CHAPTER

2
KEY TERMS
culture Global Leadership and humane orientation
cultural norms Organizational universalism
cultural values Behavior Effectiveness particularism
cultural beliefs (GLOBE) project neutral versus affective
cultural symbols 7d culture model specific versus diffuse
stories indulgence achievement versus
rituals restraint ascription
pervasive power distance time horizon
shared uncertainty avoidance internal versus external
levels of culture individualism control
national culture collectivism cultural paradoxes
business culture masculinity stereotyping
occupational cultures long-term (Confucian) ethnocentrism
organizational culture orientation cultural relativism
Hofstede model of country clusters cultural intelligence
national culture performance orientation

LEARNING OBJECTIVES
After reading this chapter you should be able to:
• Define culture and understand the basic components of culture.
• Identify instances of cultural stereotyping and ethnocentrism.
• Understand how various levels of culture influence multinational operations.
• Apply the Hofstede, GLOBE, and 7d models to diagnose and understand the impact of
cultural differences on management processes.
• Appreciate the complex differences among cultures and use these differences to build
better organizations.
• Recognize the complexity of understanding new cultures and the dangers of stereo-
typing and cultural paradoxes.

26
Culture and
Multinational
Management

When individuals encounter individuals from other societies, they react in

unpredictable ways. For instance, they may see behavior that they have trouble
understanding. They see, hear, smell, and taste things that are strange and
unpredictable. However, in today’s business world, these seemingly strange people
are often your customers, employees, suppliers, and business partners.
To remain competitive and to flourish in the complex and fast-changing world
of multinational business, multinational managers look worldwide not only for
potential markets but also for sources of high-quality and less expensive raw
materials and labor. As you saw in Chapter 1, even managers who never leave their
home country must deal with markets and workforces whose cultural backgrounds
are increasingly diverse. Managers with the skills to understand and adapt
to different cultures are better positioned to succeed in these endeavors and to
compete successfully in the world market.
Throughout this text you will encounter numerous cultural differences in
management practices from countries around the world. To help you better
understand these cultural underpinnings of management, this chapter considers
two basic questions: (1) What is culture?, and (2) How does culture affect
management and organizations? The concept of culture will be revisited in other
chapters to show how an understanding of cultural differences in management
practices can contribute to more effective management of multinational
organizations.
Understanding culture is critical to most managers. Although the world is
becoming more global, national cultures have remained fairly stable. Even in
something as basic as humor, research suggests that jokes don’t travel easily.
Marketers are thus finding that their humoristic attempts at advertising may fail.1
As such, this chapter will provide the foundation to understand people from other
societies. The rest of the text will also rely on the discussions of culture presented
in this chapter.

WHAT IS CULTURE?
The Latin origin of the word culture means to “cultivate” or to “tend to.”2 For
instance, it is used in the term agriculture to mean “tilling of the field.” In the context
of international management, culture refers to “cultivation of human character” and
“can be associated with education and refinement.”3

27
28 Part 1 • Foundations of Multinational Management

Culture is a concept borrowed from cultural anthropology. Anthropologists

believe that cultures provide solutions to problems of adaptation to the environment.
Culture helps people become attached to their society. It tells us who we are and to
what groups we belong. Culture provides mechanisms that enable the continuation
of the group. For example, culture determines how children are educated and tells
us when and whom to marry. Culture pervades most areas of our life, determining,
for example, how we should dress and what we should eat.
Anthropologists have numerous and subtly different definitions of culture.4 How-
ever, for the purposes of this book, with its focus on multinational management, culture
is defined as the pervasive and shared beliefs, norms, and values that guide the everyday
life of a group. These beliefs, norms, and values are expressed to current group members
and passed on to future group members through rituals, stories, and symbols.
Cultural norms both prescribe and proscribe behaviors; that is, they tell us what we can
and cannot do. For example, norms prescribe when and whom we can marry and what
clothes we can or cannot wear to a funeral or to the office. Cultural values tell us such things
as what is good, what is beautiful, what is holy, and what are legitimate goals in life.
Cultural beliefs represent our understandings about what is true. For example,
most people in the United States accept the scientific method as a valid way of
discovering facts. In contrast, other cultures may have the belief that facts can be
revealed only by God.
Cultural symbols, stories, and rituals communicate the norms, values, and beliefs of a
society or a group to its members. Each generation passes its culture to the next gen-
eration through certain symbols, stories, and rituals. A culture is continuously rein-
forced when people see particular symbols, hear particular stories, and engage in
specific rituals.
Rituals include ceremonies such as baptism and graduation, as well as the tricks
played on a new worker or the pledge to a sorority or fraternity. Stories include such
things as nursery rhymes, proverbs, and traditional legends (such as the U.S. legend
that George Washington could not tell a lie). Symbols may be physical, such as national
flags or holy artifacts. In the workplace, office size and location can serve as cultural
symbols. North American managers, for example, use large offices with physical
barriers such as outer offices as symbols to communicate their power. In contrast,
Japanese managers avoid physical barriers. They prefer instead to locate their desks at
the center of communication networks, where their desks are surrounded by coworkers.
Culture is pervasive in societies. It affects almost everything we do, see, feel, and
believe. Pick any aspect of your life, and it is likely influenced by your culture. What
you sleep on, what you eat, what clothes you wear, how you address your family
members and boss, whether you believe that old age is good or bad, what your toilet
looks like, all relate to cultural differences. In each of these areas, societies develop
pervasive cultural norms, values, and beliefs to assist their members in adapting to
their environments.
Because culture affects so many aspects of our lives, many of the core values,
norms, and beliefs about what should happen in everyday life are taken for granted.
People do not consciously think about how culture affects their behaviors and
attitudes. They just do what they believe is “right and natural.” They may not fully
understand why they behave as they do.
Another key component of the definition of culture is that cultural values,
norms, and beliefs must be shared by a group of people. The group must accept, for
the most part, that the norms, values, and beliefs of their group are correct and com-
pelling.5 The phrase “correct and compelling” means that, although all people in any
culture do not behave the same way all the time, behaviors are predictable most of
the time. Imagine, for example, the chaos that would exist if we did not have norms
to guide our driving. For example, when driving on two-lane roads in Ireland, drivers
routinely pass slower vehicles even when faced with oncoming traffic. Unlike in
the United States, oncoming drivers expect this tactic and routinely move to the
 Chapter 2 • Culture and Multinational Management 29

breakdown lane. Although this norm makes driving different than it is in the United
States, the majority of people in Ireland manage to drive without running into each
other.
For the multinational manager, dealing with cultural differences is unavoidable.
To succeed cross-culturally, multinational managers must learn as much as they can
about the important cultural norms, values, and beliefs of the societies in which they
work. They also must learn to recognize the important symbols, values, and rituals of
a culture. Such knowledge helps the multinational manager understand the “why”
behind the behavior of their customers, workers, and colleagues.
The next section expands our discussion of culture by looking at how the vari-
ous levels of culture affect the multinational manager in the business world.

LEVELS OF CULTURE
The international businessperson needs to be aware of three levels of culture that may
influence multinational operations: national culture, business culture, and occupa-
tional and organizational cultures. Exhibit 2.1 shows the levels of culture that affect
multinational management.

National Culture
National culture is the dominant culture within the political boundaries of the nation-
state. The dominant national culture is usually the culture of those in the majority,
or those with the greatest political or economic power. Formal education is generally
taught, and business is usually conducted, in the language of the dominant culture.
Political boundaries, however, do not necessarily reflect cultural boundaries.
Many countries, such as Canada and Singapore, have more than one major cultural
group within their political boundaries. Even states with relatively homogeneous cul-
tures have subcultures that represent regional and rural/urban cultural differences
and influence business transactions.
Most business takes place within the political boundaries of the nation-state.
As a result, the dominant culture of the nation-state has the greatest effect on
international business. In particular, the dominant national culture usually influences
not only the language of business transactions but also the nature and types of laws
that govern businesses.

EXHIBIT 2.1 Levels of Culture in Multinational Management.

National Culture

Business Culture

Organizational Culture Occupational Culture

Multinational Management
30 Part 1 • Foundations of Multinational Management

Business Culture
To a large degree, when multinational managers express concern about the impact
of culture on international operations, they focus on how national cultures influence
business operations. They ask, “How do the [Germans, Indians, Japanese, Koreans,
South Americans, Africans, Israelis, etc.] do business?” What concerns these man-
agers is business culture. More than cultural differences in business etiquette, business
culture represents norms, values, and beliefs that pertain to all aspects of doing
business in a culture.6 Business cultures tell people the correct, acceptable ways to
conduct business in a society.
Each national culture produces its own business culture. As such, business
cultures are not separate from the broader national culture. Rather, the more perva-
sive national culture constrains and guides the development of business culture in a
society. In any society, business is closely interwoven with the values, norms, and
beliefs of a culture as a whole. Examples are the priorities given to age and seniority,
the role expectations for women with their families, and expectations concerning
how superiors should behave toward subordinates.
At a very broad level, business culture, as a reflection of national culture, influ-
ences all aspects of work and organizational life. This includes how managers select
and promote employees, lead and motivate their subordinates, structure their orga-
nizations, select and formulate their strategies, and negotiate with other business-
people. Much of what you read in this text will help you understand how national
and business cultures affect organizations and management.
Business culture also guides everyday business interactions, and the business
cultures of different nations vary widely in terms of the codes of conduct that repre-
sent proper business etiquette. What to wear to a meeting, when and how to use busi-
ness cards, and how to treat members of a group are examples of business etiquette
that vary according to national cultures.
Understanding the basic etiquette of a business culture is a minimal requirement
for the multinational manager. In Germany, for example, “[s]how up half an hour late
[for a business meeting] and it makes no matter how bad the traffic and how tight
your schedule. You’ve likely lost the appointment and may have a tough time getting
another.”7

