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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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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 • 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) • Planthe 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