Module 04: Critical Thinking
Euro Disneyland
In the Euro Disneyland case study (p. 257 in the textbook), many of the issues Disney had from the start related to cultural challenges expanding into France. Using Hofstede’s four cultural dimensions as a point of reference, how would you make the following decisions using the Business Problem Solving Model in the course content?
Required:
Chapters 4 & 5 in International Management: Culture, Strategy, and Behavior
Chapter 4 PowerPoint slides
Chapter 4 PowerPoint slides – Alternative Formats
in International Management: Culture, Strategy, and Behavior
“In-Depth Integrative Case Study 2.1a: Euro Disneyland” (p. 257) in International Management: Culture, Strategy, and Behavior
Kotler, P., Manrai, L., Lascu, D., & Manrai, A. (2019).
Influence of country and company characteristics on international business decisions: A review, conceptual model, and propositions
. International Business Review, 28(3), 482-498.
Sobol, K., Cleveland, M., & Laroche, M. (2018).
Globalization, national identity, biculturalism and consumer behavior: A longitudinal study of Dutch consumers
. Journal of Business Research, 82, 340-353.
Recommended:
Botone, D., & Grama, B. (2018).
Cultural dimensions of openness as a personality factor
. Cross-Cultural Management Journal, XX(2), 139-145.
should meet the following requirements:
Important :
Format for responses to all questions (i.e., an introduction, middle paragraphs, headline (and conclusion).
Make sure to include all the key points within conclusion section, which is discussed in the assignment. Your way of conclusion should be logical, flows from the body of the paper, and reviews the major points.
I would like to see more depth for the question
International
Management
Culture, Strategy, and Behavior
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Chapter
4
THE MEANINGS AND
DIMENSIONS OF CULTURE
The World of International
Management
Culture Clashes in Cross-Border
Mergers and Acquisitions
I n one of the largest cross-border deals ever proposed, Belgian-Brazilian beverage giant ABInBev offered
US$104.2 billion to acquire British-owned SABMiller. Both
companies have multiple investments and brands in every major
beer market in the world. The merger brings ABInBev’s brands
of Budweiser, Busch, Corona, and Stella Artois together with
SABMiller’s brands of Miller, Foster, Grolsch, Peroni, Castle, and
Carlton, resulting in the largest beverage company on the globe.
The combined company will account for 30 percent of beer sales
worldwide and 60 percent of sales in the U.S. market. In late
2015, SABMiller’s shareholders agreed to the terms of the deal.1
Mergers and acquisitions are among the most challenging
strategic moves by companies seeking to grow their markets
and reap hoped-for efficiencies. Many cross-border mergers
and acquisitions have failed or experienced extreme difficulties
in the face of cultural differences that manifest in communica-
tion, work policies, compensation systems, and other aspects
of strategy and operations. These cultural differences can be
aggravated by geographic, institutional, and psychological
distance. With operations spanning the globe, and leadership
teams in both Latin America and Europe, the combined
ABInBev and SABMiller company will need to address the
interests of its culturally diverse constituencies.
Although both SABMiller and ABInBev have recent, extensive
experience with cross-border mergers and acquisitions, neither
company has been involved in a deal this large. How can this
integrated company fully realize the benefits of combining peo-
ple, production, and brands from diverse cultures? Will ABInBev
be able to achieve its aggressive sales goal of US$100 billion
annually by 2020? Looking at some past cross-border mergers,
both successful and failed, may provide some insight.
DuPont in
Denmark
When DuPont, the U.S.-based giant chemicals company, set out
to acquire Danisco, a Danish producer of food ingredients,
shareholders in Denmark initially voiced skepticism and disapproval.
To better understand the concerns of the Danish investment
community, DuPont sent executives to Copenhagen.2 Gaining
A major challenge of doing business internationally is to
respond and adapt effectively to different cultures. Such adap-
tation requires an understanding of cultural diversity, percep-
tions, stereotypes, and values. In recent years, a great deal of
research has been conducted on cultural dimensions and atti-
tudes, and the findings have proved useful in providing inte-
grative profiles of international cultures. However, a word of
caution must be given when discussing these country profiles.
It must be remembered that stereotypes and overgeneraliza-
tions should be avoided; there are always individual differ-
ences and even subcultures within every country.
This chapter examines the meaning of culture as it
applies to international management, reviews some of the
value differences and similarities of various national groups,
studies important dimensions of culture and their impact on
behavior, and examines country clusters. The specific objec-
tives of this chapter ar
e
1. DEFINE the term culture, and discuss some of the compar-
ative ways of differentiating cultures.
2. DESCRIBE the concept of cultural values, and relate some
of the international differences, similarities, and changes
occurring in terms of both work and managerial values.
3. IDENTIFY the major dimensions of culture relevant to
work settings, and discuss their effects on behavior in an
international environment.
4. DISCUSS the value of country cluster analysis and
relational orientations in developing effective international
management practices.
12
3
that would dictate a unified approach to planning, information
exchange, communication, and decision making. Executives
believed that a unified company culture—part American, part
German—would lead to a better working relationship between
employees and result in improved fiscal results for the com-
pany. After just a few months, however, continued cultural dif-
ficulty led executives to conclude that imposing a single
culture on its diverse workforce was a short-sighted strategy.
Engineers between the two companies continued to disagree
over quality and design, and personality conflicts persisted.
Americans found Germans to have an “attitude,” while Ger-
mans found Americans to be “chaotic.”8
In response to these failures, Daimler-Chrysler took a more
drastic approach to altering its operations. Rather than
attempting to impose the Daimler culture on Chrysler employ-
ees, individual business groups were permitted to adopt
whichever culture worked best for them. Essentially, two cul-
tures were allowed to persist at the merged company—those
of American Chrysler and of German Daimler. Though this
strategy worked well for groups that were located solely in the
United States or Germany, business divisions that spanned
both countries continued to face challenges. Communication
was often misinterpreted, and the approach to staffing was
questioned by executives on both sides.9
After a decade of struggle, the merger was ultimately
reversed. Daimler sold nearly its entire stake in Chrysler to an
American private equity group for a fraction of its original invest-
ment, and Chrylser entered bankruptcy proceedings just two
years later. Roland Klein, former manager of corporate commu-
nications at the merged Daimler-Chrysler, remarked that “Maybe
we should have had a cultural specialist to counsel us. But we
wanted to achieve the integration without outside help.”10
ABInBev’s Past Experiences
In many ways, ABInBev’s own history may provide the best
example of a previously successful cross-border merger. In 2008,
Belgian-Brazilian-based InBev acquired U.S.-based Anheuser
Busch, creating the world’s largest brewing company. InBev first
bid $65 per share for Anheuser Bush, which was initially
rejected. The final price agreed to was $
7
0 per share. With oper-
ations on every continent, the newly combined company had to
quickly adapt to diverse national and organizational culture back-
grounds. InBev’s organizational culture, heavily influenced by
AmBev, was described as “a work atmosphere reminiscent of an
athletic locker room . . . a culture that includes ferocious cost
an understanding of the cultural and business perspectives of
those shareholders through face-to-face, in-person meetings,
DuPont executives were able to determine that their original offer
was seen as offensively low. In response, DuPont adjusted its
offer, resulting in a 92 percent approval rate from Danisco’s
shareholders. Dupont’s CEO claims, “These face-to-face conver-
sations were critical for the actions we took next, and, ultimately,
for the successful outcome of the deal.”3
After the deal was complete, DuPont made culture a strong
focus of itsintegration efforts by first hosting a “Welcome Week”
with presentations to all employees about the new combined
firm, adjusted to local communication styles. After this week-
long celebration, designed to encourage excitement and positive
thinking, the company gauged successes and failures using reg-
ular pulse surveys. These surveys “created a heat map of poten-
tial geographic locations where there might be confusion or
miscommunication.”4 Anticipating and measuring potential
places of difficulty allowed managers to address issues as
quickly and transparently as possible, easing the integration pro-
cess. DuPont’s CEO reflected on the successful acquisition of
Danisco, saying, “If we didn’t execute and integrate well, and if
we didn’t get synergies quickly, it wouldn’t be a victory.”
5
DuPont’s careful, level-headed due diligence, strong com-
munication, and appreciation for Danisco’s corporate and
national cultures ultimately helped the firm evaluate the poten-
tial success of a combined business venture and avoided deal-
ending cultural conflicts. Forming the right deal and designing
an integration process with the goal of maximizing the value
of the deal provided the merging companies with the tools
necessary to optimize their combined value and avoid the pit-
falls of cultural miscommunications.
6
The Daimler-Chrysler Debacle
Looking at failed cross-border mergers can lend some valuable
insight as well. One classic case is that of Daimler-Chrysler,
two companies that came together in a US$36 billion acquisi-
tion that faced severe challenges from the start. Although it
was hailed as a historic “merger of equals,” enthusiasm dis-
solved in the face of cultural and personality clashes.7 From
the onset, German executives were uncomfortable with the
lack of protocol and loose structure at Chrysler. Conversely,
the American managers felt that their German bosses were too
formal and lacked any flexibility.
In its first attempt to resolve these issues, top leaders at
the company quickly worked to establish firm-wide processes
124 Part 2 The Role of Cultu
re
Our opening discussion in “The World of International Management” shows how culture
can have a great impact on mergers. For some companies, like DuPont and ABInBev,
early recognition of differences led to more successful company integration. National
cultural characteristics can strengthen, empower, and enrich management effectiveness
and success. MNCs that are aware of the potential positives and negatives of different
cultural characteristics will be better equipped to manage under both smooth and trying
times and environments.
■ The Nature of Culture
The word culture comes from the Latin cultura, which is related to cult or worship. In
its broadest sense, the term refers to the result of human interaction.16 For the purposes
of the study of international management, culture is acquired knowledge that people use
to interpret experience and generate social behavior.17 This knowledge forms values,
creates attitudes, and influences behavior. Most scholars of culture would agree on the
following characteristics of culture:
1. Learned. Culture is not inherited or biologically based; it is acquired by
learning and experience.
2. Shared. People as members of a group, organization, or society share culture;
it is not specific to single individuals.
3. Transgenerational. Culture is cumulative, passed down from one generation to
the next.
4. Symbolic. Culture is based on the human capacity to symbolize or use one
thing to represent another.
5. Patterned. Culture has structure and is integrated; a change in one part will
bring changes in another.
6. Adaptive. Culture is based on the human capacity to change or adapt, as
opposed to the more genetically driven adaptive process of animals.18
culture
Acquired knowledge that
people use to interpret
experience and generate
social behavior. This
knowledge forms values,
creates attitudes, and
influences behavior.
Going Forward
Companies from the same cultural clusters inherently understand
one another’s values, expectations of leadership, and communi-
cation styles better than people from different cultural clusters
would. With diligent planning and education of their workforce,
two firms from different organizational and national cultural back-
grounds, such as SABMiller and ABInBev, can still find success
through mergers or acquisitions. Although companies from differ-
ent geographic regions would not have an “inherent understand-
ing,” it is possible to replicate it through employee training and
strong leadership, as past mergers at DuPont and ABInBev dem-
onstrated. Managers and executives at a newly merged company
should educate its employees on the cultural differences of the
two joining firms, putting the combined company in a position to
leverage the merger as an opportunity to create a new corporate
culture that emphasizes elements and values common to both
companies’ national cultures while preserving, where necessary,
attributes of the distinct cultures of each.
Despite diversity among its British, Belgian, Brazilian, and
American roots, cultural commonalities and understanding may
help to propel the SABMiller and ABInBev merger forward. The
companies certainly face challenges ahead, but, as demon-
strated by past successes, proper management and careful
planning can maximize their chances for long-term success.
cutting and lucrative incentive-based compensation programs.”11
In contrast to this, Anheuser-Busch was known as a family-
friendly company founded in St. Louis in the 1800s with strong
emphasis on community involvement. Anheuser-Busch “won
numerous awards for its philanthropy, diversity, community
involvement, and employer of choice. The company was known
for luxurious executive offices and lots of perks, with six planes
and two helicopters to transport its employees.”12
It was clear to leadership that these two distinct cultures—
one very competitive and low cost, the other inclusive with many
expensive corporate reward systems—would create conflicts in
regards to communication, informal relationships between
employees, employee satisfaction, and mentorship.13 In response,
ABInBev formulated an integration plan that, among other
actions, led to the creation of a new board of directors for the
combined company, which included the current directors of the
InBev board, the Anheuser-Busch president and CEO, as well as
one other current or former director of the Anheuser-Busch
board. The management team consisted of executives from both
companies’ current leadership teams.14 Ultimately, the ABInBev
merger was a financial success, with EBITDA rising from 23 per-
cent to 38 percent in the three years following the deal. Despite
initial cultural clashes, this merger succeeded due to the recogni-
tion and education of these differences and the international
management experience of the company’s leaders.15
Chapter 4 The Meanings and Dimensions of Culture 1
25
Because different cultures exist in the world, an understanding of the impact of
culture on behavior is critical to the study of international management.19 If international
managers do not know something about the cultures of the countries they deal with, the
results can be quite disastrous. For example, a partner in one of New York’s leading
private banking firms tells the following story:
I traveled nine thousand miles to meet a client and arrived with my foot in my mouth. Deter-
mined to do things right, I’d memorized the names of the key men I was to see in Singapore.
