Culture, Management Style, and Business Systems

Chapter 5

Required Adaptation

• Adaptation is a key concept in international marketing • To successfully deal with individuals, firms, or authorities in

foreign countries, managers should exhibit:

• Adaptation is a key concept in international marketing • To successfully deal with individuals, firms, or authorities in

foreign countries, managers should exhibit:

1. open tolerance, 2. flexibility, 3. humility, 4. justice/fairness, 5. ability to adjust to varying tempos, 6. curiosity/interest, 7. knowledge of the country, 8. liking for others, 9. ability to command respect, and 10. ability to integrate oneself into the environment

Cultural Imperatives, Electives and Exclusives

• Cultural imperatives are the business customs and expectations that must be met, conformed, recognized and accommodated if relationships are to be successful

• Cultural imperatives are the business customs and expectations that must be met, conformed, recognized and accommodated if relationships are to be successful

• Cultural electives relate to areas of behavior or to customs that cultural aliens may wish to conform to or participate in but that are not required

• Cultural electives relate to areas of behavior or to customs that cultural aliens may wish to conform to or participate in but that are not required

• Cultural exclusives are those customs or behavior patterns reserved exclusively for the locals and from which the foreigner is barred and must not participate

• Cultural exclusives are those customs or behavior patterns reserved exclusively for the locals and from which the foreigner is barred and must not participate

The Impact of American Culture

• Ways in which U.S. culture has influenced management style include, but are not limited to, the following:

• Ways in which U.S. culture has influenced management style include, but are not limited to, the following:

1. “Master of destiny” viewpoint2. Independent enterprise as the instrument of

social action3. Personnel selection and reward based on

merit4. Decisions based on objective analysis5. Wide sharing in decision making6. Never-ending quest for improvement7. Competition yielding efficiency

Management Styles Around the World

• Cross-cultural differences influence management styles in the following areas:

• Cross-cultural differences influence management styles in the following areas:

1. Authority and Decision Making

2. Management Objectives and Aspirations

3. Communication Styles

4. Formality and Tempo

5. P-Time versus M-Time

6. Negotiations Emphasis

Differences in Management Styles Around the World

1. Differences in Authority and Decision Making• In high-PDI countries subordinates are not likely to contradict bosses, but in

low-PDI countries they often do

1. Differences in Authority and Decision Making• In high-PDI countries subordinates are not likely to contradict bosses, but in

low-PDI countries they often do

2. Differences in Management Objectives and Aspirations towards:2. Differences in Management Objectives and Aspirations towards:

Three typical patterns exist: top-level management decisions, decentralized decisions, and committee or group decisions

• Security especially of lifetime employment • Affiliation and Social Acceptance by neighbors and fellow

workers• Power and Achievement Orientation sought by managers• Importance of personal/family life over work and profit

Language Native speakers

(in millions) % of world population Mainly spoken in

Mandarin 935 (955) 14.1% China, Taiwan, Malaysia, Singapore

Spanish 387 (407) 5.85% Hispanic America, Spain, United

States, Equatorial Guinea

English 365 (359) 5.52%

Australia, Canada, Ireland, New

Zealand, United Kingdom, United

States, South Africa

Hindi 295 (311) 4.46% India

Arabic 280 (293) 4.23% North Africa, Western Asia (Middle East)

Differences in Management Styles Around the World

3. Differences in Communication Styles3. Differences in Communication Styles

According to Edward T. Hall, the symbolic meanings of time, space, things, friendships, and agreements, vary across cultures

“In some cultures, messages are explicit; the words carry most of the information. In other cultures ... less information is contained in the verbal part of the message since more is in the context”

Communication in a high-context culture depends heavily on the contextual (who says it, when it is said, how it is said) or nonverbal aspects of communication

Communication in a low-context culture depends more on explicit, verbally expressed communications

Hall places eleven cultures along a high-context/low-context continuum

Differences in Management Styles Around the World

4. Differences in Communication Styles4. Differences in Communication Styles

Level of formality in addressing business clients by first name Level of formality in addressing your boss by first name Tempo or speed in getting “down to business” Perception of time varies in many cultures

