International Management and Culture

1. International Managementand Culture Arild Aspelund

2. Outline • Dealing with people in a global setting • The cultural aspect • A practical example of International Joint Ventures

3. International Management • International labor markets and global firms • International worker mobility problems • National management styles and practices • National orientations • Strategy and control • Headquarters – Subsidiary relationship • Local subsidiaries need people who can manage well locally • Headquarters need people who can coordinate and control worldwide • One need to find a trade-off… • Dealing with culture in cross-country negotiations and alliances

4. The Cultural Aspects • What is culture? • The normative definition: The sum total of the beliefs, rules, techniques, institutions, and artifacts that characterize human populations • The behavioral definition: The collective programming of the mind • How do you get your culture? • Culture is taught through socialization processes • Socialization processes are the influence from parents, friends, education, and the interaction with a particular society • These influences result in patterns of behavior common to all members of a given society • A corporation might define such a society and hence define corporate culture

5. Hofstede’s Four (five) Dimensions of Culture • Power distance • The extent that a culture excepts that power is unequally distributed • Generally low in Scandinavia • High in south America and France • Uncertainty avoidance • Degree to which members of a culture is uncomfortable with risk and uncertainty • High uncertainty avoidance in e.g. France, Argentine and Japan • Low in the US, Denmark, India and the UK

6. Hofstede’s Four (five) Dimensions of Culture • Individualism • The extent to which people are supposed to take care of themselves and be emotional independent from others • Generally high in Scandinavia, the US and UK • Low in Indonesia, Thailand and South America • Masculinity • The value attributed to achievement, assertiveness, and material success • High in Germany, Japan and the UK • Generally low in the feminine societies of the Scandinavian countries and the Netherlands

7. Hofstede’s Four (five) Dimensions of Culture • Long-term Orientation • To what extent do people have a future-oriented perspective rather that focus on the present • Also labeled “Confucian dynamism”; developed by Chinese scientists • A response to the critique of the “Western Mindset” of Hofstede’s original IBM study • Long term orientation: • Persistence, ordering relationships by status and observing this order, thrift, having a sense of shame • Short term orientation: • personal steadiness and stability, protecting your ‘face’, respect of tradition, reciprocation of greetings, favors, and gifts • On this scale Norway and China are at the opposite ends…

8. Trompenaar’s Seven Dimensions of Culture- A managerial extension of Hofstede • Universialism versus Particularism • Ex: A salesman that has not fulfilled his monthly sales quota due to sickness in his family • Universal reactions: The US, Canada and Switzerland • Particular exceptions: Korea, Russia and China • Individualism versus Collectivism • Are the rights and values of the individual dominant or subordinate of the collective society? • Individualists: Canada, the US, and Switzerland • Collectivists: Japan, Egypt and India

9. Trompenaar’s Seven Dimensions of Culture- A managerial extension of Hofstede • Neutral versus Emotional • How much emotions are displayed at the workplace • Is it acceptable to make a significant investment from “gut feelings” and intuition? • No! Japan, Germany, Switzerland and China • Yes! Italy and France • Specific versus Diffuse • Do hierarchies exist only at the workplace or does it exist also in the society outside the company? • Ex: Your boss ask you to paint his house over the weekend • NO! Australia and the Netherlands • ok…China, Japan, Singapore and India

10. Trompenaar’s Seven Dimensions of Culture- A managerial extension of Hofstede • Achievement versus Ascription • Is your status in the organization tied to achievements that you have done, or your gender, age, education or social class (ascribed status)? • Merit in Scandinavia and the US, the UK and Canada • Ascribed in Egypt, Russia, Japan and France • Attitudes toward time • Time viewed as sequential steps or time viewed as synchronic (many things happen simultaneously) • Northern Europe are sequential (punctual and planning) • Southern Europe are synchronic and regard chronological precision as mere coincidence…

11. Trompenaar’s Seven Dimensions of Culture- A managerial extension of Hofstede • Attitudes towards the environment • Some cultures try to control and subjugate the environment, others try to work with the nature • This is a dimension more related to religion and philosophy than national cultures • Historically the first is highly associated with western Europe and North America and the industrial revolutions • A short list of distinction between Hofstede and Trompenaar • Hofstede more related to national cultures and inevitably market selection decisions in marketing and offshoring decisions in sourcing • Trompenaar more related to management of multinational enterprises and more applicable to everyday managerial problems • Trompenaar is also more recent and had the benefit of looking at Hofstede’s work and some of the critique against it…

12. Values and Alliances- An Application of Hofstede’s Framework • As we have seen , Dutch scientist have traditionally taken lead positions in the study of culture in international Business • Harry Barkema and FreekVermeulenhave been key contributors the past two decades • The current study seek to answer two questions • Which cultural differences are the most disruptive for the initiation and development of International Joint Ventures (IJVs)? • Are cultural values stable over time? • Unique data from 828 foreign entries of 25 Dutch multinationals in 72 countries, spanning from 1966 to 1994

13. Values and Alliances- An Application of Hofstede’s Framework • Results systematically point to differences in uncertainty avoidance and long-term orientation as key predictors of… • tendency to prefer international wholly-owned subsidiaries over IJVs • and long-term survival of IJVs • These factors dominate over differences in power distance, individualism, and masculinity • How would you explain these differences? • The study also show that the cultural dimensions are fairly stable over time