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Lecture VII

This lecture explores the cultural framework in multinational corporations (MNCs) and the complexities of managing across corporate boundaries. It examines low-context and high-context cultures, their implications on MNE's managerial ideologies, ways of doing business, and cross-cultural negotiations. The lecture also discusses the cultural typology of MNCs and factors influencing cultural diversity. Additionally, it covers national customs, business customs, cross-cultural issues in international business research, and negotiation strategies.

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Lecture VII

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  1. Lecture VII MNC’s Cultural Framework and Managing across Corporate Boundaries (ch. 6)

  2. 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

  3. High-context culture • Implications on MNE’s managerial ideologies, ways of doing business, and cross-cultural negotiations

  4. 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

  5. Case Study • Use the above cultural typology to illustrate the differences among BG’s four strategic orientations of international, multinational, global and transnational companies

  6. 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

  7. Benefits of multiculturalism [Fatehi, 1996] • Reduced costs, and better resources allocation • Marketing advantage • Creativity • Problem solving • Flexibility .. etc

  8. National Customs and Business customs • Coincide – Language • Religious effect • Political effect • Laws • Taxes • Differ – Subject matter • Degree of technicalities

  9. 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

  10. 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

  11. International Negotiation • Intracultural models • Position –oriented • Interest-oriented Fisher and Ury [1981], “principled negotiation” • Intercultural models – building the rapport

  12. 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

  13. 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

  14. 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

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