Category Culture

Cultural Aspects in International Business

July 20, 2007 0 comments

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In today’s increasingly globalized business environment, it is not only efficiencies that companies have to be concerned with. Increasingly, measures of effectiveness are most important, dealing as they do with such behavioral aspects of organizations as innovation, sharing good practice and learning in a complex international system. It follows that, in considering international business processes, the human factor is a vital element of the system, for example, in negotiations, managing international workforces and managing in new international organizational forms.

“People are increasingly having to interact, negotiate and compromise with people from different cultures. The potential for management frustration, costly misunderstandings and even business failures increases significantly when dealing with people whose values, beliefs, customs and first language are different from your own. However, when understood and successfully managed, differences in culture can lead to innovative business practices and sustainable sources of competitive advantage.”

Lisa Hoecklin, 1994

These values, beliefs, customs and language all form part of national culture. Culture is therefore one of the fundamental areas of international business and we will meet aspects of culture in a number of settings throughout this course. As we have seen, international firms by definition have to operate in different cultures and this factor can add a good deal of complexity to the process of management, so much so that Peter Drucker has argued that the fundamental bases of management are insufficient in managing across borders.

International managers plan, direct, organize and control just like any other manager but the context in which they discharge their duties is much more complex than if they were managing purely domestic activities. For this reason, multinational management should be culturally sensitive in its business practices and should learn to bridge the cultural gap that exists between its methods of management and business and those of the host country. In making these adjustments, management must be aware that cultures vary and are learned, and that cultures influence behavior.

One shall meet a good many research issues related to culture -- issues which are often complex and detailed. It is necessary to develop an understanding of cultural effects in managing internationally putting one's emphasis on practical, applied issues.

You may have discovered the importance of culture through study. In International Marketing, cultural differences significantly affect marketing strategies, promotion, distribution channels and communications, for instance.

Posted by lisa
Categories: Business Entrepreneurship International Management Culture

Cultural Differences on Marketing Functions

July 20, 2007 0 comments

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Take a few minutes to pause and reflect on the potential impact of cultural differences on marketing functions. You might consider problems with advertising, communications and market research, for example.

If a firm is to succeed in local markets and/or produce goods in another country, it is necessary to know more about that country, its particular tastes and demands and, of course, how the workforce can be managed effectively. There is a rich litany of failure in this area, ranging from botched advertising campaigns, poor working relationships with colleagues overseas and failed negotiations. Thus the stakes are high and failure in these areas can be very expensive, not only in monetary terms but also threatening the standing of the company in particular markets.

Mismanagement of cultural differences can also cause frustration on the part of otherwise very capable managers, with the attendant threat to the firm that they may take their knowledge and expertise elsewhere. When successfully managed, cultural differences can be a potent competitive weapon as well as delivering increased profitability. Thinking about this competitive element reveals some obvious areas of contributory competences vis-a-vis competitors. If your organization can manage negotiations, international complexity and alliances more effectively than competitors, it may be more successful.

Why is this important in a business setting? Well, I do not think that anyone would argue that international products are not on the increase.

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Taking a blank sheet of paper and giving yourself about twenty minutes, note down the country of origin for (a) your clothes and (b) a selection of the contents of your flat or house. How many of these were produced (1) in your country by domestic firms (2) in your country by foreign owed firms and (c) imported? You should find that many products originate abroad or are produced in your country by foreign firms.

Does this matter and why?

In our daily lives, we take much of what represents our domestic culture for granted; after all, we live with it every day. It is so much part of that daily existence that people quite often find it very difficult to define their own culture, as we shall see later. It can be defined much more easily in a comparative way, by denoting differences between cultures. When we travel abroad, it is the cultural DIFFERENCES that we notice most. The differences that we do notice are quite often surface things - it is only when we get to know people more intimately that we begin to learn about the more deep-seated aspects of their culture. Surface differences are often presented in the form of stereotypes but true cultural understanding goes much deeper than this.

Many people consider cultural issues to be important only to businesses engaged in selling or manufacturing in foreign markets, i.e. an outward internationalization of the firm. However, this view is rather restrictive, as many organizations (and individual consumers) now purchase goods and services outside their home country (so-called inward internationalization). So even if your firm serves only your country’s market, there may still be a need to learn about other cultures, if only to manage negotiations on price and supply.

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Aim

This material is an introduction to critical issues related to culture and their practical application in a series of international business situations.

Outcomes

  1. Outline the main elements of culture and the effect of values, beliefs and attitudes on behavior among different people
  2. Contrast Hofstede's five dimensions of cultural differences and explain how cultural differences affect international management
  3. Evaluate the impact of cultural differences on selected elements of management behavior in multicultural environments
  4. Explain the impact of culture on negotiating processes and practices.
  5. Examine the cultural dimensions of various management activities involved when working abroad and in setting up and operating strategic alliances.

Posted by lisa
Categories: Business Entrepreneurship International Management Culture

A Broad View on Culture

July 20, 2007 0 comments

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As we have already inferred, culture is a complex concept, there being many views of culture and cultural differences. One method of portraying these is to classify the various schools of thought under three headings: convergent, divergent and universal.

Convergent.

This strand of debate concentrates on those aspects of culture that are becoming broadly similar around the world. Kenachi Ohmae, in his book ‘The Borderless World’ argues that, because of increase in the amount of information now generally available in developing countries, market demands are now becoming globalized and cultural differences are thereby diminished. For example, if one looks at youth culture, there has been a tendency to copy U.S. fashions. There is a general fashion to own electronic devices and kids’ toys are becoming increasingly international. (And, of course, hamburger and fried chicken joints are everywhere.)

Mead (1998) argues that the spread of information technology is having a convergent effect; this is in line with Levitt (1983) who surmised that markets were converging through the impact of technology on marketing practices. As goods become more generally available and the associated tastes of consumers change, this will impact on cultural dimensions.

Divergent

This school emphasizes the important differences between cultures. In some areas, there is evidence of specific measures to protect cultures from outside influence, thus crystallizing those differences. Since culture can be defined in terms of the ideas, beliefs and values that have shaped the lifestyle of an individual society, this experience becomes the source of solutions to many problems.

Although psychological needs are reasonably similar across boundaries, citizens have evolved their own range of solutions to problems which themselves become part of the cultural picture. Religion, moral codes and laws also project differences, such as that between Islamic and Christian cultures.

Universalist

This approach to culture utilizes certain cultural elements found in many, if not all, significant societies. For example, homicide is generally seen as an act of wrongdoing and there is a universal sense of the need for the training of children. Most societies have some sort of representation or symbol which denotes that society, be it a flag, a picture of the head of state or otherwise.

A truly universalist picture, while impossible, provides some insight into the basic similarities of deep–personal codes of practice throughout the world. It is perhaps the implementation of those deep issues which gives rise to the many cultural differences experienced in the business world.

One thing is certain: because an industrial routine works effectively in one country, there is no guarantee that it will work in another.

As some American firms have learned to their not insignificant cost, HRM routines are not wholly transferable between the U.S.A. and China, because Chinese people work together in different ways and so their work-related needs are very different from those of the average American citizen.

The following discussion is structured around a set of slides entitled as

"Cultural issues in International Management <http://lisaconsulting.com/culture4/>"_

Posted by lisa
Categories: International Management Culture

Understanding Culture

July 24, 2007 0 comments

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  • What is culture and where does it come from?
  • Culture at 3 levels of explicitness - artifacts, values, assumptions
  • Culture at 3 levels of organization - societal, organizational, individual
  • Some cultural differences
  • Do cultures change?
  • Explanation of why culture is important in International Management
  • Organizational culture

Culture exists at various levels, divided here into artefacts, values and assumptions. This is not the only method but is useful for our particular purposes. We will look quickly at culture at three levels of organization, taking into account the interface between national culture and organizational cultures. We will then move on to discuss cultural differences, the impact of change on culture and its effect on the management of international operations. Following a case study, we proceed to discuss some practical issues in selected areas of managerial activity.

Definition

The word ‘Culture’ comes from the Latin ‘cultura’, which is related to cult or worship and in turn is derived from the Latin word for farming =‘to cultivate’: “colere”.

In English, the word "culture" is used in a number of different ways; for example, we say a person is cultured if he or she possesses a wide appreciation of the intellectual things in life. We speak about culture in terms of classic paintings, plays and other art forms. The word "culture" is also used in science, particularly in biology and botany when we talk about culturing cells.

General issues of culture are defined by national and social characteristics. In this sense, culture is the acquired knowledge that human beings use to interpret experience and generate social behavior. This knowledge forms values, creates attitudes and influences behavior. Culture then defines a complex and inter-dependent whole, which consists of knowledge, belief, art, morals and other capabilities acquired by individuals as members of society.

Hofstede (1984) defines culture as the collective programming of the mind, which distinguishes the members of one human group from another; in this sense, values are among the building blocks of culture.

Definition

The collective programming of the mind which distinguishes the members of one human group from another....Culture, in this sense, includes systems of values; and values are among the building blocks of culture (Hofstede 1984)

Furthermore, it has been described in a general context as

‘everything that people have, think and do as a member of their society’ (Ferraro 1990).

Holt (1998) defines culture as

‘an anthropological concept that relates to a shared system of beliefs, attitudes, possessions, customs and values that define group behavior’.

Someone once counted the number of definitions of culture in the management literature and concluded that there were upwards of 345 different ones! We have to live, therefore, with several different perspectives but, as one study found, there are no universally agreed definitions – each one is unique (Copeland and Griggs 1997).

Our Own National Culture

Our own national culture is something we rather take for granted and this is quite natural. After all, we do not have to think about the way we behave every time we consider an action or an event. Consequently, it is quite difficult to describe one’s own culture for the benefit of strangers.

Take a blank sheet of paper and note down what you consider are the major elements of your national culture. At the beginning, this can be a very difficult task. But after learning some aspects of culture, this task will become easier and easier.
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Culture at 3 Levels of Explicitness

Some authors describe culture in terms of levels.

  • Artifacts

On the surface, that can be ‘sensed’ easily. Behaviors, appearances, etc.

  • Values

That people in the culture can recognize and/or articulate.

  • Assumptions

Hidden - ideas that are not/cannot be articulated, but provide the foundation for values and artifacts.

Artefacts are the surface demonstrations of culture, speech, forms of writing, dress, music, etc. and can change relatively easily over time. Values are basic assumptions about how things should be in society, convictions of what is right and wrong, good and bad. Assumptions deal with the deepest form of culture, usually not verbalized because it is assumed that everyone knows what to do. Understanding this aspect of national culture is the most difficult and even years of experience with another culture may not reveal all its dimensions.

Value Priorities Below is the outline between some value differences between USA, Japan and Arab Countries.

United States Japan Arab Countries
  1. Freedom
  1. Belonging
  1. Family Security
  1. Independence
  1. Group Harmony
  1. Family Harmony
  1. Self-Reliance
  1. Collectiveness
  1. Paternalism
  1. Equality
  1. Age/Seniority
  1. Age
  1. Individualism
  1. Group Consensus
  1. Authority
  1. Competition
  1. Cooperation
  1. Compromise
  1. Efficiency
  1. Quality
  1. Devotion
  1. Time
  1. Patience
  1. Patience
  1. Directness
  1. Indirectness
  1. Indirectness
  1. Openness
  1. Go-between
  1. Hospitality

Understanding these values is important because they fundamentally affect the way people behave; transgressing these value perceptions can lead to difficulties in business situations.

Value Differences and Similarities Across Cultures

Differences

U.S. managers value tactful acquisition of influence Japanese managers value deference to superiors Korean managers value forcefulness and aggressiveness Indian managers value no aggressive pursuit of objectives Australian managers value low-key approach with high concern for others

Similarities

Strong relationship between managerial success and personal values Value patterns predict managerial success Successful managers favor pragmatic, achievement-oriented values while less successful managers prefer static and passive values

Taking up the latter point reminds us that it is not only the differences which are important - we also need to consider areas of agreement as these, often provide a springboard for understanding the differences.

Write down what you see as the values of your own culture and any conflicts with those values which you have met in visiting or living in other countries.

Considering the similarities and differences in cultures you've selected, write down some situations in which these differences might affect a foreigner from one of the other societies, if he or she had to work in another of the countries mentioned.

In Conclusion

Values help insiders to determine how they should behave in society. For example, in terms of clothing, ladies in Arab countries are not allowed to reveal their ankles. One office furniture company found this out too late to prevent the modification of their furniture for the Arabian market, a costly mistake.

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We can examine culture at different levels of organization in the macro-business environment. Up until now, we have largely been discussing culture at the societal level but we can also consider organizational cultures and personal cultures.

Culture at Three Levels of Organization

  • National/Societal Culture

    Hofstede’s dimensions of “national” culture -- Power distance, Uncertainty Avoidance, Individualism-Collectivism, Masculinity-Femininity National subcultures (e.g., ethnicity, profession, gender)

  • Organizational Culture

    Artifacts, values & assumptions that distinguish one organization from others. Organizational subcultures (e.g., dept., function, profession)

  • Individual culture

    Thinking/behavioral tendencies resulting from socialization Individual subcultures (mindsets)

Business cultures are those that exist within a particular sector or line of business; for example, automobile traders possess aspects of culture which they share with others in that industry.

Occupational cultures are shared by people who carry out similar jobs, academics sharing a culture of research and teaching, for example, and civil engineers having professional links with others in the profession, no matter where they work.

As you can see, culture is shared with others. Furthermore, people learn about their own culture (and others) all through their lives and act within the boundaries of this learned culture. It is learned through the education system, laws, family influence, etc. We are also becoming more aware that people around the world act and behave differently, the increasing level of information that we are all experiencing fostering this awareness. Yet it is true that many people have relatively little knowledge of the deeper processes that underpin local cultures and we will discuss the effect of this factor later.

Culture & Behavior

How does culture arise, and how is it manifested?

Comes from human interactions with the environment and each other.

We develop practices that increase the probability of survival &/or increase satisfactions.

Practices are shared between people having common time, space & language, then transmitted across time periods and generations

Thus Ecology to Culture to Socialization to Personality to Behavior

We have mentioned the interactive nature of culture and its embeddedness in people. Among other factors is the ‘survival’ nature of culture, which we can often see manifest in primitive areas of the world but which still exists in developed cultures, if only rarely identified. In times of war, for instance, the survival and resilience dimensions of culture become more prominent.

Posted by lisa
Categories: International Management Culture

Nature of Culture

July 25, 2007 0 comments

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The nature of culture can be divided into six main areas for discussion purposes:

  1. Culture is learned.

Most writers concentrate on culture as a socialization process; that is, it is not a physiological entity. This is generally true, although one could argue that there are certain human physiological factors that contribute to cultural issues, such as skin color, facial differences and stature, but generally we concentrate on the learning aspect of culture. Take a very young baby from one culture to another and by the time adulthood is gained, little if anything would remain of the initial culture.

  1. Culture is shared.

For culture to become a phenomenological entity, there has to be interaction and since cultural values, beliefs, etc. belong to a certain group, they are shared within that particular community.

  1. Culture is trans-generational.

Cultural values are handed down from generation to generation and are therefore cumulative. Parents educate and bring up their children to ideas and values that they find important in the main. In some societies, this bringing up of children is strongly controlled and variation from previously defined standards of behavior is met with significant levels of punishment. In others, changes in ideas are more liberally treated and, frequently, trends revert to previously held values over the long term.