No easy job, inasmuch as the names all came in threes. So, of course, I couldn’t resist showing
off that I’d done my homework. I began by addressing top man Lo Win Hao with plenty of
well-placed Mr. Hao’s—sprinkled the rest of my remarks with a Mr. Chee this and a Mr. Woon
that. Great show. Until a note was passed to me from one man I’d met before, in New York.
Bad news. “Too friendly too soon, Mr. Long,” it said. Where diffidence is next to godliness,
there I was, calling a room of VIPs, in effect, Mr. Ed and Mr. Charlie. I’d remembered every-
body’s name—but forgot that in Chinese the surname comes first and the given name last.20
■ Cultural Diversit
y
There are many ways of examining cultural differences and their impact on international
management. Culture can affect technology transfer, managerial attitudes, managerial ideol-
ogy, and even business-government relations. Perhaps most important, culture affects how
people think and behave. Table 4–1, for example, compares the most important cultural
values of the United States, Japan, and Arab countries. A close look at this table shows a
great deal of difference among these three cultures. Culture affects a host of business-related
activities, even including the common handshake. Here are some contrasting examples:
Culture Type of Handshake
United States Firm
Asian Gentle (shaking hands is unfamiliar and uncomfortable for some;
the exception is the Korean, who usually has a firm handshake)
British Soft
French Light and quick (not offered to superiors); repeated on arrival and departure
German Brusque and firm; repeated on arrival and departure
Latin American Moderate grasp; repeated frequently
Middle Eastern Gentle; repeated frequently
South Africa Light/soft; long and involved
Source: Lillian H. Chaney and Jeanette S. Martin, Intercultural Business Communication (Englewood Cliffs, NJ: Prentice Hall, 1995),
p. 115.
Table 4–1
Priorities of Cultural Values: United States, Japan,
and Arab Countries
United States Japan Arab Countries
1. Freedom 1. Belonging 1. Family security
2. Independence 2. Group harmony 2. Family harmony
3. Self-reliance 3. Collectiveness 3. Parental guidance
4. Equality 4. Age/seniority 4. Age
5. Individualism 5. Group consensus 5. Authority
6. Competition 6. Cooperation 6. Compromise
7. Efficiency 7. Quality 7. Devotion
8. Time 8. Patience 8. Patience
9. Directness 9. Indirectness 9. Indirectness
10. Openness 10. Go-between 10. Hospitality
Note: “1” represents the most important cultural value, “10” the least.
Source: Adapted from information found in F. Elashmawi and Philip R. Harris, Multicultural Management (Houston: Gulf
Publishing, 1993), p. 63.
126 Part 2 The Role of Culture
In overall terms, the cultural impact on international management is reflected by
basic beliefs and behaviors. Here are some specific examples where the culture of a
society can directly affect management approaches:
∙ Centralized vs. decentralized decision making. In some societies, top manag-
ers make all important organizational decisions. In others, these decisions are
diffused throughout the enterprise, and middle- and lower-level managers
actively participate in, and make, key decisions.
∙ Safety vs. risk. In some societies, organizational decision makers are
risk-averse and have great difficulty with conditions of uncertainty. In
others, risk taking is encouraged and decision making under uncertainty
is common.
∙ Individual vs. group rewards. In some countries, personnel who do outstand-
ing work are given individual rewards in the form of bonuses and commis-
sions. In others, cultural norms require group rewards, and individual rewards
are frowned on.
∙ Informal vs. formal procedures. In some societies, much is accomplished
through informal means. In others, formal procedures are set forth and
followed rigidly.
∙ High vs. low organizational loyalty. In some societies, people identify very
strongly with their organization or employer. In others, people identify with
their occupational group, such as engineer or mechanic.
∙ Cooperation vs. competition. Some societies encourage cooperation between
their people. Others encourage competition between their people.
∙ Short-term vs. long-term horizons. Some cultures focus most heavily on
short-term horizons, such as short-range goals of profit and efficiency.
Others are more interested in long-range goals, such as market share and
technological development.
∙ Stability vs. innovation. The culture of some countries encourages stability
and resistance to change. The culture of others puts high value on innovation
and change.
These cultural differences influence the way that international management should
be conducted.
Another way of depicting cultural diversity is through visually separating its com-
ponents. Figure 4–1 provides an example by using concentric circles. The outer ring
consists of the explicit artifacts and products of the culture. This level is observable and
consists of such things as language, food, buildings, and art. The middle ring contains
the norms and values of the society. These can be both formal and informal, and they
are designed to help people understand how they should behave. The inner circle contains
the implicit, basic assumptions that govern behavior. By understanding these assump-
tions, members of a culture are able to organize themselves in a way that helps them
increase the effectiveness of their problem-solving processes and interact well with each
other. In explaining the nature of the inner circle, Trompenaars and Hampden-Turner
have noted that
[t]he best way to test if something is a basic assumption is when the [situation] provokes
confusion or irritation. You might, for example, observe that some Japanese bow deeper
than others. . . . If you ask why they do it the answer might be that they don’t know but
that the other person does it too (norm) or that they want to show respect for authority
(value). A typical Dutch question that might follow is: “Why do you respect authority?”
The most likely Japanese reaction would be either puzzlement or a smile (which might be
hiding their irritation). When you question basic assumptions you are asking questions that
have never been asked before. It might lead others to deeper insights, but it also might
provoke annoyance. Try in the USA or the Netherlands to raise the question of why people
are equal and you will see what we mean.21
Chapter 4 The Meanings and Dimensions of Culture 12
7
The explicit artifacts and
products of the society
The norms and values
that guide the society
The implicit, basic
assumptions
that guide people’s
behavior
Figure 4–1
A Model of Culture
Source: Adapted from Fons Trompenaars and Charles Hampden-Turner, Riding the Waves of Culture: Understanding Diversity in
Global Business, 2nd ed. (New York: McGraw-Hill, 1998).
A supplemental way of understanding cultural differences is to compare culture
as a normal distribution, as in Figure 4–2, and then to examine it in terms of stereo-
typing, as in Figure 4–3. Chinese culture and American culture, for example, have
quite different norms and values. So the normal distribution curves for the two cul-
tures have only limited overlap. However, when one looks at the tail-ends of the two
curves, it is possible to identify stereotypical views held by members of one culture
about the other. The stereotypes are often exaggerated and used by members of one
culture in describing the other, thus helping reinforce the differences between the two
while reducing the likelihood of achieving cooperation and communication. This is
one reason why an understanding of national culture is so important in the study of
international management.
French culture
U.S. culture
Source: Revised and adapted from various sources, including Fons Trompenaars and Charles Hampden-Turner, Riding the Waves of
Culture: Understanding Diversity in Global Business, 2nd ed. (New York: McGraw-Hill, 1998), p. 25.
Figure 4–2
Comparing Cultures as
Overlapping Normal
Distributions
128 Part 2 The Role of Culture
■ Values in Culture
A major dimension in the study of culture is values. Values are basic convictions that
people have regarding what is right and wrong, good and bad, and important and unim-
portant. These values are learned from the culture in which the individual is reared, and
they help direct the person’s behavior. Differences in cultural values often result in
varying management practices.
Values in Transition
Do values change over time? Past research indicates that personal value systems are
relatively stable and do not change rapidly.22 However, changes are taking place in man-
agerial values as a result of both culture and technology. A good example is provided
by examining the effects of the U.S. environment on the cultural values of Japanese
managers working for Japanese firms in the United States. Researchers, focusing attention
on such key organizational values as lifetime employment, formal authority, group
orientation, seniority, and paternalism, found that
1. Lifetime employment is widely accepted in Japanese culture, but the stateside
Japanese managers did not believe that unconditional tenure in one organiza-
tion was of major importance. They did believe, however, that job security
was important.
2. Formal authority, obedience, and conformance to hierarchic position are very
important in Japan, but the stateside managers did not perceive obedience
and conformity to be very important and rejected the idea that one should
not question a superior. However, they did support the concept of formal
authority.
3. Group orientation, cooperation, conformity, and compromise are important
organizational values in Japan. The stateside managers supported these values
but also believed it was important to be an individual, thus maintaining a
balance between a group and a personal orientation.
values
Basic convictions that
people have regarding what
is right and wrong, good
and bad, and important and
unimportant.
French culture
How the Americans see the French:
• arrogant
• flamboyant
• hierarchical
• emotional
How the French see the Americans:
U.S. culture
• naive
• aggressive
• unprincipled
• workaholic
Source: Revised and adapted from various sources, including Fons Trompenaars and Charles Hampden-Turner, Riding the Waves of
Culture: Understanding Diversity in Global Business, 2nd ed. (New York: McGraw-Hill, 1998), p. 23.
Figure 4–3
Stereotyping from the
Cultural Extremes
Chapter 4 The Meanings and Dimensions of Culture 129
4. In Japan, organizational personnel often are rewarded based on seniority, not
merit. Support for this value was directly influenced by the length of time the
Japanese managers had been in the United States. The longer they had been
there, the lower their support for this value.
5. Paternalism, often measured by a manager’s involvement in both personal and
off-the-job problems of subordinates, is very important in Japan. Stateside
Japanese managers disagreed, and this resistance was positively associated
with the number of years they had been in the United States.23
There is increasing evidence that individualism in Japan is on the rise, indicating
that Japanese values are changing—and not just among managers outside the country.
The country’s long economic slump has convinced many Japanese that they cannot rely
on the large corporations or the government to ensure their future. They have to do it
for themselves. As a result, today a growing number of Japanese are starting to embrace
what is being called the “era of personal responsibility.” Instead of denouncing indi-
vidualism as a threat to society, they are proposing it as a necessary solution to many
of the country’s economic ills. A vice chair of the nation’s largest business lobby summed
up this thinking at the opening of a recent conference on economic change when he said,
“By establishing personal responsibility, we must return dynamism to the economy and
revitalize society.”24 This thinking is supported by past research, which reveals that a
culture with a strong entrepreneurial orientation is important to global competitiveness,
especially in the small business sector of an economy. This current trend may well be
helpful to the Japanese economy in helping it meet foreign competition at home.25
Other countries, such as China, have more recently undergone a transition of val-
ues. As discussed in Chapter 2, China is moving away from a collectivist culture, and it
appears as though even China is not sure what cultural values it will adhere to. Confu-
cianism was worshipped for over 2,000 years, but the powerful messages through Con-
fucius’s teachings were overshadowed in a world where profit became a priority. Now,
Confucianism is slowly gaining popularity once again, emphasizing respect for authority,
concern for others, balance, harmony, and overall order. While this may provide sanctu-
ary for some, it poses problems within the government because it will have to prove its
worthiness to remain in power. As long as China maintains economic momentum, despite
its recent slowdown, hope for a unified culture may be on the horizon.26
■ Cultural Dimensions
Understanding the cultural context of a society, and being able to respond and react
appropriately to cultural differences, is becoming increasingly important as the global
environment becomes more interconnected. Over the past several decades, researchers
have attempted to provide a composite picture of culture by examining its subparts, or
dimensions.
Hofstede
In 1980, Dutch researcher Geert Hofstede identified four original, and later two addi-
tional, dimensions of culture that help explain how and why people from various cultures
behave as they do.27 His initial data were gathered from two questionnaire surveys with
over 116,000 respondents from over 70 different countries around the world—making it
the largest organizationally based study ever conducted. The individuals in these studies
all worked in the local subsidiaries of IBM. As a result, Hofstede’s research has been
sometimes criticized because of its focus on just one company; however, samples for
cross-national comparison need not be representative, as long as they are functionally
equivalent. Because they are so similar in respects other than nationality (their employers,
their kind of work, and—for matched occupations—their level of education), employees
of multinational companies like IBM form attractive sources of information for comparing
130 Part 2 The Role of Culture
national traits. The only thing that can account for systematic and consistent differences
between national groups within such a homogeneous multinational population is nation-
ality itself—the national environment in which people were brought up before they joined
this employer. Comparing IBM subsidiaries therefore shows national culture differences
with unusual clarity.28 Despite being first published nearly 40 years ago, Hofstede’s mas-
sive study continues to be a focal point for additional research, including the most recent
GLOBE project, discussed at the end of this chapter.
