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Chapter

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Culture and

Multinational Management

Learning Objectives (1 of 2)

Define culture and understand the basic components of culture.
Identify instances of cultural stereotyping and ethnocentrism.
Understand how various levels of culture influence multinational operations.

Learning Objectives (2 of 2)

Apply the Hofstede, GLOBE, and 7d models to diagnose and understand the impact of cultural differences on management processes.
Appreciate the complex differences among cultures and use these differences to build better organizations.
Recognize the complexity of understanding new cultures and the dangers of stereotyping and cultural paradoxes.

What is Culture? (1 of 2)

Pervasive and shared beliefs, norms, values, and symbols that guide the everyday life of a group.
Cultural norms: both prescribe and proscribe behaviors
What we can and cannot do.
Cultural values: what is good, what is beautiful, what is holy, and what are legitimate goals for life.

What is Culture? (2 of 2)

Cultural beliefs: represent our understandings about what is true.
Cultural symbols, stories, and rituals: communicate the norms, values, and beliefs of a society or a group to its members.
Culture is pervasive in society: affects all aspects of life.
Culture is shared: similarity in values, beliefs, norms.

Levels of Culture (1 of 2)

National culture: the dominant culture within the political boundaries of the nation-state.

There may be subcultures within the national culture.

Business culture: norms, values, and beliefs that pertain to all aspects of doing business in a culture.

Tells people the correct, acceptable ways to conduct business in a society.

Levels of Culture (2 of 2)

3. Occupational and organizational culture

Occupational culture: the norms, values, beliefs, and expected ways of behaving for people in the same occupational group, regardless of employer.
Organizational culture: the set of important understandings (often unstated) that members of an organization share.

Exhibit 2.1:
Three Levels of Culture

Cultural Differences and
Basic Values

Three diagnostic models to aid the multinational manager:
Hofstede model of national culture
Global Leadership and Organizational Behavior Effectiveness (GLOBE) project
7d culture model

Hofstede’s Model of
National Culture

A model mainly based on differences in values and beliefs regarding work goals
Five dimensions of basic cultural values:
Power distance
Uncertainty avoidance
Individualism
Masculinity
Long-term orientation

Hofstede’s Model Applied to Organizations and Management
(1 of 2)

Five management practices considered in the discussion of Hofstede’s model include:

Human resources management

Management selection
Training
Evaluation and promotion
Remuneration

Hofstede’s Model Applied to Organizations and Management
(2 of 2)

Leadership styles

How leaders behave

Motivational assumptions

Beliefs about how people respond to work

Decision making and organizational design

How managers make decisions and organize

Strategy

Effects of culture on selecting strategies

Exhibit 2.2:
Subject Matter Considered in Hofstede’s National Culture Studies

Subject Matter	Individual	Group	Country
Change management	X
Leadership	X	X	X
HRM	X	X
Entrepreneurship	X	X
Conflict management	X	X	X
Work-related attitudes	X	X
Alliance formation and joint venture	X	X

Power Distance (1 of 2)

Power distance concerns how cultures deal with inequality and focuses on:
Norms that tell superiors (e.g., bosses) how much they can determine the behavior of their subordinates
The belief that superiors and subordinates are fundamentally different kinds of people

Power Distance (2 of 2)

High power distance countries have norms, values, and beliefs such as:
Inequality is fundamentally good.
Everyone has a place: some are high, some are low.
Most people should be dependent on a leader.
The powerful are entitled to privileges.
The powerful should not hide their power.

Exhibit 2.3:
Managerial Implications:
Power Distance

Sources: Adapted from Hofstede, Geert. 1980 Culture’s Consequences: International Differences in Work-Related Values. London: Sage; Hofstede, Geert. 1991. Cultures and Organizations: Software of the Mind. London: McGraw-Hill; Hofstede, Geert. 1993. “Cultural Dimensions in people management.” In Vladimir Pucik, Noel M. Tichy, and Carole K. Barnette, Globalizing Management. Hoboken, NJ: Wiley, 129-158.

