Slide 5.

Chapter 5

International culture

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.2

International culture
Objectives Introduction Elements of culture The importance of culture in different business contexts National stereotypes and key dimensions of culture Cross-cultural management Culture embodied in national institutions.

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.3

Objectives
Define culture and explain the factors that underlie cultural differences. Show where and why cultural differences matter to international managers. Explain a number of frameworks that help identify important cultural differences. Examine how firms can anticipate and cope with cultural differences.

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.4

Introduction
Culture: the sum total of the beliefs, rules, techniques, institutions and artifacts that characterize human populations or the collective programming of the mind. Socialization Process: The process of enculturation or the adoption of the behaviour patterns of the surrounding culture.

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.5

Elements of culture

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.6

Table 5.1

World population percentages in terms of home region, language and religion

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Sources: www.census.gov; www.adherents.com

Slide 5.7

Language
Language is critical to culture because it is the primary means used to transmit information and ideas. Knowledge of local language can:
permit a clearer understanding of a situation; provide access to local people; allows the person to pick up nuances, implied meanings, and other information that is not stated outright.

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.8

Religion
Religions influence lifestyles, beliefs, values and attitudes and can have a dramatic effect on the way people in a society act toward each other and towards those in other societies. Religion also influences:
the work habits of people; the work and social customs (from the days of the week on which people work to their dietary habits); politics and business.

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.9

Values and attitudes

Values: basic convictions that people have regarding what is right and wrong, good and bad, important and unimportant. Attitude: a persistent tendency to feel and behave in a particular way toward some object.

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.10

Customs and manners

Customs: common or established practices. Manners: behaviour regarded as appropriate in a particular society.

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.11

Corporate culture
Corporate culture is a term used to characterize, how the managers and employees of particular companies tend to behave. Corporate culture is also used by human resource managers and senior management in their attempts to proactively shape the kind of behaviour (innovative, open, dynamic, etc.) they hope to nurture in their organizations. Promoting a distinctive corporate culture is also expected to enhance the sense of community and shared identity that underpins effective organizations.
Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.12

The importance of culture in different business contexts

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.13

Influences of culture on international management

Culture influences strategic management in a number of ways: Work attitudes
for example, work ethics, organization commitment, etc. Achievement motivation the desire to accomplish objectives and achieve success. Time and future for example: punctuality, decision-making time constraints, time expectations on implementation of plans, etc.

Ethics
standards of conduct and morality.
Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.14

Culture and strategic management

Cross-cultural management issues arise in a number of situations, including:
Within a firm: Work attitudes, achievement motivation, time and future and ethics, etc. Between firms: M&As, joint ventures, alliances and buyer-supplier relationships. Between a firm and customers: Dealing with customers.

Cf.) Dealing with national institutions.

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.15

Figure 5.1

Cross-cultural business contexts

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.16

National stereotypes and key dimensions of culture

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.17

Two approaches to culture

Two different approaches to looking at culture:
the psychic or psychological level, which focuses on the internalized norms, attitudes and behaviour of individuals from a particular culture; the institutional level, which looks at national (or group) culture embodied in institutions (government, education, economic institutions as well as in business organizations).

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.18

Geert Hofstedes four cultural dimensions

Power distance: measures the degree to which less powerful members of organizations and institutions accept the fact that power is not distributed equally. Uncertainty avoidance: measures the extent to which people feel threatened by ambiguous situations and have created institutions and beliefs for minimizing or avoiding those uncertainties.

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.19

Geert Hofstedes four cultural dimensions (Continued)

Individualism vs. collectivism
Individualism: the tendency of people to look after themselves and their immediate family only. Collectivism: the tendency of people to belong to groups who look after each other in exchange for loyalty.

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.20

Geert Hofstedes four cultural dimensions (Continued)

Masculinity vs. femininity
Masculinity: the degree to which the dominant values of a society are success, money and material goods. Femininity: the degree to which the dominant values of a society are caring for others and the quality of life.

