Category International Negotiations

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

Negotiation Process

August 1, 2007 0 comments

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We now come to the short slide presentation and commentary on the negotiation process (negotiations - web presentation) determining the areas where there is likely to be a cultural effect.

Then we look at some country-specific themes, such as making deals and appointments, before going on to a general discussion on doing business in other countries. Finally, we will discuss other sources of information, bringing in issues from the theories of culture discussed above. Further reading will reveal some of the important implications for managers and students are encouraged to access various websites relevant to the discussion.

Overview

the stages contributing to successful negotiations: planning and preparation, building relationships, exchanging information, persuasion and reaching agreement. We will look at each of these in turn.

A Framework for Successful Negotiations

  • Planning and preparation
  • Relationship building
  • Exchanging task-related information
  • Persuasion
  • Reaching agreement

Planning

Some background Issues

Background and Circumstances + Company and country profiles, management styles. Negotiation Issues + what must be achieved, what would we hope to or would like to achieve, timing and location Participants + use of third parties Processes + dress code, location, ‘getting to know you’ + women’s roles

Here we are involved with background information-gathering about the negotiation. An obvious component is a view of what is to be achieved; yet many managers still begin negotiating without a clear vision of the desired outcome. There are other factors, however. We need some background information concerning the other parties, what country they come from; their company and potential styles of negotiation. If third parties such as intermediaries are to be involved, their role must be thought out. Finally, some of the artefacts require consideration, such as dress codes, gender issues, the location of the negotiation and what efforts are to be made to build interactions and personal relationships.

The location can be surprisingly important. As in politics, some companies favor a neutral ground, instead of using the other party's premises or their own. Dress codes can be important, as can the involvement of female managers, especially if the other party originates in a paternalistic society.

Here is an interesting story how a manager of a team negotiating the supply of electronic components from Japan. The Japanese firm sent a team of representatives to Scotland to complete negotiations on price and other supply considerations. On their arrival, the lady concerned went to meet the party in the firm's reception area. She greeted them and escorted the team to the room where negotiations were to take place, organized refreshments and introduced her colleagues. She then began to make conversation with each of the delegates, but particularly with the leader of the group. The group were very surprised that she remained in the company, as the conversation was turning to business matters. Their surprise was complete when they found that she was, in fact, the most senior in status of the Scottish team; she said to me later that they had obvious difficulty in negotiating with a female, even though they were all experienced negotiators!

Relationship Building

  • personal introductions
  • building trust
  • socializing
  • importance of patience
  • seniority, age, authority and rank issues
  • business cards and gifts

Other cultural issues include the age and rank of negotiators, remember that in some societies age is seen as equivalent to seniority in the role whereas, increasingly, senior managers may be quite young (as in the USA). Authority is important, many nations expecting negotiators to be able to take action and without referring their decision for the sanction of senior managers.

Finally, we come to two important aspects: business cards and gifts. The giving and receiving of business cards is a ritual with its own rules. For example, always give a Japanese your card holding it in your two hands, not one, as this symbolizes the importance of the process. Cards should also be received in two hands AND READ IMMEDIATELY, not put straight into a pocket. You will see many Chinese and Japanese leave your card on the table, so that they can refer back to it - this is a practice that might be taken up with advantage by others! Gifts are often a bone of contention but a small gift to the head of the negotiation team may well be appreciated.

Exchanging Information

  • formal presentations and position statements
  • ‘putting cards on the table’ (distributive) versus seeking others’ point of view (integrative)
  • selecting important data for the negotiations and information about expectations

The cultural issues here are language and the process of communication, both verbal and non-verbal. Obviously, if there is a language problem, it would pay to engage the services of an interpreter (your own if possible). It is best to keep the information specific and to reduce non-verbal behavior to a minimum so as to avoid misinterpretation. This can happen with verbal communication too - I have experience of situations where one negotiating team were saying 'yes' and the opposition thought that they were agreeing with them, whereas in reality what they were saying was ‘yes - we understand’, not necessarily with agreement. So it is important in this exchange of information stage to pause and ensure that the parties share an understanding of the information that has been shared.

