Strat 4i266l

CHAPTER 11 Cross Cultural Management

Global Strategic Management : Philippe Lasserre

Behaviour Observable, Manifest « Looking at the watch Banging on the Table

Values - Beliefs Preferences Explicit, Declared, Example: « Time is Money », « Authority has to prevail »

Basic Assumptions Meaning Invisible, Unconscious, Taken for Granted Example: « Time is limited», « All men are equal » André Laurent


THE THREE SOURCES OF CULTURAL DIFFERENCES PROFESSIONAL INDUSTRY CULTURE

CORPORATE COMPANY CULTURE

• History of the company ( accumulated experiences: good and bad) • Leadership and dominant coalition • Ownership • Stage of development • Business diversity

• Functional orientation: Marketing Finance Engineering` R and D • Industry norms: Technology Change Key success factors Types of customers


NATIONAL ETHNIC CULTURE

• • • •

Country history Education Social organisation Religion, philosophy

ANTHROPOLIGICAL AND SOCIOLOGICAL RESEARCHES AND BEHAVIORAL OBSERVATIONS HAVE SHOWN THAT THERE ARE SIGNIFICANT DIFFERENCES IN BASIC ASUMPTIONS VALUES AND BEHAVIOUR ACROSS NATIONAL CULTURES THOSE DIFFERENCES HAVE AN IMPACT ON MANAGEMENT BEHAVIOUR

HALL and HALL’s STUDY: The Silent Language

HOFSTEDE’s STUDY: Four Dimensions: POWER DISTANCE / INDIVIDUALISM UNCERTAINTY AVOIDANCE / MASCULINITY-FEMINITY

ANDRÉ LAURENT’s STUDIES: Management and organisational principles

TROMPENAARS’ STUDIES: Value Orientation

RONEN and SHENKAR’S STUDIES: Country Clusters


Silent Language Punctuality Deadline Ex: German Avoid Physical emotional Proximity Ex: British

Financial Wealth Givesstatus Ex: USA Operational Factual Relationship Ex: USA Western Legalistic Countries Anglo-Saxon Germanic Nordic

Perception of Time

Circular Fluid Abundant

Perception of Space

Low Distance

Sequential Scarce

High Distance

Materialistic

Quick And Superficial

Explicit Documented

The Content Matters more Than the Person


Language of Material Goods Friendship Agreement / Disagreement Context

Non-materialistic

Long And Deep

Implicit Verbal

The Person Matters more Than the Content

Delays Postponment Ex: Arabic Physical s Showing emotion Ex: Latin Education Family Seniority Gives status Ex: Malaysia

Ex: Japan

Asian countries

African,Asian Latin American countries

Source: Adapted from Hall(1960)

Hofstede Mapping of Cultures on Power Distance and Individualism 100 Malaysia Mexico Arab Countries Indonesia India Singapore Hong Kong Brazil Thailand

POWER DISTANCE

80

Taiwan

60

Latin European Hierarchical/Individualists

Spain Japan

Asian/Latin American Hierarchical/Collectivists

Italy Canada

40

UK Sweden

USA

Australia

Denmark

20

Anglo-Saxon/Scandinavian Eqalitarian/Individualists

0 0

20

40

60

80

100

INDIVIDUALISM Source:Hofstede, 1980


“It is important for a manager to have at hand precise answers to most of the questions that subordinates may raise about their work” (Q. 24)

Percent agreement rate across countries 100 90 73

80

77

78

66

70 60 50

38

40 30

10 17

20

18

23

44

46

53

27

10 0

S

NL

USA

DK

UK


CH

B

D

F

I

INDO

SPAIN

JAPAN

André Laurent/INSEAD

“IT IS IMPORTANT FOR A MANAGER TO HAVE AT HAND PRECISE ANSWERS TO MOST OF THE QUESTIONS THAT SUBORDINATES MAY RAISE ABOUT THEIR WORK” (Q 24) 1991-2000 DATA 60

