Self Learning Material

International Human
Resource Management
(MBA-967)

Course: Master Business Administration

Semester-IV

Distance Education Programme

I.K. Gujral Punjab Technical University
Jalandhar
 Table of Contents

Lesson Title Written by Page

No. No.
1 Introduction to Cross Cultural Dr. Geeta Bansal, Professor, 1
Management USOL, Panjab University, Chd.
2 Role of culture in strategic decision Dr. Geeta Bansal, Professor, 21
making, Influence of national USOL, Panjab University, Chd.
culture on organizational culture
3 Cultural and behavioural differences Dr. Geeta Bansal, Professor, 42
across the world USOL, Panjab University, Chd.
4 Shift in Culture Dr. Geeta Bansal, Professor, 63
USOL, Panjab University, Chd.
5 Cross cultural communication Dr. Geeta Bansal, Professor, 81
USOL, Panjab University, Chd.
6 Cross cultural HRM; Staffing and Dr. Geeta Bansal, Professor, 102
USOL, Panjab University, Chd.
Training for global operations;
global staffing choices
7 Dynamics for cross cultural Dr. Geeta Bansal, Professor, 120
leadership USOL, Panjab University, Chd.
8 Managing and motivating Dr. Geeta Bansal, Professor, 139
multicultural teams USOL, Panjab University, Chd.
9 Cross cultural negotiation and Dr. Geeta Bansal, Professor, 152
decision making USOL, Panjab University, Chd.
10 Cross cultural ethics Dr. Geeta Bansal, Professor, 172
USOL, Panjab University, Chd.
© IK Gujral Punjab Technical University Jalandhar
All rights reserved with IK Gujral Punjab Technical University Jalandhar
LESSON 1

INTRODUCTION TO CROSS-CULTURAL MANAGEMENT

Structure outline

1.1 Learning objectives

1.2 Introduction to cross-cultural management
1.3 Significance of culture for international management
1.3.1 Meeting the challenge of managing global firms across various
cultures
1.3.2 Cross-cultural differences and similarities
1.3.3 Appreciating cultural diversity
1.4 Cultural dimensions
1.4.1 Hofstede's cultural dimensions
1.4.2 Trompenaars seven dimensions of culture
1.5 Impact of cross-cultural management on organizations
1.6 Summary
1.7 Glossary
1.8 Answers to check your progress
1.9 References
1.10 Suggested readings
1.11 Terminal and model questions

1.1 LEARNING OBJECTIVES

After going through the lesson you should be able to;

 Outline the significance of cross-cultural management on today’s
multicultural organizations.
 Understand the impact of cross-cultural management in international
business.
 Appreciate the cultural dimensions as outlined by thinkers like Hofstede and
Trompenaars

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1.2 INTRODUCTION TO CROSS-CULTURAL MANAGEMENT

The world is a global village, where people from different parts of the world
and with different cultural backgrounds are working and communicating
together. Since culture may be defined as “the inherited values, concepts, and
ways of living which are shared by people of the same social group.” Culture is
not possessed by a certain social class; in fact each and every person has not
only one culture but cultures which causes the complexity of the term. Simply,
cross- culture is the difference in culture among different countries. Cross-
cultural management is the effective interaction and understanding of people
who represent different cultures.

According to Nancy Adler (2008), “cross-cultural management explains the

behavior of people in organizations around the world and shows people how to
work in organizations with employees and client populations from many
different cultures.”

With the advent and influx of multinational organizations with multicultural and
multigenerational workforce manning today’s organizations, it becomes all the
more imperative to understand and be sensitive to people and their needs across
the world. Since people coming from different backgrounds are converging
together at a common platform called an organization to achieve its desired
objectives, it is necessary that cross cultural training be imparted to them. This
will not only improve the interaction amongst the employees coming from
diverse cultures but will also improve the interpersonal relationships between
them which is very important for a congenial and a productive work
environment . Thus the need for cross cultural management is there to enhance
the scope of domestic management to entail multinational management which
would be helpful to understand the behavior of people in multinational
organizations

1.3 SIGNIFICANCE OF CROSS CULTURE ON ORGANISATION

Since organizations do not operate in a social vacuum but are influenced by

socio-cultural context, the socio-cultural dimensions at a national level are
likely to influence the dimensions of organizational practices selected for the
present framework. Cultures have their own way of interpreting things and what
is good for one may be bad for others. And what is believed to be an essential
for one group may not be necessary for others. Hence with this diversity an
organization has to understand and adapt sensitively to different group’s want

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and needs and strive hard to keep the gap among these groups to minimal. The
main challenge though is to align organization culture with the local culture and
try to have sync with each other. The harmony of these together is very essential
for survival and success of organization, ignoring these aspects might challenge
the very existence.

Organizations believe in diversity as it helps them to tackle diverse set of

problems. People from different cultures bring in different skill sets to table.
This diversity in turn brings in competencies to compound present skills to be
more competitive and flexible in finding solutions.

Hence the significance of managing organizations across cross-culture is

outlined below;

1. Cross cultural management of business and organizations will invariably

lead to faster and quicker development of the nation in every sense more
so economically.
2. Following geocentric approaches in recruitment and selection of
employees will enhance the brand value and image of the organization
and enable it to attract the best talent from across the world, which will be
beneficial to both the organization and the employees as well; hence it
will be a win- win situation for both of them.
3. The organizations with multicultural and diversified workforce increases
sensitivity of the employees towards the others cultures and also help
them in understanding the other cultures and their functioning either
consciously or unconsciously as they work in a multicultural ad
diversified team of employees.
4. A culturally diversified workforce will bring in better ideas and
innovations at the workplace by the culturally differentiated people on
board. This will help the organization to infuse fresh and new ideas and
enable the organization to reap the benefits of the leaders of the pack in
adopting and launching new products and services.
5. Cross cultural management also leads to increased customer satisfaction
as the employees with different perspectives can help provide companies
with a holistic view of the market identify unmet needs of the customers
and can identify new opportunities.
6. It provides opportunities for the growth of employees where they stand to
experience more personal growth in an environment exposing them to
differences in culture, opinions and ideas. They learn to work through

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 differences in personality, culture and background. Underlying ethno-centric
notions may finally be brought to the fore and confronted as they learn to
work with different styles and cultures.

7. Diversity in the workplace is necessary to create a competitive economy in a

globalized world.

Activity 1

1. Define cross cultural management

2. Find out some examples of cultural diversity which can be useful to

international managers.

3. Find out a new case study on the impact of cross cultural management on
international business.

1.3.1 Meeting the challenge of managing global firms across various

cultures

The challenge of managing global firms dotted with diversified workforce and
policies is quite a daunting task for today’s multinational organizations as they
have to strike a balance between globalization and local needs and demands of
the customers. This is necessary because in spite of the fact that most of the
young consumers have global needs and demands, their basic cultural roots
make them adhere to the cultural norms of their parent country, necessitating
the need for glocal products and services. This is quite visible especially when it
comes to food industry. Take the example of McDonalds for instance which has
come out with Indian versions of their products to satisfy the Indian taste buds
similarly Barbie dolls came out with the Indian version of the Barbie to conform
to the Indian culture and career norms followed by Indian girls.

Though it is not always necessary to glocalize the products and services as

many multinational organizations are committed to make globalization a
success by launching global products only as they believe that globalization
imperative is not only necessary but absolutely essential for ensuring both
efficiency and effectiveness of the world business which is earnestly striving
towards globalization through the imperatives of the world trade organization.

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Various research studies have also proven that majority of the organizations
across the world are applying global strategies as followed in their home
countries while doing business with other countries across different cultures
with quite a success rate.

This can be proved by referring to various examples as discussed below.

Let us try to understand this better through the example of the cosmetics
marketing which varies greatly in consumer use across various cultures.

The difference in the consumer behavior is quite evident amongst the Germans,
French and the British

It has been observed that the typical German family consists of parent’s children
and their grandparents who are driven and lured by advertisements which are
backed by factual and rational claims. They are vary of hidden and
manipulative claims and are generally put off by companies staking such
fallacious claims thus necessitating a very rational and fact based advertisement
for them.

Strikingly different on the other hand are the French who unlike Germans are
not driven by logic and factual data, rather they are more emotional in nature
and like advertising which drives them emotionally and not rationally. While
the British are driven by ads which are humorous in nature and make them
laugh at themselves.

In some cases, however, the multinational companies prefer to send the same
message worldwide through the same set of advertising .this is possible in case
of products which are of quite high value and are high end and luxurious in
nature and they are more or less similar in their impact the world over because
of their similar clientele. For example, the Heineken beer, Hummer car, and the
Financial times. These products appeal to the consumers across the world in
different stages of their life. The same situation can be seen for the products
which are low end in nature especially in the food and beverage industry like
Coke, Pepsi , McDonald’s , Pizza Hut etc., this is more so due to the
convergence of tastes of the people in today’s globalized era.

It is however recommended that the companies should try to understand and be

sensitive to consumers of varying cultures and religion as they will have better
hold over their markets with deeper understanding and thus more profits.

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Now when the organizations decide to follow global strategies for their
products in regional markets they face three major challenges as outlined
below:

1. The first major challenge is to overcome the temptation of assuming that

all the markets the world over are the same and should be ready to keep
themselves updated with regard to the local conditions.
2. The second challenge lies in assessing the strengths and the weaknesses
of the subsidiaries in the local market and providing them timely
guidance and assistance for improving their business as per the local
demands..
3. The third challenge is again to give more freedom and autonomy to the
local subsidiaries to cater to the local demands as per their requirements
and not interfering too much into their working.

1.3.2 Cross-Cultural Differences and Similarities

It is always advisable for the multinational companies to follow different

strategies for their home countries and host countries as it will be more
beneficial than following the global strategies for their international operations.
The multinational organizations usually are driven by parochialism and
simplification due to cultural differences which they should avoid in order to
survive. Parochialism can be understood as a tendency to look at the world with
one’s own perspectives and perceptions instead of how the world views it. And
simplification on the other hand is the adoption of the same outlook for different
markets in spite of their cultural differences.

1.3.3 Appreciating Cultural Diversity

Most importantly, culture affects how people think and behave. Therefore, cultural
differences have impacts on international management. Let’s visit some of the
prominent cultures and understand their implications on international business.

1. An example of a handshake shows that there is difference in the way in which

this simple yet significant activity is conducted in different cultures:

 The Americans do it firmly,

 The Asians do it gently,
 The British do it softly,
 The French do it lightly and quickly,
 The Latin Americans do it with a moderate grasp.

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2. An example of business etiquettes in South Africa calls for the following
protocol, like

 Always scheduling a business meeting on the phone before discussing any

business.
 Always take appointments in well in advance before meeting someone and
with full preparation.
 At the time of introduction, always maintain reasonable and decent eye
contact with the persons while shaking hands firmly and providing your
business card to every person present in the meeting.
 Always respect and treat women with dignity.
 Always make business plans clear before anything else.
 Try to maintain patience between proposition of the business plan and the
answer by the other party.
 Always keep the business presentation crisp and to the point.

The above examples thus make it quite clear that different cultures have different
set of priorities and should be acknowledged and appreciated by both the parties
entering into business deals. It has been proven by extensive research that all the
cultures across the world have varying degrees of assumptions and beliefs which
invariably affect the management practices. Some of these are given below;

 The corporate decision making may be centralized or it may be

decentralized.

 There may be a predisposition of the culture to being either playing safe or

not averse to risk taking

 There may be a culture of either rewarding individual performance or it

might believe in rewarding group performance

 There are some culture which believe in following formal procedures for
everything and there are cultures which believe in informal business
procedures

 There are again cultures which encourage high organizational loyalty and
others are tolerant to low loyalty.

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  Then there are cultures which believe in cooperation while some believe in
competition

 There are organizations which have short-term orientation and there are
others which have long-term orientation in business and other dealings

 While some cultures prefer stability over innovation and are not forthcoming
when it comes to implementing new ideas and staying ahead of the bunch

1.4CULTURAL DIMENSIONS

We inherit culture and preserve it and in the process of our upbringing, we also
modify it. Culture is best understood as the way in which a group of people solves
problems and reconciles with the dilemmas at the workplace on a day today basis.

Surface culture is visible in things like what food and drinks are consumed, what
holidays are observed, how people greet etc. Surface culture can be defined as
visible social actions be do that don’t reflect the way people think.

deep culture is visible in the way people think and feel about issues such as dating
and marital dynamics, family relationships, moral/religious beliefs, individualism
vs. Collectivism, punctuality etc.

Culture can also vary across nations in terms of the following four
dimensions:

1) Assertiveness- determination of some of the aspects & attributes of people like

modest and tender vs. Tough and competitive.
2) Future orientation- degree of importance towards the future like planning for
future and researching for the betterment.
3) Performance orientation- extent and importance of excellence like receiving
highest of all
4) Humane orientation- social touch like care and concern.

Many writers have contributed towards the dimensions of culture and various
models have been developed on this basis so far.

Now let us try to find out the dimensions of culture as given by two most
prominent management consultants;

1. HOFSTEDE'S CULTURAL DIMENSIONS

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 2. TROMPENAARS SEVEN DIMENSIONS OF CULTURE

1.4.1 HOFSTEDE'S CULTURAL DIMENSIONS

Hofstede identified five value dimensions in a research conducted by him on

IBM employees spread over 70 countries, which he found to vary with culture
and he labeled these dimensions as individuality, masculinity, power distance,
uncertainty avoidance and long term orientation. See figure 2.

Power
Individualism Masculinity
Distance

Uncertainty Long Term

Avoidance Orientation

Figure 2: Hofstede’s Dimensions of Culture

1. Power Distance; Low vs. High

This cultural dimension exhibits the extent to which less powerful members of
institutions and organizations accept the unequal distribution of power in the
organization. Countries in which people blindly obey the orders of their superiors
have high power distance and vice versa.

The high power distance cultures are characterized by following where

 Inequality of status and power is acceptable and respected

 Everyone has a pre designated position in the hierarchy of the
organization.
 The employees are supposed to follow the leader of the organization

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  The powerful positions and people are entitled to certain privileges which
are not available for the less privileged.
 The ones in power and position need not shy away from the show of their
strength and power.

2. Uncertainty Avoidance; Low vs. High

This cultural dimension exhibits the extent to which people are willing to take or
avoid risk taking both professionally as well as personally. The cultures which
believe in uncertainty avoidance are the ones where people tend to play it safe and
are bothered by a situation which calls for taking decisions under uncertainty.
These cultures necessitate the need for high security and safety amongst its people
and they are driven more by the feeling of security and have a strong belief in
experts and their knowledge. Such cultures include Germany, Japan, and Spain.

The cultures which are high on uncertainty avoidance are characterized by

following where;

• People tend to avoid encouraging conflicting situations.

• People are not very encouraging towards deviant ideas and work methods,
they believe in following the old recipes for even the new conditions.
• People believe in following the rules and regulations without and signs of
confrontation.
• The expert power of the authorities is usually looked up to and respected
• People believe in collective decision making for the success of the
organization.

3. Individualism vs. Collectivism

In this cultural dimension people tend to concentrate on i me and myself above

anything and anybody else .here people are driven by the tendency to look after
themselves and their immediate family only unlike the collectivistic culture
where people are driven by the tendency to look into the collective interest of
the whole and the society rather than themselves only. Research has amply
proven that countries with high individualism are able to accumulate higher
levels of wealth Vis a Vis countries with higher collectivism. Therefore all the
developed countries exhibit high degrees of individualism and developing
countries have high collectivism per se.

The cultures with high individualism are the ones where;

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• People feel that they are solely responsible for the good of themselves and
their immediate family only and are not bothered by the society as a whole.
• People have a very need for achievement and where individual needs and
aspirations are strived to be achieved at any cost by the individuals.
• people are not emotionally dependent on organizations or groups

On the other hand, cultures high on collectivism are the ones where;

• People tend to identify themselves with the group members more than
anything else ,
• Where they feel that it is best for the group to take collective decisions for
the common good of all.
• Where the group members are loyal to each other in exchange of group
membership.

4. Masculinity vs. Femininity

The cultures with dominant masculine dimensions are the ones where men are
highly ambitious, and are driven by tremendous sense of achievement power
and materialistic things. Secondly the gender inequalities persists as men do not
like women to be at par with them .this cultural dimension exhibits a cultural
characteristic in which the dominant values in society are success, money, and
things. In contrast, femininity is the term used by hofstede to describe a
situation in which the dominant values in society are caring for others and the
quality of life. A masculine culture has the following features;

• Here personal growth, success in terms of money and fame are the most
predominant values in life
• Here the gender roles and responsibilities are clearly outlined in the social
fabric of the society.
• Here men prefer to be the sole decision makers and are by nature inclined
and conditioned towards being more assertive and dominant.
• for them everything comes after their prime focus i.e. their work

5. Long Term Orientation vs. Short Term Orientation

This cultural dimension brings forth the point that it is important to be future
oriented than being short term oriented in both personal and professional
endeavors.

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 • They believe in making the future secure by investing smartly for the future
rather than indulging into unnecessary and wasteful expenditure for short
term happiness.
• Here they are quite okay if the results are not fast enough.
• Long term persistence and perseverance to achieve goals is considered to be
perfectly alright.

Hofstede’s cultural dimensions as exhibited by various countries:

 The countries with an Anglo cultures like the united states, Great Britain and
Australia are high on individualism and masculinity, low on power distance
and uncertainty avoidance
 The Latin European countries show high uncertainty avoidance
 The Nordic countries show low masculinity
 The far eastern countries show high power distance, low individualism

Activity 2

1. Do you agree with the cultural dimensions as outlined by Hofstede?

2. Justify by finding out some case study on these dimensions outlining their
importance in international business.

1.4.2. TROMPENAARS SEVEN DIMENSIONS OF CULTURE

The seven dimensions of culture identified by trompenaars and Charles Hampden-

turner are outlined below. They found out that people from different cultures aren't
just randomly different from one another; they differ in very specific, even
predictable, ways. This is because each culture has its own way of thinking, its
own values and beliefs, and different preferences placed on a variety of different
factors. Trompenaars and Hampden-turner concluded that what distinguishes
people from one culture compared with another is where these preferences fall in
one of the following seven dimensions; see figure 3.

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 Individualism
Universalism versus Specific versus
versus
particularism diffused cultures
communitarianism

Sequential time
Neutral versus Achievement versus
versus synchronous
emotional ascription
time

Internal direction
versus outer
direction.

Figure 3: Trompenaars, Hampden-Turner’s seven Dimensions Of Culture

1. Universalism Versus Particularism

According to them universalistic cultures are the ones where people prefer to
follow the rules and regulations above anything else unlike in a particulate
culture where personal relations are above rules and regulations.
Typical Universalist cultures are Switzerland, USA. and Canada.
Typical particularistic cultures are Russia, China, and India.

2. Individualism Versus Communitarian (Group) Culture

This cultural dimension seeks answers to questions like does the society believe
in acting individually or collectively.
The cultures propagating individuality believes that the individual
achievements are more important than the group where people are conditioned
right from the beginning to take care for themselves and earn and live for
themselves only and do not bother to take care of others .
Unlike a communitarian culture where groups are highly respected form of
living and are considered to be quite important for the survival of the society.

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3. Specific Versus Diffused Cultures

The specific and diffused cultures can be differentiated by their orientation

towards personal and professional relationships.

In specific cultures people prefer to keep their personal and professional lives
separate while in the diffused cultures people tend to maintain friendly
relations with their colleagues at the workplace as well.

Again the cultures exhibiting specific cultures are America, Germany and
Switzerland and cultures having diffused dimensions are Russia, India, China
and Spain.

4. Neutral versus Emotional cultures

This cultural dimension aims at finding out the degree to which the individuals
are allowed to express themselves emotionally in their personal and
professionally.
In the neutral cultures people are supposed to be quite emotionally strong and
not expressive in public while in the emotional cultures it is considered to be
perfectly alright to express oneself emotionally in public.

Therefore in neutral cultures;

 People should manage their emotions quite well, their body language
should not express their emotions especially their facial expressions even
if they are not happy with something.
 They should keep their feelings separate from being exhibited in their
behavior professionally.
 Typical neutral cultures are Sweden, the Netherlands, Finland, and
Germany.

And in Emotionally Expressive cultures,

 People are acceptable if they are emotionally expressive at their

workplace and are open in expressing their pleasantness or
unpleasantness in relations with others while communicating.
 They are also adapting in using their body language expressively when it
comes to personal relationships and expressing ones emotions.

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  Typical emotional cultures are Poland, Italy, France, and Spain.

5. Achievement versus Ascription Oriented Cultures

This cultural dimension seeks an answer to the critical question; do we achieve

status through accomplishment or is it part of our situation in life (e.g., gender,
age, social class)

As the very name suggests, in Achievement Cultures people tend to give a lot
of importance to professionals who have achieved a lot in their lives through
hard work and exhibit a proven track record of accomplishments and
achievements in an achievement-oriented culture, peoples’ worth is evaluated
on the basis of their actions and performances, people tend to recognize, value,
and reward good performance appropriately, and use titles only when relevant.
Typical achievement cultures are: USA, Canada, Australia, and Scandinavian
countries.

On the other hand in Ascription Oriented culture people derive their status
from their birth in a socially more acceptable and respectable family and not
because of their personal achievements are known as ascribed cultures. Since
here people believe that you should be valued for who you are, titles and
credentials matter the most, so they tend to use titles frequently, and to show
respect to people with formal authority. Typical ascription cultures are: France,
Italy, and Japan.

6. Sequential time versus Synchronous time

This cultural dimension seeks an answer to the critical question; do we do tasks

in sequence or several tasks at once?

In a Sequential time culture, people tend to understand the structure of time as

being sequential, inflexible and to assign different importance to past, present
and future. For them, the order of events happening is important, the value of
time is high (“time is money”) and the value of punctuality, planning, and
respecting a schedule is accordingly high.
Typical sequential-time cultures are: Germany, the UK, and the USA

In a Synchronic time culture, people see the past, present, and future as
interlocked periods so they tend to work on several projects at once, and view
plans and commitments as flexible, because they think time itself is flexible.

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Typical synchronous-time cultures include Japan, Argentina, and Mexico.

7. Internal direction versus outer direction

This cultural dimension seeks an answer to the critical question; do we control

the environment or does it control us?

In internally directed cultures people believe that they can control the nature
through their knowledge skills and abilities to exercise control over it. They
believe in the power of science and technology and feel that they can dominate
nature by using these technical powers.

On the other hand in outer direction cultures people believe in living and
maintaining harmonious relationships with people around them and the
environment .in an outer-directed culture, people have an organic (as opposed to
the previous mechanistic one) view of nature. It is again a holistic perspective,
where man is viewed as only one of nature’s forces and should therefore live in
harmony with the others and the environment. People therefore believe that they
must rather adapt themselves to external circumstances and have to work
together with their environment to achieve goals.

Thus the five cultural dimensions as given by hofstede and the seven cultural
dimensions as outlined by Tromparans have given us ample insight into the
cultural dimensions which should be made to be understood and appreciated by
the multicultural workforce in today’s multinational organizations.

Check your progress 2

Identify the Hofstede’s cultural dimensions

1) These dimensions describe culture from loosely structured to tightly

integrate.
2) This dimension describes how a culture’s dominant values are assertive or
nurturing.
3) This dimension refers to the distribution of influence within a culture.
4) This dimension reflects a culture’s tolerance of ambiguity and acceptance of
risk.
5) This dimension believes in keeping the future in mind and working
accordingly.

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1.5 IMPACT OF CROSS CULTURE ON ORGANIZATIONS

The impact of cross culture on organizations is more clearly visible in the

communication issues, integration issues and cost issues which are discussed
below. The cross-cultural issues exist in every sphere of our lives and are more
visible in the case of organizational setups with multicultural and diversified
workforce at the helm of affairs.

1. The Communication Issues

Communication be it verbal , non verbal or Para verbal creates a lot of confusion

and misunderstandings in the cross cultural organizations as people vary in their
viewpoints, perspectives, values and ethics and connote different meanings to
different signs sometimes which makes it difficult for them to understand and
appreciate each other’s perspectives.

It becomes all the more difficult in cultures speaking different dialects and using
symbols for communication. What is considered to be an acceptable mode of
communication in one culture may not be acceptable in other cultures and vice
versa.

Cultural diversity also increases ambiguity, complexity and confusion in the

interpersonal relations when it comes to team work especially in the cross cultural
organizations. It tends to increase the complexity and problems in developing
overall organizational procedures as well at times. It might create difficulties for an
organization when it wants to reach at an acceptable solution to a given problem

The integration issues

One of the important integration issues could be the conflict of interest between the
culturally diverse workforces as each one of them has personal set of needs
aspirations, demands and desires both professionally as well as personally in the
organization. Some people have a higher need for achievement, affiliation and
power than others which accentuates the problems and conflicts.

Another issue could be cultural bias, that might crop up in the organization due to
the presence of one cultural group which may be predominantly present in the
organization and they may use their strength to overpower the cultural group in
minority.

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Cost issues

Then there could be high cost of diversity management as the organization has to
manage things across the world for culturally diverse workforce

Check your progress 1

Fill in the blanks

The three major challenges faced by the multinational companies are;

1. The MNC’s must stay abreast of……………………….. And

sidestep the temptation to assume that all markets are basically the
same.
2. The MNC’s must know the…………………………… of its
subsidiaries so that it can provide these units with the assistance
needed in addressing local demands.
3. The MNC’s must give the subsidiary more…………………….. So
that it can respond to changes in local demands.

1.6 SUMMARY

“Cross-cultural management explains the behavior of people in organizations

around the world and shows people how to work in organizations with
employees and client populations from many different cultures.” The
significance of managing organizations across cross-culture is visible in the ;
economic development of the nation, enhances organization reputation,
increases exposure of the employees, leads to innovations and creativity at the
workplace, enhances customer satisfaction, provides opportunities for the
growth of employees and increases competition. Impact of cross culture on
organization can range from communication issues to integration issues to cost
issues. Many people have contributed towards the dimensions of culture and
various models have been developed on this basis so far. Hofstede identified
four dimensions that he labeled individualism, masculinity, power distance, and
uncertainty avoidance.tromparans has given seven dimensions of culture as
universalism versus particularism, individualism versus communitarians’,
specific versus diffused cultures, neutral versus emotional, achievement versus
ascription, sequential time versus synchronous time, internal direction versus
outer direction.

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1.7 GLOSSARY

Cross cultural management: cross-cultural management explains the behavior

of people in organizations around the world and shows people how to work in
organizations with employees and client populations from many different
cultures.

Individualism: in this cultural dimension people tend to concentrate on i me and

myself above anything and anybody else.

Masculinity: the cultures with dominant masculine dimensions are the ones where
men are highly ambitious, and are driven by tremendous sense of achievement
power and materialistic things

Power distance: this cultural dimension exhibits the extent to which less powerful
members of institutions and organizations accept the unequal distribution of power
in the organization.

Uncertainty avoidance: this cultural dimension exhibits the extent to which

people are willing to take or avoid risk taking both professionally as well as
personally.

Internally directed cultures: where people believe that they can control the
nature through their knowledge skills and abilities to exercise control over it.
They believe in the power of science and technology and feel that they can
dominate nature by using these technical powers.

Outer direction cultures: where people believe in living and maintaining

harmonious relationships with people around them and the environment.

1.8 ANSWERS TO CHECK YOUR PROGRESS

Answers to check your progress 1

1. Local market conditions

2. Strengths and weaknesses.
3. Autonomy

Answers to check your progress 2

1. Individualism and collectiveness

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 2. masculinity and femininity
3. Power distance
4. uncertainty avoidance
5. long term orientation

1.9 REFERENCES

1. Bhattacharya, Deepak Kumar: 2010, Basic cross- cultural

management, PHI learning publications.
2. Mead Richard and Andrews g. Tim, International management: culture
and beyond, Wiley, 2009, England.
3. Punnett, Betty Jane. 2004, International perspectives on organizational
behavior and HRM.
4. Scarborough Jack, The origins of cultural differences and their impact on
management, quorum books, 1998, USA.

1.10 SSUGGESTED READINGS

Hill, Charles w., international business: 1998, McGraw-hill

1.11TERMINAL AND MODEL QUESTIONS

1. What is cross- cultural management? Explain its nature in detail.

2. Outline the significance of cross-cultural management on organizations.
3. Outline the impact of cross-cultural management on organizations.
4. Critically evaluate the cultural dimensions as given by hofstede and its
relevance in today’s business environment.
5. Critically evaluate the cultural dimensions as given by Tromparans.
Do you think they are superior to the other cultural dimensions?
Explain with the help of examples.

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LESSON 2

ROLE OF CULTURE IN STRATEGIC DECISION MAKING, INFLUENCE

OF NATIONAL CULTURE ON ORGANIZATIONAL CULTURE

STRUCTURE OUTLINE

2.1 Learning objectives

2.2 Introduction to the meaning of business strategy and strategic decision
making
2.3 Role of culture in strategic decision making
2.3.1 Strategic predispositions for managing across cultures
2.4 Influence of national culture on organization culture
2.4.1 Cultural arbitrage as a strategic choice to en cash globalization
2.5Summary
2.6 Glossary
2.7 Answers to check your progress
2.8 References
2.9 Suggested readings
2.10 Terminal and model Questions

2.1 LEARNING OBJECTIVES

After going through the lesson you should be able to;
 Understand what is the role of strategic decision making in cross cultural
management
 Appreciate the Strategic predispositions or alternatives for managing across
cultures
 Outline the Influence of national culture on organization culture

2.2 INTRODUCTION TO STRATEGY AND STRATEGIC DECISION

MAKING

In simple terms strategy can be defined as an action in reaction to a competitors

action and strategic decision making encompasses taking decisions with regard to

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issues which are of strategic nature to the survival of the organization and very
significant for it. It also entails taking decisions when faced with a number of
options or alternatives to choose from a given set of alternatives at a point of time
here the role of the manager is very crucial, as one decision of his can make or mar
the organizational existence in today’s highly competitive business environment.
Thus a strategy can be understood as a business approach to a set of competitive
moves that are designed to generate a successful outcome. It is also characterized
by the following; it basically is:

Management’s game plan for

 Strengthening the organization’s competitive position vis a vis the external
factors in the environment, be it socio –economic, political legal, technical
or global factors
 Satisfying the ever increasing demands needs and wants of the discerning
global customers
 Achieving the performance targets as fast as possible or else they will miss
the bus to success.

It seeks to get answers to the questions like

 Where are we now?
 Where do we want to go?
 How will we get there?
 How do we know if we got there?

The managers today generally think about strategy in different ways in the ever
volatile, uncertain, complex and ambiguous environment. For instance, some
managers believe that you must analyze the present carefully, anticipate changes in
your market or industry, and, from this, plan how you'll succeed in the future.
Meanwhile, others think that the future is just too difficult to predict, and they
prefer to evolve their strategies differently.
A business strategy is a document that clearly defines the direction a business will
pursue and the steps it will take to achieve its goals. It can simply be described as a
long-term business planning. Typically a business strategy will cover a period of
about 3-5 years or sometimes even longer.
It is basically, concerned with major resource issues e.g. raising the finance to
build a new factory or plant. Also, concerned with deciding on what products to
allocate major resources to & with the scope of a business' activities i.e. what and
where they produce – Like in the case of Barbie above which have developed a

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Black Barbie especially for African- American market with a line to match the
local acceptance and culture.
Researchers have identified a large number of factors influencing the quality of
strategic decisions. Environment, organizational structures and culture, team and
individual characteristics, and the characteristics of strategic problems themselves
have all been identified as influences on quality.

Managers in organisations use different techniques to strategically decide the

best alternative by the following ways:

1. Through Strategic Planning

2. By conducting SWOT Analysis
3. By doing the Cost-Benefit Analysis
4. By seeking Outside Advice

1. Through Strategic Planning

To plan is to decide in advance the future course of action. Strategic planning helps
in integrating the information and helps achievement of best decision. For
example, Dominos Pizza has started its campaign of 1 on 1 pizza free on
Wednesday to all the customers, the managers might have the objective of
increasing sales and implement a strategy of offering certain products to attract
more customers. After a month of pursuing the new strategy, managers can look at
sales data for the month and evaluate whether the strategy resulted in increasing
sales and then choose to keep the new price scheme or alter their strategy.

2. By conducting SWOT Analysis

A SWOT analysis is a tool that managers use to examine internal and external
factors that may influence the ability to achieve goals. A SWOT analysis involves
businesses strengths and weaknesses and the external threats and opportunities it
faces. For example: Coco cola, a well known brand has its own SWOT like
Strength is its Popularity, lot of finance and customer loyalty. Weakness is health
issues, Opportunity is buy out competition and more brand recognition, threat is
attitude and competition.

