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  • As I mentioned earlier, people look to different groups for direction when they are confused: it is important to recognize that they look to global businesses for direction — this is a new role of business.
  • The Planet Project and the Roper Poll of Values Polls that report public opinion are not as rigorous as studies reported above. Nevertheless, they provide some insight about worldwide beliefs. In 2000, Minnesota Manufacturing and Mining (3M) initiated the Planet Project, an interactive Internet-based poll to which hundreds of thousands of people worldwide responded. Volunteers also conducted face-to-face interviews in 115 nations to include opinions from those who are not Internet connected. Findings thus far show that people around the world are very concerned about their self-image and with projecting a youthful appearance. A surprising finding is that the more educated a person is, the more likely a belief in God (Johnson, 2001). Roper Starch Worldwide also asked 30,000 people worldwide to rank 57 personal values in order of importance. Of the top five values overall, protecting the family was first, followed by honesty, health and fitness, self-esteem and self - reliance. Other values rated highly were freedom, stable relationships, and faith (World T rends, 2001). Faith was ranked most highly in nations that are predominately Muslim, e.g., Indonesia, Egypt, and Saudi Arabia. The World Values Survey Introduced in 1981 the World Values Survey examines the values of 65 societies (Ingelhart and Baker, 2000) or about 80 percent of the world's population. Results show that economic development has a powerful relationship with cultural values. That is, people from low-income societies differ significantly from those in high-income countries on two dimensions: traditional vs. secular-rational values and survival vs. self-expression values.
  • Details on the GLOBE project are in Chapter 14 . 160 social scientists and management scholars from 62 cultures representing all major regions throughout the world are engaged in this long-term programmatic series of cross-cultural leadership studies. GLOBE is a multi-method multi-phase research program designed to test a cross-level integrated theory of the relationship between culture and leadership effectiveness. They looked at 62 cultures, grouping them by similarities, e.g., Anglo (this included white S. Africa), Latin Ameican, Latin Europe (French speaking Switzerland), Southern Asia, Germanic Europe, and the Middle East. Over 17 , 000 middle managers from over 900 corporations in food processing, finance, and telecommunications industries in 62 cultures participated in GLOBE surveys. GLOBE measures both cultural practices (as is) and cultural values (should be). Project GLOBE is a multi-method multi-phase research program to test relationships between culture and leadership effectiveness. Over 160 social scientists and management scholars participate in this series of studies. By 2004, researchers had gathered information from over 17,000 middle managers from more than 900 corporations in food processing, finance, and telecommunications industries in 62 cultures. These managers answered questions according to both cultural practices (as is) and cultural values (should be). Results published in the first comprehensive report on GLOBE (House et al., 2004) reflect variations in management practices worldwide. However, when asked to indicate what “ should be, ” respondents showed convergent views. For example, on gender egalitarianism — the degree to which a collective minimizes gender inequality — managers indicated that gender inequalities should be far less than now practiced. Similarly on humane orientation — the degree to which a collective encourages and rewards individuals for being fair, altruistic, generous, caring, and kind to others — the mean score on practices was a full point lower than the mean score on what “ should be ” practiced. These results suggest that current practices among managers are divergent cross-culturally, but values may be converging. A premise to be tested in later phases of the GLOBE project is the extent to which effectiveness is a function of the interaction between leader attributes and organizational contingencies (House et al., 2002).
  • I believe that national cultures will endure, but that global cultures will emerge alongside them. In particular, I think there will some day be a global business culture — we see that developing now with global rules of conduct, global rules of trade (WTO), global approaches to environmental use, etc.
  • Groups are not unorganized; rather, they have a structure that shapes the behavior of their members. When we play a role , we engage in a set of expected behavior patterns that are attributed to occupying a given position in a social unit. Based on role research, we can conclude the following: (1) People play multiple roles. (2) People learn roles from the stimuli around them. (3) People shift roles rapidly according to situational demands. (4) People experience conflict when one role contradicts another. Acceptable standards of group behavior that are shared by the group ’ s members are called norms . When accepted by the group, norms influence the group ’ s behavior with a minimum of external controls. Groups will exert pressure upon members to bring their behavior into conformity with the standards of the group. Since members desire acceptance by the group, they are susceptible to these conformity pressures. Solomon Asch ’ s classic study demonstrated the following: People desire to be one of the group and to avoid being different, so they feel pressure to conform.
  • Most theories of motivation were developed in the United States by Americans and about Americans. Maslow ’ s hierarchy of needs argues that people start at the physiological level and move up the hierarchy in this order: physiological, safety, social, esteem, and self-actualization. This hierarchy aligns with American culture. In cultures where uncertainty avoidance characteristics are strong, security needs would be on top of the hierarchy. In cultures that score high on quality-of-life needs, social needs would be on top. The view that high achievement acts as an internal motivator presupposes two cultural characteristics: a willingness to accept a moderate degree of risk and a concern with performance. This combination is prevalent in Anglo American countries. Yet these characteristics are relatively absent in countries such as Chile or Portugal. Goal-setting theory is also culture bound. Its key components align reasonably well with U.S. culture. It assumes that subordinates will be reasonably independent, that managers and subordinates will seek challenging goals, and that performance is considered important by both. Goal-setting theory is not likely to increase motivation in countries in which the opposite conditions exist, such as Chile, France, and Portugal.
  • Page 465 Deployment: Easily getting right skills where needed regardless of geographic location. Knowledge and innovation dissemination : Spreading state-of-the-art knowledge and practices throughout the organization regardless of where they originate. Identifying and developing talent on a global basis : Identifying who can function effectively in a global organization and developing his or her abilities .
  • Page 466 Dealing with global staffing pressures like these is quite complex. For example, it involves addressing, on a global basis, activities including candidate selections, assignment terms and documentation; relocation processing and vendor management; immigration processing; cultural and language orientation and training; compensation administration and payroll processing; tax administration; career planning and development; and handling of spouse and dependent matters.
  • Page 467 Shown are hourly wages for production workers (converted into US dollars). There are other labor costs to consider. For example, there are wide gaps in hours worked. Portuguese workers average about 1,980 hours of work annually, while German workers average 1,648 hours. Several European countries, including the United Kingdom and Germany, require substantial severance pay to departing employees, usually equal to at least two years’ service in the United Kingdom and one year’s in Germany.19 Compared to the usual two or three weeks of U.S. vacation, workers in France can expect two days of paid holiday per full month of service per year, Italians usually get between four and six weeks off per year, and Germans get 18 working days per year after six months of service.
