The Business of International Business is Culture Focusing

The Business of International Business is Culture: Focusing on Switzerland Russia Prof. Dr. Romie Frederick Littrell Department of Management NRU-HSE-SPb rlittrell@hse. ru Website: http: //romielittrell. homestead. com 1

Who am I? n NRU-HSE-SPb: Professor of Management (International Business) and Technical Supervisor of the Master’s programme: Business & Politics in Modern Asia n n n Ph. D, Industrial Psychology, Auckland University of Technology, New Zealand Ph. D, Business Administration, Kennedy College, Zurich, Switzerland MBA, California Coast University, USA BA, Psychology, University of Arkansas, USA ABOUT HALF MY WORKING CAREER IN BUSINESS, primarily information technology sales and marketing (longest: IBM-USA), and about half as a university professor (longest, Auckland University of Technology New Zealand) 2

Who am I? Worked in IT marketing and systems support for n Unisys n Xerox n IBM n Owned and operated a small business remarketing IBM industrial computer equipment n HR manager for Inter. Continental Hotels in China for 4 years. n n n n Taught at university, prior to HSE-SPb: Auckland University of Technology, New Zealand Hochschule Aalen, Germany Glion Hotel School, Switzerland Zhengzhou University, China Baldwin College, USA University of Texas, USA (graduate lecturer) 3

Who am I? Visiting Professor n ESAN Business School, Lima Peru n ESPM, Sao Paulo, Brazil n Bharatiya Vidya Bhavan business school, New Delhi, India n IILM institute for higher education, New Delhi, India n Izmir Economics University, Izmir, Turkey n Sun Yat-sen University, Guangzhou, China n Dalian Nationalities University, China 4

Centre for Cross Cultural Comparisons (CCCC) n An international voluntary association of academic researchers, students, and practitioners interested in the study of preferred leader behavior across societal cultures. n n n Approximately 100 individuals have contributed to the CCCC projects at some time and at some level. Established in 1996 in Zhengzhou City, Henan Province, P. R. China, now at NRU-HSE-SPb, Russian Federation http: //crossculturalcentre. homestead. com/Val ues. html 5

IB: Business transactions that cross national borders: International Business: Switzerland n n Export partners: Germany 15. 2%, US 12. 3%, China 8. 2%, India 6. 7%, France 5. 7%, UK 5. 7%, Hong Kong 5. 4%, Italy 5. 3% (2017) Import Partners: Germany 20. 9%, US 7. 9%, Italy 7. 6%, UK 7. 3%, France 6. 8%, China 5% (2017) International Business: Russian Federation n Import Partners: China 21. 2%, Germany 10. 7%, US 5. 6%, Belarus 5%, Italy 4. 5%, France 4. 2% (2017) n Export partners: China 10. 9%, Netherlands 10%, Germany 7. 1%, Belarus 5. 1%, Turkey 4. 9% (2017) 6

Ru-Ch Economic Cooperation n Russia is a large market with considerable potential for Swiss companies. Switzerland is committed to creating optimal conditions for Swiss businesses and has an action plan on developing economic relations to achieve this. A bilateral mixed economic commission meets on an annual basis to discuss the challenges encountered by Swiss and Russian companies. 7

Ru-Ch Economic Cooperation n In the period of sanctions and retaliation: Large increase in demand for Swiss dairy products (particularly cheese) Neither oil nor grain exports have been significantly affected by international sanctions so far; hence, due to EU and US sanctions on banking and commodity trading, there is now an estimated US$15 bn (£ 9 bn) of Russian assets invested in Swiss banks; 75% of Russian oil and 66% of Russian grain is traded through the city of Geneva, a global hub for commodities trading. (There are some restrictions on use of personal assets. ) 8

Business & Culture: Focus: Geert Hofstede’s model of cultural value dimensions n n n What is culture? Culture is how you were raised. Your indoctrination developed while you grew up. With a computer metaphor, culture is the software of our minds. We need shared software in order to communicate. So culture is about what we share with those around us. 9 9

