Exploring_the_Significance_and_Implications_of_Cultural_Models_for_Multi_National_Enterprise's_Decision_Making.

Topic: Exploring the significance and implications of cultural models for Multi National Enterprise’s decision making. By definition culture is the “learned, shared, and enduring orientation patterns in a society. People demonstrate their culture through values, ideas, attitudes, behaviours and symbols” (Cavusgil et al. 2008 126). According to Trompenaars F. and Hampden- Turner C. 2005, culture is the summation of the outer layer: explicit products, the middle layers: norms and values and the core: assumptions about existence. In which “explicit culture is the observable reality of the language, food, buildings, houses, monuments, agriculture, shrines, markets, fashions and art. They are the symbols of a deeper level of culture, the norms and values. Norms are the mutual sense a group has of what is right and wrong. Values, on the other hand, are closely related to the ideals shared by a group.” (Trompenaars F. and Hampden- Turner C. 2005). The importance of culture cannot be undermined in any context, culture plays a role, may it be hiring of workers, remuneration plans, office space management or the target customer. For example, Disney’s base product, in the US, the Disneyland and Disneyworld theme parks were extremely successful. But their new venture Euro Disneyland was a failure. Located in France, it failed to take into consideration the European culture, in forms- worker were forced to having to speak English in meetings, even if most people in attendance spoke French, liquor was not sold outside of the hotels or specific areas however Europeans were used to having outings with alcoholic beverages. This essay is an attempt to understand the effectiveness of cultural models and typologies in decision making during expansion. It should be noted that Disney from the above example did extensive research for the location of Euro Disneyland but failed to do any research on and understand the culture of the location. Cultural models can serve as a blackboard where the culture is placed under certain type for classification. Notable contribution in the field of cross-cultural management by Geert Hofstede, Fons Trompenaars and Charles Hampden-Turner are discussed in the essay. Dutch anthropologist Hofstede investigated the attitudes held by 116,00 employees in branches and affiliates of IBM in 50 countries, from this he established five dimensions, largely independent of each other, to categorize culture. According to him, the power distance dimension measures how different national cultures cope with inequalities in society and their effects on the workplace. The uncertainty avoidance dimension describes the extent to which people can tolerate risk and uncertainty in their lives. Individualism versus collectivism dimension describes whether a person functions primarily as an individual or within a group. Masculinity versus femininity dimension refers to a society’s orientation, based on traditional male and female values. Masculine cultures tend to value competitiveness, assertiveness, ambition and the accumulation of wealth. Whereas, feminine culture emphasize nurturing roles; interdependence among people and taking care of less fortunate is promoted. And lastly, long-term versus short-term dimension denotes the degree to which people and organizations defer gratification to achieve long-term success. (Cavusgil et al. 2008 137) Trompenaars and Hampden-Turner share similarities with Hofstede’s model, they too have five dimensions to categorize culture. Universalism versus particularism dimension describes the extent to which priority is given to rules or relationship. Communitarianisinm versus individualism describes the extent involvedness is in group or individual. Neutral versus emotional dimension describes the acceptability of response in terms of feelings expressed; this ranges from physical response to the verbal and conscious response. Diffuse versus specific dimension describes the range of involvement. And achievement versus ascription dimension describes how identities and status is accorded. (Trompenaars F. and Hampden- Turner C. 2005 29) Hofsede’s model can boast of being one of the few models which is derived from empirical findings from extensive research. The findings are presented statistically in indexes; this gives the dimensions a numerical value which can be easily compared. In addition, it is arguably controlled and true to its findings, mainly because the informant population (IBM employees) remain same across countries, as they are in the same structure, class and intellectual status. This maintains a commonality in the data, it would have been extremely difficult to compare data from different industries as they background and situation would be hugely dissimilar. For example- sample from India can be compared to and weighted against any other sample. The added advantage of this model is that dimensions tap into deep cultural values and make significant comparisons between national cultures. For example, Toys ‘r’ us would be more benefited if they open new business in more collectivist countries, as individuals are likely to buy toys for their immediate family (which may be 1 or 2 pieces) whereas collectivist are more likely to buys toys for their kin and other remote relatives, hence, better sales. The connotations of each dimension are relevant to management and can be easily used to derive expected or preferential result. Trompenaars’s model, on the other hand, is a theory based model. In which the application of the typologies are open to interpretation, the only quantifiable measurement would be the degree of what something is. For example, USA has a high universalistic or low particularistic characteristic. Managers application of the interpretation and can be highly subjective. The main drawback of both of the models is that it creates “stereotyping” of culture. By definition, stereotype is “generalization about a group of people that may or may not be factual, often overlooking real, deeper differences” (Cavusgil et al. 2008, 135) for example, South Korea is ranked 43rd in Hofstede’s individualism index and scores 18 (Hofstede, 2001 215) , this would mean that south Koreans are highly collectivist and believe life is fundamentally a cooperative experience, in fact, south Koreans are way more individualistic in the cities and metropolitan area as more of them are solitary families emphasizing on their careers, it is in the rural, agricultural or industrial