Intercultural Management - Iloka Benneth Chiemelie

Intercultural Management

1How do cultural differences impact on business relationships?

The influences of national culture on cross-national businesses have received numerous attentions in international business literature (Varner, 2000; Kale and Barnes, 1992). Why the attention has mainly been on a national bases, numerous literature have also stressed on the influence of culture in organisational relationship while references companies from the same country but different organisational cultures (Alajoutsijarvi et al., 2000).

Culture generally can be defined as the norms which govern people's behaviour in a given society. On a corporate level, this definition is also applicable as organisations are always concerned with build a culture that promotes good brand image and productivity in their workforce. These cultures are laid down in the form of "code of conducts" – does and don'ts which are contained in job contract agreements.

The impact of cultural differences on business relationship will be further illustrated by using Edward T. Hall's (1976) distinction of low-context and high-context culture. This theory was chosen because it explains numerous contexts on negotiation, agreement, and management which are all prime business issues.

Low context and high context culture

In low-context culture, the listener relies more on detailed information from the presenter and the communication style is open to suggestion and criticism. While in high-context culture, the messages is embedded in the presenter and pictures, charts or other visual images and the listeners have the responsibility of translating the real meaning of the message.

These cultural differences can be demonstrated between Chinese and American businesses. In Chinese organisation, the boss is always the boss and have full right to make decisions on any matter related to the organisation at his own will, but in American companies, the CEO is always superheated by the board of members and presidents and organisational decisions must pass these board before final implementation. On the other hand, employees are also encouraged to challenge decision in the low-context American culture and while the boss is treated as a lord in Chinese high-context culture where employees seldom criticize or place any suggestion on decisions made by the boss.

In international business, this becomes an issue when two companies from these type of countries merge together as the low-context culture organisations will require more detailed information in relation to organisation decision making, management and other factors and the high-context cultures who are not used to it might consider it as being vulgar and disturbing. This can eventually ruin a potential business that is already on the right path towards success as these two different companies with different communication context will have difficulty satisfying each other's needs in terms of information sharing and organisational communication system.

Regulating behaviour

In low-context culture behaviours are regulated in the form of written instruction on what to be done and what not to be done, while the case is directly opposite in high-context culture are they are passed through verbal instructions. For instance, if you go into an American officer they are numerous signs directing visitors to different areas such as lounge, toilets, CEO office etc., while they are fewer of these signs in the high-context culture as people are meant to ask for directions if they are not familiar with the environment.

This can influence business relationship as American staffs will find it difficult working with their Chinese counterpart if an American company was to merge with a Chinese company. The difficulty will arise in the American staffs interrogating their Chinese counterparts on why they are no signs to direct them to the right places, while the Chinese counterpart might see it as disrespecting to be interrogated in a loud or repulsive way. 

Contract

Another dimension through which the impact of cultural differences can be stressed is in the contract and agreement. In low-context culture, employees base their job activities entirely on contents contained within their contract and agreement with the company. For instance, closing hour of 6pm means 6pm and employees in low-context culture will demise their work by 6pm, while in the high-context culture, contracts are based on mutual understanding and the Confucian relationship building approach where employees can work unpaid overtime in other to finish their work for the day.

On the other hand, low-context cultures' contracts are written and signed by both the company and the employee while it is a case of handshake and verbal agreement in high-context culture. This particular dimension can illustrate the abundance of legal firms and legal personnel in the USA, as any violation of the contract either by the company or the staff is highly prosecutable while the same offence can be settle by round table discussion in high-context culture like china. This is because, high-context culture see business as a relationship building process "guanxi", while it is seen as a deal with value in low-context culture

In this case, if a Chinese company internationalized into the USA, it will influence their productivity compared to their Chinese branch as all employees will stick with the contract and seek payment for every second spent working with the company. The company can also be sued if they hesitate to pay, which is different with their Chinese branch and it can result in high employees' turnover and potential bad image for their American branch.

