Managing Across

Cultures
Theme 4
Learning Objectives
• Cultural differences and similarities
• Discuss important strategic guidelines for doing
business in a multicultural environment

2
Culture
• Acquired knowledge that people use to interpret
experience and generate social behavior
• Forms values
• Creates attitudes
• Influences behavior

3
Characteristics of Culture
• Learned
• Shared
• Transgenerational
• Symbolic
• Patterned
• Adaptive

4
Areas Affected by Culture
• Technology transfer
• Managerial attitudes
• Managerial ideology
• Business-government relations
• Human thinking and behavior

5
Priorities of Cultural Values
United States Japan Arab Countries
Freedom Belonging Family security

Independence Group harmony Family harmony

Self-reliance Collectiveness Parental guidance
Equality Age/seniority Age
Individuality Group consensus Authority
Competition Cooperation Compromise
Efficiency Quality Devotion
Time Patience Patience
Directness Indirectness Indirectness
Openness Go-between Hospitality
6
Cultural Impact on International
Management: Centralized versus
Decentralized Decision Making
• Centralized - Top managers make all important
organizational decisions
• Decentralized - Decisions are diffused throughout the
enterprise
• Middle- and lower-level managers actively participate in
and make key decisions

7
Cultural Impact on International
Management: Safety versus Risk
• Organizational decision makers are risk-averse and have
great difficulty with conditions of uncertainty in some
societies
• Some societies encourage risk taking and decision
making under uncertainty is common

8
Cultural Impact on International
Management: Individual versus Group
Rewards
• Individual rewards - Given to personnel who do
outstanding work in the form of bonuses and
commissions
• Group rewards - Required by cultural norms, and
individual rewards are frowned upon

9
Cultural Impact on International
Management: Informal versus Formal
Procedures
• Informal societies - Much is accomplished through
informal means
• Formal societies - Formal procedures are set forth and
followed rigidly

10
Cultural Impact on International
Management: High versus Low
Organizational Loyalty
• High loyalty - People identify very strongly with their
organization or employer
• Low loyalty - People identify with their occupational
group
• Such as engineer or mechanic

11
Cultural Impact on International
Management: Cooperation versus
Competition
• Some societies encourage cooperation between their
people
• Others societies encourage competition between their
people

12
Cultural Impact on International
Management: Short-term versus Long-
term Horizons
• Some cultures focus most heavily on short-term
horizons
• Such as short-range goals of profit and efficiency
• Some cultures are more interested in long-range goals
• Such as market share and technological developments

13
Cultural Impact on International
Management: Stability versus
Innovation
• Culture of some countries encourages stability and
resistance to change
• Culture of others puts high value on innovation and
change

14
Model of Culture

15
Comparing Cultures as
Overlapping Normal Distributions

16
Stereotyping from Cultural
Extremes

17
Values
• Basic convictions that people have about:
• Right and wrong
• Good and bad
• Important and unimportant
• Learned from the culture in which an individual is reared
• Differences in cultural values may result in varying
management practices

18
Hofstede’s Cultural
Dimensions
• Power distance
• Uncertainty avoidance
• Individualism and collectivism
• Masculinity and femininity
• Time orientation
• Indulgence versus restraint

19
Power Distance
• Extent to which less powerful members accept that
power is distributed unequally
• High-power-distance countries
• People blindly obey superiors
• Centralized with tall organizational structures
• Examples - Mexico, South Korea, and India
• Low-power-distance countries
• Decentralized with flatter organizational structures
• Have smaller ratio of supervisor to employee

20
Uncertainty Avoidance
• Extent to which people feel threatened by ambiguous
situations and have created beliefs and institutions that
try to avoid these
• High-uncertainty-avoidance countries
• High need for security and strong belief in experts and their
knowledge
• Highly structured organizational activities, more written rules,
and less managerial risk taking
• Low-uncertainty-avoidance countries
• Less structured organizational activities, fewer written rules,
more managerial risk taking, higher labor turnover, and more
ambitious employees

21
Individualism and
Collectivism
• Individualism: Tendency of people to look after
themselves and immediate family only
• Highly individualistic countries - Wealthier, support the
Protestant work ethic, have greater individual initiative, and
promote based on market value
• Collectivism: Tendency of people to belong to groups
and to look after each other in exchange for loyalty

22
Masculinity and Femininity
• Masculinity: Dominant social values are success,
money, and things
• Femininity: Dominant social values are caring for others
and quality of life

23
Time Orientation
• Defined as dealing with society’s search for virtue
• Long-term-oriented societies - Focus on the future and on
achieving long-term results, are able to adapt traditions
when conditions change, and tend to save and invest
• Short-term-oriented societies - Focus on quick results, do
not tend to save, believe in absolutes, and value stability
and leisure

24
Country Comparison

Source: Hofstede Insights (https://www.hofstede- 25

insights.com/country-comparison/)
Trompenaars’s Cultural
Dimensions
• Universalism versus particularism
• Individualism versus communitarianism
• Neutral versus emotional
• Specific versus diffuse
• Achievement versus ascription
• Time
• Environment