Management Processes	Low Power Distance	High Power Distance
Human resources management
Management selection	Educational achievement	Social class; elite education
Training	For autonomy	For conformity/obedience
Evaluations/promotion	Performance	Compliance; trustworthiness
Leadership styles	Participative; less direct supervision	Theory X; authoritarian; close supervision
Motivational assumptions	People like work; extrinsic and intrinsic rewards	Assume people dislike work; coercion
Decision making/organizational design	Decentralized; flat pyramids; small proportion of supervisors	Tall pyramids; large proportion of supervisors
Strategy issues	Varied	Crafted to support the power elite or government

Uncertainty Avoidance

Uncertainty Avoidance: Norms, values, and beliefs regarding tolerance for ambiguity:
Conflict should be avoided.
Deviant people and ideas should not be tolerated.
Laws are very important and should be followed.
Experts and authorities are usually correct.
Consensus is important.

Exhibit 2.4:
Managerial Implications:
Uncertainty Avoidance

Management Processes	High Uncertainty Avoidance	Low Uncertainty Avoidance
Human resources management
Management selection	Seniority; expected loyalty	Past job performance; education
Training	Specialized	Training to adapt
Evaluation/promotion	Seniority; expertise; loyalty	Objective individual performance data; job switching for promotions
Remuneration	Based on seniority or expertise	Based on performance
Leadership styles	Task-oriented	Nondirective; person-oriented; flexible
Motivational assumptions	People seek security, avoid competition	People are self-motivated, competitive
Decision making/organizational design	Larger organization; tall hierarchy; formalized; many standardized procedures	Smaller organizations; flat hierarchy; less formalized, fewer standardized procedures
Strategy issues	Averse to risk	Risk taking

Individualism/Collectivism (1 of 2)

Individualism: Focus is on the relationship between the individual and the group.
Countries high on individualism have norms, values, and beliefs such as:
People are responsible for themselves.
Individual achievement is ideal.
People need not be emotionally dependent on organizations or groups.

Individualism/Collectivism (1 of 2)

Collectivism: Collectivist countries have norms, values, and beliefs such as:
One’s identity is based on group membership.
Group decision making is best.
Groups protect individuals in exchange for their loyalty to the group.

Exhibit 2.5:
Managerial Implications:
Individualism/Collectivism

Management Processes	Low Individualism	High Individualism
Human resources management
Management selection	Group membership; school or university	Universalistic based on individual traits
Training	Focus on company-based skills	General skills for individual achievement
Evaluation/promotion	Slow, with group; seniority	Based on individual performance
Remuneration	Based on group membership/organizational paternalism	Extrinsic rewards based on market value
Leadership styles	Appeals to duty and commitment	Individual rewards/punishments based on performance
Motivational assumptions	Moral involvement	Calculative; individual cost/benefit
Decision making/organizational design	Group; slow; preference for larger organizations	Individual responsibility; preference for smaller organizations
Strategy issues	Incremental changes with periodic revolutions	Aggressive

Masculinity

Masculinity: Tendency of a culture to support traditional masculine orientation.
High masculinity countries have beliefs such as:
Gender roles should be clearly distinguished.
Men are assertive and dominant.
Machismo or exaggerated maleness in men is good.
People – especially men - should be decisive.
Work takes priority over other duties, such as family.
Advancement, success, and money are important.

Long-Term Orientation (1 of 3)

Long-Term (Confucian) Orientation: Orientation towards time that values patience.
Managers are selected based on the fit of their personal and educational characteristics.
A prospective employee’s particular skills have less importance in the hiring decision.
Training and socialization for a long-term commitment to the organization compensate for any initial weaknesses in work-related skills.

Long-Term Orientation (2 of 3)

Eastern cultures rank highest on long-term orientation.
Value synthesis in organizational decisions rather than search for correct answer.
Designed to manage internal social relationships.
Investment in long-term employment skills.
Focus on long-term individual and company goals.

Long-Term Orientation (3 of 3)

Short-Term Orientation: focus is on immediately usable skills
Western cultures, which tend to have short-term orientations, value logical analysis in their approach to organizational decisions.
Designed and managed purposefully to respond to immediate pressures from the environment.
Want immediate financial returns.

Restraint versus Indulgence

A sixth dimension of cultural values that refers to the degree to which societies enjoy life based on control or gratification of basic human desires
Indulgent societies tend to favor free satisfaction of human needs related to "enjoying life and having fun.
Restraint societies are much more restrictive and places strict norms on gratification of needs.
Multinational managers can shape work environments to take advantage of such preferences.

