Cultural Impact on Global Management

Today almost 20% of world output is produced and consumed in global markets…

Within 30 years it is estimated to be at least 80%

What is Culture?

•the collective programming of the mind that distinguishes the members of one group or category of people from another group or category of people.

•the mind refers to the head, hand and heart (thinking,feeling,acting)

•Comprises the shared values, understandings, assumptions, and goals•gives people a sense of who they are, of belonging, and of how they should behave

Characteristics of Culture:Learned:

• culture not inherited, not biologically based • Acquired by sharing learning through friends, family,

religion, education, society Shared:• people as members of a group or organization all share the

culture• not specific for an individual as that is personality

Transgenerational:• cumulative as it is passed on from one generation to

another often with slight changes as culture itself is not static Symbolic:

• Culture is based on the human capacity to symbolize or use one thing to mean or represent something else

Why Important for a Manager to understand

Culture?• Cultural savvy: a working knowledge of the

cultural variables affecting management decisions

• Cultural sensitivity: an awareness and an honest caring about another individual’s culture

• Manage on a “contingency basis”• Company reports: lack of cultural sensitivity cost

business money and opportunities– Black and Mendehall found up to 40% of expatriate manager leave

their assignments early because of poor performance or poor adjustment to local environment

– Half that remain are considered only marginally effective– Found cross cultural differences are the cause of failed

negotiations resulting in losses to over $2 billion US a year

America’s AT&T and Italy’s Olivetti

One top AT&T executive believes that most of the problems in the venture stemmed from cultural differences. “ I don’t think we or Olivetti spent enough time understanding behavior patterns,” says Robert Kayner, AT&T group executive. “ We knew the culture was different, but we never really gave it much thought”. AT&T executives are the first to admit , now, that the greatest challenges of putting a venture together is that partners frequently see the world in a very different way and potentially divisive ways

Skillful Global Managers Understand the Significance of the Following Statements:

Japanese culture promotes a sense of group identity.Japanese ambiguity is an unconscious cultural process that often leads foreigners to draw false conclusions based on Japanese appearances.

When doing business in Indonesia, shaking hands with either gender is acceptable, but using the left hand for taking food or giving gifts is unacceptable.

In an era of mergers, acquisitions and consolidations many of these ventures fail within five years, not because they were ill conceived, but rather the cultures of organizations were not successfully integrated.

Estimates are that interpersonal who go abroad without cross-cultural preparation have a failure rate much higher than those who had the benefit of such training.

The culture of the group or category of people becomes evident in two ways.

1. Internal:transforming values into behavior

2. External: through symbols heroes and rituals.(See diagram)

Collective Programming of the Mind

How is culture formed?

Values

Symbols

Heroes

Rituals

Values

Practice

s

Culture

The Onion Diagram : Manifestations of Culture a different levels of depth.

Values: •An enduring belief that a specific mode of conduct or end state of existence is personally and socially preferable to another •What is important to us.•Each of us hold numerous values (achievement, security) with varying degrees of importance•A particular value may be very important to one person but unimportant to another•Values are invisible until they become evident in behavior- Tradition seen in respect for elders•Values are the mental programs for how we behave (Our hard wiring for behavior)

Examples of Values: Why?

• wisdom, equality

•equity, prosperity• independence, imagination

•beauty, responsibility

•courage, loyalty

• achievement, social status

United States Japan Arab Countries

Priorities of Cultural ValuesTable 4-1Priorities of Cultural Values: United States, Japan, and Arab Countries

1. Freedom2. Independence3. Self-reliance4. Equality5. Individualism6. Competition7. Efficiency8. Time9. Directness10. Openness

1. Belonging2. Group harmony3. Collectiveness4. Age/seniority5. Group consensus6. Cooperation7. Quality8. Patience9. Indirectness10. Go-between

1. Family security2. Family harmony3. Parental guidance4. Age5. Authority6. Compromise7. Devotion8. Patience9. Indirectness10. Hospitality

Note: “1” represents the most important cultural value, “10” the least.

Adapted from Table 4-1: Priorities of Cultural Values: United States, Japan, and Arab Countries

Values in Culture

U.S. Cultural Values Alternative Values Examples of Management Function Affected

Table 4-2U.S.Values and Possible Alternatives

Individuals can influence the future (when there is a will there is a way).

Adapted from Table 4-2: U.S. Values and Possible Alternatives

Life follows a preordained course, and, human action is determined by the will of God.

Planning and scheduling

Individuals should be realistic in their aspirations.

Ideals are to be pursued regardless of what is “reasonable.”

