The Role of Culture in International Management

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The Role of Culture in International Management

• Chapter 4

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WHAT IS CULTURE?

• Culture can be loosely defined as a mental state
  largely shared among members of a society who
  live within national or regional boundaries.
• It is the sum total of the values, beliefs,
  behaviors, and expectations common to a group of
  people at a given time and in a given place.
• It includes a group's history, customs,
  traditions, habits, dress, practices, religions,
  language, art, architecture, artifacts, music,
  literature, and shared attitudes and feelings.

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• Understanding cultures different from one's own
  or from the mainstream culture is important in at
  least five situations in international
  management
• In communicating, transacting business, and
  negotiating with colleagues from other countries.
• In working for a foreign-based company
• In managing human resources in another country,
  whether the employees are indigenous to that
  country or hired from yet another country
• In managing foreign-born or culturally diverse
  workers in the domestic company
• In accommodating international guests

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Cultural perspectives View of Employment

• In some cultures the value of a job has only
  relative importance in the scheme of life.
• In Saudi Arabia, for example, expatriate managers
  often discover that work is not the all-consuming
  pursuit that it is in industrialized countries.
• Hard labor is actually considered unmanly there,
  and some Arabs still grow their little
  fingernails an inch or longer as a sign that they
  do not do manual labor.

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Managers as Paternalistic Leaders

• In many countries outside of the Western
  democracies, managers are expected to assume a
  paternalistic role.
• The manager is viewed as an important business
  leader, and time spent cultivating social
  relationships increases his or her effectiveness.
  
• To be successful, managers are expected to have
  personal contact with every member of the staff
  and to know their personal backgrounds.

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• Such behavior inspires loyalty and trust, but
  demands good interpersonal skills and a
  willingness to invest time with each employee.
• Managers working in paternalistic cultures need
  to display a caring feeling for employees.
• This can be demonstrated by such practices as
  appearing at birthday parties and soccer games,
  frequently walking through work areas,
  recognizing people by name, and talking and
  listening to employees.

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• Asian cultures and religions generally tend to
  emphasize collectivism, group harmony, and group
  participation.
• The manager is often viewed as a facilitator
  whose role is not to take charge but to improve
  the initiatives of others and nurture an
  environment in which employees work together for
  the good of the company.
• Individualism is less important than the
  universal good.

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Effective Supervision

• Requires acceptance or at least understanding of
  employment practices that have developed over a
  long period,
• influenced by a country history, religion, and
  political situation.
• Human resource development issues (encompassing
  performance appraisals and corrective actions)
  must also be viewed from a cultural perspective.

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• Quantitative, objectively measured performance
  appraisals as practiced in the west and many
  other countries are not universal.
• In some Eastern cultures, performance appraisals
  are more relationship-oriented they are done
  more subjectively and less directly to avoid
  confrontation.
• The point here is not which view is more correct,
  but rather which approach works best in a given
  culture.

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• The differences among cultures that influence
  employees' attitudes and motivate performance and
  behavior can make it difficult for a manager on a
  foreign assignment to know just how to act.
• Managers should understand that in the foreign
  environment, there are few clear-cut answers.

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Key Variables of Cultures Core Values Are(Next
slide for the constributors)

• Nature
• Time
• Action
• Communication
• Space

• Power
• Individualism
• Competitiveness
• Structure
• Formality

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CULTURAL VARIABLES WHEEL

• These variables are adapted from the work of
  several anthropologists and international
  business consultants including Geert Hofstede,
  Edward T. Hall, A.L. Kroeber, Clyde Kluckhohn,
  Florence kluckhohn, Frederick Strodtbeck, Stephen
  H. Rhinesmith, and Nancy Adler.

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• To develop cultural profiles, it will be helpful
  to be familiar with the kinds of universal
  cultural variables found in most societies.
• While there are countless individual variables,
  one approach to categorizing interdependent
  variables is given by Harris and Moran, who
  identified eight categories that form subsystems
  in any society (Phillip R. Harris and Robert T.
  Moran, managing cultural differences, gulf
  publishing, 1987).

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Harris Morans Eight Categories Forming the
Subsystems

• Kinship
• Family relationships, nuclear vs. Extended
• Education
• Formal informal
• Economy
• Means of production distribution in a society
• Politics - system of government in a society

• Religion
• Spiritual belief of a society
• Associations
• Formal informal associations
• Health
• Health care in a society
• Recreation
• Use of leisure time

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Hofstedes Cultural Framework

• In the early 1980s, management analyst Geert
  Hofstede conducted studies on the national
  cultures of 53 countries and regions to assess
  international differences in work-related values.
• He identified four different and independent
  criteria by which to categorize them
• Large or Small Power distance
• Individualism versus collectivism
• Strong or weak uncertainty avoidance
• Masculinity versus femininity.