GLOBE National Culture Framework

GLOBE (Global Leadership and Organizational Behavior Studies) involves 170 researchers who collected data from 17,000 managers in 62 countries
7 of 9 dimensions of GLOBE are similar to Hofstede
GLOBE’s 2 Unique dimensions:
Performance orientation
Humane orientation

Performance Orientation

Performance Orientation refers to the degree to which the society encourages societal members to innovate, to improve their performance, and to strive for excellence.
E.g., the United States and Singapore have high scores while Russia and Greece have low scores on the dimension.

Humane Orientation

Humane Orientation is an indication of the extent to which individuals are expected to be fair, altruistic, caring, and generous.
Need for belongingness and affiliation is emphasized more than material possessions, self-fulfillment, and pleasure.
Less humane-oriented societies are more likely to value self-interest and self-gratification.
Malaysia and Egypt have high humane orientation scores, while France and Germany have low scores.

7d Cultural Dimensions Model
(1 of 3)

Builds on traditional anthropological approaches to understanding culture.
Culture exists because people need to solve basic problems of survival.
Challenges include:
How people relate to others
How people relate to time
How people relate to their environment

7d Cultural Dimensions Model
(2 of 3)

5 of the 7 dimensions of this model deal with relationships among people:
Universalism vs. Particularism
Collectivism vs. Individualism
Neutral vs. Affective
Diffuse vs. Specific
Achievement vs. Ascription

7d Cultural Dimensions Model
(3 of 3)

The 2 remaining dimensions deal with how a culture manages time and how it deals with nature:
Time: Past, Present, Future, or Mixture
Nature: Control of vs. Accommodation with Nature

Universalism vs. Particularism

These concepts pertain to how people treat each other:
Universalism:
Based on abstract principles such as rules of law, religion, or cultural principles.
Particularism:
Rules are only a rough guide. Each judgment represents a unique situation, which must take into account who the person is, and his relationship to the one making the judgment.

Exhibit 2.14:
Managerial Implications: Universalism/Particularism

Individualism vs. Collectivism

Similar distinctions to Hofstede’s view
Collectivist societies:
Focus on relationships.
“Deals” are flexible, based on situation and person.
Contracts are easy to modify.
Individualist societies:
Focus on rules.
“Deals” are obligations.
Contracts are difficult to break.

Exhibit 2.15:
Managerial Implications:
Individualism/Collectivism

Neutral vs. Affective

Concerns the acceptability of expressing emotions.
Neutral:
Interactions should be objective and detached.
Focus is more on tasks rather than emotional nature of interaction.
Affective:
Emotions are appropriate in almost all situations.
Preferred to find immediate outlet for emotions.

Specific vs. Diffuse

Addresses the extent to which an individual’s life is involved in work relationships
Specific:
Business is segregated from other parts of life
Contracts often prescribe and delineate relationships
Diffuse:
Business relationships encompassing and inclusive
Prefer to involve multiple life areas simultaneously.

Achievement vs. Ascription

Addresses the manner in which society accords status
Achievement:
People earn status based on performance and accomplishments
Ascription:
Characteristics or associations define status
E.g., status based on schools or universities

Time Orientation

Time Horizon: How cultures deal with the past, present and future

Future-oriented societies, such as the U.S., consider organizational change as necessary and beneficial.

Believe a static organization is a dying organization.

Past-oriented societies assume that life is predetermined based on traditions or will of God.

Revere stability and are suspicious of change.

Exhibit 2.19:
Managerial Implications:
Time Horizon

Internal vs. External Control

Concerned with beliefs regarding control of one’s fate
Best reflected with how people interact with the environment
Does nature dominate us or do we dominate nature?
In societies where people dominate nature, managers are more proactive and believe situations can be changed.

Caveats and Cautions (1 of 2)

Cultural paradoxes: when individual situations seem to contradict cultural prescriptions
Stereotyping: assumes that all people within one culture behave, believe, feel, and act the same.
Ethnocentrism: people from one culture believe that theirs are the only correct norms, values, and beliefs.

Caveats and Cautions (2 of 2)

Cultural relativism: all cultures, no matter how different, are correct and moral for the people of those cultures.
Cultural Intelligence: ability to interact effectively in multiple cultures, composed of three components
A mental component
A motivational component
A behavior component

Summary

There are an immense variety of cultures in the world.
This chapter provides one approach to understanding national cultures.
Goal is to make one aware of complex and subtle influences of culture on multinational management.
Astute managers realize that understanding cultures is a never-ending learning process.