Lecture Notes 2016/2017: Cross-Cultural Management - RUG

Lecture: Introduction

What is cross-cultural management about?

It is not so much a managerial functional activity or specialized field (finance, HRM, logistics, marketing...).

• Within these functions, increased cross-border variety redefines existing managerial activities and introduces new managerial issues. For instance:

  • Who will be in charge of subsidiary X in country Y?

  • Where do we build a new factory?

  • How to manage multicultural teams (costs/benefits)?

  • How do I handle my boss who comes from another country?

Developing global managers: cultural skills and competences or even cultural intelligence?

Where do you find cross-cultural interactions in the managerial world? Where takes the encounter place?

• Manager – manager / employee - employee

• Manager – employee

• Board member - manager

• Shareholder – board member

• Client – employee

• Manager – consultants

• Expat family – local living conditions

• Impats – ....

• Over time the relevance/likelyhood of these encounters changes.

A variety of options with different problems, dynamics and consequences.

History of “culture” concept:

• Long history in philosophy and social sciences (anthropology, sociology, psychology, economics).

• Basic issue: distinction between nature and society.

• Culture is `... that which distinguishes men from animals ...’( Ostwald 1907).

• ... `While human nature is biologically innate and universal, culture is learned and may vary from one society to another’ ... (Inglehart 1990).

• The more people start crossing borders, the more they are confronted with cultural differences between groups of people

  • Issue with a very long history

  • Roman empire, crusades, Catholic church, Dzjengis Khan, colonial empires (VOC!), WW1, interbellum globalization, WW 2, .... and nowadays, multinational companies and global institutions as the United Nations.

Culture as a social force (example 1)

The forces of culture run deep and far in a society: further than you think. For instance: `individualism’?

• 'The quality of being an individual; individuality“ related to possessing 'An individual characteristic; a quirk.“ Individualism is thus also associated with artistic and bohemian interests and lifestyles where there is a tendency towards self-creation and experimentation as opposed to tradition or popular mass opinions and behaviours ....”

• Differences between The Netherlands and other countries in how they value “individualism”? The Netherlands scores quite high on ‘Individualism/Collectivism’ dimensions.

• However, the Exactitude project shows that we are still very much the same.

Conclusion

• So what is left of ‘individualism’ here ?

• People adapt to the “images” they have in their minds ...

• ... and these images are externally defined - by the group - culturally defined.

Definitions of culture. In 1963, there were already over a 170 definitions! (Kroeber and Kluckhohn 1963)

• Ruth Benedict (1934): “Each culture selects or chooses from the infinite variety of behavioural possibilities a limited segment which sometimes conforms to a configuration.”

• Kroeber and Parsons (1958): transmitted and created content and patterns of values, ideas, and other symbolic-meaningful systems as factors in the shaping of human behaviour’.

• Kluckhohn (1951): `Culture consists in patterned ways of thinking, feeling and reacting, acquired and transmitted mainly by symbols, constituting the distinctive achievements of human groups, including their embodiments in artefacts; the essential core of culture consists of traditional (e.g. historically derived and selected) ideas and especially their attached values’.

• Deal and Kennedy (1982):‘... the way we do things around here’.

• Hofstede(2001): “Culture is shared mental software, the collective programming of the mind, that distinguishes the members of one group or category of people from another” (2001).

Two approaches of culture:

1. Collective: culture antropology/sociology

2. Individual: psychology

Summarize:

• Variety of behavioral possibilities.

• Cultures ‘cover’ a particular set of these possibilities which makes them different from other cultures.

• Cultures are `created’ and `transmitted’.

• Individual level: think, feel, chose, behave, decide.

• Collective level: symbols, artefacts, believes, ideas, norms, values, value systems.....

• Historically rooted and path dependent.

Essential functions of culture: in general

Individual level:

1. Reduction of information overload: simplifying the world around us.

   Example of words/categories: chair / cook / manager / employee / business meeting

2. Develop an identity: national regional

Collective/societal level:

3. Decrease transaction costs in individual encounters

   Example: ‘a man a man, a word a word’. American versus Dutch contracts. What is agreed about? Negotiation versus contract.

4. Solve collective good problems

   Example: who can make which decision in a hierarchy?

Problem of human beings: information overload. People are inundated by so much information from their environment that they find it impossible to cope with it all’ (Rosch 1975 according to Shaw 1990).

Solution:

• Individual level: develop cognitive structures to help them organize and process information efficiently.

• Collective level: shared cognitive structures are even more efficient.

Psychology: Cognitive structures consist of schemas and scripts.

Schemas:

• People use ‘categories’ or ‘schemas’, which determine how we see their environment. They serve as ‘cognitive maps’, which contain a ‘definition of the situation’.

• Schemas develop over time

• Through repeated experiences with objects, persons and/or situations

• Also learned when individuals are socialized during their formative years.

Features of schemas:

• Prototypes = these represent the essential characteristics.

  Examples: a chair is a thing with one or more legs that is meant to sit on’.

• Constraint value = range of the levels of a specific schema.

  Example: How tall is a tall leader? How black should Zwarte Piet be?

• Default values = essential values of schemas.

  Example: putting it in one schema, and taking it back.

• Vertical and horizontal levels:

  • Vertical: from leaders to supervisors

  • Horizontal: political, religious, business and military and so on.

An example of culturally relevant schema: a stereotype

A stereotype is thought that may be adopted about specific types of individuals or certain ways of doing things, but that belief may or may not accurately reflect reality. Conclusion: schemas help reduce information overload, but might be incorrect.

A bank run is one of the best self-fulfilling prophecies. Because people believe there will be a bank run, they withdrawal their money and there will actually be a bank run.

Besides schemas, there are scripts. A script is a schema that contains information about the sequences of behavior appropriate to particular situations (Gioia and Manz 1985).