Posted by lisa
Categories: International Management International Negotiations

Persuasion

August 1, 2007 0 comments

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Tactics

  • clouding the issue by asking detailed questions
  • searching for direct answers
  • threats and promises
  • avoiding concessions
  • use of emotional behavior
  • the power of silence
  • getting beyond ‘yes’

For many, this is the core of the process and some make the mistake of treating this stage as the complete process, where as we have seen that there is much more to the negotiation process. There are a number of different tactics, which we need not go into details about here, save to say that the use of emotional behavior and of silence can both be very effective and also, if badly managed, may lead to a breakdown of negotiations. We bring our knowledge culture to bear again (remember Trompenaars dimension of neutral versus emotion?) Some people are very voluble, often raising their voices, not in anger but to emphasize a point. The British seldom show any emotion in negotiations, often misleading the Italians who may consider them unenthusiastic about a potential deal. The use of silence can also be very effective; it has been known for silence to push a negotiating team to making concessions they would not otherwise have made, in the mistake that the other party was not interested in their proposals. The Chinese and Japanese use this tool very well. Getting beyond 'yes' is again important: what does yes mean, that I am in agreement or that I understand?

This stage of negotiations focuses on efforts to modify the views of other parties to sway them from their current way of thinking. The Japanese negotiator believes that little persuasion should be necessary if the parties have taken the time to understand each other thoroughly. They will also react negatively to open disagreement and aggression. The Japanese tend to listen to persuasive arguments and respond with silence, which means that they will consider the argument presented.

However, American negotiators spend a lot of time and effort on persuasion. They are often aggressive in their attempts to persuade and use tactics such as threats to break off negotiations. Americans are uncomfortable with silence and interpret it to mean that that their arguments have not been understood or the other party is not willing to agree.

Posted by lisa
Categories: International Management International Negotiations

Reaching Agreement

August 2, 2007 0 comments

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  • Formal agreements
  • Informal agreements
  • Agreement not to agree
  • Agreement to continue

The next stage may seem to be simple but agreements come in many forms and for some countries (Russia for example) the agreement is not the end of the process. Some negotiators make the mistake of immediately calling in their lawyers to handle the agreement, while the other party is still outlining the agreement. This early engagement of the law can be misconstrued as a lack of trust in the negotiators. Informal agreements can be as effective as formal ones and some companies still operate in this way, building long-term relationships into the bargain. If it is to be a formal agreement, the country in which the agreement is legal should be agreed, as should any financial arrangements. As a hedge against currency fluctuations, many firms will only use certain hard currencies, although this makes difficulties for developing countries that usually have a problem with currency reserves.

There are two further possibilities. Firstly an agreement not to agree is a valid outcome and in many instances is right and proper. If the companies are not going to get along, better it is found out now, rather than later when significant investments have been made. Secondly, an agreement to continue signifies that common ground may be found but it will take more time. Unless there are pressing deadlines, arrangements for further meetings can be made.

I mentioned Russia earlier in the context of agreements. For the Russians, an agreement is only another stage in the negotiation process; for example, if anything materially affecting the agreement changes, then the agreement cannot stand and must be re-negotiated. This view is at variance with that of the Americans, wherein the agreement is the end of the process.

To reach a mutually acceptable agreement therefore some concessions by both sides are usually necessary to achieve an agreement. Japanese negotiators tend to make all concessions at the end of the negotiating process and expect that these will lead immediately to the conclusion of the agreement. They believe that at this stage they should have understood the other side’s position and how it relates to their own, so that they are in a position to decide what concessions are necessary to reach the final agreement.

American negotiators, on the other hand, tend to make concessions throughout the negotiating process and to evaluate their progress towards agreement on a continual basis. They are put off when other parties do not seem to be willing to offer concessions early in negotiations and may interpret this to mean that their side needs to offer more concessions.

Negotiations can lead to conflict and here management expertise is very much tested.

Managing Conflict

  • Conflict - good or bad
  • treatment of conflict
  • approaches to managing conflict
  • resolving disputes

Although many nationalities will do their best to avoid conflict, this sometimes happens in negotiations and needs careful management. It is usually necessary to take the heat out of the situation by taking another route through the negotiations or by backtracking to a previous point of agreement and starting again. Conflict can focus the minds of negotiators but must be balanced by good sense.

All negotiations involve tactics and these must be used carefully if the discussions are not to be threatened.

The use of threats, for example, can not only compromise the discussions but make reconciliation difficult. Concessions must be managed carefully or the original requirements of the negotiations may not be met. Consider the process from two standpoints, that of winners and losers and that of win-win situations. The latter is the more popular outcome in contemporary negotiation practice.

