Comparative Management ALL NOTES PDF

Session 1 Chapter 1 1. Introduction The work of international managers is affected by dramatic changes in economics, politics, and technology, changes that are often summarized by the term globalization. Globalization: The word used to describe the growi...

Session 1 Chapter 1 1. Introduction The work of international managers is affected by dramatic changes in economics, politics, and technology, changes that are often summarized by the term globalization. Globalization: The word used to describe the growing interdependence of the world’s economies, cultures, and populations, brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information. Culture: set of knowledge structures consisting of systems of values, norms, attitudes, beliefs, and behavioral meanings that are shared by members of a social group (society) and embedded in institutions and learned from previous generations. 2. Globalization Increased use and sophistication of information technology - Advances in information technology reduce the cost of communication, leading to more global goods. - As organizations in different countries try to keep up with the changes, this globalization of trade increases competition and contributes to the global spread and further development of technology. -> Even small and Medium-sized enterprises (SME’s) can now compete globally. SMEs: Small and medium-sized enterprises are defined differently around the world. In the United States it means companies with 500 employees or less. In the EU it is 250 employees or less. Growing Economic and Organizational Interconnectedness Free trade grew greatly from the 1990s. Three largest Trade groups: o - European Union (EU) o - North American Free Trade Agreement (NAFTA) o - Asia-Pacific Economic Cooperation (APEC) Goal= Reducing tariffs and making trade Easier. Despite protectionist measures, globalisation is unstoppable. Tariffs: Taxes used to restrict imports by increasing the price of goods and services purchased from another country, making them less attractive to domestic consumers. Protectionist: Relates to the theory or practice of shielding a country’s domestic industries from foreign competition by taxing imports. More Complex and Dynamic Work Context Some changes can affect the stability of work environments. These include outsourcing, downsizing, privatization, migration, and team-based management. - Outsourcing and Downsizing Outsourcing: business practice of hiring outside a company to perform services and create goods that traditionally were performed in-house by the company’s own employees. Benefits: - larger workforces - access to industry experts - increased flexibility -> Organisations are increasingly outsourcing manufacturing, service, and administrative functions to developing countries where labor costs are low. Drawbacks: can lead to unanticipated problems, including cultural ones Downsizing: Making an organization smaller by eliminating staff positions. - Privatization Privatization: Change of ownership in which public control over services (i.e., organizations owned or part-owned by the government) is handed over or sold to private enterprise organizations. -> This is usually done in the belief that a private organization will be more efficient than a government department. Drawbacks: - Government loses out on any future income - Controlling monopoly can be difficult - Monopolies have no incentives to lower costs for customers - Migration Migration: Movement by people from one place to another with the intentions of settling, permanently or temporarily, in a new location. -> Developed countries are the largest recipients of migrants, and China, India, and the Philippines lead the list of sources of migrants.  -> Increasing number of women in migrants -> Today’s migrants are much skilled - Teams Teams are more difficult because of Demographic changes—including increasing cultural diversity because of ease of movement across borders by workers of all skill levels, the rising average age of employees, and the addition of more women to the workforce. As a consequence, changing work methods, compensation systems, levels of employee involvement, and the job of the supervisor -> In summary, the changes caused by outsourcing, downsizing, privatization, international migration, and team-based management have combined to create a more complex and dynamic work context for firms around the world. It is in these complex situations that today’s international managers must work. More and Different Players on the Global Stage Flat world: Thomas Friedman coined this term to suggest the world is flat in the sense that the competitive playing field between industrial and emerging market countries is leveling and that individual entrepreneurs as well as companies, both large and small, are becoming part of a large, complex, global supply chain extending around the world. Gross domestic product: Monetary value of all the finished goods and services produced within a country’s borders in a specific time period. Foreign direct investment: Investment made by a firm or individual in one country into business interests located in another country. Internet bubble: A historic speculative bubble and period of excessive speculation mainly in the United States that occurred roughly from 1994 to 2000, a period of extreme growth in the use and adoption of the Internet. Transition economies: A transition economy is a country that is changing from a centrally planned economy to a market economy. Global Political and Legal Contexts Shifts in the political landscape draw attention to the need for global businesses to keep in mind the possibility that a government will undergo political changes. These changes may affect the organization. Around the world, there is a wide range of political systems. The two extremes of the continuum are pure democracy at one end versus Totalitarianism at the other. Totalitarianism: A system of government that is centralized and dictatorial and requires complete subservience to the state. In theocratic totalitarianism, the religious leaders are also the political leaders. In secular totalitarianism, ideological concepts as opposed to religion are the basis of the political system. Positives and Negatives of Globalization Whether globalization has a positive or negative effect is debatable. Positives: Rising number of transactions across borders that have improved the situation of emerging economies; the formation and expansion MNO’s; and the improvements in human rights. Negatives: Environmental damage caused by increased use of fossil fuels, the negative effects of global price competition, and the job insecurity caused by outsourcing. -> The reality is that globalization has both positive and negative effects. One thing, however, is certain: Globalization affects all aspects of the contexts in which managers work and makes their jobs more complicated. 3. The Contexts of International Management Culture is very important. It affects the goals of the institutions of society, the way the institutions operate, and the attributions (causes assigned to why people behave) their members make for policies and behavior. Institution: Social structure formed for a common purpose that influences the behavior of people and the way they live. Some institutions are government, education, religion, law, and so on. Attribution: The action of regarding something as being caused by a person or thing. What International Managers Do Several theories and definitions about management. Summary of manager’s functions in Box 1.5. Organizational Context, Culture, and Managerial Roles Box 1.5 Characteristics of Managerial Work It combines a specialist professional element and a general, “managerial” element. It involves liaison, person-management, and responsibility for a work process, beneath which there are more detailed work elements. Its episodes vary by duration, time span, recurrence, unexpectedness, and source. Much time is spent in day-to-day “trouble shooting” and ad hoc problems of organization and regulation. It involves much asking or persuading others to do things, involving the manager in face- to-face verbal communication of limited duration. Patterns of communication vary in terms of what the communication is about and with whom the communication is made. Little time is spent on any one particular activity and, in particular, on the conscious, systematic formulation of plans. Planning and decision making tend to take place in the course of other activity. Managers spend a lot of time accounting for and explaining what they do, in informal relationships and in activity concerned with “organizational politics,” such as ensuring they remain influential.  Managerial activities involve many contradictions, cross-pressures, and conflicts. Much managerial work involves coping with and reconciling social and technical conflict. There is considerable choice in terms of what is done and how: Part of managerial work is setting the boundaries of and negotiating that work itself. To understand how they should carry out their jobs, managers also rely on other people and on Norms for how to behave. Norms: Standards or patterns of social behavior that is typical or expected of a group. As globalization increases the amount of intercultural contact in organizational settings, the inadequacy of a Monocultural understanding of management to explain and predict behavior in these settings becomes more apparent. Monocultural: Having or referring to a single culture Culture and Research In this book, we show how cultures and differences between cultures profoundly affect managers’ work. But we do so from a systematic, objective, and scientific perspective Session 2 Chapter 2 1. Introduction Culture consists of patterned ways of thinking, feeling and reacting, acquired and transmitted mainly by symbols, constituting the distinctive 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 Artifacts: Objects made by human beings, typically an item of cultural or historical interest. Values: A person’s principles and beliefs about what is important in life. Roles: The expected behavior associated with a particular situation or position in a group 2. Features of culture Culture is shared Shared, in this case, means that most members have similar mental programs enabling them to understand immediately the basic values, norms, or logics that underlie what is acceptable in a society. Logic: A particular mode of reasoning viewed as valid Culture affects mental programming at an intermediate level based on experiences shared within a particular Society. Society: An enduring and cooperating social group whose members have developed organized patterns of relationships through interaction with one another. Culture is learned A second characteristic of culture is that it is gained through the process of interacting with the social environment (mainly other people) and learning from it. Over time, the people in a society develop patterned ways of interacting with their environment. Culture is systematic and organised A third characteristic of culture is that cultures are not merely random assortments of attitudes, customs, and behaviors but integrated coherent systems. Each culture is an organized system of interrelated values, attitudes, beliefs, and meanings that determine behavioral responses to a cultural group’s environment, to other people, and to other cultural groups. 