Office Manager

International Business Management
Chapter Two
Understanding the Role of Culture
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What is meant by the culture of society, and why is it important for international managers to understand it? What is meant by the culture of society, Explain how culture affects all aspects of international management?
Culture A set of shared values, understandings, assumptions, and goals that are learned from earlier generations, imposed by present members of a society, and passed on to succeeding generations. A critical skill for managing people and processes in other countries is cultural savvy that is, a working knowledge of the cultural variables affecting management decisions. Managers have often seriously underestimated the significance of cultural factors. According to numerous accounts, many blunders made in international operations can be attributed to a lack of cultural sensitivity. Examples abound. Scott Russell, senior vice president for human resources at Cendant Mobility in Danbury, Connecticut, recounts the following
An American company in Japan charged its Japanese HR manager with reducing the workforce. The Japanese manager studied the issue but couldn’t find a solution within cultural Japanese parameters; so when he came back to the Americans, he reduced the workforce by resigning—which was not what they wanted..
Cultural sensitivity, or cultural empathy, is an awareness and an honest caring about another individual’s culture. Such sensitivity requires the ability to understand the perspective of those living in other (and very different) societies and the willingness to put oneself in another’s shoes.
International managers can benefit greatly from understanding the nature, dimensions, and variables of a specific culture and how these affect work and organizational processes. This cultural awareness enables them to develop appropriate policies and determine how to plan, organize, lead, and control in a specific international setting. Such a process of adaptation to the environment is necessary to successfully implement strategy. It also leads to effective interaction in a workforce of increasing cultural diversity, in both the United States and other countries

Company reports and management studies make it clear that a lack of cultural sensitivity costs businesses money and opportunities. One study of U.S. multinational corporations found that poor intercultural communication skills still constitute a major management problem. Managers’ knowledge of other cultures lags far behind their understanding of other organizational processes. In a synthesis of the research on cross cultural training, Black and Mendenhall found that up to 40 percent of expatriate managers leave their assignments early because of poor performance or poor adjustment to the local environment. About half of those who remain are considered only marginally effective. Furthermore, they found that cross-cultural differences are the cause of failed negotiations and interactions, resulting in losses to U.S. firms of over $2 billion a year for failed expatriate assignments alone.
Culture and its effects on organizations: As generally understood, the culture of a society comprises the shared values, understandings assumptions, and goals that are learned from earlier generations, imposed by present members of a society, and passed on to succeeding generations. This shared outlook results, in large part, in common attitudes, codes of conduct, and expectations that subconsciously guide and control certain norms of behavior. One is born into, not with, a given culture, and gradually internalizes its subtle effects through the socialization process. Culture results in a basis for living grounded in shared communication standards, codes of conduct, and expectations. Over time, cultures evolve as societies adapt to transitions in their external and internal environments and relationships. A manager assigned to a foreign subsidiary, for example, must expect to find large and small differences in the behavior of individuals and groups within that organization.
These differences result from the societal or sociocultural variables of the culture, such as religion and language, in addition to prevailing national variables, such as economic, legal, and political factors. National and sociocultural variables, thus, provide the context for the development and perpetuation of cultural variables. These cultural variables, in turn, determine basic attitudes toward work, time materialism, individualism, and change. Such attitudes affect an individual’s motivation and expectations regarding work and group relations, and they ultimately affect the outcomes that can be expected from that individual

Organizational Culture
Compared to societal culture, which is often widely held within a region or nation organizational culture varies a great deal from one organization, company, institution or group to another. Organizational culture represents those expectations, norms, and goals held in common by members of that group. For a business example, consider the oft- quoted comparison between IBM—considered traditionally to be very formal, hierarchical, and rules-bound, and with its employees usually in suits—and Apple Computer, whose organizational culture is very organic, or “loose” and informal, with its employees typically wearing casual clothes and interacting informally.
Examples: KLM’s travel-benefit policies - McDonald’s in Russia
The Effect of Culture on Organizational Process
Function Affected
Alternative
U.S. culture
Planning, scheduling

