Summary with the 3rd edition of Cross-Cultural Management: Essential concepts by Thomas and Peterson

Chapter 1: What is the Role of a Global Manager?

“Dramatic shifts in economics, politics and technology shape the role of the international manager. These shifts are often encapsulated in the term ‘globalization’.” (Thomas and Peterson, 2015)

1.1 ‘Globalization’

Globalization = A process whereby worldwide interconnections in virtually every sphere of activity are growing. Some of these interconnections lead to integration/unity worldwide; others do not. The increase in interconnections is the result of shifts that have taken place in technological, political, and economic spheres.

Four categories of change that illustrate the process of globalization:

1. Growing economic interconnectedness; Causes of a greater degree of interconnectedness are:

• The establishment of free trade areas. The three largest trade groups are the European Union, the North American Free Trade Agreement, and the Asia-Pacific Economic Cooperation.

• The World Trade Organization established with the goal of reducing tariffs and liberalizing trade across the board. Therefore, local economic conditions are no longer the result of purely domestic influence.

• The gap between regional GDP growth rates of the fastest-growing and least dynamic regions of the world has begun to narrow.

• The level of FDI also has a globalizing effect. FDI, as a percentage of the world GDP, doubled between 1985 and 1994. The result of these changes in trade and FDI flows is a shift in the economic center of the world away from North America and Western Europe.

Effects of greater degree of interconnectedness are

• Organizational boundaries are not limited by a country’s boundaries. Certain parts of the organization might be located in different countries to capitalize on certain location specific advantages.

This effect is stimulated by the emergence of virtual organizations (Recap: Information Systems Management) in which employees do not meet face to face but are linked by computer technology.

• Multinational firms now manufacture and sell globally on an unprecedented

scale, and the expansion of international production continues to gather momentum.

2. More complex and dynamic work environment; Causes of globalization that affect the stability of the work environment within organizations are

• Downsizing.

• Number of permanent migrants is changing the composition of the workforce in countries. As boundaries to migration become more permeable, migration resulting from economic, political, and social factors increase. Recent migration trends are 1) the number of women migrants is increasing, and 2) the traditional migration pattern after World War II was low-skilled workers from less developed to more developed countries.

• The trend of privatization. Privatization makes formerly government-controlled enterprises available for purchase by foreign firms, thus reducing boundaries. These enterprises are often noncompetitive, and therefore privatization has a dramatic effect on the work life and management in these firms.

• As a solution to productivity problems, organizations are increasingly looking at the formation of teams of workers. There occur demographic changes, such as increased cultural diversity, because of the ease of movement of workers of all skill levels across borders, the rising average age of employees, and the addition of more women to the workforce. It is difficult and complex to introduce teams in these increasingly multicultural workplaces.

3. Increased use and sophistication of information technology; Effects of the use of IT are

• Multinational firms can now communicate all types of information throughout their geographically dispersed enterprise instantaneously.

• Access to information, resources, products, and markets is influenced by improved information technology.

4. More and different players on the global stage; The players on the international business stage were originally the firm and its foreign constituency, but they were soon joined by home country and host country governments and, more recently, by special interest groups, international agencies, and economic alliances.

Furthermore, the characteristics of these actors have changed over time. Besides that, technology is facilitating the entry of small business into the international arena. Lastly, one should not forget the international gangs and terrorists on the global stage. For example, transport illegal drugs.

1.2 ‘Global management environment’

The elements of the global manager’s environment can be divided into four categories: economic, legal, political, and cultural.

• Economic; Managers must understand the economic strategies of countries in which one is conducting business.

• Legal; Complexity arises from the variety of laws and regulations.

• Political; Political systems are the structures and processes by which a nation integrates the parts of society into a functioning unit.

• Culture; Important because 1) the economic, legal, and political systems are derived from a country’s culture and history. 2) Culture is largely invisible unlike the economic, legal, and political aspects. Managers often overlook the influence of culture since it is difficult to detect. 3) The practice of management focuses largely on interpersonal interactions.

1.3 ‘What global managers do’

Management = Managers have formal authority over their organizational unit and this status divides their activities into interpersonal, informational, and decisional role categories. Mintzberg’s framework identifies ten role categories of managers.

“Global managers face interactions with people who are culturally different.”

1.4 ‘Cross-Cultural management studies- an evaluation’

For practicing managers and management scholars to continue to improve and elaborate their understanding of management in our current dynamic environment, it is of great importance that the study of management across cultures continues to improve.

Limitations in present management studies:

• Only about 5% of the published articles focuses on international or cross-cultural studies.

• Historical factors have perpetuated parochialism in management studies.

Parochialism = A lack of awareness of alternative contexts, models, research, and values.

• Culture influences the way scholars perceive and think about the world they are investigating. Three particularly aspects of the U.S. perspective that limit the ability of U.S. management theories to explain organizational phenomena in cultures with contrasting orientations:

  1. Extreme individualism

  2. A belief that individuals are in control of their own circumstances and can, to a great degree, influence their environment and future events.

  3. Low-context communication.

• Theories indigenous to other cultures, which might show what is being missed by applying U.S. approaches abroad, are rare.

Types of international management research

For a summarizing table for all types of management research, their cultural assumptions and key research questions, Refer to Table 1.3 on page 14.

• Domestic research = Studies that are designed and conducted within a single country without regard for the boundary conditions set by the cultural orientation of the country. Constraint in both its ability to advance theory and its practical application.

• Replication research = Studies that are conceived and managed by a researcher in one country and then repeated in other countries by the originator or by local collaborators. They assume that the responses in the two cultures can be compared directly.

• Indigenous research = Studies that focus on the varied ways in which managers behave and organizations are run in a variety of specific cultural settings. They assume cultural differences and the research is conducted within a single country.

• Comparative research = Studies that seek to find both the similarities and the differences that exist across cultures regarding a particular management issue. Important is that researchers do not present one cultural perspective as dominant.

• International research = Studies that focus attention on multinational enterprises. They do recognize both similarities and differences across cultures. However, cultural context is not very present.

• Intercultural research = Studies that seek to understand the interactions between culturally different individuals in organizational settings.

It considers the culture of all parties in the interaction and contextual explanations for observed similarities and differences.

Cross-Cultural research and its issues

Studies that involve two or more cultures share several common methodological issues that are not present in purely domestic research. Methodological issues in cross-cultural research:

• Equivalence = The opportunity for bias caused by cultural differences in values, attitudes, and normative behavior is staggering. Equivalence means that culturally different participants understand equally the conce3pt and its relationship to other concepts in the study. Cross-cultural equivalence cannot be assumed at any stage of a cross-cultural study, and it must be established at three key points: the conceptualization of the theoretical constructs, the study design, and the data analysis.

  1. Conceptual/construct equivalence relates to the extent to which the concepts examined in cross-cultural research have the same meaning in different countries.

  2. Method equivalence relates to whether the measurement unit is the same in all groups.

  3. Metric equivalence is the extent to which questions have similar measurement properties across different groups.

• Sampling = Its goal is to conduct research with a small number of participants who accurately represent the population about which we want to make conclusions. The ability to select a truly representative sample in cross-cultural research is difficult.

  1. To prove the universality of a phenomenon requires a random sample of countries.

  2. Because of subcultural variation within countries, any sample selected from a specific geographic region does not necessarily represent the country.

  3. Inconsistencies in the availability of sampling frames across cultures can affect the sample.

  4. Practical considerations override some of the conditions of theoretical sampling, and convenience samples are used.

• Data collection = The most common methods are 1) questionnaires, 2) interviews. Difficulties are:

  1. People in different cultures differ in how familiar they are with particular research methods and in how ready they are to participate.

  2. Some differences between people are obvious (variation in literacy rates). However, some of them are more subtle.

  3. The researchers’ purpose is suspect by participants.

  4. Respondents may not have a frame of reference from which to respond to questions. For example, give a concrete example of a certain situation.

  5. An interview has an extra disadvantage, which is the possible interaction between interviewer and respondent. The characteristics of the interviewer, the interviewer’s technique might influence respondent answers, and the interviewer can selectively perceive or anticipate the respondent’s answers.

Overview of critiques of international and cross-cultural research:

1. Lack of a theoretical base

2. Parochialism

3. Heavy reliance on convenience samples

4. Lack of relevance

5. Reliance on a single method

6. Bias toward studying large companies

7. Reliance on a single organizational level

8. Limited to a small number of locations

Chapter 2: Describing Culture - The Basics

Culture = Consists of patterned ways of thinking, feeling and reacting, acquired and transmitted mainly by symbols, constituting the distinctive achievement of human groups, including their embodiment in artifacts; the essential core of culture consists of traditional (i.e., historically derived and selected) ideas and especially their attached values.

2.1 ‘Features of culture’

1. Culture is shared; Individuals carry in their mind three levels of programming about how they interact with their environment, See Figure 2.1 on page 22. Culture is between human nature and personality.

2. Culture is learned; Over time, the people in a society develop patterned ways of interacting with their environment. For instance; language, systems of government, forms of marriage, and religious systems. These patterns are transmitted to the new entrants.

3. Culture is systematic and organized; Cultures are integrated coherent logical systems. They are organized systems of values, attitudes, beliefs, and behavioral meanings related to each other and to the environmental context. Culture is neither genetic nor about individual behavior; it is contained within the knowledge systems of individuals. These systems are formed during childhood and reinforced throughout life. Schein identifies three levels of culture, See Figure 2.2 on page 25. Artifacts are the only visible part of culture, espoused values and basic underlying assumptions are the invisible parts. Furthermore, artifacts are consciously held values, while values and basic assumptions operate at an unconscious level.

2.2 ‘Reasons why cultures differ’

This section examines environmental elements that cause cultural differences.

• Survival; Cultural characteristics developed to aid the survival of groups in their environment. Cultural concepts that have their foundation in initial beliefs about survival or fundamental beliefs about right and wrong are probably programmed at a very deep level of consciousness. Additionally, once a cultural pattern is established, it is very resistant to change even when surrounding circumstances change.

• Language; It plays a prominent role in the way culture is transmitted. Language determines the content of a society’s mental representation of their environment. However, linguists disagree about the degree of control language exerts over perceptions, attitudes, and behavior. Besides that, language does not constrain thought. Language is an artifact of culture that helps perpetuate its values, attitudes, beliefs, and behavioral routines.

• Religion; It reflects beliefs and behaviors shared by groups of people that cannot be verified by empirical tests. The extent to which religion influences the cultural profile of a society depends on the extent to which a particular religion is dominant, the importance society places on religion, the degree of religious homogeneity in the society, and the degree of tolerance for religious diversity in the society. For an overview of the geographic distribution of the major religions around the world, See Table 2.1 on page 29. It also shows that some religions are concentrated in specific geographic regions.

• Other factors; Factors that contribute to cultural variation and persistence are

  1. Climate, topography, and the indigenous economy

  2. Proximity and topography: affect exchange of culture through natural barriers.

  3. Economic systems and technology

  4. Political boundaries

2.3 ‘Debates around culture’

Due to ambiguity several issues raised concerning culture. These issues are the concept of:

• National culture; The word nation is often used as a synonym for culture without any further conceptual grounding. Multiple cultures can exist within national borders, and the same cultural group can span many nations. Hofstede argues that since nations are political entities, they vary in their intuitions, forms of government, legal systems, etc. Additionally, most nations are characterized by one or more official languages, and many nations are small enough to have similar geographic and ecological conditions. These factors influence the way in which people interact with their environment and each other and thereby condition the way they think (their mental programming). So, nations are social systems and therefore can have cultures. Lastly, we all derive our self-identity in part from our nationality. A multinational often analyses the national culture, thereby creating two difficulties. First, when we compare national cultures, we risk ignoring the large number of subcultures. Second, we risk ignoring the variation, conflict, and dissent that exist within national cultures.

These issues can be addressed if we focus on characterizations of values, beliefs, and behavioral assumptions that individuals within a culture share.

• Convergence, divergence, or equilibrium; The extent to which cultures around the world are becoming more similar or more different. The argument for convergence of cultures is based on the fact that nations are not static entities but develop over time. This modernization results from a common economic orientation and eventually leads to a common society where differences in ideology will cease to exist. Inglehart, a proponent of the convergence perspective, identified two value orientations related to a country’s wealth, 1) materialist, 2) postmaterialist. As wealth increased, so did endorsement of postmaterialist values. Thus, as wealth gradually increases, cultural differences diminish. Additionally, sociologists suggest that to participate effectively in a modern society, people must possess a core set of psychological characteristics. The profile of a modern person is shown in Box 2.2. Smith and Bond point out an interesting reaction in developing countries. That is, as arguments for cultural convergence are popularized, many developing countries take action to distinguish themselves from the West and assert their cultural uniqueness. Another point is that a common goal, such as maintenance of the systems that support life on Earth, supports a growth in internationalism. Different opinions about cultural convergence and divergence:

  • Child: cultural convergence or divergence was a matter of level of analysis. He states that studies of macro-level issues of organizational structure and technology often indicate cultural convergence, whereas research indicating divergence was typically involved with the more micro-level issues of the behavior of individuals within organizations.

  • Yang: convergence only in the cultural characteristics that relate specifically to functioning more easily in a technological environment.

  • Ralston: identified a middle ground called crossvergence, to refer to the incorporation by individuals of influences from both national culture and economic ideology.

  • Cohen: although different environments produce different social systems, different environments can produce similar systems, and similar environments can produce vastly different cultures.

• Organizational versus national culture; Organizational culture = 1) stable attitudes, beliefs, and values held in common by organization members, 2) shared normative beliefs and behavioral expectations, 3) a set of goal-directed values, beliefs, and behaviors, 4) an internal attribute of the organization that is socially constructed, historically determined, holistic, and difficult to change.

Hofstede makes the clearest distinction between organizational and national culture. He states that these cultures are composed of different elements. Moreover, people enter organizations after their national cultural values, attitudes, and fundamental beliefs are well developed, whereas organizational practices are learned through workplace socialization. Although, organizations might have some effect on an individual’s values, fundamental attitudes, and beliefs, this effect is very weak in comparison to national culture. Another idea exists that individuals are only partly involved with their organizations, although they are totally immersed in their national culture. For a comparison of both cultures, See Table 2.2 on page 36. Lastly, the influence of organizational norms must be considered in concert with societal culture in understanding the causes of behavior in organizations.

• Acculturation and biculturalism; One way in which cultures change is through the process of acculturation. Acculturation concerns the psychological and behavioral changes that occur in people because of contact with people from different cultures. Furthermore, it is used to describe the changes in people who relocate from one culture to another. It can either be individual or collective. This process takes time and these changes might be quite slow. Besides that, acculturation patterns of individuals and groups can be influenced by a number of individual differences and situational factors, such as 1) entry status of individuals, 2) their facility with the local language, 3) their personality, and 4) the group with which individuals forge relationships on entry. Finally, people that are used to live in multiple cultures develop the ability to easily adjust their behavior to the cultural context. These people are called ‘bicultural’.