The original four dimensions that Hofstede examined were (1) power distance,
(2) uncertainty avoidance, (3) individualism, and (4) masculinity.29 Further research by
Hofstede led to the recent identification of the fifth and sixth cultural dimensions: (5) time
orientation, identified in 1988, and (6) indulgence versus restraint, identified in 2010.30
Power Distance Power distance is “the extent to which less powerful members of
institutions and organizations accept that power is distributed unequally.”31 Countries
in which people blindly obey the orders of their superiors have high power distance. In
many societies, lower-level employees tend to follow orders as a matter of procedure. In
societies with high power distance, however, strict obedience is found even at the upper
levels; examples include Mexico, South Korea, and India. For example, a senior Indian
executive with a PhD from a prestigious U.S. university related the following story:
What is most important for me and my department is not what I do or achieve for the
company, but whether the [owner’s] favor is bestowed on me. . . . This I have achieved by
saying “yes” to everything [the owner] says or does. . . . To contradict him is to look for
another job. . . . I left my freedom of thought in Boston.32
The effect of this dimension can be measured in a number of ways. For exam-
ple, organizations in low-power-distance countries generally will be decentralized and
have flatter organization structures. These organizations also will have a smaller pro-
portion of supervisory personnel, and the lower strata of the workforce often will
consist of highly qualified people. By contrast, organizations in high-power-distance
countries will tend to be centralized and have tall organization structures. Organiza-
tions in high-power-distance countries will have a large proportion of supervisory
personnel, and the people at the lower levels of the structure often will have low job
qualifications. This latter structure encourages and promotes inequality between
people at different levels.33
Uncertainty Avoidance Uncertainty avoidance is “the extent to which people feel
threatened by ambiguous situations and have created beliefs and institutions that try to
avoid these.”34 Countries populated with people who do not like uncertainty tend to have
a high need for security and a strong belief in experts and their knowledge; examples
include Germany, Japan, and Spain. Cultures with low uncertainty avoidance have people
who are more willing to accept that risks are associated with the unknown and that life
must go on in spite of this. Examples include Denmark and Great Britain.
The effect of this dimension can be measured in a number of ways. Countries with
high-uncertainty-avoidance cultures have a great deal of structuring of organizational
activities, more written rules, less risk taking by managers, lower labor turnover, and
less ambitious employees.
Low-uncertainty-avoidance societies have organization settings with less structur-
ing of activities, fewer written rules, more risk taking by managers, higher labor turnover,
and more ambitious employees. The organization encourages personnel to use their own
initiative and assume responsibility for their actions.
Individualism We discussed individualism and collectivism in Chapter 2 in reference
to political systems. Individualism is the tendency of people to look after themselves
and their immediate family only.35 Hofstede measured this cultural difference on a bipolar
continuum with individualism at one end and collectivism at the other. Collectivism is
GLOBE (Global
Leadership and
Organizational Behavior
Effectiveness)
A multicountry study and
evaluation of cultural
attributes and leadership
behaviors among more than
17,000 managers from 951
organizations in 62
countries.
power distance
The extent to which less
powerful members of
institutions and
organizations accept that
power is distributed
unequally.
uncertainty avoidance
The extent to which people
feel threatened by ambiguous
situations and have created
beliefs and institutions that
try to avoid these.
individualism
The political philosophy that
people should be free to
pursue economic and
political endeavors without
constraint (Chapter 2); the
tendency of people to look
after themselves and their
immediate family only
(Chapter 4).
collectivism
The political philosophy that
views the needs or goals of
society as a whole as more
important than individual
desires (Chapter 2); the
tendency of people to belong
to groups or collectives and
to look after each other in
exchange for loyalty
(Chapter 4).
Chapter 4 The Meanings and Dimensions of Culture 131
the tendency of people to belong to groups or collectives and to look after each other in
exchange for loyalty.36
Like the effects of the other cultural dimensions, the effects of individualism
and collectivism can be measured in a number of different ways.37 Hofstede found
that wealthy countries have higher individualism scores and poorer countries higher
collectivism scores (see Table 4–2 for the 74 countries used in Figure 4–4 and sub-
sequent figures). Note that in Figure 4–4, the United States, Canada, Australia, France,
and the United Kingdom, among others, have high individualism and high GNP. Con-
versely, China, Mexico, and a number of South American countries have low indi-
vidualism (high collectivism) and low GNP. Countries with high individualism also
tend to have greater support for the Protestant work ethic, greater individual initiative,
and promotions based on market value. Countries with low individualism tend to have
less support for the Protestant work ethic, less individual initiative, and promotions
based on seniority.
Masculinity Masculinity is defined by Hofstede as “a situation in which the dom-
inant values in society are success, money, and things.”38 Hofstede measured this
masculinity
A cultural characteristic in
which the dominant values
in society are success,
money, and things.
Table 4–2
Countries and Regions Used in Hofstede’s Research
Arabic-speaking Ecuador
Panama
countries (Egypt, Estonia Peru
Iraq, Kuwait, Finland Philippines
Lebanon, Libya, France
Poland
Saudi Arabia, Germany
Portugal
United Arab Great Britain Romania
Emirates) Greece
Russia
Argentina Guatemala
Salvador
Australia Hong Kong
Serbia
Austria (China) Singapore
Bangladesh Hungary
Slovakia
Belgium Flemish India
Slovenia
(Dutch speaking) Indonesia South A
frica
Belgium Walloon Iran
Spain
(French speaking) Ireland Suriname
Brazil Israel Sweden
Bulgaria Italy Switzerland French
Canada Quebec Jamaica Switzerland German
Canada total Japan Taiwan
Chile Korea (South) Thailand
China Luxembourg Trinidad
Colombia Malaysia Turkey
Costa Rica Malta
United States
Croatia Mexico
Uruguay
Czech Republic Morocco Venezuela
Denmark Netherlands Vietnam
East Africa New Zealand West Africa
(Ethiopia, Kenya, Norway (Ghana, Nigeria,
Tanzania, Zambia) Pakistan Sierra Leone)
Source: From G. Hofstede and G. J. Hofstede, Cultures and Organizations: Software of the Mind, 2nd ed.
(New York: McGraw-Hill, 2005).
132 Part 2 The Role of Culture
dimension on a continuum ranging from masculinity to femininity. Contrary to some
stereotypes and connotations, femininity is the term used by Hofstede to describe “a
situation in which the dominant values in society are caring for others and the quality
of life.”39
Countries with a high masculinity index, such as the Germanic countries, place
great importance on earnings, recognition, advancement, and challenge. Individuals are
encouraged to be independent decision makers, and achievement is defined in terms of
recognition and wealth. The workplace is often characterized by high job stress, and
many managers believe that their employees dislike work and must be kept under some
degree of control. The school system is geared toward encouraging high performance.
Young men expect to have careers, and those who do not often view themselves as
failures. Historically, fewer women hold higher-level jobs, although this is changing. The
school system is geared toward encouraging high performance.
femininity
A cultural characteristic in
which the dominant values
in society are caring for
others and the quality of life.
Source: Original graphic by Ben Littell under supervision of Professor Jonathan Doh based on data from The World Bank and from
G. Hofstede and G. J. Hofstede, Cultures and Organizations: Software of the Mind, 2nd ed. (New York: McGraw-Hill, 2005).
Individualism Score
G
D
P
p
er
C
ap
it
a
in
U
S
$
Germany
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0 10 20 30 40 50 60 70 80 90 10
0
0
⬥
Russia ⬥
Peru ⬥
Bangladesh ⬥
Brazil ⬥
Mexico ⬥
Colombia ⬥
Singapore⬥
Australia⬥
USA⬥
Canada⬥
Belgium⬥
France⬥
Italy⬥
Japan⬥
South Korea⬥
Saudi Arabia⬥
Chile⬥
Venezuela⬥ Argentina⬥
India⬥
Nepal⬥
Indonesia⬥
China⬥
Thailand⬥
Spain⬥
United Kingdom
⬥
Figure 4–4
GDP per Capita in 2015
versus Individualism
Chapter 4 The Meanings and Dimensions of Culture 133
Countries with a low masculinity index (Hofstede’s femininity dimension), such as
Norway, tend to place great importance on cooperation, a friendly atmosphere, and employ-
ment security. Individuals are encouraged to be group decision makers, and achievement is
defined in terms of layman contacts and the living environment. The workplace tends to be
characterized by low stress, and managers give their employees more credit for being respon-
sible and allow them more freedom. Culturally, this group prefers small-scale enterprises,
and they place greater importance on conservation of the environment. The school system
is designed to teach social adaptation. Some young men and women want careers; others
do not. Many women hold higher-level jobs and do not find it necessary to be assertive.
Time Orientation Originally called Confucian Work Dynamism, time orientation is
defined by Hofstede as “dealing with society’s search for virtue.” Long-term-oriented
societies tend to focus on the future. They have the ability to adapt their traditions when
conditions change, have a tendency to save and invest for the future, and focus on achiev-
ing long-term results. Short-term-oriented cultures focus more on the past and present
than on the future. These societies have a deep respect for tradition, focus on achieving
quick results, and do not tend to save for the future.40 Hofstede’s original time orientation
research only included 23 countries, leading to some criticism. However, in 2010, the
research was expanded to include 93 countries. Table 4–3 highlights ten differences
between long- and short-term-oriented cultures.
Asian cultures primarily exhibit long-term orientation. Countries with a high long-
term orientation index include China, Japan, and Indonesia (see Figure 4–5). In these
cultures, individuals are persistent, thrifty with their money, and highly adaptable to
unexpected circumstances. Relationships tend to be ordered by status, which can affect
the way that situations are handled. Additionally, people in long-term-oriented cultures
are more likely to believe that there are multiple truths to issues that arise, rather than
just one, absolute answer.
Table 4–3
Ten Differences between Short- and Long-Term-
Oriented Societies
Short-Term Orientation Long-Term Orientation
Most important events in life occurred
in the past or take place now
Most important events in life will occur
in the future
Personal steadiness and stability: a good
person is always the same
A good person adapts to the circumstances
There are universal guidelines about
what are good and evil
What are good and evil depend on
the circumstances
Traditions are sacrosanct Traditions are adaptable to changed
circumstances
Family life is guided by imperatives Family life is guided by shared tasks
Supposed to be proud of one’s country Trying to learn from other countries
Service to others is an important goal Thrift and perseverance are important
goals
Social spending and consumption Large savings quote, funds available
for investment
Students attribute success and
failure to luck
Students attribute success to effort and
failure to lack of effort
Slow or no economic growth of
poor countries
Fast economic growth of countries up
until a level of prosperity
Source: From G. Hofstede, “Dimensionalizing Cultures: The Hofstede Model in Context,” Online Readings in Psychology and
Culture, Unit 2 (2011), http://scholarworks.gvsu.edu/orpc/vol2/iss1/8/.
134 Part 2 The Role of Culture
Spain, the USA, and the UK were identified as having a low long-term orientation
index (Hofstede’s short-term orientation). Individuals in short-term-oriented societies
believe in absolutes (good and evil), value stability and leisure time, and spend money
more freely. Traditional approaches are respected, and feedback cycles tend to be short.
Gift giving and greetings are shared and reciprocated.41
Indulgence versus Restraint Based on research related to relative happiness around
the world, Hofstede’s most recent dimension measures the freedom to satisfy one’s nat-
ural needs and desires within a society. Indulgent societies encourage instant gratification
of natural human needs, while restrained cultures regulate and control behavior based on
social norms.42 The research leading to the identification of this sixth dimension included
participants from 93 countries. Table 4–4 highlights ten differences between indulgent
and restrained cultures.
Countries that show a high indulgence index tend to be located in the Americas
and Western Europe, including the USA, Australia, Mexico, and Chile (see Figure 4–6).
