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CHAPTER 11 Cross Cultural Management

Global Strategic Management : Philippe Lasserre

Behaviour
Observable, Manifest Looking at the watch Banging on the Table

Values - Beliefs Preferences


Explicit, Declared, Example: Time is Money , Authority has to prevail

Basic Assumptions Meaning


Invisible, Unconscious, Taken for Granted Example: Time is limited, All men are equal
Andr Laurent

Global Strategic Management : Philippe Lasserre

THE THREE SOURCES OF CULTURAL DIFFERENCES


CORPORATE COMPANY CULTURE

PROFESSIONAL INDUSTRY CULTURE

NATIONAL ETHNIC CULTURE

History of the company ( accumulated experiences: good and bad) Leadership and dominant coalition Ownership Stage of development Business diversity

Functional orientation: Marketing Finance Engineering` R and D Industry norms: Technology Change Key success factors Types of customers

Country history Education Social organisation Religion, philosophy

Global Strategic Management : Philippe Lasserre

ANTHROPOLIGICAL AND SOCIOLOGICAL RESEARCHES AND BEHAVIORAL OBSERVATIONS HAVE SHOWN THAT THERE ARE SIGNIFICANT DIFFERENCES IN BASIC ASUMPTIONS VALUES AND BEHAVIOUR ACROSS NATIONAL CULTURES THOSE DIFFERENCES HAVE AN IMPACT ON MANAGEMENT BEHAVIOUR

HALL and HALLs STUDY:


The Silent Language

HOFSTEDEs STUDY:
Four Dimensions: POWER DISTANCE / INDIVIDUALISM UNCERTAINTY AVOIDANCE / MASCULINITY-FEMINITY

ANDR LAURENTs STUDIES:


Management and organisational principles

TROMPENAARS STUDIES:
Value Orientation

RONEN and SHENKARS STUDIES:


Country Clusters

Global Strategic Management : Philippe Lasserre

Silent Language
Punctuality Deadline Ex: German
Avoid Physical emotional Proximity Ex: British Sequential Scarce Circular Fluid Abundant Delays Postponment Ex: Arabic Physical contacts Showing emotion Ex: Latin Education Family Seniority Gives status Ex: Malaysia

Perception of Time

High Distance

Perception of Space
Language of Material Goods Friendship Agreement / Disagreement Context

Low Distance

Financial Wealth Givesstatus Ex: USA


Operational Factual Relationship Ex: USA Western Legalistic Countries Anglo-Saxon Germanic Nordic

Materialistic

Non-materialistic

Quick And Superficial

Long And Deep

Ex: Japan

Explicit Documented

Implicit Verbal

Asian countries

The Content Matters more Than the Person

The Person Matters more Than the Content

African,Asian Latin American countries

Global Strategic Management : Philippe Lasserre

Source: Adapted from Hall(1960)

Hofstede Mapping of Cultures on Power Distance and Individualism


100
Malaysia Mexico Arab Countries Indonesia India Singapore Hong Kong Brazil Thailand Taiwan Spain Japan Italy Canada Germany UK Sweden USA

80

Latin European Hierarchical/Individualists


France

POWER DISTANCE

60

Asian/Latin American Hierarchical/Collectivists


40

Australia

20

Denmark

0 0 20 40 60

Anglo-Saxon/Scandinavian Eqalitarian/Individualists
80 100

INDIVIDUALISM
Source:Hofstede, 1980

Global Strategic Management : Philippe Lasserre

It is important for a manager to have at hand precise answers to most of the questions that subordinates may raise about their work (Q. 24)

Percent agreement rate across countries


100 90 80 70 60 50 40 30 20 10 0
S NL USA DK UK CH B D F I INDO SPAIN JAPAN

73 66 44 46 53

77

78

38 23 27

10 17

18

Global Strategic Management : Philippe Lasserre

Andr Laurent/INSEAD

IT IS IMPORTANT FOR A MANAGER TO HAVE AT HAND PRECISE ANSWERS TO MOST OF THE QUESTIONS THAT SUBORDINATES MAY RAISE ABOUT THEIR WORK (Q 24) 1991-2000 DATA 60

