Strat

Global Strategic Management : Philippe Lasserre

CHAPTER 11

Cross Cultural Management


Basic AssumptionsMeaning

Behaviour

Values - Beliefs Preferences

Invisible, Unconscious, Taken for GrantedExample: « Time is limited», « All men are equal »

Explicit, Declared, Example: « Time is Money », « Authority has to prevail »

Observable, Manifest« Looking at the watchBanging on the Table

André Laurent


THE THREE SOURCES OF CULTURAL DIFFERENCES

CORPORATECOMPANYCULTURE

PROFESSIONALINDUSTRYCULTURE

NATIONALETHNIC

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

• 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

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

ANDRÉ LAURENT’s STUDIES: Management and organisational principles

TROMPENAARS’ STUDIES:Value Orientation

RONEN and SHENKAR’S STUDIES: Country Clusters

HALL and HALL’s STUDY: The Silent Language


Silent Language

Perception of Time

Perception of Space

Language of Material Goods

Friendship

Agreement /Disagreement

Context

SequentialScarce

PunctualityDeadlineEx: German

DelaysPostponment

Ex: Arabic

CircularFluid

Abundant

HighDistance

Avoid PhysicalemotionalProximityEx: British

LowDistance

Physical contactsShowing emotionEx: Latin

FinancialWealth

GivesstatusEx: USA

Materialistic Non-materialistic

EducationFamily

SeniorityGives statusEx: Malaysia

OperationalFactual

RelationshipEx: USA

LongAnd Deep Ex: Japan

WesternLegalisticCountries

ImplicitVerbal

Asiancountries

The PersonMatters more

Than the Content

The ContentMatters more

Than the Person

Anglo-SaxonGermanic

Nordic

African,AsianLatin Americancountries

Source: Adapted from Hall(1960)

QuickAnd Superficial

ExplicitDocumented


INDIVIDUALISM

100806040200

PO

WE

R D

IST

AN

CE

100

80

60

40

20

0

Arab CountriesMexico

Brazil

Singapore

Taiwan

Hong KongThailand

IndiaIndonesia

JapanSpain

Italy

France

Denmark

Sweden

CanadaAustraliaGermany

UK

USA

Malaysia

Anglo-Saxon/ScandinavianEqalitarian/Individualists

Latin EuropeanHierarchical/Individualists

Asian/Latin AmericanHierarchical/Collectivists

Hofstede Mapping of Cultures on Power Distance and Individualism

Source:Hofstede, 1980


10 17 1823

27

3844 46

53

6673

7778

0

10

20

30

40

50

60

70

80

90

100

S NL USA DK UK CH B D F I INDO SPAIN JAPAN

“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)

André Laurent/INSEAD

Percent agreement rate across countries


“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

0

10

20

30

40

50

60

S ZAUSA NL DK

CNDG

BAUS D CH B BR F

JAP P I E

Per

cen

t ag

ree

© 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)

0

10

20

30

40

50

60

70

Sweden

USA NLDK UK

Germ

any

CH

Belgiu

m

France

Italy

1977-1979 1991-2000

PE

RC

EN

T A

GR

EE

© André Laurent 2003


DOING vs. BEING

"DOING" "BEING"X

USAX

ITALY



The main reason for having a hierarchical structure is so that everybody knows who has authority over whom. Q.14

83

7050

43

42

3434

3130

2617

0 20 40 60 80 100

INDONESIA

JAPAN

ITALY

UK

SWEDEN

USA


Percent agreement rate across countries


74

5956

5145

4443

3635

3226

0 20 40 60 80

SPAIN

ITALY

GERMANY

FRANCE

UK

SWEDEN

In order to have efficient work relationships, it is often necessary to bypass the hierarchical line. (Q.2)


Percent disagreement rate across countries


Country Clusters

Source: Ronen and Shenkar, 1985


VALUE ORIENTATION

EXAMPLE

1 UNIVERSALISM :

vs. PARTICULARISM :

Rules-based behaviour Relationship-based behaviour

Germanic countries Asian countries

2. INDIVIDUALISM :

vs. COLLECTIVISM :

Individual's rights are supreme Group's rights are supreme

Western countries Asian countries

3. NEUTRAL :

vs. AFFECTIVE :

Emotions are subdued and expressed indirectly Emotions are expressed freely and directly

Asian countries Western countries

4. DIFFUSE :

vs. SPECIFIC :

Focus is on context of situation Focus is on specific issues

Asian countries Germanic countries

5. ACHIEVEMENT :

vs. ASCRIPTION :

Status and respect are achieved by 'doing' Status and respect are ascribed by 'being'

Western countries Asian countries

TROMPENAAR'S FIVE VALUE ORIENTATIONS


RATIONALITY How objectives are set Importance of systems and procedures

Democratic process System, Rules led

Democratic Consensus led

Democratic Negotiation led Conflict resolution

Democratic Consensus led

Autocratic

Autocratic

AUTHORITY The ground rules for Vertical order. Origin of power

Constitution The Law Decentarilsation

The Law Decentralisation

The State The Law Centralisation

The State The Corporations Decentralisation

The State The Corporations Centralisation

The Families Centralisation

IDENTITY The ground rules for Horizontal order. (What makes society stick)

Individual rights Contracts Heterogeneity (micro cultures)

Social Welfare Homogeneity

Social Welfare Cultural Identity Heterogeneity (micro cultures)

National belonging Cultural Identity Homogeneity

Nationalism Cultural Identity Homogeneity

Clans Ethnic binding

CAPITAL How Financial Capital is found and channelled

Financial markets Low gearing

Banks Medium gearing

State and market Medium gearing

Banks High Gearing

State High Gearing

Family High Gearing

Anglo-American

GermanNordic

French& Latin

Japanese Korean OverseasChinese

Business Systems

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


HUMAN CAPITAL How human skills are developed

Academic Performance Led

Academic and Apprenticeship led

Academic Elitist

Academic plus on the job

Academic Elitist

Academic on the job.