3. Defining Culture Our working definition is that culture is a set of knowledge structures, consisting of systems of values, norms, attitudes, beliefs, and behavioral assumptions that are shared by members of a social group (society), that are embedded in institutions, and that are learned from previous generations. Consistent with this definition, culture can be described as having three levels: artifacts and creations, values, and basic assumptions. US PolygenyExample Think legal restrictions foam polygamy unconventional what is understood throph social media to be valued monogamy aligns with relition financial responsibility underlying core son dilute beliefs mu timepaterns 4. Why Cultures Differ and Persist moneyany is socially accepte There are so many factors that contribute to cultural variation that we can’t consider them all. However, anthropologists have derived a set of assumptions about how cultures interact with the environment, and these show how societies confront and solve common problems. These characteristics are summarized in Box 2.3. If international managers can understand something about how other cultures have emerged, are maintained, and are changed, they may be able to anticipate the reactions of people who have grown up in these cultures to them and to the surrounding globalizing conditions. Box 2.3 Assumptions About a Society’s Interactions With the Environment There are a limited number of common human problems for which all peoples at all times must find solutions. For example, every society must decide how to feed, clothe, house, and educate its people. There are a limited number of alternatives for dealing with these problems.  All alternatives are available to a society at all times, but some are preferred over others. Each society has a dominant pattern of value orientations (beliefs about what is appropriate and how one should behave) but also has numerous variations or alternative patterns. In both the dominant profile and the variations there is an ordered preference for alternatives. In societies undergoing change, the ordering of preferences may not be clear. Survival and the Emergence of Cultural Norms Many cultural characteristics originally developed to aid the survival and safety of group members in their environments. Another important example is the different attitudes that people in different climates have toward time. Language Language plays a prominent role in the spreading and maintenance of cultural characteristics. Because people think in particular languages, language defines the way they view the world, determining how a society enables its members to represent their environment. Some features of language are related to how people view the world. Even the way we think about time may be influenced by language. Language, therefore, is an artifact of culture that helps to perpetuate its values, attitudes, beliefs, and behavioral routines. Because we use language to interact with others, it is powerful in shaping behavior and in perpetuating beliefs and habitual, cultural, patterns of interaction Religion and Ideology Religious traditions are closely related to cultural values. They can have a cultural influence through the content of their belief systems, the structure of their beliefs and rituals, and the identities that they promote. Identity (ies): The understanding a person has of himself or herself, their self-concept. Religious groups have long competed with countries as a basis for social identities that shape people’s choices about who they are most willing to work, trade, or fight with. Governments are often originally designed to protect a group that has a common religious and cultural history. Social identity: A person's sense of who they are, based on their group memberships. The extent to which religion influences the cultural profile of a society depends on the following:  The extent to which a particular religion is dominant or state-sanctioned The importance that society places on religion The degree of religious homogeneity and fervor in the society The society’s tolerance for religious diversity Other Factors Numerous other factors contribute to cultural variation and persistence: Climate, topography, and the indigenous economy affect traditions and behavior in the primitive heritage of modern societies, as in our previous Kikuyu of Kenya example. Proximity and topography affect the exchange of culture among societies because barriers, such as mountains and oceans, limit the potential for cross- cultural interaction. Economic systems and technology affect the exchanges between cultures and hence the transfer of culture. Political boundaries (also discussed ahead) define areas where there is more or less interaction among cultures Culture and institutions Institutions are the structures and activities that provide stability to a society; they consist of the family, educational, economic, religious, and political systems. Institutions that support a society’s cultural orientation typically include a governing group that rewards desired behavior and punishes unacceptable behavior and organizations that teach and promote desirable behaviors. Once a cultural pattern is established, it is very resistant to change, even when surrounding circumstances change. 5. Debates surrounding the Concept of Culture National Cultures For managers, the laws and regulations of sovereign nations govern the activities of their firms. Therefore, for international managers, understanding culture at a national level is logical. But if, for practical purposes, the concept of national culture is adopted, two major issues arise. - Ignore the large number of subcultures that exist within some nations: In reality, differences often observed between subcultures within a country that are not obvious to the outside observer but are apparent to local nationals may be as big as differences between countries. - Ignore the individual variations that exist within national cultures—the effects on people of their unique life experiences, gained in various local and global cultural groups that, within a national culture, provide even more diversity. While acknowledging these differences, we nevertheless believe that understanding national culture brings advantages to the international manager Convergence, Divergence or Equilibrium Some people believe that cultures around the world are becoming more similar. Because national culture is related to other societal factors, such as political, legal, educational, and labor relations systems, some experts suggest that the rapid technological and economic development around the world (characterized by globalization and described in Chapter 1)  has a homogenizing (making more similar) effect on culture. We call this the convergence theory of national cultures—the view that all cultures are converging to be more similar. Organisational versus National Culture Organizational culture is often described as an internal attribute of the organization that is Socialize: To teach and enforce behavior that is acceptable to a group or society. socially constructed, historically determined, holistic, and organizational difficult to change. culture We distinguish between organizational and national culture because people enter organizations after their national cultural values, attitudes, and fundamental beliefs have been developed, whereas organizational practices are learned through workplace socialization. Organizational cultural practices such as goal-setting programs and workmates going out together after work have different implications depending on the national culture in which they occur. In summary, organizational culture is different from national culture and is composed of different elements. In addition, entry to and transmission of organizational culture occurs differently to national culture. Individuals are only partially involved with an organizational culture but are totally immersed in their national culture. Overall, the best way to consider the influence of these forces on behavior in organizations is to think of organizational norms operating within and together with societal culture. Acculturation and Biculturalism Acculturation concerns the psychological and behavioral changes that people experience because of contact with different cultures, particularly people who relocate from one culture to another. Acculturation can also occur on a larger collective scale where a whole group (e.g., Turkish immigrants in the Netherlands or the nation of Japan when controlled by the United States after WWII) undergoes change.The gradual process of psychological acculturation during immigration results in changes in individuals’ behavior, identity, values, and attitudes. Acculturation: Cultural modification of an individual, group, or people by adapting to or borrowing traits from another culture. Additionally, some individuals with the experience of living in multiple cultures acculturate to such an extent that they are able to function very effectively in more than one culture. These so-called Bicultural individuals have, through living in another culture or having intensive daily interaction with people who are culturally different, developed so much cultural flexibility that they can adjust their behavior to the immediate cultural situation. Bicultural: Individuals who have dual cultural identities. 