CHAPTER 11

Cross Cultural
Management

Global Strategic Management : Philippe Lasserre

 Behaviour
Observable, Manifest
« Looking at the watch
Banging on the Table

Values - Beliefs
Preferences

Explicit, Declared,
Example: « Time is Money »,
« Authority has to prevail »

Basic Assumptions
Meaning
Invisible, Unconscious, Taken for Granted
Example: « Time is limited», « All men are equal »

André Laurent

Global Strategic Management : Philippe Lasserre

 THE THREE SOURCES OF CULTURAL DIFFERENCES

CORPORATE PROFESSIONAL NATIONAL

COMPANY INDUSTRY ETHNIC
CULTURE CULTURE CULTURE

• History of the company • Functional orientation: • Country history

( accumulated experiences: Marketing • Education
good and bad) Finance • Social organisation
• Leadership and dominant Engineering` • Religion, philosophy
coalition R and D
• Ownership • Industry norms:
• Stage of development Technology
• Business diversity Change
Key success factors
Types of customers

Global Strategic Management : Philippe Lasserre

 ANTHROPOLIGICAL AND SOCIOLOGICAL RESEARCHES AND
BEHAVIORAL OBSERVATIONS HAVE SHOWN THAT THERE ARE
SIGNIFICANT DIFFERENCES IN BASIC ASUMPTIONS VALUES AND
BEHAVIOUR ACROSS NATIONAL CULTURES THOSE DIFFERENCES HAVE
AN IMPACT ON MANAGEMENT BEHAVIOUR
HALL and HALL’s STUDY:
The Silent Language

HOFSTEDE’s STUDY:
Four Dimensions: POWER DISTANCE / INDIVIDUALISM
UNCERTAINTY AVOIDANCE / MASCULINITY-FEMINITY

ANDRÉ LAURENT’s STUDIES:

Management and organisational principles

TROMPENAARS’ STUDIES:
Value Orientation

RONEN and SHENKAR’S STUDIES:

Country Clusters

Global Strategic Management : Philippe Lasserre

 Silent Language

Punctuality Circular Delays

Sequential Fluid Postponment
Deadline Scarce Perception of Time Abundant Ex: Arabic
Ex: German

Avoid Physical Physical contacts

High Low
emotional
Proximity
Distance Perception of Space Distance
Showing emotion
Ex: Latin
Ex: British
Education
Financial
Wealth
Language of Family
Materialistic Non-materialistic
Givesstatus Material Goods Seniority
Gives status
Ex: USA
Ex: Malaysia
Operational Quick Long
Factual And Superficial Friendship And Deep Ex: Japan
Relationship
Ex: USA
Asian
Western Explicit Agreement / Implicit
countries
Verbal
Legalistic
Countries
Documented
Disagreement
Anglo-Saxon The Content The Person African,Asian
Germanic Matters more Context Matters more Latin American
Nordic Than the Person Than the Content countries

Global Strategic Management : Philippe Lasserre Source: Adapted from Hall(1960)

 Hofstede Mapping of Cultures on Power Distance and Individualism

100
Malaysia

Mexico Arab Countries Latin European

80 Indonesia India
Singapore Hierarchical/Individualists
Hong Kong Brazil France
Thailand
POWER DISTANCE

60 Taiwan Spain
Japan
Asian/Latin American Italy
Hierarchical/Collectivists
Canada USA
40 UK Australia
Germany
Sweden

20 Denmark

Anglo-Saxon/Scandinavian
Eqalitarian/Individualists
0
0 20 40 60 80 100

INDIVIDUALISM

Source:Hofstede, 1980

Global Strategic Management : Philippe Lasserre

 “It is important for a manager to have at hand precise answers to most of
the questions that subordinates may raise about their work” (Q. 24)

Percent agreement rate across countries

100
90 78
77
80 73
66
70
53
60 46
44
50 38
40 27
30 23
18
20 10 17
10
0
S NL USA DK UK CH B D F I INDO SPAIN JAPAN

André Laurent/INSEAD

Global Strategic Management : Philippe Lasserre

 “IT IS IMPORTANT FOR A MANAGER TO HAVE AT HAND PRECISE
ANSWERS TO MOST OF THE QUESTIONS THAT SUBORDINATES MAY
RAISE ABOUT THEIR WORK” (Q 24)
1991-2000 DATA
60

