Lecture 3 - Informal Institutions

Question 1

What is culture?

Answer 1

Defined as a set of shared values, beliefs, and expected behaviours.

Question 2

What are informal institutions?

Answer 2

Rules that are not formalised but exist in, for example, norms, values and ethics.

Question 3

Why is culture important in IB management?

Answer 3

• Culture affects how organisations are structured and also the perception of for whom an organisation exists.
  US - organisation exist for the benefit of its shareholders.
• Managers need to understand the impact of cultural differences on organisation members’ behaviours.

Question 4

Why is national culture not so national?

Answer 4

• Not homogeneous (religion, language, values and norms).
• Behviours and actions of people can also change depending on where they live, income level, profession, age and ethnic background.

Question 5

Why is religion so important in IB management?

Answer 5

• Religious differences tend to raise emotions.
• Firms need to consider international and national diversity in adherences in religion through relgious ceremony, routines, values.

Question 6

What is the difference between high and low context cultures?

Answer 6

High context - much information is conveyed nonverbally, often through shared understanding (Asian cultures). Personal relations are important.
Low context - information is mainly conveyed b explicit expression (US). Written contracts and formal terms are more important.

Question 7

What did Hofstede’s studdy of cultures across different countries undertake?

Answer 7

• He surveyed 116,000 managers of one company, IBM, in 72 different countries from 1967-1973.

Question 8

What were Hofstede’s six dimensions?

Answer 8

• Power distance
• Individualism
• Masculinity vs femininity
• Uncertainty avoidance
• Long-term orientation
• Indulgence/restraint (added in 2010)

Question 9

What is power distance?

Answer 9

• The extent to which less powerful members within a country expect and accept that power is distributed unequally.

Question 10

What are the managerial implications of a high and low power distance?

Answer 10

High power distance - autocratic rule with great authority. Paternalistic, obediance, negotiations only done by the top.

Question 11

What is individualism/collectivism?

Answer 11

• Refers to the perspective that the identity of an individual is fundamentally his or her own versus the idea on an individual is primarily based on the identity of his or her collective group.

Question 12

What are the managerial implications of individualism?

Answer 12

• Individuals prefer to have decision making responsibility.
• Less chance of forming close ties in the workplace.
• Prefer direct monetary compensation rather than fringe benefits.

Question 13

What are the managerial implications of collectivism?

Answer 13

• Ties between individuals are tight and collective achievement is valued.
• Collective bonueses are preferred.
• Emphasixe good working conditions and job security

Question 14

What is uncertainty avoidance?

Answer 14

The extent to which members in different cultures accept ambiguous situations and tolerate uncertainty.

Question 15

What are the managerial implications of a high uncertainty avidance?

Answer 15

• Job security is very important.
• Set guidelines.
• Work culture where intructions are clear and initiatives are controlled.
• Decision making may be slow (assess options and outcomes)
• Resistance to change more likely.

Question 16

What are the managerial implications of a low uncertainty avoidance?

Answer 16

• More likely for employees to take risk in decision making.
• Less emotional resistance to change.
• More likely to move around jobs (move to different companies)

Question 17

What is the Masculinity vs Femininity dimension?

Answer 17

• Values are traditionally associated with “male role”, such as assertiveness, decisiveness and aggression or with the “female role” succh as compassion, care of quality of life.

Question 18

What are the features of a masculine society?

Answer 18

• Preference for high achievers, not so much sympathy for anything else, competitive, material orientation.
• Societies strive for maximum social differentiation between genders.

Question 19

What are the features of a feminine society?

Answer 19

• Preference for quality of workplace, workplace relationships, job security.
• Societies strive for minimal social differentiation between the genders.

Question 20

What is the long vs short term dimension?

Answer 20

A perspective that emphasizes how perseverance savngs for future betterment are practiced.

Question 21

What are the managerial implications of long-term orientation?

Answer 21

• Emphasis on persistence
• Status and personal relationships emphasised for longer term professional dealings.
• Leisure time can be left for another day.

Question 22

What are the managerial implications of short term orientation?

Answer 22

• Fast and quick results are emphasised in the workplace.
• Focuse on the present and bottom line.
• Personal steadfastness and stability are important.

Question 23

What is the indulgence vs restraint dimension?

Answer 23

Extent a society allows “relatively free gratification of basic and natural human desires related to enjoying life versus controlling gratification of needs through strict social norms.

Question 24

What are the managerial implications of an indulgent society?

Answer 24

• Higher emphasis on personal happiness, enjoyment, leisure. friendships, fun.
• Considerably less societal discipline.

Question 25

What are the managerial implications of a restrained society?

Answer 25

• Less emphasis on happiness as a guiding principle.
• Emphasis on moral discipline and adhering to societal expectations as a sense of value.