government spending and taxation are high
- High personal income, high marginal tax rates, and high minimum wages
- Rigid labor markets, low labor mobility, high unemployment (long-term)
Regions in Western Europe use different models
1. The Rhenish
2. The Mediterranean
3. The Anglo-Saxon
4. The Nordic
Culture
 Religions – Christian (protestant and catholic) and Jewish
 There’s growing number of Islamic immigrant minority
 High context culture – Latin and Greek
 Low context culture – Nordic, Germanic, and Anglo
 Limited but growing participation of women in work roles (more in northern europe)
 More social stigma for failure and less opportunity to begin anew
Europe Unionism
This comes from a long history of labor involvement in sociopolitical change in the late
19th and 20th centuries. Unionization rates are higher in the United States even though it’s
decreasing.
Work councils are generated by law. It is elected by employees and can include union
and non-union members.
Flextime – Several European countries have widespread flextime arrangement (flexible
schedule)
Age/Gender of CEO – well- educated men 48-50. Female directorships are more
common in Scandinavia.
Managerial Ability – In France, mobility is not a universal sign of professional success
and ambition. Bright young graduates are warned not to be anxious to the offers of
headhunters. European managers still follow the escalator model of career advancement.
(slow) Job hopper are seen as unstable
European CEOs profile
 Less likely to study business and management during their higher education
 More international experience (work, travel, studying, living) Europe itself has
different languages.
 Lower pay
 More balance between work life and private life.
Whereas continental European CEOs often have backgrounds in technical fields and
their career paths are on production and engineering, senior British managers are more
likely to have accounting and finance background.
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IBM 3711
Comparative Management
German manager starts their career at later age around mid-late 20s because tradition
of apprenticeship training. German choose to study business lass than US, France, and
Britain,
Directing process
They are high in uncertainty avoidance. More resistance to internal changes, tighter
supervision, and stronger personal bonds. They score low on individualism. Reward tends to
be weaker motivator.
Chapter 11 JAPANESE MANAGEMENT
Culture
Confucianism has a strong impact on Japanese values: groupism, hierarchy, order,
deference and harmony.
Employees identify with the firm, not with their jobs.
Hierarchy is important – big firms are thought to be excellent, small firms inferior.
Demography of Japan
Population 127,368,088 (July 2011 est.)
Age structure :
0-14 years: 13.1% (male 8,521,571/female 8,076,173)
15-64 years: 64% (male 40,815,840/female 40,128,235)
65 years and over: 22.9% (male 12,275,829/female 16,658,016)
Total population: 83.91 years
male: 80.57 years
female: 87.43 years (2011 est.)
Total fertility rate 1.39 children born/woman (2011 est)
Characteristics of population
High population density
High racial, ethnic and cultural homogeneity
World’s highest median age
World’s highest proportion of people over age 65
Core culture
 Rank order of people in society and in the firm are very important – hence
business cards should show title and rank.
 Personal honor and saving face are important – confrontation is avoided as much
as possible
 Unions are insider and work in harmony with management, hence few labor
strikes and disputes.
 Education and teachers are respected, it matters a lot which university one
graduated from, often more than GPA and specialization.
 Strong work ethic linked to education
 Sense of separateness from other cultures, a general distrust of foreigners.
Hofstede Dimensions
At a score of 54, Japan is a mildly hierarchical society (PD) Japan scores 46 on the
Individualism dimension. Certainly Japanese society shows many of the
characteristics of a collectivistic society.
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IBM 3711
Comparative Management
At 95, Japan is one of the most masculine societies in the world.
At 92 Japan is one of the most uncertainty avoiding countries on earth. This is often
attributed to the fact that Japan is constantly threatened by natural disasters from
earthquakes, tsunamis, typhoons to volcano eruptions. Under these circumstances
Japanese learned to prepare themselves for any uncertain situation. At 80, Japan scores
as one of the long term oriented societies. Japanese see their life as a very short
moment in a long history of mankind
The Economy
 Free enterprise economic system
 Alliance capitalism reflected in kieretsu business groups
 Close ties between business and government
 Global industries in which Japan is most competitive are automobiles, electronics and
machine tools
Keiretsu – key management
"large manufacturing company groups held together by capital ties”
Umbrella type structures: Matsushita, Hitachi, Toshiba, Toyota
Typical structure – stable cross–shareholding relationships
– possession of large–scale economic resources
– often close managerial ties
– executives sit on boards for several companies regular presidents meetings
Japanese Government
 Pluralistic democracy –bicameral parliament called the Diet. Parliament is made
up of upper house and lower house.