6. Culture and Social Groups In-group/out-group: Social group to which a person psychologically identifies as being a member. By contrast, an out-group is a social group with which an individual does not identify. Our membership in a cultural group helps to determine how we perceive ourselves—our self- identity—and also how others perceive us. Thus, the categorization of individuals into different groups results in a number of assumptions about both the in-group and out- group members, such as different beliefs about in-groups and out-groups, attitudes toward in-group and out-group members, and behavior directed at particular cultural groups. When categorized in a group, individuals are thought to be more similar in their beliefs and behavior, their behavior is thought to convey less information about them as individuals, and the group is believed to be more important because of their behavior than their individual characteristics. When people refer to national groups, such stereotypes of cultural groups are prevalent Stereotype: A widely held but fixed and oversimplified image or idea of a particular type of person. In-group Bias and Prejudice To maintain our self-image, we favorably compare the attributes of our own group (the in-group) with those of out-groups. Therefore, we consistently discriminate in favor of the group(s) with which we identify. Prejudiced judgments about members of out-groups relate to beliefs about the character of these groups. These often negative attitudes toward out-group members are based solely on their membership in a particular group. Ethnocentrism The attitude that reflects the categorization of cultural groups is encapsulated under the term ethnocentrism. Ethnocentrism: An attitude that one’s own cultural group is the center of everything and all other groups should be evaluated with reference to it. Session 3 Chapter 3: Comparing Cultures Broad cultural concepts:  Individualism → loosely linked individuals, who view themselves as independent from the collectives, are primarily motivated by their own preferences and needs, and give priority to their own personal growth Collectivism → closely linked individuals, who see themselves as part of one or more collectives, primarily motivated by norms and duties, and who give priority to the goals of the collective Cultural distance → values of 2 societal groups are very far apart - differences and difficulties Kluckhohn and Strodtbeck Framework 6 problems that all societies face and 3 alternative ways of handling each: example as Relationship to nature orientation to time beliefsabout humannature nature of humanactivity relationship among people conception of space Hofstede’s Study 4 dimensions of culture: Individualism-collectivism → the degree to which one’s self-identity depends on individual characteristics or on the characteristics of the groups to which they belong Power distance → how members of a culture view and accept an unequal sharing of power Uncertainty avoidance → the degree of tolerance they have for unpredictability, and how much they focus on reducing uncertainty and creating stability Masculinity-femininity → which orientations are emphasised Male orientations → ambition, acquisition and achievement Female orientation → nurturance and interpersonal harmony New dimensions through further studies: Long-term orientation → set of values that place high importance on the long-term future and  on thrift and perseverance, and low importance on immediate rewards - positively related to countries’ long-term rates of economic growth Indulgence versus restraint → indulgent societies are more open to the gratification of basic and human drives related to enjoying life and having fun (happier, in control of their lives, sociable, leisure-oriented, higher birthrates, less cardiovascular diseases, higher importance of friends, support for casual sex, more obesity) Schwartz Value Survey 7 value orientations: Egalitarianism: recognition of people as moral equals Harmony: fitting in harmoniously with the environment Embeddedness: people are embedded in the collective Hierarchy: unequal distribution of power is legitimate Mastery: exploitation of the natural or social environment Affective autonomy: the pursuit of positive experiences Intellectual autonomy: the independent pursuit of own ideas Trompenaars’s Dimensions 5 dimensions - concern relationships among people: 2 dimensions of cultural variations Loyal involvement - utilitairian Varying orientation toward group memebrs → similar to collectivism & involvement individualism Conservatism - egalitarian Varying orientations toward obligation of social relationship → similar to commitment Hofstede’s power distance 2 dimensions - time and environment: Past versus future Time Linear (one stage to another) versus holistic (all at once)  Linear: US, UK and Germany Holistic: Japan, Indian and Mexico Internal direction → the extent to which individuals feel that they themselves are the primary influence on their life External direction → they may perceive that the environment is seen as more powerful Enviroment than they are Internal: US, UK, Australia,... External: China, Russia, Saudia Arabia,... The Globe Study Nine dimensione of cultural variation first four are similar to Hofstede Institutional The degree to which organisational and societal institutional practices encourage and collectivism reward the collective distribution of resources and collective action In-group The degree to which individuals express pride, loyalty, and cohesiveness in their collectivism organisations or families Power distance The degree to which members of society expect power to be distributed unequally Uncertainty The extent towhich a society organization or grouprelies on social normsrules avoidance andprocedures toreducethe unpredictability of futureevents Gender The degree to which a collective minimises gender inequality egalitarism The degree to which individuals are assertive, confrontational and aggressive in their Assertivness relationship with others The degree to which a collective encourages and rewards individuals for being fair, Human orientation altruistic, generous, caring, and kind to others The extent to which individuals engage in future-oriented behaviours, such as delayed Future orientation I gratification, planning and investing in the future FI Performance The degree to which a collective encourages and rewards group members for orientation performance improvement and excellence sYmilar to achievement motivation Special features of the GLOBE study: Middle managers collected from Cultural dimensions measured as practices (how it is) and values (how it should be) For some dimensions, those 2 measures were negatively correlated Individualism and Collectivism Selling to a collectivist individual → first build a relationship Recognise the difference between social culture and individual values! Cultural intelligence → sensitivity to others’ cultural characteristics and the ability to show this sensitivity in one’s own actions Tightness → tight cultures have strongly enforced rules and little tolerance (Japan) - often homogenous, and often appear in societies with high population density Loosened → lose cultures have few strongly enforced rules and great tolerance for deviance Cultural complexity → the amount of difference that exists in the various aspect of the lives of individuals in a society Vertical and horizontal dimensions → how people view their status relationship with others Vertical dimension - similar to Hofstede’s power distance dimension and Swartz’s value orientation of hierarchy A high correlation between power distance and collectivism → dominant cultural profile around the world may be vertical collectivism (China, India) and horizontal individualism (Western Societies) Social axioms → generalised beliefs about oneself, the social and physical environment, or the spiritual world and take the form of statements about the relationship between two entities or concepts Dynamic externality → a cluster of beliefs that focus around religiosity and the view that effort ultimately leads to justice Social cynicism → cynical view of people, biases against some other groups, a mistrust of social institutions, and a disregards of ethical means of achieving an end Sources of guidance for managers: Organisation’s rules and procedures Superiors Colleagues Subordinates Staff experts Organisation’s norms Society’s norms Own experience and training What source a manager relies on can be an indicator of their culture Cultural distance - quantitative measures High cultural distance → might experience unfamiliarity and uncertainty when working with one another A small degree of cultural distance → easier to develop trusting relationships Article Lachman, Nedd & Hinings (1994) Analyzing cross-national management and organizations: A theoretical framework Attention needs to be placed on: (a) Whether culture is a significant explanatory factor. (b) What are the specific aspects of culture to which differences can be attributed? (c) How do these cultural elements cause the differences? - The impact cultural values have is determined by their centrality within the value system of a cultural setting more than by their prevalence in this setting. - Focus of the paper: Major problems faced by cross-cultural and international management may stem from value differences and from incongruence between management’s underlying core values and the values central to the host cultural setting. - Proposed here is a framework that specifies the mechanisms through which culture exerts its influences, differentiates between core and periphery cultural values, and accounts for the differential impact and consequences these values have for organizations and management within and across cultural boundaries. 1. Specifying the effects of culture - The social control exerted by values is the main factor in the impact of culture - Values: the bases for the choice, by a social group, of particular ends and of particular means by which these ends are to be accomplished. o Serve as mechanisms of social control by regulating behavior in accord with the requirements of the socio-cultural system. The value system legitimizes behavior by stipulating positive or negative sanctions for what is expected, desired, required, or forbidden behaviour within a cultural setting. o Cultural values have an important role of controlling and directing social behaviour, organizational behaviour included. - Not all values are equally important A) Centrality of values - The more important and central the value, the stronger its impact will be and the more consequential it will be for differences in organizational and managerial practices. - Values higher in the hierarchy are more important, more enduring and resistant to change, are highly accepted and agreed upon, and hence are more involved in social control than those lower in the hierarchy. - Core values: High priority values that are central to a social, cultural or an individual’s value system, are important in regulating social behaviour, and tend to be enduring. - Periphery values: Values of low priority, low consensus, and less importance for social control, and relatively susceptible to change. ð Efforts should be directed at identifying the core values and examining their impact on organizational practices (local interpretations of the imported values). B) Theoretical framework  - Congruence between core values governing modes of organizing in a cultural setting and the value assumptions underlying the structure and process of cross-national organizations is of critical importance for organizational effectiveness. - Organizational adaptations to pressures and constraints posed by the environment are essential because organizations depend on their environment for necessary inputs and outputs - One additional dimension: the economic dimension of availability (scarcity or munificence) of resources o Reasons for choosing resources: - The economic aspects of any society and its cultural values are intricately bound together - Since economic conditions differ across nations, the conditions prevailing within a nation are of particular importance for cross national organization - Since cross-national management involves for the most part economic organizations and activities, the potential impact of the economic environment is of considerable importance 2. Effects of cultural values A) Cultural values and individual behaviour Behaviour of individuals in the organization are influenced by the values, orientations, attitudes and beliefs individuals bring with them to their jobs (Link 1, Fig 1). - Early socialization (Childhood) – affects core values (difficult to change) - Late socialization (Adult) – affects periphery values (which may change). B) Cultural