Business & Culture: Focus: Geert Hofstede’s model of cultural value dimensions n n What is culture? In action in social life, culture constitutes the unwritten rules of the social game. These rules do not specify any details, but they specify the basic structure of the social landscape. They are about things such as independence, belonging, love, hate, respect, fear, and loyalty. They specify which contrasts matter in life: small versus big, clean versus dirty, man versus woman. 10 10

Business & Culture: Focus: Geert Hofstede’s model of cultural value dimensions n n n What is culture? Note that culture is about what we share with others. It is NOT something like personality, which is unique to an individual. If you would like to read more, https: //geerthofstede. com/culture-geert-hofstedegert-jan-hofstede/definition-culture/ 11 11

Research into national cultures Culture’s Consequences, Geert Hofstede, 1980 and 2011 Initially 5 dimensions; LTO/STO added soon after 1980 book. 1. 2. 3. 4. 5. Inequality: more or less? Power Distance large vs. small The unfamiliar: fight or tolerate? Uncertainty Avoidance strong vs. weak Relation with in-group: loose or tight? Individualism vs. Collectivism Emotional gender roles: different or same? Masculinity vs. Femininity Need gratification: later or now? Long vs. Short term orientation 12

Culture Defined n Culture: n n learned beliefs, values, rules, norms, symbols & traditions that are common to a specific group of people shared qualities of a group that make them unique is the way of life, customs, & scripts of a group of people Terms related to culture – n n Multicultural – approach or system that takes more than one culture into account Diversity – existence of different cultures or ethnicities within a group or organization 13

Related Concepts n Ethnocentrism – n n The tendency for individuals to place their own group (ethnic, racial, or cultural) at the center of their observations of the world Perception that one’s own culture is better or more natural than other cultures Is a universal tendency and each of us is ethnocentric to some degree Ethnocentrism can be a major obstacle to effective business management and leadership n Prevents people from understanding or respecting other cultures 14

Dimensions of Culture Research n Research focused on various dimensions of culture in the past 30 years – n n Hall (1976) reported that a primary characteristic of cultures is degree of focus – on the individual (individualistic) or on the group (collectivistic) Trompenaars (1994) classified an organizations culture into 2 dimensions: n n n Egalitarian-hierarchical - degree to which cultures exhibit shared power vs. hierarchical power Person-task orientation - extent to which cultures emphasize human interaction vs. focusing on tasks Hofstede (1980, 21) benchmark research identified 4, then 5 major dimensions on which cultures differ, now 6 or 7. 15

Dimensions of Culture Research n House et al’s (2004) research on the relationship between culture and leadership resulted in the GLOBE (Globeal Leadership & Organizational Behavior Effectiveness) research program n n n Initiated in 1991 – this program involved more than 160 investigators Used quantitative methods to study the responses of 17, 000 managers in more than 950 organizations, 62 different cultures Developed a classification of cultural dimensions – identified nine cultural dimensions 16

Culture’s recent consequences Geert Hofstede The individual components of this presentation and the entire presentation may be used in not-for-profit educational settings with proper attribution. Citation: Hofstede, Geert (25) Culture’s recent consequences Power. Point® file, http: //crossculturalcentre. homestead. com/Publications. html, [10 March 2021] 17

Hofstede: Why is culture so important? n Do we need to bother about culture? Every visitor of this site has her or his unique personality, history, and interest. At the same time, we share our human nature. We are group animals. We use language and empathy, and practice collaboration and inter-group competition. The unwritten rules of how we do these things differ from one human group to another. “Culture” is how we call these unwritten rules about how to be a good member of the group. 18

Hofstede: A Definition of Culture (in the anthropological sense) collective programming of the mind distinguishing the members of one group or category of people from another group/category - n - can be nation, region, organization, profession, generation, gender For review: not shown: Geert Hofstede on Culture – You. Tube 19

Values n n n Values are strong emotions with a minus and a plus pole Like evil-good, abnormal-normal, dangerous-safe, dirty-clean, immoral, indecent-decent, unnatural, paradoxical-logical, uglybeautiful, irrational-rational What is rational is a matter of values 20

