Culture in Emerging Markets

• Cultural-Institutional Perspectives for doing business in emerging markets are the focus
• A culture requires knowledge of explicit, and implicit culture when doing business in or from an emerging market
• Culture has "invisible” and “visible” elements, concepta and percepta levels
• Culture Definition: Linked to a specific social unit with shared assumptions, values, norms, attitudes and beliefs expressed in symbols or behavioral patterns

Cultural Diversity Levels

• Societal/country culture (informal institutions)
• Industry culture (banking vs. consumer goods)
• Organizational culture (entrepreneurial firm vs. established MNC)
• Department/business unit culture (finance vs. R&D)
• Job culture (consulting vs. academia)
• Culture can be assigned to concepta and percepta, or levels of cultural diversity to get an impression of a country's culture

Quantifying Culture

• Systematic quantification of cultures facilitates comparison between countries
• GLOBE study is a way to assess and quantify culture of emerging markets
• The GLOBE study is an international and cross-institutional research endeavor
• GLOBE focuses on the management level to illuminate the association between leadership and culture
• Appropriateness of different leadership styles across cultures is a key assessment
• The original GLOBE Study involved 951 companies in 60 countries, 3 industries and 17,000 middle managers

GLOBE Study Outcomes

• 10 cultural clusters
• 9 cultural dimensions
• 6 global leadership styles

GLOBE Cultural Dimensions

• Power Distance is the extent to which power should be stratified and concentrated
• Uncertainty Avoidance is the extent to which uncertainty is avoided via norms and rules
• Institutional Collectivism is the encouragement and reward distribution of resources and collective action
• In-Group Collectivism is the extent to which pride, loyalty and cohesiveness is expressed
• Gender Egalitarianism is the minimization of gender role differences
• Assertiveness is the extent of assertiveness in social relationships
• Future Orientation is the engagement in future-oriented behaviors
• Performance Orientation is the encouragement and reward of performance
• Humane Orientation is the encouragement and reward for being fair, altruistic, friendly, generous, caring, and kind

Leadership Styles

• Charismatic Leadership: inspires high performance based on core values

• Team-Oriented Leadership: focuses on team building and purpose

• Humane-Oriented Leadership: supportive, considerate, and generous

• Autonomous Leadership: focuses on independence and individualism

• Self-Protective Leadership: ensures safety and security of the individual/group

• Development status and development status = predictor of style preferences

• Cultural clusters are categorized by developed and emerging/developing countries

• One might be confronted with these clusters from a development perspective, either homogenous or heterogenous

Cultural Spillover

• Cultures are interdependent, particularly when an emerging market opens up
• Western cultural spillovers become observable

Culture & Institutions in EM

• Culture and institutions come together to make a unified impact in emerging markets, linked by National Business Systems (NBS) from L1.
• The actors of the NBS are linked by economic, political and social practice
• Formal and informal institutions shape/set rules for the practice and relationships of the various actors within the NBS
• It is advantageous to rely on culture within volatile EM environments

Culture in Relationships

• EM firm and clients/customers can depend on assertiveness, performance orientation, and humane orientation
• EM government and firms depends on governmental regulations
• Employees and EM firms rely on power distance and collectivism

Key Takeaways

• Culture has invisible and visible elements

• There are many efforts to quantify culture in emerging markets like the GLOBE study

• GLOBE can describe cultural dimensions and leadership styles in emerging markets, dependent on development status

• Culture shapes National Business Systems and relationships between actors

• Quantifying culture is helpful for businesses in an emerging market

• Being aware of what are an emerging is, the unique characteristics of emerging markets you are ready to enter an emerging market