50

Percent agree

40 30 20 10 0

U SA N L D K C N D G B A U S

F JA P

ZA

D C H

Global Strategic Management : Philippe Lasserre

B B R

A. Laurent 2003

I E

It is important for a manager to have at hand precise answers to most of the questions that subordinates may raise about their work (Q 24)
70 60 PERCENT AGREE

50
40 30

20
10

1977-1979
Global Strategic Management : Philippe Lasserre

1991-2000
Andr Laurent 2003

DOING vs. BEING

"DOING"

"BEING"

USA

ITALY

Global Strategic Management : Philippe Lasserre

Andr Laurent/INSEAD

The main reason for having a hierarchical structure is so that everybody knows who has authority over whom. Q.14 Percent agreement rate across countries
USA SWEDEN UK ITALY JAPAN INDONESIA 0 20 40 60 80 17 26 30 31 34 34 42 43 50 70 83 100
Andr Laurent/INSEAD

Global Strategic Management : Philippe Lasserre

In order to have efficient work relationships, it is often necessary to bypass the hierarchical line. (Q.2) Percent disagreement rate across countries
SWEDEN UK FRANCE GERMANY ITALY SPAIN 0 20 40 60
Andr Laurent/INSEAD

26 32 35 36 43 44 45 51 56 59 74 80

Global Strategic Management : Philippe Lasserre

Country Clusters

Source: Ronen and Shenkar, 1985

Global Strategic Management : Philippe Lasserre

TROMPENAAR'S FIVE VALUE ORIENTATIONS


VALUE ORIENTATION EXAMPLE

1 UNIVERSALISM : vs. PARTICULARISM : 2. INDIVIDUALISM : vs. COLLECTIVISM : 3. NEUTRAL vs. AFFECTIVE 4. DIFFUSE vs. SPECIFIC : : : :

Rules-based behaviour Relationship-based behaviour Individual's rights are supreme Group's rights are supreme

Germanic countries Asian countries Western countries Asian countries

Emotions are subdued and expressed indirectly Asian countries Emotions are expressed freely and directly Focus is on context of situation Focus is on specific issues Status and respect are achieved by 'doing' Status and respect are ascribed by 'being' Western countries Asian countries Germanic countries Western countries Asian countries

5. ACHIEVEMENT : vs. ASCRIPTION :

Global Strategic Management : Philippe Lasserre

Business Systems
AngloAmerican
RATIONALITY How objectives are set Importance of systems and procedures AUTHORITY The ground rules for Vertical order. Origin of power IDENTITY The ground rules for Horizontal order. (What makes society stick) CAPITAL How Financial Capital is found and channelled Democratic process System, Rules led

German Nordic
Democratic Consensus led

French & Latin


Democratic Negotiation led Conflict resolution

Japanese
Democratic Consensus led

Korean
Autocratic

Overseas Chinese
Autocratic

Constitution The Law The State The State The Law Decentralisation The Law The Decentarilsation Centralisation Corporations Decentralisation

The State The The Families Corporations Centralisation Centralisation

Individual rights Contracts Heterogeneity (micro cultures)

Social Welfare Homogeneity

Social Welfare Cultural Identity Heterogeneity (micro cultures)

National belonging Cultural Identity Homogeneity

Nationalism Cultural Identity Homogeneity

Clans Ethnic binding

Financial markets Low gearing

Banks State and Medium gearing market Medium gearing

Banks High Gearing

State Family High Gearing High Gearing

Global Strategic Management : Philippe Lasserre

Sources: Redding, Whitley, Albert, Berger and Dore, Hampden-Turner, Trompenaars.

Business Systems
AngloAmerican
HUMAN CAPITAL How human skills are developed SOCIAL CAPITAL How trust is created OWNERSHIP Who own enterprises NETWORKING How economic agents relate to each other. (The rules of business transactions) MANAGING How employees are induced to cooperation in the firm Academic Performance Led

German Nordic
Academic and Apprenticeship led

French & Latin


Academic Elitist

Japanese

Korean

Overseas Chines

Academic plus on the job

Academic Elitist Academic on the job.