• Etiquettes: completely cultural defined

• ‘Chinese Eel’ movie about cultural mistakes.

• Scripts are strongly determined by cultural dimensions. For an individual, “what to do when” is often rather normative, and an externally given social fact.

• Adjusting old schemas and scripts and creating new ones: a process of acculturation (see later lectures).

• Scripts are very important for business meetings: being on time, what will be discussed in the meeting, format of the meeting,

Intercultural problems: an issue of schemas and scripts.

• Occur between managers and subordinates from different cultures due to basic differences in how the individuals collect, process, store and use information about one another’s behaviour ... (Shaw 1990, p.626).

• In the context of cross-cultural management, three issues:

  1. Differences in content of schemas and scripts

  2. Differences in structure of schemas

  3. Differences in automatic versus controlled categorization of new information.

• Schemas and scripts are a nice conceptual basis for the course:

  • on an individual level it is the cognitive base to understand differences

  • but not completely satisfactory on the collective level.

Difference 1: endogenous or exogenous character of culture

• Psychological perspective:

  • Individuals develop schemas in a world without context.

  • Schemas are endogenous:

    For instance: a person can be labelled ‘leader’ based on observations and will give this person ‘social power and influence’.

• Sociological/anthropological perspective:

  • Cultures are a social fact in the context you are raised. Individuals are socialized by them and these are internalized.

  • Schemas are – too a large extend – exogenous.

    `Manager’ is a position, and as such, a schema. People are assigned to management positions, which makes them ‘managers’. That doesn’t make them `leaders’.

Difference 2: detailed versus wider perspective

• Psychological perspective:

  • cognitive perspective is reductionistic.

  • focus more on isolated issues which are separated from wider context.

• Sociological/anthropological perspective:

  • Cultures are ‘meaning-systems’ on a collective level.

  • Suggests a large set of schemas and scripts which together create a coherent worldview that is shared with others.

Difference 3: stimuli versus disciplining

• Psychological perspective:

  • Individuals are central and –relatively- isolated from their context.

  • Respond to outside stimuli, which explains individual differences and behaviour.

• Sociological/anthropological perspective:

  • Collective level is central. Study the context of individuals.

  • They offer a way to interpret reality in terms of `meaning- systems’,

  • They discipline individuals if they deviate from the norms and expectations. Self-enforcing systems, stronger than individuals.

Culture as a strong social force (example 2)

• Movie `Anybody’s son will do’

• Film/documentary by Bill Willers (1983) Including veteran interviews, and footage of real trainings.

• Produced by the National Film Board of Canada.

• Topic: how do armies turn civilian boys into killing soldiers?

• ‘scared the hell out of the US military machine. For years it has been impossible to find a copy’.

• It inspired Stanley Kubrick for ‘Full Metal Jacket’.

• Nowadays, quite normal footage. Or not?

Anybody’s son will do:

All soldiers belong to the same profession, no matter what country they serve, and it makes them different from everybody else. They have to be different, for their job is ultimately about killing and dying, and those things are not a natural vocation for any human being. Yet all soldiers are born civilians. The method for turning young men into soldiers - people who kill other people and expose themselves to death - is basic training. It's essentially the same all over the world, and it always has been, because young men everywhere are pretty much alike’.

The procedure is as follows:

1. Take an ordinary set of young men.

2. Destroy their individual identity.

   • Take away individual belongings.

   • Standardize them as much as possible (use uniforms/same haircut, remove earrings, etc.)

3. Train them very hard and very intensive for a substantial amount of time, so they have no time to think for themselves.

4. A: in the meantime, you tell them what they should think instead by adding new schemas and scripts in their body and mind.

   B: and induce the necessary and influential group processes that mould their new personality... (completely standardized).

Lessons:

• Culture can force you to do the unimaginable.

  Values, schemas, and scripts about what is important.

• Culture is extremely powerful and overrules your individuality. Individuality is a schema, (`a cultural construct’), in itself.

• Easier to get culture (in terms of schemas and scripts) into a person than out of a person. Cultural learning is irreversible. Learning experiences are often additive and can only partially replace each other (armies like young men, or sometimes kids).

When culture matters for managers: an example.

• Study by Cheris Shun-ching Chan, University of Hong Kong.

• Economic Sociology: combination of institutionalism and culturalism.

Hong Kong versus Taiwan:

• Hong Kong:

  • Very strong economy, richer than UK

  • No social insurance: only poverty relief.

  • Less than 30% of the private labour force is covered by retirement funds

  • Laissez-fair towards insurance market

  • Life Insurance Premiums: 1.7% of GDP

  • Policies/population = 52.9%

• Taiwan:

  • Weaker economy: half of Hong Kong in terms of GDP per capital

  • Comprehensive social insurance coverage

  • 90% of private labour force is covered

  • Protective towards insurance market

  • Life Insurance Premiums: 4.8% of GDP

  • Policies/population= 74%

Question: Why has life insurance been far more popular in Taiwan than in Hong Kong although conditions suggest otherwise?

Answer: it depends on how insurance companies handled `the taboo of a premature death’.

What is the taboo:

• `Chinese cultural taboo on thinking and talking about premature death and fatal misfortune’.

• Root can be traced to concepts of death in Confucianism, folk Buddhism and folk Taoism.

  • Confucianism: avoids death in its teachings. The avoidance further mystifies and intensifies general fear related to the topic.

  • Folk Buddhism: ‘cruel hell’ and a cold ‘dark world’ after death.

  • Folk Taoism: makes distinction between ‘dying after living a full life’ and ‘dying prematurely’. The latter is spiritually dangerous an associated with ‘hungry ghosts’.

• Chinese ideas on ‘good life’ and ‘good death’:

  • ‘Good life’: refers to improving ones life quality, as one grows older.

  • ‘Good death’: refers to living a comfortable life towards the end of life and dying after a full life.