  • Page 477 Firms opening subsidiaries abroad will find substantial differences in labor relations practices among the world’s countries and regions. This is important; remember that while union membership as a percentage of wage and salary earners is dropping in the U.S., it is still relatively high in most countries compared with the United States’ 14%: for example, Brazil, 44%; Argentina, 39%; Germany, 29%; Denmark, 80%; Japan, 24%; Egypt, 39%; and Israel, 23%.
  • Page 469 Locals are citizens of the countries in which they work. Expatriates are non-citizens of the countries in which they ’ re working. Home-country nationals are citizens of the country in which the multinational corporation has its headquarters. Third-country nationals are citizens of a country other than the parent or host country; e.g., a British executive in the Tokyo branch of a US multinational bank.
  • Page 468 Shown are the maximum failures of a country or region for international assignments International assignments are the heart of international HR, and it ’ s therefore disconcerting to see how often such assignments fail. U.S. expatriates ’ assignments that end early (the failure rate) range from 16% to 50%, and the direct costs of each such failure can reach hundreds of thousands of dollars or more. European and Japanese multinationals reported lower failure rates, with only about one-sixth of Japanese multinationals and 3% of European multinationals reporting more than a 10% expatriate recall rate.
  • Page 469 Discovering why such assignments fail is therefore an important research task, and experts have made considerable progress. Personality is one factor. For example, in a study of 143 expatriate employees, extroverted, agreeable, and emotionally stable individuals were less likely to want to leave early. And the person ’ s intentions are important: For example, people who want expatriate careers try harder to adjust to such a life. Non-work factors like family pressures usually loom large in expatriate failures: In one study, U.S. managers listed, in descending order of importance for leaving early: inability of spouse to adjust, managers ’ inability to adjust, other family problems, managers ’ personal or emotional immaturity, and inability to cope with larger overseas responsibility. Managers of European firms emphasized only the inability of the manager ’ s spouse to adjust as an explanation for the expatriate ’ s failed assignment. Other studies similarly emphasize dissatisfied spouses ’ effects on the international assignment. One expert said: The selection process is fundamentally flawed. . . . Expatriate assignments rarely fail because the person cannot accommodate to the technical demands of the job. The expatriate selections are made by line managers based on technical competence. They fail because of family and personal issues and lack of cultural skills that haven ’ t been part of the process.
  • Page 469 Failure rates have dropped 9% over the last 10 years by stressing the items listed.
  • Page 472 Many firms also use paper-and-pencil tests such as the Overseas Assignment Inventory. Based on 12 years of research with more than 7,000 candidates, the test reportedly identifies the characteristics and attitudes international assignment candidates should have. Realistic previews about the problems to expect in the new job (such as mandatory private schooling for the children) as well as about the cultural benefits, problems, and idiosyncrasies of the country are another important part of the screening process. The rule, say some experts, should always be to “spell it all out” ahead of time, as many multinationals do for their international transferees.
  • Page 472 Selecting managers for these assignments therefore sometimes means testing them for traits that predict success in adapting to new environments. One study asked 338 international assignees from various countries and organizations to specify which traits were important for the success of managers on foreign assignment. The researchers identified five factors that contribute to success in such assignments: job knowledge and motivation, relational skills, flexibility/adaptability, extra-cultural openness, and family situation (spouse’s positive opinion, willingness of spouse to live a broad, and so on; the figure shows some of the specific items that make up each of the five factors).
  • Page 473 While the number and proportion of women managers working domestically has climbed in the past few years, the same isn’t true of those assigned abroad. Women filled only about 6% of the overseas international management positions at major companies, according to one estimate, compared with about 49% of domestic U.S. management positions. Women comprise only about 13% of the total expatriate population, according to another survey. Inaccurate stereotypes may account for much of this discrepancy. For example, a new survey (“Passport to Opportunity: U.S. Women in Global Business”) found that respondents believed women aren’t as internationally mobile as men; yet 80% of female expatriates say they’ve never turned down a relocation assignment, compared with 71% of men. Another myth is that women might have a tougher time building relationships with businesspeople overseas; yet 77% of U.S. women in this survey said they were effective at building business relationships with men abroad. Sending Women Managers Abroad
  • Page 474 Level 1 training focuses on the impact of cultural differences, and on raising trainees ’ awareness of such differences and their impact on business outcomes. Level 2 aims at getting participants to understand how attitudes (both negative and positive) are formed and how they influence behavior. (For example, unfavorable stereotypes may subconsciously influence how a new manager responds to and treats his or her new foreign subordinates.) Level 3 training provides factual knowledge about the target country, while Level 4 provides skill building in areas like language and adjustment and adaptation skills.
  • Page 480 Effectively repatriating returning employees is important. Particularly after companies spend hundreds of thousands of dollars helping the person develop international expertise, it ’ s disconcerting to know that perhaps 50% of returnees leave their companies within two years of coming home. expatriates often fear they ’ re “ out of sight, out of mind ” during an extended foreign stay, and such fears are often well founded. Many firms hurriedly assign returning expatriates to mediocre or makeshift jobs. Perhaps more exasperating is discovering that the firm has promoted the expatriate ’ s former colleagues while he or she was overseas. Even the expatriate ’ s family may undergo a sort of reverse culture shock, as they face the task of picking up old friendships and starting new schools, and giving up the perks of the over overseas job, like a company car and driver. Consider one employee ’ s plight. After a 5-year work assignment overseas that entailed much responsibility and a dynamic environment, Scott Fedje returned home to a cubicle, an intellectually non stimulating project, and a whole month to make a single decision. He resigned a few months later.
