International dimensions of organizational behavior 5th edition pdf

Cross Culture Communication And Management

INTERNATIONAL DIMENSIONS OF

ORGANIZATIONAL BEHAVIOR

F I F T H E D I T I O N

N A N C Y J . A D L E R M c G i l l U n i v e r s i t y

w i t h

A L L I S O N G U N D E R S E N

C a s e W e s t e r n R e s e r v e U n i v e r s i t y

International Dimensions of Organizational Behavior, Fifth Edition by Nancy J. Adler with Allison Gundersen

COPYRIGHT © 2008, 2002 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license.

Printed in the United States of America 1 2 3 4 5 10 09 08 07

Student Edition ISBN 13: 978-0-324-36074-5 Student Edition ISBN 10: 0-324-36074-6

ALL RIGHTS RESERVED. No part of this work covered by the copyright hereon may be reproduced or used in any form or by any means—graphic, electronic, or mechanical, including photocopying, record- ing, taping, Web distribution or information storage and retrieval systems, or in any other manner—without the written permission of the publisher.

For permission to use material from this text or product, submit a request online at http://www.thomsonrights.com.

Library of Congress Control Number: 2007928990

Thomson Higher Education 5191 Natorp Boulevard Mason, OH 45040 USA

VP/Editorial Director: Jack W. Calhoun

Editor-in-Chief: Melissa S. Acuña

Senior Acquisitions Editor: Michele Rhoades

Marketing Manager: Clint Kernen

Senior Marketing Manager: Kimberly Kanakes

Senior Marketing Communications Manager: Jim Overly

Manager, Editorial Media: John Barans

Technology Project Manager: Kristen Meere

Associate Content Project Manager: Joanna Grote

Senior Frontlist Buyer: Doug Wilke

Production House: Graphic World Inc.

Senior Art Director: Tippy Mclntosh

Internal Design: Patti Hudepohl

Cover Art: Global Rose Nancy J. Adler

Printer: West Eagan, MN

For more information about our products, contact us at:

Thomson Learning Academic Resource Center

1-800-423-0563

http://www.thomsonrights.com
To my mother, Liselotte Adler, who brought together two worlds and

two very different cultures in creating the home in which I grew up.

—Nancy J. Adler

To my nieces, Stephanie and Melissa Merakis, who

give me hope and inspiration for the future.

—Allison Gundersen

v

Preface

The world of organizations is no longer defined by national boundaries. International Dimensions of Organizational Behavior breaks down the con- ceptual, theoretical, and practical boundaries that limit our ability to understand and work with people in countries and cultures around the world. Prior to the 21st century, a disproportionate amount of the pub- lished material on management came from the United States. American managers and American-trained researchers observed the behavior of people in U.S.-based organizations. From their observations and research, they developed models and theories to explain the behavior of people and organizations. The problem was in their implicit assump- tion: most scholars assumed that what was true for Americans working in the United States was also true for people from other countries work- ing worldwide. Both managers and researchers assumed that Americans’ work behavior was universal. They were wrong. International Dimensions of Organizational Behavior challenges us to transcend our parochialism—no matter which country we grew up in—and to see the world from a global perspective.

Today, managers no longer have the luxury of reducing global com- plexity to the simplicity of assumed universality; they no longer have the luxury of assuming that there is only one best way to manage. Luckily, we have learned that global complexity is neither unpredictable nor random. Variations across cultures and their impact on organiza- tions follow systematic, predictable patterns. Starting with a core of tra- ditional, primarily U.S.-based understandings of the behavior of people in organizations, International Dimensions becomes a guide for modifying our attitudes, thinking patterns, and behavior. Far from ignoring the historical body of managerial knowledge, International Dimensions expands our understanding of people’s behavior at work to include the diversity and complexity of today’s global environment.

International Dimensions of Organizational Behavior is divided into three parts. Part 1, “The Impact of Culture on Organizations,” describes the ways in which cultures vary, how that variance systematically affects organizations, and how people can recognize, manage, and effectively use cultural variance within their own work environments. Chapter 1 provides a broad context for understanding the global nature of today’s business environment. Chapter 2 focuses on the nature of cultural dif- ferences worldwide and how they impact organizations. Chapter 3 pro- vides a framework for understanding how to effectively communicate

across cultures. Part 2, “Leveraging Cultural Diversity,” presents an inte- grated approach to managing in multicultural work environments. Chapter 4 investigates cross-cultural problem solving and organization- al development; Chapter 5 presents the dynamics of multicultural teams; Chapter 6 reviews approaches to global leadership; Chapter 7 focuses on the best approaches for inspiring and motivating people from around the world; Chapter 8 reviews decision making from a global perspective; and Chapter 9 summarizes global approaches to negotiating and resolving conflict.

Part 3, “Managing Global Managers,” presents a series of issues that are unique to managing people in a global environment. It addresses the human resource management dilemmas involved in managing one’s life and career while moving across international borders. Chapter 10 describes the cross-cultural entry and re-entry transitions from the employee’s perspective and addresses such questions as: What is culture shock? How does one adjust to a new culture? How can employees who have worked abroad successfully navigate re-entry back into their home countries and home organizations? Chapter 11 also presents global transition issues, but from the perspective of the spouse. Chapter 12 introduces the challenges of managing a global career. How do the routes to the top of major companies vary from one country to another? What do managers see as the most important benefits and drawbacks of pursuing global careers? Given its focus on global managers, this section goes far beyond the scope of domestically oriented books on both management and organizational behavior.

International Dimensions of Organizational Behavior is used by executives, managers, and college students in a number of ways. First, it is fre- quently used as a basis for cross-cultural management seminars in which each chapter of the book forms the core of a course module. When used in this way, the book is often supplemented with current readings that provide a more in-depth look at specific areas of the world, as well as with news articles on contemporary world business events. After being introduced to each module with a chapter from International Dimensions, seminar participants often expand on the mate- rial in the book, based on their current interests and experience, by looking at how it applies, for instance, to e-commerce in Eastern Europe or to China’s and India’s rapidly expanding economies.

Alternatively, the book is used as a supplement to core organizational behavior courses. In this case, professors first use their standard intro- duction to the study of people’s behavior in organizations. Using Chapters 1 and 2, they then introduce the international dimensions of organizational behavior. Following this introduction, they pair a chap- ter from International Dimensions of Organizational Behavior with each of the

vi Preface

modules of their standard course. They pair Chapter 3, for example, with their perception and/or communications module; Chapter 4 with their problem solving and/or organizational development and change module; Chapter 5 with their module on group dynamics and team building; Chapters 6, 7, and 8 with their discussions of leadership, moti- vation, and decision making; and Chapter 9 with material they present on conflict management and negotiation. In addition, in combination with a module on human resource management or managing careers, or as a completely independent module, professors present Part 3 of International Dimensions, which deals with issues related to managing global managers. Participants complete the course with an in-depth understanding of organizational behavior issues from a global, rather than simply a domestic, perspective.

As a third alternative, International Dimensions of Organizational Behavior is sometimes used as a self-contained part of a more traditional organi- zational behavior, management, human resource management, or international business course. Professors selecting this option often present their more domestically oriented material first, and then add a section on international dimensions. As the economy becomes more globally integrated, this third option is preferred less frequently.

