Arches18comic.fun

INTERNATIONALCULTUREChapter5ContentsIntroduction131Whatisculture131Theimportanceofcultureindifferentbusinesscontexts133Nationalstereotypesandkeydimensionsofculture136Cross-culturalmanagement144Cultureembodiedinnationalinstitutions151ActiveLearningCaseCultureclashatPharmaciaandUpjohn130InternationalBusinessStrategyinActionMcDonald's135DanoneandParmalat—goinginternational,stayinglocal149RealCasesDonotthrowyourmeishi!
154Sportcanbelocalandglobal:ManchesterUnited155ObjectivesofthechapterPlacesandpeoplediffer.
TheJapanesetendtobeverypolite,theAustralianscharacteristicallyblunt.
Redmeans"danger"or"stop"totheBritish,butinTurkeyitsignifiesdeathandinChina,goodfortune.
InFrancegettingintoagrandeécoletendstoguaranteegoodjobprospectswhereasinSaudiArabiathewealthandstatusofyourfamilyisfarmoreimportant.
Patternsofglobaldiversityandtheimplicationsofthesedifferenceshavebeenstudiedfromarangeofperspectives,bysociologists,psychologists,anthropologists,andpoliticalscientists.
Hereweareconcernedwithhowculturaldiversityandrelateddifferencesinthebehavior,norms,andexpecta-tionsofparticulargroupsofemployees,managers,colleagues,orcustomersaffectmanagementdecisionmakingandcorporateorganizations.
Afteranintroductiontothekindsofbusinesscontextsinwhichculturaldifferencesdomatter,thischapterwilldescribesometypologiesofnationalculturaldifferencesanddiscusstheimplicationsoftheseforinternationalmanagers.
Thespecificobjectivesofthischapterareto:1Definecultureandexplainthefactorsthatunderlieculturaldifferences.
2Showwhereandwhyculturaldifferencesmattertointernationalmanagers.
3Explainanumberofframeworksthathelpidentifyimportantculturaldifferences.
4Examinehowfirmscananticipateandcopewithculturaldifferences.
RUGM_C05.
QXD8/18/084:16PMPage129130PARTTWOTHEENVIRONMENTOFINTERNATIONALBUSINESSActiveLearningCaseCultureclashatPharmaciaandUpjohnDespitebeingpartofthesameadvanced,industrializedworld,Kalamazoo(Michigan,UnitedStates),Stockholm(Sweden),andMilan(Italy)areworldsapartinmanyimportantways.
Seniormanagersleadingthemergerbetweentwopharmaceuticalfirms,UpjohnCompanyoftheUnitedStatesandPharmaciaABofSweden(withoperationsinItaly),cametorealizehowsignificantthesedifferenceswereafterthemergertookplacein1995.
SwedestakeoffmostofthemonthofJulyfortheiran-nualvacation,ItalianstakeoffmostofAugust.
Notknow-ingthis,USexecutivesscheduledmeetingsinthesummeronlytohavetocancelmanybecausetheirEuropeancoun-terpartswereatthebeach.
AsthemoredominantUSfirmbegantoimposeitswayofdoingthingsonthenewlyac-quiredEuropeanorganizations,internationalrelationshipsbecameincreasinglystrained.
NeithertheSwedesnortheItalianswerehappywithimpositionssuchasthedrugandalcoholtestingpolicybroughtinbyUpjohn,ortheofficesmokingban.
Theseclashedwithlocalwaysofdoingthingsandthemoreinfor-malworkenvironmentthattheseculturesprefer.
AlthoughUpjohnlaterrelaxedmanyoftheseworkrules,allowingsomelocalpracticesandpreferencestoprevail,ill-feelingandadegreeofresistancehadalreadydevelopedamongEuropeancolleagues.
Theadditionalbureaucracyandthecommand-and-controlstyleimposedbytheAmericanscreatedmoresignificantproblemsforthe34,000employeesandmanagersinPharmaciaandUpjohnCompany.
TheSwedeswereusedtoanopen,team-basedstyleofmanagementwhereresponsibilitiesaredevolved;managersaretrustedandnotstrictlymonitoredorcloselymanaged.
Swedishex-ecutivesalsotendtobuildupaconsensusbehindbigdeci-sions,"gettingeveryoneinthesameboat"(allaaeribaten)ratherthanhandingordersdownthehierarchy.
Asatradi-tionalUSmultinational,however,Upjohnwasmoreusedtostrongleadershipandacentralizedcommand-and-controlstructure.
ItsCEO,Dr.
JohnZabriskie,quicklycre-atedastrictreportingsystem,tightbudgetcontrol,andfrequentstaffingupdates,whichclashedwiththeSwedishorganizationstyle.
Swedishmanagerswouldleavemeet-ingsdisgruntled,havingbeenoverruledbyUSexecutiveskeentopushtheirvisionofthemergedcompany.
TheSwedes'ownwaysofdoingthingshadalreadyclashedwiththeItalianstyleofmanagement,followingthetakeoverofFarmitalia(partofMontedison)byPharmaciain1993.
Italiansareusedtoadistinctivedivisionbetweenworkers(andtheirstrongunions)andmanagers.
TheirsteeperhierarchiescontrastthemoreegalitarianSwedes.
Italiansalsoplaceahighvalueonfamiliesandwillleaveworktotendtosickrelativesorhelpwithchildcare,whichtheSwedesfrownupon.
TheadditionoftheAmericansfromUpjohntothismixcreatedfurtherculturalconfusion.
Communicationproblems,beyondtheobviouslanguagedifferences,becamearealbarriertohonestdialogue.
"Yougotherethinkingyou'regoingtostreamlinetheplace,"saidAmericanMarkH.
Corrigan,PharmaciaandUpjohnVicePresidentforClinicalDevelopment,"andyouleavejusthavingaddedfivepoundsfromsomewonderfulmeals.
"Thesedifferences,manyofthemsmallbutimportantatthelocallevel,quicklybegantohaveanimpactontheoverallperformanceofthemergedcompany.
Inthemonthsandyearsfollowingthemergerunforeseenineffi-cienciesandaddedcostsbegantounderminethepotentialsynergiesofbringingtogethertwosuchcompaniesinthefirstplace.
Atoneleveltheproblemsamountedtothingslikecanceledmeetings,neworganizationdemands(suchasmonthlyreportwriting),andageneraldeclineinstaffmorale.
Therewerealsounexpecteddifficultiesintegrat-ingtheITsystemsacrossthevariouspartsofthemergedorganization.
Theseandotherchangesaddedanestimated$200milliontothepredictedcostsoftherestructuring,takingthetotalcostto$800million.
Evenmoreseriously,forapharmaceuticalcompanyheavilyreliantonitsnewdrugspipelinetosurvive,delayedprod-uctlaunchesandthelossofkeystaff(includingtheheadofR&DatPharmacia)hadalonger-termimpact.
"Therewasprobablyanunder-appreciation.
.
.
oftheseculturaldifferences,"saysArtAtkinson,formerVicePresidentforClinicalResearchandDevelopment.
Particularproblemsresultedfromtherestructuringofthefirm'sglobalR&Dstructure.
PriortothemergerUpjohnownedwell-knownnamessuchasRogaineandMotrinandhadannualsalesofaround$3.
5billion,buthadaweaknewproductpipelineandslowsalesgrowthcom-paredtoitslargercompetitors.
Similar-sizedPharmaciahadamorepromisingpipelinebutweakdistributionandsalesintheUSmarket,theworld'slargest.
Theseamountedtoastrongrationaleforthemerger.
TogethertheycouldchallengethefinancialpowerandthelargerR&Dprogramsoftheircompetitors.
However,integratingandrefocusingthevariouspartsofthenewR&Dstructurebecameamajorproblem.
RatherthanplacetheR&DheadquartersintheUnitedStates,Sweden,orMilan,adecisionwasmadetoestablishanewandneutralLondon-basedcenterfortheR&Dfunction.
ThissimplyaddedaRUGM_C05.
QXD8/18/081:52PMPage130131CHAPTER5INTERNATIONALCULTURESocializationTheprocessofenculturation,ortheadoptionofthebehaviorpatternsofthesurroundingculturelayerofmanagementandamorecomplexmatrixreport-ingstructure,whichfurtheralienatedkeyR&Dpersonnel.
In1997,afterthestockpriceofthemergedcorporationhadfallensignificantly,CEOJohnZabriskieresigned.
SwedeJanEkberg,theformerheadofPharmacia,tookovertemporarilyandbegantorebuildaspectsofthemergedorganization.
AfteracquiringamajorpartofMonsantoin2000,PharmaciaandUpjohnbecamePharmacia,whichwasthenitselfacquiredbytheUSgiantPfizerinApril2003.
ThismadePfizer,accordingtoitsownAnnualReport,the"numberonepharmaceuticalcompanyineveryregionoftheWorld.
"Allthisprovesisthatgoingglobalishardwork.
Notalloftheseproblemscouldhavebeenforeseen,butareallackofawarenessofculturaldifferencesdidleadtomanyoftheorganizationdifficultiesandpeopleproblemswitharealimpactonthebottomline.
Websites:www.
accenture.
com/xdoc/en/ideas/outlook/1.
2000/maa2.
pdf;www.
pfizer.
com;www.
pfizer.
com/are/investors_reports/annual_2003/review/index.
htm.
Sources:R.
FrankandT.
M.
Burton,"Pharmacia&UpjohnFacesCultureClash;EuropeansChafeUnderUSRules,"WallStreetJournal,February4,1997;R.
J.
Thomas,"IrreconcilableDifferences,"AccentureOutlook,vol.
1,2000;andPfizer,AnnualReport,2003.
1WhatkindsofculturaldifferencesmatterwhenorganizationsfromdifferentcountriesmergeHowwelldothecharacteristicsdescribedinthecasematchtherespective,stereotypicalnationalculturesofthesecountries3Whatcouldseniormanagershavedonebeforeandafterthemergertoalleviatesomeoftheproblemsthatresultedfromcultureclash4Explainwhyoneorganizationmightwanttoimposesomeofitswaysofdoingthingsonanother,suchasanacquiredfirmorsubsidiary.
1243INTRODUCTIONThenumberofworkersemployedbyforeign-ownedcompanieshasgrownsignificantlyoverthepast20yearsasaresultoftheexpandingactivitiesofforeignaffiliatesofMNEsaroundtheworld.
Formanypeople,bothemployersandemployees,thishasbroughthometherealitiesofglobalization.
Anestimated73millionpeopleglobally(including24millioninChina)nowworkforforeigncompanies,nearlythreetimesthenumberin1990.
Com-paniessuchasMotorola,GeneralMotors,BritishPetroleum,andGeneralElectricareamongthelargestprivate-sectoremployersineconomiessuchasMalaysiaandSingapore.
1Thisgrowingmulticulturalworkforce,partoftheincreasinglyglobalpatternsofexchangeandinteractiondiscussedearlierinthisbook,makesitmoreandmoreimportanttounder-standhowpeople'spreferences,beliefs,andvaluesdiffer.
Understandinginternationalculturaldifferencesallowsustobeawareofandadapttothedifferencesthatmatterformanagers.
WHATISCULTURECulturecanbedefinedas"thesumtotalofthebeliefs,rules,techniques,institutions,andar-tifactsthatcharacterizehumanpopulations"2or"thecollectiveprogrammingofthemind.
"3Sociologistsgenerallytalkaboutthesocializationprocess,referringtotheinfluenceofparents,friends,education,andtheinteractionwithothermembersofaparticularsocietyasthebasisforone'sculture.
Theseinfluencesresultinlearnedpatternsofbehaviorcommontomembersofagivensociety.
Asyoucansee,definitionsofculturevaryaccordingtothefocusofinterest,theunitofanalysis,andthedisciplinaryapproach(psychology,anthropology,sociology,geography,etc.
).
RUGM_C05.
QXD8/18/084:16PMPage131132PARTTWOTHEENVIRONMENTOFINTERNATIONALBUSINESSThisissignificantinthatstudiesofculturaldifferencesadoptaspecificdefinitionandsetofmeasurablecriteria,whicharealwaysdebatable.
Researchintocultureanditsimpactinbusinessandmanagementstudiesishighlycontentiousandshouldnotjustbetakenatfacevalue,includingthestudiesdescribedbelow.
Thereisastrongconsensus,however,thatkeyelementsofcultureincludelanguage,religion,values,attitudes,customs,andnormsofagrouporsociety.
Table5.
1showshowtheworld'spopulationisdividedaccordingtogeography,language,andreligion.
Languageisperhapsthemostimportantkeytounderstandingcultureingeneralandthespecificvalues,beliefs,attitudes,andopinionsofaparticularindividualorgroup.
Englishiswidelyacceptedasthelanguageofbusiness;manyglobalinstitutionsandcompanieshaveadoptedEnglishastheirofficiallanguage.
Formanyfirms,suchasToyota,NEC,Hitachi,andIBMJapan,English-speakingabilityisaprerequisiteforpromotion.
4However,anyassumptionthatspeakingthesamelanguageremovesculturaldifferencesisdangerous—itnormallyjusthidesthem.
Moreover,arelianceonEnglishbyBritishandAmericanmanagers,andalackofotherlanguageskills,canweakentheirabilitytoempathizewithandadapttoothercultures.
Religion,linkedtobothregionalcharacteristicsandlanguage,alsoinfluencesbusinessculturethroughasetofsharedcorevalues.
Protestantsholdstrongbeliefsaboutthevalueofdelayedgratification,saving,andinvestment.
ThesociologistMaxWeber,writingin1904,sawthisProtestantworkethicasthe"spiritofcapitalism"duringtheIndustrialRevolution.
5Ratherthanspending,consuming,andenjoyinglifenow,theirreligiousbeliefspromptedtheProtestantstolooktolonger-termrewards(includingthoseintheafter-life).
ThereareparallelswiththeConfucianandShintoworkethics,whichalsoviewspiritualrewardsastiedtohardworkandcommitmenttothefruitsofindustry.
Contrastingthis,amorestoicattitudeamongsomeAfricanpopulationspartlyexplainstheiracceptanceofthewaysthingsare,becauseitisthe"willofGod"(shauriyaMungu).