50

40
Percent agree

30

20

10

P
S
D
ZA

B
A
S

DK

D
CH

B
BR

E
I
NL

F
JA
U
N
US

G
A
C

Global Strategic Management : Philippe Lasserre © A. Laurent 2003

 It is important for a manager to have at hand precise answers to most
of the questions that subordinates may raise about their work” (Q 24)
70

60
PERCENT AGREE

50

40

30

20

10

0
y

m
n

H
SA

ly
e
L

an
e

c
N

iu

Ita
ed

an
U

g
el
Sw

Fr
er

B
G

1977-1979 1991-2000

Global Strategic Management : Philippe Lasserre © André Laurent 2003

 DOING vs. BEING

"DOING" "BEING"
X X
USA ITALY

Global Strategic Management : Philippe Lasserre André Laurent/INSEAD

 The main reason for having a hierarchical structure is so that
everybody knows who has authority over whom. Q.14
Percent agreement rate across countries

USA 17
26
SWEDEN 30
31
UK 34
34
ITALY 42
43
JAPAN 50
70
83
INDONESIA
0 20 40 60 80 100
André Laurent/INSEAD

Global Strategic Management : Philippe Lasserre

 In order to have efficient work relationships, it is often necessary
to bypass the hierarchical line. (Q.2)

Percent disagreement rate across countries

SWEDEN 26
32
UK 35
36
FRANCE 43
44
GERMANY 45
51
ITALY 56
59
SPAIN 74

0 20 40 60 80

André Laurent/INSEAD

Global Strategic Management : Philippe Lasserre

 Country Clusters

Source: Ronen and Shenkar, 1985

Global Strategic Management : Philippe Lasserre

 TROMPENAAR'S FIVE VALUE ORIENTATIONS

VALUE ORIENTATION EXAMPLE

1 UNIVERSALISM : Rules-based behaviour Germanic countries

vs.
PARTICULARISM : Relationship-based behaviour Asian countries

2. INDIVIDUALISM : Individual's rights are supreme Western countries

vs.
COLLECTIVISM : Group's rights are supreme Asian countries

3. NEUTRAL : Emotions are subdued and expressed indirectly Asian countries

vs.
AFFECTIVE : Emotions are expressed freely and directly Western countries

4. DIFFUSE : Focus is on context of situation Asian countries

vs.
SPECIFIC : Focus is on specific issues Germanic countries

5. ACHIEVEMENT : Status and respect are achieved by 'doing' Western countries

vs.
ASCRIPTION : Status and respect are ascribed by 'being' Asian countries

Global Strategic Management : Philippe Lasserre

 Business Systems
Anglo- German French Japanese Korean Overseas
American Nordic & Latin Chinese
RATIONALITY
How Democratic Democratic Democratic Democratic Autocratic Autocratic
objectives are process Consensus led Negotiation Consensus led
set System, Rules led
Importance of led Conflict
systems and resolution
procedures

AUTHORITY Constitution The Law The State The State The State
The ground The Law Decentralisation The Law The The The Families
rules for Decentarilsation Centralisation Corporations Corporations Centralisation
Vertical order. Decentralisation Centralisation
Origin of
power
IDENTITY
The ground Individual rights Social Welfare Social National Nationalism Clans
rules for Contracts Welfare belonging Cultural Ethnic
Horizontal Heterogeneity Homogeneity Cultural Cultural Identity Identity binding
order. (micro cultures) Identity Homogeneity Homogeneity
(What makes Heterogeneity
society stick) (micro
cultures)
CAPITAL
How Financial Financial Banks State and Banks State Family
Capital is markets Medium gearing market High Gearing High Gearing High Gearing
found and Low gearing Medium
channelled gearing
Sources: Redding, Whitley, Albert, Berger and Dore,
Global Strategic Management : Philippe Lasserre Hampden-Turner, Trompenaars.
 Business Systems
Anglo- German French Japanese Korean Overseas
American Nordic & Latin Chines
HUMAN
CAPITAL Academic Academic and Academic Elitist Academic plus Academic Elitist Academic on
How human Performance Apprenticeship on the job the job.
skills are Led led
developed

SOCIAL
CAPITAL High trust High Trust Low trust High Trust High Trust High trust
How trust is Contracts. Contracts negotiation within groups within groups. within Family.
created Legal Low outside Low outside
Institutions
OWNERSHIP
Who own Shareholders Banks, State, Banks, Cross- Business Family Groups
enterprises Employees, Shareholders Shareholding groups, Cross-
Shareholders shareholding
NETWORKING
How economic Contracts Contracts.. Elitist Elitist Personal Personal
agents relate to Some Elitist Relationships. Relationships Relationships. Relationships
each other. (The relationships State State
rules of business Interventionism Intervention
transactions)
MANAGING
How employees System led Hierarchical Hierarchical Corporate Hirarchical Hierarchical
are induced to Motivation Technical bureaucracy. identity. Corporate Family Loyalty
cooperation in Perforamnce Competence Negotiation Corporate Loyalty
the firm measures Loyalty

Sources: Redding, Whitley, Albert, Berger and Dore, Hampden-Turner, Trompenaars.