National versus organizational cultures n n n National culture differences are rooted in values learned before age 10 They pass from generation to generation For organizations, they are given facts Organizational cultures are rooted in practices learned on the job Given enough management effort, they can be changed International organizations are held together by shared practices, not by shared values 21

Research into national cultures Culture’s Consequences, Geert Hofstede, 1980 Initially 5 dimensions; LTO/STO added soon after 1980 book. 1. 2. 3. 4. 5. Inequality: more or less? Power Distance large vs. small The unfamiliar: fight or tolerate? Uncertainty Avoidance strong vs. weak Relation with in-group: loose or tight? Individualism vs. Collectivism Emotional gender roles: different or same? Masculinity vs. Femininity Need gratification: later or now? Long vs. Short term orientation 22

Hofstede’s website: http: //geerthofstede. com/ 23

Dimension 1: Power Distance Extent to which the less powerful members of institutions and organizations expect and accept that power is distributed unequally n Transferred to children by parents and other elders n Hofstede: 10 minutes on power distance: https: //www. youtube. com/watch? v=Dq. A Jclwfy. Cw n 24

Dimension 2: Uncertainty Avoidance Extent to which members of a culture feel threatened by ambiguous and unknown situations n Not to be confused with risk avoidance: risk is to uncertainty as fear is to anxiety. Uncertainty and anxiety are diffuse feelings – anything may happen n This dimension focuses on how cultures adapt to changes and cope with uncertainty. Emphasis is on extent to which a culture feels threatened or is anxious about ambiguity. It is not risk avoidance but rather, how one deals with ambiguity. n Hofstede, 10 minutes on Uncertainty Avoidance https: //www. youtube. com/watch? v=f. ZF 6 Ly. Gne 7 Q n 25

Dimension 3: Individualism vs. Collectivism Individualism: A society in which the ties between individuals are loose: everyone is expected to look after self and immediate family n Collectivism: A society in which individuals from birth onwards are part of strong ingroups which last a lifetime n Hofstede: 10 minutes on I/C: https: //www. youtube. com/watch? v=z. Qj 1 VPNPHl. I n 26

Dimension 4: Masculinity vs. Femininity Masculinity: A society in which emotional gender roles are distinct: men are supposed to be assertive, tough and focused on material success, women on the quality of life n Femininity: A society in which emotional gender roles overlap: both men and women are supposed to be modest, tender, and focused on the quality of life n 10 minutes with Hofstede on Mas/Fem: https: //www. youtube. com/watch? v=Pyr. XKQG 2 CM n 27

Validations of country scores against over 4 measures from other sources Examples: n Power distance: Respect for elders; corruption; polarization and violence in national politics n Uncertainty avoidance: Religiosity; xenophobia; identity card obligation; faster driving n Individualism: GNP per capita; faster walking; weak family ties; frequency of using the word “I” n Masculinity: Assertiveness; performance versus solidarity; fewer women elected; homophobia 28

Dimension 5: Long Term vs. Short Term Orientation n Long Term Orientation is directed at the future and seeks future rewards through perseverance and thrift Short Term Orientation is directed at the past and present through respect for tradition, fulfilling social obligations and seeking immediate rewards 10 minutes with Hofstede on LTO/STO https: //www. youtube. com/watch? v=H 8 yg. YIGs. IQ 4 29

New Dimensions: Minkov & Hofstede: Indulgence vs. Restraint n n Integrating all presently available cross-cultural databases accessible to him, and without an a priori commitment to the five Hofstede dimensions, Michael Minkov defined three new dimensions, two of which cover issues that Hofstede’s five address only partially or not at all. Minkov labelled one of them Indulgence versus Restraint. Indulgence stands for a society which allows relatively free gratification of some desires and feelings, especially those that have to do with leisure, merrymaking with friends, spending, consumption and sex. Its opposite pole, Restraint, stands for a society which controls such gratification, and where people feel less able to enjoy their lives. 30