Implications for the Manager

  • Preparation

check aspects of the other country and the other culture

  • Team

make-up consultations, authority for both sides

  • Where and when to negotiate
  • Preparing a strategy

priorities, importance, other party’s needs, concessions, development of trust, structure for negotiations

The above brief contrast of negotiating processes indicates that negotiations can easily break down because of lack of understanding of the cultural aspects. In the first and third stage, conflict can easily happen because of misunderstandings. The Americans may feel that the Japanese are wasting time in building unnecessary relationship and silence by the Japanese may also be misinterpreted. However, different timings in the stages will also cause a similar effect. For example, in stage two, the Japanese tend to know and understand others before disclosing information, whereas the Americans might disclose information at this stage.

Now review the negotiation process and note the progression from planning to agreement.

Assess each stage in the context of your knowledge of culture and assess the impact (if any) of cultural differences.

Posted by lisa
Categories: International Management International Negotiations

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

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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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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Organizational culture and joint ventures

August 9, 2007 0 comments

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In addition to national cultural differences, differences in corporate cultures of the partners involved also play a part in the joint venture's human resource management. Corporate cultures embody ways of doing things, such as power structures and control systems, management and leadership styles, and attitudes to investment and risks. Variations in organizational cultures across the parent companies and within the venture might constitute a major impediment to effective implementation and subsequent operations.

British and German partners

The partnership between GEC and Siemens, for instance, has been reported to be marked by contrasts between British firm's decentralized and short-term approach and the centralized longer-term style of the German partner (Financial Times, 3 July 1990).

British and Italian parent companies

One of the international joint ventures among Faulkner's (1995) sample referred to earlier provides an interesting example here. This joint venture, EVC, was set up by its British and Italian parent companies, ICI and Enichem. EVC faced two very strong cultures. ICI have a strong internal culture based on teamwork and debate, whilst Enichem are much more functionally driven. The production director at Enichem for example gets on with production, and is somewhat loath to express opinion related to other areas. In ICI, the concept of Board Member is more broadly interpreted. These different cultures could not fuse easily in EVC, and the chief executive officer had some trouble over clashing cultures as a result.

The issue of organizational culture is also relevant in the context of the formation of an IJV. If the company is created by the partners as a greenfield site, the cultural clash and tension thus ensued might be comparatively less than when the venture is formed by a partial take-over of an existing firm by an outside partner. In this latter case, there are old habits and ways of doing things which might not be appropriate for the new entity and which might prove difficult to unlearn. An example of this was a company studied by Tayeb (1994). Hurricane (pseudonym), a Japanese multinational, had been attracted to ‘favourable’ investment opportunities in south west of Britain.

Japanese multinational looks toward investment opportunities in Britain

Hurricane had chosen this part of the country as the site for its operation primarily because of its high unemployment rate and because it was designated as a development zone, and therefore there were financial incentives for the company to have an operation there. The company first became involved in an existing British-owned electronics firm as partners in a joint venture, because the firm was in financial crisis and welcomed the infusion of capital from their new partners. However, the Japanese partners later met with resistance from the local managers to the technical, managerial and structural reforms which they attempted to implement.

The Japanese managers wanted to produce quality products, with minimum costs, but they had some difficulties in getting the employees to realize the merits of new methods of quality control, e.g. built-in control in the production process, and cost saving practices, such as getting their raw materials in time to go to the production line, (the so-called just-in-time process), thereby eliminating the need for expensive warehouses.

The 'old' company managers and employees were worried about the uncertainties and confusion which could be caused by the change over, and therefore resisted the introduction of new ideas and a new management style. For instance, the unions' resistance to some of the proposed changes rested on fears that the changes might reduce their power or challenge their traditional territorial claims over various jobs and skills. Also, as in some other British firms, a culture of 'them and us' was prevalent within the company which had created a division between the management and employees. This was regarded by the 'new' management team as a serious obstacle to the successful implementation of their proposed policies.

After a few months of negotiations, the Japanese partners proposed either to buy out all the shares or to pull out completely. The former option was accepted by the British managers, and the company became wholly owned by Hurricane Corporation. The Japanese now had the freedom to tackle the situation largely their own way and fundamental changes were soon under way (Tayeb, 1994).