Because a substantial amount of the traditional management litera- ture is based on the behavior of Americans working in the United States, and many practicing managers as well as students of management are familiar with U.S. patterns, International Dimensions often uses the United States as a reference point and as a point of comparison. Readers in the United States will recognize the familiar ways in which organizational behavior is usually described and be able to add a more global perspec- tive to their knowledge and skills. Readers from all countries will gain a better understanding of their own culture’s practices and ways of con- ducting business, both relative to traditional U.S.-based descriptions and, more importantly, relative to a wide variety of countries and cul- tures worldwide. No country’s system or perspective is any better or worse—any more or less effective—than any other country’s; rather, each is distinct and therefore must not be understood as a replica of any other nation.

Cross-cultural management (i.e., studying the international dimen- sions of people’s behavior in organizations) is a relatively new field com- pared to the traditional study of management. International Dimensions of Organizational Behavior integrates the best of what is known in the field as of the first decade of the 21st century. Our knowledge will continue to grow far beyond today’s understandings. Even though the limits of our understandings at times restrict us, they also define the expanding boundaries and excitement of an important and rapidly growing field

Preface vii

of knowledge. Far from leaving with a sense of knowing all there is to know, it is hoped that readers will finish the book with a sophisticated awareness of the world beyond their own national borders, an under- standing of the limits of their own knowledge, and a set of frame- works and questions to guide their managerial decisions and future inquiry.

ACKNOWLEDGMENTS

The process of understanding the human dynamics in global manage- ment has brought together some of the best thinking and insights from executives, consultants, managers, and scholars worldwide. The process is evolving. What we know today is so much more than what we under- stood yesterday, and yet so much less than what we will need for tomor- row. The excitement and passion in the search is predicated on our need to understand ourselves in a world in which no part of humanity is very far away, a world in which our success as well as our survival depends on our understanding and respect for each other.

We would like to thank the many people who have contributed to this book, each from his or her unique perspective and expertise. The quality of this book is shared by all; the errors and limitations are ours alone. Our thanks to: Liselotte Adler (USA), Arshad Ahmad (Pakistan), Nakiye Boyacigiller (Turkey), Jill deVillafranca (Canada), Joseph J. DiStefano (Switzerland), Angela Dowson (Canada), Paul Evans (England), John Graham (USA), Jon Hartwick (Canada), Mary Hess (USA), Maryann Jelinek (USA), André Laurent (France), Phyllis Lefohn (USA), Robert T. Moran (USA), Eileen Newmark (USA), Pri Notowidigdo (Indonesia), Roger Putzel (USA), Vijit Ramchandani (India), Indrei Ratiu (Britain/Romania), George Renwick (USA), Stephen Rhinesmith (USA), David Ricks (Austria), Karlene Roberts (USA), Anita Salustro (USA), Frances Westley (Canada), and Rola Zoayter (Lebanon). In addition, we would like to thank the Organizational Behavior departments at Case Western Reserve and McGill Universities for their support, and the faculty and staff of the Summer Institute for Intercultural Communication for their commit- ment to the field and research assistance.

A very special thank you goes to Troy Anderson at McGill University for his always extremely helpful research, insights, and editing assistance, and to Darlene Fowler for her patient and conscientious organizing and typing of each new revision until the chapters you see here became the fifth edition. The current fifth edition of the book International Dimensions of Organizational Behavior would not be possible without the

viii Preface

Preface ix

work contributed by many dedicated colleagues on prior editions, including Louise Dubreil, without whose help, encouragement, and insight, the first edition of this book would have never become a real- ity; Robine Andrau for her excellent editing of the second and third editions; and John Szilagyi for his professionalism and enthusiasm in managing the fourth edition and the initiation of the current fifth edition.

This page intentionally left blank

About the Authors

NANCY J. ADLER

Nancy J. Adler is a Professor of Organizational Behavior and Inter- national Management at McGill University’s Faculty of Management in Montreal, Canada. She received her B.A. in economics, M.B.A. and Ph.D. in management from the University of California at Los Angeles (UCLA).

Dr. Adler conducts research and consults on global leadership, cross- cultural management, women as global managers and leaders, and the arts and leadership. She has authored over 100 articles, produced the film A Portable Life, and, in addition to International Dimensions of Organizational Behavior, published the books Women in Management Worldwide, Competitive Frontiers: Women Managers in a Global Economy, and From Boston to Beijing: Managing with a Worldview.

Dr. Adler consults to private corporations and government organi- zations on projects in Asia, Africa, Europe, North and South America, and the Middle East. She has taught Chinese executives in the People’s Republic of China, held the Citicorp Visiting Doctoral Professorship at the University of Hong Kong, and taught executive seminars world- wide, including at INSEAD in France, Oxford University in England, and Bocconi University in Italy. She received McGill University’s first Distinguished Teaching Award in Management and is one of only a few professors to have received it a second time. Honoring her as one of Canada’s preeminent university professors, she was selected as a 3M Teaching Fellow.

Dr. Adler has served on the Board of Governors of the American Society for Training and Development (ASTD); the Canadian Social Science Advisory Committee to UNESCO; the Strategic Grants Committee of the Social Sciences and Humanities Research Council; the Executive Committees of the Pacific Asian Consortium for International Business, Education and Research; the International Personnel Association; and the Society for Human Resource Management’s International Institute, as well as having held leadership positions in the Academy of International Business (AIB); the Society for Intercultural Education, Training, and Research (SIETAR); and the Academy of Management. Dr. Adler received ASTD’s International Leadership Award, SIETAR’s Outstanding Senior Interculturalist Award, the YWCA’s Femme de Mérite (Woman of Distinction) Award,

xi

xii About the Authors

and the Sage Award for scholarly contributions to management. She was elected to both the Fellows of the Academy of International Business and the Academy of Management Fellows, as well as being inducted into the Royal Society of Canada. In addition to her role as a global manager professor and consultant, Dr. Adler is an artist, working primarily in water color and Asian ink traditions.

ALLISON GUNDERSEN

Allison Gundersen received her A.B. from Cornell University and her M.A. in Intercultural Relations from Lesley University. She has extensive experience managing and consulting in information technology and investment banking in Asia and North America, having been based in both Tokyo and New York City. Her global management work has focused on diverse teams, global responsibilities, and expatriation. Allison is currently conducting research on global leadership, interna- tional management, and cross-cultural teams as part of the Department of Organizational Behavior at Case Western Reserve University’s Weatherhead School of Management (repeatedly rated as the number one Organizational Behavior department in the world by the Financial Times), where she is pursuing her doctoral degree.

xiii

Contents

PART 1 The Impact of Culture on Organizations . . . . . . . . . . . . . . . . . . . . .3 CHAPTER 1 Culture and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Global Strategy and Culture. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Going Global: Phases of Development . . . . . . . . . . . . . . . . . . . 9

Cross-Cultural Management . . . . . . . . . . . . . . . . . . . . . . . . . . 13

What Is Culture? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

How Do Cultures Vary? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

CHAPTER 2 How Cultural Differences Affect Organizations . . . . . . . . 44

Work Behavior Varies Across Cultures . . . . . . . . . . . . . . . . . . 44

Are Organizations Becoming More Similar?. . . . . . . . . . . . . . 62

Organizational Culture and National Culture . . . . . . . . . . . . . 63

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

CHAPTER 3 Communicating Across Cultures. . . . . . . . . . . . . . . . . . . . . 69

Communicating Cross-Culturally . . . . . . . . . . . . . . . . . . . . . . 70

Cross-Cultural Misperception . . . . . . . . . . . . . . . . . . . . . . . . . 73

