International Management and Culture

International Managementand Culture

Arild Aspelund

Senter for entreprenørskap – Truls Erikson

Outline

• Dealing with people in a global setting

• The cultural aspect– A practical example of International Joint Ventures


International Management

• International labor markets and global firms– International worker mobility problems– National management styles and practices– National orientations– Strategy and control

• Headquarters – Subsidiary relationship– Local subsidiaries need people who can manage well locally– Headquarters need people who can coordinate and control worldwide– One need to find a trade-off…

• Dealing with culture in cross-country negotiations and alliances


The Cultural Aspects• What is culture?

– The normative definition: The sum total of the beliefs, rules, techniques, institutions, and artifacts that characterize human populations

– The behavioral definition: The collective programming of the mind

• How do you get your culture?– Culture is taught through socialization processes– Socialization processes are the influence from parents, friends, education,

and the interaction with a particular society– These influences result in patterns of behavior common to all members of a

given society

• A corporation might define such a society and hence define corporate culture


Hofstede’s Four (five) Dimensions of Culture

• Power distance– The extent that a culture excepts that power is unequally distributed

– Generally low in Scandinavia– High in south America and France

• Uncertainty avoidance– Degree to which members of a culture is uncomfortable with risk and

uncertainty

– High uncertainty avoidance in e.g. France, Argentine and Japan– Low in the US, Denmark, India and the UK



• Individualism– The extent to which people are supposed to take care of themselves and

be emotional independent from others

– Generally high in Scandinavia, the US and UK– Low in Indonesia, Thailand and South America

• Masculinity– The value attributed to achievement, assertiveness, and material success

– High in Germany, Japan and the UK– Generally low in the feminine societies of the Scandinavian countries and

the Netherlands



• Long-term Orientation– To what extent do people have a future-oriented perspective rather that

focus on the present– Also labeled “Confucian dynamism”; developed by Chinese scientists– A response to the critique of the “Western Mindset” of Hofstede’s original

IBM study– Long term orientation:

• Persistence, ordering relationships by status and observing this order, thrift, having a sense of shame

– Short term orientation: • personal steadiness and stability, protecting your ‘face’, respect of

tradition, reciprocation of greetings, favors, and gifts

– On this scale Norway and China are at the opposite ends…


Trompenaar’s Seven Dimensions of Culture

- A managerial extension of Hofstede

• Universialism versus Particularism– Ex: A salesman that has not fulfilled his monthly sales quota due to

sickness in his family– Universal reactions: The US, Canada and Switzerland– Particular exceptions: Korea, Russia and China

• Individualism versus Collectivism– Are the rights and values of the individual dominant or subordinate

of the collective society?– Individualists: Canada, the US, and Switzerland– Collectivists: Japan, Egypt and India




• Neutral versus Emotional– How much emotions are displayed at the workplace– Is it acceptable to make a significant investment from “gut feelings”

and intuition?– No! Japan, Germany, Switzerland and China– Yes! Italy and France

• Specific versus Diffuse– Do hierarchies exist only at the workplace or does it exist also in

the society outside the company?– Ex: Your boss ask you to paint his house over the weekend– NO! Australia and the Netherlands– ok…China, Japan, Singapore and India




• Achievement versus Ascription– Is your status in the organization tied to achievements that you

have done, or your gender, age, education or social class (ascribed status)?

– Merit in Scandinavia and the US, the UK and Canada– Ascribed in Egypt, Russia, Japan and France

• Attitudes toward time– Time viewed as sequential steps or time viewed as synchronic

(many things happen simultaneously)– Northern Europe are sequential (punctual and planning)– Southern Europe are synchronic and regard chronological

precision as mere coincidence…



- A managerial extension of Hofstede• Attitudes towards the environment

– Some cultures try to control and subjugate the environment, others try to work with the nature

– This is a dimension more related to religion and philosophy than national cultures

– Historically the first is highly associated with western Europe and North America and the industrial revolutions

• A short list of distinction between Hofstede and Trompenaar– Hofstede more related to national cultures and inevitably market selection

decisions in marketing and offshoring decisions in sourcing– Trompenaar more related to management of multinational enterprises and

more applicable to everyday managerial problems– Trompenaar is also more recent and had the benefit of looking at Hofstede’s

work and some of the critique against it…


Values and Alliances- An Application of Hofstede’s

Framework• As we have seen , Dutch scientist have traditionally taken lead

positions in the study of culture in international Business– Harry Barkema and Freek Vermeulen have been key contributors the past

two decades

• The current study seek to answer two questions– Which cultural differences are the most disruptive for the initiation and

development of International Joint Ventures (IJVs)?– Are cultural values stable over time?

• Unique data from 828 foreign entries of 25 Dutch multinationals in 72 countries, spanning from 1966 to 1994


Values and Alliances- An Application of Hofstede’s

Framework• Results systematically point to differences in uncertainty

avoidance and long-term orientation as key predictors of…– tendency to prefer international wholly-owned subsidiaries over IJVs– and long-term survival of IJVs

• These factors dominate over differences in power distance, individualism, and masculinity

• How would you explain these differences?

• The study also show that the cultural dimensions are fairly stable over time

International Management and Culture

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