  • Chapter2

    1. 1. Chapter 2 Managing Across CulturesChapter 2(1) _ Global Culture…2Chapter 2(2) _ Multicultural Teams…11Chapter 2(3) _ Motivation in a Global Context…36Chapter 2(4) _ Decision Making…51Chapter 2(5) _ Leadership…68Chapter 2(6) _ Global HRM…921 Cross-Cultural Management
    2. 2. Chapter 2(1) _Global Culture2 Cross-Cultural Management
    3. 3. CULTURAL MESSAGES COME FROM MULTIPLE SOURCES – Domestic – International – Global although most common challenges are addressed by nations, a global civil society is emerging3 Cross-Cultural Management
    4. 4. PEOPLE LOOK AT ALTERNATIVEENTITIES FOR CULTURAL DIRECTION • Affiliative groups e.g., ethnic groups • Nongovernmental organizations, e.g., the Women’s League for Peace and Freedom • Religious groups • Regional associations, e.g., Economic Union • Business organizations 4 Cross-Cultural Management
    5. 5. Multiple messages and sources create CONFUSION AND UNCERTAINTY• Leading to new questions national cultures are less well able to answer – but• In a global society, we don’t have a sense of the appropriate rules by which all can live5 Cross-Cultural Management
    6. 6. TRANSITION TIME?• Are we at a point where nationality is less important to culture than in the past? All of Us6 Cross-Cultural Management
    7. 7. WE SEE THAT SOME VALUESARE COVERGING, OTHERS ARE NOT• The Planet Project• The Roper Poll of Values• The World Values Survey• The GLOBE Project7 Cross-Cultural Management
    8. 8. GLOBE RESPONSES ON GENDER EGALITARIANISM SHOWSCOVERGENCE ON “SHOULD BE” Latin America 7 Indigenous Africa 6 Anglo 5 As Is 4 Arab 3 Nordic 2 Shd Be 1 S Asia Germanic Confucian Latin Europe East Europe8 Cross-Cultural Management
    9. 9. GLOBE RESPONSES ON HUMANE ORIENTATION ALSO SHOWS COVERGENCE ON “SHOULD BE” Latin America 7 Indigenous Africa 6 Anglo 5 4 As Is Arab 3 Nordic 2 1 Shd Be S Asia Germanic Confucian Latin Europe East Europe9 Cross-Cultural Management
    10. 10. QUESTIONS OF GLOBAL AND LOCAL CULTURES • Will global culture replace or exist with local cultures? • Will global culture bring positive or negative outcomes?10 Cross-Cultural Management
    11. 11. Chapter 2(2)- Multicultural Teams11 Cross-Cultural Management
    12. 12. Group Two or more interacting individuals who come together to achieve some objectives. Groups can be either formal or informal, and further subclassified into command, task, interest, or friendship categories.12 Cross-Cultural Management
    13. 13. Team A specific type of group where an emphasis is put on some level of member interdependence and on achievement of common goals •All teams are groups •Some groups are just people assembled together •Teams have task interdependence whereas some groups do not (e.g., group of employees enjoying lunch together)13 Cross-Cultural Management
    14. 14. Reasons for Team Popularity• Outperform individuals on tasks requiring multiple skills, judgment, and experience• Better utilization of employee talents• More flexible and responsive to changing events• Facilitate employee participation in operating decisions• Effective in democratizing the organization and increasing employee involvement and motivation14 Cross-Cultural Management
    15. 15. Basic Group Concepts Group Roles Group Norms Expected Patterns of Acceptable Standards Behavior Based on a of Behavior Shared Given Position in a by the Members Social Unit of a Group15 Cross-Cultural Management
    16. 16. Cohesiveness Social-Oriented Cohesiveness: The degree to which members of the group are attracted to each other and motivated to stay in the group Task-Oriented Cohesiveness: The degree to which group members work together, cooperate and coordinate their activity in order to achieve group goals16 Cross-Cultural Management
    17. 17. Team Effectiveness Model Organizational and Team Team Design Team Environment Effectiveness • Reward systems •Task characteristics •Team size • Achieve • Communication organizational systems •Team composition goals • Physical space • Satisfy member • Organizational needs Team Processes environment • Maintain team • Organizational •Team development survival structure •Team norms • Organizational •Team roles leadership •Team cohesiveness17 Cross-Cultural Management
    18. 18. Groups Across Cultures Two cultural dimensions are especially relevant: • Individualism-Collectivism • Power Distance • Also Uncertainty Avoidance; e.g., potential for Role Conflict (esp. in multi-functional teams)18 Cross-Cultural Management
    19. 19. The Challenge in Shaping Team PlayersGreatest where... Less demanding...– The national culture –Where employees have is highly strong collectivist values, individualistic such as Japan or– Introduced into Mexico organizations that –In new organizations historically value that use teams as their individual initial form for structuring achievement work19 Cross-Cultural Management
    20. 20. Cross-Cultural Differences Cross–cultural differences in intergroup processes – Collectivistic cultures • Expect little expression of conflict; favor suppressing conflict • Prefer to personalize interaction; focus on people, despite what group they represent • Group membership is an important part of identity and interaction20 Cross-Cultural Management
    21. 21. Power Distance and SDWTs Nicholls et al. (1999) study of SDWT in Mexico: • Why are teams failing in a highly collectivist culture such as Mexico? • Major challenges in implementing SDWTs • Workers expect to exercise little control over work and not to be involved in decision making • Expect clear instructions from the top and are not highly motivated by opportunity to initiate and take larger responsibility • Can SDWT work in high-PD cultures? How?21 Cross-Cultural Management
    22. 22. Interpersonal Relationships• Individualists tend to have more friends, but with lesser intensity level;• Collectivists tend to have less friends, but with higher intensity level.• Individualists are less suspicious towards out- group members and easier to make initial contact;• Collectivists have stronger bonds with in-group members22 Cross-Cultural Management
    23. 23. Differential Group Processes• Conformity: who is more conforming?• Formal/regulated participation vs. spontaneous• Social loafing versus social striving• Preferences for group vs. individual rewards• Equality (‘you deserve what you get’) vs. Equity (‘you get what you deserve’) vs. Need based decisions (‘to all according to their needs’)23 Cross-Cultural Management
    24. 24. Conformity • Cross–cultural variations in tendency to accept group pressure for conformity to group norms – Japanese encourage high conformity to norms of a group that has the persons primary loyalty – German students (in some experimental research) showed a lower tendency to conform – Moderate conformity among people in Hong Kong, Brazil, Lebanon, and the United States24 Cross-Cultural Management
    25. 25. Teams’ Cultural Composition •Cultural Diversity: the number of different cultures represented in the group; •Cultural Norms: the orientations of the specific cultures represented in the group toward group dynamics and processes; and •Relative Cultural Distance: the extent to which group members are culturally different from each other25 Cross-Cultural Management