Hofsetede & Minkov: Monumentalism vs Self-Effacement (Flexumility) Index (MON) n n Monumentalism stands for a society which rewards people who are, metaphorically speaking, like monuments: proud and unchangeable. Its opposite pole, Self-Effacement, stands for a society which rewards humility and flexibility. The Monumentalism Index will probably be negatively correlated with the Long Term Orientation Index, but it includes aspects not covered by the latter. 31

Intra-national cultural regional (culture area) differences n n Culture areas exist in countries of all sizes and locations, but less so in countries such as Japan, Korea, and, surprisingly the USA. 32

ETHNOLINGUISTIC FRACTIONALISATION: https: //en. wikipedia. org/wiki/List_of_countries_ranked_by_et hnic_and_cultural_diversity_level Ethnic Fractionalization Linguistic Fractionalization Religious Fractionalization China 0. 15 0. 13 0. 66 India 0. 42 0. 81 0. 33 Japan 0. 01 0. 02 0. 54 Russian Federation 0. 25 0. 44 Country 33

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Naumov & Puffer (20, p. 714): Hofstede Score Means by Geographic Regions 36

The Siberian (Australian, American) Paradox. C CCC Samples from Chita, Siberia, and European Russia 37

By Grossgliederung_Europas. svg: Nord. Westderivative work: Dch (talk) - Grossgliederung_Europas. svg, CC BY-SA 3. 0, https: //commons. wikimedia. org/w/index. php? curid=8914026 38

Linguistic areas: Switzerland 39

Hofstede: Ch, De, Fr, It 40

End of oral presentation: For copy of PPT file contact: rlittrell@hse. ru 41

Comparison of some average dimension scores UAI PDI IDV MAS LTO_WVS Indulgence Monumentalism Latvia Ukraine Korea, South Russia Belarus Estonia 63 44 70 Lithuania Taiwan China Japan 9 16 32 93 21 60 40 60 30 69 86 75 81 81 82 65 69 30 92 82 93 87 88 83 85 60 18 39 95 93 39 36 42 58 80 54 60 17 20 46 19 45 66 95 40 84 93 77 76 74 74 74 65 62 56 52 46 42

Highest Indulgence Scores from Samples (Minkov used a difference scoring system than Hofstede’s) Indulgenc UAI PDI IDV MAS LTO_WVS e Ghana 4 435 Ghana Nigeria 13 435 Nigeria 0 432 Puerto Rico Venezuela 76 81 12 73 16 398 Venezuela Mexico 82 81 30 69 24 370 Mexico Costa Rica 86 35 15 21 369 Costa Rica Peru 87 64 16 42 25 243 43

Lowest Indulgence Scores UAI PDI IDV MAS LTO_WVS Indulgence 60 40 60 30 82 40 Estonia Ukraine 86 32 Ukraine Albania 61 24 Albania Estonia Russia 95 93 39 36 81 21 Russia Latvia 63 44 70 9 69 16 Latvia Pakistan 70 55 14 50 50 0 Pakistan 44

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Correlates of LTO/STO Dimension n n n n Short term Good and evil are absolute Concern with Truth Analytical thinking Weaker at mathematics Old age seen as a bad time but starting late Higher rates of imprisonment Spending rates Focus on bottom line Past and present economic stagnation n n n n Long term Good and evil are relative Concern with Virtue Synthetic thinking Better at mathematics Old age seen as a good time and starting early Lower rates of imprisonment Savings rates Aim at market position Past and present economic growth 46

Are there national management and leadership cultures ? n n In national cultures, all spheres of life and society are interrelated: family, school, job, religious practice, economic behavior, health, crime, punishment, art, science, literature, management, leadership Hofstede: There is no separate national management or leadership culture – management and leadership can only be understood as part of the larger culture 47

Review: Additional dimensions: Michael Minkov Video: About an hour: https: //www. youtube. com/watch? v=z. CR 1 cm 468 QE 48