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.21

Figure 5.2

Hofstedes power distance against individualism for 20 countries

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Source: Hofstede, G. (1983). The cultural relativity of organizational practices and theories, Journal of International Business Studies, Fall, p. 92. Copyright Geert Hofstede

Slide 5.22

Fons Trompenaars seven cultural dimensions

1. Universalism vs. particularism Universalism: the belief that ideas and practices can be applied everywhere in the world without modification. Particularism: the belief that circumstances dictate how ideas and practices should be applied and somethings cannot be done the same everywhere.

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.23

Fons Trompenaars seven cultural dimensions (Continued)

2. Individualism vs. collectivism: centres on

whether individual rights and values are dominant or subordinate to those of the collective society. 3. Neutral culture vs. emotional culture:
Neutral culture: A culture in which emotions are held in check. Emotional culture: A culture in which emotions are expressed openly and naturally.

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.24

Fons Trompenaars seven cultural dimensions (Continued)

4. Specific vs. Diffuse: measures whether work relationships (e.g. the hierarchical relationship between a senior manager and a subordinate) are workplace specific or extend (diffuse) into the social context outside the workplace. 5. Achievement vs. Ascription: measures whether ones status within organizations is based on merit (achieved) or on class, gender, education or age (ascribed).

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.25

Fons Trompenaars seven cultural dimensions (Continued)

6. Attitudes toward time
Sequential: cultures that view time in a sequential or linear fashion; order comes from separating activities and commitments. Synchronic: cultures that view events in parallel over time; order comes from coordinating multiple activities and commitments.

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.26

Fons Trompenaars seven cultural dimensions (Continued)

7. Attitudes toward the environment: measures the emphasis, a particular culture places on peoples relationship with nature and the natural environment.

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.27

The GLOBE projects nine dimensions of culture

1. Assertiveness. 2. Future orientation: A propensity for planning, investing, and delayed gratification. 3. Gender differentiation: The degree to which gender role differences are maximized. 4. Uncertainty avoidance: A reliance on societal norms and procedures to improve predictability, a preference for order, structure and formality. 5. Power distance.

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.28

The GLOBE projects nine dimensions of culture (Continued)

6. Institutional collectivism: individualism vs. collectivism. 7. In-group/family collectivism: A pride in smallgroup membership, family, close friends etc. 8. Performance orientation: (much like achievement orientation). 9. Humane orientation: An emphasis on fairness, altruism and generosity.

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.29

Cross-cultural management

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.30

Figure 5.4

Management dimensions of culture

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.31

Useful strategies for managing cultural diversity

Some useful strategies for managing cultural diversity Recognize diversity.
Build diversity issues into recruitment, HRM planning, strategy, location decisions, alliances and partnerships. Identify where and to what degree local divisions should be encouraged or empowered to take the lead in expressing and managing diversity. Encourage cross-border discussion and interaction as well as focused training. Aim for a cultural balance in particular areas of strategic and tactical decision-making. Lead from the top.
Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.32

Multinational organizational structures: imperialist or independent?

Ethnocentric: top management is dominated by home-country nationals and procedures and management styles are transferred from head office and imposed on regional subsidiaries in place of local ways of doing things. Polycentric: firms tend to act like a federation of semi-autonomous organizations with financial controls or strict reporting structures holding them together. Geocentric: An equal sharing of power and responsibility between headquarters and subsidiary.
Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.33

Table 5.3

Organization types reflecting cultural predispositions

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.34

Culture embodied in national institutions

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.35

Culture embodied in national institutions

Western Pluralism: emphasizes individual competitiveness, commonly represented by separate ventures competing in price-defined markets for success. Command Economies: are centrally planned hierarchies with less individualism and less individual incentive.

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009

Slide 5.36

Culture embodied in national institutions (Continued)

Organic Ordering: refers to the family-centred hierarchies of Asia, Southern Europe and Latin America. Structured Networks: reflect the more equal, structured relationships between companies and with public sector organizations that exist in some countries.

Alan M Rugman and Simon Collinson, International Business, 5th Edition, Pearson Education Limited 2009