Without culture it would be impossible to engage in either commerce and trade or governance.

The other
two sectors require a continuous infusion of social trust to function.

Markets and governments are extensions of culture and never the reverse. They have always been and
will always be secondary rather than primary institutions in the affairs of humanity because culture
creates the emphatic cloak of sociability that allows people to confidently engage each other either in the
marketplace or government sphere. – Jeremy Rifkin (The Emphatic Civilization)

Culture

- Acquired knowledge that people use to interpret experience and generate social behavior
- Culture forms values, creates attitude and influence behavior
- Reference point

Each of us is multicultural!

- Multiple Reference Points

- Family, Job, Corporate, Regional, Social Culture

HRM

- Is the organizational function that deals with issues related to people

- Human resource management works to achieve the most efficient way that organizations can
achieve and enforce:
o The selection and development of people within the organization (effective integration
of skills/capabilities and job placements)
o The mobilization of each employee’s potential so individual and group needs are met and
the objectives of the organization are achieved

An organization’s HRM activities include

- Human resource planning

- Staffing and recruiting
- Performance management
- Training and development
- Compensation and benefits
- Industrial relations

I-HRM

- Increasing globalization, firms, and employees in them moving all over the world
- Major problems in international operations because of human resource management blunders
- Hence need to understand human resource management in a global perspective
- Morgan defines IHRM as an interplay of 3 dimensions: HR activities, types of employees &
countries of operations.
- The role of HR in International Operations
- Managing a Multicultural Workforce
- Developing Managerial Talent in a Global Business Environment
 - Research done shows 3 global pressures: 1. Deployment, 2. Knowledge & innovation
dissemination 3. Identification & development of talent on a global basis.

Why is I-HRM different from HRM

1. More HR activities
a. International Taxation and Relocation
b. Administrative services for expatriates
c. Host government relations
d. Language translation services
2. The need for a broader perspective
a. Equity issues
b. The changing emphasis in HR practices
3. Risk exposure
a. The human and financial consequences of failure
b. Terrorism/Emergency evacuation procedures
4. Broader external influences
a. The type of government
b. The state of economy
c. The accepted practice of doing business
5. More involvement in employee’s personal lives
a. Ensure expatriates understand
b. Housing arrangements
c. Healthcare
d. Compensation (cost of living allowances, premiums, taxes)
e. Visa requirements
f. Schooling

Management Approaches Affected by Cultural Diversity

- Centralized vs Decentralized decision making

- Safety vs risk
- Individual vs group rewards
- Short term vs long term orientation
- Informal vs formal procedures
- High vs low organizational loyalty
- Cooperation vs competition
- Stability vs innovation

Cross Cultural Management aims to

- Understand how the different types of cultures affect management practices

- Identify and acknowledge the similarities and differences across cultures in various management
practices and organizational contexts
- Increase effectiveness in global management

A model of culture: concentric circles

Outer layer: observable (e.g. language, food, buildings, art) – Explicit artifacts and products of society

Middle layer: helps people understand how they should behave – Norms and values that guide society

Inner layer: intangible, helpful for problem solving and well interactions with other people – Implicit, basic
assumptions that guide people’s behavior

19th Century

Culture or civilization is the complex whole comprising knowledge, beliefs, arts, morals, laws, customs, as
well as other capacities and habits acquired by man as a member of society. – Edward B. Taylor Primitive
civilization (1871)

20th Century

Culture is what allows an individual to integrate into society. – Franz Boas & Ralph Linton (1930)

Modern Definitions

Culture consists of patterns, explicit and implicit, of and for behavior acquired and transmitted by symbols.
– Clyde Kluckhorn, 1954

Culture is to the collectivity what personality is to the individual. It is the interactive aggregate of common
characteristics that influence a human group’s response to its environment. Culture is the collective
programming of the mind. – Geort Hofstede, 1980

Culture is a universal orientation system which is typically for a society, a nation, an organization or a
group. – Alexander Thomas, 1983

