Intercultural Management

Knowledge Management in Multicultural Environment

Prepared by:

Atefeh
Molaie
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Khurshed
Alam
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Natalya
Grigoryeva
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Annika
Eweler

INDIVIDUALISM / COLLECTIVISM AND POWER DISTANCE

Individualism vs collectivism is one of the main and most significant cultural
dimensions which influence transfer of knowledge within MNCs. This cultural
dimension was firstly introduced by G. Hofstede, and yet has been continuously
examined and researched in the scientific literature.
According to his theory, cultures can be divided into two groups: collectivistic and
individualistic. In individualistic nations independence is highly valued and personal
achievements are regarded much more than group interests. The self is an
autonomous entity and is relatively independent of groups. Most of European and
Anglo-Saxon societies are considered to be highly individualistic. By contrast, in
collectivistic cultures qualities such as interdependence, loyalty, solidarity, and
identification with the in-group are strongly emphasised. Asian and Middle East
countries are good examples of collectivistic societies.
The cultural dimension of collectivism-individualism is closely linked to another
dimension - power distance. Here the distinctiveness among the nations is made by
hierarchy and power distribution is the society. High power countries have norms,
values and beliefs, such as: inequality is fundamentally good; everyone has a place,
some are high, some are low; most people should be dependent on a leader, the
powerful are entitled to privileges... 1. In small power countries the societal
structure is quite the opposite and characterized to be flat.
Superposing these two dimensions, it is possible to subdivide individualistic and
collectivistic countries into vertical and horizontal ones. Individualistic countries
where hierarchy is important are vertical individualists (i.e. Great Britain, USA).
Countries with flat distribution of power are horizontal individualists (i.e.
Scandinavian countries). The majority of collectivistic countries have a significant
power distance; therefore, we will consider only vertical collectivists. According to
Hofstedes findings, among 40 countries which he researched, there were no
countries with small power distance and collectivism, whereas 20 countries were
with large power distance and collectivism; on the contrary, there were only 5

Aswathappa K. (2008), p.183

countries with large power distance and individualism2. Picture 1 below shows an
approximate geographical distribution of the mentioned types.
Picture 1

Vertical
individualist
s

Horizontal
individualists
Vertical
collectivists

Vertical
collectivists

Horizontal
individualists

DIFFERENT APPROACHES TO KNOWLEDGE

Individualists and collectivists have different approaches to work with information
and to transfer knowledge. Individualists prefer explicit, complex and rational
information. They believe that any information can be articulated, organized and
created from theoretical analyses and synthesis, and tend to perform better when
knowledge management processes emphasize personal attributes such as beliefs,
feelings, and attitudes towards an object, person, or event 3.
On the other hand, collectivistic countries prefer relational (rather then rational)
information and tacit knowledge, relevant to in-groups. Context is more important
for them than content. Collectivists always need context to understand the
importance of knowledge. In terms of knowledge management, they are considered
to deal better with organisational history, patterns of obligation, past practices,
norms of doing things in a specific way as preferred by the ingroup. 4

Gannon M.J., Newman K.L. (2002), p.283

Bhagat, R.S. & Steers, R.M. (2009), p.180
4
Bhagat, R.S. & Steers, R.M. (2009), p.180
3

As far as knowledge management in MNCs is concerned, information cannot always

freely circulate among these groups due to their different approaches to working with
it. The possible ways of knowledge flows are schematically shown below on the
Picture 2.
Picture 2
combination

Vertical
individualists

Horizontal
individualists
combination

internalization

externalization

Vertical
collectivists

Individualists of both types dont have many issues with transferring information
between each other. They both prefer explicit knowledge using combination as a
mode of working with it. The only matter that they might have is related to the
information about superiority and hierarchy. Horizontal individualists will ignore the
information about positions, distinctiveness of organizational status or other similar
attributes, whereas it will be of a high importance for vertical individualists.
Moreover, the similar situation is observed in collectivistic countries. Using
socialization mode of working with information, collectivists can effectively share
knowledge with each other.
More questions arise when an MCN needs to transfer information from
individualistic to collectivistic environment, and vice versa. Due to the quite different
approaches in working with knowledge there, managers should be more careful. In
such cases individualists are recommended to use internalization of knowledge if
they need to transfer it to collectivists. The opposite approach of externalization will
be required to transfer information from collectivistic environment to individualistic
one.

Summing up the above, a conclusion can be drawn that it is possible to share

information among different cultures taking into account that individualistic and
collectivistic societies have little similarity in gathering, transferring and acquiring
knowledge. However, to make this process most effective, one should use the certain
approaches such as combination, socialization, externalization and internalization.

KNOWLEDGE MANAGEMENT IN RUSSIA5

Due to its geographical position between Europe and Asia, Russia has a combination
of Asian and European features, having taken traditions and patterns from both parts
of the world. However, the country is mostly associated with collectivism and
paternalism, especially after a few decades of Soviet period when unity and equality
was praised. Individualistic qualities have been traditionally qualified as undesirable,
and consequently, suppressed. Nevertheless, after the USSR collapse the country
headed fast towards Western values and lifestyle. During the last 20 years, economic
and social structure has been changed significantly though the country still keeps its
main historical features.
As far as Russian people are still mainly collectivists, tacit knowledge plays a
significant role in Russian business. Context is always very important and the way
Russian people communicate is usually loaded with hidden content. Knowledge is
usually implicit and hard to transfer to non-Russian people.
Below are notes of a Western businessman who was working in Russia about the
importance of traditions in Russian business culture: the use of nicknames (or
diminutives), inside jokes or corporate traditions are the most visible features. [...]
You may notice that Alexei is called Aliosha by his colleagues; that there is probably
a poster in the coffee-room with quotes from famous soviet movies and that no
birthday is to be ignored among the staff6.
Another example is that business talks rarely start straightforward with a business
subject. Firstly, its crucial for parties to understand the context and to gather more
information about each other. A conversation usually starts with subjects remote
from the business world (weather, politics, family, sport, etc.). And only after that,
when parties are confident about each other the business matter can be discussed.
Importance of the context in Russian business environment is also stressed by
preference of face-to-face meetings. Speakers tone of voice, facial expression, and
gestures gives the most information, thats why Russian businessmen prefer talking
about the deal in person. Not surprisingly, written contracts bear less binding power
than an oral agreement and a handshake after dinner.

5
6

The examples in the chapter are based on the article of Dumetz, J.

Dumetz, J.

BIBLIOGRAPHY

Books
Aswathappa K. International Business, Tata McGraw-Hill, 3rd Edition, Dehli,
2008
Bhagat, R.S. & Steers, R.M. Cambridge Handbook of Culture, Organizations and
Work, Cambridge University Press, Cambridge, UK, 2009
Gannon M.J., Newman K.L. Handbook of Cross-Cultural Management,
Blackwell, Oxford, 2002
Hofstede, G.H. Cultures Consequences: Comparing Values, Behaviours,
Institutions, and Organizations Across Nations, Thousand Oak, CA: Sage
Publications, California, 2001

Internet sources
Dumetz, J. Communication within the Russian business culture: Mind the context!
(http://old.goinglobal.com/hot_topics/russia_jerome_business.asp), accessed on
23.06.2010