    26. 26. Surface and Deep Diversity In multicultural teams, diversity can be in the form of: • Surface-level (black-American; Caucasian- American; French and Vietnamese) and/or • Deep-level (Irish and English; Singaporean and Chinese; N. and S. Africans)26 Cross-Cultural Management
    27. 27. Dynamics of Team Diversity Social Context Org. Context Group Dynamics Affective Team Long-termDiversity Reactions Behaviours Conseq.•Surface •Cohesion •Communication •Performance•Deep •Satisfaction •Conflict •Promotion •Commitment •Cooperation •Turnover 27 Cross-Cultural Management
    28. 28. Jackson, Joshi & Erhardt (2003) • Surface-level diversity has more immediate impact and is influential in early-stage/newly formed teams while deep-level becomes more important over time and its effects last longer. • Diversity, in general, and cultural/ethnic diversity in particular, have mixed effects on team processes and performance; • Less effect on simpler, motor-based tasks; more effect on complex, interdependent teamwork28 Cross-Cultural Management
    29. 29. Earley & Mosakowski (2000)• Studied effects of heterogeneity in transnational teams using experimental and field settings• Reasoned that the effects of national heterogeneity on team performance is non-linear;• Found that in the early stages, homogenous teams (those with only one major national group identity) outperformed both moderately heterogeneous (groups with two different sub- group identities) and highly heterogeneous (no clear sub-group identities exist) teams.29 Cross-Cultural Management
    30. 30. Earley & Mosakowski (2000)• In the longer term, high-heterogeneous teams’ performance increased as they managed to create a hybrid-culture;• Such hybrid culture was not created in moderately heterogeneous teams, whose performance was lower than both high and low heterogeneity teams.Team processes mediated the effects of heterogeneity on team performance, such that:• In homogenous groups, members perceived many similarities between themselves (remember SIT?); trust, shared mental models and open communication developed early on in the team’s life30 Cross-Cultural Management
    31. 31. Earley & Mosakowski (2000)• In moderately heterogeneous teams, a dynamic of ‘us vs. them’ prevailed, with the two sub-groups sticking to themselves in times of conflict, resulting in little cross sub-group cooperation;• In highly heterogeneous teams, as time passed, members go to know each other better and since there were no dominant sub-groups, they were free to form a ‘hybrid culture’-unique to their team and overarching each members’ national identity.• Implications for joint ventures and projects where two cultures (national or organizational) get together to try to create a cooperative structure 31 Cross-Cultural Management
    32. 32. Diversity and Teams • Overall, diversity causes process losses • Can be beneficial if team overcomes these losses over time • Depends on organizational culture and top- management support • Highly heterogeneous and highly homogenous teams work better than mid-range ones • Fault lines in teams lead to rivalry coalitions => decrease effectiveness32 Cross-Cultural Management
    33. 33. Conditions for Effectiveness More Effective Less Effective Task Innovative Routine Stage Divergence (earlier) Convergence (later) Conditions Differences Recognized Differences Ignore Task-based member Culture-base members selection selection Pluralism Ethnocentrism Equal Power Cultural Dominance Superordinate goals Individual goals External feedback No feedback/autonomy33 Cross-Cultural Management
    34. 34. Some Implications • Investment in diverse teams is more sensible for the longer-term, for complex tasks and when team members are (relatively) pluralistic • More careful task design is needed • Positive feedback, early on • Preparation and training, through conceptual and experiential approaches is recommended • Strive to create a third culture through superordinate goals and neutralization of differences34 Cross-Cultural Management
    35. 35. Diversity: Beyond the Obvious • Seemingly culturally similar team members may have the hardest time to get along: need to take into account other variables besides culture (history, class) • Idiosyncratic cultural variables, e.g., intellectual style (Russians vs. N. Americans) • Prior experience with different cultures plays important role (usually for the better) • Virtual Teams: added complexity35 Cross-Cultural Management
    36. 36. Chapter 2(3)-Motivation in a Global Context36 Cross-Cultural Management
    37. 37. Introduction to Motivation Motivation Psychological process through which unsatisfied wants or needs lead to drives that are aimed at goals or incentives The Basic Motivation Process Unsatisfied Drive toward goal to Attainment of goal need satisfy need (need satisfaction)37 Cross-Cultural Management
    38. 38. Introduction to Motivation• Need Theories• Cognitive theories – Expectancy theory: describes internal processes of choice among different behaviors – Equity theory: describes how and why people react when they feel unfairly treated – Goal setting theory: focuses on how to set goals for people to reach• Behavioral theory – Behavior modification: focuses on observable behavior, not internal psychological processes38 Cross-Cultural Management
    39. 39. Basic Assumptions• The Universalist Assumption – All people are motivated to pursue goals they value – Specific content of the goals that are pursued will be influenced by culture – Movement toward market economies may make motivation more similar in different countries39 Cross-Cultural Management
    40. 40. Motivation Theories Are Culture Bound Hierarchy Need for of Needs Achievement Goal-Setting Theory40 Cross-Cultural Management
    41. 41. Attitudes and Personality• Personality characteristics – People in individualistic cultures (United States) have stronger need for autonomy than people in group–oriented cultures (Japan) – People in cultures that emphasize avoiding uncertainty (Belgium, Peru) have stronger need for security than people in cultures that are less concerned about avoiding uncertainty (Singapore, Ireland)41 Cross-Cultural Management
    42. 42. Need Theories of Motivation• Concept of needs holds across cultures• People from different cultures may express and satisfy needs differently• Importance of needs in Maslows need hierarchy – United States: self–actualization – Latin America: security, affiliation – France and Germany: need for security – New Zealand: belongingness and love• McClelland: needs for affiliation, power and achievement42 Cross-Cultural Management
    43. 43. International Aspects of Job Design• Herzberg: Two Factor Theory• Individual and group–based job design – U.S. managers have mostly used individual approaches to job design – Recent shifts to group–based approaches – Managers in other industrialized countries have mainly emphasized group–based job design43 Cross-Cultural Management
    44. 44. Job Design (Cont.) • Changing specific job characteristics – Belgium, Mexico, Greece, Thailand: not likely to accept efforts to increase autonomy and task identity – French managers particularly dislike recommendations to decentralize decision authority. Subordinates do not expect them to do so – Quality circles: big success in Japan, but only partial in the US44 Cross-Cultural Management
    45. 45. Cognitive and Behavioral Theories of Motivation • Two assumptions that could restrict use of these theories outside the U.S. – Individual controls decisions about future actions – Manager can deliberately shape the behavior of people45 Cross-Cultural Management