2.4 ‘Culture and groups’

Cultures are defined by members and nonmembers. This in-group—out-group distinction is useful in describing attitudes and behavior both within and across cultural group boundaries. Cultures and social groups have two issues to consider:

• The characteristics of groups can change as members come and go.

• Our membership in a cultural group helps to determine how we perceive ourselves, as much as how others perceive us.

When individuals are categorized as a group, individuals are thought to be more similar in their beliefs and behavior, their behavior is thought to convey less information about them as individuals, and the group is believed to be a more important cause of their behavior than individual characteristics. However, the categorization has several implications:

• In-group bias = The universal bias toward our own group is related to the role of our cultural group in defining who we are. To maintain our self-image, we favorably compare the attributes of our own group with those of out-groups. Therefore we consistently discriminate in favor of the groups with which we identify.

• Ethnocentrism = The attitude that one’s own cultural group is the center of everything, and all other groups are evaluated with reference to it. Characteristics of ethnocentrism are

  1. What goes in our culture is seen as ‘natural and correct’, and what goes on in other cultures is perceived as ‘unnatural and incorrect’.

  2. We perceive our own in-group customs as universally valid.

  3. We unquestionably think that in-group norms, roles, and values are correct.

  4. We believe that it is natural to help and cooperate with members of our in-group, to favor our in-group, to feel proud of our in-group, and to be distrustful of and even hostile toward out-group members.

Chapter 3: A Comparison of Cultures

3.1 ‘Six problems all societies face- Kluckhohn and Strodtbeck’s Framework’

The essence of culture is described by the content and structure of the basic mental representations members of particular social groups share. These value differences arise from the solutions different social groups have devised for dealing with the finite number of problems with which all people must deal. Because there are a limited number of ways in which a society can manage these problems, it is possible to develop a system that categorizes and compares societies on this basis. Kluckhohn and Strodtbeck identified six dimensions along which a society can be categorized, See Figure 3.1 on page 44:

1. Relationships to nature; Control nature (domination) – work together (harmony) – submit to nature (subjugation)

2. Orientation to time; People should make decisions with respect to traditions or events in the past – present – future

3. Beliefs about human nature; Good – mixed – evil

4. Nature of human activity; Orientation on living for the moment (being) – reflecting (controlling) – striving for goals (doing)

5. Relationships between people; Greatest concern and responsibility for one’s self + family (individualistic) – for one’s own group (group, collateral) – for one’s groups that are arranged in a rigid hierarchy (hierarchical).

6. Conception of space; Private – mixed – public

The value orientations are not bipolar dimensions. That is, a high preference for one assumption does not necessarily imply a low preference for the other two assumptions in the same value orientations. All preferences can be represented in a society, but with a rank order of the preferred alternatives.

3.2 ‘Culture comparison- Hofstede’s Framework’

Hofstede developed a framework with respect to comparing cultures. He identified four dimensions:

• Individualism – collectivism; The extent to which one’s self-identity is defined according to individual characteristics or by the characteristics of the groups to which the individual belongs on a permanent basis, and the extent to which individual or group interests dominate.

• Power distance; The extent to which power differences are accepted and sanctioned in a society.

• Uncertainty avoidance; The extent to which societies focus on ways to reduce uncertainty and create stability.

• Masculinity – femininity; The extent to which traditional male orientations of ambition and achievement are emphasized over traditional female orientations of nurturance and interpersonal harmony.
  Actually, there is also a fifth and a sixth dimension, related to time orientation, as critics on Hofstede’s work noted that there was no dimension capturing people’s time orientation, and indulgence versus restraint

• Confucian Work Dynamism (also: Long-tern Orientation); Includes supporting the values of relationships based on status, thrift, persistence, and a sense of shame and rejecting the values of steadiness and stability, face, tradition and reciprocating gifts.

• Indulgence – restraint; Indulgence refers to societies that have a relatively large proportion of citizens who say that they are very happy and believe that they are in control of their lives. This dimension shows significant importance in the field of marketing.

Hofstede derived a classification of national cultures, as he gave 40 countries a score ranging from 0 to 100 on each of the four dimensions, table 3.1.

Intranational consensus = Level of agreement between individuals in a society about the importance of a particular value dimension.

Note: Hofstede’s scores were the average score for all participants in each country. Therefore, not every particular individual will be a representative of the mean score. The mistake of applying the scores at the country level to individuals is called ecological fallacy.

In an effort to investigate the possibility that Hofstede’s study might contain cultural bias because it was developed in the West, researchers conducted a similar study based on Chinese values. This study indicated four dimensions:

• Integration: incl. tolerance, harmony, solidarity, etc.

• Human-heartedness: incl. kindness, patience, etc.

• Confucian work dynamism: incl. order, persistence, sense of shame, etc.

• Moral discipline: being disinterested, having few desires, etc.

Substantial similarity was found for three of the four dimensions. The dimensions uncertainty avoidance and Confucian dynamism did not correlate as highly with dimensions derived in the other culture. This suggests that these dimensions are less universally applicable.

Hofstede also provided a measure of national cultural distance, using his four cultural dimensions. The measure is an index, which is corrected for differences in the variances of each dimension and then arithmetically averaged.

Iij = index for the ith cultural dimension for the jth country.

Iiu = index for the ith cultural dimension for the uth country.

Vi = variance for the ith cultural dimension.

The cultural distance index represents the relative distance of nations from each other in the multidimensional space defined by the four cultural dimensions. It is used to indicate the overall degree of similarity or dissimilarity between different nationalities. A low index relates to more similarity and a high index relates to more dissimilarity.

Criticism of Hofstede’s study:

• Hofstede conducted research only in organizations within IBM, which limits the ability to generalize to other organizations whose members might be systematically different.

• The items in the survey were not developed from any theoretical base but extracted form a broader survey designed to assess employee satisfaction, perception of work, and personal beliefs and goals.

• A technical problem is associated with the mathematics of the factor analysis in that there were too few data point for the number of questionnaire items.

• Two of the Hofstede dimensions were separated arbitrarily.

• Many of the items within dimensions seem to be unrelated to each other.

• Many of the items related to several of the dimensions.

3.3 ‘Seven value orientations- Schwartz’ Value Survey’

The Schwartz Value Survey (SVS) = Conducted a series of studies on the content and structure of human values. The content of values refers to the criteria people use to evaluate events and select courses of action. Structure is the organization of these values based on their similarities and differences. This study identified three universal human requirements:

1. The nature of the relationship between the individual and the group.

2. The preservation of the society itself.

3. Final problem related to the relationship of people to the natural world.

From these requirements, 57 values derived that reflect various ways of satisfying these needs. Respondents were asked the extent to which each value was a guiding principle in their live. The results were mapped separately for each country and the analysis showed which items clustered together. For an example of the map, See Figure 3.2 on page 50.

Value types = The groups in which values are clustered.

The results of this study strongly suggest that the structure of values is consistent across cultures. That means that there is a similar relationship between values in all cultures. The value types that are discovered during this study can be seen as a refinement of Hofstede’s earlier developed dimensions. However, this framework does not indicate which value dimensions are most important in each culture.

To define cultural dimensions at the level of national culture, Schwartz and colleagues, performed a multidimensional scaling analysis on the correlations between the average rating and the universal values in a number of different samples in countries. This yielded seven value types:

1. Egalitarianism; Recognition of people as moral equals.

2. Harmony; Fitting in with the environment.

3. Embeddedness; People as embedded in the collective.

4. Hierarchy; Legitimation of unequal distribution of power.

5. Mastery; Exploitation of the natural or social environment.

6. Affective autonomy; Pursuit of positive experiences.

7. Intellectual autonomy; Independent pursuit of own ideas.

3.4 ‘Value orientation, 7 dimensions- Trompenaars’ Framework’

Fons Trompenaars also conducted a study related on value orientations. He derived seven value dimensions, the first five concern relationships between people, and the last two are about orientations toward time and the environment.

1. Universalism – particularism; Universalism, belief that what is true and good can be discovered and applied universally. Particularism, belief that unique circumstances determine what is right or good.

2. Individualism – collectivism; The extent to which people plan their actions with reference to individual benefits versus those of the group.

3. Neutral – affective; Neutral, emotion should be held in check, and self-control is important. Affective, natural to express emotions.

4. Specific – diffuse; The extent to which individuals allow access to their inner selves to others. Specific, people separate the private part of their lives from the public. Diffuse, private and public live overlap.

5. Achievement – ascription; How status and power are determined in a society. Achievement, status based on what a person does. Ascription, status based on who a person is.

6. Time; Past vs. future. The extent to which time is viewed as linear vs. holistic.

7. Environment; The extent to which people feel that they themselves are the primary influence on their lives. Alternatively, the environment is seen as more powerful than they are, and people should strive to achieve harmony with it.

Two more dimensions of cultural variation at the national level were discovered later and can be seen as extensions and refinements of Hofstede’s individualism – collectivism and power distance dimensions:

1. Loyal involvement – utilitarian involvement; Representing varying orientations toward group members.

2. Conservatism – egalitarian commitment; Representing orientations toward obligations of social relationships.

3.5 ‘9 dimensions of cultural variation- The GLOBE Study’

The GLOBE study = Global Leadership and Organizational Behavior Effectiveness, is the most recent study of cultural differences.

One of the outcomes of the GLOBE research was the construction of nine dimensions of cultural variation. The first four are direct extensions of Hofstede’s work:

1. Institutional collectivism; The degree to which organizational and societal institutional practices encourage and reward collective distribution of resources and collective action.

2. In-group collectivism; The degree to which individuals express pride, loyalty, and cohesiveness in their organizations or families.

3. Power distance; The degree to which members of a collective expect power to the distributed equally.

4. Uncertainty avoidance; The extent to which a society, organization, or groups relies on social norms, rules, and procedures to alleviate unpredictability of future events.

The 5^th and 6^th are a reconceptualization of Hofstede’s masculinity-femininity dimension:

5. Gender egalitarianism; The degree to which a collective minimizes gender inequality.

6. Assertiveness; The degree to which individuals are assertive, confrontational, and aggressive in their relationships with others.

The 7^th and 8^th are based on the work of Kluckhohn and Strodtbeck:

7. Humane orientation; The degree to which a collective encourages and rewards people for being fair, altruistic, generous, caring, and kind to others.

8. Future orientation; The extent to which people engage in future-oriented behaviors such as delayed gratification, planning, and investing in the future.

The final dimension is defined by the GLOBE authors:

9. Performance orientation; The degree to which a collective encourages and rewards group members for performance improvement and excellence.

Note: the cultural dimensions were measured both as practices (the way things are) and values (the way things should be).

3.6 ‘Individualism and collectivism’

Individualism and collectivism are perhaps the most useful and powerful dimensions of cultural variation in explaining a diverse array of social behavior. Individualism is the tendency to view oneself as independent of others and to be more concerned about the consequences for oneself of a particular behavior. Collectivism is the tendency to view oneself as interdependent with selected others, to be concerned about the consequences of behavior for one’s reference group, and to be more willing to sacrifice personal interest for the good of this group. However, collectivism does not equate with socialism.

Although individualists and collectivists probably behave similarly toward members of their in-group, they differ in the ways in which they designate who is a member of this group. Furthermore, collectivists form very few of these groups, but the groups are broad in scope, encompassing many interrelated relationships. Individualists have many groups with which they identify, but their relationships within these groups are superficial.

Tightness and complexity

According to Triandis the degrees of cultural tightness and complexity are major influences on the degree of individualism or collectivism in a society. Individualism is a result of looseness and complexity, whereas collectivism is a result of tightness and simplicity. Loose cultures often heave multiple and sometimes conflicting norms about appropriate behavior.

Tightness = The extent to which members of a culture agree about what is correct behavior, believe they must behave exactly according to cultural norms, and believe they will receive or should give severe criticism for even small deviations from cultural norms.

Note: a culture might be tight and loose at the same time. For example, being tight in political a context and loose in terms of religion.

Note: Hofstede found a high positive correlation between gross national product and individualism, with wealthier countries being more individualistic.

For an illustration of the relationship between tightness, cultural complexity, and individualism – collectivism, Refer to Figure 3.4 on page 57.

Vertical and horizontal dimensions

Vertical and horizontal dimensions relate to the way people view their status relationships with others. The vertical dimension is comparable with Hofstede’s power distance dimension. Refer to Table 3.2 on page 58, which shows how different combinations of vertical and horizontal individualism and collectivism correspond to how societies tend to view their members, based on Fiske’s orientation research, Rokeach’s value research and their political system.

3.7 ‘Basic truths and premises- Social axioms’

It would be wrong to infer that societal culture is only about value orientations. In addition to considering values, researchers have recently proposed that general beliefs, or social axioms, provide another way to understand societal cultures.

Social axiom = Basic truths or premises, or generalized expectancies that relate to a wide range of social behaviours across different contexts.

Social axioms are not statements, like “Good health is important”, but are more of causal relationships, “Good health leads to success”.

3.8 ‘Culture as a source of guidance’

Eight sources of guidance for handling the work situations managers face;

1. Organization rules and procedures

2. Superiors

3. Colleagues

4. Subordinates

5. Staff experts (internal consultants)

6. Organization’s norms

7. Society’s norms

8. Own experience and training

Refer to Table 3.3 on page 61, negative numbers mean that it is the least important (widespread beliefs in this case)

Chapter 4: How Culture Works - The Basics of Cross-Cultural Interaction

4.1 ‘How culture influences ways of thinking’

Culture influences how mangers think about, evaluate, and respond to people who are culturally different. Issues that contribute to this phenomenon;

• Social cognition = The role that our mental representations play in the ways we process information about people or social events.

• Stored in these mental representations are the specific features that define an object, event, or situation and the rules defining their interrelationship. These structures are called schemas when they define a category or scripts when they contain a behavioral sequence. These cognitive structures are derived from our past experiences and are simple representations of the complex concept they represent. They help us to reduce the complexity of our environment to a manageable number of categories.

  1. Cultural identity = In international management, we are most concerned with the effect of the categorization of people, particularly regarding their culture. We categorize ourselves according to our membership within or outside the social groups in our environment. This categorization includes information about the relevant attitudes and behaviors associated with these groups.

• Cultural norms = Acceptable standards of behavior that are shared by members of our cultural group. Individual’s behavior is influenced by the cultural norms of society, but only to the extent that a norm exists for a particular situation and for which societal sanctions for noncompliance exist. Social groups enforce norms only if they perform one of the following functions:

  1. Facilitate the group’s survival

  2. Increase the predictability of group members’ behavior

  3. Reduce embarrassment for group members

  4. Express the central values of the group (clarify the group’s identity)

Scripts are guides of behavior that are used when cues about a situation match a particular script.

They are learned, so members of one’s cultural group can pass them on and reinforce them. Therefore, much of our behavior and the behavior that we observe in others is a semi-reflexive response to the situation influenced by cultural norms.

• Perception = the process by which people interpret the messages received from their senses and thereby give meaning to their environment.

