ISCTE SCHOOL OF MANAGEMENT COMPARATIVE INTERNATIONAL MANAGEMENT

COMPARATIVE MANAGEMENT
Comparative Management Focuses on the similarities and differences among business and management systems from different contexts. Intercultural management Intercultural management is the combination of knowledge, insights and skills which are necessary for adequately dealing with national and regional cultures and differences between cultures, at the several management levels within and between organisations. (W. Burggraaf) what is culture? corporate culture, national culture, regional , ---

WHY IS IT IMPORTANT? WHAT CAN WE GAIN FROM IT? LEVELS OF ANALYSIS TYPES OF RESULTS

Ad-hoc, specific Clusters of cultures/countries (cultural distance) Dimensions of culture National profiles stereotypes cultural standards How to communicate, negotiate Dos and donts Knowledge related to the different management functions (leadership, team work, planning ) International careers intercultural adjustment. Culture shock. Intercultural training.

MANAGEMENT THEORIES
Universal, culture-free Culture- bound? one best way ? Open-systems theory, contingency theories

ISCTE SCHOOL OF MANAGEMENT COMPARATIVE INTERNATIONAL MANAGEMENT

NEED TO CONSIDER DIFFERENCES?

AREAS and FUNCTIONS of management MKT Consumers, consumer behaviour PRODUCTION HR . Plan Organize Leading, directing Controlling Attitude towards time Flat steep hierarchies/organizations Individualistic group oriented Explicit, rely on procedures, rules VS more implicit, subtle or inexistent Design FORD: Nova model

FINANCE importance of capital markets - raise capital

The Need To Consider Cross Cultural Differences These differences show themselves in all sorts of differing ways but it is worth outlining some key aspects in which cultural diversity has been shown to impact on organisational management approaches which are central to the process of managing business (from Hodgetts R& Luthans R, 1997 ). Centralised vs. Decentralised decision making. There is variation across national culture in the extent to which important organisational decisions are made by senior managers, or whether decisions are made down the line with authority devolved. Safety vs. risk. In some cultures, managers have a very low tolerance of uncertainty and manage in ways to control this. In others, there is a much greater tolerance of uncertainty and much greater risk-taking. Individual vs. group rewards. In some cultures, there is emphasis on rewarding individual achievement. In other cultures the emphasis is on rewarding the group collectively. Informal vs. formal procedures. In some cultures, there is considerable use of informal procedures. In others, formal procedures are very important. High vs. low organisational loyalty. In some cultures, people identify less with their organisation or employer and more with their occupational group or profession. Co-operation vs. competition. Some cultures emphasise co-operation in the organisation, others foster competition.

APPROACHES TO COMPARATIVE MANAGEMENT

Main Approaches: Socio-economic nature Behavioural/psychological nature Different models Environmental (ecological) Economic development Behavioural Farmer/Richman Harbison and Myers

Ghiselli and Porter

Open system perspective Negandhi Culture Hofstede 2

ISCTE SCHOOL OF MANAGEMENT COMPARATIVE INTERNATIONAL MANAGEMENT

DEVELOPMENT OF COMPARATIVE MANAGEMENT

After World War II North American multinationals Richman:

"A vital question for international business seems to be to what extent can American principles, practices and general know-how be transferred effectively to other countries, at what cost, and to what degree and extent is the overall process and effectiveness of management constrained by cultural variables?"
RICHMAN, B. (1965: 294), Significance of cultural variables Academy of Management Journal 8, pp. 292-308

Nowotny (1964) North America VS Europe past-future wisdom-vitality stability-mobility convention-informality necessity-abundance quality-quantity diversity-organization

NOWOTNY, O. (1964: 101), American vs European management philosophy, Harvard Business Review 42, May-Apr, pp. 101-108

ISCTE SCHOOL OF MANAGEMENT COMPARATIVE INTERNATIONAL MANAGEMENT

Main results of comparative management research

according to Negandhi[1975:334]

1. There is no one way of doing things. The principle of equifinality applies to the functioning of social organizations; managers may achieve given objectives through various methods. 2. There is no universal applicability of either authoritarian or participating-democratic management styles. In general the United States can best be characterized as following democraticparticipative style, while Germany, France, and most of the developing countries are authoritarian in their management style. The authoritarian style is not necessarily dysfunctional in developing countries. This perhaps may be the "right type" of leadership. 3. More objective measures are brought to bear in making managerial decisions with respect to compensation, objectives, goal setting, etc., in the developed countries; subjective judgement (emotions, religious beliefs) often enters the decision making processes in the developing countries. 4. There are similarities and differences among the managers around the world. Similarities are explained in terms of industrialization or the industrial subculture. Differences are explained in terms of cultural variables. The cultural factors are considered the most important influencing variables.

