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MGMT2102 – MANAGING ACROSS CULTURES – Semester 1 2018

MGMT2102 – MANAGING ACROSS CULTURES Lecture 1 : International business ?  

International business consists of all commercial transactions that take place between two or more countries (Daniel et al. 2009) International business refers to business activities that straddle two or more countries (Morrison 2006)

Globalisation  

Global competition is characterised by networks of international linkages that bind countries, institutions, and people in an interdependent global economy. (Viswanathan 20017) As the world is getting more and more connected, will human beings uni-cultural in the near future?

Global trends Understanding of key global trends:      

Political dynamics (blocs, networks and alliances) Economic trends Societal trends and movements across borders Cultural shifts Technology revolution Other?

PESTEL: Global environment analysis = Analysis of the global environment of a company in addition to other such analyses (ex: market analyses)       

Political Economic Socio-cultural Technological Ecological Legal + Ethical and Corporate Responsibility Environment (SDGs 2030)

The changing global landscape (Steers chap. 1) Characterised by:   

‘Contradictory and turbulent world, in which there are few certainties and change is constant…’ ‘Business cycles becoming more unpredictable… and companies, institutions, and employees come and go with increasing regularity…’ ‘Recent waves of technological change that resist pressure for stability or predictability…’ 1

MGMT2102 – MANAGING ACROSS CULTURES – Semester 1 2018 

Amount of knowledge and nature of the knowledge required in a rapidly changing global environment requires ongoing learning and understanding of not only the business perspectives, but the cultural/cross cultural and interpersonal perspectives as well!

The global manager’s role  

Mega environment: global competition, global trends and forces, MNC – host country interdependence Host-country environment: economic, political, technological, culture, subsidiary-host interdependence, local competition, culture

Effects of globalisation on corporations    

Global companies are becoming less tied to specific locations Companies that desire to remain competitive will have to develop a cadre of experienced international managers Small companies are also affected by globalisation and need to build capacity and human resources for managing impacts What are the implications for International Managers / International Resource Management?

Sustained competitive advantage       

Firm resources and sustained competitive advantage Firm’s human resources Valuable Rare Inimitable Not substitutable Investment in developing capabilities, including cross cultural competence

Regional trading blocs    

Much of today’s world trade takes place within these three regional free-trade blocs: Western Europe, Asia, and the Americas Impact an influences of trading blocs, European Union, ASEAN, NAFTA, etc The rise of Emerging Economics (BRIC, MINT) ‘Half of the global growth now comes from emerging markets’. (Robert Zoellick, President World Bank 2011)

International management 

The process of developing strategies, designing and operating systems, and working with people around the world to ensure sustained competitive advantage.

The role of the global manager Deresky (20017) considers the role of the Global Manager in the complex environment reflected in the ‘Open Systems Model’ as: Within the larger context, of global trends and competition, the rules for engagement for the global manager are set for each country… The astute manager will analyse the new environment, anticipate how it may affect the (performance and) future of the company, and then develop appropriate

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MGMT2102 – MANAGING ACROSS CULTURES – Semester 1 2018 strategies and operating styles. She or he will need to take into account the business practices and expectations of varying sets of (stakeholders) suppliers, partners, customers, and local managers…’

Approach by Steers et al (2017) Recognise global challenges

Develop global understanding

Understanding the challenges and responsibilities facing global managers reading

Understand the context in which global managers operate (cultural and organisational) research

Develop global management skills Develop specific global management knowledge and skills across a range of topics Engagement

Questions for consideration 1. With globalisation, it is suggested that the world is not getting smaller; it is getting faster. Do you agree or disagree? What does it mean for global managers or global employees? 2. Over 50% of international joint ventures fail within the first five years of operation. What, if anything, can future managers do to reduce this failure rate? 3. What are major challenges when managers shift from a bicultural business environment to a more multicultural environment?

Reading 1 Cross-cultural interaction: What we know and what we need to know (Nancy J. Adler and Zeynep Aycan (2018)     

Emerging global community Interconnected vs divisiveness Globalisation of inequality and lack of transparency Current state of research focusing on how to manage cross-cultural interaction within the contexts of expatriation, negotiation, and multicultural teams (MCTs) The importance of cross cultural management training and scholarship in preparing global managers

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MGMT2102 – MANAGING ACROSS CULTURES – Semester 1 2018

Lecture 2: The role of culture in global management 1. Stages in developing multicultural competence (Steers 2017)

2. Developing multicultural competence Becoming a global manager is the result of a process, a career path streaming through different assignments and cultures. It is a journey, not an end state. What differentiates effective global managers is not so much their managerial skills – although this is obviously important – but the combination of these skills with additional multicultural competencies that allow people to apply their managerial skills across a diverse spectrum of people and environments. Sample authentic scenario: Glimpses of another world If you were the global manager, how would have responded?