The environment presents us to much information, therefore, we screen out much of it. Differences in what is perceived and what is screened out are influenced by the characteristics of the perceiver, the person being perceived, and the situation. For international management it is interesting to understand why there exist differences in the ways people from different cultures perceive events and each other. A key element of our perception is whether a person is categorized as a member of our in-group or an out-group member. A number of factors seem to influence the extent to which we categorize others as a member of our group:

1. Certain category indicators may be universal indicators of group membership.

2. The distinctiveness of the category indicator against the social field may be a primary categorization factor.

3. The extent to which a person is prototypical of a particular group influences categorization into that group. Atypical people are harder to categorize.

4. Deviations from normal speech in terms of accent, syntax, or grammar are particularly salient cues for group membership.

5. A history of interactions with another group improves the ability to categorize them.

• An important effect of categorization of others as out-group members is that once categorized, they are subsequently perceived as being more similar to each other than in-group members, perceived similarity and attraction. That is because we see the individual variation that occurs in our own cultural group but perceive other cultures as homogeneous. Selective perception also depends on the characteristics of what is being perceived. We tend to pay more attention to information that is distinctive.

• Selective avoidance = When confronted with information contrary to our existing views, we tune it out by diverting our attention elsewhere.

The perceptual bias about our own and other cultural groups has an additional implication for cross-cultural interactions: perceptions of similarity lead to interpersonal attraction. We are attracted to people whom we perceive to be similar to us because this similarity validates our view of the world and the way it should be. Thus, the extent to which we perceive other individuals as similar to us influences our attitudes and behavior toward them. The mechanisms that lead us to selectively perceive others are based on learning to perceive in a certain way because of socialization in a culture. However, these mechanisms also rely on some expectation of how people outside our own culture will behave.

• Stereotypes = a categorization of the characteristics and behavior of a set of individuals. Thus, stereotypic expectations of a cultural group are a result of the natural cognitive process of social categorization.

  Categorizing cultures based on a limited number of dimensions is a form of national stereotyping. This presents us with an overly simple representation of a cultural group. Once this categorization has occurred, we apply the stereotype to the same degree to each individual in the category. Furthermore, once formed, these stereotypic expectations of others tend to become self-perpetuating. Thus, we reconstruct information about the social category to be consistent with our stereotype.

Stereotypes are learned, therefore, we tend to have more complex stereotypes about social categories with which we have more familiarity. We have more complex mental pictures of our own culture, which leads to the expectation of more variability in behavior in our own culture. It also results in differences in our evaluation of new information about a culture. The more information we have about a cultural group, the more likely we are to accept new information about them.

The usefulness of stereotypic expectations about members of another culture is limited due to:

• The extent to which these mental pictures contain accurate information.

• Our recognition that either positive or negative feelings about the cultural group are invariably attached to the stereotype.

• Our ability to adjust our expectations based on new information about the group.

Social dominance theory = suggests that within every complex society certain groups are dominant over others and enjoy a disproportionate amount of privilege. According to this idea, the extent to which my national group is high status will influence the attitude of others toward it and my attachment to it.

• Attributions = help us understand and react to our environment by linking the observation of an event to its causes. The search for and assignment of a cause for behavior seems to be a mental process that operates in much the same way across cultures.

Internally caused behaviors are those under the control of the individual, and externally controlled behaviors are forced on the person by the situation. In order to attribute behavior, we rely on cues from the situation that indicate the extent to which individuals are in control. However, sometimes the situational cues we rely on to make attributions are inconclusive. That is, not all behavior is unambiguous about its cause. When observations do not clearly indicate the cause of behavior, we rely on information we already have about the individual to make a judgment.

Attribution of the cause of behavior is also influenced by whether the behavior is being exhibited by a member of our own cultural group. We are more likely to attribute desirable behaviors by members of our in-group to internal causes, while more likely to attribute desirable behaviors of out-group members to external causes. Besides that, there exist cultural differences among the attribution of the cause of behavior. Furthermore, individualists and collectivist may not engage in intergroup comparisons to the same degree. Collectivists might not be as interested in comparing themselves with out-groups and instead focus on their in-group. By contrast, individualists might make more comparisons but also make a distinction between groups with which they do and do not compare themselves.

4.2 ‘Cross-Cultural interaction model’

For the Cross-cultural interaction model, Refer to Figure 4.2 on page 81. >> Assumption: behavior of a person from another culture.

Situational cues determine the extent to which the situation evokes a preexisting behavioral sequence, a script. Then, the person perceiving the behavior interprets the meaning of these interactions. This interpretation consists of two stages: (1) the identification of the behavior (categorization of behavior), and (2) attributing the behavior to a cause. The extent to which situational cues about the cause of the behavior exist and the relative development of the perceiver’s mental representation of the other culture both influence the accuracy of the attribution. Lastly, the perceiver’s attitudes and behavioral response depend on how the behavior is attributed. If there is no existing script for the behavioral response, the respondent might create a new one using existing knowledge about his or her culture. The ability of people to adjust old scripts or create new ones is a significant part of having a successful cross-cultural encounter.

Cultural differences might be expected in motivation based on a person’s internal representation of self. Motivation involves the reasons people take or persist in a particular action. Cultural values reflect individuals’ needs but also prescribe the behavior required to satisfy those needs. We expect that members of different cultures respond to different motivating factors in their intercultural interactions. Central to understanding the nature of motivation in different cultures is the way in which people define themselves. People in all cultures develop an understanding of themselves as physically distinct and separate from others.

A cultural distinction in the definition of the inner self is the extent to which people regard themselves as separate from others or as connected with others. There exist two types of self-concept: independent and interdependent.

Motivational implications of differing self-concepts:

• People with independent self-concepts will be motivated to express internal needs, rights, and the capacity to withstand undue social pressure.

• People with interdependent self-concepts will be motivated to be receptive to others, to adjust to their needs, and to restrain their inner needs or desires.

• People with interdependent self-concepts are more influenced in their behavior by contextual factors (ex. norms).

• Motives linked to the self (ex. self-enhancement) can assume a different form, depending on the concept of self being enhanced or verified.

It can be argued that differences in the self-concept lead to differences in the extent to which the reduction of cognitive conflict or dissonance is a motivator. Dissonance occurs when one says or acts one way in public but feels quite differently in private.

Chapter 5: Cross-Cultural Dimensions of decision Making of Management

5.1 ‘Rational decision making’

The study of managerial decision making is typically divided into:

• Prescriptive approaches = What managers should do, the model is based on a set of assumptions that indicates how a decision should be made.

• Descriptive approaches = What managers actually do.

In order to optimize a particular outcome, people must progress either implicitly or explicitly through six steps in the decision-making process, Refer to Box 5.1 on page 89:

1. Problem definition

2. Identify decision criteria

3. Weight the criteria

4. Generate the alternatives

5. Evaluate the alternatives

6. Select the optimal solution

While recognizing that decisions are actually made within limitations that put boundaries on rationality, it is useful to consider the opportunity for cultural variation in the prescriptive framework. Cultural differences exist in every step of the decision-making process and are related to the decisions structures. The cultural variation in decision criteria is consistent with the cultural orientations of the managers. Differences exist in:

1. The amount of information one considers before making a final decision is culture bound.

2. Cultures with a strong past orientation tend to place more value on alternative solutions that have been used successfully in the past, whereas present- or future-oriented cultures are more likely to favor unique and creative solutions to problems.

3. The extent to which people vary in the choice rules they use in making decisions. Individualistic cultures are more likely to use a variety of different choice rules than collectivistic cultures.

4. Motivational differences may influence the weighting of alternatives.

5. The person who makes the decision and how long the decision process takes (vertical/horizontal cultures).

5.2 ‘The optimization model’

The optimization model assumes that decision makers can:

• Accurately define the problem

• Identify all decision criteria

• Accurately weigh the criteria according to known preferences

• Be aware of all available alternatives

• Accurately assess each alternative

Although decision makers might attempt to follow a rational model consistent with their cultural norms, they are limited in their ability to do so. Individual judgment is restricted by its ability to be rational and by cognitive limitations. An alternative to the rational model that recognizes these limitations is the satisficing model. This one suggests that decision markers forgo optimal solutions for ones that are acceptable, thus accept a satisfactory solution instead of optimal.

Rationality might be defined differently depending on how individuals from different cultures define themselves. Moreover, even though a manager makes a decision in a less than rational way, it could be more important to appear rational in some cultures than in others.

Decision makers use one of four decision styles to cope with the psychological stress of making a decision:

• Vigilance; Optimal decision style, a pattern consisting of a careful collection of facts and consideration of alternatives.

• Complacency; Either ignoring the decision completely or simply taking the first available course of action.

• Defensive avoidance; Passing the decision off to someone else, putting off the decision, or devaluing the importance of making a decision.

• Hypervigilance; Making a hasty, ill-conceived decision, also called panicking.

There is found significantly greater use of the alternatives to vigilance in non-Western than in Western.

Bounded rationality and satisfying concepts indicate that the managerial decisions typically will not conform to a rational model. In fact, an observation of what mangers do indicates that they might actually avoid analytical processes.

5.3 ‘Heuristics’

Heuristics = rules of thumb (cognitive tools) that people use to simplify decision making. It can result in biases in the decision, but often the increased speed of decision making outweighs the loss in decision quality. People are unaware of using heuristics. The three general heuristics that are used to simplify decision making are:

• Availability = The extent to which instances or occurrences of an event are readily available in memory. It influences managers’ judgments of the frequency, probability, or likely causes of that event. The heuristic is based on life experience and cultural differences in judgments.

• Representativeness = Mangers’ assessment of the likelihood that an event will occur is influenced by how similar the occurrence is to their mental representation (stereotype) of similar experiences. Furthermore, people often inappropriately expect that random and nonrandom events will even out. Thus, after a run of bad outcomes, they believe they are due for a positive result. However, the outcome of a random event is independent of the outcomes of previous events. A cross-cultural implication is reflected in the confidence a decision maker has in the correctness of the decision. Once managers made a decision, collectivists display greater confidence in its correctness while individualists are less certain.

• Anchoring and adjustment = A manager often makes a judgment by starting from some initial point and then adjusting to yield a final decision. The initial point, the anchor, can come from the way a problem is framed, from historical factors, or from random information. For example, a starting salary might be adjusted by an annual increase in terms of a percentage. Furthermore, there are numerous examples of bias resulting from anchoring and adjustment.

5.4 ‘Heuristics leading to motivational biases in decision making’

These heuristics presented can result in specific types of biases. When we consider cultural variation and the role it plays in social cognition, we can anticipate systematic differences in how these heuristics are applied and the resulting biases.

Important note: Because managers from different cultures perceive the world differently, their subjective realities differ, and therefore, the ways in which they simplify complex realities differ as well.

Many of the decision choices managers make can be influenced by motivational biases, which are based on differences in self-concepts. Decision making with interdependent self-concepts should be more influenced by social motives. Besides that, culturally based motivational differences might exist in the need for consistency in internal attitudes and external behavior. Therefore, we should not expect judgments made by those with interdependent self-concepts to be motivated by the same sort of cognitive consistency that drives those with independent notions of self. A common decision bias relates to an unrealistically positive self-evaluation. Optimism bias is stronger in people with an independent self-concept.

5.5 ‘Selection and reward allocation decisions’

Two common managerial decisions that are relevant in terms of cross-cultural interactions are (1) the selection of employees, and (2) the allocation of rewards. There exists variation around the world concerning these two procedures. The variation in selection technique is consistent with the suggestion that cultural differences influence the institutionalization of the selection process. Despite some convergence toward common practices, research found more differences than similarities in the practices used. Furthermore, cultural variation in the specifications of job requirements used in recruiting candidates is evident. Concerning reward allocation, research found differences in perceptions of fairness by individuals and collectivists in relation to in-group and out-group.

In addition, power distance or hierarchy may be the best predictor of differences across cultures in reward allocation. Reward allocation criteria include equity, equality, need, and seniority. Individualists prefer reward allocation based on equity, and collectivists prefer more equal distributions. This preference of collectivists is affected by whether the reward is to be received by an in-group or out-group member. When present, need seems to override other preferences for reward distribution in all cultures.

5.6 ‘Some ethical dilemmas around decision making’

Increasingly, managers around the world are recognizing the ethical dimension of their decisions. The consensus about what is morally correct erodes in the face of differing values and norms.

• Moral philosophy = A set of principles used to decide what is right or wrong. The main categories are:

• Consequential models = Focus on the outcomes or consequences of a decision to determine whether the decision is ethical. Utilitarianism = the moral doctrine that we should always act to produce the greatest possible balance of good over harm for everyone affected by our decision.

• Deontological or rule-based models = Human beings have certain fundamental rights and that a sense of duty to uphold these rights is the basis of ethical decision making. The best known approach is the categorical imperative (KANT). It says that individuals have the right to be treated as an entity unto themselves and not simply as a means to an end. Difficulty: achieving wide consensus on which rules to base fundamental rights on. It might be possible to gain universal acceptance for a set of fundamental rights if they protect something of great importance to all cultures, if they are under continuous threat, and if all cultures can absorb the cost of protecting them. Note: managers in different cultures can subscribe to the same moral philosophy while still choose to behave in different ways.

• Cultural relativism = Moral concepts are legitimate only to the extent that they reflect the habits and attitudes of a given culture. Thus, ethical standards are specific to a particular culture, and any cross-cultural comparison is meaning less. It leaves open the opportunity to attribute a wide range of behavior to cultural norms. Hypernorms = principles so fundamental to human existence that they transcend religious, philosophical, or cultural differences.

• Cognitive moral development = approach to understanding ethical decision making that focuses on the mental determination of right and wrong based on values and social judgments. It suggests that all people pass through all stages of moral development and that ethical behavior can be understood by identifying a person’s level of moral maturity. Table 5.2 on page 107 shows the six stages divided over three levels.

Stages in the model relate to age-based stages in human development.

It also relates to intelligence, level of education, work experience, and degree of ethical training. As a result, as individuals’ cognitive process of moral decision making becomes more complex, they progress to higher stages. Stage one till four exist in all cultures, stage five and six exist in both Western and Eastern cultures. Managers’ stage of cognitive moral development determines their mental process of deciding what is right or wrong.

• Figure 5.1 on page 109 shows that both individual and situational factors are able to affect the assessment of the decision being ethical or unethical. Both the expectation about the outcomes of one’s actions and the reliance on social information to make decisions are strongly shaped by culture. Thus, culture influences the relationship between level of moral development and making an (un) ethical decision.

Organizations differ in adopted principles of social responsibility and have processes for social responsiveness. These principles and processes facilitate ethical decision making.

Thus, the limited amount of research on descriptive models of ethical behavior illuminates the importance of the three factors:

1. Level of moral development

2. Individual factors

3. Situational factors in describing ethical decision making in an international environment.

Chapter 6: Cross-Cultural Communication and Negotiation of Management

6.1 ‘Cross-cultural communication processes’

Underlying every negotiation that takes place in an international context is the process of cross-cultural communication.

Communication = Transmitting messages, including information about the nature of the relationship, to another person who interprets these messages and gives them meaning.

For the understanding of the message, the sender and receiver must share a vast amount of common information, called grounding. This information is updated during each communication practice. Cross-cultural communication is significantly more demanding than communication in a single culture because culturally different individuals have less grounding information.