Percent agree

50 40 30 20 10


I E

P

F JA P

B B R

D C H

U SA N L D K C N D G B A U S

ZA

S

0

© A. Laurent 2003

It is important for a manager to have at hand precise answers to most of the questions that subordinates may raise about their work” (Q 24) 70

PERCENT AGREE

60

50 40 30

20 10

0

1977-1979 Global Strategic Management : Philippe Lasserre

1991-2000 © André Laurent 2003

DOING vs. BEING

"DOING"

X

X

USA

ITALY


"BEING"


The main reason for having a hierarchical structure is so that everybody knows who has authority over whom. Q.14 Percent agreement rate across countries USA

17 26 30 31

SWEDEN

34 34

UK

42

ITALY

43 50

JAPAN

70 83

INDONESIA 0

20


40

60

80

100 André Laurent/INSEAD

In order to have efficient work relationships, it is often necessary to by the hierarchical line. (Q.2) Percent disagreement rate across countries 26

SWEDEN

32 35 36

UK

43 44 45 51

56

ITALY

59 74

SPAIN 0

20


40

60

80 André Laurent/INSEAD

Country Clusters

Source: Ronen and Shenkar, 1985


TROMPENAAR'S FIVE VALUE ORIENTATIONS VALUE ORIENTATION

EXAMPLE

1 UNIVERSALISM : vs. PARTICULARISM :

Rules-based behaviour

Germanic countries

Relationship-based behaviour

Asian countries

2. INDIVIDUALISM : vs. COLLECTIVISM :

Individual's rights are supreme

Western countries

Group's rights are supreme

Asian countries

3. NEUTRAL vs. AFFECTIVE

:

Emotions are subdued and expressed indirectly Asian countries

:

Emotions are expressed freely and directly

Western countries

4. DIFFUSE vs. SPECIFIC

:

Focus is on context of situation

Asian countries

:

Focus is on specific issues

Germanic countries

Status and respect are achieved by 'doing'

Western countries

Status and respect are ascribed by 'being'

Asian countries

5. ACHIEVEMENT : vs. ASCRIPTION :


Business Systems AngloAmerican RATIONALITY How objectives are set Importance of systems and procedures AUTHORITY The ground rules for Vertical order. Origin of power IDENTITY The ground rules for Horizontal order. (What makes society stick) CAPITAL How Financial Capital is found and channelled

Democratic process System, Rules led

German Nordic Democratic Consensus led

French & Latin Democratic Negotiation led Conflict resolution

Japanese Democratic Consensus led

Korean Autocratic

Overseas Chinese Autocratic

Constitution The Law The State The State The Law Decentralisation The Law The Decentarilsation Centralisation Corporations Decentralisation

The State The The Families Corporations Centralisation Centralisation

Individual rights Contracts Heterogeneity (micro cultures)

Social Welfare

National belonging Cultural Identity Homogeneity

Nationalism Cultural Identity Homogeneity

Financial markets Low gearing

Banks State and Medium gearing market Medium gearing

Banks High Gearing

State Family High Gearing High Gearing

Homogeneity


Social Welfare Cultural Identity Heterogeneity (micro cultures)

Clans Ethnic binding

Sources: Redding, Whitley, Albert, Berger and Dore, Hampden-Turner, Trompenaars.

Business Systems AngloAmerican HUMAN CAPITAL How human skills are developed SOCIAL CAPITAL How trust is created OWNERSHIP Who own enterprises NETWORKING How economic agents relate to each other. (The rules of business transactions) MANAGING How employees are induced to cooperation in the firm

German Nordic

French & Latin

Japanese

Korean

Overseas Chines

Academic Performance Led

Academic and Apprenticeship led

Academic Elitist

Academic plus on the job

Academic Elitist Academic on the job.