Occupational Culture and Organizational Culture

Although differences in national and business cultures usually present challenges to
the multinational manager, other distinct cultures develop around work roles and
organizations. These cultures are called occupational and organizational cultures.
Different occupational groups, such as physicians, lawyers, accountants, and
craftspeople, have distinct cultures called occupational cultures. Occupational cultures
are the norms, values, beliefs, and expected ways of behaving for people in the same
occupational group, regardless of their organizational employer.
In spite of the importance of national and business cultures, the multinational
manager cannot ignore differences in occupational cultures. To demonstrate this
point, a study by Hofstede including more than 40 different national cultures found
that people with similar jobs often had very similar cultural values. Moreover, the
people from different occupational groups were often more similar to one another
than to people from their own national cultures.
Occupational cultures are more commonly found among professional and tech-
nical occupations, such as physicians. This distinction occurs because professionals
have similar educational backgrounds and have access to the free flow of technical
information across national boundaries.
During the last decade, managers and academics realized that the concept of cul-
ture also applies to individual organizations. Differences in organizational cultures
 Chapter 2 • Culture and Multinational Management 31

seemed to explain why two organizations with similar structures and strategies
would have different performance levels and why a merger of two otherwise suc-
cessful companies would fail. In particular, the idea of an organizational culture
helps us understand how organizations are affected by more than their formally
designed systems, such as their organizational structure.
Vijay Sathe defined organizational culture as “the set of important understandings
(often unstated) that members of a community share in common.” Edgar Schein of
MIT added that these assumptions, values, and beliefs concerning the organization
are discovered and created when members learn to cope with external and internal
problems, such as developing a strategy or the criteria for allocating organizational
rewards. When coping strategies—such as Hewlett-Packard’s “management by wan-
dering around”—work successfully, they are taught to new members as “the correct
way to perceive, think, and feel in relation to those problems.”
Organizations seldom have only one organizational culture, nor perhaps should
they. Because organizational subunits (i.e., divisions, departments) all face different
situations, most subunits develop distinct subcultures. Subunits may retain many of
the overall characteristics of the parent company, but, for example, few would
expect an R&D department to have the same culture as a manufacturing plant.
Although various parts of an organization may have different organizational cul-
tures, it is important to note that organizational cultures may also have as important
an influence on employees as the national culture does. For instance, consider that
many U.S. companies promote the use of first names as a way to encourage employees
to bond and feel comfortable with each other. Such practices may not work well in
more hierarchical societies such as Germany and France, where it is important to
respect titles and hierarchy. However, organizational cultures in smaller firms may
actually make the use of first names more acceptable because their small size
encourages employees to be more familiar with each other. Consequently, it is critical
for the multinational manager to understand the influences of the various levels of cul-
ture on employees. In fact, research shows that when an organizational culture is com-
patible with the national culture, employees are more likely to feel at ease at work.
Although this section discussed the categories such as national culture, organi-
zational culture, and occupational culture, it is clear that the multinational manager
must also need to understand the complex interplay among these levels. Recent
research8 compared the impact of international differences (national culture and
geographic) and non-international differences (organizational culture and demo-
graphic) on the creation of barriers to knowledge transfer in multinationals. Analyz-
ing data from 2090 members from 289 teams, the researchers found that the
importance of international differences and non-international differences in creating
barriers to knowledge transfer depended on the situation. For example, the authors
found that geographic differences based on country location and world region loca-
tion created more barriers for knowledge transfer than national culture differences.
In contrast, the authors found that organizational culture differences in the form of
structural differences created greater barriers than demographic differences (e.g.,
age, education, etc.) in terms of knowledge transfer.
The above clearly shows that understanding differences between countries is a
very complex endeavor. To start this effort, it is critical to understand how countries
differ on national cultures. In the next section, we discuss some of the more popular
frameworks for understanding national culture.

Cultural Differences and Basic Values: Three Diagnostic Models

to Aid the Multinational Manager
Multinational managers face a complex and challenging array of cultural differences.
To be successful, multinational managers must understand the important ways in
32 Part 1 • Foundations of Multinational Management

which national and business cultures differ. The following sections therefore
describe three popular models of culture.
The Dutch scientist Geert Hofstede introduced the first model in the early 1980s
and continued his research on national culture for over two decades.9 Management
scholars now use Hofstede’s work extensively as a way of grasping cultural differ-
ences. We call his model the Hofstede model of national culture. Despite the fact that the
model was first introduced in the 1980s, it remains very strong and has recently been
updated.10 Hofstede based his model primarily on differences in values and beliefs
regarding work goals. This model has easily identifiable implications for business
because it provides a clear link between national and business cultures. It also
serves as a basis for extensive research on cross-cultural management.11 Later in
the text, you will see numerous examples of Hofstede’s ideas providing the back-
ground for attempts to understand differences in management practices.
The second model, the most recent development of a framework for understand-
ing national culture, is represented by the Global Leadership and Organizational Behavior
Effectiveness (GLOBE) project.12 This model, based heavily on Hofstede’s national culture
model, involves nine cultural dimensions. Seven of these nine dimensions are
directly related to the five Hofstede dimensions, while two of those nine dimensions
were developed independently of the Hofstede model. We will therefore focus our
discussion of the GLOBE national culture model on these two dimensions.
Finally, the third model, created by Fons Trompenaars, is called the 7d culture
model because it represents seven dimensions of culture. This model has emerged
from extensive and continuing cross-national research by Trompenaars and his
colleagues.13
All three models equip managers with the basic tools necessary to analyze the
cultures in which they do business. Furthermore, these approaches also provide use-
ful terms to help you understand the complexities of different cultural values. By
using these models, you will develop an initial understanding of important cultural
differences and key cultural traits.
The next section provides more detail on the Hofstede model, followed by a
briefer section describing the GLOBE model. The section concludes with Trompe-
naars’s 7d model.

Hofstede’s Model of National Culture

To describe national cultures, Hofstede14 originally used five dimensions that speak
to basic cultural values:
1. Power distance: Expectations regarding equality among people.
2. Uncertainty avoidance: Typical reactions to situations considered different
and dangerous.
3. Individualism: Relationship between the individual and the group in society.
4. Masculinity: Expectations regarding gender roles.
5. Long-term orientation: Basic orientation toward time.
Hofstede’s framework was based on 116,000 surveys from 88,000 employees of
IBM subsidiaries around the world. Although the original sample included 72 coun-
tries, Hofstede used only the countries that provided more than 50 responses.15 Hof-
stede thus identified four of these cultural value dimensions in the reduced sample of
40 countries.16 However, the database was later expanded to include 10 additional
countries from three regions, specifically Arab countries and East and West Africa.
Later research by Hofstede and others added to the number of countries studied
and introduced the fifth dimension, long-term orientation.17
Research on the long-term orientation dimension was unique. Rather than using
survey questions developed by Western researchers, Michael Bond and several
 Chapter 2 • Culture and Multinational Management 33

Chinese colleagues designed a new survey based on questions developed by Asian

researchers that reflected Confucian values. Hofstede and Bond have related long-
term orientation to the recent economic growth in the mini-dragons (e.g., Singapore,
South Korea) of the rising Asian economies.18
In more recent research, the Bulgarian scholar Minkov used data from the
World Values Survey (http://www.worldvaluessurvey.org/wvs.jsp) to derive a sixth
dimension. This dimension known as indulgence versus restraint refers to the degree
to which societies enjoy life based on control or gratification of basic human
desires.19

Hofstede’s Cultural Model Applied to Organizations

and Management
The following section defines Hofstede’s dimensions of national culture.20 It also
adapts and extends this work to show how cultural values affect numerous manage-
ment practices in different cultures. The management practices considered in the
discussion of Hofstede’s model are:
1. Human resources management
a. Management selection: How people are chosen for jobs.
b. Training: What the focus of job training is.
c. Evaluation and promotion: What counts to get ahead.
d. Remuneration: What accounts for differences in pay.
2. Leadership styles: How leaders behave.
3. Motivational assumptions: Beliefs regarding how people respond to work.
4. Decision making and organizational design: How managers structure their
organizations and make decisions.
5. Strategy: Effects of culture on selecting and implementing strategies.
Before getting into the specifics of Hofstede’s cultural scheme, it is important to
note that it has received widespread attention by researchers. A recent large-scale
analysis of Hofstede’s work21 shows that between 1980 and 2002 Hofstede’s dimen-
sions have been considered in over 180 studies. These studies have looked at the
impact of culture on a wide range of areas ranging from alliance formation to work-
related attitudes. To give you an idea of the versatility of the framework, Exhibit 2.2
shows some of the subject matter considered and whether they were studied at the
individual, group, or country level. Many of these issues will be revisited as you read
later chapters in the text.

Power Distance
Power distance is concerned with how cultures deal with inequality. It focuses on:
(1) the norms that tell superiors (bosses, leaders) to what extent they can determine
the behavior of their subordinates, and (2) the belief that superiors and subordinates
are fundamentally different kinds of people.
High-power-distance countries have norms, values, and beliefs such as the
following:22
• 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.
• The powerful should not hide their power.
34 Part 1 • Foundations of Multinational Management

EXHIBIT 2.2 Subject Matter Considered in Hofstede’s National Culture Studies.

Subject Matter Individual Group Country

Change management—the degree to which companies are ready to deal with X
changes in areas such as technology, team-based selling, etc.
Leadership—cultural impact on the degree to which leaders were perceived as X X X
being more effective or motivation to lead
HRM—cultural impact on factors such as preference for affirmative action, X X
individual-based pay, formal appraisal practices, etc.
Entrepreneurship—cultural impact on factors related to individuals’ desires X X
or interest in starting new businesses
Conflict management—degree to which cultural factors impacted conflict X X X
management issues such as preference for bargaining over mediation or
collaboration and accommodation
Work-related attitudes—impact of culture on factors such as job satisfaction, X X
work strain, ability to get along with others, etc.
Alliance formation and joint venture performance—extent to which culture X X
influences preferences for entering alliances and joint ventures and
determinants of success

SOURCE: Adapted from Kirkman, Bradley L., Kevin B. Lowe, and Cristina B. Gibson. 2006. “A quarter century of Culture’s Consequences: A review of
empirical research incorporating Hofstede’s cultural values framework.” Journal of International Business Studies, 10(4): 1–36.

Organizations in countries with a high level of power distance use management

systems and processes that reflect a strong concern with hierarchy. As shown later
in the chapter in Exhibit 2.8, Latin American, Latin European, and Far Eastern coun-
tries demonstrate the highest levels of power distance.
The concern for hierarchy and inequality in organizations is rooted in early
socialization in the family and school. In high-power-distance cultures, children
are expected to be obedient to parents and elders. This deference continues as
long as parents are alive. When children enter school, teachers assume the domi-
nant role. Children must show extreme respect and they seldom challenge a
teacher’s authority. Later in life, organizations assume many of the roles of parents
and teachers.
In high-power-distance countries, the ideal people for a managerial job have
either come from a high social class or graduated from an elite university. These
characteristics define the person as having the intrinsic or built-in qualities of a
leader. Who you are in terms of elite associations is more important than past perfor-
mance. Leaders and subordinates expect large wage differences between manage-
ment and workers.
The basic motivational assumption in high-power-distance countries is that
people dislike work and try to avoid it. Consequently, managers believe that they
must adopt a Theory X leadership style; that is, they must be authoritarian,
must force workers to perform, and must closely supervise their subordinates.
Similarly, employee training emphasizes compliance (following orders) and
trustworthiness.
Organizational structures and systems match the assumptions regarding leader-
ship and motivation. Decision making is centralized. Those at the top make most of
the decisions. The close supervision of workers requires many supervisors and a tall
organizational pyramid (an organization with many levels). Strategic decisions in
high-power-distance countries are influenced by the need to maintain and support
those in power.
Exhibit 2.3 gives a summary of the managerial implications for power distance.
The next section considers uncertainty avoidance.
 Chapter 2 • Culture and Multinational Management 35

EXHIBIT 2.3 Management Implications of Power Distance.