Global Strategic Management : Philippe Lasserre

 THE IMPACT OF INTERNATIONAL CULTURAL
DIFFERENCES FOR MANAGEMENT
INTERPERSONAL RELATIONSHIPS MULTICULTURAL TEAMS

• Communication • “Expatriates” vs “Locals”

• Etiquette • Group
• Decoding attitudes and behaviour building/working/Relationships/`
• Understanding “silent” language • Conflict resolutions

HIERARCHICAL /MANAGERIAL PARNERSHIPS/TRANSACTIONS

INTERACTIONS BOSS/COLLEAGUES/
SUBORDINATES) • Contracts negotiations
• Feedback • Joint Ventures/Partnerships
• Control • Official meetings
• Reward/Punishments • Community events/Social events
• Personal space
• Motivations

Global Strategic Management : Philippe Lasserre

 MULTICULTURAL vs. MONO-CULTURAL TEAMS

MONO-CULTURAL TEAMS

DISASTER SYNERGY

LOW HIGH

PERFORMANCE

MULTICULTURAL TEAMS

Global Strategic Management : Philippe Lasserre André Laurent/INSEAD

 MAJOR OBSTACLES TO PERFORMANCE IN
MULTI-CULTURAL SITUATIONS (1)

• Discussion of differences perceived as

uncomfortable,
inappropriate, threatening or illegitimate.

• Assumption of similarity/homogeneity.

• Cultural diversity is denied, lost as a potential

resource
and transformed into a significant handicap.

• Richness of diversity lost on the way.

André Laurent/INSEAD

Global Strategic Management : Philippe Lasserre

 MAJOR OBSTACLES TO PERFORMANCE IN
MULTI-CULTURAL SITUATIONS (2)

• The gap between pretended similarity and inner conviction

of actual difference widens and creates uncomfortable
situation.

• Cautious behavior and unproductive costly politeness

emerge
as coping mechanisms to handle the situation.

• This leads to low risk taking, avoidance of confrontation

and achievement of the smallest common denominator.

André Laurent/INSEAD

Global Strategic Management : Philippe Lasserre

 MAJOR OBSTACLES TO PERFORMANCE IN
MULTI-CULTURAL SITUATIONS (3)

• Western individualism.

• Fear of stereotyping

• Parochial mindset (only one way of

thinking/acting).

• Ethnocentric mindset (the best way of

thinking/acting).

• Blindness to one’s own cultural conditioning.

André Laurent/INSEAD

Global Strategic Management : Philippe Lasserre

 MAJOR OBSTACLES TO PERFORMANCE IN
MULTI-CULTURAL SITUATIONS (4)

• Perception of the other culture as unfortunate

deviation from the norm.

• If diversity is neither recognized, understood,

acknowledged nor discussable, how could it possibly
be appreciated, valued and utilized?

• Cultural diversity then re-enters as a handicap likely

to lead to failure. Any synergy between cultures
becomes inaccessible.

André Laurent/INSEAD

Global Strategic Management : Philippe Lasserre

 Negotiation Styles: American vs Japanese
Negotiation Parameters
Attitude toward silence during
negotiations
Reaction to Cross-cultural
signals
Attitude toward sequential
bargaining and negotiating
progress
Attitude toward sharing
information
Form of the Contract
Commitment to the Contract
Global Strategic Management : Philippe Lasserre
Typical American
Strongly averse;
uncomfortable’; “fill the void”
Unaware; or consider it
unimportant
Strongly attracted to both
Open; willing
Long; detailed; covering all
foreseeable contingencies
Total binding
Typical Japanese
Essential: for decorum; and for
non-verbal communication
and empathy (haragei).
Aware indifference
Unimportant
Collect it avidly, but don’t give
it out
Prefer very short; and limited
to general principles and
affirmations.
Weak; the relationship is what
counts, not the document; and
inevitable changing conditions
will necessitate later
amendments
Source : Sunshine, 1990
 1 of 2 Negotiation Styles: American vs Japanese
Negotiation Parameters Typical American Typical Japanese

