The Role of CultureManaging Across National andOrganizational CulturesMark McKennaBUS 162 (6), International and Comparative ManagementSan Jose State UniversityChapters 5 and 6, Hodgetts, Luthans and Doh, InternationalManagement: Culture, Strategy and Behavior , 6th edition (New York:McGraw-Hill Irwin, 2006)Adapted from PowerPoint slides by R. Dennis Middlemist, Professor ofManagement, Colorado State University
OVERVIEW1. Applying Hofstede’s Cultural Dimensions2. Organizational Cultures3. Multiculturalism
APPLYING HOFSTEDE’SCULTURAL DIMENSIONS1. Cross-Cultural Differences and Similarities2. Six Basic Cultural Variations3. Exercise: A Jumping Off Place
Differences and Similarities Challenges for effective cross-cultural management ◦ Parochialism: the tendency to view the world through one’s own eyes and perspective ◦ Simplification: the process of exhibiting the same orientation toward different cultural groups Similarities across cultures ◦ In US and Russian firms organizational behavior modifications led to performance improvements ◦ Antecedents of organizational commitment were similar in US and Korea firms
Differences and Similarities Differences across cultures ◦ In the criteria used in evaluating personnelNetherlands France Germany BritainReality Imagination Leadership HelicopterAnalysis Analysis Analysis ImaginationHelicopter Leadership Reality RealityLeadership Helicopter Imagination AnalysisImagination Reality Helicopter Leadership ◦ In the norms and rules regulating wages, compensation, pay equity, and maternity leave ◦ In labor relations, job design, and the design of employee training programs
Basic Cultural Variations1) What is the nature of people?2) What is the person’s relationship to nature?3) What is the person’s relationship to other people?4) What is the modality of human activity?5) What is the temporal focus of human activity?6) What is the conception of space?
A Jumping Off Place A successful, mid-sized Ohio-based US manufacturing firm decides to open a plan near Madrid, Spain. Factors in the decision include: ◦ The end of its licensing agreement with a German firm ◦ New patents and technology ◦ Lower labor costs in Spain The Spanish partner will provide on-site support; the US firm will provide capital, technology and training
A Jumping Off Place If the venture in Spain is successful, the US manufacturer plans to use this experience to open plants first in Italy, then in France Put yourself in the position of an international consultant or manager ◦ What differences would you anticipate between Spain and the US? ◦ How might lessons learned in Spain need to be adapted for operations in Italy? ◦ How would France differ from both, and from the U.S.?
Figure 4-5: A Power-Distance andIndividualism-Collectivism
Figure 4-6: A Power-Distance andUncertainty-Avoidance
Figure 4-7: A Masculinity-Femininityand Uncertainty-Avoidance
A Jumping Off Place Power Indivi- Uncertainty Masculinity Distance dualism Avoidance Low High Low MidUSA (40) (91) (46) (62) Mid Low High LowSpain (57) (51) (86) (42) Low High High MidItaly (50) (76) (75) (70) Mid Mid High LowFrance (68) (71) (86) (43)
Caveats and an Observation Caveats… ◦ What is typical? ◦ How discrete are subcultures? ◦ Are values and beliefs fixed or fluid? ◦ What are the significant “dimensions”? ◦ Are attributes generalizable or situation specific? Observation… ◦ “Understanding the properties and prospects of nations requires openness to the richness and diversity of national practices and institutions” (Brendan McSweeney, http://geert-hofstede.international-business- center.com/mcsweeney.shtml)
ORGANIZATIONALCULTURES1. Definition2. Interactions between National and Organizational Cultures3. Strategic Predispositions of International Organizations4. A Typology of Organizational Cultures
Definitions Hodgetts, Luthans and Doh (p. 154) ◦ “shared values and beliefs that enable members to understand their roles and the norms of the organization.” Edgar Schein (1997, p. 12) ◦ “a pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, and that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems.”