  1. Culture is symbolic.

Culture is based on the human capacity to symbolise. A certain number of symbols can represent a particular culture, even a comparatively primitive one. National flags, national anthems, photographs or effigies of heads of state and national dress or even animals are all examples of cultural symbols. If one wishes to show displeasure against a nation or culture, that displeasure may be made more representational by burning the flag or a picture of the president and so on. Symbols may include values or ideas, capabilities or acts, things or possessions. These symbols are idiosyncratic to the group or individual and are usually easily identifiable.

  1. Culture is patterned.

Culture is patterned because it consists of tangible and intangible components, in which change in one may cause change in another, i.e. it is structured and integrated. This interdependence of cultural components is of fundamental importance, as cultural change necessarily affects more than one component and therefore change is more difficult to sustain.

  1. Cultures are adaptive.

Cultures change over time but only slowly, as fads and fashions come and go, and some aspects are wedded to the culture and others rejected. However, over the long term, there seem to be modifying influences that prevent continuous large-scale changes in society. When change does come, it is the artefacts of culture which change easily and may be cyclic in nature; it takes more fundamental change to affect values and assumptions.

Select a culture (your own or another) and examine each of the above elements in the context of that culture. For example, what are the important symbols, what has changed in the culture and how has this change affected other elements of that culture?

Comparing cultures

When we wish to compare cultures, there are several dimensions that can be used.

Assessing Cultural Factors

  • Language
  • Religion
  • Education
  • Social Systems
  • Level of Development
  • Behavior

Educational differences may be manifest in the structure and length of compulsory education (if it exists) together with the format of education (whether formal or informal).

Social systems include the structure of society, family and neighborhood structures, organization of social support and charity work, social and pressure groups and so on.

The level of development must be considered, i.e. whether the society is developed or less so, and finally aspects of the behavior of members of that culture, both verbal and non-verbal in nature.

Selecting two countries with which you are familiar, outline the major differences between them, using the criteria above.

Posted by lisa
Categories: International Management Culture

CAVEATS AND CAUTIONS

July 25, 2007 0 comments

"Stereotyping <http://en.wikipedia.org/wiki/Stereotyping>"_

"Ethnocentrism <http://en.wikipedia.org/wiki/Ethnocentrism>"_

"Cultural relativism <http://en.wikipedia.org/wiki/Cultural_relativism>"_

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We note that there is a great danger of generalizing too much when we discuss cultures. We know that in many cultures there exist sub-cultures which, although sharing much of the identity of the main culture, evolve important differences shared only by that sub-culture. Also, whilst we are all members of cultures and may therefore identify with the main dimensions, we are all individuals and interpret societal issues in our own way.

It is only too easy to stereotype all people within a culture to certain types of behavior (most stereotyping occurs at the artefact level). So we may represent the French as smelling of garlic or English football fans as always misbehaving. Stereotyping is easy - that is why people and elements of the press often do it - and it essentially misrepresents the truth because other cultural dimensions are also important.

Another problem found in some cultures is that of ethnocentrism: considering that one’s own culture is best and that other people should adapt to elements of it. Colonial powers tend to be ethnocentric when dealing with subject nations and, arguably, we see elements of this today when nations try to influence the political thinking and activities of other societies.

Thirdly, we have to be careful, when comparing cultures, that we are not just comparing artefacts but also looking at the deeper elements of society. It has been argued that this is where fundamental differences exist and where understanding is most difficult.

Note any instances of stereotyping or ethnocentrism that you have experienced or observed recently. How does this compare with your developing knowledge of culture and the reasons for cultural differences?

Quite often, then, we work with stereotypes rather than deep knowledge; that is, we represent cultures at a simplistic level of behavior that somehow symbolizes that culture. This is not only a trait displayed by individual people. Governments, political groups and other organizations often resort to stereotyping to increase the impact of their message. An example of this is evident in times of war or political unrest.

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Categories: International Management Culture

Theoretical Approaches to Culture

July 26, 2007 0 comments

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In order to understand national culture and its impact on business, we need some theoretical work upon which to base our discussions. You will find that, over the years, theoretical ideas have been refined as the sophistication and direction of research has evolved.

Theoretical Work

  • Kluckhohn and Stodtbeck (1961) - Cultural Orientations
  • Hall (1976) - Cultural Contexts
  • Laurent (1983), Adler, Campbell and Laurent (1989) - Culture, Status and Function
  • Hofstede (1980, 1984, 1991), Sondergaard (1994) - Culture and the Workplace
  • Trompenaars (1993) - The Business Consultant’s Perspective

We begin with some early research (though not the earliest cultural research) and you can see that elements of this are still evident in the latest approaches to explanations of culture.

Cultural Orientations (Kluckhohn and Stodtbeck, 1961)

Six basic orientations -

  • What is the nature of people?
  • What is the person’s relationship to nature?
  • What is the person’s relationship to other people?
  • What is the modality of human activity?
  • What is the temporal focus of human activity?
  • What is the conception of space?

The dimensions of this piece of anthropological research are reflected in later work. They identify six basic orientations as shown on the slide.

The temporal focus of human activity is related to the concept of time. How time is perceived is relevant to aspects of behavior such as punctuality and the use of time.

"Time is money”, as Henry Ford once said, is a particular perception of time.

The conception of space is relevant to the design of collective areas and also to the distance between people in conversation, something that is very culture-specific. We can readily see that this work, although of a non-business nature, has wide implications for human behavior, particularly in the world of business.

High and Low Context (Hall, 1976)

Defining Feature:

Extent to which behavioral cues are made explicit (e.g., through conversation, written documents), or are inherent in the situation.

Implications for Relationships, work settings

Hall developed a two-dimensional measure, which, although not sufficient in itself, provides an interesting insight into the explicitness or otherwise of societal behavior.

Essentially, Hall argues that some societies deal with societal rules implicitly, i.e. discussion and written documents do not make cultural rules explicit, compared with societies where the rules and regulations are carefully portrayed in interactions.

Hall suggests that, in order to analyze the behavioral characteristics of a group, one must understand the context in which they exist and how members of the group react to that context.

He classifies cultures into two groups: high context and low context. Some of the main characteristics are shown below.

Characteristic Low Context High Context
Relationship Long lasting Shorter period
Communications Shared code,non-verbal Messages,verbal
Authority Personally responsible Diffused
Agreement Informal,spoken Formal,written
Insiders and outsiders Distinguished Less distinguished
Cultural pattern Ingrained Adapt change faster
Using the characteristics above, examine your own domestic culture and suggest whether it displays a low or high context.

Hall’s work does not allow for the ranking of countries or for any scale of measurement, so it is of limited value. However, the work does have value in identifying those cultures which are more formal and rule-driven than less formal cultures.

Culture, Status and Function

  • Laurent (1983),
  • Adler, Campbell and Laurent (1989)
  • Laurent - Europe and USA
  • Adler et al - PRC, Indonesia and Japan

Two associated research programs come next: Laurent (1983) and Adler, Campbell and Laurent (1989). The earlier work was carried out in Europe and the USA and was extended in the latter work to SE Asia. Essentially, the researchers were considering status and function within business in different countries. They chose four quite broad areas: perception of the organization as a political system, systems of authority, how roles were formulated and the type of hierarchal systems.

Laurent, Adler et al - By-passing the hierarchy

In order to have efficient work relationships, it is often necessary to by-pass the hierarchical line

Disagree

Country %
Sweden 22%
UK 31%
USA 32%
Denmark 37%
Germany 46%
Italy 75%
PRC 66%

Laurent, Adler et al. The manager as expert or the manager as facilitator

It is important for a manager to have at hand precise answers to most of the questions that subordinates may raise about their work.

Agree

Country %
Sweden 10%
USA 18%
UK 27%
France 53%
Italy 66%
Indonesia 73%
PRC 74%
Japan 78%

Bypassing the hierarchical line to get things done would be found acceptable in countries like Sweden and the UK but not so in Italy or Japan. In those countries, things would have to be played ‘by the book’ - the hierarchical format for taking decisions would have to be followed, no matter what the situation.

The second point is particularly important - to what extent a manager is expected to have the answers to all staff queries. In Sweden, the USA and the UK, we as managers are not expected to know all the answers (perhaps only what is required to help with accessing the required information). In Japan and Indonesia, managers are assumed to be expert and thus able to provide immediate response to all staff queries.

It is readily apparent that, if a Swede is to work in a Japanese organization, a change of management approach may be needed; otherwise he or she may lose status in the eyes of staff members. On the other hand, a Chinese manager working in Europe may have to change to a more participative style of management.

If you have work experience, consider the questions above and relate them to your own experience. Do you agree, for instance, that the manager should always be able to answer subordinates’ questions immediately?

Hofstede, 1980, 1984, 1991

We now move to the two most important sets of studies into culture and organizations, the work of Hofstede and Trompenaars (both Dutchmen incidentally)

Hofstede carried out his research in the late 1970s and early 1980s. Initially, he made two questionnaire surveys within a single organization (IBM ), involving over 116,000 managers in 72 different countries. According to this research, Hofstede suggests that the way people in different countries perceive and interpret their organizational world varies along four dimensions: power distance, uncertainty avoidance, individualism versus collectivism and masculinity versus femininity.

Specifically, he argues the following:

  • work-related values are not universal
  • underlying values persist when a multi-national company tries to impose the same
  • norms on all its foreign interests
  • local values determine how Headquarters regulations are interpreted
  • by implication, a Multinational Corporation (MNC) that insists on uniformity across its interests is in danger of creating morale problems and inefficiencies
  1. Work-related values are not universal. In some countries, there exists a balance between work and home life that emphasizes the quality of life. In others, work is an economic necessity and everyone works, quite often for long hours. In some societies, work is given a religious meaning, the Protestant work ethic, for instance. People perceive the role of work differently between cultures and have implications for the way people are managed and motivated. In the UK, for instance, there have been several studies which suggest that people look for self-fulfillment through their work and that "money isn’t everything".
  2. Underlying values persist when a multi-national company tries to impose the same norms on all its foreign interests. That is to say, local values persist even when work instructions seem to conflict with them. Many companies have found to their cost that export of systems from headquarters to subsidiaries has not been successful because local interests prevailed.
  3. Local values determine how headquarters instructions are interpreted. Even in the most rule-oriented organization, instructions need to be interpreted by people. What Hofstede says is that local conditions will necessarily affect that interpretation.
  4. By implication, a multi-national company that insists on uniformity across its interests is in danger of creating morale problems and inefficiencies. Any conflict between headquarters rules and regulations and the local culture can lead to problems within the organization and consequent loss of efficiency. In extreme situations, management may find it very difficult to function effectively because of problems associated with headquarter needs.

Hofstede’s four dimensions of culture

Hofstede originally evolved four dimensions of behaviour: power distance, uncertainty avoidance, individualism and collectivism and masculinity versus femininity (slide 22). Later on, in association with Michael Bond, he evolved a fifth dimension: Confucian Dynamism. We will now set out these dimensions in more detail and assess their application in management situations.

  • Power Distance - the distance between individuals at different levels of the hierarchy
  • Uncertainty Avoidance - more or less the need to avoid uncertainty about the future
  • Individualism v Collectivism - the relationship between individuals and others
  • Masculinity v Femininity - the division of roles in society
  • Plus
  • Confucian Dynamism (Hofstede and Bond 1988)

Power distance

The extent to which less powerful members of institutions accept that power is distributed unequally

Large (Mexico, South Korea, India) + blindly obey order of superiors + hierarchical organizational structure

Small (U.S., Denmark, Canada) + decentralized decision making + flat organizational structures

HIGH POWER DISTANCE - NORMS, VALUES, AND BELIEFS

  • Inequality is good
  • Everyone has a place
  • People should depend on a leader
  • The powerful are entitled to privileges
  • The powerful should not hide their power

This refers to the degree of inequality between people and the readiness with which this inequality is expected in social situations. The lower the power distance, the more individuals will expect to participate in organizational decision making processes. It is likely that managers and subordinates will mix easily both in formal situations and in more informal gatherings. Outside the firm, people at various levels would mix relatively freely. In larger power distance situations, people expect instructions instead of participation - there is more dependency on direction and discretion in making decisions is not permitted. Managers would not mix socially with subordinates and would not expect any interaction with junior staff. Countries which exhibit high power distance ratings are China, Japan and Indonesia, with Denmark and other Scandinavian countries at the low power distance end of the scale.

Individualism/Collectivism

Individualism

The tendency of people to look after themselves and their immediate family only

  • strong work ethic
  • promotions based on merit
  • U.S., Canada, Australia

Collectivism

The tendency of people to belong to groups and to look after each other in exchange for loyalty

  • weaker work ethic
  • promotions based on seniority
  • China, South American cultures

Four Defining Features

  • Independent vs. interdependent self
  • Individual vs. group goals
  • Norm- vs. contract-driven behavior
  • Rationality vs. relatedness

Implications for…

  • Professional Behavior
  • Conflict resolution
  • Motivation
  • Ethics
  • Responsibility

Individualism is the tendency for people to look after themselves and their immediate family only, although in extreme cases, the individual element is driven for that person only. On the other hand, collectivism is the tendency of people to belong to groups or collectives and to look after each other in exchange for loyalty. Individual needs are then subservient to the goals of the group as a whole. The UK, Australia and Canada show high scores for individualism while Japan, Brazil, Chile and Columbia exhibit comparatively low readings. There are several implications here for managerial processes connected with motivation, responsibility and ethics.

Masculinity/Femininity

Masculinity (Vs. Femininity)

  • the dominant values in society are success, money and things
  • emphasis on earning and recognition
  • high stress workplace
  • Japan

Femininity

  • the dominant values in society are caring for others and the quality of life
  • employment security
  • employee freedom
  • Scandinavian cultures

MASCULINITY - NORMS, VALUES, AND BELIEFS

  • Clear definitions of gender roles
  • Men are assertive and dominant
  • Support for Machismo
  • Men should be decisive
  • Work is priority
  • Growth, success, and money are important

This factor relates to the degree to which ‘masculine’ values, such as achievement, performance, success, money and competition prevail over feminine values such as the quality of life, maintaining warm personal relationships, the idea of service, care for the weak and solidarity. Masculine cultures exhibit separate roles for women and men. The more feminine cultures tend to express a desire for a high quality of life and the environment over materialistic ends. The USA and Italy are at the high end of the masculine scale, whereas Denmark and Sweden are positioned at the feminine end of the scale. Differences in masculinity scores are also reflected in the types of career opportunity available in organizations and consequent job mobility.

Uncertainty Avoidance

Uncertainty Avoidance (High or Low)

The extent to which people feel threatened by ambiguous situations

High( Germany, Japan, Spain)

  • high need for security
  • strong beliefs in experts

Low (Denmark, UK)

  • willing to accept risks
  • less structuring of activities

UNCERTAINTY AVOIDANCE - NORMS, VALUES, AND BELIEFS

  • Avoid conflict
  • Low tolerance of deviant people and ideas
  • Respect for laws and rules
  • Experts and authorities are usually correct
  • Consensus is important

Uncertainty Avoidance concerns the degree to which people prefer rules, with fixed patterns of life and formal structures governing behavior. Risk taking is not a comfortable process and people prefer to have the maximum amount of relevant information before deciding on a plan of action. There is an expectation that rules and regulations will be followed closely, with a low tolerance for deviancy of action or ideas. In low uncertainty avoidance countries, people are happy to face the future with less formal rules and to interpret rules to fit the situation. Risk-taking is part of everyday life and following a hunch is as good as formal long-term planning. Control systems tend to be less detailed in low uncertainty avoidance areas. The USA and Canada show lower uncertainty avoidance while Japan, Greece and Portugal display relatively high levels.