values and organizational structure Cultural values permeate organizations by defining organizational processes, role structures, and role relations as culturally acceptable, relatively neutral, or in conflict with culturally prescribed norms and therefore, unacceptable. (Link 2, Fig 2) Culture free perspective: maintain that variations in organizational forms are due to differences in economic environments or imperatives of technology but not culture. Culturalist perspective: maintain that much of the variation is due to cultural differences. Configurations of organizational structures and managerial approaches that impinge on core values will be culturally bound (culturalist perspective) Those impinging on periphery values may appear to be culture free (culture free perspective)  3. Availability of Economic Resources The framework proposes that the environmental dimension of relative scarcity of resources may affect organizations (Link 3, Fig 1) as well as individual behaviour (Link 4, Fig 1) within given settings. A) Economic Resources and organizational structure Choices of organizational structures and practices can vary with resource availability. In fact, the congruence of organizational adaptation practices with prescribed norms is related to scarcity or munificence of resources. o Under conditions of scarcity, when organizations are forced to exert greater efforts to obtain needed resources, they are more likely to engage in legally questionable or clearly proscribed activities (violations, tax evasion). However, organizational adaptation is a vehicle for absorbing the effects of economic or other contextual constraints into organizational structures and practices. (Link 3, Fig 1). Moreover, while adoption of responses incongruent with periphery values may be possible, adoption of responses incongruent with core values may have serious consequences for the effectiveness of the organization. B) Economic Resources and individual Behaviour Scarcity of economic resources influences individual adherence to certain values, by reinforcing specific choices within the legitimized range (Link 4, Fig 1). Different levels of scarcity might engender individual differences in value emphasis even in the same cultural setting). 4. Congruency and Organizational Effectiveness - Congruency between core value assumptions underlying specific organizational structures and processes, and the core values of the host cultural setting that govern and legitimize (or sanction) corresponding patterns of behaviour is emphasized. - Incongruences may impact organizational effectiveness: o (Link 2) interface of organization and culture and within the org. at the interface between role expectations and behaviour o (Link 5) prescribed structures and processes o (Link 3) importance of effective organizational adaptation to factors of the environment. - Feedback effects of organizational effectiveness within as well as outside the organization. o Suggests that the level of effectiveness may, in turn, influence role expectations and organizational structures and processes.  o It can also influence the availability of resources in the environment, or even some cultural values. 5. Specifying cultural effects on organizational dimensions: Illustrations - By articulating the impact of cultural values on organizational structure and processes, the framework can serve as a hypothesis-generating schemes. (Figure 2) - Values governing power relations, social relations, orientations to work and values pertaining to uncertainty have implications for the structure and processes of organizations, as well as the behavioural styles. (See Table 1, very similar to Hofstede dimensions) - Power values: they specify appropriate forms of power relationships and authority in social organizations (e.g. preference for long or short power distances in social relations) o Define the appropriate hierarchical arrangements and the power-compliance strategies that should be employed within organizations. - Social relations: forms of human bonds determining cultural preferences for particular role relationships o They may range from individualistic (US) to collectivistic consensus (Japan) orientation. - Work orientation: Cultural preferences may range from a strong emphasis on work as means for achieving non-work goals and social status (instrumental orientation) to a strong emphasis on work as a highly value activity itself. - Uncertainty: From high avoidance of uncertainty to its acceptance 6. Coping with incongruencies Contingency approach of cultural congruence describing different incongruencies which may have different consequences for cross-cultural organizations and may require different managerial approaches. Four types of incongruencies: A) Type A: Contention (Org. Core – Cul. Core) Most problematic for the effectiveness of cross-national organizations and management (conflicts, frictions may reduce effectiveness) o However, some forms of value coupling may be helpful - Entry strategy: should account for the equally dominant local values (joint venture with a local organization is a good option because it allows loose coupling of core values)  - Coping strategy: is conflict avoidance by negotiating, log-rolling, coalitions or co- optation B) Type B: Primacy (Org. Core – Cul. Periphery) This contingency is conductive to change and innovation introduced by the imported company - The org. may increase congruence by forcing change in local peripherical values with its host cultural environment to match core organizational values - Entry strategy: organizational transplantation of organizational structures and processes into the host setting - Coping strategy: is to control change for management - An external change may be even desirable and encouraged - Since organizational core and host peripherical values are concerned, a strategy of transferring expatriate management into the host setting can be proposed (org. core values can be attained, local values change can be stimulated and reduction in incongruences) C) Type C: Submission (Org. Periphery – Cul. Core) Periphery organizational values are incongruent with local core ones - Efforts to change local core values are not worthwhile. o Instead, compliance with and adoption of local core values may be more effective - Operate through local organizations (mergers, franchises or purchases) to reduce incongruences - Hiring local human resources is useful D) Type D: Indifference (Org. Periphery – Cul. Periphery) The least disruptive incongruence (it’s between periphery values) - Incongruences may be either bridged or left to coexist with relatively low costs for the organization - No specific entry or coping strategies 7. Concluding points  The framework presented here attempts to articulate the impact of cultural values on the structure and processes of cross-national organizations. It proposes that: 1. Core and periphery cultural values exert different social control at the individual vs organizational levels 2. Individual behavior is regulated by the values inculcated through early/late socialization processes 3. Org. are shaped through the legitimation of certain choices of org. structure and processes 4. Particular choices are influenced by other contextual factors (availability resources) 5. These contextual factors also influence individual choices by reinforcing certain values and behaviors 6. Incongruencies in integrating these influences affect org. effectiveness Article Morris, Podolny & Sullivan (2008) Culture and coworker relations: Interpersonal patterns in American, Chinese, German, and Spanish divisions of a global retail bank. The detailed summary of the article "Culture and Coworker Relations: Interpersonal Patterns in American, Chinese, German, and Spanish Divisions of a Global Retail Bank" delves into the nuances of how national culture influences coworker networks within the divisions of a global retail bank. The authors, Michael W. Morris, Joel Podolny, and Bilian Ni Sullivan, explore the premise that different cultures have distinct norms that shape the content and structure of employee interactions, which can be understood through the lens of market, family, law, and friendship relations. The paper, published in Organization Science in August 2008, suggests that these cultural norms act as templates for coworker interaction norms. The authors use an egocentric network survey to gather data on the relationships between employees, focusing on network structure attributes such as density and multiplexity, and relationship attributes like longevity and affective tone. The theoretical framework of the study combines insights from mid-20th-century sociology and contemporary cognitive anthropology. It draws on Talcott Parsons' systems theory, which described patterns of interpersonal interaction distinctive to American, Chinese, German, and Spanish cultures. The study also considers anthropological accounts of how cultural norms evolve from preexisting relational models. The authors propose that the different interpersonal patterns observed by Parsons reflect different relational models that are salient in different cultures. For example, in Chinese culture, filial responsibility is a salient model and influences coworker interactions. The study explores hypotheses about distinctive features of the four cultures, aiming to illuminate differences in how employees interact with their coworkers.  The paper also critiques the predominant focus on internal values in cultural research, suggesting that culture may be more effectively carried by external social situations and structures. It argues that different informal structures may form in different cultures due to different interpersonal norms. The authors summarize Parsons' typology of patterns and propose their relational templates as follows: - American culture with an economic emphasis, where the template is market transaction. - Chinese culture with a familial emphasis, where the template is filial responsibility. - German culture with a political emphasis, where the template is legal procedure. - Spanish culture with an expressive emphasis, where the template is honor-bound sociability. The study seeks to provide a multifaceted look at relationships to uncover insights about cultural variation in employee behavior, going beyond the dichotomy of individualistic and collectivistic cultures to also differentiate among collectivistic cultures that prioritize different kinds of collectivities. Session 4 Chapter 5 This chapter reviews the process of individual decision making and explores the opportunity for cultural variations in how managers simplify complex decision-making processes. Additionally, the rise of ethical problems in international contexts are discussed. 