International Management

By Prof.N.S.Nilakantan

International management 

The challenging role of international manager. · Globalization, disappearing boundaries. · Organisation culture and its implication for international business. · The design of International organizations · The manager as leader; the leadership role across cultures · Challenge of Multinational Work cultures, Groups & Teams.

International management 
³A

definition of international management must include an interpretation and µelaboration of the key terms international and management as well as of their interaction¶.´ ± Jean J. Boddewyn  The term µinternational¶ means ³crossing the borders and (applies) to processes intersected by national borders.

management 
Management

can be defined as the process aimed at accomplishing organizational objectives by (1) effectively coordinating the procurement, allocation, and utilization of the human, financial, intellectual, and physical resources of the organization and (2) maintaining the organisation in a state of satisfactory , dynamic equilibrium within the environment.

 First.  Second. financial. intellectual. and physical resources and to integrate them into a unified whole. an organization lives in a dynamic environment that constantly affects its operations.Role of a manager  The above definition of management has two basic premises. . the various environments have different dynamism. management is needed to coordinate the human.  To further complicate the manager¶s job.

have the ability to be radically changed through elections and revolutions. For example. evolve and converge over time. like the political environments. uniThis is due partly to the different rates of speed at which the various environmental factors are changing in the different countries and in part to the nature of the parameters themselves. some of the environmental factors. The financial environment especially when one considers foreign exchange rates is continuously in a state of change. Others. such as the distinct national cultures. .Role of an international manager      The multinational setting is more dynamic than the uni-national ( domestic) setting.

Importance of culture  We had earlier studied financial and political environments. .  Now let us take a look at the cultural environment.

Culture. Some cultural differences are easier to manage than others. . Culture is an obvious source of difference to the international manager.Organizational culture     Culture as a concept is very difficult to define. in this sense. and values are among the building blocks of culture¶. includes systems of values. Hofstede¶s definition is perhaps the best known: µ Culture is the collective programming of the mind which distinguishes the members of one human group from another«.

Individualism and collectivism are social patterns that define cultural syndromes.  Individualism and collectivism  Power distance  Uncertainty avoidance  Masculinity and femininity  Time orientation .Hofstede¶s study of cultures  Hofstede used five dimensions to explain differences in behaviors from one culture to another.

Collectivism may be defined as a social pattern that consists of closely linked individuals who see themselves as belonging to one or more groups and who are motivated by norms.Hofstede¶s Cultural Dimensions (contd. and obligations identified by these groups. . duties. and contracts. rights. needs.)   Individualism may be defined as a social pattern that consists of loosely-linked individuals looselywho view themselves as independent of groups and who are motivated by their own preferences.

.)   Power distance is the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally. Uncertainty avoidance is the extent to which the members of a culture feel threatened by uncertain or unknown situations or by ambiguity in a situation.Hofstede¶s Cultural Dimensions (contd.

tough. men are supposed to be assertive. and concerned with the quality of life).e. and concerned with quality of life). tender.)   Masculinity pertains to societies in which social gender roles are clearly distinct (i.Hofstede¶s Cultural Dimensions (contd..e. and focused on material success whereas women are supposed to be more modest. Femininity pertains to societies in which social gender roles overlap (i. both men and women are supposed to be modest.. . tender.

In some cultures. However. time is not considered to be limited and valuable. Societies place different emphasis on time.Hofstede¶s Cultural Dimensions  Hofstede¶s final dimension is time orientation. efficient use of time is emphasized. in other countries. but is an inexhaustible resource. .

Culture can also be thought of as having three other levels: The visible daily behaviour Values and social morals Basic cultural assumptions .Cultural differences         A culture must have these three characteristics: It is learned It is interrelated It is shared.

We learn our national culture very intensively in the early years of life.  He/she has also internalized values associated with various activities.  By the age of five.Culture is learned  Culture is acquired by people over time through their membership of a group that transmits culture from generation to generation. . a person is already an expert in using his/her language.

business and social status. . decides. Tenets of a culture extend to other members of the group.Culture is interrelated and shared    One part of the culture is deeply connected with another part such as religion and marriage. we will define culture as the learned ways in which a society understands. The cultural values are passed on to an individual by other members of the culture group. and communicates. For our purpose.