Completely incompatible with underlying logic of life insurance: `pricing a human life’ or early death.

• Result: people have `selective inattention to fatal risks’ / puts it out of cultural schematic frames.

• Empirical observations: ‘don’t want to talk about bad things’ / ‘a waste of money’/ `not worth it’.

• Preference for money management products: want money back during their lives.

• Given these taboos, why is life insurance in Taiwan much more popular than in Hong Kong? Cultural similarity!

Some context: Hong Kong

• Former British colony until 1997.

• Hardly any domestic insurance companies.

• Open market: Foreign insurance companies rule.

Some context: Taiwan

• Commercial insurance introduced by Japanese in late 19th century.

• Only domestic insurance firms;

• Heavily protected by government regulations.

• USA forced market to open in 1980’s.

So what was the difference?

• Hong Kong: insurance firms continued to push the western idea of risk management.

  • Tried to educate people about the risks of life and necessity to protect your family.

  • ‘It didn’t drive them to buy. It was savings that drove them to buy’ (Quote from a HK sales agent).

• Taiwan: life insurance was a savings instrument.

  • Living insurance: similar to saving, but family is paid when person dies.

  • Foreign firms started to push ‘death insurance’ later, without much success.

Hong Kong started to sell Life insurance in much larger proportions after 2001. Why?

Life insurance was combined now with money management products that fitted local preferences: cultural adaptation.

Take home message:

• Culture is a very strong force, denial makes no sense.

• What might seem normal, rational or logical from your own point, might not be the same for other cultures.

Lecture: Studying culture

The attacks in Paris changed from freedom of speech to an attack on European life-style

Cross cultural management and the clash of civilization

• CCM assumes: cultural variation enriches life, but also potential source of (unnecessary) problems. But if you understand each other better, there don’t have to be problems.

• CCM assumes: intentions of both parties are positive, and build on mutual respect. This is the difference with the case of Paris, no good intentions.

• CCM: build on the Universal Declaration of Human Rights (UN, 1948)

• But what happens when intentions of one party are negative and intolerance prevails?

‘Paracox of Tolerance’ (Karl Popper, 1945): How can you be tolerant if the other part is not tolerant to you?

“Unlimited tolerance must lead to the disappearance of tolerance. If we extend unlimited tolerance even to those who are intolerant, if we are not prepared to defend a society against the onslaught of the intolerant, then the tolerant will be destroyed, and tolerance with them.”

Studying culture

Why are cultures different?

1. Cultural materialism: stresses cultural variety study the difference

Ecological and environmental conditions determine cultural variety.

Examples:

• Dutch and Japanese cooperatism (dikes and polders versus sawahs/rice fields)

• American low trust cowboy culture

Example 1: ‘The ecology of religious believes’

• Botero et.al (2014) PNAS, Study of nature of Gods in 583 societies.

• Moralizing high Gods = `supernatural beings believed to have created or govern all reality, intervene in human affairs, and enforce or support human morality’ (p.1.).

• ‘... beliefs in moralizing high gods promote cooperation between humans ...’

• ‘... these beliefs are more prevalent among societies that inhabit poorer environments and are more prone to ecological duress....’

• `.... and are more likely in politically complex societies that recognize rights to movable properties... ‘.

Example 2: Local differences.

• Drenthe is a small province, still there are cultural differences (see the figure).

• Reason: Veen zand en zand grond.

  2. Evolutionary psychology: stresses cultural universals, looking for similarities.

Kluckhohn and Strodtbeck (1961): 6 basic issues cultures have to deal with:

1. Relationships to nature: domination, subjugation, harmony.

2. Believes about human nature: good or evil.

3. Relationships between people: individual versus collective, collateral versus hierarchy.

4. Nature of human activity: being, achieving, thinking.

5. Conception of space: public versus private.

6. Orientation to time: role of past, present, and future.

The underlying issues are the same, the answers vary per culture.

Nice example: Hofstede’s work.

How to study culture?

• Domestic research: sometimes excludes culture. US based research is usually the norm

• Replication research:

• Indigenousresearch:

• Comparative research:

• International research:

• Intercultural research:

Etic and Emic approaches: Derived from Linguistics (Pike, 1967)

• Etic approach: the general

• Outside perspective.

• Nomothetic

• Emic approach: the specific

• Inside perspective.

• Idiosyncratic.

• Ethic/Nomothetic

  – Outside perspective

  – The comparable, the general, universalistic

– Nomos = law

– Looking for laws/ universals

– Explanations

– Institutions, organizations or nations can be understood by comparing them on relevant concepts, variables or dimensions

– Example: Hofstede/Globe studies

• Emic / Ideographic :

– Inside perspective

– The unique, the specific, idiosyncratic

– Ideos = idea

– Looking for insights,

– Descriptions

– Institutions, organizations or nations can only be understood in terms of their own cultures

– Example: see the figure

If you really want to understand how a culture operates a survey is not sufficient. Hofstede’s research shows differences between cultures, not how cultures operate. Emic is more described.

Why does the topic of culture enter management studies?

Reason 1:

• After WW2, USA dominated the western economic hemisphere

• Consequence: American management theories were seen as universal. There was only ‘one best way’ of managing.

• Until 1980’s. Japan emerged as a very strong competitor (low prices / higher quality products)

• Big American question: what do they do differently? How is this possible?

• Start of attention for Japanese management style: completely different in many aspects. Cultural differences as a relevant management issue moved to center of attention.

• Making lower levels responsible for the quality.

Reason 2:

• 1980’s M&A became popular. How people relate became a pressing issue, and a source of cooperative problems (and failures).

• Relevance of culture – as an issue – was originally driven by consultants, not academics.

Hofstede: ‘Culture’s consequences’

Genesis of Hofstede dimensions: phase 1

• Etic approach to the study of culture ... in search of the relevant universal cultural dimensions

• These express underlying structures in the value systems.