1. Rational Decision making The study of managerial decision making can be divided into: - Prescriptive approaches: what managers should do à rational model of decision making - Descriptive approaches: what managers actually do Icquired or reffering to ground by foundedon determined long standingcustom Rational model of decision making:effsergggg.gg by 1. Problem definition 2. Identify decision criteria (e.g. experience) steps 3. Weight the criteria (1-5 points) process 4. Generate the alternatives 5. Evaluate the alternatives 6. Select the optimal solution Cultural differences in the optimization model This model comes with limitations such as time, resources, skills and cultural variations: - Behavioural preferences. The Kluckhohn and Strodtbeck model of cultural variation in preferences for behaviour (Chapter 3) suggests that at the problem definition step, the activity orientation of the culture may influence whether a situation is defined as a problem. US managers have a more problem-solving orientation (doing). Indonesian managers – situation accepting culture (being). Information usage for decision making is also influenced by culture. - Selecting and weighting criteria can also be affected by culturally different value orientations. For example, US managers choose more short-term oriented goals in comparison to Koreans. - Generating and evaluating alternatives. For example, in the Schwartz value system (Chapter 3) harmony-oriented cultures are more likely than mastery-oriented cultures to emphasize alternative solutions that favour the natural environment. - Adoption of rules of choice. Individualist cultures, in which feeling unique is a common goal, are more likely to use a variety of different choice rules than are those from collectivist cultures. In addition, motivational differences can influence, for example, in favour of those alternatives that have the most highly valued outcomes for the individual or for a collective. - Identity of decision maker. Vertical individualist cultures, such as France, tend to have decision-making authority vested in only a few high-ranking individuals, with superiors being an important source of guidance for making decisions. In contrast, horizontal collectivist cultures, such as Israeli kibbutzim, push decision making well down in the organizational structure and involve large numbers of people. - Pace of decision making. US is more deceive, therefore, quicker. Arab cultures are slower at making decisions. - Organization structures for decision making. The decision-making structures of organizations also reflect cultural variation. For example, the ringi-sei decision-making process characteristic of Japanese organizations is consistent with the Japanese cultural orientations of collectivism and high power distance Limits to rationality - bounded ability to be rational - incomplete information about the problem, the decision criteria, and their own preferences. - External constraints such as culture of the culturaldifferences the optimizationmodel assumes that decision I  y Alternative: the satisficing model: A decision-making strategy that aims for a satisfactory or adequate result rather than the optimal solution. 2. Decision Styles Cope with psychological stress of making a decision by using… Four decision styles Vigilance: optimal style; consists in careful collection of facts and considerations of alternatives. Complacency: involves either ignoring the decision completely or simply taking the first available course of action. Defensive avoidance: passing the decision off to someone else, putting off the decision, or devaluing the importance of making a decision. Hypervigilance: which could be called panicking, is making hasty, ill-conceived decisions. Simplifying strategies of decision making Heuristics: are rules of thumb, mental tools that people use to simplify decision making. Speed up decision making but can lead to biases. Most used are: - Availability: mental shortcut that relies on immediate examples that come to a given person’s mind when evaluating a specific topic, concept, method, or decision. - Representativeness: A mental shortcut in which people assess the similarity of objects and organize them based around the category or prototype. Outweighs logic of probability. Collectivist societies display more confidence in the correctness of their decision. - Anchoring and adjustment: Basing decisions on known “anchors” or initial points or familiar positions and then adjusting relative to this starting point. Pygmalion/Rosenthal effect: expectations of a person affect that person’s performance. Motivational biases in decision making - Decision makers with interdependent self-concepts may be more influenced by social motives, such as respectfulness, affiliation, care for others, avoidance of blame, and the need to comply. - There may be culturally based motivational differences in the need for consistency between internal attitudes (what we think) and external behaviour (what we do).  - A common decision bias is having an unrealistically positive self-evaluation. 3. Selection and Reward Allocation Decisions Two important managerial decisions affected by cross-cultural interaction are the selection of employees and the allocation of rewards. Nepotism: is the practice among those with power or influence of favouring relatives or friends, especially by giving them jobs. Both selection decisions and reward allocation decisions vary systematically across cultures. Much of this variability stems from the cultural dimensions of individualism–collectivism and power distance. The limited research evidence suggests that the mental processes involved in decision making are not universal and that managers must be very careful when trying to apply decision models based on Western modes of thought to non-Western cultures. 4. Ethical Dilemmas in Decision Making Descriptive (what is current practice?) & Prescriptive/normative models (what should current practice be?) - Moral philosophies: Systematic approach to defending and recommending concepts of (deciding what is) right and wrong conduct. - Ethical dilemma: A situation in which a difficult choice has to be made between two courses of action, either of which might violate a moral principle. Guided by 1 or more moral philosophies. - Consequential models: A theory holding that the morality of an action is determined by its consequence, not by whether it follows a set of written edicts or laws. These models focus on utilitarianism. - Utilitarianism: A theory that states that the best action is the one that maximizes utility, which is typically defined as that which produces the greatest well-being of the greatest number of people. - Deontological or rule-based models: Deontological principles state that human beings have certain fundamental rights, and that ethical decision making should be based not on concern for consequences but on having a duty to uphold these rights. An example is the categorical imperative. - Categorical imperative: A moral law that is unconditional or absolute for all agents, the validity or claim of which does not depend on any ulterior motive or end. Also stated as, act to treat people always as an end and never as only a means.  Normative Corporate Guidelines has put together universal rules for all international managers to follow. Example: UDHR, ECHR, Helsinki, OECD, ILO, TNC Code (p28) o Employment Practices & Policies o Consumer Protection o Environmental Protection o Political Payments & Involvement o Basic Human Rights & Fundamental Freedoms Cultural Relativism: The idea that a person’s beliefs, values, and practices should be understood based on that person’s own culture rather than be judged against the criteria of another. Moral principles are only legitimate when aligned with culture’s attitude, belief, habits. Problems emerged since there are acts that we cannot defend due to cultural variation: hypernorms, a concept that applies to principles so fundamental that, by definition, they serve to evaluate lower-order norms, reaching to the root of what is ethical for humanity. Cognitive Moral Development: is the idea that people pass through stages in which they become more adequate at responding to moral dilemmas than the previous stage. There are six stages of moral development at three distinctive levels (of moral maturity): 1. Preconventional level: individual perspective (under 9 years) Stage 1. Obedience and punishment: Sticking to rules to avoid physical punishment. Obedience for its own sake. Stage 2. Instrumental purpose and exchange: Following rules only when it is in immediate interest. Right is an equal exchange, a fair deal. Primitive individualism 2. Conventional level: member of society perspective (adolescents & adults) Stage 3. Interpersonal accord, conformity, mutual expectations: Stereotypical “good” behaviour, living up to what is expected by people close to you. Morality. Stage 4. Social accord and system maintenance. Fulfilling duties and obligations to which you have agreed, upholding laws except in extreme cases where they conflict with fixed social duties, contributing to the society, group. 3. Postconventional level: principled perspective Stage 5. Social contracts and individual rights: being aware that people hold a variety of values; rules are relative to the group. Upholding rules because they are the social contract. Upholding nonrelative values and rights regardless of majority opinion. Stage 6. Universal ethical principles: Following self-chosen ethical principles. When laws violate these principles, act in accord with principles. Culture’s influence on ethical decision making: The model above suggests that individual differences can influence the likelihood of people choosing and doing what they believe to be ethical. Each manager will approach an ethical dilemma with a particular level of cognitive moral development. But decisions made in a social context can be strongly influenced by the situation, including the culture, which often directly affects the identification of the ethical component of an issue. Descriptive research on ethical decision making in an international environment emphasizes three factors: 1. level of moral development, 2. other individual factors (e.g. internal locus of control) 3. situational (including cultural) factors (e.g. field dependence) "The Impact of National Culture and Economic Ideology on Managerial Work Values: A Study of the United States, Russia, Japan, and China" by David A. Ralston 1. Crossvergence Perspective: - Concept Explained: Crossvergence is a theory that suggests work values in a global business environment are shaped by a blend of a country's national culture and its economic ideology. It's like mixing ingredients from two different recipes to create a new dish that has flavors of both. - Study Finding: The study found that managerial work values in the United States, Russia, Japan, and China are influenced by this mix of their cultural beliefs and economic systems, rather than purely by one or the other. 2. Role of National Culture: - Concept Explained: National culture refers to the values, beliefs, and norms shared by people in a particular country. It's like the unique personality of a country that influences how people think and act in work settings.  - Study Finding: The research highlighted that national culture has a significant impact on work values, showing that the traditional ways and societal norms of a country continue to shape how managers think and behave, even in a globalized world. 