Interactions The values and beliefs employees bring to the workplace affect their behavior within the workplace Working for MNC may accentuate rather than moderate or erase cultural differences Cultural differences across subsidiaries often cause coordination problems Important dimensions of cultural difference within organizations include: motivation, relationship, identity, communication, control, and conduct
European’s Perceptions of CulturalDimensions of U.S. Operations/Same MNC Activities Outputs Job Person Corporate Professional Open Closed Tight Loose Conventional Pragmatic 30 31 32 33 34 35 36 37 38 39 40 41 42Adapted from Figure 6–1 Europeans’ Perception of the Cultural Dimensions of U.S. Operations (A) andEuropean Operations (B) of the Same MNC
European’s Perceptions of Cultural Dimensionsof European Operations/Same MNC Activities Outputs Job Person Corporate Professional Open Closed Tight Loose Conventional Pragmatic 30 31 32 33 34 35 36 37 38 39 40 41 42Adapted from Figure 6–1 Europeans’ Perception of the Cultural Dimensions of U.S. Operations (A) andEuropean Operations (B) of the Same MNC
Strategic PredispositionsPhilosophies of Ethnocentric predisposition Management ◦ A nationalistic philosophy of management Ethnocentric whereby the values and interests of the predisposition parent company guide strategic decisions.
Strategic PredispositionsPhilosophies of Polycentric predisposition Management ◦ A philosophy of management whereby strategic decisions are tailored to suit the Ethnocentric predisposition cultures of the countries where the MNC operates. Polycentric predisposition
Strategic PredispositionsPhilosophies of Regiocentric predisposition Management ◦ A philosophy of management whereby the Ethnocentric firm tries to blend its own interests with predisposition those of its subsidiaries on a regional basis. Polycentric predisposition Regiocentric predisposition
Strategic PredispositionsPhilosophies of Geocentric predisposition Management ◦ A philosophy of management whereby the company tries to integrate a global Ethnocentric predisposition systems approach to decision making. Polycentric predisposition Regiocentric predisposition Geocentric predisposition
Typology of Organizational Cultures Equity Fullfillment-oriented Project-oriented culture culture INCUBATOR GUIDED MISSILE Person TaskEmphasis Emphasis FAMILY EIFFEL TOWER Power-oriented Role-oriented culture culture Hierarchy
Typology of Organizational Cultures Family culture ◦ Power oriented and headed by a leader who is regarded as a caring parent ◦ Management looks after employees, ensures they are well-treated ◦ May promote loyalty and commitment or lead to support for an ineffective leader Eiffel tower culture ◦ Jobs are well defined ◦ Everything is coordinated from the top ◦ Relationships are specific and job-related ◦ Status remains with the job
Typology of Organizational Cultures Guided missile culture ◦ Work is typically undertaken by teams or project groups ◦ Individual expertise is more important than formal hierarchies ◦ Team members are interdependent and (at least potentially) equal Incubator culture ◦ Organizations as incubators for self-expression and self-fulfillment ◦ Little formal structure ◦ Focus is on development of an innovative product or service
MULTICULTURALISM1. The Evolution of International Corporations2. Problems and Advantages of Diversity3. Putting It All Together
The Evolution of InternationalCorporations Phase1 Phase2 Phase3 Phase4 Domestic International Multinational Global firms firms firms firmsSource: Nancy J. Adler, International Dimensions of Organizational Behavior, 2nd ed. (Boston: PWS-KentPublishing, 1991), p. 123.
Phases of Multiculturalism Domestic firms ◦ Focus on delivering a product or service in a domestic market ◦ Ethnocentric perspective – “one good way” ◦ Multicultural challenge is to manage intra-national cultural diversity International firms ◦ Multidomestic market-oriented strategy ◦ Polycentric or regiocentric perspective – “many good ways” ◦ Multicultural challenge is to manage cross- cultural relationships with clients and employees
Phases of Multiculturalism Multinational firms ◦ Focus is on lower costs and increasing efficiency ◦ Multinational perspective – “one least-cost way” ◦ Multicultural challenge is to manage intra- organizational cultural diversity Global firms ◦ Global dominance through mass customization ◦ Geo/multicentric perspective – “many good ways” ◦ Multicultural challenge is to manage both internal and external diversity
Problems and Advantages Problems associated with diversity ◦ Lack of group cohesion ◦ Mistrust of others ◦ Erroneous or biased perceptions ◦ Miscommunication Advantages of diversity ◦ Enhanced creativity ◦ Better decision making; preventing groupthink ◦ More effective and productive performance Cross-cultural groups are better at innovation; single culture groups are more effective performing routine tasks
Putting It All Together Complexity in organizational culture ◦ Interface between national and organizational culture ◦ Types of organizational culture ◦ Degree of multiculturalism Implications for managers ◦ National cultural values Impact on employee behavior Are not easily changed ◦ Particularly important when considering The management of human resources Mergers and acquisitions