Scottish company sets up an IJV in China

The problem of old habits carried over to the new venture is a concern of the Scottish company which is in the process of setting up an IJV in China. Chinese workers have lived and worked within a Communist structure, which has been proven to be flawed in terms of efficiency.

A standard joke going around among the Scottish Managers is ‘How many Chinamen does it take to change a light bulb?’ As one of the negotiators recalled the actual experience he had, the answer is four.

“We needed a light bulb changing in the house and we had four people coming to change it, one to go up the ladder to put it in, one to hand the bulb up to him, one to hold the ladder and one to supervise, you know. So, they do employ everybody but not everybody is all that productive”.

The challenge facing the company as the managers see it is not to change the cultural attitudes and values of their Chinese workforce, but to help them unlearn unproductive working practices, and replace them with those which are more conducive to greater efficiency.

In addition, what the company is aiming for is to recruit young employees who are basically more adaptable, and who have not been subject to traditional working practices. They will then train these employees to work the Scottish partner way. The belief is that the Chinese would not have any problem with this approach, because they need to be competitive in the world market, so they will be keen to learn the way their foreign partners do things and maybe within 20 or 30 years they will be doing it even better.

German-Czech IJVs

In their analysis of two German-Czech IJVs, Pollard et al (1996) argued that both organizational and professional cultures could affect the operation of a joint venture company. In one case, the transfer of technology from a parent company was successful only because that parent was allowed to dominate the specification and implementation of new systems. Co-operation between the firms would not have worked because of a skills disparity between German and Czech staff.

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National Culture and the Transfer of Management Techniques Across Borders

August 9, 2007 0 comments

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Although the cultural relativity of management practices has attracted a great deal of comparatively recent attention by academics and practitioners, the teaching and learning of such practices, in terms of both content and style, are still viewed by many as a culture-free universal matter.

National Culture and Organizations

The last three decades or so have seen a lively debate on the role of national culture in the shape and operation of business organizations. Some commentators have emphasized the universality and similarities between organizations (Kerr et al ; Cole ; Hickson et al ; Form ; Negandhi).

Others have emphasized the uniqueness of organizations, given their cultural contexts (e.g. Meyer and Rowan ; Hofstede ; Lincoln et al ; Laurent ).

However, as Tayeb argues, the two sides of the debate are not mutually exclusive; rather they complement one another. That is, certain aspects of organizations are more likely to be universal [such as shop-floor layout, hierarchal structure and the division of functions], whereas other areas are more culture specific [such as human resource management, management styles and control procedures]

What is certain is that organizations and their employees do not live in a vacuum, separated from their societal surroundings. To begin with, national culture as a set of values, attitudes and behaviors includes also those which are relevant to work and organization. These are carried into the workplace as part of the employees' cultural baggage. Work-related values and attitudes [such as power distance, tolerance for ambiguity, honesty, the pursuance of group or individual goals, work ethic and entrepreneurial spirit] have been argued to be part of the cultural identity of a nation.

Moreover, society at large has certain expectations from its organizations and exerts influences on them, through various formal and informal means. Political, social, and economic institutions and factors, such as economic structure, trade unions, social stratification, educational systems and pressure groups, can all exert their own influences in turn on the organization.

As Amado et al point out:

'[The] genius would seem to reside in the aptitude for integrating cultural reality into management modes, rather than ignoring it or establishing it into one-sided, imperious determinism and then sitting back passively to suffer the consequences. If the way such organization functions can be seen actually to "work", it is also because they are in step with the cultural reality on which they are based, which they can even be said to reflect. In other words, there really does exist a sort of cultural resonance between the organizations "micro" context and the "macro" context of society, this resonance helps in understanding the equilibrium of an organizational system, as strange as it may seem at first glance'.

Japanese and American Companies

Societal context can also influence the means by which managers may perform their tasks and implement organizational strategies and policies. A comparison between Japanese companies from a collectivist culture, with those originating in an individualist one, say that of the United States, shows that the 'whats' may be universal and similar but the 'hows' are different and the differences appear to be culture-specific (Tayeb ).