    46. 46. Cognitive and Behavioral Theories of Motivation• Both assumptions reflect U.S. values of free will, individualism, individual control• Cultural contrasts – Muslim managers believe something happens mainly because God wills it to happen – Hong Kong Chinese believe luck plays a role in all events46 Cross-Cultural Management
    47. 47. Cognitive and Behavioral Theories • Expectancy theorys validity in other cultures – Japanese female life insurance sales representatives responded to commission system as expected – Russian textile workers • Linked valued extrinsic rewards to worker performance • Productivity increased as the theory predicts • Generally, expectancy theory best explains motivation of people in cultures that emphasize internal attribution47 Cross-Cultural Management
    48. 48. Cognitive and Behavioral Theories (Cont.) • Equity theory: complex cross–cultural effects – Reward allocation decisions followed equity theory premises in U.S., Russian, and Chinese samples – Other studies • Chinese emphasized seniority in their reward decisions more than Americans. • Eastern European transition economies: endorsed positive inequity more than American students48 Cross-Cultural Management
    49. 49. Culture & Motivation • Research on goal setting theory in several countries • Results consistent with U.S. work that formulated the theory • Some cultural differences – U.S. students not affected by how goals were set – Israeli students performed better when goals were set participatively; consistent with culture of cooperation49 Cross-Cultural Management
    50. 50. Idiosyncratic FactorsBeyond cultures’ variance along the major cultural value dimensions, there are specific aspects anchored in nation’s history and expressed through its symbols and language. Ignoring such factors may render motivational techniques ineffective or even result in de-motivation; e.g.: Slay the Dragon!!50 Cross-Cultural Management
    51. 51. Chap 2(4)- Decision Making across Cultures51 Cross-Cultural Management
    52. 52. Decision Making Process of choosing a course of action among alternatives52 Cross-Cultural Management
    53. 53. Various Factors * Time Orientation • Deciding for the short/long term? • How long to make a decision? • Polichronic or monochronic style? * Who decides: Groups vs. Individuals * Voting vs. Consensus based decisions * Process: Participative vs. Autocratic53 Cross-Cultural Management
    54. 54. Value of Rationality Strong preference for rational D.M. vs. Occasional or low value on rationality; In some cultures more emphasis on: • Emotions • Religion • Ideology54 Cross-Cultural Management
    55. 55. Rational Decision Making The Rational Approach assumes that – Managers follow a systematic, step-by-step process. – Organization is economically based and is managed by decision makers who are entirely objective and have complete information. It assumes that rational choices are: • Consistent • Value-maximizing • Within specified constraints55 Cross-Cultural Management
    56. 56. The Six-Step Rational Decision-Making Model 1. Define the problem 2. Identify decision criteria 3. Weight the criteria 4. Generate alternatives 5. Rate each alternative on each criterion 6. Compute the optimal decision56 Cross-Cultural Management
    57. 57. Cultural Contingencies in Decision Making Step 1. Problem Problem solving; change Situation acceptance Recognition 2. Information Search Gathering facts Gathering ideas and possibilities 3. Construction of New, future oriented Past/present/future Alternatives based on change based on stability 4. Choice Individual level; Group level; by senior delegation of management; slowly responsibility; fast 5. Implementation Slow; top-down Fast; broad participation57 Cross-Cultural Management
    58. 58. Case Study: The Road to Hell (p. 512) • What mistakes did John Baker Made? Why did he not realize his mistake when it occurred? • What would you recommend that Baker do now? • What do you learn from this case about human resource management across different nations?58 Cross-Cultural Management
    59. 59. Stages of Moral Development Stage Level Description 6. Following self-chosen ethical principles, even if they Principled violate the law 5. Valuing rights of others; upholding non-relative values and rights regardless of the majority’s opinion 4. Maintaining conventional order by Conventional fulfilling obligations to which you have agreed 3. Living up to what is expected by people close to you 2. Following rules only when it’s in your immediate interest Pre-conventional 1. Sticking to rules to avoid physical punishmentAdapted from L. Kohlberg, “Moral Stages and Moralization: The Cognitive-Developmental approach,” pages 34-55 inMoral Develop and Behavior: Theory, Research, and Social Issues, ed. T. Lickona (New York: Holt, Rinehart & Winston, 1976). 59 Cross-Cultural Management
    60. 60. Three Different Criteria in Making Ethical Choices • Utilitarian Criterion - made solely on basis of outcomes or consequences • Focus on Rights - made consistently with fundamental liberties and privileges • Focus on Justice - requires imposing and enforcing rules fairly and impartially for equitable distribution of benefits and costs60 Cross-Cultural Management
    61. 61. Ethical Aspects of Decisions • Multinational firms face many ethical questions and issues • Operate in many countries; subject to the laws of those countries • Legal and social context of globally oriented organizations can present their managers with ethical dilemmas61 Cross-Cultural Management
    62. 62. Ethical Aspects of Decisions Two ethical views Cultural Ethical relativism Multinational realism organization62 Cross-Cultural Management
    63. 63. Ethical Aspects of Decisions Ethical views: • Cultural relativism • Cultural relativism refers to differences in ethical values among different cultures • Premise: right and wrong should be decided by each societys predominant ethical values • Cultural relativists base their argument on three points63 Cross-Cultural Management
    64. 64. Ethical Aspects of Decisions - Cultural relativism (cont.) • Three points – Moral judgments are statements of feelings and opinions; neither wrong nor right – Moral judgments are based on local ethical systems; cannot judge right or wrong across cultures – Prudent approach: do not claim an action is either right or wrong64 Cross-Cultural Management
    65. 65. Ethical Aspects of Decisions - Cultural relativism (cont.) • Managers should behave according to local ethical systems, even if behavior violates home country ethical system • Many philosophers reject cultural relativisms argument that codes of ethics cannot cross national boundaries • Agree that countries vary in defining right and wrong65 Cross-Cultural Management
    66. 66. Ethical Aspects of Decisions – Ethical realism • Morality does not apply to international transactions • Because no power rules over international events, people will not behave morally • Because others will not behave morally, one is not morally required to behave ethically66 Cross-Cultural Management
    67. 67. Ethical Aspects of Decisions • International ethical dilemmas – Goods made in a country with no child labor laws – Goods made in a country with child labor laws that are not enforced – Changing the behavior of local people – Making small payments that are allowed under the company’s national law67 Cross-Cultural Management