Management Processes Low Power Distance High Power Distance

Human resources management
Management selection Educational achievement Social class; elite education
Training For autonomy For conformity/obedience
Evaluations/promotion Performance Compliance; trustworthiness
Remuneration Small wage difference between Large wage difference between management
management and worker and worker
Leadership styles Participative; less direct supervision Theory X; authoritarian, with close supervision
Motivational assumptions People like work; extrinsic and intrinsic Assume people dislike work; coercion
rewards
Decision making/organizational Decentralized; flat pyramids; small Tall pyramids; large proportion of supervisors
design proportion of supervisors
Strategy issues Varied Crafted to support the power elite or
government

SOURCES: Adapted from Hofstede, Geert. 1980. Culture’s Consequences: International Differences in Work-Related Values. London: Sage; Hofstede, Geert.
1991. Cultures and Organizations: Software of the Mind. London: McGraw-Hill; Hofstede, Geert. 1993. “Cultural dimensions in people management.”
In Vladimir Pucik, Noel M. Tichy, and Carole K. Barnette, Globalizing Management. Hoboken, NJ: Wiley, 139–158.

Uncertainty Avoidance
Uncertainty avoidance relates to norms, values, and beliefs regarding a tolerance for
ambiguity. A higher-uncertainty-avoidance culture seeks to structure social systems
(such as politics, education, and business) in such a way that order and predictability
are paramount and rules and regulations dominate. In such a culture, risky situations
create stress and upset people. Consequently, people avoid behaviors such as chang-
ing jobs.
High-uncertainty-avoidance countries have norms, values, and beliefs such as
the following:23
• Conflict should be avoided.
• Deviant people and ideas should not be tolerated.
• Laws are very important and should be followed.
• Experts and authorities are usually correct.
• Consensus is important.
The business cultures in countries high on uncertainty avoidance have manage-
ment systems and processes that make organizations and employees dependable and
predictable. People in such cultures react with stress and anxiety when the rules of
behavior are not clear in organizational settings. Generally, Nordic and Anglo coun-
tries are low on uncertainty avoidance, whereas Latin European and Latin American
countries are high.
In high-uncertainty-avoidance cultures, entry-level people are chosen for their
potential fit with and loyalty to the organization. Managers follow the logic, “If peo-
ple are like me, come from my town or my family, then I understand them and trust
them more.” This minimizes interpersonal conflict, reduces potential employee turn-
over, and makes people more predictable.
In some cultures, uncertainty regarding employees is further reduced through
the selection and promotion of people with specialized expertise. Employers seek
out people who will be loyal and committed to them and to the organization. Later,
seniority, long-term commitment to the organization, and expertise in the area of
management become the prime bases for promotion and payment. Both managers
36 Part 1 • Foundations of Multinational Management

and employees believe that loyalty to the organization is a virtue and that conflict
and competition should be avoided.
Task-directed leaders give clear and explicit directions to subordinates. This
reduces ambiguity regarding job expectations. The boss tells workers exactly what to
do. Task-directed leaders are the preferred leaders in high-uncertainty-avoidance cul-
tures. Such leaders make subordinates less anxious because subordinates know exactly
what is expected of them. Similarly, organizations in these cultures have many written
rules and procedures that tell employees exactly what the organization expects of them.
Consequently, employees tend to believe that these rules should not be broken.
In contrast, leaders in low-uncertainty-avoidance cultures favor more flexibility
and allow subordinates more choices on the job. The design of their organizations
also builds in more freedom, imposing fewer rules and regulations. There are also
more subordinates per manager, which results in less supervision and greater auton-
omy for workers.
People in high-uncertainty-avoidance cultures do not like risk, and they often
fear failure. As decision makers, they are conservative. It is unlikely that individual
managers will choose risky strategies for their organizations. Hofstede24 notes, how-
ever, that neither low nor high uncertainty avoidance necessarily relates to success.
Innovations may be more likely in low-uncertainty-avoidance countries like the
United States, but the implementation of innovations may be more likely in high-
uncertainty-avoidance countries such as Japan.
Exhibit 2.4 summarizes the managerial implications of uncertainty avoidance.

Individualism/Collectivism
The values, norms, and beliefs associated with individualism focus on the relationship
between the individual and the group. Individualistic cultures view people as unique.
People are valued in terms of their own achievements, status, and other unique
characteristics.
The cultural values associated with individualism are often discussed with the
opposing set of values, called collectivism. Collectivist cultures view people largely in
terms of the groups to which they belong. Social groups such as family, social class,
organization, and team all take precedence over the individual.

EXHIBIT 2.4 Management Implications of Uncertainty Avoidance.

Management Processes High Uncertainty Avoidance Low Uncertainty Avoidance

Human resources management
Management selection Seniority; expected loyalty Past job performance; education
Training Specialized Training to adapt
Evaluation/promotion Seniority; expertise; loyalty Objective individual performance data; job
switching for promotions
Remuneration Based on seniority or expertise Based on performance
Leadership styles Task-oriented Nondirective; person-oriented; flexible
Motivational assumptions People seek security, avoid competition People are self-motivated, competitive
Decision making/organizational Larger organization; tall hierarchy; Smaller organizations; flat hierarchy, less
design formalized; many standardized procedures formalized, with fewer written rules and
standardized procedures
Strategy issues Averse to risk Risk taking

SOURCES: Adapted from Hofstede, Geert. 1980. Culture’s Consequences: International Differences in Work-Related Values. London: Sage; Hofstede,
Geert. 1991. Cultures and Organizations: Software of the Mind. London: McGraw-Hill; Hofstede, Geert. 1993. “Cultural dimensions in people management.”
In Vladimir Pucik, Noel M. Tichy, and Carole K. Barnette, Globalizing Management. Hoboken, NJ: Wiley, 139–158.
 Chapter 2 • Culture and Multinational Management 37

Countries high on individualism have norms, values, and beliefs such as the
following:25
• People are responsible for themselves.
• Individual achievement is ideal.
• People need not be emotionally dependent on organizations or groups.
In contrast, collectivist countries have norms, values, and beliefs such as the
following:26
• One’s identity is based on group membership.
• Group decision making is best.
• Groups protect individuals in exchange for their loyalty.
Countries with low individualism have collectivist norms, values, and beliefs that
influence a variety of managerial practices. Organizations in collectivist cultures tend
to select managers who belong to favored groups. Usually, the favored group is the
extended family and friends of the extended family. Being a relative or someone
known by the family becomes more important than an individual’s personal qualifica-
tions. In contrast, people in highly individualistic societies, such as the United States
(the most individualistic society by Hofstede’s measurement), often view favoritism
toward family and friends as unfair and perhaps illegal. In such societies, most people
believe that job selection should be based on universalistic qualification, which
means that the same qualifications apply universally to all candidates. The cultural
belief is that open competition allows the most qualified individual to get the job.
Organizations in collectivist cultures base promotions mostly on seniority and
age. People tend to move up the organizational hierarchy by being promoted with
their age cohort (people of the same age). People feel that a major reward for work-
ing is being taken care of by their organizations, a type of organizational paternalism.
The senior managers in the organization act as father figures. Unlike individualistic
societies, where people expect extrinsic rewards such as money and promotions,
managers in collectivist societies use “a call to duty” as an emotional appeal to
work for the good of the group.
The individualism-collectivism remains one of the most widely studied Hofstede
national culture dimension. In one of the most recent studies, findings showed that
the collectivism dimension had a positive influence on Chinese firms’ desire to
engage in joint ventures.27 Examining a sample of 1361 Chinese firms’ joint ventures
spanning from 1985 to 2003, the authors show that collectivism encouraged these
firms to behave similarly by engaging in such joint ventures. This provides further
evidence of the group’s influence through collectivism even on firms. The common
behaviors showed that firms also respond to norms that originate from collective
pressures.
Exhibit 2.5 summarizes the managerial implications of high-individualism versus
collectivist (low-individualism) norms, values, and beliefs.

Masculinity
Different cultural expectations for men and women occur in all societies. In all
cultures, men and women are socialized differently and usually perform different
roles. A variety of studies shows that in most—but certainly not all—cultures, male
socialization places a greater emphasis on achievement, motivation, and self-reliance.
In contrast, the socialization of women emphasizes nurturance and responsibility.28
As a cultural dimension, masculinity represents the overall tendency of a culture to
support the traditional masculine orientation; that is, higher masculinity means that
the business culture of a society takes on traditional masculine values, such as an
emphasis on advancement and earnings. However, within each culture, there remain
gender differences in values and attitudes.
38 Part 1 • Foundations of Multinational Management

EXHIBIT 2.5 Management Implications of Individualism.

Management Processes Low Individualism High Individualism

Human resources management
Management selection Group membership; school or university Universalistic based on individual traits
Training Focus on company-based skills General skills for individual achievement
Evaluation/promotion Slow, with group; seniority Based on individual performance
Remuneration Based on group membership/ Extrinsic rewards (money, promotion) based
organizational paternalism on market value
Leadership styles Appeals to duty and commitment Individual rewards and punishments based
on performance
Motivational assumptions Moral involvement Calculative; individual cost/benefit
Decision making/organizational Group; slow; preference for larger Individual responsibility; preference for smaller
design organization organizations
Strategy issues Incremental changes with periodic Aggressive
revolutions

SOURCES: Adapted from Hofstede, Geert. 1980. Culture’s Consequences: International Differences in Work-Related Values. London: Sage; Hofstede,
Geert. 1991. Cultures and Organizations: Software of the Mind. London: McGraw-Hill; Hofstede, Geert. 1993. “Cultural dimensions in people management.”
In Vladimir Pucik, Noel M. Tichy, and Carole K. Barnette, Globalizing Management. Hoboken, NJ: Wiley, 139–158.