• Values: Important and lasting beliefs or ideals shared by the members of a culture about what is good or bad and desirable or undesirable. Values have major influence on a person's behaviour and attitude and serve as broad guidelines in all situations.

• Outcome: four dimensions:

• Power distance

• Individualism versus Collectivism

• Masculinity versus Femininity

• Uncertainty Avoidance

Features of basic values

• Values are beliefs

• Values are desirable goals

• Values transcend specific actions and situations

• Values serve as standards or criteria

• Values are ordered by importance

• The relative importance of values guide action

• Example: take care of your body is a value. Don’t do drugs is a norm (it’s about behavior).

Dimension 1: Power distance

High Power distance:

• Inequalities among people are both expected and desired

• Subordinates expect to be told what to do

• A manager is always right

• Managers have privileges and status

• Power: (Machiavelli): the culture of the lions

• A correlation with climate / temperature

Low Power distance

• Inequality among people should be minimized

• Inequalities among people are both expected and desired

• Subordinates expect to be consulted

• A manager is not always right and if so, you should tell him.

• Managers are also ordinary people; management is restricted to function and role.

• Power: (Machiavelli): the culture of the foxes

Definition:

This dimension expresses the degree to which the less powerful members of a society accept and expect that power is distributed unequally. The fundamental issue here is how a society handles inequalities among people. People in societies exhibiting a large degree of power distance accept a hierarchical order in which everybody has a place and which needs no further justification. In societies with low power distance, people strive to equalise the distribution of power and demand justification for inequalities of power (source Geert Hofstede).

Dimension 2: Individualism and collectivism

Individualism:

• ‘I’: Identity based in the individual

• Personal development

• Loyal to ones’ own interest

• Relationship employer- employee is a contract, based on mutual advantage

• Guilt

• Loss of self-respect

Collectivism:

• ‘We’: identity based in the social network to which one belongs

• Strong we-feeling

• Loyal to the collective; the interests of the group

• Relationship between employer-employee is perceived in moral terms

• Shame

• Loss of Face

Many motivation theories are based on personal development and self-interest. Their claim for universality is not justified (see also course literature).

Definition:

The high side of this dimension, called individualism, can be defined as a preference for a loosely-knit social framework in which individuals are expected to take care of only themselves and their immediate families. Its opposite, collectivism, represents a preference for a tightly-knit framework in society in which individuals can expect their relatives or members of a particular in-group to look after them in exchange for unquestioning loyalty. A society's position on this dimension is reflected in whether people’s self-image is defined in terms of “I” or “we.” (source Geert Hofstede).

Dimension 3: Masculinity of Femininity

Masculinity:

• Boys fight, girls are supposed to watch and admire.

• Girls cry, boys don’t.

• Male are supposed to be ambitious, assertive and tough; women are supposed to be tender and to take care of relationships

• High achievement motivation

• Decisive and assertive

• Admiration for the winner

Femininity:

• People should not fight, but if boys fight, girls are allowed to join them.

• People are supposed to be modest;

• Both men and women are allowed to be concerned about relationships

• Warm relationships

• Intuition, strive for consensus

• Sympathy for the underdog

Definition:

The masculinity side of this dimension represents a preference in society for achievement, heroism, assertiveness and material rewards for success. Society at large is more competitive. Its opposite, femininity, stands for a preference for cooperation, modesty, caring for the weak and quality of life. Society at large is more consensus-oriented. In the business context Masculinity versus Feminity is sometimes also related to as 'tough versus tender' cultures. (source Geert Hofstede)

Dimension 4: Uncertainty avoidance

High uncertainty avoidance:

• People prefer structured situations.

• Many rules

• Precision and punctuality come naturally

• Absolut values; strict codes

• Suppression of deviant behaviour

• More nervous, more stress, more expressive

• We are on principle, you are opportunistic

Low uncertainty avoidance:

• Comfortable in relative unstructured situations;

• There should not be more rules than is strictly necessary

• Precision and punctuality have to be learned

• Relativistic

• Tolerance for abnormal behaviour

• Controlled and cool

• You are dogmatic, we are practical and pragmatic.

Definition:

The uncertainty avoidance dimension expresses the degree to which the members of a society feel uncomfortable with uncertainty and ambiguity. The fundamental issue here is how a society deals with the fact that the future can never be known: should we try to control the future or just let it happen? Countries exhibiting strong UAI maintain rigid codes of belief and behaviour and are intolerant of unorthodox behaviour and ideas. Weak UAI societies maintain a more relaxed attitude in which practice counts more than principles. (source Geert Hofstede)

Genesis of Hofstede dimensions: phase 2

Dimension 5: long term versus short term orientation.

• Michael Bond expects dimensions to be eurocentric.

• Develops new questionnaire with Chinese scholars (published in 1991).

• Based on Chinese values and the heritage of Confucianism.

• Finds similar dimensions + plus one new !

Short term orientation:

• Cherishing virtues that relate to the past and the present

Long term orientation:

• Cherishing virtues that relate to the future

Short term orientation:

• USA, UK, Zimbabwe, Phillipines, Mexico

Long term Orientation:

• East Asiatic countries: China, Taiwan, Japan, Vietnam

Indicator: savingsquote

Definition:

• Every society has to maintain some links with its own past while dealing with the challenges of the present and the future. Societies prioritize these two existential goals differently.

• Societies who score low on this dimension, for example, prefer to maintain time-honoured traditions and norms while viewing societal change with suspicion. Those with a culture which scores high, on the other hand, take a more pragmatic approach: they encourage thrift and efforts in modern education as a way to prepare for the future.