3. By doing the Cost-Benefit Analysis

In a cost-benefit analysis, managers estimate the amount of outcome i.e. revenue

expected from a certain project and the expected costs of pursuing the project. By

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estimating the costs and benefits associated with several different projects,
managers can determine which project is expected to produce the greatest benefit.

4. By seeking Outside Advice

While entrepreneurs and small business owners may be experts in their chosen
industry, they are often not experts in actually managing businesses. Business
owners often seek outside help to aide in the strategic decision making process.

Importance of strategic decision making in today’s organizations

Strategic Decision making is very useful for the successful operation of
organizational activities. All the managerial functions such as planning,
organizing, directing and controlling are determined by the decision.
1. Pervasive Function: It is useful & an essential aspect in each level of
management like Top level management makes strategic decisions such as
planning, organizing, directing and controlling. Middle level management
makes tactical decisions such as division of works, fixation of authority and
responsibility, integration of efforts etc. Operating level management makes
regular operating decisions such s preparation of schedule of daily works,
divisions of works, delegation of authority etc.
2. Systematic Analysis- It helps in making step by step investigation of each and
every alternative. Best way out of the intuitive analysis is systematic analysis.
Thus, this helps in making proper analysis of all the aspects quantitatively.
3. Evaluation of Problems correctly- It is a good answer to all the questions like
what, when, how & which. Before taking any decision, all the alternatives must
be pointed out properly to come at a requisite solution.
4. Reduces Uncertainty and risks- Risk can never be reduced but its possibility
of happening or not happening can be measured with the help of great decisions
and planning.
5. Indispensable part of management- It helps in smooth operation of business
& is a very important part of every management activity.
6. Multiple Goals- Decisions in the organizations have many goals. For example
a decision goal on new product development may simultaneously emphasize on
other goals such as cost-effectiveness, quality etc. Thus, it helps in avoiding the
chance of contradicting goals.

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 CHECK YOUR PROGRESS 1
FILL IN THE BLANKS
1. ………………………….helps in integrating the information and helps
achievement of best decision.

2. A ………………………is a tool that managers use to examine internal and

external factors that may influence the ability to achieve goals.

3. In …………………………, managers estimate the amount of outcome i.e.

revenue expected from a certain project and the expected costs of pursuing
the project.

4. While entrepreneurs and small business owners may be experts in their

chosen industry, they are often not experts in actually managing businesses.
Business owners often seek …………………….. to aide in the strategic
decision making process.

2.3 ROLE OF CULTURE IN STRATEGIC DECISION MAKING

Culture eats strategy for breakfast… Peter Drucker

Managers working in the cross-cultural environment need to understand how

culture influences the decision making styles and processes. Culture influences the
decision making in the context of national/institutional culture and individual
based value system of the decision makers. National/Institutional culture produces
a collective pattern of decision making, while the individual culture, through the
nurtured value systems, and affect the perception and interpretative power of the
individual decision maker when he/she takes the decision.

The following dimensions of culture like the time orientation, power distance,
individualistic versus collectivistic cultures, its competitiveness, its structure, space
and modes of communication have a tremendous impact on the strategic decision
making for an organization which must be duly taken care of. See figure 1.

Page 25 of 190
 Cultural Dimensions Effecting
Decisions

1.Time Orientation 3.individualism 5.Space

2.Power Distance 4.Competitiveness 6.Communication

Figure 1: Cultural Dimensions Effecting Decisions

1. Time orientation: different cultures across the world have different orientation
towards time; where for some it is flexible while for some it is not flexible. The
two types of time orientation which have been classified by Hall and Hall are
monochromic and polychromic. A culture following monochromic time orientation
prefers to view time in a linear way, thereby performing one activity at a time and
not rushing through it by multitasking .their main concern is to perform one task
nicely at a time by focusing on information and not on people. On the other hand,
in cultures where polychronic time system is used people focus on more than one
task at a time and depend less on detailed information, and schedules are open to
change.

2. Power distance: some cultures are quite open to accepting inequality in status
power and position and do not mind being directed by people in power and higher
positions. They respect the hierarchy in the organization where they are supposed
to follow the lines of communication through the scalar chain. Such cultures have
high power distance and cultures which is not receptacle to position power and
hierarchy show signs of low power distance.

3. Individualism refers to the culture that focuses on the individual over the group.
In this case the individual is supposed to be more self-reliant and there is less need
to resort to the group and there is no difference between in-groups and out-groups.

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While on the other hand Collectivism refers to the shared values of the group
where the interests of the group overweigh the interests of the individual

4. Competitiveness- some organizations thrive on competitiveness rather than

collaboration amongst the employees in order to inculcate fresh thinking and new
and innovative ideas in the organization. Moreover it also generates a feeling of
responsibility in them and encourages them to be more creative as well. When
competition is valued in an organization, then the focus is on wealth, performance
and ambitions. While in other cultures, job satisfaction is accorded more
importance where competition is not valued as much as working in a congenial
competition free environment

5. Space- This refers to the concept of personal and public space, whereby in some
cultures privacy is important while in others public spaces are more important. In
some cultures it is acceptable to discuss personal issues, while some cultures do
not encourage such personal conversation in their professional workplace.

6. Communication- Hall and Hall have outlined two types of context, one is a
low context and the other is a high context culture. The low context culture is
characterized by written communication where most of the information and
communication takes place in the written format. While in the high context
cultures more emphasis is given on verbal communication and commitments by the
employees.

2.3.1 STRATEGIC PREDISPOSITIONS FOR MANAGING ACROSS

CULTURES

There are a number of factors which contribute towards developing

culture specific strategies especially in today’s global networks. These
can be summarized as following.

1. There is a challenge of meeting the demands of local customers as per

their cultural preferences as it is quite difficult to make them accept the
other culture’s products and services easily. Though it has been found
that people in the developing countries are more open to global products
than their developed countries counterparts.
2. The importance of being an insider, as in the case of customers who
prefer to buy “local product.”

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 3. The difficulty of managing global organizations, as in the case of some
local subsidiaries that want more decentralization and others that want
less.
4. The need to allow subsidiaries to use their own abilities and talents and
not be restrained by headquarters, as in the case of local units that know
how to customize products for their market and generate high returns on
investment with limited production output.

Thus by responding to cultural needs of local operations and customers, MNCs

find that regional strategies can be used effectively in capturing and maintaining
worldwide market niches.

As MNCs become more transnational, their strategies must address the cultural
similarities and differences in their varied markets .Most MNCs have a cultural
strategic predisposition toward doing things in a particular way.

Four distinct strategic predispositions have been identified which are delineated
below as; See Figure 2.

1. Ethnocentric approach
2. Polycentric approach
3. Regio centric approach
4. Geocentric approach

• Ethnocentric • Polycentric
approach approach

Values and
Values and
interests of the
interests of the
parent
host company
company

Integrate a Blend its own

global systems interests with
approach to those of its
decision subsidiaries on
making. a regional basis.
• Geocentric • Regiocentric
approach approach

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 Figure 2: Four distinct strategic predispositions

Ethnocentric predisposition aims at following the home country management

practices and strategies even in the host country or country of its operations and
business. it basically propagates its national /ethnic culture across the countries
of its business.

Polycentric predisposition aims at following the host country management

practices and strategies even in the host/local country or country of its
operations and business. it basically propagates and follows its local culture in
the countries of its business.

Regiocentric predisposition is a philosophy of management whereby the firm

tries to blend its own interests with those of its subsidiaries on a regional basis.

Geocentric predisposition is a philosophy of management whereby the

company tries to integrate a global systems approach to decision making which
is practiced for all its operations across the globe. They believe in following the
best practices irrespective of the global or local strategies.

ACTIVITY 1

Discuss the various strategic predispositions for managing across cultures

for multinational organizations by finding out a case study on the various
predispositions followed by any one multinational organization.

The Orientation of an MNC under different profiles with regard to its mission
statement, governance policy, strategy, structure, marketing , finance ,personnel
policies and technology are discussed below;

With regard to its Mission, the orientation of the organization would be;

 Ethnocentric when it comes to Profitability of the organization

 Polycentric when it comes to ensuring Public acceptance in the host
country.
 Regio centric when both profitability and public acceptance are required.
 Geocentric when again both profitability and public acceptance are
required.

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With regard to Strategy

 When the organization intends to follow the path of Global integration, it

would be pursuing ethnocentric approach (home country strategy)
 When the organization intends to follow the path of National
responsiveness, it would be pursuing Polycentric approach (host country
strategy)
 When the organization intends to follow the path of Regional integration
and national responsiveness, it would be pursuing Regiocentric
approach.(blending host country with home country)
 When the organization intends to follow the path of Global integration
and national responsiveness, it would be pursuing Geocentric
approach.(best in class or global)

With regard to Governance

 When the directions of governance are flowing from the home country
i.e. from Top to down, it would be called ethnocentric approach.
 When the directions of governance are flowing from the host country i.e.
from Bottom to-Up, it would be called Polycentric approach.
 When the directions of governance are mutually negotiated between
region and its subsidiaries it would be called Regio centric approach.
 When the directions of governance are mutually negotiated at all levels of
the corporation, it would be called geocentric approach.

With regard to Structure

 When the organization has Hierarchical product divisions, it would be

advisable to follow ethnocentric approach.
 When the organization has Hierarchical area divisions, with autonomous
national units, it follows Polycentric approach.
 When the organization has Product and regional organization tied through
a matrix, it follows Regiocentric approach.
 When the organization has A network of organizations, it follows
Geocentric approach.

With regard to Culture

 When the organization follows the home country culture, it is

ethnocentric approach.

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  When the organization follows the Host country culture, it is Polycentric
approach.
 When the organization follows Regional culture, it is Regiocentric
approach.
 When the organization follows Global culture, it is geocentric approach.

With regard to Technology

 When the organization follows the route of Mass production, it would be

Ethnocentric in nature.
 When the organization follows the route of Batch production, it would be
Polycentric in nature.
 When the organization follows the route of Flexible manufacturing, it
would be Regiocentric in nature.
 When the organization follows the route of Flexible manufacturing, it
would be Geocentric in nature.

With regard to Marketing

 When the Product development is determined primarily by the needs of

home country customers, it is ethnocentric marketing.
 When the Local product development is based on local needs, it is
Polycentric marketing.
 When the products are standardized within region, but not across regions,
it is Regiocentric marketing.
 When the organization offers global products with local variations, it is
geocentric marketing.

With regard to Finance

 When the organization follows repatriation of profits to home country, it

is Ethnocentric in nature.
 When the organization follows the policy of Retention of profits in host
country, it is Polycentric in nature.
 When the organization follows the policy of Redistribution of profits with
region, it is Regiocentric in nature.
 When the organization follows the policy of Redistribution of profits
globally, it is Geocentric in nature.

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With regard to human resource management practices

 The organization follows the ethnocentric approach when the People of

home country are developed for manning key positions anywhere in the
world where its operations are conducted.
 The organization follows the Polycentric approach when the People of
host /local nationality are developed for key positions in their respective
country, where the operations are conducted.
 The organization follows the Region centric approach when the Regional
people are developed for key positions anywhere in the region.
 The organization follows the Geo centric approach when the Best people
from around the world are developed for key positions anywhere in the
world.

CHECK YOUR PROGRESS 2

Match the strategic predisposition

1.Ethnocentric predisposition 1. Philosophy of management

whereby strategic decisions are
tailored to suit the cultures of the
host countries where the MNC
operates.

2.Polycentric predisposition 2. Philosophy of management

whereby the firm tries to blend its
own interests with those of its
subsidiaries on a regional basis.

3.Regiocentric predisposition 3. Philosophy of management

whereby the company tries to
integrate a global systems approach
to decision making.

4.Geocentric predisposition 4. Philosophy of management

whereby the values and interests of

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 the parent/home company guide
strategic decisions.

2.4 INFLUENCE OF NATIONAL CULTURE ON ORGANIZATIONAL

CULTURE

It is well known that national cultures differ at the level of unconscious values
which are acquired during childhood and these national cultures are stable, the
afterward changes that occur are practices whereby the underlying values are left
untouched.

National Culture is divided on the basis of two models

1. Single Dimension Model- Countries are divided on the basis of one

dimension only like per- capita income only

2. Multiple Dimension Level- Countries are divided on the basis of many

dimensions like per capita income, population, growth of economy etc.

Elements that contribute to the creation of a national culture:

1. Physical environment- Environment in which the nation exist like political,

legal, economical, resources etc

2. History of the nation- Growth of the economy in the passage of time and as
per the past records available.

Cultures – both national and organizational – differ along many dimensions. Four
of the most important are:

1. Directness (get to the point versus imply the messages)

2. Hierarchy (follow orders versus engage in debate)
3. Consensus (dissent is accepted versus unanimity is needed)
4. Individualism (individual winners versus team effectiveness)

Page 33 of 190
Organizational Culture: Organizational cultures differ at the level of practices
which can be described as superficial and they are to some extent manageable.
These organizational cultures differ from one company to the other within the
same country. A typical multinational organizational culture may include the
following dimensions like values attitudes norms and expectations and rituals
symbols and the routines that are normally followed.

Types of Organization Culture

In 1972 Harrison suggested that organization culture can be classified into four
types i.e. the power culture, the role culture, the person culture and the task culture.

The power culture: The organization culture showcasing the power culture relies
on the power of the leader where he is responsible for every decision. He dons
upon himself the responsibility of the strategies and the strategic decision making
where his vision has a tremendous impact on the working of the organization.

The role culture: The organization culture showcasing the role culture is
characterized by well defined roles along with the responsibilities for everybody
across various levels in the organization.

The person culture: In the person culture people with professional expertise and
knowhow are preferred over managers without professional degrees.

The task culture: The task culture gives importance to the individual performance
and not the leaders. See figure 3

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 •Leader Is •Formally
Responsible For Structured With
Everything Defined Rules
And Authority

Power Role
Culture Culture

Task Person
Culture Culture
•Driven By •Professionals Are
Individual Given More
Performance And Importance Than
Not Leaders Managers

Figure 3: Types of Organization Culture

Thus, it can be observed that the organization culture invariably affects the;

 way corporate strategies are outlined

 The organizational long term and short term goals are determined
 And how the national and international operations are carried out
 The quality of its human resources

2.4 INFLUENCE OF NATIONAL CULTURE WITHIN THE

ORGANIZATION

Schein (2004) says that organizational culture matters because cultural elements
determine strategy, goals and modes of operating. Therefore, creating good, strong
culture is vital for business in long-term success.

However, few organizations spend time on understanding their cultural values.

Many organizations lack of understanding their core values.

Page 35 of 190
Cultures influences the organization in many ways

For example at the Macro level, the laws and economic institutions matters a lot

While at the Micro level the organization is influenced through a number

of cultural elements relating to Employer- employee relationships and Behaviour
among employees in the organization.

Before proceeding further , let us try to understand the difference between the
national culture and the organization culture.

As can be seen from the exhibit below, the national culture is broader in outlook,
has a shared meaning, is characterized by unconditional relationships within the
organization, is embedded with the national sentiments, is totally immersed in the
organization, is quit complex and influence the organizational culture to a large
extent.

While the organizational culture has a narrower outlook, has a shared behaviour , is
characterized by conditional relationships , is partly involved , is quite manageable
and has certain sub cultures as well.

Differences in National Culture and Organizational Culture

National Culture Organizational Culture

Broader Narrower

Shared meaning Shared behavior

Unconditional relationship Conditional relationship

Born into it Socialized into it

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Totally immersed Partly involved

More complex Manageable

Influences organization culture Sub cultures

The influence of national culture on organizational culture is visible in the

following:

1) Cultural Adaptation: It refers to the manner in which a social system of a

nation fits into the environment of the organization. Adaptation is necessary
for survival. The type of clothing, food & dwelling, suitable for the climatic
and weather conditions, are forms of adaptations.
2) Cultural Shock: 'Culture shock' is used to describe the emotional rollercoaster
that someone experiences while living in other country. Anyone who has
worked and lived in a foreign country will experience culture shock of some
sort. Recognizing culture shock is an important way of being able to deal with
it. Dealing with it helps minimize the risk of becoming disillusioned with a
new country and the possibility of deciding that a quick return 'home' is the
only solution.
3) Cultural Transmission: Culture is transitive in nature i.e. it is transmitted
from one generation to another. This nature makes it cumulative. Cultural
accumulations facilitated by cultural transmissions, enables man to build upon
the achievements for the past. Thus, enabling the greatest impact on
Organizational Culture. If the same culture nurturing the employees is
transmitted to new entrants then:

 It implements the sense of identity and unity in the new entrant and enables
him to accept the culture and people more easily.
 It strengthens the social system stability as a social glue that holds the
organization together

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  It serves as control mechanism and shapes the attitudes and behaviour of the
employees
 It helps to distinguish one organization from another.

ACTIVITY 2

Is it always advisable to keep in mind the culture of the host country while
making strategic decisions of launching a new product? Discuss with
examples.

2.4.1 CULTURAL ARBITRAGE AS A STRATEGIC CHOICE TO

ENCASH GLOBALIZATION

While differences in race, social norms, or language create distance between two
countries, they can also be strong levers for building global presence. French
cuisine and wines enjoy global cachet. So do American fast-food chains like
McDonald's and Pizza Hut. For many Indian businesses "" from basmati to
Bollywood "" cultural arbitrage is a quick ticket to globalization.

"Products marketed to the Indian Diaspora are a very obvious example of using
cultural bridges across international boundaries. By selling to such a niche, firms
can easily penetrate global markets,"

That's certainly the tack the Vicco Group took. For years, the company marketed
its Vicco Vajradanti toothpaste mostly to Indians all over the world. In the early
1980s, Chairman G K Pendharkar decided that he wanted to market Vicco
toothpaste in the US to Americans. His first few attempts to sign on distributors in
California backfired. Laughs Pendharkar: "Americans could not even pronounce
the word 'ayurvedic', let alone understand it."

Pendharkar felt that if the Chinese could make capital from acupuncture and the
Germans could make homoeopathy globally acceptable, an Indian company could
take ayurveda global. He changed the brand name from Vicco Ayurvedic to Vicco
Herbal Toothpaste, adapted the formulation to suit American tastes, and set up two
distribution channels. That worked: a brand that once struggled to survive in

Page 38 of 190
California is available across the US today.

While one distributor sells the sweetened version of Vicco Ayurvedic to Indians by
exclusively targeting Indian grocery stores, another sells unsweetened Vicco
Herbal toothpaste through whole foods supermarkets. Pendharkar's next goal: to
put Vicco Herbal on the shelves of mainline supermarkets in all 52 US states.

2.5 SUMMARY

Strategic decision-making is the process of developing and putting into action

choices that will influence the long-term welfare of the organization. These choices
often involve major organizational changes and large resource commitments that
are difficult to reverse once they are implemented.Managers in organisations use
different techniques to strategically decide the best alternative by Strategic
Planning, SWOT Analysis, Cost-Benefit Analysis and Outside Advice.
The dimensions of culture like the time orientation, power distance, individualistic
versus collectivistic cultures, its competitiveness, its structure, space and modes of
communication have a tremendous impact on the strategic decision making for an
organization which must be duly taken care of. As MNCs become more
transnational, their strategies must address the cultural similarities and differences
in their varied markets .Most MNCs have a cultural strategic predisposition toward
doing things in a particular way. Four distinct strategic predispositions have been
identified which are; Ethnocentric predisposition, which is a nationalistic
philosophy of management whereby the values and interests of the parent/home
company guide strategic decisions, Polycentric predisposition which is a
philosophy of management whereby strategic decisions are tailored to suit the
cultures of the host countries where the MNC operates, Regiocentric predisposition
which is a philosophy of management whereby the firm tries to blend its own
interests with those of its subsidiaries on a regional basis and Geocentric
predisposition which is a philosophy of management whereby the company tries
to integrate a global systems approach to decision making.

Cultures – both national and organizational – differ along many dimensions. Four
of the most important are:Directness (get to the point versus imply the messages)
Hierarchy (follow orders versus engage in debate),Consensus (dissent is
accepted versus unanimity is needed) Individualism (individual
winners versus team effectiveness)

Page 39 of 190
The different types of Organization Culture are Power culture Role Culture and
Task Culture, Person Culture. Thus in organization- culture affects the way:
strategy is determined, goals are established, how the organization operates and
The personnel of the organization.

Culture influences the organization in many ways; At the Macro level: laws and
economic institutions, the nation must be considered by organizations going about
their business. At the Micro level: the organization is influenced through a number
of cultural elements relating to: employer-employee relationships and behaviour
among employees.

2.6 GLOSSARY

Ethnocentric predisposition is a nationalistic philosophy of management

whereby the values and interests of the parent/home company guide strategic
decisions.

Polycentric predisposition is a philosophy of management whereby strategic

decisions are tailored to suit the cultures of the host countries where the MNC
operates.

Regiocentric predisposition is a philosophy of management whereby the firm

tries to blend its own interests with those of its subsidiaries on a regional basis.

Geocentric predisposition is a philosophy of management whereby the

company tries to integrate a global systems approach to decision making.

2.7ANSWERS TO CHECK YOUR PROGRESS

Answers to check your progress 1

1. Strategic planning
2. SWOT analysis
3. In a cost-benefit analysis
4. Outside help.

Answers to check your progress 2

1. ………….. 3.Ethnocentric

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2. ………….. 1.Polycentric
3. ……………..4. Geocentric
4………………3. Regiocentric

2.8REFERENCES

1. Cox, and W Hopkins (2006) “Developing a Whole Organisation Culture”.

2. Gray, D., Hall, R Jones, C Raffo, I Chambers (2007) “Business Studies”,
Person Education, UK

2.9 SUGGESTED READINGS

1. Robbins , S.,(1989) “Organizational Behavior”, Prentice Hall, UK

2. Schein,E., (2004) , “Organizational Culture and Leadership”, Jossey-Bass,
New-York

2.10 TERMINAL AND MODEL QUESTIONS

1. What is strategic decision making? How culture impacts the strategic

decisions of the organization? Explain with a case study

2. Outline the role of culture and its relation with strategic decisions for an
organization

3. What do you think is the influence of national culture on organization

culture?

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LESSON 3
CULTURAL AND BEHAVIOURAL DIFFERENCES ACROSS THE
WORLD: MODELS FOR COMPARING CULTURES

STRUCTURE OUTLINE

3.1 Learning objectives

3.2 Introduction to cultural and behavioral differences
3.3Models of cultural dimensions
3.3.1 Hofstede’s value dimension
3.3 .2 Kluckhohn and Strodtbeck’s value orientation
3.3.3 Globe‘s cultural dimensions
3.4 Summary
3.5 Glossary
3.6 Answers to check your progress
3.7 References
3.8 Suggested readings
3.9 Terminal and model Questions

3.1 LEARNING OBJECTIVES

After going through the lesson, you should be able to;

 Understand the behavioral and cultural differences across the world in

multinational organizations which are important to be taken note of by
global managers.
 Appreciate the Models of cultural dimensions as given by Hofstede,
Kluckhohn and strodtbeck and GLOBE studies.

3.2 INTRODUCTION TO CULTURAL AND BEHAVIOURAL

DIFFERENCES

The most important aspect of understanding behavioral and cultural differences is

to first of all decipher the meaning of culture and try to understand how and what
makes one culture different from another. For that the prerequisite is to understand

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and appreciate the cultural differences amongst the nations which make it unique
with a different flavor all together.
The behavior of individuals and organizations depends on number of factors.
Culture is one of the subsets of behavior. Attitude and values are two important
aspects of our behavior, and both are influenced by culture significantly.
To understand such correlation, we need to understand the aspects which add to the
differences in culture envelop the language, the time orientation, the use of space,
religion and values. See figure 1.

Use Of The Time

Language Religion Values
Space Orientatio

Figure 1: Aspects of cultural differences

1. Language

The strong version says that language determines thought, and that linguistic
categories limit and determine cognitive categories, the weak version says that
only linguistic categories and usage influence thought and certain kinds of non-
linguistic behavior. In the Low-context cultures, the message is conveyed by the
words used. On the other hand, in the High-context cultures, words convey only a
limited part of the message.

2. Time orientation

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With regard to orientation towards time, there are two types of cultures; the
polychronic and the monochronic cultures.
The Polychronic cultures (also called P Time) have;
 Circular view of time.
 There is no pressure for immediate action or performance.
 The Emphasis is mainly on the present state of affairs.
The Monochronic cultures (also called M Time) have;
 Linear view of time.
 Create pressure for action and performance.
 Long-range goals and planning are important.

3. Use of space
Again different cultures exhibit different preferences for the usage of space. The
study is also known as Proxemics which reveals important cultural differences.
Proxemics is the study of how people use space to communicate. Since the
Concept of personal space varies across cultures the Space is arranged differently
in different cultures.

4. Religion
This is in fact one of the most significant and visible aspects of culture. It defines
the codes of ethics, religious convictions, beliefs, sentiments, customs, rituals,
festivals and moral behavior of the society etc. For a long time now, religion has
been Influencing the conduct of economic matters in a nation. The cost of ignoring
certain religious aspects could be very high, sometimes even fatal, in international
business. Religion may also influence the attitude towards work and wealth like, in
United States, it is common to hear people talk about the “Protestant work culture”
which holds that people should work hard, be industrious, and save their money.

5. Values and national culture

Cultures vary in underlying patterns of values and attitudes. Cultural differences

cause major variations in people’s values. Americans want everything now, have
little patience with waiting, and are pushy. Japanese on the other hand are tend to
be patient, with the attitude of waiting and willing to stay with the jobs for the
longer period of time. Germans believe more on analytic decision making, with
less interest on brainstorming and quick decision making. And, Indians are
conservative in their decision making style, hedging the risk of uncertainty.
Thus, culture and behavior are closely connected. Varying cultures of different
human societies impose patterns of social behavior on the basic nature of humans.

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The result varies from person to person, with aggressive, dominant and even
violent behavior manifested in some, and acquired human traits more evident in the
behavior of others. Hence, culture plays the most crucial role in shaping our
individual and social behavior.

CHECK YOUR PROGRESS 1

FILL IN THE BLANKS WITH REGARD TO THE ASPECTS OF

CULTURAL DIFFERENCES

1. The strong version says that ………………..determines thought, and that

linguistic categories limit and determine cognitive categories,
2. ……………………………have Circular view of time and there is no
pressure for immediate action or performance.

3. ………………………………..have Linear view of time and Create pressure

for action and performance.
4. …………………………is the study of how people use space to
communicate.
5. …………………….is in fact one of the most significant and visible aspects
of culture which defines the codes of ethics, religious convictions, beliefs,
sentiments, customs, rituals, festivals and moral behavior of the society etc.

BEHAVIORAL DIFFERENCES IN DIFFERENT CULTURES

Since the organizations are made up of people who are unique individuals, each
bestowed with a specific set of value system, behavioral norms, grown up in
different environments, having different academic, socio economic, spatial and
demographic background from varying cultures and religions with predetermined
predispositions perspectives and perceptions, they bring along with themselves a
complete personality encompassing all the above traits . The whole personality
thus cascades down in their group and individual behavior and is amply reflected
in their decision making.
This entire cultural potpourri is quite challenging for the multinational
organizations to manage but at the same time it adds its charm and beauty to the
whole organization and renders it a unique identity. People coming from different
cultures thus invariably tend to be different in their thinking and behavior, what is
acceptable in one country may not be acceptable in others and vice versa.

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Here it would be pertinent to mention the existence of the learning organizations,
where one of the principles says that people have different mental models, i.e. their
thinking and perception about others as individuals and as other teams. They tend
to judge them by their behavior which may or may not be acceptable. Like Some
acceptable and desired behaviors in American organizations may be considered
rude or could hinder smooth operations in some countries.

Let us try to decipher some of the widely quoted key behavioral norms and
their considerations.

1. Key Behavior: communicating openly and directly with others to arrive at a

mutually acceptable decision.
Consideration:
It is interesting to find out that this open and direct communication of thoughts is
considered to be quite rude and impolite in the gulf countries.
The revised behavior could be: It would be more acceptable if both the parties
make an effort to share their thoughts and expressions before reaching a final
decision.

2. Key Behavior: Seeking performance feedback from others

Consideration: This behavior might be acceptable in some cultures where people
are not afraid of critical feedback, while in some cultures it might be considered as
having low self esteem and low level of confidence where you are constantly
seeking approval and feedback on your performance from others
The revised behavior could be: giving a patient and careful hearing to the others
viewpoint on one’s performance and take improvement initiatives accordingly.

3. Key Behavior: Trying to create confidence and trust in others by openly and
honestly expressing one’s feelings.
Consideration: it is again interesting to find out that this type of open expression
of one’s feelings is not acceptable in Japanese culture as they are very particular
about what others think of them and their behaviors, more so in their absence. This
makes them take a very diplomatic stance in their dealings with others.

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The revised behavior could be: however this can be done the other way also, that
is trying to make the other person understand the rationale behind their feelings to
enable them to be more acceptable.

4. Key Behavior: Taking leadership roles and acting proactively to finding

solutions to problems.
Consideration: this type of behavior may not be acceptable in Asian cultures
where there is high power distance and leadership and hierarchy are respected and
duly followed. For example we have a highly authoritarian culture in India with
high power distance, implying thereby that leadership behaviors are acceptable
only from the people in formal position and power or who are entrusted to do so.
Hence, leading-type of behavior may not be considered appropriate and, is rarely
demonstrated by individuals in non-leadership roles.
The revised behavior could be: acting and taking initiative even without
demonstrating leadership inclinations.

5. Key Behavior: Taking quick stern and decisive actions to solve the current
issues facing the organizations hindering its success and growth.
Consideration: this quick and stern decision making may not be possible in
cultures following bureaucratic structures of functioning where it takes quite long
to pass through all the layers of hierarchy to reach a final decision for example in
Saudi Arabia.
The revised behavior could be: laying down clear lines of communication and
hierarchy and formulating and devising ways to quick decision making in certain
cases within a limited time frame.

6. Key Behavior: The communication used in the organization garners

enthusiasm, motivation and commitment from others.
Consideration: In some cultures it is very important to be polite and non
aggressive while getting your viewpoint across others for example in china , it is
quite significant to maintain relationships especially in business and they try to put
across their viewpoint without offending others . Aggressive or overly forceful
behavior, particularly those that threaten team cohesion are absolutely not looked
up to or are acceptable norms of communication.

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The revised behavior could be: communicating in a nice unambiguous way and
at the same time being sensitive to others needs and expectations.
More and more global organizations are these days thriving on cultural
assimilation and are turning it to their advantage by just being sensitive to others
cultural heritage and giving due respect to their feelings and sentiments. This
becomes all the more important in customer driven environments. This has led to
most of the organizations laying down clear norms of expectations and behaviors
from their people to enhance their efficiency and effectiveness in cross cultural
environment.
Some of the behaviors which have been gaining importance in cross cultural
environment are discussed below;

1. The people in the organization are trained to be culturally sensitive to others

thinking and behavioral patterns.
2. They are made to appreciate and understand others decisions which might
have strong cultural roots.
3. They are made to learn collectively about different cultures and turning them
into their advantage.

ACTIVITY 1

Outline a brief introduction to behavioral and cultural differences across countries

and its impact on organization behavior citing some significant case studies on the
above discussed aspects of cultural differences.

3.3MODELS OF CULTURAL DIMENSIONS

In the following pages we are going to talk about the models of cultural
dimensions as give by prominent thinkers like;
3.3.1 Hofstede’s Value Dimension
3.3.2 Kluckhohn and Strodtbeck’s Value Orientation

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3.3.3 GLOBE’s Cultural Dimensions

3.3.1 HOFSTEDE’S VALUE DIMENSIONS

Hofstede has given five cultural dimensions which have already been discussed in
detail in the previous chapter. Here we will only explore the cultural and
behavioral dimensions of theses value dimensions and its implications on business
decision making.

1. Individualism vs. collectivism

2. High vs. low risk taking
3. High vs. low Power Distance
4. Masculine vs. feminine
5. Long-term versus Short-term Time Orientation

1. Individualism versus Collectivism

This dimension refers to the extent to which people prioritize or weigh their
individuality against their willingness to submit to the goals of the group. In
individualistic cultures, the need of individuals over groups is emphasized unlike a
collectivistic culture where group is put before individual interest. As already
discussed;
Through this dimension, it can be seen whether individual or collective decision
making is given more importance in the organization
It exhibits the preference of the people in the organization to perform individually
or in teams. A typical individualistic culture is visible in United States
And a collectivist culture is visible in Mexico.