Analysis of cultural influences  One way to approach the analysis. . is to examine cultures by means of a high context/low context analysis.  The use of communication techniques varies in different cultures. Hall used this finding to make a generalized division between what he referred to as µlowµlowcontext cultures¶ and µ high ±context cultures¶.

In low context cultures information tends to be more explicitly stated. . In high context cultures information is embedded in the social situation and is implicitly understood by those involved in the situation.Hall¶s Framework    Context refers to cues and other information that are present in a given situation.

the social importance and knowledge of the person and the social setting add extra information. expecting that the receivers will accurately decode the words used to gain a good understanding of the intended message. Senders of messages encode their messages. . In such cultures. and will be perceived by the message receiver. HighHigh-context cultures use and interpret more of the elements surrounding the message to develop their understanding of the message.Analysis of cultural influences   LowLow-context cultures rely on spoken and written language for meaning.

The different layers of culture .

Contextual continuum of differing cultures .

. Networking ±using the power of other partners ± seems to play a far greater role for Arab buyers. highThe Japanese and Arabs have a complex way of communicating with people according to their socio demographic background. at one extreme we have the lowlow-context cultures of northern Europe. µ Falling in love¶ with the wrong agent may therefore spoil the exporter¶s chances of spending a long period of time in the market. In an analysis of industrial behaviour in Arab countries Solberg found that building trust with partners willing to endorse one¶s products take more time in Arab countries than is customary in the West. At the other extreme we have the high-context cultures. In Arab countries the position of the agent and his network with prominent families may be critical for success.Analysis of cultural influences       As can be seen from the figure.

. France.Sensuality and touch culture ±example of Drakkar Noir Saudi Arabia is the sixth biggest fragrance market in the world after the U. What is specifically Arabian in the campaigns is often dictated by Arabian morals. In the Saudi version. Saudi also has the highest per capita consumption of fragrance. and Italy. Japan.  In promoting perfumes the big importers generally use the same advertising materials used by marketers in Europe. the man¶s arm is clothed in a dark jacket sleeve and the woman is touching the man¶s hand only with her fingertip.  . Drakkar Noir has two versions of advertisements for the men¶s perfume in which Guy Larouche ( via the advertising agency Mirabelle) tones down the sensuality for the Arab version.  Normally Saudi Arabia is a high-touch culture but highinappropriate use of touch in advertising messages may cause problems.  The European ad shows a man¶s hand clutching the perfume bottle and a woman¶s hand seizing his bare forearm. Germany.S.

European ad ±left Saudi ad .right .

Design of international organization  Finding the organizational structure best suited to a company¶s global corporate strategy is a challenge for the international company¶s top management. and areas has created problems and tensions in the international transactions and management of international companies.  Companies usually modify the structures and make trade-offs among the various approaches tradewhile attempting to integrate their geographically far-flung operations. products. The imperative to coordinate the functions. far- .

Another challenge facing international managers is that.Design of international organization    This has led to the exploration of multimultidimensional structures as well as ways of enhancing the traditional hierarchies. The international matrix structure offers various advantages over the traditional structures. . after finding a suitable structure for a particular global strategy at a certain point in time they must keep modifying the structure to suit evolving company strategy.

but the word leadership seems to be relatively new. and other religious texts. generally. Descriptions of great leaders exist in culturally diverse books and manuscripts like Homer¶s Iliad. the Gita. no generally accepted definition of leadership exists. the Bible. leadership is defined as the process of influencing people and providing a work environment so that they can accomplish their group or organizational objectives.Leadership defined     Leadership has existed as a concept since the beginning of recorded history. . Despite 50 years of research on this topic.

Although individuals may feel that they are not leaders. . when they are able to get tasks accomplished using their influence. they are exercising leadership.Difference of a leader    The difference between a leader and other organizational roles is the degree of influence that leaders have over their followers. Effective leaders tend to exercise both substantial and subtle influence over their followers to perform actions that go beyond simple compliance with their job descriptions.