5. Differences in Negotiations Emphasis5. Differences in Negotiations Emphasis

• Differences with respect to the product, its price and terms, services associated with the product, and finally, friendship between vendors and customers

• Differences with respect to the product, its price and terms, services associated with the product, and finally, friendship between vendors and customers

Gender Bias in International Business

• The gender bias against women managers exists in some countries

• The gender bias against women managers exists in some countries

• Gender bias poses significant challenges in cross-cultural negotiations

• Gender bias poses significant challenges in cross-cultural negotiations

• Women are not accepted in upper level management roles in Asian, Middle Eastern, and Latin American

• Women are not accepted in upper level management roles in Asian, Middle Eastern, and Latin American

Business Ethics

Business ethics is complex in the international marketplace because value judgments differ widely among culturally diverse groups

Business ethics is complex in the international marketplace because value judgments differ widely among culturally diverse groups

The Foreign Corrupt Practices Act 1997: Imprisonment for bribery The Foreign Corrupt Practices Act 1997: Imprisonment for bribery

Existence of different levels of corruption, bribery, and fraudExistence of different levels of corruption, bribery, and fraud

Corruption varyingly defined from culture to culture Corruption varyingly defined from culture to culture

Bribery creates a major conflict between ethics and profitability Bribery creates a major conflict between ethics and profitability

The Corruption Perceptions Index ranks countries and territories based on how corrupt their public sector is perceived to be. A country or territory’s score indicates the perceived level of public sector corruption on a scale of 0 - 100, where 0 means that a country is perceived as highly corrupt and 100 means it is perceived as very clean. A country's rank indicates its position relative to the other countries and territories included in the index. This year's index includes 176 countries and territories.

RANK COUNTRY SCORE SURVEYS USED CI: LOWER CI: UPPER

1 Denmark 90 7 87 93

1 Finland 90 7 85 95

1 New Zealand 90 7 87 94

4 Sweden 88 7 85 91

5 Singapore 87 9 83 90

6 Switzerland 86 6 81 90

7 Australia 85 8 83 86

7 Norway 85 7 82 87

9 Canada 84 7 80 87

9 Netherlands 84 7 81 88

11 Iceland 82 6 75 89

12 Luxembourg 80 6 75 85

13 Germany 79 8 75 83

14 Hong Kong 77 8 74 80

15 Barbados 76 3 65 87

16 Belgium 75 7 71 78

17 Japan 74 9 70 78

17 United Kingdom 74 8 72 77

19 United States 73 9 66 79

20 Chile 72 9 69 76

20 Uruguay 72 6 70 75

22 Bahamas 71 3 70 73

Ethical and Socially Responsible Decisions

• Areas of decision making where ethical issues arise: • Areas of decision making where ethical issues arise:

1. employment practices and policies, 2. consumer protection, 3. environmental protection, 4. political payments and involvement

in political affairs of the country, and

5. basic human rights and fundamental freedoms

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Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Three Ethical Principles

Utilitarian Ethics Does the action optimize the "common good" or benefits of all constituencies?

Rights of the Parties Does the action respect the rights of the individuals involved?

Justice or Fairness Does the action respect the canons of justice or fairness to all parties involved?

Principle Question

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A Decision Tree for Incorporating Ethical and Social Responsibility Issues into Multinational Business Decisions

Does the decision efficiently optimize the common good or benefits of:

SocietyCultureOrderJustice“The good life”Other

The Individual?FreedomHealth and welfareSelf-realizationHuman dignityOpportunityOther

The Business firm?StockholdersManagementProfitsGrowthOther

The Economy?Economic growthAllocation of resourcesProduction and distribution of goods and servicesOther

Are there critical factors that justify suboptimizing these goals and satisfactions?

Does the decision respect the rights of individuals involved.

Reject decision

Are there critical factors that justify the abrogation of a right.

Does the corporate decision respect the canons of justice or fairness to all parties involved?

Rejectdecision

Are there critical factors that justify the violation of a canon of justice?

Rejectdecision

Accept decision

YESNO

YES

NO

YES YES

NO

NO

YES YES

NO

NO

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