• In the business context and in our country comparison tool this dimension is related to as '(short term) normative versus (long term) pragmatic' (PRA). In the academic environment the terminology Monumentalism versus Flexhumility is sometimes also used. (source Geert Hofstede)

Hofstede dimensions: phase 3

Dimension 6: Indulgence versus restraint

Michael Minkov re-analyses old and new material, around 2010

Indulgence:

• Pleasure, enjoyment, delight

• Indulgence stands for enjoying life and having fun

Restraint:

• Reserved, subdued

• Restraint stands for a society that suppresses gratification of needs and regulates it by means of strict social norms.

Definition:

Indulgence stands for a society that allows relatively free gratification of basic and natural human drives related to enjoying life and having fun. Restraint stands for a society that suppresses gratification of needs and regulates it by means of strict social norms.(source Geert Hofstede)

Strengths of the Hofstede studies:

• Sample: a ‘controlled experiment’ – specific group, same characteristics, only nationality of respondents varies.

• It is not the absolute scores that matter; the relative differences, they matter

• Studied employees, not managers (see cultural constraints p.93).

• Validated by other culture studies for at least a number of dimensions

• Gradually embedded in economic, organizational, sociological and anthropological theory.

Weaknesses of the Hofstede studies:

• Sample & Generalization: could IBM employees systematically differ from employees of other organizations?

• Values – Hofstede’s values are extracted from 2 surveys on employee satisfaction.

• Statistics: Analysed country level differences in factor analyses.

• Outcomes are:

• Dependent on the statistical technique (individual verus country level analyses).

• Permanently reinterpreted over time (new dimensions, renaming of a dimension).

Etic approach: danger of stereotyping: It doesn’t tell you enough about individuals.

Ecological fallacy: don’t apply domestic characteristics to individuals.

Take away message:

• Meeting people – bell shaped curves overlap

• A societal mean on a dimension does say anything about individuals.

• Schemas and scripts are distributed within populations, and not necessarily different between individuals

• (See also hypothesis 3 in Shaw 1990)

• What applies to collectives does not necessarily apply to individuals

GLOBE study

Global Leadership and Organizational Behaviour Effectiveness

• What did GLOBE do?

– Worldwide study on variations in org.behaviour and leadership style.

– 62 countries, 951 organizations, 17.000 respondents

– 9 dimensions of cultural variation

• 2 types of questions: Organizational situations:

– `As it is’ (practices)

– `As it should be’ (values)

See the figure about the three GLOBE theoretical linkages.

The globe has nine dimensions, described in the figure.

Another figure shows the similarities between Hofstede’s cultural dimensions and GLOBE.

Trompenaar’s 7 dimensions; 7 dilemmas

1. Universal (rules) <=> Particularism (exceptions)

2. Analysed specifics <=>Integrated wholes

3. Individualism <=> Communitarianism (community)

4. Inner-directed <=>Outer-directed

5. Time as sequence <=> Time as synchronization

6. Achieved (status by results) <=>ascribed

7. Equality <=> Hierarchy

Other culture classifications

• High versus low context cultures, Edward Hall (1976).

• Schwartz Value Survey – not all values are equally relevant to different groups of people.

• See also the course literature for other examples.... and their pros and cons.

Conclusions:

• Cultures are very different: variety of classifications

• Different causes for these differences (Variety).

• Different approaches in studying cultural differences (Etic/emic).

• Multiple dimensions have been discovered over time: over decades, slowly emerging consistency.

• Stereotyping: speaking about individuals and speaking about groups is not the same

• Comparative research might help to understand or discuss certain behavioural patterns.

• Interpretations of culture: simple versus sophisticated

• What might seem normal, rational or logical from your own point, might not be the same for other cultures.

Lecture: Organizational cultures

Important authors:

• Edgar Schein (1992) ‘Organizational culture and leadership’. He provides a description of two different cultures, in different countries.

• Geert Hofstede et al. (2010) Cultures and Organizations: Software of the Mind. 3rd edition

• Deal and Kennedy (1982) Corporate Cultures: The Rites and Rituals of Corporate Life.

• Fons Trompenaars

Definitions of organizational culture: “A pattern of shared basic assumptions that was learned by a group as it solved its problems of external adaptation and internal integration...” (Edgar Schein, 1992, p.12)

Or simply: `the way we do things around here...’(Deal and Kennedy 1982)

A person’s identity is mix between different cultural experiences

• National culture

• Ethnic

• Gender

• Generation

• Religion

Education:

• Professional cultures

• Academic culture

• Business culture

• Engineering culture

• Governmental culture

• Legal culture

• Medical culture

Job:

• Organizational culture

• Organizations typically have their own corporate culture

• What to wear?

• How open can you be?

• How punctual should you be?

Culture can be as an Iceberg: you can see and things that are very hard to see and there is more going on below the surface.

Three levels of culture (Schein)

• Artifacts: Visual organizations structures and processes (hard to decipher)

• Espoused Values: Strategies, goals, philosophies (espoused justifications)

• Basic understanding assumptions: Unconscious, taken for granted beliefs, perceptions, thoughts and feelings (ultimate source of value and action)

Example: Espoused values: an example of Philips.

Cultural Dimensions at organizational level

• Difference with the national dimensions: practices instead of values.

• Process oriented vs results oriented

• Employee oriented vs job oriented

• Parochial vs Professional

• Open vs closed system, how open to new people?

• Loose vs tight control

• Normative vs pragmatic

• According to Hofstede, Hofstede & Minkov (2010) “Culture and organizations”, 3rd edition.

Organizational cultural differences especially visible during mergers and acquisitions:

Bim Bensdorp, head of Strategy Koninklijke Hoogovens in the 1990’s.

Guest lecturer in 2012: `Mergers and acquisitions

• Between half and three quarter fail

• Internal causes more important than external

• Main risk: no cultural fit

• Culture factor: poorly researched, much underestimated!