3. Implications for Corporate Strategies: - Concept Explained: This is about how companies should plan their global or local business strategies considering the differences in national cultures and economic ideologies. It's like deciding whether to offer the same menu worldwide or customize it for local tastes in a global restaurant chain. - Study Finding: The findings suggest that to be successful globally, companies need to understand and integrate these diverse cultural and economic perspectives into their strategies. 4. Individualism-Collectivism Values Construct: - Concept Explained: This construct measures whether a society values individual achievements and independence (individualism) or group harmony and collective effort (collectivism). It's like comparing a solo sports athlete's mindset to that of a team player. - Study Finding: The study used this construct to compare cultures and found significant differences in how these four countries prioritize individual versus group interests. 5. Hypotheses Testing: - Convergence (Economic Ideology-Driven): - Hypothesis: Countries become more similar in work values as they develop economically. - Study Finding: There was some evidence of convergence, but not completely. - Divergence (National Culture-Driven): - Hypothesis: Countries maintain their unique work values regardless of economic changes. - Study Finding: Strong evidence was found that national culture continues to shape work values significantly. - Crossvergence: - Hypothesis: Work values evolve from both cultural and economic influences. - Study Finding: Strongly supported; work values are indeed a mix of cultural and economic influences. 6. Country-Specific Observations: - The study provided specific insights into how the United States, Russia, Japan, and China differ in their managerial work values due to their unique cultural and economic backgrounds. 7. Managerial Implications: - Concept Explained: This relates to how managers in international businesses should understand and adapt to these cultural and economic differences. - Study Finding: The research emphasized the need for managers to be aware of these differences to effectively manage and operate in different cultural contexts. The Global Moral Compass for Business Leaders" by Lindsay J. Thompson 1. Complex Moral Challenges of Globalization: - Globalization extends beyond economic integration to encompass ethical complexities. Challenges like climate change and human rights are not just local or national issues but global ones, demanding a broader ethical consideration from business leaders. This necessitates a balance between economic benefits and moral responsibilities on a global scale. 2. Role of Business Leaders: - Business leaders must navigate the moral complexities arising from globalization. This involves understanding and integrating diverse stakeholder values into their decision-making processes. Leaders are tasked with creating sustainable value while addressing these ethical challenges, reflecting a shift from traditional business roles focused purely on profitability. 3. Global Moral Compass: - The Global Moral Compass is a conceptual tool proposed to help leaders manage moral complexity in global business. It integrates different cultural values and economic ideologies, offering a more nuanced approach to ethical decision-making. This framework aids leaders in aligning their business strategies with diverse global ethics. 4. Moral Challenges and Dilemmas: - Globalization often results in moral dilemmas, where leaders face choices between equally valid yet conflicting ethical options. These dilemmas highlight the need for an adaptive and nuanced approach to moral decision-making in the global business context. 5. Human Values and Ethology: - Universal human values like the moral duty of care and human welfare underpin ethical considerations in business. These values are not confined to any single culture or society but are seen as fundamental to human nature, guiding moral and ethical behavior across different global contexts. 6. Moral Agency in Business: - Business leaders are recognized as moral agents who must consider the social implications of their decisions. This extends the role of businesses beyond profit-making to include social responsibilities, aligning business practices with broader societal values and ethics. 7. The Global Moral Compass Framework: - This framework comprises four dimensions: vision, code, fitness, and performance. Each dimension plays a critical role in ethical decision-making, providing a comprehensive structure for understanding and navigating the moral landscape of global business. 8. Moral Vision and Code: - Moral vision relates to the core values and identity that guide an organization. In contrast, the moral code involves articulated principles and rules that provide a structure for ethical decisions and behavior within the organization. 9. Moral Fitness and Performance: - Moral fitness refers to the cultivation of character and ethical responsibility. Performance, on the other hand, focuses on actions and decisions made in response to ethical challenges, emphasizing the practical application of ethical principles. 10. Limitations of Conventional Wisdom:  - The reliance on secular reason in modern cultures does not adequately address the complexities of global moral challenges. This limitation underscores the need for a more holistic approach that integrates various ethical perspectives and wisdom traditions. 11. Building Moral Solidarity: - The Global Moral Compass can help create moral solidarity among diverse teams and organizations. By providing a shared ethical framework, it facilitates a common understanding and approach to ethical challenges in a globalized business environment. Hypotheses and Their Support 1. Global Moral Challenges Hypothesis: - Hypothesis: Globalization inherently presents complex moral challenges that leaders cannot ignore. - Support: Supported by the detailed discussion of global challenges and their moral implications. 2. Leadership Role Hypothesis: - Hypothesis: Effective leadership in global business requires managing moral complexities. - Support: Supported through examples and the emphasis on integrating stakeholder values. 3. Utility of Global Moral Compass Hypothesis: - Hypothesis: The Global Moral Compass is an essential tool for navigating moral complexities in global business. - Support: Supported by the framework's comprehensive approach to integrating diverse ethical perspectives. 4. Moral Dilemmas Hypothesis: - Hypothesis: Globalization intensifies moral dilemmas. - Support: Supported by the discussion of ethical conflicts arising from global interconnectedness. 5. Universal Human Values Hypothesis: - Hypothesis: Universal human values underpin ethical considerations in global business. - Support: Supported through the discussion of shared moral duties and human welfare. 6. Moral Agency of Business Hypothesis: - Hypothesis: Businesses have a moral agency that extends beyond profit-making. - Support: Supported by the argument for social responsibility in business decisions. 7. Effectiveness of Global Moral Compass Framework Hypothesis: - Hypothesis: A multi-dimensional approach, like the Global Moral Compass, is necessary for ethical leadership. - Support: Supported by the detailed explanation of the framework's dimensions and their roles in ethical decision-making.  Session 5 Chapter 4 Introduction - Culture influences Managers through psychological and interpersonal mechanisms (involving how they think about, evaluate, and respond to people from other cultures - We examine how people think (their social cognition) when they work with people of other culture Social cognition - “how we develop mental images of objects”→simplify complexity & recall later to use it o Basedonexperiences(Basiccategorization) - When these images define a category (e. g. “Boss, Fish, French people”) = Schema - When these images define a behavior (e. g. giving orders) = Script - Type 1 social cognition: spontaneous with little consciousness (Meet someone – friendly unconscious impression automatic – shaking hands) = most common - Type 2 social cognition: less spontaneous (Meet someone – unfamiliar/tense relationship – conscious saying “hi”) controlled Cultural identity: - Social identity = total of social categories we use to describe ourselves - Group that forms our social identity = cultural group from which we get our cultural identity - Chinese in NZ – “experienced differences (food) and mobbing – the more abuse she experienced, the stronger she identified with her origin China - We tend to categorize individuals by their group. German – “You must be into cars”. Scripts - Behavior template for upcoming situations based on previous situations/experiences o Ignoring mobbing as a reduction technique learned from parents (but cross-cultural may not work out?) - In the case of business: Every culture has its own identity and behavior scripts. US Meeting: Being on time, short chatting, and jumping into topics = Type 1 behavior - Using scripts in other cultures may lead to confusion for other people. Type 2 behavior may be required Cultural norms  - Standards of acceptable behavior - Tell us what we can expect from others in certain situations and what is expected from us - Not acting accordingly may lead to social disapproval or punishment (not getting a job without proper clothing) - Functions of cultural norms: o Making survival easier (e. g. protecting from other groups) o Increase the predictability of group members’ behavior o Reduceembarrassment o Communicating group values → clarifying group identity Selective perception: - Process in which a person only perceives what they want to and ignore other’s viewpoints - Is a learned process (parents/teachers did it the same way) - Whether or not we perceive/select someone as part of our group is influenced by: o Category indicators (e. g. race, gender) o Small number of those who are different (European in Tokyo vs. countryside) o The extent to which the person is typical for the group (if I act like a person from India in Germany→Confusion) o Languageandaccent - Selective avoidance = tendency to direct attention away from information that challenges existing beliefs: Also includes filtering unusual things out Perceived similarity and attraction - Perceptions of similarity lead to attraction because o We favor people who see the world the same as we o We favor people of the same religion, style, culture... - These people are more likely to confirm our opinions rather than disagree, which empowers our opinion. The process is called consensual validation. Stereotypical expectations (=Schemas) - = Categorizing groups of people to what they look/act like (natural process of simplifying information) - National stereotypes are fixed, overgeneralized beliefs about people from a particular country based on limited information about them - Resistance to new information: even if our stereotypes are proven wrong, we tend to ignore this and stick to our stereotypes - Social dominance theory: within every society, there are groups that are dominant over others and therefore enjoy privilege. This can also be extended to a global perspective – certain nationalities enjoy high status e. g. due to their economic power. ➔ Effective (good) use