Life is preordained

Individual influence culture
Morale, productivity

People adjust to the environment
The environment is changeable
Motivation, rewards

Wisdom and luck are also needed

Hard work leads to success
Loyalty, commitment, and motivation
The individual employee has a primary obligation to his or her family and friends.
A primary obligation of an employee is to
The or organization
Promotions, recruitment

Employment is for a lifetime

Employment can be ended
Culture’s Effects on Management
Convergence—the phenomenon of the shifting of individual management styles to become similar to one another
Self-Reference Criterion—the subconscious reference point of one’s own cultural values. Many people in the world understand and relate to others only in terms of their own cultures.
Parochialism—occurs, for example, when a Frenchman expects those from or in another country to automatically fall into patterns of behavior common in France
Ethnocentrism—describes the attitude of those who operate from the assumption that their ways of doing things are best—no matter where or under what conditions they are applied,

Explain distinguish the major dimensions which define cultural differences among societies or groups?
Why do international managers need to have cultural intelligence in order to interact successfully in host countries?
Managers should recognize, of course, that generalizations in cultural profiles will produce only an approximation, or stereotype, of national character. Many countries comprise diverse subcultures whose constituents conform only in varying degrees to the national character. Example: Canada, distinct stereotyping a cultural profile that tends to develop some tentative expectations—some cultural context—as a backdrop to managing in a specific international setting.
Good managers treat people as individuals, and they consciously avoid any form of stereotyping. However, a cultural profile is a good starting point to help managers develop some tentative expectations—some cultural context—as a backdrop to managing in a specific international setting. It is useful, then, to look at what cultural variables have been studied and what implications can be drawn from the results.
Cultural Subsystems that Influence People and Their Behavior
Before we can understand the culture of a society, we need to recognize that there are subsystems in a society which are a function of where people live; these subsystems influence, and are influenced by, people’s cultural values and dimensions and so affect their behaviors, both on and off the job.
The following sections describe these eight categories and explain their implications for workplace behavior.
Kinship The kinship system consists of an extended family with many members, spanning several generations. This extended, closely knit family, typical in many Eastern nations, may influence corporate activities in cases where family loyalty is given primary consideration—such as when contracts are awarded or when employees are hired (and a family member is always selected over a more suitable candidate from outside the family). In these family-oriented societies, such practices are pervasive and are taken for granted. Foreign managers often find themselves locked out of important decisions when dealing with family businesses. If, however, they take the time to learn the local cultural expectations regarding families, they will notice predictable patterns of behavior and be better prepared to deal with them. Such traditional practices are exemplified in the experience of an Asian MBA, educated in the United States,

Education The formal or informal education of workers in a foreign firm, received from whatever source, greatly affects the expectations placed on those workers in the workplace. It also influences managers’ choices about recruitment and staffing practices, training programs, and leadership styles. Training and development programs, for example, need to be consistent with the general level of educational preparation in that country.

Economy Whatever the economic system, the means of production and distribution in a Society (and the resulting effects on individuals and groups) has a powerful influence on such organizational processes as sourcing, distribution, incentives, and repatriation of capital. At this time of radically changing political systems, it appears that the drastic differences between capitalist and socialist systems will have less effect on multinational corporations (MNCs) than in the past.

Politics The system of government in a society, whether democratic, communist, or dictatorial, imposes varying constraints on an organization and its freedom to do business.. It is the manager’s job to understand the political system and how it affects organizational processes to negotiate positions within that system and to manage effectively the mutual concerns of the host country and guest company.