High-masculinity countries have norms, values, and beliefs such as the

following:29
• Gender roles should be clearly distinguished.
• Men are assertive and dominant.
• Machismo or exaggerated maleness in men is good.
• People—especially men—should be decisive.
• Work takes priority over other duties, such as family.
• Advancement, success, and money are important.
In highly masculine societies, jobs are clearly defined by gender. There are men’s
jobs and women’s jobs. Men usually choose jobs that are associated with long-term
careers. Women usually choose jobs that are associated with short-term employment,
before marriage and children. However, smaller families, delayed childbirth, pressure
for dual-career earnings, and changing national cultural values may be eroding the
traditional views of masculinity. In addition to clear work-related roles based on gen-
der, work in masculine cultures tends to be very central and important to people,
especially men. In cultures like Japan, men often take assignments for over a year in
other cities or other countries while their family members remain at home.
In a high-masculinity culture, recognition on the job is considered a prime moti-
vator. People work long hours, often work more than five days a week, and take
short vacations. In most low-masculinity countries, work is typically less central.
People take more time off, take longer vacations, and emphasize quality of life.
There are, however, some exceptions. In the highly masculine Mexican culture, for
example, gender differences are strong but work is less central. The cultural value
is that people “work to live.”
In masculine cultures, managers act decisively. They avoid the appearance of
intuitive decision making, which is often regarded as feminine. They prefer to work
in large organizations, and they emphasize performance and growth in strategic deci-
sion making.
Exhibit 2.6 shows the major effects of high masculinity on work and
organizations.
 Chapter 2 • Culture and Multinational Management 39

EXHIBIT 2.6 Management Implications of Masculinity.

Management Processes Low Masculinity High Masculinity

Human resources management
Management selection Independent of gender, school ties less Jobs gender identified; school performance
important; androgyny and ties important
Training Job-oriented Career-oriented
Evaluation/promotion Job performance, with less gender-based Continues gender-tracking
assignments
Remuneration Less salary difference between levels; More salary preferred to fewer hours
more time off
Leadership styles More participative More Theory X; authoritarian
Motivational assumptions Emphasis on quality of life, time off, Emphasis on performance and growth;
vacations; work not central excelling to be best; work central to life;
job recognition important
Decision making/organizational Intuitive/group; smaller organizations Decisive/individual; larger organization
design preferred
Strategy issues Preference for consistent growth Aggressive

SOURCES: Adapted from Hofstede, Geert. 1980. Culture’s Consequences: International Differences in Work-Related Values. London: Sage; Hofstede,
Geert. 1991. Cultures and Organizations: Software of the Mind. London: McGraw-Hill; Hofstede, Geert. 1993. “Cultural dimensions in people management.”
In Vladimir Pucik, Noel M. Tichy, and Carole K. Barnette, Globalizing Management. Hoboken, NJ: Wiley, 139–158.

The next section deals with the impact of long-term orientation on work and
organizations.

Long-Term Orientation
Because we have data on the long-term (Confucian) orientation for only a few countries,
Hofstede and others have produced less research on how this orientation relates to
work and organizations. Consequently, the discussion is more speculative on this
issue than on others.
Because of the need to be sensitive to social relationships, managers in cultures
high on long-term orientation are selected based on the fit of their personal and edu-
cational characteristics to the company. A prospective employee’s particular skills
have less importance in the hiring decision than they do in cultures with short-term
orientation. Training and socialization for a long-term commitment to the organiza-
tion compensate for any initial weaknesses in work-related skills. Organizations in
cultures with short-term orientation, in contrast, must focus on immediately usable
skills. Managers do not assume that employees will remain with the company for an
extended period of time. They cannot be assured of a return on any investment in
employee training and socialization.
In short-term-oriented cultures, leaders use quick rewards that focus on pay and
rapid promotion. Employees in long-term-oriented cultures value security, and lea-
ders work on developing social obligations.
Hofstede notes that Western cultures,30 which tend to have short-term orienta-
tions, value logical analysis in their approach to organizational decisions. Managers
believe in logically analyzing the situation for their company and following up with a
solid game plan. In contrast, Eastern cultures, which rank the highest in long-term
orientation, value synthesis in organizational decisions. Synthesis is not a search for
the correct answer or strategy; rather, it takes apparently conflicting points of
view and logic and seeks practical solutions. Not surprisingly, organizations in
short-term-oriented cultures are designed and managed purposefully to respond to
immediate pressures from the environment. Managers often use quick layoffs of
“excess” employees to adjust to shrinking demand for products. Organizations in
40 Part 1 • Foundations of Multinational Management

long-term-oriented cultures are designed first to manage internal social relation-

ships. The assumption is that good social relationships eventually lead to successful
organizations. The difference between long- and short-term-oriented cultures is
apparent in the goals that companies set in strategic decision making. Managers in
countries such as the United States want immediate financial returns. They are
most comfortable with fast, measurable success. Countries with more long-term
orientations do not ignore financial objectives, but they prioritize growth and long-
term paybacks. Long time horizons allow managers to experiment and seek success
by developing their “game plans” as they go along.
Exhibit 2.7 summarizes the managerial implications of long-term (Confucian)
orientation.
To apply Hofstede’s model to specific countries, look at Exhibit 2.8, which dis-
plays the percentile ranks of selected countries for five of Hofstede’s dimensions of
national culture. To interpret this exhibit, you need to understand that the percentile
for each country tells you the percentage of other countries that rank below it. For
example, the United States has the highest scores on individualism, so its percentile
rank tells you that 100 percent of the countries are equal to or below the United
States on individualism. A percentile rank of 75 percent tells you that 75 percent of
the other countries have equal or lower ranks on a cultural dimension.
To simplify generalizations from Hofstede’s data, the table groups countries by
country clusters.31 Country clusters are groups of countries—such as Anglo, Latin
American, and Latin European—with roughly similar cultural patterns. Although cul-
tures differ within these broad classifications, such summaries are useful for con-
densing cultural information. They are also useful in predicting likely cultural traits
when specific information is not available.

Restraint versus Indulgence

As mentioned earlier, Minkov, a Bulgarian researcher, analyzed data from the World
Values Survey and came up with a sixth dimension called restraint versus indul-
gence.32 Because the dimension is so new, not much research has been done on it.
This section therefore presents the dimension briefly and examines some of the dom-
inant characteristics of societies with these dimensions.

EXHIBIT 2.7 Management Implications of Long-Term Orientation.

Management Processes Short-Term Orientation Long-Term Orientation

Human resources management
Management selection Objective skill assessment for immediate Fit of personal and background characteristics
use to company
Training Limited to immediate company needs Investment in long-term employment skills
Evaluation/promotion Fast; based on skill contributions Slow; develop skills and loyalty
Remuneration Pay, promotions Security
Leadership styles Use of incentives for economic Building social obligations
advancement
Motivational assumptions Immediate rewards necessary Immediate gratification subordinate to
long-term individual and company goals
Decision making/organizational Logical analyses of problems; design Synthesis to reach consensus; design for
design for logic of company situation social relationships
Strategy issues Fast; measurable payback Long-term profits and growth; incrementalism

SOURCES: Adapted from Hofstede, Geert. 1980. Culture’s Consequences: International Differences in Work-Related Values. London: Sage; Hofstede,
Geert. 1991. Cultures and Organizations: Software of the Mind. London: McGraw-Hill; Hofstede, Geert. 1993. “Cultural dimensions in people management.”
In Vladimir Pucik, Noel M. Tichy, and Carole K. Barnette, Globalizing Management. Hoboken, NJ: Wiley, 139–158.
 Chapter 2 • Culture and Multinational Management 41

EXHIBIT 2.8 Percentile Ranks for Hofstede’s Cultural Dimensions for Selected Countries by Cultural Cluster (100 = highest,
50 = middle).

Cultural Group/Country Power Distance Uncertainty Avoidance Individualism Masculinity Long-Term Orientation
Anglo:
Australia 25 32 98 72 48
Canada 28 24 93 57 19
Great Britain 21 12 96 84 27
United States 30 21 100 74 35
Arab:
Arab countries 89 51 52 58 n/a
Far Eastern:
China 89 44 39 54 100
Hong Kong 73 8 32 67 96
Singapore 77 2 26 49 69
Taiwan 46 53 19 41 92
Germanic:
Austria 2 56 68 98 n/a
Germany 21 47 74 84 48
The Netherlands 26 36 93 6 65
Switzerland 17 40 75 93 n/a
Latin America:
Argentina 35 78 59 63 n/a
Colombia 70 64 9 80 n/a
Mexico 92 68 42 91 n/a
Venezuela 92 61 8 96 n/a
Latin European:
Belgium 64 92 87 60 n/a
France 73 78 82 35 n/a
Italy 38 58 89 93 n/a
Spain 43 78 64 31 n/a
Near Eastern:
Greece 50 100 45 67 n/a
Iran 46 42 57 35 n/a
Turkey 67 71 49 41 n/a
Nordic:
Denmark 6 6 85 8 n/a
Finland 15 42 70 13 n/a
Norway 12 30 77 4 n/a
Sweden 12 8 82 2 58
Independent:
Brazil 75 61 52 51 81
India 82 17 62 63 71
Israel 4 66 66 47 n/a
Japan 32 89 55 100 n/a

SOURCES: Adapted from Hofstede, Geert. 1980. Culture’s Consequences: International Differences in Work-Related Values. London: Sage; Hofstede,
Geert. 1991. Cultures and Organizations: Software of the Mind. London: McGraw-Hill; Hofstede, Geert. 1993. “Cultural dimensions in people management.”
In Vladimir Pucik, Noel M. Tichy, and Carole K. Barnette, Globalizing Management. Hoboken, NJ: Wiley, 139–158; Ronen, S., and O. Shenkar. 1985.
“Clustering countries on attitudinal dimensions: A review and synthesis.” Academy of Management Review, September.
42 Part 1 • Foundations of Multinational Management

The restraint versus indulgence dimension examines characteristics not consid-

ered by the other five dimensions. Indulgent societies tend to favor free satisfaction
of human needs related to “enjoying life and having fun.”33 In contrast, restraint soci-
eties are much more restrictive and place strict norms on gratification of needs.
To give you an idea of how the two dimensions differentiate among societies,
Exhibit 2.9 shows the characteristics of societies high on the two dimensions.
According to extant research, indulgence tends to be more prevalent in societies
based in South and North America and in Western Europe. In contrast, restraint is
emphasized in Easter Europe, Asia, and the Muslim world. Furthermore, because the
dimension is so new, not much research has been done on the dimension. Neverthe-
less, one can see the implications of these dimensions for multinational management.
Indulgent societies tend to be more relaxed with an emphasis on leisure and sports.
Multinational managers can shape work environments to take advantage of such
preferences. In contrast, restraint-oriented societies tend to have stricter social
norms and because of the emphasis on order, it is very likely that a more strict and
traditional organizational hierarchy may work well. Multinational managers in such
societies are also better off providing more order and directions to employees to
encourage them to take control of their work environments. The future will likely
provide more insights into this dimension as more researchers study the impact of
this dimension on other management-related concepts.
The above has provided you with ample detail on Hofstede’s work and the impli-
cations for multinational management. However, despite the extensive work validat-
ing Hofstede’s work, it has not been without criticism. The following lists the most
scathing critiques of Hofstede’s work34:
• One cannot understand culture simply by collecting surveys. Furthermore, the
dimensions were derived on samples less than 1000 for some countries. Does
such an approach really show how homogeneous a society is?
• One cannot assume that all nations share one uniform culture. As we discuss
later, there is significant heterogeneity among members of the same society.
• One cannot study culture by looking at only one organization, namely IBM.
• Finally, the IBM data are old and need to be updated.

