INDUSTRIAL PSYCHOLOGY

CROSS CULTURAL ORGANIZATION BEHAVIOR

Submitted to Grace Amin, M.Psi, Psikolog

MGT (HRM 2016)

Inanda Meitasari (014201600071)
Yoshua Kurnia Salim (014201600077)
Hu Ming Hui (014201600114)
Sun Jian Chao (014201600149)

Students of
Management Study Program
President University
20171
Table of Contents

Introduction ............................................................................................................................................. 3
Literature Review.................................................................................................................................... 4
A. Culture ....................................................................................................................................... 4
B. Diversity ..................................................................................................................................... 5
Discussion ............................................................................................................................................... 6
A. Individualism-Collectivism ...................................................................................................... 7
B. Power Distance .......................................................................................................................... 8
C. Uncertainty Avoidance ............................................................................................................. 9
D. Masculinity–Femininity .......................................................................................................... 10
E. Suggestion for Managing Cultural Diversity ........................................................................ 10
1. Help Employees Build Cultural Intelligence ........................................................................ 10
2. Avoid Ethnocentrism ............................................................................................................ 11
3. Listen to Locals ..................................................................................................................... 11
4. Recognized that Culture Changes ......................................................................................... 11
5. Do Not Always Assume That Culture is the Problem .......................................................... 11
Conclusion ............................................................................................................................................ 13
References ............................................................................................................................................. 14

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Introduction

Every country has its own uniqueness in culture. The culture is created from the history
of the country, economic conditions, and so on, which are impacting the way of people act,
think, and feel. For instance, experiencing shame in organizational contexts had a negative
effect on adaptive behavior and performance among Dutch samples who experienced shame as
a threat to the independent self, whereas it had a positive effect on outcomes among Philippines,
who experienced shame as a threat to harmony that needed to be restored1. Therefore, we
cannot deny that the culture different really has big impact for somebody who brings it. The
cross culture takes a role in unity the cultural diversity, especially in an organization.

Started in twenty-first century, globalization had led the advance of exchanging in

information, technology, and economic. In economic, the globalization can be seen through the
foreign companies or other foreign direct investment (FDI) which established in the host
country. By this event, the company usually placed several expertise or labors from origin
country to work at the host company. For instance, at Astra Honda Motor Indonesia, Ltd.
(AHM), there are many expertise from Japan (the origin country of AHM) as to help in
managing subordinates from Indonesia. Having many employees from different countries may
lead to cross cultural in organization behavior. The exchanging of cultures among the
employees and from the organizational itself will create the “new-blended” culture which
belongs to the company.

Crossing cultures in workforce management can be competitive advantage for the

company or challenge. It says as advantage, if the company can unite all the employees and
combining the best culture (behavior) then implement it to the company organizational culture
which may lead to enhance the performance. The challenge for crossing cultures is when the
employee got culture-shock and bring up bad behavior which can create clash with other
employees. In this terms, the management should find the exact way as to make all the
employees feel welcome and do not feel the cultural become barriers for their performances.
This paper will discuss moreover about the cultural diversity, challenges, the role of ethics and
national culture, also suggestions for managing cross culture.

1
(Gelfand, Erez, & Aycan, 2007)

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Literature Review

A. Culture
There are many definitions of culture. According to Merriam-Webster dictionary, culture
is 1) the integrated pattern of human knowledge, belief, and behavior that depends upon the
capacity for learning and transmitting knowledge to succeeding generations; 2) the customary
beliefs, social forms, and material traits of a racial, religious, or social group2. While according
to E.B. Tylor, culture is defined as a social domain that emphasizes the practices, discourses
and material expressions, which, over time, express the continuities and discontinuities of
social meaning of a life held in common3. Although definitions of culture vary, many
emphasize that culture is shared, is adaptive or has been adaptive at some point in the past, and
is transmitted across time and generations4.

