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Culture & International Business Part 2


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Culture & International Business Part 2

  1. 1. 2 Cultural classifications <ul><li>Edward Hall (1977) </li></ul><ul><li>Context-based culture </li></ul><ul><li>Hofstede (1984) </li></ul><ul><li>Five cultural dimensions </li></ul><ul><li>Most influential, similar approach by Trompenaars </li></ul><ul><li>GLOBE (1991) – Robert J House </li></ul><ul><li>Global Leadership & Organisational Behaviour Effectiveness: questionnaires for local managers </li></ul>
  2. 2. 2.1.1 Context based culture – nature of communication <ul><li>Japan </li></ul><ul><li>Many Asian countries </li></ul><ul><li>UK </li></ul><ul><li>USA </li></ul><ul><li>Germany </li></ul>High Context Low
  3. 3. <ul><li>Based on company study in late 1960s & early 1970s </li></ul><ul><ul><li>IBM employees (over 100,000) in 50 countries </li></ul></ul><ul><ul><li>Why just IBM? </li></ul></ul><ul><ul><li>Corporate culture (Edgar Schein) controls for the corporate culture element </li></ul></ul><ul><li>Originally four dimensions, later added a fifth: </li></ul><ul><ul><li>Long-term / short-term orientation </li></ul></ul><ul><li>Website </li></ul><ul><ul><li> </li></ul></ul>2.2.1 Hofstede’s dimension
  4. 4. 2.2.2 Hofstede's categories <ul><li>Individualism Collectivism </li></ul><ul><li>Large power distance Small power distance </li></ul><ul><li>(Is inequality accepted?) </li></ul><ul><li>High uncertainty avoidance Low uncertainty avoidance </li></ul><ul><li>Masculinity Feminity </li></ul><ul><li>Short-term orientation Long-term orientiation </li></ul>
  5. 5. 2.2.3 Groupings
  6. 6. 2.2.4 Cultural groups NB: Map and groupings precede liberalisation of Russia, E. Europe, and China
  7. 7. 2.3 GLOBE framework <ul><li>Discussed in two special issues of JIBS 2006 & 2010 </li></ul><ul><li>Based on Hofstede’s contribution </li></ul><ul><li>9 Dimensions </li></ul><ul><li>3 Hofstede Dimensions: Power Distance, Uncertainty Avoidance, Future orientation </li></ul><ul><li>Individualism-Collectivism now: Institutional and In-Group Collectivism </li></ul><ul><li>Masculinity vs. Feminity: Assertiveness, Performance Orientation, Gender Equality, Humane Orientation </li></ul>
  8. 8. <ul><li>3.1 Attitudes to culture in internationalisation of MNCs </li></ul><ul><li>3.2 International competitiveness & strategy </li></ul><ul><li>3.3 Personal behaviour in the workplace (expatriates / inpatriates) </li></ul><ul><li>Intra-company communication </li></ul><ul><li>Negotiations / contracts </li></ul><ul><ul><li>Single deals or long-term relationships? </li></ul></ul><ul><li>International projects and work groups </li></ul><ul><ul><li>Joint ventures between companies from different countries </li></ul></ul><ul><li>Accounting practices & corporate governance (institutions) </li></ul>3. How doe culture matter to businesses?
  9. 9. 3.1 Howard Perlmutter: Internationalization of MNCs <ul><li>Research approach </li></ul><ul><ul><ul><li>Observed what MNCs were doing (1969-...) </li></ul></ul></ul><ul><li>Internationalisation of MNC strategies: </li></ul><ul><ul><ul><li>1. Ethnocentric </li></ul></ul></ul><ul><ul><ul><li>2. Polycentric </li></ul></ul></ul><ul><ul><ul><li>3. Geocentric </li></ul></ul></ul><ul><li>How do MNCs manage multi-cultural workforces? </li></ul><ul><ul><ul><li>Who makes it up the ladder? </li></ul></ul></ul><ul><ul><ul><li>Ethnocentric: home country managers </li></ul></ul></ul><ul><ul><ul><li>Polycentric: subsidiaries led by locals, HQ by home country managers </li></ul></ul></ul><ul><ul><ul><li>Geocentric: international team of globally revolving high-performing, diverse staff </li></ul></ul></ul>
  10. 10. <ul><li>Nielsen (2005)*: </li></ul><ul><li>Western corporate strategy = Chess </li></ul><ul><li>Eastern corporate strategy = Go </li></ul><ul><li>Objective of Go is not to “kill” the opponents pieces, but to capture space. </li></ul><ul><li>The winner pre-empts competition in critical global markets: </li></ul><ul><ul><ul><li>Geographic territories </li></ul></ul></ul><ul><ul><ul><li>Control key suppliers, components, technologies & distribution channels (strangulation through encirclement) </li></ul></ul></ul><ul><ul><ul><li>Nielsen, Christine. &quot;The Global Chess Game . . . Or Is It Go? Market-Entry Strategies for Emerging Markets.&quot; Thunderbird International Business Review 47, no. 4 (2005): 397–427. </li></ul></ul></ul>3.2 International Strategy: Chess or Go?
  11. 11. 3.3 Expatriates & personal effectiveness
  12. 12. 4. Conclusion <ul><li>Culture & its definition </li></ul><ul><ul><ul><li>A holistic concept that deals both with intra-personal cognition, emotion and values, as well as inter-personal behaviour, rules & artifacts </li></ul></ul></ul><ul><ul><ul><li>Makes it hard to operationalise for business & management studies </li></ul></ul></ul><ul><li>Cultural categorisations </li></ul><ul><ul><ul><li>Hofstede etc. all have specific concepts about the “measurability” and “comparability” of culture </li></ul></ul></ul><ul><li>How does culture matter to business? </li></ul><ul><ul><ul><li>The day-to-day practice of business: team-work, internal communications, negotiations </li></ul></ul></ul><ul><ul><ul><li>Thinking like an anthropologist? Kate Fox’s Watching the English </li></ul></ul></ul>
  13. 13. Tutorial: Presentations & LG-Nortel JV case