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C H A P T E R 5
International culture
Chapter objectives
2. Show where and why cultural differences matter to international managers.
4. Examine how firms can anticipate and cope with cultural differences.
Chapter summary
1. Culture can be defined as the sum of the beliefs, rules, techniques, institutions and artifacts
that characterize human populations or the collective programming of the mind. The key
2. A number of studies have attempted to map and compare the shared characteristics of
managers and employees in different countries. This is then used to examine the effects of
3. To operate effectively across national borders, multinational enterprises (MNEs) must
develop a general awareness and appreciation of cultural difference amongst their managers
4. In addition to the cultural interactions within a firm and with customers, MNEs must
interact with culturally shaped institutions that include government agencies, government
mechanisms, the education system, economic institutions and business organizations.
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Chapter outline
Introduction
What is culture?
The importance of culture in different business contexts
National stereotypes and key dimensions of culture
Culture at two levels
Hofstedes four dimensions of culture
Trompenaars seven dimensions of culture
The GLOBE projects nine dimensions of culture
Applying the national culture frameworks
The implications of cultural differences for organizations and managers
Cross-cultural management
Organization
Leadership
Communication
The corporate response
Culture embodied in national institutions
Lecture outline
A. Introduction
1. An estimated 73 million workers around the world are employed by foreign firms. This
implies an increasing amount of exchange and interaction across cultures that MNEs
must manage.
B. What is culture?
1. Definitions of culture vary according to the focus of interest, the unit of analysis and the
approach. For the purposes of this book, culture can be defined as the sum of the
2. The key elements of culture include language, religion, values and attitudes, customs
and norms of a group or society. Language is perhaps the most important key to
understanding culture in general and the specific values, beliefs, attitudes and opinions
of a particular individual or group. Despite the dominance of English in international
C. The importance of culture in different business contexts
1. Cross-cultural management issues arise in a range of business contexts: (a) within
individual firms. For example, where a home country manager needs to understand how
local employees from a host country require different organizational structures and
2. Ethnocentrism, the belief that ones way of doing things is better than that of others, can
be a major barrier to good international management. For firms to build successful
3. Despite the various patterns and processes of globalization, cultural differences still
remain important. Terms like cultural convergence (such as the homogenization of
D. National stereotypes and key dimensions of culture
1. This section deals with how individual and group behavior can be linked to specific
cultural groups and how these relate to business styles and company structures. This is a
2. There are traditionally two different approaches to looking at culture: (a) the psychic or
psychological level, which focuses on the internalized norms, attitudes and behavior
3. People who are born in, or grew up in, the same countries tend to share similar cultural
4. There have been many studies that attempt to develop stereotypes by mapping
comparisons and sharing characteristics of managers and employees in different
5. Using 116,000 questionnaires on IBM managers across 70 countries, Geert Hofstede
was able to map key cultural characteristics of these countries according to four value
dimensions: (a) Power distance: measures the degree to which less powerful members
of organizations and institutions accept the fact that power is not distributed equally.
6. Trompenaars, another researcher, expanded the framework and focused more on the
management implications of cultural differences. His study involved 15,000 employees
in 50 countries and mapped seven dimensions of culture: (a) universalism vs.