Cultural differences in OB can take various forms. For example, general principles might
hold across cultures, but the enactment of these principles can vary (e.g., equity principles).
The magnitude or direction of relationships can also vary across culture (e.g., participative
leadership and performance). Additional and/or different dimensions might be needed to
understand OB phenomena in other cultures. According to Hofstede’s culture framework5,
there are several dimensions as to understand the cross cultural which are as follow:

1) Individualism versus Collectivism (IDV) is explores the degree to which people in a

society are integrated into groups;
2) Power Distance Index (PDI) is defined as the extent to which the less powerful members
of organizations and institutions (like the family) accept and expect that power is
distributed unequally;
3) Uncertainty Avoidance Index (UAI) is defined as the awareness to surrounding which
causing the risk;
4) Masculinity versus Feminity (MAS), where there are still strong assumption regarding
gender equality among the organization.

2
(Meriam-Webster Dictionary: Culture, n.d.)
3
(James, Magee, Scerri, & Steger, 2015)
4
(Gelfand, Erez, & Aycan, 2007)
5
(Hofstede's Cultural Dimensions Theory, n.d.)

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 This research will help the manager to understand also shows that cultural variation with
respect to these four dimensions’ influence employee job behaviors, attitudes, well-being,
motivation, leadership, negotiations, and many other aspects of organizational behavior.

B. Diversity
Diversity refers to the ways in which people are similar or different from each other. It may
be defined by any characteristic that varies within a particular work unit such as gender, race,
age, education, tenure, or functional background (such as being an engineer versus being an
accountant). Merriam Webster dictionary defined diversity as the condition of having or being
composed of differing elements; or the inclusion of different types of people (such as people
of different races or cultures) in a group or organization programs intended to promote diversity
in schools6. Therefore, the cultural diversity is when there are several persons who have
different or similar in the way they think, act, or belief which passed from one to another
generation and can be accepted or not.

6
(Merriam-Webster Dictionary: Diversity, n.d.)

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Discussion

In achieving the goal of an organization, the people or the employees should unity and
they need to have the same goal orientation as the leader. However, the employees have
different cultures which involved into their way of thinking, behavior, also may affect their
performances. For instance in negotiating, U.S. negotiators are more likely to share information
directly and achieve high joint gains through this strategy, whereas Japanese, Russian, and
Hong Kong negotiators are more likely to share information indirectly through their patterns
of offers and achieve high joint gains through this strategy (Adair et al. 2001)7.

This phenomenon usually happened in multi-national organization or company where

the employees are from local or overseas. The company usually tried to apply the origin culture
in the host company, for example when the very first time Starbuck established in Indonesia,
the baristas and manager are from U.S., after that they would like to employed local employee.
Unfortunately, the local employee still cannot adapt with the origin culture. Therefore, the
manager of Starbucks tried to modified the culture and suits with the local employees. Through
this example, the role of manager and related department are very important as to try to make
the difference become a benefit for the organization.

In Hofstede’s culture framework, there are several dimensions which can be a useful
tool to understand the systematic differences across cultures. The website has many research
results about the culture framework in almost every country in this world which shown in
percentage and we can compare two countries.

Picture 1. The Geert Hofstede Website

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(Gelfand, Erez, & Aycan, 2007)

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 Besides comparing in the percentage, there are many analysis or explanation regarding
the culture framework among the countries. That four dimensions can influence employee job
behaviors, attitudes, well-being, motivation, leaderships, negotiations, and many other aspects
of organizational behavior. The four dimensions are:

A. Individualism-Collectivism
Individualistic cultures are cultures in which people define themselves as an individual
and form looser ties with their groups. These cultures value autonomy and independence of the
person, self-reliance, and creativity. Countries such as the United States, United Kingdom,
and Australia are examples of individualistic cultures. In contrast, collectivistic cultures are
cultures where people have stronger bonds to their groups and group membership forms a
person’s self-identity. Asian countries such as China and Japan, as well as countries in Latin
America are higher in collectivism.

When individualists are asked a question such as “Who are you? Tell me about yourself,”
they are more likely to talk about their likes and dislikes, personal goals, or accomplishments.
When collectivists are asked the same question, they are more likely to define themselves in
relation to others, such as “I am Chinese” or “I am the daughter of a doctor and a homemaker.
I have two brothers.” In other words, in collectivistic cultures, self-identity is shaped to a
stronger extent by group memberships (Triandis, McCusker, & Hui, 1990). There are major
and minor points for being collectivist and individualist.

