OB in the Cross-Cultural Context

1. OB in the Cross-Cultural Context • Why are cross-cultural issues important? • Growing impact of global business • New markets • Demand for global services • Low cost manufacturing • U.S. management practices not necessarily likely to translate to different cultures • Paradox: may be easier to adjust to a very different culture than to a very similar culture

2. Why International Management? • Important to have a global perspective • Overseas suppliers or markets • Low cost production • Emerging markets (Eastern Europe, LDC) • E-business has no borders • Immigrant labor force even in U.S. • Culture critical to global business, yet hardest to understand • Based on unspoken values and assumptions • Human behavior isn’t logical • But, human behavior is very complex

3. Ethnocentric Home country methods are the best Polycentric Host country methods are the best Approaches to International Business Geocentric Use the best methods, no matter what the source

4. Basic Principles of Culture • What is logical and important in one culture may seem irrational and unimportant in another • In describing cultures, people tend to stress the differences and overlook the similarities • Stereotyping may be inevitable for people who lack frequent contact with another culture • Cultures are not homogenous; differences exist due to gender, age, socioeconomic status, education • Understanding another culture is a journey, not a goal

5. Barriers to Cross-Cultural Understanding • Cultural chauvinism / corporate imperialism / ethnocentrism • Stereotypes (positive and negative) • The highly successful organization may find it more difficult to adapt

6. But……. • The ethical dilemma • Are there common values? • Basic idea of social organization, goal orientation • Personality structure (Big 5) • What about cultural convergence? • Cultural evolution • Cultural diffusion • Immigration and acculturation

7. What Kinds of Differences Make a Difference? • Some specific items: • Language • Religion • Business practices and etiquette • Different laws • Different customs • Culture in general

8. Language Issues • U.S. one of few countries where we don’t learn a second (or a third) language • Languages learned in school often do not translate to business usage • Do you try? • Not in France, not unless you can pronounce it right ! • Other countries, yes: it’s a gesture of goodwill • But, even if the language is the same, will we understand? (Britspeak)

9. Languages of The World Source:http://www.infoplease.com/

10. World Religions Source:http://www.infoplease.com/

11. Religious Issues • Islam: • Ramadan fasting • 5 daily prayers (15 minutes or so), even at work • Modest dress for women (including head scarf) • Friday, not Sunday (noon prayers on Fridays)

12. Legal Issues • Sample of Mexican employment laws • Individual employment contracts required • Strict limits on overtime • Unionization by facility • Full pay for workers while on strike • Discrimination covers political doctrine and social condition

13. Different Country, Different Customs: Dress and Address • Dress • “Casual Days” are a U.S. custom • Removing one’s shoes • Addressing Other People • Herr und Frau, not first names in Germany • Titles (Dr., Professor, “Assistant Vice President”, etc.) very important everywhere but U.S. • Business cards essential in Latin America, Europe, Japan • Personal space: much smaller in Latin America, Spain, Italy

14. Different Country, Different Customs: Time • Time • Time fluid in Latin America, Spain, Italy • Time off work: Germany, France, Scandinavia: 6 weeks vacation, August in the country • Africa: everyone attends funerals (impact of AIDS) • Working hours and pace • Europe (esp. Germany) isn’t open 24/7 • Latin America, Middle East, Japan: take time to establish relationship before getting down to business

15. Different Country, Different Customs: Eating and Drinking • Drinking • Tea in Japan • Coffee in Egypt • Vodka in Russia • A pint over lunch in the UK • Dietary Restrictions: • India: no beef • Islamic countries: no pork or alcohol

16. Perceptions of Corruption Higher score = less corrupt Source: Transparency International

17. Economic Freedom Higher score = less freedom Source: Wall Street Journal

18. Cultural Dimensions:Hofstede’s Big 4 • Based on survey of IBM employees worldwide • The dimensions • Collectivism - Individualism • Power Distance • Uncertainty Avoidance • Masculinity / Femininity (quality of life) • Weaknesses: • Does not include LDCs • Data 20 years old However, recent research confirms this structure

19. Change in Cultures • Hofstede’s data indicates some shift to individualism, but no change in other dimensions • Disneyland phenomenon • That is, surface indicators change, but meaning does not • But….the case of Hong Kong • Management values in Hong Kong intermediate between PRC and U.S. • Indication of flexibility / change?