Goal setting and career development

We must work hard to accomplish our objectives (Puritan ethic).

Hard work is not the only prerequisite for success. Wisdom luck, and time also are required.

Motivation and reward system

Values in Culture

U.S. Cultural Values Alternative Values Examples of Management Function Affected

Table 4-2U.S.Values and Possible Alternatives

A primary obligation of an employee is to the organization.

Adapted from Table 4-2: U.S. Values and Possible Alternatives

Individual employees have a primary obligation to their family and friends.

Loyalty, commitment, and motivation

Employees can be removed if they do not perform well.

The removal of an employee from a position involves a great loss of prestige and will rarely be done.

Promotion

Company information should be available to anyone who needs it within the organization.

Withholding information to gain or maintain power is acceptable.

Organization, communication, and managerial style

Values in Culture

U.S. Cultural Values Alternative Values Examples of Management Function Affected

Table 4-2U.S.Values and Possible Alternatives

Competition stimulates high performance.

Adapted from Table 4-2: U.S. Values and Possible Alternatives

Competition leads to unbalances and disharmony.

Career development and marketing

What works is important.. Symbols and the process are more important than the end point.

Communication, planning, and quality control.

Values

Symbols

Heroes

Rituals

Values

Practice

s

Culture

The Onion Diagram : Manifestations of Culture a different levels of depth.

•manifest in ways of greetings, paying respect, social and religious ceremonies.

Rituals:

Thailand Pee/Nong Wai Khru Ceremony

USA 4th of July (Independence Day)

•keeping the individual bond with the norms of the collectivity(group).

Values

Symbols

Heroes

Rituals

Values

Practice

s

Culture

The Onion Diagram : Manifestations of Culture a different levels of depth.

•are persons dead or alive, imaginary or real who possess characteristics that are highly prized in a culture and thus serve as role models for behavior

Heroes:

America- George Washington- the first President of USA/commander of revolutionary forces to defeat Britain

Thailand- King Rama 5(พระบาทสมเด็�จพระจ ลจอมเกล�าเจ�าอยู่��หั�ว)Toh Phrom Ma Rangsee (สมเด็�จพระพ ฒาจารยู่� (โต พรหัมร�ส�)

Values

Symbols

Heroes

Rituals

Values

Practice

s

Culture

The Onion Diagram : Manifestations of Culture a different levels of depth.

Symbols:

•these consist of words, gestures, pictures and objects language flags.

Islamic countries “May God be willing”Israel flag Star of David (in god we trust)Thai Flag red-white-blue represents

nation-religion-king

Values

Symbols

Heroes

Rituals

Values

Practice

s

Culture

The Onion Diagram : Manifestations of Culture a different levels of depth.

•symbols and heroes and rituals are subsumed under the term “practices”

Practices:

•they are visible to an outside observer but their explicit cultural meanings are invisible and lie precisely and only in the way these practices are interpreted by insiders.

How Culture Affects Managerial Approaches

In some societies, top managers make all important organizational decisions. In others, these decisions are diffused throughout the enterprise, and middle- and lower-level managers actively participate in, and make, key decisions.

VS.Centralized

Decision MakingDecentralized

Decision Making

How Culture Affects Managerial Approaches

In some societies, organizational decision makers are risk averse and have great difficulty with conditions of uncertainty. In others, risk taking is encouraged, and decision making under uncertainty is common.

VS.Safety Risk

How Culture Affects Managerial Approaches

In some countries, personnel who do outstanding work are given individual rewards in the form of bonuses and commissions. In others, cultural norms require group rewards, and individual rewards are frowned on.

VS.Individual Rewards

Group Rewards

How Culture Affects Managerial Approaches

In some societies, much is accomplished through informal means. In others, formal procedures are set forth and followed rigidly.

VS.Informal

ProceduresFormal

Procedures

How Culture Affects Managerial Approaches

In some societies, people identify very strongly with their organization or employer. In others, people identify with their occupational group, such as engineer or mechanic.

VS.High Organizational

LoyaltyLow Organizational

Loyalty

How Culture Affects Managerial Approaches

Some societies encourage cooperation between their people. Others encourage competition between their people.

VS.Cooperation Competition

How Culture Affects Managerial Approaches

Some cultures focus most heavily on short-term horizons, such as short-range goals of profit and efficiency. Others are more interested in long-range goals, such as market share and technologic development.

VS.Short-term Horizons

Long-term horizons

How Culture Affects Managerial Approaches

The culture of some countries encourages stability and resistance to change. The culture of others puts high value on innovation and change.

VS.Stability Innovation

Negotiation Video-Values

American Negotiator Japanese Negotiator

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