Freely able to satisfy their basic human desires, individuals in these societies tend to live
in the moment. They participate in more sports and activities, express happiness freely,
and view themselves as being in control of their own destiny. Freedom of speech is
considered vital, and smaller police forces are commonplace. People in indulgent cultures
tend to view friendships as important, have less moral discipline, and exhibit a more
extroverted, positive personality.
Countries that show a low indulgence index (Hofstede’s dimension of high
restraint) tend to be located in Asia and Eastern Europe, including Egypt, Russia, India,
and China. In these societies, individuals participate in fewer activities and sports,
express less happiness, and believe that their own destiny is not in their control. Main-
taining order is seen as vital, resulting in larger police forces and less crime. People
tend to value work ethic over friendships, exhibit introverted personalities, and follow
a stricter moral discipline.43
Figure 4–5
Countries with Very High
Long-Term and Short-Term
Orientation Scores
High Short-Term
High Long-Term
Note: Country rankings were completed using Geert Hofstede’s Long-Term Orientation (LTO) scores. High Short-Term refers to
countries with scores less than 35 and High Long-Term refers to countries with scores greater than 60.
Source: Original graphic by Ben Littell under supervision of Professor Jonathan Doh based on data from Geert Hofstede,
“Dimensionalizing Cultures: The Hofstede Model in Context,” Online Readings in Psychology and Culture, Unit 2 (2011),
http://scholarworks.gvsu.edu/orpc/vol2/iss1/8/.
Chapter 4 The Meanings and Dimensions of Culture 1
35
Table 4–4
Ten Differences between Indulgent and Restrained Societies
Indulgent Restrained
Higher percentage of people declar-
ing themselves very happy
Fewer very happy people
A perception of personal life control A perception of helplessness: what
happens to me is not my own doin
g
Freedom of speech seen as important Freedom of speech is not a primary
concern
Higher importance of leisure Lower importance of leisure
More likely to remember positive
emotions
Less likely to remember positive
emotions
In countries with educated popula-
tions, higher birthrates
In countries with educated populations,
lower birthrates
More people actively involved in
sports
Fewer people actively involved in sports
In countries with enough food, higher
percentages of obese people
In countries with enough food, fewer
obese people
In wealthy countries, lenient sexual
norms
In wealthy countries, stricter sexual
norms
Maintaining order in the nation is not
given a high priority
Higher number of police officers per
100,000 population
Source: From Geert Hofstede, “Dimensionalizing Cultures: The Hofstede Model in Context,” Online Readings in Psychology
and Culture, Unit 2 (2011), http://scholarworks.gvsu.edu/orpc/vol2/iss1/8/.
High Indulgence
High Restraint
Note: Country rankings were completed using Geert Hofstede’s Indulgence versus Restraint (IVR) scores. High Indulgence refers to
countries with scores greater than 50 and High Restraint refers to countries with scores less than 25.
Source: Original graphic by Ben Littell under supervision of Professor Jonathan Doh based on data from Geert Hofstede,
“Dimensionalizing Cultures: The Hofstede Model in Context,” Online Readings in Psychology and Culture, Unit 2 (2011),
http://scholarworks.gvsu.edu/orpc/vol2/iss1/8/.
Figure 4–6
Countries with Very High
Indulgence and Restraint
Scores
136 Part 2 The Role of Culture
Integrating the Dimensions A description of the four original and two additional
dimensions of culture is useful in helping to explain the differences between various
countries, and Hofstede’s research has extended beyond this focus and shown how
countries can be described in terms of pairs of dimensions. In Hofstede’s and later
research, pairings and clusters can provide useful summaries for international
managers. It is always best to have an in-depth understanding of the multicultural
environment, but the general groupings outline common ground that one can use as
a starting point. Figure 4–7, which incorporates power distance and individualism,
provides an example.
Upon first examination of the cluster distribution, the data may appear confus-
ing. However, they are very useful in depicting what countries appear similar in
values and to what extent they differ from other country clusters. The same countries
are not always clustered together in subsequent dimension comparisons. This indicates
Figure 4–7
Power Distance versus
Individualism
I
n
d
iv
id
u
al
is
m
(I
D
V
)
in
d
iv
id
u
al
is
t
Power Distance (PDI)small large
co
lle
ct
iv
is
t
5
85
75
65
55
45
35
25
15
95
10 30 50 70 90 110
Guatemala
Ecuador
Bang
lades
h
Pakis
tan
Chin
a,
Thail
and
Jap
a
n
Hong
Kong
Singa
pore
Mala
ysia
Philip
pines
India
Moro
cco
Arab
ctrs
S. Ko
rea
Taiw
an Vietn
am
W A
frica
E Afr
ica
Iran
Indon
esia
Colombia
Portugal
CroatiaGreece
Slovakia
S. Africa
Israel
Malta
Finland
Ireland France
Austria
Canada total
Canada Quebec
Poland
Hungary
Italy
Belgium NI
Belgium Fr
Sweden
Germany
Denmark
Switzerland Ge
Switzerland Fr
Norway
Netherlands
Great Britain
United States
New Zealand
Australia
Estonia, Luxembourg
Czech Rep.
Spain
Russia
Romania
Bulgaria
Slovenia
Serbia
Argentina
Suriname
Jamaica Brazil
Salvador
Chile
Uruguay
Mexico
Peru
Trinidad
Costa Rica
PanamaVenezuela
slant
e
d
regular Europe and Anglo countries
Asia and Muslim countries
quadrant partition lines
Latin America
Legend
italics
Turke
y
⬥
⬥
⬥
⬥
⬥⬥
⬥
⬥
⬥
⬥ ⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥⬥
⬥
⬥
⬥
⬥ ⬥ ⬥ ⬥
⬥
⬥ ⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥
⬥ ⬥
⬥
⬥
⬥
⬥
⬥
Source: From G. Hofstede and G. J. Hofstede, Cultures and Organizations: Software of the Mind, 2nd ed. (New York: McGraw-Hill,
2005).
Chapter 4 The Meanings and Dimensions of Culture 137
that while some beliefs overlap between cultures, it is where they diverge that makes
groups unique to manage.
In Figure 4–7, the United States, Australia, Canada, Britain, Denmark, and New
Zealand are located in the lower-left-hand quadrant. Americans, for example, have very
high individualism and relatively low power distance. They prefer to do things for them-
selves and are not upset when others have more power than they do. The other countries,
while they may not be a part of the same cluster, share similar values. Conversely, many
of the underdeveloped or newly industrialized countries, such as Colombia, Hong Kong,
Portugal, and Singapore, are characterized by large power distance and low individual-
ism. These nations tend to be collectivist in their approach.
Similarly, Figure 4–8 plots the uncertainty-avoidance index against the power-
distance index. Once again, there are clusters of countries. Many of the Anglo nations
tend to be in the upper-left-hand quadrant, which is characterized by small power distance
Figure 4–8
Power Distance versus
Uncertainty Avoidance
U
n
c
e
rt
a
in
ty
A
vo
id
a
n
ce
(
U
A
I)
st
r
o
n
g
Power Distance (PDI)small large
w
e
a
k
5
85
95
75
65
55
45
35
25
15
115
105
10 30 50 70 90 110
Guatemala⬥
family
pyramid
market
machine
Chin
a
⬥
Thail
and⬥
Japa
n
⬥
Hong
Kong
⬥
Singa
pore
⬥
Mala
ysia
⬥
Philip
pines
⬥
India⬥
Moro
cco
⬥
Bang
lades
h
⬥
Arab
ctrs
⬥
S. Ko
rea
⬥
Taiw
an
⬥
Viet
nam
⬥
W A
frica
⬥
E Af
rica
⬥
Iran⬥
Indon
esia
⬥
Pakis
tan
⬥
Colombia
⬥
Portugal⬥
Croatia⬥
Greece⬥
Slovakia
⬥
S. Africa
⬥
Israel⬥
Malta
⬥
Finland
⬥
Ireland
⬥
France⬥
Austria⬥
Canada total ⬥
Canada Quebec⬥
Poland⬥
Hungary⬥
Italy
⬥
Belgium NI⬥
Belgium Fr
⬥
Sweden⬥
Germany⬥
Denmark⬥
Switzerland Ge
⬥
Switzerland Fr
⬥
Ecuador
⬥
Norway
⬥
Netherlands
⬥
Great Britain
⬥
United States
⬥
New Zealand
⬥
Australia⬥
Estonia⬥
Luxembourg
⬥
Czech Rep.⬥
Spain⬥
Russia⬥
Romania⬥
Bulgaria⬥
Slovenia
⬥
Serbia⬥
Argentina
⬥
Suriname
⬥
Jamaica ⬥
Brazil⬥
Salvador
⬥
Chile
⬥
Uruguay⬥
Mexico⬥
Peru
⬥
Trinidad
⬥
Costa Rica ⬥ Panama⬥
Venezuela⬥
slant
ed
regular Europe and Anglo countries
Asia and Muslim countries
quadrant partition lines
Latin America
Legend
italics
⬥
Turke
y
Source: From G. Hofstede and G. J. Hofstede, Cultures and Organizations: Software of the Mind, 2nd ed. (New York: McGraw-Hill,
2005).
138 Part 2 The Role of Culture
and weak uncertainty avoidance, while, in contrast, many Latin, Mediterranean, and
Asian nations are characterized by high power distance and strong uncertainty avoidance.
The integration of these cultural factors into two-dimensional plots helps illustrate
the complexity of understanding culture’s effect on behavior. A number of dimensions
are at work, and sometimes they do not all move in the anticipated direction. For exam-
ple, at first glance, a nation with high power distance would appear to be low in indi-
vidualism, and vice versa, and Hofstede found exactly that (see Figure 4–7). However,
low uncertainty avoidance does not always go hand in hand with high masculinity, even
though those who are willing to live with uncertainty will want rewards such as money
and power and accord low value to the quality of work life and caring for others (see
Figure 4–9). Simply put, empirical evidence on the impact of cultural dimensions may
differ from commonly held beliefs or stereotypes. Research-based data are needed to
determine the full impact of differing cultures.
Figure 4–9
Masculinity versus
Uncertainty Avoidance
U
n
ce
rt
a
in
ty
A
vo
id
a
n
ce
(
U
A
I)
st
ro
n
g
Masculinity (MAS)feminine masculine
w
e
a
k
5
85
95
75
65
55
45
35
25
15
115
105
5 25 54 65 85
Guatemala ⬥
Chin
a
⬥
Thail
and
⬥
Japa
n ⬥
Hong
Kong
⬥
Singa
pore
⬥
Mala
ysia
⬥
Philip
pines
⬥
India⬥
Moro
cco
Bang
lades
h
⬥
Arab
ctrs,
⬥
S. Ko
rea
⬥
Taiw
an ⬥
Viet
nam
⬥
W A
frica
⬥E
Afri
ca ⬥
Iran⬥
Indon
esia⬥
Pakis
tan
⬥
Colombia⬥
Portugal⬥
Croatia
⬥
Greece
⬥
Slovakia (110) ⬥
S. Africa⬥
Israel
⬥
Malta
⬥
Finland ⬥
Ireland⬥
France⬥
Austria⬥
Canada total
⬥
Canada Quebec
⬥
Poland⬥
Hungary⬥
Italy
⬥
Belgium NI ⬥
Belgium Fr
⬥
Sweden⬥
Germany⬥
Denmark⬥
Switzerland Ge⬥
Switzerland Fr⬥
Ecuador⬥
Norway⬥
Netherlands⬥
Great Britain
⬥
United States⬥
New Zealand
⬥
Australia⬥
Estonia
⬥
Luxembourg,
Czech Rep.⬥
Spain
⬥
Russia ⬥
Romania ⬥
Bulgaria
⬥
Slovenia
⬥
Serbia⬥
Argentina
⬥
Suriname ⬥
Jamaica⬥
Brazil⬥
Salvador⬥
Chile
⬥
Uruguay⬥
Mexico⬥
Peru ⬥
Trinidad⬥
Costa Rica ⬥
Panama
⬥
Venezuela⬥
slant
ed
regular Europe and Anglo countries
Asia and Muslim countries
quadrant partition lines
Latin America
Legend
italics
⬥
Turke
y
Source: From G. Hofstede and G. J. Hofstede, Cultures and Organizations: Software of the Mind, 2nd ed. (New York: McGraw-Hill,
2005).
Chapter 4 The Meanings and Dimensions of Culture 139
The Hofstede cultural dimensions and country clusters are widely recognized and
accepted in the study of international management. His work has served as a springboard
to numerous recent cultural studies and research projects.