of stereotypes includes: o accurateinformationgathering mental inate's iiiiiiijtaiiii.ie iiiiiiiiieimim is.s another culture maybe o consideration of both positive and negative information o ability to re-fresh information and adjust expectations Differential attributions - Attribution helps us to understand our environment by linking our observation of an event (girl is running) to its potential causes. (joy/danger/lack of time). Attribution underlies internal (controlled by individual) and external (controlled by environment) factors. - Faced with a different culture, we may make wrong attributions to behaviors because we don’t know better. E. g., he did not shake my hand – must be unfriendly. - Ultimate attribution error: If members of our cultural group perform well, we tend to attribute it to internal factors (Our national team won because of their hard work). When members of other groups perform well, we tend to attribute it to external factors such as luck or mistakes of the referee. - Fundamental attribution error: tendency to attribute any behavior to characteristics of the individual (He’s poor because he’s lazy) and underestimating the situational context (he’s poor because of undereducation). US and European people tend to attribute to individual factors; Asians tend to consider the circumstances. (Link to session 4) Cross-cultural interaction model - All these mechanisms above influence our behavior - Self-schemas and motivation  - Motivation = Why people take a certain action - Culture guides motivation - Independent self-schemas: people are motivated to express internal needs (money, autonomy) and withstand social pressure (Western-individualistic) - Interdependent self-schema: people are motivated to be receptive to others and are capable of restraining own needs (Asian-collectivistic) - It may be that everybody is motivated by self interest but some peoples’ interest lies in expressing themselves and others’ lies in fitting to the norm The Cultural Mosaic: A Metatheory for Understanding the Complexity of Culture – Chao & Moon Introduction: - Workplaces become culturally more diverse - Growth in multinational corporations increases - Additional changes (2005): more women entering employment, aging population, etc. Culture - Value system that influences behavior Cultural mosaic - Mosaic = composite picture made up of distinct tiles - Viewing an individual’s culture as a cultural mosaic allows observation/comparison of individual, local, and global cultures. - Cultural mosaic consists of 1. Demographic, 2. Geographic and 3. Associative features Demographic tiles of the cultural mosaic Physical in nature - Age: Different values at different stages (change); influenced by historical periods (WWII role of women); older people differ from younger people because of critical historical experiences - Gender: Children learn through interaction in same-sex-groups which promotes gender- specific language, style, norms (=gender-specific culture); observed in corporate values, too - Race & Ethnicity: Asian cultures tend to have an interdependent construal of themselves in which relationships with others play a crucial role in one’s identity. Western cultures tend to have an independent construal of themselves in which references to other’s thoughts, feelings, and actions are not necessary. Instead, one’s unique attributes are highlighted. People of color tend to have high levels of collectivism and familism.  Geographic tiles of the cultural mosaic Refer to physical features of a region (natural or human-made) - Continental location: Eurasia facilitated east-west travel leading to trade and sharing of technology→steel, germs, and guns; Africa, Australia, and America developed isolated. - Climate: Hotter areas are associated with masculinity, collectivism, and lower power distance; Colder areas are associated with femininity, individualism, and higher power distance. - Development stage: hunter-gatherer societies are individualistic; agricultural societies are more collectivistic. Associative tiles of the cultural mosaic Groups with whom individual chooses to identify - Human need to form and maintain interpersonal relationships that are frequent, pleasant, and include a concern for each other’s welfare - Social identity = part of an individual’s self-concept that derives from group membership (e. g., family) - Organizations also represent groups with whom an individual can identify. Employees tend to identify with their work groups rather than with the whole organization. Work-group identification likely empowers motivation. Integrating the primary tiles of the cultural mosaic - Unified Identity: This involves creating a single identity by combining elements from different cultural backgrounds (e.g., Italian American). - Dominant Cultural Identity: This structure focuses on one primary identity, excluding others. An example is assimilating into a host country's culture while rejecting one's ethnic cultural identity. - Merger of Cultural Identities: This recognizes multiple group identities simultaneously across various situations. It differs from a hybrid identity, resembling an ideal merger of two organizations where each retains its identity. - Compartmentalization: This involves activating different cultural identities based on specific contexts or situations (e.g., being American at work and Italian at home). Multiple identities coexist independently. Research at the individual level  - Proposition 1: Behaviors influenced by concordant cultural identities are likely to be more predictable than behaviors influenced by discordant cultural identities. - Proposition 2: Activation of particular patterns of cultural identities is influenced by the strength of the pattern as well as situational contexts. Situational contexts that can activate cultural identity patterns include organizational, task, and reward structures and leadership. - Proposition 3: Within an individual, the cultural mosaic behaves like a complex system with localized structures with (a) some tiles dominating others, (b) some tiles self-organizing into local structures, consolidating into a unifying identity, and (c) other tiles maintaining independent influences, manifesting themselves in unpredictable ways. - Proposition 4: Across individuals, networks of cultural mosaics behave like a complex system with localized structures, with (a) some tiles dominating others in interactions, (b) some tiles self- organizing into local structures, building on shared cultural identities, and (c) other tiles maintaining independent influences, manifesting themselves in unpredictable ways. - Proposition 5: Interpersonal interactions are facilitated by shared cultural identities. Shared cultural identities are localized structures in an interpersonal network, providing common frames of reference, values, and behavioral expectations between people. Research at the group level Individuals form subgroups based on shared cultural identities or common interests. - Proposition 6: There is a critical threshold within group diversities that guides the emergence of self-organizing cliques. - Proposition 7: Members who share cultural mosaic tiles with members of other groups are more likely to bridge structural holes between these groups. Applying the cultural mosaic to organizational psychology & Conclusion - Organizations feel uncomfortable about any particular addition (of individuals) because they implicitly know that any new member can influence the future culture of the organization - The globalizing world requires a need to better understand multiple culture effects - Cultural mosaic as a metaphor for how individual and group identity is shaped - General need to recognize that cultural complexity should be embraced, not dissected. It enriches flexibility which is necessary to deal with complex situations. The Effects of Business and Political Ties on Firm Performance: Evidence from China – Sheng, Zhou & Li Business ties are deemed more beneficial when legal enforcement is inefficient and technology is changing rapidly whereas political ties lead to greater performance when general government support is weak and technological turbulence is low. Firms operating in China should be cautious in their use of business and political ties and adapt their tie utilization to changing institutional and market environments. In turbulent circumstances, social ties emerge as an important strategic option that can enable firms to secure resources and deal with uncertain environments. Social ties help overcome the limits of weak institutional infrastructures. Theory and Hypothesis: Business versus Political ties: - Through networking activities and personal interactions, executives build social ties not only with business players but also with government officials. o Business ties: are a firms informal social connections with business organizations. ▪ Providesfirmswithimportantmarketresources: It offers crucial market information that may not be available in the open market. Pertinent events or changes in the market. Information about (un)trustworthy partners. Close social interactions and communications promote learning and mutual adjustment between businesss partners and knowledge facilitation. o A firm can increase its absorptive capacity and knowledge utilization by integrating new knowledge.  Past behaviors are observable and indicative of the firm’s reputation. Social ties can help the firm obtain network legitimacy. o Political ties: A firm’s informal social connections with government officials in various levels. ▪ Helpfirmsobtainkeyregulatoryresources Governments in emerging economies guide economic activities by devising industry development plans and setting regulatory policies. Political connections provide firms with crucial access to policy and aggregate industrial information The Chinese government still controls a significant portion of scarce resources. A connection with government officials offers a shortcut to these products. Political ties improve a firms political legitimacy. - Both forms of ties rely on personal interactions and social networks. o They differ with respect to their time horizons ▪ Businessties:Firmshavecommoninterestsinmaximizingtheir economic returns so the parties work together to coordinate exchanges. These relational norms constrain their opportunistic behavior, reduce the perceived risks and transactional costs in the relationship. ▪ Politicalties:Lackaneffectivemechanismtoensurelong-term cooperation. Government officials primary interests center on developing their political careers whereas business organizations attempt to achieve economic returns. o The main priority is to please superordinate officials, not accommodating business organizations – might create opportunity for relationship conflict mitigating long-term cooperation. o When a limited time horizon exists in a relationship, exchange parties who possess greater power are more likely to engage in opportunistic behavior. Contingent effects of institutional environment Institutions support the effective functioning of the market mechanism. When formal institutions fail, informal governance mechanisms (social ties) act as substitutes to facilitate