International Management

International Management Phatak, Bhagat, and Kashlak

CHAPTER 5 The Cultural Environment

Learning Objectives • Understand the concept of culture and cultural variations in international management. • Explain the relationship of environmental factors on societal culture. • Discuss the significance of various frameworks for understanding cultural differences around the world. • Identify distinctive management styles that exist in different countries of the world.

Chapter Topics • What is Culture? • The Dimensions of Culture • Culture and Management Styles in Selected Countries

What is Culture? • Culture is acquired knowledge that people use to interpret experience and generate social behavior. This knowledge forms values, create attitudes, and influences behavior. • Culture is a concept that has been used in several social science disciplines to understand variations in human thought processes in different parts of the world. • Culture is to a society what memory is to an individual.

Components of Culture Objective Component Consists of such things as infrastructure of roads, architecture, patterns of music, food, and dress habits Subjective Component Ways that people categorize experience, associations, beliefs, attitudes, self-definitions, role definitions, norms, and values

Ex 5.1: Environmental Influences on International Management Functions Country Specific Influences Eco. system; Political system Tech. level Important historical events Customs and Traditions of the Country Religion; Dialects and languages Education Cultural Orientation and Value Pattern Influences Attitudes Toward Work; Money; Time; Family; Authority; Change; Risk; Equality Influences International Management Functions Organizing and controlling; Managing technological change; Motivating; Communicating; Decision-making; Negotiating; Ethical/ social response.

Cultural Sensitivity … may be defined as a state of heightened awareness for the values and frames of reference of the host culture.

Cultural Sensitivity (contd.) • Parochialism is the belief that there is no other way of doing things except that found within one’s own culture, that is, that there is no better alternative. • Ethnocentrism is similar to parochialism, and tends to reflect a sense of superiority, and ethnocentric individuals believe that their ways of doing things are the best, no matter which cultures are involved.

Cultural Sensitivity (contd.) • Geocentrism is very different to both parochialism and ethnocentrism, reflecting a belief that it is necessary to be responsive to local cultures and markets.

Fig 5.3: Cultural Emphasis on Important Dimensions

Hofstede’s Cultural Dimensions Hofstede's study demonstrated that there are national and regional cultural groupings that affect the behaviour of societies and organizations, and that are very persistent across time. He has found four well-known dimensions of culture in his study of national work related values: • Individualism and collectivism • Power distance • Uncertainty avoidance • Masculinity and femininity

Hofstede’s Cultural Dimensions (contd.) • Individualism may be defined as the tendency of people to look after themselves and their immediate family only. • Collectivism may be defined as the tendency of people to belong to groups or collectives and to look after each other in exchange for loyalty. • He found that, wealthy countries have higher individualism scores and poorer countries higher collectivism scores. • The word 'collectivism' in this sense has no political meaning, rather it refers to the group, not to the state.

High individualism: Greatersupport for the protestant work ethics. Greater individual initiatives Promotion based on markets value (merits). (e.g. U.S.A, Denmark, Sweden) Low individualism (Collectivism): Less support for the protestant work ethics. Less individual initiatives. Promotion based on seniority. (e.g. Latins, Pakistan, Indonisia) Individualism vs. Collectivism

Hofstede’s Cultural Dimensions (contd.) • Power distance is the extent to which less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally. • Countries in which people blindly obey the orders of their superiors have high power distance. • Lower level employees tend to follow orders as a matter of procedures, which is not related to power distance. • In small power distance, people relate to one another more as equals regardless of formal positions • In large power distance, subordinates acknowledge the power of others simply based on where they are situated in certain formal, hierarchical positions

Power distance Low- power distance: • Organizations are decentralized. • Flatter organizational structure • Smaller number of supervisory personals • Lower level employees are highly qualified. • (e.g. Austeria, Denmark, Newzland) High-power distance: • Centralized organizations. • Tall organizational structure. • Lower level employees have low qualifications • (e.g. India, S. Korea(

Hofstede’s Cultural Dimensions (contd.) • Uncertainty avoidance is the extent to which the members of a culture feel threatened by ambiguous situations and have created beliefs and institutions that try to avoid these. • Cultures that scored high in uncertainty avoidance prefer rules (e.g. about religion and food) and structured circumstances, and employees tend to remain longer with their present employer.