Briefly describe the four dimensions in your own words. Think about your own work experiences and identify those processes which may be related to one or more of these dimensions. For example, are the payment systems based on individual effort or group achievement?

Confucian Dynamism

  1. Integration

Noncompetitiveness, trustworthiness, filial piety (obeying parents, honoring ancestors), patriotism

  1. Work Dynamism

Thrift, persistence, sense of shame, respect for tradition, protecting your “face”

  1. Human-Heartedness

Kindness, patience, courtesy, sense of righteousness

  1. Moral Discipline

Moderation, being disinterested & pure, having few desires

Implications for... Economic Growth

With the recent rise of China and other SE Asian economies, it became obvious that the four dimensions would not be adequate. Perhaps a strong point of Hofstede is that his work is evolving over time and this is a good example of a theory being extended to fit changing patterns of organizational life. Together with Michael Bond, Hofstede developed the idea of Confucian Dynamism.

This is a complex dimension, for westerners at least, since Confucianism is in itself complex. Essentially, Hofstede and Bond have identified some highly important and relatively important characteristics, which are listed below:

Highly important

  • Persistence and perseverance
  • Ordering relationships by status and observing that order
  • Thrift
  • Self-effacing attitudes

Relatively important

  • Personal sturdiness and stability
  • Issues of ‘face’
  • Respect for tradition
  • Reciprocation of greetings, favors and gifts

Although some of my Chinese colleagues consider that these characteristics are changing as China develops economically, especially a growing tendency towards individualism, they can be seen in action in many Chinese-foreign interactions. The formal rules are important, not only in everyday situations but also in negotiations.

HOFSTEDE’S VALUE DIMENSIONS BY COUNTRIES

Anglo cultures (US, GB, Australia)

  • High on individualism and masculinity, low on power distance and uncertainty avoidance

Latin European

  • High uncertainty avoidance

Nordic

  • Low masculinity

Far Eastern

  • high power distance, low individualism

The four dimensions are summarized by area; in fact, Hofstede’s results present certain clusters of countries which display similar characteristics. Nordic countries tend to be feminine, whereas the US and the UK tend to be more masculine.

Posted by lisa
Categories: International Management Culture

Managerial Issues

July 27, 2007 0 comments

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The following five tables match selected managerial processes to each of the four original dimensions and to short term versus long term orientation. The processes are Human Resource Management (selection, training, promotion and remuneration), leadership styles, motivational assumptions, decision making/organizational design and strategy issues. It is useful for us to take each process in turn and observe the differences between high and low examples of each. If we take training as an example, we note that in low power distance countries, a major criterion is for autonomy, i.e. the manager can take a decision on his own responsibility, whereas in high power distance countries, training emphasizes conformity. With regard to individualism, training in high individualism countries will be generally geared to meeting individual achievement, whereas in low individualism countries, training is more directed towards company-based skills.

MANAGEMENT PROCESSES LOW POWER DISTANCE HIGH POWER DISTANCE
Human Resources Management    
Management Selection Educational achievement Social Class Elite Education
Training For autonomy For conformity/obedience
Evaluations/Promotion Performance Compliance;trustworthiness
Remuneration Small wage differences between management & worker Large wage differences
Leadership Styles Participative; theory Y Authoritarian Close Supervision
Motivational Assumptions People like work; extrinsic/intrinsic rewards Assume people dislike work; Coercion
Decision Making/ Decentralized, flat pyramids; Tall pyramids;
Organizational Design Small proportion of supervisors Large proportion of supervisors
Strategy Issues Varied Crafted to support the power elite or government

Comparing Management Process -- High and Low Uncertainty Avoidance

MANAGEMENT PROCESSES High U. Avoidance Low U. Avoidance
HR Management    
Management Selection Seniority; expected loyalty Past job performance; education
Training Specialized Training to adapt
Evaluations/Promotion Seniority; Expertise; Loyalty Objective individual performance data; job switching for promotions
Remuneration Based on seniority or expertise Based on performance
Leadership Styles Task oriented Non-directive; flexible person-oriented;
Motivational Assumptions People seek security; avoid competition People self motivated competitive
Decision Making/ Larger organizations; Smaller organizations
Organizational Design Tall hierarchy; Formalized; many standardized procedures Flat hierarchy; Less formalized with fewer written rules/ standardized procedures
Strategy Issues Risk adverse Risk taking

Comparing MANAGEMENT PROCESSES -- LOW and HIGH POWER DISTANCE

MANAGEMENT PROCESSES LOW POWER DISTANCE HIGH POWER DISTANCE
HR Management    
Management Selection Educational achievement Social Class; Elite Education
Training For autonomy For conformity/obedience
Evaluations/Promotion Performance Compliance;trustworthiness
Remuneration Small wage differences between management and worker Large wage differences
Leadership Styles Participative; theory Y Authoritarian; Close Supervision
Motivational Assumptions People like work; extrinsic/intrinsic rewards Assume people dislike work; Coercion
Decision Making/ Decentralized, Flat pyramids; Tall pyramids;
Organizational Design Small proportion of supervisors Large proportion of supervisors
Strategy Issues Varied Crafted to support the power elite or government

Comparing Management Process -- HIGH and LOW INDIVIDUALISM

MANAGEMENT PROCESSES LOW INDIVIDUALISM HIGH INDIVIDUALISM
HR Management    
Management Selection Group membership; school or university Universalistic based on individual traits
Training Focus on company based skills General skills for individual achievement
Evaluations/Promotion Slow with group; seniority Based on individual performance
Remuneration Based on group membership/org paternalism Extrinsic rewards (money, promotion) based on market value
Leadership Styles Appeals to duty and commitment Individual rewards and punishments based on performance
Motivational Assumptions Moral involvement Calculative; Individual cost/benefit
Decision Making Group; slow; Individual responsibility;
Organizational Design Larger organizations Smaller organizations

Comparing Management Process -- HIGH and LOW MASCULINITY

MANAGEMENT PROCESSES LOW MASCULINITY HIGH MASCULINITY
HR Management    
Management Selection Independent of gender, school ties less important; androgyny Jobs gender identified; School performance and ties important
Training Job-Oriented Career oriented
Evaluations/Promotion Job performance with less gender role assignments Continues gender tracking
Remuneration Less salary differences between levels; more time off More salary preferred to less hours
Leadership Styles More theory Y; More theory X;
Motivational Assumptions Emphasis on quality of life, time off, vacations; work not central Emphasis on growth and performance excelling to be best work central to life job recognition important
Decision Making Intuitive/group Decisive/individual
Organizational Design smaller organizations larger organizations preferred
Carry out this exercise for each of the tables above and comment on the likely practices in countries with (a) high power distance and high masculinity and (b) low individualism and high uncertainty avoidance.

Comparing Management Process -- SHORT and LONG TERM ORIENTATION

MANAGEMENT PROCESSES Short term orientation Long term orientation
HR Management    
Management Selection Objective skill assessment for immediate use to company Fit of personal and background characteristics
Training Limited to immediate company needs Investment in long term employment skills
Evaluations/Promotion Fast; based on skill contributions Slow; develop skills and loyalty
Remuneration Pay; promotions Security
Leadership Styles Use incentives for economic advancement Build social obligations
Motivational Assumptions Immediate rewards necessary Subordinate immediate gratification for long term individual and company goals
Decision Making Logical analyzes of problems; Synthesis to reach consensus;
Organizational Design Design for logic of company situation Design for social relationships
Strategy Issues Fast; measurable payback Long term profits and growth; Incrementalism
This table might be considered in the context of the concept of time. Assess the potential impact on managerial practices if the companies take a predominately short-term approach.

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Categories: International Management Culture

Assessing Hofstede’s Work

July 27, 2007 0 comments

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Problems - assumptions about cultural territory and cultural homogeneity

  • single industry
  • one organization IBM - effect of organization culture

Strengths - control of populations

  • sample size 115,000 people in 50 countries
  • consistent use of dimensions
  • support from other studies - Sondergaard (1994)

Hofstede’s research is not without its weaknesses. Then fact that his survey was carried out in a single organization poses questions: How much of the results of his survey are national characteristics and how much IBM culture, for instance. Many of his work related values have a western bias and the inclusion of senior and middle managers may exclude perceptions of other groups. Furthermore, his studies were carried out before 1989, which meant that former command economies and China were not included. Some critics have argued that the research itself is culturally bound because the questions asked were based on industrial judgment founded on western thought.

Finally, a more general objection is that Hofstede assumes a nation-bound perspective, that culture and nation state correspond. This excludes the existence of subcultures and, more importantly perhaps, assumes that a country’s culture ends at the political border. However, we know that, in border regions, there is more of a mix of adjacent cultures, a good example of this being on the borders of Germany with Poland and the Czech Republic where, because of border shifts over time, it is sometime difficult to determine what is Germany and what is the other country.

On the other hand, his methodology is robust, he handles his samples in a controlled way and successive researchers have generally agreed with Hofstede’s findings. Sondergaard’s study is a good retrospective on Hofstede’s work.

Despite the criticisms, Hofstede’s research remains one of the most comprehensive and robust in the literature and the cultural dimensions are now used in many practical settings, as well as having theoretical importance. One colleague of mine, affiliated to Lund University in Sweden, is one of several people who offer consultancy services, based on Hofstede’s work, to international organizations.

Posted by lisa
Categories: International Management Culture

‘The Practical Guide to Culture in the Workplace’ - Fons Trompenaars (1993)

July 27, 2007 0 comments

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Another important researcher is Fons Trompenaars (another Dutchman) and his book ‘Riding the Waves of Culture’ discusses his main research rationale and findings. While some of his work has distinct similarities to Hofstede’s dimensions, other elements have a strong association with earlier, more general, research into cultural behavior. He describes seven dimensions.

Trompenaars’ cultural dimensions

  • universalism v particularism
  • collectivism v individualism
  • neutral v emotional
  • specific v diffused orientation
  • according status
  • managing time
  • relationship with nature

Trompenaars surveyed employees of fifty companies in 30 countries in the late 1980s. His research was particularly directed at how business was carried out and at business problems that occurred in a range of cultural settings, rather than concern with generic cultural issues. Five of the dimensions are related to personal interrelationships, the other two concerning the use or perception of time.

Universalism versus Particularism

Universalism:

the belief that ideas and practices can be applied everywhere without modification

  • USA, Germany, and Sweden

Particularism:

the belief that circumstances dictate how ideas and practices should be applied

  • Spain and Japan

The universalist approach says that what is good and right applies everywhere, for instance, rules penalizing sales staff that do not fulfill their quotas apply whether or not the individual claims extenuating circumstances.

The particularist approach emphasizes the obligations of relationships: a salesman has failed to achieve his quota because of his concern for a sick son, so can be excused.

Trompenaars presents findings from three cases. In response to a case concerning insider information, the percentage of respondents who would not tip off a friend (i.e. the most universalist) is greatest in Japan and least in Oman and Russia.

Collectivism versus Individualism

Individualism:

refers to people regarding themselves as individuals

  • USA, UK, and Sweden

Collectivism:

refers to people regarding themselves as part of a group

  • Japan and France

    ‘Do we relate to others by discovering what each one of us individually wants and then try to negotiate the differences, or do we place ahead of this some shared concept of the public and collective good?’

    Trompenaars 1993

Findings are given for responses to three questions. In response to one concerning options for the quality of life, the least interest in individual freedom was shown in Nepal, then Kuwait, the most in Canada, then the US. This description is very close to Hofstede’s concept of the dimension.

Neutral Vs. Affective

Neutral: emotions are held in check

  • Japan and the USA

Affective: emotions are openly and naturally expressed

  • Mexico, Netherlands, and Switzerland

Some cultures are affective, in that they readily show emotions; others are neutral and control or subdue their emotions. Findings are given for one question: whether informants would express their feelings openly if upset at work. The greatest readiness to do so was shown in Italy, then France and the USA.

Specific Vs. Diffuse

Specific: individuals have a large public space and a small private space

  • UK, USA, and Switzerland

Diffuse: both public and private space are similar in size

  • Venezuela, China, and Spain

In specific-orientated cultures, the manager separates the work relationships with subordinates from other dealings with them. Findings are given for two cases. In response to a question of whether a manager should help the boss paint his house, Australian and the Netherlands showed to most unwillingness and China, then Nepal, the most willingness.

Achievement Vs. Ascription

Achievement:

people are accorded status based on how well they perform their functions

  • USA, Switzerland, and UK

Ascription:

status is attributed based on who or what a person is

  • Venezuela and China

While some cultures give status on the basis of achievement, others ascribe it on the basis of age, class, gender, education and so on. Findings are given for two cases. In response to a statement that ‘the most important thing in life is to think and act in the ways that best suit the way you really are, even if you do not get things done’ (which Trompenaars reads as a reflection of ascribed status), most agreement was shown in Egypt, then Turkey and Argentina, least by Norway, then the USA.

Managing Time

Trompenaars distinguishes between sequential and synchronic cultures and past or future-oriented ones.

Past or Present-Oriented Vs. Future-Oriented

Past or present-oriented :

emphasize the history and tradition of the culture

  • Venezuela, Indonesia, and Spain

Future-oriented:

emphasize the opportunities and limitless scope that any agreement can have

  • USA, Italy, and Germany

Sequential Vs. Synchronous Time

Sequential:

time is prevalent, people tend to do only one activity at a time, keep appointments strictly, and prefer to follow plans

  • USA

Synchronous:

time is prevalent, people tend to do more than one activity at a time, appointments are approximate, and schedules are not important

  • Mexico and France

    Do countries emphasize their traditions or their forward thinking?

Relationship with Nature

Some cultures believe that they can and should control nature. Trompenaars characterizes these as inner-directed. Outer-directed cultures go along with nature.

Inner Directed

Believe in controlling outcomes

  • U.S.

Outer Directed

Believe in letting things take their own course

  • Asian Cultures

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Categories: International Management Culture

Assessing Trompenaars

July 29, 2007 0 comments

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  • summaries the content of previous studies, particularly Kluckhohn and Strodtbeck, Laurent and Hofstede
  • provides numerous applications of findings
  • little regard paid to population and spread of responses
  • problems with scoring of parameters
  • lack of correspondence between responses

The main benefit gained from Trompenaars’ work is that it provides practical examples of culture at work. Combined with the work of Hofstede, business people can gain an insight into the potential impact of cultural differences and appreciate some of the problems that may be encountered in doing business with firms and individuals in other countries.

To summarize the theoretical discussions, we can consider the impact of dimensions on national cultural aspects of organizational life.

