Chapter 2

Chapter 2
Culture and Multinational
Management

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Learning Objectives

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


Learning Objectives

•• Understand the Hofstede, GLOBE, and 7d models.
Understand the Hofstede, GLOBE, and 7d models.
•• Appreciate the complex differences among cultures
Appreciate the complex differences among cultures
and use these differences for building better
and use these differences for building better
organizations.
organizations.
•• Recognize the complexity of understanding new
Recognize the complexity of understanding new
cultures and the dangers of stereotyping and cultural
cultures and the dangers of stereotyping and cultural
paradoxes.
paradoxes.


What is Culture?

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


What is Culture?
(cont.)

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

Culture: Front Stage & Back
Stage

•• Front stage of culture: easily observable aspect of
Front stage of culture: easily observable aspect of
culture
culture
•• E.g., Japanese executive bows or North American
E.g., Japanese executive bows or North American
robust handshake.
robust handshake.
•• Back stage of culture: only insiders or members of the
Back stage of culture: only insiders or members of the
culture understand other aspects of culture
culture understand other aspects of culture
•• E.g., Japanese saying “it’s difficult” and twisting
E.g., Japanese saying “it’s difficult” and twisting
head to one side really means it’s impossible.
head to one side really means it’s impossible.

Three Levels of Culture

1. National culture: the dominant culture within the
1. National culture: the dominant culture within the
political boundaries of the nation-state.
political boundaries of the nation-state.
2. Business culture: norms, values, and beliefs that
2. Business culture: norms, values, and beliefs that
pertain to all aspects of doing business in a culture.
pertain to all aspects of doing business in a culture.
– Tells people the correct, acceptable ways to
– Tells people the correct, acceptable ways to
conduct business in a society.
conduct business in a society.


Three Levels of Culture
(cont.)

3. Occupational and organizational culture
3. Occupational and organizational culture
•• Occupational culture: the norms, values, beliefs,
Occupational culture: the norms, values, beliefs,
and expected ways of behaving for people in the
and expected ways of behaving for people in the
same occupational group.
same occupational group.

•• Organizational culture: the set of important
Organizational culture: the set of important
understandings that members of an organization
understandings that members of an organization
share.
share.

Exhibit 2.1: Three Levels of
Culture


Cultural Differences and
Basic Values

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


Hofstede’s Model
of National Culture

•• Five dimensions of basic cultural values
Five dimensions of basic cultural values
•• Power distance
Power distance
•• Uncertainty avoidance
Uncertainty avoidance
•• Individualism
Individualism
•• Masculinity
Masculinity
•• Long-term orientation
Long-term orientation


Hofstede’s Model Applied to
Organizations and
Management
•• Management practices considered in the discussion of
Management practices considered in the discussion of
Hofstede’s model include:
Hofstede’s model include:
•• 1. Human resources management
1. Human resources management
•• Management selection
Management selection
•• Training
Training
•• Evaluation and promotion
Evaluation and promotion
•• Remuneration
Remuneration


Hofstede’s Model Applied to
Organizations

2. Leadership styles
2. Leadership styles
3. Motivational assumptions
3. Motivational assumptions
4. Decision making and organizational design
4. Decision making and organizational design
5. Strategy
5. Strategy


Power Distance

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


Power Distance (cont.)

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

Exhibit 2.2: Managerial
Implications for Power
Distance


Uncertainty Avoidance

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


Implications of Uncertainty
Avoidance


Individualism/Collectivism

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


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


Implications of


Masculinity

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

Implications of Masculinity


Long-Term (Confucian)
Orientation

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

Long-Term (Confucian)
Orientation

•• Eastern cultures rank highest on long-term orientation.
Eastern cultures rank highest on long-term orientation.
•• Value synthesis in organizational decisions.
Value synthesis in organizational decisions.
•• Belief in substantial savings.
Belief in substantial savings.
•• Willingness to invest.
Willingness to invest.
•• Acceptance of slow results.
Acceptance of slow results.
•• Persistence to achieve goals.
Persistence to achieve goals.
•• Sensitivity to social relationships.
Sensitivity to social relationships.
•• Pragmatic adaptation.
Pragmatic adaptation.

Short-term Orientation

•• Western cultures, which tend to have short-term
Western cultures, which tend to have short-term
orientations, value logical analysis in their approach to
orientations, value logical analysis in their approach to
organizational decisions.
organizational decisions.
•• Designed and managed purposefully to respond to
Designed and managed purposefully to respond to
immediate pressures from the environment.
immediate pressures from the environment.
•• Often use quick layoffs of “excess” employees to
Often use quick layoffs of “excess” employees to
adjust to shrinking demand for products.
adjust to shrinking demand for products.


Long-Term Orientation vs.
Short-Term Orientation
•• The difference is apparent in the goals companies set
The difference is apparent in the goals companies set
in strategic decision making.
in strategic decision making.
•• Managers in countries (short-term) want immediate
Managers in countries (short-term) want immediate
financial returns, and fast, measurable success (e.g.,
financial returns, and fast, measurable success (e.g.,
U.S.).
U.S.).
•• Managers in countries (long-term) prioritize growth and
Managers in countries (long-term) prioritize growth and
long-term paybacks.
long-term paybacks.
•• Long time horizons allow managers to experiment, seek
Long time horizons allow managers to experiment, seek
success by developing “game plans” as they go along.
success by developing “game plans” as they go along.