EXHIBIT 2.9 Indulgence versus Restraint.

Indulgence
• Higher proportion of very happy people
• High importance of leisure
• Emphasis on importance of freedom of speech
• Perception that one can control one’s life
• More citizens involved in active sports
• More likely to recall positive emotions
Restraint
• Lower proportion of very happy people
• Low perception of control on one’s life
• Freedom of speech is not seen as critical
• Less importance of leisure activities
• Fewer people engaged in active sports
• Less likely to recall positive emotions

SOURCE: Based on Hofstede, G. 2011. Dimensionalizing cultures: The Hofstede model in context. Online Readings in Psy-
chology and Culture, 2(1). http://dx.doi.org/10.9707/2307-0919.1014.
 Chapter 2 • Culture and Multinational Management 43

Despite the above criticisms, Hofstede’s dimensions have stood the test of time.
Many other researchers including Hofstede have addressed these criticisms. In fact,
the next framework we discuss, namely the GLOBE model of culture,35 was devel-
oped as a result of the criticisms of Hofstede’s work. However, this model is heavily
based on Hofstede’s dimensions, and we focus mainly on the two dimensions unique
to the model.

GLOBE NATIONAL CULTURE FRAMEWORK

The GLOBE project involves 170 researchers who collected data on 17,000 managers
in around 1000 local companies from 62 countries around the world.36 Using the Hof-
stede model as their foundation, the GLOBE researchers conceptualized and devel-
oped nine cultural dimensions. Of the nine dimensions, only two are independent of
the Hofstede model. The seven GLOBE dimensions that are similar to Hofstede’s
model are:
• Assertiveness orientation and gender egalitarianism (similar to masculinity-
femininity).
• Institutional and family collectivism (similar to individualism-collectivism).
• Future orientation (similar to long-term orientation).
• Power distance.
• Uncertainty avoidance.37
In addition to examining nine different dimensions, the GLOBE researchers also
asked respondents to either describe their cultures (“as is”) or provide some judg-
ment of their culture (“should be”). As a result, the GLOBE research resulted in 19
different culture scores for each country.
Many of the implications discussed earlier for Hofstede’s cultural dimensions
apply to the corresponding GLOBE dimensions. The two dimensions unique to the
GLOBE project are performance orientation and humane orientation. Below we
describe these two dimensions.
Performance orientation refers to the degree to which a society encourages its mem-
bers to innovate, improve their performance, and strive for excellence. This dimen-
sion is similar to Weber’s Protestant work ethic and reflects the desire for
achievement in society.38 Countries such as the United States and Singapore have
high scores on performance orientation, whereas countries such as Russia and
Greece have low scores on that dimension. Javidan, Dorfman, de Luque, and House
argue that countries with high-performance-orientation scores tend to favor training
and development, whereas in countries low on performance orientation, family and
background are more important.39 In societies with high performance orientation,
people are rewarded for taking initiative and performing with the belief that one
can succeed by trying hard. In contrast, low-performance-oriented societies reward
harmony with the environment; they emphasize loyalty and integrity while regarding
assertiveness as unacceptable.
To give you an idea of what influences performance orientation exerts on soci-
ety, consider the recent study examining its influence on entrepreneurship.40 Using
10 years of cross-national data on entrepreneurship from 42 countries, the study
shows that performance orientation has a positive influence on entrepreneurship.
Such results are not surprising given that performance orientation places strong
emphasis on innovation and individual achievements. Such values likely encourage
individuals in high-performance-orientation societies to turn new ideas into commer-
cial endeavors.
Exhibit 2.10 summarizes some of the implications of performance orientation for
management.
44 Part 1 • Foundations of Multinational Management

EXHIBIT 2.10 Management Implications of Performance Orientation.

Management Processes High Performance Orientation Low Performance Orientation

Human resources management
Management selection Based on individual achievement Emphasis on seniority and experience
and merit
Training Value training and development Value societal and family relationships
Evaluation/promotion Based on merit and achievement Based on age
Remuneration Pay, promotions Tradition
Performance appraisal Systems emphasize results Systems emphasize integrity and loyalty
Leadership styles Have can-do attitude Emphasize loyalty and belongingness
Motivational assumptions Value bonuses and rewards Value harmony with environment and quality
of life
Communication Value direct and to-the-point Value subtlety and ambiguity in
communication communication

SOURCE: Adapted from House, R., P. Hanges, M. Javidan, P. Dorfman, and V. Gupta. 2004. Culture, Leadership and Organizations: The GLOBE Study of 62
Societies. Thousand Oaks, CA: Sage Publications.

Humane orientation is an indicator of the extent to which individuals are expected

to be fair, altruistic, caring, and generous. In high-humane-oriented societies, the
need for belonging and affiliation is emphasized more than needs such as material
possessions, self-fulfillment, and pleasure. Societies that are less humane oriented
are more likely to value self-interest and self-gratification.41
Countries such as Malaysia and Egypt score highly in terms of humane orientation,
whereas France and Germany have low scores. As such, companies in high-
humane-oriented countries such as Egypt are generally expected to be caring and offer
benefits that seem unusual for U.S. companies. For instance, companies may offer
tuition assistance to employees’ children, paid family vacations, or even home appli-
ances.42 Exhibit 2.11 lists some of the management implications of humane orientation.
The GLOBE data show that countries can be categorized by 10 clusters and that
these clusters differ with respect to the 9 cultural dimensions. Clusters in the GLOBE
project include Anglo, Confucian Asia, Eastern Europe, Germanic Europe, Latin Amer-
ica, Latin Europe, Middle East, Nordic Europe, Southern Asia, and Sub-Saharan.
Exhibit 2.12 shows the various clusters and their corresponding cultural scores.

EXHIBIT 2.11 Management Implications of Humane Orientation.

Management Processes High Humane Orientation Low Humane Orientation

Relationships Importance of others (i.e., family, Emphasis on self-interest
friends, and community)
Leadership styles
Style More consideration-oriented leadership Less consideration-oriented leadership
Concern for subordinates Individualized/holistic consideration Standardized/limited consideration
Approach More benevolent Less benevolent
Relationship with subordinates More personal and less informal More informal and less personal
Motivational assumptions Need for belongingness Motivation by power and material possessions
Company role Support for employees Expectation of people to solve problems on
their own

SOURCE: Adapted from House, R., P. Hanges, M. Javidan, P. Dorfman, and V. Gupta. 2004. Culture, Leadership and Organizations: The GLOBE Study of 62
Societies. Thousand Oaks, CA: Sage Publications.
EXHIBIT 2.12 The GLOBE Model of Culture.

Performance Future Humane Institutional In-Group Gender Power Uncertainty

Cluster Orientation Assertiveness Orientation Orientation Collectivism Collectivism Egalitarianism Distance Avoidance
Anglo High Medium Medium Medium Medium Low Medium Medium Medium
Confucian Asia High Medium Medium Medium High High Medium Medium Medium
Eastern Europe Low High Low Medium Medium High High Medium Low
Germanic Europe High High High Low Low Low Medium Medium High
Latin America Low Medium Low Medium Low High Medium Medium Low
Latin Europe Medium Medium Medium Low Low Medium Medium Medium Medium
Middle East Medium Medium Low Medium Medium High Low Medium Low
Nordic Europe Medium Low High Medium High Low High Low High
Southern Asia Medium Medium Medium High Medium High Medium Medium Medium
Sub-Saharan Africa Medium Medium Medium High Medium Medium Medium Medium Medium

SOURCE: Based on Javidan, Mansour, Peter W. Dorfman, Mary Sully de Luque, and Robert House. 2006. “In the eye of the beholder: Cross cultural lessons in leadership for project GLOBE.” The Academy of Manage-
ment Perspectives, February, 20(1): 67–90.
Chapter 2 • Culture and Multinational Management
45
46 Part 1 • Foundations of Multinational Management

Refer to Exhibit 15.6 in Chapter 15 to see which countries are included in each clus-
ter. Many of the management implications of Hofstede’s cultural dimensions can be
used for the seven GLOBE dimensions that are similar to Hofstede’s.
Similar to Hofstede, the GLOBE framework has also been subjected to criti-
cisms. Some have argued whether all nine dimensions are really necessary especially
that they expand on Hofstede’s work.43 Additionally, it is very difficult to incorporate
all nine dimensions in any study. Furthermore, empirical research has also shown
that many of the dimensions formulated by the GLOBE framework are highly corre-
lated. This would suggest that the dimensions may not be as distinct as thought.
Finally, others have discussed whether all dimensions can actually be validated.44
Despite the above criticisms, both GLOBE and the Hofstede approaches have
their own merits and have made significant contributions to understanding how
countries differ. Next we consider the model developed by Trompenaars and his col-
leagues. You will see that this model is also similar in some respects to Hofstede’s,
but it contains more dimensions and deals with a broader array of countries.

7d Cultural Dimensions Model

To construct the 7d dimensions, Fons Trompenaars, a Dutch management consul-
tant, collected data from business clients and participants in his seminars. His data
collection efforts resulted in 9140 questionnaires. Although he initially speculated
that there are seven cultural dimensions, only two dimensions have been empirically
verified. However, it is a critical framework and has significant support from practi-
tioners. We will therefore consider each of the seven dimensions.
The 7d cultural model builds on traditional anthropological approaches to under-
standing culture. Anthropologists argue that culture comes into existence because
all humans must solve basic problems of survival.45 These challenges include how
people relate to others, such as family members, supervisors, friends, and fellow
workers; how people deal with the passage of time; and how people relate to their
environment. All cultures develop ways to confront these basic issues, but their strat-
egies are not the same, which is why cultures differ significantly.
Five of the seven dimensions of the 7d cultural model deal with the challenges of
how people relate to each other. Each dimension is a continuum or range of cultural
differences. The five dimensions that deal with relationships among people are:
1. Universalism versus particularism: The choice of dealing with other people
based on rules or based on personal relationships.
2. Collectivism versus individualism: The focus on group membership versus
individual characteristics.
3. Neutral versus affective: The range of feelings outwardly expressed in the
society.
4. Diffuse versus specific: The types of involvement people have with each
other, ranging from all aspects of life to specific components.
5. Achievement versus ascription: The assignment of status in a society based
on performance (e.g., college graduation) versus assignment based on heritage.
The two final dimensions deal with how a culture manages time and how it deals
with nature:
6. Past, present, future, or a mixture: The orientation of the society to the past,
present, or future or some combination of the three.
7. “Control of” versus “accommodation with” nature: Nature viewed as
something to be controlled versus something to be accepted.
Exhibit 2.13 gives a summary of the 7d model and the issues addressed by each
dimension. The following sections define the dimensions and show their managerial
applications.
 Chapter 2 • Culture and Multinational Management 47

EXHIBIT 2.13 The 7d Model of Culture.