Trompenaars
In 1994, another Dutch researcher, Fons Trompenaars, expanded on the research of
Hofstede and published the results of his own ten-year study on cultural dimensions.44
He administered research questionnaires to over 15,000 managers from 28 countries and
received usable responses from at least 500 in each nation; the 23 countries in his
research are presented in Table 4–5. Building heavily on value orientations and the rela-
tional orientations of well-known sociologist Talcott Parsons,45 Trompenaars derived five
relationship orientations that address the ways in which people deal with each other;
these can be considered to be cultural dimensions that are analogous to Hofstede’s dimen-
sions. Trompenaars also looked at attitudes toward both time and the environment, and
the result of his research is a wealth of information helping explain how cultures differ
and offering practical ways in which MNCs can do business in various countries. The
following discussion examines each of the five relationship orientations as well as
attitudes toward time and the environment.46
Universalism vs. Particularism Universalism is the belief that ideas and practices can
be applied everywhere without modification. Particularism is the belief that circum-
stances dictate how ideas and practices should be applied. In cultures with high univer-
salism, the focus is more on formal rules than on relationships, business contracts are
adhered to very closely, and people believe that “a deal is a deal.” In cultures with high
universalism
The belief that ideas and
practices can be applied
everywhere in the world
without modification.
particularism
The belief that
circumstances dictate how
ideas and practices should
be applied and that
something cannot be done
the same everywhere.
Table 4–5
Trompenaars’s Country Abbreviations
Abbreviation Country
ARG Argentina
AUS Austria
BEL Belgium
BRZ Brazil
CHI China
CIS Former Soviet Union
CZH Former Czechoslovakia
FRA France
GER Germany (excluding former East Germany)
HK Hong Kong
IDO Indonesia
ITA Italy
JPN Japan
MEX Mexico
NL Netherlands
SIN Singapore
SPA Spain
SWE Sweden
SWI Switzerland
THA Thailand
UK United Kingdom
USA United States
VEN Venezuela
140 Part 2 The Role of Culture
particularism, the focus is more on relationships and trust than on formal rules. In a
particularist culture, legal contracts often are modified, and as people get to know each
other better, they often change the way in which deals are executed. In his early research,
Trompenaars found that in countries such as the United States, Australia, Germany,
Sweden, and the United Kingdom, there was high universalism, while countries such as
Venezuela, the former Soviet Union, Indonesia, and China were high on particularism.
Figure 4–10 shows the continuum.
In follow-up research, Trompenaars and Hampden-Turner presented the respon-
dents with a dilemma and asked them to make a decision. Here is one of these dilemmas
along with the national scores of the respondents:47
You are riding in a car driven by a close friend. He hits a pedestrian. You know he was
going at least 35 miles per hour in an area of the city where the maximum allowed speed
is 20 miles per hour. There are no witnesses. His lawyer says that if you testify under oath
that he was driving 20 miles per hour it may save him from serious consequences. What
right has your friend to expect you to protect him?
a. My friend has a definite right as a friend to expect me to testify to the lower figure.
b. He has some right as a friend to expect me to testify to the lower figure.
c. He has no right as a friend to expect me to testify to the lower figure.
With a high score indicating strong universalism (choice c) and a low score indicat-
ing strong particularism (choice a), here is how the different nations scored:
Figure 4–10
Trompenaars’s
Relationship Orientations
on Cultural Dimensions
Individualism vs.
Communitarianism
Individualism
Sin
Communitarianism
ThaJpnIdoFraChiGerHK ItaVenBelSwiBrzSpa
NL
Swe
Aus
UKArg
CIS
Mex
CzhUSA
Achievement vs. Ascription
Achievement Ascription
Aus USA Ger Arg Tha Bel Fra Ita
Brz
NL
HK
Spa Jpn Czh Sin CIS Chi Ido VenSwi
UK
Swe
Mex
Specific vs. Di�use
Specific Di�use
Aus UK USA
Swi
Fra NL Bel Brz Czh Ido Spa Chi VenHK
Sin
Swe
CIS
Tha
Arg
Jpn
Mex
Ita
Ger
Neutral vs. Emotional
Neutral Emotional
Jpn UK Sin Aus Ido HK Tha Bel
Ger
Swe
Arg
USA
Czh
Fra
Spa Ita
Ven
CIS Brz Chi Swi NL Mex
Universalism
Universalism vs.
Particularism
Particularism
USA Aus Ger
Swi
Swe UK NL Czh Ita Bel Brz Fra Jap
Sin
Arg Mex Tha HK Chi Ido CIS Ven
Source: Adapted from information found in Fons Trompenaars, Riding the Waves of Culture (New York: Irwin, 1994); Charles
Hampden-Turner and Fons Trompenaars, “A World Turned Upside Down: Doing Business in Asia,” in Managing Across Cultures:
Issues and Perspectives, ed. Pat Joynt and Malcolm Warner (London: International Thomson Business Press, 1996), pp. 275–305.
Chapter 4 The Meanings and Dimensions of Culture 141
Universalism (no right)
Canada 96
United States 95
Germany 90
United Kingdom 90
Netherlands 88
France 68
Japan 67
Singapore 67
Thailand 63
Hong Kong 56
Particularism (some or definite right)
China 48
South Korea 26
As noted earlier, respondents from universalist cultures (e.g., North America and
Western Europe) felt that the rules applied regardless of the situation, while respondents
from particularist cultures were much more willing to bend the rules and help their friend.
Based on these types of findings, Trompenaars recommends that when individuals
from particularist cultures do business in a universalistic culture, they should be prepared
for rational, professional arguments and a “let’s get down to business” attitude. Con-
versely, when individuals from universalist cultures do business in a particularist environ-
ment, they should be prepared for personal meandering or irrelevancies that seem to go
nowhere and should not regard personal, get-to-know-you attitudes as mere small talk.
Individualism vs. Communitarianism Individualism and communitarianism are key
dimensions in Hofstede’s earlier research. Although Trompenaars derived these two
relationships differently than Hofstede does, they still have the same basic meaning,
although in his more recent work Trompenaars has used the word communitarianism
rather than collectivism. For him, individualism refers to people regarding themselves as
individuals, while communitarianism refers to people regarding themselves as part of a
group, similar to the political groupings discussed in Chapter 2. As shown in Figure 4–10,
the United States, former Czechoslovakia, Argentina, the former Soviet Union (CIS), and
Mexico have high individualism.
In his most recent research, Trompenaars posed the following situation. If you were
to be promoted, which of the two following issues would you emphasize most: (a) the
new group of people with whom you will be working or (b) the greater responsibility of
the work you are undertaking and the higher income you will be earning? The following
reports the scores associated with the individualism of option b—greater responsibility
and more money.48
communitarianism
Refers to people regarding
themselves as part of a
group.
Individualism (emphasis on larger responsibili-
ties and more income)
Canada 77
Thailand 71
United Kingdom 69
United States 67
Netherlands 64
France 61
Japan 61
China 54
Singapore 50
Hong Kong 47
Communitarianism (emphasis on the new group
of people)
Malaysia 38
Korea 32
142 Part 2 The Role of Culture
These findings are somewhat different from those presented in Figure 4–10 and
show that cultural changes may be occurring more rapidly than many people realize. For
example, findings show Thailand very high on individualism (possibly indicating an
increasing entrepreneurial spirit/cultural value), whereas the Thais were found to be low
on individualism a few years before, as shown in Figure 4–10. At the same time, it is
important to remember that there are major differences between people in high-
individualism societies and those in high-communitarianism societies. The former stress
personal and individual matters; the latter value group-related issues. Negotiations in
cultures with high individualism typically are made on the spot by a representative, peo-
ple ideally achieve things alone, and they assume a great deal of personal responsibility.
In cultures with high communitarianism, decisions typically are referred to committees,
people ideally achieve things in groups, and they jointly assume responsibility.
Trompenaars recommends that when people from cultures with high individualism
deal with those from communitarianistic cultures, they should have patience for the time
taken to consent and to consult, and they should aim to build lasting relationships. When
people from cultures with high communitarianism deal with those from individualistic
cultures, they should be prepared to make quick decisions and commit their organization
to these decisions. Also, communitarianists dealing with individualists should realize that
the reason they are dealing with only one negotiator (as opposed to a group) is that this
person is respected by his or her organization and has its authority and esteem.
Neutral vs. Emotional A neutral culture is one in which emotions are held in check.
As seen in Figure 4–10, both Japan and the United Kingdom are high-neutral cultures.
People in these countries try not to show their feelings; they act stoically and maintain
their composure. An emotional culture is one in which emotions are openly and natu-
rally expressed. People in emotional cultures often smile a great deal, talk loudly when
they are excited, and greet each other with a great deal of enthusiasm. Mexico, the
Netherlands, and Switzerland are examples of high emotional cultures.
Trompenaars recommends that when individuals from emotional cultures do busi-
ness in neutral cultures, they should put as much as they can on paper and submit it to
the other side. They should realize that lack of emotion does not mean a lack of inter-
est or boredom, but rather that people from neutral cultures do not like to show their
hand. Conversely, when those from neutral cultures do business in emotional cultures,
they should not be put off stride when the other side creates scenes or grows animated
and boisterous, and they should try to respond warmly to the emotional affections of
the other group.
Specific vs. Diffuse A specific culture is one in which individuals have a large pub-
lic space they readily let others enter and share and a small private space they guard
closely and share with only close friends and associates. A diffuse culture is one in
which public space and private space are similar in size and individuals guard their
public space carefully because entry into public space affords entry into private space as
well. As shown in Figure 4–10, Austria, the United Kingdom, the United States, and
Switzerland all are specific cultures, while Venezuela, China, and Spain are diffuse
cultures. In specific cultures, people often are invited into a person’s open, public space;
individuals in these cultures often are open and extroverted; and there is a strong separa-
tion of work and private life. In diffuse cultures, people are not quickly invited into a
person’s open, public space because once they are in, there is easy entry into the private
space as well. Individuals in these cultures often appear to be indirect and introverted,
and work and private life often are closely linked.
An example of these specific and diffuse cultural dimensions is provided by the
United States and Germany. A U.S. professor, such as Robert Smith, PhD, generally
would be called “Doctor Smith” by students when at his U.S. university. When shop-
ping, however, he might be referred to by the store clerk as “Bob,” and when golfing,
Bob might just be one of the guys, even to a golf partner who happens to be a
neutral culture
A culture in which emotions
are held in check.
emotional culture
A culture in which emotions
are expressed openly and
naturally.
specific culture
A culture in which
individuals have a large
public space they readily
share with others and a
small private space they
guard closely and share
with only close friends and
associates.
diffuse culture
A culture in which public
space and private space are
similar in size and
individuals guard their
public space carefully
because entry into public
space affords entry into
private space as well.
Chapter 4 The Meanings and Dimensions of Culture 143
graduate student in his department. The reason for these changes in status is that, with
the specific U.S. cultural values, people have large public spaces and often conduct
themselves differently depending on their public role. In high-diffuse cultures, on the
other hand, a person’s public life and private life often are similar. Therefore, in
Germany, Herr Professor Doktor Schmidt would be referred to that way at the uni-
versity, local market, and bowling alley—and even his wife might address him for-
mally in public. A great deal of formality is maintained, often giving the impression
that Germans are stuffy or aloof.
Trompenaars recommends that when those from specific cultures do business in
diffuse cultures, they should respect a person’s title, age, and background connections,
and they should not get impatient when people are being indirect or circuitous. Con-
versely, when individuals from diffuse cultures do business in specific cultures, they
should try to get to the point and be efficient, learn to structure meetings with the judi-
cious use of agendas, and not use their titles or acknowledge achievements or skills that
are irrelevant to the issues being discussed.
Achievement vs. Ascription An achievement culture is one in which people are
accorded status based on how well they perform their functions. An ascription culture
is one in which status is attributed based on who or what a person is. Achievement
cultures give high status to high achievers, such as the company’s number-one salesper-
son or the medical researcher who has found a cure for a rare form of bone cancer.
Ascription cultures accord status based on age, gender, or social connections. For ex-
ample, in an ascription culture, a person who has been with the company for 40 years
may be listened to carefully because of the respect that others have for the individual’s
age and longevity with the firm, and an individual who has friends in high places may
be afforded status because of whom she knows. As shown in Figure 4–10, Austria, the
United States, Switzerland, and the United Kingdom are achievement cultures, while
Venezuela, Indonesia, and China are ascription cultures.
