Global Environment‐ Political, 

Legal and Cultural Differences
 Legal Differences
• Civil Law
• Common law
• Islamic Law 
 Political Differences
• Democracy  
• Monarchy – (absolute & constitutional)
• Authoritarianism 
• Theocracy  
 What Is Culture?
• Culture is the pervasive and shared beliefs, 
norms, values, and symbols that guide 
everyday life  
– transmitted by symbols, stories and rituals
– often taken‐for‐granted
 NATIONAL
CULTURE

National culture influences the culture 
of the organization of the organization 
at a broader level
 NATIONAL
CULTURE

BUSINESS
CULTURE

ORGANIZATION OCCUPATIONAL
CULTURE CULTURE

MULTINATIONAL
MANAGEMENT
 Two Diagnostic Models to Aid 
the Multinational Manager

• Hofstede’s Model of National Culture
• 7d Cultural Dimensions Model‐
Trompenaars’s Alternative Dimensions 
 Hofstede’s Cultural Dimensions
• Work‐related value dimensions
• Most influential effort to group by cultural 
values
• Surveyed over 116,000 employees in more 
than 70 countries
• Created maps of pairs of dimensions
 Hofstede’s Model of National Culture
Hofstede’s four dimensions of culture
Power Distance, Individualism, Masculinity, 
Uncertainty Avoidance, 
Another set of dimension was added in 1991 –
Long‐term orientation 
In 2010,  ‘Long Term Orientation’ was replaced 
by Pragmatic Vs Normative (PRA)
Then 6th dimension was added ‘Indulgence Vs 
Restraint
 Power Distance
• The extent to which the less powerful members of 
organizations and institutions (like the family) accept and 
expect that power is distributed unequally. 

• This represents inequality (more versus less), but defined 
from below, not from above. It suggests that a society's level 
of inequality is endorsed by the followers as much as by the 
leaders. 

• All societies are unequal, but some are more unequal than 
others
 Power Distance
•
 Management Implications Of Power Distance

MANAGEMENT LOW POWER DISTANCE HIGH POWER DISTANCE

PROCESSES
Human Resources
Management
Management Selection Educational achievement Social class; elite
education
Training For autonomy For conformity/obedience
Evaluations/Promotion Performance Compliance;
trustworthiness
Small wage difference Large wage differences
Remuneration between management and between management and
worker workers
Leadership Styles Participative; theory Y Authoritarian; close
supervision
People like work; extrinsic Assume people dislike
Motivational Assumptions and intrinsic rewards work; Coercion
Decision Decentralized; flat Tall pyramids; large
Making/Organizational pyramids; Small proportion proportion of supervisors
Design of supervisors
Crafted to support the
Strategy Issues Varied power elite or government
 Uncertainty Avoidance

• Organizations in societies that are structure‐oriented 
have a preference for strong code of behaviors and 
management practices and tolerate less deviation 
from them; they tend to support their employees. 
• Organizations that are risk‐oriented encourage 
individuals to take initiatives and risks; they may give 
their  employees less structure and support.
Uncertainty Avoidance
 Management Implications of Uncertainty Avoidance
MANAGEMENT H IG H U N C E R TA IN TY LO W U N C E R TA IN TY
PROCESSES A V O ID A N C E A V O ID A N C E
H um an R esource
M anagem ent S eniority; expected loyalty P ast job perform ance;
education
M anagem ent S election
Training S pecialized Training to adapt
E valuation/P rom otion S eniority; expertise; loyalty O bjective individual
perform ance data; job
sw itching for prom otions
R em uneration B ased on seniority or B ased on perform ance
expertise
Leadership S tyles Task oriented N ondirective; person-
oriented; flexible
M otivational A ssum ptions P eople seek security; avoid P eople self m otivated;
com petition com petitive
D ecision Larger organization; tall S m aller organizations; flat
M aking/O rganizational hierarchy; form alized; m any hierarchy; less form alized
D esign standardized procedures w ith few er w ritten
rules/standardized
procedures
S trategy Issues R isk adverse R isk taking
 Individualism Vs Collectivism 
• Self‐perception as individual or part of a 
group‐The degree of individual or group 
orientation
• Individualism: A society in which the ties 
between individuals are loose: everyone is 
expected to look after self and immediate 
family only
• Collectivism: A society in which individuals 
from birth onwards are part of strong in‐
groups that last a lifetime and oppose other 
in‐groups
Individualism Vs Collectivism 
 MANAGEMENT LOW INDIVIDUALISM HIGH INDIVIDUALISM
PROCESSES
Human Resources
Management
Management Selection Group membership; school Universalistic based on
or university individual traits
Training Focus on company based General skills for
skills individual achievement
Evaluation/Promotion Slow with group; seniority Based on individual
performance
Remuneration Based on group Extrinsic rewards (money,
membership/organizational promotion) based on
paternalism market value
Leadership Styles Appeals to duty and Individual rewards and
commitment punishments based on
performance
Motivational Assumptions Moral involvement Calculative; Individual
cost/benefit
Decision Group; slow; preference Individual responsibility;
Making/Organizational for larger organizations preference for smaller
 Masculinity Vs Femininity 
• Masculine/feminine dimension is less about 
gender than about gender roles
• focuses on the degree the society reinforces, 
or does not reinforce, the traditional 
masculine work role model of male 
achievement, control, and power
• Materialism and Concern people and quality 
of life 
Masculinity Vs Femininity 
Management Implications Of Masculinity