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For example countries like Australia and New- Zealand are high on individualism
i.e. they give a lot of importance to individual achievement, do not avoid
uncertainty, and believe in equality and traditional values. This suggests that the
organizational structure in these countries would be flat, with individuals making
decisions on their own and competing for scarce resources. Unlike the Japanese
and the Indonesians who rely on group and society and give more importance to
achieving collectively rather than as individuals. This would suggest a system that
seeks consensus among group members but is competitive and has clear
distinctions in terms of power.

2. High vs. Low risk taking

This cultural dimension showcases the ability of the organizations to take risks or
avoid risks. A culture with low uncertainty avoidance values risk taking and vice
versa. This dimension exhibits the cultural tendency of the group toward
discomfort with risk and ambiguity.

It clearly showcases the group inclination towards well formulated and structured
policies and plans over the unstructured ones. For Example France is known to
have a culture of high uncertainty avoidance, implying thereby that they like to
play safe and abide by the set boundaries, rules and regulations. On the other hand
Hong Kong exhibits a culture of low uncertainty avoidance or high risk taking
where they believe in thinking outside the box and try to be creative by not binding
themselves within boundaries.
For example, people in contries like south africa and china are a little more
conservative in nature and avoid taking risks as far as possible. This suggest a
system with concern for the good of the group or society at large as compared to
their counterparts in singapore and australia who showcase more of the risk taking
ablities , which is clearly shown in their working style and achievements thereof
which suggest a paternalistic leadership system, with the leader expressing concern
about the quality of life but without under concern for job security.

3. High or Low Power Distance

This cultural dimension shows the people s acceptance of hierarchy and status
within the organizations. This basically tells us the extent to which power is
divided between the haves and the have-nots. This dimension exhibits the

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willingness of a culture to accept status and power differences among members.
Shows Respect for hierarchy and rank in organizations. For example Indonesia
exhibits a high power culture while Sweden has a low power distance culture.

For example, people in countries like Malaysia , Japan and honkong accept
unequal distribution of power thereby reflecting high power distance at the
workplace. This suggest that the society believes that there should be a well-
defined hierarchy in which everyone has a rightful place.;on the other hand, in
countries like australia and newzealand there is low power distance and the
distribution of power is not unequal and thus people doing different jobs are not
treated differently or unequally. This suggest that the prevelant belief is that all the
people should have equal rights and the opportunity to change their position in the
society.

4. Feminine-Masculine/ Achievement –Nurturing culture

This dimension shows the extent to which a culture exhibits traditionally masculine
attributes (assertiveness, competitiveness, toughness, ambition, achievement,
material possessions, success) or feminine (family, cooperation, tenderness,
nurturing, caring for others, preserving the environment, quality of life) and the
extent to which gender distinctions are maintained. Japan is a highly masculine
culture while Thailand is a feminine culture.
For example japan shows the highest level of achievement culture whereby a lot
of emphasis is laid on materialistic achievements, assertiveness and
competitiveness, while newzealand has exhibited a high nurturing climate where
developing and maintaining relationships is more importanat than anything else.on
the other hand , in countries like australia and singapore it it somewhere between
the both in the continuum implying thereby that they want to achieve success but at
the same time value relationships as well.

5. Long-Term/Short-Term Orientation

This dimension exhibits the tendency of a culture to emphasize future-oriented

values versus present-oriented values. It Shows adoption of long-term or short-
term performance horizons. For example South Korea exhibits a long term oriented
culture and America has short term oriented culture.
All the cross cultural values discussed above thus impact the global businesses to a
large extent as there are significant variations in their orientations across cultures.

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CHECK YOUR PROGRESS 2

IDENTIFY THE CULTURAL DIMENSION

1. This dimension refers to the extent to which people prioritize or weigh their
individuality against their willingness to submit to the goals of the group.

2. It clearly showcases the group inclination towards well formulated and

structured policies and plans over the unstructured ones.

3. This dimension exhibits the willingness of a culture to accept status and

power differences among members. Shows Respect for hierarchy and rank in
organizations.

4. This dimension shows the extent to which a culture exhibits traditional

attributes like assertiveness, competitiveness, toughness, ambition and
achievement.

5. This dimension exhibits the tendency of a culture to emphasize future-

oriented values versus present-oriented values.

3.3.2 KLUCKHOLN AND STRODTBECK'S DIMENSIONS OF CULTURE

They have identified the following six cultural dimensions which are significant
for understanding and appreciating cross cultural differences across countries and
are quite important in interpersonal communication and relationships with people
in the multinational organizations. These are:
 The behavior and the basic nature of individuals , which would depend upon
their culture to a large extent
 The kind of relationship they share with nature per se
 What is their feeling of their duty and responsibility towards others
 What mode of activity do they prefer
 How much importance is given to the public or the private space especially
in the organizations
 What is their orientation towards past present and future in their lives?

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 Let us discuss these aspects in more detail to have better understanding of the
same so that it can be used by international managers and would help in effective
and efficient dealings across different cultures and countries of course.
1. The nature of people
The basic nature of individuals in different cultures is assumed to be different in
terms of their orientation and general behavior towards others. People from
individualistic cultures are considered to be self centered Vis a Vis people from
collectivistic cultures who are by nature inclined towards being good to others.
People are considered to be either good or bad or evil depending upon the cultures
from where they come. Good natured people are considered to be extroverts who
are socially affable and love to work in teams. On the other hand bad natured
people are considered to be snobs or arrogant who does not get along with others
easily, while the evil natured are the ones who indulge in anti social activities
which are not in favor of the general society.

Apart from this some cultures produce people who have high internal locus of
control, i.e. they believe in making their own destiny through hard work, others
have high external locus of control where people believe more in destiny, they are
fatalists. While the lot which falls in between the two is the ones who believe in
hard work and leave the rest to destiny.

2. The relationship with Nature

There are people who are submissive to the happenings around in the nature while
there are others who try to control it and want to become master of the nature.
Different cultures condition individuals differently with regard to their relationship
with nature. Some cultures teach to be submissive to nature while others encourage
questioning nature and trying to overpower it with advanced use of technology.
They believe in controlling nature through technology.

3. Duty towards others

Again this dimension is clearly reflected in the individualistic versus collectivistic
culture, wherein people from individualistic cultures tend to be more concerned
about themselves and their immediate family while people from collectivistic
cultures are more inclined towards the social groups and they think of the

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collective good of the society rather than themselves only. They feel that they have
a responsibility towards others as well and are ready to forgo their individual
freedom for the good of others. They believe in acting as a support system to the
society where everybody stands up for others all the times be it good or bad.

Thus the individualistic societies encourage people to be independent at a very

early stage and they are taught to take up their responsibility as soon as they
become capable of the same. Unlike the collectivistic cultures where people are not
encouraged to take up individual responsibility as they are a protected lot right
from the beginning and they are conditioned to look for help and support around
whenever they need.

Then there are societies which are lineal and are hierarchy oriented where power
passes on to the family members only .while societies which are co lineal believe
in collective decision making and encourage group interactions more than holding
individuals responsible for their own actions.

4. Mode of activity

There are societies which give more importance to your ascribed status coming
from your family background and its status, on the other hand there are societies
which give more importance to your earned status through hard work and
achievement in the society .these societies have three types of orientation, being,
being in becoming and doing orientation.

Being Orientation

 Here people believe in releasing stress by indulging in the satisfaction of

existing desires as and when they feel like,
 They believe in working for the present moment,
 They are easily satisfied with what they have in the present ,
 And for them family background is more important.

Being-in-Becoming Orientation

 Here people give more Stress to the idea of development and growth,
 Emphasize activity contributing to development of self,
 And Value spiritual life more than material one.

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Doing Orientation

 Here people Stress more on activity and action,

 Have a sense of urgency about getting things done,
 Believes in measuring accomplishment by standards external to the
individual himself ,
 And believe in action and efficiency more than anything else.

Relational (Social) Orientation:

This orientation is of three types; namely Authoritarian, Collective and

Individualistic Orientation.

a) Authoritarian Orientation

 Here people believe that some individuals are born to lead,

 authoritarian relationships are easily accepted
 And the eyes cannot rise above the eyebrow.

b) Collective Orientation

 This is also called Group orientation which is most important of all social
entities
 People feel dependent on group, safe within it, and are proud to be a part of
it ,
 They tend to be competitive with other groups,
 Exhibit tremendous group concern for all its members and generally make
decisions by consensuses which are acceptable to all.
 Countries like China, India, Africa, Latin America fall into this category.

c) Individualistic Orientation

Here all people have equal rights and complete control over destiny

 The Individual goals and objectives take priority over group goals and
objectives,
 Use first names while addressing people ,
 Are encouraged to be self-reliant and independent ,
 Individualistic Orientation is Predominant in the United States culture.

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5. Privacy of space
One approach is that space is owned by individuals and privacy is important.
Meetings are held behind closed doors and are by invitation only. The alternative
is open ownership, where people can go where they please and meetings are open
to all who want to attend.
 Societies that see space as private will partition space for individual or small
group use.
 Societies that see space as public have few divisions and use space for
interchangeable purposes.

1) Temporal orientation
Which is more important: past, present or future?
Some societies focus on the past, ancestors and traditionalism. Others are focused
on the hedonism of today, whilst still others plan carefully for the future.
Past Orientation

 Believe in significance of prior events

 Religions, tradition: extremely important
 Past: guide for decisions and truth
 Respect: ancestors, predecessors, older people
 Time: cycle, repeating

Present orientation

 Moment: most significance

 Future: vague, ambiguous, unknown
 Enjoyment: in the present
 Time: cycle, repeating

Future orientation

 Future: emphasize, expect to be grander and nicer

 If at first you don’t succeed, try, try, and try again.
 Time: linear
The above discussion must have apprised you of the various cultural
dimensions as given by Kluckholn and Strodtbeck.

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 ACTIVITY 2

Critically evaluate the various Models of cultural dimensions especially with

reference to the following;

a) Hofstede’s Value Dimension

b) What according to you is the significance of understanding these
dimensions for international managers?

3.3.3. GLOBE’s Cultural Dimensions

GLOBE is the acronym for “Global Leadership and Organizational Behavior

Effectiveness,” a 62-nation, 11-year study involving 170 researchers
worldwide. The study incorporated both the implicit leadership theory (ILT) and
Hofstede's dimensions into one unique research study. The GLOBE study extended
the ILT to include individuals of a common culture maintaining a relatively stable
common belief about leaders, which varies from culture to culture. They labeled
this the Culturally Endorsed Implicit Leadership Theory (CLT) in the following
discussion; let us view GLOBE’s findings about how business values and practices
vary across nations and cultures.

Values, Practices, and Leadership

A significant fact about GLOBE’s nine cultural dimensions is that each one was
conceptualized in two ways: Practices or "as is," and Values or "should be.”

There are the nine dimensions of culture which highlight the Cultural Acumen for
the Global Manager as outlined by globe leadership survey. These dimensions
have been ranked in various countries from high to low.

1. Performance orientation
2. Uncertainty Avoidance
3. In-Group Collectivism
4. Power Distance
5. Gender Egalitarianism

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 6. Humane Orientation
7. Institutional Collectivism
8. Future orientation
9. Assertiveness

1. Performance Orientation

The GLOBE researchers conclude that performance orientation “relates to the

extent to which leaders set ambitious goals, communicate high expectations for
their subordinates, build their subordinates’ self-confidence, and intellectually
challenge them” And their concluding remark is that people who value high
performance “seem to look to charismatic leaders who paint a picture of an
ambitious and enticing future, but leave it to the people to build it” .

2. Uncertainty Avoidance

The cultural dimension named "uncertainty avoidance" also emerged from the
research as very important. It is "the extent to which a society, organization, or
group relies on social norms, rules, and procedures to alleviate the unpredictability
of future events”. An alternative way of thinking about uncertainty avoidance is
that it’s about the extent to which ambiguous situations are felt as threatening –
i.e., about the extent to which deliberate measures (such as making and enforcing
rules and procedures) are taken to reduce ambiguity.

3. In-Group Collectivism

The findings about "in-group collectivism" are important because this cultural
dimension emerges as a strong predictor of the two most widely admired
characteristics of successful leaders. In-group collectivism is “the degree to which
individuals express pride, loyalty, and cohesiveness in their organizations or
families”. Societies that highly value in-group collectivism strongly associate the
Charismatic / value-based and team oriented global leader behaviors (CLTs) with
outstanding leadership.

4. Power Distance

The findings concerning "power distance" are interesting primarily because they
failed to confirm a relationship expected by the researchers. But first, let’s define
power distance as “the extent to which a community accepts and endorses
authority, power differences, and status privileges”. Societies that highly value

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power distance strongly associate the self protective global leader behavior with
outstanding leadership. Power distance did show a strong positive relationship with
Self-Protective leadership .It has been observed that “The high power distance
values and practices of Asian societies are often associated with face-saving and
status-consciousness, both of which are elements of the Self-Protective leadership
dimension”.

5. Gender Egalitarianism

The findings for "gender egalitarianism" are also quite significant because it is one
of the predictors of the most widely admired characteristic of successful
leaders. Gender egalitarianism is “the degree to which a collective minimizes
gender inequality”. Societies that highly value gender egalitarianism strongly
associate the charismatic/value based and participative global leader behaviors
(CLTs) with outstanding leadership.

6. Humane Orientation

"Humane orientation" is defined as “the degree to which an organization or society

encourages and rewards individuals for being fair, altruistic, friendly, generous,
caring, and kind to others”. Societies that highly value humane orientation strongly
associate humane orientation as global leader behavior (CLT) with outstanding
leadership.

7. Institutional Collectivism

"Institutional collectivism" is defined as “the degree to which organizational and

societal institutional practices encourage and reward collective distribution of
resources and collective action”. Societies that highly value
institutional collectivism strongly negatively associate autonomous global leader
behavior (CLT) with outstanding leadership.

8. Future Orientation

"Future orientation" is “the degree to which a collectivity encourages and rewards

future-oriented behaviors such as planning and delaying gratification”. Societies
that highly value future orientation do not strongly associate it with any global
leader behavior (CLT).

9. Assertiveness

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"Assertiveness" is “the degree to which individuals are assertive, confrontational,
and aggressive in their relationships with others”. Societies that highly value
assertiveness do not strongly associate it with any global leader behavior
(CLT).The cultural clusters classified on the basis of the nine cultural dimensions
as outlined by the GLOBE project with high and low scores on these dimensions
are shown in the table below.

3.4 SUMMARY
The aspect which adds to the differences in culture envelops the language, the time
orientation, the use of space, religion and values. Since the members of a particular
culture generally have a preferred set of responses to the world, they tend to differ
from other cultures in both certain obvious and subtle ways which are called
Cultural Patterns. The obvious ways are of course their food and style of dressing
up. The subtle and the less visible ways are culture’s collective assumptions of
what the world is like which manifests in their shared judgments. The Cultural
Patterns can be better understood in terms of beliefs, values, norms, and social
practices. The models of cultural dimensions discussed in the chapter are;
1. Hofstede’s Value Dimension
2. Kluckhohn and Strodtbeck’s Value Orientation
3. Globe’s cultural dimensions.

Hofstede’s Value Dimension includes; Power-Distance: the extent to which people

accept unequal power distribution in a society, Collectivist-Individualist: the extent
to which people prioritize or weigh their individuality versus their willingness to
submit to the goals of the group; Feminine-Masculine: the extent to which a culture
exhibits traditionally masculine or feminine values; Uncertainty Avoidance: the
extent to which a society willingly embraces or avoids the unknown.
Kluckhohn and Strodtbeck’s Value Orientation have outlined the importance of
cultural dimensions like nature of people, their relationship with nature and others,
their duty towards others and time orientation.
The Globe’s cultural dimensions have explained, Performance orientation
Uncertainty Avoidance, In-Group Collectivism, Power Distance, Gender
Egalitarianism, Humane Orientation, Institutional Collectivism, Future orientation,
Assertiveness

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3.5GLOSSARY

Performance Orientation: it relates to the extent to which leaders set ambitious

goals, communicate high expectations for their subordinates, build their
subordinates’ self-confidence, and intellectually challenge them.

Institutional Collectivism: it is the degree to which organizational and societal

institutional practices encourage and reward collective distribution of resources
and collective action”. Societies that highly value institutional collectivism
strongly negatively associate autonomous global leader behavior (CLT) with
outstanding leadership.

Future Orientation: It is the degree to which a collectivity encourages and

rewards future-oriented behaviors such as planning and delaying
gratification”. Societies that highly value future orientation do not strongly
associate it with any global leader behavior (CLT).

Gender Egalitarianism: It is the degree to which a collective minimizes gender

inequality”. Societies that highly value gender egalitarianism strongly associate the
charismatic/value based and participative global leader behaviors (CLTs) with
outstanding leadership.

6. Humane Orientation: It is the degree to which an organization or society

encourages and rewards individuals for being fair, altruistic, friendly, generous,
caring, and kind to others”. Societies that highly value humane orientation strongly
associate humane orientation as global leader behavior (CLT) with outstanding
leadership.

3.6 ANSWERS TO CHECK YOUR PROGRESS 1

1. Language
2. The Polychronic cultures
3. The Monochronic cultures
4. Proxemics
5. Religion.

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ANSWERS TO CHECK YOUR PROGRESS 2

1. Individualism
2. Uncertainty avoidance
3. Power distance
4. Masculinity
5. Long term / short term orientation

3.7 REFERENCES

1. Cherunilam, Francis., International Business: Prentice Hall of India: 2004

2. Hill ,Charles W.,International Business: McGraw Hill- Post Script 1998
3. Punnett ,Betty Jane, International Perspectives on Organizational behavior
and Human resource Management: Prentice Hall of India: 2004

3.8 SUGGESTED READINGS

1. Bhattacharya, Deepak Kumar: 2010, Basic Cross- Cultural Management,

PHI learning publications.
2. Mead Richard and Andrews G. Tim, International Management: Culture and
Beyond, Wiley, 2009, England.

3.9 TERMINAL AND MODEL QUESTIONS

1. Behavioral differences in different culture are important to be understood

and appreciated in cross cultural management across organizations. Do you
agree? Discuss with the help of some case study.
2. Do you think Kluckhohn and Strodtbeck’s Value Orientation is good enough
to appreciate cultural differences. Explain.
3. What do you understand by The GLOBE dimensions of culture? What were
the findings of the research study with regard to the culturally endorsed
leadership behavior?

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LESSON 4: SHIFT IN CULTURE

STRUCTURE OUTLINE

4.1 Learning objectives

4.2 Introduction: Culture as a factor in a people’s response to change
4.3 Significance of shift in culture
4.3.1 Cultural dimensions for understanding shift in culture
4.3.2 Organizational culture change/shift process
4.4 Influence of economic factors and foreign intervention on shifts in local
culture
4.5 Summary
4.6 Glossary
4.7 Answers to check your progress
4.8 References
4.9 Suggested readings
4.10 Terminal and model Questions

4.1 LEARNING OBJECTIVES

After going through the lesson, you should be able to

 Appreciate the significance and Elements of shift in culture
 Find out the Cultural dimensions for understanding shift in culture
 Outline the Organizational culture change process
 Understand the Influence of economic factors and foreign intervention on
shifts in local culture

4.2 INTRODUCTION

Culture as a factor in a people’s response to change

By now you must have got a fair idea as to what is culture. But still let us try to
decipher it a little more. By common understanding, culture is something which is
manifested in the way things are done in a particular place. More specifically it is
visible in the way people think, believe and behave, and also what their expectation

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of others thinking beliefs and behavior is. Like a person from particular culture
would expect the person from the other culture to act in the same manner as he
does. Thus in global scenario in multinational organizations it would mean
understanding the others cultures and bringing in necessary changes to enable the
organization to operate efficiently.
In this backdrop it is important that individuals and teams strive together to achieve
higher results by resorting to cultural shifts.
This can be done by identifying the acceptable behaviors thoughts and beliefs and
trying to incorporate it in the individuals. It is needless to mention that the
organization culture is made up of the combined thoughts beliefs and actions of all
its members and therefore a shift in culture would call for a shift in the individuals
thoughts actions and behaviors. Thus the first step would be to identify the desired
state of behaviors thoughts and actions and trying to incorporate it into the
individuals.
Thus a shift in culture would call for shift in three things;
 Shift in behavior
 Shift in thoughts
 Shift in beliefs
Let us discuss them briefly;
Shift in behavior
Behavior is visible in the people’s actions, what they say and what they do when
interacting with others. Whatever the desired behaviors, they should be
communicated to the individuals and they should be rewarded or punished for
following or not following the desired behaviors in the organization. Thus a shift in
behavior can be implemented by following a carrot and stick policy.
Shift in thoughts
Nevertheless shifting thoughts is more challenging and difficult than shifting
behaviors .this calls for tremendous efforts on the part of the organization by
offering a lot of alternative ways of thinking and ideas and encouraging them to
take up the unbeaten paths and being adventurous and experimental. Rewarding
risk taking is a high point in encouraging new thinking amongst the individuals.
Constantly giving feedback and reinforcement for newer thinking will ultimately
lead to shift in thoughts and consequently shift in organizational culture.
Shift in beliefs

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Now again this is even more difficult than changing individuals thoughts and
behaviors as they run even deeper into their personality and are engrained in them
during the process of growing up. They tend to pick up their beliefs from the
society especially their parents, teachers and the ones who influence them deeply.
So changing beliefs is difficult. So the emphasis should be more on changing
thoughts and actions than beliefs in order to have cultural shift in the organizations.
Thus simply put, Culture shift can be understood in terms of moving towards a
different set of pattern with different values, attitudes and behavior. In
organizations today, it has become very common activity, culture changes with the
change in projects and employees usually resist changing because it leads to Shifts
away from “traditional values” towards “secular values” and Changes with
shift from “survival values” to “self-expression values.

For example; A French executive would probably be offended if a new

acquaintance were to address him by his first name. Giving the "thumbs up" signal
in Australia is impolite. And a display of frankness so common to Americans
perpetuates the Japanese impression that the American people exhibit a lack of
discipline. Even though such cultural collisions often elicit negative feedback, they
rarely provoke extreme hostility. Instead, committing a cultural taboo is usually
regarded as improper, discourteous, or disrespectful. The individual who has the
misfortune of committing the taboo is "rewarded" with expressions of anger or flat-
out silence, which in turn can be misinterpreted.
Change is quite a common phenomenon for every organization today. Once you
leave your country and enter into another say for any personal work, social activity
or a business related task, you have to mould yourself to a greater extent with the
cultures of the other nation. And, yes seventy percent of change initiatives fail
simply because Successful Change is learning--and learning is most of the times
difficult as it creates a lot of noise in the corridors of the organization, is linear in
nature. may not be that contributing to one’s intellectual level and it may not
possible to measure it in the short term as the benefits of learning are mostly
visible in the long run only.
By now you are clear that managing change and enabling a shift in culture is quite
challenging, apart from being difficult. This can be attributed to two reasons as
outlined below;

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Firstly, there is ambiguity in the definition of culture, it being a soft concept.
Moreover it cannot be measured in concrete a term which makes it all the difficult
to change it.
Secondly, since the culture is made up of sum total of the people’s beliefs,
thinking actions and behavior, it is difficult to change. Changing one individual’s
behavior is difficult, how is it possible to change the behavior of an entire
organization. The issue of cultural change is quite contentious and needs to be
dealt with strategically by taking stock of certain things that might be a hindrance
in encouraging innovation and finding out ways in creating an enabling culture
which supports change whole heartedly.

Let us look in to an organization culture that may be a stumbling block in

change initiatives and discourages innovation;

• Some cultures are not forthcoming and accepting to the ideas given by the
subordinates and are vary of implementing it as they come from not so
experienced or new employees in the organization.
• They might be dependent upon the Approvals of the higher authorities every
time a new idea is floored
• There is a lot of criticism from the peer group which does not encourage the
individuals to try new things.
• Some organization suffers from Insecurity from certain individuals who
might be more intelligent. they do not praise their efforts and thus
discourage them
• Some organizations think that a lot of problems will lead to failure only,
hence they do not encourage taking up newer avenues and paths.
• Some organizations believe in maintaining high Control and tight
surveillance over the activities of the individuals thereby hampering their
creative instincts.
• Some of them have a lot of Secret policies which are not discussed openly
amongst the team and individuals and believe in making sudden
announcements which are not taken very positively by the members.
• Some of them believe in not sharing all the information

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 • Some believe in delegating unproductive and dirty work only to the new
employees thus generating resentment among them
• Sometimes Arrogance in the attitude of the top management also blocks
innovative culture in the organization where they think that people down the
line are not capable enough.

On the other hand certain organizational climates are conducive to change

initiatives which are visible through the following;

 They believe in giving a lot of encouragement to the individuals to freely

voice their opinions on certain sensitive issues
 They believe in testing differences of viewpoint supporting it with ample
evidence
 They believe in collating and clarifying any sort of information flow in the
organization.
 They do not discourage constructive controversy and believe in solving
issues amicably
 They encourage a feeling of togetherness in the organization by sharing a
belief that they are all sailing in the same boat.
 Last but not the least they believe in having a Joint control over the
management of the organization.

Culture shift basically puts creativity to work to bring positive change. But, this
phenomenon is not a simple process. It includes the chain of activities,
understanding of internal as well as external environment.

There are many considerations that might help organization assess the level of
emphasis which should be placed on cultural awareness:
 Priorities – The relative importance of a country / market in relation to the
international strategy.
 Economics – The alignment of favorable national economic conditions at a
macro and market level.
 Politics – The relative compatibility of national political intentions and
prevailing ideology.

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  Legal – The consistency of legal infrastructure and the fit of ethical codes
with company requirements.
 Linguistic Compatibility – The ease of linguistic clarity between key
people operating in different languages.
 Engagement – The degree of success dependent or reliant on high levels of
local workforce performance.
The greater the lack of compatibility...the greater the need to enhance
organization’s cross cultural capability.

CHECK YOUR PROGRESS 1

FILL IN THE BLANKS

There are many considerations that might help organization assess the level of
emphasis which should be placed on cultural awareness:
1. ……………. The relative importance of a country / market in relation to the
international strategy.
2. …………….The alignment of favorable national economic conditions at a
macro and market level.
3. ……………. The relative compatibility of national political intentions and
prevailing ideology.
4. …………….The consistency of legal infrastructure and the fit of ethical
codes with company requirements.
5. ……………….The ease of linguistic clarity between key
people operating in different languages.
6. ………………The degree of success dependent or reliant on high levels of
local workforce performance.

4.3 SIGNIFICANCE OF SHIFT IN CULTURE IN ORGANSATIONS

Does organizational culture affect corporate performance? Many writers on this

subject agree to it. Generally they argue that culture serves three important
functions. First, corporate culture is deeply embedded form of social control that
influences employee behavior and decisions. Culture is pervasive and operates
unconsciously. Second, corporate culture is the “social glue” that bonds people
together and makes them feel part of the organizational experience. Employees are
motivated to internalize the organization’s dominant culture because it fulfills their
need for social identity.

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Finally, corporate culture assists the sense-making process. It helps employees
understand organizational events. . They can get on with the task at hand rather
than spend time trying to figure out what is expected of them. Employees can also
communicate more efficiently and reach higher levels of cooperation with each
other because they share common mental models of reality.

Culture is not a constant. Culture is thus related to the development of one’s

attitude. Every organization seeks to be more effective and achieve better results.
It’s important for organizations of different size and level to create the kind of
environment or culture where the positive managerial patterns of listening,
coaching, guiding, involving and problem-solving are actively encouraged and
reinforced. This is where the policy of the Human Resources department is critical
as it reflects and reinforces organizational values and culture.

Focusing on building and sustaining an organizational culture is a way of

showing that people are the organization’s most valuable asset. But sometimes
a change is required for better efficiency and productivity. Companies which have
embraced organizational culture change see a positive increase in their employee
engagement i.e. greater employee retention, attraction of new customers like
customer satisfaction and boosting their revenues by reduction in operating cost.
Over the last decade the interest in organizational culture has grown quickly. Shift
in culture is a large-scale undertaking because every organization’s culture
comprises an interlocking set of goals, roles, processes, values, communication
practices, attitudes and assumptions; these are the organizational tools needed to be
put into play for great results.

The point that needs to be understood at this juncture is that Structure, organization
and strategy are all implicit in the organization culture. When we change culture,

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we change all three.

Thus, all this leads to the impact of change in culture of the organization and
affects in the following ways:
1) Culture Shift leads to a positive change which in turn leads to the achievement
of goals effectively and efficiently.
2) Shift gives the entire organization unique identity, thus increase the goodwill
and profits of the organization
3) Helps in the fulfillment of social responsibility i.e. it shapes the direction of the
community.
4) Helps in economic growth and advantage
5) Helps in maintaining members’ identity i.e. the degree to which employees
identify with the organisation as a whole rather than with their type of job or
field of professional expertise.
6) Helps in Unit integration i.e. the degree to which units within the organisation
are encouraged to operate in a co-ordinated or interdependent manner.
7) Also, controls the degree to which rules, regulations and direct supervision are
used to oversee and control employee behaviour.
8) Avoids Risk i.e. the degree to which employees are encouraged to be
aggressive, innovative and risk seeking.

4.3.1 CULTURAL DIMENSIONS FOR UNDERSTANDING SHIFT IN

CULTURE

Cultures have some important traits. An understanding of these dimensions will be

helpful for understanding the relevance of shift in culture.

High context culture vs. low context culture

It is important to understand the two forms of communication in culture; It refers

to a culture's tendency to use high-context messages over low-context messages in
routine communication. Developing trust is an important first step to any business
transaction. According to Hall, the High context cultures are collectivist,
preferring group harmony and consensus to individual achievement. And people
in these cultures are less governed by reason than by intuition or feelings. Words

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are not so important as context, which might include the speaker’s tone of voice,
his facial expression, gestures, posture—and even the person’s family history and
status.
A Japanese manager explained his culture’s communication style to an American:
“We are a homogeneous people and don’t have to speak as much as you do here.
When we say one word, we understand ten, but here you have to say ten to
understand one.” Flowery language, humility, and elaborate apologies are typical.
Whereas in Low level context solving a problem means lining up the facts and
evaluating one after another. Decisions are based on fact rather than intuition.
Discussions end with actions. And communicators are expected to be
straightforward, concise, and efficient in telling what action is expected. To be
absolutely clear, they strive to use precise words and intend them to be taken
literally.

Masculine (achievement oriented) v/s feminine cultures (nurturing)

Masculinity vs. femininity in cultures - refers to the value placed on traditionally

male or female values (as understood in most Western cultures). So called
'masculine' cultures value competitiveness, assertiveness, ambition, and the
accumulation of wealth and material possessions, whereas feminine cultures place
more value on relationships and quality of life

Neutral V/s Affective cultures

In relationships between people, reason and emotion both play a role. Which of
these dominates will depend upon whether we are affective, that is we show our
emotions, in which case we probably get an emotional response in return, or
whether we are emotionally neutral in our approach. Members of cultures which
are affectively neutral do not express their feelings but keep them carefully
controlled and subdued. In contrast, in cultures high in affectivity, people show
their feelings plainly by laughing, smiling, grimacing, scowling and gesturing; they
attempt to find immediate outlets for their feelings

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Universalist vs. Particularistic cultures

The Universalist, or rule-based, approach is roughly: "What is good and right can
be defined and always applies." In particularistic cultures, far greater attention is
given to the obligations of relationships and unique circumstances. Take the
case of trying to cross the street at the red light. In a very rule-based society like
the U.S., you will still be frowned at even if there is no traffic. It tends to imply
equality in the sense that all persons, or citizens, falling under the rule should be
treated the same.

ACTIVITY 1
Find out some more instances or case studies from the newspapers with
regard to the influence of the various cultural dimensions of culture on
business and how can these be managed to the best interest of the
multinational organizations.

4.3.2 ORGANSIATION CULTURE CHANGE/ SHIFT PROCESS

Some of the important components to be taken care of while contemplating a shift

in the culture of an organization are outlined as following.

 Create value and belief statements – Deeply understand the employees,

use employee focus groups, by department, to put the mission, vision, and
values into words that state their impact on each employee’s job
 Practice effective communication - keeping all employees informed about
the organizational culture change process ensures commitment and success.
Telling employees what is expected of them is critical for effective
organizational culture change
 Review organizational structure - changing the physical structure of the
company to align it with the desired organizational culture may be
necessary.

