Because learning changes everything.

International
Management:
Culture, Strategy, and
Behavior

Part Two: The Role of

Culture

Chapter 5: Managing across Cultures

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 Chapter Objectives

The specific objectives of this chapter are:

1. EXAMINE the strategic dispositions that characterize

responses to different cultures.

2. DISCUSS cross-cultural differences and similarities.

3. REVIEW cultural differences in select countries and

regions, and note some of the important strategic
guidelines for doing business in each.

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 The World of International Management
Taking a Bite Out of Apple:
Corporate Culture and an Unlikely Chinese Start- up

1. Discuss similarities and differences across cultures regarding the

individual versus the collective approach for Apple and Xiaomi.
2. Discuss the differences in the approach to the supply chain and
manufacturing processes at Xiaomi and Apple.
3. Discuss the product focus at Apple and how it differs from that at
Xiaomi.
4. Discuss the results of cultural differences between Apple and Xiaomi
regarding intellectual property and the resulting legal conflicts for
each.
5. Analyze which strategy is working and why.

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 The Strategy for Managing Across Cultures

As MNCs become more transnational, their strategies must address the

cultural similarities and differences in their varied markets.
• Renault made strategic decisions that changed how it did business.
• Renault acquired interest in established foreign automakers.
• It integrated its sales organizations with those of Nissan in Europe,
creating a well-integrated, efficient sales force.
• Renault started producing Nissan models in its Brazilian plant to
expand its South American offerings by using current facilities.
• They strategically targeted developing international markets to
provide the most potential for future growth.
• In the first half of 2018, sales grew by nearly 10 percent, record-high
growth for the company.

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 Strategic Predispositions

Four distinct predispositions have been identified.

• Ethnocentric predisposition—the values

and interests of the parent company guide
strategic decisions.
• Polycentric predisposition—strategic Successful MNCs
decisions are tailored to suit the cultures of the use a mix of these
countries where the MNC operates. predispositions
based on the
• Regiocentric predisposition—the firm tries
demands of the
to blend its own interests with those of its
current
subsidiaries on a regional basis.
environment.
• Geocentric predisposition—the company
tries to integrate a global systems approach to
decision making.

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 Orientation of an MNC

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 Meeting the Challenge

Many MNCs are committed to a globalization imperative, a belief that

one worldwide approach is key to both efficiency and effectiveness.
• Yet, these factors seem to call for unique strategies.
• The diversity of worldwide industry standards.

• A continual demand by local customers for differentiated products.

• The importance of being an insider.

• The difficulty of managing global organizations.

• The need to allow subsidiaries to use their own abilities and talents and not
be restrained by headquarters.

MNCs find that regional strategies can be used effectively in capturing

and maintaining worldwide market niches.

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 Globalization versus Nation Responsiveness

The globalization versus national responsiveness challenge is even more

acute when marketing products that vary greatly in consumer use.
• The way in which the marketing message is delivered is important.
• Sometimes, the product and the message are similar worldwide.
The need to adjust global strategies for regional markets presents three
major challenges for most MNCs.
• The MNC must stay abreast of local market conditions and sidestep
the temptation to assume that all markets are basically the same.
• They must know the strengths and weaknesses of subsidiaries so it
can provide them with assistance in addressing local demands.
• The multinational must give the subsidiary more autonomy so that it
can respond to changes in local demands.

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 Globalization vs.
National Responsiveness

Advertising (for example)

French
• Avoid reasoning or logic
• Advertising predominantly emotional, dramatic, symbolic
• Spots viewed as cultural events – art for sake of money – and reviewed as if they were
literatures or films

British
• Value laughter above all else
• Typical broad, self-deprecating British commercial amuses by mocking both advertiser
and consumer

Germans
• Want factual and rational advertising
• Typical German spot features standard family of 2 parents, two children, and
grandmother

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 Globalization vs.
National Responsiveness

How to add value to marketing:

• you must be aware that your international audience will
frequently have different tastes, needs and customs
• Tailor advertising message to particular culture
• Stay abreast of local market conditions; don’t assume all
markets basically same
• Know strengths and weaknesses of MNC subsidiaries; provide
them assistance in addressing local demands
• Give subsidiary more autonomy; let it respond to changes in
local demand

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 Globalization vs.
National Responsiveness

How to add value to marketing:

• Your plan will need to address many other factors, such as:
– payment (international transactions and currency exchanges)
– paperwork (increased documentation),
– practices (different cultural, social and business styles)
– partnerships (strategic alliances to strengthen your market
presence)
– protection (increased risks relating to payment, intellectual
property or travel)

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 Cross-Cultural Differences and Similarities

Cultures can be similar or quite different across countries—the challenge

is to recognize and effectively manage the similarities and differences.

Parochialism is the tendency to view the world

through one’s own eyes and perspectives.
While there are
• A temptation for international managers. cultural differences,
Simplification is the process of exhibiting the there also are
same orientation toward different cultural groups. similarities—not
• This orientation reflects an individual’s culture. everything is totally
different.
Effective international managers understand the
culture in which they do business.

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 Cultural Variations

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 Similarities across Cultures

Some similarities across cultures have been uncovered by researchers.

A study done in the largest textile factory in Russia found the
following.
• Communication activity was a significant predictor of effective
performance in both Russia and the U.S.
Another study at the same Russian factory tested OB modification.
• What worked in the U.S., produced positive results in the Russian
factory.
Similarities from a study comparing Korean and U.S. workers.
• As organizational size increased, commitment declined.
• As structure became more employee-focused, commitment increased.
• Positive perceptions of organizational climate increased commitment.