In collectivistic societies, family bonds are more influential in people’s daily lives.
While individualists often refer to their nuclear family when thinking about their
families. Understanding the importance of family in collectivistic cultures is critical to
understanding their work behaviors. For example, one multinational oil company in Mexico
was suffering from low productivity. When the situation was investigated, it became clear that
the new manager of the subsidiary had gotten rid of a monthly fiesta for company employees
and their families under the assumption that it was a waste of time and money. Employees had
interpreted this to mean that the company no longer cared about their families.

Collectivists are more attached to their groups and have more permanent attachments to
these groups. Conversely, individualists attempt to change groups more often and have weaker
bonds to them. Collectivists draw sharper distinctions between the groups they belong to and
those they do not belong to. They may be nice and friendly to their in-group members while
acting much more competitively and aggressively toward out-group members. This tendency

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has important work implications. While individualists may evaluate the performance of
their colleagues more accurately, collectivists are more likely to be generous when
evaluating their in-group members.

In collectivists cultures, disobeying or disagreeing with one’s group is difficult and people
may find it hard to say no to their colleagues or friends. Instead of saying no, which would
be interpreted as rebellion or at least be considered rude, they may use indirect ways of
disagreeing, such as saying “I have to think about this” or “this would be difficult.” Such
indirect communication prevents the other party from losing face but may cause
misunderstandings in international communications with cultures that have a more
direct style. Collectivist cultures may have a greater preference for team-based rewards as
opposed to individual-based rewards. For example, in one study, more than 75% of the subjects
in Philippines viewed team-based pay as fair, while less than 50% of the U.S.-based subjects
viewed team-based rewards as fair.

B. Power Distance
Power distance refers to the degree to which the society views an unequal distribution of
power as acceptable. In low power distance cultures, egalitarianism is the norm. In high
power distance cultures, people occupying more powerful positions such as managers,
teachers, or those who are older are viewed as more powerful and deserving of a higher level
of respect. High power distance cultures are hierarchical cultures where everyone has their
place. Powerful people are supposed to act powerful, while those in inferior positions are
expected to show respect. Many Asia countries still having high power distance. For example,
Thailand is a high power distance culture and, starting from childhood, people learn to
recognize who is superior, equal, or inferior to them. When passing people who are more
powerful, individuals are expected to bow, and the more powerful the person, the deeper the
bow would be.

High power distance within a culture may easily cause misunderstandings with those
from low power distance societies. For example, the limp handshake someone from India may
give or a job candidate from Chad who is looking at the floor throughout the interview are in
fact showing their respect, but these behaviors may be interpreted as indicating a lack of
confidence or even disrespect in low power distance cultures.

One of the most important ways in which power distance is manifested in the workplace
is that in high power distance cultures, employees are unlikely to question the power and

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authority of their manager, and conformity to the manager will be expected. Managers in
these cultures may be more used to an authoritarian style with lower levels of participative
leadership demonstrated. In these cultures, people may feel uncomfortable when they are
asked to participate in decision making. For example, peers are much less likely to be
involved in hiring decisions in high power distance cultures. However, the minor point in
having lack participative may create transparent-less in the authority of the leader and lead in
misused of authority.

C. Uncertainty Avoidance
Uncertainty avoidance refers to the degree to which people feel threatened by
ambiguous, risky, or unstructured situations. Cultures high in uncertainty avoidance prefer
predictable situations and have low tolerance for ambiguity. Employees in these cultures
expect a clear set of instructions and clarity in expectations. For example, one study showed
that when hiring new employees, companies in high uncertainty avoidance cultures are
likely to use a larger number of tests, conduct a larger number of interviews, and use a
fixed list of interview questions (Ryan, Farland, Baron & Page, 1999). Employment
contracts tend to be more popular in cultures higher in uncertainty avoidance compared
to cultures low in uncertainty avoidance. The level of change oriented leadership seems to
be lower in cultures higher in uncertainty avoidance. Companies operating in high
uncertainty avoidance cultures also tend to avoid risky endeavors such as entering foreign
target markets unless the target market is very large.