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  Consider also the subcultures within the organization- To be done by
acknowledging, respecting and discussing the perceived differences of
organizational members between core values and beliefs.
 Redesign your approach to rewards and recognition - you will likely need
to change the reward system to encourage the behaviors vital to the desired
organizational culture
 Review all work systems – employee promotions, pay
practices, performance management and employee selection to make sure
they are aligned with the desired culture.
 Do the homework well - Know your audience, and especially with today’s
access to information, there’s no excuse for not doing your homework.
 Always remember the world is watching and sharing- Any mistakes
made, can, and may, be magnified. Sadly, the world is filled with those who
eagerly jump on simple human error and make it worse.
 Never Assume- Don’t take it for granted that everyone is using terms in the
same way. Tone of voice may suggest understanding, but that doesn’t prove
that you’re on the same page, so always double-check.

Before an organization can change its culture, it must first understand the current
culture, or the way things are now. And, once you understand your current
organizational culture, your organization must then decide where it wants to go,
define its strategic direction, and decide what the organizational culture should
look like to support success. What vision does the organization have for its future
and how must the culture change to support the accomplishment of that vision?
Your management team needs to answer questions such as:

What are the most important values you would like to see represented in your
organizational culture?

Are these values compatible with your current organizational culture? Do

they exist now? If not, why not?

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However, knowing what the desired organizational culture looks like is not
enough. Organizations must create plans to ensure that the desired organizational
culture becomes a reality. Finally, the individuals in the organization must decide
to change their behavior to create the desired organizational culture. This is the
hardest step in culture change

CHECK YOUR PROGRESS 2

Identify the important components to be taken care of while contemplating a

shift in the culture of an organization

1. Deeply understanding the employees by using employee focus groups, by

department, to put the mission, vision, and values into words that state their
impact on each employee’s job
2. Keeping all employees informed about the organizational culture change
process to ensure commitment and success.
3. Changing the physical structure of the company to align it with the desired
organizational culture may be necessary.
4. By acknowledging, respecting and discussing the perceived differences of
organizational members between core values and beliefs.
5. Changing the reward system to encourage the behaviors vital to the desired
organizational culture

4.4 ECONOMIC FACTORS AND SHIFT IN CULTURE: FOREIGN

INTERVENTION AND INFLUENCE ON SHIFT IN CULTURE
(GLOCALIZATION)

When a multinational organization wants to do business abroad, it must take into

consideration the socio political, economical and technological factors into
account. A sure shot strategy to succeed in international business is to glocalize
your products to receive a warm welcome in the foreign land. The economy of the
country and the political stability are of paramount importance when doing
business in foreign lands. Culture affects everything we do. Thus the cultural

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values underpinning a society must be analyzed correctly. What are the religions
practiced by majority of people? Is the society individualist or collectivist? Is there
any dominant political ideology?
Thus culture, culture symbols, target audience are of critical importance. As brands
go international brand managers can forget the simple truth. That is, know your
market, shift the culture, become change agent and then prosper in the market.

Let us try to understand this phenomenon better through the following

examples. You must have heard of these infamous errors made by
multinational corporations when translating brands or slogans abroad. Or we
can say the price they had to pay for not resorting to shift in culture while
doing business abroad.

Kentucky Fried Chicken entered the Chinese market, to their horror they
discovered that their slogan "finger lickin' good" came out as "eat your fingers off"

Chinese translation also proved difficult for Coke, which took two tries to get it
right. They first tried Ke-kou-ke-la because when pronounced it sounded roughly
like Coca-Cola. It wasn't until after thousands of signs had been printed that they
discovered that the phrase means "bite the wax tadpole" or "female horse stuffed
with wax", depending on the dialect. Second time around things worked out much
better. After researching 40,000 Chinese characters, Coke came up with "ko-kou-
ko-le" which translates roughly to the much more appropriate "happiness in the
mouth".

Similarly, things weren't much easier for Coke's arch-rival Pepsi. When they
entered the Chinese market a few years ago, the translation of their slogan "Pepsi
Brings you back to Life" was a little more literal than they intended. In Chinese,
the slogan meant, "Pepsi Brings Your Ancestors Back from the Grave".

Also, General Motors had a perplexing problem when they introduced the Chevy
Nova in South America. Despite their best efforts, they weren't selling many cars.
They finally realized that in Spanish, "nova" means "it won't go". Sales improved
dramatically after the car was renamed the "Caribe."

Sometimes it's one word of a slogan that changes the whole meaning. Most of the
problems caused by cross-cultural clashes are usually the result of the failure by

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some or all parties involved to recognize and account for differences in culturally-
based communication styles.
These clashes gives rise to the importance of understanding different culture
especially before entering into the new country with innovative products because
each culture has its own set of communication and we should first realize that there
is no such thing as a universal form of communication.

Take the simple gesture of a smile. It is not unusual for Americans to exchange
smiles with complete strangers. They smile at people on the street, at the airport, in
restaurants, shopping malls and so on. They consider it a friendly gesture.
However, in other cultures a smile can take on a completely different meaning. A
smile can be considered insulting or it can signal embarrassment. Many Americans
fail to realize that common gestures such as shrugging one's shoulders or
scratching one's forehead can be completely misinterpreted by someone from
another country. Culture shapes individuals’ thoughts about social norms, rewards,
and opportunity, also, shape(s) the way individuals think about progress or form(s)
the principles around which economic activity is organized…”

By introducing new products or ideas and practices to a new country, an

international business entity becomes a change agent. This may shift consumption
from one product to another, or it may lead to massive social change. A product or
service that is developed and distributed globally, but is also fashioned to
accommodate the user or consumer in a local market. This means that the product
or service may be tailored to conform to local laws, customs or consumer
preferences. Products or services that are effectively ‘glocalized’ are, by definition,
going to be of much greater interest to the end user.”

ACTIVITY 2
1. Do you think Culture really matters when it comes to shifting the
organizational culture? Explain with examples.
2. Outline the various cultural dimensions for understanding shift in
culture

4.5 SUMMARY

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Introducing new products or ideas and practices to a new country, an international
business entity becomes a change agent. This may shift consumption from one
product to another, or it may lead to massive social change. A product or service
that is developed and distributed globally, but is also fashioned to accommodate
the user or consumer in a local market. This means that the product or service may
be tailored to conform to local laws, customs or consumer preferences. Products or
services that are effectively ‘glocalized’ are, by definition, going to be of much
greater interest to the end user.”
Culture affects everything we do. The cultural values underpinning a society must
be analyzed correctly. What is the religion practiced by majority of people? Is the
society individualist or collectivist? Is there any dominant political ideology? Thus
culture, culture symbols, target audience are of critical importance. As brands go
international – in some cases as we have seen above- brand managers can forget
the simple truth. That is, know your market, shift the culture, become change agent
and then prosper in the market.
Culture today matters to globalization, to economic and social rights, and to civil
and political rights because the very idea of rights is a cultural construct. Culture is
thus a powerful influence on an individual’s responses to his or her environment.
Culture shift is moving towards a different set of pattern with different values,
attitudes and behavior. In organizations today, it has become very common
activity, culture changes with the change in projects and employees usually resist
changing because it leads to: Shifts away from “traditional values” towards
“secular values” and Changes with shift from “survival values” to “self-
expression values.

High contexts can be difficult to enter if you are an outsider (because you don't
carry the context information internally, and because you can't instantly create
close relationships).And, Low contexts are relatively easy to enter if you are an
outsider (because the environment contains much of the information you need to
participate, and because can you form relationships fairly soon, and because the
important thing is accomplishing a task rather than feeling your way into a
relationship).
In an increasingly connected and interdependent world effective
communication not only becomes more important but also much more difficult.

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Ironically, it is often not dissimilar languages that cause the greatest problems but
rather much more mundane and harder to detect cultural differences.
Culture is thus related to the development of one’s attitude. Every organization
seeks to be more effective and achieve better results. It’s important for
organizations of different size and level to create the kind of environment or
culture where the positive managerial patterns of listening, coaching, guiding,
involving and problem-solving are actively encouraged and reinforced. This is
where the policy of the Human Resources department is critical as it reflects and
reinforces organizational values and culture.

4.6 GLOSSARY

The Universalist approach: it can be understood as, what is good and right can be
defined and ALWAYS applies under all circumstances.
Particularistic cultures: Here far greater attention is given to the obligations of
relationships and unique circumstances
Values & Attitude- Values are principles, standards or qualities that an individual
or group of people hold in high regard.
Religion- A religion is an organized collection of beliefs, cultural systems,
and world views that relate humanity to an order of existence.

4.7 ANSWERS TO CHECK YOUR PROGRESS

Answers to check your progress 1

1. Priorities
2. Economics
3. Politics
4. Legal
5. Linguistic Compatibility
6. Engagement

Answers to check your progress 2

1. Creating value and belief statements

2. Practicing effective communication
3. Reviewing organizational structure

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 4. Considering the subcultures within the organization
5. Redesigning your approach to rewards and recognition

4.8 REFERENCES

1. Bhattacharya ,Deepak Kumar., Basic Cross- Cultural Management:2010.PHI

Learning
2. Cherunilam ,Francis International Business:2004
3. Hill, Charles W. International Business: 1998: McGraw hill.
4. Lindsay, Stace “Culture, Mental Models, and National Prosperity” in
Culture Matters, How Values Shape Human Progress, Harrison &
Huntington, Basic Books, 2000.
5. Punnett ,Betty Jane: International Perspectives on Organizational behavior
and HRM: 2004
6. Rao, V. and M. Walton (Eds.) 2004. Culture and Public Action. How and
why does culture matter? Stanford: Stanford University Press.

4.9 SUGGESTED READINGS

1. Torben Rick: Corporate culture an important part of change management:

2009
2. Mireless, Allen. How to Avoid Cross- cultural Communication blunders-
2014.
3. Banish ,Bryan J., The role of Organizational Change: Cambridge 1993
4. Rypkema .Donovan., Culture, Historic Preservation and Economic
Development in the 21st Century: September 1999, Yunnan Province, China

4.10 TERMINAL AND MODEL DUESTIONS

1. Glocalization is the mantra for today’s organizations. Do you agree?

Discuss.
2. Give an introduction to shift in culture? And explain its important elements?
3. What is the Significance of shift in culture and its role in organizations?
4. Discuss the Influence of economic factors and foreign intervention on shifts
in local culture

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5. Distinguish between High context cultures or Low Context cultures?
6. Explain the relationship of shift in culture in organization?
7. Today organizations have become Change Agent. Critically examine the
statement

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LESSON 5 : CROSS CULTURAL COMMUNICATION

STRUCTURE OUTLINE

5.1 Learning objectives

5.2 Introduction

5.3 Role of effective communication for cross cultural management

5.4 Managing culture specific perception

5.5 Significance of verbal and non verbal communication across cultures

5.5.1 Verbal communication styles

5.5. 2 non verbal communication styles

5.6 Barriers to effective communication across cultures

5.7 Summary

5.8 Glossary

5.9 Answers to check your progress

5.10 References

5.11Suggested readings

5.12Terminal and model questions

5.1 LEARNING OBJECTIVES

After going through the lesson, you should be able to

 Understand the Role of effective communication for cross cultural

management and international marketing
 Appreciate the Significance of verbal and non verbal communication across
cultures

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  Examining the dimensions of cross cultural communication : managing
culture specific perception

5.2 INTRODUCTION

The most effective definition of communication so far, says that it is the imparting
or interchange of thoughts, opinions or information by speech writings or signs.

When such communication or interaction takes place among people who represent
different cultures, it is referred to as cross cultural communication. Now it is
important to understand that communication between the same culture and
different cultures are characteristically different as the difference is more visible in
terms of their thinking patterns and behavior which they have learnt over
generations and are carried on for a long time. Like in Indian culture the value of
spoken words was very high in the past where people would do anything to honor
their verbal commitments, and the same hold true even now, though it is
substantiated with written agreements. Thus it can be understood that India applies
both high context and low context cultural features.

Elements of Communication

Before proceeding further let us recall the basic elements of communication which
will help in the nuances of cross cultural communication better.

1. Communication is a two way process involving a sender and the receiver

2. All the communication are directed towards sending or receiving a message
which can be in the nature of information sharing, a directive to do
something, an inquiry, to clarify something, a feeling, an expression of
opinion or an idea from the communicator.
3. Commonness of understating between the sender and receiver which include
common factors like culture, language and environment. It would be
important at this point that the words, phrases, gestures and expressions used
by the parties are purely cultural specific and possess high degree of
communicative potential for people from similar background.
4. An ideal communication should be able to evoke the desired response from
the receiver

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 5. Communication can either be verbal, non-verbal, Para-verbal.

All the above mentioned five elements can also be viewed as the process of
communication that is starting from:
Sender Message Method Receiver response

5.3 ROLE OF EFFECTIVE COMMUNICATION FOR CROSS CULTURAL

MANAGEMENT AND INTERNATIONAL MARKETING

Communication is one of the most important factors in cross cultural management

and paves way for successful international business and negotiations. So far we
have learnt about different cultures and their significance in international business,
in this lesson, we will talk about the importance of communication, verbal non
verbal and Para verbal. Needless to mention that cultural sensitivity and awareness
is of prime importance when you are dealing with international clients
Communication connotes different meanings in different cultures. You are well
aware of the various theories of culture discussed so far and you know that
communication modes and techniques vary across cultures. Some cultures are high
context while some cultures are low context. Some cultures give more importance
to time while others take it casually. Apart from the verbal and the non verbal
communication the various traditions norms customs, beliefs values attitudes and
behavioral patterns, color preferences are also very much a part of any cross
cultural communication activity. Cultural awareness and sensitivity goes a long
way in determining the business relations and a manager well versed in this can
never go wrong.

For example the Chinese place fruits on the grave of the dead to pay last respects
and homage unlike the Americans who place flowers on the grave. An American
business delegation proceeding to meet a Chinese business house got o know of the
death in the family and immediately proceeded to the graveyard with fruit baskets,
which really impressed the Chinese business house and their negotiations started
well in advance on a healthy and respectful note.

It is very important to exhibit a reasonable amount of tolerance to the accent,

pronunciation, use of words and certain type of body language of other cultures.
But of course care should be taken of and blunders in communication should be
avoided. These days the multinational organizations are well aware of the

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significance of communication across cultures and therefore do impart culture
specific training to the expats before sending them on international assignments.
The aim is to make them more insightful, tolerant and adaptable to other culture
which in turn leads to better business relations.

Thus we can say that Communication is purely cultural as

• It draws on speech patterns, language, and nonverbal messages

• It is interactive in nature

• It operates through social relationships

Similarly Cultural Fluency is Essential for effective cross-cultural

communication which encompasses;

• Understanding your own cultural lenses

• Understanding communication variation across cultures

• Applying these understandings to enhance relationships

ACTIVITY 1

What do you think is the importance of cross cultural awareness in this

globalized world where we say the cultures are converging. Do we still
need to create cross cultural awareness amongst the expats? Discuss
with the help of a case study.

5.4 MANAGING CULTURE SPECIFIC PERCEPTION

In order to understand cross cultural communication, it is important to find out

how to manage culture specific perception, which has been discussed as
following in the context of high Vs low context cultures, time orientation, role
of emotions and reasons, use of personal space, significance of fate and
personal responsibility and the importance of face.

1. High context Vs low context cultures

2. Perception of Time

3. Perception of emotions and reasons : affective Vs neutral cultures

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 4. Perception of Space

5. Fate and Personal Responsibility

6. Importance of Face

1. High context Vs low context cultures

The high context cultures leave much of their messages unspecified leaving things
to be understood by the receiver in the context through non verbal cues or body
language. On the other hand the low context cultures clearly specify all the
messages with precise written words. The high context cultures are Mediterranean
Central European, Latin American, African, Arab, Asian, and American Indian.
While the low context cultures are UK, USA, and Germany etc.

Now the major challenge in cross cultural communication and negotiation is to

train the expat managers in dealing with both high and low context cultures where
someone from low context culture should be trained or sensitize to appreciate the
significance of nurturing relationships at the personal level when dealing with
organizations operation in high context cultures.

The cultural differences are also visible when it comes to the choice of medium of
communication as mentioned earlier. The technologically and economically
advanced countries make use of extensive technologies to communicate and place
more emphasis on written or oral communication than face to face communication.
Countries like USA, Canada etc use this mode on the other hand a country like
Japan in spite being highly advanced prefers face to face communication. Such
perspective differences in the medium of communication cannot be attributed to
the degree of industrialization but to the culture that is high context or low context.
Some cultures believe in building long term personal relationships others believe in
entering into legal formalities thus it is very important to sensitize the global
manager in appreciating the high context and the low context cultures.

2. Sequential or Synchronic Time In Cross Cultural Communication:

Perception of Time

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Some cultures follow Monochronic time schedule, where Things are done in a
linear fashion and the Manager addresses Issue A first and then moves on to Issue
B. Here the Time schedules are very important and time is viewed as something
that can be controlled and should be used wisely

While some cultures follow Polychronic time schedules, where People tend to do
several things at the same time and place higher value on personal involvement
than on getting things done on time. Here the Schedules are subordinated to
personal relationships

Organizations belonging to sequential or synchronic timings have different views

about time which influences the communication style to a large extent it is
interesting to note here that people tend to perceive time either sequentially or
synchronically i.e. those who believe in sequential time consider time a linear
commodity in which time can be either spend saved or wasted. On the other hand
those who view time synchronic in nature believe that time in constant which can
neither be controlled nor constrained e.g. a person arriving late in meetings in a
sequential culture will lead to a feeling of disrespect. On the other hand reporting
before time for a meeting in a synchronic culture is considered to be a sign of
impatience.

Let us try to understand the business meetings in both the cultures. In sequential
businesses meetings the primary focus is on one item of agenda at a time where the
discussions are very formal and protocol bound while in the synchronic cultures it
is the other way round where extensive discussions takes place.

It would be interesting to note that the Japanese are very uncomfortable when a
business delegate arrives with a set agenda.

Needless to mention that time is viewed and utilized differently in different

cultures. We have already discussed it , but now let us find out how the perception
of time adds an altogether dimension to the business itself especially the cross
cultural business.

Both the developed and the developing countries have their own set of
perceptions with regard to time. Let us find out through a set of examples.

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For example when you are dealing or communicating with your Swiss counterpart,
it would be entirely different the way you would with the Italians .the Americans
view time as money, and are always on the move in their quest to make
money. For them time is very precious and treat it as linear, and you have
to flow with it to seize the moment.

The Americans are not alone in this pursuit or perception of time; they are
accompanied by the Swiss, the Germans and the British in this Endeavour
of saving time and taking quick and rational decisions on time without
wasting it.

These countries are also known as the ones following a monochromic work
culture where they believe in doing one thing at a time more effectively and
efficiently rather than doing too many things simultaneously which will not
produce the desired results. Thus when you are communicating or
negotiating with these groups you must ensure and follow their time
perceptions lest you should lose out on an important deal. They believe in
following the protestant work ethic and equate success with the working
hours spent effectively. The more you work, the more you earn. This is the
mantra of success for the achievement oriented American culture. But
interestingly, this is not the case with the British, who think it is very
unrealistic for a class conscious country like Britain and other south
European countries, which give more importance to authority, privilege
and birthright.

On the other hand , the managers coming from the Spanish , Italian or an
Arab culture are not that particular about time and do not mind extending
the conversations f they feel that they might have to leave the conversation
in between. For them, completing a human transaction is the best way they
can invest their time.

3. Affective or Neutral Cultures

Another aspect of cross cultural communication is affective or neutral where both

reason and emotions play a vital role; here it is important to understand the
significance of emotion and reason. The Affective cultures are emotion driven and
feelings are out rightly expressed, where walking out to the room is common and

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intolerance is prominent and neutral cultures exhibit lack of emotion. It rather
involves critical analysis and reasoning and shy away from emotional outbursts
like the Japanese. Neutral culture is more visible in Japan, Indonesia, and UK. The
affective culture is more prominent in Italy, France, and USA.

4. Perception of Space: It is the perception of the people with regard to the

differences in comfortable distance between people which is maintained by them
while interacting with each other. This point is discussed in detail in non verbal
communication

5. Perception of Fate and Personal Responsibility: the cultures in which

people feel that they are the masters of their lives are driven by personal
responsibility , where as in cultures where people see themselves as subject to
things outside their control are driven by their fate.

6. Perception of Face and Face-Saving: Face is the standing a person has in the
eyes of others. The importance of “face” and face-saving varies across cultures,
wherein some cultures value “face” more than their own well-being while there are
cultures which do not care about face all that much.

CHECK YOUR PROGRESS 1

Fill in the blanks by finding out the cultural dimensions

1. The ……………………………………….. Leave much of their messages

unspecified leaving things to be understood by the receiver in the context
through non verbal cues or body language.
2. The …………………………… ……. clearly specify all the messages
with precise written words.
3. Some cultures follow …………………………….where the time schedules
are very important and time is viewed as something that can be controlled
and should be used wisely
4. Some cultures follow…………………………………., where People tend to
do several things at the same time and place higher value on personal
involvement than on getting things done on time. Here the Schedules are
subordinated to personal relationships

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 5. The ………………………are emotion driven and feelings are out rightly
expressed, where as ………………………….. Exhibit lack of emotion.

5.5 SIGNIFICANCE OF VERBAL AND NON VERBAL

COMMUNICATION STYLES IN CROSS CULTURAL
COMMUNICATION

The communication can be in the nature of either; Verbal or Non-verbal

Verbal communication is the use of words and languages to interact between two
or more individuals (belonging to different cultures). It can be in the nature of oral
or written which includes reading, writing, listening and speaking. This is the most
important part of business communication and requires thorough training to the
expat managers.

Non-verbal communication takes place without the use of words through

gestures, facial expressions (a stare, a smile, raising a finger which carries different
meanings across cultures) e.g. Americans consider it to be very normal to smile at
strangers while Japanese consider it very rude. Non verbal communication is more
important while insuring the success of business deals and negotiations across
cultures.

In addition, in the organizational set up, the communication flows can be either;
Internal or external, Formal or informal, Upward downward or horizontal,
Diagonal, Grapevine. All these forms of communication are inherently different in
different parts of the world as they tend to follow culture specific protocols of
communication .These differences are more clearly visible in the western and the
eastern cultures.

5.5.1 Verbal communication styles

Let us now try to find out the verbal communication styles. There are basically
four types of Verbal communication styles;

1. Indirect And Direct Styles

2. Elaborate And Succinct Styles
3. Contextual And Personal Styles

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 4. Affective And Instrumental Styles

1. Indirect and Direct Styles

As you have already learnt, in high-context cultures, the messages are implicit and
indirect. Here the Voice intonation, timing, and facial expressions play important
roles in conveying information than the spoken or written words.

However In low-context cultures, people often meet only to accomplish the desired
objectives of the meetings and negotiations and tend to be direct and focused in
their communications rather than leaving things to be understood by the other
party.

2. Elaborate and Succinct Styles

In this communication style , the communicator uses three degrees of

communication quantity i.e. he is either very elaborate in his talks and
discussions, or he chooses to be exacting or he can prefer to be very succinct
while information sharing .

The elaborating style is more popular in high-context cultures that have a

moderate degree of uncertainty avoidance

The exacting style focuses on precision and the use of the right amount of words
to convey the message and is more common in low-context, low-uncertainty-
avoidance cultures

The succinct style is more common in high-context cultures with considerable

uncertainty avoidance where people tend to say few words and allow
understatements, pauses, and silence to convey meaning.

3. Contextual and Personal Styles

In this communication style, the communicator chooses to be either contextual or

personal in nature.

If he chooses to apply the Contextual style, it is the one that focuses on the
speaker and relationship of the parties. The Contextual style is often associated
with high-power distance, collective and high-context cultures

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Whereas in the Personal style, the focus is on the speaker and the reduction of
barriers between the parties .Personal style is more popular in low-power-distance,
individualistic, low-context cultures

4. Affective and instrumental styles

Affective style is common in collective, high-context cultures and is characterized

by language that requires the listener to note what is said and to observe how the
message is presented. The meaning is often nonverbal and requires the receiver to
use his or her intuitive skills to decipher the message.

Instrumental style is goal oriented and focuses on the sender who clearly lets the
other party know what he or she wants the other party to know. The instrumental
style is more commonly found in individualistic, low-context cultures.

Look at the figure 1 below to find out some of the high context/implicit
communication cultures and the low context / explicit communication cultures.
The Swiss Germans, the Germans the Scandinavians and the north Americans the
French follow low context culture in varying dgrees.While the English, the Italians
,the Latin Americans, the Arabs and the Japanese follow high context
communication cultures.

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Figure 1: High Context /Implicit and Low Context / Explicit Communication
across Cultures.

Now let us look into the major characteristics of the verbal styles; the indirect and
direct, the elaborate and succinct , the contextual or personal and the affective or
instrumental styles Vis a Vis the major variation , the interaction focus and content
and the cultures in which characteristic it is found. See table 1 below.

Table 1: Showing the Major Characteristics of the Verbal Communication

Styles

Summary of Communication Process and Verbal Communication Styles

across various cultures

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 Look at the table 2 below and see the differences in the verbal communication
styles being used in different countries. This snapshot of the verbal styles is very
useful for the expat mangers which they should religiously follow to be successful
in their cross cultural negotiations and communication.

Table 2: Showing the Cross Cultural Usage of the Verbal Communication

Styles

Communication Flows

Another significant aspect of communication is its flow, which can be either

Downward, upward or horizontal communication. It is the transmission of
information from manager to subordinate, from subordinate to the manager or
amongst the people at the same level. The Primary purpose of manager-initiated
communication is to convey orders and information. The Managers use this
channel for instructions and performance feedback. The channel facilitates the flow
of information to those who need it for operational purposes. The purpose of
upward communication could be to give their viewpoints suggestions or air their
grievances to the higher management. The purpose of the horizontal
communication could be to hold discussions and meetings to resolve issues at the
same level.

CHECK YOUR PROGRESS 2

Identify the verbal communication style

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 1. Here the Voice intonation, timing, and facial expressions play important
roles in conveying information than the spoken or written words.
2. People often meet only to accomplish the desired objectives
3. The meaning is often nonverbal and requires the receiver to use his or her
intuitive skills to decipher the message.
4. The communication style is goal oriented and focuses on the sender who
clearly lets the other party know what he or she wants the other party to
know.
5. This style focuses on the speaker and relationship of the parties.
6. This style focuses on the speaker and the reduction of barriers between the
parties

5.5.2 NON VERBAL COMMUNICATON

It is the transfer of meaning through means such as body language and use of
physical space. Non verbal communication includes gestures, use of space that
does not involve language. The four kinds of non verbal communication that cross
cultural managers should understand are proxemics, kinesics, facial and eye
behavior and Para language. It is important to understand that non verbal
behavior is culture bound.

1. Proxemics

It is the study of the way that people use physical space to convey messages to
others while communicating non verbally during meetings and negotiations. They
use either intimate distance, personal distance, social distance or public distance
while interacting.

• Intimate distance is used for very confidential communications (18inches)

• Personal distance is used for talking with family and close friends (18inches
to 4 feet)
• Social distance is used to handle most business transactions (4 feet to 8 feet)
• Public distance is used when calling across the room or giving a talk to a
group (8 feet to 10 feet). See figure 2 below to understand the distance more
clearly.

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 Figure 2: Showing the Personal Space in the U.S.

More specifically, it is the individuals perception which includes territorial space

which constitutes ones comfort zone while communication and interacting with
each other. The territorial space or the comfort zone varies across cultures which
makes people uncomfortable when operating in different cultural zones, for
example it has been observed that the comfort zone or Arabs and Americans is
different, the Arabs prefer a closer talking distance visa-vis American. The seating
arrangements also vary across cultures, where people are seated according to the
purpose of communication. For example if the purpose is cooperation then the
person should be seated beside you, when the purpose is to encourage direct and
open communication the person should be seated at a right angle, when the
purpose is competition or confrontation the person should be seated directly across
you. Thus proxemics is an important aspect of cross cultural communication which
the mangers tend to ignore at their own peril.

2. Kinesics

It is the study of communication through body movement and facial expression:

Eye contact, Posture, Gestures. It is the study of body movements, including the
hands, fingers, foot tapping, showing some signs to others, some of which are

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considered to be offensive to the other person. This is also culture specific. The
managers need to be trained in this aspect as well to ensure that his body language
does not go against him during cross cultural meetings and negotiations. For
example the Arabs find it very offensive when someone sits in front of them by
exposing the sole of their shoes towards them. Smoking is also not acceptable in
some cultures, interestingly Japanese are chain smokers and one needs to be
tolerant in front of them.

3. Facial and eye contact: this is again an important parameter of non verbal
cross-cultural communication. Since your face is a rich source of information and
non verbal communication, it tells a hundred stories about the person. This is in
continuation of affective Vs neutral cultures, where in affective cultures emotions
are freely exhibited unlike in the neutral cultures where they are hidden and not
expressed freely. For example looking into the eyes is considered to be offensive
by the Japanese, while it is a sigh of honesty and truthfulness for the Americans.

4. Para verbal communication: it encompasses the person’s speech, the tone, the
pitch, the loudness, the flow etc in one’s speech. This also varies across cultures,
like the Japanese are quite soft spoken and use a very low pitch while conversing.

5.6 BARRIERS TO EFFECTIVE COMMUNICATION ACROSS

CULTURES

Barriers to effective communication across cultures can be due to gender

differences, cultural and language and perception of individuals.

1. Gender Differences

Conversation between male and female is also termed as cross cultural

communication. There is a stark difference in the conversation style when it comes
to male and female conversation where females are considered low on information
sharing as compared to their male counterparts, in order to overcome this barrier it
is important to develop awareness of these differences and work them out by
seeking clarification rather than interpreting the said statement.

2. Cultural Diversity

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Another significant barrier is cultural diversity which evident in cultural values and
behavioral patterns as visible in work related values especially people hailing from
these countries USA, Germany, UK, Japan, India. These work related values
impact the level of motivation, leadership, and teamwork. For example in German
culture authority and hierarchy are greatly valued which makes it difficult for them
to have an open line of communication with their supervisors unlike their
American counterparts.

3. Stereotyping :Viewing people of other cultures through the narrow lens of

stereotype for example an Asian stereotype of Americans that they are aggressive
and arrogant thus making them insensitive and unapproachable.

4.Cultural factors like Collectivism and individualism is another factor in cross

cultural communication where people coming from individualistic culture tend to
take more independent and more assertive decision unlike the people coming from
collectivist culture who tend to encourage open discussions.

ACTIVITY 2

According to you ,which communication style is more effective, verbal or non

verbal .Outline the significance of the two styles by giving some examples or
case studies from the international business.

Achieving Communication Effectiveness

However these are just a few hindrances in effective cross cultural communication
which can be managed by improving the feedback system, imparting language and
cultural training.

Suggestions that can be of value to American managers who are engaged in

international communications include:

Be careful not to use generalized statements about benefits, compensation, pay

cycles, holidays, or policies in your worldwide communications.

Since most of the world uses the metric system, be sure to include converted
weights and measures in all internal and external communications.

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Keep in mind that even in English-speaking countries, words may have different
meanings. Not everyone knows what is meant by “counterclockwise,” or “quite
good.”

Remember that letterhead and paper sizes differ worldwide. The 81⁄2 by 11-inch
page is a U.S. standard, but most countries use an A4 (81⁄4 111⁄2-inch) size for
their letterhead, with envelopes to match.

Dollars are not unique to the United States. There are Australian, Bermudian,
Canadian, Hong Kong, Taiwanese, and New Zealand dollars, among others. So
when referring to American dollars, it is important to use “US$.”

5.7 SUMMARY

The communication or interaction that takes place among people who represent
different cultures is referred to as cross cultural communication. Communication
between the same culture and different cultures are characteristically different as
the difference is more visible in terms of their thinking patterns and behavior
which they have learnt over generations and are carried on for a long time. In order
to understand cross cultural communication, it is important to find out how to
manage culture specific perception, which has been discussed in the context of
high Vs low context cultures, time orientation, role of emotions and reasons, use of
personal space, significance of fate and personal responsibility and the importance
of face.

Apart from the above the significance of verbal and non verbal communication
across cultures has been established where different Verbal communication styles
and non verbal communication styles have been outlined. Verbal communication is
the use of words and languages to interact between two or more individuals
(belonging to different cultures). It can be in the nature of oral or written which
includes reading, writing, listening and speaking. Non-verbal communication takes
place without the use of words through gestures, facial expressions. There are
basically four types of Verbal communication styles; Indirect and Direct Styles,
Elaborate and Succinct Styles, Contextual And Personal Styles and Affective And
Instrumental Styles. The four kinds of non verbal communication that cross
cultural managers should understand are proxemics, kinesics, facial and eye
behavior and Para language. It is important to understand that non verbal behavior

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is culture bound. Last but not the least Barriers to effective communication across
cultures has been discussed which could be due to gender differences in
information sharing, cultural and language diversity .Some suggestions to improve
cross cultural communication includes training to the expats with regard to all the
above mentioned aspects of cross cultural communication to improve the
negotiations and business deals.