Synopsis: Features of Culture

- Shared by all
- Makes life easier
- Acquired not innate
- Learned and taught unconsciously
- Not origin, but consequence of collective identity
- A system of interdependent elements
- Subject to changes, A pattern which shapes behaviors

Subcultures and multiple identities

Examples of Cultural Diversity

- Greeting
- Work and Cultural Priorities
- Culture affects management practices

Cultural Differences in Negotiations and Conflicts

 - Desire for a long term relationship or just a one-time deal
- Preference to win negotiation or preference for a win-win situation
- Informal or formal attitude
- Direct or indirect communication style
- Show emotions or hide emotions
- Decisions made by the group or by the leader

The Different Dimensions of Culture

Why do we experience problems?

Assumptions

- We are alike! I do not have to worry about anything

- We may be different, but I would like to do business the way I know and want!
- They are different, I need to be very careful and cautious. I do not know what I am getting into.
- They are different, but I can train them about our ways.

Perception

- A person’s interpretation of reality

- Filtered experience
o The fabric of the filter is determined by our cultural background
o It is very likely that the same experiences may be interpreted differently by people from
diverse cultural backgrounds

Stereotypes

- A tendency to think in terms of generalizations (people belonging to a single class)

- Lazy way of thinking

Hofstede’s Question and Methodology

- What are the components of culture, a small set of dimensions or characteristics, that enable us
to classify culture-in-the-large (at a national level)? And do nations differ and can they be
clustered into culturally-similar nations?
o Late 1960s, questionnaires were distributed to thousands of IBM employees worldwide.
o They answered the questions about work modes, methods, and meanings on desirable
and desired situations and characteristics
o The results were subjected to factor analysis

Hofstede’s Cultural Dimensions (PUMITI)

- Power Distance
- Uncertainty Avoidance
- Individualism/Collectivism
- Masculinity/Femininity
- Time Orientation
- Indulgence
Power Distance – The extent to which less powerful members of institutions and organizations accept that
power is distributed unequally

o High power distance countries – people may blindly obey the orders of their superiors
and are less likely to question authority. Companies tend to use centralized decision
making and tall organization structures (many levels of management) Ex: Philippines,
Malaysia, Mexico
o Low power distance countries – flatter and decentralized organization structures, smaller
ratio of supervisors, employees are more likely to question authority, participative
management may be used Ex: New Zealand, UK, Norway

Individualism – Tendency of people to look after themselves and their immediate family only

o Countries high in individualism: High individual initiative. Promotions are based on

achievement. Salaries are based on market value Ex: United States, Australia, UK

Collectivism – Tendency of people to belong to groups or collectives and to look after each other in
exchange of loyalty

o Countries high in collectivism: Low individual initiative. Salaries and promotions may be
based on seniority Ex: Taiwan, South Korea, Thailand

Uncertainty avoidance - Extent to which people feel threatened by ambiguous situations and have created
beliefs and institutions that try to avoid such situations

o High uncertainty avoidance countries: people have high need for security, strong beliefs
in experts and their knowledge, more written rules and procedures, less risk taking by
managers Ex: Greece, Japan, Portugal
o Low uncertainty avoidance countries: people are more willing to accept risks associated
with the unknown, fewer written rules and procedures, more risk taking by managers,
higher employee turnover, more ambitious employees Ex: Singapore, Denmark, Sweden

Masculinity – the dominant social values are success, money and things

o Countries high in masculinity: People place great importance on earnings, recognition,

advancement, achievement, challenge, wealth. High job stress Ex: Japan, Italy,
Switzerland

Femininity – the dominant social values are caring for other and the quality of life

o Countries high in femininity: great importance on cooperation, friendly atmosphere,

employment security, and the natural environment. Low job stress Ex: Norway, Sweden,
Denmark

Long term orientation vs short-term orientation – dimension associates the connection of the past with
the current and future actions/challenges

o A lower degree (short-term): indicates that traditions are honored and kept, while
steadfastness is values Ex: Philippines, UK, US, New Zealand
 o A higher degree (long-term): view adaptations and circumstantial pragmatic problem
solving as a necessity Ex: China, Hong Kong, Taiwan

Indulgence vs restraint – essentially a measure of happiness. Indulgence is defined as “a society that allows
relatively free gratification of basic and natural human desires related to enjoying life and having fun.” Its
counterpart is defined as “a society that controls gratification of needs and regulates it by means of strict
social norms.”

