Appunti di Cross cultural management

Cross-cultural management: the challenging role of the global market

Globalization has been described as the "crystallization of the world as a single place", the overlapping of the interests of business and society, or "an increase in the impact on human activities of forces that span national boundaries". Parker describes it as "a process whereby worldwide interconnections in virtually every sphere of activity are growing. Some of these interconnections lead to integration/unity worldwide; others do not."

This increase in interconnections is the result of shifts that have taken place in technological, political, and economic spheres. The following four categories of change illustrate the process of globalization.

Growing economic interconnectedness

The economic interconnections among countries were dramatically increased with the advent of free-trade areas in the 1990s. The three largest, which account for about one half of the world’s trade, are:

• European Union (EU)
• North American Free Trade Agreement (NAFTA)
• Asia-Pacific Economic Cooperation (APEC)

In addition, the World Trade Organization (WTO), formed in 1995 with the goal of reducing tariffs and liberalizing trade across the board, now has 157 member-nations.

• Greater degree of interconnectedness among the world’s economies.
• The gap between regional GDP growth rates of the fastest growing and least dynamic regions of the world has begun to narrow.
• The level of foreign direct investment (FDI) also has a globalizing effect. Since the great recession began, flows have stabilized at approximately their 2000 levels. The inward flow of FDI now accounts for about one-third of the GDP of developing countries compared to about 10 percent in 1980 (with China).
• Effects of globalization: 1. potential to favour developed market economies and 2. a small number of large emerging economies but are not even consistently positive in developed economies.
• Organizational boundaries are also affected by globalization: production, sales and marketing, and distribution might all be located in different countries to capitalize on certain location-specific advantages.
• Networks of less hierarchical relationships and cooperative strategic alliances.
• Emergence of virtual organizations.
• Manufacturing and sales on a global basis on an unprecedented scale.

More complex-dynamic work environment

Due to downsizing, privatization, and team-based management.

Downsizing

Workforce reductions due to mergers and acquisitions.

• The number of permanent migrants is changing the composition of the workforce in numerous countries. The number of women migrants is increasing and today’s migrant is much more likely to be highly skilled.

Privatization

Governments in both developed and developing countries are selling state-owned businesses to private investors at an increasing rate.

• Privatization enables formerly government-controlled enterprises to be available for purchase by foreign firms, thus reducing boundaries.
• Major changes in technology, workforce size, and management are often required to meet global standards of quality and efficiency.

Team-based management

Teams of workers as a solution to productivity problems.

• Demographic shifts in the workforce in many countries.
• Demographic changes: increasing cultural diversity because of ease of movement of workers of all skill levels across borders, the rising average age of employees, and more women to the workforce.
• Introducing teams involves changes in work methods, compensation systems, level of employee involvement, and the role of the first-line supervisor.

Increased use and sophistication of information technology

• Multinational firms can now communicate all types of information worldwide and instantaneously.
• Access to information, resources, products, and markets is influenced by improved information technology.
• Businesses are almost entirely unconcerned with traditional boundaries and barriers, including barriers of scale and scope.

More and different players on the global stage

• The players on the international business stage were originally the firm and its foreign constituency but were soon joined by home- and host-country governments and, then, by special interest groups, international agencies, and economic alliances.
• The characteristics of these actors have changed over time; more small businesses, the service sector is increasing, and more international managers, international gangs, and terrorists (China, Russia, Japan, Italy, and USA).

Environment of global management

• The elements of the global manager’s environment can be divided into four categories: economic, legal, political, and cultural.
• Managers must have knowledge about the economic strategies of countries, the complexity of laws and regulations, structures and processes by which a nation integrates the parts of society into a functioning unit, and different cultures.

Culture is uniquely important to international management for three reasons:

• Economic, legal, and political characteristics of a country are a manifestation of a nation’s culture and history.
• Culture is largely invisible and difficult to detect, and managers therefore often overlook it.
• Management largely focuses on interpersonal interactions with individuals who are culturally different.

What global managers do

Managerial work was characterized by brevity, variety, and fragmentation, with a high degree of interpersonal interaction. Interpersonal interactions are at the core of management.

How global managers carry out their role: sources of guidance

Managers throughout the world report that they rely heavily on their: own experience and training; on other people, their role set (colleagues, superiors, and subordinates), and norms (explicit organizational rules and procedures; and implicit norms such as the organisational culture) in order to understand how to carry out their job.

Organizational context, culture, and managerial roles

The global context of international management might affect the manager’s role. Managers can have jobs with similar demands and constraints and still differ in what roles they choose to emphasize (choices that managers from different cultures make about their roles). The roles and work behaviours of managers are the result of both the national and organizational context. Culture also affects the roles and behaviour of managers indirectly (informational, interpersonal, or decisional roles).

Evaluating cross-cultural management studies

• In much management research, his world is the United States and their theory reflects it inherent belief in the superiority of U.S. management but of parochialism—a lack of awareness of alternative contexts, models, research, and values.
• Questions to which management scholars seek answers are a product of the time in which they are studied (after 2 W. War)
• The lack of universality of “made in America” theories. However, three particularly pervasive aspects of the U.S:

• Extreme individualism
• A belief that individuals are in control of their circumstances and can influence their environment and future (free will)
• Low-context communication (the meaning of a message is contained in the explicit communication)

Most cross-cultural research must be carefully evaluated with the recognition of the limitations presented by the cultures involved and the method used.