Explain using Hofstede theory how different management style differ in each of these selected countries.

In 1970s, Hofstede conducted an empirical study of IBM with the objective of measuring different dominant values amongst people of different nation. The result yielded the development of Hofstede's four dimensions of cultural values as individualism vs collectivism; masculinity and femininity; uncertainty avoidance and power distance. These cultural dimensions will be used to analyse the differences amongst management style of the countries listed below. 

Japan

Figure (1): Japan's Hofstede cultural dimensions analyses

Japan is a collectivist society, and as Schwartz (1992) said, collectivist society value reciprocation of favor, a sense of belonging, and respect for tradition. In this case, the Japanese management system puts the organization at first instead of personal interest and they are willing to sacrifice their own time for the interest of the organization. This can be illustrated in low turnover of employees in Japanese companies with most of them sticking with the same company for the least of their lives, giving their best at all time in order to ensure a successful life achieves bu gaining respect for a job well done in the company they work for.

On the other hand, Japanese society is a high-power distance society and the full right to manage an organization is bestowed on the management teams with less interest, opinion or view of other employees taking into consideration. They operate an oligarch-like system where all other employees must only respond with yes and not to question the decision of the management system. This can be seen in the frequent resignation of top managers as they are more willing to resign from their positions than seek help from their subordinates.

Hofstede and Bond (1984) studies found Japan a society high inmasculine dimension with males expecting an "in-charge" role. The masculine society is associated with constant improvement and high level of achievement, and this is common in Japanese society with establishment of numerous innovative companies, and quest to become a world power in technology, innovation and business development. Thus, in Japan, constant improvement is always expected from the management system as they are obliged to be better than their predecessors.

Finally, based on Hofstede's cultural dimensions, Japan is high inuncertainty avoidance and doesn't like taking too much risk. Thus, they don't confront conflicts, but instead pursue group harmony.Hofstede and Bond (1984) highlighted that the Japanese management style is based on clear rules, procedure, and clearly written job responsibilities with very single employee expected to perform his job according to the set rules and procedures.

Germany

Figure (2): Germany's Hofstede cultural dimensions analyses

Germany is an individualistic country, and people stress on personal achievements and individual rights. Thus, this influences their management style in the see that manager see promoting personal achievements as key to increasing productivity. In that case, German companies practice employee of the month, best technician and offer promotion to outstanding employees for their workforce performance.

Most western countries are characterized with low power distance and Germany is no exception. In Germany, the management system is an open style that allows criticism of management ideas and puts decisions through debates from both executives and other staffs. The management also operates in accordance to the terms and conditions contained within each employee's contract as violation of the contract terms can lead to the company being prosecuted. The open management system also offers room for innovation and creativity as employees can try new ideas outside the commands of their supervisors. The low power distance can also be illustrated with the fact that current German Vice Chancellor is a female.

More like their Japanese counterpart, Germany is masculine in nature and like the masculine dimensions; achievement, success and power are considered essential. The overall German management in relation to masculinity can be found in their high value for "technik" which means constant improvement (innovation). German automobile such as Bugatti, Volvo, Mercedes and Volkswagen are an illustration of the desire for success. Their managements pressure their employee to offer their best at all times and rewards are based on employees' performance rather than interpersonal relationship because "business is always business".

Compared to other western countries such as America and Australia, Germany is high in uncertainty avoidance and don't like taking risks as they believe too much risk can negatively affect their business performance. Thus, the management style is designed in such a way that employees are designated to the jobs that fall within their academic qualification and experience, and heads-on-time is also considered a priority. Employees are put through rigorous check on their work, and most sophisticated jobs are automated to ensure precision and less uncertainty. 