5.8 GLOSSARY

Verbal communication is the use of words and languages to interact between two
or more individuals. It can be in the nature of oral or written which includes
reading, writing, listening and speaking.

Non-verbal communication takes place without the use of words through

gestures, facial expressions (a stare, a smile, raising a finger which carries different
meanings across cultures)

High context Vs low context cultures

The high context cultures leave much of their messages unspecified leaving things
to be understood by the receiver in the context through non verbal cues or body
language. On the other hand the low context cultures clearly specify all the
messages with precise written words.

Monochronic or Polychronic time schedules

In monochromic time schedule, things are done in a linear fashion and the
Manager addresses Issue A first and then moves on to Issue B. Here the Time
schedules are very important and time is viewed as something that can be
controlled and should be used wisely.

While some cultures follow Polychronic time schedules, where People tend to do
several things at the same time and place higher value on personal involvement
than on getting things done on time. Here the Schedules are subordinated to
personal relationships

Affective or Neutral Cultures

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The Affective cultures are emotion driven and feelings are out rightly expressed,
while neutral cultures exhibit lack of emotion and involve critical analysis and
reasoning.

Kinesics

It is the study of communication through body movement and facial expression

including Eye contact, Posture, Gestures.

Proxemics

It is the study of the way that people use physical space to convey messages to
others while communicating non verbally during meetings and negotiations. They
use either intimate distance, personal distance, social distance or public distance
while interacting.

5.9 ANSWERS TO CHECK YOUR PROGRESS

Answers to check your progress 1

1. High Context Cultures

2. Low Context Cultures
3. Monochronic Time Schedule
4. Polychronic Time Schedules
5. Affective Cultures, Neutral Cultures

Answers to check your progress 2

1. Indirect style
2. Direct style
3. Affective style
4. Instrumental style
5. Contextual style
6. Instrumental style

5.10 REFERENCES

Bhattacharya, Deepak Kumar, Cross cultural management, text and cases, PHI

5.11SUGGESTED READINGS

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Hill, Charles. International business, McGraw Hill

5.12 TERMINAL AND MODEL QUESTIONS

1. What do you think is the Role of effective communication for cross cultural
management and international marketing?
2. Outline the Significance of verbal and non verbal communication across
cultures
3. What according to you is the importance of managing culture specific
perception

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LESSON 6: CROSS CULTURAL HRM; STAFFING AND TRAINING FOR
GLOBAL OPERATIONS

STRUCTURE OUTLINE

6.1 Learning objectives

6.2 Introduction
6.3 Cross cultural staffing: Manpower planning, Recruitment and Selection.
6.3.1 Global staffing choices
6.4 Cross cultural training practices
6.4.1 Training Delivery Programs
6.5 Expatriates
6.6 Summary
6.7 Glossary
6.8 Answers to check your progress
6.9 References
6.10 Suggested readings
6.11 Terminal and model Questions

6.1 LEARNING OBJECTIVES

After going through the lesson, you should be able to;

 Appreciate the Elements of HRM in a Global Cross Cultural Environment
 Outline the Cross cultural staffing and training practices
 Find out the Global staffing choices available to the multinational
organizations.
 Understand the issues relating to Expatriates in the global recruitment
market

6.2 INTRODUCTION

International Human Resource management is the process of sourcing, allocating

and effectively utilizing human resources in a multinational organization.
In global organizations, human resource managers are required to achieve
two conflicting strategic objectives:
First, they have to integrate human resource policies and practices across number
of subsidiaries in different countries.
Second, they have to make HRM practices sufficiently flexible to accommodate
different business and cultural settings.

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Such problems of balancing integration and differentiation are a common dilemma
facing International HR Managers and are a major challenge for companies
operating across international borders.
Thus IHRM is all about worldwide management of human resources.

6.3CROSS CULTURAL STAFFING

The cross cultural staffing at the international level encompasses manpower

planning and recruitment and selection practices which have been discussed in
detail in the following pages.

Why international staffing policies?

Since many organizations headquartered in developed countries now have large

proportion of their workforce located elsewhere in the world, it becomes
imperative to have International Staffing policies .For example,
 The Ford Motor company has half its employees outside US
 Philips Electronics has three-fourths of its employees outside the
Netherlands.
 More than half of Matsushita Electric’s employees are outside Japan.
 Just over half of L.M. Ericsson’s staff works outside Sweden.

IHRM involves ascertaining the corporate strategy of the company and assessing
the corresponding human resource needs;
 Determining the staffing and organizational strategies
 Recruiting , inducting, training , developing and motivating the personnel
 Putting in place the performance appraisal in compensation plans and
industrial relation strategy and the effective management of all these.

MANPOWER PLANNING IN A GLOBAL ECONOMY

As economic and technological change creates a global environment for

organizations, human resource planning is involved in decisions about
participating as an exporter or as an international, multinational, or global
company. Even purely domestic companies may draw talent from the international
labor market.
When organizations decide to operate internationally or globally, they need to
look into the following;
 Manpower planning involves decisions about where and how many
employees are needed for each international facility.

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  Decisions about where to locate include considerations such as the cost
and availability of qualified workers.
 These considerations must be weighed against financial and operational
requirements.
 Other location decisions involve outsourcing.
Owing to the challenges cited above, Human resource Planning must align with the
overall company business plan and specify exactly what role management
planners, recruiters, compensation specialists, and line and staff managers will play
in the process of selecting employees to send abroad. For example, HR selection
process varies from country to country. It would depend upon the number of Job
openings vs. the number of college graduates passing out each year.

In Japan since the number of jobs is more than the number of graduates; the firms
adopt an aggressive strategy in hiring employees.

While in Mexico the number of graduates is more than jobs, it relies on needs-
based placement and no newspaper advertisement etc is used for hiring.

For US based Mitsubishi-Chrysler joint venture auto plant, employees are

selected the Japanese way. Here Selection is a 3 day process, covering the
following aspects;
DAY 1: work related tests that mimic actual factory jobs
DAY 2: written, medical and drug tests
DAY 3: final screening by plant supervisors

The Selection process tests individuals for high level of skills, dedication, aptitude
for learning new work methods, teamwork etc.
Post selection, rigorous basic training and on-the-job training is given to the
selected candidates.
In US, concrète results is the criteria for sélections & promotion un like UK and
France where school & family background is important.

CHECK YOUR PROGRESS 1

Fill in the blanks

1. Manpower planning involves decisions about
………………………employees are needed for each international
facility.
2. Decisions about where to locate include considerations such as
the………………………………………

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 3. These considerations must be weighed against financial and
……………………….
4. Other location decisions involve …………………….

RECRUITMENT AND SELECTION

Recruitment and selection program for international assignments involves

assessing prospective candidates on certain criteria thought to be associated with
assignment effectiveness. Selection for foreign assignments should reflect criteria
that have been associated with success in working overseas which should look into
the following aspects.
1. Competency in the employee’s area of expertise
2. Ability to communicate verbally and nonverbally in the foreign country
3. Flexibility, tolerance of ambiguity, and sensitivity to cultural differences
4. Motivation to succeed and enjoyment of challenges
5. Willingness to learn about the foreign country’s culture, language, and
customs
6. Support from family members
7. Qualities associated with success in foreign assignments are the ability to
communicate in the foreign country, flexibility, enjoying a challenging
situation, and support from family members.

6.3.1 GLOBAL STAFFING CHOICES OR APPROACHES

The multinational organizations have to adopt one of the approaches for

international manpower planning, recruitment and selection, training, performance
appraisal compensation etc. these approaches have been discussed in detail below.

One of the following four approaches are used for recruitment by the MNCs

1. Ethno-centric – In this approach, key positions are given to the citizens of

the home country.
2. Poly-centric – In this approach, Primary positions are given to the nationals
from the host country.
3. Regio-Centric – In this approach, Primary positions are given to the people
from countries with similar cultures, experience and management practices.
4. Geo-centric – In this approach, best qualified individuals are hired from
across the globe, regardless of nationality, treating world as market to
implement global business operations.
.

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 1. Ethnocentric approach

This policy is the one in which all the key management positions are filled by the
Expatriates from the parent country nationals. The expatriates are usually trained to
be more aligned to the interest of the home country and are able to protect their
interest in the foreign .This approach is regarded appropriate where the
organizational mode of the company is international.

The Advantages of this approach are that it;

 Overcomes lack of qualified managers in the host nation at times, especially
at the senior positions.
 Helps in aligning the interest of the home and the host country.
 Enables the organization operating at international level to practice Unified
culture in all its locations ,
 Helps in transferring the core competencies of the organization.
 The company is also able to transfer employees with a clear performance
record that will provide some level of predictability of success in the host
country.

However it has a few Disadvantages, like it may;

 Produce resentment in the host country as their nationals are not hired or
given preference in some key positions.
 Lead to cultural myopia which means the firm's failure to expand their view
beyond the limited view of their very own world.
 Lead to the loss of local perspective and insights that local employees can
provide that may help overcome unique hurdles in each foreign office.
 Be expensive to hire expatriates as compared to hiring executives locally.

2. Polycentric approach
A company with polycentric staffing policy recruits host country nationals to
manage subsidiaries from mail room clerks all the way up to the executive
suites. Polycentric staffing is particularly feasible in developed countries, such
as European countries, Canada, Australia and Japan, where highly educated and
trained employees can be easily located. This approach is best suited to multi-
domestic businesses. In many aspects this approach is a response to the
shortcomings of the ethnocentric approach. And in that light it has the
advantages which the ethnocentric approach does not have.

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 The Advantages of this approach are that it;

 Helps the organization in overcoming cultural myopia, and enables them

to look beyond their limited visions.
 Eliminates language barriers, adjustment problems of expats, and
removes the need of expensive cultural training programmes.
 Is also inexpensive to implement as the company does not have to incur
relocation expenses.
 Is able to better guide the company on local market conditions, business
environment; both the strategic macro and micro aspects relating to the
local politics, laws and culture at each foreign location.
 Sends a message to the country and its consumers that the company is
willing to make a commitment to the country and its people.

However it has a few Disadvantages, like it may;

 Limit opportunity to gain experience of host country nationals outside their
own country.
 Create a gap between home and host country operations.
 Mean that at times relying on locals’ means there may be some disconnect in
perspective and interests with the home country as the Locals might have the
tendency to put local interests above the company. This might be
jeopardizing to the home country.

3. Geocentric approach

A geocentric approach seeks best people for key jobs and positions throughout the
organization regardless of nationality. This approach is best suited to global and
trans-national businesses. Here again the company would be dealing with the
expatriates as the individuals hired would be from across the globe.

The Advantages of this approach are that it;

 Enables the firm to make best use of its human resources.

 Equips executives to work in a number of cultures.
 Helps build strong unifying culture and informal management network.

However it has a few Disadvantages, like it may;

 Sometimes become difficult to recruit expatriates due to stringent National
immigration policies of the host countries.

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  Be expensive to implement this approach due to additional training and
relocation expenses to be incurred.
 Be cumbersome to have a rational Compensation structure for the global
managers due to differences in the value of currency of the host and the
home country. This is more difficult when the expatriates from the
developed countries are posted in the developing countries.

4. Regiocentric approach

In this approach, the executives are selected after a rigorous selection procedure
from different countries but from within the geographic region of business. This
approach aims at hiring the best people from the region. For example a European
MNC will recruit people from European countries only as they are well versed
with the culture and business environment of the region. That helps in better
operational efficiency and effectivess and is good for the overall health of the
organization.

The Advantages of this approach are that it;

 Allows interaction between executives transferred to regional HQs from

subsidiaries in the region and PCNs posted to regional HQs.
 Improves career prospects at regional level.

However it has a few Disadvantages, like it may;

 Constrain the organization from taking a global stance.
 Lead to the career prospects of the employees restricted to a regional level
only.

CHECK YOUT PROGRESS 2

State whether true or false

1. In Ethno-centric approach, key positions are given to the citizens of the

host country.
2. In Poly-centric approach, Primary positions are given to the nationals from
the host country.
3. In Regio-Centric approach, Primary positions are given to the people from
countries with dissimilar cultures, experience and management practices.

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 4. In Geo-centric approach, best qualified individuals are hired from across
the globe, from the home country nationality.

6.4CROSS CULTURAL TRAINING

Training is considered as an investment in boosting an expatriate’s performance.

Increasing number of organizations have started considering the requirements of
the spouse and family in their pre departure training programs
Now, we will examine how the international assignment is a vehicle for both
training and development, as reflected in the reasons why international
assignments continue to play a strategic role in international business operations.

What Special Training Do Overseas Candidates Need?

Now the most important question is that what kind of training can reduce this expat
failure .It has been found out that the expats can be given training at four levels
starting with the cultural training, to understanding attitudes of different cultures,
to factual knowledge to language training. It is required to enable them to deal with
inability of the spouse and self to adjust with the foreign environment. It has been
found that only 30%of the expat managers receive training before their departure.

The role of training in preparing and supporting personnel on international

assignments is also considered. The aims of cross cultural Training and
Development program are;
1. It gives the employees the knowledge, skills, and abilities to perform
successfully.
2. Improves the adaptation of the expatriates to local conditions and culture
3. Helps managers and employees acquire international skills and in-depth
knowledge of local markets
4. Understands how training must be adapted to host country workers

Need for training and development varies across cultures and there are
Differences in training and development across cultures as well due to the
following reasons:
1. Because of the Differences in educational systems as discussed above,
2. Values regarding educational credentials
3. Cultural values regarding other personnel practices
4. Differences in institutional pressures: Europe vs. USA

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Cross-Cultural Preparation is a tool for cross cultural training

When an organization selects an employee for a position in a foreign country, it

must prepare the employee for the foreign assignment. This kind of training is
called cross-cultural preparation. It often includes family members who will
accompany the employee on the assignment.

This is training to prepare employees and their family members for an assignment
in a foreign country.
The training covers all three phases of an international assignment:
1. Preparation for departure
2. The assignment itself
3. Preparation for the return home (repatriation)

Cross-cultural Training As part of pre-departure training of expatriate managers,

an area of focus is cross-cultural training. The goal of cross-cultural training should
be to equip the managers with knowledge, skills and attitudes which enable them
to achieve the following adjustments and effectiveness which are indicators of
international success:

Managers to be personally adjusted, i.e. they feel happy and satisfied with
situation abroad,
Professionally effective if they perform their tasks, responsibilities on-the-job
competently,
Inter-personally adjusted and effective and they take interest in interacting with
locals capably.

Example: Pre-departure training, says Peter J. Dowling and his associates that “It
can prevent costly mistakes such as that of the highly paid expatriate who brought
two miniature bottles of brandy with him into Qatar (a Muslim country in the
Middle-East). The brandy was discovered by customs, and the expatriate was
promptly deported and ordered never to return”.

The six competencies needed in a specific country can be drawn. The

competencies that are perceived as being most important for success of global
managers are:
1. Leadership,
2. Initiative,
3. Emotional Stability,
4. Motivation,

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 5. Ability to handle responsibility,
6. Cultural sensitivity
7. Ability to handle stress and
8. being flexible

Components of Effective Pre-departure Training

1. Cultural awareness programs: foster the understanding of the HC

culture
2. Preliminary visits: provide a preview to allow the employee to assess
his suitability for the job
3. Language training: English, corporate language
4. Practical assistance: local orientation

1. Cultural Awareness

If the expected interaction between the expatriate and members of the host
culture is low, and if the degree of cultural dissimilarity between the expatriate’s
culture and the host culture is also low, then cultural issues in training can take on
secondary importance in relation to task or job-related issues. The level of training
rigor can be low in this case and training could last for less than a week which
would include cultural assimilation by giving cultural briefings, lectures, showing
movies and giving books on the country’s culture.

If the expected interaction between the expatriate and members of the host culture
is high, and if the degree of cultural dissimilarity between the expatriate’s culture
and the host culture is also high, then cultural issues should be correspondingly
high on the expatriate’s training agenda. The level of training rigor can be
moderate to high in this case.

2. Language Training

Since training the expat in the host country language apart from good working
knowledge and expertise on English is a prerequisite for effective and efficient
communication, training in this regard is of paramount importance.
This will not only improve his understanding of the host country culture but will
also improve his negotiating skills. Knowledge of the language will also enable
him to access the explicit and the implicit sources of information in the
organization, which would otherwise be a little difficult for him to comprehend.

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 In addition he should be thorough with the corporate language which is in
common use in the organization e.g. The working vocabulary and sometimes the
slang is important to be understood to become a part of the informal groups in the
organization which are the major sources of information where all the gossip and
information brew on the coffee tables.
This will enhance his capability of conducting the day toady business more
effectively and efficiently.

3. Preliminary Visits

Some companies make an arrangement for sending the expats to the host country
before joining to give them he first hand experience of the environment and the
climate to take the final decision.

Basically this exercise is done to enable the expat to better understand and
appreciate the cultural differences and match it with their area of interest and gauge
their suitability for the same. The purpose of a preliminary visit is to help
expatriates to assess their suitability for, and their interest in the assignment,
introduce them to the business context, and to enable them to make better pre
departure preparations without much hassles and anxiety. Research indicates that
many organizations make use of the tool of preliminary visits for expatriates, or
would consider its use. Generally, preliminary visits are not offered to expatriates
if the expatriates are already familiar with the country, or if the country is
considered culturally close.

4. Practical Assistance for Expatriate and his Family

Apart from training the expat , it is very important to provide pre departure training
to the family members of the expats as it will help them in adjusting to the new
culture and environment more comfortably without any anxiety and pressure. They
will be able to assimilate themselves into the host country culture, its do’s and
don’ts etc, and will help them in overcoming negative feelings about the visiting
country. This exercise is usually done by exposing them to the foreign culture
through audio video aids before their departure. Sometimes they are also handed
over the CD’s and print material to acclimatize them with the host country culture
and its norms of acceptable behavior.

Types of practical assistance include

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Relocation Assistance which covers giving them Information that would assist and
help them in relocating in the foreign land especially with regard to the housing
and the schooling of their children, they also provide assistance for finding out jobs
for their spouses in case they are interested. Sometimes this exercise is done before
the expat actually moves into the host country to help the family stay together
without much compromise. This is gaining importance because of the increased
aspirations and ambitions of the young couples where they give equal importance
to a successful career and a happy marital life. And there is positive correlation
between the two, which the multinational companies are realizing and thus
practicing.

Local Orientation; Assistance in finding suitable accommodation and schooling at

a reasonable commuting distance.

6.4.1 Training Delivery Programs

There are two types of delivery mechanisms followed worldwide which may
be either;

1. Centralized: Ethnocentric or Geocentric in nature

A centralized Ethnocentric training program me is the one in which training

originates at the headquarters of the home country and corporate trainers travel to
the host country or the subsidiary companies across the world to impart specific
training of their organization work culture .
A centralized Geocentric training program me is the one in which the training
develops through input from both headquarters and subsidiary staff and trainers
could be from any location.

2. Decentralized: Polycentric in nature

A decentralized Polycentric training program me is the one where training is

based on a local or regional work culture of the host country. Local people develop
training materials and techniques for use in their own area. Effective training
considers cultural background of the trainees.
Challenges in cross cultural training; Developing Globally Minded Managers
The Companies whose CEO's have international assignment experience are better
performers. The Companies must identify managers with global potential and

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provide them various training and development opportunities to reap the benefit of
their vast international exposure.

Training has a positive impact on cross cultural effectiveness.

Cultural awareness training is not just for the employee going overseas. It has
numerous applications domestically that will increase organizational effectiveness.
Findings indicate that it should be a regular part of personnel training especially
management development. The realities of a more pluralistic society and
international business make this a necessity.

In an organization whose employees come from more than one country, two
special challenges arise with respect to training and development.

1. Training and development programs should be effective for all

participating employees, regardless of their country of origin.
When organizations hire employees to work in a foreign country or transfer them
to another country, the employer needs to provide the employees with training in
how to handle the challenges associated with working in a foreign country.
2. The plan or design for training program must consider international
differences among trainees to make it more effective.

ACTIVITY 1

Do you think pre departure training of the expats is a good option to reduce
their failure rate? If yes. Justify your answer with substantial case studies on
the same.

6.5 THE EXPATRIATES

The issue of expatriate managers arises mainly due to ethnocentric and geocentric
staffing approaches where suitable candidates from the home country and the
region are sent for assignments in the host country of business.
An important aspect of managing the expats is that of the failure of the expats in
the host country.
The expat failure can be understood in terms of the premature return of the expat to
his home country due to a number of reasons owing to his personal or professional
incompetency. On the part of the organization, it could be the result of a faulty
selection procedure followed by the organization where in it has not been able to
test the candidate’s ability to survive and withstand the vagaries of the foreign

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land, or they have not presented him with the realistic picture of the working
environment abroad. In case an expat come back home from the foreign
assignment, the Average cost per failure can be equal to thrice the expats annual
domestic salary.
Let us find out the reasons for expat failure, especially the American and the
Japanese expats.
The most common reason for an American expat is his spouse’s inability to
cope in the foreign land while a for Japanese manager this is the last reason for his
return back home.
On the other hand the most common reason for a Japanese expat is that he
himself is not able to cope with the larger scale of foreign assignment and
responsibility and interestingly this is the last reason cited by the Americans.

Now the challenge lies in managing the expat failure rate.

This can be done by improving the expat success rate while recruitment and
selection for international assignments by taking note of the following things.
• Firstly, by showcasing a very realistic picture of the country and its
hardships to the prospective expats.
• Ensuring a rigorous screening and selection criteria for international
assignments.
• Offering a very good induction and orientation program to the selected
employees.
• Offering them reasonably good and flexible benefits including relocation
and hardship allowances in the foreign land.
• Taking care of the family by helping in getting a job to the spouse, and
assisting in the education of their children.

Selecting International Managers (expats)

Test for traits that predict success in adapting to new environments include:
1. Job knowledge and motivation
2. Relational skills
3. Flexibility and adaptability
4. Extra-cultural openness
5. Family situation

Selecting managers for these assignments therefore sometimes means testing them
for traits that predict success in adapting to new environments. Let us have a look
at the Traits Distinguishing Successful International Executives in the exhibit
shown below.

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Further in order to improve the rate of success of expats, the following
dimensions must be taken care of as shown in the exhibit below.

It covers dimensions like self orientation, others orientation, perceptual ability

and cultural toughness.

1. The test of self orientation will check the candidates level of self esteem ,
self confidence and menatl toughness , i.e. ability to wrk under pressure and
stress in the foreign land .
2. The test of others orientation measures the candidates ability to
communicate easily with foriegeners and his ability to develop relationships
with others personally as wella s professionally.
3. The test of perceptual ability measures the candidates understanding of
the behaviour of other people who might come into his contact at the
personal and professional level,his ability to empathize with others , ability
to be non judgemental about others , his ability to adapt and being flexible
under different situations or we can say that he is a self monitoring person
who can adjust and adapt himself according to the situation.
4. The test of measuring his cultural toughness in the foreign land is of
utmost importance .

All the above mentioned factors are essential before finalizing a candidate for
foreign assignment to ensure their success.

ACTIVITY 2

1.Find out few case studies on expat failures on international assignment with
the reasons thereof.
2. find out if there is any difference in the expat failure from the developed
and the developing countries.

6.6 SUMMARY

IHRM examines policies, decisions, issues, challenges and trends in managing a

global workforce. In this chapter we have discussed the cross cultural staffing and
training practices. When organizations operate globally, their employees are very
likely to be citizens of more than one country. They may come from the
employer’s parent country, host country, or a third country.When organizations

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operate overseas, they hire a combination of parent-country nationals, host-country
nationals, or third-country nationals.
The MNC’S can resort to one of the following four approaches for recruitment.
Ethno-centric where the key positions are held by citizens of home country, Poly-
centric where the primary positions are held by nationals from host country, Regio-
Centric where the primary positions are by people from countries with similar
cultures, experience and management practices and Geo-centric where the best
qualified individuals are hired at home and abroad regardless of nationality,
treating world as market to implement global business operations.

The Best International training Practices are; Context free which can be applied
everywhere, Content specific which can be applicable to countries with similar
culture ,Context dependent practices which are limited to specific country settings,
or companies.
There are two types of delivery mechanisms; Centralized and Decentralized
Centralized Training Delivery Programs would be either; Ethnocentric in nature
whereby the training originates at headquarters and corporate trainers travel to
subsidiaries companies across the world to impart their organization work culture
specific training. Geocentric in nature whereby the training develops through input
from both headquarters and subsidiary staff and trainers could be from any
location. Decentralized Training Delivery Programs would be
Polycentric in nature whereby the Training is based on a local or regional work
culture of the host country.
Local people develop training materials and techniques for use in their own area.
Effective training considers cultural background of the trainees. The training
covers all three phases of an international assignment: Preparation for departure.
The assignment itself, Preparation for the return home (repatriation)
The competencies needed in a specific country are: Leadership, Initiative,
Emotional Stability, Motivation, Ability to handle responsibility, Cultural
sensitivity, Ability to handle stress and Being flexible

6.7 GLOSSARY

International Human Resource management: it is the process of sourcing,

allocating and effectively utilizing human resources in a multinational
organization.
Ethnocentric approach: This policy is one in which all the key management
positions are filled by parent country nationals. This approach is regarded
appropriate where the organizational mode of the company is international.

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Polycentric approach: A company with polycentric staffing policy recruits host
country national to manage subsidiaries.
Geocentric approach: A geocentric policy seeks best people for key jobs
throughout the organization regardless of nationality.
Regiocentric approach: This approach aims at hiring the best people from the
region.
Centralized Ethnocentric training program me : it is the one in which training
originates at the headquarters of the home country and corporate trainers travel to
the host country or the subsidiary companies across the world to impart specific
training of their organization work culture .
Decentralized Polycentric training program me is the one where training is
based on a local or regional work culture of the host country.

6.8 ANSWERS TO CHECK YOUR PROGRESS

Answers to check your progress 1

1. Where and how many
2. Cost and availability of qualified workers
3. Operational requirements
4. Outsourcing

Answers to check your progress 2

1. False ,Home country

2. True
3. False, similar
4. False ,regardless of nationality

6.9 REFERENCES
1. Aswathappa, K and Dash, Sadhna. “International Human Resource
Management”. Tata McGraw Hill company ltd. New Delhi. 2009. p. 135-
153
2. Noe ,R.A., J.R. Hollenbeck, B. Gerhart, and P.M. Wright, fundamentals of
Human Resource Management 4th edition
3. Pathak. “International HR strategies”. University of Michigan. 1995
4. Rao, P.L. “International human resource management”. Excel Books. New
Delhi. 2008. p.49-60

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6.10SUGGESTED READINGS

1. Bhattacharya ,Deepak Kumar., Basic Cross- Cultural Management::

2010.PHI Learning
2. Cherunilam ,Francis International Business:2004
3. Hill, Charles W. International Business: 1998: McGraw hill.
4. Lindsay, Stace “Culture, Mental Models, and National Prosperity” in
Culture Matters, How Values Shape Human Progress, Harrison &
Huntington, Basic Books.
5. Punnett , Betty Jane: International Perspectives on Organizational behavior
and HRM.
6. Rao, V. and M. Walton (Eds.) 2004. Culture and Public Action. How and
why does culture matter? Stanford: Stanford University Press

6.11TERMINAL AND MODEL QUESTIONS

1. It is necessary to understand cross cultural environment for effective HR

policies. Do you agree? Discuss.

2. Outline the Factors affecting HRM practices in international markets.

3. Delineate the Cross cultural staffing practices, especially with regard to the
selection of an expatriate.

4. What do you understand by cross cultural training? What is its significance

in global environment? Discuss.

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LESSON 7: DYNAMICS OF CROSS-CULTURAL LEADERSHIP

STRUCTURE OUTLINE

7.1 Learning objectives

7.2 Introduction to Cross-Cultural Leadership
7.2.1 Cross cultural leadership defined
7.2.2 Six Cross-Cultural Competencies for global leaders
7.2.3 Review of Empirical Studies on Cross Cultural Leadership
7.3 Theories of leadership
7.3.1 The GLOBE dimensions of leadership
7.3.2 The Implicit leadership theory
7.3.3 The Hofstede’s cultural dimensions on leadership
7.4 Measuring cross cultural leadership
7.5 Role of Cross- Cultural Leader
7.6 Challenges of cross cultural leadership
7.7 Summary
7.8 Glossary
7.9 Answers to check your progress
7.10 References
7.11 Suggested readings
7.12 Terminal and model questions

7.1 LEARNING OBJECTIVES

After going through the lesson you should be able to ;

 Define Cross cultural leadership and identify the Six Cross-Cultural
Competencies for global leaders
 Review some of the Empirical Studies on Cross Cultural Leadership
 Understand the theories of leadership; The GLOBE dimensions of
leadership, The Implicit leadership theory, The Hofstede’s cultural
dimensions on leadership
 Find out how to Measure cross cultural leadership and what is the role of
a Cross- Cultural Leader
 Outline the Challenges of cross cultural leadership

7.2 INTRODUCTION TO CROSS- CULTURAL LEADERSHIP

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Cross cultural leadership is gaining increased importance in today’s corporate
world as more and more organizations are not hesitating in adopting a
geocentric approach when it comes to selecting the top man for the job. This
phenomenon has given rise to cross cultural leadership where the top most
positions in the organizations are held by people belonging to different
backgrounds all together, be it socio political economic cultural etc. Thus
Globalization is central to the discussion of culture and leadership. The
increased interdependence between nations in terms of economic, social, and
political aspects has furthered the significance of cross cultural leadership.

Of late Globalization has led to the following three challenges;

1. The design of effective multinational organizations

2. The identification and selection of leaders for these organizations
3. The management of organizations with culturally diverse employees and
the development of leadership competence in cross-cultural awareness
and practice

7.2.1 Cross cultural leadership defined

In the leadership literature, there is a lack of consensus over how to define and
refer to cross-cultural leadership. However there are three acceptable definitions
of cross cultural leadership which are delineated below.

Organizational leadership and culture

The most comprehensive research on leadership namely the GLOBE study has
out lined two components of leadership which they found to have described
cross cultural leadership in some way.
First of all they have defined organizational leadership as “the ability of an
individual to influence, motivate, and enable others to contribute toward the
effectiveness and success of the organizations of which they are members”
The GLOBE’s definition of leadership includes “shared motives, values,
beliefs, identities, and interpretations or meanings of significant events that
result from common experiences of members of collectives and are transmitted
across age generations.”

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2. Cross cultural leader as an International executive
International executive has been defined as “an executive who is in a job with
some international scope, whether in an expatriate assignment or in a job
dealing with international issues more generally”.

3. Cross cultural leader as a Global Leader

A cross cultural leader is the one who is able to influence the thoughts,
attitudes and behaviors of the global community to encourage them to work
towards a common goal and vision and produce synergistic effects.
Such leaders tend to possess certain traits and values like tremendous Cross-
Cultural Relationship Skills; they are high on cognitive orientation, armed with
excellent business acumen and expertise in organizing things globally and have
a great vision.

You must have realized by now that, there is no one right way to define and
refer to a cross-cultural leader. What is important to note is that these various
terms and definitions have a similar underlying meaning. Whichever term you
use, the underlying theme is that cross-cultural leadership involves the ability to
influence and motivate

7.2.2 Six Cross-Cultural Competencies for global leaders

The cross Leaders must possess the following cross-cultural competences which
will enable them to emerge as winners in this highly competitive and dynamic
business environment.

1. The cross cultural leaders must have the ability to appreciate the
differences in culture worldwide, more specifically they should be well
versed with the macro and the micro aspects of the business environment
where they tend to do business.
2. They should have the uncanny ability to understand the local
perspectives, preferences, tastes, habits, trends, likings and disliking and
the ability to absorb high technologies by the people of the country in
which they want to do business.
3. They should exhibit tremendous comfort in working with multicultural
teams and individuals from cultures across the world.

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 4. Should be able to survive and thrive in any culture and should be well
versed with multilingual communication; verbal non verbal and Para
verbal.
5. Cross cultural leaders should be willing to learn to relate to people from
other cultures from a position of equality.
6. They must possess a vision that is Trans cultural and is in the best
interest of the organization.

Let us try to understand the dynamics of cross cultural leadership, the

most commonly practiced leadership tendency is Ethnocentrism.

