T3 The Influence of Cultural Distance in Country-Market Decision PDF

SECTION 2 Unit 3: The influence of cultural distance in the country-market decision Internationalization of Businesses: Management and Strategies (EUS) Maite Ugalde Enríquez Contents 1. The concept of cultural distance 2. The cultural dimen...

SECTION 2 Unit 3: The influence of cultural distance in the country-market decision Internationalization of Businesses: Management and Strategies (EUS) Maite Ugalde Enríquez Contents 1. The concept of cultural distance 2. The cultural dimensions *Images in these slides have been downloaded from the internet for teaching purposes. They are property of third parties. 2 Contents 1. The concept of cultural distance 2. The cultural dimensions 3 1. The concept of cultural distance Culture is the variable that better explains the differences in most aspects of business. “Culture are the ensemble of rules and values that a community shares and that conditions or defines the way in which individuals behave and perceive the others behaviour” (Pla and León, 2004, p.231) 4 1. The concept of cultural distance 5 1. The concept of cultural distance How does culture affect managerial approaches? 6 1. The concept of cultural distance 7 1. The concept of cultural distance !! Cultural fit among different cultures has an impact within the organization and between Partners Different Leadership Styles Around The World 8 1. The concept of cultural distance Business Speaker Erin Meyer: How Cultural Differences Affect Business 9 Contents 1. The concept of cultural distance 2. The cultural dimensions 10 2. The cultural dimensions Cultural dimensions (according to…) - Equivalents 11 2. The cultural dimensions Power Distance Degree to which a society accepts the unequal distribution of power in different institutions (families, community, etc.), organizations and workplaces. Defined from below: Marks the relationship between superiors and subordinates (treatment, wages, hierarchical structures) Power distance Countries with low power distance Countries with high power distance Autocratic management styles and Participative management styles; flatter paternalistic leadership; pyramidal organizational structures. organizational structures. Anglo-Saxon and Northern European Latin American countries, Russia, China and countries. some Asian and Eastern European countries. 12 2. The cultural dimensions Uncertainty avoidance The degree to which people in a society prefer to control and know the situations they face and try to avoid unstructured (new, unfamiliar, surprising or unusual) situations. It has to do with a society's tolerance for ambiguity. Marks the operational structure of the organization (mechanisms of coordination, degree of formalization, etc.). Aversion to uncertainty Countries with low aversion to uncertainty Countries with high Aversion to uncertainty What is new is an opportunity → High What is new is a threat → High formalization, employee turnover, flexible and agile company loyalty as a value, stable relationships structures to adapt to changes quickly. with suppliers, customers, workers. Anglo-Saxon and Northern European countries, Mediterranean countries, some Latin Americans China, India and Japan. 13 2. The cultural dimensions Assertiveness The degree to which values traditionally associated with the male role (competitiveness, success, wealth, ambition, exercise orientation) prevail in society over values traditionally associated with the female role (personal relationships, solidarity, quality of life, people orientation). Marks the separation of tasks / jobs by gender. Assertiveness Countries with low assertiveness Countries with high assertiveness Feminine countries: teamwork, quality of life are Masculine countries: power, money, material things are valued. Informal structures. Participative management valued. Aggressive leadership styles that encourage style, flexible hours, concern for balancing work and competition. family life, etc. Northern Europe, Latin America, Arab and Germanic Anglo-Saxon and Asian countries. countries. 14 2. The cultural dimensions Individualism Degree to which individuals prefer to act and feel recognized as individuals, rather than being part of a group or collective. Marks the company's human resources policy. Individualism / Collectivism Countries with high collectivism Countries with high individualism Individual responsibilities are diluted in the The person is considered responsible for their group. Remuneration policies based on actions. Remuneration policies based on individual collective behaviour. A lot of worker behaviors. Less identification of the worker with identification with the company. Invasion of the company. Unquestionable right to privacy. privacy is normal. Arab, Latin American and Asian countries. Northern Europe and Anglo-Saxon countries 15 2. The cultural dimensions Long term orientation Degree to which society values long-term commitments and accepts current effort in exchange for future reward or gratification, versus immediate goal achievement and rewards. Marks the company's strategic orientation. Long-term orientation Countries with a short-term orientation Countries with a long-term