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 Many Differences across Cultures
Understanding the HRM strategies
before managing in the industry
aids effective performance.
• HRM differences can be found in
wages, compensation, pay
equity, and maternity leave .
It is possible to link cultural clusters
and compensation strategies.
• In Pacific Rim countries, use
group-based incentive plans.
• In high-masculinity cultures, pay
high salaries to senior managers.
• In EU nations, compensation
strategies should be similar.
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In the U.K., Ireland, and the U.S.,
managers value individualism.
• Motivate—earnings, recognition,
advancement, and challenge.
Conventional wisdom about HRM
practices in certain countries are no
longer valid.
• Traditionally, Japanese
employees did not leave their
jobs for other firms.
• Job-hopping among Japanese
employees is becoming
increasingly common.
15
 Criteria used to evaluate personnel

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 International
Human Resource
Management:
a partially
completed
contingency
matrix

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Figure 5-2: GLOBE Analysis: Comparing Values in China, the
U.S., and Argentina

Examination of the GLOBE project has resulted in a breakdown of how

managers behave and how different cultures can yield managers with
similar perspectives in some realms, and diverge in other sectors.

Access the text alternative for this image.

© McGraw-Hill Education Source: Original graphic by Professor Jonathan Doh based on data from the GLOBE project research. 18
Using the GLOBE Project to Compare Managerial Differences

One interesting development is the increasing frequency of executives

from one part of the world assuming leadership roles in another.
• in 2018, NTT Data Services named its first non-Japanese executive
chairman of the board in the company’s history.
• At Nippon Sheet Glass, American Craig Naylor resigned suddenly in
2012 after just two years as CEO.
A study of multinational executives listed the following as key
characteristics successful MNC managers must have.
• Setting an example for junior employees.
• Learning to thrive in unstable environments.
• Learning about your business and the emerging markets environment.
• Through formal classes, mentoring, and direct experience.

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 Managing Culture in China

Despite China’s global presence, many MNCs still find that doing
business in China can be a long, grueling process.
• A key criterion for doing business in China is technical competence.
• The Chinese tend to value punctuality, so arrive on time.
• Keep in mind that patience is critically important.
• Another important dimension of Chinese culture is guanxi, which
means “good connections,” but resembles nepotism.
• The Chinese, as a collective society, pride themselves on being
members of a group.
• In negotiations, reciprocity is important.
• The transitioning economy has caused a shift in business culture,
affecting professionals’ private lives.

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 Managing Culture in Russia

By following certain guidelines, MNCs can begin to tap the potential

opportunities in Russia.
• Build personal relationships and hammer out contracts later.
• Use local consultants—expatriates may not be up to date, and often
not trusted by the local businesspeople.
• Consider business ethics—behavior in Europe and the U.S. is not
always the same as in Russia.
• Be careful about compromising or settling things too quickly.
• Russians today tend to be suspicious of anything conceded easily.
• Fix and reinforce the final agreements with a nice dinner and an
invitation to visit your country and see your facilities.

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 Managing Culture in India

In recent years, India has begun to attract the attention of large MNCs.

• Shaking hands with male business associates is almost always an

acceptable practice.
• A universal greeting, “Namaste,” means “greetings to you.”
• For Western businesspeople in India, light weight and light colored
business casual attire or, in formal attire if called for, is the norm.
• Indian businesspeople will wear local dress and foreign
businesspeople are not expected to dress like locals.
• Remember that Indians are very tolerant of outsiders and understand
that many are unfamiliar with local customs and procedures.
• There is no need for phony attempts to conform to Indian culture.

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 Managing Culture in France

Many in the United States believe that it is more difficult to get along with
the French than with other Europeans.
• French culture is markedly different from that in the United States.
• In France, social class and status are very important.
• Class stereotypes exist and most do not change their social status.
• In the workplace, many French people are not motivated by
competition or the desire to emulate fellow workers.
• No overtime, long vacations, yet known for high productivity.
• Most French organizations are highly centralized with rigid structures.
• In French companies, top managers have far more authority than their
U.S. counterparts, and they are less accountable for their actions.

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 Managing Culture in Brazil

Brazil is a Latin American country, but highlighted as some characteristics

make it markedly different compared to other Latin American countries.
• Brazilian businesspeople tend to have a relaxed work ethic.
• Respect inherited wealth and roots over entrepreneurial opportunities.
• View time in a very relaxed manner, punctuality is not a strong suit.
• People are good-natured and avoid confrontation, yet are risk seekers.
• In Brazil, physical contact is acceptable as a form of communication.
• They stand very close in conversation and touch the person’s back,
arm, or elbow—face-to-face interaction is preferred.
• Appearance is important, it reflects you and your company.
• Patience is key, but don’t let the slow atmosphere fool you—be
prepared.

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 Managing Culture in Arab Countries

Intense media attention to the Syrian Civil War, the Iraq War, terrorist
actions, and continuing conflicts in the Middle East have revealed to
everyone that Arab cultures are distinctly different from Anglo cultures.
• Arabs view time differently with no concern for missed meetings as
they believe they have no control over time in the first place.
• Arab culture generally holds that destiny depends more on the will of a
supreme being than on the behavior of individuals.
• Individual action is of little consequence.
• Social status is largely determined by family position and connections,
not necessarily by accomplishments.
• Initial meetings typically are used to get to know the other party.
• Arab business people tend to attach importance to status and rank.
• Pay deference to the senior person first.

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 Review and Discuss

1. Define the four basic predispositions MNCs have toward

their international operations.
2. In what way are parochialism and simplification barriers
to effective cross-cultural management? In each case,
give an example.
3. Many MNCs would like to do business overseas in the
same way that they do business domestically. Do
research findings show that any approaches that work
well in the U.S. also work well in other cultures?

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