The Nature of Culture Culture defined: Acquired knowledge that people use to interpret experience and generate social behavior. This knowledge forms values, creates attitudes, and influences behavior. Characteristics of Culture Learned Shared Trans-generational Symbolic Patterned Adaptive Priorities of Cultural Values A Model of Culture Business Customs in South Africa Arrange meeting before discussing business over phone. Make appointments as far in advance as possible. Maintain eye contact, shake hands, provide business card Maintain a win-win situation Keep presentations short Values in Culture Values Learned from culture in which individual is reared Differences in cultural values may result in varying management practices Basic convictions that people have about Right and wrong Good and bad Important and unimportant Value Similarities and Differences Across Cultures 1. 2. 3. 4. 5. Strong relationship between level of managerial success and personal values Value patterns predict managerial success and can be used in selection/placement decisions Country differences in relationship between values and success; however, findings across U.S., Japan, Australia, India are similar Values of more successful managers favor pragmatic, dynamic, achievement-oriented and active role in interaction with others Values of less successful managers tend toward static and passive values; relatively passive roles in interacting with others Hofstede’s Cultural Dimensions 1. 2. 3. 4. Power distance Uncertainty avoidance Individualism/collectivism Masculinity/femininity Hofstede’s Cultural Dimensions Power distance: Less powerful members accept that power is distributed unequally High power distance countries: people blindly obey superiors; centralized, tall structures (e.g., Mexico, South Korea, India) Low power distance countries: flatter, decentralized structures, smaller ratio of supervisor to employee (e.g., Austria, Finland, Ireland) Hofstede’s Cultural Dimensions Uncertainty avoidance: people feel threatened by ambiguous situations; create beliefs/institutions to avoid such situations High uncertainty avoidance countries: high need for security, strong belief in experts and their knowledge; structure organizational activities, more written rules, less managerial risk taking (e.g., Germany, Japan, Spain) Low uncertainty avoidance countries: people more willing to accept risks of the unknown, less structured organizational activities, fewer written rules, more managerial risk taking, higher employee turnover, more ambitious employees (e.g., Denmark and Great Britain) Hofstede’s Cultural Dimensions Individualism: People look after selves and immediate family only High individualism countries: wealthier, protestant work ethic, greater individual initiative, promotions based on market value (e.g., U.S., Canada, Sweden) High collectivism countries: poorer, less support of Protestant work ethic, less individual initiative, promotions based on seniority (e.g., Indonesia, Pakistan) Hofstede’s Cultural Dimensions Masculinity: dominant social values are success, money, and things High masculine countries: stress earnings, recognition, advancement, challenge, wealth; high job stress (e.g., Germanic countries) High feminine countries: emphasize caring for others and quality of life; cooperation, friendly atmosphere., employment security, group decision making; low job stress (e.g., Norway) Strategic Predispositions Ethnocentric predisposition A nationalistic philosophy of management whereby the values and interests of the parent company guide strategic decisions. Strategic Predispositions Polycentric predisposition A philosophy of management whereby strategic decisions are tailored to suit the cultures of the countries where the MNC operates. Strategic Predispositions Regio-centric predisposition A philosophy of management whereby the firm tries to blend its own interests with those of its subsidiaries on a regional basis. Strategic Predispositions Geocentric predisposition A philosophy of management whereby the company tries to integrate a global systems approach to decision making. Meeting the Challenge The Globalization Imperative: Belief that one worldwide approach to doing business is key to efficiency and effectiveness. 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 Globalization vs. National Responsiveness Advertising (for example) French British Avoid reasoning or logic Advertising predominantly emotional, dramatic, symbolic Spots viewed as cultural events – art for sake of money – and reviewed as if they were literatures or films 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 Globalization vs. National Responsiveness 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 Cross-Cultural Differences and Similarities Parochialism and Simplification Parochialism: view world through own eyes and perspectives Simplification: exhibit same orientation toward different cultural groups Cross-Cultural Differences and Similarities Similarities across cultures: Not possible to do business same way in every global location Procedures and strategies that work well at home can’t be adopted overseas without modifications Some similarities have been found Russia and U.S. (for example) Traditional management Communication Human resources Networking activities OB Mod Cross-Cultural Differences and Similarities Differences across cultures Far more differences than similarities found in cross-cultural research Wages, compensation, pay equity, maternity leave Importance of criteria used in evaluation of employees Cultural Differences in Selected Countries and Regions Doing Business in Russia 1. 2. 3. 4. Build personal relationships with partners. When there are contract disputes, there is little protection for the aggrieved party because of the time and effort needed to legally enforce the agreement. Use local consultants. Because the rules of business have changed so much in recent years, it pays to have a local Russian consultant working with the company. Ethical behavior in the United States is not always the same as in Russia. For example, it is traditional in Russia to give gifts to those with whom one wants to transact business. Be patient. In order to get something done in Russia, it often takes months of waiting. Cultural Differences in Selected Countries and Regions: Russia 5. 