International Management and Cross-Cultural Competence
Chapter 4
International Management and Cross-Cultural Competence
1. The study of international management is more important than ever as the huge global economy continues to grow. Doing business internationally typically involves much more than importing and/or exporting goods. The six stages of the internationalization process are licensing, exporting, local warehousing and selling, local assembly and packaging, joint ventures, and direct foreign investments. There are three main guidelines for success in international joint ventures: (a) Be patient while building trust with a carefully selected partner; (b) learn as much as fast as possible without giving away key secrets; and (c) establish clear ground rules for rights and responsibilities. Global companies are a present-day reality, whereas transnational companies are a futuristic vision. A global company does business simultaneously in many countries but pursues global strategies administered from a strong home-country headquarters. In contrast, a transnational company is envisioned as a decentralized global network of productive units with no distinct national identity. There is growing concern about the economic and political power that such stateless enterprises may acquire as they eclipse the power and scope of their host nations.
2. Cultural intelligence (CQ) is defined as the ability of an outsider to “read” individual behavior, group dynamics, and situations in a foreign culture as well as the locals do. Those with high CQ are cross-cultural chameleons who blend in with the local cultural situation. Global managers with high cultural intelligence possess these nine cross-cultural competencies: 1. building relationships; 2. valuing people of different cultures; 3. listening and observation; 4. coping with ambiguity; 5. translating complex information; 6. taking action and initiative; 7. managing others; 8. adaptability and flexibility; and 9. managing stress. According to Howard Perlmutter, management tends to exhibit one of three general attitudes about international operations: an ethnocentric attitude (home-country-oriented), a polycentric attitude (host-country-oriented), or a geocentric attitude (world-oriented). Perlmutter claims that a geocentric attitude will lead to better product quality, improved use of resources, better local management, and more profit than the other attitudes.
3.In high-context cultures such as Japan, communication is based more on nonverbal and situational messages than it is in low-context cultures such as the United States. The nine cultural dimensions identified by the GLOBE project are power distance, uncertainty avoidance, institutional collectivism, in-group collectivism, assertiveness, gender equality, future orientation, performance orientation, and humane orientation.
4.Comparative management is a new field of study concerned with how organizational behavior and management practices differ across cultures. A unique study by Geert Hofstede of 116,000 IBM employees in 40 nations classified each country by its prevailing attitude toward four cultural variables. In view of significant international differences on these cultural dimensions, Hofstede suggests that American management theory and practice be adapted to local cultures rather than imposed on them. The cross-cultural study of work goals uncovered a great deal of diversity. Thus, motivational programs need to be tailored to the local culture.
5.Across 62 societies in the GLOBE study, the charismatic/value-based (goal-directed visionary) and team-oriented (competent team builder) leadership styles were found to be widely applicable. The self-protective (self-centered) leadership style was not acceptable in any culture. The participative leadership style (involving others in making and implementing decisions) had mixed applicability across cultures, as did the humane-oriented (supportive and nurturing) style. Global managers need to use a contingency approach to leadership, adapting their styles to the local culture.
6.Culture shock is a normal part of expatriate life. Job performance issues, family and/or individual culture shock, and homesickness are the leading reasons why U.S. expatriates go home early (a costly problem). Systematic cross-cultural training—ideally including development of interpersonal, observational, language, and stress management competencies—is needed. Expatriates also must be flexible and able to handle ambiguity. Specific cross-cultural training techniques include documentary programs, training via a culture assimilator, language instruction, sensitivity training, and field experience.
7.North American women fill a growing but still small share of foreign positions. The long-standing assumption that women will fail on foreign assignments because of foreigners’ prejudice has turned out to be false. Women from the United States and Canada have been successful on foreign assignments but face two major hurdles at home: self-disqualification and prejudicial managers. Culture, not gender, is the primary challenge for women on foreign assignments. The situation for African Americans parallels that for women.