High-uncertainty: Have greater deal of structuring of organizational activities. More written rules Less risk taking Lowe labor turnover Less ambitious employees (e.g. Mediteranea cultures, Latin, Amirca, Japan) Low-uncertainty: Organization settings with less structuring of activities Less written rules More risk taken Higher labor turnover More ambitious employees (e.g.Denmark, Great Britan) Uncertainty avoidance

Hofstede’s Cultural Dimensions (contd.) • Masculinity :A culture in which the dominant values in society are success, money, and things. • Femininity: A culture in which the dominant values in society are caring for others and the quality of life.

Countries with High Masculinity Great importance to earning, recognitions, achievement, challenge, advancement. Individuals are independent in decision making. Achievements are defined in terms of wealth and recognitions. Workplace: high job stress, many managers believe that their employees dislike work and must be kept under some degree of control. (e.g. Germanic countries, Japan) Countries with Low Masculinity (Femininity) Great importance to co- operations, friendly atmosphere. employment security. Individuals are encouraged to be group decision makers. Achievement is defined in terms of layman contacts and living environment. Workplace: low stress, managers give their employees more credit for being responsible and allow them more freedom. (e.g. Noway) Masculinity vs. Femininity

Cultures with high Masculinity Tend to favor large scale enterprises. Economic growth is more importance than conservation of the environment School system: geared toward encouraging high performance Youngman expect to have careers and those who don’t, find themselves as a failure. Fewer women hold higher level jobs. High job stress in workplace and industrial conflict is common. Cultures with low Masculinity (high femininity) Favor small-scale enterprise. Great importance on conservation of the environment School system: designed to teach social adaptation. Some young men/women want careers, others don’t. Some young men/women held higher-level job Less job stress in workplace and there is not much individual conflict Masculinity vs. Femininity (cont.)

Trompenaars’ Cultural Dimensions • According to Trompenaars’, every culture distinguishes itself from others by the specific solutions it chooses to certain problems which reveal themselves as dilemmas. It is convenient to look at these problems under three headings/ dimensions: those which arise from our relationships with other people; those which come from the passage of time; and those which relate to the environment • How people deal with and relate to each other • Universalism vs. particularism • Individualism vs. communitariansim • Neutral vs. emotion (Do we display our emotions?) • Specific vs. diffuse relationship (Is responsibility specifically assigned or diffusely accepted?) • Achievement vs. ascription (Do we have to prove ourselves to receive status or is it given to us?) • Time • Emphasis on past, present, or future • Whether it is sequential or synchronic • Relation to nature • Internal or external orientation

1 (a). Universalism vs. Particularism (What is more important, rules or relationships?) • Universalism: is the believe that ideas and practices can be applied everywhere in the world without modification. • In high universalism cultures, the focus is more on formal rules than on relationships. • Particularizm: is the belief that circumstances should be applied and something cannot be done the same everywhere. • In cultures with high particularism, the focus is more on relationship and trust than on form rules.

1(b). Individualism vs. Communitarianism(Do we function in a group or as individuals?) • Individualism: refers to people regarding themselves as individuals. • Communitarianism: refers to people regarding themselves as a part of group.