Cross-Cultural Misinterpretation . . . . . . . . . . . . . . . . . . . . . . 75

Cross-Cultural Misevaluation . . . . . . . . . . . . . . . . . . . . . . . . . 86

Communication: Getting Their Meaning, Not Just Their Words . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

PART 2 Leveraging Cultural Diversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97 CHAPTER 4 Creating Cultural Synergy . . . . . . . . . . . . . . . . . . . . . . . . . . 99

Cultural Invisibility: Strategies for Recognizing Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

xiv Contents

Cultural Synergy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

CHAPTER 5 Managing Multicultural Teams . . . . . . . . . . . . . . . . . . . . . 126

Managing a Multicultural Workforce . . . . . . . . . . . . . . . . . . 126

Domestic Multiculturalism . . . . . . . . . . . . . . . . . . . . . . . . . . 129

Teams: The Organization in Microcosm . . . . . . . . . . . . . . . . 131

Types of Diversity in Teams. . . . . . . . . . . . . . . . . . . . . . . . . . 132

Cultural Diversity’s Impact on Teams . . . . . . . . . . . . . . . . . . 134

Conditions for High-Performing Multicultural Teams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140

Managing Culturally Diverse Teams . . . . . . . . . . . . . . . . . . . 144

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

CHAPTER 6 Leading Globally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157

Global Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158

Leadership Vision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158

Leadership Theories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166

Cultural Contingency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168

Global Leadership Competencies . . . . . . . . . . . . . . . . . . . . . 169

Global Leadership: Creating a Positive Future . . . . . . . . . . . 172

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174

CHAPTER 7 Motivating People From Around the World: Inspiring People to Contribute . . . . . . . . . . . . . . . . . . . . . 184

Hierarchies of Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185

Three Motives: Achievement, Power, and Affiliation . . . . . . 186

The Two-Factor Motivation Theory . . . . . . . . . . . . . . . . . . . 187

Expectancy Theories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188

Cultural Intelligence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192

Beyond Motivation: Inspiration . . . . . . . . . . . . . . . . . . . . . . 192

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199

CHAPTER 8 Multinational Decision Making. . . . . . . . . . . . . . . . . . . . . 207

Problem Recognition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210

Information Search . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210

Constructing Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . 211

Contents xv

Choice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212

Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214

Ethical Decision Making . . . . . . . . . . . . . . . . . . . . . . . . . . . 214

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219

CHAPTER 9 Negotiating Globally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224

Negotiating Globally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226

Negotiating Successfully: The People, the Situation, and the Process . . . . . . . . . . . . . . . . . . . . . . . . 229

Negotiation Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236

Negotiation Tactics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246

Negotiating Across Cultures: Ethical Challenges . . . . . . . . . 258

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261

PART 3 Managing Global Managers . . . . . . . . . . . . . . . . . . . . . . .271 CHAPTER 10 Managing Cross-Cultural Transitions:

Moving Abroad and Coming Back Home . . . . . . . . . . . . 273

Entering a New Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277

Managing Expatriates Effectively, Equitably, and Ethically . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282

Coming Home: Re-entering One’s Own Culture . . . . . . . . . . 284

Professional Re-entry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288

Underutilized Global Managers. . . . . . . . . . . . . . . . . . . . . . . 296

Coaching Women for Global Managerial Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304

CHAPTER 11 A Portable Life: The Expatriate Spouse . . . . . . . . . . . . . . 314

Single-Career Couples: The Traditional Expatriate’s Wife. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315

Living Globally: Dual-Career Couples. . . . . . . . . . . . . . . . . . 330

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340

CHAPTER 12 Global Careers: Succeeding in the 21st Century . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345

What It Takes to Reach the Top . . . . . . . . . . . . . . . . . . . . . . . 346

Is the Traditional Expatriate Manager Extinct? . . . . . . . . . . 348

Today’s Global Careers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349

Global Managers and Leaders: No Longer Men Alone. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 358

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370

Epilogue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383

Painting on Book Cover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397

xvi Contents

INTERNATIONAL DIMENSIONS OF

ORGANIZATIONAL BEHAVIOR

PART 1

The Impact of Culture on Organizations

CHAPTER 1 Culture and Management

CHAPTER 2 How Cultural Differences Affect Organizations

CHAPTER 3 Communicating Across Cultures

Chapter 1

Culture and Management

Verité en-deçà des Pyrénées, erreur au-delà. (“There are truths on this side of the Pyrenees

which are falsehoods on the other.”)1

—Blaise Pascal

Capital raised in London in the Eurodollar market by a Belgium- based corporation may finance the acquisition of machinery by a subsidiary located in Australia. A management team from French Renault may take over an American-built automotive complex in the Argentine. Clothing for dolls, sewn in Korea on Japanese- supplied sewing machines according to U.S. specifications, may be shipped to Northern Mexico for assembly with other components into dolls being manufactured by a U.S. firm for sale in New York and London during the Christmas season. A California-manufac- tured [plane] . . . is powered by British . . . engines, while a com- peting [aircraft] . . . flies on Canadian wing assemblies. A Frenchman is appointed president of [a] U.S. domiciled . . . corpo- ration, while an American establishes . . . a Swiss-based interna- tional mutual fund (28:1–2).

Managing the global enterprise and modern business management have become synonymous. The terms international, multinational, transna- tional, and global can no longer be relegated to a subset of organizations or to a division within the organization. Definitions of success now tran- scend national boundaries. In fact, the very concept of domestic business may have become anachronistic. Today “the modern business enterprise has no place to hide. It has no place to go but everywhere” (56:xiii).

Executives no longer question the increasing importance of global business. As indicated in the 21st Century Report (38), more than two- thirds of the world’s CEOs view foreign competition as a key factor in their firms’ business success. Similarly, two-thirds of the world’s CEOs

5

expect to generate employment and revenues increasingly from outside their firms’ home countries (38:30,31). These same executives believe that effectively managing human resources is critical to global success (38:2). The post–World War II years saw a major expansion of world trade. From 1948 through 1972 world exports grew from $51 billion to $415 billion, representing a sevenfold increase in monetary terms and a four- fold increase in volume (22:23).2 By 1980 international trade volume exceeded $1 trillion as compared with $800 billion in 1975 (48). In the 1990s, world exports grew from $4.3 trillion in 1990 to $7.1 trillion in 1999, an increase of 65 percent (27), and by 2005 they had grown to $12.6 trillion, an increase of an additional 77 percent (47). By the 1990s, Coca- Cola, for example, earned higher profits selling soda to the Japanese than to Americans (82:5). By 2006, Coca-Cola produced nearly 400 prod- ucts in over 200 countries, with more than 70 percent of its income coming from outside the United States (21). Mexicans, not Americans, lead the world in the consumption of Coca Cola’s beverages, consum- ing, on average, 533 8-oz. beverages per year (21). Today’s world trade dwarfs all prior statistics.

By the mid-1980s, the U.S. Commerce Department estimated that some 70 percent of U.S. firms faced “significant foreign competition” in their domestic markets, up from only 25 percent a decade earlier (67:11). By the end of the 1980s, the chairman of the Foreign Trade Council estimated the figure to be 80 percent. Companies are increas- ingly looking outside their domestic markets for revenue. In a study of U.S. companies with revenues over $1 billion, Accenture found that, on average, executives expect sales revenue generated abroad to reach 42 percent of their overall earnings by 2009, compared with 26 percent in 2002 (14). Ninety-seven “percent report that their organization is upgrading its global operations” (14). Today, in the early years of the twenty-first century, global competition is serious, pervasive, and here to stay (49).