TraitTrait-based perspectives Behavioural perspectives Contingency perspectives Implicit perspectives Transformational perspectives .Perspectives on leadership  Through      research.. mainly in the U.S. five different perspectives have been identified.

 The trait-based perspective developed from the traitbelief that certain leadership competences or traits were natural to some and not to others.  .  The last of these traits. knowledge of selfthe business.TraitTrait-based perspectives If you take the examples of Louis Gerstner. Lee Iacocca and other such leaders. intelligence. and emotional intelligence are all necessary in different combinations for leadership.  Traits of self-confidence. emotional intelligence. it appears that these individuals possess several leadership traits or competencies. has only recently been studied and is considered as crucial for effectiveness.

. A number of cross. leaders high on both consideration and initiation of structure tended to achieve higher subordinate performance. The other cluster was called initiation of structure which focussed on behaviours that define and structure work roles.Behavioural perspectives       The behavioural perspective focuses on behaviours that make leaders effective. Various studies have identified two clusters of leadership . In general. One cluster was called consideration which reflected peoplepeople-oriented behaviours such as showing trust. respect and a concern for other¶ wellbeing.cultural studies have shown the crossimportance of these two dimensions.

The contingency model. developed by Fiedler. A leader¶s style is assessed by the Least Preferred Co-workers (LPC) scale. presented the idea that the nature of the situation moderates the relationship between the leader¶s style and group effectiveness.cultural studies have been crossconducted using this approach. .Contingency perspectives     The contingency perspective was developed to account for leadership effectiveness that did not follow the predictions of behavioural theories. and it reflects Cothe leader¶s ability to work with the least preferred co-workers in his or her group. coA number of cross.

is mixed. Research in Japan has not succeeded in finding support for this and support in Mexico. where selfself-monitoring was used as another leadership characteristic. Cultural differences may be a key situational characteristic which has many different dimensions.Cross ±cultural studies    Filipino managers who are more task-oriented taskwere better at creating high-performing groups highbut Chinese managers who were more relationship oriented were more effective in achieving goals. .

Implicit perspectives    These theories focus on the way subordinates perceive a leader. . Specific leader behaviours do not necessarily make a person a leader unless the followers perceive him or her as a leader. Followers develop prototypes or mental representations of leaders through their life experience and interactions with others.

This notion is supported across cultures.S. but more research needs to be undertaken to fully understand how charisma and cultural differences act together to produce effective leaders. Researchers have argued that charismatic leaders are more effective than non-charismatic leaders regardless of nonnational and cultural differences.Transformational perspectives Transformational leadership theories focus on the process of a leader using his or her charisma to inspire followers to go beyond their immediate self-interest for the good of the selfwork group and the organization.  Charisma is a special quality of inter-personal influence interthat some leaders possess and that enables their followers to develop respect and trust for the leader.  U.  .  This perspective has the best potential for being applicable in different countries and cultures.

Italy. . perspective is mostly concerned with managerial behaviours and tends to describe leaders as Autocratic versus democratic Participative versus directive TaskTask-versus relationship-oriented relationshipHigh on initiation of structure or consideration. Industry leaders in Mexico. India.S.Leadership across culture and borders        Some functions of leadership are similar across borders and cultures. and France are highly regarded for their social status and access to political power. Research on leadership from the U.

In fact.When is leadership needed      Research on leadership clearly tells us that no style of leadership works well in all cultures and nations. Let us look at some situations. In some task environments a work team may be entirely self-managing. Concern about the significance of leadership in managing organizations extends beyond the desire for improved profitability and higher levels of performance in the stock market. attempts to change selfthe directions of the group can be counterproductive in these cases. . Leaders are not always needed to enhance performance of work groups.