Indulgent – Mexico, United States, United Kingdom

Restraint – Russia, Czech Republic

Philippine Value Orientations (Geertz Hofstede)

- Hi Power Distance
- Lo Uncertainty Avoidance
- Lo Individualism
- Lo Masculinity

Key Elements in the Definition

- Basic assumptions
- Shared by a group
- Assumptions have demonstrated validity
- They will be taught to newcomers

Key Functions of Culture

- External Adaptation
- Internal Integration
- Provides a sense of identity

Who creates culture?

- People create “culture” based on their history, experience and “inspiration”

- Culture changes – they are not static

Leadership and Organizational Culture

- Leaders, particularly visionary and articulate leaders, define and institutionalize the organization’s
culture

How leaders influence organizational culture

- The most powerful primary mechanisms for culture embedding or reinforcement are:
o What leaders pay attention to, measure and control
o Leaders reactions to critical incidents and organizational crises
o Deliberate role modeling, teaching, and coaching by leaders
o Criteria for allocation of rewards and status
 o Criteria for recruitment, selection, promotion, retirement and excommunication
- The most powerful secondary articulation sand reinforcement mechanisms are
o The organizational design and structure
o Organizational systems and procedures
o Design of physical space, facades and buildings
o Stories, legends, myths and parables about important events and people
o Formal statements of organizational philosophy, creeds, and charters

Benefits of strong organizational cultures

- It exerts strong influence on the behavior of all members of the organization

- It can be a strong unifying force

Fons Trompenaars & Charles Hampden-Turner’s Cultural Dimensions (UNATISI)

- Universalism vs Particularism
o Universalism – the belief that ideas and practices can be applied everywhere in the world
without modification. People tend to focus on formal rules and expect business partners
to do the same.
 Ex: US, Canada
o Particularism – the belief that circumstances dictate how ideas and practices should be
applied and some things cannot be done the same way everywhere. People tend to focus
on relationships, working things out to suit those involved
 Ex: Russia, China
- Neutral vs Emotional (How do we show our emotions?)
o Neutral – a culture in which emotions are held in check. People try not to show their
emotions
 Ex: UK, Germany
o Emotional – a culture in which emotions are expressed openly and naturally. People smile,
may talk loudly, greet each other with enthusiasm, show happiness or unhappiness
 Ex: Italy, Spain
- Achieved status vs ascribed status (Do we work to get where we are or is prestige/status given?)
o Achievement – culture in which people are accorded status based on how well they
perform and what they have accomplished
 Ex: US, Canada
o Ascribed – culture in which status is attributed based on who or what a person is
 Ex: Saudi Arabia
- Time orientation
o Sequential use of time – people do one thing at a time, keep appointments strictly, follow
plans to the letter
 Ex: Germany, US
o Synchronous use of time – people do more than one thing at a time, appointments are
approximate
 Ex: Japan, Argentina
- Individualism vs Communitarianism (Do we prefer to work individually or in a group?)
 o Individualism - People believe in personal freedom and achievement. They believe that
you make your own decisions, and that you must take care of yourself.
 Ex: US, Canada
o Communitarianism - People believe that the group is more important than the individual.
The group provides help and safety, in exchange for loyalty. The group always comes
before the individual.
 Ex: Latin-America, Japan
- Specific vs Diffuse Relationships (How far do we get involved?)
o Specific - People keep work and personal lives separate. As a result, they believe that
relationships don't have much of an impact on work objectives, and, although good
relationships are important, they believe that people can work together without having a
good relationship.
 Ex: US, UK
o Diffuse - People see an overlap between their work and personal life. They believe that
good relationships are vital to meeting business objectives, and that their relationships
with others will be the same, whether they are at work or meeting socially. People spend
time outside work hours with colleagues and clients.
 Ex: Argentina, China
- Internal vs External orientation (Do we control the environment or leave it to fate/destiny?)
o Inner directed cultures (Analyse)
 About thinking and personal judgement, “in our heads.”
 Assumes that thinking is the most powerful tool
 Big picture focus is being out of touch with reality
 Ideas and intuitive approaches are the best way
 Ex: US, UK
o Outer-directed cultures (Integrate)
 Seek data in the outer world
 Assumes that we live in the real world
 Real world is where we should look for our information and decisions
 The big picture
 Ex: China, Russia