High trust Contracts. Legal Institutions

High Trust Contracts

Low trust negotiation

High Trust within groups

High Trust within groups. Low outside

High trust within Family. Low outside

Shareholders

Banks, Employees, Shareholders

State, Shareholders

Banks, CrossShareholding

Business groups, Crossshareholding

Family Groups

Contracts

Contracts.. Some Elitist relationships

Elitist Relationships. State Interventionism

Elitist Relationships

Personal Relationships. State Intervention

Personal Relationships

System led Motivation Perforamnce measures

Hierarchical Technical Competence

Hierarchical bureaucracy. Negotiation

Corporate identity. Corporate Loyalty

Hirarchical Corporate Loyalty

Hierarchical Family Loyalty


Sources: Redding, Whitley, Albert, Berger and Dore, Hampden-Turner, Trompenaars.

THE IMPACT OF INTERNATIONAL CULTURAL DIFFERENCES FOR MANAGEMENT INTERPERSONAL RELATIONSHIPS • • • •

Communication Etiquette Decoding attitudes and behaviour Understanding “silent” language

HIERARCHICAL /MANAGERIAL INTERACTIONS BOSS/COLLEAGUES/ SUBORDINATES) • • • • •

Control Reward/Punishments Personal space Motivations


MULTICULTURAL TEAMS • “Expatriates” vs “Locals” • Group building/working/Relationships/` • Conflict resolutions

PARNERSHIPS/TRANSACTIONS • • • •

Contracts negotiations t Ventures/Partnerships Official meetings Community events/Social events

MULTICULTURAL vs. MONO-CULTURAL TEAMS

MONO-CULTURAL TEAMS

DISASTER

SYNERGY

LOW

HIGH

PERFORMANCE

MULTICULTURAL TEAMS



MAJOR OBSTACLES TO PERFORMANCE IN MULTI-CULTURAL SITUATIONS (1) • Discussion of differences perceived as uncomfortable, inappropriate, threatening or illegitimate.

• Assumption of similarity/homogeneity. • Cultural diversity is denied, lost as a potential resource and transformed into a significant handicap. • Richness of diversity lost on the way.



MAJOR OBSTACLES TO PERFORMANCE IN MULTI-CULTURAL SITUATIONS (2) • The gap between pretended similarity and inner conviction of actual difference widens and creates uncomfortable situation.

• Cautious behavior and unproductive costly politeness emerge as coping mechanisms to handle the situation. • This leads to low risk taking, avoidance of confrontation and achievement of the smallest common denominator.



MAJOR OBSTACLES TO PERFORMANCE IN MULTI-CULTURAL SITUATIONS (3) •

Western individualism.

•

Fear of stereotyping

•

Parochial mindset (only one way of thinking/acting).

•

Ethnocentric mindset (the best way of thinking/acting).

•

Blindness to one’s own cultural conditioning.



MAJOR OBSTACLES TO PERFORMANCE IN MULTI-CULTURAL SITUATIONS (4) • Perception of the other culture as unfortunate deviation from the norm.

• If diversity is neither recognized, understood, acknowledged nor discussable, how could it possibly be appreciated, valued and utilized? • Cultural diversity then re-enters as a handicap likely to lead to failure. Any synergy between cultures becomes inaccessible.



Negotiation Styles: American vs Japanese Negotiation Parameters

Typical American

Typical Japanese

Attitude toward silence during negotiations

Strongly averse; uncomfortable’; “fill the void”

Essential: for decorum; and for non-verbal communication and empathy (haragei).

Reaction to Cross-cultural signals

Unaware; or consider it unimportant

Aware indifference

Attitude toward sequential bargaining and negotiating progress

Strongly attracted to both

Unimportant

Attitude toward sharing information

Open; willing

Collect it avidly, but don’t give it out

Form of the Contract

Long; detailed; covering all foreseeable contingencies

Prefer very short; and limited to general principles and affirmations.