How Cultures Differ (together Hofstede, Hall)

Individualism/Collectivism

  • Power Distance, Uncertainty Avoidance, Masculinity/Femininity, Confucian Dynamism
  • High/Low Context
  • Categorization & Language
  • Assumptions about Time
  • Assumptions about Change

Groups and Synergy

A mixed culture group is most likely to be synergistic

when members -

  • value the exchange of alternative points of view
  • tolerate uncertainty in group processes
  • co-operate to build group decisions
  • respect each other’s experiences and share their own
  • use the exposure to others’ cultural values as a positive opportunity for cross-cultural learning
  • overcome the misunderstandings and inefficiencies that result from members of different cultures working together

In many organizations, especially the multinationals, teams of people are often brought together from different countries to work on specific projects. The slides suggest some considerations which would help such teams function effectively, for instance, the need to use cultural differences to promote innovation and to expose staff from a particular culture to the attitudes of people from foreign cultures, thereby increasing their international competence.

If you have any experience of working with someone from another culture, you might care to reflect on these points in the light of your own experience.

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Categories: International Management Culture

Control and other Management Issues

July 29, 2007 0 comments

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Control

  • Organizational Structure
  • Budgets
  • Production Processes
  • Inventory and Distribution
  • Marketing and Sales

It is apparent that culture affects many managerial processes carried out across borders and that cultural differences can affect even the most standard of routines. Control is no exception and, outside the centralization/decentralization debate, there are some interesting examples.

Budgets are subject to differences because of the varying accounting standards and their construction is subject to individual management interactions. Therefore, that which is important to control through budgets in one country may not be reflected in the design of budgets in another. This argument can be extended to other areas, the net effect being to add complexity to the way in which international firms are controlled.

A similar argument can be extended to negotiations of various kinds

Implications for International Management: Differences in Negotiation Approaches

American Japanese/Chinese
Deal w/ strangers Deal through connections
A deal is a deal Deals can be changed
Share lots of info Share minimal info
Quick Slow

The discussion widens to include the impact of culture on various management approaches.

How Cultures Affect Management Approaches

Centralized Decision Making Decentralized Decision Making
Risk Averse Risk Seeking
Individual Rewards Group Rewards
Informal Procedures  
High Organizational Loyalty Low Organizational Loyalty
Co-operation Encouraged Competition Encouraged

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Categories: International Management Culture

Organizational Culture versus National Culture

July 29, 2007 0 comments

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Organizational culture is one of the control systems that regulates and governs employee attitudes and behavior. There is a widely held belief among some managers that organizational cultures tend to moderate or erase the impact of national culture. The logic of such conventional wisdom is that, if an American company set up operations in France, it would not be long before the French employees began to act like Americans. In fact, evidence seems to suggest that the opposite may be true. Hofstede’s research found that the national culture values of employees impact significantly on their organizational performance and that the cultural values the employees bring to the workplace are not easily changed by the organization. For instance, some French employees would have a higher power distance than Swedes and some a lower power distance, such that ‘if a company hired locals in Paris, they would on the whole, be less likely to challenge hierarchical power than would the same number of locals hired in Stockholm’ (Hodgetts and Luthans, 2000).

Dr. Monir Tayeb states that people take their ‘cultural baggage’ into the workplace.

Monir Tayeb’s claim that national culture and organizational culture were sometimes difficult to distinguish and in fact often meld together.

Organizational Culture: Hofstede Framework

Underlying patterns:

  • Process- vs. Results-Oriented
  • Employee- vs. Job-Oriented
  • Parochial vs. Professional
  • Open vs. Closed System
  • Loose vs. Tight Control
  • Normative vs. Pragmatic

Artefacts:

Rituals, stories, jargon, informal practices, dress codes, office layout, humor, etc.

The orientation on results versus process can be illustrated by the masculinity versus femininity dimension. Open versus closed systems are examples of low and high uncertainty avoidance and loose versus tight control as a feature of power distance. Cultural artefacts at the organizational level include such things as dress codes, office layouts and office practices. In fact, we can use the three-tier approach that we used earlier for discussing national cultures.

One specific problem faced by many researchers is to differentiate between national culture and organizational culture. For example, if one studies the behavior of managers within, say, IBM, is the differences in responses one might obtain in the various subsidiaries due to subsidiary differences or to differences between the countries in which the organizations are located?

In practice, differentiating between national and other cultural effects is very difficult and anyone who researches in this exciting area of management endeavor faces this problem.

Posted by lisa
Categories: International Management Culture

Do Cultures Change?

July 29, 2007 0 comments

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Evidence from Individualism/Collectivism Research

  • Artifacts change more quickly; Values/Assumptions changes less quickly.
  • Japanese and Chinese are becoming increasingly individualist, and Americans are becoming increasingly collectivist.
  • Largely due to “dialog's” in Japan and America, and changing socio-political environment in China

It was identified earlier the relative ease with which artefacts change and noted that values, and more especially assumptions, take much longer to change.

Assumptions about the Nature of Change

Western: Eastern:
Linear Cyclical
Unusual, Caused through Natural; equilibrium
disequilibrium in change
Goal oriented Journey oriented
Planned or managed by Observed or followed
external agents by internal participants
Implications for…  
Org Development!  

Assumptions related to change processes themselves are culturally defined, with change in the west being more the result of a spectacular situation, rather the comparative nature of incremental change in eastern countries. This is a big generalization and you might like to consider what type of event causes cultural change.

Considering your own culture or another with which you are familiar, set out patterns of change over the past ten or so years. Are they changes at the artefact level or are they more fundamental?

CONCLUSIONS

  • Culture has a variety of levels that affect multinationals
  • Models provide starting point to understand culture
  • Learning another culture is a never ending process

Does anyone ever get to understand fully another culture? Probably not, although some get close by living in another culture for a long time. What they do achieve is an understanding of why people act and think in the way they do, though not necessarily all the antecedents of thought or action though.

You might like to think about this for a while. Decide what is the essence of your own culture.

As you might expect, an understanding of some of the complexities of culture and cultural differences is an important attribute of international organizations and therefore of international managers, in that they can adapt and confront differences.

Given the persistence of cultural diversity, international managers need to recognize and anticipate the impact of cultural differences on foreign operations as well as on themselves, since values, beliefs and norms are only shared and understood among a society’s members.

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Categories: International Management Culture

The case of Upjohn

July 29, 2007 0 comments

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'Pharmacia and Upjohn merger in rough cultural waters'

A US company who had difficulties of co-ordination at their Swedish subsidiary through cultural differences in the form of different work attitudes and perception towards time.

Case 1

American executives, once part of Michigan's Upjohn Corporation, are becoming intensely familiar with London. They arrive with overnight bags and jet-lagged expressions to meet Swedish colleagues from the former Pharmacia S.A. flying from Stockholm to work in the new world headquarters of Pharmacia & Upjohn Inc. The $7 billion company was the result of a merger between the two giant Swedish and American companies in late 1995 and the office is located in the London area because an unobtrusive building near Windsor Castle was the only location that satisfied all of the executives involved in the decision.

Selecting a headquarters took months of negotiation, foreshadowing the problems now plaguing the newly merged company. After the merger was completed, the Americans wanted their Swedish counterparts to move to Kalamazoo, Michigan - a proposal which was unilaterally rejected. A second suggestion called for relocating the central office to Mississippi, where Upjohn had extensive R&D facilities. Managers from both Michigan and Stockholm rejected this option. Italy was considered because Pharmacia had substantial subsidiaries in southern Europe. Few managers in either group felt comfortable with the language and cultural requirements of an Italian location. France was unsuitable due to complex legal requirements, language barriers, and gut-level resistance. London presented a relatively bland compromise. Neither partner had facilities in London, no one had particular connections in or biases about the United Kingdom, and all executives could at least communicate in English. Hiring support staff would be easy, and travel would be a reasonable burden.

With the city chosen, managers had to agree on a style of building. Americans rejected a proposal for upscale and modern facilities with wide conference facilities and "open style" offices, since they were accustomed to well-insulated offices appointed according to rank and status. The Swedes, labelled as "too groupy" for American tastes, felt equally put off by the prospect of working like boxed rats in cubicles and locked offices. The solution was a nondescript, aging red-brick building which was remodelled to provide private space for the Americans and open space for the Swedes. But it also needed access to gardens and public transport, as well as a southern exposure to provide "acceptable light and air" to please Italians, who became part of the executive core, and Parisians, who felt "forced into a stifling Anglo environment."

The company has been buffeted by hundreds of relatively minor business culture problems since it was born but major conflicts have also surfaced. Soon after the headquarters problem was resolved, the new American chief executive, John Zabriskie, brought a style of management described as "brisk, fast-lane, driven and a full charge to take no prisoners." Within three months of relocation, Zabriskie left in what was called "a mutual agreement over un-reconcilable management differences." Current CEO Jan Ekberg, who replaced Zabriskie, said that difficulties had little to do with Zabriskie himself, other than his obviously entrenched American approach to business. Still, associated problems rankled throughout the company.

"We have half a merger," Ekberg said in an interview. "The companies were ideally suited, with compatible product lines and extensive research and manufacturing in their respective regions. Neither had markets in one another's areas. Upjohn needed Europe and a world presence after being anchored in the U.S. and Pharmacia could not compete in North America without the strength of Upjohn. What we missed was that a merger has less to do with accounting than with human beings."

At the outset, American executives tried to graft their U.S. management style onto an established European business. In Ekberg's view, this hard-driving, mission-oriented American approach shocked the more gradualist, consensus-oriented Swedish managers. American managers wanted plans, actions, immediate results and a reporting system or committee process tailored to inflexible power relationships. Americans regularly made proposals that encountered no obvious contention, so they assumed that the proposals had become decisions. They then moved directly toward implementing the perceived decisions, while Swedish colleagues, assuming that the Americans had merely put forward ideas, proceeded to contemplate the implications. They retreated to their offices to do some research or just think about the issues while the Americans charged ahead. In contrast, if a Swede put forward a proposal, he or she essentially invited input and consideration from colleagues, perhaps leading to consensus to move forward. This casual pace prompted impatient responses from Americans, who sometimes bypassed the Swedes and simply went ahead with their own agendas. At least the Swedes and Americans always arrived promptly and attended carefully to business; Italian managers might not even show up for a meeting. They found that Americans and Swedes were far too preoccupied with time and procedures to appreciate the finer points of life. French managers stayed at home when they had the choice and sometimes insisted on bilingual interpretations or translations of documents. One American executive, who decided to take early retirement rather than try to adapt to the situation, said, "these People just rubbed each other the wrong way. . . . we couldn't even agree on a new name for the company and ‘Pharmacia Upjohn’ was the default. . . . in fact, many of us are too set in our ways to even try to understand a new culture."

Organizational differences presented a set of problems that compounded human relations issues. Americans were accustomed to bonus payments in the form of stock options, deferred income and supplemental retirement benefits. Throughout the Upjohn company, prior to the merger, management compensation included a strong component of non-cash (or tax-advantaged) benefits. A Swedish company has no use for these methods, coming from a social system that offers universal medical care, state-mandated retirement annuities and employment protection, a social welfare approach to taxation and pervasive benefits for all employees which limit differentials between lower-level employees and managers or high-level executives. European accounting systems simply do not accommodate stock-option bonuses or selective, non-monetary rewards.

At the same time, Americans came to work early, stayed late, took few vacations, and coupled holidays with business trips. Not so for Europeans. Ekberg explained that the American managers from Kalamazoo could not begin to comprehend how their European counterparts could take off the entire month of August for vacation. "They were astonished at European vacation habits," said Ekberg. "I must admit there are different traditions and I think Europeans are much more international. We are used to working across borders, in different languages. We are used to treating people in a different way. The Americans are really not very international because they have this huge home base. American companies sell their products abroad but this does not necessarily make them international." Ekberg identified his most pressing task during the next few years as melding together an organization that could tolerate differences in expectations.

Goran Ando, the executive vice-president for research at Pharmacia & Upjohn, offered some insight into the culture clash. "I am a Swede who has lived in both Britain and the United States for a number of years and I see in Americans a more can-do approach to things," Ando said. "They try to overcome problems as they arise. A Swede may be slower on the start-up. He sits down and thinks over all the problems and, once he is reasonably convinced he can tackle them, only then will he start running. But I don't know which style is the best." Ando said he had found that one solution was to move American and European managers back and forth across the Atlantic, even for brief visits. This, he said, "may help to speed up the development of contacts and it will enhance understanding because you develop respect for each other."

The Pharmacia & Upjohn situation, its top executives insist, is being rectified, but not without pain. The organization is becoming flatter, moving toward Swedish methods of team management and away from systems based on hierarchical ranks. Global communication systems are under development in London and international accounting and information systems will benchmark American practices. However, the French maintain a dual accounting process that will be difficult to change. Major cross-border training has been introduced to raise levels of understanding among several continental European groups and regional U.S. interests. Unfortunately, the company has also launched a major downsizing program to cut excess facilities and staff, at the same time beginning to rebuild with new talent strong in a global perspective for doing business.

Posted by lisa
Categories: International Management Culture

International Negotiations

July 31, 2007 0 comments

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We are probably most familiar with the process of cross-cultural negotiations in our experience of current affairs. Hardly a day passes without some mention of high-level negotiations attempting to resolve inter-country differences, or conferences being held to try to obtain an international consensus on issues such as environmental pollution, whaling and so forth.

Even within EU-based negotiations we frequently reveal differences of opinion, which have their bases in national cultural differences, such as the centralism of France versus the ‘laissez-faire’ approach of the British government towards industrial and fiscal policy.

The politicians involved in all these settings have to agree, not only on action, but also over some deep-seated aspects of national pride and national culture through a process of compromise and diplomacy.

In business, similar problems occur. Negotiation of an agreement is subject to many cultural rules as well as commercial ones. This is an area where cultural differences can play a significant part. Arriving at agreement is a complex process and many factors must be explored by the parties concerned, while maintaining an understanding of the negotiating issues and continually checking for mutual understanding.

Many specialist books on negotiating skills have been published; several use what we could classify as a ‘cookbook’ approach, providing recipes for the dos and don'ts of negotiating. These tend to provide a surface approach to understanding cultural differences. Books, which look at doing business in various countries, provide more information about the country but tend to generalize about the negotiating processes. Finally, there are those books which seek to explore the cultural heritage of a country, as well as providing a goodly measure of business advice. An example of this is represented by Schecter’s book on Russian Negotiating Behavior. Schecters’s book highlights the importance of history and country-related historical development in understanding the background cultural environment of negotiating.

In international business, there are many agreements to be negotiated, drafted, signed and finally implemented: supply of services and raw materials, supply of marketing and design expertise, strategic alliances and joint venture agreements, export and distribution agreements, to mention just a few.

What makes cross-border negotiation different from purely domestic negotiation is that cross-border agreements are much more complex because the negotiators must deal with varied frameworks, such as legal and political pluralism, currency fluctuations (and other forms of economic risk) government intervention, instability and change, ideological and cultural diversity. International business negotiations involve interactions between managers from disparate cultures. Cultural norms and differences between the negotiators have a significant influence on how they behave throughout the process.

What makes cross-border negotiation different from purely domestic negotiation is that cross-border agreements are much more complex because the negotiators must deal with varied frameworks, such as legal and political pluralism, currency fluctuations (and other forms of economic risk) government intervention, instability and change, ideological and cultural diversity. International business negotiations involve interactions between managers from disparate cultures. Cultural norms and differences between the negotiators have a significant influence on how they behave throughout the process.

Gesteland (1999) suggests that there are two golden rules in international business:

  1. The seller is expected to adapt to the buyer
  2. The visitor is expected to observe local customs,

There are exceptions, of course, but these rules have fairly general application. Be yourself, advises Gesteland, but also be aware of local customs, traditions and habits, adapting to them as necessary.