Hofstede’s descriptions of expected behaviors and cultural traits as a function of cultural value scores and environment Hofstede, G. (1994) The business of international business is culture, International Business Review, 3(1), 1 -14. Cultural traits summarised from notes of Prof. & Dean Emeritus Charles H. Tidwell, Jr. , Ph. D Andrews University, Berrien Springs, MI, USA, and Adjunct Professor, Southern Adventist University, Collegedale, Tennessee, USA

Russia High (93) Small Power Distance Societies Large Power Distance Societies In the family: 1. Children encouraged to have a will of their own 2. Parents treated as equals 1. Children educated towards obedience to parents 2. Parents treated as superiors At school: 1. Student-centered education (student initiative) 2. Learning represents impersonal “truth” 1. Teacher-centered education (order) 2. Learning represents personal “wisdom” from teacher (expert, guru) At work place: 1. Hierarchy means an inequality of roles, established for convenience 2. Subordinates expect to be consulted 3. Ideal boss is resourceful democrat 1. Hierarchy means existential inequality 2. Subordinates expect to be told what to do 3. Ideal boss is benevolent autocrat (good father) 50

Traits: Power Distance in Societies Social Norms Political Work School High Power Distance those in power have privileges powerful people try to look as powerful as possible inequality the norm; everyone has specific place respect for authority military / autocratic / oligarchic government power struggle Low Power Distance all have equal rights powerful people try to look less powerful than they are inequality should be minimized; no set hierarchy respect for individuality little discussion / violence common much discussion, little violence tall organizational pyramids short organizational pyramids wide salary range from top to bottom narrow salary range from top to bottom subordinates expect to be told subordinates expect to be consulted government based on majority power sharing students dependent on teachers treat students as equals parents side with teachers to maintain parents may side with students against order teachers students treat teachers with respect – even students treat teachers as equals out of class 51

Russia: Low (Ind 39) Collectivist Societies Individualist Societies In the family: 1. 2. 3. 4. Education towards “we” 1. Education towards “I” consciousness Opinions pre-determined by group 2. Private, personal opinions Obligations to family or in-group: expected Harmony 3. Obligations to self: Respect Self-interest Shame Self actualization At school: Guilt Formal learning is for the young 1. Education can be lifelong only 2. Learn how to learn Learn how to do At work place: Value standards different for ingroup and out-groups: particularism Other people are seen as members of their group Relationship prevails over task Moral model of employer-employee relationship 1. Same value standards apply to all: universalism 2. Other people seen as potential resources 3. Task prevails over relationship 4. Calculative model of employer-employee relationship 52

Russia: Low (Ind 39) High Collectivism In Russia, despite a bureaucratic, multilevel approval structure in most organizations: n Successful business relations are based on personal contacts and networking. n Trust, based on good interpersonal relations, is a crucial element in business for the generation currently occupying higher executive positions. n Very often contracts and business goals are more relations- than results-oriented. 53

Russia: Low (Ind 39) High Collectivism Interpersonal relations: n n Prima facie, technocrats are direct, formal and show a lot of skepticism, especially at the first meeting. The only way to break the ice and to get into business is to build good personal relations with these post-soviet managers. 54

Generational expectations n n The younger people (those under 40), are less influenced by the Communist system, but older generations can still exhibit some characteristics, such as unwillingness to take responsibility, sticking to rules and needing authorization. It is important to keep in mind that Soviet generation technocrat specialists are real experts in their area of work. , creative, inventive and capable of finding solutions for almost any problem in a relatively short time. 55

The post-perestroika generation n n This group is often highly educated in western business practices, sometimes in western country business schools and tend to use Western work and management styles. They tend to be more punctual and taskoriented than their predecessors and share individualistic attitudes towards life. 56

The post-perestroika generation n New generations are more egalitarian and have greater trust of foreigners. More often than not, meetings with them are fairly informal and attendees are treated as equals. The show more respect to contract conditions, stick to time commitments and are usually more compromising negotiators. 57