Cultural field = culturally based elements of a person’s background that influence communication.

Figure 6.1 on page 113 shows how cross-cultural communication works. Effectiveness of the communication depends on the lack of distortion. Distortion can occur through several reasons:

• The encoded message can be affected by the communication skills and knowledge of the sender and by the associated cultural field. The ability to encode accurately is determined by our skill in the chosen channel.

• The symbols a person uses to express an idea vary with the cultural field. Convenience and skill are important determinants in the choice of medium.

• All of the factors that affect the sender also influence the receiver. Therefore, the receiver must also be skilled in the medium in use and have sufficient knowledge to interpret the message correctly.

The extent to which the cultural fields overlap reduces the opportunity for distortion.

6.2 ‘Language’

Language = A symbolic code of communication consisting of a set of sounds with understood meanings and a set of rules for constructing messages.

The meanings attached to any word by a language are completely arbitrary, but cultural conventions control the features of language use. Difficulty: although translators know the meaning of words and the grammatical rules, effective communication is often not achieved.

The diversity of languages means that an important issue in cross cultural communication is finding a common language that both parties can use to work effectively. Practically, at least one of the two parties must use a second language, which causes several implications:

1. It creates cognitive strain: it takes more effort for the second language user.

2. The greater the fluency of the second language users, the more likely they are to be seen as competent in other respects.

3. First language users in a cross-language interaction tend to respond to lower linguistic competency of their partner by modifying aspects of their speech. Foreign speak = speech accommodation can be perceived as ingratiating.

4. If the first language user is unable to recognize signals that indicate a lack of understanding, the second language user may pretend to understand in order to avoid embarrassment.

6.3 ‘Communication styles’

Communication behaviors are logical extensions of the internalized values and norms of their respective cultures. Thus, culturally based rules govern the style, conventions, and practices of language usage.

Cultures differ in terms of communication:

• Explicit versus implicit communication; The degree to which they use language itself to communicate the message.
  High-context communication relates to implicit, while low-context communication relates to explicit, Refer to figure 6.2 on page 118. There is also a relationship to Hofstede: individualists >> low-context communication, collectivists >> high-context communication.

• Direct versus indirect communication; Individualists use direct communication, while collectivists use indirect communication. Directness depends on the social context. In collectivist cultures, politeness and desire to avoid embarrassment often take precedence over truth.

• There also exist cultural differences in the use of silence. Often collectivist cultures value silence as a way of controlling the communication interaction, whereas individualists value talking in the same way. However, even among individualist cultures, the use of silence and talking can vary.

• One additional stylistic element that has a systematic relationship to culture is the use of praise and the response to praise. Cultural differences exist in how frequently praise is used, what is praised, and how people respond.

6.4 ‘Other language considerations’

• Slang and jargon = Slang is an informal usage of language typically more playful or metaphorical and associated with a particular subgroup. Jargon is associated with a particular subgroup but is often a very specialized or technical language of people engaged in a similar occupation or activity. These forms can enhance communication within a group, while making it more difficult for outsiders to understand. These forms create three implications for cross-cultural communication:

  • The number of possible variations in expression in any particular language group is greater.

  • These nonstandard terms or usage might last for only a few years before disappearing unless they are incorporated into the standard form of the language.

  • The knowledge of a shared specialized language by culturally different individuals can enhance their communication ability to some extent.

• Euphemisms = Every culture has words that by tradition or convention are not often used publicly. These prohibited words are often associated with sexual relations or bodily functions. They are often handled by substituting a less direct expression, or euphemism.

• Idioms = Very language has unique ways of combining words to express a particular thought. Often, a particular phrase or construction differs from its literal meaning.

• Proverbs and maxims = Short sayings that express things that are obviously true in a particular culture and often advise people how they should behave. They can provide insight into some of a culture’s central values.

6.5 ‘Practical considerations to language usage’

• Language accommodation = Who will accommodate whom in an intercultural communication? Speech accommodation involves shifting one’s speech patterns to achieve greater language similarity. Sometimes, because of a history, one language group refuses to speak another group’s language. A key consideration is ethnolinguistic vitality of the language. That is, the language that has higher prestige and is widely used in the relevant institutions or settings is more likely to be adopted.

• Stylistic accommodation = The idea that adapting one’s communication style to that of the other culture participant in an intercultural communication will help to bridge cultural distance and improve communication is based on the similarity-attraction paradigm. That is, stylistic accommodation leads to perceptions of similarity, which in turn lead to positive attitudes toward the member of the other culture. The extent to which stylistic accommodation is viewed positively seems to depend on the motive to which it is attributed.

• Language fluency = The degree of language fluency creates several problems for the second-language user that extend beyond the user’s ability. Higher degrees of language fluency can lead to the second-language user being perceive as having a higher competency in other areas. Fluency in a foreign language can also cause a person to be perceived as having beliefs more closely aligned with the foreign language group.

6.6 ‘Nonverbal communication’

Nonverbal communications convey important messages and are produced more automatically than are words. Nonverbal communication helps to regulate intercultural interaction by providing information about our feelings and emotional state, adding meaning to our verbal messages, and governing the timing and sequencing of the interaction. Nonverbal behaviors have the same functions across cultures. However, nonverbal systems of communication have a significant amount of variation around the world. The two types of differences are:

1. The same nonverbal behavior can have very different meanings across cultures.

2. Different nonverbal cues can be used to mean the same thing in different cultures.

Categories of nonverbal behaviors are:

• Tone of voice = Along with the words we speak, the way we say them communicates feelings and attitudes. It includes pitch, volume, speed, tension, variation, etc.

Cultural norms ascribe different meanings to features and qualities of tone of voice. These meanings can be categorized along the dimensions of dominance, positivity, and arousal. Often people fall into the trap of using self-referent criteria in explain tone of voice. Thus, they interpret tone of voice as if it were them speaking.

• Proxemics = The way in which people use personal space in their interactions with others. People seem to follow predictable patterns when establishing distance between themselves and others that are consistent with cultural norms. In general, people in colder climates seem to prefer larger physical distance in communication than people in warmer climates. Furthermore, people touch in a variety of ways depending on purpose. Cultures vary widely in the meanings associated with the various forms of touching and with who can touch whom and on what part of the body in what circumstances. Cultures have been classified as high-touch versus low-touch. Touching behavior in any culture is likely to depend on a number of factors, including age, gender, and social status. Proxemics have some additional implications for the international manager. For instance, issues related to the office space among different cultures.

• Body position and gestures = The way people position their body conveys information in all cultures. However, people learn which body position is appropriate in a given situation in the same way that they internalize other aspects of culture. People from high-power distance cultures might show more bodily tension as a way of indicating submissiveness or deference. Hand gestures are used both intentionally and unintentionally in communication. The one’s that are used as a substitute for words are called emblems. Very complicated is that the same hand gesture can have different meanings in different parts of the world. Being able to distinguish the meaning of gestures in a culture seems to be an indicator of cultural competence.

• Facial expression = Facial expression is a key source of information, particularly about emotional states. Underlying emotional states seem to be closely linked to facial expression. Research found that the same facial expressions were associated with certain emotions in all cultures. This is true for the six basic emotions: anger, fear, sadness, disgust, happiness, and surprise. The link between facial expressions and emotions is a direct one that operates without conscious thought. However, people often seek to override this linkage. Therefore, facial expressions are influence by a person’s culturally learned display rules. Due to these display rules, the meaning of facial expressions can vary across cultures to the extent that people are controlling their facial display.

• Eye contact (gaze) = All cultures use gaze in nonverbal communication. Both maintaining eye contact and avoiding eye contact communicate important messages. The interpretation of eye contact differs among cultures, and the rules seem to be fixed fairly early in life and persist regardless of subsequent cross-cultural experience. The appropriate level of eye contact in conversation can also vary according to the relative status of the individuals involved. Three notes:

  1. It is not possible to rely on uniformity even within a single culture because other factures, such as education, can have a significant impact on nonverbal communication.

  2. Not all nonverbal behaviors are of equal importance within a culture.

  3. There are both similarities and differences in nonverbal communication across cultures.

6.7 ‘Cross-cultural negotiation and conflict resolution’

An important application of cross-cultural communication for the international manager is face-to-face negotiation. All negotiations share some universal characteristics. They involve two or more parties who have conflicting interests but a common need to reach an agreement. Research found that the outcomes of negotiation are to be contingent on:

• Factors associated with the behavior of people involved in the negotiation.

• Factors associated with the process of negotiation.

• Factors associated with the negotiation situation.

Efforts to understand cross-cultural negotiations fall into one of three types:

• Descriptive approaches = The Graham four-stage model suggests that all business negotiations proceed through four stages:

  • Non-task sounding or relationship building

  • Task-related exchange of information

  • Persuasion

  • Making concessions and reaching agreement

Graham suggests that the content, duration, and importance of each of these stages can differ across cultures. Thus, the internalized cultural values and norms of the negotiator influence which aspects of the process is emphasized. Differences have been recorded in styles of persuasion, conflict resolution preferences, and initial bargaining positions and concession patterns. Persuasion styles: (see next page)

• Rational: U.S., factual-inductive style, relied on logic.

• Affective: Syrian, relied on emotional appeals.

• Ideological: Russia, relied on references to ideological.

Conflict resolution preferences:

• Confrontation and competitive.

• Subtle form of bargaining.

Graham found differences in the tactics used by negotiators between a number of different countries.

• Cultural dimensions approach = The cultural effects are attributed to the cultural values and norms of the participants. Cultural dimensions have been related to differences in cognitive processes related to negotiation. Individualist and collectivist cultures have been found to differ with regard to egocentric perceptions of fairness. Cultural dimensions also relate to the negotiation processes and their outcomes. A difficulty is that negotiators may change their behavior when negotiating with someone from another culture. Furthermore, there also exist cultural differences in the speed of changing negotiation tactics. However, contrary findings about the extent to which negotiations change their behavior in intercultural interactions exist. These findings suggest that contextual differences can influence the extent to which culturally based preferences for negotiation behavior are altered in cross-cultural interactions.

• Holistic approach = Considers both the knowledge structures of the participants and the social context in which the negotiation takes place. The extent to which negotiators believe they are accountable for the negation outcomes influences their behavior. Also the extent to which negotiators feel the need to bring negotiations to a conclusion quickly influences the extent of cultural influence. Furthermore, the hierarchical relationship between individuals can influence the extent to which culture influence conflict resolution behavior. One way in which the complex influence of culture and context on negotiation has been studied is to try to understand negotiation through the metaphors that people use to make sense of the process. The content of the metaphors tends to be culturally specific, whereas the process being described is consistent. Metaphors for negotiation are individuals’ subjective realities of the social interaction, which guide the behavior of the participant. In addition, they identify the tasks to be performed (problem), the norms for interaction (scripts), and the outcomes of the interaction (feelings).

An example of metaphors is shown in Table 6.2 on page 136. metaphors may be a useful tool in that hey help negotiators understand their own culture and who it shapes the reality they impose on the negotiation situation.

Chapter 7: Cross-Cultural Motivation and Leadership of Management

7.1 ‘Cross-cultural motivation’

One of the most difficult tasks that international managers face is the need to motivate and lead individuals from different cultures.

Motivation = willingness of individuals to exert effort toward a goal. The concept is studied in two types of theories:

1. Content theories = Explain motivation in terms of need satisfaction. Unsatisfied needs create tension, which individuals are motivated to reduce through their behavior. Maslow suggested that needs motivate individuals in a sequential hierarchy from basic to growth. A potential limitation of need theories is that individual needs are placed at the bottom of the hierarchy, which may be less appropriate in a collectivist society in which more relational needs are basic. McClelland theory focusses on three needs of achievement, affiliation, and power. Research indicates that individuals that value achievement strive for personal success, whereas successful managerial performance requires individuals who value power high and affiliation low. McClelland suggested that the need for achievement motivation training in developed countries. The majority of cross-cultural research on content theories focused on higher-order needs, while ignoring lower-order needs. Furthermore, social stratification in many societies affects the dominant needs of individuals.

2. Process theories = Explain the choices that people make about their behavior. There are three main process theories:

   1. Equity theory (Adams) = Motivational consequences result from the imbalance that can exist when individuals perceive that the ratio of their inputs to outcomes is unequal. As a result, individuals will behave in a way to restore balance. Studies of reward allocation norms have generally found differences across cultures on the preference for equity. It becomes clear that the preference is related to the extent of hierarchy. An extension to this theory is the idea that some individuals are more equity sensitive than others. Individuals can be classified as equity sensitives, benevolents, and entitleds. Equity sensitives prefer a balance between inputs and outcomes. Benevolents are more tolerant when they are underrewarded. Entitleds experience less dissonance when overrewarded than when underrewarded. Research found differences in the extent to which particular nationalities fell into each of the three categories.

   2. Expectancy theory (Porter & Lawler, Vroom) = Motivation is the result of the combination of the expectation that effort (E) will lead to performance, that his performance will be instrumental (I) in reaching certain outcomes, and the value (V) placed on these outcomes by individuals. Thus, effort = V * I * E. Research found significant differences in both expectancies and valences across cultures. Difficulty: it assumes that individuals have control over their performance and the outcomes they will work for and that their employer has the ability to identify and provide valued rewards. These assumptions make it hard to transport the theory across cultures.

   3. Goal-setting theory (Locke & Latham) = Involves the responses of individuals to the existence of goals and the manner in which the goals were set. The basic principles of goal setting are (1) specific difficult goals (but achievable) consistently lead to better performance than specific easy goals, general goals, or no goals; and (2) goal setting is most effective when there is feedback showing progress toward the goal. Research with regard to cultural variation in goal setting has focused on the way in which commitment to goals is achieved, particularly the effect of participation in setting the goal. It found that prevailing work norms may influence the extent to which participation in goal setting may be effective in a particular culture.

Process theories have been criticized for depict the individual as a rational information processor seeking to maximize personal gain. Furthermore, culture may affect what motivates people more than the process through which people are motivated.

7.2 ‘The functions of work’

Individual work motivation is influenced by why people engage in work and what they value in their work. Research in dictated some consistency across countries in what people perceive as the functions of work. Respondents from different countries placed different levels of importance on these purposes.

There also exist cultural differences in the extent to which work is central to individuals’ lives, See Figure 7.1 on page 144. furthermore, there is variation across cultures in what individuals hope to achieve from work. However, the most important work goal across cultures was that of interesting work, so some consistency exists.

7.3 ‘Designing motivating jobs’

In the past the focus of work design was on improving worker efficiency, now more focus is going to the characteristics of the job to increase worker motivation. Three approaches to job design from three different cultures are: the job characteristics model, sociotechnical systems, and quality control circles.

Job characteristics model suggest that any job can be defined in terms of five characteristics:

1. Skill variety: different activities required

2. Task identity

3. Task significance: substantial effect on others

4. Autonomy

5. Feedback

To be motivating, a job must be perceived as (1) meaningful, the worker must (2) feel responsible for outcomes, and the worker must (3) know the actual results of work activities. The motivating potential of the job depends on the extent to which individuals have a strong need for personal growth. Alternative approaches to work characteristics suggest that people respond to socially induced perceptions of their job as opposed to objective characteristic of the job. In addition to the model, it is developed in an individualistic culture, and the application in a more collectivistic culture requires modification.