What does the future portend? According to The Economist, between 1995 and 2020, “the world will see the biggest shift in economic strength in more than a century” (33:3). Emerging economic giants will dwarf developed industrial economies, and “within a generation, China will overtake . . . [the United States] as the world’s biggest economy” (33:4). Since 2000, the average annual percentage change in total output in devel- oping countries was more than twice that of advanced economies (9.5% versus only 4.1% [47]). Moreover, many of the top 15 economic perform- ers this century will be from today’s rapidly developing economies, with countries such as Thailand and Taiwan overtaking Britain (33:4). In fact, the five fastest growing economies from 1990-2004 were Albania, Bosnia and Herzegovina, China, Ireland, and Vietnam (96:1). The developing

6 The Impact of Culture on Organizations

world’s share of world exports of manufactured goods jumped more than 400 percent in the last quarter of the twentieth century (33:4). Developing countries are playing a greater role in the global marketplace, with low- and middle-income economies accounting for 28.5 percent of world trade, up from 22.3 percent in 1999 (96:3).

Will today’s economically developed countries continue to prosper or will they lose out to the gains forecast for developing economies?3 Experts differ in their predictions. Pessimists from economically developed coun- tries argue that with increasing access to advanced technology, jobs are shifting from workers in rich countries to cheaper, educated labor in economically developing countries. They see free trade with developing countries as a recipe for increasing unemployment in previously eco- nomically developed countries, huge wage inequalities, and a massive migration of firms to countries with high skills and low wages. In a dra- matic role reversal, economically developing countries that historically were considered victims of multinational exploitation are viewed as vil- lains, stealing capital and jobs and, ironically, creating inequities by destroying the wealth of developed economies.

On the surface this pessimistic scenario appears likely, especially when comparing the hourly wages of production workers. Midway through the first decade of the twenty-first century, it cost $33 an hour to employ a production worker in Germany, $23 an hour in the United States, and $22 an hour in Japan; but only $5.50 in Hong Kong, $2.50 in Mexico, and 50 cents in Sri Lanka (94). According to the president of the World Economic Forum, it has become possible for countries to simulta- neously have high productivity, advanced technology, and low wages (81). A major French consumer electronics group, for example, employs three times as many highly skilled workers in Asia as it does in France. Similarly, the Italian sportswear maker Fila produces only 10 percent of its sportswear in Italy; it subcontracts the rest in lower-wage Asian economies. Thomas Friedman, author and New York Times editorial columnist, accurately depicts the complex reality of today’s global busi- ness environment by tracing the supply chain for his Dell notebook from his telephone order through delivery to his home in Maryland. It “involved about four hundred companies in North America, Europe, and primarily Asia, but with 30 key players”; even with a delay, this just-in-time process took only 17 days (32:515-520).

Optimists from economically developed countries, however, predict a different scenario. According to optimists, advanced economies, far from losing out to the growing prosperity of economically developing countries, are benefiting from it. Billions of new consumers in the devel- oping world are markedly increasing demand for exports from the advanced economies. In just the past decade, exports from high-income

Culture and Management 7

to low- and middle-income countries have already more than doubled. India’s middle class, estimated to grow to over 350 million by 2010, is an example of growing markets, “clamoring for the latest in flavored tooth- paste and flat-panel TVs” (85). In addition, the optimists contend that both advanced and developing economies benefit from increased com- petition. Greater economies of scale and better allocation of resources resulting from increased competition and financial diversification are improving expected rates of return for all major players. The proportion of foreign direct investment into developing countries increased from 12 to 41 percent of the total over the 1990s (97). In absolute terms, the flow of foreign direct investment into economically developing countries is even more impressive, increasing nearly sevenfold from $36 billion to $233 billion from 1990 to 2005 (93). Over the same period, foreign direct investment in the world’s richest economies increased from $172 billion to $380 billion over the same period (93), indicating that investment in emerging economies has not occurred to the detriment of developed economies.

Although international businesses have existed for centuries, the world has clearly entered an era of unprecedented global economic activity that includes worldwide production and distribution, as well as increasingly large numbers of international joint ventures, multina- tional mergers and acquisitions, and global strategic alliances. Examples of new global operations and alliances abound, with almost every major firm earning more from their global than from their domestic opera- tions. Global companies such as ABB (Asea Brown Boveri), Honda, BP, Siemens, and Tata each do business in more than 100 countries (1;13;83;87). The economic integration of the European Union and the introduction of the common European currency, the Euro, focused the world’s attention on transborder business activity and the importance of trading blocs. India and China, with their large populations and expanding economies, are rapidly becoming powerful forces in world markets. Although the U.S. and Canadian economies have been inextri- cably linked to the world economy for years, the signing of the North American Free Trade Agreement refocused Canadian, Mexican, and U.S. attention on international business.

As Professor Ian Mitroff observes, “For all practical purposes, all business today is global. Those individual businesses, firms, industries, and whole societies that clearly understand the new rules of doing busi- ness in a world economy will prosper; those that do not will perish” (64:ix). Mitroff challenges us to realize that “It is no longer business as usual. Global competition has forced . . . [executives] to recognize that if they and their organizations are to survive, let alone prosper, they will have to learn to manage and to think very differently” (64:x).

8 The Impact of Culture on Organizations

GLOBAL STRATEGY AND CULTURE To succeed, corporations must develop global strategies (98).4 The final decades of the twentieth century made the importance of such recogni- tion commonplace, at least among leading firms and management scholars; the twenty-first century has made it imperative. Incorporating today’s global realities, new time- and quality-sensitive approaches to managing research and development, production, marketing, and finance have evolved rapidly. More recently an equivalent evolution in the understanding of international organizational behavior and man- agement of global human resource systems has developed. Although other functional areas have increasingly been using global financial, production, and marketing strategies that were largely unheard of—or would have been deemed inappropriate—only one or two decades ago, many firms are continuing to conduct the worldwide management of people as if neither the strategic challenges presented by the external economic and technological environment nor the internal structure and organization of the firm have changed.

Focusing on global strategies and management approaches from the perspective of people and culture allows us to understand the influence of national and ethnic cultures on organizational functioning. Rather than becoming trapped within the commonly asked (and unfortunately misleading) question of whether organizational dynamics are universal or culturally specific, this book focuses on the crucially important ques- tions of when and how to be sensitive to culture.

GOING GLOBAL: PHASES OF DEVELOPMENT As we investigate the influence of cultural diversity on multinational and global firms, it becomes clear that national cultural differences are indeed important, but that their relative impact depends on the stage of develop- ment of the firm, industry, and world economy. Using the model shown in Table 1-1, which traces the development of global enterprises, we can distinguish distinct variations in the relative importance of cultural diversity and, consequently, equally distinct variations in the most appropriate approaches to managing people worldwide (4;5;95). Whereas historically the order of the phases has varied, depending primarily on the organization’s age and origin as an Asian, European, or North American firm, the order presented here reflects the most common evo- lution for North American firms. Today, as transnational dynamics increasingly define global business competitiveness, firms frequently skip phases in order to more rapidly position themselves to maximize their global competitive advantage.