Religion Religion commonly underlies both moral and economic norms. In the United States, the effects of religion in the workplace are limited (other than a generalized belief in hard work, which stems from the Protestant work ethic), whereas in other countries religious beliefs and practices often influence everyday business transactions and on-the-job behaviors. For example, in India, McDonald’s does not serve beef or pork out of respect for Hindu and Muslim customers.
Associations Many and various types of associations arise out of the formal and informal groups that make up a society. Whether these associations are based on religious, social, professional, or trade affiliations, managers should be familiar with them and the role they may play in business interactions.
Health The system of health care in a country affects employee productivity expectations, and attitudes toward physical fitness and its role in the workplace. These expectations will influence managerial decisions regarding health care benefits, insurance, physical facilities, sick days, and so forth.
Recreation Closely associated with other cultural factors, recreation includes the way in which people use their leisure time, as well as their attitudes toward leisure and their choice of with whom to socialize. Workers’ attitudes toward recreation can affect their work behavior and their perception of the role of work in their lives

Cultural variables dimensions: Cultural variables result from unique sets of shared values among different groups of people. Most of the variations between cultures stem from underlying value systems which cause people to behave differently under similar circumstances. Values determine how individuals will probably respond in any given circumstance. As a powerful component of a society’s culture, values are communicated through the eight subsystems just described and are passed from generation to generation.
Project GLOBE Cultural Dimensions: Recent research results on cultural dimensions have been made available by the GLOBE (Global Leadership and Organizational Behavior Effectiveness) Project team. The team comprises 170 researchers who have collected data over seven years on cultural values and practices and leadership attributes from 18,000 managers in 62 countries. Those managers were from a wide variety of industries and sizes of organizations from every corner of the globe. The team identified nine cultural dimensions that distinguish one society from another and have important managerial implications assertiveness, future orientation, performance orientation, humane orientation, gender differentiation, uncertainty avoidance, power distance, institutional collectivism versus individualism, and in-group collectivism.
Assertiveness This dimension refers to how much people in a society are expected to be tough, confrontational, and competitive versus modest and tender. Austria and Germany, for example, are highly assertive societies that value competition and have a “can-do” attitude
Future Orientation This dimension refers to the level of importance a society attaches to future-oriented behaviors such as planning and investing in the future. Switzerland and Singapore, high on this dimension, are inclined to save for the future and have a longer time horizon for decisions.
Performance Orientation its refers to whether or not people are encouraged to strive for continued improvement. Singapore, Hong Kong, and the United States score high on this dimension; typically, this means that people tend to take initiative and have a sense of urgency and the confidence to get things done.
Humane Orientation This dimension measures the extent to which a society encourages and rewards people for being fair, altruistic, generous, caring, and kind. Highest on this dimension are the Philippines, Ireland, Malaysia, and Egypt, indicating a focus on sympathy and support for the weak.
Cultural Clusters: Gupta et al (2002), from the GLOBE research team, also analyzed their data on the nine cultural dimensions to determine where similarities cluster geographically.

Hofstede’s Value Dimensions: Earlier research resulted in a path breaking framework for understanding how basic values underlie organizational behavior; this framework was developed by Hofstede based on his research on over 116,000 people in 50 countries.
Power distance: is the level of acceptance by a society of the unequal distribution of power in institutions.
Uncertainty avoidance refers to the extent to which people in a society feel threatened by ambiguous situations. Individualism: The tendency of people to look after themselves and their immediate families only and to neglect the needs of society
Collectivism : The desire for tight social frameworks, emotional dependence on belonging to “the organization,” and a strong belief in group decisions
Trompenaars’s Value Dimensions: If view the placement of these countries along a range from personal to societal, based on each dimension, some interesting patterns emerge.
Looking at Trompenaars’s dimension of universalism versus particularism, we find that the universalistic approach applies rules and systems objectively, without consideration for individual circumstances, for example—puts the first obligation on relationships and is more subjective..
In the neutral versus effective dimension, the focus is on the emotional orientation of relationships. The Italians, Mexicans, and Chinese, for example, would openly express emotions even in a business situation, whereas the British and Japanese would consider such displays unprofessional; they, in turn would be regarded as “hard to ‘read’.”
In the achievement versus ascription dimension, the question that arises is “What is The source of power and status in society?” In an achievement society, the source of status and influence is based on individual achievement—how well one performs the job and what level of education and experience one has to offer..