Trompenaars recommends that when individuals from achievement cultures do
business in ascription cultures, they should make sure that their group has older, senior,
and formal position holders who can impress the other side, and they should respect the
status and influence of their counterparts in the other group. Conversely, he recommends
that when individuals from ascription cultures do business in achievement cultures, they
should make sure that their group has sufficient data, technical advisers, and knowledge-
able people to convince the other group that they are proficient, and they should respect
the knowledge and information of their counterparts on the other team.
Time Aside from the five relationship orientations, another major cultural difference
is the way in which people deal with the concept of time. Trompenaars has identified
two different approaches: sequential and synchronous. In cultures where sequential ap-
proaches are prevalent, people tend to do only one activity at a time, keep appointments
strictly, and show a strong preference for following plans as they are laid out and not
deviating from them. In cultures where synchronous approaches are common, people
tend to do more than one activity at a time, appointments are approximate and may be
changed at a moment’s notice, and schedules generally are subordinate to relationships.
People in synchronous-time cultures often will stop what they are doing to meet and
greet individuals coming into their office.
A good contrast is provided by the United States, Mexico, and France. In the United
States, people tend to be guided by sequential-time orientation and thus set a schedule
and stick to it. Mexicans operate under more of a synchronous-time orientation and thus
tend to be much more flexible, often building slack into their schedules to allow for
interruptions. The French are similar to the Mexicans and, when making plans, often
determine the objectives they want to accomplish but leave open the timing and other
factors that are beyond their control; this way, they can adjust and modify their approach
as they go along. As Trompenaars noted, “For the French and Mexicans, what was
achievement culture
A culture in which people
are accorded status based
on how well they perform
their functions.
ascription culture
A culture in which status is
attributed based on who or
what a person is.
144 Part 2 The Role of Culture
important was that they get to the end, not the particular path or sequence by which that
end was reached.”49
Another interesting time-related contrast is the degree to which cultures are past- or
present-oriented as opposed to future-oriented. In countries such as the United States,
Italy, and Germany, the future is more important than the past or the present. In countries
such as Venezuela, Indonesia, and Spain, the present is most important. In France and
Belgium, all three time periods are of approximately equal importance. Because different
emphases are given to different time periods, adjusting to these cultural differences can
create challenges.
Trompenaars recommends that when doing business with future-oriented cultures,
effective international managers should emphasize the opportunities and limitless scope
that any agreement can have, agree to specific deadlines for getting things done, and be
aware of the core competence or continuity that the other party intends to carry with it
into the future. When doing business with past- or present-oriented cultures, he recom-
mends that managers emphasize the history and tradition of the culture, find out whether
internal relationships will sanction the types of changes that need to be made, and agree
to future meetings in principle but fix no deadlines for completions.
The Environment Trompenaars also examined the ways in which people deal with
their environment. Specific attention should be given to whether they believe in control-
ling outcomes (inner-directed) or letting things take their own course (outer-directed).
One of the things he asked managers to do was choose between the following statements:
1. What happens to me is my own doing.
2. Sometimes I feel that I do not have enough control over the directions my life
is taking.
Managers who believe in controlling their own environment would opt for the first
choice; those who believe that they are controlled by their environment and cannot do
much about it would opt for the second.
Here is an example by country of the sample respondents who believe that what
happens to them is their own doing:50
United States 89%
Switzerland 84%
Australia 81%
Belgium 76%
Indonesia 73%
Hong Kong 69%
Greece 63%
Singapore 58%
Japan 56%
China 35%
In the United States, managers feel strongly that they are masters of their own fate.
This helps account for their dominant attitude (sometimes bordering on aggressiveness)
toward the environment and discomfort when things seem to get out of control. Many
Asian cultures do not share these views. They believe that things move in waves or
natural shifts and one must “go with the flow,” so a flexible attitude, characterized by a
willingness to compromise and maintain harmony with nature, is important.
Trompenaars recommends that when dealing with those from cultures that believe
in dominating the environment, it is important to play hardball, test the resilience of the
opponent, win some objectives, and always lose from time to time. For example, repre-
sentatives of the U.S. government have repeatedly urged Japanese automobile companies
to purchase more component parts from U.S. suppliers to partially offset the large volume
Chapter 4 The Meanings and Dimensions of Culture 145
of U.S. imports of finished autos from Japan. Instead of enacting trade barriers, the United
States was asking for a quid pro quo. When dealing with those from cultures that believe
in letting things take their natural course, it is important to be persistent and polite, maintain
good relationships with the other party, and try to win together and lose apart.
■ Integrating Culture and Management:
The GLOBE Project
Most recently, the GLOBE (Global Leadership and Organizational Behavior Effective-
ness) research program reflects an additional approach to measuring cultural differences.
Conceived in 1991, the GLOBE project is an ongoing research project, currently consist-
ing of three major interrelated phases. GLOBE extends and integrates the previous anal-
yses of cultural attributes and variables published by Hofstede and Trompenaars. The
three completed GLOBE phases explore the various elements of the dynamic relationship
between the culture and organizational behavior.51
At the heart of phases one and two, first published in 2004 and 2007, is the study
and evaluation of nine different cultural attributes using middle managers from 951
organizations in 62 countries.52,53 A team of 170 scholars worked together to survey over
17,000 managers in three industries: financial services, food processing, and telecom-
munications. When developing the measures and conducting the analysis, they also used
archival measures of country economic prosperity and of the physical and psychological
well-being of the cultures studied. Countries were selected so that every major geo-
graphic location in the world was represented. Additional countries, including those with
unique types of political and economic systems, were selected to create a complete and
comprehensive database upon which to build the analysis.54 This research has been con-
sidered among the most sophisticated in the field to date, and a collaboration of the work
of Hofstede and GLOBE researchers could provide an influential outlook on the major
factors characterizing global cultures.55
While phases one and two focus on middle management, phase three, first published
in 2012, examines the interactions of culture and leadership in upper-level management
positions. More than 1,000 CEOs, and more than 5,000 of their direct reports, were sur-
veyed by 40 researchers across 24 countries. To provide compatibility across all phases
of the GLOBE project, 17 of the 24 countries surveyed in phase three were also included
in the initial study performed for phases one and two.56 A further explanation of phase
three, which deals primarily with leadership, occurs in Chapter 13. Table 4–6 also provides
an overview of the purposes and results of the different phases.
Table 4–6
GLOBE Cultural Variable Results
Variable Highest Ranking Medium Ranking Lowest Ranking
Assertiveness Spain, U.S. Egypt, Ireland Sweden, New Zealand
Future orientation Denmark, Canada Slovenia, Egypt Russia, Argentina
Gender differentiation South Korea, Egypt Italy, Brazil Sweden, Denmark
Uncertainty avoidance Austria, Denmark Israel, U.S. Russia, Hungary
Power distance Russia, Spain England, France Denmark, Netherlands
Collectivism/societal Denmark, Singapore Hong Kong, U.S. Greece, Hungary
In-group collectivism Egypt, China England, France Denmark, Netherlands
Performance orientation U.S., Taiwan Sweden, Israel Russia, Argentina
Humane orientation Indonesia, Egypt Hong Kong, Sweden Germany, Spain
Source: From Mansour Javidan, Peter W. Dorfman, Mary Sully de Luque, and Robert J. House, “In the Eye of the Beholder: Cross Cultural Lessons in Leadership from
Project GLOBE,” Academy of Management Perspectives 20, no. 1 (2006), p. 76.
146 Part 2 The Role of Culture
The GLOBE study is interesting because its nine constructs were defined, concep-
tualized, and operationalized by a multicultural team of over 100 researchers. In addition,
the data in each country were collected by investigators who were either natives of the
cultures studied or had extensive knowledge and experience in those cultures.
Culture and Management
GLOBE researchers adhere to the belief that certain attributes that distinguish one culture
from others can be used to predict the most suitable, effective, and acceptable organiza-
tional and leader practices within that culture. In addition, they contend that societal
culture has a direct impact on organizational culture and that leader acceptance stems
from tying leader attributes and behaviors to subordinate norms.57
The GLOBE project set out to answer many fundamental questions about cultural
variables shaping leadership and organizational processes. The meta-goal of GLOBE was
to develop an empirically based theory to describe, understand, and predict the impact
of specific cultural variables on leadership and organizational processes and the effective-
ness of these processes. Overall, GLOBE hopes to provide a global standard guideline
that allows managers to focus on local specialization. Specific objectives include answer-
ing these fundamental questions:58
• Are there leader behaviors, attributes, and organizational practices that are
universally accepted and effective across cultures?
• Are there leader behaviors, attributes, and organizational practices that are
accepted and effective in only some cultures?
• How do attributes of societal and organizational cultures affect the kinds of
leader behaviors and organizational practices that are accepted and effective?
• What is the effect of violating cultural norms that are relevant to leadership
and organizational practices?
• What is the relative standing of each of the cultures studied on each of the
nine core dimensions of culture?
• Can the universal and culture-specific aspects of leader behaviors, attributes,
and organizational practices be explained in terms of an underlying theory
that accounts for systematic differences across cultures?
GLOBE’s Cultural Dimensions
Phase one of the GLOBE project identified the nine cultural dimensions:59
1. Uncertainty avoidance is defined as the extent to which members of an organi-
zation or society strive to avoid uncertainty by reliance on social norms, rituals,
and bureaucratic practices to alleviate the unpredictability of future events.
2. Power distance is defined as the degree to which members of an organization
or society expect and agree that power should be unequally shared.
3. Collectivism I: Societal collectivism refers to the degree to which organiza-
tional and societal institutional practices encourage and reward collective dis-
tribution of resources and collective action.
4. Collectivism II: In-group collectivism refers to the degree to which individuals
express pride, loyalty, and cohesiveness in their organizations or families.
5. Gender egalitarianism is defined as the extent to which an organization or a
society minimizes gender role differences and gender discrimination.
6. Assertiveness is defined as the degree to which individuals in organizations or
societies are assertive, confrontational, and aggressive in social relationships.
7. Future orientation is defined as the degree to which individuals in organiza-
tions or societies engage in future-oriented behaviors such as planning, invest-
ing in the future, and delaying gratification.
Chapter 4 The Meanings and Dimensions of Culture 147
8. Performance orientation refers to the extent to which an organization or soci-
ety encourages and rewards group members for performance improvement and
excellence.
9. Humane orientation is defined as the degree to which individuals in organiza-
tions or societies encourage and reward individuals for being fair, altruistic,
friendly, generous, caring, and kind to others.
The first six dimensions have their origins in Hofstede’s cultural dimensions
(see Figure 4-11). The collectivism I dimension measures societal emphasis on col-
lectivism; low scores reflect individualistic emphasis and high scores reflect collec-
tivistic emphasis by means of laws, social programs, or institutional practices. The
collectivism II scale measures in-group (family or organization) collectivism such as
pride in and loyalty to family or organization and family or organizational cohesive-
ness. In lieu of Hofstede’s masculinity dimension, the GLOBE researchers developed
the two dimensions they labeled gender egalitarianism and assertiveness. The dimen-
sion of future orientation is similar to Hofstede’s time orientation dimension. Future
orientation also has some origin in past research, as does performance orientation and
humane orientation.60 These measures are therefore integrative and combine a number
of insights from previous studies.
A unique contribution of the GLOBE project is the identification of both values,
which represent how people think things should be, and practices, which represent how
things actually are. For example, GLOBE researchers found that China exhibits a high
level of power distance in practice (a score of 5.02) despite the fact that the Chinese
people desire a lower level of power distance (a score of 3.01) in their culture. Fig-
ure 4-12 shows the differences in values and practices within Brazil. Recently, further
analysis has been conducted with regard to corporate social responsibility (CSR), a topic
discussed in detail in Chapter 3.61
GLOBE Country Analysis
The initial results of the GLOBE analysis are presented in Table 4–7. The GLOBE
analysis corresponds generally with those of Hofstede and Trompenaars, although with
some variations resulting from the variable definitions and methodology. Hofstede cri-
tiqued the GLOBE analysis, pointing out key differences between the research methods;
Figure 4–11
Comparing the Cultural
Dimension Research:
Geert Hofstede and
the GLOBE Project
Geert Hofstede
Dutch researcher
GLOBE Project
170 researchers
1980 (updated in 1988 & 2010) 2004 (Phase 1 – cultural dimensions)
Hofstede and the GLOBE Project: Comparing the Research
Scholars
Date
Completed
Identified Dimensions
Sample
Collectivism I
Collectivism II
Power Distance
Uncertainty Avoidance
Gender Egalitarianism
Assertiveness
Future Orientation
Performance Orientation
Humane Orientation
Managers from 951 companies
~17,000 participants
> 60 countries
Individualism
Power Distance
Uncertainty Avoidance
Masculinity
Time Orientation (1988)
Indulgence (2010)
IBM employees
~116,000 participants
> 70 countries
Source: Original graphic by Ben Littell under supervision of Professor Jonathan Doh based on data from G. Hofstede and G. J.