Atthemostgenerallevelculturecanrefersimplytothelifestyleandbehaviorofagivengroupofpeople,socorporatecultureisatermusedtocharacterizehowthemanagersandemployeesofparticularcompaniestendtobehave.
Butthetermisalsousedbyhumanre-sourcemanagersandseniormanagementintheirattemptstoproactivelyshapethekindofbehavior(innovative,open,dynamic,etc.
)theyhopetonurtureintheirorganizations.
Pro-motingadistinctivecorporatecultureisalsoexpectedtoenhancethesenseofcommunityandsharedidentitythatunderpinseffectiveorganizations.
Table5.
1Worldpopulationpercentagesintermsofhomeregion,language,andreligionHomeregion%Language%Religion%Asia58.
4Mandarin14.
4Christianity,including:33Africa12.
4Hindi6.
0Catholics20Europe9.
5English5.
6Protestants9LatinAmerica8.
4Spanish5.
6Orthodox4FormerSovietbloc5.
5Bengali3.
4Islam22NorthAmerica5.
2Russian2.
8Hinduism15AustraliaandNewZealand0.
6Portuguese2.
6Non-religious14Japanese2.
0Buddhism6German1.
6Chinesetraditional4Korean1.
3Primal–indigenous3French1.
3Other3Other54.
4(approx.
200)Sources:www.
census.
gov;www.
adherents.
com.
CorporatecultureThesharedvalues,traditions,customs,philosophy,andpoliciesofacorporation;also,theprofessionalatmospherethatgrowsfromthisandaffectsbehaviorandperformanceRUGM_C05.
QXD8/18/084:16PMPage132133CHAPTER5INTERNATIONALCULTURETHEIMPORTANCEOFCULTUREINDIFFERENTBUSINESSCONTEXTSCross-culturalmanagementissuesariseinarangeofbusinesscontexts.
Withinindividualfirms,forexample,managersfromaforeignparentcompanyneedtounderstandthatlocalemployeesfromthehostcountrymayrequiredifferentorganizationstructuresandHRMprocedures.
Incross-bordermergersandacquisitions(M&As),realizingtheexpectedsyn-ergiesveryoftendependsonestablishingstructuresandproceduresthatencompassbothculturesinabalancedway.
Cross-borderjointventures,alliances,orbuyer–supplierrela-tionshipsbetweentwoormorefirmsalsorequireaculturalcompromise.
Finally,forfirmstosellsuccessfullytoforeigncustomersrequiresculturallysensitiveadaptationstoprod-ucts,services,marketing,andadvertising.
Figure5.
1outlines,atthemostgenerallevel,linksbetweenbusinesscontextsandparticularcharacteristicsofindividualsorgroupsthatareinfluencedbysocialandculturalnormsofaparticularregion.
Attheface-to-facelevelinmeetingsthelanguageandbehaviorofdifferentpeoplesvaryandtheirmutualunderstandingofeachother'sculturewillinfluencetheeffectivenessandefficiencyofcommunicationbetweenthem.
Thisinfluenceshowwellmulticulturalworkplacesoperateatalllevels,fromstrategysettingattheseniorleveltoplant-flooroperations.
Firmsalsotendtohavedifferentorganizationalanddecision-makingpracticesdependingonwheretheyhaveevolvedandwhichculturesandsubculturestheyencompass.
Forfirmstobuildsuccessfulalliancesandpartnerships,orforM&Aactivitiestosucceedatthecompany-to-companylevel,thereneedstobeanunderstandingoftheorganizationalFigure5.
1Cross-culturalbusinesscontextsRUGM_C05.
QXD8/18/081:52PMPage133134PARTTWOTHEENVIRONMENTOFINTERNATIONALBUSINESSdifferencesbetweenthem.
Thiscoverspracticallyeveryelementofcorporateorganizationsfromdecision-makingstructuresandsystemsandmanagement–laborrelationshipstoindividualemployees'attitudestowardtheirworkandtheiremployer.
Finally,cultureinfluencesthebehaviorandpreferencesofclientsandcustomers.
Tosellsuccessfullyinaforeignmarket,amanagerneedstoadapthisorherproductorservicetomeetthedifferentneedsofthatparticulargroupofcustomers.
Anyalterationinadvertising,marketing,productorservicefeatures,after-salessupport,technicalback-up,documentation,etc.
,willbepartlyguidedbyculturaldifferences.
Failuretodothisendsinthekindsofmarketingmistakesandcommunicationblundersthatbecomemarketingfolklore.
Forexample,Ford'slow-costtruckwasinitiallymarketedastheFeiratoSpanish-speakingpeople,butthismeans"uglyoldwoman"inSpanish.
TheFordComet,ahigh-endcar,wassoldastheCalienteinMexico,whichislocalslangfor"prostitute.
"Unsurprisinglyneithermodeldidwellinthesemarkets.
Thisreinforcestheabovepointabouttheimportanceoflanguage,butalsodemonstrateshowsomeofthelargestandmostexperi-encedcompaniesdonotappeartodothemostbasicculturalduediligence(theirhome-work!
)whenlaunchingproductsandservicesinforeignmarkets.
Thechapteronmarketingstrategyinthisbookexaminesthesekindsofissuesmoreclosely.
AcrossallofthebusinesscontextsinFigure5.
1ignoranceofculturaldifferencesrepresentsacommonstumblingblockforinternationalmanagers.
Ethnocentrism,thebeliefthatone'sownwayofdoingthingsissuperiortothatofothers,canalsobeamajorbarriertogoodinternationalmanagement.
Thechallengeliesinrecognizingdifferences,combiningtheadvantagesthatstemfromdifferentstylesandapproaches,adjustingandadaptingtosucceedwithdifferentpeople,indifferentpartnerships,andindifferentmarkets.
EthnocentrismThebeliefthatone'sownwayofdoingthingsissuperiortothatofothers.
ActivelearningcheckReviewyouranswertoActiveLearningCasequestion1andmakeanychangesyoulike.
Thencompareyouranswertotheonebelow.
1WhatkindsofculturaldifferencesmatterwhenorganizationsfromdifferentcountriesmergeThedefinitionofcultureitselfgivessomeindicatorsofthekindsofdifferencesthatmatter.
Organizationsfromdifferentcountrieswillhavedevelopeddifferentbeliefs,values,andpatternsofbehaviorbasedontheirunderlyingnationalculture.
Awiderangeofdifferencescouldbeimportant,includingattitudestowardworkandworkplacepractices,management–laborrelations,thedecision-makinghierarchy,anddivisionofresponsibilities.
Cross-borderM&Aoftenalsorequireschangestothemarketingandbrandingofproductsandservicesassalesareexpandedintonewmarkets.
Differencesinthelanguage,values,andpreferencesofcustomersindifferentcountriesalsoneedtobetakenintoaccount.
CulturehasalwaysbeenimportantDespitethevariouspatternsandprocessesofglobalization,culturaldifferencesstillremainimportant.
Evenwithgreatercommonaccess,viavariousmediaandtheInternet,tothesamebrands,rockicons,andsportsstars,differencesremain.
Termslikeculturalconver-genceor,simply,Americanization(thehomogenizationofglobalconsumerpreferencesthroughtheubiquityofMcDonald's,Coca-Cola,andFord)overstatethesimilaritiesbetweengroupsofpeoplearoundtheworld.
(SeethecaseInternationalBusinessStrategyinAction:McDonald's.
)CulturalconvergenceThegrowingsimilaritybetweennationalcultures,includingthebeliefs,values,aspirations,andthepreferencesofconsumers,partlydrivenbyglobalbrands,media,andcommonglobaliconsRUGM_C05.
QXD8/18/081:52PMPage134135CHAPTER5INTERNATIONALCULTUREInternationalBusinessStrategyinActionMcDonald'sWhenJoséBové,aself-proclaimedleaderofFrance'santi-globalizationmovement,wassentencedforvandalizingaMcDonald'srestaurantin1999,heclaimedtohavetheback-ingoftheFrenchpeople.
Thatmighthavebeenanoverstate-ment,but40,000Frenchpeopleweretheretoshowtheirsupport.
ItwasnotonlytheFrench,however;inthe1990sMcDonald'srestaurantswerevandalizedinabout50coun-tries.
AtissueistheworldwideperceptionthatMcDonald'srepresentsaparticularfriendlyRonald-McDonald-typeofUSimperialism.
Traditionallifestyles,criticssay,arebeingerodedbyMcDonald'smarketingpractices,itsvaluechainsystem,itsfast-foodconcept,andtheunhealthyfooditself.
Yet,McDonald'sbendsoverbackwardstoblendintolocalcultures.
Thecompanyadvertisesitselftoitscriticsasaglobalcompanyownedandrunbylocalpeople.
Indeed,thefranchisesystemmakesitsothatMcDonald'sJapanisrunbytheJapaneseandIsrael'sMcDonald'srestaurantsarerunbyIsraelis.
Localbusinessownerschoosetheirmenu'sofferingstofittheirculture,findalternativesuppliers,andcreatesuitablemarketingfortheirculture.
AnAmericaninSaudiArabiamightseatsinglemenwithfamiliesataMcDonald'sopening,butaSaudiArabianownerwouldknowthatthisisunacceptableandtherestaurantwillbedesignedtoaccommodatetheculture.
InthelandofJoséBové,Asterix,aFrenchcomic-stripcharacterwhostandsforindividualityandironicallysymbolizeslocalresistancetoimperialforces,replacedthegoofyRonaldMcDonaldinthecompany'smarketingintheearly2000s.
In1999,FrenchMcDonald'swenttheextramiletoprovehowlocalitwasbyprintingadvertisementsmakingfunofUSeatinghabits.
Inonead,alargeAmericancowboycomplainsthatMcDonald'sFrancedoesnotimportAmericanbeefto"guaranteemaximumhygieniccondi-tions.
"FrenchrestaurantsaremorefashionablyandmorecomfortablydesignedthanNorthAmericanonestocreateanenvironmentwherecustomersmayenjoylongermealsinaccordancewithFrenchtradition.
Iftheywant,customerscanorderabeerfromthemenu.
InIndia,wherelocaltastesareverydifferentfromthoseintheUnitedStates,thecompanycraftedanentirelydifferentmenuthatdoesnotusebeeforporkduetothemostlyvegetarianpopulation.
TheIndianBigMacismadeoflamb.
InIsrael,thelocallyownedMcDonald'spurchasesover80percentofitsingredientsfromlocalproducers,including100percentkosherhamburgermeat,potatoes,lettuce,buns,andmilkshakemix.
Therearenocheese-burgersinIsrael'sMcDonald'sbecausedairyproductscannotbeeatentogetherwithmeat.
Ontheotherhand,McDonald'sdoesbringitsownculturetoitsforeignoperations.
InChina,wherechildren'sbirthdaysarenottraditionallycelebrated,asuccessfulMcDonald'smarketingstrategyencouragedbirthdaypar-tiesattheirestablishments.
Notabaddealforchildren,butstillaculturaleffectfromaforeignmultinational.
Moremundanethings,suchascombomeals,arepopularizedthroughMcDonald'sexpansion.
Bypromotingitscarbon-atedbeveragesinIndia,thefirmisunsettlingthecountry'steaculture.
Thecompany'spresencecreatesaculturalexchange,notaone-sidedculturaltakeover.
BeyondreactionarybehavioragainstMcDonald'scultural"impositions,"McDonald'shashadtosuffersimplyforbeingbornintheUnitedStates.
JusthoursaftertheUnitedStatesbeganbombingAfghanistanin2001McDonald'srestaurantswerevandalizedincitiesinPakistanandIndonesiaandMuslimclericsaskedfortheboycottofUSproducts.
Foractivistsandculturalprotectors,themostfrustratingthingisthattheircallsgounheeded.
OwnersofMcDonald'sfranchisescontinuouslyremindcustomersthattheytooarelocals,thattheiremployeesarelocals,andthattheirsuppli-ersaremainlylocal.
InBrazil,someanti-warprotestorsontheirwayhomewillstopataMcDonald'sforabitetoeat.
SomeofMcDonald'smajortroubles,however,areinitsmostestablishedmarketsintheUnitedStates,Canada,andtheUK.
RussianandChinesego-gettersmightthinkthatamealinMcDonald'sputstheminaclassabove,butinitstwomajormarketsofNorthAmericaandEurope,wherethefirmderivesovertwo-thirdsofallrevenue,thefoodisconsideredunhealthy.
Indeed,bothCanadaandtheUKconsideredimposingataxonfattyfoodsonthegroundsthatitwasdamagingtopeople'shealthanditcoststhehealth-caresystemasubstantialamount.
Thetaxisunlikelytobeimposedbecauseofastrongbacklashfrompovertygroupswhoarguethatthistaxwouldplaceanunevenburdenonthosewhodependoncheapfoodfortheireverydaysurvival.
IntheUnitedStates,thefirmisbeingsuedoverclaimsthatitmisledparentsaboutthenutritionalvalueofitsproducts,leadingtheirchildrentobecomeobeseandunhealthy.
McDonald'sintheUKreactedbyeliminatingsupersizedoptionsfromthemenu.
AsetofhealthieroptionshasnowbeenintroducedinEuropeandNorthAmericaasthecompanyfendsoffcriticsinsomeofitsfriendliestmarkets.
Sources:DavidBarboza,"WhenGoldenArchesAreTooRed,WhiteandBlue,"NewYorkTimes,October14,2001;TonyKaron,"Adieu,RonaldMcDonald,"Time.
com,January24,2002;SimonRomero,"WarandAbuseDoLittletoHarmUSBrands,"NewYorkTimes,May9,2004.
RUGM_C05.
QXD8/18/081:52PMPage135136PARTTWOTHEENVIRONMENTOFINTERNATIONALBUSINESSCulturesvaryandthesevariationsleadtorealandsignificantdifferencesinthewaysthatcompaniesoperateandpeoplework.
Moreover,becauseofglobalizationmoreandmorefirmsarecomingheadtoheadwiththeaddedcomplexityofdoingbusinessglobally,whichstemsfromthehugeamountofvarietyintheworldthatstillexists(andarguablywillalwaysexist).
Beforemovingontoexaminesometypologiesofglobalcultures,hereisawordofwarning.