High trust Contracts. Legal Institutions Shareholders

High Trust Contracts

Low trust negotiation

High Trust within groups

High Trust within groups. Low outside

High trust within Family. Low outside

Banks, Employees, Shareholders Contracts.. Some Elitist relationships

State, Shareholders

Banks, CrossShareholding

Business groups, Crossshareholding Personal Relationships. State Intervention

Family Groups

Contracts

Elitist Relationships. State Interventionism

Elitist Relationships

Personal Relationships

System led Motivation Perforamnce measures

Hierarchical Technical Competence

Hierarchical bureaucracy. Negotiation

Corporate identity. Corporate Loyalty

Hirarchical Corporate Loyalty

Hierarchical Family Loyalty

Global Strategic Management : Philippe Lasserre

Sources: Redding, Whitley, Albert, Berger and Dore, Hampden-Turner, Trompenaars.

THE IMPACT OF INTERNATIONAL CULTURAL DIFFERENCES FOR MANAGEMENT


INTERPERSONAL RELATIONSHIPS Communication Etiquette Decoding attitudes and behaviour Understanding silent language MULTICULTURAL TEAMS Expatriates vs Locals Group building/working/Relationships/` Conflict resolutions

HIERARCHICAL /MANAGERIAL INTERACTIONS BOSS/COLLEAGUES/ SUBORDINATES) Feedback Control Reward/Punishments Personal space Motivations

PARNERSHIPS/TRANSACTIONS Contracts negotiations Joint Ventures/Partnerships Official meetings Community events/Social events

Global Strategic Management : Philippe Lasserre

MULTICULTURAL vs. MONO-CULTURAL TEAMS

MONO-CULTURAL TEAMS

DISASTER
LOW

SYNERGY
HIGH

PERFORMANCE

MULTICULTURAL TEAMS

Global Strategic Management : Philippe Lasserre

Andr Laurent/INSEAD

MAJOR OBSTACLES TO PERFORMANCE IN MULTI-CULTURAL SITUATIONS (1)


Discussion of differences perceived as uncomfortable, inappropriate, threatening or illegitimate.

Assumption of similarity/homogeneity. Cultural diversity is denied, lost as a potential resource and transformed into a significant handicap. Richness of diversity lost on the way.

Global Strategic Management : Philippe Lasserre

Andr Laurent/INSEAD

MAJOR OBSTACLES TO PERFORMANCE IN MULTI-CULTURAL SITUATIONS (2) The gap between pretended similarity and inner conviction of actual difference widens and creates uncomfortable situation.

Cautious behavior and unproductive costly politeness emerge as coping mechanisms to handle the situation. This leads to low risk taking, avoidance of confrontation and achievement of the smallest common denominator.

Global Strategic Management : Philippe Lasserre

Andr Laurent/INSEAD

MAJOR OBSTACLES TO PERFORMANCE IN MULTI-CULTURAL SITUATIONS (3)

Western individualism. Fear of stereotyping Parochial mindset (only one way of thinking/acting). Ethnocentric mindset (the best way of thinking/acting). Blindness to ones own cultural conditioning.

Global Strategic Management : Philippe Lasserre

Andr Laurent/INSEAD

MAJOR OBSTACLES TO PERFORMANCE IN MULTI-CULTURAL SITUATIONS (4)


Perception of the other culture as unfortunate deviation from the norm.

If diversity is neither recognized, understood, acknowledged nor discussable, how could it possibly be appreciated, valued and utilized? Cultural diversity then re-enters as a handicap likely to lead to failure. Any synergy between cultures becomes inaccessible.

Global Strategic Management : Philippe Lasserre

Andr Laurent/INSEAD

Negotiation Styles: American vs Japanese


Negotiation Parameters Attitude toward silence during negotiations Reaction to Cross-cultural signals Attitude toward sequential bargaining and negotiating progress Typical American Strongly averse; uncomfortable; fill the void Unaware; or consider it unimportant Strongly attracted to both Typical Japanese Essential: for decorum; and for non-verbal communication and empathy (haragei). Aware indifference Unimportant

Attitude toward sharing information


Form of the Contract

Open; willing
Long; detailed; covering all foreseeable contingencies

Collect it avidly, but dont give it out


Prefer very short; and limited to general principles and affirmations.