Negandhi, A.(1975), Comparative management and organization theory: a marriage needed Academy of Management Journal 18, pp. 334-344

ISCTE SCHOOL OF MANAGEMENT COMPARATIVE INTERNATIONAL MANAGEMENT

Similarities and Differences between Arab and American Managers

Predominant Characteristics
1 2 3
Leadership Style

Arab Stereotype
Egalitarian, emphasis on peer approval and gain personal acceptance. Consultative Ritual, display a high desired for long-term relations, affective, e.g., appeals to emotions and feelings, concession seeking. Hard work is a virtue in the light of the needs of man and the necessity to establish equilibrium in one's individual and social life. Family and work are the center of life. Necessary to avoid chaos and to build a family-type environment.

American Stereotype
Materialistic likes "wheeling and dealing," emphasis on opportunities to get ahead. Participative Direct, seeking short-term relations, emphasis on facts and logical analysis,; concessions are made on occasion.

Decision Style

Negotiation Style

Work Orientation

Hard work is a virtue by itself, work is the center of life.

Attitudes Toward Organizational Authority

Important to the extent that it facilitates work, less emphasis on hierarchical relations and rules. Impersonal, emphasis on results, thriving on competition, gamesmanship, calculated risks, and maneuvering, documentation is highly valued. All directions written, routine, formal, engages in manipulation of facts, which is justified through the manipulative "flexible ethics." Seniority increases in pay are not as effective as merit, incentive awards, opportunity for advancement, and money is extremely important because it's the "name of the game."

Business Conduct

Highly personalized, emphasis on honesty, moral aspects, and verbal commitment, documentation is not highly regarded. Face-to-face, informal, urgent, emphasis on human interest, and stress actual case studies or examples of how programs have benefited the people. Accept longevity and seniority oriented pay increases, emphasis on recognition by the superior for a good job by the group and personal growth as a part of humanity . Motivation comes from social relations, interpersonal transactions, egalitarian value, and opportunity to get paid for helping other. Informal, generally judgment based, emphasis on human relations aspect of the individual performance. Highly subjective, selection depends on personal contacts, nepotism, regionalism, and family name. A sign of something is going wrong, used only in crisis situation.

Communication System

Reward Systems

Motivational System

Motivation comes from high achievement, hierarchical advancement and material gains.

10

Performance Appraisal

A goal-oriented and wrapped into the organization's planning system, generally objective-based and emphasis on immediate feedback. Relatively objective, standard developed, merit and experience are considered.

11

Recruitment of Personnel Use of Management Consultants

12

Highly regarded and used frequently.

Abbas Ali (1988): A CROSS-NATIONAL PERSPECTIVE OF MANAGERIAL WORK VALUE SYSTEMS

In Advances in International Comparative Management, Vol. 3, pages 151-169. 5

ISCTE SCHOOL OF MANAGEMENT COMPARATIVE INTERNATIONAL MANAGEMENT

TYPES OF CROSS-CULTURAL MANAGEMENT RESEARCH Title

Parochial Research Culture Single culture studies Approach to Similarity & Difference
Assumed similarity

Approach to Universality
Assumed universality

Type of Study
Domestic studies

Primary Question
What is the behavior of people like in work organizations? Study is only applicable to one culture and yet it is assumed to be applicable to many cultures.

Main Methodological Issues Traditional Methodologies

All of the traditional methodological issues concerning design, sampling, instrumentation, analysis and interpretation WITHOUT reference to culture.

Ethnocentric Research

Second culture studies Studies in many cultures

Search for similarity

Questioned universality

Replication studies

Can we use home country theories abroad? Can this theory which is applicable in Culture A be extended to Culture B?

Standardization and translation. How can research

be standardized across cultures? How can instruments be LITERALLY translated? Replication should be identical to original study with the exception of language.

