Cross CulturalManagement

• Describes organizational behavior within countries and cultures

• Compares organizational behavior across countries and cultures

• Seeks to understand and improve the interaction of customers, suppliers, employees, executives, and others from countries and cultures around the world

Culture defined

• “The collective programming of the mind which distinguishes the members of one human group from another…the interactive aggregate of common characteristics that influence a human group’s response to its environment.” – Hofstede

• Socially derived, taken-for-granted assumptions that shape behavior, or structure one’s perception of the world

What are Americans like?

• Direct, don’t talk around things.• Competitive• Independent and individualistic• Questioners: Ask a lot of questions• Dislike silence

– Would rather talk about the weather than deal with silence

• Punctual

• “For managers who have to operate in an unfamiliar culture, training based on home-country theories is of very limited use and may even do more harm than good”

– An American was sent to manage a bank in Venezuela. He asked the employees for their input and recommendations to solve a problem. How did the employees react?

Why Study International Organizational Behavior?

Expectations of Manger’s Across Cultures

• “It is important for managers to have at hand precise answers to most of the questions their subordinates may raise about their work.”

• Percentage agreeing with the above:– Sweden: 10%– Germany: 46%– Spain & Japan: 78%– USA: 18%

Average vacation days for employees with one year of service

• USA: 10 days• Spain: 22 days• Germany: 18• Sweden: 30• Finland: 20• Japan:10

Maternity Leave

• Sweden: Either parent, 90% pay for 12 months

• Denmark, 90% pay for 28 weeks• Germany, 14 weeks, 100% pay• Ireland, 14 weeks, 70% pay• Italy, 20 weeks, 80% pay• USA, 12 weeks, unpaid (FMLA)

Hofstede’s Study• Study of IBM employees across the world

– National culture explained more of the differences in work-related values and attitudes than did:• Position within the organization• Profession• Age• Gender

• Found four core dimensions of national culture

Hofstede’s Dimensions of National Culture

• Individualism versus collectivism– Individualism: (USA, Australia)

• Emphasis on the individual: make primary contributions to oneself

– Collectivism: (Japan)• Emphasis on the group: make primary contributions to group

goals and objectives • Members are expected to look after other members

– Implications• Organizational loyalty, teamwork, social loafing

Hofstede’s Dimension’s (cont.)

• Power distance: • measures the extent to which the less powerful

members of an organization accept/expect an unequal distribution of power

– Large “PD” (Venezuela, Philippines)• Wide differences in power are accepted and often

preferred – Titles & hierarchy are very important

– Small “PD” (Denmark, Ireland)• Power differences are played down

– Boss is not someone to fear• Implications

– Organizational structure (pyramid vs. flat) – Decision-making issues: Participative vs. authoritarian,

decentralized vs. centralized

Hofstede’s Dimensions (cont.) • Uncertainty Avoidance

– The extent to which people feel threatened by ambiguity & uncertainty (risk) and therefore try to avoid such situations• Implications

– Career stability (job security), formal rules– High in uncertainty avoidance (Portugal, Greece)

• Concept of “lifetime employment”• Formal rules help to reduce uncertainty• Working hard is a way of reducing uncertainty (“karoshi”)

– Low in uncertainty avoidance (Denmark, Singapore)• Risk taking is more accepted & encouraged

Hofstede’s Dimensions (cont.)• Quantity vs. quality of life

– Quantity: emphasizes acquisition of money and things (materialism) – (USA)

– Quality: emphasizes relationships and overall quality of life (time for activities outside of work is important) – (Sweden)• Implications for work hours, vacation time, pay issues

• Gender roles:The extent to which career and family roles for men and women are distinct– Similar: Both men and women work outside the home

and take care of family obligations (Sweden)– Unique: Men work outside of the home, women take

care of the family (Japan, Austria, Mexico)• Implications for paternity & maternity leave, on-site day care,

flex-time

Expatriates

• People from one national culture working in another for a fixed period of time– U.S. expatriates (3 years is the average

assignment)– Average 3 year assignment can cost firms up to

$1 million per expat• Moving expenses, education, expat premiums, cost

of living differences, inflation, etc.

Catskill Roads

• What should they do? Why?• In general, what factors should be

considered in the decision to accept or reject an expatriate assignment?

Why U.S. managers would accept an international assignment

• Cross-cultural experience (52%)

– Gain a greater understanding of another way of life

• Money (40%)

– Higher salary, more fringe benefits• Career Advancement (21%)

– Increased opportunities & exposure

Why U.S. managers would NOT accept an international assignment

• Location– Political unrest, dangerous

• Career– High risk of job failure, isolation from home

company, forgotten • Family

– Dual-careers, spouse unwilling to move

Repatriation Issues

• Will I have a job at the same company when I return?– 46% of U.S. firms do not guarantee a position at home

upon completion of the assignment• Mergers, downsizing, layoffs

– An international assignment may be a high-risk career strategy – Why type of job will I have upon return?

• Less challenging, lower status, and less responsibility• High rate of turnover for “expats” upon return (25% within a

year)– Consider the cost of an expatriate assignment (about $1 million)

and the potential loss of part of this “investment”

Reasons for Expatriate Failure

• U.S. “Expats” (up to 45% failure rate)1) Inability of spouse to adjust

• Career disruption• Social needs• Personal & career identity

2) Manager’s inability to adjust3) Other family reasons

• Children at school & related adjustments• Issues with family in the U.S. (elder care)

Expatriate Selection Issues

• Personality issues– High tolerance for ambiguity– High self-monitor – Emotional stability– Nonjudgmental, nonevaluative– Flexibility & willingness to try new ways– Initiative

Expatriate Selection Issues (cont.)

• Family Issues– “Would your spouse be interrupting a career to

accompany you? If yes, how might this affect your spouse and your relationship with each other?

– “Are you prepared to have less contact with your extended family?”• AT&T’s self-assessment of “cultural-adaptability”