Chap5 Managing Across Cultures

International Management Ninth Edition Luthans | Doh
International Management Luthans | Doh

International Ninth Edition
Fred Luthans
Management Jonathan P. Doh

Ninth Edition
Chapter 5
Managing Across Cultures

Chapter Objectives
The specific objectives of this chapter are:

1. EXAMINE the strategic dispositions that
characterize responses to different cultures.
2. DISCUSS cross-cultural differences and
similarities.
3. REVIEW cultural differences in select countries
and regions, and note some of the important
strategic guidelines for doing business in each.
Strategic Predispositions
Four distinct predispositions toward doing
things in a particular way:
1. Ethnocentric
2. Polycentric
3. Regio-centric
4. Geocentric
• Ethnocentric predisposition
– A nationalistic philosophy of management
whereby the values and interests of the parent
company guide strategic decisions.
• Polycentric predisposition
– A philosophy of management whereby strategic
decisions are tailored to suit the cultures of the countries
where the MNC operates.
• Regio-centric predisposition
– A philosophy of management whereby the firm tries to
blend its own interests with those of its subsidiaries on a
regional basis.
• Geocentric predisposition
– A philosophy of management whereby the company tries
to integrate a global systems approach to decision
making.
Orientation of an MNC
Meeting the Challenge

• The Globalization Imperative:
– Belief that one worldwide approach to doing business is
key to efficiency and effectiveness.
– Many factors facilitate the need to develop unique
strategies for different cultures:
• Diversity of worldwide industry standards
• Continual demand by local customers for differentiated
products
• Importance of being insider as in case of customer who
prefers to “buy local”
• Difficulty of managing global organizations
• Need to allow subsidiaries to use own abilities and
talents unconstrained by headquarters
Globalization vs.
National Responsiveness
• Advertising (for example)
– French
• Avoid reasoning or logic
• Advertising predominantly emotional, dramatic, symbolic
• Spots viewed as cultural events – art for sake of money – and
reviewed as if they were literatures or films
– British
• Value laughter above all else
• Typical broad, self-deprecating British commercial amuses by
mocking both advertiser and consumer
– Germans
• Want factual and rational advertising
• Typical German spot features standard family of 2 parents, two
children, and grandmother
Globalization vs.
National Responsiveness
• How to add value to marketing:
– Tailor advertising message to particular culture
– Stay abreast of local market conditions; don’t
assume all markets basically same
– Know strengths and weaknesses of MNC
subsidiaries; provide them assistance in
addressing local demands
– Give subsidiary more autonomy; let it respond to
changes in local demand
Cross-Cultural
Differences and Similarities
• Parochialism and Simplification
– Parochialism: view world through own eyes and
perspectives
– Simplification: exhibit same orientation toward
different cultural groups
Cultural Variations
Cross-Cultural
• Similarities across cultures:
– Not possible to do business same way in every global
location
– Procedures and strategies that work well at home can’t be
adopted overseas without modifications
– Some similarities have been found
• Russia and U.S. (for example)
– Traditional management
– Communication
– Human resources
– Networking activities
– OB Mod
Cross-Cultural
• Differences across cultures
– Far more differences than similarities found in
cross-cultural research
– Wages, compensation, pay equity, maternity leave
– Importance of criteria used in evaluation of
employees
Cultural Clusters
International
Human Resource Management
Cultural Differences in Selected

Countries and Regions
Doing Business in China

1. The Chinese place values and principles above money and expediency.
2. Business meetings typically start with pleasantries such as tea and
general conversation about the guest’s trip to the country, local
accommodations, and family.
3. The Chinese host will give the appropriate indication for when a
meeting is to begin and when the meeting is over.
4. Once the Chinese decide who and what is best, they tend to stick with
these decisions. Although slow in formulating a plan of action, once
they get started, they make fairly good progress.

Countries and Regions: China
5. In negotiations, reciprocity is important. If the Chinese
give concessions, they expect some in return.
6. Because negotiating can involve a loss of face, it is
common to find Chinese carrying out the whole process
through intermediaries.
7. During negotiations, it is important not to show
excessive emotion of any kind. Anger or frustration is
viewed as antisocial and unseemly.
8. Negotiations should be viewed with a long-term
perspective. Those who will do best are the ones who
realize they are investing in a long-term relationship.

Doing Business in Russia
1. Build personal relationships with partners. When there are
contract disputes, there is little protection for the aggrieved
party because of the time and effort needed to legally enforce
the agreement.
2. Use local consultants. Because the rules of business have
changed so much in recent years, it pays to have a local
Russian consultant working with the company.
3. Ethical behavior in the United States is not always the same as
in Russia. For example, it is traditional in Russia to give gifts to
those with whom one wants to transact business.
4. Be patient. In order to get something done in Russia, it often
takes months of waiting.