There are exceptions, of course, but these rules have fairly general application. Be yourself, advises Gesteland, but also be aware of local customs, traditions and habits, adapting to them as necessary. In this section, we will explore the process of negotiation in an international context , outlining important elements of negotiation behaviour. A good deal of information is available from Gesteland’s book and from

"Executive Planet website - <http://www.executiveplanet.com/index.php?title=Main_Page>"_ - which contains good country-specific and detailed information on several relevant factors.

How might cultural differences impact on negotiations? Make a list of points now.

Let us take the example of timing and scheduling as an example.

Gesteland (1999) suggests that people perceive time very differently across cultures; this view is comparable with both Trompenaars’ and Kluckhohn and Stodbeck’s dimensions of temporal activity. Hall (he of the high and low context approach to culture ) calls those cultures in which timing and scheduling matters a great deal, ‘monochronic’ examples being Nordic and Germanic Europe, North America and Japan. Polychronic cultures value loose scheduling and have a relaxed approach to timing, examples being the Arab world, most of Africa, Latin America and south and south-east Asia. The remainder can be described as moderately monochronic! We are reminded that this is a very general description; in fact there are subtle differences within countries, as well as between them. Northern Italy, for example, is more monochronic than the south of the country, similar differences existing between northern and southern Spain.

Knowledge of differences and, much more, ability to adapt to differences without affecting performance are vital. Arrive late for a business meeting in Germany and you will create the impression that you will be also late in delivering any promised goods or services. This type of culture shock can be avoided with some careful planning and intelligence gathering beforehand (see the slide on preparation and planning for negotiations below). Living and working in a monochronic culture perhaps makes us less tolerant of situations in which we are kept waiting; the difficulty in making a change of mind-set to deal with foreign situations takes more than mere knowledge of the differences in behavior - we have to prepare ourselves

Visit "Executive Planet website - <http://www.executiveplanet.com/index.php?title=Main_Page>"_ and/or alternatively http://www.bspage.com/1netiq/Netiq.html and carry out a cross-country comparison of timing, classifying your selected countries according to Hall’s view of time-dependent and time-relaxed countries.

Posted by lisa
Categories: International Management Culture International Negotiations

International Business Management - Web Presentations

August 1, 2007 0 comments

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"Expatriate Compensation <http://lisaconsulting.com/presentation/expatriatecompensation/>"_

"Expatriate Deployment <http://lisaconsulting.com/presentation/workingabroad/>"_

"Cultural Issues in International Management <http://lisaconsulting.com/culture4/>"_

"International Negotiations <http://lisaconsulting.com/presentation/negotiations/>"_

"International Joint Ventures: Strategy and Operation <http://lisaconsulting.com/presentation/jointventures/>"_

"Business Ethics and Corporate Social Responsibility <http://lisaconsulting.com/presentation/ethics/>"_

"The International Business Environment <http://lisaconsulting.com/presentation/intbuzenvi/>"_

"Managing in MNEs <http://lisaconsulting.com//presentation/managingmne/>"_

"Managing Human Resources in the International Firm <http://lisaconsulting.com/presentation/ihrm/>"_

"A Leadership and Management Behavior in Multinational Companies <http://lisaconsulting.com/presentation/leadership/>"_

Posted by lisa
Categories: International Management Culture International Negotiations Web Presentations Working Abroad

Some Examples of Mapping Negotiation

August 2, 2007 0 comments

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Power distance

According to Hofstede, cultures which accept and expect that power is distributed unequally (with greater power distance index) will be more likely to have decision-making concentrated at senior levels, all important decisions having to be finalized and agreed by the group leader. The consequences for international negotiators are that negotiators from larger power distance cultures may need to seek approval from the supervisor more frequently and for more issues, leading to a protracted negotiation process. For example, Indonesian managers (who have a very high power distance index in Hofstede’s scoring) take about six times longer than comparable American managers to reach a decision (Gesteland 2000). This situation calls for a degree of patience from those negotiating with Indonesian managers.

Individualism/Collectivism

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Individuals play different roles in different societies. In some groups, the individual is seen as an important entity (such as in UK groups) who may be given negotiating authority and discretion. In contrast, Japanese managers negotiate as a group and are more concerned with achieving overall success than with any individual measure of effort or success.

In collectivist societies, relationships play a critical role in negotiations, which take a long time to rebuild if anything goes wrong. This can be contrasted with individualistic societies, where negotiators are more interchangeable and often rely on competences rather than relationships.

The consequences are that negotiators from collectivist cultures will strongly depend on cultivating and sustaining long-term relationships, whereas negotiators from individualistic cultures are more likely to swap negotiators whenever short-term criteria seem appropriate. For example, Indonesians expect the first negotiation meeting to be taken up with general conversation and socializing before actual business negotiations begin (Gesteland 2000).

Masculinity/Femininity

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The cultures perceive as masculine such qualities as assertiveness, the acquisition of money and ‘things’ and not necessarily caring for others’ quality of life or people. This dimension influences negotiating by increasing the competitiveness when negotiators from masculine cultures meet negotiators from feminine cultures, who are more likely to show empathy for the other party and to seek compromises.

Uncertainly avoidance

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This fourth dimension indicates how comfortable managers are in unstructured situations such as rapid change and novelty, as opposed to structured situations which are stable, secure and more absolute.

Negotiators from uncertainly avoidance cultures are uncomfortable with ambiguous situations and are more likely to seek stable rules and procedures when they negotiate. In contrast, the risk seeker is more likely to adapt to quickly-changing situations and will be less comfortable when the rules of negotiation are ambiguous or shifting. The Chinese negotiator may regard the final written agreement as less important than the strength of the relationship with the other company and they may expect to renegotiate the contract if circumstances change. Russians tend to see the agreement as simply another stage of an ongoing process, whereas for Americans the agreement is the end of the process.

From Hofstede’s work, the impact of cultural issues on negotiator behavior is clear, although not exhaustive. However, if the negotiating counterpart originates in a very different culture, the mixture becomes complex to manage. No cultural research fully describes all negotiation settings and experience is as important as knowledge of the procedures and practices.

You might like to take the dimensions in Trompenaars’ work and apply them to the negotiation process.

Note down the implications of each of the dimensions for the negotiation process and the implications for managers.

Posted by lisa
Categories: International Management Culture International Negotiations

'Chile: A Latin experience in patience'

August 2, 2007 0 comments

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Hector Raos McLachlin is a Canadian citizen from Vancouver. He is also part Chilean, a heritage that traces through his grandmother, who married a mining engineer shortly after World War II. Hector's mother was born in Chile before the family moved to Canada and as a young man Hector came to be known by the name Raos, after his maternal family name. He grew up hearing intriguing stories about the mountains and streams of his grandmother's home in the wine country some distance from Santiago. Raos majored in commerce while at college and as a young adult he worked in a trade office where he learned about international transactions, including much about Latin American trade. He had been brought up to understand Spanish, although he was not well schooled in the finer points of Latin culture. Nevertheless, lifelong preparations set the stage for Raos to take the entrepreneurial plunge in 1996, when Canadian customs regulations changed to favour the import of foreign wines.

Financed by a legacy from his grandfather, Raos went to Santiago to establish a Co-operative venture with a winery offering wholesale capabilities and government backing to expand export trade. To Raos's surprise, the Chilean wineries made excellent products and he hoped that government subsidies and tax breaks on export quotas would help him to build a thriving trade through Vancouver connections.

On his first visit to Chile, Raos met with two members of the Allende family, who owned the winery in which he was interested. During a four-day visit, he examined the fields, toured several of the family's facilities and studied their warehousing system and retail outlet in Santiago. The Allendes were very cordial hosts but they adopted unexpectedly formal attitudes. Dressed exquisitely in European suits, an elder family member and his 20-ish son seemed to follow an agenda of meetings and site visits, coupled with long lunches and dinners that began near midnight and lasted well into the early morning hours. After their initial meeting, Raos quickly shopped for an up-market suit and several expensive shirts, clothing that he had not brought with him. He matched the Allende protocol in appearance and demeanour - a smart move in retrospect, since these occasions included introductions to bankers, government officials and merchant friends of the family, as well as several cousins, uncles and in-laws.

In each instance, casual conversations stretched over long periods, almost always covering the same ground. His acquaintances wanted to hear about his grandparents, where his mother had been born, what relatives they had in Chile now and what his family did in Vancouver. The questions were so patterned that Raos became weary of answering them.

Throughout the visit, little was said about why Raos had come to Chile. The Allendes knew of his proposal for a cooperative venture through correspondence prior to the trip but, whenever he tried to speak of business, the elder Allende would change the topic through a somewhat boisterous anecdote or story. In one conversation with a banker, for example, he broke into a long explanation of how the family had fought through a drought that had almost devastated their vineyards. In another instance, he explained an ordeal of finding a supplier of wine bottles. During dinner with a government trade counsellor, Raos was left to chat with the official's wife while the Chileans debated changes in politics. Raos was tempted to butt into these stories, feeling irritated by what he perceived as self-centred boasting by the elder Allende. Even as Raos was escorted to his flight home, the elder Allende made an odd remark that Raos, being "paled by the lack of sun in Canada," should "return to the warmth of Chile."

Several months later, Raos visited again. In the interim, he had corresponded in detail through the younger Allende about an agreement either to import wine to Canada as a broker or to make an equity investment in a separate export company that would wholesale the Chilean wine in Vancouver. Raos wanted to create an equity joint venture and his correspondence was weighted toward persuading the Allende family to agree with his plan. However, when he arrived in Santiago to pursue the negotiations, he was met by the younger Allende and an uncle who seemed to convey very guarded messages about any business venture. Talks dealt more specifically with business prospects than those during the first visit but Raos was left with the feeling that the family was quite happy with its current business, without the complications of exporting wine to Canada.

General details about price points and margins were discussed, questions about shipping wine and whether it would "travel well" were brought up and various issues such as bottling, case-quantity storage and currency differentials were raised. But legal issues and contract terms were not discussed. The Allende uncle often told boastful anecdotes, much as the elder Allende patron had done, but he was a gracious host and agreed to visit Vancouver in the spring of 1997. The younger Allende promised to discuss Raos's questions more carefully with his father and then to get back to Raos on the finer points of doing business.

Several months passed and Raos eventually sent a detailed proposal to the Allendes, with an offer of a direct equity stake in an export company. He outlined price points and projected sales and summarized a very thorough market report on potential customers. He put the offer in terms that he felt deserved a clear response - either acceptance or a counter offer - that would move the negotiations toward a conclusion. Instead, he was met with silence. The Allende family made absolutely no reply other than a brief fax to acknowledge receipt of his proposal. The uncle did not come to Vancouver and Raos's telephone calls seemed to be ignored.

Angered by the silence, Raos made an unannounced trip to Santiago in June 1997. He arrived in casual dress wearing no tie and, although tidy, he looked ready for a back-yard barbecue rather than an important business meeting. The elder Allende, dressed as though for the theatre at 10:00 A.M., greeted Raos with some reserve. He said that they would meet for lunch at Raos's hotel about 1:00 P.M. Raos went to the hotel and took a seat on the patio at the appointed time with a cool beer and waited. An hour passed and no one showed up for the meeting. At 2:40, the barman brought a message that his party would be coming soon. By 3:30, Raos was ready to leave. In fact, he was almost anxious to leave, to return to Vancouver and just forget the whole thing. He went back to his room and mentally wrote off the whole deal.

Shortly before 7:00 P.M., the younger Allende arrived with a driver. He apologized for a difficult day and the missed appointments, then invited Raos to pack his clothes and come out to his house to stay. He explained that his father would talk with him soon at home. Raos reluctantly allowed the driver to help pack him out of the hotel. On the way to the Allende home, Raos was told that the family had a surprise for him . . . someone to meet. When they arrived, Raos was escorted by the driver to a very nice upstairs room in a large villa and invited to refresh himself and come downstairs. The Allendes would be on the veranda, and he could come as he was or in even more casual attire.

Raos rinsed his face and hands, ran his fingers through his hair and wished that he had had a haircut before leaving Vancouver. When he reached the veranda, he was surprised to discover the entire family gathered amidst an impressive spread of snacks and catered foods, chilled wines and beer, and with two musicians who broke out in a lively tune on their guitars when Raos arrived. The elder Allende immediately extended a hand in greeting and clasped his other hand over Raos's in a strong and unexpected gesture. He was dressed in perfectly creased casual slacks, his greying hair carefully combed, yet he sported a colourful shirt that was purposely opened to reveal, in macho style, a golden chain and cross.

"We celebrate a new member of our family today, Raos," Allende said. "You will be our adopted son and you will sell our wines, and make everyone very proud. Our grape will be the toast of Vancouver, and you and my other sons will make their mothers very happy." This grandiose announcement left Raos unable to speak. Before he could gather himself even to think straight, the elder Allende continued. "And this, Raos, is my personal surprise for you." He made a sweeping gesture with his arm and introduced a lovely lady, probably in her 70s, who stood up from a small straight chair. She nodded her head with a slight smile of greeting. "This is your grandmother's youngest sister whom we fortunately found living peacefully in a beautiful valley near your home."

Raos was still unable to respond with composure but he greeted the lady somewhat awkwardly and they exchanged a sincere-but-reserved hug. After refreshments, several more songs and somewhat difficult chats with his newfound relative, Raos spoke with the younger Allende. "I don't understand," he said. "I was ready to go home, and no one even bothered to meet me or to discuss our proposals. . . . what's going on?". "My father was waiting to see the real Hector Raos," Allende answered. "He liked you from the first day, as we all did, but we could not see what was inside you. You were behind your new clothes and too quick with your answers. We are not like that and it was my father's decision to see what you were really like."

"And what of my great-aunt?" Raos asked.

"My father wanted to know your bloodline," Allende said. "So much can be said through one's relatives but father also wondered why your people had not stayed close to one another."

"That's a good question," Raos said. "I knew, vaguely, that grandma had two sisters and perhaps a brother but we never spoke much about them."

"Oh, we understand," Allende said. "Your grandmother's sister is very proud of her Canadian relatives but we are simple people. You have other relatives who are on the boats, fishing from a village. The lady here, she lives in a valley and she even has old letters from your grandmother but she does not read or write very well. Father brought her here with a friend's help who owns a plane. That's why we were not at the hotel. My father, he is very impressed that you dare to come to his offices and speak your thoughts. He said 'We will work with this man' and that was it."

Posted by lisa
Categories: International Management Culture International Negotiations

Culture and Joint Ventures or Strategic Alliances

August 2, 2007 0 comments

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It was mentioned earlier that negotiations were not only about sales and supplies but also about firms working together to achieve mutual benefits. We now move to this subject to consider the cultural implications for firms working together in joint ventures.

Briefly, there are three main areas of cultural impact.

That is, the negotiations concerning the setting up of the venture, a strategic partnership between two or more independent firms.

The second area is in the management of the venture once it is implemented; managing in a joint venture is very different from a conventional firm, in that one may have to influence perhaps, rather than command. A clash of management styles is therefore bound to happen and it depends on the expertise of managers to overcome this clash and evolve ways of working together.

The third area is in staffing the venture and inter-staff relationships.

Posted by lisa
Categories: International Management Culture International Negotiations

Transfer of Knowledge Across Borders

August 2, 2007 0 comments

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For many joint ventures, and for many firms, one major difficulty is the transfer of knowledge between different cultures. Educational systems differ around the world; this factor has an effect on the design of training schemes for all levels of staff.