3. Developing multicultural competence

4. Some thoughts (Steers, 2017) We do not see things as they are; we see things as we are.” Talmud, Babylonia “All people are basically the same; it is only their habits and environments that differ.” - Trimetric Classic, China “Ample evidence shows that the cultures of the world are getting more and more interconnected and that the business world is becoming increasingly global. As economic borders come down, cultural barriers will most likely go up and present new challenges and opportunities for business. When cultures come in contact, they may converge in some aspects, but their idiosyncrasies will likely amplify.” Robert House, Wharton 4

MGMT2102 – MANAGING ACROSS CULTURES – Semester 1 2018

5. Some thoughts (Deresky, 2017)  

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Cultural Intelligence (IQ, EQ, CQ) Cultural Intelligence: an outsider’s seemingly natural ability to interpret someone’s unfamiliar and ambiguous gestures (behaviours and communication) in just the way that person’s compatriots and colleagues would. Harvard Business Review Cultural sensitivity, or cultural empathy, is the awareness of and an honest caring about another individual’s culture. Such sensitivity requires the ability to understand the perspective of those living in other (and very different) societies and the willingness to put oneself in another’s shoes. Deresky, p. 108 Challenges in mergers when two cultures collide: DaimlerChrysler Alliance (p.110) German corporate culture: conservative, rigid company re: corporate bureaucracy, quality standards US corporate culture: informal, outward oriented, less rigid in operations, more risk taking.

6. What is culture? 

The collective programming of the mind that distinguishes the members of one human group from another (Hofstede).

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The collection of beliefs, values, behaviours, customs, and attitudes that distinguish the people of one society from another (Kluckholn).

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Shared motives, values, beliefs, identities, and interpretations or meanings of significant events that result from common experiences of members of collectives that are transmitted across generations (GLOBE).

7. Characteristics of culture 

Culture is shared by members of a group, and, indeed, sometimes defines the membership of the group itself.

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Culture is learned through membership in a group or community.

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Culture influences the attitudes and behaviours of group members.

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Culture can be adapted and adjusted and behaviours can be changed.

Visible cultural traits: customs, traditions, behaviour, symbols, artefacts Invisible cultural traits: RISKS: assumptions, beliefs, attitudes, values, worldviews, perceptions

8. Consider: understanding your own culture Culture is both simple and difficult to understand, simple because definitions abound that are easily understood, but difficult because of its subtleties and complexities. Lao Tzu observed that “water is the last thing a fish notices,” using water as a metaphor for culture. That is, most people are so strongly immersed in their own culture that they often fail to see how it affects their patterns of thinking or their behaviour. It is only when we are ‘out of the water’ that we become aware of our own cultural biases and assumptions.

9. Consider: the power of perceptions A woman in a village in Brazil became seriously ill. She was convinced that she would die if she did not get proper treatment. So she took three actions: she went to the local medical clinic; she lit a

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MGMT2102 – MANAGING ACROSS CULTURES – Semester 1 2018 candle in the local church; and she sacrificed a chicken following the local cultural custom. She soon made a full recovery. (Steers 2017) 1. Which of these actions caused her recovery? 2. While we may disagree with how others see things, it is their perceptions, not ours, that help determine behaviour. 3. What are the implications of this for managers working across cultures?

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Four descriptive models of culture

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Cultural value dimensions

Values determine how individuals probably will act in given circumstances. Contingency management requires managers to adapt to the local environment and people and to adjust their management styles accordingly.

12.

Hall dimensions (Steers 2017)

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MGMT2102 – MANAGING ACROSS CULTURES – Semester 1 2018   

Hall: Anthropologist …national Culture difference in communication (mainly in Germany, France, US and Jan. Mainly focused on how cultures vary in intercultural communication. Three cultural dimensions …CONTEXT, SPACE, TIME Cause of many aspects on miscommunication and misunderstanding

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Hofstede’s value dimensions

Hofstede’s research, which was conducted prior to the GLOBE project, is based on 116,000 people in 50 countries. Nonetheless, all of the research was conducted in a single firm—IBM. As such, the result should be interpreted with caution. Power distance is a society’s acceptance of unequal power distribution. In high power distance cultures, formal authority and hierarchy are very respected. Thus leadership tends to be autocratic and centralized. In low power distance cultures superiors and subordinates are more likely to view one another as equals, leading to more cooperation. Uncertainty avoidance is the extent to which people feel threatened by ambiguous situations. High uncertainty avoidance cultures are very uncomfortable with ambiguity and tend to have strict laws and closely followed procedures. In businesses, managers tend to make low-risk decisions, employees are not aggressive, and lifetime employment is common. Low uncertainty avoidance cultures are more comfortable with ambiguity. In these cultures, company activities are less formal and structured, managers take more risks, and employees have more job mobility. Individualism is the tendency for people to look after themselves and their immediate families only and to neglect the needs of society. Democracy, individual initiative, and achievement are valued. Collectivism entails tight social frameworks, emotional dependence on the organization, and strong belief in group decisions. Countries scoring higher on individualism tend to have higher GNPs and freer political systems. Social loafing is more common in individual than in collective cultures. Masculinity refers to the degree to which traditionally masculine values (e.g., assertiveness, materialism, and lack of concern for others) prevail. Femininity emphasizes the traditionally feminine values of concern for others, relationships, and quality of life. In more feminine cultures one tends to find less work-family conflict, less job stress, more women in high-level jobs, and a reduced need for assertiveness.