Ethnocentrism may viewed as a leadership behavior which makes them

concentrate on their very own culture and are heavily influenced by the beliefs ,
thoughts , norms of their native culture rather than on the international culture.
They are sometimes obsessed by their culture and are always trying to prove its
superiority over other cultures. Now this tendency on the part of the leaders to
follow ethnocentrism can be fatal as it can lead to a myopic vision of the leader
and can be counterproductive for the organization aiming to be a global player.
It does not allow them to have a holistic approach and acceptability of other
cultures which can endanger their survival in the long run.
Ethnocentrism is an obstacle to effective leadership because it prevents people
from fully understanding or respecting the world view of others.

7.2.3 Review of Empirical Studies on Cross Cultural Leadership

Hitt and Duane (2002) suggest that a new type of strategic leadership is
required to help firms successfully navigate the dynamic and uncertain
environment in which they compete today. The strategic leadership needed in
21st century firms is involved with building company resources and capabilities
with an emphasis on intangible human capital and social capital. Human capital
is the firm's repository of valuable knowledge and skills; social capital provides
access to critical resources. Both are significant contributors to achievement of a
competitive advantage. Leaders must effectively manage these important
resources for the firm. Management of these resources involves evaluating
current resource stocks and making changes such as adding (e.g., developing or
acquiring externally) and deleting (e.g., layoffs) human resources and external
relationships.
According to Bryant (2003) transformational leadership is more effective at
creating and sharing knowledge at the individual and group levels, while

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transactional leadership is more effective at exploiting knowledge at the
organizational level.
According to Treviño, Brown & Hartman (2003) ethical leadership was more
than traits such as integrity and more than values-based inspirational
leadership. In order to be perceived as an ethical leader by those outside the
executive suite, the executive must engage in socially salient behaviors that
make the executive stand out as an ethical figure against an ethically neutral
ground.
Ashar & Lane-Maher (2004) linked the concept of success to spirituality and
stated that to be successful one needs to embrace spirituality as well.
Storey (2005) focused attention on executive level leadership. He drew a
distinction between ‘leadership in organizations’ and ‘leadership of
organizations’
Taormina (2005) evaluated behavioral statements about leadership
excellence for their importance from Indonesia, Malaysia, the Philippines,
Singapore, and Thailand. The study revealed the following four factors as
significant for leadership effectiveness.
(1) Consideration for Others;
(2) Progressive Stability;
(3) Strategic Thinking; and
(4) Trust in Others.
Pajunen’s (2006) stated that a correct combination of absorptive and adaptive
capacities merged with managerial wisdom provided the basis for effective
strategic leadership at the beginning of the 20th century in a similar way as
today. Boerner, Eisenbeiss & Griesser (2007) shed light on the mediating
processes by which transformational leadership influences follower
performance and innovation, respectively. They hypothesize that
transformational leaders boost follower performance by stimulating
organizational citizenship behavior, whereas they enhance follower
innovation by triggering controversial discussion of task related issues
(debate). Casimir & Waldman (2007) indicate that the perceived importance
of specific leadership traits is determined partly by culturally endorsed
interpersonal norms and partly by the requirements of the leadership role.

ACTIVITY 1

1. Define Cross cultural leadership as you have understood so far

2. Outline some Cross-Cultural Competencies for global leaders apart from the
one’s mentioned in the text.

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3. Conduct a Review of some more recent studies on Cross Cultural
Leadership

7.3 THEORIES OF CROSS CULTURAL LEADERSHIP

The cultural dimensions of the country would greatly influence the style of
leadership to be practiced .There are three theories of cross cultural leadership
which can help you in understanding this concept more aptly as discussed
below. Let us take them up one by one. The three theories are;

1. The GLOBE’s cultural dimensions of leadership

2. The Implicit Leadership Theory
3. The Hofstede’s Cultural Dimensions of leadership

7.3.1. THE GLOBE DIMENSIONS OF LEADERSHIP

The study conducted under GLOBE is a juxtaposition of the implicit leadership

theory and the Hofstede’s cultural theory. The GLOBE study extended the
implicit leadership theory (ILT) to include individuals of a common culture
maintaining a relatively stable common belief about leaders, which varies from
culture to culture. They have renamed this theory as the culturally endorsed
implicit leadership theory. In the following discussion, let us view GLOBE’s
findings about how business values and practices vary across nations and
cultures. Though this dimension of culture has been discussed in detail earlier,
for your increased understanding it has been discussed in this chapter as well so
that you are able to relate it to cross cultural leadership better.

The nine most significant dimensions as outlined by this study highlight the
cultural acumen of the global leaders which encompasses traits ranked from
high to low across various countries and cultures.

These nine traits are;

1. Performance Orientation
2. Uncertainty Avoidance
3. Gender Differentiation
4. Power Distance
5. Assertiveness
6. Future Orientation
7. Individualism

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 8. Collectivism
9. Humane Orientation

A very notable observation with regard to this theory is that it has been
conceptualized in a dual manner i.e. each of the nine cultural dimensions have
been looked into ‘As it is’ being practiced and ‘How it should be’.

1. Performance Orientation

The GLOBE researchers conclude that performance orientation “relates to the

extent to which leaders set ambitious goals, communicate high expectations for
their subordinates, build their subordinates’ self-confidence, and intellectually
challenge them” And their concluding remark is that people who value high
performance “seem to look to charismatic leaders who paint a picture of an
ambitious and enticing future, but leave it to the people to build it” This
leadership trait has been found to be quite important for success in the global
business. It “reflects the extent to which a community encourages and rewards
innovation, high standards, excellence, and performance improvement”. The
societies which propagate Performance Orientation, associate charismatic, value
based and autonomous leadership behavior with outstanding leadership

2. Uncertainty Avoidance

Uncertainty avoidance as a leadership trait is "the extent to which a society,

organization, or group relies on social norms, rules, and procedures to alleviate
the unpredictability of future events” .An alternative way of thinking about
uncertainty avoidance is that it’s about the extent to which ambiguous situations
are felt as threatening – i.e., about the extent to which deliberate measures (such
as making and enforcing rules and procedures) are taken to reduce ambiguity.
Uncertainty avoidance was found to have a strong negative relationship with the
global leadership trait named Participative leadership .When one finds in a
society or organization a relatively high value placed on uncertainty avoidance,
one is very likely to find among the same people a low level of endorsement for
Participative leadership. The societies which propagate Uncertainty Avoidance,
associate, team oriented humane and self protective leadership behavior with
outstanding leadership.

3. In-Group Collectivism

In-group collectivism is “the degree to which individuals express pride, loyalty,

and cohesiveness in their organizations or families”. The findings about "in-

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group collectivism" are important because this cultural dimension emerges as a
strong predictor of the two most widely admired characteristics of successful
global leaders. The societies which propagate in group collectivism associate
charismatic, value based and team oriented leadership behavior with
outstanding leadership.

4. Power Distance

The findings concerning "power distance" are interesting primarily because

they failed to confirm a relationship expected by the researchers. But first,
let’s define power distance as “the extent to which a community accepts and
endorses authority, power differences, and status privileges”. Power distance
did show a strong positive relationship with Self-Protective leadership .It has
been observed that “The high power distance values and practices of Asian
societies are often associated with face-saving and status-consciousness, both of
which are elements of the Self-Protective leadership dimension”. The societies
which propagate Power Distance associate self protective leadership behavior
with outstanding leadership.

5. Gender Egalitarianism

The findings for "gender egalitarianism" are also quite significant because it is
one of the predictors of the most widely admired characteristic of successful
leaders. Gender egalitarianism is “the degree to which a collective minimizes
gender inequality”. The societies which propagate Gender Egalitarianism
associate charismatic, value based and participative leadership behavior with
outstanding leadership.

6. Humane Orientation

This dimension Humane orientation is defined as “the degree to which an

organization or society encourages and rewards individuals for being fair,
altruistic, friendly, generous, caring, and kind to others". The societies which
propagate Humane Orientation associate humane oriented leadership behavior
with outstanding leadership.

7.Institutional Collectivism

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This dimension Institutional collectivism" is defined as “the degree to which
organizational and societal institutional practices encourage and reward
collective distribution of resources and collective action”. The societies which
propagate Institutional Collectivism negatively associate autonomous
leadership behavior with outstanding leadership.

8.Future Orientation

This dimension Future orientation is defined as “the degree to which a

collectivity encourages and rewards future-oriented behaviors such as planning
and delaying gratification”. The societies which propagate Future Orientation
do not associate it with any global leadership behavior.

9. Assertiveness

This dimension called Assertiveness is “the degree to which individuals are

assertive, confrontational, and aggressive in their relationships with
others”. The societies which propagate Assertiveness do not associate it with
any global leadership behavior.

Leadership attributes identified by the GLOBE study

According to the GLOBE study, around twenty two universally desirable

leadership attributes have been identified which have been outlined below;

 These are; that they should be viewed as trustworthy by their people,

 They should be just in their dealings with others,
 Be Honest
 Have a tremendous foresight to visualize the future for their organization,
 Be able to plan well in advance ,
 Should be encouraging for their subordinates under all circumstances,
 Should exhibit positive attitude all the times,
 Be dynamic in all situations and willing to take risks,
 Should be motivating for his team,
 Be able to build confidence of his people all through ups and downs,
 Should be motive arouser i.e. Be able to show his people a motive to
strive ahead,
 Should present him as dependable
 Should be Intelligent

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  Decisive, effective bargainer
 Win win problem solver
 Be seen as a highly communicative individual
 Be well informed
 Should have excellent administrative skills
 Be a good coordinator
 Should be a team builder
 Who is always driven towards excellence

However the study has also outlined certain universally undesirable leadership
attributes, which are;

A person who exhibits traits of a loner, who is asocial, non cooperative,

irritable, non explicit, egocentric, ruthless and dictatorial cannot be a global
cross cultural leader
There are certain Strengths of the GLOBE Model as given below;

• The GLOBE study is a major study with broad applicability throughout

the world n cross cultural global leadership.
• The Findings have emerged from a well-developed research design and
have been widely substantiated by evidence.
• The Cultural classification as given by the model is broader than the
previous models.
• The Model provides explicit information on what is universally accepted
as good and bad leadership.
• The Model underscores complexity of leadership process and how
culture influences it.

The Weaknesses of the GLOBE Model are;

• It has been found that it does not provide a basis for a single theory of
how culture relates to leadership.
• The Cultural terms used in the study are unnecessarily vague.
• The Model is based on perceptions of leadership rather than leadership
actions
• The nine leadership behaviors are built on subscales that model very
different behaviors.
• The desirable and undesirable traits have the same problems of context as
trait theory.

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CHECK YOUR PROGRESS 1

Fill in the blanks

1. The societies which propagate Performance Orientation, associate

…………………………………… leadership behavior with outstanding
leadership.

2. The societies which propagate Uncertainty Avoidance, associate

………………………………………leadership behavior with outstanding
leadership.

3. The societies which propagate in group collectivism associate

……………………………………………….leadership behavior with
outstanding leadership.

4. The societies which propagate Gender Egalitarianism associate

…………………………………………..leadership behavior with outstanding
leadership.

5. The societies which propagate Institutional Collectivism

………………………………………………….leadership behavior with
outstanding leadership.

7.3.2. THE IMPLICIT LEADERSHIP THEORY

The Implicit leadership theory maintains that most of the times people view
good leaders as the ones who are propagated and respected in their own
cultures. In cross cultural settings individuals have their own predetermined set
of values ethics and morals which greatly influence their liking of the leaders
who fit into their scheme of things and usually think and behave like them only.
Thus this theory says that people’s underlying assumptions and beliefs greatly
influence the extent to which they perceive a person as a good and successful
leader, which invariably varies across cultures of course.

7.3.3. THE HOFSTEDE’S CULTURAL DIMENSIONS OF

LEADERSHIP

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 By now you are well versed with the five cultural dimensions as outlined by
hofstede, which are Individualism/Collectivism, Feminine/Masculine, Power
Distance, Uncertainty Avoidance, and Long Term/ Short Term orientation.
Understanding these cultural dimensions will help the individuals in
appreciating the similarities and dissimilarities in various cultures.

The Core values of country’s culture often define type of leadership behavior
that is acceptable to them.
For example, in high Power Distance culture, an emphasis on hierarchical
relationships and directive approaches is accepted like in Hong Kong, Latin
American countries and Russia. Thus the person in authority and leadership
position is more acceptable than in a low power distance culture. Here
authoritative style of leadership would be acceptable. While in low Power
Distance culture, hierarchical relationships are not valued and supportive or
participative approaches are more acceptable like in Austria, Scandinavia and
Israel. Here participative and democratic style of leadership would be more
successful.
Similarly Individualistic versus Collectivistic culture will determine the
leadership style. In collectivistic cultures leader is looked upon as a paternal
figure and his intervention in the employee’s affairs is acceptable whereas in
individualistic cultures he is looked upon as an expert and his intervention in
the employee’s affairs is not acceptable.
Again when it comes to Masculine versus Feminine cultures, Acceptance of
women as leaders is more in feminine cultures as compared to masculine
cultures.
When it comes to Accepted style for leaders, if it is a Long-Term-Orientated
culture, the leaders are elected for a longer duration than if it is a short term
oriented culture.

7.4 MEASURING CROSS CULTURAL LEADERSHIP

A Multicultural workforce is rapidly and irreversibly becoming the norm in a

large number of organizational situations. Thus, in this competitive scenario
and change in cultural diversity, it is very well required to know that a manager
should become a cross-cultural leader and possess the following traits to be
more effective and efficient.

 A cross cultural leader should be able to lead and motivate employees

constantly by updating them with latest management tips on day today

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 working of the organization, especially with regard to decision making
which is the most important aspect of managing in the global scenario.
 He should be well equipped with providing leadership training to his
employees to enable them to take up leadership positions in their
respective domains as and when the situation demands.
 Should be able to inculcate good rational improved and consistent
management level decision-making at all levels
 Should be able to motivate the employees to boost the performance and
productivity of departments to meet the increasing demands at the global
levels
 Should be able to enthuse a sense of increased accountability and
responsibility amongst the employees across various levels
 Should be able to foster more effective and efficient techniques of
communication vertically, horizontally and diagonally.
 Should be able to garner the confidence and trust of the employees
through consistent management actions than speech, he should be seen
practicing what he preaches.
 Should rely on continuous performance evaluation and improvement
through regular and critical feedback. Identify what employees really
need from you as a leader and tools to deliver it
 Should be comfortable at working with multicultural workforce with
divergent personalities.
 Should be able to frame and enforce legally safe progressive disciplinary
practices according to international practices.
 Should be able to manage the anger and emotions of the disturbed
employees in a peaceful and more effective manner.
 Should be able to communicate his broader vision to his people and get
their support thereof under all circumstances.
 Should be able to delegate the work across levels to the most efficient
people without losing control of work quality and responsibility.
 Should be high on emotional intelligence and be a Captain Cool all the
times who is able to handle difficult or sensitive situations more
confidently without losing his cool.
The above mentioned traits are however not a guarantee for success in the
growing competitive international environment. According to one study
conducted by House in 2001, a global manager should be able to work with
people of all cultures, religion caste creed and gender. And interestingly success
in one culture does not mean that he will be successful in every other culture.
But there are fair chances of his success anyways if he possesses some of the
above traits.

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7.5 ROLE OF A CROSS CULTURAL LEADER

The onset of growing globalization and internationalization has led to an

increased need of a global cross cultural leader for the organizations which are
operating in number of companies. And this is the case for most of the
organizations these days. The leaders of today’s organizations are faced with
the daunting task of managing multicultural workforce. Not only has this they
are supposed to be sensitive to their needs wants aspirations apart from their
values norms thinking behaviour and actions.
Thus the added responsibility on the shoulders of a cross cultural leader is that
he should be able to strategically manage all the functions of management
through cultural excellence. Though it is desirable for everybody to be culture
sensitive but it is all the more important for cross cultural leaders to enable
them to achieve their goals. Strategic leadership affects organizational culture
as well, through the way they delegate authority and divide up task
relationships. E.g.: Michael Dell believes in keeping his organization structure
flat and has decentralized authority to the lower- echelons of management
across the organization.
Hence, it is only imperative for the global manger to be well versed of the cross
cultural requirements and his knowledge quotient of the cross cultural attributes
should be high enough. Because the success and failure of the leader rests
tremendously on the way he is able to strike a tradeoff between organizational
strategy, leadership and culture.

ACTIVITY 2

1. Identify the roles of a cross cultural leader

2. Find out a case study of a cross cultural leader who you think has truly
been influential in managing global organizations.

7.6 CHALLENGES OF CROSS CULTURAL LEADERS

Some of the challenges facing the cross cultural leaders are that they need to
employ a rational Reward System which should be acceptable to all, should be
able to manage and create a stable workforce, should be able to manage the
Cultural Network and last but not the least they have to select the right
candidates with a global outlook for their organizations. Thus in gist it can be

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said that their biggest challenge is to attract retain and motivate the right people
for the organization and create people stable organizations.

Maintaining a
stable
workforce

Employ the Challenges of Managing the

reward system Leaders in cultural
Cross Cultural network
Environment

Selecting and
socializing
new
employees

Figure 1: Challenges of Leaders in Cross Cultural Environment

1) Employing a Reward System-Reward systems strengthen corporate

culture when they are consistent with cultural values. Aggressive cultures
might offer more performance-based individual incentives, whereas
paternalistic cultures would more likely offer employee assistance
programs, medical insurance, and other benefits that support employee
well- being

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 2) Managing a stable workforce: organizations depend on a stable
workforce to communicate and reinforce the dominant beliefs and values.
The organization’s culture can literally disintegrate during periods of
high turnover and precipitous downsizing because the corporate memory
leaves with these employees. For this reason, some organizations keep
their culture intact by moderating employment growth and correcting
turnover problems.
3) Managing the Cultural Network-Organization culture is learned, so an
effective network of cultural transmission is necessary to strengthen the
company’s underlying assumptions, values, and beliefs. The cultural
network exists through the organizational grapevine.
4) Selecting and socializing new employees- A good fit of the personnel
makes it easier for the organization and for employees to adopt the
corporate culture. Along with selecting people with compatible values,
companies maintain strong cultures through the effective socialization of
new employees.

CHECK YOUR PROGRESS 2

State whether true or false

1. Aggressive cultures do not offer performance-based individual

incentives.

2. Paternalistic cultures would more likely offer employee assistance

programs, medical insurance, and other benefits that support employee
well- being.

3. Organizations do not depend on a stable workforce to communicate and

reinforce the dominant beliefs and values.

4. An effective network of cultural transmission is not necessary to

strengthen the company’s underlying assumptions, values, and beliefs.

5. A good fit of the personnel makes it easier for the organization and for
the employees to adopt the corporate culture.

7.7 SUMMARY

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Global leadership has been defined as “a process of influencing the thoughts,
attitudes, and behaviors of a global community to work together synergistically
toward a common vision and common goals”. There are three theories of cross
cultural leadership are; THE GLOBE cultural dimensions, Implicit Leadership
Theory, Hofstede’s Cultural Dimensions. Implicit leadership theory maintains
that most of the times people view good leaders as the ones who are propagated
and respected in their own cultures. Thus this theory says that people’s
underlying assumptions and beliefs greatly influence the extent to which they
perceive a person as a good and successful leader, which invariably varies
across cultures of course, The five cultural dimensions as outlined by hofstede,
which are Individualism/Collectivism, Feminine/Masculine, Power Distance,
Uncertainty Avoidance, and Long Term/ Short Term orientation helps us in
appreciating the similarities and dissimilarities in various cultures, The GLOBE
dimensions identified Nine Dimensions of Culture; Uncertainty avoidance,
Power distance, Institutional collectivism, In-group collectivism, Gender
egalitarianism, Assertiveness, Future orientation, Performance orientation
which are ranked from high to low across various countries and cultures. In
order to be truly effective, there are five critical qualities that a leader must
have. He should; be a Visionary; be a person of Integrity and Honesty and have
Values; know how to properly motivate others; be able to lead change and
finally, be able to lead a culture of change.

7.8 GLOSSARY

Cross cultural leader: He is the one who is able to influence the thoughts,
attitudes and behaviors of the global community to encourage them to work
towards a common goal and vision and produce synergistic effects.

Performance Orientation: It relates to the extent to which leaders set

ambitious goals, communicate high expectations for their subordinates, build
their subordinates’ self-confidence, and intellectually challenge them.

Uncertainty avoidance: It is the extent to which a society, organization, or

group relies on social norms, rules, and procedures to alleviate the
unpredictability of future events.

Humane Orientation: It is the degree to which an organization or society

encourages and rewards individuals for being fair, altruistic, friendly, generous,
caring, and kind to others.

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Institutional Collectivism: it is defined as the degree to which organizational
and societal institutional practices encourage and reward collective distribution
of resources and collective action.

7.9 ANSWERS TO CHECK YOUR PROGRESS

Answers to check your progress 1

1. Charismatic, value based and autonomous

2. Team oriented humane and self protective
3. Charismatic, value based and team oriented
4. Charismatic, value based and participative
5. Negatively associate autonomous
Answers to check your progress 2
1. False ,might
2. True
3. False , they do depend
4. False ,it is necessary
5. True

7.10 REFERENCES

1. Barrett, G. V., ed. , & Bass, B. M. (Eds.). (1976). Cross cultural issues
in industrial and organizational psychology. New York: John Wiley.

2. Adler, N. J. and Bartholomew, S. Managing globally competent people.

3. Academy of Management Executive vol. 6 (1992) pp. 52–65.

4. Ayman, R. and Chemers, M. M. The relationship of supervisory behavior

ratings to work group effectiveness and subordinate satisfaction among
Iranian managers. Journal of Applied Psychology vol. 68 (1983) pp. 338–
341

5. Bass, B. M. Does the transactional-transformational leadership paradigm

transcend organizational and national boundaries? American
Psychologist vol. 52 (1997) pp. 130–139

7.11 SUGGESTED READINGS

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 1. Leadership and change management in a multicultural context- Carnegie
Bosch Institute, Carnegie Mellon University Pittsburgh, PA2014

7.12 TERMINAL AND MODEL QUESTIONS

1. Give a brief Introduction of Cross-Cultural Leadership and its

significance in globalized world.
2. Critically evaluate the research findings of the GLOBE PROJECT,
highlighting the dimensions of leadership. Do you agree with it? Discuss.
3. Measuring cross cultural leadership is not only significant but necessary.
Discuss.
4. What is the Role of a Cross- Cultural Leader? What is the Influence of
Cross- Cultural Leadership on today’s organizations.
5. Define Cross cultural leadership and identify the Six Cross-Cultural
Competencies for global leaders
6. Review some of the Empirical Studies on Cross Cultural Leadership
7. Discuss the Implicit leadership theory and The Hofstede’s cultural
dimension on leadership and their significance in understanding cross
cultural leadership.
8. Find out how to Measure cross cultural leadership and what is the role of
a Cross- Cultural Leader?
9. Outline the Challenges of cross cultural leadership

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CHAPTER 8: MANAGING AND MOTIVATING MULTICULTURAL
TEAMS

STRUCTURE OUTLINE
8.1 Learning objectives
8.2 Introduction
8.2.1 Understanding multicultural teams
8.2 .2 Challenges in managing multicultural teams
8.2.3 Benefits of the multicultural teams
8.3 The various cultural dimensions and their impact on motivation of
multicultural teams
8.4 Theories of motivation and applying them to multicultural teams
8.5 Strategies for Managing and motivating multicultural teams
8.6 Summary
8.7 Glossary
8.8 Answers to check your progress
8.9 References
8.10Suggested readings
8.11Terminal and model questions

8.1 LEARNING OBJECTIVES

After going through the lesson you should be able to

 Understand the nature of cross cultural teams
 Appreciate the challenges faced in managing and motivating cross cultural
teams
 Outline the benefits of the cross cultural teams
 Find out the various cultural dimensions and their impact on motivation of
multicultural teams
 Revise the theories of motivation and apply them to multicultural teams
 Outline the strategies for managing and motivating cross cultural teams

8.2 NTRODUCTION

Before moving ahead let us find out what is motivation?

Motivation is the force which drives us to achieve what we want. All the
individuals have certain needs and wants which he wants to fulfill. The various
behavioral scientists have recognized the importance of these wants and feel that
these should be identified and fulfilled by the organization to have a motivated
workforce.

Simply, motivation refers to the inner urges that cause people to behave in a
certain ways. In the workplace, we talk of people being highly motivated when
they work hard to accomplish objectives that are consistent with the
organization’s goals. We talk of people being demotivated on the job when they
seem disinterested and need to be pushed to job.

Thus, the question as to what motivates executives is more urgent today than
ever before, for the following reasons:-

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  Firstly, Globalization and emergence of multinational organizations
manned with multicultural workforce with their unique cultural
dispositions and preferences and varying value systems across cultures.

 Secondly, the level of motivation and morale of today’s millennial

workforce is going through a very rough ride and it is quite low at all the
levels in the organizational hierarchy. This could be because of the
economic slowdown in the global market which has forced the companies
to resort to downsizing or rightsizing their organizations.

 Thirdly, today’s workforce is not motivated by the age old methods being
employed by the organizations. The huge challenge of attracting retaining
and motivating the workforce is another dampener in the motivational
strategies that are being used.

Thus, most of the companies today are adopting a mix of strong corporate culture,
a stable work environment, a good pay and perks, job stability and opportunities
for growth to incentivize the employees and keep them motivated throughout. In
addition they are doling out competitive pay packages to them.

8.2.1 Understanding multicultural teams

The task of managing a diversified and dispersed workforce at home and

internationally is one of the major tests of a manager.

People are taught the values of their culture since their childhood and that
represent the way they behave which is taken for granted and that influences their
social behavior. This is important in the way that whatever the situation could be,
people stick to their values and behave in a different way, because this is how
they grew up. It is important to highlight that cultural diversity provide
competitive advantage to global organizations, since it offers tangible benefits
such as the improvement of effectiveness and productivity, expansion on the size
of the market and increase the awareness of the communication patterns within
the organization.

On the contrary, it can also bring disadvantages which generate conflicts and
misunderstanding

When a culturally diverse workforce is on the prowl in any organization, it is

bound to bring up along with them their complete personality which is
predominantly culture bound. To be more specific, they are the assimilation of
their culture comprising of its language, values beliefs and attitudes etc which is
clearly manifested in their behavior. Now , here is the catch , since these
individuals belong to different cultures, there is bound to be some conflict arising
out of cultural differences which can be detrimental to the efficient working and
functioning of the teams. But at the same time the challenge lies in exploiting the
cultural differences and leveraging them to its advantage. it should be duly noted
that working with multicultural groups affects not only communication in the way

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of understanding meanings but also leads to integration problems as having
differences in behavior and preferences, people might not work in the same way
and this brings ambiguity and confusion, leading to conflicts and disappointment
between employees.

8.2.2 Challenges in managing cross cultural teams

In today’s multicultural business environment, organizations are entrusted with

an additional task of integrating culturally diverse workforce into a productive
team. In this context it would be pertinent to mention the contribution of Peter
Senge who brought to the fore the concept of organizational learning. Cross
cultural teams have become a norm rather than an exception, which necessitates a
lot of redesigning of the policies of the organization especially the human
resource policies.
Working with people from different cultures with team work approach calls for
careful identification of the nature of cultural differences, understanding the
implications of cultural differences, creating awareness of cultural differences and
acceptance assimilation and absorption of the same in the working culture. Apart
from this knowing how to manage these differences and turn it into their
advantage is the biggest challenge as well as an opportunity for the multinational
organizations to convert it into their strength and exploit the opportunities
available in the global arena.
Thus it is very important to know the differences and formulating appropriate
strategies to leverage it into corporate advantage.Higgs and Rowland identified
that cross cultural team work requires a shared understanding and commitment to
the team goals.

Let us outline some of the challenges which need to be taken care of while
managing and motivating multicultural teams.

1.The challenge of diversified Communication, Language and Expression used

by individual team members

2. The challenge of managing the diversified Working Styles and approaches of

people coming from diversified backgrounds

3. The issue relating to different value systems and Dominating Influences

4.The differences in the Motivators and Expectations From the Job of the
individuals coming from various cultural backgrounds

5. Issues relating to individual preconceptions and stereotypes

6. Differentiated abilities regarding decision making and problem solving

7. Differences in the use of technology by people coming from advanced or not

so technologically advanced countries.

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 8.Difference in the attitude towards time orientation

9. Differences in the utilization of space

10. People coming from masculine or feminine cultures, high or low power
distance, individual or collectivist cultures, with high or low levels of uncertainty
avoidance, with short term or long term orientation.

8.2.3 Benefits of the cross cultural teams

The cross cultural teams provide a plethora of advantages and benefits to the
organizations as well as the individual team members. The team members are
able to enhance their knowledge due to exposure to the experiences and
knowledge of the diversified people coming from different backgrounds. It also
enables them to increase their interpersonal skills while dealing with cross
cultural people.
The following benefits can be derived from cross cultural teams
1. There are common goals for all cross border operations which helps the
members in being focused in their pursuits.
2. Helps the organization in keeping pace with the global changes, which is
possible with the sharing of knowledge and access to a wide range of
information. The cross cultural teams also get to experience new things in
their international assignments.
3. It provides better knowledge of management practices and enhances their
level of competitiveness.
4. Cross cultural teams nevertheless fosters innovation and creativity
amongst the team members.
5. It leads to continuous improvement in all the spheres of management.

CHECK YOUR PROGRESS 1

Fill in the blanks
1. There are common goals for all ……………………………….. Which
helps the members in being focused in their pursuits
2. Helps the organization in keeping pace with the ………………………,
which is possible with the sharing of knowledge and access to a wide
range of information. The cross cultural teams also get to experience new
things in their international assignments.
3. It provides better knowledge of………………………………. and
enhances their level of competitiveness.
4. Cross cultural teams nevertheless fosters…………………………….
amongst the team members.
5. It leads to …………………………………… in all the spheres of
management.

8.3 THE VARIOUS CULTURAL DIMENSIONS AND THEIR IMPACT ON

MOTIVATION OF MULTICULTURAL TEAMS

Since what motivates a person depends on the individual’s background and

cultures, it is important to appreciate and understand cultural differences across
cultures to find out what motivates employees in the organization. It becomes all
the more important and challenging when it comes to motivating multicultural
teams and groups.

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Now the million dollar question is whether to adopt an ethnocentric, polycentric,
regiocentric or geocentric approach in managing and motivating the multicultural
teams. What motivates a person in one culture (eastern or Asian) may not be a
motivator for a person hailing from another (say western or African) culture.
Let us quickly recall the theories on cultural dimensions discussed at various
places in the text already for your convenience and their impact on motivating
multicultural teams.

1. The most significant of the theories is that of Hofstede; which has outlined
five cultural dimensions namely power distance, uncertainty avoidance,
individualism, achievement orientation and long term orientation. These cultural
dimensions invariably impact individual motivation across cultures.

2. Similarly the seven dimensions of culture outlined by Tromparans;

Universalism versus particularism, Individualism versus communitarians, Specific
versus diffused cultures, Neutral versus emotional, Achievement versus ascription,
Sequential time versus synchronous time, Internal direction versus outer direction
also invariably impact individual motivation across cultures.

3. Hall’s High-Context and Low-Context Dimensions states that high-context

cultures use more symbols and non-verbal cues in communication. While the Low-
Context cultures assign primary meaning to the objective.

4.Kluckholn and Strodtbeck's Dimensions of Culture has the following

dimensions; The nature of people ,The relationship with nature ,Duty towards
others ,Mode of activity ,Privacy of space ,Temporal orientation .

5. Lorange’s cross cultural studies has tried to identify what managers perceived
as being most important for career success or what motivates an individual at the
workplace. The findings showed the following results.
It was found out that;
 For the American managers, the most important criterion to have a
successful career with the company was high ambition, drive which should
be supported by a pragmatic, individualistic and achievement oriented
assessment system.
 On the other hand for the French, the most important criterion to have a
successful career with the company was to be labeled as having potential.
 The Germans more than others believed that creativity was essential for
success

The studies further explored the following

How far the managers carry their status into the wider context outside the
workplace E.g. it was found out that the French and the Italian managers carry
their status outside as compared to their British counterparts who are more likely to
play under their subordinate in a match of polo. This implies that it is easier to
manage and motivate multicultural teams in British organizations as compared to
the French and the Italian organizations where the managers are more status
conscious.

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Similarly in some cultures like Asian countries, the managers or superiors are
seen as experts and technically sound who should be able to provide answers to
technical queries. This is because the subordinates cannot challenge their
superior’s advice. While in some cultures like Sweden the managers act more as
facilitators and should be able to tap sources of expert power elsewhere in the
company than giving all the technical answers himself.
It was found that nationality had three times more influence on the shaping of
managerial assumptions than age and education. This would definitely impact the
level of motivation when it comes to multicultural teams.