One example can be given: The former COMECON countries have been striving to make the transition to a market economy. For many years, management effort was devoted to achieving production quotas set by the center. Now, company managers need to carve out their own futures and, of course, require new expertise to do this. However, one must not make the mistake of thinking that what is relevant to managers in western Europe is as relevant in Poland or Hungary, because of the legacy of the communist years. Therefore, the transfer of knowledge across borders requires more than technical expertise - it also needs a cultural dimension.

What has to be considered the major cultural impediments to business-related learning across borders?

Posted by lisa
Categories: International Management Culture Working Abroad

Culture and Leadership

August 2, 2007 0 comments

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Management style is an important factor in cross-cultural management studies, both in terms of national and organizational culture. It is obvious that, in a rapidly internationalizing world, managers are having to lead a variety of people situated or originating in different countries. Cultural differences in leadership processes and styles have only recently attracted research attention, perhaps because of the increasing pace of globalisation but also because it has become evident that the process of managing a British worker may not be applicable in leading a group of Chinese workers. As countries of origin begin to blur, the issue of leadership effectiveness in different cultural settings is becoming an important topic of analysis. Leaders throughout the world are faced with linking employees from diverse cultural backgrounds where the workforce is multicultural. The trait, personal-behavioral and situational explanations of leadership paid little attention to multicultural differences, stereotypes, biases, language differences and a host of other factors. Putti et al (1998) contend that, while some countries accept a participative leadership style, in other countries (high power distance ones particularly) authoritarian styles are more acceptable.

Lately, this rather neglected area of international management research has been addressed on one of the biggest cross-cultural studies since the work of Hofstede in the 1980s. Named ‘The Globe Project’ a group of researchers from a wide range of countries have been brought together to investigate cultural differences in leadership. The Globe Project website contains a wealth of information and a number of working papers are available free of charge in a range of formats.

Consider the role of leadership in managerial behavior and note down some aspects of leadership that might be subject to cross-cultural differences. For example, some people would perceive a good leader as being a champion for the department or section.

Posted by lisa
Categories: International Management Culture

Working Abroad

August 3, 2007 0 comments

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This aspect of organizational life has concerned researchers and managers alike for many years, because it is generally recognized that sending a manager to work for the company abroad is a challenging experience, where failure could be costly for both parties. In the case of the employee, failure might be a significant demotivator and may cause him or her to leave the company, with an attendant loss of resources for the firm and might even cause the employee to rethink their future career path, even though the fault was not entirely of his or her own making. From the firm’s point of view, failure is not only expense but it might also damage its market position and affect customer relationships. Consequently, many firms now provide mechanisms for the preparation and support of the manager posted abroad, to help the manager perform to the bet of his or her ability as soon as possible after arrival.

Full details of the research do not concern us here but some important points can be made, illustrating typical problems that might be encountered and suggested steps taken to alleviate some of the pressures of working abroad.

Modern business careers increasingly involve some time working abroad, as firms increase their international activities. For many, progress in their career is dependent on international experience and there are an increasing number of people who specialize in international management, undertaking assignments for various firms during their careers.

Many students, for that matter, are undertaking study abroad, either for a semester or for a whole year. Both these activities necessarily involve people experiencing cultural differences, even in similar cultures such as the U.S.A. and Canada, Sweden and Denmark, etc. Living in a foreign country on a day-to-day basis for a significant length of time means dealing with another culture beyond the artefact level and, for many, this has a major effect on their lives. We explore what we call expatriate experience, particularly in a business context.

We are concerned here primarily with medium- and long-term deployment abroad, short business trips and short-term business projects being excepted, as they do not have the same impact on people's lives. We look at some of the fundamental reasons for working abroad, the cultural impact on the people concerned, suitable preparation for foreign deployment and factors connected with repatriation.

Posted by lisa
Categories: International Management Culture Working Abroad Int HR Management

Expatriate Failure

August 5, 2007 0 comments

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Early recall of manager - company and employee effects

  • Many failures can be traced to poor company practices and lack of preparation
  • US failure rates estimated between 25 - 40%.
  • European data - 10% France, 3% Sweden, about 10% overall
  • Japanese data - about 5%

Typical Causes of Failure (US Companies)

  • Inability of spouse to adjust
  • Manager's inability to adjust
  • Other family problems
  • Manager's personal or emotional maturity
  • Inability to cope with larger overseas responsibility

Failure is defined in many ways but generally in terms of early recall of staff. This failure has serious consequences for both staff and employer.

Think and write down the possible effects of expatriate failure on both parties.

In fact, the effect on employers is easier to understand at first hand: there may be damage to the firm's standing in the market or damage may have occurred to working relationships within the organization or with supplier and customers Furthermore, expatriate deployment is an expensive exercise and, presumably, another member of staff will have to take over at short notice, adding further to the costs.

A little consideration will identify the problems of failure faced by the member of staff. Failure is always demotivating, at best, and could result in that person leaving the company's employ. However, the failure may not be the fault of the individual concerned - it might have been due to lack of preparation or even poor selection, both of which are the firm's responsibility. Alternatively, it might be due to problems with others and not the expatriate individual, for example. The data shows that U.S. failure rates are well above those of European or Japanese firms and it is interesting to speculate why this is so. The following two slides show the most common sources of failure in U.S. and Japanese firms. They are inherently different, U.S. failures tending to emanate from non-work situations and the Japanese from pressures encountered in the work situation.

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Categories: International Management Culture Working Abroad

Managing Overseas Activities

August 5, 2007 0 comments

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  • Parent Country Nationals (PCNs)
  • Host Country Nationals (HCNs)
  • Third Country Nationals (PCNs)

In theory, there are three classes of managing overseas activities: Parent Country Nationals (PCNs), Host Country Nationals (HCNs) and Third Country Nationals (TCNs).

'Parent Country Nationals' refers to the deployment of Headquarters staff abroad, i.e. a U.S. firm sends an American to manage its activities in Russia, a British firm sends a Briton to lead a team in Indonesia, etc. There is thus a very close cultural affinity between the staff member and the home base.

Increasingly, firms are employing nationals of the countries in which they are operating, i.e. an American firm engages a Russian to work in its Russian subsidiary, and a French firm engages an Italian to run its subsidiary in Italy. This is the case of Host Country Nationals, where such people have a close cultural affinity with the subsidiary but not with headquarters. Some firms find this a difficult situation to manage and prefer the use of PCNs.

There is an expanding corpus of managers and others who specialize in operating internationally. These are Third Country Nationals, such as a Dutchman working for a British firm in Germany or a Norwegian working for a Finnish firm in China, and so on. These TCNs have cultural affinity neither with HQ nor the subsidiary; however, they do bring desirable expertise to the company. One problem for management here is that the TCNs tend to be loyal only to their individual careers, rather that to individual firms.

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Categories: International Management Culture Working Abroad

Repatriation

August 5, 2007 0 comments

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THE REPATRIATION PROBLEM

  • Difficult for many organizations
  • "Reverse culture shock"
  • Expatriates must relearn own national and organizational culture
  • Includes whole family

STRATEGIES FOR SUCCESSFUL REPATRIATION PROVIDE:

  • A strategic purpose for repatriation
  • A team to aid the expatriate
  • Home country information sources
  • Training and preparation for the return
  • Support for expatriate and family

The repatriation process is of great importance. If the former expatriate is to be integrated back into the company and for the company to benefit from that person’s experience abroad.

Putting yourself in this position of returning to your home culture after a two-year absence, note down the things that might have changed most, such as personal relationships.

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Categories: International Management Culture Working Abroad Int HR Management

International Business Management

August 7, 2007 0 comments

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"1. An introduction to International Management <http://lisaconsulting.com/presentation/intmanaement/>"_ and its importance. The role of international managers.

"2. The International Business Environment <http://lisaconsulting.com/presentation/intbuzenvi/>"_ Developments in international trade. The importance of the Triad. Developments in the international business environment including the importance of economic groups such as the EU, NAFTA, ASEAN and others. Political, legal and technological issues in international business. The complexity of the international business environment, relations with host governments. The competitive advantage of nations. International competitiveness and its impact on international management.

"3. Culture and International Management <http://lisaconsulting.com/culture4/>"_ Cultural issues and the international firm, cultural diversity, convergence and divergence. Models for analyzing cultural differences. Cultural issues in the workplace and the diversity of management styles, a critical analysis of the work of Hofstede and others.

"4. International Business Ethics and Corporate Social Responsibility <http://lisaconsulting.com/presentation/ethics/>"_ Ethical behavior in MNEs, tensions in international management. MNEs and corporate social responsibility. Current debates.

Unit 5. International strategy

International corporate and business level strategy. International entry strategies.

"6. International Collaborative Strategies <http://lisaconsulting.com/presentation/jointventures/>"_

International collaborative strategies, strategic alliances and joint ventures. Managing International Joint Ventures

"7. Managing Human Resources in the International Firm <http://lisaconsulting.com/presentation/ihrm/>"_

and "A Leadership and Management Behavior in Multinational Companies <http://lisaconsulting.com/presentation/leadership/>"_

"8. Managing in Multinationals <http://lisaconsulting.com//presentation/managingmne/>"_

Managing multinational and transnational firms. International organizational structures and their evolution. Managing innovation in MNCs/TNCs. Planning, organizing and controlling international businesses, the importance of synergy in international operations.

  1. International Staff Deployment

"Expatriate Compensation <http://lisaconsulting.com/presentation/expatriatecompensation/>"_

"Expatriate Deployment <http://lisaconsulting.com/presentation/workingabroad/>"_

Problems of expatriate deployment. Culture shock and expatriate failure. Training for expatriate deployment. A critical analysis of the work of Mendenhall and others. Developing international managers.

  1. The Future of International Management

Contemporary debates in international business development, developments in selected areas, the EU, NAFTA, etc. The internationalization of small businesses.

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Categories: International Management Culture Web Presentations Working Abroad Int HR Management

National Culture and International Joint Ventures

August 9, 2007 0 comments

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Background

International strategic alliances have been growing in importance in recent years as a choice vehicle for companies to expand their product, geographic or customer reach (Contractor and Lorange, 1988; Gugler, 1992). Between 1990 and 1995 the number of domestic and cross-border alliances grew by more than 25 percent annually (Bleeke and Ernst, 1995).

As the term ‘strategic alliance’ implies, companies involved in a strategic alliance join together in an exercise of shared strategies and vision, usually in order to be able to handle their environment and markets more effectively, but not shared financial and managerial activities. The companies may own certain proportion of each other's shares, but they do not become a jointly owned entity and do not lose their independence. They may even exchange senior executives on a reciprocal short-term 'visit' basis, and develop common career management learning and development policies, but they do not merge their employees.

Joint ventures move a few steps further than strategic alliances, to shared assets and ownership, pooled skills and knowledge, mixed employees, and joint management. Joint ventures have become a popular mechanism both nationally and internationally and their numbers have grown dramatically since the 1980s (Geringer and Woodcock, 1989; Harrington, 1988; Hergent and Morris, 1988).

International joint ventures, formed by organizations in two or more countries, have become a widespread form of cross-border business cooperation. They offer unique benefits of cross-culturally meshing each organization's complementary skills, assure or speed market access trans-nationally, leap-frog the host nation's technological gaps, and strategically respond to the increasingly intense national and global competition (Killing, 1982; Beamish et al., 1994).

International joint ventures have proliferated because individual companies recognize that expansion into new markets can be resource-intensive and risky. Traditional models of acquisition and merger are less attractive, especially if the venture is product- market- or time-dependent. Companies may meet significant resistance to opening new markets in foreign countries, as governments strive to protect local firms (Datta, 1988).

Many governments, notably those in the former socialist countries of east and central Europe and a vast majority of the so-called developing countries around the world, may require a stake in international joint ventures or insist that local companies have a significant holding of the new company equity.

Joint ventures, and indeed other forms of strategic alliances, have had a mixed record. As Bleeke and Ernst (1995) point out, the term alliance can be deceptive. In many cases, an alliance really means an eventual transfer of ownership. The median life span for alliance is only about seven years, and nearly 80 percent of joint ventures - one of the most common alliance structures, ultimately end in a sale by one of the partners.

Many reasons such as strategic misfit, pre-occupation with short-termism, and incompatible organizational and human resource management policies have been offered by researchers as the causes of the relatively high failure rate of alliances (see for instance, Niederkofler, 1991; Harrigan, 1986; Harrington, 1988). International joint ventures also appear to be particularly susceptible to failure on the management and other behavioral fronts caused arguably by higher potential for cultural misunderstandings.

As Faulkner (1995) puts it, long term success, whilst obviously reliant upon the economic benefits, is also particularly strongly dependent upon the attitudes of the partners towards each other, how they manage the joint enterprise, and on the degree to which the partners adopt a positive learning philosophy, thus enabling the alliance to evolve, all of which are influenced by the cultural characteristics of the partners involved. Indeed, many of the problems and misunderstandings in international alliances and joint ventures have their roots in the cultural differences existing at both national and organizational levels.

Examples of the effect of cultural differences on international joint venture performance have been documented by Peterson and Shimada (1978) and Simiar (1980). They found that cultural differences frequently led to failure on the part of parent company managers to 'understand' one another. The resultant breakdown of communications generally had significant negative consequences, sometimes leading to collapse of the venture.

The implications of national culture for international joint ventures (IJVs) are most likely to be influenced by the national cultures of the partners and the socio-cultural and political economy of the country in which the IJVs are located as well as the relevance of other closely related factors such as organizational culture and the creation of the ventures.

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Categories: International Management Culture International Joint Ventures

International joint Ventures and National Cultures

August 9, 2007 0 comments

The extent to which other nations’ cultures might influence any firm with overseas interests depends on the degree of its internationalization and on the aspects of its activities (Tayeb, 1996a).

Internationalization

Internationalization process could entail various stages and forms from simple export or import through to franchising, licensing, turnkey projects, to establishment of joint ventures and wholly-owned subsidiaries. The extent to which a company decides to internationalize depends, among other things, on the size and nature of their domestic market, their production capacity and capability, and the financial and other resources like the expansion into foreign markets requires.

The relevance of other peoples' cultures become greater for a firm as it spreads its activities and products beyond its national boundaries to reach foreigners with different value systems and tastes. The farther internationalization goes, the more company's involvement with foreigners will be, and the more sophisticated the device would have be to respond to their demands and expectations.

Major aspects of organization

There are three broad areas of activities in which virtually all companies engage:

  • those concerned with the strategic and planning aspects of their business;
  • those related to their internal organization (notably human resource management);
  • and those concern the interface (e.g. marketing and negotiation) between internal and external aspects of their activities.

The extent to which national culture influences organizations' activities, even in the case of fully globalized ones, depends on the types of activities performed.

For international joint ventures this relevance of culture is most pronounced at the initial stages of negotiations between the would-be alliance partners, and then later at the core values and strategic policies that they would develop jointly and the processes leading to their agreements on their characteristics. These stages of cross-border cooperation require sensitivity to the cultural backgrounds of the negotiators and of the employees who later staff the venture. Cultural insensitivity here is a prescription of failure (Konieczny, 1994).