• Culture sometimes an ‘excuse’ ‘

Phases of the integration process

1. Pre-merger until D-day: closed and open phase

2. Post-merger: transition, integration

Focus of topmanagement: ‘the wedding party’, not the ‘marriage’

Bim Bensdorp: Pitfalls in M&As: `It takes 100 days to get the job done!’

Speed/decisiveness is okay when dealing with organizational/operational integration, but cultural integration may take 1000 days or many more!

Famous example: Daimler Chrysler (1998-2007)

• ‘Perfect storm’: chronic overcapacity, retail revolution, wave of environmental concerns.

• Largest transnational Merger: 440.000 employees, $ 100 billion market value in 1998.

• ‘A merger of equals, a merger of growth, and a merger of unprecedented strength’, Jürgen Schrempp, CEO of Daimler.

• ‘There was a remarkable meeting of minds at the senior level, ...., there was no cultural clash’.

Chrysler:

• Image of American excess. Brand value of assertiveness and risk taking cowboy mentality within a cost- controled athmosphere.

• Poorer, blue collar brand

• Marry up

• Chrysler executive ‘The Jeep.. ... much higher customer satisfaction ratings than the Mercedez’

Daimler:

• Image of disciplined engineering. Brand value of uncompromising quality.

• Fancy, special brand

• Marry down

• Daimler executive: ‘I would never drive a Chrysler’

They both had different schemas

Jürgen Schrempp: ’what happened to the dynamic cowboy can-do culture I bought’.

Dutch culture: what is it about and where does it come from?

1. Culture with a big C: “meaningful artefacts made by humans, often to relive history, or for reasons of plain beauty”

2. Rembrandt van Rhijn’s ‘Nachtwacht’

3. Anton Corbijn, photographer, 1980-1990

2. Culture with a little C: “local customs and traditions people enjoy in particular regions and countries”

3. Ice skating

4. Eating fries with mayonnaise

Research (2013 NBTC): 11.000 respondents in 13 countries see The Netherlands as: tolerant, hospital, open and friendly, and they think of Tulips, Mills and Cheese.

Where does the Dutch culture come from?

Four important issues:

Issue 1: Living in a delta: relationship with water

• ‘The sea gives and the sea takes’

• `God made the world, but the Dutch made the Netherlands’

Even after centuries, the contest between the Dutch and the water is, at best, a draw. 'When the water comes, it comes like a wall ....’, 'When the water comes, we are all the same': Social background doesn’t matter, you can’t protect yourself. – high dependency between people – close cooperation is necessary between everyone involved.

Collective good: Yes/no problem. A dike protects you all ... or nobody.

Two consequences:

1. Close cooperative system: Hoogheemraadschappen

2. Technological developments over time: Engineering: engineering water systems, enormous technical developments over time

Social engineering: inclination to control/design society.

“Hoogheemraadschappen”:

• Powerful, but rather invisible institutions in charge of water systems – a state in the state.

• Independent of daily democratic structures, no policitian can influence this for political reasons.

• Democratically chosen:

• By land owners and property owners

• Have their own tax system

• Tax based on size of property, voting system not

• Based on good organization and close cooperation

• Clear designation of tasks and responsibilities

• Detailed planning (of opening and closing sluices)

• Careful maintenance according to fixed standards

• Strict procedures for emergencies (discussions are put on the side, no time for disputes, all must pull together to fight the danger).

Technical developments over time: technical and social engineering

Example of social engineering: map of the “Noordoost Polder” (finished in 1942).

1. Physical infrastructure: 460 km2 (20km x 23km)

2. Social infrastructure

Issue 2: Dutch independence from King of Spain: Philip II

1568-1648: 80 year war with Spain (and many others by the way).Not against the King, but against his representatives (Alva, the Iron Duke) and their policies (taxes! ‘de 10e penning’introduced by Alva).

• Country moved from Roman Catholic to Protestant.

• Strong resentiments against power and wealth of Catholic Church (`beeldenstorm’)

• Start of the Golden Age around 1600: Netherlands developed into a world power

• Country run by civilians (‘regenten’):

• Hardly any nobility

• Catholic church was rather weak

Issue 3: Protestantism, Calvinism and the Verzuiling (`to each, his own’)

Strong representation of Protestant ethic: - ... with their direct link to God (no admiration for worldly powers)

• ... success in life is a sign for success in the afterlife (but no reason to enjoy it now).

• ... with thrift and hard work, you can build a castle (‘zuinigheid met vlijt bouwt huizen als kastelen’)

And a rather clear view on how to enjoy wealth:

• `....Let those who have abundance remember that they are surrounded with thorns, and let them take great care not to be pricked by them.....’(quote from Calvin).

Pilarization:

• Variety of different groups had to live together: no big civil wars ! !

• Solution was a system in which each organizes its own affairs,

• ... and is hardly bothered by the others:`To each, his own’ (`je moet de ander in zijn waarde laten’).

• Protestants (in all its varieties)

• Catholics

• Socialists

• Liberals

• Sounds like `Tolerance’ !

• Enormous effect on cultural and academic life in that era.

• System started to unravel 40 years ago but is still influential

• ‘Tolerance and democracy’ and ‘openess and progressive outlook’(Ramalho Ortigao, 150 years ago),

• But, alternatively .....

• ‘This was a cold-weather God, keeping watch over a puritan society which confuses its indifference with tolerance’. (Portugees novelist, Rentes de Carvalho, 1980’s )

• Conclusion: interpretation of the same cultural characteristics depends on the backgrounds of the observer

Issue 4: Trading: open borders

• Hanze network : 14th century

• ‘Verenigde Oost-indische Compagnie’ = VOC

• Established in 1602

• First MNE

• State in the state: war ships, soldiers, money, own (military) strategies, 25.000 employed in its hay days.

• Colonial relations: New York, Suriname, Dutch Antilles, South Afrika, but mainly ‘Nederlands Indië’ (Dutch Indies or Indonesia).