26
Universalism versus
Particularism
• Universalism: Belief that ideas and practices can be
applied everywhere without modification
• Countries with high universalism - Formal rules and close
adherence to business contracts
• U.S., UK, Germany, Sweden, and Australia
• Particularism: Belief that circumstances dictate how
ideas and practices should be applied
• Countries with high particularism - Legal contracts are
modified and the way deals are executed change as people
get to know each other
• China, Indonesia, and Venezuela

27
Individualism versus
Communitarianism
• Individualism - People regard themselves as
individuals
• Stress personal and individual matters and assume
personal responsibility
• Communitarianism: People regard themselves as part
of a group
• Value group-related issues, achieve in groups, and assume
joint responsibility

28
Neutral Culture versus
Emotional Culture
• Neutral: Emotions are held in check
• High-neutral cultures - People act stoically and maintain
composure
• Emotional: Emotions are expressed openly and
naturally
• High-emotional cultures - People smile a lot, talk loudly,
and greet each other with enthusiasm

29
Specific versus Diffuse
• Specific culture
• Large public space is shared with others and small private
space is guarded closely and shared with only close friends
• People are open and extroverted and have a strong
separation of work and personal life
• Diffuse culture
• Public and private spaces are similar in size
• Public space is guarded because entry into public space
affords entry into private space
• People are indirect and introverted and work and private life
are closely linked

30
Achievement versus
Ascription
• Achievement culture: People are accorded status
based on how well they perform their functions
• High status is given to high achievers
• Ascription culture: Status is attributed based on who or
what a person is
• Status is based on age, gender, or social connections

31
Time Orientation
• Sequential - Only one activity at a time, appointments
are kept strictly, and plans are followed as laid out
• Synchronous - Multitasking, appointments are
approximate and easily changed, and schedules are
subordinate to relationships
• Cultures can be past- or present-oriented or future-
oriented

32
Dealing with Environment
• Inner-directed - People believe in controlling outcomes
• Dominant attitude toward environment
• Outer-directed - People believe in letting things take
their own course
• Flexible attitude, characterized by a willingness to
compromise and maintain harmony with nature

33
GLOBE Project
• GLOBE - Global Leadership and Organizational
Behavior Effectiveness
• Extends and integrates previous analyses of cultural
attributes and variables
• Evaluates nine different cultural attributes using middle
managers from different organizations in many countries

34
Phases of GLOBE Project
• First two phases - Evaluate nine different cultural
attributes using middle managers from different
organizations in many countries
• Scholars surveyed managers in financial services, food
processing, and telecommunications industries
• Third phase - Examines the interactions of culture and
leadership in upper-level management positions

35
GLOBE's Cultural
Dimensions
• Uncertainty avoidance
• Power distance
• Collectivism I: Societal collectivism
• Collectivism II: In-group collectivism
• Gender egalitarianism
• Assertiveness
• Future, Performance, and Humane orientations

36
GLOBE Country Analysis
• Corresponds with those of Hofstede.
• Variations - Variable definitions and methodology
• GLOBE provides a current comprehensive overview of
general stereotypes that can be analyzed for greater
insight

37
Globe Analysis

38
Strategic Predispositions
Ethnocentric
• Firm allows values and interests of the parent company to
guide strategic decisions

Polycentric
• Company makes strategic decisions tailored to suit the
cultures of the countries where the MNC operates

Regiocentric
• Firm blends its own interests with those of its subsidiaries
on a regional basis

Geocentric
• Company integrates a global systems approach to decision
making
39
Orientation of an MNC under
Different Profiles

Source: From Balaji S. Chakravarthy and Howard V. Perlmutter, “Strategic Planning for a Global Business,” Columbia Journal of World
Business, Summer 1985, pp. 5–6.

40
Orientation of an MNC under
Different Profiles

Source: From Balaji S. Chakravarthy and Howard V. Perlmutter, “Strategic Planning for a Global Business,” Columbia Journal of
World Business, Summer 1985, pp. 5–6.

41
Orientation of an MNC under
Different Profiles

Source: From Balaji S. Chakravarthy and Howard V. Perlmutter, “Strategic Planning for a Global Business,” Columbia Journal of
World Business, Summer 1985, pp. 5–6.