Muchofthissectionwilldescribehowvariouskindsofindividualandgroupbehaviorcanbelinkedtospecificculturalgroupsandassociatetheseculturaldispositionswithdifferentbusinessstylesandcompanystructures.
Actingonthebasisofculturalstereotypesishighlysensitiveandcanbeproblematic.
Forexample,atthesimplestlevelabankermaybeabletoproveempiricallythatPakistanisaremoresuccessfulthanJamaicansatstartingandrunningsmallbusinessesaroundtheworld.
UsingthisinsightasthebasisfordiscriminatingagainstJamaicanswantingbankloansforbusinessstart-upsisnotonlyunethical,butinmostcountriesfallsfoulofracediscriminationlaws.
NATIONALSTEREOTYPESANDKEYDIMENSIONSOFCULTURECultureattwolevelsTherearetraditionallytwodifferentapproachestolookingatculture:Thepsychicorpsychologicallevel,whichfocusesontheinternalizednorms,attitudes,andbehaviorofindividualsfromaparticularculture(psychicdistanceisameasureofdifferencesbetweengroups).
Theinstitutionallevel,whichlooksatnational(orgroup)cultureembodiedininstitutions(government,education,andeconomicinstitutionsaswellasinbusinessorganizations).
Inthischapterwewillmainlydiscussthefirst,cultureassharedpsychology,withabriefreferencetonationalinstitutionaldifferencesattheend.
Peoplewhoarebornin,orgrewupin,thesamecountrytendtosharesimilarculturalcharacteristics.
NordstrmandValhneexaminedasampleofSwedishfirmstounderstandtheeffectsofpsychicdistanceonmarket-entrystrategiesandcosts.
6Theyranked20par-ticularcountriesaccordingtoarangeofnationalcharacteristicsthatcontributetopsychicdistanceandfound,asyoumightexpect,thatDenmarkisclosesttoSweden(1/20),theUKcomesinat6/20,Portugalat15/20,Japan16/20,Brazil17/20andAustralia20/20.
Nationalityandculturetendtocoincide,althoughnationsencompassawidevarietyofinstitutions,religions,beliefs,andpatternsofbehavior,anddistinctivesubculturescanalwaysbefoundwithinindividualcountries.
Theonlywaytomakesenseofthiswidediversityistocharacterizedistinctculturalgroupsthroughsimplifiednationalstereotypes.
Manystudieshaveattemptedtocreatethesestereotypesbymappingandcomparingthesharedcharacteristicsofmanagersandemployeesindifferentcountries.
7Researchersthenexaminetheeffectsofkeydifferencesonbusinessbehavior,organization,structure,andultimatelytheperformanceofcompaniesfromdifferentcountries.
Thefollowingdescribesthemilestonestudiesofthiskindinthemanagementfield.
Hofstede'sfourdimensionsofcultureGeertHofstedeisaDutchpsychologistwhoconductedoneoftheearliestandbest-knownculturalstudiesinmanagement,onIBM'soperationsin70countriesaroundtheworld.
8PsychicdistanceAmeasureofthesimilarityordifferencebetweentwocultures;alsocommonlydefinedasthemeasurabledistancebetweenthehomemarketandaforeignmarketresultingfromtheperceptionofculturalandbusinessdifferencesRUGM_C05.
QXD8/18/081:52PMPage136137CHAPTER5INTERNATIONALCULTUREGettinganswersto32statementsfromover116,000questionnaires,hemappedkeyculturalcharacteristicsofthesecountriesaccordingtofourvaluedimensions:1Powerdistanceistheextenttowhichacultureacceptsthatpowerinorganizationsisdistributedunequally.
Highpowerdistanceequateswithsteeporganizationalhierarchies,withmoreautocraticleadershipandlessemployeeparticipationindecisionmaking(seeFigure5.
2forexamples).
2Uncertaintyavoidanceisthedegreetowhichmembersofasocietyfeeluncomfortablewithriskanduncertainty.
Highuncertaintyavoidance(Japan,Argentina,France)willbereflectedinthehighpriorityplacedonrituals,routines,andproceduresinorganizationsandsocietyingeneral.
Countrieswithlowuncertaintyavoidance(Denmark,UK,India,US)tendtoemphasizeflexibilityandinformalityratherthanbureaucracy.
3Individualismistheextenttowhichpeoplearesupposedtotakecareofthemselvesandbeemotionallyindependentfromothers(seeFigure5.
2forexamples).
4Masculinityisthevalueattributedtoachievement,assertiveness,andmaterialsuccess(Japan,Mexico,Germany,UK)asopposedtothestereotypicalfemininevaluesofrelationships,modesty,caring,andthequalityoflife(Sweden,Netherlands,Denmark),accordingtoHofstede.
Figure5.
2illustratessomeofHofstede'sfindingsusingtwoofthemostusefuldimensions,powerdistanceagainstthedegreeofindividualism/collectivism.
Itreflectssomegeneralstereotypesofthecountriesincluded,withcleargroupingofAustralia,UKandUSashighlyindividualisticandlesshierarchical(smallpowerdistance)culturesagainstMexico,Thailand,andPanamaattheotherextreme.
Wewillelaborateonthesedefinitionsandtheirpracticalinterpretationthroughoutthischapter.
Amonghismostimportantcontributions,Hofstedeprovidedstrongevidenceforthesignificanceofnationalcultureoverprofessionalrole,gender,orrace,asadeterminantofvariationinemployees'attitudes,values,andbehaviors,accountingfor50percentofthePowerdistanceindexIndividualismindexFigure5.
2Hofstede'spowerdistanceagainstindividualismfor20countriesSource:Hofstede,G.
(1983).
Theculturalrelativityoforganizationalpracticesandtheories,JournalofInternationalBusinessStudies,Fall,p.
92.
CopyrightGeertHofstede.
PowerdistanceAculturaldimensionthatmeasuresthedegreetowhichlesspowerfulmembersoforganizationsandinstitutionsacceptthefactthatpowerisnotdistributedequallyUncertaintyavoidanceTheextenttowhichpeoplefeelthreatenedbyambiguoussituationsandhavecreatedinstitutionsandbeliefsforminimizingoravoidingthoseuncertaintiesIndividualismThetendencyofpeopletolookafterthemselvesandtheirimmediatefamilyonlyMasculinityThedegreetowhichthedominantvaluesofasocietyaresuccess,money,andmaterialthingsRUGM_C05.
QXD8/18/081:52PMPage137138PARTTWOTHEENVIRONMENTOFINTERNATIONALBUSINESSdifferenceshisstudyobserved.
However,hisstudieshavecomeinforsignificantcriticism,despitewidespreadadoptionofthefour-dimensionalframework.
Threecommoncriti-cismsare:(1)thatthedimensionsdevelopedfromdatacollectedbetween1968and1973wererelevantonlyforthatparticularperiod;(2)thatcorporateculturalandotherinflu-encesfromthisone-organization(IBM)studycreatedsignificantbias;(3)thatthesoleuseofattitude-surveyquestionnaireswasnotavalidbasisfortheresultingvaluesanddimen-sionshisstudyconcludedwith.
9AlthoughHofstedehascontinuedtowriteonculture,organizations,andmanagement10itisusefultolookmoredeeplyintotheworkofanotherwell-knownDutchcultureguru.
Trompenaars'sevendimensionsofcultureFonsTrompenaarsbuiltonHofstede'sworkbyexpandingtheframeworkforstereotypingandcomparingdifferentnationalculturesandbyfocusingmoreonthemanagementimplicationsofculturaldifferences.
Usinginitialresearchinvolving15,000employeesin50countries,Trompenaarsexploredthe"culturalextremesandtheincomprehensionthatcanarisewhendoingbusinessacrosscultures,"evenwhenpeopleareworkingforthesamecompany.
11Trompenaarsarrivedatsevendistinctivedimensionsofcultureandusedthequestionnaireresponsesinhisstudytomapawidevarietyofcountriesalongacontinuumfromoneextremetotheotherwithineachdimension.
Thekeytounderstandingthismappingapproachistoidentifywhereeachcountryorcultureispositionedrelativetoothersononeormoreofthesedimensions.
Relativepositioninggivesinsightsintothekindsofconflicts,misunderstandings,andorganizationalandmanagementproblemsthatarelikelytoarisewhenindividuals,groups,orfirmsfromthesecountriesinteractinanyofthewaysdescribedabove.
1Universalismversusparticularism.
Inuniversalisticculturesrulesandregulationsareappliedinallsituations,regardlessofparticularconditionsorcircumstances.
TheexampleusedbyTrompenaarsreferstoasalesmanwhodoesnotfulfillhismonthlysalesquotabe-causehewaslookingafterhissickson.
Shouldhebepenalizedaccordingtostandardcom-panyregulationsorshouldhebeexcusedbecauseoftheparticularcircumstancesAccordingtoTrompenaars'findings,Switzerland,Canada,andtheUnitedStatesareamongthemostuniversalist.
AustraliaandtheUKarealsotowardthisendofthescale.
Germanyisclosertothecenter,asisFrance,butthelattersitsontheparticularistsideofthescale.
Korea,Russia,andChinaarethemostparticularistofcountries.
(NotethatsomeofthecountriesstudiedbyHofstede,likethestronglyparticularistYugoslavia,nolongerexist.
)2Individualismversuscollectivism.
Thisdimension,clearlybuildingonHofstede,centersonwhetherindividualrightsandvaluesaredominantorsubordinatetothoseofthecol-lectivesociety.
ThemostindividualistcountriesareCanada,theUnitedStates,Switzerland,andtheUK.
AmongthemostcollectivistareJapan,Egypt,andIndia(andNepalandKuwait).
3Neutralversusemotional.
Thisreflectshowmuchemotionsaredisplayedinthework-place.
Moreimportantlyitindicateswhetheremotionalorsubjective(ratherthanobjec-tive)formsofassessmentarethoughttobethebasisforgooddecisionmakinginorganizations.
Someorganizationsemphasizereports,data,andanalyticaldecisionmakingbymanagers,whereasothersfeelthatopinions,intuition,andgutfeelingsarecredibleorvalidcriteria.
PredictablythemostemotionalcountriesincludeItalyandFranceandtheleastemotionalgroups(intheworkplaceatleast)aretheJapanese,Germans,Swiss,Chinese,andIndonesians.
4Specificversusdiffuse.
Doworkrelationships(suchasthehierarchicalrelationshipbetweenaseniormanagerandasubordinate)existjustintheworkplace(aretheyUniversalismTheuniformapplicationofrulesandprocedures,regardlessofsituation,context,orindividualsinvolvedParticularismJudgingasituationandadjustingrulesandproceduresaccordingtothespecificsituationorindividualsinvolvedCollectivismThetendencyofpeopletobelongtogroupswholookaftereachotherinexchangeforloyaltyNeutralApreferenceforunemo-tional,objectiveanalysisofasituationoradecisionandforlimiteddisplaysofemotionsandfeelingsintheworkplaceEmotionalAnacceptanceofemotionandsubjectivityasthebasesforsomedecisionmakingandapreferenceforexplicitdisplaysofemotionsandfeelingsintheworkplaceSpecificAtendencytolimitwork-placerelationshipsandobligations,includingrela-tivestatusandhierarchicalposition,totheworkplaceDiffuseAtendencyforworkplacerelationshipsandobliga-tions,includingrelativestatusandhierarchicalposition,toextendintosocialsituationsandactivitiesoutsideofworkRUGM_C05.
QXD8/18/081:52PMPage138139CHAPTER5INTERNATIONALCULTUREspecific),ordotheyextendintothesocialcontextoutsidetheworkplace(diffuse)Hereatellingexampleiswhetheranemployeeiswillingtohelppaintaseniormanager'shouseoveraweekend.
ClearlyAustralianbossesarelikelytogetacharacteristicallybluntanswertothisrequest!
China,Japan,India,andSingaporedisplayhighlydiffuserela-tionships,AustraliaandtheNetherlandsthemostspecific.
5Achievementversusascription.
Thisdimensionreferstoone'sstatuswithinorganiza-tions,contrastingthosecultureswherestatus,credibility,authority,andultimatelypowertendtobebasedonmerit(achieved)againstthosewhereclass,gender,education,oragetendtobethedefiningcharacteristics(statusisascribed).
CountrieswherestatustendstobeascribedincludeEgypt,Turkey,andArgentina(andslightlylessso,Russia,Japan,andFrance),andthosewhereitisachievedincludeNorway,Sweden,andpredictablytheUnitedStates,Australia,Canada,andtheUK.
6Attitudestowardtime.
Sequential(timeasasequenceofevents)versussynchronic(severaleventsjuggledatthesametime)viewsoftimetendtorelatetopunctualityformeetingsanddeadlines.
SwedesandothernorthernEuropeanculturestendtobepunctualandplanaccordingtospecifictimetables.
ManysouthernEuropean,LatinAmerican,andArabicculturesseepunctualityandchronologicalprecisionasfarlessimportant.
Theyalsotendtonaturallycopewitharangeofissuessimultaneously,ratherthanonebyone.
7Attitudestowardtheenvironment.
Thisdimensionreflectstheemphasisaparticularcultureplacesonpeople'srelationshipwithnatureandthenaturalenvironment.
Ontheonehandsomeculturesemphasizecontrolandsubjugationofenvironmentalforces,whereasothersemphasizetheneedtoworkwithnature,inharmonywiththeenvironment.
Clearlyreligiousandphilosophicaldifferencesaroundtheworldinfluencedifferenceswithinthisdimension.
Trompenaars'sevendimensionshavebeenusedinavarietyofwaystogaininsightsintothekindsofproblemsthatmightariseinthecontexts(facetoface,companytocompany,andcompanytocustomer)outlinedinFigure5.
1.
Ingeneraltheyindicatetheorganiza-tionalcharacteristicswecanexpectfromfirmsbasedinparticularcountriesordominatedbycertainnationalities.
Theyarealsousedtomeasurechangesinculturalvaluesandbehaviorovertime.
ResearchshowsthatinbothJapanandChina,forexample,achieve-mentorientationisontheincreasealongsidesomeelementsofindividualism.
12TheJapanesearemovingawayfromarelianceoncollectivismintheformofthestate,largefirms,andgroupassociationsandplacingmorevalueonpersonalresponsibilityandindividualperformance.
