The Impact of National Culture

1. The Impact of National Culture MGMT414

2. A look at culture • “Knowledge, belief, art, morals, law, custom, and any other capabilities and habits acquired by man as a member of society” – Sir Edward Taylor, English anthropologist, 1832-1917 • “A set of distinctive spiritual, material, intellectual and emotional features of society or a social group” & includes art and literature, lifestyles, ways of living together, value systems, traditions and beliefs – UNESCO 2002 • Collective programming of the minds – Geert Hofstede

3. What is Culture? The entire set of social norms and responses that dominate the behavior of a population. It is a conglomeration of beliefs, rules, institutions and artifacts that characterize human population. It is transmitted by symbols, stories and rituals over generations.

4. Culture is • Learned • Shared • Cumulative • Symbolic • Integrated • Dynamic acquired knowledge that people use to filter the life experiences and to generate social behavior. It is:

5. Levels of Culture National Culture Business Culture Organizational Culture Occupational Culture

6. Surface manifestations Values Basic Assumtions

7. ELEMENTS OF CULTURE Language Social Structure CULTURE Communication Values and Attitudes Religion

8. Why do we experience problems? Assumptions • We are alike! I do not have to worry about anything! • We may be different, but I would like to do business the way I know and want! • They are different, I need to be very careful and cautious. I do not know what I am getting into. • They are different, but I can train them about our ways

9. Perceptions and Stereotypes • A Perception is a person's interpretation of reality. In other words perception is a filtered experience, and the fabric of the filter is determined by our cultural background. It is very likely that same occurrences may be interpreted differently by people from diverse cultural backgrounds. • A Stereotype is a tendency to think in terms of generalizations. We generally categorize people as belonging to a single class. We should never let ourselves be trapped in this lazy way of thinking about other countries and people.

10. HOFSTEDE'S Cultural Dimensions • Power Distance • Uncertainty Avoidance • Individualism/Collectivism • Masculinity/Femininity • +Time Orientation

11. Power Distance • Inequality is not disturbing • Everyone has a place • People should depend on a leader • The powerful are entitled to privileges • The powerful should not hide their power • Authoritarian Management • Limited Communication/Feedback • Centralized Decision Making

12. Uncertainty Avoidance • Less risk tolerant • Less entrepreneurial • Low tolerance of deviant people and ideas • Avoid conflict • Respect for laws and rules • Experts and authorities are usually correct • Consensus is important

13. Individualism/Collectivism • People are responsible for themselves • Individual achievement is ideal • More independent decision making • Competence is the central criteria • People are not emotionally dependent on organizations or groups • Loyalty?

14. Masculinity • Clear definitions of gender roles • Men are assertive and dominant • Support for Machismo • Men should be decisive • Work is priority • Growth, success, and money are important

15. Power Distance Organizational Structure Relatively Flat - Hierarchical Pyramid Status Symbols Relatively Unimportant - Very Important Importance of "Face" Face Saving less important - Face Saving Important Participative Management Possible - Not Possible Role of Manager Facilitator - Expert

16. Uncertainty Avoidance Corporate Plans Seen as guidelines - Seen as important to follow Competition Seen as Advantageous - Seen as Damaging Budgeting Systems Flexible - Inflexible Control Systems Loose - Tight Risk Take - Avoid

17. Collectivist - Individualist Decision Making Group Consensus - Individual Reward Systems Group Based - Individual/Based on Merit Ethics/Values Particularism - Universalism Organizational Concern Look after employees - Employees look after selves

18. Femininity /Masculinity Valued Rewards Quality of Life - Money, Performance Networking Important for Relationships - Important for Performance Interpersonal Focus Maintaining Relationship - Getting the Task done Basis for Motivation Service to Others Ambition - Getting Ahead

19. Hofstede’s Cultural Classification Schemes • Power Distance Index (PDI) • Uncertainty Avoidance Index (UAI) • Individualism (IDV) • Masculinity (MAS) • Long-Term Orientation (LTO) 19

20. Power Distance Index (PDI) LARGE POWER DISTANCE SMALL POWER DISTANCE acceptance of inequalities: no acceptance of inequalities:power is distributed un-equally strive for power equalizationacceptance of hierarchies differences must be justifiedeverybody has his/her place little acceptance of hierarchies Location ScoreMalaysia 104 (highest; largest Mexico 81 power distance) Hong Kong 68France 68Portugal 63Greece 60Spain 57Japan 54Italy 50USA 40 Canada 39 Location Score Netherlands 38Germany 35UK 35Switzerland 34Finland 33Norway 31Sweden 31Denmark 18Israel 13Austria 11 (lowest; smallest power distance) 20

21. Uncertainty Avoidance Index (UAI) STRONG UNCERTAINTY AVOIDANCE WEAK UNCERTAINTY AVOIDANCE control the futurelet the future happendon’t like risk and ambiguity relaxed about othersbeliefs in conformity, stability practice more important than codesand principles for belief and behaviorintolerance toward deviant deviance is toleratedpersons and ideas Location ScoreGreece 112 (highest need to Portugal 104 avoid uncertainty) Japan 92France 86Spain 86Italy 75Austria 70Germany 65Finland 59 Location Score Switzerland 58Norway 50Canada 48USA 46UK 35Sweden 29Denmark 23Singapore 8 (lowest need to avoid uncertainty) 21