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MGMT2102 – MANAGING ACROSS CULTURES – Semester 1 2018

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Hofstede’s value dimensions

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The 6th dimension: indulgence vs restraint

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MGMT2102 – MANAGING ACROSS CULTURES – Semester 1 2018

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Profile for Australia and China

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Trompenaars

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Sherpa Tensing Nepali Sherpa mountaineer. He was one of the first two individuals known to reach the summit of Mount Everest, which he accomplished with Edmund Hillary on 29 May 1953. Great Feat to reach top … Son - Climbing Everest has become a "charade" in which the mountain is desecrated and Sherpas exploited, according to the son of Sherpa Tenzing Norgay.

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GLOBE Research Project Dimensions

GLOBE: Global Leadership and Organizational Behavior Effectiveness   

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Data gathered by 170 researchers over seven years Data were collected from 18,000 managers in sixty-two countries. Constructs: assertiveness, future orientation, performance orientation, humane orientation, gender differentiation, uncertainty avoidance, power distance, institutional collectivism vs. individualism, and in-group collectivism Five constructs overlap with Hofstede’s dimensions

The GLOBE (Global Leadership and Organizational Behavior Effectiveness) dimensions are based on data gathered by 170 researchers over seven years. The data were collected from 18,000 managers in sixty-two countries. There are nine dimensions that distinguish cultures from one another and have implications for managers: assertiveness, future orientation, performance orientation, humane orientation, gender differentiation, uncertainty avoidance, power distance, institutional collectivism

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MGMT2102 – MANAGING ACROSS CULTURES – Semester 1 2018 vs. individualism, and in-group collectivism. Only four are discussed in the text because the other five overlap with Hofstede’s dimensions. Assertiveness concerns how much people are expected to be tough, confrontational, and competitive versus modest and tender. Low assertiveness countries have sympathy for the weak and emphasize loyalty and solidarity. Performance orientation concerns the importance of performance improvement and excellence and refers to whether people are encouraged to strive for continued improvement. Low performance orientation countries place priority on things like tradition, loyalty, family, and background. They associate competition with defeat.

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GLOBE Research Project Dimensions

Assertiveness concerns how much people are expected to be tough, confrontational, and competitive versus modest and tender. Low assertiveness countries have sympathy for the weak and emphasize loyalty and solidarity. Performance orientation concerns the importance of performance improvement and excellence and refers to whether people are encouraged to strive for continued improvement. Low performance orientation countries place priority on things like tradition, loyalty, family, and background. They associate competition with defeat.

Future orientation: how societies look at planning and investing in the future High future = inclined to save for the future and have a longer time horizon Low future= plan more in shorter term and place more emphasis on instant gratification. Humane orientation: the extent to which a society encourages and rewards people for being fair, altruistic, generous, caring and kind. High humane: a focus on sympathy and support for the weak. People are usually friendly and tolerant and value harmony Low humane: give more importance to power and material possessions as well as selfenhancement. 10

MGMT2102 – MANAGING ACROSS CULTURES – Semester 1 2018

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Common themes across cultures

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Level of analysis

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Consider: Financial crisis and employee lay-offs

In difficult economic times, companies around the world face the same challenge: What to do with excess employees.  In much of North America, reduced demand for services often leads logically – and culturally consistently – to employee lay-offs.  In Germany and the Netherlands, companies will often seek other remedies, such as jobsharing.  In Japan, companies frequently decide to transfer redundant employees to other parts of the organisation or its subsidiaries, even if they too are overstaffed. Same problem, but very different responses, and it is all part of the institutional or societal environment facing managers. Example: ‘Manage of the Month’ (Individualistic) VS ‘Team of the Month’ (group)

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Cultural complexities and contradictions

 Individuals within the same society may use different strategies to deal with identical challenges. As a result, it is unwise to stereotype an entire culture.  Instead, we need to look for nuances and counter-trends, not just the principal trends themselves.  We also need to look for differences in context – the events and environments surrounding people as they form their attitudes and behavioural patterns.  Failure to recognise this often leads to failed personal and business opportunities.

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MGMT2102 – MANAGING ACROSS CULTURES – Semester 1 2018

24.

Culture and its effects on organisations

Organizational culture functions equivalently to societal culture, but varies a great deal from one organization to another—even within a single societal culture. Nonetheless, organizational culture is at least partially a function of and must respond to societal culture. Airline KLM responded to Dutch attitudes regarding families and norms regarding relationships by extending its travel benefits policy to any couple who formally registered as living together— regardless of whether the couple was heterosexual or homosexual, formally married or not. McDonald’s provides more extensive training to employees in Russia than to those in the US because Russians are less familiar with working within a capitalist system.

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Vignette: seat assignments to Tel Aviv

1) If you were the flight attendant or captain, and realising that you must take concrete action, what ex...