MANAGEMENT LOW MASCULINITY HIGH MASCULINITY

PROCESSES
Human Resources
Management
Management Selection Independent of gender, Jobs gender identified; school
school ties less performance and ties important
important; androgyny
Training Job-Oriented Career oriented
Evaluation/Promotion Job performance with Continues gender tracking
less gender role
assignments
Remuneration Less salary differences More salary preferred to less
between levels; more hours
time off
Leadership Styles More theory Y; More theory X;
Motivational Assumptions Emphasis on quality of Emphasis on performance and
life, time off, vacations; growth; excelling to be best;
work not central work central to life; job
recognition important
Decision Intuitive/group; smaller Decisive/individual; larger
Making/Organizational organizations organization preferred
Design
Long Term (Confucian) Orientation
• Belief in substantial savings
• Willingness to invest
• Acceptance of slow results
• Persistence to achieve goals
• Sensitivity to social relationships
• Pragmatic adaptation
Long Term Orientation
Management Implications Of Long Term Orientation
MANAGEMENT
PROCESSES
H u m a n R e s o u rc e s
M anagem ent
M a n a g e m e n t S e le c tio n
T r a in in g
E v a lu a tio n /P r o m o tio n
R e m u n e r a tio n
L e a d e r s h ip S t y le s
M o tiv a tio n a l A s s u m p tio n s
D e c is io n
M a k in g /O r g a n iz a tio n a l
D e s ig n
S tr a te g y Is s u e s
SHO RT TERM
O R IE N T A T IO N
O b je c tiv e s k ill a s s e s s m e n t
fo r im m e d ia t e u s e to
com pany
L im ite d t o im m e d ia te
com pany needs
F a s t; b a s e d o n s k ill
c o n tr ib u tio n s
P a y ; p r o m o tio n s
U s e in c e n tiv e s fo r e c o n o m ic
advancem ent
Im m e d ia t e r e w a r d s
n e c e s s a ry
L o g ic a l a n a ly s e s o f
p r o b le m s ; d e s ig n fo r lo g ic
o f c o m p a n y s itu a tio n
F a s t; m e a s u r a b le p a y b a c k
L O N G T E R M O R IE N T A T IO N
F it o f p e r s o n a l a n d
b a c k g r o u n d c h a r a c t e r is tic s
In v e s t m e n t in lo n g te r m
e m p lo y m e n t s k ills
S lo w ; d e v e lo p s k ills a n d
lo y a lty
S e c u r ity
B u ild s o c ia l o b lig a tio n s
S u b o r d in a t e im m e d ia te
g r a tif ic a tio n fo r lo n g te r m
in d iv id u a l a n d c o m p a n y
g o a ls
S y n th e s is to r e a c h
c o n s e n s u s ; d e s ig n fo r
s o c ia l r e la t io n s h ip s
L o n g te r m p r o fits a n d
g r o w th ; In c r e m e n ta lis m
 Indulgence vs. Restraint

• Indulgence allows relatively free gratification
of basic human drives leading to enjoying life 
• Restraint curbs gratification and enjoying life 
and regulates it by strict social norms

25
 Indulgent societies Restrained societies
• Few restrictions on  • Restrictive regulations 
behavior on behavior
• People value freedom of  • People value strong 
expression government
• People feel healthier and  • People feel less happy 
happier and less healthy
• Leisure ethic • Work ethic
• Loose sexual mores • Strict sexual mores
• Smaller police force • Larger police force
 Power Distance x Uncertainty Avoidance
(first 4 dimension scores for 76 countries)
SMALLER PD, WEAKER UA LARGER PD, WEAKER UA

NORDIC Countries
CHINA
ANGLO Countries
INDIA
NETHERLANDS

German Speaking Countries FRANCE, LATIN CTRS
BALTIC STATES POLAND, SE EUROPE
HUNGARY JAPAN, KOREA
SMALLER PD, STRONGER UA LARGER PD, STRONGER UA

27
Individualism/Collectivism x Masculinity/Femininity
(first 4 dimension scores for 76 countries)
Long/Short Term Orientation x Indulgence/Restraint 
(scores for 90 countries)
INDULGENT, SHORT‐TERM INDULGENT, LONG TERM

NIGERIA, SOUTH AFRICA SWEDEN, NETHERLANDS

SOUTH AMERICA AUSTRIA, SWITZERLAND

Anglo Countries BELGIUM, FRANCE   

POLAND, PORTUGAL
ZIMBABWE, 
ISLAMIC COUNTRIES
Italy, German speaking 
countries, BALTICS, EASTERN 
EUROPE  CHINA, JAPAN, INDIA            

RESTRAINED, SHORT‐TERM RESTRAINED, LONG‐TERM