Cultural Dimension Critical Question

Relationships with people:
Universalism versus particularism Do we consider rules or relationships more important?
Individualism versus collectivism Do we act mostly as individuals or as groups?
Specific versus diffuse How extensively are we involved with the lives of other
people?
Neutral versus affective Are we free to express our emotions, or are we
restrained?
Achievement versus ascription Do we achieve status through accomplishment,
or is it part of our situation in life (e.g., gender, age,
social class)?
Perspective on time:
Sequential versus synchronic Do we do tasks in sequence or several tasks at once?
Relationship with the environment:
Internal versus external control Do we control the environment, or does it control us?

SOURCE: Adapted from Trompenaars, Fons, and Charles Hampden-Turner. 1998. Riding the Waves of Culture: Under-
standing Cultural Diversity in Global Business. New York: McGraw-Hill.

Universalism versus Particularism

Universalism and particularism pertain to how people from a culture treat each other
based on equally applied rules rather than personal relationships. In a universalistic
culture, how people are treated is based on abstract principles such as the rules of
law, religion, or cultural principles (e.g., “Do unto others as you would have them
do unto you”). Thus, universalism suggests that there are rules or appropriate and
acceptable ways of doing things, and we look to those precise guides in all
situations.
In contrast, in particularistic cultures, rules represent only a rough guide to life.
Each judgment represents a unique situation and the “right” way of behaving must
take into account who the person is and his or her relationship to the one doing the
judging. In particularistic cultures, rules may be in place and fully recognized, but
people expect exceptions to be made for friends, family relations, and others. The
focus is on situation-to-situation judgments and on the exceptional nature of chang-
ing circumstances.46
In developing his 7d model, Trompenaars uses dilemmas that show contrasts in
cultural values. Consider the following dilemma and the different cultural assump-
tions that people use to make the “right” choice.
One of the dilemmas used to show differences between universalistic and partic-
ularistic cultures concerns the story of a motorist hitting a pedestrian while going
35 miles per hour in a 20-mile-per-hour zone. The driver’s lawyer notes that if a
witness says the driver was going only 20 miles per hour, the judge will be lenient.
The question is this: Should a friend who is a witness be expected to—or feel obli-
gated to—testify to the lower speed? In universalistic cultures such as the United
States and Switzerland, more than 93 percent say no. The principle of telling the
truth supersedes friendship. In particularistic cultures such as South Korea, Nepal,
and Venezuela, close to 40 percent say yes. Friendship supersedes the law.47
No culture is purely universalistic or particularistic. However, the tendency to
lean in one direction or the other influences business practices and relationships
between business partners from different cultures. In particular, more universalistic
cultures tend to use contracts and law as a basis for business. Managers from such
cultures are often uncomfortable when written documents are ignored and the
48 Part 1 • Foundations of Multinational Management

EXHIBIT 2.14 Universalism versus Particularism: Differences and Managerial Implications.

Universalism Particularism

United United Czech Nigeria Mexico South

States Kingdom Rep. Korea

Differences
Focus on rules Focus on relationships
Contracts difficult to break Contracts easy to modify
Trustworthy people honor their word Trustworthy people adapt to each other’s needs
based on trust
Belief is in only one reality Reality is relative to each person’s situation
“Deals” are obligations “Deals” are flexible based on the situation and
the person
Managerial Implications
Use procedures applied to all Use informal networks to create understanding
Formalize business practices Make changes subtly and privately
Treat all cases similarly Treat each case based on its unique
circumstances
Announce changes publicly Keep only insiders informed

SOURCES: Adapted from Economides, A. A. 2008. “Culture-aware collaborative learning.” Multicultural and Technology
Journal, 2(4): 243–267; Trompenaars, Fons, and Charles, Hampden-Turner. 1998. Riding the Waves of Culture: Under-
standing Cultural Diversity in Global Business. New York: McGraw-Hill.

personal relationships between partners become paramount. Consequently, man-

agers from universalistic cultures doing business in particularistic cultures must be
sensitive to building relationships. However, managers from particularistic cultures
must make efforts to realize that the emphasis on law and contract does not mean a
distrust of the business partner in a universalistic culture.
Exhibit 2.14 gives a brief description of universalism and particularism as
cultural dimensions and shows the managerial implications for doing business in each.

Individualism versus Collectivism

In the preceding sections, we examined Hofstede’s view of individualism and collec-
tivism. The 7d model considers the same distinctions. Although the 7d view of indi-
vidualism is similar to Hofstede’s in concept, the rankings of countries do not match
exactly. One explanation for this difference may be that Trompenaars’s ranking
comes from more recent data. Another reason is that the 7d model uses a different
methodology from Hofstede’s model and captures more subtle aspects of the
individualism-collectivism continuum.
One of the questions that Trompenaars used to examine cultural differences in
individualism asked about typical organizations in each country. One choice repre-
sented organizations where individual work and individual credit were common.
The other choice represented group work and group credit. In the more collectivist
societies, such as India and Mexico, fewer than 45 percent of the workers said that
their jobs involved individual work with individual credit. Somewhat surprising was
the finding that the former Eastern Bloc countries of the Czech Republic, Russia,
Hungary, and Bulgaria were the most individualistic in their organizations, ranking
ahead of the United States.
Exhibit 2.15 gives a brief description of individualistic and collectivistic cultural
dimensions and the managerial implications of doing business in each.
 Chapter 2 • Culture and Multinational Management 49

EXHIBIT 2.15 Individualism versus Collectivism: Differences and Managerial Implications.

Individualism Collectivism

Czech United Nigeria Egypt Japan

Rep. Kingdom
Differences
Focus on “me” or “I” Focus on “we”
Individual achievement and responsibility Group achievement and responsibility
Individual decision making Decision making by groups
Managerial Implications
Use individual incentives such as pay for Focus on group morale and cohesiveness
performance
Plan for turnover Expect low turnover
Provide for individual initiative Set group goals

SOURCES: Adapted from Economides, A. A. 2008. “Culture-aware collaborative learning.” Multicultural and Technology
Journal, 2(4): 243–267; Trompenaars, Fons, and Charles Hampden-Turner. 1998. Riding the Waves of Culture: Under-
standing Cultural Diversity in Global Business. New York: McGraw-Hill.

Neutral versus Affective

The neutral versus affective dimension of the 7d model concerns the acceptability of
expressing emotions. In cultures with a more neutral orientation, people expect
interactions to be objective and detached. The focus is more on the task and less on
the emotional nature of the interaction. People emphasize the achievement of objec-
tives without the messy interference of emotions. In contrast, in cultures with a more
affective orientation, all forms of emotion are appropriate in almost every situation.
Expressions of anger, laughter, gesturing, and a range of emotional outbursts are
considered normal and acceptable. It is natural and preferred to find an immediate
outlet for emotions.48
You can test yourself on this dimension by responding to one of Trompenaars’s
dilemmas: How would you respond in a negotiation if your partner called your proposal
insane? People from neutral cultures attempt to hide their emotional reactions to this
insult. Revelation of the hurt would show weakness and vulnerability. People from
affective cultures would react immediately. They realize that such a reaction shows
that they are insulted and they believe that their partner should know this. This is
expected behavior and is not viewed negatively by people in an affective culture.49
Exhibit 2.16 gives a brief description of the neutral versus affective cultural dimen-
sions and the managerial implications of doing business in these different contexts.

Specific versus Diffuse

The specific versus diffuse cultural dimension addresses the extent to which an indivi-
dual’s life is involved in his or her work relationships. In a specific-oriented culture,
business is segregated from other parts of life. People in business-exchange and
work relationships know each other, but the knowledge is very limited and shared
for only very specific purposes. In such societies, written contracts frequently pre-
scribe and delineate such relationships. Conversely, in diffuse-oriented cultures,
business relationships are more encompassing and inclusive. The preference is to
involve multiple areas and levels of life simultaneously; truly private and segregated
spaces in life are quite small. In doing business, the parties come to know each other
50 Part 1 • Foundations of Multinational Management

EXHIBIT 2.16 Neutral versus Affective: Differences and Managerial Implications.

Neutral Affective

Sweden Czech United Norway Mexico China

Rep. Kingdom
Differences
Do not reveal thoughts or feelings Feelings and thoughts revealed verbally and
nonverbally
Control over emotions admired Emotional expression uninhibited
Physical contact and expressive gestures Animated expression and gesturing admired;
avoided touching is common

Managerial Implications
Act under control to show status Avoid appearing detached, which suggests
distance
Keep dialogue to the point Expect strong commitment to positions
Tolerate emotional outbursts

SOURCES: Adapted from Economides, A. A. 2008. “Culture-aware collaborative learning.” Multicultural and Technology
Journal, 2(4): 243–267; Trompenaars, Fons, and Charles Hampden-Turner. 1998. Riding the Waves of Culture: Under-
standing Cultural Diversity in Global Business. New York: McGraw-Hill.

personally and more thoroughly, and they become acquainted with each other across
a variety of life’s dimensions and levels.50
The example Trompenaars uses to test the differences between specific and diffuse
cultures concerns a boss who asks a subordinate to help him paint his house. In spe-
cific cultures, most people believe that the worker has no obligation to help because
the boss has no authority outside work. In diffuse cultures, people feel an obligation
to help the boss in any way possible, even beyond the job’s requirements.51
Exhibit 2.17 gives a brief description of specific versus diffuse cultural dimen-
sions and the managerial implications of doing business in these different contexts.

Achievement versus Ascription

The dimension identified as achievement versus ascription addresses how a particular soci-
ety accords or gives status. In achievement-oriented cultures, people earn status
through their performance and accomplishments. In contrast, when a culture bases sta-
tus on ascription, one’s inherent characteristics or associations define status. For exam-
ple, ascription-oriented societies often assign status based on schools or universities
attended, or on age. Ascribed status does not require any justification. It simply exists.
In such cultures, titles and their frequent usage play a large part in interactions.52
Exhibit 2.18 gives a brief description of the achievement versus ascription cul-
tural dimensions and the managerial implications of doing business in each.

Time Orientation
To coordinate any business, managers must have a shared understanding of time.
Experts on culture find vast differences in how people deal with time, and these dif-
ferences become apparent when people from different cultures engage in business
exchanges. One dimension of time that is important to managers is the time horizon.
The time horizon concerns how cultures deal with the past, present, and future, as well
 Chapter 2 • Culture and Multinational Management 51

EXHIBIT 2.17 Specific versus Diffuse: Differences and Managerial Implications.

