Impact of Culture

1
Impact of Culture

• What is it? Measures?
• General management activities
• Communication and meaning
• International strategy
• Multi-cultural management
• Entry modes and alliances
• HRM (Lincoln Electric)

2
CultureWhat is it?

• Value system
• Norms, beliefs, behaviors
• Common way of thinking
• Societys communicable knowledge
• Societys characteristics passed on generation by
  generation

3

• Power Distance
• Small - trusting, less formal organizations
• Large - mistrusting, hierarchical organizations
• Uncertainty Avoidance
• Weak - risk is non-threatening diversity is
  appreciated
• Strong - risk averse, diversity is threatening
• Individualism
• Collectivist - belonging to groups ideal group
  decision making
• Individualist - individual initiative and
  achievement leadership is the ideal
• Masculinity
• Feminine - quality of life people and
  relationships come first
• Masculine results-oriented performance
  assertiveness

4
Implications for Management

• INTERPERSONAL
• Punctuality
• Interpersonal distance
• Tempo of business
• Negotiations
• Bribery
• Linear vs. circular communication
• High vs. low context communication

• ORGANIZATIONAL
• Organizational structure
• Decision making
• Leadership
• Adaptation of products
• HRM policies
• Entry mode choice
• Location of value-creating activities

5
Multicultural ManagementJapanese-American
Context

• Job dissatisfaction
• Lack of commitment towards company
• Propensity to quit

?
Cultural Differences
6
Evidence of a Problem?

• If Americans fail on a project, they are never
  given another chance. Yet, Americans are rarely
  explicitly told what their authority is.
• In Japan, formal job descriptions dont exist.
  This can lead to role ambiguity in the U.S.
• One source of frustration for Americans is the
  lack of input in decision making.

7
Evidence of a Problem?

• Our engineers leave because of the constraints
  placed on innovativeness and flexibility
• I seem to have several bosses, which can be
  confusing.
• My supervisor doesnt spend enough time
  preparing me for this position.
• Theres a lack of open, honest communication.
• I cant make your meeting, Wally, because two of
  our middle managers just quit.

8
How to Address Cultural Problems
Negative Attitudinal Outcomes
Chain of causality often neglected
Intermediate Perceptions teachable?
Supervisory Behaviors receive scant attention
in most training programs
Cultural Differences basics commonly understood.
9
Supervisory Behaviors

• Mentoring
• Psycho-social
• Career-related
• Delegation
• Authority-specific
• Task-related
• Communication
• Effectiveness
• Formalization

• Monitoring
• General
• Corrective
• Intrusive
• Interpersonal Exchange
• Exchange Quality
• Acculturating Exchange
• Abusive Exchange

10
Delegation Model
Procedural Justice
Commitment
Authority Delegation
Trust
Job Satisfaction
Cultural Difference
Role Ambiguity
Task Delegation
Low Propensity to Quit
Role Conflict
11
Mentoring Model
Procedural Justice
Psycho- social Mentoring
Commitment
Trust
Career- related Mentoring
Job Satisfaction
Cultural Difference
Role Ambiguity
Low Propensity to Quit
Job- related Feedback
Role Conflict
12
Culture and Organizations

• Organizing demands answers to two questions
• Who has the power to decide what?
• What rules or procedures will be followed to
  attained desired ends?
• Power Distance and Uncertainty Avoidance are most
  important

13
National and Organizational Culture
Low Power Distance High Power Distance
Autonomy Need for Authority
Results-oriented Process-oriented

Low Uncert. Avoid High Uncert. Avoid
Ambiguity OK Needs security
Open-system decisions Closed-system decisions

14
Leadership

• Perceived levels of power
• Quality/characteristics of exchange with
  subordinates
• Communication patterns
• Trust (both ways)
• Delegation of tasks

15
Organizational Structures/Systems

• Formality of policies and rules
• Hierarchical vs. flat organizations
• Mechanistic vs. organic
• Authoritative vs. consensual decision making
• HRM systems
• Accounting systems

16
Motivation and Reward

• Formation/role of setting goals
• Achievements
• Compensation system
• Job satisfaction
• Organizational commitment

17
Communication and Meaning(Hall Hall)
Low Context
Explicit Written/ Spoken
MEANING
Context Surroundings/ Non-verbal
High Context
18
Impact of Culture on Strategy and Entry Mode

• Adaptation vs. Standardization
• Product
• Marketing
• HRM

Germany
U.S.
Mexico

• Entry
• Resources
• Control
• Risk

Malaysia
19
Entry, Alliances ,and Culture

• Entry JVs preferred when
• Target country-market culturally different (CD)
• Initiating firm high UA
• Structure Majority ownership preferred when
• Initiating firm high PD

20
Impact of Culture on AlliancesA Strategic
Option View
External Forces
Equity Alliance
Internal Forces
Buyout
Dissolution
21
Strategic Option View of Alliances
External Forces
Equity Alliance
Value Uncertainty Risk
High Market Value
High PD
High UA
Internal Forces
Buyout
Dissolution
22
Culture and Alliances as Options

• Partnership buyouts more likely when
• Initiating firm high PD
• Alliance portfolios (U.S. vs. Japan)
• Japanese hold equity alliances longer
• Japanese hold larger number of smaller alliances
• Japanese more likely to invest further/acquire
  partner
• Americans more likely to spin off partners
  (success)
• Americans faster to terminate alliance (failure)

23
Alliances and Culture cont.

• Longevity JVs terminate faster/earlier when
• Partners are culturally different (CD)
• Mistrust Suspicions of poor performance when
• Initiating firm high UA
• Trust Expectations of good performance when
• Partners are culturally similar

24
Managing Overseas Assignments

• High Failure RatesUS Expatriates
• 25 are recalled
• 30-50 under perform
• 77 get demoted after returning
• Higher Costs ( 100-200)
• Base salary
• Housing, school, travel, spousal allowances

25
EXPATS
LOCALS
Knows company products Strong links to HQ Has
technical skills lacking in local market
Knows country, local market No spouse
problem Cheaper
PROS
Rare Expensive, spouse problem High failure
rates Short-sighted focus Likely to leave upon
return
Steep learning curve for high- tech
products Weak links to HQ Dual pressures
company AND country
CONS