ACTIVITY 1
Taking cue from the above studies, outline some more examples of differences
in cross cultural teams.

8.4 THEORIES OF MOTIVATION AND APPLYING THEM TO

MULTICULTURAL TEAMS

Before proceeding further, let us review some of the very prominent studies
and research done on motivation. According to Shah (1999), it has been
reinforced time and now that pay practices that fall in line with changing business
tactics will prove to be effective as drivers of motivation. In contrast, the fourth
generation approach propounded by Joiner (1998) is based on the assumption that
intrinsic motivation is a far more effective motivator than financial rewards or
punishment and that organizational performance is greatly influenced by how
people will co-operate. Lawler III (1975) on the other hand has identified certain
organizational situations where salary should not be however used as a motivator.
Where trust level is low, where individual performance is difficult to measure,
where subjective measures of performance are used, where inclusive measures of
performance cannot be developed. Where large salary rewards cannot be given to
the best performances. Dessler (1998) maintains that people have infinite needs,
only some of which can be satisfied directly with money. Other needs like need for
achievement, affiliation, power or self actualization etc also motivate behavior but
can only be satisfied indirectly by money. Although the motivational potential of
rewards has been recognized from time immemorial (Kanungo and Mendonca,
1992), it is only in the past few decades that the psychological and practical
significance of rewards – pay, in particular, has been researched (Lawler, 1971)
Besides, being conceptually flawed (Dyer and Parker, (1976); Guzzo, (1979),
Kanungo and Hartwick, 1987), the intrinsic extrinsic dichotomy is completely at
variance with the fact, that in developing societies, economic and social security is
considered more important in life than freedom and control at the workplace
(Kanungo, 1979). Consequently, extrinsic rewards can, and do, serve as
motivators for employees in these countries.
The alternative approach to reward systems recognizes that rewards, be they
intrinsic or extrinsic, will motivate the desired employee behavior only when they
are perceived to be salient, valued and contingent on that behavior (Kanungo and
Hartwick, 1987; Kanungo and Mendonca1988). This approach based on the
constructs of the expectancy theory of work motivation, permits the design of
reward systems that take into account and provide for culture based value and need
differences. It is therefore ideally suited for developing countries as well.

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Before moving ahead it would be pertinent to mention here that most theories of
motivation were developed in the United States by Americans and about
Americans. Thus the traces of American culture are clearly visible in the theories
which also renders them to be little difficult to apply them across various cultures
and multicultural teams in today’s global organizations.

There is a Universalist Assumption with regard to motivation which states that;

 All people are motivated to pursue goals they value
 Specific content of the goals that are pursued will be influenced by culture
 Movement toward market economies may make motivation more similar in
different countries.

The most popular theories of motivation is that of Maslow’s need hierarchy ,

which outlines the lower order and the higher order needs of the individuals which
motivates them towards their goals . Here it would be necessary to mention that the
concept of needs varies across cultures and People from different cultures may
express and satisfy needs differently which will in turn necessitate different
motivational strategies for cross cultural teams. Need Theories are based on the
idea that people have certain needs, and their behaviors are designed to help them
fulfill these needs. Simply it focuses on the unfulfilled needs of the employees.
Maslow proposed a hierarchy of needs going from the most basic needs at the
bottom of the hierarchy to the highest-level ones at the top. Let us have a quick
review of the importance of needs according to Maslow's need hierarchy across
various cultures.
 The individuals from the United States are driven by the highest order need
of self–actualization
 While the individuals from Latin America are driven by the need for
security and social affiliation
 Similarly the individuals from France and Germany also need security
 The kiwis (New Zealand) are looking for having a sense of belongingness
and love.
As is clearly evident from the above examples, people hailing from different
cultures are motivated and driven by different set of needs wants desires and
aspirations which in turn poses a challenge for organizations operating across
various cultures around the world to manage and motivate multicultural teams.
Maslow’s hierarchy of needs argues that people start at the physiological level and
move up the hierarchy in this order: physiological, safety, social, esteem, and self-
actualization. This hierarchy aligns with American culture. In cultures where
uncertainty avoidance characteristics are strong, security needs would be on top of
the hierarchy. In cultures that score high on quality-of-life needs, social needs
would be on top.

David McClelland on the other hand has identified three needs, which he feels
drives the persons towards higher levels of performance. These are need for
achievement, need for affiliation and need for power. People with a high need for
achievement seek to excel and thus tend to avoid both low-risk and high-risk
situations. . They prefer either to work alone or with other high achievers. On the

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other hand people with high affiliation needs are always striving towards
maintaining good relations with others and socializing and working in teams
motivates them more than working individually as is preferred by people with high
need for achievement. Again some people are driven by high need for power which
may be in the nature of either personal power or institutional power. People with
this need are motivated when they are assigned work of higher responsibility and
authority and enable them to yield power over others.
The view that high achievement acts as an internal motivator presupposes two
cultural characteristics: a willingness to accept a moderate degree of risk and a
concern with performance. This combination is prevalent in Anglo American
countries. Yet these characteristics are relatively absent in countries such as Chile
or Portugal.

Adams' Equity theory of motivation theory

Equity refers to the fairness that people perceive in a situation. Basically, equity
theory describes how and why people react when they feel unfairly treated .This
theory stresses the importance of evaluating and rewarding people fairly so that the
work is rewarded equitably. If the perceived fairness in rewards is high people are
motivated and vice versa. Thus it is important to ensure that people are
compensated and rewarded equitably both internally and externally and also there
are no inequities on the basis of gender caste, religion and race which is very
significant in multicultural organizations to create people stable organizations. For
example, in some places, men and women are doing the same work but are paid
differently because women are deemed to be less valuable than men or it is
believed that they need less compensation. Discrimination on the basis of gender,
age, race, religion, language, physical ability and other similar factors is unlawful
in North America and Western Europe, but is acceptable in some places.

Herzberg’s two-factor theory:

The Intrinsic Extrinsic Rewards Classification popularized by Herzberg’s Two
Factor Theory (1966) argued that intrinsic rewards such as Autonomy,
Recognition, and Challenging Assignments alone motivated employees to high
work performance. Extrinsic rewards on the other hand such as Pay, Benefits,
Praise from the supervisor did not motivate employees to high work performance,
they only served to lower employee dissatisfaction. This emphasis on intrinsic
rewards clearly reflects the cultural bias that employees work primarily to satisfy
their personal achievement and autonomy needs. Hence, only those rewards which
satisfy the salient growth needs will be effective motivators.

International Aspects of Job Design and its impact on employee motivation

Individual and group–based job designs: The U.S. managers have mostly used
individual approaches to job design but recent shifts have been done to group–
based approaches. Managers in other industrialized countries have mainly
emphasized group–based job design. The main reason for this change is due to
changing specific job characteristics
For example in Belgium, Mexico, Greece and Thailand, they are not likely to
accept efforts to increase autonomy and task identity. The French managers

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particularly dislike recommendations to decentralize decision authority and the
Subordinates do not expect them to do so.
Similarly the implementation of Quality circles is widely acceptable and
successful in Japan, but its success has only been partial in the US.

CHECK YOUR PROGRESS 2

State whether true or false
1. Concept of needs varies across cultures and People from different cultures
may express and satisfy needs differently which will in turn necessitate
different motivational strategies for cross cultural teams.
2. Quality circles are not widely acceptable and successful in Japan, but its
success has only been partial in the US.
3. The U.S. managers have mostly used team based approaches to job design
but recent shifts have been done to group–based approaches.
4. Herzberg explained that employees can be satisfied only when their needs
for personal growth and meaning are fulfilled and motivators may or may
not be responsible to do so.
5. The view that high achievement acts as an internal motivator presupposes
two cultural characteristics: a willingness to accept a moderate degree of risk
and a concern with performance

8.5 STRATEGIES FOR MANAGING AND MOTIVATING CROSS

CULTURAL TEAMS

By now you must have realized that management and development of people needs
to be done in the light of their cultural diversity which in turn poses major
challenges for the human resource practitioners to attract retain and motivate tye
right talent. The multinational organizations are adopting either ethnocentric
geocentric or regiocentric policies when it come s to recruiting their human
resources. These are called expatriates and pose a challenge for the organization to
be managed and motivated all the times to contribute towards organizational goals
and objectives. It is in this backdrop that some issues will be discussed regarding
the management and motivation of the multicultural workforce

Some of the ways to manage & motivate the employees are;

1. Encouraging Open Communication at all levels in the management

hierarchy
One issue that can be particularly concerning in a multicultural work environment
is communication issues. When you have workers who speak different languages;
and non verbal behavior it becomes difficult to make sure everyone comprehends
what is being said and connote the same meaning as envisaged by the other person.
For example, you might have native Spanish speakers who are not fluent in
English. This can be challenging if you and other workers have limited or no
knowledge of Spanish.
This issue can be sorted out by hiring people who have the knowledge of both
English and Spanish language and who can act as a communication link between
the team members.

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Another option which can be explored is to seek the services of companies
providing translators who can provide assistance during crucial or strategic staff
meetings.
However, the best option could be to encourage the employees to have some
working knowledge of the language in which maximum transactions are held.

2. Providing Intercultural Training to employees on regular basis

This strategy of providing intercultural training to the staff on regular basis is also
recommended to train and develop the staff to meet international standards. These
days there are a number of options available to impart training on the job or off the
job, online or offline etc. imparting regular programs like executive development
programs, trainings by outside agencies and consultancy firms can boost the level
of confidence and motivation amongst the team members. It may involve inviting
experts of various ethnic groups and backgrounds to speak about various cultural
differences while also emphasizing how everyone is alike in their work goals,
ambitions and ethics. This training must be continual, because it is a process rather
than a one-time event.

3. Designing culturally aware motivation strategies

Another good option could be to design culture sensitive motivation strategies
encompassing different techniques of motivating employees from diversified
backgrounds and thus turning out a more productive and efficient workforce.
This initiative can be done in the following steps;
 One, getting the right and accurate interpretation
 Two, setting the standards of expectations
 Three, providing positive motivation and reinforcement

1. One, getting the right and accurate interpretation

Understanding human behavior is of paramount importance when it comes to

changing it for the benefit of the organization. Most of the organizations are
working towards incorporating behavioral changes by interpreting behavior in the
right manner, more specifically culture bound.

2. Two, setting the standards of expectations

In culturally bound organizations it becomes very important to tell the new team
members or recruits about the organizational expectations which are more or less
culture specific. For example there are supposed to be differences in the
expectations with regard to work ethics and profession in the developed and the
developing countries. These expectations should be clearly downloaded to the team
members to avoid any communication gaps between the standards of performance
and the actual performance of the culturally diversified team.

3. Three, providing positive motivation and reinforcement

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Another important aspect of motivation in the culturally diversified workforce is
to appreciate the desired behavior in the organization which is a first step in
positive motivation and reinforcement of the good behavioral practices in the
organization.

Inculcating Cultural intelligence

The need of the hour in culturally diversified organizations is to motivate people to

be culturally alert and sensitive. This can be inculcated by concerted efforts on the
part of the management by undertaking culture specific training programs
encompassing sensitization of the local cultures, their values and beliefs and
particular behavioral patterns. Understanding cultures across the globe will lead to
certain advantages to the organizations operating globally. These would be in the
nature of understanding the customer base better and satisfying their needs as per
their cultural requirements, managing the human resources in a better way by
recruiting and selecting the right candidate, adapting a global leadership style and
communicating and respecting other cultures. Thus inculcating cultural intelligence
will go a long way in having effective and efficient cross cultural teams which are
self motivated.
ACTIVITY 2
Based on your own knowledge, outline some more strategies that can be
applied in motivating cross cultural teams.

8.6 SUMMARY

Motivation is the force which drives us to achieve what we want. All the
individuals have certain needs and wants which he wants to fulfill. The various
behavioral scientists have recognized the importance of these wants and feel that
these should be identified and fulfilled by the organization to have a motivated
workforce.

Simply, motivation refers to the inner urges that cause people to behave in a certain
ways. In the workplace, we talk of people being highly motivated when they work
hard to accomplish objectives that are consistent with the organization’s goals. We
talk of people being de motivated on the job when they seem disinterested and
need to be pushed to job.
Cross-cultural teams can have their fair share of problems once the novelty of
interacting with new people fades. From simple issues like understanding language
idioms to more complex work culture issues, there is scope of a lot of problems.
Global organizations are transferring people increasingly to other countries which
create cultural diversity within work teams. Various problems and ways of
working have been discussed.
The various theories of motivation which are discussed in the lesson are; The Role
of Needs in Motivation, The Role of Equity in motivation theory, the equity
theory. Cross-cultural corporations are compelled to work hard in order to improve
their core competence as well as develop their competitive advantages due to
severe global workplaces. Therefore, what motivation factors could influence them
to work harder is not just a matter of human resource management, but also a
concern of every single employee.

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8.7 GLOSSARY

Cross cultural teams: can be understood as the demonstration of culture including

languages, beliefs, values, etc. by the behavior of individuals of a particular culture
through groups of individuals working together.

Culture: it is the complete whole which includes knowledge, belief, art, morals,
laws, customs, and any other capabilities or habits acquired by man as a member of
society.

Maslow’s need hierarchy theory of motivation: Need Theories are based on the
idea that people have certain needs, and their behaviors are designed to help them
fulfill these needs. Simply it focuses on the unfulfilled needs of the employees.
Maslow proposed a hierarchy of needs going from the most basic needs at the
bottom of the hierarchy to the highest-level ones at the top

Herzberg’s two-factor theory: The Intrinsic Extrinsic Rewards Classification

popularized by Herzberg’s Two Factor Theory (1966) argued that intrinsic
rewards such as Autonomy, Recognition, and Challenging Assignments alone
motivated employees to high work performance. Extrinsic rewards on the other
hand such as Pay, Benefits, Praise from the supervisor did not motivate employees
to high work performance, they only served to lower employee dissatisfaction.

Adams' Equity theory of motivation theory: This theory stresses the importance
of evaluating and rewarding people fairly so that the work is rewarded equitably.

8.8 ANSWERS TO CHECK YOUR PROGRESS

Answers To Check Your Progress 1

1. Cross border operations
2. Global changes
3. Management practices
4. Innovation and creativity
5. Continuous improvement
Answers to check your progress 2
1. True
2. False , is widely accepted
3. False ,individual approaches
4. False, motivators are also present
5. True

8.9 REFERENCES

1. Punnett, Betty Jane International Perspectives on Organizational behavior and

Human Resource Management: Prentice Hall of India: 2004

8.10 SUGGESTED READINGS

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Employee motivation in a cross-cultural organization Arcada University of
Applied Sciences Department of Business Administration, Media and Technology:
Helsinki 2010

8.11 TERMINAL AND MODEL QUESTIONS

1. Why do you think it is challenging to motivate a multicultural workforce?

Explain its significance with reference to the various need theories of
motivation.
2. Outline the strategies to manage a Cross-Cultural Workforce? What are the
challenges in managing and motivating multicultural teams? Explain.
3. Discuss the contribution of various theories of motivation and their applicability
in motivating a diverse set of people in multicultural teams.
4. What are the major problems encountered in motivating and managing
multicultural teams.

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CHAPTER 9: CROSS CULTURAL NEGOTIATION & DECISION
MAKING

STRUCTURE OUTLINE

9.1 Learning objectives

9.2 Introduction

9.2.1 Culture and dispute: Aspects to be considered before negotiating

9.2.2 Resolution of conflicts and disputes: The variables of negotiations

9.2. 3 Cross cultural negotiation training

9.2.4 The negotiation process across cultures
9.3 Negotiation styles across cultures
9.3.1 Approaches to negotiation across various cultures
9.3.2 International ethical dilemmas faced during cross cultural negotiation

9.4 Cross cultural decision making

9.4.1 Cross cultural differences in decision making styles

9.4.2 Influence of culture on decision making

9.5 Summary
9.6 Glossary
9.7Answers to check your progress
9.8 References
9.9 Suggested readings
9.10 Terminal and model questions

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9.1 LEARNING OBJECTIVES

After going through the lesson, you should be able to;

 Understand the various aspects of Cross-cultural negotiations and Cross

cultural negotiation training

 Outline the variables of negotiations

 Find out how Negotiation process is actually done across cultures and
 Approaches to negotiation across various cultures

 Know what is Cross cultural decision making

 Find out Cross cultural differences in decision making styles

 Appreciate the cultural factors which Influence decision making

9.2 INTRODUCTION TO CROSS CULTURAL NEGOTIATION

As we have already read in the chapters above, International businesses deal not
only across borders, but also across cultures. Culture profoundly influences how
people think, communicate, and behave. Hence, it affects the kinds of transactions
organizations make and the way they negotiate them.
Negotiation describes the process of discussion between two or more parties aimed
at reaching a mutually acceptable agreement through a process of interaction and
communication. In the global arena, cultural differences produce great difficulties
in the negotiation process and should be dealt with efficiently to reach an
agreement which is very important.

Some significant differences in negotiation process across various cultures

have been observed which are delineated below.

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These include;

1. The preparation process for negotiation itself across various cultures is a

significant difference.

2. The second difference lies in the importance accorded to the two things
required in successful negotiation, i.e. the task and the interpersonal
relations. Some cultures give more importance to tasks while others feel
maintaining interpersonal relations are more important, causing a major
source of difference in negotiations. The number of people present and the
extent of their influence.

3. The third difference observed is in terms of the communication pattern

encompassing both verbal and non verbal communication and the relative
time spent on negotiations in different cultures. You are already aware that
some cultures are monochronic while some are polychromic cultures.

Thus it is advisable that managers are well aware of theses cultural differences in
negotiations as it will help them in sailing successfully through the whole
negotiation process smoothly with the most desirable and acceptable results.

9.2.1 Culture and dispute: Aspects to Be Considered Before Negotiating

The Three interconnected aspects to be considered before negotiating are the

basis of relationship, the amount of information and the negotiation style
which are discussed below:

1.Basis of relationship: In countries like north America and Europe , the business
meetings are viewed as strictly official and contractual in nature , where personal
relationships are not given any importance and are considered to be unhealthy
which might affect the objectivity of the deals. On the other hand in South America
and a lot of Asian countries the deals are cracked more at the personal level where
partnerships are entered on the basis of personal relationships, faith and trust on the
other party.

2. The amount and type of presentation of information: the way of presenting

the business proposals is quite important, where in the western culture it is

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important to make a business presentation using a lot of statistics and factual data
presented in a tabular form. On the other hand the South Americans prefer the
information to be presented crisply verbally with the aid of graphical presentation
using charts and pie diagrams and maps where ever required.

3. Negotiation style: Different cultures showcase different negotiating styles

where in some cultures like the Middle East, they prefer to talk all the things
simultaneously instead of adopting a sequential approach in dealing. The South
Americans can become quite vocal aggressive and animated in their presentations.
The Japanese on the other hand believe in taking decisions based on consensus.

While in Asia the decision is usually taken by the senior most member of the
family and by the top management in the organizations. Here it is important to
understand that the Chinese are hard wired and highly trained in negotiating skills
where they do not believe in win win situation for both the parties and bargain
hard to gain more Vis a Vis their competitors. The Germans believe in analyzing
the data and information to great lengths before finalizing.

Thus the purpose of training in international negotiations is to help the executives

in cracking successful negotiation deals. Some of the executives become so apt in
negotiating that they become a part of permanent negotiating teams (remember
Will Smith acting as a successful negotiator in one of the English films)

9.2.2 Resolution of conflicts and disputes: The Variables of Negotiations

There are a number of variables in cross cultural negotiations like the process of
negotiation, the selection of negotiators , the role of individual aspirations and
concern of protocols , complexity of language , non verbal behavior , time ,
thinking and decision making skills which are discussed below.

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Process of negotiation: The process of negotiation would be highly affected by
the executives coming from high context (implicit) or low context (explicit where
everything is clearly made clear to the other party either verbally or non verbally)
cultures and monochromic and polychromic cultures.

The selection of negotiators: This aspect would depend on a large extent to the
amount of decentralization and gender bias. Like in Arabian countries they may
not like to negotiate with the female executives while the female executives are
expected to perform well during negotiations in India. Some organizations in
countries like Korea select negotiators on the basis of certain criteria like their
knowledge, status and expertise, while in India status difference is viewed very
critically and prefers to have a status neutral negotiating team.

The role of individual aspirations and concern of protocols: This variable also
plays a significant role in negotiation process, where in countries like USA, people
with high level of individualism are selected while in China, India and Japan
people with collectivistic tendencies are selected. The negotiation process is also
impacted by the general business environment trends, practices and norms, values
and beliefs, assumptions and traditions etc which are crucial in successful
negotiations.

Complexity of language: A Language difference across cultures is another major

hurdle in cross cultural negotiations where the executives are supposed to
understand the other party’s language for better understanding of the business
proposals. Though the help of translators can be taken but the final onus of
finalizing the deal lays with the negotiating team, thus it I important that they know
the language of the other party.

Non verbal behavior : it has been generally observed that the Americans being
low context( explicit ) , do not rely on non verbal behavior, and the Japanese on the
other hand would rely on high context( implicit ) communication. Thus while
negotiating it becomes important that the high context individuals make very
specific business proposals while dealing with teams from low context cultures.

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 Time: since successful negotiations are positively correlated to patience, it
becomes imperative for the negotiating teams to be patient but it varies across
cultures where it has been found that the Americans are more impatient and want
to seal the deal hurriedly while the japans and the Chinese are typically patient and
take their time in finalizing the deals.

Thinking and decision making skills: Again this variable would be dependent on
the team coming from individualistic or collectivistic cultures where
individualistic teams would be quick in decision making and the collectivistic
teams would be waiting for everybody to reach a consensus before taking the final
decision which will hamper the efficiency and the effectiveness of the deals .

CHECK YOUR PROGRESS 1

Fill in the blanks with regard to the important differences in the negotiation
process from country to country include;

1. The ………………………………….preparation for a negotiation

2. The relative emphasis on tasks versus …………………………….

3. The reliance on …………………………………rather than specific issues

4. The number of people present and the extent of their ………………….

5. The communication and the ……………………… on negotiations.

9.2.3 Cross Cultural Negotiation Training

In the light of the cultural differences across the planet it becomes imperative for
the multinational organizations to train their executives in negotiation which is a

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must to crack the deals, which if not taken care of can be disastrous to the
organizations when they might be losing some very important and strategic deals
which might cost them long term survival in the business.

Systematic training in this regard will enable the executives to better understand
the cultural differences and will help the negotiator in gaining advantage over
others.

Some of the training areas which are important to be taken care of are briefly
explained below.

These relate to eye contact, personal space and touch,, time, style of meeting and
greeting the international executives and the ritual of gift exchange.

1. Eye Contact: Different cultures across the world give different connotations to
eye contact like the Americans, the English and the Europeans feel that a person
maintaining a strong eye contact is sincere and confident; the South Americans feel
it is a sign of trust worthiness. On the other hand the Japanese being quite
conservative feel it is rude to maintain prolonged eye contact. Thus training and
knowledge of this aspect is very important for international negotiations.

2. Personal Space and Touch: Similarly giving personal space and touching
the opposite party is also very important, like the Americans, the English and
the Europeans maintain quite a distance while negotiating and this distance is even
more conspicuous with the Japanese where it is up to 4 feet. On the other hand the
South Americans and the Middle East executives prefer to be c loser to the
negotiating party. Both these aspects of training, eye contact and personal spacing
and touching can be given through role playing, simulating exercises etc.

3. Time: The western culture is very particular about time and they consider time
as money and give a lot of importance to punctuality, there you might lose your
contract for not being on time. Even Chinese and Japanese executives feel

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offended if you do not report on time. While if you are in South America or
southern Europe coming on time for a meeting does not carry the sense of urgency.

4. Style of Meeting and Greeting the International Executives: greeting others

by shaking hands is very common and acceptable across the world in business
meetings but it may not be so between genders in some cultures which should be
very well taken care of .secondly the firmness of the handshake is also very
crucial, where in some cultures a weak handshake is considered to be a sign of
weakness and low level of confidence, while a firm handshake is considered to be
aggressive in some cultures. In Japanese culture bowing in respect is a very
common and well known style which should be strictly adhered to while dealing
with Japanese clients.

5. The Ritual of Gift Exchange: Accepting and giving gifts is very common and
acceptable in Chinese and Japanese cultures while it sends out negative signals in
the American and the British culture. Similarly the price of the gift also matters.
Gifting is a very difficult part in international negotiations and must be given prime
importance in training in this aspect.

Thus it is very important to train the executives in international and cross cultural
etiquettes with regard to corporate dining , dressing , behavioral and emotional
skills , which have a tremendous bearing on the success and failure of the
negotiations.

9.2.4 The negotiation process across cultures

To start with let us apprise you that the Negotiation process encompasses six
steps which are followed sequentially starting with the preparation, followed by
investing time and resources in relationship building in the organization, indulging
in exchanging of task related information with the negotiators, following rigorous
persuasion tactics, seeking concessions and finally wrapping it up with signing
agreements with the concerned party. See figure 1 below.

Step 1: Preparation stage

This step calls on the part of the manager to fully familiarize himself with the
following things which are instrumental in successful negotiations

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The first thing should be to check and verify the context in which the negotiations
are required and the background check of the negotiators in terms of their
reputation and peculiar behavioral patterns which might be detrimental to the
negotiations.

They must be aware of the cultural differences in terms of language and

environment.

Last but not the least the managers must be fully aware of their own strengths and
weaknesses with a complete understanding of their own negotiating style and that
of others as well. They should be aware of the requirements that might arise during
the course of negotiations and the demands which might be put forth by other
parties in negotiations.
They should also be aware of the composition of the negotiating team with whom
they are going to deal with.

Figure 1: The Negotiation Process

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b) Relationship building – this stage involves taking time to build mutual trust
between the two parties before actually starting any business discussions at the
outset.

c) Exchanging task related information – during this stage each side makes a
presentation and states its position, normally followed by a question-and-
answer session

d) Persuasion – during this stage both parties try to persuade the other to accept
more of their position while giving up some of their own; there are recognizable
tactics for this stage like stressful tactics etc

e) Concessions and Agreements – at this point each side will make various
concessions so that an agreement can be reached and signed.

ACTIVITY 1

Discuss a case study relating to the resolution of conflict and healthy

negotiations in any multinational company.

9.3 NEGOTIATION STYLES ACROSS CULTURES

Differences across cultures in negotiations are quite visible as can be seen

from the following examples.

 Like, most of the times, the north Americans base their negotiations on facts
and figures and believe in presenting information based on these. They further
assume that the other party will also appreciate the logical reasoning behind the
presentation.

 On the other hand the Arabian negotiators believe in using emotional and
subjective data while negotiating.

 And it is interesting to note that the Russians are driven by the ideals on the
basis of which the societies function.

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Managing Cross-Cultural Negotiation

Dr. Nancy Adler compares key indicators of success as reported by negotiators

from four national backgrounds; the Americans, the Japanese, the Chinese and the
Brazilians which is discussed below.
The American negotiators are well versed in preparing and planning well in
advance for negotiations, they are quite apt in thinking under pressure during
negotiations, they apply a lot of judgment and intelligence while negotiating as
they are quite culture sensitive. They are able to express themselves verbally and
have complete product knowledge .they are very good in perceiving and exploiting
power and are known for their integrity.
The Japanese negotiators are known for their total dedication and commitment to
anything they work, for which they are appreciated and win respect and confidence
of their contemporaries and also the opposition parties; they follow complete
integrity in their working. The Japanese negotiators demonstrate impressive
listening skills and are good in expressing themselves verbally also and they try to
have a broad perspective with regard to various things during negotiations and do
not waste their time energy and resources on petty matters.
The Chinese negotiators are known for exhibiting high degree of persistence and
determination in negotiations, for which they are respected and win confidence of
their contemporaries. At the same time they demonstrate exemplary product
knowledge and are known for their preparation and planning skills in negotiation.
They are also apt in exercising their judgment and make negotiations an interesting
and fruitful process.
The Brazilian negotiators exercise good preparation and planning skills , are able
to work under pressure and apply their judgment and intelligence, they are verbally
expressive , have full product knowledge, are able to perceive and exploit
knowledge and exhibit high levels of competitiveness while negotiating.

9.3.1 APPROACHES TO NEGOTIATION ACROSS VARIOUS

CULTURES

In this section we will sketch out the various negotiation approaches being
followed by some of the most prominent cultures who have a profound share and
impact on the international businesses. These are;

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1. U.S. Approaches to Negotiation
2. African Approaches to Negotiation
3. Japanese Styles of Negotiation
4. European Styles of Negotiation

5. Latin American Styles of Negotiation

1. U.S. Approaches to Negotiation

The U.S. approach to negotiation is mostly driven by individualistic values systems
beliefs attitudes and behavior rather than group or collectivistic negotiations. Here
the individual style of negotiation is predominant which varies with individual’s
personality and encompasses independent decisions based on self experience and
self reliance .The individuals tend to rely more on experiential learning rather than
group experience which is peculiar to the US negotiators.

2. African Approaches to Negotiation

Unlike the US approach to negotiation, the African negotiations are mostly driven
by group or social norms. They tend to take collectivistic decisions based on the
approval of their ancestors and social lineage. This type of decision making and
negotiations minimizes the role of the formal system of law for the African
societies.
3. Japanese Styles of Negotiation
The Japanese style of negotiation is known to have very positive outcomes in any
negotiation system which is mostly driven by focusing on group goals and
collectivistic decision making , they tend to respect the interdependence between
the group members and hierarchy is highly followed in any type of group
interaction and negotiations .
To start with, the Japanese negotiations are characterized by the use of soft and
polite conversation style which gives a very warm and pleasant start to any
negotiation process. Another reason is that the Japanese give a lot of importance to
face and face saving and thus avoid entering into unnecessary confrontation and
conflict with the other party. They are mostly engaged in the muted use of power
and prefer to maintain harmonious and calm environment while negotiating which
makes it all the more effective and the results are also acceptable to others. They

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are more concerned about maintaining harmonious relationships with others rather
than wasting their energies on petty things .They are also known for staying away
from making procedural suggestions unlike their US counterparts.
4. European Styles of Negotiation
Since the Europeans are a conglomeration of a number of cultures like the British
the French the Germans the Italians etc, each one having their own set of strong
cultural values and working style , so does the negotiation process varies in each
of these countries. It is driven by many factors like the language spoken in these
countries, the nationality, the religion and many other contextual factors. For
example it would be interesting to note that the French are known for following a
very aggressive approach while negotiating and similarly the Germans and the
British are known to be a little less or moderately aggressive.

5 Latin American Styles of Negotiation

The Latin American style of negotiation is driven by role expectations. They feel
that they must accomplish the desired task with full responsibility once they
assume it. They tend to rely on polychromic time orientation and believe in having
a high context communication while negotiating.
9.3.2 International ethical dilemmas faced during cross cultural negotiations

There are certain ethical dilemmas faced during cross cultural negotiations which
include the following elements and impacts the negotiations to a considerable
extent especially when it comes to business transactions and negotiations between
the developing and the developed countries. The developed countries tend to
impose a slew of non tariff barriers on the goods and services imported from the
developing countries. The ethical dilemma would take place in the following cases.
These would include the business transactions in case where the;

• Countries involved produce goods where there are no child labor laws.

• Countries involved have child labor laws but are not enforced

• Where the consumer behavior keeps on changing.

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• Countries negotiating or entering into business do not have any reservations
with regard to making payments in parts , which is permissible under the
national law of the country.

CHECK YOUR PROGRESS 2

STATE WHETHER TRUE OR FALSE

1. In American settings, appeals tend to be made to logic, relying on

"objective" facts. Emotional sensitivity is highly valued, and dealings may
seem straightforward and impersonal.
2. Japanese negotiators value emotional sensitivity highly, and tend to hide
emotions behind calm exteriors.
3. Latin American negotiators tend to share the Japanese appreciation of
emotional sensitivity, and do not express themselves passionately about their
points of view.
4. Arab negotiators do not appeal to emotions and subjective feelings in an
effort to persuade others.
5. Russians tend to appeal to ideals, drawing everyone's attention ,Foreign
governments and bureaucracies
9.4 CROSS CULTURAL DECISION MAKING

Well by now you must have understood the nuances of cross cultural implications
on negotiations. It is also clear now that the national orientation influences to a
large extent the type of decisions that are taken. Most of the times the decisions are
taken by taking into consideration the deep rooted values and beliefs of the country
in question.