Hofstede, Cultures and Organizations: Software of the Mind, 2nd ed. (New York: McGraw-Hill, 2005), and the GLOBE project
research.
148 Part 2 The Role of Culture
Figure 4–12
Comparing Values and
Practices in Brazil
Assertiveness
Institutional Collectivism
In-Group CollectivismPower Distance
Performance Orientation Future Orientation
Gender EgalitarianismHumane Orientation
Uncertainty Avoidance
0
1
2
3
4
5
6
7
PracticeValues
Source: Original graphic by Ben Littell under supervision of Professor Jonathan Doh based on data from the GLOBE project research.
Hofstede was the sole researcher and writer of his findings, while GLOBE consisted of
a team of perspectives; Hofstede focused on one institution and surveyed employees,
while GLOBE interviewed managers across many corporations; and so on. The disparity
of the terminology between these two, coupled with the complex research, makes it
challenging to compare and fully reconcile these two approches.62 Other assessments
have pointed out that Hofstede may have provided an introduction into the psychology
of culture, but further research is necessary in this changing world. The GLOBE analy-
sis is sometimes seen as complicated, but so are cultures and perceptions. An in-depth
understanding of all facets of culture is difficult, if not impossible, to attain, but GLOBE
provides a current comprehensive overview of general stereotypes that can be further
analyzed for greater insight.63,64
We will explore additional implications of the GLOBE findings as they relate to
cross-cultural perspectives in Chapter 5 and managerial leadership in Chapter 13.
The World of International Management—Revisited
This chapter’s opening discussion of the successes and failures of cross-border mergers
by DuPont, ABInBev, and Chrysler illustrates the importance of culture and how cultural
differences may contribute to global management challenges. Cultural distance can influ-
ence both positively and negatively how decisions are made, reported, and resolved.
Having read this chapter, you should understand the impact culture has on the actions
of MNCs, including general management practices and relations with employees and
customers, and on maintaining overall reputation.
Recall the chapter opening discussion about the merger of ABInBev and SABMiller
and then draw on your understanding of Hofstede’s and Trompenaars’s cultural dimen-
sions to answer the following questions: (1) What dimensions contribute to the differences
Chapter 4 The Meanings and Dimensions of Culture 149
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e
st
io
n
n
ai
re
G
LO
B
E
p
h
as
e
3
•
D
e
te
r
m
in
e
t
h
e
m
an
n
e
r
in
w
h
ic
h
n
at
io
n
al
cu
ltu
r
e
i
n
flu
e
n
ce
s
e
xe
cu
tiv
e
l
e
ad
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rs
h
ip
p
ro
ce
ss
e
s
•
E
xa
m
in
e
t
h
e
r
e
la
tio
n
sh
ip
b
e
tw
e
e
n
le
ad
e
rs
h
ip
e
xp
e
ct
at
io
n
s
(C
LT
s)
a
n
d
C
E
O
b
e
h
av
io
r
•
E
xa
m
in
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t
h
e
r
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la
tio
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sh
ip
b
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tw
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n
C
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O
le
ad
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rs
h
ip
b
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h
av
io
r
an
d
e
ff
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ct
iv
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n
e
ss
•
D
e
te
rm
in
e
w
h
ic
h
C
E
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l
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ad
e
rs
h
ip
b
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h
av
–
io
rs
a
re
m
o
st
e
ff
e
ct
iv
e
•
In
vo
lv
e
a
t
o
ta
l
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f
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ve
r
1
6
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r
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se
ar
ch
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rs
fr
o
m
6
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n
at
io
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al
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o
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ar
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p
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i
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a
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f
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p
in
te
rv
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w
s
w
ith
m
id
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ve
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m
an
a
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rs
i
n
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m
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st
ic
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rg
an
iz
at
io
n
s
•
C
h
e
ck
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te
m
s
fo
r
re
le
va
n
ce
a
n
d
u
n
d
e
rs
ta
n
d
ab
ili
t
y
•
S
u
rv
e
y
o
v
e
r
1
7
,0
0
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m
an
ag
e
rs
r
e
p
re
se
n
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in
g
9
5
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iz
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s
i
n
6
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c
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ltu
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•
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vo
lv
e
m
o
re
t
h
an
4
0
r
e
se
ar
ch
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rs
i
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4
co
u
n
tr
ie
s
•
1
7
o
f
th
e
2
4
c
o
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n
tr
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s
co
m
p
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te
d
p
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as
e
s
1
a
n
d
2
i
n
a
d
d
iti
o
n
t
o
p
h
as
e
3
•
In
te
rv
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w
s
an
d
s
u
rv
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ys
w
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re
c
o
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d
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ct
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d
fo
r
4
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C
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s
w
ith
in
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h
c
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•
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t
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m
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re
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an
1
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d
5
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ts
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•
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h
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q
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o
m
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s
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(
i.e
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w
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r
p
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•
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m
p
lo
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ri
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s
p
sy
ch
o
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e
tr
ic
a
ss
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m
e
n
t
p
ro
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re
s
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r
sc
al
e
i
te
m
s
•
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an
sl
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a
n
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k
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rv
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m
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ts
i
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ac
h
c
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n
tr
y
•
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o
n
d
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t
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s
in
s
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ve
ra
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n
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s
•
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m
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o
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re
se
ar
ch
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•
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se
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ro
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at
is
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re
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to
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ca
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at
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d
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lia
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le
•
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ss
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d
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iz
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p
ra
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.,
as
i
s)
a
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(s
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ld
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)
•
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LM
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se
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t
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yp
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th
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(c
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ltu
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t
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ip
a
t
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rg
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iz
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al
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ta
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•
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e
tw
e
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n
6
a
n
d
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ir
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p
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ip
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h
av
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p
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o
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al
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ac
tio
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a
n
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ir
m
p
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an
ce
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m
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th
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a
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v
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lim
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at
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si
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•
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t
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al
ly
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te
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ag
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m
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te
am
(T
M
T
)
o
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tc
o
m
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s
in
cl
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m
itm
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t,
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ff
o
rt
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t
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am
s
o
lid
ar
ity
•
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xt
e
rn
al
ly
o
ri
e
n
te
d
f
ir
m
o
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tc
o
m
e
s
in
cl
u
d
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c
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m
p
e
tit
iv
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s
al
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s
p
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rf
o
rm
an
ce
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co
m
p
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tit
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R
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an
d
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m
p
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tit
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d
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m
i-
n
at
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n
o
f
th
e
i
n
d
u
st
ry
•
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al
id
at
io
n
o
f
cu
ltu
re
a
n
d
l
e
ad
e
rs
h
ip
sc
al
e
s
•
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an
ki
n
g
o
f
6
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s
o
ci
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ta
l
cu
ltu
re
s
o
n
9
c
u
ltu
re
d
im
e
n
si
o
n
s
•
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ro
u
p
in
g
o
f
6
2
c
u
ltu
re
s
in
to
1
0
c
u
ltu
re
cl
u
st
e
rs
•
C
re
at
io
n
o
f
2
1
p
ri
m
ar
y
le
ad
e
rs
h
ip
a
n
d
6
g
l
o
b
al
l
e
ad
e
rs
h
ip
s
ca
le
s
•
D
e
te
rm
in
at
io
n
o
f
re
la
tio
n
sh
ip
s
b
e
tw
e
e
n
cu
ltu
re
d
im
e
n
si
o
n
s
an
d
l
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ad
e
rs
h
ip
d
im
e
n
si
o
n
s
•
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e
te
rm
in
at
io
n
o
f
u
n
iv
e
rs
al
ly
d
e
si
ra
b
le
an
d
c
u
ltu
ra
lly
s
p
e
ci
fic
l
e
ad
e
rs
h
ip
q
u
al
iti
e
s
(i.
e
.,
C
LT
s)
•
Le
ad
e
rs
t
e
n
d
t
o
b
e
h
av
e
i
n
a
m
an
n
e
r
e
xp
e
ct
e
d
w
ith
in
t
h
e
ir
c
o
u
n
tr
y
•
C
u
ltu
ra
l
va
lu
e
s
d
o
N
O
T
h
av
e
a
d
ir
e
ct
e
ff
e
ct
o
n
C
E
O
b
e
h
av
io
r;
r
at
h
e
r,
th
e
e
ff
e
ct
is
i
n
d
ir
e
ct
t
h
ro
u
g
h
C
LT
s
(c
u
ltu
ra
lly
e
n
d
o
rs
e
d
t
h
e
o
ry
—
i.e
.,
le
ad
e
rs
h
ip
e
xp
e
c-
ta
tio
n
s)
•
B
o
th
t
h
e
f
it
o
f
C
E
O
b
e
h
av
io
rs
(
to
e
xp
e
c-
ta
tio
n
s)
a
n
d
d
e
g
re
e
o
f
le
ad
e
rs
h
ip
b
e
h
av
–
io
r
p
re
d
ic
t
e
ff
e
ct
iv
e
n
e
ss
•
S
u
p
e
ri
o
r
an
d
i
n
fe
ri
o
r
C
E
O
s
e
xh
ib
it
d
iff
e
r-
e
n
t
p
at
te
rn
s
o
f
b
e
h
av
io
r
w
ith
in
t
h
e
ir
co
u
n
tr
y
S
o
u
rc
e
:
F
ro
m
P
e
te
r
D
o
rf
m
an
,
M
an
so
u
r
Ja
vi
d
an
,
P
au
l
H
an
g
e
s,
A
li
D
as
tm
al
ch
ia
n
,
an
d
R
o
b
e
rt
H
o
u
se
,
“G
LO
B
E
:
A
T
w
e
n
ty
Y
e
ar
J
o
u
rn
e
y
in
to
t
h
e
I
n
tr
ig
u
in
g
W
o
rl
d
o
f
C
u
ltu
re
a
n
d
L
e
ad
e
rs
h
ip
,”
Jo
u
rn
a
l
o
f
W
o
rl
d
B
u
si
n
e
ss
4
7
(
2
0
1
2
),
p
.
5
0
5
.
150 Part 2 The Role of Culture
between how Brazilian and United Kingdom workers address management problems,
including operational or product flaws? (2) What are some ways that Brazilian culture
may affect operational excellence in a positive way? How might it hurt quality? (3) How
could managers from Brazil or other similar cultures adopt practices from European
cultures when investing in those regions?
1. Culture is acquired knowledge that people use to
interpret experience and generate social behavior.
Culture also has the characteristics of being learned,
shared, transgenerational, symbolic, patterned, and
adaptive. There are many dimensions of cultural
diversity, including centralized vs. decentralized
decision making, safety vs. risk, individual vs.
group rewards, informal vs. formal procedures,
high vs. low organizational loyalty, cooperation vs.
competition, short-term vs. long-term horizons, and
stability vs. innovation.
2. Values are basic convictions that people have
regarding what is right and wrong, good and bad,
and important and unimportant. Research shows
that there are both differences and similarities
between the work values and managerial values of
different cultural groups. Work values often reflect
culture and industrialization, and managerial values
are highly related to success. Research shows that
values tend to change over time and often reflect
age and experience.
3. Hofstede has identified and researched four major
dimensions of culture: power distance, uncertainty
avoidance, individualism, and masculinity. Recently,
he has added a fifth dimension, time orientation,
and more recently yet, a sixth dimension, indul-
gence vs. restraint: Each will affect a country’s
political and social system. The integration of these
factors into two-dimensional figures can illustrate
the complexity of culture’s effect on behavior.
4. In recent years, researchers have attempted to clus-
ter countries into similar cultural groupings to study
similarities and differences. Through analyzing the
relationship between two dimensions, as Hofstede
illustrated, two-dimensional maps can be created to
show how countries differ and where they overlap.
5. Research by Trompenaars has examined five rela-
tionship orientations: universalism vs. particularism,
individualism vs. communitarianism, affective vs.
neutral, specific vs. diffuse, and achievement vs.
ascription. Trompenaars also looked at attitudes
toward time and toward the environment. The result
is a wealth of information helping to explain how
cultures differ as well as practical ways in which
MNCs can do business effectively in these environ-
ments. In particular, his findings update those of
Hofstede while helping support the previous work
by Hofstede on clustering countries.