Types of international management research: six categories of research studies

1. Domestic Research: within a single country without regard for the boundary conditions set by the cultural orientation. Culture is ignored, or universality of theory is assumed. The vast majority originated in USA & suffers from the parochialism.
2. Replication Research: replicating research results first found in one country by repeating the research in other countries. Universality is questioned; there is no theory available to predict the effect of culture. The goal of such research is to compare the responses in the two cultures as closely as possible. Finding: theory X applies in culture A & also in culture B?
3. Indigenous Research: focuses on the different and varied ways in which managers behave and organizations are run in a specific cultural setting in a way that highlights something that is expected to be unique. Cultural differences are assumed to exist; indigenous theory is needed to explain behaviour. Examples of indigenous approaches are the concept of simpatìa (interactions in Hispanic cultures), amae (indulgent dependence – superior-subordinate relationships in Japan), guanxi (relationships for Chinese businesses) cultures.
4. Comparative Research: Comparative studies seek to find both the similarities and differences that exist across cultures regarding a particular management issue and if a theory is universal and the ways in which it is culturally limited. Similarities and differences exist; there may or may not be a theory available to predict the effect of culture.
5. International Research: focus attention on the multinational enterprise (MNE). They recognize that both similarities and differences exist across cultures, but the cultural context does not figure prominently in the conceptualization of the study. Finding: How organizations that operate in multiple countries function.
6. Intercultural Research: seeks to understand the interactions between culturally different individuals in organizational settings. The mechanisms responsible for the influence of culture are an integral part of these studies. Intercultural research considers the culture of both parties in the interaction as well as contextual explanations for observed similarities and differences. Finding: How the theory is influenced by cultural differences, and how is universal.

Methodological issues in cross-cultural research

Equivalence, sampling, and data collection

Equivalence: instrument development process & data collection strategy are important in research across national boundaries. Conceptual or construct equivalence relates to the extent to which concepts have the same meaning in different countries. Method equivalence relates to similarities and differences in the way to which the cultural groups being studied respond to measurement instruments in general: acquiescence (tendency for some cultural groups to agree/disagree with all or most questions asked) and extremity bias (the extent to which cultural groups systematically choose the extreme points or the middle points on rating scales). Metric equivalence refers to the extent that questions (survey items) have similar measurement properties across different groups.

• Sampling: a small number of participants who accurately represent a clearly identifiable population.
• Data Collection: questionnaires, followed by interviews. Questionnaires are the most common quantitative method, interviews are the most common qualitative method used in international and cross-cultural research.

Critiques of international and cross-cultural research

• Questionable Theoretical Base: relying too heavily on a very small set of dimensions about a society’s cultural values.
• Parochialism: culture is often ignored in management research, and domestic conclusions are assumed to be universal.
• Samples That Assume Country Homogeneity.
• Lack of Relevance.
• Reliance on a Single Method: questionnaires gathered at a single point in time.
• Bias Toward Studying Large Companies: The vast majority of studies conducted in the organizational context of large firms.
• Reliance on a Single Organizational Level (managers or skilled-production and service workers).
• Limited to Small Number of Locations.

Describing culture: what it is and where it comes from

“Culture consists of patterned ways of thinking, feeling and reacting, acquired and transmitted mainly by symbols, constituting the distinctive achievement of human groups, including their embodiment in artefacts; the essential core of culture consists of traditional (i.e., historically derived and selected) ideas and especially their attached values”.

Culture as the subjective perception of the human-made part of the environment.

• CULTURE: categorization of social stimuli, associations, beliefs, attitudes, roles, and values that individuals in a society share and that are learned from previous generations.
• CULTURE IS SHARED.
• CULTURE IS TRANSMITTED BETWEEN GENERATIONS AND LEARNED.
• CULTURE IS SYSTEMATIC AND ORGANIZED.

Hofstede: culture consists of shared mental programs that control individuals’ response to their environment.

Why cultures differ and persist

1. Survival (and the Emergence of Social Institutions x stability).
2. Language: defines the way they view the world.
3. Religion & Ideology through content, structure of beliefs & identity.
4. Climate, topography and the indigenous economy.
5. Proximity and topography affect the exchange of cultures.
6. Economic systems and technology.
7. Political boundaries.

Debates surrounding the concept of culture

• National culture: extent to which a nation has a distinctive culture, but not true. For example, in Canada there are Anglo- & Francophones. Hofstede: nations are political entities, they vary in their forms of government, legal systems, educational systems, labor, and employment relations systems, all of which reflect a working cultural consensus. Nations are social systems & thus, can have cultures. Moreover, nationality has a symbolic value to citizens that influences how we perceive ourselves.
• Convergence, divergence, or equilibrium: extent to which cultures around the world are becoming more similar or more different; internationalism (common set of attitudes & behaviours), “modern person”, modernization.