Culture and Management 9

DOMESTIC PHASE As shown in Tables 1-1 and 1-2, historically, most firms initially oper- ated from a domestic, or ethnocentric, perspective. Firms produced unique products and services that they offered almost exclusively to the domestic market. The uniqueness of the product or service and the lack of international competition negated the firm’s need to demonstrate sensitivity to national cultural differences. When firms exported prod- ucts, they often did so without altering them for foreign consumption. Foreign buyers, rather than the home country product-design, manu- facturing, or marketing teams, absorbed the inconvenience of inherent cultural differences. In this phase, products from English-speaking countries, for example, were sent to non-English speaking countries without translating the packaging into the local language. In some ways the implicit message sent to people outside the home country was “We will allow you to buy our product”; and, of course, the assumption was that foreigners would want to buy. During this initial phase, people, assumptions, and strategies from the headquarter’s country dominated management: firms in the domestic phase regarded cross-cultural man- agement and global human resource systems as largely irrelevant.

MULTIDOMESTIC PHASE Domestic competition ushered in the second phase, and with it the ini- tial need to market and produce abroad. Irrelevant during the initial domestic phase, sensitivity to cultural differences became critical to implementing effective corporate strategy in the multidomestic phase. The domestic phase’s product orientation shifted to a market orienta- tion, with companies now needing to address each foreign market sep- arately and differently.

Whereas the unique technology of, and single market for, the domestic phase’s products and services fit well with an ethnocentric “one-best-way” approach, during the multidomestic phase firms began to assume there were “many good ways” to manage, each dependent on the particular country involved. Successful companies no longer expected foreigners to absorb cultural mismatches between buyers and sellers. Rather, home- country representatives modified their style to fit with that of their clients and colleagues in foreign markets. Although cultural differences became important in the design and marketing of culturally appropriate products and services, they became critical in worldwide production. Managers had to learn culturally appropriate approaches to managing people in each country in which the company operated.

MULTINATIONAL PHASE By the 1980s many industries had entered the multinational phase. The competitive environment for these industries had changed again, giving

10 The Impact of Culture on Organizations

C ulture and M

anagem ent

11

TABLE 1-1 Global Corporate Evolution

Domestic Phase Multidomestic Phase Multinational Phase Global Phase Competitive strategy Domestic Multidomestic Multinational Global Importance of world Marginal Important Extremely important Dominant

business Primary orientation Product/Service Market Price/Cost Strategy Product/service New, unique More standardized Completely standardized Mass-customized

(commodity) Type of development Product engineering Process engineering Engineering not Product and process

emphasized emphasized engineering Technology Proprietary Limited sharing Widely shared Almost instantly and

extensively shared R&D/ Sales High Decreasing Very low Very high Profit margin High Decreasing Very low Initially high, yet

immediately decreasing Competitors None Few Many Significant (few or many) Market Small and domestic Large and multidomestic Larger and multinational Largest and global Production location Domestic Domestic and primary Multinational, based on Global, least cost

foreign markets least cost and best quality Exports None Growing, high potential Large, saturated Imports, exports,

and “transports” Structure Functional divisions Functional with inter- Multinational lines Global alliances, flattened

national division of business “heterarchy” Centralized Decentralized Centralized Coordinated and decentralized

Source: Adapted by Adler, 2007; based on Adler and Ghadar (5); with phases I-III based on Vernon (95).

rise to demands for culturally sensitive management practices within each firm. In multinational industries, a number of companies pro- duce almost indifferentiable products (practically commodities), with price defining their only potentially significant competitive advantage. From this global price-sensitive—and therefore cost-sensitive—per- spective, cultural awareness, vis-à-vis clients, declines in importance. Price competition among almost identical products and services pro- duced by various multinational companies negates the importance of most cultural differences and almost all advantages gained by cultural sensitivity when marketing to customers worldwide.

As shown in Table 1-2, the primary product design and marketing assumption is no longer the domestic phase’s “one best way” or even the multidomestic phase’s “many good ways,” but rather “one least-cost way.” The primary market becomes global, with almost no geography- based market segmentation. Firms can gain competitive advantage only through process engineering, sourcing critical factors on a worldwide basis, and benefiting from economies of scale. Price competition signif- icantly reduces the influence of cultural differences.

GLOBAL PHASE Many managers believed that the multinational phase would be the ulti- mate phase for all industries. Their assumption proved to be false. Although some industries today continue to operate under the norms of the multinational phase, a fourth phase has emerged for firms in globally

12 The Impact of Culture on Organizations

TABLE 1-2 Corporate Cross-Cultural Evolution

Domestic Multidomestic Multinational Global Phase Phase Phase Phase

Strategy Domestic Multidomestic Multinational Global Primary Product/ Market Price/Cost Strategy

orientation Service Perspective Ethnocentric Polycentric or Multinational Global/

Regiocentric Multicentric Cultural Marginally Very Somewhat Critically

sensitivity important important important important With whom No one Clients Employees Employees and

clients Level No one Employees and Managers Executives,

clients managers, employees and clients

Strategic “One way” or “Many good “One least- “Many good assumption “One best way” ways” cost way” ways”

Equifinality Simultaneously

Source: Adapted by Adler, 2007; based on Adler and Ghadar (5).

competitive industries. In this global (or transnational) phase, top qual- ity, least possible-cost products become the baseline, the minimally acceptable standard. Competitive advantage comes from strategic think- ing, mass customization, and outlearning one’s competitors. Product and service ideas are drawn from worldwide sources, as are the factors and locations of production. Companies, however, tailor final products and services and their marketing to discrete market niches. Critical com- ponents of this type of market segmentation are nationality and ethnic- ity. Culture, once again, becomes a critical competitive factor.

Successful global firms competing under transnational dynamics need to understand their potential clients’ needs, no matter where in the world the clients live. They need to be able to quickly translate these worldwide client needs into products and services, produce those prod- ucts and services on a timely and least-cost basis, and then deliver them to clients in a culturally acceptable fashion for each of the national and ethnic communities involved.

In the global phase, the exclusive product, sales, or price orientation of past phases almost completely disappears. Companies replace these indi- vidual orientations with a culturally responsive design orientation, accompanied by a rapid, worldwide, least-cost production function. The company that designs and brings to market the next new-best-thing wins. Needless to say, culture is critically important at this most advanced stage. Similarly, the ability to manage cross-cultural interaction, multinational teams, and global alliances becomes fundamental to overall business suc- cess. Whereas effective global human resource strategies varied from irrel- evant to helpful in past phases, in the global phase they have become essential, a minimum requirement for organizational survival and success.

CROSS-CULTURAL MANAGEMENT The importance of world business has created a demand for managers sophisticated in global management and skilled at working with people from countries other than their own (80). Cross-cultural management explains the behavior of people in organizations around the world and shows people how to work in organizations with employee and client populations from many different cultures (24;41;71). Cross-cultural man- agement describes organizational behavior within countries and cultures; compares organizational behavior across countries and cultures; and, most important, seeks to understand and improve the interaction of co- workers, managers, executives, clients, suppliers, and alliance partners from countries and cultures around the world. Cross-cultural manage- ment thus expands the scope of domestic management to encompass international and multicultural dynamics. Rather than global management

Culture and Management 13

being a subset of traditional domestic approaches, single-culture/domes- tic management is now recognized as a limited subset of global, cross- cultural management.