Countries and Regions: Russia
5. Russians like exclusive arrangements and often negotiate with
just one firm at a time.
6. Russians like to do business face-to-face. So when they
receive letters or faxes, they often put them on their desk but
do not respond to them.
7. Keep financial information personal. Russians wait until they
know their partner well enough to feel comfortable before
sharing financial data.
8. Research the company. In dealing effectively with Russian
partners, it is helpful to get information about this company,
its management hierarchy, and how it typically does business.

Countries and Regions: Russia
9. Stress mutual gain. The Western idea of “win–win” in
negotiations also works well in Russia.
10. Clarify terminology. The language of business is just getting
transplanted in Russia so double-check and make sure that
the other party clearly understands the proposal, knows what
is expected and when, and is agreeable to the deal.
11. Be careful about compromising or settling things too quickly
because this is often seen as a sign of weakness.
12. Russians view contracts as binding only if they continue to be
mutually beneficial, so continually show them the benefits
associated with sticking to the deal.

• Doing business in India
1. It is important to be on time for meetings.
2. Personal questions should not be asked unless the other
individual is a friend or close associate.
3. Titles are important, so people who are doctors or
professors should be addressed accordingly.
4. Public displays of affection are considered to be
inappropriate, so one should refrain from backslapping
or touching others.

Countries and Regions: India
5. Beckoning is done with the palm turned down; pointing
often is done with the chin.
6. When eating or accepting things, use the right hand
because the left is considered to be unclean.
7. The namaste gesture can be used to greet people; it also
is used to convey other messages, including a signal that
one has had enough food.
8. Bargaining for goods and services is common; this
contrasts with Western traditions, where bargaining
might be considered rude or abrasive.

Doing business in France
1. When shaking hands with a French person, use a quick
shake with some pressure in the grip.
2. It is extremely important to be on time for meetings and
social occasions. Being “fashionably late” is frowned on.
3. During a meal, it is acceptable to engage in pleasant
conversation, but personal questions and the subject of
money are never brought up.
4. Visiting businesspeople should try very hard to be
cultured and sophisticated.

Countries and Regions: France
5. The French tend to be suspicious of early friendliness in the
discussion and dislike first names, taking off jackets, or
disclosure of personal or family details.
6. In negotiations the French try to find out what all of the other
side’s aims and demands are at the beginning, but they reveal
their own hand only late in the negotiations.
7. The French do not like being rushed into making a decision,
and they rarely make important decisions inside the meeting.
8. The French tend to be very precise and logical in their
approach to things, and will often not make concessions in
negotiations unless their logic has been defeated.

• Doing business in Arab countries
1. It is important never to display feelings of superiority, because
this makes the other party feel inferior. Let one’s action speak for
itself and not brag or put on a show of self-importance.
2. One should not take credit for joint efforts. A great deal of what
is accomplished is a result of group work, and to indicate that
one accomplished something alone is a mistake.
3. Much of what gets done is a result of going through
administrative channels in the country. It often is difficult to
sidestep a lot of this red tape, and efforts to do so can be
regarded as disrespect for legal and governmental institutions.

Countries and Regions: Arab Countries
4. Connections are extremely important in conducting business.
5. Patience is critical to the success of business transactions. This
time consideration should be built into all negotiations.
6. Important decisions usually are made in person, not by
correspondence or telephone. This is why an MNC’s personal
presence often is a prerequisite for success in the Arab world.
Additionally, while there may be many people who provide
input on the final decision, the ultimate power rests with the
person at the top, and this individual will rely heavily on
personal impressions, trust, and rapport.
Review and Discuss

1. Define the four basic predispositions MNCs have
toward their international operations.
2. In what way are parochialism and simplification
barriers to effective cross-cultural management? In
each case, give an example.
3. Many MNCs would like to do business overseas in
the same way that they do business domestically.
Do research findings show that any approaches
that work well in the U.S. also work well in other
cultures?

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International Management Ninth Edition Luthans | Doh

International Management Luthans | Doh

Management Jonathan P. Doh

Managing Across Cultures

The specific objectives of this chapter are:

Meeting the Challenge

Cultural Differences in Selected

Doing Business in China

Cultural Differences in Selected

Cultural Differences in Selected

Cultural Differences in Selected

Cultural Differences in Selected

Cultural Differences in Selected

Cultural Differences in Selected

Cultural Differences in Selected

Cultural Differences in Selected

Cultural Differences in Selected

Cultural Differences in Selected

Review and Discuss

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