InChinathereisashiftincompaniestowardperformance-relatedrewardsandindividualinitiative,builtonthechangingviewsofthegrowingurbanelite.
Buttherearealsowiderconcernsregardingthesocialcostsaswellasthebenefitsofself-interest.
TheGLOBEproject'sninedimensionsofcultureMorerecentresearchhasbuiltontheHofstedeandTrompenaarsresearch.
TheGlobalLeadershipandOrganizationalBehaviorEffectiveness(GLOBE)projectbeganin1992andcontinuestoday.
Ithasinvolved150researcherscollectingdataonculturalvaluesandmanagementandleadershipattributesfrom18,000managersacross62countriesinthetelecommunications,food,andbankingindustries.
13InthesamewayasHofstedeandTrompenaarsbeforethem,theresearchersplacecountriesalongastandard1to7scale.
TheGLOBEproject,however,endsupwithninekeyculturaldimensions:1Assertiveness.
TheUnitedStates,Austria,Germany,andGreecearehigh;Sweden,Japan,andNewZealandarelow.
2Futureorientation.
Apropensityforplanning,investing,delayedgratification:Singa-pore,Switzerland,andtheNetherlandsarehigh;Russia,Argentina,andItalyarelow.
AchievementorientedWherestatusisearnedratherthanaright;recruitmentandpromotionopportunitiestendtobemoredependentonperformance,asinameritocracyAscriptionorientedWherestatusismoreofarightthanearned;recruit-mentandpromotionopportunitiestendtobemoredependentonseniority,ethnicity,gender,religion,orbirthSequentialCulturesthatviewtimeinasequentialorlinearfashion;ordercomesfromseparatingactivitiesandcommitmentsSynchronicCulturesthatvieweventsinparallelovertime;ordercomesfromcoordinatingmultipleactivitiesandcommitmentsRUGM_C05.
QXD8/18/081:52PMPage139140PARTTWOTHEENVIRONMENTOFINTERNATIONALBUSINESS3Genderdifferentiation.
Thedegreetowhichgenderroledifferencesaremaximized:SouthKorea,Egypt,India,andtheChinaarehigh;Hungary,Poland,andDenmarkarelow.
4Uncertaintyavoidance.
Arelianceonsocietalnormsandprocedurestoimprovepre-dictability,apreferencefororder,structure,andformality:Sweden,Switzerland,andGermanyarehigh;Russia,Bolivia,andGreecearelow.
5Powerdistance.
Russia,Thailand,andSpainarehigh;Denmark,theNetherlands,andIsraelarelow.
6Institutionalcollectivism(individualismvs.
collectivism).
Promotingactiveparticipationinsocialinstitutions:Sweden,SouthKorea,andJapanarehigh;Greece,Argentina,andItalyarelow.
7In-group/familycollectivism.
Aprideinsmall-groupmembership,family,closefriends,etc.
:Iran,India,andChinaarehigh;Denmark,Sweden,andNewZealandarelow.
8Performanceorientation(muchlikeachievementorientation).
Singapore,HongKong,andtheUnitedStatesarehigh;Russia,Argentina,andItalyarelow.
9.
Humaneorientation.
Anemphasisonfairness,altruism,andgenerosity:Ireland,Malaysia,andEgyptarehigh;Germany,Spain,France,Singapore,andBrazilarelow.
Asyoucansee,manyofthesedimensionsmatchthoseofHofstedeandTrompenaars,andtheoverallGLOBEframeworkisverymuchanextensionoftheirapproach.
TheGLOBEresearchershaveexaminedtheHRMimplicationsoftheseculturaldiffer-encesforpracticingmanagersandlookedatwaystoavoidthepitfallsofignoranceandinsensitivity.
14Asimilarlong-runningstudybytheCRANETnetworkhasfocusedonEuropeanculturaldifferencesandreportssimilarfindings.
15AswiththeotherculturalmappingstudiesbyHofstedeandTrompenaars,GLOBEhasfacedsomecriticalappraisal,whichhelpsusunderstandthestrengthsandweaknessesofitsconcludingframework.
Arecentsetofdebateshasusefullyraisedsomemethodologicalissuesassociatedwiththesekindsofstudies,andprovidesinterestingpointsofcontentionweshouldbeawareof,ratherthanblindlyacceptingtheabovekindofresearch.
16ApplyingthenationalcultureframeworksDifferentstylesofcommunicationandinteractionresultfromtheculturaldifferenceslistedabove.
Thesecanleadtoworkplacemisunderstandings,poorinterpersonalandinter-grouprelationships,inefficiency,andhighercosts.
Threeexamplesprovidesomeinsightsintohowwecanapplytheabovetypologies.
USmanagers,accordingtoalloftheabovestudies,arehighlyassertiveandperformanceorientedrelativetomanagersfromotherpartsoftheworld(theycomearoundthemid-pointonalltheotherdimensions).
Theirinteractionstyleischaracteristicallydirectandexplicit.
Theytendtousefacts,figures,andlogictolinkspecificstepstomeasurableoutcomes,andthisisthemainfocusofworkplaceinteraction.
GreeksandRussiansarelessindividualistic,lessperformanceoriented,andshowlowerlevelsofuncertaintyavoidance(arelessdrivenbyprocedures)thantheAmericans.
WhenRussianandGreekmanagers,employees,customers,suppliers,orpublic-sectorofficialsinteractwithUScounterparts,theymaywellfindtheirapproachtoodirectandresultsfocused.
Forthemcommunicationislikelytobemoreaboutmutuallearningandanexplorationofrelevantissuesthananexplicitagreementaboutspecificexpectationsandendresults.
Similarly,theSwedesmayfindtheUSstyletooaggressiveandunfriendly,workingagainsttherelationship-buildingprocessthatforthemisamajorobjectiveofworkplaceinteraction.
TheKoreansandJapanesehavehighlygender-differentiatedsocietieswithmalestendingtodominatedecisionmakingandleadingmostface-to-facecommunication.
TheagendaHumaneorientationCulturesthatemphasizehelpingothers,charity,andpeople'swidersocialobligationsRUGM_C05.
QXD8/18/084:16PMPage140141CHAPTER5INTERNATIONALCULTUREfordiscussionislikelysetbymales,andtraditionallanguageformsdifferaccordingtowhetheramanisaddressingawomanoranolderpersontalkingtoayoungerperson,andviceversa.
Gender-(andage-)relatedroles,responsibilities,andbehaviorsarethereforedeeplyembeddedinlanguageandcustoms.
17PolandandDenmarklieattheotherendofthecontinuumonthegender-differentiationdimension.
PerhapsevenmorethanotherWesternmanagers,theirlackofawarenessofthisculturaldifferencerunstheriskofbothembarrassingfemaleemployeesandoffendingandalienatingseniorJapanesemaleman-agers.
Thiskindofclashcanmakenegotiationsandinteractionofallkindsbetweenthesegroupsthatmuchmoredifficult.
CertainkindsofHRMtechniquesareinappropriatefororganizationsthatshowhighpowerdistanceratings.
CompaniesandmanagementconsultanciesintheUK,theUnitedStates,andnorthernEuropeancountrieshavedevelopedfairlyparticipativemanagementsystemstoimproveproductivity,basedontheircharacteristicallylowpowerdistanceandflatorganizationalhierarchies.
Techniquessuchas360-degreefeedbacksystemsfordevel-opingmanagement–employeerelationshipsarenotlikelytowork,however,inMexican,Panamanian,Thai,orRussianorganizations,whichhavehighpowerdistanceandsteephierarchies.
Subordinatesareuncomfortablebeingaskedtoevaluateseniormanagers,andmanagerswouldnotseesubordinatesasqualifiedtocommentontheirperformance.
Morethanthis,toemployeesinsomecountriesthiskindofconsultationcangivetheimpressionthatseniormanagersdonotknowwhattheyaredoing!
Theemployeesmaylosefaithinseniormanagement'sabilityandleave!
Noneoftheaboveexamplesmeansthatinternationalmanagersshould(orevercould)entirelychangetheirbehaviortosuitlocalvaluesandpractices.
Likemanyofthechallengesfacingmanagers,culturalsensitivityandcross-culturaleffectivenesscomefromstrikingabalancebetweenone'sownnorms,values,andprinciplesandthoseofthe"foreigner.
"Thelessonformultinationalfirmsisthatethnocentriccorporateculturesandcompletelystan-dardizedHRsystemsdonotwork.
Thekeychallengeistoadapttogetthebestfromlocaldifferences.
EthnocentricAbeliefinthesuperiorityofone'sownethnicgroup;thedominanceofthehome-countrycultureindecisionmaking,humanresourcemanagement,andoverallcorporatecultureinamultinationalfirmActivelearningcheckReviewyouranswertoActiveLearningCasequestion2andmakeanychangesyoulike.
Thencompareyouranswertotheonebelow.
2Howwelldothecharacteristicsdescribedinthecasematchtherespective,stereotypicalnationalculturesofthesecountriesAccordingtotheaboveframeworkstheymatchreasonablywell.
TheUScultureischarac-terizedasindividualistic,achievement/performanceoriented,andassertive.
Mostofthesetraitsclashwiththe"feminine"(inHofstede'scharacterization)valuesofrelationships,modesty,caring,andthequalityoflifeemphasizedbytheSwedes.
HofstedefindsUSmanagerslesshierarchicalthanmostcultures,whichisnotindicatedinthePharmacia–Upjohncase.
However,asFigure5.
2shows,bothcountrieshavealowpowerdistanceandhighindividualismrating,relativetoothercountries,buttheUnitedStateshasslightlyhigherpowerdistance(steepermanagementhierarchy)thanSweden.
Swedenalsohasarelativelyhighuncertaintyavoidanceranking,preferringorder,structure,andformality,whichdoesnotstandoutinthecasestudy.
Swedesarealsohighoninstitutionalcollectivismbutlowonfamilyorsmall-groupcollectivism.
TheItaliansaretheopposite.
UnliketheAmericans,theItaliansarenotatallorientedtowardachievement(Trompe-naars)orperformance(GLOBE).
TheyarealsomoreemotionalthantheSwedesandAmericansaccordingtoHofstedeandhavearelativelylowfutureorientation(GLOBE).
RUGM_C05.
QXD8/18/081:52PMPage141142PARTTWOTHEENVIRONMENTOFINTERNATIONALBUSINESS"Thewaywedothingshere":theimplicationsofculturaldifferencesfororganizationsandmanagersMappingoutavarietyofnationalculturaltypologiesusingthevariousdimensionsofculturedescribedabovegivesussomeinsightsintothekindsofdifferencesthatexistamongdifferentgroupsofmanagers,employees,andorganizations.
TwokeyquestionsabouttheroleoftheindividualinafirmandtheroleofafirminasocietyfromTrompenaars'studygiveusastartingpointtoexplorethemanagementimpli-cationsofculturaldifferences.
TheresponsesinFigure5.
3reflectthedegreeofsupportfortheparticularpropositionAorBforeachofthesequestions.
Americansclearlydisplaywhathasbeentermed(originallybythesociologistMaxWeber)amechanisticandfunctionalviewofthefirmasanorganization(A)andashareholder-driven,profit-orientedviewofthisorganizationinsociety(althoughmorethanhalftheUSvoteinFigure5.
3wasforoptionB).
TheJapanesetendtohaveamoreorganicviewofthefirm,emphasizingtheimportanceofsocialnetworksandtheobligationofthefirmtoawiderconstituencyofstakeholders(althoughthisisacharacteristicoftraditionalJapanthathasbeenstronglytestedintherecentrecessionaryenvironment).
Awiderangeoffactorswithinorganizationsareinfluenceddirectlyorindirectlybytheculturalpredispositionsofmanagersandemployees.
Weknowfromtheabovestudiesandawiderangeofotherresearchthatthesefactorsinclude:Thegeneralrelationshipbetweenemployeesandtheorganization:theirrolesandrespon-sibilities,obligations,andloyaltiesandthelinkthishaswithlifeoutsidetheworkplace.
Figure5.
3ExcerptsfromTrompenaars'culturalattitudessurveySource:Hampden-Turner,C.
andTrompenaars,F.
TheSevenCulturesofCapitalism:ValueSystemsforCreatingWealthintheUnitedStates,Britain,Japan,Germany,France,SwedenandtheNetherlands(NewYork:Doubleday,1993).
RUGM_C05.
QXD8/18/081:52PMPage142143CHAPTER5INTERNATIONALCULTUREHierarchy,powerandauthority,andtheacceptedroutestoattainingthese,includingfactorsthatunderpinstatusandcredibilityindifferentsocietiesandorganizations.
Theroleofformalrulesandregulationsversustheinformalcommunication,personalnetworks,andhidden"rulesofthegame.
"Theacceptedbasisfordecisionmaking,includingrationale,scientific,mechanistic,andobjectiveversussubjective,tacit,ruleofthumb,etc.
Thedegreetowhichemployeesactandaretreatedasindividualsorgroupsandtheroleofinterpersonalrelationships.
Motivationandrewardssystems.
Interactionandcommunicationmechanisms.
Workattitudesandtheappropriatemanagementofworkattitudeshaveasignificantinfluenceonproductivityandinnovativenessinacompany.
Managersandemployeeswhoaremotivatedbytheircoresocialvaluestoworkhardandcontinuallystrivetoimprovetheircompany'sproductsandservicesandtheprocessesbywhichtheyareproducedareclearlyasourceofcompetitiveadvantage.
Itisinterestingtonotehowsocialnormsmaydriveastrongworkethicdespiteindividualdissatisfactionwithworkloadorjobresponsi-bilities.
ThishasbeenshowninseveralcompaniesbetweenUSandJapanesefactorywork-erswheretheJapanesearefoundtobemoreloyalandalignedwithcompanyobjectivesbutfarlesssatisfiedindividually.
18Table5.
2comparesinterviewresponsesfromsampleworkforcesinsevencountries.
Theresultingrankingofwhatitisthatemployeesvaluemostfromtheirjobsshowsthat"inter-estingwork"iswhattendstoengagemostpeople,beyondeverythingelse.
Table5.
2Averageandintra-countryrankingofworkgoals:aseven-nationcomparisonWorkgoalsBelgiumUKGermanyIsraelJapanNetherlandsUnitedStatesOpportunitytolearn5.