PAROCHIALISM Parochialism means viewing the world solely through one’s own eyes and perspective. A person with a parochial perspective neither recog- nizes other people’s different ways of living and working nor appreci- ates that such differences can offer significant opportunities or create serious consequences. People in all cultures are, to a certain extent, parochial. Journalists, politicians, and managers alike, for example, have frequently decried Americans’ parochialism.5 Americans speak fewer foreign languages, demonstrate less interest in other cultures, and are more naïve in global business situations than most of their trading partners. In The Tongue-Tied American (84), U.S. Congressman Paul Simon deplored the shocking state of foreign language illiteracy in the United States and emphasized the heavy price Americans pay for it diplomatically, commercially, economically, and culturally. His message was a “shocking indictment of the complacent, potentially catastrophic monolingual arrogance of . . . [Americans], from top government leaders to the . . . [person] in the street” (90). Echoing Simon’s sentiments in reference to South America, former U.S. Congressman James Symington explained the problem as Americans’

fundamental, dogged, appalling ignorance of the Latin mind and culture. Foreign students and statesmen refresh their perceptions of the United States by reading our poets, essayists, novelists and humorists. But our approach is like that of the man who, when asked which hurts most, ignorance or apathy, replied, “I don’t know and I don’t care.” Such indifference cannot be justified by our otherwise commendable concern for what people do rather than what they think. . . . Preoccupied with acting, we seldom miss opportunities to ignore thought. [Perhaps, in the future] . . . diplomats—possibly even presidents—might know something of the cultural lessons that stir our neighbors’ hearts (86).

Fortune magazine reports that “A ‘Copernican revolution’ must take place in the attitudes of American CEOs as the international economy no longer revolves around the U.S., and the world market is shared by many strong players” (54:157). Lester Thurow, former dean of MIT’s Sloan School of Management, asserts that CEOs “must have an understanding of how to manage in an international environment. . . . To be trained as an American manager is to be trained for a world that is no longer there” (34:50). Similarly, Harvard management professor Rosabeth Moss Kanter asserts that “Global thinking is what’s important for companies today,

14 The Impact of Culture on Organizations

not [simply] international operations” (50; also see 7;8;9;36;57;65;70;74;75;76). “The task is not to build a sophisticated structure, but to build a matrix in the minds of managers” (7:212). Many business leaders predict that the next generation of top executives will have to perform well on multiple global assignments to reach the top (15:B18;20). Royal Dutch Shell, for example, requires four expatriate assignments before it considers a manager for promotion into senior management. Yet in the United States such global exposure and experience has neither been the norm in the past nor, unfortunately, is it as common as it should be today (11).

In the closing decades of the twentieth century, a Dun & Bradstreet survey found that only a handful of the 87 chairmen and presidents of the 50 largest U.S. multinational corporations could be considered career internationalists. Of the 87 top executives, 80 percent had had no international experience at all, except for inspection tours (25). Today, executive recognition of the importance of global experience has increased, but not as rapidly in the United States as in many other parts of the world. For example, whereas almost two-thirds of today’s U.S. executives see “emphasizing an international outlook” as very impor- tant for twenty-first century CEOs, only a third consider experience outside of the United States as equally important, and fewer than one in five consider foreign language training as very important (54:158). By comparison, more than eighty percent of non-U.S. executives consider an international outlook as very important for future CEOs, twice as many (70% versus 35%) consider experience outside of their home country as very important, and more than three times as many (64% ver- sus 19%) consider foreign language training as very important (38;54:158).

Why have many Americans ignored the need to think and to act globally? Americans’ historic parochialism is understandable and at the same time unfortunate. Because the United States has such a large domes- tic market (over 300 million people) and English has become the world’s business language, many Americans continue to assume that they nei- ther need to speak other languages nor to go to other countries to suc- ceed in business. Few young Brazilians, Israelis, Swedes, or Thais remain trapped in this parochial and privileged assumption.

Historical U.S. political and technological dominance also led many Americans to believe that they could conduct business strictly from an American perspective. In many fields in which for years U.S. technology was the only advanced technology available, potential clients and trading partners from around the world had no option but to “buy American.” Global business expertise was unnecessary because the product sold itself (domestic phase). In the public sector, projects transferring tech- nology from the United States to economically developing countries further encouraged Americans to view the world from an American perspective (multidomestic phase). An Indonesian’s comments about

Culture and Management 15

Americans’ views of people from economically developing countries capture this technologically based parochialism:

The questions Americans ask me are sometimes very embarrassing, like whether I have ever seen a camera. Most of them consider them- selves the most highly civilized people. Why? Because they are accus- tomed to technical inventions? Consequently, they think that people living in bamboo houses or having customs different from their own are primitive and backward (79).

The academic community further reinforced U.S. managers’ tendency toward parochialism. Most management schools are in the United States, the vast majority of management professors and researchers are U.S. edu- cated, and the majority of management research has focused on U.S. companies. In a survey conducted in the 1980s of more than 11,000 arti- cles published in 24 management journals, approximately 80 percent reported on studies focusing on U.S. companies conducted by American researchers (2). Fewer than 5 percent of research articles describing the behavior of people in organizations included the concept of culture (2). Less than 1 percent focused on people from two or more cultures work- ing together, a crucial area to understand for global business success (2). The publishing of cross-cultural management articles is increasing much more slowly than the rate at which business has gone global (35;58;60;66).

Even in the last decade, only 6.5 percent of organizational behavior and human resource management (HRM) articles published in leading U.S. management journals were international; however, almost three times as many (17.5%) organizational behavior and HRM articles in leading management journals published outside of North America were international (4). Among these international articles, almost every study (96%) found that culture had a significant impact on managerial styles and organizational success (4). The manager about to negotiate a major contract with a client from another country, the executive about to become director of Asian, European, or Latin American operations, and the newly promoted vice president for global marketing all receive less guidance than they need from the available management literature. Cultural misunderstandings persist at the most sophisticated levels of intercultural interaction. In September 2005, for example:

[U.S.] Deputy Secretary of State Robert Zoellick gave a speech to the National Committee on United States-China Relations in which he repeatedly urged China to become a responsible ‘stakeholder’ in the international system. It turns out that there is no word in Chinese for ‘stakeholder,’ and the initial Chinese reaction was puzzlement and reaching for a dictionary. Did Mr. Zoellick mean ‘steak holder?’

16 The Impact of Culture on Organizations

After all, he was speaking at a dinner. Maybe this was some Texas slang for telling China it had to buy more U.S. beef? Well, eventually the Chinese got a correct interpretation (32).

The United States will continue to have a large domestic market, English will continue to be the language of international business, and technological excellence will continue to typify many U.S. companies. Nonetheless, the domain of business has rapidly moved beyond national boundaries; the limitations of monolingualism have become more apparent; and sustained technological superiority in many industries has become a cherished memory. The intense global competition of the past decade renders parochialism self-defeating. No nation can afford to act as if it is alone in the world (parochialism) or as if it is superior to other nations (ethnocentrism). The U.S. economy, like that of all other coun- tries, is inextricably linked to the health of the world’s economy. Like businesspeople the world over, Americans must now compete on a global scale and contribute based on world-class standards.

GLOBAL VERSUS DOMESTIC ORGANIZATIONS Two fundamental differences between global and domestic organizations are geographic dispersion and multiculturalism. The term geographic dis- persion refers to the spread of global organizations’ operations over vast distances worldwide (51). Whether organizations produce in multiple countries or only export to them, whether employees work as expatriates or only travel abroad, whether legal ownership involves joint ventures, wholly owned subsidiaries, or strategic alliances, global firms must man- age despite the added complexity of working in many countries simulta- neously. Geographic dispersion confronts organizations with political risk, fluctuations in exchange rates, substantial transportation and com- munication costs, varying regulatory structures, and many other com- plexities determined by greater distances and national borders.