• Central hub in Europe/world in terms of transportation. See harbour Rotterdam

West Indies: large number of islands

Variety of different groups. Differs a lot per island.

• For instance: Curaçao has a large black community because it used to be a slave trading island with a few large plantations. Aruba was a naval base and had some (very) limited mining.

• Different historical linkages can matter a lot. Dutch Antilles are part of Dutch Kingdom.

• Dutch laws, Dutch schooling system, Dutch language at school, Dutch cultural influence, but ......... also a lot of caribean influences. (carnaval, baseball, ....)

• Small island culture: relational issues are extremely important.

Characteristics of the Dutch (1) (KIT & vd Horst)

1. Egalitarian:

• `... act normal, that is crazy enough’.

• No one should dominate

• Consensus: a feasible compromise is the ultimate aim

2. Utilitarian

• Fight the water, results count.

3. Organized

• Need to be on time

• Diaries and planned meetings

• Rules, procedures and clear responsibilities

4. Trade-oriented

• Fisherman, merchants and transport

• Competition, but not to the death

• Aversion of non-sense and a love for hard facts

5. Privacy-minded

• Reserved, avoid physical contact

• Cautious with strangers

• Respect privacy of others

Geert Hofstede, compares business related cultural aspects all over the world:

The Netherlands

1. a culture with a low power distance: hierarchy for convenience only, equal rights,

2. a rather individualistic culture

3. a rather feminine culture: a focus on the quality of life and caring for one another, don’t stand out in the crowd.

4. a culture that dislikes uncertainty, and tries to ban it by making rules/organizing it.

5. a culture with a rather short-term orientation, with strong social pressures to ‘keep up with the Joneses’, impatience to realize quick results, and a strong concern with establishing the Truth/ normative.

6. A culture which is indulgent: follow and try to realize impulses with regard to enjoying their life. Positive, optimistic and leisure time is important.

Lecture: Culture in management & cultural adaptation

Culture in the field of management studies

Why ‘Culture’ became relevant in management studies.

• Reason 1: Contextual changes around 1980 – Emergence of Japan as an important competitor. Big shock for Americans, that Japan did it in a different but very effective way

• Reason 2: Task related changes - Managers increasingly realize that success of M&As depends on succesfull integration of people and organizations (see lecture 2 as well).

There have always been mergers and acquisitions, but the amount and sizes became more significant.

• Reason 3: Academic arguments. Different people make different rational decisions. Culture is important for this.

• Reason 4: affects different managerial roles:

Role 1: Manager as decision maker: how rational can you be? To make a rational decision you need goals, options, pros and cons.

Follow the steps:

• problem definition

• decision criteria

• weighting of criteria

• alternatives

• evaluations

• selection of optimal solutions.

• The rationality aspect assumes that everybody goes through these steps and makes the same conclusion.

Deviations from rational decision making:

• Bounded rationality of even ambiguity, sometimes you cannot know the options.

• Cultural constraints on rationality:

• Vigilance: collection of facts and consideration of alternatives but:

• Complacency: ignoring the decision

• Defensive avoidance: putting off, passing on the decision to someone else, or devaluating its importance.

Hypervigilance (panicking):

• Simplifying strategies, different heuristics:

– Availability

– Representativeness

– Anchoring and adjustment

Role 2: Manager as negotiator

• Negotiators with different cultural backgrounds differ in term of (for instance):

– Language issues.

• Language as a communication tool: finding a bridge language (pros/cons)

Communication style

– Explicit/implicit

– Direct/indirect

– Silence/verbal

Non-verbal communication issues

– Tone of voice

– Proxemics

– Body posture and gestures

– Facial expressions

– Eye contact

Coding communication (verbal and non-verbal): Sender codes the message and the receiver decodes the message. The same for the feedback

High context cultures (=HCC):

• Speaking style focuses on in-group members who share similar experiences.

• With little pieces of information/words communicates complex messages due to referal to context.

• HCCs are relational, collectivist, intuitive and contemplative.

• In business relations: trust is key.

Low context cultures (=LCC):

• Speaking style assumes less ‘contextual clues’ and is necessarily more explicit.

• LCCs are logical, linear, individualistic, and action-oriented. People like logic, facts and directness.

• In business relations: explicit contracts are important.

Where:

• Low context cultures: US / Northern parts of Europe (f.i.Denmark).

• High context cultures: Middle East, Asia, Africa, South America, Japan

HCC:

• Cultures in which groups are valued over individuals

• Cultures with strong sense of tradition and history

LCC: Accomodates variety in individual backgrounds. Cultural change is more rapid.

Role 3: Manager as a leader

• Leadership is a schema; the definition is dependent on your culture.

• When leadership is defined differently, different behavior is expected both from leaders/managers as well as employees.

• Leaders are supposed to motivate, but what motivates people? Culture matters:

• Content theories

• Process theories (equity, Expectancy, Goal-setting)

Leaders are supposed to motivate. Example: goal-setting performance appraisal process:

Requires:

• task analysis / goal setting / self-appraisal / personal evaluation by manager/ direct face-to-face feedback

Concept matches with USA culture:

• Low degree of `political influence orientation’

• High degree of individualism

Direct and personal feedback works ......much less with Russian culture:

• High degree of `political influence orientation’

• Higher degree of collectivism.

• Direct feedback destroys harmony and ‘employee looses face’.

On the contrary, evaluating group performance, and indirect feedback are more effective (according to Elenkov 1998).

Elenkov describes variety in managerial values between USA and Russia. Shows that differences in cultural values affect cross-border transfer of managerial concepts. For instance, Russia:

• high power distance / collective mentality.