 Dominant political party is the Liberal Democratic Party (LBD)
 Weak ties between unions and political parties
The Japanese manager
 Homogeneous group, male, university graduate in science/engineering, tends
to work in private firm, slightly older than managers in other developed
countries.
 Slow promotion
 Rotation is common and frequent among managers
 Earn lower salaries than managers in other developed countries, the lowest
proportion of female managers
 Almost exclusively Japanese by nationality except for a few firms; Nissan,
Sony.
 MBA does not bring higher salary/promotion. Many Japanese firms offer inhouse training to insiders and outsiders.
Japanese management functions
 Planning
Less formalized but with more environmental scanning and direction,
Imitative business strategy rather than creative
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IBM 3711
Comparative Management
Much more flexibility with long-term vision and detailed short and medium-term plans
Make use of a great deal of information from intelligence and specialized units
Firms are less profit-oriented, shareholder value is not as important as the well-being of
employees and society. Japanese firms usually do not lay off employees even though they
become redundant.
Consensus-based decision making whereby a draft proposal is sent (ringisho) after
which there is an exchange of information and opinion (nemawashi). However, not all
decision follow the ringi process, some are made by senior managers.
 Control
– Centralized management control
– Hostile takeover of firms are very rare, seen as socially irresponsible and causes the
acquirer to lose face.
– Unlike other developed countries, annual shareholder meetings are held in calm
atmosphere and shareholders do not challenge management.
– However, firms are careful when recruiting entry level staff as they can be lifetime
employees – it is not unusual for senior HR managers to sit on the board.
 Organizing
– Flexibility is a trait of Japanese firms and employees that is admired by Western
experts.
– Job rotation and cross-training increase flexibility
– Not a good idea to assign work to individuals, it is better to give the whole job to a
group and let them divide it among themselves.
Practices in Japanese Manufacturing firms
Business strategy:
– Minimize costs of production by JIT
– Total Quality is the responsibility of everyone, not just
managers/inspectors
– Maintain consistently high quality output at all factories through
standardization of best work practices & procedures
Just-In-Time (JIT)
JIT: an integrated set of activities designed to achieve high-volume production using
minimal inventories of raw materials, finished goods & work in process.
Encompasses the successful execution of all production activities required from design
to delivery of products.
Common sense based/simple techniques
KAI
ZEN
To modify, to change
Think, make good, make better
= KAIZEN
Make a problem easier by studying it, and making the improvement through
elimination of waste.
JAPANESE MANAGEMENT OVERSEAS
Japanese firms – ethnocentric approach
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IBM 3711
Comparative Management
Managers sent to work in subsidiaries abroad are closely monitored by
headquarters.
Average duration 3 years
COMMON BELIEF
Japanese management system is so unique that it cannot be easily transferred overseas
because these processes of management are culture bound
Japanese worker job satisfaction
Statement, “I think of the company as a part of my life at least equal in
importance to my personal life,” 57 percent of Japanese respondents agreed
22 percent of American respondents agreed
only 8 percent of the Japanese agreed that they thought of their company as strictly a
place to work and separate from their personal life compared to 23 percent of the
Americans
Motivation
– High wages based on seniority (including substantial bonuses). Loyalty to the firm is a
must.
– Praise for work is seen as flattery
– Employment security (for regular employees)
– Company-sponsored welfare systems (I.e. subsidized housing, recreational facilities,
matchmaking, etc.)
– With economic recession, there is more recruitment of temporary workers
Leadership
Charisma and transformational leadership styles not necessary
Leaders should be harmony builders, kind, generous, just and moral.
“the nail that sticks out will be hammered down”. Lack of strong leadership examples
Communication
– Very high-context culture
– Implicit, indirect. Yes can be No.
– Need to read between the lines, learn to interpret body and facial language.
– Silence and thinking before speaking are valued
– More face to face communication than written.
The dark side of Japanese management
Christopher Meek (2004) Journal of Managerial Psychology found:
– High commitment – low satisfaction
– Increase in Karoshi – death through overwork
– Bullying in the workplace