The similarities between American and Japanese companies are primarily because the countries are fundamentally capitalist entities. They ultimately pursue profit maximization. The approaches are different but the objectives are the same. In the American firms, the managers may go for short-term profits to satisfy their shareholders and to satisfy the performance criteria set for them by their bosses. Their Japanese counterparts might choose to achieve profits via long-term growth strategies and market dominance. Both must tackle issues such as economic recession, labor costs, competition and the like. A Japanese company might choose, in response to economic down-turns, to reduce labor costs by cutting the managers' pay; its American counterpart might respond to similar conditions by laying off a significant number of manual workers and some white-collar workers, with a paltry 1 percent pay cut for the executives (The Economist . The roots of these different approaches can be traced to their respective socio-cultural backgrounds (Tung ; Briggs ; Tayeb ).

The Japanese employees' and employers' behaviors may be related to their collectivism, the inclusion of the workplace in their in-group, their sense of duty and indebtedness to one another as members of a group and their value for face-saving. Since suffering a humiliating loss of face in World War II, their determination to succeed economically in the world has intensified group cohesion among members of society, with the feeling of being all part of one big family.

By contrast, Americans belong to a very individualistic nation, where people pursue mainly their own interests and those of their immediate family - the in-group definitely does not include the workplace. The primary commitment and loyalty of individuals do not therefore lie with the company or any other larger groupings of which they may be a member.

These characteristics seem to be reflected in the culture of business organizations. The Japanese company typically considers its employees as an asset rather than a liability; it invests in their development, has a long term view of their relationships, and hires employees (especially the skilled core work-force) on a long-term basis, training them through rotation in various functional departments in order to enhance their flexibility. Employees, in return, display a high degree of commitment and loyalty to their work organization.

The American company and its employees typically have a short-term perspective. Employees join their work organization as a step on their career development ladder, leaving the company when better prospects beckon elsewhere. The company, on its part, hires and fires the employees at will, recruiting them to fill specified slots - flexibility is not an objective.

At a more operational level, two studies are of particular relevance to the 'what' and 'how' argument, the first by Tayeb and the other by Misumi .

Indian and English work-related attitudes

Tayeb, in a cross-cultural comparative study of Indian and English work-related attitudes and values and organizational structures, suggested that, although in modern industrial societies business organizations tend to develop similar structural configurations in response to similar task-environments, the means by which they achieve these configurations differ depending on the particular socio-cultural characteristics of the society in which they operate and from which the bulk of their employees come.

She found that matched-pair Indian and English organizations were similar in such universal dimensions as specialization and centralization but differed considerably on the amount of consultation or delegation of authority which took place within them. English managers consulted their subordinates more widely before decision-taking and delegated authority further down the hierarchy than did their Indian counterparts. Additionally, English employees communicated with each other to a far greater extent than did the Indian employees.

The differences between the two samples were consistent with the cultural differences between Indian and English people as a whole (Tayeb ). Later studies, such as those conducted by Lincoln and Kalleberg and Smith et al arrived at similar conclusions.

Leadership Style

Misumi's theory of leadership style is based on the argument that behavior must be understood in terms of genotypes and phenotypes,

the core intention of an action and the manner in which that intention is expressed in a particular cultural context.

In other words, there may well be certain underlying universal structures in the behavior of managers which are 'genotypic' or inherent in the superior-subordinate relationships. But these genotypic structures will be expressed in a variable manner, which is affected by numerous factors in the specific environment of a particular manager.

For instance, a Japanese manager might show his concern for an employee by taking an interest in his private life, such as arranging his marriage for him or helping him to solve personal problems, whereas American or British managers show the same concern by providing their employees with appropriate equipment so that they can perform their job properly (Smith et al ; Tayeb ).

East and Central Europea and the former USSR

In transition economies, such as those of East and Central Europe (ECE) and in the former Soviet Union (FSU), it is particularly difficult to study such patterns of work-place interaction, as the work environment is changing rapidly and with it the attitudes and behavior of managers and other employees alike.

What should not be underestimated, though, is the strength of the pre-1990 culture in former command economies. It can be argued that the old elites still have significant power in society, particularly in government and privatized companies. What may be suggested, however, is that the same conditions prevail, the structures and layout of facilities being basically similar to equivalent industries abroad but the local cultural differences having a marked effect on the workplace and management decision-making.

Just as the rest of Europe is a mosaic of management styles (Stenton ), so are the ECE and FSU regions. It would therefore be quite erroneous to consider these cultures as an amorphous whole. For example, power distance in Poland is high but not as high as in France (Yancouzas and Boukis ). The Russian Federation has a larger power distance than both these countries, whereas in the Czech Republic the power distance dimension is similar to the comparatively low UK value.

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