1(c). Neutral vs. Emotional (Do we display our emotions?) • Neutral culture: a culture in which emotions are held in cheek. • People in these countries try not to show their feelings. ( e.g. Uk) • Emotional Culture: a culture in which emotions are expresses openly and naturally. • People in these countries often smile a great deal, talk loudly when they are excited, and great each other with great deal of enthusiasm. (e.g. Mexico, Netherlands, Middle eastern)

1 (d). Specific vs. Diffuse(Is responsibility specifically assigned or diffusely accepted?) • Specific culture: a culture in which individuals have large public space they readily share with others and share a small private space they guard closely and share with only close friends and associates. • There is a strong separation of work and private life. (e.g. USA, UK) • Diffuse culture: a culture in which public space and private space are similar in size, and • individuals guard their public space carefully, because entry into public space affords entry into private space as well. • Work and private life are closely linked. (e.g. Middle East)

1(e). Achievement vs. ascription (Do we have to prove ourselves to receive status or is it given to us?) • Achievement culture: a culture in which people are accorded status based on how well they perform their function. • Give high status to high achievers. • Ascription culture: a culture in which status is attributed based on who or what a person is. • Accord status based on age, gender, or social connections.

2) Time:the way in which people deal with the concept of time a- Emphasis on past, present, or future • Past: Talk of history, Recreate golden age, Respect for ancestors, View on tradition. • Present: Current acts most important, Plan but don’t execute, Present relationships, View on contemporary • Future: Focus on prospects, Enthusiastic planning, Youthful and future plans, View future advantage -

2) Time:the way in which people deal with the concept of time. b- Whether it is sequential or synchronic • Sequential approach: • People tend to do only one activity at a time. • Keep appointments strictly • A strong preference for following plans as they are laid out and not deviating from them. • Synchronous approach: • People tend to do more than one activity at a time. • Appointments are approximate to relationships and may be changed at a moment’s notices. • Schedules generally are subordinate to relationships. • People often will stop what they are doing to meet and greet individuals coming into their office.

3) Relation to nature • Trompenaars states concern for the role of the natural environment within a given culture. • He suggests human survival has depended upon man’s acting with and against the environment. • Problems that are related to nature differ considerably among cultures. • Externalist cultures view nature as a force more powerful than the individual, a force to be feared or emulated. • Internalist societies see the major force in life, the origins of vice and virtue as residing within the individual. • External orientation: (e.g. Egypt, China) -Compromising attitude toward nature -Comfortable with natural cycles and change -Most important to maintain relationships -Achieve harmony among various goals -Quietly work through conflicts • Internal orientation: (e.g. USA, Germany) -Dominating attitude toward nature -Discomfort with environmental change -Most important to win your objective -Set ownership and specific goals -Openly discuss disagreements

Ex. 5-14: Ronen and Shenkar’s Framework Nordic Near Eastern Finland Turkey Norway Arab Germanic Iran Denmark Bahrain Austria Greece Abu Dhabi U.A.E. Sweden Germany Oman Kuwait Switzerland S. Arabia Malaysia U.S. Singapore Hong Kong Australia Anglo Far Eastern Canada France Argentina New Zealand S. Vietnam Philippines U.K. Venezuela Belgium Indonesia Taiwan Thailand Ireland Mexico Chile Latin American S.Africa Latin European Peru Italy Spain Columbia Portugal Israel Brazil Japan Independent India

Ex. 5.15: Schwartz’s Value Dimensions (selected) Hierarchy Mastery Conservatism Wealth Successful Family security World of beauty Affective Autonomy Harmony Enjoying life Curious World of peace Intellectual Autonomy Egalitarian Commitment

Hall’s Framework • Context refers to cues and other information that are present in a given situation. • In high context cultures information is embedded in the social situation and is implicitly understood by those involved in the situation. • In low context cultures information tends to be more explicitly stated.

Triandis’ Framework • Cultural syndrome is composed of • Cultural complexity • Tightness versus looseness, and • Two aspects of individualism versus collectivism (horizontal and vertical)

Key Terms and Concepts • Culture • Subjective culture • Objective culture • Convergence of culture • Divergence of culture • Cultural sensitivity • Parochialism • Ethnocentrism • Geocentrism

Key Terms and Concepts (contd.) • Individualism versus collectivism • Power distance • Uncertainty avoidance • Masculinity versus femininity • Time orientation

International Management