For any international organization, it is of enormous significance to understand cultural differences and make good use of them in the global context. National culture may be thought of as the values, beliefs, perceptual orientations, and norms typical of the members of a particular society (Trompenaars, 1997). Management techniques inconsistent with national culture can lead to conflict between multinational corporations (MNCs) and its employees and, perhaps the broader society. Comparative studies of national culture across a large number of countries are limited because of the significant costs associated with data collection. A study by Geert Hofstede, using data collected in around 60 countries in the late 1970s, remains influential despite controversy over his methodology and interpretation of the findings. Through insight into a culture perspective, the essay analyzes the role and impact of culture on International Human Resource Management (IHRM). It starts by comparing the cultural dimensions of Australia and China, and then deals with the methodological and limitations of Hofstede's research process, as well as the application of the findings to the human resource management function.
Hofstede's model of cultural traits identifies five dimensions of culture that assist to explain why people from various cultures behave the way they do. Through the comparison of Chinese and Australian culture using the cross-cultural dimensions: power distance (PDI), uncertainty avoidance (UAI), masculinity (MAS), individualism (IDV), and long-term orientation (LTO); an insightful view into the differences and similarities of the cultures can be obtained. By exploring these differences and similarities from an IHR perspective, strategies aimed at achieving organizational goals can be better achieved.
The first national culture dimension to be identified is the measurement of power distance. In countries with high power distance like China (PDI of 80), individuals are more likely to accept differences in authority or inequality. Management is inclined to be dictatorial, with their subordinates remaining faithful and obedient to them at all times. On the contrary, in Australia with a relatively low PDI of 36 (ITIM International, 2003), individuals place more emphasis and value on independence. Harrison (1995) suggests that "societies with low PDI are characterized by the norm value that inequalities between people should be minimized, and, to the extent that hierarchies exist in such societies and their organizations, they exist only for administrative convenience".
Schuler, Dowling, & De Cieri's (1993) framework of SIHRM proposes that factors endogenous to the firm such as organization structure, are important influences on IHR strategy and practice. The issue is whether multinational corporations (MNCs) should transfer its national or global HRM system to a particular subsidiary or allow the subsidiary to develop or maintain existing employment practices rooted in indigenous practices. According to Taylor, Beechler, and Napier (1996), the greater the differences, the less likely the transfer of home-country practices. Hence, the vast contrast between Australia and China's PDI rankings proves to be problematic for international businesses, making organizational design extremely difficult for the IHRM function (Briscoe & Schuler, 2004).
Additionally, employment practices such as performance management will also require different approaches. Performance management generally involves two-way communications which is not embraced by Chinese culture as the large power distance found in China indicated that it is inappropriate for subordinates to challenge the authority of their superiors (Lewis, 2003). Therefore when conducting a performance appraisal in China, a straight forward form of appraisal would be better received and employee participation should be encouraged through further training and never forced.
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