22. Individualism (IDV) “I” - INDIVIDUALISM: WE- COLLECTIVISM: preference for loosely knit social framework preference for tightly knit social framework high individual autonomy – selfcentered low ind. autonomy-we centered individuals take care ofselves and immediate family only will be taken care ofwhen needed loyalty to family, group, clan Location Score Norway 69Switzerland 68Germany 67Finland 63Austria 55Spain 51Japan 46Greece 35Portugal 27Pakistan 14Venezuela 12 (lowest; most “We” oriented) Location ScoreUSA 91 (highest; most Australia 90 “I’ oriented) UK 89Canada 80Netherlands. 80Italy 76Denmark 74Sweden 71France 71 22

23. Masculinity (MAS) MASCULINITY (performance/achievement) FEMININITY (welfare/relations) winner take all (reflected also in women) welfare for all (reflected also in men)preference for achievement, preference for relationshipsheroism, assertiveness modesty, caring for the weakand material success quality of lifemaximum social differentiation between the sexes minimum social differentiationperformance societies focus on peoples’ welfare Location ScoreJapan95 (highest; performance/Austria 79achievement orientation)Italy 70Switzerland 70UK 66Germany 66USA 62Hong Kong 57 Location ScoreGreece57Canada 52France 43Finland 26Netherlands 14Norway 8Sweden 5 (lowest; most welfare/ relations oriented) 23

24. Long-Term Orientation (LTO) SHORT TERM LONG TERM Traditions are adapted to our time Respect for traditions Limited respect for social obligations Respect for social regardless of costs Keep up with the Jones´s Frugality, economizing w/resources Low private savings High savings rate, can invest Expects quick results Patience with results Need to own the truth Respect the demands of virtue Place Index Poland 32 Germany (W) 31 Australia 31 New Zealand 30 USA 29 UK 25 Zimbabwe 25 Philippines 19 Nigeria 16 Pakistan 00 (short term) Place Index China 113 (long term) Hong Kong 96 Taiwan 87 Japan 80 Brazil 65 India 61 Thailand 56 Singapore 48 Netherlands 44 Sweden 33 24

25. Japan PowerSocial statusSuccess Success Hungary Austria Switzerland Germany Mexico MAS Italy UK China Poland USA Argentina Greece Venezuela Canada Czechia Belgium Russia Turkey Panama Spain France Status needs low Thailand Portugal FEM Chile Finland Netherlands Denmark PowerSocial Status Norway Sweden PDI- PDI+ Mapping cultural dimensions 25 (Marieke de Mooji, 2005)

26. Cross-cultural comparisons High- vs. Low-context cultures Hofstede’s classification scheme Project GLOBE World Value Survey (WVS) 26

27. Japanese High context IMPLICIT Arabian Latin American Spanish Italian English (UK) French English (US) Scandinavian German Low context EXPLICIT Swiss High- vs. Low-context cultures • High-context cultures: • Interpretation of messages rests on contextual cues • Examples: China, Korea, Japan, etc. • Low-context cultures: • Put the most emphasis on written or spoken words • United States, Scandinavia, Germany, etc.

28. Project GLOBE 9 dimensions: - uncertainty avoidance - power distance - collectivism - collectivism II - gender egalitarianism - assertiveness - future orientation - performance orientation - humane orientation 28

29. Clusters • Anglo cultures (US, GB, Australia) • High on individualism and masculinity, low on power distance and uncertainty avoidance • Latin European • High uncertainty avoidance • Nordic • Low masculinity • Far Eastern • High power distance, low individualism

30. World Value Survey 30

31. Fons Trompenaars & Charles Hampden-Turner • Universalism vs Particularism (What is important? Rules or relationships?) • Neutral vs Affective Relationships (How do we show our emotions?) • Individualism vs Communitarianism (Do we prefer to work individually or in a group?) • Specific vs Diffuse Relationships (How far do we get involved?) • Achieved status vs Ascribed status (Do we work to get where we are or is prestige/status given?) • Time orientation • Internal vs External orientation (Do we control the environment or leave it to fate/destiny?)

32. High and Low Context Cultures Contextual differences affect the way you approach situations such as decision making, problem solving, and negotiating.

34. a. Contextual Differences cont. • Decision making: In lower context cultures, business people try to reach decisions quickly and efficiently. They’re concerned with reaching an agreement on main points, leaving details to be worked out later by others. In higher-context cultures, details are important and they take their time.

35. a. Contextual Differences cont. • Problem Solving: Low context cultures encourage open disagreement, whereas high context cultures avoid confrontation and debate. • Negotiating: Low context cultures view negotiations impersonally and focus on economic goals, whereas high-context cultures emphasize relationships and a sociable atmosphere when negotiating.

36. Methodology • Six countries were selected from the CRANET database varying from high to low context. Turkey and Greece as high context countries, Italy and France as medium context and Finland and Sweden as low context countries. The dependent or criterion variable, internal transparency, was measured by using the questions related to whether organizations brief clerical and manual employees on issues of business strategy, financial performance and the organization of work. A seven-point scale was created, with six indicating the briefing of both clerical and manual employees on all three issues, and zero indicating no briefing of either category on any of the issues.

37. Strategic Nature of HRM, Union Presence and Direct Communication in 9 countries listed in order of high to low context

38. Findings • One way analysis of variance was conducted and showed that there was signigficant difference between the three groups (high, medium and low context countries) in terms of their average internal transparency score. As high context countries Turkey and Greece had 2.12 average internal transparency score, as medium context countries France and Italy had 2.93 average internal transparency score and as low context countries Finland and Sweeden had average internal transparency scores of 4.62. This shows that as predicted in high context cultures, there is less formal information sharing between the organization and the employees while in low context cultures the level of formal communication is much higher.