8a5.
554.
975.
836.
265.
386.
167b895795Interpersonalrelations6.
346.
336.
436.
676.
397.
196.
085442637Opportunityforpromotion4.
494.
274.
485.
293.
333.
315.
081011108111110Convenientworkhours4.
716.
115.
715.
535.
465.
595.
259567889Variety5.
965.
625.
714.
895.
056.
866.
1067611946Interestingwork8.
258.
027.
266.
756.
387.
597.
411131221Jobsecurity6.
807.
127.
575.
226.
715.
686.
3033210473Matchbetweenthepeople5.
775.
636.
095.
617.
836.
176.
19andthework8656164Pay7.
137.
807.
736.
606.
565.
276.
822213552Workingconditions4.
194.
874.
395.
284.
185.
034.
84119119101011Autonomy6.
564.
695.
666.
006.
897.
615.
7941084318aFirstrowshowsaveragerankonascaleof1to10.
bSecondrowshowsrankingofworkgoalswithineachcountry,witharankof1beingmostimportantand11beingleastimportant.
Source:AdaptedfromItzhakHarpaz,"TheImportanceofWorkGoals:AnInternationalPerspective,"JournalofInternationalBusinessStudies,vol.
21,no.
1(1990),p.
81.
RUGM_C05.
QXD8/18/081:52PMPage143144PARTTWOTHEENVIRONMENTOFINTERNATIONALBUSINESSFigure5.
4ManagementdimensionsofcultureCROSS-CULTURALMANAGEMENTThreekeyareascapturemanyofthefactorscoveredbytheabovetypologiesandculturalstereotypes,whereculturaldifferencescanmakeasignificantdifferenceatthecompany-to-companyandface-to-facelevels.
Theseareorganization,leadership,andcommunication(seeFigure5.
4).
OrganizationOrganizationstylesrangefromorganic,informal,orpeopleorientedtosystematicormechanistic,formal,ortaskoriented,inkeepingwithsomecommonorganizationaldimensionsdescribedbysociologiststhroughouthistory(suchasMaxWeberandEmileDurkheim).
Organizationsthatoperateverymucharoundpersonalrelationshipsandsocialnetworkscontrastthosethataremuchmorefunctionalandlogical.
Infactdifferentculturesanddifferentfirmsdisplayelementsofboththesecharacteristics,butthebalancevariesconsiderablyandcancreatetensionswhengroupsofpeopleorfirmsfromdifferentendsofthespectruminteractortrytocooperate.
Asanaidtopredictingdifferencesamongindividuals,groups,orfirms,andunderstand-ingthesignificanceofthesevariations,relativedifferencesamongcountries,organizations,andgroupsofpeopleareimportant,ratherthananyabsolutescores.
Forexample,familycompaniesarecharacteristicallydirective,individualorientedbutorganic.
Multinationalfirmsareusuallymoreautocraticandmechanistic.
Consultingandprofessionalservicesfirmsareoftenmechanisticandemphasizeindividualperformanceandrewardsbutmayalsobefairlyteamoriented.
Entrepreneurialnewventureswillusuallybeorganic,unsys-tematic,andgrouporiented.
LeadershipLeadershipstylesrangefromindividualoriented,directive,autocratic,topdown,orauthoritariantogrouporiented,participative,democratic,bottomup,oregalitarian.
Again,culturalgroupsandcorporationsoftenencompassbothkindsofleadershipbuttendtoreflectonedominantstyle.
Individualmanagersfromculturesthatscorehighonthepowerdistanceorassertivenessdimensionsarelikelytobeviewedbythosefromotherculturesasautocraticanddirectivebutwilltendtoviewothersasindecisiveandtoocompromising.
Theywillnotwanttospendtoomuchtimediscussingissuestoachieveaconsensus.
IftheyalsoreflectanorganicRUGM_C05.
QXD8/18/081:52PMPage144145CHAPTER5INTERNATIONALCULTUREorinformal(lowuncertaintyavoidance)culture,thiswillresultinaninstinctiveorunsys-tematicdecision-makingandimplementationstyle,andtheymightbeviewedasanunpre-dictableautocrat.
Thiscontraststhecombinationofhighpowerdistanceandhighuncertaintyavoidance,whichresultsinamoredirectiveandmechanisticstyle.
Suchleaderspreferestablishedformalroutinesandacommand-and-controlbureaucracy,whileothermanagersarelikelytoseethisasover-regulatedandinflexible.
ThePharmaciaandUpjohncasedemonstratesarangeofthesestylesandtheproblemsthatresultfromtheimpositionofanewstyleoforganizationandleadershipwithinacorporatemerger.
CommunicationClearly,attheface-to-facelevellanguagedifferencescanbethemostprominentbarriertocommunicationandthereforetocooperationandcoordination.
EnglishspeakerstendtohaveanadvantageinmanysituationssinceEnglishhasemergedasthemainlanguageofbusinessglobally.
However,thishasledtocomplacencyamongsomeindigenousEnglishspeakers,notablytheBritishandtheNorthAmericans.
First,lesseffortisoftenmadetolearnotherlanguagesandtheirassociatedcultures,whichnormallylimitsamanager'sunderstandingofforeigncolleagues,workers,orcustomers.
Second,theassumptionisoftenmadethatoncethelanguagebarrierisbrokenculturaldifferencesarealsoremoved,whereasthesemayremain,causingmiscommunicationandmisinterpretation.
Asformuchofthischapteronculture,preparationandawarenessarethebeststartingpointsforminimizingdifferencesthatcancreateproblems.
Itisthroughefficientcommunicationthattwopartiessteertowardanunderstanding—amutuallyagreedbasisfordoingbusiness.
Thesignsandsignalsonthisroutetoanunder-standingarestronglyinfluencedbyculture.
Differentgroupshavedifferentwaysofdisplayingapprovalorofshowingfrustrationinnegotiationsanddifferentideasofwhatconstitutesafinalagreement.
TheJapanesedonotreallyhaveanequivalentwordfortheEnglish"no"andindicatedisapprovalinarangeofnon-verbalways.
TheJapanesewordhaidoesmean"yes"butitoftenmeans"yes,Iunderstandwhatyouaresaying"not"yes,Iagreewithwhatyouaresaying.
"Germansplacealotofemphasisonwrittencommunicationsanddocumentedevidenceratherthanverbalinteraction,comparedtotheSpanishandItalianstowhomverbalinteractionandagreementisrecognizedasbindinginsomecontexts.
TheAmericanspreferlegalcontractsandhavearmiesoflawyerstomakeagreementshighlyspecified.
Other,moreorganicbusinessculturestendtoworktowardarelationshipinwhichtrustandunderstandingreplacetheneedforlegallybindingcontracts.
Again,awarenessthroughpreparationandanticipationofdifferencesisthebeststartingpointforavoidingcultureclash.
ThecorporateresponseHowhaveMNEsrespondedtothechallengeofmanagingacrossculturalboundariesWhatkindsoforganizationstructures,HRMprocedures,andcorporatecultureshavebeendevelopedtocopewiththeenormousdifferencesamongpeopleandtounifythisdiversitytowardacommonpurposeAtaverygenerallevelgoodtransnationalfirmsdevelopanawarenessandappreciationofculturaldifferencesamongtheirmanagersandemployees.
Theyalsotakestepstoencourageadaptationofpersonalbehaviorororganizationalpractices,orproductsandservices,tosuitthechangingmixofcultureswithinthefirm,insubsidiariesandinkeymarkets.
Trainingprograms,includingarangeofactivitiesattheinductionstage,whennewrecruitsjoinafirmorexistingpersonneltakeuparoleinanewcountry,areastandardwayforfirmstodothesethings.
Jobrotation,withafocusondevelopinginternationalmanagerswithpersonalexperienceinavarietyofdifferentcountries,isalsopracticedbyanumberoffirms.
ItisCultureclashWhentwoculturalgroups(nationalorcorporate)meet,interact,orworktogetheranddifferencesintheirvalues,beliefs,rulesofbehavior,orstylesofcommunicationcreatemisunderstandings,antagonism,orotherproblemsRUGM_C05.
QXD8/18/081:52PMPage145146PARTTWOTHEENVIRONMENTOFINTERNATIONALBUSINESSnormallyverydifficulttoassesssuchpracticesusinganyformofcost–benefitanalysis.
Thecostsareusuallyeasilyidentifiable,butthebenefitsareveryoftenintangible.
Formanyexpe-riencedinternationalcompanies,suchasShellorNestlé,along-termcommitmentto(andin-vestmentin)culturalawarenessissimplyacceptedasanecessarypartofbeingglobal.
Beyondawarenessandadaptation,thebestfirmsaimtoleveragethediversityofcultureswithintheirorganizationsandcombinethebestaspectsofdifferentwaysofdoingthings.
Corporateculture,asharedidentityspanningculturallydiversegroupsofemployees,providesawaytodothis.
Companiescanusefullyinvestintheirownsocializationmecha-nisms,suchassocialeventsalongsideregularmeetingsandconferences.
Companymaga-zines,intranets,andevenin-housetelevisionchannelsforcorporatecommunicationscanallsupportthisprocess.
Thesemaynotonlyimprovecross-culturalawareness,butalsopromotesharedvalues,symbols,andevenlanguagetohelpbindemployeestogether.
19Hereisalistofotherusefulstrategiesformanagingculturaldiversitydistilledfromanumberofresearchstudies:201Recognizediversity.
Identifyandmapthevariousnationalculturesandethnicgroupswithinthefirmandusethistounderstandwhichelementsofconsistencyandstandard-izationcanorshouldbepromoted.
2Builddiversityissuesintorecruitment,HRMplanning,strategy,locationdecisions,al-liances,andpartnerships.
Thishelpsavoidclashesandinefficiencyandsupportsculturalawareness.
3Identifywhereandtowhatdegreelocaldivisionsshouldbeencouragedorempoweredtotaketheleadinexpressingandmanagingdiversity.
Somedegreeofdevolutionofre-sponsibilityawayfromthecenterofthefirmallowslocaldivisionstoidentifyaspectsofdiversitythataremostimportanttothemandtheiroperations.
4Encouragecross-borderdiscussionandinteractionaswellasfocusedtraining.
Includespecifickinds/combinationsofinternationalexperienceforfast-trackmanagers.
5Aimforaculturalbalanceinparticularareasofstrategicandtacticaldecisionmaking(suchasbrandchangesforforeignmarkets).
Ensurea(numerically)balancedpoolofmanagersorappropriatelydiverseinputsintodecisionmaking.
6Leadfromthetop.
Aimtomatchthegeographicdiversityofthefirm'sbusinesseswithaculturallymixedseniormanagementgroupandboardofdirectors(asinthecaseofSonyandUnilever).
ActivelearningcheckReviewyouranswertoActiveLearningCasequestion3andmakeanychangesyoulike.
Thencompareyouranswertotheonebelow.
3WhatcouldseniormanagershavedonebeforeandafterthemergertoalleviatesomeoftheproblemsthatresultedfromcultureclashAsimplestartingpointwouldbetoreviewthevariousframeworks(Hofstede,Trompe-naars,andGLOBE,forexample)tounderstandsomegenericdifferencesbetweenthenationalculturesinvolvedinthemergerandanticipatesomeofthelikelyproblems.
Itwouldhavealsohelpedtoexaminethepotentialareasoforganizationalconflictwithseniormanagersfromeachcompanyand/orwithmanagerswithsomeexperienceoftwoormoreofthecountriesandtheirwaysofdoingthings.
Somedegreeofculturaltrainingorinductionplusaninvestmentinjointmeetingsandeventstogettoknoweachothercouldalsohaveimprovedunderstandingandmorale.
However,thecost–benefittrade-offforthesekindsofpre-andpost-mergeractivityisdifficulttopreciselyassess.
RUGM_C05.
QXD8/18/081:52PMPage146147CHAPTER5INTERNATIONALCULTUREMultinationalorganizationstructures:imperialistorindependentAkeydilemmaforinternationalfirmsisthedegreetowhichtheypromoteorevenimposeacommon,standardizedcorporatecultureacrosstheorganization.
Althoughthiswillcreateeconomiesofscaleandbemoreefficientinanumberofrespects,itwillalsostiflediversityandcreateclasheswithlocalculturesandwaysofdoingthingsaroundtheorganization.
Firmsrespondtothisdilemmaindifferentways,withdifferentoutcomes.
Atthesim-plestlevelwecanmapoutarangeofresponsesfromwhatistermedimperialist,whereacommoncultureisimposedwhereveracompanyhasapresence,tofederalistorindependentstructures,whereeachnationalsubsidiarybasesitsowncultureonlocalnormsandvalues.
Thereareproblemsassociatedwitheitheroftheseextremesandmostfirmstrytosteeramiddleline,standardizingsomeelementsacrossthewholeorganizationtocentralizeandsimplifysomepracticesandunifyemployees,whileallowingdifferentia-tionwherenecessary.
Thistransnationalcultureallowsforacompromiseinworkstyles,values,andapproaches,harnessingthestrengthsthatlieindiversity.
Table5.
3illustratesarangeoforganizationtypes.
Inparticular,itlinkselementsoforganizationstructureanddesignwithculturalorientation,forexample,intherelationshipbetweenheadquartersandregionalsubsidiaries.
Itspecificallyextendstheethnocentric,polycentric,andgeocentrictypologiesintroducedbyPerlmutterinthe1960s.
21Ethnocentricfirmsarewheretopmanagementisdominatedbyhome-countrynationals,andproceduresandmanagementstylesaretransferredfromtheheadofficeandimposedonregionalsubsidiariesinplaceoflocalwaysofdoingthings.
Polycentricfirmstendtoactlikeafederationofsemi-autonomousorganizationswithfinancialcontrolsorstrictreportingstructuresholdingthemtogether.
Subsidiariesareabletoreflectthelocalculturalnorms,andheadquartersappreciatestheneedfordifferentorganizationdesigns,proceduralnorms,rewardssystems,etc.
,aslongasprofitsflowtothecenter.
Geocentricfirmsareseenastheideal,collaborative,andmeritocraticformofglobalor-ganization.
(Unileverisseenasanexamplebasedontheabovestatement.