Germany is an example of a high uncertainty avoidance culture where people prefer

structure in their lives and rely on rules and procedures to manage situations. Similarly, Greece
is a culture relatively high in uncertainty avoidance, and Greek employees working in
hierarchical and rule-oriented companies report lower levels of stress. In contrast, cultures such
as Iran and Russia are lower in uncertainty avoidance, and companies in these regions do not
have rule-oriented cultures. When they create rules, they also selectively enforce rules and
make a number of exceptions to them. In fact, rules may be viewed as constraining. Uncertainty
avoidance may influence the type of organizations employees are attracted to. Japan’s
uncertainty avoidance is associated with valuing job security, while in uncertainty-avoidant
Latin American cultures, many job candidates prefer the stability of bigger and well-known
companies with established career paths.

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 D. Masculinity–Femininity
Masculinity and femininity are two important terms in cross-cultural communication.
Masculine cultures are cultures that value achievement, competitiveness, and acquisition of
money and other material objects. Some countries, like Germany, Britain, Japan, Mexico, Italy,
Austria, and Argentina belong to typical masculinity. Masculine cultures are also
characterized by a separation of gender roles. In these cultures, men are more likely to be
assertive and competitive compared to women.

Feminine cultures are cultures that value maintaining good relationships, caring for the
weak, and emphasizing quality of life. In these cultures, values are not separated by gender,
and both women and men share the values of maintaining good relationships. Most
countries in North Europe are femininity, such as Sweden, Norway, and Finland.

The level of masculinity inherent in the culture has implications for the behavior of
individuals as well as organizations. For example, in masculine cultures, the ratio of CEO
pay to other management-level employees tends to be higher, indicating that these cultures are
more likely to reward CEOs with higher levels of pay as opposed to other types of rewards.

Those are the four dimensions according to the Hofstede’s culture framework which the
manager or the related division need to pay attention. With the increasing importance of
international business as well as the culturally diverse domestic workforce, there are several
things which can be done as to manage cultural diversity.

E. Suggestion for Managing Cultural Diversity

1. Help Employees Build Cultural Intelligence
Cultural intelligence or cultural quotient (CQ) is a person’s capability to understand how a
person’s cultural background influences one’s behavior. The concept is related to that of cross-
cultural competence, but goes beyond that to actually look at intercultural capabilities as a form
of intelligence that can be measured and developed. A great manager will let the employees to
know and learn as much as possible about the culture diversity in order they have ability in
adapting many situations and have a sensitivity in tolerating the cultural difference. In other
words, employees will need to be selected based on cultural sensitivity and understanding and
trained to enhance such qualities, therefore they can be sustained and secure their career.

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 2. Avoid Ethnocentrism
Ethnocentrism is the belief that one’s own culture is superior to other cultures one comes
across. Ignoring cultural differences, norms, and local habits may be costly for businesses and
may lead to unmotivated and dissatisfied employees. Successful global companies modify their
management styles, marketing, and communication campaigns to fit with the culture in which
they are operating. For example, Apple Inc.’s famous PC versus Mac advertising campaign
was reshot in Japan and the United Kingdom using local actors. The American ads were found
to be too aggressive for the Japanese culture, where direct product comparisons are rare and
tend to make people uncomfortable.

3. Listen to Locals
When doing cross-cultural business, locals are a key source of information. Local workers
know better about their hometown and customers than you, it’s good for capture market. To
get timely and accurate feedback, companies will need to open lines of communication and
actively seek feedback. For example, Convergys, a Cincinnati-based call-center company, built
a cafeteria for the employees in India. During the planning phase, the Indian vice president
pointed out that because Indian food is served hot and employees would expect to receive hot
meals for lunch, building a cafeteria that served only sandwiches would create dissatisfied
employees.

4. Recognized that Culture Changes

Cultures are not static—they evolve over the years. A piece of advice that was true 5
years ago may no longer hold true. For example, showing sensitivity to the Indian caste
system may be outdated advice for those internationals doing business in India today.

5. Do Not Always Assume That Culture is the Problem

While familiarizing employees about culture, emphasizing the importance of interpersonal
skills regardless of cultural background will be important.

Those five suggestions have emphasized the manager or related department to realize that
cultural diversity can be managed and can be competitive advantage for the company itself.
However, the needs of having deeper research in making the cross culture organization
behavior is highly needed since the culture may change as time goes by.