Commitment to the Contract

Total binding

Weak; the relationship is what counts, not the document; and inevitable changing conditions will necessitate later amendments
Source : Sunshine, 1990

Global Strategic Management : Philippe Lasserre

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Negotiation Styles: American vs Japanese


Typical American Typical Japanese Structured; strategic; starting from trust Launching a long-term relationship Rank; position; social competence

Negotiation Parameters

Basic approach to business in Transactional; profit-oriented; general detail-conscious; legalistic Central purpose of the negotiation Selection Criteria for negotiator(s) Reaching agreement on a contract Verbally articulate generalists; technical competence; rational abilities Few

Appropriate number of negotiators Appropriate role(s) of Lawyers Attitude toward decisionmaking process, and appropriate degree of delegation of authority to negotiators

Many: in order to demonstrate seriousness and for functional coverage, including learning. None: seen as adversarial troublemakers. Consensual middle-up decision-making (ringi seido); little or no authority delegated to negotiators.

Key participant: leader, contract advisor, and/or draftsperson Top-down decision-making; very high degree of delegation of authority

Global Strategic Management : Philippe Lasserre

Source : Sunshine, 1990

2 of 2

Negotiation Styles: American vs Japanese


Typical American Direct; informal; familiar; egalitarian; candid Little or none; irrelevant or improper; logic more important than emotions; issues more important than personalities Typical Japanese Highly indirect; highly formal; hierarchical; reserved Acute; personal rapport essential to establish trust (ningen kankei).

Negotiation Parameters Appropriate tone for negotiation and communication Negotiators interest in personal feelings and values of counterparts

Appropriateness of socialising Inappropriate; unacceptable; with counterparts risks conflict of interest and loss of personal control Attitude toward time during negotiations Acutely time-conscious; time is money; impatient

Highly appropriate; and traditional release; also, ritualised gift-giving. Patience in the key.

Global Strategic Management : Philippe Lasserre

Source : Sunshine, 1990

Chinese Business Negotiating Styles


Large team, vague authority, presence of technical people, often with incompetent interpreter Exploit agreed principles Play home court Buy best technology but show no appreciation for monetary value of knowledge Making interests Price-sensitive Stalling, delays and indecision Play competitors off against each other Sweet and sour approach Attrition Shaming technique Exploiting vulnerabilities Taking surprising actions Showing anger Friendship means obligation Double standards Richer bears heavier burden

Hierarchical Non-legalistic vs. Legalistic approach

Mixed feelings toward foreigners Re-negotiate old issues.

Global Strategic Management : Philippe Lasserre

Source: Tony Fang, 1997

Differences in Business Practice Examples


ETIQUETTE Addressing How to name the other person In Malaysia nobility titles are the proper way to address ( Encik, Tan, etc.. In France people are addressed by their title (Monsieur le Directeur) In the USA first name is normal In Japan, the exchange of business cards is critical Feet soles showing are offending Arabs Left hand shaking is not proper in Muslim countries Finger pointing is considered as highly threatening and impolite in Asia Malaysian businessmen use jacket and ties while in Singapore long sleeves shirts are normal business attires French business transactions usually take place at a lunch or dinner table Chinese banquets and sometime drinking punctuate deals Signs of impatience are considered as improper in many cultures Lengthy preliminaries are usual in the Middle East Silent pauses are the norms in Chinese or Japanese

Gesturing

How to position oneself and how to use body language

Dressing

Dress code

Eating

Importance of meals in business dealing. Behaviour at the table How to control time

Timing

Talking

Importance of verbal communication

Global Strategic Management : Philippe Lasserre

Differences in Business Practice Examples


RELATIONS Engaging Importance given to establishing personal relationships in business transactions Importance given to overall agreements on principles versus details Products technology versus Connexions as a source of competitive advantage Preferences given to friends and families in supplies contracts

Most Asian countries privilege the personalisation of contacts before engaging in business transactions Legal contracting is the norm in the USA while broad agreements are considered satisfactory in Japan In China, connexions (Guanxi) are still a very important factor of competitive advantage In Asia the notion of extended families implies that preferential treatment be given to families and friends for supplies contracts.

Contracting

COMPETING Advantages

Supplying

Global Strategic Management : Philippe Lasserre

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