A more collectivistic approach to job design is developed by Trist, who combines the social and technical aspects of the work system. Sociotechnical job designs almost always involve autonomous work groups, which have almost complete responsibility for a significant task. Thus, the team becomes the focus of job design instead of the individual.

Another example of job design is the quality circles based on the belief that workers understand their own work better than anyone else and therefore contribute to its improvement.

Quality circles = small groups that voluntarily and continuously conduct quality control activities.

To conclude the job characteristics model, the choice of job design might be best informed by cultural dimensions that relate to the way in which the characteristics of the job fulfill culturally based expectations of what work is about.

7.4 ‘Leadership’

Western definition of leadership = The ability of individuals to influence organization members toward the accomplishment of goals.

The meaning and importance of leadership vary across cultures. In examining leadership across cultures, several questions need to be addressed:

• Is leadership a global concept?

• Is there a comprehensive set of leader behaviors and styles that are universally important?

• To what extent are universally recognized leader behaviors conceptually functionally equivalent?

• To what extent are specific leadership characteristics and behaviors enacted differently?

WESTERN LEADERSHIP THEORY

Leadership theory is often described as having progressed through four distinct periods, each with a dominant theoretical approach:

1. Trait theories

2. Behavioral theories

3. Contingency theories

4. Implicit theories

Trait theories

The search for the personality characteristics possessed by great leaders failed. This led researcher in other directions in search of explanations of leadership.

Behavioral theories

Research identified two dimensions of leader behavior:

• Initiating structure = Production or task oriented.

• Consideration = Employee or relationship oriented

Studies across cultures found that relationship-oriented leaders increase subordinates’ satisfaction. The leadership of orientation to task causes more variation across cultures. In addition, behavioral theories ignore the influence of subordinates and the situation. Furthermore, the fact that effective leaders must adapt their behavior to the situation and the needs of their followers can be even more important in cross-cultural situations.

Contingency theories

Fiedler’s contingency model presents the basic idea that the situation moderates the relationship between the leader’s style and effectiveness. A leader’s style is an assessment of personality characteristics determined by responses on the least preferred coworker scale. Although there is a lot of criticism on this theory, it is also suggested that by appropriately including cultural differences, it could prove to be universally applicable.

Path-goal theory identifies four leader behaviors and specifies a number of situational and follower characteristic moderators of the relationship between leader style and follower satisfaction and performance. An idea related to this theory is that the attributes of situations and the characteristics of subordinates could enhance, neutralize, or substitute for some leadership behaviors. This so-called leadership substitutes theory suggests that characteristics of subordinates can act as substitutes for such leader behavior as being directive while actually enhancing the effect of other types of leader behavior, such as being supportive.

Implicit theories

These theories define leadership as the process of being perceived as a leader. Followers develop mental representations or prototypes of leaders through exposure to social situations and interactions with others.

After the formation of this leader prototype, individuals are perceived as leaders by the extent to which their behavior matches the behavior expected of a prototypical leader. Thus, specific leader behaviors do not make a person a leader unless that person is perceived as a leader by followers. This idea shows that individuals from different cultures can have different leader prototypes. Furthermore, meeting followers’ expectations of leader behavior can result in higher perceptions of trust and leader effectiveness. Besides that, it is also possible that there are some universally endorsed attributes and behaviors that comprise implicit leadership.

Leaders have an extraordinary effect on followers, which garners the followers’ admiration, respect, trust, commitment, dedication, and loyalty.

Charismatic or transformational leaders = Those who are able to inspire their followers to transcend their own self-interests for the good of the organization. They are self-confident, have an idealized goal or vision, are very committed to that goal, and are perceived as unconventional and agents of radical change. This might tend to be universal.

Project GLOBE

The Global Leadership and Organizational Behavior Effectiveness (GLOBE) research program is a recent extension of implicit leadership theory. It found 22 leadership attributes that were universally desirable and 8 that were universally undesirable. From these items, six dimensions of leadership were derived and compared across the 10 cultural clusters defined according to the GLOBE cultural dimensions (chapter 3):

• Charismatic/value based = The ability to inspire, motivate, and expect high performance from others on the basis of firmly held core beliefs.

• Team oriented = Emphasizes team building and implementation of a common purpose or goal among team members.

• Participative = Reflects the degree to which managers involve others in making and implementing decisions.

• Humane oriented = Reflects supportive and considerate leadership, including compassion and generosity.

• Autonomous = Independent and individualistic leadership.

• Self-protective = Focuses on ensuring safety and security on the individual, self-centered and face saving.

NON-WESTERN THEORIES OF LEADERSHIP

There exist three non-Western theories of leadership:

• Performance-maintenance theory (PM)

• Leadership in the Arab world

• Paternalism

Performance-maintenance theory

The systematic evaluation of leadership behavior in this culture (incl. Japan), which is governed more by group norms than individual direction, is rare. Misumi’s PM theory identifies four types of leaders based on two basic dimensions of leadership: performance and maintenance.

• Performance; Dimension describes behavior directed toward achieving group goals.

  1. Pressure-type = Supervisory behavior regarding strict observance of regulations and pressure for production.

  2. Planning-type = Concern the planning and processing of work.

• Maintenance; Dimension relates to behavior directed at group maintenance and preservation. These dimensions are conceptually similar to the task-oriented and relationship-oriented dimensions found in Western theories.

The P and M dimensions are concerned with behavior as experienced by followers and can therefore differ according to the context in which the behavior takes place.

In addition, tests of PM theory outside Japan lend support to the idea that both culture-free and culture-specific leadership behaviors can exist. Thus, although the broad dimensions of performance and maintenance seem to be applicable across cultures, the specific leader behaviors perceived by followers to indicate these dimensions seem to vary across cultures.

Leadership in the Arab world

Leadership behavior in Arab societies is strongly influenced by the Islamic religion and tribal traditions, as well as by contact with Western culture. Managers are expected to behave like fathers, their roles include protecting and caring for employees, as well as having overall responsibility for the business. Overlaying this tribal influence is the legacy of a rigid bureaucracy. The combination of these tribal norms with bureaucratic structures resulted in an authoritarian and patriarchal approach to leadership called sheikocracy. This style is characterized by hierarchical authority, subordination of efficacy to human relations and personal connections, and conformity to rules and regulations based on the personality and power of those who made them.

Arab managers want to be modern by adopting Western practices but simultaneously wish to maintain tradition, this is called a duality. The prophetic-caliphal model of leadership typifies this duality of relationships prevalent in Arab culture. According to the theory, the very existence of the rational bureaucratic procedures of institutions is undermined by the prevalence of two societal characteristics: (see next page)

• Individualism = The tendency to make decisions without considering the opinions of others.

• Personalism = Viewing one’s relationship to others from an egocentric perspective in which one’s own set of needs dominates.

Prophetic vs. caliphal:

• Prophetic = The leader will garner feelings of love, unity of purpose, and voluntary submission to authority by followers.

• Caliphal = The leader must use coercion and fear in order to maintain his status as a leader, and conflict and strife will result.

Paternalism

Paternalistic leadership involves a hierarchical relationship between the leader and followers in which the leader provides direction in both the professional and private lives of subordinates in exchange for loyalty and deference. It is common in cultures with high power distance. There exist five dimensions of paternalistic leadership:

• Creating a family atmosphere at work

• Establishing close and individualized relationships with subordinates

• Involvement in non-work lives of subordinates

• Expecting loyalty from subordinates

• Expecting deference from subordinates

Paternalistic leadership has been associated with positive employee attitudes in collectivistic and high-power distance cultures.

7.5 ‘Cross-cultural leadership - a model’

The cross-cultural model of leadership, See Figure 7.2 on page 156, has as its basis a cognitive information processing approach to leadership. Furthermore, it is assumed that the leader has the ability to influence others. It consists of three key elements of the theory, (1) leader’s image, (2) individual and group processes, and (3) substitutes for leadership, that are all affected by cultural variation. In addition, the interpersonal interactions between the leader and followers are subject to cultural influence. Finally, the outcomes of leadership are also embedded in a cultural context, in that the evaluation of leader effectiveness can be based primarily on the performance of either individuals or groups.

The model highlights the question of how to best manage the interaction between leaders and managers who are culturally different. two important considerations are suggested. First, followers are likely to have an expectation of leadership behavior based on the leader’s culture. Second, like communication and negotiation behavior, adapting leader behavior to be more like that typical of the followers’ culture is risky.

7.6 ‘Practical implications on leadership’

The general functions of leadership are probably universal across cultures. Leadership in a number of cultures is categorized as concerned with the task, with the relationship with members, or both. Furthermore, research found that managers regardless of culture, indicated a desire to get things done while using less authority.

Culture seems to affect the type of leader behavior accepted and effective in a given society. In general, leadership styles across cultures are consistent with the dominant cultural values of the country. The cross-cultural model of leadership suggests that leader behavior consistent with what followers expect will be more likely to result in an individual being perceived as a leader and therefore make that individual more effective. It must be noted that specific behavior that indicates fair treatment can be very different for each cultural group.

The characteristics of the situation influence the extent to which leadership can make a difference. Leaders are always under pressure to conform ot the social situation in which they must operate. In addition, many of the factors that influence the performance of followers are outside a manager’s control. Furthermore, different cultures tend to place different degrees of importance on the role of leadership.

Chapter 8: Multicultural Work Groups andn Teams - The Challenges

8.1 ‘Work groups’

Three distinctive characteristics of work groups in organizations have been identified.

1. Work groups are social systems that have boundaries with members who have different roles and are dependent on each other. Both people within the group and those on the outside will recognize the group’s existence.

2. The groups have a task to perform.

3. Work groups function in an organizational context.

Distinction between three primary types of work groups:

• Task forces: work groups in organizations. They focus on the completion of a specific project, within a limited time frame. Members are selected based on the task-related skills required by the group.

• Crews: focus on the tools required in the performance of the task. The interaction between group members is based on the use of tools. Tools are defined as task-related implements or devices.

• Organizational teams: focus on the interrelationship between the group members. These teams are sets of people with specific skills and abilities who are provided with tools and procedures to address certain sets of tasks over a long period of time.

One must consider these differences in trying to explain and predict the behavior of different organizational groups.

8.2 ‘Assessing work group effectiveness’

The effectiveness of a work group depends on how well the group uses its resources to accomplish its task. However, the long-term effectiveness of a work group might not be assessed accurately by considering only how it is performing at a single point in time. A broader definition includes:

• The output of the group must meet the quantity, quality, and timeliness standards of the organization.

• The processes employed by the group should enhance the ability of the group members to work together.

• The group experience should contribute to the growth and personal well-being of the group members.

Group dynamics are complex, and research has produced a number of group process models. Figure 8.1 on page 164 shows the work of Goodman and identifies six variables that influence the process and performance of the group.

• The external or contextual conditions imposed on the group.

• The resources of the group members.

• The structure of the group.

• The group process.

• The group task.

• The composition of the group.

External conditions

Part of the group behavior is determined by the larger organization to which the group belongs. Research indicates that contextual factors influence both the productivity of work groups and employee satisfaction with the group. Furthermore, organizational factors such as firm strategy and human resource practices influence the impact of diversity in work groups. In addition, the geographic dispersion of the organization influences the manner in which work groups must interact.

Group member resources

Group members bring two types of resources to groups: personal attributes, and their skills and abilities. In general, member skills and abilities are positively related to group performance. Research suggests that the characteristics of individuals in groups influence the overall affective tone of the group.

Group structure

Each of the structures (task forces, crews, or teams) shapes the behavior of the group members by prescribing the norms, role expectations, and status relationships shared by group members. Although all groups share the same types of norms, the norms for a particular group are unique. Group norms can come from explicit statements made by group members, critical incidents in the group’s history, or early behavior that emerges and persists. The ability of work groups to adjust their role structure to changes in the context of their task influences their performance. Group member roles are affected by the conflict created in the process of role assignment. Cultural difference in preferences for different roles in multicultural groups exists. The effect of status systems in groups can be summarized in three categories:

1. The effect of a person’s status on his or her relationship with other group members.

2. The effect of group member’s status on this or her evaluation by others.

3. The effect of status on a group member’s self-esteem.

In general, group members with higher status have more influential in the group, are evaluated more positively, and have higher self-esteem.

Group processes

Group processes are how groups achieve their outcomes. Because groups form their own social systems, the outcomes of work groups are not the same as the sum of their individual members’ efforts. This process is shown in Figure 8.2 on page 167. Examples of process losses include groupthink and social loafing.

Groupthink = The norm for group consensus overrides the motivation to realistically appraise alternative courses of action.

Social loafing = Individuals reduce their effort on group tasks.

Group processes over time

An additional element of group processes is the changes that groups go through over time. Tuckman argues that all groups go through five stages:

1. Forming = Group members begin to think of themselves as part of a group. They might be uncertain how they fit into the group.

2. Storming = The characteristics, attitudes, and expectations of individuals come into conflict with the structure of the group.

3. Norming = The group agrees on the expectations that specify the acceptable behavior of the group.

4. Performing = The efforts of the group shift to accomplishing the task at hand.

5. Adjourning = The task is completed.

Note: groups can revert to prior stages.

For groups that have a deadline for the accomplishment of their task, the punctuated equilibrium model might be helpful. Here the group sets its direction at the first meeting, and this pattern of behavior and approach to the task become firmly adhered to for the first one-half of the group’s existence. A transition seems to occur at about the midway point. The group drops the previous patterns of behavior and perspectives in favor of a new direction.

At the final meeting of the group, lots of activity occurs as the group members press each other to make their contribution to accomplish the task.

Virtual global teams seem to engage in specific patterns of temporal rhythms that involve face-to-face interactions.

Group task

The nature of the tasks in which the group is engaged influences both the processes and outcomes of the group. Tasks not only relate to the end result of group activity but also specify such aspects of group processes as the degree and nature of interdependence of group members. Jackson classifies group tasks into three types:

1. Clearly defined production tasks.

2. Cognitive or intellective tasks: problem-solving tasks.

3. Creative idea generation and decision-making tasks: reaching consensus.

Group composition

Members of work groups might be similar or different on a number of different dimensions important to the performance of the group. Group composition can be classified as homogeneous on a particular dimension, heterogeneous on that dimension, or minority-majority. Minority-majority groups are those in which one or a few members are different on the dimension of interest. Research on minority-majority groups has tended to focus on the influence of minority members on the majority. It is shown that minority members are slower to express their opinions, but this speed increases as the size of the minority grows.

Recently, research on homo/heterogeneous focuses on differentiating between surface-level diversity and deep-level diversity. Findings:

• Heterogeneity in observable attributes is generally found to have a negative effect on affective outcomes.

• Group heterogeneity on underlying attributes has a direct relationship to the level of process losses suffered by the group.

• Group heterogeneity on task-related abilities and skills is typically shown to be positively related to group performance on the tasks typically found in organizations.