areas that collectivism is higher. The disparity of the data accumulation and interpretation is limited to context it is being used in. Brummelhuis (1984) explains the Thai concept in terms of avoidance and distrust of authority. “The individual’s preoccupation is not so much with self realization and autonomy as with adaptation to the social or cosmological environment” in other words, “s/he resorts to individual solutions as a reaction to social pressures and as a means of escaping them. This defines individualism in negative terms, and differs from the highly positive definition usually applied to American culture” (Mead, 2005, 50) Hofstede’s model’s main weakness is that the informants worked within a single industry and a single multinational. McSweeney (2002) argues that the values of the IBM employees are typical to the small group of informants. He believes their core values would be different from the majority as they were all educated, generally middle class, city dwelling and in each country the same segment wanted to work for IBM. Hence, the results would have varied if other social groups were involved. In addition, there is the issue of bias in the questionnaire response. He argues that the “administration of the survey and ownership of its results were IBM’s; some of the questionnaires were completed within groups and not individually” (McSweeney 2002 p 103) and believes subjectivity creped in as respondents were aware that managers might develop new policies on the basis of the survey results. He argues that in some cultures the questionnaire is treated objectively, elsewhere, because of doubt and to please immediate superiors, respondents manipulated answers. Trompenaars has categorized nations as either preferring task-oriented leadership styles or relationship-oriented leadership styles. This categorization of leadership styles, as either task-oriented or relationship-oriented, was devised by Fred Fiedler in the Americas of 1950s. Trompenaars ascertained that Hong Kong managers prefer a task-oriented leadership style, while Malaysian managers prefer a relationship-oriented leadership style. This approach reduces a complex construct like leadership to just two variables. It also recommends that an even more complex phenomenon like culture can be approached on the basis of whether a task-oriented managerial style is suitable or a relationship-oriented managerial style is to be preferred. The main idea of such models is to categorize culture into certain set value. If countries are indeed culturally diverse, how useful is comparing these culture' For example, countries with high power distance scores can be so different from countries with low power distance scores that managers from the first type may not be able to work in the latter type and vice versa. In addition, a country with a high power index score comprises individuals who may have low scores as well. The rule may suggest that individuals from that country have high power distance scores; hence everyone in the culture falls under that category. But a large number of exceptions to that rule may exist. If exceptions to the rule are as numerous as the rule itself, can meaningful predictions based on that rule be made about individual managerial behaviour' Another important aspect is that of time. Most of the models create a snapshot of the culture in that particular time frame, as culture and management is constantly evolving the picture portrayal may not be true to the time. For example, the case of China, 30 years ago, when the culture was heavily influenced by communist beliefs, the power distance status would lead us to believe that China is highly autocratic and controlled. Now, Chinese culture has developed a trend of undertaking a more mixed view with certain amount of acceptability to capitalist beliefs. This would result in lowering the power distance score. But how does it help to know that managers in Mexico have high power distance scores' Does it render them unfit to work in Sweden' Can the archetypical Chinese corporate CEO with his long-term orientation, be able to function effectively in a culturally antithetical country like America' The evidence is that he can. In which case, he is not a slave of his own cultural orientation as some typologies would have us believe. He has rather adjusted or evolved. In conclusion, Cultural models are most useful when their limitations are taken into consideration. That is typologies may not provide with appropriate answers by considering on of the dimension, culture has to be scanned through the entire dimension collection and results from the collective comparison be verifiable. In practical terms, the research findings have to mould to the specific situation and needs. Understanding the dimension score won’t be enough for complete comprehension, the need to understand industry standards and the organization culture is also important. For example, in case of Disney, simply knowing the culture of the European market to be individualistic or collectivist won’t help as Disney as it has to decide on its organizational culture. Mead 2005 argues Hofstede’s work to be “best there is” this is because he believes there is no other study (currently available) that compares so many national cultures. Both Jackson (2004) and House et al. (2004) have emphasised that “considerate leaders find greater acceptance than not-so-considerate leaders irrespective of culture”, and that cross-cultural studies exist which prove this. This underscores the fact that there exist certain universal human needs, predispositions, preferences, etc. which bind the human race together. It is, therefore, misleading to use culture as a separator, which continuously differentiates nations, and the peoples of those nations. Cross-cultural studies should examine the similarities between cultures as much as differences to better come to grips with culture. The GLOBE study of House et al. (2004), confirms Hofstede's categorization of countries high on individualism. The countries that Hofstede ranked as high on individualism were considered equally high by the GLOBE data band. These countries include the US, Australia, Great Britain, Canada, the Netherlands, New Zealand, Denmark, and Sweden. Yet management practices used in one of these countries may or may not be appropriate in another of these countries. Bibliography Adler, N. J. 2002, International dimensions of organizational behaviour, 4th edition. Canada: South western. Blodgett, J. G., Bakir, A. and Rose, G. 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