20. Collectivism - Individualism • Identification with group vs. identification as an individual • Collective cultures: • Think in terms of in-groups and out-groups • Life decisions made by group • Look after one’s in-group, no matter what • Individualistic cultures • Concern for self and immediate family • Individual privacy • Association with level of economic development

21. Venezuela Pakistan Taiwan Portugal Greece Brazil India Japan Arab countries Spain Israel Austria Germany Norway France Canada Great Britain U.S. Collectivism - Individualism: Where Collective…………...……Individualistic

22. Power Distance • The extent to which a culture accepts that power is distributed unevenly • High power distance • People have a place in society, high or low • Superiors are to be respected • Less trust and cooperation • Low power distance • Equal rights for everyone • Hierarchies are established for convenience • Power can be judged to be legitimate or not

23. Power Distance: Where High…………………...……...……Low • Philippines • Mexico • India • Brazil • Hong Kong • France • Turkey • Pakistan • Japan • Argentina • U.S • Canada • Australia • Germany • Sweden • Ireland • Denmark • Israel

24. Uncertainty Avoidance • The extent to which a society feels threatened by ambiguity and uncertainty • High uncertainty avoidance • Lots of policies, rules, regulations • Hard work valued, time is money • Acceptance of authority • Conflict avoided • Low uncertainty avoidance • Look to common sense • Tolerance, constructive conflict • Aggression less accepted

25. Uncertainty Avoidance: Where High…………………...……...……Low • Uruguay • Belgium • Japan • France • Mexico • Israel • Italy • Austria • Arab countries • Germany • Switzerland • East Africa • Canada • U.S. • India • Great Britain • Sweden • Singapore

26. Masculinity / Femininity (Quality of Life) • The extent to which society values typically “masculine” values, such as assertiveness, and acquisition of things, as opposed to caring for others and quality of life. • Masculine cultures • Clear gender roles; machismo • Live to work • Ambition, success valued • Feminine cultures • Sympathy for the unfortunate • Work to live • People are important

27. Masculinity / Femininity: Where High…………………...……...……Low • Japan • Italy • Mexico • Ireland • U.S. • Australia • Hong Kong • Arab countries • Brazil • Israel • Indonesia • France • Spain • South Korea • Portugal • Finland • Netherlands • Sweden

28. …Plus One • Confucian Work Dynamic • Based on work done in East Asia by “Chinese Cultural Connection” group • Focus on: • Long-term • Order • Thrift • Persistence • Respect for tradition

29. Different Dimensions…Same Result • Company provided housing, marriage brokers, etc. in Asian countries • Feminine concern for people? • Taking care of the in-group? • Cooperative labor negotiations • Japan: collective orientation • Netherlands: feminine quality of life • Economic growth and development • Europe: Protestant Work Ethic (Individualistic, High Power Distance, Masculine) • Asia: Confucian Work Dynamic

30. Do National Borders = Cultural Borders? • Multiple cultures • Canada • Belgium • India • Culturally homogeneous areas • Scandinavia • Cultural clusters

31. Cultural Clusters

32. General Expatriate Issues: The Sojourners • How many are there? • Nobody really knows • Estimated 350,000 or more (estimate from 1996) • Who are they? • 87% male • Managers • Sales, technical, professional • What happens? • Estimated 25% to 50% of assignments fail • Cost…$50,000 and up

33. Why do Expatriates Fail? • Family problems (60%) • Inability to adjust • Lack of flexibility • “Culture shock” • Lack of sensitivity to host culture

34. Culture Shock • An emotional and psychological reaction to the confusion, ambiguity, value conflicts and hidden clashes that occur as a result of fundamentally different ways of perceiving the world and interacting socially between cultures. Disequilibrium Stress

35. Aspects of Adjustment • Sociocultural • Social skills needed to operate in different culture • Psychological • Well-being, satisfaction • “Culture shock”

36. What Can Be Done? • Selection procedures • Organizational support: before, during, and after assignment • Training • Few U.S. firms train expatriates (30%) • Most European / Asian firms do • Different success rates clearly establish value of training

37. Training for Expatriates • Knowledge-based • Language • Cultural differences • Cultural sensitivity • General • Specific • Include spouse and, if possible, family members

38. Other Support Mechanisms • Mentor or buddy systems • Trips home • Assistance with schooling and other family needs • Housing / cost of living differentials • Security • Safe housing • Guards, kidnapping insurance, etc.