Chapter Four: International Management and Cross-Cultural Competence

Chapter Four
International
Management and
Cross-Cultural
Competence
Copyright Houghton Mifflin Company. All rights reserved. Chapter Four | 2
Chapter Objectives
Describe the six-step internationalization process
and distinguish between a global company and a
transnational company.
Define the term cultural intelligence, and contrast
ethnocentric, polycentric, and geocentric
attitudes toward foreign operations.
Explain from a cross-cultural perspective the
difference between individualistic and collectivist
cultures, and identify at least four of the GLOBE
cultural dimensions.
Chapter Objectives (contd)
Discuss Hofstedes conclusion about the
applicability of American management theories in
foreign cultures, and the practical significance of
the international study of work goals and
leadership styles.
Summarize the leadership lessons from the
GLOBE Project.
Chapter Objectives (contd)
Identify the four leading reasons why U.S.
expatriates fail to complete their assignments, and
discuss the nature and importance of cross-
cultural training in international management.
Summarize the position of North American
women on foreign assignments.

International Competition
Forces Shrinking the Globe
Air travel
Modern information technology
Corporate globalism
International Management
The pursuit of organizational objectives in international
and cross-cultural settings

The Internationalization Process
Stage 1: Licensing
Authorizing companies in foreign countries to produce
and/or market a given product within a specified
territory in return for a fee
Stage 2: Exporting
Goods produced in one country are sold to customers
in foreign countries.
Stage 3: Local warehousing and selling
Goods produced in one country are shipped to the
parent companys storage and marketing facilities
located in overseas countries.
The Internationalization Process (contd)
Stage 4: Local Assembly and Packaging
Components, rather than finished products, are shipped to
company-owned foreign facilities for final assembly and sales.
Stage 5: Joint Ventures (also Strategic Alliances
or Partnerships)
A company in one country pools its resources with another foreign
company or companies to create and market products and jointly
share profits and losses.
Stage 6: Direct Foreign Investment
The production and marketing of products through a wholly owned
subsidiary in a foreign country
Involves cross-border mergers
Joint Ventures and
Strategic Partnerships
Recommendations for Achieving Success
Exercise patience: Select and build trust with a partner
that produces compatible but not direct competitive
products.
Race to learn: Learn as fast and as much as possible
without giving away core technologies and secrets.
Play by the book: Establish at the outset ground rules
about the rights and responsibilities of all parties.
From Global Companies to
Transnational Companies
Global Company
A multinational venture centrally managed from one
country
Has global strategies for product design, financing, purchasing,
manufacturing, and marketing
Transnational Company
A global network of productive units with a
decentralized authority structure and no distinct
national identity
Relies on a blend of global and local strategies
Table 4.1: Corporate Giants Worldwide
Toward Greater Global Awareness
and Cross-Cultural Competence
Travelers:
Engage in short-term
visits to foreign
countries
Have limited
knowledge of local
history, culture, and
customs
Have limited local
language skills
Dont attempt to adapt
to the local
environment
Settlers
Take assignments
lasting up to five years
Have in-depth insights
into the host countrys
history, customs, and
culture
Speak the local
language well or
fluently
Are culturally trained to
go native
Cultural intelligence (CQ): The ability to interpret and act
in appropriate ways in unfamiliar cultural surroundings
Contrasting Attitudes Toward
International Operations
Ethnocentric Attitude
The view that assumes the home countrys personnel
and ways of doing things are best
Polycentric Attitude
The view that assumes local managers in host
countries know best how to run their own operations
Geocentric Attitude
A world-oriented view that draws upon the best talent
from around the world

The Cultural Imperative
Culture
A populations taken-for-granted assumptions, values,
beliefs, and symbols that foster patterned behavior
Societal culture
Norms, values, attitudes, role expectations, taboos, symbols,
heroes, beliefs, morals, customs, and rituals
Are U.S. Corporations Turning the World into a
Single Americanized Culture?
Cultural roots run deep, have profound effects on
behavior, and are not easily altered.
The Cultural Imperative (contd)
High-Context Cultures
Cultures in which nonverbal and situational messages
convey primary meaning
Status of an individual is of tantamount importance in
determining relationships.
Low-Context Cultures
Cultures in which words convey primary meaning
Nonverbal messages are secondary to spoken words.
The terms of the deal are more important than building a
business relationship.
Table 4.3: Nine Cultural Imperatives
from the GLOBE Project
Other Sources of Cultural Diversity
Individualistic cultures
Cultures that emphasize individual rights, roles, and
achievements
Collectivist cultures
Cultures that emphasize duty and loyalty to collective
goals