Edward Hall

- American scientist and anthropologist

- Different approach than Hofstede and Trompenaars-Turner
- He attempted to identify the cultural dimensions from the perspective of human common life
- Orientation of culture in space, time, and communication

Space

- The physical personal distance between communicating people. This distance differs from culture
to culture: relation of a person to personal space is determined not only by culture but also by
individual characteristics
- Generally speaking, in collectivistic cultures, people keep shorter distance by communication
whereas in individualistic cultures, people prefer longer personal distance
 - Intimate zone, friend zone, social zone, audience zone

Time

- In monochrome oriented cultures, time is linear. There is little tolerance to time collisions and to
interrupts. Monochrome cultures are apparent in Germany, USA, Japan
- In polychrome oriented cultures, people like to do more things in one time, different meetings
can be planned for the same time. Time collisions are being tolerated and accepted and also very
flexible attitude to changes and mistakes, which can cause these time collision. Typical example
of polychrome society is Latin America and South Europe, i.e. Italy, Spain, Portugal

Communication

- In cultures with low range of context, people express themselves directly and they say what they
think. All information has to be explicitly expressed. Cultures with low communicative context are
present primarily in norther and Western Europe and the USA.
- Cultures with large range of context are characterized by indirect communication which is
accompanied by high and strong communicative context. Direct expression in this type of culture
is considered to be rude. They use nonverbal communication. Among these cultures with large
communicative context belong Asian and Arab cultures.

Globe Project

- Performance Orientation: The degree to which a collective encourages and rewards (and should
encourage and reward) group members for performance improvement and excellence.
- Assertiveness: The degree to which individuals are (and should be) assertive, confrontational, and
aggressive in their relationship with others.
- Future Orientation: The extent to which individuals engage (and should engage) in future-oriented
behaviors such as planning, investing in the future, and delaying gratification.
- Humane Orientation: The degree to which a collective encourages and rewards (and should
encourage and reward) individuals for being fair, altruistic, generous, caring, and kind to others.
- Institutional Collectivism: The degree to which organizational and societal institutional practices
encourage and reward (and should encourage and reward) collective distribution of resources
and collective action.
- In-Group Collectivism: The degree to which individuals express (and should express) pride, loyalty,
and cohesiveness in their organizations or families.
- Gender Egalitarianism: The degree to which a collective minimizes (and should minimize) gender
inequality.
- Power Distance: The extent to which the community accepts and endorses authority, power
differences, and status privileges.
- Uncertainty Avoidance: The extent to which a society, organization, or group relies (and should
rely) on social norms, rules, and procedures to alleviate unpredictability of future events. The
greater the desire to avoid uncertainty, the more people seek orderliness, consistency, structure,
formal procedures, and laws to cover situations in their daily lives.
Organizational Culture

- A pattern of basic assumptions that the group has learned as it solved its problems of external
adaptation and internal integration, that has worked well enough to be considered valid and
therefore to be taught to new members as the correct way to perceive, think and feel in relation
to those problems

Functions of Organizational Culture

- Culture provides a sense of identity to members and increase their commitment to the
organization
- Culture is a sense-making device for organization members
- Culture reinforces the values of the organization
- Culture serves as a control mechanism for shaping behavior