    68. 68. Chapter 2(5)-Leadership68 Cross-Cultural Management
    69. 69. Definitions There are almost as many definitions of leadership as there are theories…some of the more common ones are: • Ability to influence a group toward the achievement of goals. • The process whereby one individual influences other group members towards the attainment of defined group or organisational goals. • The process of creating vision for others and having the power to translate it into a reality and sustain it.69 Cross-Cultural Management
    70. 70. Foundation for Leadership Leadership Behaviors and Styles The use of work-centered behavior Authoritarian designed to ensure task Leadership accomplishment. The use of work-centered behavior Paternalistic coupled with a protective employee Leadership centered concern. The use of both work- or task- Participative centered and people centered Leadership approaches to leading subordinates.70 Cross-Cultural Management
    71. 71. Leader–Subordinate Interactions Authoritarian Leader Subordinate Subordinate Subordinate One-way downward flow of information and influence from authoritarian leader to subordinates.71 Cross-Cultural Management
    72. 72. Leader–Subordinate Interactions Paternalistic Leader Subordinate Subordinate Subordinate Continual interaction and exchange of information and influence between leader and subordinates.72 Cross-Cultural Management
    73. 73. Leader–Subordinate Interactions Participative Leader Subordinate Subordinate Subordinate Continual interaction and exchange of information and influence between leader and subordinates.73 Cross-Cultural Management
    74. 74. Contingency Theories • Leaders use various leadership styles/behaviours; • Quality of leadership experience depends on several situational factors, including followers and task type. • Path-Goal Model - Leader assists followers in attaining goals and ensures goals are compatible with overall objectives74 Cross-Cultural Management
    75. 75. Path-Goal TheoryA theory of leadership suggesting that subordinates will be motivated by a leader only to the extent they perceive this individual as helping them to attain valued goals.75 Cross-Cultural Management
    76. 76. Path-Goal Theory  Four basic leadership styles: • Instrumental (directive): An approach focused on providing specific guidance and establishing work schedules and rules. • Supportive: A style focused on establishing good relations with subordinates and satisfying their needs. • Participative: A pattern in which the leader consults with subordinates, permitting them to participate in decisions. • Achievement Oriented: An approach in which the leader sets challenging goals and seeks improvements in performance.76 Cross-Cultural Management
    77. 77. Path-Goal Theory Environmental contingency factors • Task structure • Formal authority system • Work groupLeader behavior• Directive Outcomes• Supportive • Performance• Participative • Satisfaction• Achievement oriented Subordinate contingency factors • Locus of control • Experience • Perceived ability77 Cross-Cultural Management
    78. 78. LeadershipCore values of country’s culture often define type of leadership behavior that is acceptable – In high PD, an emphasis on hierarchical relationships—directive approaches accepted; Hong Kong, Latin American countries; Russia – In low PD, hierarchical relationships are not valued —supportive (or participative) approaches accepted; Austria, Scandinavia, Israel78 Cross-Cultural Management
    79. 79. LeadershipIndividualism-Collectivism• Leader as a paternal figure vs. leader as an expert• Degree to which intervention of leader in follower’s private lives is expected and acceptedMasculine/Feminine• Acceptance of women as leaders• Accepted style for leadersLong-Term-Orientation• Elect leaders for four years…or forty?Leader’s style: first among equals (China) or class of its own (Arab Countries)79 Cross-Cultural Management
    80. 80. GLOBE Project • Multi-country study and evaluation of cultural attributes and leadership behavior • Are transformational characteristics of leadership universally endorsed? • 170 country co-investigators • 65 different cultures • 17,500 middle managers • 800 organizations80 Cross-Cultural Management
    81. 81. GLOBE Project • Which traits are universally viewed as impediments to leadership effectiveness? • Based on beliefs that – Certain attributes that distinguish one culture from others can be used to predict the most suitable, effective and acceptable organizational and leader practices within that culture – Societal culture has direct impact on organizational culture – Leader acceptance stems from tying leader attributes and behaviors to subordinate norms81 Cross-Cultural Management
    82. 82. GLOBE Cultural Variable ResultsVariable Highest Medium Lowest Ranking Ranking RankingAssertiveness Spain, U.S. Egypt, IrelandSweden, New ZealandFuture orientation Denmark, CanadaSlovenia, Egypt Russia, ArgentinaGender differentiation South Korea, Italy, Brazil Sweden Denmark EgyptUncertainty avoidance Austria, Denmark Israel, U.S. Russia, HungaryPower distance Russia, Spain England, France Demark, NetherlandsCollectivism/Societal Denmark, Hong Kong, U.S. Greece, Hungary SingaporeIn-group collectivism Egypt, China England, France Denmark, NetherlandsPerformance orientation U.S., Taiwan Sweden, Israel Russia, Argentina Humane orientation Indonesia, Egypt Hong Kong, Germany, Spain Sweden 82 Cross-Cultural Management
    83. 83. Universal Leadership Attributes Positive Negative• Trustworthy • Loner• Just • Non-Cooperative• Honest • Ruthless• Charisma • Non-explicit• Inspiration & Vision • Irritable• Team-Orientation • Dictatorial• Excellence-Oriented• Decisive• Intelligent83 Cross-Cultural Management
    84. 84. Leadership and ManagementNeed to bear in mind that leadership style is very much situation dependent: for example, in some situations (e.g., emergency) and in some organizational cultures, directive style will be accepted even in a country like the US;Participation is more likely if the basis of power is more achievement based (instrumental) than if it is ascribed (personal) andDegree of participation in decision making and leadership by subordinates vary cross-nationally84 Cross-Cultural Management
    85. 85. Leadership in the International Context Attitudes of European European managers tend to use a participative approach. Managers Toward Researchers investigated four Leadership Practices areas relevant to leadership. Does the leader believe that employees Capacity for Leadership prefer to be directed and have little and Initiative ambition? (Theory X) OR Does the leader believe that characteristics such as initiative can be acquired by most people regardless of their inborn traits and abilities? (Theory Y)85 Cross-Cultural Management
    86. 86. Leadership in the International Context Attitudes of European Most evidence indicates European managers tend to use a participative Managers Toward approach. Researchers investigated Leadership Practices four areas relevant to leadership. Capacity for Leadership Does the leader believe that detailed, complete instructions should be given to and Initiative subordinates and that subordinates need only this information to do their jobs? Sharing Information OR Does the leader believe that general and Objectives directions are sufficient and that subordinates can use their initiative in working out the details?86 Cross-Cultural Management