Basic approach to business in Transactional; profit-oriented; Structured; strategic; starting

general
Central purpose of the
negotiation
Selection Criteria for
negotiator(s)
Appropriate number of
negotiators
Appropriate role(s) of
Lawyers
Attitude toward decision-
making process, and
appropriate degree of
delegation of authority to
negotiators
detail-conscious; legalistic
Reaching agreement on a
contract
Verbally articulate
generalists; technical
competence’; “rational
abilities”
Few
Key participant: leader,
contract advisor, and/or
draftsperson
Top-down decision-making;
very high degree of
delegation of authority
from trust
Launching a long-term
relationship
Rank; position; ”social
competence”
Many: in order to demonstrate
seriousness and for functional
coverage, including learning.
None: seen as adversarial
troublemakers.
Consensual middle-up
decision-making (ringi seido);
little or no authority delegated
to negotiators.

Global Strategic Management : Philippe Lasserre Source : Sunshine, 1990

 2 of 2 Negotiation Styles: American vs Japanese

Negotiation Parameters Typical American Typical Japanese

Appropriate tone for
negotiation and
communication
Negotiators’ interest in
personal feelings and values
of counterparts
Appropriateness of socialising Inappropriate; unacceptable;
with counterparts
Attitude toward time during
negotiations
Direct; informal; familiar;
egalitarian; candid
Little or none; irrelevant or
improper; logic more
important than emotions;
issues more important than
personalities
risks conflict of interest and
loss of personal control
Acutely time-conscious; “time
is money”; impatient
Highly indirect; highly formal;
hierarchical; reserved
Acute; personal rapport
essential to establish trust
(ningen kankei).
Highly appropriate; and
traditional release; also,
ritualised gift-giving.
Patience in the key.

Source : Sunshine, 1990

Global Strategic Management : Philippe Lasserre
 Chinese Business Negotiating Styles

• Large team, vague authority, • Play competitors off against each

presence of technical people, often
with incompetent interpreter
• Exploit “agreed principles”
• Play home court
• Buy best technology but show no
appreciation
for monetary value of knowledge
• Making interests
• Price-sensitive
• Stalling, delays and indecision
• Hierarchical
• Non-legalistic vs. Legalistic approach
other
• “Sweet and sour” approach
• Attrition
• Shaming technique
• Exploiting vulnerabilities
• Taking surprising actions
• Showing anger
• Friendship means obligation
• Double standards
• “Richer bears heavier burden”
• Mixed feelings toward foreigners
• Re-negotiate old issues.

Source: Tony Fang, 1997

Global Strategic Management : Philippe Lasserre
 Differences in Business Practice Examples
ETIQUETTE
Addressing How to name the other  In Malaysia nobility titles are the proper way to
person address ( Encik, Tan, etc..
 In France people are addressed by their title
(Monsieur le Directeur)
 In the USA first name is normal
 In Japan, the exchange of business cards is
critical
Gesturing How to position oneself and  Feet soles showing are offending Arabs
how to use body language  Left hand shaking is not proper in Muslim
countries
 Finger pointing is considered as highly
threatening and impolite in Asia
Dressing Dress code  Malaysian businessmen use jacket and ties
while in Singapore long sleeves shirts are
normal business attires
Eating Importance of meals in  French business transactions usually take place
business dealing. at a lunch or dinner table
Behaviour at the table  Chinese banquets and sometime drinking
punctuate deals
Timing How to control time  Signs of impatience are considered as improper
in many cultures
 Lengthy preliminaries are usual in the Middle
East
Talking Importance of verbal  Silent pauses are the norms in Chinese or
communication Japanese

Global Strategic Management : Philippe Lasserre

 Differences in Business Practice Examples

RELATIONS
Engaging Importance given to  Most Asian countries privilege the
establishing personal personalisation of contacts before
relationships in business engaging in business transactions
transactions
Contracting Importance given to  Legal contracting is the norm in the
overall agreements on USA while broad agreements are
principles versus details considered satisfactory in Japan
COMPETING
Advantages Product’s technology  In China, connexions (Guanxi) are
versus Connexions as a still a very important factor of
source of competitive competitive advantage
advantage
Supplying Preferences given to  In Asia the notion of “extended
friends and families in families” implies that preferential
supplies contracts treatment be given to families and
friends for supplies contracts.

Global Strategic Management : Philippe Lasserre