Implications of Long-term
(Confucian) Orientation


GLOBE National Culture
Framework

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


Performance Orientation

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


Exhibit 2.8: Management
Implication of Performance
Orientation


Humane Orientation

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


Exhibit 2.9: Management
Implications of Humane
Orientation


7d Cultural Dimensions Model

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

7d Cultural Dimensions Model

•• Dimensions that deal with relationships include:
Dimensions that deal with relationships include:
•• Universalism vs. Particularism
Universalism vs. Particularism
•• Collectivism vs. Individualism
Collectivism vs. Individualism
•• Neutral vs. Affective
Neutral vs. Affective
•• Diffuse vs. Specific
Diffuse vs. Specific
•• Achievement vs. Ascription
Achievement vs. Ascription


7d Cultural Dimension Model
(cont.)

•• Dimensions dealing with how a culture manages time
Dimensions dealing with how a culture manages time
and how it deals with nature:
and how it deals with nature:

•• Past, Present, Future, or Mixture
Past, Present, Future, or Mixture
•• Control of vs. Accommodation with Nature
Control of vs. Accommodation with Nature


Exhibit 2.11: Summary of 7d
Model and Issues


Universalism vs. Particularism

•• Pertain to how people treat each other based on rules
Pertain to how people treat each other based on rules
or personal relationships.
or personal relationships.
•• Universalistic --
Universalistic
•• Right way is based on abstract principles such as
Right way is based on abstract principles such as
rules, law, religion.
rules, law, religion.
•• Particularistic --
Particularistic
•• Each judgment represents a unique situation, with
Each judgment represents a unique situation, with
exceptions for rules based on relationships or
exceptions for rules based on relationships or
circumstances.
circumstances.

Implications of
Universalism/Particularism


Individualism vs. Collectivism

•• Similar distinctions to Hofstede’s view
Similar distinctions to Hofstede’s view
•• Collectivist societies --
Collectivist societies
•• People defined by group memberships such as family
People defined by group memberships such as family
•• Responsibility, achievement, and rewards are group-based
Responsibility, achievement, and rewards are group-based
•• Individualist societies --
Individualist societies
•• People trained to be independent
People trained to be independent
•• Assume individual responsibility for success or failure
Assume individual responsibility for success or failure


Implications of


Neutral vs. Affective

•• Concerns acceptability of expressing emotions
Concerns acceptability of expressing emotions
•• Neutral --
Neutral
•• Interactions are objective and detached
Interactions are objective and detached
•• Focus is on tasks rather than emotional nature of
Focus is on tasks rather than emotional nature of
interaction
interaction
•• Affective --
Affective
•• Emotions are appropriate in all situations
Emotions are appropriate in all situations
•• Prefer to find immediate outlet for emotions
Prefer to find immediate outlet for emotions

Implications of Neutral vs.
Affective


Specific vs. Diffuse

•• Extent to which an individual’s life is involved in work
Extent to which an individual’s life is involved in work
relationships
relationships
•• Specific --
Specific
•• Business segregated from other parts of life
Business segregated from other parts of life
•• Contracts often prescribe and delineate relationships
Contracts often prescribe and delineate relationships
•• Diffuse --
Diffuse
•• Business relationships encompassing/inclusive
Business relationships encompassing/inclusive
•• Private and segregated space is small
Private and segregated space is small

Implications of Specific vs.
Diffuse


Achievement vs. Ascription

•• Manner in which society gives status
Manner in which society gives status
•• Achievement --
Achievement
•• People earn status based on performance and
People earn status based on performance and
accomplishments
accomplishments
•• Ascription --
Ascription
•• Characteristics or associations define status
Characteristics or associations define status
•• E.g., status based on schools or universities
E.g., status based on schools or universities


Implications of Achievement
vs. Ascription


Time Orientation

Time Horizon: How cultures deal with the past, present
Time Horizon: How cultures deal with the past, present
and future
and future
•• Future-oriented societies, such as the U.S.,
Future-oriented societies, such as the U.S.,
consider organizational change as necessary and
consider organizational change as necessary and
beneficial.
beneficial.
Believe a static organization is a dying organization.
Believe a static organization is a dying organization.
•• Past-oriented societies assume that life is
Past-oriented societies assume that life is
predetermined based on traditions or will of God.
predetermined based on traditions or will of God.
Revere stability and are suspicious of change.
Revere stability and are suspicious of change.

Implications of Time Horizon


Internal vs. External Control

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

Implications of Internal vs.
External


Caveats and Cautions

•• Stereotyping: assumes that all people within one
Stereotyping: assumes that all people within one
culture behave, believe, feel, and act the same.
culture behave, believe, feel, and act the same.
•• Ethnocentrism: occurs when people from one culture
Ethnocentrism: occurs when people from one culture
believe that theirs are the only correct norms, values,
believe that theirs are the only correct norms, values,
and beliefs.
and beliefs.
•• Cultural Intelligence: ability to interact effectively in
Cultural Intelligence: ability to interact effectively in
multiple cultures
multiple cultures
•• Cultural relativism: all cultures, no matter how different,
Cultural relativism: all cultures, no matter how different,
are correct and moral for the people of those cultures.
are correct and moral for the people of those cultures.

Conclusion

•• Chapter provides understanding of various ways to
Chapter provides understanding of various ways to
understand national cultures
understand national cultures
•• Sensitize to complex and subtle influences of culture
Sensitize to complex and subtle influences of culture
on multinational management
on multinational management
•• Variety of cultural levels affect multinational managers
Variety of cultural levels affect multinational managers
•• Astute managers realize that understanding cultures is
Astute managers realize that understanding cultures is
a never-ending learning process.
a never-ending learning process.


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