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Categories: International Management Culture International Joint Ventures

Negotiations in International Joint Ventures

August 9, 2007 0 comments

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Language

One of the major issues concerning negotiations with trade partners from other cultures is language. Although it is not always necessary to know the partners' mother tongue, various research studies have shown that a correlation exists between successful company performance in winning new business in foreign markets, and the ability of the company to conduct its business in the language of the customer.

Competence in foreign languages is most needed by those involved in export, marketing, sales, technical work, arranging a joint venture deal and any other activities aimed at establishing and facilitating trades between companies and institutions concerned.

It is of course possible, and that is precisely what many business people do, to hire an interpreter. But the knowledge of a partner's language or the use of an interpreter is not enough to create shared understanding between people from different cultural backgrounds. Language represents and expresses the culture, the value systems behind it. Not knowing this underlying culture can cause problems.

As Jankowicz (1994) points out, some people tend to underestimate the difficulties involved in the creation of shared understanding and scarcely recognize the issue of cultural differences.

Polish and French Managers

Jankowicz makes a further pertinent point, in the context of the problems involved in teaching Western management theories and practices to Polish managers. Using terminology taken from French literary criticism he makes a distinction between langue (language as translated) and parole (language as experienced in a given culture).

If this distinction is not recognised by partners involved in multicultural dealings, misunderstanding is bound to happen.

Pollard (1994) suggests that language was a significant factor in negotiations between UK and Kazakh managers where misunderstandings of words were traced to differences their contextual interpretation.

Japanese and British Managers

A business anecdote concerning a Japanese and a British manager who conduct a deal in English language illustrates this point. While the British manager goes through the contract clause by clause, setting out his conditions, the Japanese manager keeps saying 'yes'. By the time the British manager has reached the end of the text and conditions, he thinks he has clinched the deal, only to be told by his Japanese counterpart that he now has got to go back to his headquarters to discuss the matter with his boss. What the British manager understood by 'yes' was agreement with the clauses; what the Japanese manager meant by 'yes' was 'yes, I hear you, carry on, tell me more'.

There are of course other aspects of culture which manifest themselves in a negotiation situation.

As Hagen (1988) points out, foreign partners not only speak languages other than one's own, but also have a tendency, for cultural reasons, to think in different ways and have different priorities in the way in which they do business.

For example, some people prefer to conduct their business meetings with foreigners, initially at least, in a formal manner, and would be offended to be addressed by their first name; some might believe that the use of an informal style and first name would signal to the partners that they are trusted. Two partners from these different cultural backgrounds could easily misunderstand each other if they engaged in negotiations without a prior knowledge of one another's assumptions and values.

Take another example of cultural differences among business negotiators. In some cultures, people involved in business deals, would like to build up personal relationships first and establish the trustworthiness of their trade counterparts before going on to engage in business contracts and activities with them.

Kazakh and British Managers

This factor was particularly important in both Kazakhstan IJVs, the UK-based organizations both reported that significant amounts of time had to be devoted to building up relationships with local management and officials before any venture-related negotiations could take place.

Alternatively, in other cultures, business negotiators would prefer to get down to the nitty-gritty of the deals and contracts straightaway, relying heavily on the legal rights and obligations clauses included therein to safeguard their interests, which reflects business negotiation practice in the USA.

American and European managers

Altany (1989), comparing American business people with their European counterparts, points out that Americans often feel that the European practice of meticulously cultivating personal relationships with business associates slows the expedient conduct of business.

They argue that time is money, and the Europeans waste time. But to the Europeans in general, trust and long-term commitment - not legal contracts and short-term gains - are the heart and soul of a solid business relationship. And the European approach, slower though it is, usually leads to longer and stronger business alliances. The development of these long-term alliances can bring rich rewards for European business partners.

The concept of high-context and low-context is of relevance here. A feature of the high-context, personal style of doing business is that people spend time with clients and partners, become friends and in the process produce reciprocal feeling of obligation. Here there is a greater distinction between insiders and outsiders, between 'us' and 'them' than is found in low-context business cultures.

Relaxing with business clients during lunch and after work is crucial to building the close rapport that is absolutely necessary if one is to do business in a high context business culture; whereas this is not as common or necessary in low-context business (Hall, 1977; 1989; Hall and Hall, 1990).

The manner in which information exchange and communication are structured in negotiations and other business encounters can also reflect the high and low contexting. For example, high-context people, such as the Japanese, are rather slow getting to the point and do not expect to have to be very specific even when they do. They talk around the point. They think that intelligent human beings should be able to discover the point of a discourse from the context, which they are careful to provide. In contrast, the low-context people are fast getting to the point, tend to over-inform and are much more direct in delivering their message. (Hall, 1977; 1989).

American and German

Meyer's (1993) analysis of a group of American and German managers who were engaged in a joint project illustrates the difficulties and challenges that multicultural teams experience at the formative stages of their negotiations and cooperation.

Meyer’s study demonstrates that the Germans and Americans have divergent expectations about appropriate behaviors on at least three levels:

  • the process of relationship and trust-building,
  • the process of communication,
  • and the management of meetings.

The German process of relationship-building is slow, drawn-out and interspersed with frequent 'tests' of the actual level of trust achieved. In contrast, the Americans, even if previously unfamiliar, begin a new relationship in a personable and friendly manner as each party is eager to invest the new relation with an up-front measure of good-will.

As regards communications, American negotiators perceive the German style as directness, even blunt, whereas the Germans complain about the chattiness and superficiality of their American counterparts and their tendency to engage in non-committal 'small talk'. This may reflect the ways in which verbal communication is viewed by the parties involved.

For the Germans, conversation is a channel for exchange of information and the distinction of right from wrong, true from false (Dahrendorf, 1967).

For the American the culturally defined purpose of conversation is more to cultivate social bounds between speakers.

In meetings, the Germans tend to follow a predetermined agenda rather rigidly, but the Americans view the agenda as a loose set of guidelines which can be deviated from freely as and if necessary.

American and Chinese

In a case study of an American multinational company, which is in the process of setting up a joint venture in China, Tayeb (1996b) observed further manifestations of cultural implications for negotiations.

For example, even though the negotiating team includes two members of Chinese origins who are fluent Mandarin speakers, there are still causes for frustration and tension. The negotiations are progressing at a very slow pace, a pace determined by the Chinese partners.

When the team first went to China, the expatriates from the parent company already posted there warned the team of what they might expect in this regard: As one of the team members pointed out, ‘The Chinese will move at the speed they want to move at, they probably don't have all that much in the way of concern for schedule. Time isn't of the essence, it's more the quality of the discussion or the quality of the exchange. And the faster that we try to go then the more it would cost us to do it. We would have to give up more and more and more until we're probably losing money on the deal’.

The partners started in March 1995 on negotiations in Beijing and months later they have still a long way to go.

Typically, when negotiators reach a certain position, the Chinese partners say they must now go back to the ministries that support them, and they will come back and say that, for instance, the deal was unacceptable, and the whole process starts all over again. Or they may change team members on their side because, for example, the government ministries do not feel they are doing as good a job as they might be. This means that the Scottish negotiators have to get their side of argument over to these new people.

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Categories: International Management Culture International Negotiations International Joint Ventures

Human resource management in International Joint Ventures

August 9, 2007 0 comments

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Beyond the negotiation and setting up stages, another aspect of an organization for which sensitivity to national culture is of utmost importance is the management of human resources. At this stage, national cultures become increasingly relevant to international joint ventures, because of their joint management involvement. International joint ventures bring together two or more sets of employees whose national culture gives them fundamentally different views on what constitutes a desirable management style or appropriate organizational hierarchy (Norburn and Schoenberg, 1994).

As Schuler et al (1993) point out, "[National culture is important because of its] impact upon acceptable, legitimate and feasible practices and behaviors... Acceptable in terms of "can we pay workers different rates, and thereby differentiate them, according to performance"; legitimate in terms of "are there any legal statutes prohibiting us from not paying workers overtime for work on Saturday and Sunday"; feasible in terms of "while the society is hierarchical, authoritarian and paternalistic, can we empower the workforce to make workplace decisions in order to facilitate our quality strategy? "

Various comparative studies have demonstrated that certain cultural attitudes and values have significant implications for organizations and the ways in which they are managed (see for instance, McClelland, 1961, Crozier, 1964; Hofstede, 1980, Hofstede and Bond, 1984, Tayeb, 1988, Hall and Hall, 1990; Meek and Song, 1993). These values and attitudes include individualism, collectivism, attitudes to power and authority, achievement motivation, attitudes to conflict and harmony, tolerance of ambiguity and uncertainty, interpersonal trust, and many more.

The Table below, illustrates some examples of the ways in which organizations could be influenced by work-related cultural traits.

Culture-specific aspects of organization

Organization Examples of the Examples of relevant
Dimensions relevant underlying process cultural traits
Centralization Power Relationship Attitudes to power and authority; Trust and confidence in others; Respect for other people's views
Specialization Clear-cut job Ability to cope with
and specifications, uncertainty; Attitude
Formalization job territory to privacy and autonomy
Formalization Control and Attitude to control
and discipline and discipline
Standardization    
Direction of Information Attitude to
Communication sharing information
sharing;   Respect for other people's views
Span of control Power relationship Attitude to power and authority

From: Tayeb, 1996

In an IJV if employees coming from partners’ country of origins have differing levels and degrees of the work-related attitudes and values listed in column 3, there is bound to be tension caused by their implications for columns 2 and 1. Schoenberg et al.'s (1995) research findings demonstrate the kind of complexities involved.

Anglo-French joint ventures

Schoenberg and his colleagues studied four major Anglo-French joint ventures from the chemicals and engineering sectors which formed between 1986 and 1989. The researchers sought to establish the major organizational difficulties and opportunities the partners experienced during the formation and management of the partnership, and the management practices that could overcome and make most of these differences.

They compared the two nations on two of Hofstede's (1980) dimensions, power distance and uncertainty avoidance. They argued that the former would determine the views of each nationality on such issues as the preferred degree of centralization and the appropriate levels for decision making whilst the latter would guide the preferences for the number of levels within the organization and the rigidity of the organizational systems.

In Hofstede's study the French scored higher on both power distance and uncertainty avoidance than did the British. These differences of scores, Schoenberg et al. argued, was reflected in the management styles of the managers in the joint ventures studied.

The natural French management style was widely perceived as being more autocratic, with decision-making authority clearly concentrated at top management levels. In contrast, British executives were accustomed to leave more discretion to middle management levels, with strategic information more widely shared. The two national management styles failed to allocate decision-making discretion at the same organizational level.

British managers would assume that the purpose of a meeting was to arrive at a consensus view and then act upon that view. To French managers the purpose of a meeting was simply to clarify the arguments they would later put forward to their bosses for consideration.

Remuneration system and status of employees were another point of difference. For the French, hierarchical position and payment were dependent upon the educational qualifications of the incumbent.

For the British they were both based on the content of the job itself. These two different approaches to remuneration had caused some serious problems.

Following the French approach would mean that for similar jobs in the French parent company significant differences existed between the salary of an ingenieur and a technicien. In comparison, remuneration in the British partner tended to be based more exclusively upon the job actually done.

In the two of the alliances where technical problems had to be solved by bi-national teams, the underlying scientific approaches could be seen to diverge. The French favored the use of precise theoretical calculations to make sure in advance that a system would work, and would enjoy engineering sophisticated and very general solutions. The British were satisfied with a simpler system that proved empirically to work.

Japanese joint-ventures in China

This kind of cultural clash is a manifestation of the extent to which we all take our home-grown assumptions for granted and expect others to know them and to behave accordingly. Japanese joint-ventures in China are an interesting case in point.

Yager et al. (1994), in their study of foreign joint ventures in China, found that Japanese managers were almost baffled by Chinese workers' display of a lack of pride in and identity with their employer organizations. An examination of some of Chinese cultural characteristics shows that the underlying values of Chinese workers' attitudes to their workplace are quite different from those of their Japanese counterparts.

Culturally, China represents a "high-context" (Hall, 1959) culture, in which meanings often derive from relationships, authority and context. In China conceptions of self, morality, time, causality and probability may differ significantly from conceptions in many other countries (Redding, 1990). Indeed, the persistence of personalized loyalty (i.e. loyalty to a particular individual) in Chinese culture may impede development of organizational loyalty (Castaldi and Soerjanto, 1988). As a consequence, a sense of personal contribution to organisational objectives, so evident for example in the Japanese model of business operation, is not present in Chinese organizations (Yager et al. (1994).

In contrast, Japanese managers come from a culture where, among other things, employees are known for their high degree of commitment to their workplace, and for including it in their in-group. Consequently, the Japanese managers who had taken such sentiments and attitudes for granted found their absence in Chinese work environment puzzling.

There are also other aspects of Chinese culture which might cause some difficulties for joint ventures operating in China.

Traditionally, Chinese personal networking has been important, if not essential, to success, using extended family and other developed relationships and connections to gain cooperation and to get things done. The success of Chinese networking skill in building the effectiveness of small businesses, their interpersonal relationships, loyalties, and a system of mutual support do not seem to carry over to larger organizations, including joint ventures with foreigners. This had implications for discipline. Industrial discipline, a concept implying not only that workers follow a regimen in their jobs, but also the will of supervisors to exercise sanctions in controlling worker behavior, was non existent among Chinese workers. A sense of responsibility to the employer organization, consistency in work performance and follow-through also seemed to be unusual. There was a pervasive need to build identity to the enterprise. Although some joint venture managers reported initial resentment among workers for strict discipline and enforcement of work rules, companies that had adopted clear, enforceable expectations coupled with production bonuses and visible rewards seemed to be more successful (Yager et a., 1994).

An awareness of cultural differences between partners and respect for these could of course help ease complexities and tensions which might arise in an IJV, and thereby increase the chances of the joint venture’s success. But this may be easier said than done. Faulkner’s (1995) study provides a revealing example.

Faulkner found that mutual trust, sensitivity to company culture, and sensitivity to national culture were among the top five attitudes which have a strong association with alliance success. Nine out of ten joint ventures surveyed claimed to have positive attitudes on both or all sides towards national and corporate cultural differences. However, the situation was not always totally trouble-free.

British and Japanese JV

For example, in ICI Pharma, a joint venture of British and Japanese parentage, relationship seems to have met with culture problems. There seems to be, at least on the ICI side, a fundamental difficulty in moving mentally out of the strong ICI culture, into a sensitive understanding of partners from other cultures. The ICI Pharma joint venture has been in existence since 1972, yet ICI can still say: "One of the things that still holds us back in Japan is our lack of understanding of Japanese culture. Relationships are very important in Japan, and we are much less certain about what might spoil a relationship than we would be with a European or US company"

In another joint venture, the Courtaulds/Nippon Paint joint venture, attitude problems also seem to have placed a brake on the development of the relationship. The venture started off well because the people setting it up were sensitive to their cultural differences: "... then there were people changes, and the older people who knew Nippon very well retired, and the younger people came in and didn't understand the Japanese culture, and way of doing things"

The inherent difficulties are involved in adopting and maintaining positive cooperative attitudes in international strategic alliances.

This internal conflict only emphasizes the apparent importance of the attitude question in sustaining a positive alliance relationship (Faulkner, 1995).