8.3 ‘The influence of culture on work groups’

Culture’s influence on work groups is mainly present in the cultural composition of the work group. The cultural composition of work groups affects the way they function through three general types of mechanisms:

1. Cultural norms = The orientations of the specific cultures represented in the group toward the functioning of groups.

2. Cultural diversity = The number of different cultures represented in the group.

3. Relative cultural distance = The extent to which group members are culturally different from each other.

Cultural norms

One of the most important influences on group effectiveness is the mix of cultural norms represented in the work group. Different cultures have very different orientations toward what is appropriate in terms of work group function and structure. Lot of research is done about this subject, the most important findings are:

• Individuals bring mental representations to the work group, with which they interpret events, behaviors, expectations, and other group members.

• Members of new groups who previously developed norms for cooperation acted cooperatively in a subsequent similar situation.

• People with different cultural orientations have different views of what are appropriate group processes.

• Individuals from a collectivist culture were less likely to engage in social loafing than were members form a more individualist culture.

Cultural diversity

Cultural diversity is about the number of different cultures that are represented in the group. Cultural diversity has been shown to have both positive and negative effects on work group effectiveness. Culturally diverse groups are likely to suffer from increased process losses and have lower group performance than homogeneous groups.

However, because of the different perspectives of group members, cultural diversity should result in more creative and higher-quality group decisions. In addition, having specific knowledge of another culture can be thought of as a task-relevant ability for some group tasks. Another finding concerning minority influence is that the expression of alternative views by culturally different group members can raise the quality of group decision making and problem solving by increasing the attention of the group to the decision-making process. Cultural diversity also influences the formation of subgroups within the task group. When group members fall into two non-overlapping cultural categories, individuals sometimes identify more strongly with their cultural subgroup than with the task group as a whole. These cultural subgroups are called faultlines.

Moreover, the effect of process losses and gains is not consistent over the life of the group. Over time, culturally diverse groups achieve a reduction in process losses. It can be said that members find ways of dealing with the problems of intercultural interaction, sometimes with the help of feedback. A hybrid team culture emerges in response to change of direction and facilitate the performance of culturally diverse work groups.

Relative cultural distance

Relative cultural distance concerns the extent to which each individual in the group is culturally different from the other group members. Culturally different work groups are aware that they are different, and this awareness causes them to compare themselves to the other members of the group. Based on this comparison, they evaluate the appropriateness of their behavior and their status in the work group. If group members perceive their status in the group favorably, they are likely to participate more fully and to perceive the group more positively. The relative difference of individuals from other group members also influences the extent to which they identify with the task group versus their cultural group. Furthermore, group members’ willingness to participate depends on the salience of the task group identity versus that of their cultural group.

Other research found that the extent to which group members differed from others affected their assessment of the level of conflict in the group and their willingness to express their ideas. All these differences can result in a lower expectation of a successful interaction with the other group members and a higher estimate of the effort needed to achieve success.

8.4 ‘The influence of culture in different group structures and tasks’

The nature of the task and the structure of the work group influence the extent to which the cultural composition of the work group affects its outcomes. Both the structure of the work group and the task with which it is involved specify the nature of the relationship between work group members. Production tasks generally offer less opportunity for the effects of cultural composition than would creative idea generation and decision-making tasks. Crews, task forces, and teams differ in terms of the importance of member composition to their functioning.

Crews face little effect of member composition (they use tools to interact), whereas the structure of teams are very sensitive to member differences. For task forces, group composition is more important than for crews but less important than for teams, see Figure 8.3 on page 174.

8.5 ‘Global virtual teams’

One way in which many organizations are dealing with the challenges of globalization is by forming work groups with geographically dispersed structures. These are called virtual teams, and a key characteristic is that they interact primarily by electronic networks. Therefore, work group members can be separated by time, geography, and culture but also by work practices, organization, and technology. The proposed advantages of global virtual teams focus on the ability to choose the best group members regardless of geographic or organizational boundaries. However, electronic interaction is different from face-to-face communication. Electronically mediated groups tend to form more slowly, and they reduce the ability to sense the social presence of other group members. Moreover, because of electronic intermediation, there is a lack of evidence of cultural differences, which might make culture a somewhat less salient dimension in these groups. Research suggests that these reductive effects of collaborative technologies are beneficial for culturally diverse teams in reducing the process losses from diversity.

A negative aspect of virtual teams is that due to the lack of physical contact, the identification with the team is less. Furthermore, regardless of cultural background, team members tend to report less confidence in their ability to work in virtual team environments than in face-to-face teams. Besides that, research found that virtual teams take more time to complete their tasks than do face-to-face teams. Mixed findings are about the quality of the teams decisions.

8.6 ‘Culturally diverse work groups’

The dominant characteristics of the organization influence the types of goals and methods that are acceptable for work groups. In addition, management controls the resources required for work groups to be effective. Key organizational factors that influence the effectiveness of work groups are:

1. Level of management support.

2. The extent to which individual rewards come from the group.

3. The status afforded the group.

4. The amount of training provided to the group.

5. The extent to which the organization allows groups to be self-managed.

Management support

The most effective work groups exist in organizations that provide high levels of organizational support. In addition, research suggests that management must either design work around groups or around individuals but that mixing the two designs in so-called hybrid groups is not effective. Furthermore, an organization culture that supports diversity leads to more effective work groups. With regard to global virtual teams, management support may be even more important to provide the information and reinforcement necessary to achieve their goals.

Group-level rewards

Research suggests that a mix of individuals and group rewards will be most effective with work groups, particularly the self-regulating variety. However, recently others suggest that these hybrid reward systems can lead to lower individual effort and hence poor group performance. Moreover, a recent study found that the extent to which individuals derived their rewards from the team was positively related to both team performance and team member attitudes.

It must be noted that these results must be treated with some caution based on what we know about preferences for reward allocation across cultures (individuals prefer equity, collectivists prefer equality). The effectiveness of a particular reward allocation system is likely to be influenced by the cultural composition of the work group and the preferences of group members.

Work group status

Research suggests that being a member of a high-status group will increase members’ feelings of self-worth and effectiveness.

The positive effect that high group status has on the individual improves both individual and work group performance. It must be noted that the extent to which individuals from different cultures derive their self-esteem from work groups can vary considerably. The status of work groups might have a greater influence to work in the group for individualistic cultures than collectivistic cultures.

Training

Managers often seem to assume that employees automatically have the skills to be effective work group members. The need for training in the specific electronic tools required for interaction in global virtual teams is obvious. However, training in interaction skills is also important when there are different opinions within the work group.

Self-management

The benefits of group work are related to the delegation of a substantial amount of authority to the work group or team. However, if too much authority is delegated, work groups can charge of in inappropriate directions. Research found that it is the extent to which work group members feel empowered rather than the degree of self-management that might be most important to group effectiveness and the empowerment stems from more than just the degree of self-management. Also feedback can have a substantial influence in the success of work groups.

8.7 ‘Multicultural work groups- challenges of management’

Even if it were possible to determine the optimal cultural mix in a particular work group situation, it is unrealistic for managers to control the cultural composition of work groups. Therefore, they must try to maximize the positive consequences of both homogeneity and diversity. Several ideas came up to deal with this multicultural management challenge. .

Work group task and structure

Work groups with high degrees of interpersonal interaction will be more susceptible to both the process losses and process gains produced by cultural differences between group members. Moreover, less structured tasks are more open to the influence of cultural differences than are highly structured and regulated production tasks. Lastly, the task and work group structure must match with the other characteristics of the situation.

Broad evaluation criteria

Multicultural work groups should probably be evaluated in terms of group processes and individual outcomes as well as task accomplishment. Assessing how a work group is doing according to broader criteria than just accomplishment of the immediate task can give managers insight into the longer-term potential of the group. It also means encouraging exploration activities, which involve experimentation, innovation, and divergent thinking. It is the opposite of exploitation, which focuses on production, efficiency, and convergent thinking.

Composition and task requirements

The guiding principle for work group organization should be to ensure that the work group has the task-related knowledge, skills, and abilities required to complete the group tasks.

These task-related requirements can also include culture, in that characteristics of specific culturally based knowledge and skills might be appropriate to certain tasks.

Common purpose

Creating a shared sense of purpose among the work group members can be even more important in multicultural work groups. To achieve a common purpose, managers must understand the sensitivity of the values, attitudes, and beliefs of culturally different work group members. However, this can be a way to overcome the cultural differences when focusing on commonalities and creating a group identity.

Chapter 9: International Organization Challenges - Structure and Culture

Organizations are social systems intentionally structured to achieve goals. They are not independent of their surroundings but are open systems that continuously take inputs from the environment, transform them, and then return output to the environment in the form of products, services, or knowledge.

9.1 ‘Organizations’

Structure is the systems used to coordinate people through differentiation of roles and a hierarchy of authority in order to accomplish goals. The structure can be described in terms of its degree of complexity, formalization, and centralization.

1. The complexity of an organization is the extent to which it is differentiated along three dimensions.

   1. Horizontal differentiation = The number of different types of jobs that exist in an organization.

   2. Vertical differentiation = The number of levels in the hierarchy of the organization.

   3. Spatial differentiation = The extent to which the organization’s physical facilities and personnel are geographically dispersed.

2. Formalization is the extent to which rules and procedures determine the activities of organization members. Highly formal organizations make a lot of use of rules and procedures.

3. Centralization is the extent to which decision making is concentrated at a single point.

These three elements of organization structure can be combined in various ways. However, every organization’s structure is characteristic of one of two fundamental types, figure 9.1:

• Mechanistic organizations: centralized decision authority, high formality, and high complexity.

• Organic organizations: decentralized decision authority, low formalization, and low complexity.

9.2 ‘Organizational designs’

Mintzberg proposed that all organizations are composed of five essential parts:

• The operating core; Employees who perform the basic tasks.

• The middle line; Managers who connect the operating core tot the strategic apex.

• The support staff; Provide indirect support services to the rest of the organization.

• The technostructure; Technical analysts who have responsibility for various forms of standardization in the organization.

• The strategic apex; Composed of top-level managers who have overall responsibility of the organization.

According to Mintzberg, each of these parts is dominant in one of the five basic types of organizational design, See Table 9.1 on page 185 for characteristics and examples:

• Simple = The strategic apex is dominant.

• Machine bureaucracy = Technostructure is dominant.

• Professional bureaucracy = Operating core is dominant.

• Divisional = Middle-line is dominant. Groups of semi-autonomous units coordinated by a central headquarters.

• Adhocracy = Support staff is dominant.

9.3 ‘Explanations for organizational structures’

Explanations that have evolved for the existence of different organizational structures can be classified into four groups. In the order of their development:

1. Deterministic theories

2. Contingency theories

3. Ecological theories

4. Institutional theories

The first two deal with individual organizations, whereas the last two deal with populations of organizations.

Deterministic theory

This study mainly focused on the one best way to organize. The origin of the strategy-structure relationship came from Chandler. The argument is that as the strategy of the firm moves from a single product through vertical integration to product diversification, the firm must develop more complex and formal structures to coordinate activities.

This view suggests that some optimal structure exists that reflects a particular strategy. The argument for organization size as a determinant of organization structure is not without its critics. However, size seems to be strongly related to at least some elements of structure. The greatest effect of size is on vertical differentiation. As organizations increase the number of employees, the organizations add more levels. In addition, increases in organizational size are related to increases in formalization but to decreases in centralization.

Contingency theory

Deterministic theories are concerned only with internal factors to the organization. Contingency theories developed because of the recognition that organizations interact with their environment. Organizational environments are described in a various ways. However, perhaps the most useful categorization is in terms of environmental uncertainty because managers will try to reduce uncertainty in order to improve effectiveness. Simple static environments create less uncertainty for managers than do complex dynamic environments. The idea existed that managers adjust the organization structure to reduce environmental uncertainty. However, there exists doubt whether or not this approach reflects reality.

Ecological theory

Ecological theories focus on the structures of whole populations of organizations. In this view, the environment determines organizational structure not through choices of managers but by selecting out the organizations that do not fit. Thus, whole populations of organizations survive or fail, with little regard for the actions taken by individual firms. This natural selection view of organizations suggests that environmental forces drive the evolution of corporate structures and that actions by managers have little effect.

Institutional theory

Institutional theory focuses on the ways that organizations in shared environments come to adopt structures that are viewed as appropriate and that are reinforced in interactions with other organizations. That is, it explains the structural similarity (isomorphism) that exists across organizations. Institutional theory suggests that two factors influence organization structure. First, the effect of the environmental agents in shaping the organization. Second, the processes internal to the firm that interpret certain externally validated structures as appropriate. Three categories of environmental pressures toward institutional isomorphism are defined: (see next page)

• Coercive isomorphism = Patterns of organization are imposed on the firm by an outside authority.

• Normative isomorphism = Professional bodies promote ‘proper’ organizational structure.

• Mimetic isomorphism = Organizations copy the structure of firms that have been successful in dealing with a particular environment.

Large multinational organizations can be subjected to competing isomorphic pressures in the different environments in which they operate.

9.4 ‘Cultural influences on organizational structure’

Why are international organizational designs in different societies alike in some respects and different in others? The culture-free approach tries to answer this question while considering culture irrelevant. For organizations to be effective, the design of the organization must fit with their size, technology, and strategy. Moreover, it is found that firms respond similarly to contingency variables, the means by which they do so has been found to be different and consistent with the cultural characteristics of the countries studied.

Alternatives to the culture-free perspective often rely on the effect of societal institutions as a basis for understanding national differences in organizational structures. However, empirical evidence supports a relationship between culture and organizational structure. Two mechanisms by which national culture influences organizational structure emerge.

• Organizational structure is seen as a manifestation or symptom of the manager’s cultural values.

• National culture influences the extent to which different ways of organizing are accepted by the members of a society. Thus, pressures from the organizational environment, including culture, dictate the type of structure seen as correct or legitimate.

As shown in Figure 9.1 on page 192, the contextual variables central to contingency approaches can account for the similarity in organizational structures found around the world. Through one path, differences in the organizational choices that mangers make are guided by their culturally based value orientations. Managers are not necessarily aware of these subconscious influences and simply make choices about structures that feel correct. The other path for cultural influence relies on environmental pressure to shape organizational structure. That is, organizational structure is less the product of conscious design than it is a reflection of the structures that society will accept as legitimate. The societal characteristics of mutual obligation, familialism, and personal connections support the effectiveness of this organizational form.

Two organizational forms that have similar orientations to the family business but reflect different societal pressures are the keiretsu in Japan and the chaebol in Korea. The modern keiretsu, although no longer family owned, is a complex network of inter-firm networks consisting of a large number of industries and is usually anchored by a bank. It functions with coordination and control facilitated by reciprocal ownership and with a focus on long-term gains. This organizational form is a unique product of its national environment. The chaebol are family dominated, multi-industry conglomerates. They differ from zaibatsu in that they are heavily populated with family members and are financed by the government.

