Lecture 3 - Managing in Diverse Cultures Flashcards
Where do informal institutions come from?
Socially transmitted information, part of the heritage we call cultures, ethics and norms
What is ethnocentrism?
A self-centred mentality held by a group of people who perceive their own culture, ethics, and norms as natural, rational and morally right
Define culture
“the collective programming of the mind which distinguishes the members of one group or category of people from another
What are the two main components of culture?
LANGUAGE
- transmits the culture
- starting point to understand culture is to learn the language
RELIGION
- substrate the culture
- some people may not be religious but follow/accept the culture
What is lingua franca?
A global business language - used to understand different cultures
What are the three approaches to understanding/classifying culture?
Context approach
Cluster approach
Dimension approach
What is the context approach to understanding culture?
Context is the background against which interaction takes place
- individual countries
- check high context to low context diagram in lecture notes
What is the cluster approach to understanding culture?
Groups countries that share similar culture into clusters
What is the dimension approach to understanding culture?
Focuses on multiple dimensions of cultural differences both within and across cultures
- Hofstede’s (1980) 5 cultural dimensions
What is the individualist v collectivist dimension of culture?
How people define themselves and their relationship to others
INDIVIDUALIST
- believes individual is most important
- ties between individuals are relatively loose
- stress independence over dependence
- reward individual achievement
- value uniqueness of individual
COLLECTIVIST
- views, needs, and goals of group most important (e.g. family, village or company)
- ties between individuals relatively close
- obligation to the group is the norm
- self is defined in relation to others
- focus on cooperation, not competition
What is the uncertainty avoidance dimension of culture?
“People within a culture are made nervous by situations which they perceive as unstructured, or unpredicatable”
HIGH UNCERTAINTY AVOIDANCE
- avoid ambiguity (need help defining things)
- strict codes of behaviour
- resist change
LOW UNCERTAINTY AVOIDANCE
- accept ambiguity and lack of structure
- more inclined to take risks and ‘think outside the box’
- less resistance to change
If downsizing, need to be very clear with communication to avoid uncertainty
What is the power distance dimension of culture?
Extent to which people view inequality as normal
HIGH POWER DISTANCE (distance between those in authority and those at lower levels)
- Power is a scarce resource
- Natural and inevitable
- Centralization of power
LOW POWER DISTANCE
- Minimal power differences
- Power can be achieved through hard work (takes a long time to gain manager status)
- Superiority not rigid
What is the masculinity vs femininity dimension of culture?
Relationship between gender and sex-role differentiation and appropriate behaviour
MASCULINITY
- Distinct roles
- Men are assertive, ambitious and competitive
- Women are supportive and nurturing
FEMININITY
- Fewer rigid gender roles
- Men and women are more equal
- Interpersonal relationships
What is the long-term vs short-term orientation dimension of culture?
Based on Confucianism
LONG-TERM ORIENTATION
- Perseverance and savings for a better tomorrow
- Do anything and all you can to achieve a goal
- “Eye on the prize”
SHORT-TERM ORIENTATION
- Immediate gratification
- “Make money, spend money”
- Less willing to sacrifice
What are the limitations of Hofstede’s work?
- two extremes: no middle ground (no continuum)
- only one company used in the research: dimensions could differ among companies
- need to look at culture between sectors as well as companies (e.g. finance = masculine and HR = feminine)
- generations were not considered
- assumes domestic population is a homogenous whole
- nations not proper units of analysis: culture goes beyond borders
- is study too old to be of any modern value?
- limited dimensions don’t give sufficient information about cultural differences
Outline the culture differences with global business
Contracts in high-context vs. low-context countries.
Preparations for countries in other clusters.
Empowerment in high and low distance countries.
Entrepreneurship and individualism.
What is cultural intelligence?
An individual’s ability to understand and adjust to new cultures
- Managers should be aware of the prevailing norms and their transitions globally
What are actions associated with developing cultural intelligence?
- be prepared
- slow down
- establish trust
- understand the importance of language
- respect cultural differences
- understand that no culture is inherently superior in all aspects
What are the three phrases of acquiring cultural intelligence?
1) Awareness
2) Knowledge
3) Skills
Define ethics
The principles, standards, and norms of conduct governing individual and firm behavior
There is overlap between what is ethical and legal. But in some cases, what is legal may be unethical
What are the three views on firms’ ethical motivations?
NEGATIVE VIEW
Suggests that firms may simply jump onto the ethics bandwagon under social pressure to appear more legitimate without necessarily becoming better
POSITIVE VIEW
Maintains that some (though not all) firms may be self-motivated to do it right regardless of social pressure
INSTRUMENTAL VIEW
Believes that good ethics may simply be a useful instrument to help make money
What are the two schools of thought regarding how to manage ethics overseas?
ETHICAL RELATIVISM
Follows the line of thought: “When in Rome, do as the Romans do.”
ETHICAL IMPERIALISM
Refers to the absolute belief that: “There is only one set of Ethics, and we have it.”
- Americans are especially renowned for believing that their ethical values should be applied universally
What are the three core principles behind managing ethics overseas?
- respect for human dignity and basic rights
- respect for local traditions
- respect for institutional context
What are the four strategic responses to ethical challenges? Explain and give an example for each
REACTIVE STRATEGY:
- passive
- deny responsibility
- do less than required
- firms do not feel compelled to act when problems arise and denial is the first line of defence
DEFENSIVE STRATEGY
- focuses on regulatory compliance
- admit responsibility but fight it
- do the least that is required
ACCOMMODATIVE STRATEGY
- accepting responsibility becomes an organisational norm
- do all that is required
- cognitive beliefs and values are increasingly internalised
PROACTIVE STRATEGY
- anticipate responsibility and institutional changes
- do more than is required
Define corruption
The abuse of public power for private benefits usually in the form of bribery, in cash or in kind
- big issues for MNCs
What forces can be used to tackle corruption?
Transparency International
- most influential anti-corruption NGO
Foreign Corrupt Practices Act (FCPA)
- enacted by US Congress in 1977
- bans bribery of foreign officials and can be regarded as an institutional weapon in the global fight against corruption
Are cultures converging or diverging?
Some argue for a convergence toward “modern” Western values such as individualism and consumerism
Divergence – others argue that Westernization in consumption does not indicate Westernization of values