Commitment to the Contract

Total binding

Weak; the relationship is what counts, not the document; and inevitable changing conditions will necessitate later amendments


Source : Sunshine, 1990

1 of 2

Negotiation Styles: American vs Japanese

Negotiation Parameters

Typical American

Typical Japanese

Basic approach to business in Transactional; profit-oriented; general detail-conscious; legalistic

Structured; strategic; starting from trust

Central purpose of the negotiation

Reaching agreement on a contract

Launching a long-term relationship

Selection Criteria for negotiator(s)

Verbally articulate generalists; technical competence’; “rational abilities”

Rank; position; ”social competence”

Appropriate number of negotiators

Few

Many: in order to demonstrate seriousness and for functional coverage, including learning.

Appropriate role(s) of Lawyers

Key participant: leader, contract advisor, and/or draftsperson

None: seen as adversarial troublemakers.

Attitude toward decisionmaking process, and appropriate degree of delegation of authority to negotiators

Top-down decision-making; very high degree of delegation of authority

Consensual middle-up decision-making (ringi seido); little or no authority delegated to negotiators.



2 of 2

Negotiation Styles: American vs Japanese

Negotiation Parameters

Typical American

Typical Japanese

Appropriate tone for negotiation and communication

Direct; informal; familiar; egalitarian; candid

Highly indirect; highly formal; hierarchical; reserved

Negotiators’ interest in personal feelings and values of counterparts

Little or none; irrelevant or improper; logic more important than emotions; issues more important than personalities

Acute; personal rapport essential to establish trust (ningen kankei).

Appropriateness of socialising Inappropriate; unacceptable; with counterparts risks conflict of interest and loss of personal control Attitude toward time during negotiations

Acutely time-conscious; “time is money”; impatient


Highly appropriate; and traditional release; also, ritualised gift-giving. Patience in the key.


Chinese Business Negotiating Styles • Large team, vague authority, presence of technical people, often with incompetent interpreter

• Play competitors off against each other • “Sweet and sour” approach

• Exploit “agreed principles” • Play home court • Buy best technology but show no appreciation

• • • •

Attrition Shaming technique Exploiting vulnerabilities Taking surprising actions

for monetary value of knowledge • Making interests • Price-sensitive • Stalling, delays and indecision

• • • •

Showing anger Friendship means obligation Double standards “Richer bears heavier burden”

• Hierarchical • Non-legalistic vs. Legalistic approach

• Mixed feelings toward foreigners • Re-negotiate old issues.


Source: Tony Fang, 1997

Differences in Business Practice Examples ETIQUETTE Addressing

How to name the other person

Gesturing

How to position oneself and how to use body language

Dressing

Dress code

Eating

Importance of meals in business dealing. Behaviour at the table

Timing

How to control time

Talking

Importance of verbal communication


 In Malaysia nobility titles are the proper way to address ( Encik, Tan, etc..  In people are addressed by their title (Monsieur le Directeur)  In the USA first name is normal  In Japan, the exchange of business cards is critical  Feet soles showing are offending Arabs  Left hand shaking is not proper in Muslim countries  Finger pointing is considered as highly threatening and impolite in Asia  Malaysian businessmen use jacket and ties while in Singapore long sleeves shirts are normal business attires  French business transactions usually take place at a lunch or dinner table  Chinese banquets and sometime drinking punctuate deals  Signs of impatience are considered as improper in many cultures  Lengthy preliminaries are usual in the Middle East  Silent pauses are the norms in Chinese or Japanese

Differences in Business Practice Examples RELATIONS Engaging

Contracting

COMPETING Advantages

Supplying

Importance given to establishing personal relationships in business transactions Importance given to overall agreements on principles versus details



Most Asian countries privilege the personalisation of s before engaging in business transactions



Legal contracting is the norm in the USA while broad agreements are considered satisfactory in Japan

Product’s technology versus Connexions as a source of competitive advantage Preferences given to friends and families in supplies contracts



In China, connexions (Guanxi) are still a very important factor of competitive advantage



In Asia the notion of “extended families” implies that preferential treatment be given to families and friends for supplies contracts.


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