When managing a diverse group of employees, ensuring the ethicality of organizational

behavior will require special effort. Cultural diversity introduces challenges to managing
ethical behavior, given that cultures differ in the actions they view as ethical. Ethical behavior

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also known as an acting in ways consistent with what society and individuals typically think
are good values. Cultural differences are particularly important when doing cross-cultural
business. A study comparing U.S., Korean, and Indian managers found differences in attitudes
toward business ethics, particularly with Koreans thinking that being ethical was against the
goal of being profitable. Indian and Korean subjects viewed questionable practices such as
software piracy, nepotism, or the sharing of insider information as relatively more ethical
compared to subjects in the United States. At the same time, Korean and Indian subjects viewed
injury to the environment as more unethical compared to the U.S. subjects. In other words,
the ethical standards held in different societies may emphasize different behaviors as
ethical or unethical.

When dealing with unethical behavior overseas, companies will need to consider the
ethical context. Having internal reporting mechanisms may help, but research shows that in
very high power distant societies, these mechanisms often go unused. Even when a
multinational company has ethical standards that are different from local standards,
using the headquarters’ standards in all cross-cultural interactions will not be possible or
suitable. The right action often depends on the specifics of the situation and a consideration of
the local culture. For example, in the 1990s, Levi-Strauss & Company found that some of its
contractors in Bangladesh were using child labor consisting of children under 14 years old
in its factories. One option they had was to demand that their contractors fire those children
immediately. Yet, when they looked at the situation more closely, they found that it was
common for young children to be employed in factories, and in many cases these children
were the sole breadwinners in the family. Firing these children would have caused significant
hardship for the families and could have pushed the children into more dangerous working
conditions. Therefore, Levi- Strauss reached an agreement to send the children back to
school while continuing to receive their wages partly from the contractor companies and
partly from Levi- Strauss. The school expenses were met by Levi-Strauss and the children
were promised work when they were older. In short, the diverse ethical standards of the world’s
cultures make it unlikely that one approach can lead to fair outcomes in all circumstances.

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Conclusion

Management of diversity effectively promises a number of benefits for companies and may
be a competitive advantage. Yet, challenges such as natural human tendencies to associate with
those similar to us and using stereotypes in decision making often act as barriers to achieving
this goal. By creating a work environment where people of all origins and traits feel welcome,
organizations will make it possible for all employees to feel engaged with their work and
remain productive members of the organization.

By implementing the cross cultural system, hopefully the misunderstand of culture

different can be minimized, therefore there will be no disadvantage for some people in the
group. The awareness of cultural diversity should be implemented not only for the employees
but also for the whole stakeholder in the organization. Do not let the diversity become the
barrier in reaching the goal.

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References
Bauer, T., & Erdogan, B. (2012). Chapter 2: Managing Demographic and Cultural Diversity.
In An Introduction to Organizational Behavior (v. 1.0). (pp. 73-89). Creative
Commons. Retrieved September 12, 2017
Gelfand, M. J., Erez, M., & Aycan, Z. (2007). Cross-Cultural Organizational Behavior. The
Annual Review of Psychology, 479-519. Retrieved September 12, 2017, from
arjournals.annualreviews.org
Hofstede's Cultural Dimensions Theory. (n.d.). Retrieved September 12, 2017, from
Wikipedia: https://en.wikipedia.org/wiki/Hofstede%27s_cultural_dimensions_theory
James, P., Magee, L., Scerri, A., & Steger, M. (2015). Urban Sustainability in Theory and
Practice: Circles of Sustainability. Retrieved from Wikipedia:
https://en.wikipedia.org/wiki/Culture
Meriam-Webster Dictionary: Culture. (n.d.). Retrieved September 12, 2017, from Meriam-
Webster Online Dictionary: https://www.merriam-webster.com/dictionary/culture
Merriam-Webster Dictionary: Diversity. (n.d.). Retrieved September 12, 2017, from
Merriam-Webster Online Dictionary: https://www.merriam-
webster.com/dictionary/diversity
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https://www.mindtools.com/pages/article/seven-dimensions.htm

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