Traits of: High Individualism National more economic development developed / wealthy modern industry, urbanization greater social mobility / larger middle class nuclear family Politics political power by voter laws / rights same for all Religion/ monotheistic Ideas individual conversion matter of fact about science / tech Work family relationships a disadvantage in hiring and promotion based on skill / rules School Other more working hours teachers deal with individuals students expected to speak up learn how to learn disability a handicap to overcome children take care of self as soon as possible security through insurance Low Individualism (collectivism) less economic development underdeveloped / poor more traditional agriculture less social mobility / smaller middle class extended family / tribe political power by interest groups law / rights depend on group polytheistic group conversions science / tech seen as magic relatives preferred in hiring and promotion take in-group status into account fewer working hours teachers deal with groups students expected to listen learn how to do disability a shame children maintain lifelong contacts with family security through social network 58

Masculinity: Russia Moderately Low: 36 Feminine Societies Masculine Societies In the family: 1. Stress on relationships 2. Solidarity 3. Resolution of conflicts by compromise and negotiation 1. Stress on achievement 2. Competition 3. Resolution of conflicts by fighting them out At school: 1. Average student is norm 2. System rewards student’s social adaptation 3. Student’s failure at school is relatively minor accident 1. Best students are norm 2. System rewards student’s academic performance 3. Student’s failure at school is disaster, may lead to suicide At work place: 1. Assertiveness ridiculed 2. Undersell yourself 3. Stress on life quality 4. Intuition 1. Assertiveness appreciated 2. Oversell yourself 3. Stress on careers 4. Decisiveness 59

Traits: Masculinity/ Femininity in Society Social Norms Politics and Economics Religion Work Family and School High Masculinity Low Masculinity (High Femininity) ego oriented relationship oriented money and things are important quality of life and people are important live in order to work in order to live economic growth high priority environment protection high priority conflict solved through force conflict solved through negotiation most important in life less important in life only men can be priests both men and women as priests larger gender wage gap smaller gender wage gap fewer women in management more women in management preference for higher pay preference for fewer working hours traditional family structure flexible family structure girls cry, boys don’t; boys fight, girls both boys and girls cry; neither fight don’t failing is a disaster failing a minor accident 60

UAI: Russia: High: 95 Weak Uncertainty Avoidance Societies Strong Uncertainty Avoidance Societies In the family: 1. What is different is ridiculous or 1. What is different is dangerous curious 2. Higher anxiety and stress 2. Ease, indolence, low stress 3. Showing of aggression and 3. Aggression and emotions not emotions accepted shown At school: 1. Students comfortable with: 2. Unstructured learning situations 3. Vague objectives 4. Broad assignments 5. No time tables 6. Teachers may say “I don’t know” 1. Students comfortable with: 2. Structured learning situations 3. Precise objectives 4. Detailed assignments 5. Strict time tables 6. Teachers should have all the answers At work place: 1. Dislike of rules, written or unwritten 2. Less formalization and standardization 1. Emotional need for rules, written or unwritten 2. More formalization and standardization 61

Traits, Uncertainty Avoidance in Societies High Uncertainty Avoidance Low Uncertainty Avoidance School teachers have all answers structured learning openness to change, innovation tolerance of diversity supress emotions high interest in politics citizen protest accepted fewer and general laws and regulations Protestant, Buddhism, Taoism, Hinduism little persecution for beliefs Avoid ritualization and ceremony teachers may say “don’t know” open-ended learning Family traditional gender roles fewer gender roles children taught world is hostile children taught world is benevolent Social Norms Politics / Legal System Religion conservatism, law and order xenophobic express emotions weak interest in politics citizen protest repressed more and specific laws and regulations Catholic, Islam, Judaism, Shintoism aggressively fundamentalist Ritualized / ceremonial 62

Long-Term / Short-Term Orientation Russia: High: 81 High Long Term Low Long Term (i. e. Short Term) emphasis on persistence emphasis on quick results relationships ordered by status not a major issue in relationships personal adaptability important personal steadfastness and stability important face considerations common but seen protection of one’s face is important as a weakness leisure time not too important leisure time important save, be thrifty spend invest in real estate invest in mutual funds relationships and market position important good or evil depends on circumstances bottom line important belief in absolutes about good and evil 63