)Anequalsharingofpowerandresponsibilitybetweenheadquartersandsubsidiary;seniormanagementpromotedaccordingtoabilityratherthannationality;subsidiariesthatshareworldwideobjectiveswithmanagersfocusingbeyondnationalmarketinterests.
Inthegeocentricorganizationthebenefitsofculturaldiversity,suchasknowledgeoflocalcustomersandbusinesspractices,areharnessedforthegoodofthefirmasawhole.
Thecostsofdiversity,suchaslanguageandcommunicationproblems,differentvalues,andattitudestowardwork,areminimized.
Firmsmovingtowardthismorebalanced,geocentricapproachhavetorecognizediversityanditseffectsandidentifywhichelementsofconsistencyinregulationsandvaluesshouldbepromoted,whereandwhen.
LocaldivisionsmustidentifyTable5.
3OrganizationtypesreflectingculturalpredispositionsImperialistInterventionistInteractiveIndependentOrganizationEthnocentricEthnocentricGeocentricPolycentricStructureSteephierarchyFlathierarchyNetworkFederationStrategyDictatedCentrallydecidedJointlyspecifiedLocallyspecifiedDecisionmakingCentralizedDistributedSharedDevolvedPolycentricEachsubsidiary,division,orfunctionreflectsthecultureofitshostcountry;localmanagers'culturalpredis-positionsanddecisionmakingdominateoverthoseofhome-countrymanagersinamultinationalfirmGeocentricNeitherhome-norhost-countryculturedominatesdecisionmaking,humanresourcemanagement,andoverallcorporatecultureinamultinationalfirmRUGM_C05.
QXD8/18/081:52PMPage147148PARTTWOTHEENVIRONMENTOFINTERNATIONALBUSINESSaspectsofdiversitythataremostimportanttothemandtheiroperationsandtaketheleadinexpressingandmanagingthesedifferences.
Discussion,interaction,cross-divisionalteamworkandjobrotation,support,awareness,andunderstandinggoalongsidetrainingprograms,languagecourses,andculturalassimilation.
Unileverisanexampleofafirmthathascloselyexaminedtherangeofculturesitencompassedandmadeadeliberateattempttouseculturaldifferencesasastrengthratherthanaweaknessforfulfillingitsstrategicaims.
Aspartofahigh-profileinternalcampaignthecompanydescribeditselfasamulti-localmultinational,andthiswasusedtoexplicitlyinformemployeesofitsculturaltolerance.
AccordingtoastatementfromaUnileverboardchairman,oneofthefirm'sobjectiveswasto"UnileverizeourIndiansandIndianizeourUnileverians.
"22Cultureclashincross-borderM&AandjointventuresTherangeoforganizationstylesinTable5.
3alsoreflectstherangeofwaysmultinationalfirmsapproachthemanagementofjointventuresoroffirmsacquiredthroughmergerandacquisition(M&A).
Theycaneitherimposetheirownstyleofmanagementontheseorganizationsorallowthemtheindependencetoreflecttheirownculturalnormsandexistingcorporatecultures.
23Culturaldifferencesoftenprovetobeasignificantpost-mergerbarrierformanagerslook-ingtorealizethesynergiesandaddedvalueofpoolingtheresourcesandcapabilitiesoftwocompaniesfromdifferentpartsoftheworld.
ThePharmacia–Upjohncaseaboveillustratesthisclearly.
Cultureclashanditsimpactonthebottomlineareoftencomplexanddifficulttopredict.
MoreoftenfailuretoanticipatecultureclashresultsfromthelackofawarenessonthepartofseniormanagersanddealmakersdrivingtheM&Astrategy.
Financialanalysesthatfocusthedue-diligenceprocessofcountingupassetsandidentifyingcost-cuttingbenefitstendtomissanyestimationofculturalandorganizationalsynergy(orlackthereof).
Antici-patingsuchproblemsandpreparingforthedevelopmentofeffectiverelationshipsbetweenpeoplefrombothsidesofanM&Aoranallianceiscentraltomaximizingtherewards.
Daimler-BenzranintotheseproblemswhenitmergedwithChrysler.
Anumberofsenior-levelUSmanagerseitherwereaskedtoleaveorleftbecausetheywereunhappyaboutthestyleofmanagementimposedbyDaimler.
AmongtheseearlyleaversweremembersofthedesignteamresponsibleforthePTCruiserandotherChryslersuccessesofthelate1990s.
Manywenttoarch-rivalGeneralMotors,whichisnotanunusualoutcome.
Onestudyshowedthatonaverage20percentofafirm'stopmanagementwillleavewithinoneyearofbeingacquiredand70percentwillgowithinfiveyears.
24Culturalawarenessandsomedegreeoforganizationaladaptationcanlimitthenumberofkeypeoplewhodoleavefollowingacross-borderM&A.
Understandinghowtopredictandmitigatethenegativeeffectsofculturaldifferencesshouldbeontheagendaforallmanagers.
Despitethis,insomecasesanethnocentric,imperialistapproachispreciselywhatisneededtodriveanewlymergedorganizationforward.
WhenCarlosGhosnledthepartialtakeoverofNissanbyRenault,heimposedaverynon-Japanesewayofdoingthingsonthefirm.
Intermsofthefirmwithinitsbroadereconomicandsocialcontext,breakingkeiretsutiesandlayingoffemployeeswereradicalstepstotake.
Internallyheinstitutedperformance-relatedpayandpromotionandcutthrougharangeoftraditionalritualsaroundHRM,budgetcon-trol,anddecisionmakingthatwereunderpinnedbythetraditionalJapanesecultureofthecompany.
Thesewerethekindsofchangesthatneededtobemadetoreverseyearsoflossesandindebtedness.
Itwasalso,arguably,impossiblefortheincumbentJapanesemanagementtomakesuchchanges.
(Chapter17,onJapan,containsthefullNissan–Renaultcase.
)Attheotherendofthespectrum,reflectingagainonTable5.
3,TataTeaLimited,ownerof54teaestatesandthesecond-mostpopularteabrandinIndia,providesuswithanRUGM_C05.
QXD8/18/081:52PMPage148149CHAPTER5INTERNATIONALCULTUREInternationalBusinessStrategyinActionDanoneandParmalat—goinginternational,stayinglocalThedairyindustry,inthemain,isalocalindustry.
Mostdairyproductssoldatlocalsupermarketscomefrompro-cessingplantswithina500mile(800km)radius.
However,thisdoesnotmeanthatthesefirmsareallsmall,localop-erations.
Onthecontrary,thereareasmallnumberofverylargeMNEsinthisindustrythatdobusinessworldwideandtargettheirdairyofferingstolocaldemand.
ThebestknownoftheseisNestlé,whichbeganoperationsin1904whenitopenedevaporatedmilkfactoriesinbothEuropeandtheUnitedStates.
Todaythecompanyisthelargestdairycompanyintheworldandhasoperationsin86coun-tries.
Thereareacoupleofotherlargecompetitorsaswell,althoughtheydonotcompeteonasbroadascale.
OneoftheseisDanone,aFrenchMNEwithannualrev-enuesof14.
3billion($13.
2billion,whichmakeitoneoftheworld's500largestfirms.
Thecompany'sproductlineisnotasbroadasNestlé,butitisjustasbigastheSwissMNEinthedairysector.
Danonehasoperationsin120countriesandemploysover86,000people.
However,itsprimarybaseisEuropewhereitgenerates24percentofitsrevenuesinFranceandanother35percentthroughouttherestofEurope.
DanonewasoriginallyaSpanishyogurtproducerthatmergedwiththeFrenchfirmGervaisin1967.
Thenin1973thecompanymergedwithBSN,aglassmanufacturer,andadoptedthepackagingcapabilityoftheglasssystemtothefoodbusiness.
However,theglassbusinesswasdroppedinthelate1970s,andsincethenDanonehasfocusedondefiningitsplaceinthedairyindustryanddetermininghowitcanbetteraddresstheculturaldemandsofitslocalcustomers.
WiththedecisiontofocusmostheavilyonEuropeandtotakeadvantageoftheexpandingEU,Danonesetupcentralizedpurchasingandresearchdepartmentsinordertoobtaineconomiesofscaleinfooddistributionacrossthatcontinent.
Atthesametimethecompanylookedtogainagreaterpresenceinothermarkets,includ-ingNorthAmerica,subsequentlytakinga40percentstakeinStonyfieldFarm,anorganicyogurtmakerbasedinLondonderry,NewHampshire.
AlthoughStonyfieldcontin-uedtooperateautonomously,thefirm'sstrongcustomerrelationsprogramanditsexpertiseinmarketingfast-growingorganicproductsprovidedDanonetheopportunitytofurtherincreaseitsUSmarketsharetoexploitthestrengthsofitsnewacquisition.
Andtoensurethatitcontinuestofocusonitsmainbusi-nessofdairyfood,Danonehassoldoffitsgrocerybusi-nessandwithdrawnfrombrewingandpackaging.
Todaythecompany'seffortsarebeingdirectedmostheavilytowardthedistributionofFrench-madedairyproducts.
SoinbothEuropeanditsworldwidemarkets,Danoneisworkingtoanswerthequestion:howcanwedevelopandmarketFrench-madedairyproductsthatmeettheneedsofthelocalmarketTheothermajorglobalrivaltoNestléwastheItalianMNE,Parmalat.
LikeDanone,Parmalatmarketedawidevarietyofdairyproductsincludingmilk,yogurt,desserts,butter,andcheese.
Yetthecompanywasbestknownforitsdevelopmentofultra-high-temperature(UHT)pasteurizedmilkthatallowsmilktolastuptosixmonthswithoutrefrig-eration.
ByspecializingintheproductionanddistributionofUHTmilkacrossEurope,Parmalatwasabletocutbothpro-ductionanddistributioncostsandtoincreaseitsprofitabil-ity.
Atthesametime,andunlikeDanone,thecompanywasmorevigorousinitsinternationalexpansion.
InadditiontomovingintoFranceandGermanyinthe1970s,thecompanybeganexpandingintoNorthandSouthAmericasoonthere-after.
Asaresult,Parmalatearned32percentofitsrev-enuesinEurope,31percentinNorthandCentralAmerica,andanother29percentfromSouthAmerica.
AustraliaandAsiaaccountedfortheremaining8percent.
Likeitstwoothercompetitors,NestléandDanone,Par-malatcarefullytargeteditsproductstothelocalmarketandsoughttoacquirelocalcompaniesthathadestab-lishedmarkets.
Forexample,ParmalatpurchasedAultDairies,oneofCanada'slargestoperations,aswellasBeatriceFoods,anothermajorCanadianfirm.
Parmalatsubsequentlybecamethatcountry'slargestdairyfirm.
Parmalatalsohaditssubsidiariesemploythecompany'sfoodexpertisetoexploittheirlocalmarkets.
Forexample,drawingonitsUHTtechnology,Parmalat'sAustraliansubsidiarywasabletoexportmilkproductsthroughouttheSource:Corbis/LucasSchifresRUGM_C05.
QXD8/18/085:00PMPage149150PARTTWOTHEENVIRONMENTOFINTERNATIONALBUSINESSAsianmarket,andthecompany'sArgentineansubsidiary,whichspecializedinUHTmilkproducts,wasabletocreateexportmarketsinBrazilandVenezuela.
Inaddition,incateringtolocaltastesthecompanydevelopedawidevarietyofproductssuchasadessertcalleddulcedeleche,whichitexportedtoalargenumberofcountriesincludingtheUnitedStates,theUK,Russia,Spain,Uruguay,andVenezuela.
Parmalat,however,tendedtomaintainlocallyknownbrands,ratherthanreplacingthemwithitsown.
IntheUK,forexample,ParmalatownedtheLoseleyyogurtbrand,whichwaswellregardedasquiteanupmarketbrand.
Similarly,consumersinCanadaandAustraliamaybesur-prisedtohearthattheirfavoritebrands,suchasBeatriceorPauls,wereownedbyParmalat.
DanoneandParmalataregoodexamplesofcompaniesthatsellproductsthatareculturallyinfluenced.
InDanone'scase,ithaschosentodosobystayingprimarilyinEurope.
Parmalat,ontheotherhand,hasbeenmuchmoreactiveinthelargerinternationalarena.
Both,however,havebeensuccessfulbecausetheyhavebeenabletoblendtheirexpertisewiththeneedsoftheirspecificmarkets.
InthecaseofParmalatthissuccessnowappearstohavecometoanend.
Itreachedsalesof$9.
4billionin2002andmanagedacquiredbrandsin30differentcoun-tries.
ButinDecember2003,withtalkoffraudscandalsinItaly,itwasrevealedthatParmalathadareported$11bil-liondebtand$5billionincashmissing.
By2006,althoughthegroupstilloperatesinthedairyindustry,itisamuchreducedinscaleandglobalscope.
Ithassoldoffnumer-ousnationalbusinessesandstillfacesongoinglitigation.
Websites:www.
danone.
com;www.
parmalat.
net;www.
nestle.
com.
Sources:Danone,AnnualReport,2006;http://www.
danone.
com;Parmalat,AnnualReport,2006,http://www.
parmalat.
net;AdrianMichaels,"JudgeseeksParmalatsettlement,"FT.
com,December6,2006;"ASmallTown'sBigCheeses,"TheEconomist,May29,1997;NikhilDeogun,"DanoneGroupeScoopsUp40%StakeinStonyfieldFarm,"WallStreetJournal,October4,2001,p.
B9;andDeborahOrr,"WhoGetsParmalat'sMilkandCookies"Forbes.
com,December24,2003,http://www.
forbes.
com/2003/12/24/cz_do_1223parmalat.
html.
exampleofasuccessfulM&Awhichfollowedthe"independent"approachvis-à-visitsnewlyacquiredsubsidiary.
InMarch2000itboughtoneoftheUK'stopteabrands,TetleyTea,somesayonthebasisofprofitsatTataConsultingServices,thesuccessfulITandsoft-warearmofthe$9billionTataconglomerate.
Comingmorethan50yearsaftertheendof200yearsofBritishcolonialrulethathadsupportedBritishownershipofteaestatesinIndia,thisshiftofpowerisanappropriatesymbolforthetwenty-firstCentury.
