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www.bradford.ac.uk/management
Cross Cultural Management
Frank McDonald
Bradford Centre in International Business
4 October 2011 Copyright Bradford University School of Management
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Outline of Talk
• Importance of cultural differences
• National/sub-national and organizational culture & cultural space
• The changes to culture
• How to managing cultural differences
• Sources of help
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Why are cultural differences important?
• “What you can do in one to two weeks in Europe can take months here” Chris Chenug commenting on SMEs doing business in China (EIU, 2011)
• This is often considered to be a problem of bureaucracy and/or corruption – but in essence these are often closely connected to different cultural attitudes
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Obstacles to SME exporting
Source: EIU, 2011 – FedEx Report on SME and emerging markets
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Failure of Cross-cultural Management
• Iridium a 26 country satellite venture went into liquidation in 1999 after it proved incapable of managing cross-cultural problems.
o “According to one person who was there, several partners refused to talk to him after the meeting”. (Fitzgerald Communications. Transcript of a conference Call regarding Iridium Satellite LLC, December 12, 2000)
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Measuring Cultural Differences
• Hofstede’s measures o Power distance index (PDI) - the extent to which the less
powerful members of society accept that power is distributed unequally
o Individualism (IDV)- the importance of individual (rather than collective or group) rights and achievements
o Uncertainty Avoidance Index (UVI) - the degree of acceptance of uncertain outcomes in the face of changing circumstances
http://www.geert-hofstede.com/
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Measuring Cultural Differences
o Masculinity (MAS) - the distribution of emotional roles - masculine values are more associated with competition and ambition, while feminine values are more associated with relationships and quality of life issues
o Long Term Orientation (LTO) - degree of acceptance of long term time horizons – future as opposed to present outcomes
http://www.geert-hofstede.com/
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Example of Negotiations differences with Asian and Western parties
• Goal - Thai, Chinese, and Japanese negotiators value long-term relationships. Western negotiators aim at signing a contract.
• Communication - Thais tend to speak softly and use almost no gestures, and prefer indirect language. Americans are direct and prefer a straightforward presentation with a minimum of game playing.
Numprasertchai & Swierczek, 2006, Journal of Intercultural Communication
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Example of Negotiations differences with Asian and Western parties
• Time - Americans are sensitive to time. They view it as a limited resource that must not be wasted. Japanese spend time to learn about their counterparts. Thais have a very relaxed attitude to time and scheduling
• Nature of agreements - Thais generally respect contracts, but personal commitment has more value. Germans are detail-oriented and prefer specific provisions.
Numprasertchai & Swierczek, 2006, Journal of Intercultural Communication
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Typical Openings of a Meeting in Different Cultures (Source: Lewis 2000)
Minuten 0 5 10 15 20 25 30
Italy
UK
France
U.S.
Germany
Japan
.
20 -begin, when all have arrived.
Minutes 0 5 10 15 20 25 30
Spain /
UK
Finland
Japan
formal introduction, sit down, begin.
formal introduction, coffee, sit down, begin.
informal introduction, coffee, jokes, begin.
formal introduction, tea & biscuits, 10 minutes small-talk, (weather, comfort, sport), begin.
formal introduction, 15 minutes small-talk (politics, scandals etc.), begin.
formal introduction, prescribed seating arrangements,green tea, 15- 20 minutes small-talk (courtesies),
abrupt signal of highest-ranking member, begin.
20 - 30 minutes small-talk (soccer, family), while other participants arrive,
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National Culture
• “Culture is the collective programming of the human mind that distinguishes the members of one human group from those of another. Culture in this sense is a system of collectively held values.” -- Geert Hofstede
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Organizational Culture
• “Culture is the deeper level of basic assumptions and beliefs that are shared by members of an organization, that operate unconsciously and define in a basic ‘taken for granted’ fashion an organization's view of its self and its environment.” -- Edgar Schein
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Sub-national Culture• Many countries have distinctive sub-national
cultures eg north and south Italy; north and south India; Scotland, England & N Ireland in the UK
• Some of these sub-national cultures have more in common with ethnic groups in neighbouring countries than within their own country eg Kurds in Iran, Iraq and Turkey, Basques in France and Spain
• Countries such as Indonesia are so cultural diverse as to call into question the value of national concepts of culture
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Cross-cultural Space within a Country
Space of cultural
interaction for firm
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Cross-cultural Space across countries
Space of cultural
interaction
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Incremental and Radical Change in Culture
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Evolution of culture space – positive outcome
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Evolution of culture space - negative outcome
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No interaction in cross-cultural space
No common space
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Solutions
• If high benefits from doing business in such cases can seek to move your space sufficiently to make business possible.
• If benefits are high but not sufficiently high to cover costs of moving your space use indirect exporting and agents
• If benefits are not sufficient for costs of indirect exports/agents don’t do business
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Interaction of cross-cultural space
Common space
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Cross Cultural Management (CCM) of Common Space
• CCM training to make key agents in your company aware of CCM fundamentals and to gain knowledge on how to do effective CCM
• Negotiation strategies
• Expanding common space to make it easier & therefore lower cost to develop business
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Training in CCM – lots of programmes available key issues are
• Evaluate training
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Negotiation strategies (Weiss)
• Low familiarity with counterpart’s culture– Employ agent or advisor or involve mediator– Induce counterpart to follow one’s own script
• Moderate familiarity– Adapt to the counterpart’s script– Coordinate adjustment for both parties
• High familiarity– Embrace counterpart’s script– Improvise or effect symphony
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Expanding Common Space
• Develop CCM skills
• Identify foreign partners with high benefits to costs of developing common space
• Specialise – division of labour
• Develop CCM resources – buying in expertise is often cheaper than making it
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Benefits to Costs of CCM
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Virtuous Cycles
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Degenerative Cycles
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Sources of help
• Various governmental (UKTI, Commercial sections of Embassies)
• A host of consultancy companies
• Online help – some of it free
• From University of Bradford School of Management –Placement students, MBA and Master projects, KTPs etc
19 July 2011 Copyright Bradford University School of Management