Chapter 3 – Impact of Culture on IHRM

CHAPTER 3 – Impact of Culture on IHRM

Learning Outcomes:Definition of cultureImportance of culture in international

businessImportance of culture to IHRMDifferentiating between convergence,

divergence and cross-vergence

Definition of what we called a “culture”:Culture is the characteristic way of behaving

and believing that a group of people have developed overtime and share. Groups culture consist of:

- gives them a sense of who they are, of belonging, of how they should behave.

- capacity to adapt to circumstances (culture defines what is appropriate)

- affects every aspect of the management process (how people think, solve problems and make decisions)

National Culture and Organizational culture:Organizational culture:

“ in organizational theory, culture is shaped by organization’s unique history and situational growth. It can be defined as the values, beliefs and expectations more or less shared by the organization’s members . It effects the way a company does business and makes known relevant employees, customers, suppliers, competitors.

National Culture:“A nation’s culture, similar to that of an organization,

is comprised of the symbols, values, rituals, and traditions of the people living in a particular region. Language, food, and family traditions are all rooted in national culture. How people behave in public verse how they behave within their own home is also associated with values and standards of their nation. Cultures usually differ in relationships between the individual and society, ways of dealing with conflict, relationships to authority, and conceptions of class and gender.”

The 4 “Dimensions” of culture:Dutch scientist, “Greet Hofstede” identified

four cultural dimensions around which counties have been clustered, with people in each group exhibiting identical behaviours. The four dimensions are Power distance, uncertainty avoidance, individualism and masculinity.

1. Power Distance: power distance is the extent to which power

is distributed unequally. High power distance countires have norm, values and beliefs such as:

inequality is fundamentally goodEveryone has a place, some are high, some

are lowMost people should be dependent on a leaderThe power is entitled to privilegesThe powerful should not hide their power

Eg: managers adopt theory X leadership style. i.e they must be authoritarian, must force workers to perform and must supervise closely.

2. Uncertainty Avoidance: Uncertainty avoidance is the extent to which

people feel threatened by ambiguous situations, and have created beliefs and institutions that they try to avoid these. Countries with citizens who do not like uncertainty tend to have a high need for security and a strong belief in experts and their knowledge. The characteristics of such culture are:

Conflict should be avoidedDeviant people and ideas should not be toleratedLaws are very important and should be followedExperts and authorities are usually correct and Consensus is important

3. Individualism: individualism is the tendency of people to

look after themselves and their family only. The opposite of this is collectivism. The characters of such culture are:

People are responsible for themselves,Individual achievement is idealPeople need not be emotionally dependent on

organizations or groups.

4. Masculinity: It refers to a situation in which the dominant

values in a society are success, money and other material things. High masculine culture have norms, values and beliefs that:

Gender roles should be clearly distinguishedMen are more assertive and dominant,Machismo and exaggerated maleness is goodPeople-especially men-should be decisiveWorks take priority over other things such as

familyAdvancement, success and money are important.

the opposite of masculinity is FEMINITY

Managing Across Culture:Managing multiculturalism or cross-cultural

management is of considerable significance as it offers the following potential benefits:

Increase creativity and innovation Demonstrating more sensitivity in dealing with foreign

customers Hiring the best talent from anywhere Demonstrating a global perspective Creating a “super-organisational culture”, using the

best of all cultures Greater flexibility within the organisation both to adapt

to a wider range of environments and to change within these environments

To evolve universally acceptable HR policies and practices.

Competencies needed for cross-cultural management:Possess a strong personal identityHave knowledge of and felicity with the

beliefs and values of cultureDisplay sensitivity to the effective processes

of the cultureAble to communicate with the language of

the cultural group Perform specially sanctioned behaviourMaintain active social relations

Leadership across cultures:The leader of an MNC needs to be endowed with the

following skills and abilities:

Cosmopolitan: flexible to operate comfortably in pluralistic cultural environment

Skilled at International Communication: knowing atleast one foreign language and understand foriegners

Culturally sensitive: use experience in different national, regional and organizational cultures to build relationships

Capability of rapid Acculturation: adjusting to different cultural settings

Knowledge about cultural and institutional influences on Management: understand how national culture and social institutions affect the entire management

A Facilitator of subordinates’ intercultural performance: prepare expatriates for overseas assignment taking in mind deep cultural difference.

User of cultural synergy: combine the strength of each cultural group and with performance standardes across culture.

A promoter and user of the growing World Culture

A commitment to continuous improvement in self-awareness and renewal

Global findings Participative leader is more acceptable in Canada,

Brazil and Australia.Americans like 2 kinds of leaders – those who provide

employees with empowerment, autonomy and those who are bold, fearful and risk takers.

Malaysians expect leaders to be humble, modest, dignified and they remain in power.

Arab treat leaders as HeroesIranians expect their leaders to exhibit power and

strengthFrench expect their leaders to appreciate the finer

aspects of French culture and arts and have good knowledge of mathematics

Dutch value equality.

What is the impact of culture on IHRM ?