6. 7. 8. Russians like exclusive arrangements and often negotiate with just one firm at a time. Russians like to do business face-to-face. So when they receive letters or faxes, they often put them on their desk but do not respond to them. Keep financial information personal. Russians wait until they know their partner well enough to feel comfortable before sharing financial data. Research the company. In dealing effectively with Russian partners, it is helpful to get information about this company, its management hierarchy, and how it typically does business. Cultural Differences in Selected Countries and Regions: Russia 9. 10. 11. 12. Stress mutual gain. The Western idea of “win–win” in negotiations also works well in Russia. Clarify terminology. The language of business is just getting transplanted in Russia so double-check and make sure that the other party clearly understands the proposal, knows what is expected and when, and is agreeable to the deal. Be careful about compromising or settling things too quickly because this is often seen as a sign of weakness. Russians view contracts as binding only if they continue to be mutually beneficial, so continually show them the benefits associated with sticking to the deal. Organizational Cultures and Diversity The Nature of Organizational Culture 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 expected participants to share (e.g., low absenteeism, high efficiency) Organizational Culture (continued) Other values and beliefs: Philosophy set forth regarding how to treat employees and customers Rules dictating do’s and don’ts of employee behavior pertaining to productivity intergroup cooperation… Organizational climate as reflected by way participants interact with each other, treat customers, and feel about how treated by senior level management 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 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 Organizational Culture in MNCs Four steps in integration of organizational cultures resulting from international expansion via mergers/acquisitions: 1. 2. 3. 4. 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 Overall Communication Process 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 Verbal Communication Styles 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) Verbal Communication Styles Indirect and Direct Styles High-context cultures: messages implicit and indirect; voice intonation, timing, facial expressions play important roles in conveying information Low-context cultures: people often meet only to accomplish objectives; tend to be direct and focused in communications Communication Barriers Language barriers 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. Communication Barriers Cultural barriers (continued) 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 Common Forms of Nonverbal Communication Nonverbal Communication 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 Nonverbal Communication 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 in U.S. Communication Effectiveness Improve feedback systems Language training Cultural training Flexibility and cooperation Negotiating Styles Managing Cross Cultural Negotiations Negotiation: Process of bargaining with one more parties at arrive at solution acceptable to all Two types of negotiation: Distributive when two parties with opposing goals compete over set value Integrative when two groups integrate interests, create value, invest in the agreement (win-win scenario) Negotiation Types and Characteristics Steps of the Negotiation Process: 1. 2. 3. 4. 5. Planning Interpersonal relationship building Exchange of task related information Persuasion Agreement Cultural Differences Affecting Negotiations 1. 2. 3. 4. 5. 6. Don’t identify counterpart’s home culture too quickly; common cues such as accent may be unreliable. Beware of Western bias toward “doing”. Ways of being, feeling, thinking, talking can shape relationships more powerfully than doing. Counteract tendency to formulate simple, consistent, stable images. Don’t assume all aspects of culture are equally significant. Recognize norms for interactions involving outsiders may differ from those for interactions between compatriots. Don’t overestimate familiarity with counterpart’s culture. Negotiation Tactics Location Time limits Buyer-seller relationship Bargaining behaviors Use of extreme behaviors Promises, threats and other behaviors Nonverbal behaviors Supermarket Lab Exercise Project is about.. Shanghai Disneyland The most recent Disneyland in the world Planning to expand rapidly The goal of the project is to propose ONE attraction for Shanghai Disneyland’s future expansion, the one that your team will bring the most success to Shanghai Disneyland (the “killer” attraction). Exercise Process Step 1: Each person needs to figure out what is your killer attraction. (a one-page description is due on Nov 23) Step 2: Exchange your idea with your partners Set up at least TWO meetings for all team members, each for about 30-45 minutes First meeting to know each other and to exchange ideas Second meeting to continue discussion to reach an agreement Step 3: Class presentation (Nov 23) Report and present the communication process between you and your partner. At the end of the presentation, use 3 key words to describe your partner. Some expectations For the collaboration/negotiation process: Be Creative Be collaborative, but it doesn’t mean to be compromised Be aware of communication/technology/cultural barriers Have fun in the process, but also think about the 5 steps of negotiation For presentation: Use the concepts we have learnt as a guideline when explaining what has happened in the exercise (e.g., What kind of communication barriers you have encountered, and how you have overcome them) A picture is worth a thousand words. Report the funny details in your negotiation/collaboration Project description Each team will be responsible for giving a 10 minutes presentation to report the final result of collaboration and communication/negotiation process. The evaluation of this exercise is based on the quality of both your oral presentation and your slides.