9.5 ‘The informal organization’

Informal organization refers to the elements of an organization that help to reduce individual variability in the behavior of organization members but is not reflected in a formal organization chart. Organizational culture produces both functional behaviors that contribute to the goals of the organization and dysfunctional behaviors that have negative effects. The main positive effects are provide 1) a sense of identity for the organization, while differentiate from other organizations, 2) a mechanism of socializing organization members into a way of doing things that is consistent with the goals of the organization. The negative effects are 1) the barrier to change that is created, 2) the conflict that can be created between organizational subcultures or between merged firms with different cultures.

Van den Berg and Wilderom suggest that organizational culture can be defined along five dimensions:

• Autonomy

• External orientation

• Interdepartmental coordination

• Human resource orientation

• Improvement orientation

Erez provides another view with regard to organizations that operate beyond their national cultures. She suggests that to some extent the forces of globalization are shaping the cultures of global organizations to be similar, at least on certain dimensions.

9.6 ‘The organization of multinational organizations’

The need for multinational organizations (MNOs) to coordinate and control operations across multiple environments led to several approaches to placing foreign activity within the broader organizational structure. The approach taken can depend on the location and type of foreign subsidiaries, the impact of international operations on corporate performance, and the path through which the firm’s international operations have developed over time. Five ways of integrating international activity are common:

• International division = Groups all international activities together in a single organizational unit.

• Product division = Groups all units involved with like products together around the world. In this case, it is possible for foreign subsidiaries in the same country to have a different relationship to the firm depending on the product line.

• Functional division = Expands its domestic functional units into its foreign counterparts based on geography.

• Geographic division = Groups all functional areas into geographic units.

• Matrix structure = Each subsidiary reports to more than one group for the purpose of integrating international operations with functional areas, product areas, or both.

Another popular and influential categorization is provided by Barlett and Ghoshal, in which they consider the 1) configuration of the organization’s capabilities, 2) the role of overseas operations, and 3) the development and dissemination of knowledge, See table 9.2 on page 196.

International collaborative alliances

A recently emerged international organizational form is that of collaborative alliances with foreign firms. These alliances typically take one of three forms:

• Informal cooperative alliances: often limited in scope and has no contractual requirement.

• Formal cooperative alliances: require a contractual agreement and are often indicated by broader involvement.

• International joint ventures: separate legal entities with joint ownership.

Despite the trend toward this organizational form, most international alliances have a short duration, with many alliances failing to meet performance expectations. The most often reason for failure is incompatibility of the partners. However, when selecting a potential partner, firms typically search for partners with capabilities that it lacks itself. Research found that such compatibility factors as national culture of the partner, its organizational structure and culture, and past experience are as important to success as task-related criteria. Moreover, it is suggested that the selection of partners and the formation of structure in the alliance is facilitated by an understanding of the culturally based assumptions and preferences of potential partners with regard to both the formal and informal organization.

International mergers and acquisitions

Another way in which new organizational forms are created is through the merger of firms or the acquisition of one firm by another. Increasingly, mergers and acquisitions occur across national and cultural boundaries; therefore, the effect of cultural differences must be taken into account. Cross-cultural comparisons of mergers and acquisitions have found cultural differences in preferences for types of integration processes, control systems, and management practices by acquiring firms. Besides that, there exists evidence that integration approaches and practices need to be aligned with the cultural and institutional context in which the merger partner operates. Stahl suggests that culture affects the outcomes of mergers and acquisitions in two distinct ways. First, cultural differences can have an adverse effect on integration outcomes, such as the creation of positive attitudes toward the new organization. Second, the cultural differences can also be a source of value creation by providing new and unique capabilities, resources, and learning opportunities. The influence of cultural differences seems to depend on the integration design chosen and on the use of social integration mechanisms.

The structure of MNO subsidiaries

Regardless of the overall organizational form, the subunits of the MNO operate in distinct local environments, creating additional complexity. An idea helpful in understanding the difficulty that the MNO is facing is that the organizational structure and management practices of subsidiaries of the MNO are influenced by the opposing forces toward adaptation to the local environment and consistency within the organization. Research suggests that pressures for consistency among subsidiaries in the international firm stem from two factors: (see next page)

• Organizational replication = The tendency of the firm to duplicate, in new environments, existing structures and procedures that are effective.

• Imperative for control = Suggests that standardization of policies is used to reduce the complexity and uncertainty inherent in the control of international operations.

MNOs are confronted with additional complexity because of geographic and cultural differences between subsidiaries and between the subsidiary and headquarters. In new environments the pressures for local adaptation derive from the social nature of organizations, hence their tendency to reflect the values, norms, and accepted practices of the societies in which they operate. The elements of organizational structure in the foreign subsidiaries of MNOs can be represented in terms of these dual pressures, see Figure 9.2 on page 200. As shown in the figure, the pressures for conformity to local norms and for internal consistency with the rest of the organization can vary from subsidiary to subsidiary.

9.7 ‘The relationship between the MNO and its members’

Two views have been used to examine the relationship of individuals to MNOs: the roles of managers and the psychological contract.

The roles of managers

The complexity of the global environment of MNOs emphasizes the key managerial roles of information exchange, coordination, information scanning, and control. The managers of subsidiaries in MNOs, because they function across internal and external organizational boundaries, perform this linking function and occupy these unique boundary-spanning roles. The subsidiary manager, because of membership in the two separate but related entities, is the recipient of role expectations from both. To the extent that role pressures of the senders differ, are contradictory, or are mutually exclusive, the manager will experience conflict about the appropriate role. To the extent that these role pressures are incomplete, the manager will experience role ambiguity. When managers go native, they fail to consider the parent company’s perspective in the performance of their duties, or fail to consider local interests.

Research found that managers might rely on culturally based scripts to carry out their jobs when the organizational environment does not clearly indicate appropriate behavior.

In addition, in cases in which role expectations are conflicting or ambiguous, the national culture of the manager can be influential in how the role is perceived and how the manager responds. Thus, culture should exert an even more pronounced influence under these conditions.

Psychological contract and cultural differences

The unique characteristics of MNOs serve as one indicator of what is expected of organization members and what they can expect in return. The psychological contract consists of individual beliefs or perceptions concerning the terms of the exchange relationship between the individual and the organization. Organizations signal their commitments and obligations to the employee through things as overt statements. In addition, the social context in which these messages are conveyed influences how they are perceived and recorded in memory.

Psychological contracts involving the employment relationship have both transactional and relational elements, but they can differ in the extent to which they are transactional or relational. Transactional aspects of contracts emphasize specific, short-term, monetary obligations. Relational contracts emphasize broad, long-term, socio-emotional obligations. We can predict that cultural differences will exist in terms of 1) the extent to which social cues are important in defining the psychological contract, 2) the extent to which characteristics of the contract are shared among organization members, and 3) the extent to which the contract with the employer is perceived as transactional or relational.

In addition to influencing contract formation, cultural variability can influence what is perceived as a violation of the contract and how such violation develops. A more indirect means of cultural influence might also exist in the way that individuals evaluate the nature of their relationship with their organization.

Chapter 10: International Assignments Challenges

10.1 ‘Expatriates’ role’

The role that expatriates must take on is affected by the staffing strategy that the MNO has for its foreign operations. The fundamental preferences of MNOs for a particular staffing strategy have been:

• Polycentric = Local foreign managers only.

• Ethnocentric = Home country managers predominate.

• Geocentric = A mix of nationalities at home and abroad.

The staffing strategy of an MNO is affected by its stage of internationalization, its country of origin, the size and the task complexity of its foreign affiliates, and the cultural distance of the affiliate form headquarters.

10.2 ‘Individual staffing decisions’

Individual staffing decisions reflect the overall firm-level staffing strategy mentioned previously, whether or not this strategy is made explicit. However, some consistency across firms exists. Research found that firms transferred personnel internationally for one of three reasons: 1) to fill a technical requirement, 2) to develop the manager, or 3) to develop the organization. However, there might exist variation between cultures in which of the three reasons is most influential for them to make use of an expatriate.

Recent research indicates that little has changed in expatriate selection in recent years, with managerial performance in the domestic setting and technical competences continuing to lead the list of selection criteria. His overemphasis on technical competence as a selection criterion may result because high technical qualifications present a lower perceived risk of adverse consequences to the selecting manager. Furthermore, firms may place the most emphasis on selection criteria that are most easily measured.

Making a staffing decision is limited by a number of factors, including restrictions imposed by other organizational requirements and those imposed by the individuals themselves. Reasons for accepting an assignment (US people): (see next page)

• A sense of vocation.

• Financial rewards.

• The desire to escape undesirable circumstances at home.

• Enhancing an international career.

Furthermore, more than for other types of assignments, the willingness to undertake an overseas posting is influenced by the willingness of the partner to relocate.

10.3 ‘How to define success’

Firms and expatriate employees are concerned with the success of an overseas assignment. However, the definitions of success vary widely. In this chapter uses three definitions of success:

• Turnover = The return of expatriates to their home country. It is often measured with the assumption that the expatriate will remain on assignment for the time originally agreed upon.

• Adjustment = The ability of the expatriate to overcome culture shock and adjust to the new environment. The overall adjustment was refined in later research to include three dimensions of adjustment, namely 1) general living adjustment, 2) work adjustment, and 3) interaction adjustment. Figure 10.1 on page 210 shows the relationships between these types of adjustment and their individual, job, cultural, and non-work antecedents. Note: job characteristics are related primarily to work adjustment and individual characteristics are related to all types of adjustment. The cycle of adjustment, a U-shaped pattern, is shown in Figure 10.2 on page 211. The cycle shows four stages:

  1. Honeymoon stage = Everything is new, exciting, and interesting. The new environment intrigues the expatriate in the same way as if the expatriate were a tourist.

  2. Culture shock stage = The expatriate becomes frustrated and confused because the environment is not providing familiar cues.

  3. Adjustment stage = The expatriate begins to understand cultural differences, learns the ways to get things done, and begins to settle into the rhythm of daily living in the foreign country.

  4. Mastery stage = The expatriate becomes able to function in the new culture almost as well as at home.

Not all expatriates achieve mastery in their new environment.

• Task performance = The requirement that expatriates meet the often conflicting performance expectations of home office superiors and host nationals.

10.4 ‘The adjustment-performance relationship’

The adjustment-performance relationship might be more complicated than has often been assumed. Research support for a positive relationship between adjustment and performance is somewhat equivocal. Some studies have found performance negatively related to expatriates’ perceptions of the intensity of their adjustment to the new culture. Several different effects of this relationship have been found, depending on the facet of adjustment and the measure of performance used, page 224.

Multidimensional definition of success in an expatriate assignment includes:

• The individual meets the performance expectations of quality and quantity of both home country and host country superiors.

• The individual develops and maintains satisfactory relationships with local nationals.

• The individual acquires skills related to managing people of different cultures.

• The individual remains on assignment the agreed-upon length of time.

10.5 ‘Factors that affect the success of expatriates’

Individual factors

Much of the early research on individual differences focused on the personality characteristics of people who were effective in overseas assignments. However, personality characteristics is not the only determiner of expatriate outcomes. Therefore, the emphasis shifted to the behavior of successful individuals or their social skills. The behaviors or personal abilities that are considered important for success are:

• The ability to manage psychological stress.

• The ability to communicate effectively.

• The ability to establish interpersonal relationships.

Besides that, five characteristics of individuals related to success are identified (in order of importance):

1. Family situation

2. Adaptability

3. Job knowledge

4. Relational ability

5. Openness to other cultures

Some evidence suggests that the importance of these factors might be cross-culturally consistent. Because of the difficulty involved in defining the prototypical expatriate, the classification of these individual differences into broad skill or behavior dimensions may be a more useful way to include individual characteristics in the evaluation of antecedents to success in an overseas assignment.

Demographics

Research findings concerning this subject are:

• The age of the expatriate has been found to be positively related to organizational commitment, work adjustment, and job satisfaction but negatively correlated with willingness to relocate, intent to leave, and general satisfaction.

• Tenure of expatriates has been found to be positively related to job satisfaction and negatively related to intent to leave.

• The education level of expatriates has been found to be negatively related to job satisfaction and commitment to the organization and positively related to general adjustment and interaction adjustment but not work adjustment.

• Married expatriates have been found to be more job satisfied and higher performers.

• The adjustment of the partner or family is positively related to expatriate adjustment and negatively related to intent to leave.

Note: it is assumed that demographic characteristics indicate underlying values, attitudes, and beliefs, which in turn relate to outcomes.

Foreign language ability and previous international experience

The particular elements of success to which these factors apply and the mechanisms through which they operate have not been clearly defined. The ability to speak the foreign language is positively related to the expatriate’s performance. However, this might not be due to the language skills, but due to the willingness to communicate. It might be that the quality of international experience is as important as the amount in facilitating adjustment to another culture. Research suggests that the amount of prior overseas experience was positively related to adjustment and to job satisfaction.

The effects of these two factors are likely to be influenced by the amount of intercultural interaction required by the assignment, the degree of cultural novelty in the situation, or the level of the expatriate in the organization.

Nationality of expatriates

The cultural background of the expatriates themselves, as well as the characteristics of the foreign culture, can influence some aspects of their overseas experience. Differences have been found in the cultural skill and knowledge and in job satisfaction reported by U.S. and German expatriates living in Japan. Expatriates form different countries establish different kinds of social networks, which in turn influence their adjustment.

Gender of expatriates

In the past, it was very uncommon to be a women in international management. Nowadays, about 14% of the expatriates were female. The shortage of qualified men, legal and social pressure for equal opportunity, the increasing familiarity with women in management positions, and the increasing ability of women to self-select for an overseas assignment because of changing company attitudes have resulted in a greater presence of women in the expatriate community. A persistent barrier for women has been the reluctance of companies to send them overseas. Personnel managers listed the following reasons why not to hire women: foreigners’ prejudice against women, dual careers, selection bias, women not interested, women unqualified, and women not effective.

Compared to men, women are exposed to additional work and non-work challenges, including the attitudes of local nationals toward working women, but also family issues such as child care and dual career conflicts. However, it might also be an advantage. Because of their small number, their visibility increases. In addition, they are afforded higher status because of their uniqueness, or they have better interpersonal skills than men.

Job and organizational factors

Expatriate job characteristics

Work role characteristics have an influence on the work adjustment of expatriates. The amounts of ambiguity, novelty, and conflict in the expatriate’s role all have a negative effect on adjustment to a new work role and on job satisfaction. Work adjustment is positively related to the intent to remain on assignment.

Job level

The organizational level of job changers influence the types of strategies available to them to deal with the effects of moving to a new role and hence probability of favorable outcomes. Additionally, the organizational level of expatriates might also carry with it other factors, such as more challenging assignments, which may need to be considered in predicting the effect of organizational level on the expatriate experience. Key organizational factors that influence success include the amount of organizational support provided expatriates and their families, the extent to which the expatriate was provided with realistic information about the country and the assignment, and the amount of cross-cultural training provided.