ButthetakeoverwasbarelynoticedbytheBritishpublic.
InstarkcontrasttotheimperialistapproachoftheBritishinIndiaallthoseyearsago,Tatatookahands-offapproach,allowingtheex-istingmanagement,withitslocalknowledgeandexperience,tocontinuerunningTetley.
Afederalstructurewithdevolveddecisionmakingissupportedbyapolycentricorganiza-tionalstyle.
25ActivelearningcheckReviewyouranswertoActiveLearningCasequestion4andmakeanychangesyoulike.
Thencompareyouranswertotheonebelow.
4Explainwhyoneorganizationmightwanttoimposesomeofitswaysofdoingthingsonanother,suchasanacquiredfirmorsubsidiary.
Standardizingwaysofdoingthingsacrosstheoverallorganization,toacertainextent,canbemoreefficient.
Differencescancreatedifficultiesincommunication,teamwork,moti-vation,orcoordination,andtheimpactoncompanyperformancecanbesignificant.
Itisim-portanttomakethedistinctionbetweenthevalues,beliefs,andnorms,plustheassociatedworkpracticesandmanagementstructuresthatstemfromthedominantnationalculture(theimpositioncanthenbedescribedasethnocentric)orfromthecorporateculture.
Inthelattercasethefirmwillbeaimingtoderivethebenefitsofhavingasharedculturethatbridgesthenationalculturaldifferencesacrosstheoverallorganization.
RUGM_C05.
QXD8/18/081:52PMPage150151CHAPTER5INTERNATIONALCULTURECulturaldifferencesbetweengroupsofpeopleintheonefirm,orbetweentheemployeesoftwofirmsengagedinajointventure,arenotnecessarilyaproblem.
However,whentheydocreatedifficultiesintermsofcommunication,teamwork,motivation,orcoordination,theimpactoncompanyperformancecanbesignificant,despitethefactthatclearcause-and-effectrelationshipsareoftendifficulttoidentifyprecisely.
Ratherthanasingle"bestpractice"fordealingwiththis,theexamplesabovesuggestthatsolutionsarecontextspecific.
CULTUREEMBODIEDINNATIONALINSTITUTIONSThesecondlevelatwhichwecananalyzeculturaldifferencesandtheireffectsisattheinstitutionallevel,wherenationalculturalcharacteristicsareembodiedininstitutionsfromgovernmentagenciesandgovernancemechanismstotheeducationsystem,economicinstitutions,andbusinessorganizations.
Firmsengagingincross-borderjointventuresorM&Aneedtotakeaccountofthenationalcontextinwhichthenewpartneroracquiredfirmissituated.
Similarly,whenmarketingandsellingproductsinanewnationalmarket,thesebroaderdifferencesmatter.
Acountry'sdistinctivepolitical,legal,andinstitutionalcontextpartlyreflectsitsdominantnationalculture.
Educationsystems,laborlaws,environmentalregulations,capitalmarkets,andtherelationshipsbetweenprivate-sectorbusinessesandpublic-sectororganizationswillvaryaccordingly.
26Trompenaarsuseshisfindingssimplytodividevariouscountriesintosubgroupsreflectingsharedcharacteristicsstemmingfromcommonculturalinfluences(Figure5.
5).
Westernpluralismemphasizesindividualcompetitiveness,commonlyrepresentedbyseparateventurescompetinginprice-definedmarketsforsuccess.
Survivalofthefittestisthecatchphrase,andcompaniestendtoberunasmeritocracies.
Commandeconomiesarecentrallyplannedhierarchieswithlessindividualismandlessindividualincentive.
Clearly,asglobalpoliticschanges,countriesaretendingtomoveoutofthiscategory.
Forexample,PolandisnowanemergingcapitalistcountryreflectingthecharacteristicsofWesternpluralismmorethanacommandeconomy.
HierarchyEqualityAnalyzingIntegratingFigure5.
5SharedcharacteristicsstemmingfromcommonculturalinfluencesSource:Hampden-Turner,C.
andTrompenaars,F.
TheSevenCulturesofCapitalism:ValueSystemsforCreatingWealthintheUnitedStates,Britain,Japan,Germany,France,SwedenandtheNetherlands(NewYork:Doubleday,1993).
RUGM_C05.
QXD8/18/081:52PMPage151152PARTTWOTHEENVIRONMENTOFINTERNATIONALBUSINESSOrganicorderingreferstothefamily-centeredhierarchiesofAsia,southernEurope,andLatinAmerica.
Inter-andintra-organizationinteractionwillbebasedaroundinforma-tionsharingandcollaborativecompetition.
Structurednetworksreflectthemoreequal,structuredrelationshipsbetweencompaniesandwithpublic-sectororganizationsthatexistinsomecountries.
France,withsomecomparisonswithotherWesterneconomiesandorganizations,providesanexample,givingasnapshotofsomeofthemaincharacteristicsthatstemfromthecountry'sculturaldistinctiveness.
France:culturalandsocialcharacteristicsthatcreateanationaldistinctivenessNationalcharacteristicsCentralplanning,nationalprotectionismfordomesticindustry,andstronggovernmentinterventioninthemarket(comparedtootherEuropeaneconomies)lieattheheartoftheFrenchsystem.
CivilservantsareintellectualandrespectedasinJapan(butnottheUK)andwellpaid(unlikeJapan).
Communicationtendstobevertical(up–across–down).
Bypassingofficialchannelsisnotcommon:uncertaintyreductiontendstopredominate.
Hierarchyisimportant,bureaucracyrespected.
Clearhierarchy,divisionalization,andrulesandregulationsguidebehavior.
However,thisexistsalongsidearespectformaverickgesturesandindividualsorgroupsthatovercometheobstaclesandbeatthesystem.
Government-to-businesslinksareformalandinformal,withtheelitistgroupsfromthegrandeécolesbridgingpublicandprivatesectorsattheseniorlevel.
AscriptiondominatesoverachievementcomparedtotheUKortheUnitedStates,againwithparallelswithJapan.
Competitionoccursatschoolagewhensuccessdeterminesassignmenttoaparticularcadreorecheloninsideandoutsidetheworkplace(dependingontheschoolattendedasmuchasindividualperformance).
Francehasalargenumberoffamily-ownedandmanagedfirms.
ItdoesnothavetheMittelstand(smalltechnicalandengineeringfirms)thatunderpinthechemicalandmachinetoolindustriesinGermany.
Capitalmarketsarecompetitivebutarenotas"short-termist"asintheUKandtheUnitedStates,withanoverwhelmingemphasisonsharevaluesanddividends.
FrancedoesnothavethestronginterfirmnetworksthatexistinGermanyandJapan(keiretsu),whichincludelinksbetweenfinancialinstitutions(banks,institutionalshareholders)andthecompaniestheyfund.
FrenchorganizationsFrenchcompaniesalsotendtobehierarchical,bureaucratic,andwellstructured,butthereisastrongviewofthecompanyasasocialentity(anespritdecorps)withanem-phasisonobligationandloyaltyratherthanindividualgain.
Despitemovestowardamoreequalrelationship,Frenchmanagerscontinuetohaveasupervisoryroleoverworkers.
GermanandJapanesemanagers,bycomparison,tendtobemorecollegiateandcooperativeacrosslevelsofthehierarchy,includingmentoringarrangementsbetweenseniorandjuniormanagers.
Hierarchicalrelationshipsarediffuse(inTrompenaars'terminology)ratherthanlimitedtotheworkplace(FrancerankshighestamongEuropeancountriesalongthisdimen-sion).
Companieshavearesponsibilitytowardthewidersociety,andmanagers,becauseoftheirprofessionalstatus,havearoletoplayinsociety.
MittelstandAbout3.
4millionsmallandmedium-sizedfirmsdefinedashavinglessthan50millionturnoverthatmakeuptheheartoftheGermaneconomyEspritdecorpsThespiritofagroupthatmakesthememberswantthegrouptosucceedRUGM_C05.
QXD8/18/081:52PMPage152153CHAPTER5INTERNATIONALCULTUREScientificmanagementtechniques,termedgestion,dominate,whichparallelsGermanzealforquantificationandmeasurementtoguideperformanceimprovement.
Thereisapremiumontechnicalandon-the-jobtraining(similartoGermanyandJapan).
MarketingandaccountancyskillsarelessvaluedthanintheUKandtheUnitedStates.
Asurprisetomanyobserversisthatone-fifthofthelaborforceisunionized.
Frenchlaborlaw(CodeduTravail)iscomprehensiveandenforced.
CompaniesarerelativelyloyaltotheiremployeescomparedtoBritishorUSfirms,butthereisnotthestrongsocialcontractthatexistsinJapan.
GestionTheskillorpracticeofcontrolling,directing,orplanningsomething,especiallyacommercialenterpriseoractivityKEYPOINTS1Culturecanbedefinedas"thesumtotalofthebeliefs,rules,techniques,institutions,andartifactsthatcharacterizehumanpopulations.
"2Culturaldifferencescanhaveanimportanteffectattheface-to-faceorcompany-to-companylevelsandneedtobetakenintoaccountindealingwithdifferentgroupsofcustomersaroundtheworld.
3Culturecanbeanalyzedattwolevels:thepsychicdistancebetweengroupsofpeople,andthedifferencesincultureembodiedinnationalinstitutionsandsocio-economicsystems.
4Hofstede,Trompenaars,andtheGLOBEresearchershaveconstructedusefulframe-worksforunderstandingbroaddifferencesbetweennationalcultureswhichunderpindifferencesinthedesignoforganizationsandthebehaviorofmanagersandemployees.
5Differencesinorganization,leadership,andcommunicationcanbeusedtomeasuredifferencesingroupsandindividualsandhelpmanagersanticipatewhenandwhyculturesmayclash.
6Companyresponsestothechallengesofmanagingdiversityrangefromtheimperialisttotheindependentapproaches.
7Ethnocentricfirmsimposeacommoncultureonallsubsidiaries,polycentricfirmsallowsubsidiariestoreflectlocalwaysofdoingthings,andgeocentricfirmsmaintainabalancebetweencenterandsubsidiary.
8WheninJapan,donotthrowyourmeishi!
grandeécoleculturesocializationcorporatecultureethnocentrismculturalconvergencepsychicdistancepowerdistanceuncertaintyavoidanceindividualismmasculinityuniversalismparticularismcollectivismneutralemotionalspecificdiffuseachievementorientedascriptionorientedsequentialsynchronichumaneorientationethnocentriccultureclashpolycentricgeocentricMittelstandespritdecorpsgestionKeytermsRUGM_C05.
QXD8/18/081:52PMPage153154PARTTWOTHEENVIRONMENTOFINTERNATIONALBUSINESSReviewanddiscussionquestions1Inyourownwords,whatismeantbythetermculture2Inwhatwaydoethnocentrismandmisconceptionsaboutotherculturesinhibitthosedoingbusinessinternationally3WhyislanguagesocriticalinunderstandinginternationalcultureHowcanthisproblembedealtwitheffectively4Whyareculturaldifferencesanimportantfactorwhenadaptingproductsfornewoverseasmarkets5UseTrompenaars'sevendimensionsofculturetocompareandcontrastyourownnationalstereotypetoanother.
6WhyareworkattitudesofimportancetoMNEsCiteanddescribetwoexamples.
7Whatkindsofrewardsystemsarelikelytobeeffectiveinmoreindividualisticandachievement-orientedculturesliketheUnitedStates8ExplainhowtheGLOBEprojecthasextendedthedimensionsofnationalculturebeyondtheworkofHofstedeandTrompenaars.
9InthePharmacia–UpjohnmergerhowdidemploymentpracticesandworkplaceregulationsdifferamongtheAmericans,theSwedes,andtheItalians,andwhatimpactdidthesedifferenceshaveontheoperationalefficiencyofthemergedcompany10Showwithexampleshowmanagersinmultinationalfirmscouldimprovetheiremployees'awarenessoftheimportantdifferencesamongcultures.
11WhatarethebenefitsandtheproblemsforapolycentricMNE12Whyisanunderstandingoftheinstitutionalnorms,regulations,andpracticesofothercountriesimportantforinternationalfirmsGiveexamplestoillustrateyouranswer.
13WhatdoestheFrenchtermgestionmeanSometimeagotheCompetitivenessDivisionoftheDepartmentofTradeandIndustry(DTI)intheBritishgovernmentcommissionedresearchonBritishsmallandmedium-sizedenterprises(SMEs)thathadmanagedtosetupsuccessfulbusinessesinJapan,oneofthetoughest(thoughlucrative)globalmarketstobreakintoforforeignfirms(seeChapter17).
Numeroussuccessstoriesfromthestudyshowhowsomefirmsmanagedtoadapttothediffer-encesinculture,society,andbusinesspracticesthatcanactasbarrierstoforeignfirms.
Buttherearealsonumeroustalesoftheblundersthatsomemanagersmadethatunder-minedtheireffortstoestablishthemselvesinJapan.
MeishiisJapanesefor"businesscard,"buthasadeepersignificanceinJapanthanelsewhereasarepresentationoftheemployee'sallegiancetoandrespectforhisorhercom-pany.
Thestrongemphasisplacedonloyaltyandobligationbetweenemployeesandtheirfirms,lifetimeemploymentbasedonamoralcontract(ratherthanaprice-basedcon-tract),andamanager'spositionasamemberofacollectiveallhaveastronginfluenceonhis(sometimesher)behaviorwheninteractingwithothers.
Kaisha-inliterallymeans"companyperson,"butitalsodenotestheindividualasarepresentativeof"ourcompany"inthesenseofasharedgroupconsciousness.
Thecompanynamecomesfirst,be-foretheindividual'snameonthemeishiandwhenmakingintroductions.
Theexchangeofmeishialsoestablishesrela-tiverankwithinthestrictcorporateandsocialhierarchyandthereforeguidesthecorrectbehaviorandevenformofRealCaseDonotthrowyourmeishi!
RUGM_C05.
QXD8/18/081:52PMPage154155CHAPTER5INTERNATIONALCULTURElanguageusedforinteracting.
OverallfortheJapaneseex-changingmeishiisanimportantsymbolicritual.