economic activities. Moreover, social ties serve as a key form of governance during early transition phases in emerging economies. Enforcement Inefficiency: The extent to which the enforcement of legislation and regulations is problematic as reflected by unlawful or unethical corporate behaviors. - When legal enforcements are ineffective, firms with close political connections can exploit the power of their government connections. Analyses and results: Business vs Political ties;  - Business ties are positively related to firm performance - Political ties have no significant effect on it. - Changes in government support do not alter the impact of business ties. - However, political ties have a positive effect on firm performance when government support is low. - Higher levels of technological turbulence strengthen the positive effect of business ties on firm performance. - Business ties have a stronger positive effect on firm performance when there is a high technological turbulence. Discussion Theoretical Contributions - Business ties have a stronger positive effect overall on firm performance than political ties. o The effects of social ties are conditional on the institutional and market environments. - Business and political ties capture two distinct facets of relational governance and provide access to different resources. o With market-resources and a llong-term orientation, business ties should have a stronger performance impact than political ties. o Political ties provide regulatory resources and are short- term in nature. Political ties have no significant impact on firm performance. - When courts cannot efficiently enfoce exchanges, the legitimating effects of business ties are salient for deterring opportunistic behavior and boosting performance however, such benefits decline when legal enforcement improves. - When the government does not support all firms, political ties enable individual firms to secure regulatory resources for their own benefits. However, it is counterproductive when the government works efficiently and fair. - Business ties enhance whereas political ties inhibit performance when technologies change rapidly. o A rapidly changing technological environment propels companies to update their technologies and products to maintain their competitive position. Business ties facilitate the acquisition and use of updated technology and knowledge. - In China: o Both business and political ties improve organizational performance o Political ties foster the performance of high-tech ventures. o However, the role of political ties is declining as the institutional finfrastructure improves. Due to the fact that institutions tend to change incrementally rather than discontinuously, a dynamic role of social ties is revealed in changing institutional environments Managerial implications: - Marketers must distinguish between business and political ties and understand the distinct roles. o Marketers should build connections with business partners and government officials; in one-third of China’s richest 800 entrepreneurs were official party members. o Companies must be cautious about using political ties, which may not improve their performance or could even become a liability in certain conditions. - Uncertainty in the political systems may inhibit firm performance o China has been transitioning to a market economy and the role of government has changed from guiding to facilitating economic activities. o Marketing managers should refrain from political connections and rely more on business networks which can foster performance. Nowadays, entrepreneurs rely more on networking amongst themselves. - Marketing managers should adapt their network building and utilization strategies to local institutional environments which vary significantly across regions in China. o When legal enforcement is inefficient, the use of business ties effectively reduces unlawful behaviors and unfair competition o When the government does not provide sufficient support to all organizations, firms can capitalize on their political connections. However, if it is well developed, they should be cautious. - Marketers need to adjust their use of ties to reflect industrial uncertainty such as technological turbulence. When the industry is characterized by low levels of turbulence, the resources obtained from political ties (tax subsidies, approval) can help bfirms build competitive advantages and better performance. o Those in knowledge-intensive and turbulent industries may refuse political networking and rely on business connections. - Due to the cultural tradition of using ties and the widely accepted premise that political ties are beneficial, they remain in practice. o However, as the institutions improve, firms should realize they need to focus on business ties as political ones may limit their performance. Session 6 Chapter 6 Communication Process model 1. Definition of Communication: Communication is described as the act of transmitting messages, which include information about the nature of the relationship between the sender and receiver. Both parties play an active role in this process. 2. Importance of Shared Knowledge (Grounding): For communication to be successful, it's not enough just to transmit a message; the meaning of the message must also be understood. This understanding relies on shared knowledge or 'grounding', which is based on each individual's experiences and is constantly updated during communication. The example of hospital emergency room personnel illustrates how shared knowledge enables efficient communication. 3. Challenges in Electronic Communication: The chapter notes that updating shared knowledge is particularly challenging in electronic communication compared to face-to-face interactions. 4. Cross-Cultural Communication: Communicating across cultures is more demanding because individuals from different cultures have less shared knowledge and grounding. The 'cultural field' of a person, which includes their background, education, values, and attitudes, significantly influences communication. 5. Communication Process Model: The chapter presents a model of the communication process involving the sender, the message, the channel, and the receiver, all embedded in their cultural fields. The message is encoded by the sender, transmitted through a channel, and then decoded by the receiver. The effectiveness of communication depends on minimizing distortion at each stage. 6. Influence of Personal and Cultural Fields: The personal experiences of the sender influence how a message is encoded. Cultural norms also play a role, as seen in routine responses to common greetings in different cultures. Similarly, the symbols and language used vary with the cultural field, affecting both the sender and receiver. 7. Choice of Communication Channel: People may choose different communication channels (e.g., written or verbal) based on the communication's goal, convenience, and their skill with the medium. The rise of email and text messaging as substitutes for various channels is noted. 8. Receiver's Role: Just as the sender's abilities and cultural field influence the message, the receiver's skills and cultural knowledge are crucial for correctly interpreting the message. The overlap in cultural fields between sender and receiver reduces the potential for miscommunication. 9. Example of Sony's U.S. Facility: The chapter concludes with an example from Sony's U.S. production facility, where technical communication between Japanese and American engineers was more effective due to shared technical knowledge, compared to their communication on social and personal matters. Language 1. Language as a Symbolic Code: Language is described as a set of sounds with understood meanings and a set of rules for constructing messages. The meanings and syntax are culturally specific, and cultural conventions influence language use. For example, the chapter illustrates how different words for the same object (like 'cat' in English and 'neko' in Japanese) emerge in different languages. 2. Cultural Connotations in Language: Words can have cultural connotations that are not present in other languages. The example of the Cantonese words for the numbers four and eight, which sound like 'death' and 'prosperity' respectively, demonstrates how language can influence cultural practices and beliefs. 3. Differences Even Within the Same Language: The chapter highlights that even among English speakers, there are significant differences due to cultural conventions. For instance, certain words and phrases have different meanings in British, American, and Canadian English. 4. Challenges in Translation: Effective communication can be challenging even when translators know the meanings of words and grammatical rules. The chapter provides humorous examples of English translations that fail to convey the intended meaning accurately. 5. English as a Lingua Franca in Business: English has become the common language in international business. This often requires non-native English speakers to use English as a second language, which can be challenging. 6. Implications of Using a Second Language: Using a second language requires more effort and can be exhausting over time. Fluency in a second language is often associated with competence in other areas. Native speakers may modify their speech when communicating with non-native speakers, a practice known as 'foreigner speak', which can sometimes be perceived as patronizing. 7. Challenges for Both Native and Non-Native Speakers: Cross-language communication can be demanding for both native and non-native speakers. Native speakers may need to recognize signals of misunderstanding and create an environment where it's acceptable to check for understanding. Non-native speakers might pretend to understand to avoid embarrassment or to appear competent. 8. Overall Impact on Communication: The chapter concludes that cross-language communication requires both parties to devote more attention to the communication process to ensure effective understanding and transfer of information. Explicit Versus Implicit Communication 1. Cultural Variations in Communication Style: The chapter begins by noting that communication styles vary significantly across cultures. For instance, in the United States, effective communication is typically explicit, direct, and unambiguous. In contrast, some cultures, like Indonesia, favor more inexact, ambiguous, and implicit communication. 2. High-Context and Low-Context Communication: The chapter introduces a bipolar typology to describe these differences: high-context (HC) and low-context (LC) communication styles. In HC communication, most of the information is internalized in the person or the physical context, with little in the explicit, transmitted part of the message. LC communication is the opposite, with the majority of the message conveyed through the explicit words spoken. 3. Cultural Examples: Various countries have been classified along the HC-LC continuum. In LC cultures, the words carry most of the message's meaning. In HC cultures, much of the meaning is implicit, and the receiver must interpret it based on their knowledge of the speaker, the setting