Specific Diffuse

Sweden Czech United Norway Mexico China

Rep. Kingdom
Differences
Direct in relationships Indirect and subtle in relationships
Blunt and precise in communication Ambiguous or evasive in communication
Principled moral reasoning Situation-based moral decision making

Managerial Implications
Use of objectives and standards Attempt continuous improvement
Separate private and business lives Mix private and business lives
Give clear and precise directions Use ambiguous directions to give employees
latitude

SOURCES: Adapted from Economides, A. A. 2008. “Culture-aware collaborative learning.” Multicultural and Technology
Journal, 2(4): 243–267; Trompenaars, Fons, and Charles Hampden-Turner. 1998. Riding the Waves of Culture: Under-
standing Cultural Diversity in Global Business. New York: McGraw-Hill.

as the boundaries among these time zones. Mexicans and Chinese, for example, have
long time horizons and distinct boundaries among the time zones.53
Exhibit 2.19 summarizes the cultural characteristics of different time horizons. It
also gives some managerial implications of differing time orientations.
In future-oriented societies, such as the United States, organizational change is
considered necessary and beneficial. A static organization is a dying organization.

EXHIBIT 2.18 Achievement versus Ascription: Differences and Managerial Implications.

Achievement Ascription

Norway Ireland Austria Japan Hong Argentina

Kong
Differences
Use title only when relevant Use of titles common and expected
Superiors earn respect through job Respect for superior shows commitment to
performance organization
Mixture of age and gender in management Background and age main qualification for
management
Managerial Implications
Emphasize rewards and respect based on skills Emphasize seniority
and accomplishments
Senior-level managers defer to technical and Use personal power of superior for rewards
functional specialists
Emphasize the chain of command

SOURCES: Adapted from Economides, A. A. 2008. “Culture-aware collaborative learning.” Multicultural and Technology
Journal, 2(4): 243–267; Trompenaars, Fons, and Charles Hampden-Turner. 1998. Riding the Waves of Culture: Under-
standing Cultural Diversity in Global Business. New York: McGraw-Hill.
52 Part 1 • Foundations of Multinational Management

EXHIBIT 2.19 Time Horizon: Differences and Managerial Implications.

Past/Present Future

Hong Israel Russia Korea Hong

Kong Kong
Differences
Past Present Future
Communication references history Enjoy the moment Communication refers to
and origins of country, business, potential achievements
and family
Respect for past glory and elder Planning seldom results in Planning important
execution
History provides a context for Immediate impact most Potential for future
present actions important advantage emphasized
Managerial Implications
Past and Present Future
Emphasize and be sensitive to history and Motivate by emphasis on opportunities
tradition
Avoid strict deadlines for completion of tasks Set specific deadlines

SOURCES: Adapted from Economides, A. A. 2008. “Culture-aware collaborative learning.” Multicultural and Technology
Journal, 2(4): 243–267; Trompenaars, Fons, and Charles Hampden-Turner. 1998. Riding the Waves of Culture: Under-
standing Cultural Diversity in Global Business. New York: McGraw-Hill.

However, in past-oriented societies, people often assume that life follows a preor-
dained course based on traditions or the will of God. As a result, strategic planning
has little importance for the organization. A changing organization is suspicious to
both employees and society. Stability is revered. Within these organizations, senior
people are thought to make the best decisions because they have the authority and
wisdom to know the right way to do things. Symbols and rituals dominate the organi-
zational culture.
To consider your own time horizon, ask yourself how long ago your past started
and ended, how long ago your present started and ended, and when your future will
start and end. Trompenaars uses similar questions to measure the time horizons of
different cultural groups.54

Internal versus External Control

The cultural dimension of internal versus external control concerns beliefs regarding control
over one’s fate. This cultural dimension is perhaps best reflected in how people interact
with their natural environment. Does nature dominate us, or do we dominate nature?
To measure this dimension, Trompenaars and his colleagues presented managers
with the following options: “It is worthwhile trying to control important natural forces
like the weather,” and “Nature should take its course, and we just have to accept it the
way it comes and do the best we can.”55 Managers in Arabic countries, such as Bah-
rain, Egypt, and Kuwait, were the most fatalistic, with fewer than 20 percent of them
choosing the option of control over nature. This contrasts with more than 50 percent
of the managers from Spain and Cuba, who chose the option of control over nature.
Exhibit 2.20 summarizes internal versus external cultural dimensions and their
managerial implications.
 Chapter 2 • Culture and Multinational Management 53

EXHIBIT 2.20 Internal versus External Control: Differences and Managerial Implications.

Internal Control External Control

Poland Brazil Greece Ethiopia China

Differences
Dominate the environment Emphasis on compromise
Show convictions Harmony and adjustment is good
Focus on self or own group Adaptation to cycles

Managerial Implications
Emphasize authority Emphasize patience
Dominate subordinates Build and maintain relationships with
subordinates, equals, and superiors
Emphasize win-win relationships

SOURCES: Adapted from Economides, A. A. 2008. “Culture-aware collaborative learning.” Multicultural and Technology
Journal, 2(4): 243–267; Trompenaars, Fons, and Charles Hampden-Turner. 1998. Riding the Waves of Culture: Under-
standing Cultural Diversity in Global Business. New York: McGraw-Hill.

Cultural values regarding relationships with nature can affect how organizations
and managers approach strategic and operational problems. In cultures where
nature is believed to dominate people, managers are likely to be fatalistic. They
believe that situations must be accepted and reacted to rather than changed. In
such cultures, people do not emphasize planning and scheduling. Work schedules
must adjust to other priorities, such as family.
In contrast, where cultural values support the notion that people dominate
nature, managers tend to be proactive. They believe that situations can be changed.
Strategic plans and operations reflect the assumption that obstacles can be con-
quered. What works is what is important. Organizations focus on using concrete
data that suggest the best way to solve problems.
This section concludes our examination of the 7d view of culture. As Exhibit 2.8
did for the Hofstede model, Exhibit 2.21 gives percentile rankings for these dimen-
sions in selected countries.
From the sections on cultural models, you should have acquired two skills. First,
you should now be able to apply the models to diagnose and understand the basic
cultural values of a society. Second, you should be able to apply this information to
assess how the characteristics of a particular culture affect business operations.
Later chapters will build on your knowledge of culture and of the concepts intro-
duced here. However, developing an in-depth understanding of any culture goes
beyond the simple application of cultural models. The successful multinational man-
ager will seek information continually from all sources. Consider, for example, how
Exhibit 2.22 shows that proverbs provide informal insights into national cultures.
The chapter concludes with some cautions for all who venture into international
operations.

CAVEATS AND CAUTIONS

Although understanding the cultures of people and organizations is crucial for inter-
national business success, multinational managers in particular must realize that cul-
tures provide only broad guidelines for behavior. For instance, although the United
States scores very highly on individualism, it has the highest percentage of charity
54 Part 1 • Foundations of Multinational Management

EXHIBIT 2.21 Percentile Ranks for the 7d Model Cultural Dimensions in Selected Countries.

Past Future Internal

Universalism Individualism Neutral Specific Achievement Orientation Orientation Control
Argentina n/a n/a 21 n/a 8 n/a n/a 59
Australia n/a 71 69 73 84 32 n/a 78
Austria n/a n/a 90 60 3 n/a n/a 63
Belgium n/a 52 46 n/a n/a n/a n/a 43
Brazil n/a 19 46 n/a 34 18 n/a 73
Bulgaria n/a 84 81 n/a 29 n/a n/a 20
Canada 95 74 77 80 92 n/a 47 88
China 26 26 85 3 58 82 89 2
Cuba n/a n/a 4 n/a 11 n/a n/a 98
Czech Rep. 16 100 56 37 45 n/a 84 n/a
Denmark n/a 61 33 70 82 n/a n/a 80
Egypt n/a 10 2 n/a n/a n/a n/a n/a
Ethiopia n/a n/a 100 97 37 n/a n/a 24
Finland n/a 58 50 63 76 n/a n/a 39
France 63 n/a 25 53 71 77 74 90
Germany n/a 35 35 n/a 61 64 53 34
Greece 42 32 38 40 55 n/a n/a 51
Hong Kong n/a n/a 92 87 13 100 100 29
Hungary 79 94 58 23 47 n/a n/a n/a
India 21 16 83 27 18 9 39 27
Indonesia 47 n/a 85 17 n/a 36 39 32
Ireland 84 48 23 n/a 95 n/a n/a 71
Italy n/a n/a 31 n/a 66 n/a 16 43
Japan 58 6 98 57 53 59 63 n/a
Kenya n/a n/a n/a n/a 26 n/a n/a 17
Malaysia n/a 29 25 43 n/a n/a n/a n/a
Mexico n/a 13 50 n/a 63 n/a n/a n/a
The Netherlands n/a 55 63 93 n/a 41 32 54
Nigeria 53 81 69 13 n/a n/a n/a 76
Norway n/a n/a 44 50 100 23 n/a 95
Pakistan n/a 42 n/a n/a n/a n/a n/a n/a
Philippines n/a n/a 15 33 21 n/a n/a n/a
Poland 37 87 96 90 39 27 n/a 100
Portugal n/a 39 67 n/a 74 n/a n/a 46
Romania 68 90 n/a n/a n/a n/a n/a n/a
Russia 5 97 17 10 42 50 11 12
Korea 11 n/a n/a n/a 24 91 79 61
Singapore 32 23 69 47 68 73 5 10
Spain n/a 68 4 n/a 32 55 n/a 93
Sweden 89 45 63 100 79 86 68 22
Switzerland 100 n/a 29 67 50 68 58 49
Thailand n/a n/a 58 n/a 16 n/a n/a 56
United Kingdom 74 65 n/a 83 87 45 26 68
United States n/a 77 54 77 97 14 21 66
Russia 5 97 17 10 42 50 11 12

SOURCE: Computed from data reported in Trompenaars, Fons, and Charles Hampden-Turner. 1998. Riding the Waves of Culture: Understanding Cultural
Diversity in Global Business. New York: McGraw-Hill.
 Chapter 2 • Culture and Multinational Management 55

EXHIBIT 2.22 Proverbs: Windows into National Cultures.

Cultural Belief/Value Country or Culture Proverb

Time United States Time is money.
China Drips of water wear through stone.
Directness Mexico Only little children and drunks always tell the truth.
Arab If I have regretted my silence once, I have regretted my chatter many times.
Modesty Japan The nail that sticks up gets pounded down.
Korea A barking dog is never a good hunter.
Collectivism Arab My brother and I against my cousin. My cousin and I against the stranger.
Indonesia Both a light burden and a heavy burden should be carried together.
Value of age Turkey Beauty passes, wisdom remains.
Nigeria The elders of a community are the voice of God.
Power distance Romania There is no good accord where every man would be a lord.
China When you are an anvil, hold still. When you are a hammer, strike at will.
Fate Arab Man does not attain everything he desires; winds don’t always blow as the
vessels wish.
China A wise person adapts to circumstances as water conforms to the jar that
contains it.
Risk Korea Even if it is a stone bridge, make sure it is safe.
Arab Only a fool tests the depth of water with both feet.