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Power Distance Individualism

• The power distance (that is, the social distance
  between those in authoritative or leadership
  positions and those with no authority or
  decision-making responsibility) between leaders
  and followers and the amount of personal freedom
  allowed individuals in different societies affect
  the way relationships develop in organizations
  and how authority will be accepted.
• Managers need to adapt their leadership styles to
  Conform to the norms of the host environment.

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Power Distance Uncertainty Avoidance

• Uncertainty avoidance, is the extent to which
  people in a society feel threatened by ambiguous
  situations.
• People in strong uncertainty avoidance cultures
  tend not to be high-risk takers.

• Power distance, is the level of acceptance by a
  society of the unequal distribution of power in
  institutions.
• People in large power distance cultures accept
  and expect authoritative leadership.
• While people in small power distance cultures
  accept and expect participative leadership.

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Collectivism Masculinity

• Collectivism is a strong belief in group
  decisions.
• People from a collectivist country, like Japan,
  believe in the will of the group rather than that
  of the individual.

• Masculinity, refers to the degree of
  traditionally masculine values i.e.
• Assertiveness.
• Materialism, and.
• Lack of concern for others.

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• Three aspects of supervision that are likely to
  be influenced by cultural differences are
• 1. Motivation
• 2. Decision-making
• 3. Communication, including
• The ability to listen effectively
• Save this for the next chapter

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Motivation and Productivity

• Managers must understand the local work ethic
  if they are to understand what motivates
  employees.
• In America people tend to be job-oriented rather
  than company-oriented.
• Compared with say Japan, for instance, people are
  connected to their companies.
• Their attention and energies are concentrated on
  the companytheir personal life is their company
  life.

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• Competition as motivation. While individual
  initiative and competition in the workplace is
  greatly admired in western cultures, they are not
  always similarly admired in other cultures.
• Overt individual competitiveness is frowned upon
  in many Asian cultures, where cooperation is
  considered an art form.

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• In these cultures, overt competition in the
  workplace means everyone loses, because it
  creates winners and losers in an environment that
  prizes teamwork more highly than individual
  achievement.
• Managers can get performance only by effectively
  using personal influence and working through
  individual members of a group.

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• Working hours. Average working hours and holidays
  vary around the world.
• Japan has the highest average weekly hours of
  work (48) of any industrialized nation.
• The Netherlands had the highest number of annual
  leave days (36.5).
• The united states, with 12 days, has the lowest
  among all industrialized nations.
• Spain?

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• It is important for cross-cultural managers to
  understand the relative importance of money,
  time, social status, and holiday variables as
  motivators in each host country.
• It is also important to recognize that in some
  countries, individual company policy
  notwithstanding, working hours, annual eave, sick
  leave, and the like are regulated by laws and
  heavily influenced by prevailing business
  practices.

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• Incentive programs and rewards. Cultural
  sensitivity needs to be demonstrated when
  designing incentive and reward programs.
• What is appropriate and motivating in the united
  states and Spain may have different results in
  other countries or with other natives.

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• The American pay-for-performance system emanates
  from civil rights laws and efforts to be fair in
  setting compensation differentials.
• However, it can be extremely demanding of
  employees from cultures that are not accustomed
  to such thinking.
• Tying performance to rewards in some cultures
  would be comparable to parents implementing a
  system of feeding each family member in
  accordance with that members contribution to the
  family income.

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Decision-Making

• Decision-making and management are intertwined.
• Indeed, there is a school of thought that refers
  to management by decision, which means that the
  true manager is the one who makes decisions or
  more accurately, the one who makes exceptional
  decisions.
• Just as management is culturally influenced, so
  may decisions and the decisional process itself
  have a cultural bias.

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• U.S. Decision-Making. In the United States, the
  prevailing business practice is to encourage
  managers to assume personal responsibility for
  their operations top managers are compensated
  better than in any other country.
• This often results in limited worker
  participation in decision-making.

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• With direct accountability usually being an
  integral part of managerial responsibility,
  supervisors dictate decisions that are carried
  out by employees.
• Known as top-down decision-making, this style
  can optimize managerial performance and provide
  rapid and flexible decision-making, but it ties
  the companys success to the talents of a few key
  individuals.

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• Japanese Decision-Making. In Japan, a bottom-up
  approach to decisions is most common, and the
  principle of collective responsibility is
  employed. Senior management is likely to provide
  only broad guidelines to a department the
  department is then expected to get goals based on
  those guidelines and to design a strategy by
  which the goals can be attained.