In Hofstede (2002), the five dimensions of national cultures were related to expectations of behavior Reaction to the unfamiliar can influence openness to new ideas and new ways of doing things: Fight: Strong Uncertainty Avoidance Tolerate: Weak Uncertainty Avoidance 64

Geert Hofstede’s 7 -Dimension theory in 2008 • Indulgence vs. Restraint: Indulgence defines a society that allows relatively free gratification of some desires and feelings, especially those that have to do with leisure, merrymaking with friends, spending, consumption, and sex. Its opposite pole, • Restraint, defines a society which restricts such gratification, and where people feel less free and able to enjoy their lives. 65

• Indulgence vs. Restraint. Minkov (27, p. 114) specifies that at the societal level, happiness is associated with a perception of life control, with life control being a source of freedom and of leisure. • Societies with high means for Indulgence tend to co-mingle work and social activities, and generally have a less “serious” attitude toward work than societies with high means for Restraint. 66

Geert Hofstede’s 7 -Dimension theory in 2008 • Monumentalism vs. Flexumility (a created word, with the dimension name changed to Self Effacement by theorists): • Monumentalism is related to pride in self, national pride, making parents proud, and believing religion to be important, similar to Mc. Clelland’s (1961) concept of need for achievement 67

Geert Hofstede’s 7 -Dimension theory in 2008 • Monumentalism vs. Flexumility (a created word, with the dimension name changed to Self Effacement by theorists): • The Flexumility pole identifies societies valuing humility, with members seeing themselves as not having a stable, invariant self-concept, and a flexible attitude toward Truth. 68

n n End of presentation: further overheads may be reviewed if desired at www. crossculturalcentre. homestead. com Or by requesting from rlittrell@hse. ru 69

Hofstede Related to Business Practice 70

Hofstede - Individualism High emphasis on person n Low emphasis on group n creative ncreative person valued person is disruptive n initiative valued n conformity valued n 71

Planning in Russia n n Because of the relative unpredictability of the Russian economy and politics, most companies still prefer to make short-term plans on a yearly, quarterly and monthly basis. Plans are typically made to down, and then distributed to the heads of eachdepartment. There is not much information flow between different levels within an organization. The number of those in an organization who make important decisions individually, without consulting others, is rather high compared to European organizations. In total, one of the major shared features of the 77

Leadership in Russia n n One of the major shared features of the Russian business culture is a strong role of the company MD/CEO (often its founder) and his or her personality in planning and control. Leadership is usually based upon paternalistic, charismatic leadership, as this model is considered to be more flexible and adaptive than the Western, process-oriented model. 78

General conclusion from culture studies There is no such thing as a universal economic or psychological rationality NATIONALITY constrains RATIONALITY 79

http: //www. geerthofstede. com/ Further reading, Geert & Gert Jan Hofstede’s website

Hofstede Related to Business Practice 81

The business of international business is culture Hofstede, Geert (1994) “The Business of International Business is Culture”, International Business Review, Vol. 3, No. 1, pp. 1 -14. Hofstede, Geert (24) “The Business of International Business is Culture, Even More So!”, Academy of Management International Management Division Newsletter, December, pp. 1 -14. http: //division. aomonline. org/im/about/Newsletters/AOM_DEC 04. pdf 82

Hofstede: The Business of International Business is Culture, Even More So! n n The functioning of international business organizations hinges on intercultural communication and cooperation. Geert Hofstede: “As I wrote in 1994, managing international business means handling both national and organizational culture differences at the same time. ” 83

Hofstede: The Business of International Business is Culture, Even More So! n n Organizational cultures are somewhat manageable while national cultures are given facts for management; common organizational cultures across borders are what keeps multinationals together. 84