Levels of Organizational Culture

Artifacts – symbols of culture in the physical and social work environment

Values

- Espoused: what members of an organization say they value

- Enacted: reflected in the way individuals actually behave

Assumptions – deeply held beliefs that guide behavior and tell members of an organization how to
perceive and think about things

Understanding Organizational Culture

1. Antecedents
a. Founder’s Values
b. Industry and business environment
c. Senior leaders’ vision and behavior
d. National Culture
2. Organizational Culture
a. Observable artifacts
b. Espoused values
c. Basic assumptions
3. Organizational structure and practices
a. Reward System
b. Organizational design
4. Group and Social Processes
a. Socialization, Mentoring, Decision making, Group dynamics, Communication, Influence
and empowerment, Leadership
5. Collective Attitudes and Behavior
a. Work attitudes
b. Job Satisfaction
 c. Motivation
6. Organizational Outcomes
a. Innovation and stress
b. Effectiveness

Corporate Culture

- Influences the way people in a corporate setup behave

o Treatment of customers
o Treatment of subordinate
o Standards of organizational performance
o Accountability

Competing Values Framework

- A framework used as a basis for many methods and theories in OB

- All these phrases are divided in 4 quadrants by
o Horizontally: left: internal focus and integration to right: external focus and
differentiation
o Vertically: top: flexibility and discretion to bottom: stability and control
Family/Clan Culture

- Concern with human relations model

- Supports flexibility
- Maintain focus internally
- Tends to be thinking in the interest of the group as a whole
- Core values: Belonging, trust, participating
- Motivation: membership, cohesiveness
- Effectiveness: member commitment, participation

Adhocracy Culture

- Concern with open system model

- Support flexibility
- Focus on external environment
- Willing to take risks
- More able to develop a vision of the organization
- Core value: company growth, size, competitiveness outside
- Motivation: creativity, variety
- Effectiveness: market development, resources acquisition
Market culture

- Concerned about the rational goal model

- Focus on goal achievement, organization performance
- Tends to be directive, functional working behavior
- Core value: pursuit on a well-defined objective
- Motivation factor: competition and a successful achievement
- Effectiveness criteria: planning, productivity, efficiency

Hierarchical Culture

- Concerned about internal process model

- Support stability
- Tends to be conservative and cautious
- Core value: executions of regulations
- Motivation: security, order, rules
- Effectiveness: control, stability

Organization Culture Assessment Instrument (OCAI)

- Assess six key dimensions of organizational culture

- Providing a picture of how your organization operates and the values that characterize it
- DOMOSC
o Dominant Characteristics
 Group: personal like a family
 Developmental: entrepreneurial, risk taking
 Rational: competitive, achievement oriented
 Hierarchical: controlled and structured
o Organizational Leadership
 Group: facilitating
 Developmental: innovation
 Rational: aggressive, result-oriented
 Hierarchical: coordinating, efficiency oriented
o Management of employees
 Group: teamwork, consensus, participation
 Developmental: freedom, uniqueness
 Rational: competitiveness, achievement
 Hierarchical: security, predictability
o Organizational glue
 Group: loyalty, mutual trust
 Developmental: commitment to innovation, development
 Rational: achievement and goal accomplishment
 Hierarchical: formal rules and policies
 o Strategic emphases
 Group: human development, openness
 Developmental: acquisition of resources, creating new challenges
 Rational: competitive actions and winning
 Hierarchical: stability
o Criteria of success
 Group: teamwork, concern for people
 Developmental: unique and new products and services
 Rational: winning in the marketplace
 Hierarchical: efficiency, low cost

United States Inner Layer

- American dream
o National ethos of the United States
o the ideal by which equality of opportunity is available to any American, allowing the
highest aspirations and goals to be achieved
o the set of ideals in which freedom includes the opportunity for prosperity and success, as
well as an upward social mobility for the family and children, achieved through hard work
in a society with few barriers