    87. 87. Leadership in the International Context Attitudes of European Most evidence indicates European managers tend to use a participative Managers Toward approach. Researchers investigated Leadership Practices four areas relevant to leadership. Does the leader support participative Capacity for Leadership leadership practices? and Initiative Sharing Information and Objectives Participation87 Cross-Cultural Management
    88. 88. Leadership in the International Context Attitudes of European Most evidence indicates European managers tend to use a participative Managers Toward approach. Researchers investigated Leadership Practices four areas relevant to leadership. Capacity for Leadership Does the leader believe that the and Initiative most effective way to control employees is through rewards Sharing Information and punishment? and Objectives OR Does the leader believe that Participation employees respond best to internally generated control? Internal Control88 Cross-Cultural Management
    89. 89. Japanese vs. U.S. Leadership StylesDimension Japan USEmployment Often for life Often short-termEvaluation Slow, takes many years Fast: those not promoted often leaveCareer Paths Very general; based on v. specialised; people stay rotations in one areaDec. Making Group based By individual managersControl Mech. Implicit & informal; Explicit; based on reliance on trust and knowing the control goodwill mechanismsResponsibility Shared collectively Assigned individuallyConcern for Broad and covers the limited to work-lifeemployees whole life89 Cross-Cultural Management
    90. 90. Differences in Middle Eastern and Western Management90 Cross-Cultural Management
    91. 91. Differences in Middle Eastern and Western Management91 Cross-Cultural Management
    92. 92. Leadership-Other Issues • Emphasis on Emotional Intelligence is especially important for leading cross- culturally • Idiosyncratic effects & paradoxes: – Moderately masculine Muslim and Hindu nations with traditional views on women… but, – Israel, India, Pakistan and other exceptions • Charismatic leadership is not universally accepted92 Cross-Cultural Management
    93. 93. Chapter 2(6)-GLOBAL HUMAN RESOURCES93 Cross-Cultural Management
    94. 94. HR Challenges of International BusinessResearchers asked “What are the key global pressuresaffecting human resource management practices in yourfirm currently and for the projected future?” Responseswere: • Deployment • Knowledge and innovation dissemination • Identifying and developing talent globally94 Cross-Cultural Management
    95. 95. Global Staffing Pressures – Candidate selections – Assignment terms – Relocation – Immigration – Culture and language – Compensation – Tax administration – Handling spouse and dependent matters95 Cross-Cultural Management
    96. 96. Economic Differences Translate into differences in HR practices: • Espousing ideals of free enterprise • Wage costs vary • Other labor costs vary: severance pay; holidays96 Cross-Cultural Management
    97. 97. International Labor Relations Union membership varies widely worldwide 29% 80% 24% 39% 44% 14% 39% 23%97 Cross-Cultural Management
    98. 98. International Staffing Multinational corporations (MNC’s) use several types of international managers: – Locals – Expatriates • Home-country nationals • Third-country nationals98 Cross-Cultural Management
    99. 99. Sources of Human Resources Home Country Nationals – Expatriate managers who are citizens of the country where the MNC is headquartered • Expatriates – Those who live and work away from their home country – Citizens of the country where the MNC is headquartered • Expatriates are useful for: – starting up operations – providing technical expertise – helping the MNC maintain financial control over the operation • Expatriates almost always were men – Situation is changing • Expatriates typically used in top management positions99 Cross-Cultural Management
    100. 100. Sources of Human Resources • Host-Country Nationals – Local managers who are hired by the MNC – Used in middle- and lower-level management positions – Nativization • Requirement of host-country government that mandates employment of host-country nationals100 Cross-Cultural Management
    101. 101. Sources of Human Resources • Third-Country Nationals (TCNs) – Citizens of countries other than the one in which the MNC is headquartered or the one in which the managers are assigned to work by the MNC – Found in MNCs that have progressed through the initial and middle stages of internationalization101 Cross-Cultural Management
    102. 102. Sources of Human Resources – Advantages of using TCNs • Require less compensation • Good working knowledge of the region • Given home office experience, often can achieve objectives better than other types of managers • Offer different perspectives102 Cross-Cultural Management
    103. 103. Failure Rates of International Assignments International assignment failure can cost hundreds of thousands of euros Europe % Failure Japan US 0 20 40 60103 Cross-Cultural Management
    104. 104. Why International Assignments Fail • Personality • Person’s intentions • Family pressures • Lack of cultural skills • Other non-work conditions like living and housing conditions, and health care104 Cross-Cultural Management
    105. 105. Improving Failure Rates/Solutions • Provide realistic previews • Have a careful screening process • Improve orientation • Provide good benefits • Test employees fairly • Shorten assignment length105 Cross-Cultural Management
    106. 106. Important Predictors of Success • Family situation tops the list • Flexibility/adaptability screening was high on results • Use paper and pencil tests like the Overseas Assignment Inventory • Previewing what changes an international assignee can expect106 Cross-Cultural Management
    107. 107. Selecting International Managers • Test for traits that predict success in adapting to new environments Predictive trait • Job knowledge and motivation breakdown • Relational skills • Flexibility and adaptability • Extra-cultural openness • Family situation107 Cross-Cultural Management
    108. 108. Traits Distinguishing Successful International ExecutivesSCALE SAMPLE ITEMSensitive to Cultural Differences When working with people from other cultures, works hard to understand their perspectives.Business Knowledge Has a solid understanding of our products and services.Courage to Take a Stand Is willing to take a stand on issues.Brings Out the Best in People Has a special talent for dealing with people.Acts with Integrity Can be depended on to tell the truth regardless ofIs Insightful circumstances. Is good at identifying the most important part of aIs Committed to Success complex problem or issue. Clearly demonstrates commitment to seeing theTakes Risks organization succeed.Uses Feedback Takes personal as well as business risks.Is Culturally Adventurous Has changed as a result of feedback. Enjoys the challenge of working in countries other thanSeeks Opportunities to Learn his/her own.Is Open to Criticism Takes advantage of opportunities to do new things.Seeks Feedback Appears brittle—as if criticism might cause him/her toIs Flexible break.* Pursues feedback even when others are reluctant to give in.*Reverse scored Doesn’t get so invested in things that she/he cannot change when something doesn’t work.108 Cross-Cultural Management