SOURCE: Wederspahn, Cary M. 2003. “Proverbs: Windows into other cultures.” Executive Planet, October 4, 2002. http://www.executiveplanet.com/index.
php?title=Main_Page.

giving in the world (clearly a collectivistic behavior). Similarly, whereas many Latin
American cultures prefer warm interpersonal relationships, researchers were sur-
prised to find that Costa Ricans preferred automatic tellers over human tellers.56
Finally, consider that the Japanese contracts tend to be shorter and more ambiguous
than U.S. contracts although the Japanese have low tolerance for ambiguity as indi-
cated by their uncertainty avoidance scores. These are examples of cultural paradoxes,
where individual situations seem to contradict cultural prescriptions. However, if
one assumes that all people within a culture behave, believe, feel, and act the same,
it is known as stereotyping.
Using the cultural stereotype—the typical way people act—to understand a cul-
ture is not necessarily wrong if done carefully. Broad generalizations about a culture
can serve as a starting point for understanding the complexities of cultural differ-
ences. Most books that explain how to do business with the [name a culture] use
stereotypical cultural generalizations. Such books are helpful in understanding a cul-
ture as a whole, not in perceiving the variations within it. However, managers must
also understand that there are differences even among people from the same
cultures.
After considering such information about significant local differences, however,
the multinational manager must realize that organizational and occupational cultures
differ within a national context. However, the multinational manager must also
acknowledge that even individuals vary widely within each level of culture within a
country.57 As an example, cross-cultural research58 has shown that the individual
employee’s power distance orientation was critical in explaining employee–manager
relationships. In a comparison between U.S. and Chinese samples, the researchers
showed that an individual’s power distance orientation was more critical in explain-
ing how followers perceived leaders relative to country-level power distance. This
led them to recommend changing the adage “When in Rome, do as the Romans” to
“When in Rome, get to know Romans as individuals.”
56 Part 1 • Foundations of Multinational Management

Consequently, management functions such as planning, organizational design,

and personnel management must account not only for differences in national cul-
ture, but also for differences in occupational and organizational cultures. Similarly,
successful leadership, motivation, and the development of individual employees
must take into account the unique characteristics of each employee.
Perhaps the greatest cultural danger facing the multinational manager is ethnocen-
trism, which occurs when people from one culture believe that theirs are the only cor-
rect norms, values, and beliefs. The ethnocentric person may look down on people
from other cultures and may even consider them backward, dirty, weird, or stupid.
The work of many anthropologists leads to the conclusion that the multinational man-
ager can offset ethnocentric tendencies and truly understand other cultures only by
adopting a mindset of cultural relativism. This is the philosophical stance that all cultures,
no matter how different, are correct and moral for the people of those cultures.
Few multinational managers are so ethnocentric that they fail to realize that people
from other cultures just do things differently. Rather, the danger is a subtle form of eth-
nocentrism; that is, managers may find it difficult to remain entirely neutral in response
to other cultures. For example, issues such as the variations in the pace of work in other
countries, the unwillingness of subordinates to take responsibility, or practices such as
bribery often frustrate North American managers. Especially when first assigned over-
seas, managers must be wary of judging subordinates in terms of their own cultural
values. A common ethnocentric reaction is, “Why don’t they do it right, as we do?”
Given the complexities and subtleties associated with national cultures, multina-
tional managers have to work diligently to adequately understand any culture. Often
this process can take years of living and working in the new country. Some suggest
that multinational managers should approach new countries like scientists to verify
whether their stereotypes are correct.59 Such individuals can seek out local mentors
who can help them understand the subtleties of the local culture. Finally, it is critical
for the multinational manager to continually assess situations that defy stereotypes to
get a more complex understanding of the culture. This also suggests that one should
be aware that one is never really fully understanding of local subtleties.
Chapter 11 discusses how multinational firms can provide cultural training to
their managers who are about to take foreign assignments in new cultures. Some
training can be very rigorous and include stays in the local culture. However, in
other cases, such as work being outsourced, the local employees may, of necessity,
receive less rigorous cross-cultural training.
The goal of the multinational manager is ultimately to become culturally intelli-
gent. Researchers define cultural intelligence as the ability to interact effectively in mul-
tiple cultures.60 A culturally intelligent manager is able to understand diverse
cultural situations and acts appropriately. Additionally, cultural intelligence is com-
posed of three components: (1) a mental component based on the person’s cultural
knowledge acquired through education and personal experiences and use of cultural
knowledge when faced with cross-cultural situations, (2) a motivational component
based on the desire to continuously learn new aspects of cultures and adapt to these
cultural differences, and (3) a behavioral component based on the ability to exhibit
the appropriate forms of verbal and nonverbal behaviors in new cultural settings.61
Although it is a relatively new concept, research has shown the value of cultural
intelligence. For example, one study showed that those individuals with high cultural
intelligence were more likely to emerge as leaders in multicultural teams.62 In
another study of expatriates, result showed that cultural intelligence was an impor-
tant predictor of success in a new culture.63
How can managers become culturally intelligent? Recent research suggests that
exposure to new cultural experiences in other countries heightens cultural intelli-
gence.64 A multinational company may therefore send its employees on foreign
trips for this kind of exposure. That study also points to the importance during
one’s education of studying abroad and seeking foreign internships as a means to
 Chapter 2 • Culture and Multinational Management 57

start developing cultural intelligence. The research also suggests that the depth of
exposure increases cultural intelligence. Multinationals may therefore benefit from
sending their employees on frequent and different foreign assignments.

SUMMARY AND CONCLUSIONS

After completing this chapter you should know that a variety of cultural levels
affect multinational managers and organizations. However, the descriptions and
examples of cultural effects on management are broad illustrations. No one book
or chapter can do justice to the immense variety of cultures that exist in the world.
This chapter hopes only to sensitize readers to the extremely complex and subtle
influences that culture has on management and organizations.
The models of cultural values proposed by the GLOBE researchers, by
Hofstede, and by Trompenaars and his colleagues provide basic concepts for
analyzing cultural differences. They are tools to help you understand a culture and
adjust your business practices to various cultural environments.
The most successful multinational managers realize that understanding a
different culture is a never-ending learning process. They will prepare for their
international assignments by studying as much as they can about the country in
which they will work, including but not limited to business etiquette. Under-
standing the national culture as well as important historical, social, aesthetic,
political, and economic trends builds a foundation. They will study the language,
for few can really get behind the front stage of culture without speaking the local
language. Finally, they will be sensitive and observant, continually adjusting their
behavior to conform to what works locally.
This chapter presents only a brief introduction. As you read later chapters,
especially those with a comparative focus, you will broaden your understanding of
cultural differences. You also will learn to seek advantage in differences and to
avoid looking at culture as a potential obstacle.

NOTES
1. Crawford, H. J., and G. D. Gregory. 2015. “Humorous advertising that travels: A review
and call for research.” Journal of Business Research, 68: 569–577.
2. Minkov, M. 2013. Cross-cultural Analysis: The Science and Art of Comparing the
World’s Modern Societies and their Cultures. Thousand Oaks, CA: Sage.
3. Ibid.
4. Kroeber, A. L., and C. Kluckhohn. 1952. “Culture: A critical review of concepts and
definitions.” Papers of the Peabody Museum of American Archaeology and Ethnology,
47: 1.
5. Terpstra, Vern, and Kenneth David. 1991. The Cultural Environment of International
Business. Cincinnati, OH: South-Western.
6. Ibid.
7. Craighead’s International Business, Travel, and Relocation Guide 2000. Detroit, MI:
Gale Research.
8. Haas, M. R., and J. N. Cummings. 2015. “Barriers to knowledge seeking within MNC
teams: Which differences matter most?” Journal of International Business Studies,
46: 36–62.
9. Hofstede, Geert. 2001. Culture’s Consequences: International Differences in Work-
Related Values, 2nd ed. Thousand Oaks, CA: Sage.
10. Minkov, M. 2013. Cross-cultural Analysis: The Science and Art of Comparing the
World’s Modern Societies and their Cultures. Thousand Oaks, CA: Sage.
11. Hofstede, Culture’s Consequences.
12. House, R., P. Hanges, M. Javidan, P. Dorfman, and V. Gupta. 2004. Culture, Leadership
and Organizations: The GLOBE Study of 62 Societies. Thousand Oaks, CA: Sage.
58 Part 1 • Foundations of Multinational Management

13. Trompenaars, Fons, and Charles Hampden-Turner. 1998. Riding the Waves of Culture:
Understanding Cultural Diversity in Global Business. New York: McGraw-Hill. http://
www.7d-culture.nl/.
14. Hofstede, Culture’s Consequences.
15. Kirkman, Bradley L., Kevin B. Lowe, and Cristina B. Gibson. 2006. “A quarter century
of Culture’s Consequences: A review of empirical research incorporating Hofstede’s
cultural values framework.” Journal of International Business Studies, 10(4): 1–36.
16. Hofstede, Culture’s Consequences.
17. Hofstede, Geert. 1991. Cultures and Organizations: Software of the Mind. London:
McGraw-Hill; Hofstede, Geert, and Michael Harris Bond. 1988. “The Confucian connection:
From cultural roots to economic growth.” Organizational Dynamics, 16: 4, 4–21.
18. Hofstede and Bond.
19. Hofstede, G. 2011. “Dimensionalizing cultures: The Hofstede model in context.” Online
Readings in Psychology and Culture, 2(1). http://dx.doi.org/10.9707/2307-0919.1014.
20. Hofstede, Culture’s Consequences.
21. Kirkman, B. L., K. B. Lowe, and C. B. Gibson. 2006. “A quarter century of Culture’s
Consequences: A review of empirical research incorporating Hofstede’s cultural values
framework.” Journal of International Business Studies, 37: 285–320.
22. Hofstede, Culture’s Consequences.
23. Ibid.
24. Ibid.
25. Ibid.
26. Ibid.
27. Li, C., and K. P. Parboteeah. 2015. “The effect of culture on the responsiveness of firms
to mimetic forces: Imitative foreign joint venture entries into China, 1985–2003.”
Journal of International Management, http://dx.doi.org/10.1016/j.jwb.2014.08.002.
28. Hofstede, Culture’s Consequences.
29. Ibid.
30. Hofstede, Cultures and Organizations.
31. Ronen, S., and O. Shenkar. 1985. “Clustering countries on attitudinal dimensions: A
review and synthesis.” Academy of Management Review, September, 435–454.
32. Minkov, M. 2013. Cross-cultural Analysis: The Science and Art of Comparing the
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 Chapter 2 • Culture and Multinational Management 59

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