Multiculturalism, the second fundamental dimension of global firms, means that people from many countries and/or cultures interact regularly. Domestic firms can be multicultural if their employees or clients come from more than one culture.6 Many organizations in Québec, for example, employ Anglophones (English speakers) and Francophones (French speakers) to work within the same organization. Similarly, many companies in California hire Hispanic and Asian as well as Anglo- Saxon employees. Multiculturalism adds to the complexity of global firms by increasing the number of perspectives, approaches, and business methods represented within the organization.

To successfully manage the geographical dispersion and multicultur- alism of multinational organizations, managers must develop a global

Culture and Management 17

mindset (7;9;17;18;36;53;57;65;74;88). In fact, it is the mindsets of key man- agers that shape business strategy and ultimately determine the success of the firm. Managers with a global mindset address strategic business decisions as cosmopolitans, always considering the broader world pic- ture rather than just the local situation (9 based on 63;42). Similarly, using their highly developed cognitive complexity, managers with a global mindset simultaneously consider the complex multicultural situations facing the firm, and consistently make appropriate trade-offs among competing multinational options (9).

Whereas most books on global management have focused on understanding and managing geographical dispersion, this book focuses primarily on managing multiculturalism and raises such ques- tions as: How do people vary across cultures? How do cultural differ- ences affect organizations? When do global managers recognize cultural differences? What are the best strategies for managing multicultural- ism? How can companies best leverage cultural diversity, using it as a competitive advantage rather than viewing it as a source of problems?

WHAT IS CULTURE? To understand the differences between domestic and global manage- ment, it is necessary to understand the primary ways in which cultures around the world vary. Anthropology has produced a literature rich in descriptions of a full range of cultural systems, containing profound implications for managers working outside their native countries. Anthropologists view culture in many ways. Culture is seen as “that complex whole which includes knowledge, belief, art, law, morals, cus- toms and any capabilities and habits acquired by a . . . [person] as a member of society” (86:1). Alternatively, it is viewed as “a way of life of a group of people, the configuration of all the more or less stereotyped patterns of learned behavior, which are handed down from one gener- ation to the next through the means of language and imitation” (6:4). After cataloging more than 100 different definitions of culture, anthro- pologists Kroeber and Kluckhohn (55:181) offered one of the most com- prehensive and generally accepted definitions:

Culture consists of patterns, explicit and implicit, of and for behav- ior acquired and transmitted by symbols, constituting the distinc- tive achievement of human groups, including their embodiment in artifacts; the essential core of culture consists of traditional (i.e., historically derived and selected) ideas and especially their attached values; culture systems may, on the one hand, be consid- ered as products of action, on the other, as conditioning elements of future action.

18 The Impact of Culture on Organizations

Culture is therefore (19:19)

• Something shared by all or almost all members of a given social group

• Something older members of a group pass on to younger members • Something (as in the case of morals, laws, and customs) that

shapes behavior, or . . . structures one’s perception of the world

Managers frequently see culture as “the collective programming of the mind which distinguishes the members of one human group from another . . . the interactive aggregate of common characteristics that influence a human group’s response to its environment” (45:25). In gen- eral, we see people as being from different cultures if their ways of life as a group differ significantly.

Cultural Orientations The cultural orientation of a society reflects the complex interaction of values, attitudes, and behaviors displayed by its members (43). As shown in Figure 1-1, individuals express culture and its normative qualities through the values they hold about life and the

Culture and Management 19

FIGURE 1-1 Influence of Culture on Behavior and Behavior on Culture

Culture

ValuesBehavior

Attitudes

world around them. These values in turn affect their attitudes about the form of behavior considered most appropriate and effective in any given situation. The continually changing patterns of individual and group behavior eventually influence the society’s culture, and the cycle begins again. What are the differences among values, attitudes, and behavior?

Values A value is that which is explicitly or implicitly desirable to an individual or group and which influences the selection from available modes, means, and ends of action. Values can be both consciously and unconsciously held (52). Values therefore reflect relatively general beliefs that either define what is right and wrong or specify general preferences (16:23). Research has shown that personal values affect corporate strategy (12;30;37;39;44;73;75;78;92) and that managerial values affect all forms of organizational behavior (7;29;68;69), including selection and reward systems (16), superior/subordinate relationships (61), group behavior, communi- cation, leadership, conflict management styles (56), and approaches to negotiating. Latin American managers, for example, consider loyalty to the family to be highly important—a value that leads them to hire com- petent members of their own family whenever possible. U.S. managers strongly believe in individual achievement—a value that leads them to emphasize a candidate’s track record and performance on qualifying exams rather than family membership. In both cases a strongly held value influences managerial behavior.

Attitudes An attitude expresses values and disposes a person to act or to react in a certain way toward something. Attitudes are present in the relationship between a person and some kind of object. Initial market research, for example, showed that French Canadians have a positive attitude toward pleasant or sweet smells, whereas English Canadians prefer smells with efficient or clean connotations. The first advertise- ments for Irish Spring soap directed at French Canadians therefore stressed the pleasant smell, whereas the ads directed at English Canadians stressed the inclusion of effective deodorants.7

Behavior Behavior is any form of human action. For example, based on their culture, Middle Easterners stand closer together (a behavior) than do North Americans, whereas Japanese stand farther apart than do either North Americans or Middle Easterners. Latin Americans touch each other more frequently during business negotiations than do North Americans, and both touch more frequently than do Japanese. People’s behavior is defined by their culture.

CULTURAL DIVERSITY Diversity exists both within and among cultures; however, within a sin- gle culture certain behaviors are favored and others repressed. The norm

20 The Impact of Culture on Organizations

for a society is the most common and most generally accepted pattern of values, attitudes, and behavior. In global business, for example, a man wearing a dark gray business suit reflects the norm through a favored behavior, whereas a man wearing a green business suit would violate the norm. A cultural orientation describes the attitudes of most people most of the time, never of all people all of the time. Accurate stereotypes reflect societal or cultural norms.

Societies enforce norms by communicating disapproval toward transgressors—people who engage in prohibited behavior. Some norms, such as laws, may be highly significant; whereas other norms, such as customs and habits, may be less important. A norm’s importance is measured by how severely society condemns those who violate it. In the United States, for example, an important norm proscribes bribery. Companies caught using bribery to increase their business are publicly prosecuted and fined; both punishments reflect severe cultural sanc- tions. A less important norm in the United States is the tradition of say- ing “Good morning” when greeting colleagues at the beginning of the day. If I fail to say “Good morning” one day, it is unlikely that society will punish me severely. At worst, my colleagues may assume that I am pre- occupied or perhaps tired.

Anthropologists Kluckhohn and Strodtbeck (52) discuss a set of assumptions that allows us to understand the cultural orientations of a society without doing an injustice to the diversity within the society.8

The six assumptions (73) are as follows:

1. “There are a limited number of common human problems for which all peoples at all times must find some solutions.” Each society, for example, must decide how to clothe, feed, and house its people. Each society must decide on systems of justice, communication, education, health, commerce, transportation, and government.