orientation Spontaneity and the ability to enjoy the moment are more valued. They tend to have an aversion to Development of strategic plans. More flexible uncertainty. Business decisions are made in organizational structures to adapt to future changes. relation to the immediate consequences, without More efficient structures. thinking about the future. Anglo-Saxon and Germanic countries, northern Europe and Latin America, Eastern Europe and the Middle East Asia 16 2. The cultural dimensions Complacency and self-control It refers to the degree to which people can or try to control their impulses and desires. Marks the attitude, enthusiasm and motivation of the workforce. Compliance and self-control Countries with high complacency / indulgence Countries with high self-control / restrictions Restricted societies are more likely to have strict social Forgiving societies tend to look positively on people norms curb and regulate these gratifications of needs who enjoy life and pursue fun. and impulses. Latin America, areas of Africa, Anglo-Saxon countries Arab countries, East Asia, Eastern Europe. and Northern Europe. 17 2. The cultural dimensions Performance Orientation Degree to which individuals are oriented towards the achievement of results. To what degree is the business or the people involved more important. Marks the way to reach agreements and establish contracts. Performance Orientation Human orientation: The degree to which society positively values and rewards the behaviors of individuals oriented towards helping others and showing solidarity, justice or compassion Countries with a high orientation towards the Countries with a high orientation towards the relationship endowment Trust is essential for doing business, the personal relationship of friendship, affection, etc. it is vital Treatment is impersonal, legalistic and contractual. to the business. Arab countries, Latin America and most of Africa Northern Europe, Germanic and Anglo-Saxon countries 18 2. The cultural dimensions Time consideration Degree of rigidity with which individuals incorporate the time variable into their behavior (punctuality of schedules, compliance with deadlines, scheduling of activities and agendas, etc.) Marks the way time is managed. Time consideration Countries with monochronic cultures Countries with polychronic cultures Importance of punctuality and compliance with Time is not important, interruptions, delays, deadlines. Punctuality and meeting deadlines changes to the agenda, improvisations, etc. are have a strong correlation. Inflexibility of accepted. agendas. Northern Europe, Germanic countries, some Latin America, Arab countries, South Asia and most Anglo-Saxons and Japan of Africa. 19 2. The cultural dimensions Expressivity Degree and intensity with which we modulate the volume of our voice (paraverbal language) and gestures and expressions associated with body language (non-verbal language). Marks the style of interpersonal communication: tone of voice, gestures, silences, distances and living space, looks, etc. https://www.youtube.com/watch?v=i4wKg2Ddoas Expressivity Countries with expressive cultures Countries with reserved cultures Verbal communication is accompanied by abundant gestures and the tone of the language is Tone and gestures are more moderate. usually high. Arab countries, Latin Europe and Latin America. Northern Europe, Southeast Asia and Germanic countries. 20 2. The cultural dimensions Universalism – particularism The degree to which the rules are widely accepted. Marks respect and interpretation (literal or flexible) of laws and contracts. Universalism - particularism Countries with universalist cultures Countries with particularistic cultures Particular circumstances are considered more Rules and obligations act as a moral important than rules, particular relationships reference since they are considered to be the (family, friends, etc.) are stronger than any expression of how to do things correctly, with abstract rule so that the answers can be different justice and equality, beyond private interest. depending on the circumstances and which be the specific people involved. Northern Europe, Germanic and Anglo-Saxon Southeast Asia, China, Russia. countries 21 2. The cultural dimensions Specificity – holism Degree to which tasks, responsibilities and objectives are disaggregated. Marks the vision with which things are analyzed: Specificity – holism Countries with specific cultures Countries with holistic cultures The analysis of things is done in a more global way, they consider that the whole goes beyond Tend to analyze the facts separately, so that the sum of the parts and therefore each thing the considerations that others may make about cannot be explained separately. Things go beyond a specific issue are limited only to this and do the concrete aspect. It is important to know the not extend to other facets. context and other issues related to what we are doing. Southeast Asia, most of Latin America Anglo-Saxon countries, China, Japan. 22 2. The cultural dimensions https://www.hofstede-insights.com/country-comparison-tool?countries 23 2. The cultural dimensions The higher the value, the more relevant that factor is for the country 24