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Categories: International Management Culture International Negotiations International Joint Ventures Int HR Management

Socio-Cultural and Political Ecomony Implications

August 9, 2007 0 comments

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National culture and other institutions of the country in which an IJV is situated play a significant part in the actual form that the organization and management style of the joint venture will take. In other words, the host country forms the immediate external environment of the IJV with which it has to interact and to whose pressures and expectations it has to respond. Companies undertaking expansion through IJVs need to understand the significant elements of local country culture, especially in terms of initial negotiations and partner selection.

As far as human resource management is concerned, the IJV’s policies and practices are generally decided by its senior managers, with or without consultation with their employees. But these policies are adopted and implemented having regards to the national context within which the company operates. The political ideology of the government of the day (and the political regime as a whole), the economic conditions of the country (e.g. level of unemployment), the power of trade unions (or lack of it), and the socio-cultural characteristics of employees and managers (and the general public), are examples of a host country’s influences on an IJV’s HRM policies. Moreover, the host country's membership of global and regional pacts and agreements can also have a significant bearing on the organization's HRM strategies. The Social Chapter of the Maastricht Treaty of European Union is an example of this kind.

Major institutions which serve as the channels of influence on an IJV generally fall within six broad categories: legal system, political culture, industrial relation culture, level of economic advancement, membership of global and regional agreements, and the national culture as a whole.

In most countries influences of these institutions on a company’s human resource management are incorporated in the rules and regulations governing employee-management relations, some more explicitly than others. These rules and regulations can either be related to the employees' individual rights, such as equal opportunity, job security, wage levels, work schedules, work injuries and post-employment economic security. Or they can be related to the employees' collective rights, such as unionization, bargaining, the resolution of contract disputes, and participative decision making.

In some countries, there are further rules and regulations which apply specifically to foreign companies operating within their territories, over and above those which apply to all firms. For instance, foreign firms may be required to include local people in their top management teams, and to build or contribute to the construction of local amenities such as houses, hospitals, schools and similar facilities for their employees.

Because of these influences it is argued that the initial decisions taken by the partners in an IJV as to the location of the company would have significant implications for its subsequent management style and indeed its success and survival.

The figure below summarizes the relationship between an IJV and its host country.

Host country influences on an IJV’s human resource management

Legal System HRM Political culture
National International firm's Industrial Relations
Culture HR Management, Culture
Level of policies and Global and regional
economic practices agreements
advancement    

The Collapse of the USSR

The break up of the former USSR into independent republics illustrates another case of some potentially significant implications of macro-level factors for human resource management at the miro-level.

In Kazakhistan, for instance, under the USSR culture, women could and did achieve high positions in business. Now that the country is independent, its old predominantly patriarchal culture, which lay dormant under the Soviet rule, is enjoying a revival, replacing the 'Russian Communist' culture. As a result, the perception of the role of women in the society and at workplace is changing. In the short-term at least it is unlikely that women will have the same opportunities as they had before (Pollard, 1994). Furthermore, the reviving Kazakh culture places a great emphasis on age and seniority and prescribes 'proper' junior-senior relationships, stemming from its nomadic traditions (Rywkin, 1982). This could have repercussions for organizational hierarchy, authority structure, and promotion and compensation policies, among others.

In Conclusion,international joint ventures face additional challenges over and above those experienced by their single-culture owned counterparts because of their culturally mixed ownership. The tensions and dynamics caused by the mixed parentage manifest themselves at the negotiation stage for all types of cross-border alliances, but are specifically acute for human resource management in joint ventures. Management styles have their roots in different cultural assumptions of partners in a joint venture.

It was also pointed out that major cultural values and attitudes, such as attitude to power, tolerance of ambiguity, individualism, collectivism, and interpersonal trust, are relevant to HRM in IJVs.

The location of an IJV can also exert influences on its internal organization and management style through for example rules and regulations governing employment relations.

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Categories: International Management Culture International Joint Ventures Int HR Management

Teaching Management Practices

August 11, 2007 0 comments

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The societal context of management practices plays a significant role in the character of such practices. The learning content and style of teaching of such practices should also reflect their wider context.

Nations differ from one another in their needs, aspirations and objectives. Educational establishments reflect these and can respond effectively only if they tailor their practices accordingly. What, however, one observes in many business schools around the world, especially in the developing countries, is a separation of those schools from their wider context.

For many decades, the United States used to be, and still is to some extent, a model for 'best practice', now Japan is increasingly viewed as a role model. Teaching style and content, exemplified in MBA and similar courses, seem to impart universal management technique packages based on Western models, theories and practice, while the learning needs of managers and students of management are far from being universal.

The point is particularly relevant to developing countries, many of whom, attempting to upgrade their organizational systems and improve their performance in the international market, import various management practices and educational techniques from the more advanced industrialized nations, without due regard to their own socio-cultural and technological characteristics. If these imported practices are not modified and adapted to local conditions, the transfer process will almost certainly fail (Hofstede ). There is also a possibility that the adoption of Western management systems may have an adverse affect on national characteristics such as the effect of 'rational' models on entrepreneurial spirit. Business Development - Sub-Saharan Africa and Srinivas Two studies support the argument that institutional and management development are critical in the context of developing national economies, Bazemore and Thai in their work on the countries of Sub-Saharan Africa and Srinivas on business development in the Third World generally. They warn, however, that problems have been experienced, because of an over-reliance of training methods, poor quality training and a failure to integrate training in the development process. In developing countries, therefore, it is important to assess the type and content of training needed in the context of what is to be achieved nationally. Governments play a crucial role in linking economic development with industrial development. (Bazemore and Thai ; Srinivas ).

Management Education

The methods and the context in which management education is provided is vitally important. For instance, learning styles, just like management styles, are affected by cultural factors. The learning experience in American business schools is very different from learning in a Polish or a Chinese University where educational methods are much more formal. Another consideration is the delivery format of the educational package, apart from MBA courses a good deal of management training is provided through various undergraduate programs, short courses and in-company training schemes.

Identification of who should be trained is perhaps another issue and consideration given to the importance of 'training the trainers' - in this way a multiplier effect is gained. Finally, there is often a lack of local textbooks, importing foreign textbooks also tends to transfer western models and methodologies without incorporating local considerations. This factor may also place a language barrier on the assimilation of new knowledge which may only be overcome in the medium- to long-term.

The contrast between India and the United Kingdom

The contrast between a developing country like India and a developed country like the United Kingdom exemplifies these issues. India is trying to catch up with the industrialization process and become a major player in the international business community. However, it must overcome certain inherent obstacles and problems, such as a colonial legacy which has slowed down its industrialization; massive poverty, a high illiteracy rate, communal tension, a poor physical infrastructure and culturally-rooted resistance to change (Tayeb ).

As a consequence, the government has adopted a protectionist economic policy to encourage the restructuring of the economy and to protect disadvantaged sections of the population, amongst other strategies. Although there has been a measure of liberalization of trade in recent years, then economy is far from being an 'open-door' one. In a climate such as this, where market forces are subservient to social priorities in determining strategies and actions, managers grapple with different needs and challenges from those of an advanced economy like the UK.

By contrast, the UK pursues a liberal open-door economic policy, enjoys a modern physical infrastructure, an educated and skilled workforce and a fully developed industrial base. Here the internal market is competitive, keeping managers constantly on their toes. Research and Development, marketing, advanced technology and business priorities generally are their main pre-occupation, for which they need a different set of tools from their Indian counterparts.

If Indian and British business schools and other institutions of higher education are to cater for the real needs of their respective managers and would-be managers, their curricula should be vastly different from one another. Comparative empirical studies in these two and many other countries are required to determine to what extent differences of approach actually exist in educational establishments around the world.

Developing Nations

It is also important for developing nations, in parallel with learning from abroad, to build on their own resources and develop computable indigenous management teaching practices. The transfer of such practices should not replace but in fact compliment local ones that are a culmination of the context of that particular society. As Marsden points out, current development efforts focus on building institutional capacity through the encouragement of local self-reliance. For developing nations, the West - or Japan for that matter - is not the only source of valuable innovation and creativity. 'Local', 'traditional' or 'folk' knowledge is no longer the irrelevant vestige of 'backward' people who have not yet made the transition to modernity. Rather, it is the vital well-spring and resource bank from which alternative futures might be built.

Jankovitz suggests the interesting and important metaphors of 'selling' and 'new product development' in transferring management expertise. 'Selling' infers a finished product whereas new product development carries with it the need to assess the market requirement and potential use of the product before it is designed, if necessary developing it further as market needs change. This approach also infers that the producer-customer interface is dynamic - managers should not be expected accept new learning passively but to interact with it.

The management context of many developing economies, particularly those of ECE and the FSU will continue to change, requiring the modification of management learning as organizations in these countries become more sophisticated in dealing with the market economy within their own national and industrial environment.

Conclusion

National culture is inextricably linked to management processes and practices, and also to management education. The provision of knowledge, the expectations of its recipients and implementation of new techniques all have significant cultural dimensions. Therefore, the transfer of management knowledge must somehow make a transition across cultures, if such knowledge is to be put into effective practice. The provision of management knowledge should include assessment of the needs of the recipient, as part of the training program design. Learning and adapting new knowledge to local needs takes time - this is often underestimated by providers and recipients alike.

Western Institutions working with universities and business schools abroad have a responsibility to help such institutions develop materials in a way which will be more suitable to their students. This is not to say that local institutions should not be agents of change themselves, but there is a real danger that foreign institutions will develop management course provision which is unsuitable for the needs of their country's managers.

As organizations expand nationally and internationally, the competitive environment has become increasingly challenging and it is probably unsurprising that management should assess techniques used successfully by other organizations both within the industry and on a wider front. Now that Universities operate across borders more frequently, the provision of management education in foreign countries, as well as domestically, may make fresh challenges to the curricula of Business Schools and other institutions.

There may be a danger, though, that the transfer of management knowledge from the West to other countries is perceived as a one-way process. Involvement in management and organizational development in other countries may well provide additional insights for those who provide relevant know-how to these nations.

In the words of Stenton

'..it is not enough to see the relationship between the central and western parts of our continent as a one-way transfer of educational and managerial know-how, with western institutions in the role of consultants bringing 'revealed truth'. Western respect for difference and acknowledgment of diversity will be enriched via successful co-operation with Central Europe'

Businesses and institutions need to become attuned to cultural issues in management development and the application of management techniques. Unfortunately, the transfer of management knowledge between countries still brings with it a litany of failure as well as potential for success. This hit-and-miss approach to the transfer of management knowledge seems to prevail into the twenty-first century.

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Categories: International Management Culture

Learning from Others

August 12, 2007 0 comments

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Transfer of ideas and models in the field of management, and other collective and individual human activities across borders is of course not new and in fact has a long history. In ancient times, great empires learned from one another as well as from those peoples that they conquered. In more recent times, colonial powers took their administrative skills and procedures to their colonies. The Indian civil service is well known to have been modeled after that of the UK during British rule: even now, some five decades after independence, strong traces of British systems are still discernible in Indian Bureaucracy.

Although never a colony, Iran has had for centuries close cultural and commercial ties with France. When, early in the twentieth century, the Iranians wanted to modernize their institutions, they imported ideas from France, especially in such areas as education, the civil service and the legal system.

The early part of the twentieth century saw the adoption of Scientific Management techniques in Europe. Since the early 1980s, Japanese management techniques have been adopted in the USA and the UK in an attempt to emulate the success of Japanese firms. More recently, the economic transition of ECE and FSU countries and the development of the Chinese economy has brought with them a search for management expertise mostly centered on the West.

In the context of the almost continuous evolution of management thought in the West, there exists an interesting perception on the part of some commentators and by many managers in ECE countries that the transition from the command to the market economy will be effected in the short-term. Whilst some organizations will necessarily adopt new methods quickly, it may be naive to think that some fifty years of business context will be replaced in the short-term. Although this fifty year period is only part of a cultural time-frame of much greater antiquity, it has had a major effect on management thinking and behavior in the relevant countries.

A question which has for a long time been a center of debate amongst academics, and a focus of interest amongst managers is 'to what extent are management practices transferable from one country to another'?

From a purely culturaist point of view, organizations and management styles are, as Crozier expresses it 'cultural solutions to social problems'. In which case, an Iranian organization has nothing to learn from an American company, because the two countries are poles apart culturally. A proponent of the universalist approach would argue that business is business wherever you go. Managers have to deal with customers, competitors, unions, creditors and so on, regardless of where they are located.

The reality - what managers actually do - is much too complicated to fit into any one of the above models or indeed any black and white prescriptions. Some practices can be transferred almost without any change from one country to another. Some must be modified to become workable in another setting. Some are deeply culture-specific and may be very difficult to transfer. Some practices are part of a coherent strategy, a 'package' and cannot therefore be transferred successfully in isolation and without the rest of the package going with them as well (Tayeb ).

For example, teamwork has become very fashionable and many managers especially in the West attempt to emulate the Japanese companies in this respect. Team-work is congruent with a collectivist culture and may not necessarily find fertile ground in individualistic countries, or at least not as successfully as in Japan.

This cultural argument aside, team-work is only one aspect of a whole set of Japanese management styles and practices. The package contains some other 'supporting' items such as collective decision-making, job rotation and flexible working arrangements, long-term employment, mutual emotional dependence between employee and employer, seniority-based promotion, team appraisal and reward policies. These other factors all contribute to the presence of team-work in Japanese companies.

To be effective in Western, or any other non-Japanese culture, the idea of the work team should be transferred with at least some of its 'sibling' techniques, outlined above. For example, there is an inherent mutually exclusive dichotomy of thinking in setting up work-teams and asking people to co-operate with one another as team members, and yet reward people on the basis of individual performance, thus encouraging competition among team members. Another example can be cited: one cannot expect employees to consider themselves as members of a 'big, happy family', with a high degree of commitment to their workplace, if, when economic downturns come or there is a fall-off in demand, the company lays off workers and other junior employees or reduce their pay, and leave jobs, salaries and bonuses of senior managers and directors intact.

Similar arguments can be made for other management practices such as Quality Circles, TQM, JIT, plant-based unionization, seniority wage settlement and ringi decision-making, some of which have been attempted by Western companies with mixed results (see for instance Oliver and Davies ; Oliver and Wilkinson ; Tayeb ; Shadur et al. ). In the same vein, Huo argues against the transplanting of American HRM practices into Chinese organizations.

Kindlarski , in considering whether Poland should adopt European, American or Japanese models of Total Quality Management argues the need for a specific Polish approach to quality and how to implement quality programs. This view is supported by Thorpe and Pavlica in their comparative study of British and Czech managers, which indicates that, when adopting any foreign knowledge, managers make sense of new management techniques in terms of their own country culture as 'every country creates its own preferred way of defining and practicing management' (Thorpe and Pavlica p213). In addition, they may have to assess the implications for the organization as well as deciding how to manage the change effectively.

These issues are particularly important in transition and other developing economies where many competing demands are made on management time and resources. There is a need, therefore, to evaluate issues such as implementation timescales, costs, possible resistance to change and the strategic relevance of new techniques being considered by organizations.

The ability gain new expertise through business partnerships should not be ignored (Harrigan ; Kogut ). Technology transfer has been a significant factor in the strategic use of joint ventures by organizations in developing economies. As Pucik argues, the sharing of information and know-how within a common strategic purpose may provide greater opportunities for learning than if a firm retains an individual market presence. Although involvement in joint ventures is still associated with significant risks, firms in developing economies have benefited by an injection of new technology and market expertise in dealing with the pressures and changes brought about by a market economy orientation.

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Categories: International Management Culture