South Korea

Figure (3): South Korea's Hofstede cultural dimensions analyses

South Korea is a collectivist society and therefore, their management style is closely related to that of Japan. In South Korea, work is seen as an act of relationship and companies try to understand their staff's personal interest while the staffs also take the interest of the company above their own personal interest. For instance, the management can give leave of absence for minor issues such as shopping, while employees can also work unpaid overtime with full dedication. The management style is mainly based on building long lasting relationship that will ensure low employee turnover and high productivity.

South Korea has a high power distance, and this indicates that inequality is high. Thus, a manager is treated as a demi-lord and his commands are unquestionable by the subordinates who have to do their job according to their commands. Therefore, it can be argued that the management style is based on clear and distinction instructions as is similar with japan, where employees must undertake their job with the exact procedures and instruction they have been told to the so with. Another illustration is that in South Korea, during a press meeting participants will not seat until they receive the commands of the boss to do so as compared to the American society where participants are expected to have a seat without anybody instructing them to do so.

South Korea illustrates a high difference in masculinity vs femininity in comparison with their Asian counterpart Japan, as they are high in femininity. Being a feminine country, South Korea values the nature of caring and nurturing people more than success and personal achievements. Thus, the management style is such in which both genders are considered to me equal and each person is assigned a job based on their capabilities and not in relation to their gender. For instance in South Korea, you can have both female managers and females in other top organizational management team as compared to the more masculine nature of Japan.

South Korea ranks high in uncertainty avoidance and in an effort to or reduces this level of uncertainty, strict rules, laws, policies, and regulations are adopted and implemented in their organizational management style. Each strategy is put through vigorous scrutiny in order to eliminate the chance of the unexpected before they are adopted in the organization.

Latin America

Figure (4): Venezuela's Hofstede cultural dimensions analyses for Latin America

From the above figure, it can be illustrated that venezuela which was choosen as a representattive of the South American Market is high in power distance. This points to the already discussed context that the managemnet style is centered towards the board of directors and their deicisions are the primary root to all organisational decisions. Their management style are not debatle within the panel of other employees are compared to their North American counterparts.

In contrast to their North American counterpart and other westernized nation such as Germany, South Americans are collectivist. Thus, the management style is such that practices each employee seeing the other as a member of the family (company) and offering these members necessary help to ensure that the family is always successful through unity (increase productivity through cooperation).

The Venezuelans and other South Americans are like Germans in terms of the fact they are a masculine society. This highlights the importance of profit maximization and continues growth in their management style. Each management expects that all employees will produce efficient and pristine result from all the work they are assigned to.

Finally, the management style is centered on high uncertainty avoidance and they take precaution in all organizational management issues to ensure that all possible negative outcomes are removed through an elimination process that values more of the accurate and factual results than untested hypothesis.

Cross-cultural business negotiation can be complex at times. Describe some of the characteristic shown by the following negotiators. Give four for each negotiator.

American negotiator

No assumptions – during business negotiation, American negotiators don't assume knowledge of anything related to the business, and they seek full detailed of the whole negation process (Lothar Katz, 2007).This is related to the low-context communication strategy where "all that is said to be, must be proven to be".

Cooperation for business purpose rather than relationship – American negotiators are cooperative with the whole negotiation process, but their cooperation is only for business purpose and not related to any interpersonal relationship. Thus, they see "face saving" as an individual thing rather than "saving the face" of the company (Lothar Katz, 2007).   

Preparation and time - time and extreme preparation are a core element of American negotiation, which highlights their masculine nature build around performance and improvement. Time is considered to have value, and must be maintained or paid for when used. Thus, a negotiation scheduled for 8.am will start 8.am on the dot. Extra time is also taken to prepare for all documents needed to ensure none of the crucial required document is left out.

Flexibility and Risk takers – compared to other societies, Americans have more authority to make decisions during negotiation process and their risk taking nature can lure them into promising an idea on the discussion table and bringing in new risky (sometimes untried) ideas to the negotiation table.