Hofstede: The Business of International Business is Culture, Even More So! n n n As tariff and technological advantages wear off, competition automatically shifts, besides towards economic factors, towards cultural advantages or disadvantages. No country and no organization can be good at everything; cultural strengths imply cultural weaknesses. This is a strong argument for making cultural considerations part of strategic planning, and locating activities in countries, in regions and in organizational units that possess the cultural characteristics necessary for competing in these activities. 85

Hofstede: The Business of International Business is Culture, Even More So! n n n Culture is present in the design and quality of products and in the presentation of services. In the 1980 s the belief spread that technology and modernity would lead to a worldwide convergence of consumers' needs and desires. This should enable global companies to develop standard brands with universal marketing and advertising programs. 86

Hofstede: The Business of International Business is Culture, Even More So! n n n In the 1990 s more and more voices in the marketing literature expressed doubts about this convergence, and referred to culture indices to explain persistent cultural differences. Analysing national consumer behaviour data over time, Dutch marketing expert Marieke de Mooij showed that actual buying and consumption patterns in affluent countries in the 1980 s and 90 s diverged as much as they converged. Affluence implies more possibilities to choose among products and services, and consumers‘ choices reflected psychological and social needs which are culture-bound. 87

Hofstede: The Business of International Business is Culture, Even More So! n n In advertising, the same global brand may appeal to different cultural themes in different countries. In general, what is a bicycle? n In Mexico? n In China? n In the USA? 88

Hofstede: The Business of International Business is Culture, Even More So! n n Advertising, and television advertising in particular, is directed at the inner motivation of prospective buyers whose minds have not been and will not be globalised. Organizations moving to unfamiliar cultural environments are often badly surprised by unexpected reactions of the press, the authorities or the public to what they do or want to do. 89

Hofstede: The Business of International Business is Culture, Even More So! n n Perhaps the effect of the collective values of a society is nowhere as clear as in these cases. The values are partly invisible to the newcomer, but they become all too visible in press reactions, government decisions, or organized actions by uninvited interest groups. 90

Nike Air n Muslims took offence at Nike’s “flaming air” logo in June, 1997 when the "flaming air“, claiming that the logo looked too similar to the Arabic form of God's name, "Allah". Nike pulled more than 382, 000 pairs of sneakers from the market. 91

Hofstede: The Business of International Business is Culture, Even More So! n n n Mergers, acquisitions, joint ventures and alliances across national borders have become quite frequent, but they remain a regular source of cross -cultural clashes. Cross-national ventures have often turned out to be dramatic failures. This will continue as long as management decisions about international ventures will be based solely on financial considerations. Those making the decision rarely imagine the operating problems that arise inside the newly formed hybrid organizations. 92

Hofstede: The Business of International Business is Culture, Even More So! n n Even within countries, such ventures have a dubious success record, but across borders they are even less likely to succeed. If cultural conditions do look favourable, the cultural integration of the new cooperative structure should still be managed; it does not happen by itself. Cultural integration takes lots of time, energy, and money. These are some of the implications of culture spelled out in the new, edition of my book “Cultures and Organizations: Software of the Mind”. 93

Culture Shock and Hofstede’s Power Distance n n Geert Hofstede (Culture’s Consequences, 1980, p. 21) studied culture within organizations. Part of his study was on the dependence relationship or Power Distance -- the extent to which the less powerful members of an organization expect and accept that power is distributed unequally. 94

Hofstede uses this story to illustrate Power Difference n n n The last revolution in Sweden disposed of King Gustav IV, whom they considered incompetent, and surprising invited Jean Baptise Bernadotte, a French general who served under Napoleon, to become their new King. He accepted and became King Charles XIV. Soon afterward he needed to address the Swedish Parliament. Wanting to be accepted, he tried to do the speech in their language. His broken Swedish amused the Swedes so much that they roared with laughter. 95

Culture Shock n n The Frenchman was so upset that he never tried to speak Swedish again. Bernadotte was a victim of culture shock - never in his French upbringing and military career had he experienced subordinates who laughed at the mistakes of their superior. This story has a happy ending as he was considered a very good king and ruled the country as a highly respected constitutional monarch until 1844 (his descendants still occupy the Swedish throne). 96