Polycentric Research

Search for difference

Denied universality

Individual studies of foreign cultures

How do managers manage and employees behave in country X? What is the pattern of relationships in country X?

Description. How can country X be studied without either

using home country theories or models and without using obtrusive measures? Focus is on inductive methods and unobtrusive measures.

Comparative Research

Studies contrasting many cultures

Search for both similarity and difference

Emergent universality

Studies comparing

How are the management and employee Which theories hold across cultures and which do not?

Equivalence. Is the methodology equivalent at each stage

in the research process? Are the meanings of key concepts defined equivalently? Has the research been designed such that the samples, instrumentation, administration, analysis, and interpretation are equivalent with references to the cultures included?

many foreign cultures styles similar and different across cultures?

Geocentric Studies

International business studies

Search for similarity

Extended universality

Studies of multinational organizations

How do multinational organizations function?

Geographical Dispersion. All of the traditional

methodological questions with the added complexity of geographical distance. Translation is often less of a problem since most MNOs have a common language across all countries in which they operate. The primary question is to develop an approach for studying the complexity of a large organization. Culture is frequently ignored.

Synergistic Studies

Intercultural management studies

Use of similarities and differences as a resource

Created universality

Studies of intercultural interaction within work settings

How can the intercultural interaction within a domestic or international organization be managed? How can organizations create structures and processes which will be effective in working with members of all cultures?

Interaction models and integrating processes.

What are effective ways to study cross-cultural interaction? How can universal and culturally specific patterns be distinguished? What is the appropriate balance between culturally specific and universal processes within one organization? How can the proactive use of cultural differences to create universally accepted patterns be studied?

Nancy Adler: Understanding the ways of understanding: cross-cultural management methodology reviewed in Advances in International Comparative Management, 1984, pg.31-67

ISCTE SCHOOL OF MANAGEMENT COMPARATIVE INTERNATIONAL MANAGEMENT

Six different approaches to cross-cultural management research.

Studies vary in the theoretical and management issues which they address, in their assumptions about universality, in their ways of dealing with similarity and differences, and, therefore, in the methodological problems which they must confront. The most common type of management studies has been and still is parochial studies - studies of the United States conducted by Americans. Assume universality. The second most common type is ethnocentric studies - studies which attempt to replicate American management research in foreign countries. The third is polycentric studies - studies which focus on describing the patterns of management and organization in foreign countries. Universality denied. View institutions as only being understandable in terms of their own culture The fourth type, comparative management studies, attempts to identify aspects of organizations which are similar and aspects which are different in cultures around the world. Try to distinguish between those aspects of organizational theory which are truly universal and those which are culture specific. Try to define patterns which emerge from all cultures studied. No culture is dominant. The fifth type, geocentric studies, focuses on studying organizations which operate in more than one culture. In international business, these studies focus on identifying the similarities among cultures which will allow MNOs to have unified policies for their worldwide operations. Investigate the managing of MNO. Underlying assumption is that there are universally effective approaches to organizing and managing. Transcultural meaning beyond culture .... The sixth, and to date the least common type of management research, is culturally synergistic studies which emphasize creating universality. Synergistic studies explore cross-cultural interaction and the positive uses of similarities and differences in creating both universal and culturally specific patterns of management. The purpose of synergistic studies is to create transcultural structures and processes which can be used around the world while maintaining an appropriate level of cultural specificity. Understand patterns of relationships and theories which apply when people from more than one culture interact within a work setting people within multinational and transnational organizations, people on international assignments for domestic organizations, and people in domestic organizations which have cross-cultural employee, supplier, or client populations. Rare. Each of the six types of studies is designed to address a different set of questions and is based on a different set of assumptions. For researchers to successfully build a theoretical framework for understanding the behavior of people in organizations around the world, and for managers to effectively use the results of cross-cultural management research, it is necessary to differentiate the six types of studies and to delineate those areas in which further research is needed.

ISCTE SCHOOL OF MANAGEMENT COMPARATIVE INTERNATIONAL MANAGEMENT

Country clusters

Country clusters based on employee attitude. Source: S. Ronen and 0. Shenkar. "Clustering Countries on Attitudinal Dimensions: A Review and Synthesis." Academy of Management Review, 1985