(contd)
Time
Monochronic time: A perception of time as a straight
line broken into standard units
Timely arrivals and keeping appointments are considered
important.
Polychronic time: A perception of time as flexible,
elastic, and multidimensional
Appointment schedules are considered approximations and are
not kept precisely.
(contd)
Interpersonal space
Some cultures prefer a close rather than wide distance
between conversing individuals.
Language skills
Language fluency opens insights into another culture.
Religion
Religion has many effects on personal and professional
activities in many cultures.
Comparative
Management Insights
Comparative Management
The study of how organizational behavior and
management practices differ across cultures
Made-in-America Management Theories Require
Translation
Gert Hofstedes research led him to recommend that
American management theories be adapted rather than
imposed on other local cultures.
A Cross-Cultural Study
of Work Goals
Findings implications
Managers need to adapt the motivation programs to
local preferences.
An international contingency approach to motivation is
called for.
Leadership must be adapted to the local culture.
Participative leadership is the most applicable style where
workers trust their leader.
Directive leadership is considered the least appropriate style of
leadership.

Figure 4.1: GLOBE Leadership Matrix
Lessons in Leadership from
the GLOBE Project
Leadership Styles
Charismatic/value-based*
Team-oriented*
Participative
Humane-oriented
Self-protective
International managers need a full repertoire of
leadership styles that they can use flexibly in a
culturally diverse world.

*Greatest cross-cultural applicability

Staffing Foreign Positions
Why Is the U.S. Expatriate Failure Rate So
High?
Ineffective job performance
Job offers from other companies
Culture shock: Negative feelings triggered by
an expectations-reality mismatch
Family and personal adjustment problems that
arise after arriving in the foreign assignment
Table 4.6: Research Findings on Why
U.S. Expatriates Go Home Early
Cross-Cultural Training
Cross-Cultural Training
A guided experience that helps people live and work in
foreign cultures
Specific Training Techniques
Documentary programs familiarize the expatriate with
assignment destination.
Culture assimilator exposes the expatriate to simulated
intercultural incidents and situations.
Language instruction builds the expatriates
conversational skills in a foreign language.
Cross-Cultural Training (contd)
Specific Training Techniques (contd)
Sensitivity training provides experiential
exercises to teach expatriates to be aware of
the impact of their actions on others in another
culture.
Field experiences provide firsthand exposure to
ethnic subcultures that heightens expatriates
cultural awareness.

Competencies for Successful
Cross-Cultural Adaptation
Building relationships
Valuing people of
different cultures
Listening and
observation
Coping with ambiguity
Translating complex
information

Taking action and
initiative
Managing others
Adaptability and
flexibility
Managing stress
Cross-Cultural Training (contd)
Is One Technique Better Than Another?
A combination of documentary and interpersonal
training is the best combination for expatriates.
An Integrated Expatriate Staffing System
Provide orientation for both expatriate and family.
Have family sponsors or assigned mentors available at
the foreign assignment.
Repatriation is an importance part of the entire foreign
assignment experience.
What About North American Women
on Foreign Assignments?
Women are above-average in being successful in
foreign assignments.
Strongest barriers to foreign assignments have
been self-disqualification and the prejudice of
home country managers.
Culture is a bigger hurdle than gender: Women on
foreign assignments are seen as North Americans
first, then as women.
Relying on Local Management
Advantages of Using Foreign Nationals
They know the language and culture.
They do not require huge location expenses.
Host governments favor more local control.
Disadvantage
Local managers may not be attuned to home-office
goals and procedures.
Summary
The growing global economy makes the study of
international management more important than
ever.
Cultural intelligence (CQ) is an outsiders ability to
read a foreign culture as well as the locals do.
The forms and meanings of communications are
different in high and low context cultures.
Comparative management provides insights into
how organizational behavior and management
practices differ across cultures.
Terms
International
management
Global company
Transnational
company
Cultural intelligence
(CQ)
Ethnocentric attitude
Polycentric attitude
Geocentric attitude
Culture
High-context cultures
Low context cultures
Individualistic cultures
Collectivist cultures
Monochronic time
Polychronic time
Comparative
management
Culture shock
Cross-cultural training

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