Expatriate training

The conventional wisdom regarding cross-cultural training of expatriates is that although the positive effect of training is well documented, firms often fail to provide training because they believe it is not effective or that there is insufficient time before departure. Research found that cross-cultural training is positively related to self-development, adjustment, relationships with host nationals, and performance. However, there are doubts about what type of training is most effective and when to start with the training. Figure 10.3 on page 220 shows the framework for selecting cross-cultural training. It suggest that the selection of training methods for a particular situation can be determined by referring to the degree of cultural novelty in the situation, the requirements for intercultural interaction with host nationals, and the degree of novelty in the job. The model shows that if the requirements of the situation become more demanding, the cross-cultural training required should move from more passive to more participative modes. The idea that expatriate training might be delivered more effectively after the expatriates arrive in country is based on the notion that for training to be effective, it should be delivered when trainees are most motivated to learn.

Related to the issue of cross-cultural training is the expatriate’s accurate or realistic conception of the situation to which the expatriate is moving. Research found that realistic expectations of new jobs would be related to positive outcomes. It provides the opportunity for expatriates to make adjustments in anticipation of environmental differences.

Another organizational factor, which is related to elements of expatriate success, is the extent of organizational support received by expatriates. However, the effect of the level and nature of organizational support is complicated. Furthermore, the level of the expatriate’s commitment to the organization determines the effectiveness of support programs.

In addition to job and organizational factors, other factors external to the expatriate and over which the expatriate has little control can influence the expatriate’s success. The two most important environmental factors are cultural novelty and social support.

Environmental factors

Cultural novelty

The extent to which the host country culture is different from the expatriate’s home culture is typically theorized to make the adjustment process more difficult. Research found that cultural novelty is negatively related to interaction adjustment, general adjustment, and willingness to accept an assignment and positively related to social difficulty. However, the research support for these negative effects of cultural novelty on outcomes is not universal. This suggest the possibility that cultural novelty can exert its influence differently depending on the characteristics of the individual and the situation.

Social support

Being able to draw on social relationships provides a mechanism for dealing with the stress associated with an overseas assignment. Research supports the direct positive effect of social support from both host and home country nationals on the adjustment of expatriates.

Another issue regarding repatriation is that reentry to one’s home country after a long stay requires a process of adjustment similar to that of the initial transfer overseas. Repatriation is distinct, in both degree and kind, from other types of job-related geographic transfers, because:

• The degree of novelty is higher for a transfer between countries as compared to within a country.

• In the repatriation situation, the individual is returning to his or her home country after a period of absence of typically 2 to 5 years or even more. Thus, during that time the individual and home country have undergone changes independent from each other.

• For most expatriates the repatriate experience is qualitatively different from the expatriate experience, since most repatriates are returning home from an assignment in a country of which they had little or no prior experience.

10.6 ‘The process of repatriation’

Research found that repatriation adjustment was facilitated by such factors as the amount of clarity and discretion the expatriate had in the new role but negatively affected by the time spent overseas, social status, and housing conditions. Table 10.1 shows the percentage of repatriates reporting the availability of each practice. It seems fairly clear that an integrated set of practices was required for successful repatriation.

10.7 ‘Overseas assignments and global careers’

The effect of an overseas assignment on the longer-term career of managers depends in part on how a person views his or her career. Although an international assignment might facilitate an individual’s movement to a higher career stage, in general expatriates have reported that their overseas assignment did not have a positive long-term effect on their career, that their firms do not take advantage of the skills they learned overseas, and that their assignments were better for their personal development than for their professional careers. Until recently the study of global careers focused on the assignment of expatriates by multinational organizations. However, the nature of how people view their careers has been changing from an upward progression of job experiences to a more subjective sense of where one is going in one’s work life. This change in careers’ perception is called boundaryless careers.

Chapter 11: Future Challenges for Cross-Cultural Management

11.1 ‘The changing environment of business’

Globalization is characterized by growing worldwide connections between organizations and their various constituencies, by rapid and discontinuous change, by growing numbers and diversity of actors involved in global activities, and by greater managerial complexity.

The book concentrates on four trends that set the stage for cross-cultural management in the future:

1. The uneven development in the world

2. The increased influence of economies in transition

3. The continued influence of information and communication technology

4. The growing pressure on the natural environment

Uneven development issues

The uneven economic development around the globe has numerous implications for policy makers. These involve the stimulation of economic growth in various regions, the ethnic tensions that parallel economic capitalism and culture, and the extreme responses y terrorists. Perhaps the most significant effect of the differences in development form a cross-cultural management perspective has to do with the impact on the labor pool. Economic development within nations affects the availability of wage-earning jobs. In developing countries, working hours are longer, part-time employment is high, and many people work several part-time jobs.

Besides that, uneven economic development is the second (after political issues) biggest influence on worldwide migration, with economic migrants crossing boundaries between developing and developed countries. These immigrants increase the diversity of the workforce and the so-called brain drain effect (migration of skilled workers from less developed to developed countries) can occur. Furthermore, differences in the cost of labor between the developed and developing world are a major factor influencing the migration of jobs to countries where labor is cheap abundant. In addition, this outsourcing of jobs can provide access to skills not available in the local labor pool. The final stage of job migration occurs when highly skilled professional and knowledge jobs are outsourced.

Lastly, job migration in concert with the growing need for knowledge workers will (1) increase the number of women in the workforce, 2() increase the average age of workers, and (3) increase the demand for people with higher levels of education worldwide.

Influence of transition economies

Fundamental to economic transition in the replacement of one set of institutions that govern economic activity by another. As these transition economies grow in importance on the global stage, MNOs and their managers will be confronted with the need to understand the legacy of state socialism that influences both organizations and managers. Under state socialism, plans were fulfilled in large part according to state priority, and many countries rapidly industrialized. Many controls were used to achieve the central planning goals of avoiding overproduction, massive unemployment, and economic depression. Several controls are listed on page 243, and compared to market practices.

A central belief of the socialist system was that a worker had a right to a job and its associated benefits. These characteristics of socialist organizations created a psychological contract that led to employees under state socialism were encouraged to perceive their relationship with the organization in long-term socio-emotional terms.

In addition to the institutional and organizational context of transition economies, two individual-level issues with regard to managers in these countries should be noted. First, managerial behavior is influenced by the extent to which managers have been exposed to formal management training. Second, the cultural profile of managers in these economies is likely to reflect hierarchical and collectivist value orientations that have been reinforced by the socialist system. Additional cultural effects that are an outcome of this juxtaposition of cultural values and institutional influences include learned helplessness in the control over rewards and punishments and a reluctance to take risks or stand out from the crowd.

At the same time, managers in transition economies are often sensitive to being treated as inferior by foreigners. Against the influence of globalization, managers in transition economies still exist in an environment that contains the vestiges of state socialism. The mark left by socialism includes:

• Centralization and bureaucratic organization of power

• A drive for production quantity over quality

• Paternalistic behavior of superiors

• Soft budget constraints

• Weak responses to prices

• Mechanisms to compensate for chronic shortages

• A disregard for the external environment

Managers in transition economies are likely to be highly educated, to have a cultural profile, and to have to come to management from a wide range of backgrounds.

Information and communication technology

Information and communication technology involve two main activities: (1) processing information, and (2) transmitting it from one location to another. The pool of scientific knowledge grows extensively. As the cost of technology decreases the developing world is making slow, but steady progress in coming online. Besides that, the world’s online population becomes more culturally diverse.

Increasingly, the work environment relies on knowledge. The ability to leverage the ever-expanding sea of knowledge on a global scale will be an important future management challenge. It can become an equalizer in terms of access to knowledge and may also have an effect on work opportunities. Finally, the advent of nearly universal language translation capability, which is already beginning to appear on the Internet, has the potential for an even greater exchange of ideas than exists today.

Pressure on the natural environment

Due to globalization, the activities in one part of the world affect organizations and individuals in other regions. Therefore, people become increasingly aware that the earth is a finite natural resource that must be shared by everyone. Finally, it is becoming clear that national governments are ill quipped to address global environmental issues alone. As a result, there will be increasing pressure on the international manager of the future to be environmentally responsible.

The developing and developed worlds face different population challenges. In most industrialized countries, population growth began to approach zero in the 1960. Population decline means a reduction in the indigenous labor supply and an aging workforce.

Until recently the low birthrates in the developed world were more than offset by high rates in developing countries. The world’s population growth combined with global economic development is placing increasing demands on the resources we all share. Because national interests sometimes conflict with global water use standards, global organizations are becoming water system builders. The self-interest of nations and individuals also affect the land on which the world’s food is grown.

The approaches to dealing with the stress being placed on the natural environment by development are tremendously variable across countries and are potentially a result of the influence of national culture. Although it is rarely studied, some evidence suggests that culture is an important influence on a nation’s performance regarding environmental sustainability. The industrialization that accompanies economic development increases the world’s prosperity but also increases the potential for ecological disruption. Four trends toward more sustainable development are apparent:

• Tensions between economic growth and environmental protection will continue to rise.

• Developing nations will not be able to imitate the consumption patterns of the developed world.

• Lifestyles in the rich nations of the world will need to change.

• Maximization of profits will end to be replaced by the expansion of opportunities.

For international managers, this means that organizations involved in global business will be expected to explicitly consider their role in preserving the natural environment. Bird and Smucker suggested three principles concerning this issue:

• An awareness of the cultural, historical, and institutional dynamics of the local community, which reflect the type of responsibilities expected of the organization and the limitations of any universal codes of conduct.

• The necessity of non-intimidating communication with local stakeholders that allows the organization to recognize and respond to local concerns in pursuit of its own objectives.

• The need for the firm’s operations to safeguard and improve the social and economic assets of the local communities with regard to the inevitable disruptions that international business brings.

11.2 ‘The adaptation of organizations and people towards previous discussed trends’

Another perspective of this chapter is the adaptations of organizations and people with regard to the four trends just discussed. The tree categories of adjustment to our thinking about cross-cultural management are:

1. Understanding the context of management in MNOs

2. The future of the organization of work

3. The development of global managers

The MNO context

Cross-cultural management involves the interaction of culturally different people in the context of organizations. The defining quality of MNOs as a context for management is that they actively manage assets in several nations rather than only engaging in market transactions across national boundaries. MNOs include both business and nongovernment organizations. MNOs have several distinctive characteristics, including high levels of organizational complexity and the need to transfer complex knowledge over distance. According to Peterson and Thomas, the MNO provides context that can have a unique effect in any of three ways:

• Frequency of occurrence = Extremes occur in a management factor, which makes its relationship with other factors more obvious in the MNO than in purely domestic organizations.

• Functional relationships = An extreme or set of extremes produces a moderator effect in the relationships between management activities.

• Unique constructs = Something unusual or unique about the MNO context produces differences in a known management issue.

One way in which organizations are adapting the emerging environment of business is by adapting their organization structure. On the one hand, as information technology becomes even more sophisticated and inexpensive, it is more convenient to delegate decision making at all organizational levels, resulting in flatter organizations. On the other hand, hierarchical organizations may continue to persist because they provide individuals with a sense of identity, status, and belonging and can be efficient in managing complex tasks. In recent years, the development and dissemination of knowledge have taken center stage as a consideration in the global competitiveness in MNOs. It has been proposed that the effectiveness of cross-border knowledge transfer is related not only to the type of knowledge being transferred, but also to culturally based transaction patterns and the cognitive styles of individuals involved.

A third management issue involving the MNO context is that new types of organizations are beginning to consider their multinational-ness. MNOs are starting to address the cultural diversity that exists both in the organization and in the populations. A final contextual issue facing cross-cultural management in the future in the relationship between individuals and organizations across cultures. The issues associated with the preferences individuals have for associating with organizations that have certain characteristics may take on even greater importance in the future. However, other research suggests that person-organization fit may not be as important in developing countries.

The future organization of work

Based on current trends, it is possible to identify several areas in which organizations are likely to need to adapt work practices. These involve the increased reliance on global virtual teams, the changing nature of overseas assignments, and work-family reconciliation issues. Teams that do not at some time interact through electronic media may largely cease to exist. Questions can be asked about the quality and of the work as technology comes closer and closer to replicating face-to-face interactions. Another issue is the extent to which team members identify with the team.

A second issue is the extent to which cultural differences influence individuals’ perceived status within a work group or team and the status of the team in the organization. Cultural differences in perceived status lead to differences in beliefs about the legitimacy of group participation and the nature of the status hierarchy of the group, which in turn affect the amount of conflict in the group. A third issue is the changing nature of overseas assignments. Overseas assignments lead to new knowledge gained from overseas experience. Furthermore, a growing trend in nonstandard overseas assignments is emerging. Nonstandard assignments include commuting overseas, rotational assignments, and contractual postings. The main reasons for this trend is cost reduction and employee immobility. An additional trend concerns the recognition that knowledge gained by expatriates overseas can be integrated into more effective business practice. There is need for this knowledge in order to gain competitive advantage.

A final consideration has to do with the widespread difficulties in reconciling work and family. Three areas of concern to international managers are apparent:

1) the work-family issues associated with overseas assignments, 2) the influence of different institutional arrangements around the world n reconciliation of work and family, and 3) the role of culture in balancing work and family. The most common institutional factors that affect work-family reconciliation, are government regulations and the presence of statutory family support arrangements.

The development of global managers

The future managers who will able to deal with the many additional layers of complexity that globalization brings to their jobs and who operate effectively within the complexity of the various trends in the cultures of the world will be different. There are three issues with regard to the development of global managers:

1. The changing nature of international management careers

2. The development of skills and abilities related to effective intercultural interactions

3. The role of bicultural individuals

International management careers

The idea of what constitutes a career has taken on new characteristics that broaden its applicability to global managers. The way in which managers view their careers has shifted from a progression up the career ladder to a more subjective sense of what one does during one’s working life. And the kinds of knowledge and competencies required of global managers can be developed by means other than company sponsored overseas assignments. Recently, the pool of candidates desiring a global career is changing, because 1) the number of women on overseas assignment has been steadily increasing, 2) the number of dual-career partnerships is increasing, and 3) international managers will increasingly include individuals form places other than the US and Western Europe. These differences will be important in terms of the effective cross-cultural interactions required.

Cross-cultural skills and abilities

Interacting effectively with people from other cultures and behaving appropriately in a culturally novel context are indications of the cross-cultural skills and abilities needed by global managers. The characteristics of effective intercultural interaction are:

• Good personal adjustment

• Good interpersonal relationships with culturally different others

• Completion of task-related goals

The search for a universal skill set that is important to cross-cultural interactions is leading to the development of new models that predict intercultural effectiveness. They contain both general and culture-specific elements, but as opposed to concentrating on constituent elements they focus on the ability to exhibit appropriate behavior. These models shift the focus from specific skills to a culture-general meta-skill. It is found that the unique ability to manage MNOs effectively is not tied to a specific culture.

Biculturals

Cross-cultural management research typically assumes that individuals have only one cultural profile. However, given the changing patterns in the world’s workforce, it is increasingly possible that more employees and managers will be bicultural. Biculturals have a dual pattern of identification with different cultures. That is, they have more cognitively complex cultural representations than do mono-culturals. It is increasingly clear that people can gain competence in more than one culture, without losing their old cultural identity of having to choose one culture over the other. The current state of knowledge about bicultural individuals provides more questions than answers for cross-cultural management.