particularism: measures the degree to which universal rules are applied regardless of
7. The Global Leadership and Organizational Behavior Effectiveness (GLOBE) project
involves 150 researchers collecting data on cultural values and management and
leadership attributes from 18,000 managers across 62 countries in the
telecommunications, food and banking industries. The GLOBE project, however, ends
8. Different styles of communication and interaction result from the cultural differences
9. According to the above studies, US managers are highly assertive and performance
oriented relative to managers from other parts of the world (they come around the
10. A wide range of factors within organizations are influenced directly or indirectly by the
cultural predispositions of managers and employees, including (a) the general
relationship between employees and the organization: their roles and responsibilities,
obligations and loyalties and the link this has with life outside the workplace;
E. Cross-cultural management
1. Three key areas capture many of the factors covered by the above typologies and
2. Organization relates to how things are organized, forecasted and planned; how
information is gathered and disseminated and how results are measured. Organizations
3. Leadership relates to who has power, how it is achieved, how it is exercised, who makes
decisions and who is considered a good boss. Leadership styles range from individual-
4. Communication relates to language and nonverbal communication. Face-to-face
language differences can be the most prominent barrier to communication and therefore
to cooperation and coordination. A lack of understanding of the language of a partner or
5. Generally speaking, successful transnational firms develop an awareness and
appreciation of cultural differences amongst their managers and employees. They also
6. The best firms aim to leverage the diversity of cultures within their organizations and
combine the best aspects of the different ways of doing things. Corporate culture, a
7. A key dilemma for international firms is the degree to which they promote or even
impose a common, standardized corporate culture across the organization. The ways in
which firms respond to this dilemma can be categorized as follows: (a) ethnocentric
firms are where the top management is dominated by home country nationals and
8. Cultural differences often prove to be a significant post-merger barrier for managers
looking to realize the synergies and the added value of pooling the resources and
F. Culture embodied in national institutions
1. Firms engaging in cross-border joint ventures, M&A or simply marketing products in a
foreign market need to take account of the national context in which the new partner or
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2. Western pluralism emphasizes individual competitiveness, commonly represented by
separate ventures competing in price-defined markets for success. Survival of the fittest
is the catchword, and companies tend to be run as meritocracies. Command economies
Answers to review and discussion questions
1. In your own words, what is meant by the term culture?
2. In what way do ethnocentrism and misconceptions about other cultures inhibit those
doing business internationally?
3. Why is language so critical in understanding international culture? How can this
problem be dealt with effectively?
4. Why are cultural differences an important factor when adapting products for new
overseas markets?
Cultural differences are important because they define the preferences of individuals. The more
obvious example is language. For example, computer software sold in Latin America must give
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5. Use Trompenaars seven dimensions of culture to compare and contrast your own
national stereotype to another.
6. Why are work attitudes of importance to MNEs? Cite and describe two examples.
Work attitudes are important to MNEs because they influence both the quality and the quantity
of employee output. People who have a positive attitude toward work are likely to do more and
7. What kinds of rewards systems are likely to be effective in more individualistic and
achievement-oriented cultures like the United States?
8. Explain how the GLOBE project has extended the dimensions of national culture
beyond the work of Hofstede and Trompenaars.
The GLOBE project has extended the dimension of national culture to nine. This is more than
the four dimensions mapped by Hofstede and the seven dimensions of Tromopenaars. While
9. In the PharmaciaUpjohn merger, how did employment practices and workplace
regulations differ among the Americans, the Swedes and the Italians, and what impact
did these differences have on the operational efficiency of the merged company?
The Americans, the Swedes and the Italians were all used to, and expected, different vacation
schedules. The Swedes take all of July for their summer vacations while the Italians take all of
10. Show with examples how managers in multinational firms could improve their
employees awareness of the important differences between cultures.
Training programs, including a range of activities at the induction stage, when new recruits join
11. What are the benefits and the problems for a polycentric MNE?
Polycentric firms tend to act like a federation of semiautonomous organizations with financial
controls or strict reporting structures holding them together. Subsidiaries are able to reflect the
12. Why is an understanding of the institutional norms, regulations and practices of other
countries, important for international firms? Give examples to illustrate your answer.
13. What does the French term gestion mean?
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Answers to real cases
Do not throw your meishi!
1. Explain what kinds of broad cultural differences we are likely to find between the
Japanese and the British.
The collective approach of the Japanese contrasts with the individualistic approach of the
British. Moreover, loyalty to the firm is a very important factor in Japan, which had a tradition
of lifetime employment, while British managers and their companies are more reliant on a
2. What impression do you think the Scottish engineer made on the Japanese executives?
The Scottish engineer threw his business card. This might have been perceived by the Japanese as
disrespect to the company that he works for. In turn, this might have led the Japanese to believe
that the Scottish engineer did not take his job seriously and was not someone to be trusted within a
3. What steps could the Scottish firm have taken to avoid this kind of mistake?
4. How easy is it to do a simple costbenefit analysis on investments into improved
cultural awareness amongst employees?
It is very difficult to do a costbenefit analysis on investments to improve cultural awareness
amongst employees because while the costs are easily determined, the benefits are often intangible
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Sport can be local and global: Manchester United
1. What makes a sport local, regional or global?
2. What major drivers are responsible for the internationalization of Manchester
United?
3. How important are Manchester Uniteds strong local roots to its international success?
Since its birth in 1878, Manchester United long epitomized the connection between the local