It is a well accepted fact that some national styles of negotiations are driven by
group decision making and collaborations while others are driven by an autocratic
or individualistic styles. Though both the styles have their own set of plus and
minuses.

The concept of distributed leadership has been suggested for American businesses
which tend to be followed by organizations having decision making handled at the

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levels closest to the operations. Through this process an open atmosphere for the
exchange of ideas and an aura of experimentation flourished when the leader
tapped into organizational intelligence, utilized the dynamics of top-down, bottom
up and lateral positioning of power, and recognized cultural norms, traditions and
preferences within the team.

On the other hand Rowe and Boulgarides (1983) declared the decision-making
process dependent on context, perception, cues, nuances, decision-maker
values, and cultural distinction.

This definition expanded to a wider audience of business leaders from all over the
world. In other words, leaders in different countries approached the process of
making decisions by allowing the culture to decide.

9.4.1 CROSS CULTURAL DIFFERENCES IN DECISION MAKING

STYLES

Cross cultural differences in values, attitudes, systems and practices are some of
the significant issues which call for convergence in decision making in global
organizations for whom developing a universal corporate culture is the most
challenging task. It would be interesting to note here that people with diverse
cultural backgrounds converge to a common set of values and in the process create
the desired corporate culture. Decision making is nevertheless a process of
problem solving in a meaningful way and is culture sensitive. This is the reason
behind visible differences in decision making styles across cultures and countries.

Decision making styles

Since of the behavior of the people is culture specific it is but natural that their
decision making would also be an outcome of their cultural values thinking norms
and traditions etc. The difference in decision making is more evident in the eastern
and the western cultures. Since decision making is one of the most important tasks
of the manager in an organization, his style will tremendously influence the major
business decisions and the resultant success or failure of the business.

Managers hailing from individualistic cultures will tend to take quick decisions
independently, which will in turn promote a culture of competition. This culture

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of taking independent decisions is visible in North America, Canada and north and
west European countries.

On the other hand, managers coming from collectivistic cultures will take
collective decisions after consulting his team members, and will create a culture of
cooperation. This type of culture is more visible in south East Asian countries like
India, China etc.

Let us find out some more differences in the decision making style of the
individualistic and collectivistic cultures.

Avoidant decision making style: This style is preferred by the Chinese, followed
by the Koreans, the Canadians and the Americans. The Japanese however do not
subscribe to this style at all.

Competitive decision making style: This style is more favorable with the Koreans
followed by the Chinese, the japans and the Americans. This competitive style is
gaining increased importance in the Asian countries also of late due to the
increased pace of globalization.

Dominant decision making style: This style is more or less like the competitive
style which is widely practiced in South Korea, America Canada and Japan.

9.4.2 CULTURE AND COMPLEX DECISION MAKING

It is important to examine the impact of culture on complex decision making which

gives rise to certain questions as outlined below;

1. How do cultural factors influence the process of complex decision making?

2. How can we influence the process of decision making with the cultural
factors?

3. Can we distinguish and relate between different ways of complex decision

making?

4. How do complex decision making styles get influenced by cognitive factors?

5. Can we isolate cognitive and cultural inputs in complex decision making

styles?

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The researches carried on so far in this regard have not been able to find answers to
these questions effectively. However some empirical and theoretical researches on
cross cultural management suggest three factors, within which answers to the
above questions can be found out.

These factors are

1. The predictability and plan ability of the environment in which the business
operates. Since the cultural differences are the starting point in the differences in
decision making styles, they become predictable to some extent depending upon
the mangers culture and country of origin. Similarly the environment can also
predicted as all the socio economic political technological factors are publically
visible through press and media which be impacting the business decisions.

2. Degree of cultural requirements in decision making: in some cultures the

decision making depends largely on the dominant value system which may be
either individualistic or collectivistic in nature. The individual decision makers are
independent and sometimes their decisions might turn out to be gamble and yield
poor results, and the organization might have to pay heavy price for it. The
collapse of the Lehman brothers is a classic example of the individualistic decision
making style.

3. Power distance and social hierarchy: in cultures where power distance is high.
Decision making capability gets limited for narrow control span. This does not
mean that high power distance results in poor decision making. Here the decision
maker should focus on adverse social implications, and their decisions would be
more conservative and risk averse. On the hand, where there is low power distance,
the decision makers tend to adopt control oriented strategies and are more prone to
taking some bold innovative and creative decisions.

ACTIVITY 2

Outline some examples of Avoidant decision making style, Competitive

decision making style and Dominant decision making style from the literature
on cross cultural decision making.

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9.5 SUMMARY

Negotiation is a form of social interaction. It is the process by which two or more

parties try to resolve perceived incompatible goals .Negotiating across borders is
more complex because of the number of stakeholders involved and give rise to
cultural conflicts. A country’s orientation influences the level of thinking to a
considerable level in which decisions are made. While some decision-making
processes include collaboration, others rely on an authoritarian approach.
Managers hailing from individualistic cultures will tend to take quick decisions
independently, which will in turn promote a culture of competition. This culture
of taking independent decisions is visible in North America, Canada and north and
west European countries. On the other hand, managers coming from collectivistic
cultures will take collective decisions after consulting his team members, and will
create a culture of cooperation. This type of culture is more visible in south East
Asian countries like India, China etc.

9.6 GLOSSARY

Distributed leadership for organizations when decision making was handled at

the level closest to operations

9.7ANSWERS TO CHECK YOUR PROGRESS

Answers to check your progress 1

1. Amount and type of

2. Interpersonal relationships
3. General principles
4. Influence
5. Time spent

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Answers to check your progress 2
1. False , not highly valued

2. True

3. False, they do express themselves passionately

4. False, they do

5. True

9.8 REFERENCES

1. Avruch, Kevin Cross Cultural Conflict: Institute for Conflict Analysis &
Resolution (4D3), George Mason University 3330 Washington Blvd.,
Arlington VA 22201 USA

2. Baron, Michelee Le .Culture Based Negotiation Styles by July 2013

3. Brett, Jeanne M. Culture and Negotiation:: Northwestern University,

Evanston, USA: Intenational Journal of Psychology, 2000, 35

9.9 SUGGESTED READINGS

1. Cutcher, Joel ,-Gershenfeld and Thomas A. Kochan, Dispute Resolution and

Team-Based Work Systems, in workplace Dispute Resolution, Edited by
Sandra Gleason, :Michigan State University: Press, 1997

2. Ford , John .Cross Cultural Conflict Resolution in Teams:2012 Article

3. Hall, Troy. A Cultural Decide: Differences in decision making between

Japan & United States:, South Caloria, Federal Credit Union: Feb 19, 2013

4. Jeswald W. Salacuse Negotiation: The Top Ten Ways the culture can affect
Negotiation Governance | September / October 2004 Kevin

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 5. Moore, Chris and Peter Woodrow Mapping Cultures-Strategies For
Effective Intercultural Negotiations, Track Two, July 1999.

9.10 TERMINAL AND MODEL QUESTIONS

1. Give an introduction to cross cultural negotiation & decision making and its
significance in international business.
2. Critically evaluate the different processes of cross- cultural negotiation,
styles and its management at the international level.
3. Outline the Role of culture & dispute in cross cultural decision making.
4. Discuss the strategies that can be used in resolution of conflicts and disputes
in cross-cultural businesses.

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 CHAPTER 10: CROSS CULTURAL ETHICS: ETHICS AND VALUES
ACROSS CULTURES & ETHICAL DILEMMAS

STRUCTURE OUTLINE

10.1 Learning objectives

10.2 Introduction
10.3 Ethics defined, principles of ethics, School of thought on ethics, Influence on
ethical conduct
10.4 Values defined, workplace values, importance of values at workplace
10.5 Ethics and values across cultures
10.5 .1 Influence of culture on ethics in business
10.5 .2 Issues about ethics and cultures
10.5 .3 Business ethics in global community
10.5 .4 Improving global business ethics
10.5 .5 International ethical agreements
10.6 Summary
10.7 Glossary
10.8 Answers to check your progress
10.9 References
10.10 Suggested readings
10.11 Terminal and Model Questions

10.1 LEARNING OBJECTIVES

After going through the lesson, you should be able to

 Define Ethics and values; identify the principles of ethics
 Understand the School of thought on ethics and its Influence on ethical
conduct
 Examine the importance of Ethics and values across cultures
 Know the importance of Business ethics in global community
 Outline some methods in improving global business ethics

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10.2 INTRODUCTION

The onset of globalization liberalization and privatization has changed the entire way
of doing business. The emergence of multinational businesses has led to a serious
thinking on the part of the global organizations like UNCTAD, ILO, and WTO etc to
converge the ethical values of all the participating cultures to ensure that they are all
operating under international or global standards of ethics. It would be interesting to
know at this point that there are certain business practices which are absolutely
acceptable in one culture and are not tolerated in others. This situation poses a lot of
challenges in front of the international managers to cope up with the international
code of ethics to survive in the long run.

10.3 ETHICS DEFINED, PRINCIPLES OF ETHICS, SCHOOL OF

THOUGHT ON ETHICS, INFLUENCE ON ETHICAL CONDUCT

Ethics defined: It is a code of behavior that a society considers moral and

appropriate for guiding relationship with one another. The issues at stake here
includes: honesty, integrity, fair, open and straight-forward dealing. Ethics involves
judgments as to good and bad, right and wrong and what ought to be.
Thus Ethics can be understood in terms of notions of Right and wrong, Fair and
unfair and Moral and immoral.
Business Ethics: It is the application of general ethical principles and standards to
the actions and decisions of business organizations and the conduct of their
personnel. Ethical principles are globally accepted standards of correct and incorrect
which set the type of conduct an ethical company or person supposed to assume.

SCHOOLS OF THOUGHT ON ETHICS

There are two Schools of thought on Ethics; the Existentialists and the
Relativists
The Existentialists led by Jean-Paul Sartre believe that standards of conduct cannot
be logically acceptable and no act is essentially correct or incorrect .Thus each
person may attain their own alternatives about ethical principles. This observation

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resides in the belief that humans are only what they would like to be .Here what one
individual believes is “correct” may not essentially be supposed by others. They may
say, possibly, there is no right answer in this situation.
The Relativists however believe in the expression for some general ideology of
right and wrong. They argue that the ethical reply depends on the circumstances, i.e.,
that ethics is relative to a particular society.

The Three Ethical Principles: Individual Rights, Utilitarianism and

Distributive Justice

Ethics is an enormous fields of philosophic study, but basically it all boils down to
three general principles that can then branch off into various sub-groupings and
variations on the basic theme. Ethical conduct in society, therefore, essentially
comes down to three distinct values that take into consideration;
1. Individual Rights The rights of the individual, aims at fundamental entitlements
in society
2. Utilitarianism :The rights of the masses, (Utilitarianism) aims at greatest good
for greatest number
3. Distributive Justice: And the concept of distributive justice says that there is
inequality with equal access to favoured positions and inequality must benefit the
least well off

The Three Influences on ethical conduct

There are three influences on ethical conduct; moral intensity, ethical sensitivity
and situational influences.

Moral intensity: It is the degree to which an issue demands the rigorous

application of ethical principles
Ethical sensitivity: It is the ability to recognise the presence, and determine the
relative importance, of an ethical issue.
Situational influences: It involves the competitive pressures and other conditions
affect ethical behaviour

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 CHECK YOUR PROGRESS 1

Identify the three principles of ethics

1. The rights of the individual, aims at fundamental entitlements in society
2. The rights of the masses, (Utilitarianism) aims at greatest good for greatest
number
3. And the concept of distributive justice says that there is inequality with equal
access to favoured positions and inequality must benefit the least well off

Identify the Three Influences on ethical conduct

4. It is the degree to which an issue demands the rigorous application of ethical

principles
5. It is the ability to recognise the presence, and determine the relative importance,
of an ethical issue.
6. It involves the competitive pressures and other conditions affect ethical
behaviour

10.4 VALUES DEFINED, WORKPLACE VALUES, IMPORTANCE OF

VALUES AT WORKPLACE.

Values on the other hand are beliefs that a given behavior or outcome is desirable or
good. Values serve as standards of conduct that guide our behavior. for Example
how we value (a) the environment, (b) self-respect (c) keeping our family safe, (d)
good health, (e) politics etc
Values defined: Values are Stable, long-lasting beliefs about what is important
define what is right or wrong, good or bad and Include cross-cultural, ethical and
organisational culture values.
Workplace values: There are two types of values which are predominant at the
workplaces the world over and determine the code of conduct and ethics practised by
the managers.

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1. Terminal versus Instrumental values: The terminal values are the desired
states of existence by the individual e.g. he may be aspiring for a happy
prosperous and a wealthy life. The instrumental values are the desirable modes of
behaviour to achieve the terminal values. e.g. An individual may strive to
achieve the above terminal value of a happy wealthy life through hard work and
being honest.
2. Espoused versus enacted values: The espoused values are the ones we want
others to believe we hold. The enacted values are values-in-use; that is what we
actually practice in our day today lives.

Needless to mention that both the above values are culture specific and must be
understood and appreciated by people working across cross cultures and businesses.
Importance of values at work: there has been a growing importance of values at
work due to the following factors;
1. Globalisation: which encompasses increasing awareness of, and sensitivity to,
different values across cultures to be more productive and efficient
2. Replacing direct supervision: This potentially aligns employees’ decisions and
actions with corporate goals
3. Demand for ethical practices: This involves increasing pressure to engage in
ethical practices

Value Dimensions As Given By Hofstede and Kluckholn and Strodtbeck

Let us the recall the value dimensions as outlined Hofstede and Kluckoln
&Strodbeck which have been the basis of our understanding of the international
aspects of cross cultural management.
The five value dimensions given by Hofstede are
Individualism Vs collectivism: where Collectivists tend to identify themselves by
group membership, give priority to group goals and put more emphasis on
harmonious relationships and are driven by more socially-based emotions unlike
the individualists who are driven by personal goals and ambitions over the group
goals .
Power distance: it is the degree to which people accept an unequal distribution of
power in society and are tolerant to differences in the pay and opportunities.

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Uncertainty avoidance: it is the degree to which people tolerate ambiguity (low
UA) or feel threatened by ambiguity and uncertainty (high UA)
Achievementnurturing: The degree to which people value assertiveness,
competitiveness and materialism (achievement) versus relationships and well-being
of others (nurturing)
Long/short-term orientation: The degree to which people value thrift, savings and
persistence (long-term) versus past and present issues (short-term)

The six dimensions of culture by Kluckholn and Strodtbeck

1. What are the society’s assumptions about the essential goodness of people?

2. What does the society emphasize in interpersonal relations, the individual or the
group? Should people feel free to act as individual or as a group?

3. What is the value of personal space in the society?

4. What does the society assume about the relationship of man and nature? Is man
meant to live in harmony with nature or to dominate it?

5. What is the role of change in society (value for stability?)

6. What is society’s regard for time past present or future?

These value dimensions would invariably affect the ethical business practices
followed by the international managers.

ACTIVITY 1
1. Identify the different types and levels of values.
2. Define the five main values that vary across cultures.
3. Describe three ethical principles and other factors influencing ethical
behaviour.
4. Explain how moral intensity, ethical sensitivity and the situation
influence ethical behaviour.

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10. 5 ETHICS AND VALUES ACROSS CULTURES

Diverse cultures possess different values, making it difficult to make a particular

"right" ethical choice.
For example, The French and Americans carry different opinion on whistle-
blowing. American companies believe it to be a natural part of business as
compared to the French. So they set up secret hotlines, in fact, usually. The French,
in contrast, view whistle-blowing as hindrance to team spirit amongst co-workers
and criticize such measures.

10.5.1 INFLUENCE OF CULTURE ON ETHICS IN BUSINESS

In Today's global scenario, companies employ people from different parts of the
world, as employees, managers, and colleagues. This leads to increase in the
variety of cultures on the workplaces. Employees with different upbringing in
different cultures having different ethics may bring theirs customs and traditions to
the global office.

Cultural Relativism

It states there is no particular fact that can be considered as the base for ethical or
moral behavior, as interpretations of truths related to ethics are influenced by
different cultural practices.

Cultural relativism is a normative ethical position rather than a prescriptive one.

That is, rather than prescribing what ought to be done in a exact situation, it
describes the way people behave in that situation. The observation that suggests,
different culture consists of different set of norms and values which govern
behavior in their own, serve as basis for cultural relativism. This is in contrary to
universalism, where norms and values are identical for everyone.

10.5.2 ISSUES ABOUT ETHICS AND CULTURE

Keep in mind that ethics does not refer only to monetary favors, i.e., corruption,
but includes clash of interest, exploitation of position by abusing ones office (e.g.
misusing secret information, government property, official time etc.).
According to Gbadamosi high ethical standards, and low corruption perception will
always be significant in organizations and human societies.

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Diverse cultures have different rules of conduct. Some cultures view certain ethical
practices with different levels of condemnation .The more serious problem
concerns two different ethical standards meeting in a business transaction. For
example, US vs. Russian; US vs. Nigerian; US vs. Colombian; US vs. UK; US vs.
Germany; Israel vs. Egypt

This situation is characterized as cultural conflict

Cultural conflicts and unethical behavior are bribery, corruption and sleaze.
Different cultures give different arguments for and against bribery.
The arguments for bribery says that it is necessary to do business, is a common
and accepted practice and is viewed as a form of commission tax or compensation.
While arguments against bribery are that it is out rightly wrong , illegal, leads to
compromising on the personal beliefs of the individuals . promotes government
corruption, is a slippery slope , prohibits taking a stand for honesty, benefits only
the recipient, creates and encourages unfair means to gain favors and enhances
dependence on corruption and to top it all deceives the stakeholders.

10.5.3 BUSINESS ETHICS IN GLOBAL COMMUNITY

It is important to take note of the fact that business ethics vary in the global
community as;
 Some notions of right and wrong are universal while others are not
(universalism vs. relativism)
 There is Cross-cultural variability in ethical standards across the nations
 It is important to determine what is ethical and what is not ethical when
local standards vary
 Managers have to figure out how to navigate the gray zone when cross-
culture ethics differ
 They Should adhere to the higher standard(s)
It would be better to understand the above contention in the light of the three
schools of thought as outlined below.

The three Schools of Thought on ethics are

1. Ethical Universalism
2. Ethical Relativism

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 3. Integrative Social Contracts Theory

1. Ethical Universalism

Ethical universalism is a philosophy or belief system that states that there is one
universal system of ethics that applies to everyone regardless of their culture, race
or religion. Ethical relativism is the opposite of ethical universalism.
Ethical universalism is also called moral universalism or moral objectivism.
Although ethical universalism states that there is one universal system of ethics, it
does not hold that each ethical decision has a clear right and wrong choice. Ethical
universalism allows for the possibility of gray areas in moral decision making and
for the possibility of multiple answers that are each equally moral. As long as the
ethical system is applied equally to everyone, the system is one of ethical
universalism.
 The most important concepts of what is right and wrong are universal and
transcend culture, society, and religion.
 It Results in a set of universal ethical standards that apply to members of all
societies, all companies, and all businesspeople,
 It further sets limits and puts boundaries on ethical behavior on the
members.

2. Ethical Relativism

It is a theory that holds that there are no universally accepted ethical standards. “It
is the view that there is no objective standard of right and wrong, even in
principle.”There are Two Types of Ethical Relativism: Personal or individual
ethical relativism and Social or cultural ethical relativism
Individual Ethical Relativism: it states that “Ethical judgments and beliefs are the
expressions of the moral outlook and attitudes of individual persons.”We have
histories and experience by which we have acquired our views. But to say that our
views are right or wrong, correct or incorrect will not work because that judgment
assumes an objective standard.
Cultural Ethical Relativism: it states that “Ethical values vary from society to
society and that the basis for moral judgments lies in these social or cultural
views.”“For an individual to decide and do what is right, he must look to the norms
of the society. No society’s views are better than any other societies. One cannot
judge another society’s values in any objective sense.

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  In Ethical Relativism differing religious beliefs, customs and behavioral
norms across countries and cultures give rise to multiple sets of standards
concerning what is ethically right or wrong.
 Further what is ethical or unethical depends on the prevailing local ethical
standards and can vary from one nation to another to quite an extent.
 There can be multiple sets of ethical standards which are followed.
 There is no one-size-fits-all set of ethical norms

3. Integrative Social Contract Theory (ISCT)

Integrative Social Contract Theory encompasses the following norms which must
be understood for better business ethics across cultures. It has been widely
accepted that this theory should be adopted to improve business ethics across
cultures. There are four types of norms namely;

1. The Hyper norms which consist of Trans cultural values including

fundamental human rights. This is also called moral minima.
2. The Consistent norms which consist of norms those are culturally
specific, but consistent with hyper norms and legitimate norms.
3. The Moral free space norms which consist of strongly held cultural
beliefs in particular countries that are in tension with hyper norms
4. The Illegitimate norms which consist of norms that are incompatible
with hyper norms. See figure 1 below

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Figure 1 : Showing the global norms in the integrated social contract theory

This theory provides a middle path between universalism and relativism. Where
the ethical standards a company should try to uphold are governed by both:
1. A common or universal set of ethical standards that apply everywhere
2. And the Ethical standards that vary according to local custom (i.e., cultures,
traditions, and shared values)
The more stringent standards should always take precedence over the lenient ones.

CHECK YOUR PROGRESS 2

Fill in the blanks
1. The……………………….. which consist of Trans cultural values
including fundamental human rights
2. The ……………………..which consist of norms those are culturally
specific, but consistent with hyper norms and legitimate norms.
3. The …………………….. norms which consist of strongly held cultural
beliefs in particular countries that are in tension with hyper norms
4. The ……………………….. which consist of norms that are
incompatible with hyper norms.

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10.5.4 IMPROVING GLOBAL BUSINESS ETHICS

The multinational companies are always faced with the dilemma of following
either the host country or the home country ethics in international operations. They
are pressurized by the respective stakeholders in their host as well as the home
countries. Enderle has identified four approaches to Improving Global Business
Ethics across cultures and multinational businesses in order to improve their
acceptability and effectiveness in the global transactions. These are;
1. Foreign country type – it aims at conforming to the host country norms.
2. Empire type – it aims at applying domestic norms to the host country.
3. Interconnection type –it aims at having a hybrid approach where norms
applied are based on pragmatism i.e. what works for the MNE in a particular
situation.
4. Global type – it reflects norms deemed appropriate for ‘global citizenry and
not related to MNE interests.

Four Actions for Improving International Business Ethics

1. Create global codes of conduct
a. Global codes and standards set by corporations
b. Global Codes and standards set by international organizations
2. Integrate ethics into a global strategy
3. Suspend activities in host country
4. Create ethical impact statements

There is need of realizing the fact that what is considered “deemed ethical
practices” in one own country must be practice equally necessarily as deemed
ethical in another country. This will help in making conduct global business
quite easy. The MNC’s must not crush the businesses-or other countries –code
of conducts, while giving justice only to their own businesses or own country’s
ethical code.

The following practices can be adopted by companies to integrate ethic and

business conduct:

 There must be commitment to the company’s ethical programs by Top

management. The involvement of Top management is very much necessary.

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  The management’s prospects for the company’s codes must be in writing.
The code must explain explicitly stating the intentions of management.
 The ethical program must be provided an organizational identity. There
should be structured approach for supporting company’s ethical programs
e.g. Top level ethical committee at the board of directors and at different
levels of organization.
 The ethical codes must be imparted through the formal training programs.
In order to implement the code of ethics, every employee must be trained
through the formal Ethical training program.
 The Trainer for the Ethical training programs can be intercultural consultant
as well as line manager like role models. For developing /creating a culture
of ethical norms, the primary requisite is that each line manager should be
aware of his / her responsibility for making each employee strictly adhere to
the ethical norms.
 There must be penalty or punishment for those who violate the ethical code /
norms of the company in order to strict enforcement.

Actions speak louder than words. There is need of an hour to implement the ethical
code /practices through doing in their decisions and actions by each employee of
the company rather by what is written in the Ethical company code or what a
company’s top management & line managers speak .

ACTIVITY 2
1. Write a note on the relevance of International ethical agreements in
international business by quoting some relevant case studies on the issue.

10.5.5 INTERNATIONAL ETHICAL AGREEMENTS

Several international ethical guidelines have been enacted which have been
briefly discussed below.

1. OECD Guidelines for MNEs (1976): The OECD is a unique forum where the
governments of 30 democracies work together to address the economic, social and
environmental challenges of globalization.
The OECD is also at the forefront of efforts to understand and to help governments
respond to new developments and concerns, such as corporate governance, the
information economy and the challenges of an ageing population.

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 2.UNCTAD Code on Restrictive Business Practices (1980): “Restrictive
business practices” means acts or behavior of enterprises which, through an abuse
or acquisition and abuse of a dominant position of market power, limit access to
markets or otherwise unduly restrain competition, having or being likely to have
adverse effects on international trade, particularly that of developing countries ,and
on the economic development of these countries economic development of these
countries or throughout formal or informal, written or unwritten agreements or
arrangements among enterprises, have the same impact.
3. UN Code of Conduct for Transnational Corporations (1983): The
elaboration of the United Nations Code of Conduct on Transnational Corporations
was one of the main tasks of the Commission on Transnational Corporations.
Transnational corporations and the issues surrounding their treatment and conduct
continue as a worthy theme of serious international discussion.

10.6 SUMMARY

Ethics has been defined as a code of behavior that a society considers moral and
appropriate for guiding relationship with one another. Business Ethics is the
application of general ethical principles and standards to the actions and decisions of
business organizations and the conduct of their personnel. Ethical principles in
business are not materially different from ethical principles in general. Business
actions are judged by the general ethical standards of society Thus, Ethical
principles are globally accepted standards of correct and incorrect which set the type
of conduct an ethical company or person supposed to assume. These
principles provide a guide to making decisions but they also establish the criteria by
which your decisions will be judged by others. There are essentially two Schools of
thought on Ethics; the Existentialists and the Relativists. The Existentialists led by
Jean-Paul Sartre believe that standards of conduct cannot be logically acceptable and
no act is essentially correct or incorrect Thus each person may attain their own
alternatives about ethical principles. The Relativists however believe in the
expression for some general ideology of right and wrong. They argue that the ethical
reply depends on the circumstances, i.e., that ethics is relative to a particular society.

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There are three Ethical Principles: first Individual Rights which aims at fundamental
entitlements in society, Utilitarianism which includes the rights of the masses which
aims at greatest good for greatest number of people, Distributive Justice which says
that there is inequality with equal access to favoured positions and inequality must
benefit the least well off.
There are three influences on ethical conduct; Moral intensity which is the degree to
which an issue demands the rigorous application of ethical principles, Ethical
sensitivity which is the ability to recognise the presence, and determine the relative
importance, of an ethical issue, Situational influences which involves the
competitive pressures and other conditions affect ethical behaviour
On the other hand values are defined as Stable, long-lasting beliefs about what is
important ,define what is right or wrong, good or bad and Include cross-cultural,
ethical and organisational culture values. There are two types of values which are
predominant at the workplaces the world over and determine the code of conduct
and ethics practised by the managers. The terminal values are the desired states of
existence by the individual the instrumental values are the desirable modes of
behaviour to achieve the terminal values. The espoused values are the ones we want
others to believe we hold. The enacted values are values-in-use; that is what we
actually practice in our day today lives. There has been a growing importance of
values at work due to Globalisation, Replacing direct supervision and growing
demand for ethical practices.
Cultural Relativism states there is no particular fact that can be considered as the
base for ethical or moral behavior, as interpretations of truths related to ethics are
influenced by different cultural practices.
There are three Schools of Thought on ethics; Ethical Universalism, a philosophy or
belief system that states that there is one universal system of ethics that applies to
everyone regardless of their culture, race or religion. Ethical relativism is the
opposite of ethical universalism, Ethical Relativism, is a theory that holds that there
are no universally accepted ethical standards. “It is the view that there is no objective
standard of right and wrong, even in principle.”There are Two Types of Ethical
Relativism: Personal or individual ethical relativism and Social or cultural ethical
relativism. Individual Ethical Relativism states that “Ethical judgments and beliefs
are the expressions of the moral outlook and attitudes of individual person. Cultural

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Ethical Relativism states that “Ethical values vary from society to society and that
the basis for moral judgments lies in these social or cultural views.Integrative Social
Contract Theory (ISCT) encompasses the following norms which must be
understood for better business ethics across cultures. It has been widely accepted
that this theory should be adopted to improve business ethics across cultures. There
are four types of norms namely;The Hyper norms which consist of Trans cultural
values including fundamental human rights. The Consistent norms which consist of
norms those are culturally specific, but consistent with hyper norms and legitimate
norms. The Moral free space norms which consist of strongly held cultural beliefs
in particular countries that are in tension with hyper norms ,The Illegitimate norms
which consist of norms that are incompatible with hyper norms.
The Ethical behavior across cultures and multinational businesses can be improved
by adopting any of these methods , namely Foreign country type which aims at
conforming to the host country norms. Empire type which aims at applying
domestic norms to the host country, Interconnection type which aims at having a
hybrid approach where norms applied are based on pragmatism i.e. what works for
the MNE in a particular situation and Global type which reflects norms deemed
appropriate for ‘global citizenry and not related to MNE interests.

10.7 GLOSSARY

Ethics: It is a code of behavior that a society considers moral and appropriate for
guiding relationship with one another. The issues at stake here includes: honesty,
integrity, fair, open and straight-forward dealing. Ethics involves judgments as to
good and bad, right and wrong and what ought to be.
The Existentialists theory believes that standards of conduct cannot be logically
acceptable and no act is essentially correct or incorrect Thus each person may attain
their own alternatives about ethical principles.
The Relativists theories believe in the expression for some general ideology of
right and wrong. They argue that the ethical reply depends on the circumstances, i.e.,
that ethics is relative to a particular society.
Individual Rights which aims at fundamental entitlements in society

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Utilitarianism which includes the rights of the masses which aims at greatest good
for greatest number of people
Distributive Justice which says that there is inequality with equal access to
favoured positions and inequality must benefit the least well off.
Values are defined as Stable, long-lasting beliefs about what is important ,define
what is right or wrong, good or bad and Include cross-cultural, ethical and
organisational culture values.
Cultural Relativism states there is no particular fact that can be considered as the
base for ethical or moral behavior, as interpretations of truths related to ethics are
influenced by different cultural practices.
Ethical Universalism a philosophy or belief system that states that there is one
universal system of ethics that applies to everyone regardless of their culture, race or
religion. Ethical relativism is the opposite of ethical universalism.
Ethical Relativism is a theory that holds that there are no universally accepted
ethical standards. It is the view that there is no objective standard of right and
wrong, even in principle
Individual Ethical Relativism states that Ethical judgments and beliefs are the
expressions of the moral outlook and attitudes of individual person.
Cultural Ethical Relativism states that Ethical values vary from society to society
and that the basis for moral judgments lies in these social or cultural views
Integrative Social Contract Theory (ISCT) encompasses the four norms which
must be understood for better business ethics across cultures. The Hyper norms
which consist of Trans cultural values including fundamental human rights. The
Consistent norms which consist of norms those are culturally specific, but consistent
with hyper norms and legitimate norms. The Moral free space norms which consist
of strongly held cultural beliefs in particular countries those are in tension with
hyper norms, The Illegitimate norms.

10.8 ANSWERS TO CHECK YOUR PROGRESS

Answers to check your progress 1

1. Individual Rights
2. Utilitarianism

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 3. Distributive Justice
4. Moral intensity
5. Ethical sensitivity
6. Situational influences

Answers To Check Your Progress 2

1. Hyper norms
2. Consistent norms
3. Moral free space
4. Illegitimate norms

10.9 REFERENCES

1. Punnett ,Betty Jane: International Perspective on Organizational Behaviour

and Human Resource Management: Prentice Hall Limited:2004
2. Cherunilam, Francis: International Business: Prentice Hall of India: Third
Edition: 2004

10.10 UGGESTED READINGS

Pedersen, Paul B.: Ethics, Competence and Professional Issues in Cross-Culture:

Edition 2007

10.11 TERMINAL AND MODEL QUESTIONS

2. Write an introduction to ethics values and culture and its significance in

today’s business environment.
3. Define Ethics & Business Ethics and explain its correlation?
4. Discuss the various ethics and values followed across different cultures and
how they deal with it.
5. The country’s Culture has a great influence on the ethics of the MNC’S doing
business in that country. Do you agree?

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6. Outline the various issues that should be taken care of about ethics and
cultures while doing business across international boundaries.
7. Give a briefing of the Business ethics in global community.
8. How can global business ethics be improved. Explain with examples.

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