• Employees expect autocratic leadership

• Incompatible with US concepts of Leadership

• Small power distance / individualistic

• Employees expect participation in decision making, confidence and independence to negotiate with boss

Cross-Cultural Management, cultural distance and adaptation:

• Level 1: Individual level: Expatriation process
• Level 2: Group level: Diversity and the work group performance
• Level 3: Company level: FDI country selection, entry modes and Cross-border mergers and Acquisitions (lecture 3) plus organizational composition
• Level 4: Societal level: country diversity and societal integration processes

If companies cross borders they are faced with a couple of, often related, questions:

Question 1: where to go and why ?

Question 2: How to run foreign operations?

Global standardization versus local adaptation (see book of Thomas and Peterson)

Question 3: Who needs to be assigned to the key positions?

Home-country, host country and third country nationals.

Finding the right mix:

Individual level: expatriation

Group level: issues of cultural diversity

Perlmutter: ethnocentrism, polycentrism, geocentrism

After WW2, American companies dominated the international scene.

• American management style was seen as exemplary. As a result:

• Export of American management concepts (`one-size-fits-all’, see also lecture 2) (see articles of this course).

• Strong emphasis on expatriation of American managers due to a perceived lack of local candidates for vacancies.

• History of economic domination has a cultural component as well – from colonialism to American supremacy (see example of Robinson Crusoe).

• Strong emphasis on studies of ‘expatriation process’

Level 1: Individual level, adapting one self to other cultures…

Working abroad: expatriation

All kinds of aspects are studied over time, big research field:

• When to send them?

• Who to select?

• How to prepare them?

• What are the costs?

• What is the role of the family?

Most important:

• During expatriation: acculturation, adjustment, or adaptation process

• After expatriation: success/failure are important issues (see Harzing 1995)

Success relates to (a) turn-over, (b) level of adjustment, and © individual subjective well-being.

Cultural adaptation (part 1): ... the official story of Robinson Crusoe ...

• Novel in 1719 by Daniel Defoe, first English novel. Enormous best seller and one of the most influential novels in literary history.

• Diary of a British colonist named Robinson Crusoe.

• His ship sinks and he ends up, on an uninhabited island for 28 years.

• He recreates his own European world (technology, religion) in a hostile natural environment.

• European culture seems superior and suitable for all circumstances.

• Then a man from a local tribe escapes from a set of cannibals, Robinson is not alone anymore.

• Robinson names his companion `Friday’, turns him into a servant/slave and baptises him.

• It is a colonial story in which one culture sees itself as superior and tries to dominate the other.

• They finally leave the island and return to the UK together.

• Story is often used in economics to explain some aspects of exchange relations: `Robinson Crusoe Economics’.

Cultural adaptation (part 2) alternative story ... › French novelist Michel Tourmin,

• Rewrites the story in 1967 and gives it a different twist. Title: `Friday, or the other Island’.

• Robinson loses his mind over time in this strange and hostile environment in which he is extremely lonely.

• Friday comes and is perfectly adapted to the local circumstances and is the stronger of the two men (see also lecture 2 on the sources of culture).

• Robinson subsequently adapts himself to Fridays’ culture.

• In the end, he refuses to return to the ‘civilized world’ and stays on the island. -- he went ‘native’ ---

• Cultural encounters change the cultures themselves: f.i. colonialism.

• Van Reybrouck (see reader): `Congo: a history’.

• Role of anthropologists in colonial times.

• Cultural descriptions turn real due to f.i. the educational system. Self fulfilling prophecy ?

Conclusion:

• Original Robinson Crusoe story: denial of any problem in cultural adaptation. Transplanting his own culture to new environment without problems

• However, when adapting to different cultural environments, variety of outcomes is possible.

• Expatriates need to cope with cultural differences: focus on `culture shocks’, both in academia as well as in practice.

Culture shock is the personal disorientation a person may feel when experiencing an unfamiliar way of life due to immigration or a visit to a new country, or to a move between social environments, also a simple travel to another type of life

Some symptoms of a culture shock

• a feeling of sadness and loneliness,

• an over-concern about your health,

• headaches, pains, and allergies

• insomnia or sleeping too much

• feelings of anger, depression, vulnerability

• idealizing your own culture

• trying too hard to adapt by becoming obsessed with the new culture

• the smallest problems seem overwhelming

• feeling shy or insecure

• become obsessed with cleanliness

• overwhelming sense of homesickness

• feeling lost or confused

• questioning your decision to move to this place

• Two dimensions of adaptation:

• Socio-cultural adjustment: ... the ability to fit in or effectively interact with members of the host country.

• Psychological well-being: ... an individuals’ subjective well- being or satisfaction in their new cultural environment.

And three different aspects to adapt to:

• Work

• Interactions with others

• General non-work environment (see also Thomas and Peterson book).

Four phases of cultural adaptation:

• Honeymoon phase – first few weeks

• Negotiation phase – between 1st and 3rd month

• Adjustment phase – 6 to 12 months

• Mastery phase – 12 months and more.

Some remarks:

• People might only experience a few phases before they leave

• Many holiday experiences do not pass the honeymoon phase.

• People might only experience a few phases

Because of these phases:

• problems in adapting oneself and consequent choices (f.i. return home frustrated after the negotiation phase)

• Individual characteristics and cultural distances do matter to the severity of the shock

• Reverse Culture Shock

• Reverse culture shock can be just as severe.

Two sides to this:

1. Personal: Cross-cultural experiences change your schemas and scripts while home-environment stays the same (for instances, Erasmus exchange students).

2. Environment: after longer periods, home environment changes as well (emigrants to other countries, sometimes after decades).

Thomas Wolfe, 1940, ’You can’t go home again’

Cultural distance and expat adjustment

Cultural distance matters: larger cultural distances lead to more adjustment problems. For Belgian people it is easier to adjust to the Netherlands than for Chinese people.

This seems to be asymmetric: German managers are better able to adjust to the USA than vice versa.

For instance: cultures with a high levels of uncertainty avoidance might create more difficulties for outsiders to integrate.