SOCIAL CAPITAL How trust is created

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

OWNERSHIP Who own enterprises

Shareholders

Banks, Employees, Shareholders

State, Shareholders

Banks, Cross-Shareholding

Business groups, Cross-shareholding

Family Groups

NETWORKING How economic agents relate to each other. (The rules of business transactions)

Contracts

Contracts.. Some Elitist relationships

Elitist Relationships. State Interventionism

Elitist Relationships

Personal Relationships. State Intervention

Personal Relationships

MANAGING How employees are induced to cooperation in the firm

System led Motivation Perforamnce measures

Hierarchical Technical Competence

Hierarchical bureaucracy. Negotiation

Corporate identity. Corporate Loyalty

Hirarchical Corporate Loyalty

Hierarchical Family Loyalty

Anglo-American

GermanNordic

French& Latin

Japanese Korean OverseasChines

Business Systems

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


THE IMPACT OF INTERNATIONAL CULTURAL DIFFERENCES FOR MANAGEMENT

• Communication• Etiquette• Decoding attitudes and behaviour• Understanding “silent” language

• “Expatriates” vs “Locals”• Group

building/working/Relationships/`• Conflict resolutions

• Feedback• Control• Reward/Punishments• Personal space• Motivations

• Contracts negotiations• Joint Ventures/Partnerships• Official meetings• Community events/Social events

HIERARCHICAL /MANAGERIAL INTERACTIONS BOSS/COLLEAGUES/SUBORDINATES)

INTERPERSONAL RELATIONSHIPS

PARNERSHIPS/TRANSACTIONS

MULTICULTURAL TEAMS


MULTICULTURAL vs. MONO-CULTURAL TEAMS

MULTICULTURAL TEAMS

PERFORMANCE

MONO-CULTURAL TEAMS

LOW HIGH

DISASTER SYNERGY



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 resourceand transformed into a significant handicap.

• Richness of diversity lost on the way.



• The gap between pretended similarity and inner convictionof actual difference widens and creates uncomfortablesituation.

• Cautious behavior and unproductive costly politeness emergeas coping mechanisms to handle the situation.

• This leads to low risk taking, avoidance of confrontation and achievement of the smallest common denominator.





• 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.




• 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

Source : Sunshine, 1990

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





Basic approach to business in general

Transactional; profit-oriented; 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 decision-making 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.

1 of 2





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 with counterparts

Inappropriate; unacceptable; risks conflict of interest and loss of personal control

Highly appropriate; and traditional release; also, ritualised gift-giving.

Attitude toward time during negotiations

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

Patience in the key.

2 of 2

Global Strategic Management : Philippe Lasserre Source: Tony Fang, 1997

Chinese Business Negotiating Styles

• Large team, vague authority,

presence of technical people, often

with incompetent interpreter

• Exploit “agreed principles”

• Play home court

• Buy best technology but show no

appreciation

for monetary value of knowledge

• Making interests

• Price-sensitive

• Stalling, delays and indecision

• Hierarchical

• Non-legalistic vs. Legalistic approach

• Play competitors off against each

other

• “Sweet and sour” approach

• Attrition

• Shaming technique

• Exploiting vulnerabilities

• Taking surprising actions

• Showing anger

• Friendship means obligation

• Double standards

• “Richer bears heavier burden”

• Mixed feelings toward foreigners

• Re-negotiate old issues.


ETIQUETTE

Addressing How to name the other person

In Malaysia nobility titles are the proper way to address ( Encik, Tan, etc..

In France 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

Gesturing How to position oneself and how to use body language

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

Dressing Dress code Malaysian businessmen use jacket and ties while in Singapore long sleeves shirts are normal business attires

Eating Importance of meals in business dealing. Behaviour at the table

French business transactions usually take place at a lunch or dinner table

Chinese banquets and sometime drinking punctuate deals

Timing How to control time Signs of impatience are considered as improper in many cultures

Lengthy preliminaries are usual in the Middle East

Talking Importance of verbal communication

Silent pauses are the norms in Chinese or Japanese

Differences in Business Practice Examples


RELATIONS Engaging Importance given to

establishing personal relationships in business transactions

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

Contracting Importance given to overall agreements on principles versus details

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

COMPETING Advantages Product’s technology

versus Connexions as a source of competitive advantage

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

Supplying Preferences given to friends and families in supplies contracts

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

Differences in Business Practice Examples

Strat

Documents

hand precise answers

global strategic management

high trust contracts

elitist relationships

high trust

negotiation parameters

verbal communication

andr laurent insead