Indian negotiator

Relationship and respect – like their Asian counterparts, Indian negotiators value relationship and they developed strong interpersonal and business relationship through respect for other people's ideas(Rajesh, 2005). Thus, they are willing to sacrifice their personal time and effort during the business negotiation process to ensure that their counterparts fell a sense of belonging in a bid to build a deal based on respect for each other's ideas.

Less sensitive to time – compared to the American negotiators discussed earlier, Indians are less sensitive towards time and therefore, they can wait for the arrival of their fellow business negotiators and late arrival is welcomed with a smile later than frown. Thus, it is also common to notice an Indian negotiator arriving late during a negotiation process (Rajesh, 2005).

Negotiation process must be outlined – just like the Americans, Indians require that the whole negotiation process be outline and topics highlighted will be scrutinized with their request for further information, evidence and details (Rajesh, 2005).

Contractual obligations do not have the same sanctity – in Indian negotiation, negotiators take the environment into consideration and thus contractual obligations can easily be violated (Rajesh, 2005). This is mainly due to the low infrastructures available such as interruptible electricity, insufficient transportation system and low skilled manpower. Thus, their late arrival to negotiation table could easily be caused by high traffic on their way.

Italian negotiator

Bargaining – Italians, especially in the South, are used to hard bargaining and haggling. They may expect to do a lot of it during a negotiation. Strong emotions and much drama may accompany the process, with a wide spectrum reaching from flatery to biter complaints, but never open aggression (Lothar Katz, 2007). 

Slow and protracted pace of negotiation – Italian negotiators take a slow and protracted pace in the negotiation table as they seek clear and precise meaning for every objective highlighted during the negotiation process. Extra time is also allocated for outside the table meeting as they seek to consult each other before making any final decisions(Lothar Katz, 2007).   

Dress code is taken serious - good and fashionable attire are essentials of an Italian business process and so is their negotiation process. Negotiators are valued based on their dressing; although it is of little significance, dressing code can influence how their Italian partners will speak to them (Lothar Katz, 2007).   

Win-win solution achieved through long-term relationship – Italians value long-term relationship and this influences their negotiation style as they seek to leverage their relationship and position in order to create a win-win situation for both parties geared towards gaining long-term benefits (Lothar Katz, 2007).  

BIBLIOGRAPHY

Alajoutsijarvi, K., Moller, K. and Tahtinen, J. (20000, "Beautiful exit: how to leave your business partner", European Journal of Marketing, Vol. 34 No. 11/12, pp. 1270-89.

Hofstede, G.  (1980), Culture's Consequences: International Differences in Work-related Values, Sage, Beverly Hills, CA.  

Hofstede, G. and Bond, M. 91984), "Hofstede's culture dimensions: an independent validation using Rokeach's value survey", Journal of Cross-cultural Psychology, Vol. 15 No. 4, pp. 417-33. 

Kale, S. and Barned, J. (1992), "Understanding the domain of cross-national buyer-seller interactions", Journal of International Business Studies, Vol. 23 No1, pp. 101-32. 

Lothar, K. (2007). "Negotiating International Business - The Negotiator's Reference Guide to 50 Countries around the World". Available at: http://www.globalnegotiationresources.com/cou[Accessed on: 19 – 03 – 2012].  

Rajesh, K. (2005), "Negotiating with the complex, imaginative Indian".Ivey Business Journal, improving the practice of management. Available at: http://www.opus-seminars.com/zarticles

/RK-Negotiating-India.pdf [Accessed on: 19-3-2012].

Schwartz, S.H. (1992), "Universals in the content and structures of values: theoretical advances and empirical tests in 20 countries", in Zanna, M. (Ed), Advances in Experimental Social Psychology, Vol. 25, Academic Press, New York, NY, pp. 1-65. 

Varner, I. (2000), "The theoretical foundation for intercultural business communication: a conceptual model", The Journal of Business Communication, Vols. 37 No. 1, pp. 39-58.