    109. 109. Performance Appraisal of International Mangers Five suggestions for improving the expatriate appraisal process:1. Stipulate the assignment’s difficulty level. For example,being an expatriate manager in China is generally considered more difficultthan working in England, and the appraisal should take such difficulty-level differences into account.2. Weight the evaluation more toward the on-site manager’sappraisal than toward the home-site manager’s distant perceptions ofthe employee’s performance.109 Cross-Cultural Management
    110. 110. Performance Appraisal of International Mangers • 3. If however (as is usually the case), the home-site manager does the actual • written appraisal, have him or her use a former expatriate from the same • overseas location to provide background advice during the appraisal process. • 4. Modify the normal performance criteria used for that particular position to • fit the overseas position and characteristics of that particular locale. • 5. Attempt to give the expatriate manager credit for his or her insights into • the functioning of the operation and specifically the interdependencies • of the domestic and foreign operations.110 Cross-Cultural Management
    111. 111. The New Workplace: Sending Women Abroad • In the US, only 6% filled overseas positions compared to 49% domestic • One survey found inaccurate stereotypes: – Not as internationally mobile – Might have a tougher time building teams111 Cross-Cultural Management
    112. 112. Performance Appraisal of International Mangers Five suggestions for improving the expatriate appraisal process:1. Stipulate the assignment’s difficulty level. For example,being an expatriate manager in China is generally considered more difficultthan working in England, and the appraisal should take such difficulty-level differences into account.2. Weight the evaluation more toward the on-site manager’sappraisal than toward the home-site manager’s distant perceptions ofthe employee’s performance.112 Cross-Cultural Management
    113. 113. Performance Appraisal of International Mangers • 3. If however (as is usually the case), the home-site manager does the actual • written appraisal, have him or her use a former expatriate from the same • overseas location to provide background advice during the appraisal process. • 4. Modify the normal performance criteria used for that particular position to • fit the overseas position and characteristics of that particular locale. • 5. Attempt to give the expatriate manager credit for his or her insights into • the functioning of the operation and specifically the interdependencies • of the domestic and foreign operations.113 Cross-Cultural Management
    114. 114. Culture Shock! Shock!M • Disorientation upon entering a new cultural environment • Normal use of own cultural filter fails – interpretation of perceptions – communication of intentions • All people experience culture shock... Past experience and training can shorten its length114 Cross-Cultural Management
    115. 115. Culture Shock: Responses – Gone native (assimilation): accepts the new... rejects own – Participator (integration): adapts to the new ... but retains own – Tourist (separation): avoids the new... – Outcast (marginalization): won’t/can’t adapt... rejects own...115 Cross-Cultural Management
    116. 116. Phases • Honeymoon – euphoria, unrealistically positive attitudes towards host country, stay in hotel shields from mundane difficulties, house hunting/school hunting exciting, sightseeing!! • Irritation and Hostility (the crisis stage) – problems adjusting at work, local clocks dont fit yours, difficulties getting the routine daily tasks done, everything stinks; some never recover116 Cross-Cultural Management
    117. 117. Symptoms – homesickness – boredom – withdrawal (reading is an obsession, focus on home nationals, avoid host nationals) – excessive sleep need, compulsive eating and drinking – irritability – exaggerated cleanliness117 Cross-Cultural Management
    118. 118. Symptoms (cont.) – marital stress, family tension, conflict – stereotyping host nationals – hostility towards host nationals – loss of ability to work effectively – fits of weeping – psychosomatic illnesses118 Cross-Cultural Management
    119. 119. Phases • Gradual Adjustment – can manage, cope with situation now • Biculturalism/Coping – ability to function in both cultures, acceptance of local customs and values for what they are (not going native), possible to get by, positive and growth gaining experience119 Cross-Cultural Management
    120. 120. Nature of Culture Shock • Not a jolt, rather a series of cumulative experiences • Cultural differences become focus of attention • Foreign ways are quaint no more... they seem inferior to your own120 Cross-Cultural Management
    121. 121. What Special Training Do Overseas Candidates Need? • Impact of cultural differences • Understanding attitude formation • Factual knowledge about target country • Language and adjustment/adaptability skills121 Cross-Cultural Management
    122. 122. Four Step Approach to Training Overseas Candidates Level 1 training focuses on the impact of cultural v differences, and on raising trainees’ awareness of such differences and their impact on business outcomes. vLevel 2 training aims at getting participants to understand how attitudes (both negative and positive) are formed and how they influence behavior. vLevel 3 training provides factual knowledge about the target country. vLevel 4 training provides skill building in areas like language and adjustment and adaptation skills.122 Cross-Cultural Management
    123. 123. Cross-Cultural Training Training TrainingMonth Time Rigor Hig Immersion s Approach h Assessment Field experience Simulations Affective Sensitivity Approach trainingWeek Culture assimilator Language: training “intensive” s Informatio Role-playing Cases n Giving Stress reduction Geographic training briefings Cultural Briefings Cultural Briefings Language: “Moderate”Day(s) Films/Books Interpreters Low Language: Length of “Survival” Assignment Weeks Months Years123 Cross-Cultural Management
    124. 124. Repatriation of Expatriates • Repatriation – Return to one’s home country from an overseas management assignment • Reasons for returning – Formally agreed-on tour of duty is over – Expats want their children educated in the home country – Unhappiness with foreign assignment – Failure to perform well • Readjustment problems – Permanent position upon return constitutes a demotion – Lack opportunity to use skills learned abroad upon return – Salary and benefits may decrease upon return124 Cross-Cultural Management
    125. 125. Repatriation Problems • Leaving the firm prematurely • Mediocre or makeshift jobs • Finding former colleagues promoted • Reverse culture shock125 Cross-Cultural Management
    126. 126. RepatriationSeveral steps can be taken to avoid repatriation problems: vWrite repatriation agreements vShorten Assignment periods vAssign a sponsor vProvide career counseling vKeep communications open vOffer financial support vDevelop reorientation programs vBuild in return trips126 Cross-Cultural Management
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