AseniortechnologymanagerfromScotlandonhisfirstassignmenttoJapanwasattemptingtoestablishastrate-gicalliancewithalocalfirmasastartingpointformarket-ingandsellinghisfirm'sproductslocally.
InhisfirstmeetinghefacedsixseniorexecutivesfromtheJapanesefirm,rangedacrossaboardroomtabletraditionallyinorderofseniority.
AlmostthefirstactoftheScottishmanagerwastothrowhisnewlyprintedmeishiacrossthetabletoeachoftheJapaneseexecutivesinturn!
Thereisnowayofknowinghowsignificantthissingleactwasinunderminingthisfirm'smarketentryinJapan.
ItfailedinitsattempttoforgeanalliancewiththisparticularJapanesefirmandwithothers,eventuallyleadingittoabandonitsattempts.
WhatwecansayforcertainisthatasmallamountofpreparationbythismanagertobuildevenabasicunderstandingofbusinessetiquetteinJapanwouldhaveimprovedthiscompany'schancesofbuildingasuccessfulbusinessinJapan.
Theoverallstudy,including30detailedcasestudiesofsuccessfulBritishfirmsinJapan,demonstratesveryclearlythatmanagersneedtounderstandtheculturalandsocialnormsthatunderpinbusinesspracticesindifferent1ExplainwhatkindsofbroadculturaldifferenceswearelikelytofindbetweentheJapaneseandtheBritish.
2WhatimpressiondoyouthinktheScottishengineermadeontheJapaneseexecutives3WhatstepscouldtheScottishfirmhavetakentoavoidthiskindofmistake4Howeasyisittodoasimplecost–benefitanalysisoninvestmentsintoimprovedculturalawarenessamongemployeescountriesiftheyaregoingtodobusinessinthosecoun-tries.
Thelessonappliestofirmsengagedincross-bordermergersandalliances,expandingintonewmarketsthroughforeigndirectinvestmentactivities,orevenatthesimplelevel,whenhiringnewrecruitsfromoverseas,out-sourcingtoforeigncountries,orsellingproductsandservicesabroad.
Culturalawarenessiscriticaltomakingbusinessrelationshipswork,attheface-to-faceleveloratthecompany-to-companylevel.
Sources:S.
Collinson,SmallandSuccessfulinJapan:AStudyof30BritishFirmsintheWorld'sMostCompetitiveMarket(London:AveburyPress,AshgatePublishingGroup,1996);C.
Nakane,JapaneseSociety(Tokyo:CharlesE.
Tuttle,1973).
RealCaseSportcanbelocalandglobal:ManchesterUnitedFormostsportsthereappearstobeanaturalconnectionwiththeculturesandcommunitiesofparticularlocationsandevenindividualvenues.
Oftenhistoryplaysastrongrole,evenwhensportsareplayedinternationally.
StAndrewsLinksCourse,Lord'sCricketGround,andWembleyStadiumallhaveaparticularsymbolismtoplayersandfansofgolf,cricket,andfootball(soccer)inandbeyondtheUK.
Thesecontrastwithmore"placeless"globalsportingevents,particularlytheOlympicGames,whichinvolvemostnationsoftheWorld.
Ratherthancreatingasenseofcommonidentitysucheventscanreinforcenationalcul-turalidentitiesthroughinternationalcompetition.
Othersportsremainlocal:JapaneseSumoWrestling,AussieRulesFootball,andHurlinginIreland,forexample,wheretheconnectionwithnationalculture,communityandhistoryarestrongest.
AmericanfootballisplayedinseveralcountriesbutonlyseriouslyintheUnitedStates.
Itisnotonlyahugecommercialenterprisebut,likebasket-ballandbaseball,stronglyembeddedinlocalcommunitiesthroughschoolsandcolleges,asanimportantsymbolofUSculturalidentity.
Source:GettyImages/AFP/JavierSorianoSomesportscouldbedefinedasregional,suchasbase-ballwhichispredominantlybasedinNorthAmerica,butalsopopularinJapanandplayedlittleelsewhere.
Afewsportsaremarkedonaglobalbasis,althoughnotallpartsofthetriadarefullyinvolved.
Golf,tennis,andsoccerhaveRUGM_C05.
QXD8/18/084:17PMPage155156PARTTWOTHEENVIRONMENTOFINTERNATIONALBUSINESSglobaltelevisionaudiencesandadvertisingrevenues.
Amongthese,soccerisrecognizedasthebiggest,playedbyanestimated240millionpeoplewith1.
5millionteamsand300,000clubsworldwide.
Manycountries,fromBraziltoCameroon,ItalytoSouthKorea,wouldclaimthegameasanimportantpartofpopularnationalculture.
Butsoc-cerisnotamajorsportinNorthAmerica,whereitrankswellbehindAmericanfootball,baseball,hockey,andcarracing.
Europehostssomeofthemajorsoccerclubbrands,with52leaguesandacombinedincomeofover$13billion.
WithinthistheEnglishPremiershipleagueisworth$3billion.
PerhapstheleadingclubinthePremiershipisManchesterUnited.
Notyouraveragesoccerclub,butcertainlyoneofthebestillustrationsinthesportingworldoftheevolvingmixbetweenlocalculturalheritageandinternationalbusiness.
Bornin1878,ManchesterUnitedlongepitomizedtheconnectionbetweenthelocalteamandthelocalcommu-nity.
Itsfanbasewasdominatedforoverahundredyearsbylocalpeople,withTraffordParkandtheManchesterShipCanal,oneoftheworld'sfirstindustrialcenters,atitsheart.
Thegrassroots,blue-collar,working-man'spassionandfierceloyaltyremainattheculturalheartoftheclubtoday.
RatherthansymbolizingEnglishcultureitdemon-stratesthestrengthandpersistenceoftheregionalsubcultureofEngland'sindustrialnorth-west.
Thisisrein-forcedbystrongrivalrywithotherleadingclubssuchasLiverpool,Arsenal,andChelsea.
Nowthebrandsoftheseteamsareverymultinational.
Intheearly1990s,despitestronggrowthininternationalmerchandisingsalesthroughManchesterUnitedMer-chandising,over90percentofrevenuestotheclubstillcamefromthedomesticUKmarket.
Butagrowingglobalfanclub,theinternationalspreadofManchesterUnitedMagazine,andthegrowingavailabilityoftelevisedgamesbeyondtheUK(particularlyviaRupertMurdoch'sglobalmedianetworks)ledtoanexportdriveinthelate1990sandearly2000s.
Countrieswithnationalteamsbutfewbigleagueteams,likeIreland,Scandinavia,andarangeofAsiancountries,wheresocceriswatchedbymillionsonTV,becametheclub'sbestmarkets.
By2002theglobalclubmembershiphadgrownto200branchesin24coun-triesandwithprofitsofover$25milliononturnoverofover$100million,itwasconsideredtheworld'swealthiestclub.
MUTV,theclub'sownTVchannel,andalargerangeofInternetsitesfueledinterestintheteam.
By2003Man-chesterUnitedhadattractedanestimatedglobalfanbaseof53million.
MajorsponsorshipdealswithNikeandlaterVodafone(at$15millionperyear)boosteditsfinancesanditsglobalbrandfootprint.
Thecross-bordertakeoverbytheUS-basedGlazerfamilyin2005madetheclubevenmoreinternationalbyanydefinition.
BoostedbywinsinthePremiership,theFACupandtheEuropeanChampionsLeague,theclub'sfanbasehadgrowntoanestimated75millionworldwide.
Significantly,40millionofthesewereinAsia,comparedto23millioninEurope.
In2006–2007ManchesterUnitedgeneratedrevenuesof$212million,secondonlytoRealMadrid's$236million.
ThereweresevenBritishclubsinthetoptwentyandfourinthetopten,theothersbeingChelsea($191million),Arsenal($177mil-lion),andLiverpool($134million).
TheothersinthetoptenareBarcelona($195million),BayernMunich($150million),InterMilan($131million),andASRoma($106million).
Bythistimetheclubhadarangeofregionalsponsors,withPepsiCo,Anheuser-BuschandSchickinNorthAmerica,LadbrokesinEurope,andFujiFilmandAirAsiainAsia.
Thesewereco-brandingpartnersalongsideglobalsponsorssuchasAIG,Vodafone,Nike,andAudi(andafewlocalpartnerslikeDimensionDatainSouthAfrica).
Insomecasesthesehavebeentheroutetojointproductsandservices,suchascontentservicesdeliveredbymobilephonetoManchesterUnitedfansthroughVodafone.
Pretaxprofitsfortheclubreached$60millionin2006andturnover,includingmerchandisingandmediapartner-ships,wasover$400million.
Despitethefactthat,onaverage,overhalftheteamcomprisesforeignplayerswhoplayagainsttheEnglandnationalteamintheWorldCup,anddespitethefactthattheclubsfanbaseis(intermsofpurenumbers)moreAsianthanEnglish,thepassionfortheclubisstillasstrongaseveraroundManchester.
GlobalsportsteamslikeManchesterUnitedareembeddedinlocalfolklore,passionatelydiscussedinbarsandclubsaroundtheworld,partoftheculturalidentityofcommunities,butatthesametimetheyaremultinationalbusinesseswithglobalbrandsandinternationalstrategies.
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manutd.
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stm.
1Whatmakesasportlocal,regional,orglobal2Whatmajordriversareresponsiblefortheinterna-tionalizationofManchesterUnited3HowimportantareManchesterUnited'sstronglocalrootstoitsinternationalsuccessRUGM_C05.
QXD8/18/081:52PMPage156157CHAPTER5INTERNATIONALCULTUREENDNOTES1UNCTAD,WorldInvestmentReport2007,UnitedNations,Geneva;http://www.
unctad.
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2D.
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H.
McCulloch,InternationalBusiness:TheChallengeofGlobalCompetition,7thed.
(Boston:IrwinMcGraw-Hill,1999),p.
258.
3G.
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4K.
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B7B.
5M.
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(London:Roxbury,1993).
6K.
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NordstrmandJ.
-E.
Vahlne,"IstheGlobeShrinkingPsychicDistanceandtheEstablishmentofSwedishSalesSubsidiariesduringtheLast100Years,"inM.
Landeck,Internationaltrade–regionalandglobalissues(Basingstoke:St.
Martin'sPress,1994).
7ManytextsreferbacktotheworkofHallasoneoftheearliestauthorsinthisfield;E.
T.
Hall,"TheSilentLanguageofInter-nationalBusiness,"HarvardBusinessReview,May–June,1960,pp.
87–96.
8G.
Hofstede,"TheCulturalRelativityofOrganizationalPracticesandTheories,"JournalofInternationalBusinessStudies,Fall1983,p.
92;G.
Hofstede,CulturesandOrganiza-tions;SoftwareoftheMind:InterculturalCooperationandItsImportanceforSurvival(London:HarperCollins,1983).
9B.
McSweeny,"Hofstede'smodelofnationalculturaldiffer-encesandtheirconsequences:atriumphoffaith–afailureofanalysis,"HumanRelations,vol.
55,no.
1(2002),pp.
89–118,citesadditionalproblemsinastrongercritiqueofHofstede'sapproach.
Jowell,R.
"Howcomparativeiscomparativere-search"AmericanBehavioralScientist,vol.
42,no.
2(1998),pp.
168–178,meanwhilesuggeststhatHofstedeandotheranalysts'cross-nationaldataaretooconcernedwith"leaguetablesofdistributionsshowingmerely'geewhiz'nationaldiffer-ences"ratherthanofferingexplanationsandinterpretations.
10G.
Hofstede,Culture'sConsequences:ComparingValues,Behaviors,InstitutionsandOrganizationsacrossNations,2nded.
(ThousandOaks,CA:Sage,2001);G.
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,"WhatGoalsDoBusinessLeadersPursueAStudyinFifteenCountries,"JournalofInternationalBusinessStudies,vol.
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11F.
Trompenaars,RidingtheWavesofCulture:UnderstandingCulturalDiversityofBusiness(London:NicholasBrealey,1993);F.
TrompenaarsandC.
Hampden-Turner,RidingtheWavesofCulture:UnderstandingCulturalDiversityinGlobalBusiness(London:NicholasBrealey,1998);FonsTrompenaarsandCharlesHampden-Turneralsorunaconsultancyspecial-izinginadviceandtrainingoncross-culturalissues.
Theweb-siteforthefirmhassomeusefulresourcesforfurtherresearch:http://www.
7d-culture.
nl/.
Asimilarsite,witharangeoftoolsandtechniquesforunderstandingandmanagingdifferencesinEuropeancultures,is:http://www.
johnmole.
com.
12C.
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Chen,"NewTrendsinRewardsAllocationPreferences:ASino-USComparison,"AcademyofManagementJournal,April1995,p.
425;Y.
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13M.
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J.
House,"CulturalAcumenfortheGlobalManager:LessonsfromProjectGLOBE,"OrganizationalDynamics,vol.
29,no.
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14D.
A.
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5–6.
15Thishasinvolved38universitiesinannualsurveysofaround7,000organizationsacrossEurope;C.
J.
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Harris(eds.
),InternationalHumanResourceManagement:ContemporaryIssuesinEurope(London:Routledge,1999);C.
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37,no.
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37,no6(2006),pp.
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37,no.
6(2006),pp.
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91.
19Therearemanyfirmsthatofferadviceandtrainingservicestohelpcompaniesimprovetheirculturalawarenessandtheabil-ityofemployeestoadapttoculturaldiversity.
Ausefulstartingpoint,however,isG.
Wederspahn,"DoYourEmployeesNeedInterculturalServices"2002,http://www.
grovewell.
com/pub-cultural-knowledge.
html.
20FinancialTimes,ManagingGlobalBusiness,MasteringMan-agementSeries(London:Pearson,2000);M.
C.
Gentile,ManagerialExcellencethroughDiversity:TextandCases(Chicago:Irwin,1996);D.
A.
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J.
Ely,"MakingDifferencesMatter:ANewParadigmforManagingDiversity,"HarvardBusinessReview,September–October1996,pp.
79–90.
21H.
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4,no.
1(1969),pp.
9–18.
22PerlmutterinBartlettandGhoshal,2000,p.
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(Boston:McGraw-HillInternationalEditions,2000).
23S.
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25CollinsoninAngwin,ImagesofM&A.
26R.
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