2. “There are a limited number of alternatives which exist for dealing with these problems.” People, for example, may house themselves in tents, caves, igloos, single-family dwellings, or apartment build- ings, but they cannot survive the winter without some form of housing.

3. “All alternatives are present in all societies at all times, but some are preferred over others.”

4. “Each society has a dominant profile or values orientation and, in addition, has numerous variations or alternative profiles.” People may cure disease, for example, with chemotherapy, surgery, acupunc- ture, acupressure, prayer, or nutrition. Many Chinese prefer acu- pressure and acupuncture; many British prefer chemotherapy and surgery; many Indians prefer ayurvedic medicine and many Christian Scientists prefer prayer.

Culture and Management 21

5. “In both the dominant profile and the variations, there is a rank ordering of preference for alternatives.”

6. “In societies undergoing change, the ordering of preferences will not be clearcut.” As the cyber revolution changes society, for exam- ple, organizations’ preferences to communicate using the Internet, fax, telephone, e-mail, courier, or postal system become unclear; different organizations make different choices. These assumptions emphasize that cultural descriptions always refer to the norm or stereotype; they never refer to the behavior of all peo- ple in the culture, nor do they predict the behavior of any particu- lar person.

HOW DO CULTURES VARY? As shown in Table 1-3, six basic dimensions describe the cultural ori- entations of societies: people’s qualities as individuals, their relation- ship to nature and the world, their relationship to other people, their primary type of activity, and their orientation in space and time (52;56). The six dimensions answer the questions: Who am I? How do I see the world? How do I relate to other people? What do I do? How do I use space and time? Each orientation reflects a value and each value has behavioral and attitudinal implications. As summarized in Table 1-4, this section introduces the six value dimensions and gives managerial examples for each. Because many people are familiar with U.S. busi- ness customs, the examples highlight differences between the mana- gerial practices in the United States and those in a number of other countries.

HOW PEOPLE SEE THEMSELVES What is the nature of the individual: good or evil? Americans traditionally see people as a mixture of good and evil, capable of choosing one over the other. They believe in the possibility of improvement through change. Some other cultures see

22 The Impact of Culture on Organizations

TABLE 1-3 Values Orientation Dimensions

Perception of Dimensions Individual Good Good and evil Evil World Dominant Harmony Subjugation Human Relations Individual Laterally Hierarchical

extended groups groups Activity Doing Controlling Being Time Future Present Past Space Private Mixed Public

Source: Based on Kluckhohn and Strodtbeck (52), as adapted by Lane and DiStefano (56).

Culture and Management 23

TABLE 1-4 Cultural Orientations and Their Implications for Management

Cultural U.S. Cultural Contrasting Cultural Dimensions Orientation Orientation What is the nature Mixture of good and evil Good (Evil)

of people? Change is possible. Change is impossible. Example: Emphasize training and Emphasize selection and fit;

development; give people select the right person for the opportunity to learn the job; do not expect emp- on the job. loyees to change once hired.

What is a person’s People dominant over Harmony (Subjugation) relationship to the nature and other aspects external environment, of the external including nature? environment.

Example: Policy decisions made to Policy decisions made alter nature to fulfill to protect nature while people’s needs—i.e., meeting people needs—i.e., building dams and roads. sustainable development.

What is a person’s Individualistic Group (Hierarchical relationship to or Lateral) other people?

Example: Personnel director reviews Personnel director selects academic and employment the closest relative of the records of each candidate chief executive as the to select the best person best person for the job. for the job.

Example: Individuals make decisions Groups make decisions What is the primary mode Doing Being (Controlling)

of activity? Example: Employees work hard to Employees work only as

achieve goals; employees much as needed to earn maximize their time at enough to live; employees work. minimize their time at work.

How do people see space? Private Public Example: Executives hold important Executives hold important

meetings in large offices meetings in open areas, behind closed doors with with open doors and a secretary screening out many interruptions from interruptions. employees and visitors.

What is a person’s Future/Present Past (Present) temporal orientation?

Example: Mission statement refers Mission statement this year to 5- and 10-year goals reflects policy statements while focus is kept on this 10 years ago; the company year’s bottom line and strives to use tradition to quarterly reports; innova- perform in the future as tion and flexibility to meet it has in the past. a dynamic, changing future are emphasized.

Source: Adapted by Adler (3:411) updated 2007; based on Kluckhohn and Strodtbeck (52) and DiStefano (23); also see Lane and DiStefano (56).

people as basically evil—as reflected in the Puritans’ orientation. Others see people as basically good—as reflected in utopian societies through- out the ages. Societies that consider people good tend to trust them a great deal, whereas societies that consider people evil tend to suspect or mistrust them. In high-trust societies, for example, people leave doors unlocked and do not fear being robbed or assaulted. In low-trust soci- eties, people bolt their doors. After making a purchase on the internet, people in high-trust societies expect to receive the merchandise and to have their credit card appropriately debited; they do not expect to be cheated. In low-trust societies, caveat emptor (“let the buyer beware”) rules the marketplace; one can trust only oneself. In many countries people are more trusting in rural communities than in urban centers. Today’s web-mediated e-business challenges buyers to trust unseen sellers, and sellers to assess their confidence levels in unseen buyers.

Today many citizens of the United States and Canada lament that their fellow citizens cannot be trusted the way they used to be. A Toronto hotel, for example, posts a sign reminding guests that “Love is leaving the towels.” Los Angeles gas stations, to assure that motorists will not drive away without paying, require motorists to pay twenty dol- lars or sign a credit card slip before filling their gas tanks. A Minneapolis firm, National Credential Verification Service, makes a profitable busi- ness of exploiting the lack of trust among corporate recruiters and job candidates by exposing résumé deception. Out of 233 personnel officers responding to a survey of Fortune 500 companies, only one said that deception by applicants for executive positions was diminishing (59:85). To add to this mistrust, many people find it more difficult to trust for- eigners than citizens of their own country.

Managers in the People’s Republic of China describe their approach as combining the extremes of good (Confucian tradition) with evil (the tradition of Lao Tzu)—a marriage of opposites. They also describe their belief that peasants are good while rich people are not so good, as reflected in a story told among people living in Tianjin, the fourth largest city in China:

At the Franco-Chinese joint venture winery in Tianjin between France’s Rémy Martin and China’s Dynasty, a French director left his wallet filled with French francs in a ped-a-cab. The ped-a-cab driver, a peasant, waited all day outside the winery to return the wallet to the Frenchman.

Perhaps because people fear the unknown, they frequently tend to assume that evil intentions motivate foreigners’ behavior. Canadian gov- ernment officials, for example, thought the Inuits, a native people, were evil when they burned down the doors in their Canadian-built public

24 The Impact of Culture on Organizations

housing projects. The officials misinterpreted the Inuits’ behavior as vandalism and therefore judged it to be evil, whereas the Inuits had actually altered the houses to fit their normal more collective—and therefore doorless—lifestyle. The Canadian government condemns the destruction of property, whereas the Inuits condemn closed doors that separate people from family members and neighbors.

Apart from their tendencies toward good or evil, can human beings improve themselves? Societies and organizations vary in the extent to which they believe that adults can change or improve. Organizations that believe people can change, for example, emphasize training and develop- ment, whereas organizations that believe people are incapable of change emphasize selection systems. With today’s Internet and information systems revolution, some organizations have chosen to replace many of their current administrative-support personnel with e-technology and information systems experts. Other companies have retrained their current