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Decision-Making in Other Cultures.

• Expatriate managers on foreign assignments have
  often been amazed to find multi-level approval
  needed for the authorization of even routine
  decisions. In many places, companies are still
  very much run from the top office.
• Even where efforts have been made to delegate
  decision-making power, employees continue to seek
  the approval of superiors.

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• French, Italian, and German managers are inclined
  to believe that a tight rein of authority is
  needed to obtain adequate job performance and
  that there is more prestige in directing than in
  persuading.
• In South Asia and South America, those with
  authority believe employees want a strong manager
  who gives orders, and workers traditionally do
  not question the actions of their managers.

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• In Africa and the Arab countries, executives have
  strong traditions of consultation in
  decision-making.
• Senior members of the ruling families or the
  community are still sometimes consulted on
  matters of importance.
• The consultation method is used almost to the
  exclusion of joint decision-making or delegation.
  

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Performance Appraisals

• The use of performance appraisals implies that
  performance is important and that it can be
  measured or appraised objectively.
• Performance appraisals as they are used in the
  united states have a strong American bias.
• They also make use of goals or behavioral
  standards to be measured against targets in an
  annual review. There are a number of assumptions
  inherent in this system.

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• They involve a database that is measured
  objectively, recorded quantitatively, and kept
  permanently in an employees records.
• In Eastern cultures, the opposite belief
  prevailsmankind lives in harmony with the
  environment and destiny is preordained. Giving
  direct feedback also ignores the problem of
  saving face so crucial to many Eastern
  cultures, where
• confronting an employee with failure in an
  open, direct manner would be considered tasteless.

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• Among Turks and Arabs, employees tend to be
  evaluated in terms of their loyalty to superiors
  rather than their actual job performance.
• In Taiwan, Hong Kong, Singapore, and South Korea,
  performance appraisals aware also more
  relationship-oriented, stemming from Confucianist
  management practices.

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• The following two examples illustrate two
  non-Western approaches to performance appraisals
•  Taiwan. The most commonly used appraisal methods
  in Taiwan are rating scales, essays, and forced
  distribution.
• These methods are imbedded in a socio-cultural
  context characterized by collectivism and large
  power distance.

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• Each department in a Taiwanese company is viewed
  as a family within a larger clan system.
• The department head is viewed as the paternal
  figure in the family. Departmental or sibling
  rivalry is a subtle, yet powerful aspect of
  organizational life in Taiwan.
• Taiwanese bonuses tend to be based on
  non-performance criteria such as an employees
  need for extra cash to support a large family or
  to pay for unusual misfortunes.

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• Japan. In Japan, performance appraisal methods
  and standards are subjective. They also tend to
  appraise traits instead of achievements.
• There is more concern with judging a persons
  integrity, morality, loyalty, and cooperative
  spirit than his or her actual performance.

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Corrective Actions

• According to Western theories of management,
  employees are supposed to accept criticism as
  valuable feedback. Assuming that employees in
  other countries will similarly accept such
  criticism may be a mistake.
• To Arabs, Africans, Asians, and Latin Americans,
  preservation of dignity is an all-important
  value.

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• Public criticism is intolerable to the extent
  that employees may either unite an antagonism
  against the manager who criticizes or leave the
  job altogether.
• In a unionized work situation, there might be an
  employee grievance.
• Corrective actions abroad must be undertaken with
  an awareness of the prevailing practices and laws
  governing such actions.

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Discharge

• Discharging an employee can prove very difficult
  in a foreign country.
• The American practice of firing for just cause or
  laying off according to business conditions is
  perceived as brutal in almost every other
  country.

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• Workers in many countries are protected by strong
  labor laws and union rules.
• The hotel manager who is unaware of this, risks
  costly lawsuits and penalties as well as damage
  to the reputation of the hotel as a place to
  work.
• A Mexican labor law, for example, gives workers
  complete protection.

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• The employer who does not understand the
  consequence of taking away ones rice bowl
  (although the iron rice bowlor guaranteed
  employment policyis changing along with market
  economy reforms) may pay a high political price
  for the lesson.
• If there is an employee problem, the Chinese
  prefer education through criticism, that is,
  they want to make the worker see the error of his
  or her ways and, through criticism or persuasion,
  mend them.

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• Most labor laws throughout Europe also prohibit
  companies from laying-off in hard economic times.
  
• In Indonesia, people cannot be fired without a
  long process of government red tape. Labor
  letter,
• wall street journal, may 12, 1992, p. A1.

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• An employer must give three written warnings over
  a period of a year, specifying complaints with
  written copies distributed to labor officials.
• A manager must meet the employee to suggest
  changes in performance, and do it diplomatically.