42
Globalization Imperative
• Belief that one worldwide approach to doing business is
key to efficiency and effectiveness
• Effective multinational companies (MNCs) should make
efforts to address local needs
• Regional strategies can be used effectively to capture and
maintain worldwide market niches

43
Need for Unique Strategies for
Different Cultures
• Diversity of worldwide industry standards
• Continual demand by local customers for differentiated
and locally-sourced products
• Difficulty of managing global organizations
• Local units should be allowed to use their own abilities
and talents unconstrained by headquarters

44
Delivery of Marketing
Message
Nationality Nature of advertising
Germans • Factual and rational
• Spots feature a standard family of two parents, two
children, and grandmother

French • Avoidance of reasoning or logic

• Emotional, dramatic, and symbolic
• Spots are viewed as cultural events and reviewed as if
they were literature or films

British • Laughter is valued

• Typical broad, self-deprecating commercial mocks
both the advertiser and consumer

45
Challenges Faced by MNCs
• Staying abreast of local market conditions and not
assuming that all markets are same
• Knowing the strengths and weaknesses of its
subsidiaries and assisting them in addressing local
demands
• Giving more autonomy to the subsidiary

46
Barriers to Cross-Cultural
Management

Parochialism

• Tendency to view the world through one’s

own eyes and perspectives

Simplification

• Process of exhibiting the same orientation

toward different cultural groups
47
Six Basic Cultural Variations

Note: *Indicates the dominant U.S. orientation.

Source: Adapted from the work of Florence Rockwood Kluckhohn and Fred L. Stodtbeck.
48
Six Basic Cultural Variations

Note: *Indicates the dominant U.S. orientation.

Source: Adapted from the work of Florence Rockwood Kluckhohn and Fred L. Stodtbeck.
49
Cross-Cultural Similarities
• Russia and U.S.
• Traditional management, communication, human resources,
and networking activities
• Organizational behavior modification interventions

50
Cross-Cultural Similarities
• Korea and U.S.
• Organizational commitment relates to employees' position
in the hierarchy, tenure in their current position, and age
• Commitment increases with positive perceptions of
organizational climate

51
Cross-Cultural Differences
Examples Human resource management differences
Mexico • Concept of an hourly wage plays a minor role
Austria and Brazil • Employees with one year of service are
automatically given 30 days of paid vacation
Some jurisdictions • Legislated pay equity between male- and
in Canada female-intensive jobs
Japan • Compensation levels are determined by age,
length of service, and educational background
United Kingdom • Employees are allowed up to 40 weeks of
maternity leave, and employers must provide a
government-mandated amount of pay for 18 of
those weeks
Majority of large • Head of human resources is on the board of 52
Swedish directors
companies
Approaches for Formulating Effective
Compensation Strategies in Different
Clusters
Examples Strategies
Pacific Rim countries • Incentive plans should be group-based
Japan, Hong Kong, • High salaries should be paid to senior-
Malaysia, the Philippines, level managers
and Singapore
Italy and Belgium • Higher salaries should be paid to local
senior-level managers
Portugal and Greece • Profit-sharing plans are effective
Denmark, the Netherlands, • Personal-incentive plans are useful
and Germany
Great Britain, Ireland, and • Compensation plans should provide
the United States opportunity for earnings, recognition,
advancement, and challenge 53
Business in China
• Primary criterion - Technical competence
• Value is placed on punctuality, patience, guanxi
networking, and reciprocity
• Guanxi: Good connections

54
Business in Russia
• Building personal relationships with partners is
important
• Working with local consultants can be valuable
• Gift-giving is considered ethical when engaging in
business transactions

55
Business in France
• Social interactions are affected by class stereotypes
• French organizations tend to be highly centralized and
have rigid structures
• Management is autocratic in nature

56
Business in Brazil
• Brazilian businesspeople tend to have a relaxed work
ethic
• Face-to-face interaction is preferred
• Patience is key when managing business

57
Business in Arab Countries
• Arab businesspeople:
• Follow a fatalistic approach to time
• Tend to attach a great deal of importance to status and
rank
• Business-related discussions may not occur until the
third or fourth meeting

58
 ‘L’ORéAL MASTERS
MULTICULTURALISM’,
HAE-JUNG HONG AND DOZ, Y. (2013),
HARVARD BUSINESS REVIEW

59
Company Background
• Founded in 1909
• Since 2004: revenue has increased by half & net profit
almost doubled
• Offices in over 130 countries
• 2012: half of its sales from emerging markets ↑18,4 % in
Asia-Pacific region ↑17,6 % in Africa & Middle East
• World leader in skin care, make up & hair color

60
Brand Portfolio
• France - L'Oréal Paris, Garnier, Lancôme
• America - Maybelline, Kiehl's, SoftSheen-Carson
• Britain - The Body Shop
• Italy - Giorgio Armani
• Japan - Shu Uemura

61
Key Business Issue
• Global businesses Tensions between :
• Global integration Economies of scale & scope
• Local responsiveness Adaption of local preferences

• Product development and marketing:

• Consumer-products division most critical
• Product innovation of 20 % each year
• 3.5 % of revenues in R&D
• Internationalization of management team

62
Company initiatives
• International Talent
• Late 1990´s - began to hire executives from mixed cultural
backgrounds
• Developing a new product takes a year of knowledge
exchange
• Multicultural managers:
• International subsidiaries
• Other global companies
• Graduates
• Increasing multiculturalism in senior management

63
Benefits for company

64