 However many situations in high-tech and highsymbol processing organizations( such as investment banks. universities. and research laboratories) are of such a nature that leaders¶ knowledge could be lower than the subordinates¶. .Leader in individualistic culture A leader in an individualistic culture is best seen as an individual who provides the task or relationship functions lacking in a group at a given point in time.

if not impossible. as well as organizationally specific culture and control systems. The way group leaders and followers relate to each other is largely determined by the patterns of communication and motivation ( including reward systems). . it is difficult. an effective leader is one who has all of the necessary attributes of task and group maintenance functions.Leader in collectivistic culture    In contrast. to find a wellwell-managed team in a collectivistic culture with high power distance. Since the principle of seniority and respect for organizational superiors is embedded in these contexts.

S. not only in the U. Surprisingly this technique has failed miserably. Egypt. but also in India. despite multiple attempts by many companies to benefit from it. . and Latin America.Quality circles    A number of studies show that group decision making reflected in the well-known Japanese welltechniques of quality circles ( a group of workers who discuss ideas about improving work processes when difficulties arise) is highly effective in East Asian cultures. Quality circles are effective in Japan because of the low level of influence that leaders exercise in improving work processes..

representing a majority of the world¶s population.  A global network of more than 170 management scholars and social scientists from 62 countries collaborated for the purpose of understanding cultural influences on leadership in organizations. using both quantitative and qualitative methods to collect data from over 18000 managers.GLOBE project on leadership  The largest study on leadership effectiveness is the Global Leadership and Organizational Effectiveness (GLOBE) research program done at Wharton. .

for example ± are accepted everywhere. egocentric. self. a good bargainer. and a team builder. encouraging. . Behaviours that are dependent on the cultural context include group orientation. an effective communicator. Negative behaviours that are universal include being uncooperative. and dictatorial.GLOBE project on leadership     The goal of the GLOBE project is to understand patterns of leadership that are universally accepted and those that are subject to the unique influences of the cultural contexts in which they operate. Findings show that specific leadership behaviour ± being trustworthy. and charisma.protectiveness. selfparticipative skills. ruthless. humaneness. autonomy.

Subordinateship ( attitude towards leaders) is a strong factor in determining the types of leaders that are likely to be effective in each situation. . In high power distance cultures. regardless of the educational level of the subordinate. and less powerful people take it for granted that they will be dependent on the more powerful. or a good father. the ideal boss is a benevolent autocrat.Subordinateship    We discussed in implicit perspectives of leadership that in order to understand the significance of leadership in different countries we must focus on the perceptions and attitudes that followers have about their leaders.

Those who have strong emotional dependence on their leaders and those who do not have any emotional dependence on their leaders. Hofstede notes that less powerful people are at one extreme or the other. .Hofstede¶s findings   In practice. The next slide shows the kind of subordinate behaviours found in three countries characterized in terms of three levels of power distance.

15-4: Subordinateship for Three Levels of Power Distance 15Small Power Distance Subordinates have weak dependence needs Superiors have weak dependence needs toward their superiors Subordinates expect superiors to consult them and may rebel or strike if superiors are not seen as staying within their legitimate role Ideal superior to most is a loyal democrat Laws and rules apply to all.Ex. but a certain level of privilege for superiors is considered normal Status symbols for superiors contribute moderately to their authority and will be accepted by their subordinates Ideal superior to most is a benevolent autocrat or paternalist Everybody expects superiors to enjoy privileges.) Subordinates have medium dependence needs Superiors have medium dependence needs toward their superiors Subordinates expect superiors to consult them but will accept autocratic behavior as well Large Power Distance Subordinates have strong dependence needs Superiors have strong dependence needs toward their superiors Subordinates expect superiors to act autocratically Ideal superior to most is a resourceful democrat Laws and rules apply to all.S. laws and rules differ for superiors and subordinates Status symbols are very important and contribute strongly to the superior¶s authority with the subordinates . and privileges for superiors are not considered acceptable Status symbols are frowned upon and will easily come under attack from subordinates Medium Power Distance (U.

as explained by Hall in his framework of cultural influences. . Describe the cultural difference as an important challenge to the international manager.Assignment     Define international management and explain the challenging role of an international manager. What are the five dimensions used by Hofstede to explain cultural differences? Explain the importance of context.

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