Lecture VII
MNC’s Cultural Framework
and Managing across
Corporate Boundaries (ch. 6)
Cultural Complexity – Contextual variations
[E. T. Hall, The Silent Language, 1973]
 Low-context culture

Explicit

More legal paperwork

Verbal communication
 High-context culture

Implicit
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Nonverbal communication

Emphasis on value, social norms

Individual’s position in society
High-context culture
 Implications on MNE’s managerial
ideologies, ways of doing business, and
cross-cultural negotiations
Cultural Typology of MNC’s Organization
 Monolithic – Homogeneous, minimum
structural integration
 Plural – Work force includes host nationals
(structural integration), but the company doesn’t
value its cultural diversity
 Multicultural – Full structural and informal
Integration
Case Study
 Use the above cultural typology to
illustrate the differences among BG’s
four strategic orientations of
international, multinational, global and
transnational companies
Factors influencing cultural diversity
 Acculturation
• Method of resolving the difference between the
dominant culture and the minority culture through
assimilation, pluralism, or separation
 Structural integration
 Informal integration
 Cultural bias
• Highest in the monolithic organizations; least in the
multicultural organizations
 Intergroup conflicts
• Conflicts are higher in the plural organizations
Benefits of multiculturalism
[Fatehi, 1996]
 Reduced costs, and better resources
allocation
 Marketing advantage
 Creativity
 Problem solving
 Flexibility .. etc
National Customs and Business customs
 Coincide – Language
Religious effect
Political effect
• Laws
• Taxes
 Differ – Subject matter
Degree of technicalities
National Customs and Business customs (Contd..)
Business customs change continually.
Although highly resistant to change, national
customs are transformed by the rapid
changes in the business customs
Other cross-cultural issues in international business
research
 Gender role rigidity
 Hofstede’s cultural dimensions of
Individualism/collectivism, Power
distance, Uncertainty avoidance,…
 P-time, M-time cultures
International Negotiation
 Intracultural models
•
•
Position –oriented
Interest-oriented
Fisher and Ury [1981], “principled negotiation”
 Intercultural models – building the
rapport
A 10-point intracultural/intercultural negotiation
Strategy (F. L. Acuff, 1993)

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
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


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Plan the negotiation
Adopt a win-win approach
Maintain high standards
Use language that is simple and accessible
Ask lots of questions, then listen with your eyes and ears
Build solid relationships
Maintain personal integrity
Conserve concessions
Be patient
Be culturally literate and adapt to the negotiating strategies of
the host country environment
Why Strategic Alliances
Technology
Market Access
Pool Capital
Capacity
Shared Risks – reduced risks
An alternative to Merger
Test the water before a full-fledged global
integration
Strategic Alliances
Risks and Costs
competitive collaboration – cases in China
Speed – easy, but not always the best solution
Alliances need not be permanent
Flexibility
Learning