6. Recent research undertaken by the GLOBE project
has attempted to extend and integrate cultural attri-
butes and variables as they relate to managerial lead-
ership and practice. The GLOBE project identified
nine cultural dimensions through the study of middle
managers from over 900 different countries. These
analyses confirm much of the Hofstede and Trompe-
naars research, with greater emphasis on differences in
managerial leadership styles. Unique to the GLOBE
project is the identification of both values, which
represent how people think things should be, and
practices, which represent how things actually are.
SUMMARY OF KEY POINTS
KEY TERMS
achievement culture, 143
ascription culture, 143
collectivism, 130
communitarianism, 141
culture, 124
diffuse culture, 142
emotional culture, 142
femininity, 132
GLOBE, 130
individualism, 130
masculinity, 131
neutral culture, 142
particularism, 139
power distance, 130
specific culture, 142
uncertainty avoidance, 130
universalism, 139
values, 128
Chapter 4 The Meanings and Dimensions of Culture 151
REVIEW AND DISCUSSION QUESTIONS
1. What is meant by the term culture? In what way
can measuring attitudes about the following help
differentiate between cultures: centralized or decen-
tralized decision making, safety or risk, individual
or group rewards, high or low organizational loy-
alty, cooperation or competition? Use these atti-
tudes to compare the United States, Germany, and
Japan. Based on your comparisons, what conclu-
sions can you draw regarding the impact of culture
on behavior?
2. What is meant by the term value? Are cultural val-
ues the same worldwide, or are there marked differ-
ences? Are these values changing over time, or are
they fairly constant? How does your answer relate
to the role of values in a culture?
3. What are the four major dimensions of culture stud-
ied by Geert Hofstede? Identify and describe each.
What is the cultural profile of the United States? Of
Asian countries? Of Latin American countries? Of
Latin European countries? Based on your compari-
sons of these four profiles, what conclusions can
you draw regarding cultural challenges facing
individuals in one group when they interact with
individuals in one of the other groups? Why do you
think Hofstede added the fifth dimension of time
orientation and the sixth dimension related to indul-
gence versus restraint?
4. As people engage in more international travel and
become more familiar with other countries, will
cultural differences decline as a roadblock to inter-
national understanding, or will they continue to be
a major barrier? Defend your answer.
5. What are the characteristics of each of the following
pairs of cultural characteristics derived from Trompe-
naars’s research: universalism vs. particularism, neu-
tral vs. emotional, specific vs. diffuse, achievement
vs. ascription? Compare and contrast each pair.
6. How did project GLOBE build on and extend
Hofstede’s analysis? What unique contributions are
associated with project GLOBE?
7. In what way is time a cultural factor? In what way
is the need to control the environment a cultural
factor? Give an example for each.
The Renault-Nissan alliance, established in March 1999,
is the first industrial and commercial partnership of its
kind involving a French company and a Japanese com-
pany. The Alliance invested more than 1 billion rand in
upgrading Nissan’s manufacturing plant in Rosslyn, out-
side Pretoria, to increase output and produce the Nissan
NP200 pickup and the Renault Sandero for the South
African market. Visit the Renault-Nissan website at
http://www.renault.com to see where factories reside for
each car group. Compare and contrast the similarities
and differences in these markets. Then answer these
three questions: (1) How do you think cultural differ-
ences affect the way the firm operates in South Africa
versus France versus Japan? (2) In what way is culture
a factor in auto sales? (3) Is it possible for a car com-
pany to transcend national culture and produce a global
automobile that is accepted by people in every culture?
Why or why not?
INTERNET EXERCISE: RENAULT-NISSAN IN SOUTH AFRICA
1. Chad Bray, “Anheuser-Busch InBev Completes
Agreement for SABMiller,” New York Times,
November 12, 2015, p. B1.
2. Ellen Kullman, “DuPont’s CEO on Executing a
Complex Cross-Border Acquisition,” Harvard Busi-
ness Review, July–August 2012, https://hbr.
org/2012/07/duponts-ceo-on-executing-a-complex-
cross-border-acquisition.
3. Ibid.
4. Ibid.
5. Ibid.
6. Ibid.
7. Bill Vlasic and Bradley A. Stertz, Taken for a Ride:
How Daimler-Benz Drove off with Chrysler (New
York: Wiley, 2000).
8. Dorothee Ostle, “The Culture Clash at DaimlerChrysler
Was Worse Than Expected,” Automotive News
Europe, November 22, 1999, http://europe.
autonews.com/article/19991122/ANE/911220842/
the-culture-clash-at-daimlerchrysler-was-worse- than-
expected.
9. Ibid.
10. Ibid.
ENDNOTES
152 Part 2 The Role of Culture
11. Andrew Inkpen, “InBev and Anheuser-Busch,”
Thunderbird School of Global Management (2010),
pp. 8–9, https://cb.hbsp.harvard.edu/cbmp/product/
TB0251-PDF-ENG.
12. Ibid.
13. Ibid.
14. Anheuser-Busch InBev, “Anheuser-Busch InBev
2013 Annual Report,” press release (2013), http://
www.ab-inbev.com/content/dam/universaltemplate/
ab-inbev/investors/sabmiller/reports/annual-reports/
annual-report-2013 .
15. James Allen, “The Beliefs That Built a Global
Brewer,” Harvard Business Review, April 27,
2012, https://hbr.org/2012/04/the-beliefs-that-
built-a-globa.
16. Pat Joynt and Malcolm Warner, “Introduction:
Cross-Cultural Perspectives,” in Managing Across
Cultures: Issues and Perspectives, ed. Pat Joynt and
Malcolm Warner (London: International Thomson
Business Press, 1996), p. 3.
17. For additional insights, see Gerry Darlington,
“Culture—A Theoretical Review,” in Managing
Across Cultures, ed. Joynt and Warner, pp. 33–55.
18. Fred Luthans, Organizational Behavior, 7th ed.
(New York: McGraw-Hill, 1995), pp. 534–535.
19. Gary Bonvillian and William A. Nowlin, “Cultural
Awareness: An Essential Element of Doing
Business Abroad,” Business Horizons, November–
December 1994, pp. 44–54.
20. Roger E. Axtell, ed., Do’s and Taboos around the
World, 2nd ed. (New York: Wiley, 1990), p. 3.
21. Fons Trompenaars and Charles Hampden-Turner,
Riding the Waves of Culture: Understanding Diver-
sity in Global Business, 2nd ed. (New York:
McGraw-Hill, 1998), p. 23.
22. George W. England, “Managers and Their Value Sys-
tems: A Five-Country Comparative Study,” Columbia
Journal of World Business, Summer 1978, p. 39.
23. A. Reichel and D. M. Flynn, “Values in Transition:
An Empirical Study of Japanese Managers in the
U.S.,” Management International Review 23, no. 4
(1984), pp. 69–70.
24. Yumiko Ono and Bill Spindle, “Japan’s Long
Decline Makes One Thing Rise: Individualism,”
The Wall Street Journal, December 29, 2000,
pp. A1, A4.
25. Sang M. Lee and Suzanne J. Peterson, “Culture,
Entrepreneurial Orientation, and Global Competi-
tiveness,” Journal of World Business 35, no. 4
(2000), pp. 411–412.
26. “Confucius Makes a Comeback,” The Economist,
May 17, 2007, www.economist.com/world/asia/
displaystory.cfm?story_id=9202957.
27. Geert Hofstede, Culture’s Consequences: Interna-
tional Differences in Work-Related Values (Beverly
Hills, CA: Sage, 1980).
28. Ibid., pp. 251–252.
29. Ibid.
30. Geert Hofstede, “National Culture,” http://geert-
hofstede.com/national-culture.html.
31. Geert Hofstede and Michael Bond, “The Need for
Synergy among Cross-Cultural Studies,” Journal of
Cross-Cultural Psychology, December 1984, p. 419.
32. A. R. Negandhi and S. B. Prasad, Comparative
Management (New York: Appleton-Century-Crofts,
1971), p. 128.
33. For additional insights, see Mark F. Peterson et al.,
“Role Conflict, Ambiguity, and Overload: A
21-Nation Study,” Academy of Management
Journal, June 1995, pp. 429–452.
34. Hofstede, Culture’s Consequences.
35. Ibid.
36. Ibid.
37. Also see Chao C. Chen, Xiao-Ping Chen, and James
R. Meindl, “How Can Cooperation Be Fostered?
The Cultural Effects of Individualism-Collectivism,”
Academy of Management Review 23, no. 2 (1998),
pp. 285–304.
38. Hofstede, Culture’s Consequences, pp. 419–420.
39. Ibid., p. 420.
40. Ibid.
41. Geert Hofstede, “Dimensionalizing Cultures: The
Hofstede Model in Context,” Online Readings in
Psychology and Culture, Unit 2 (2011), http://
scholarworks.gvsu.edu/orpc/vol2/iss1/8.
42. Hofstede, “National Culture.”
43. Hofstede. “Dimensionalizing Cultures.”
44. Fons Trompenaars, Riding the Waves of Culture:
Understanding Diversity in Global Business
(New York: Irwin, 1994), p. 10.
45. Talcott Parsons, The Social System (New York: Free
Press, 1951).
46. Also see Lisa Hoecklin, Managing Cultural Differ-
ences (Workingham, England: Addison-Wesley,
1995).
47. Charles M. Hampden-Turner and Fons Trompenaars,
“A World Turned Upside Down: Doing Business in
Asia,” in Managing Across Cultures, ed. Joynt and
Warner, p. 279.
48. Ibid., p. 288.
49. Fons Trompenaars and Charles Hampden-Turner,
Riding the Waves of Culture: Understanding
Diversity in Global Business, 2nd ed. (New York:
McGraw-Hill, 1998), p. 23.
Chapter 4 The Meanings and Dimensions of Culture 153
50. Ibid., p. 140.
51. Peter Dorfman, Mansour Javidan, Paul Hanges, Ali
Dastmalchian, and Robert House, “GLOBE: A
Twenty Year Journey into the Intriguing World of
Culture and Leadership,” Journal of World Business
47 (2012), pp. 504–518.
52. Ibid.
53. Mansour Javidan and Robert House, “Leadership
and Cultures around the World: Findings from
GLOBE: An Introduction to the Special Issue,”
Journal of World Business 37, no. 1 (2002),
pp. 1–2.
54. Robert House, Paul J. Hanges, Mansour Javidan,
Peter W. Dorfman, and Vipin Gupta, Culture, Lead-
ership, and Organizations: The GLOBE Study of 62
Societies (London: Sage, 2004).
55. Kwong Leung, “Editor’s Introduction to the
Exchange between Hofstede and GLOBE,” Journal
of International Business Studies 37 (2006), p. 881.
56. Dorfman et al., “GLOBE: A Twenty Year Journey
into the Intriguing World of Culture and
Leadership.”
57. House et al., Culture, Leadership, and Organiza-
tions: The GLOBE Study.
58. Mansour Javidan and Robert House, “Cultural Acu-
men for the Global Manager: Lessons from Project
GLOBE,” Organizational Dynamics 29, no. 4
(2001), pp. 289–305.
59. Robert House, Mansour Javidan, Paul Hanges, and
Peter Dorfman, “Understanding Cultures and
Implicit Leadership Theories across the Globe: An
Introduction to Project GLOBE,” Journal of World
Business 37, no. 1 (2002), pp. 3–10.
60. Ibid.
61. David A. Waldman, Mary Sully de Luque, et al.,
“Cultural and Leadership Predictors of Corporate
Social Responsibility Values of Top Management: A
GLOBE Study of 15 Countries,” Journal of Interna-
tional Business Studies 37 (2006), pp. 823–837.
62. Geert Hofstede, “What Did GLOBE Really Mea-
sure? Researchers’ Minds versus Respondents’
Minds,” Journal of International Business Studies
37 (2006), pp. 882–896.
63. P. Christopher Earley, “Leading Cultural Research
in the Future: A Matter of Paradigms and Taste,”
Journal of International Business Studies 37 (2006),
pp. 922–931.
64. Peter B. Smith, “When Elephants Fight, the Grass
Gets Trampled: The GLOBE and Hofstede Projects,”
Journal of International Business Studies 37 (2006),
pp. 915–921.
65. CIA, “South Aftica,” The World Factbook (2016),
https://www.cia.gov/library/publications/the-world-
factbook/geos/sf.html.
66. Ibid.
67. Ibid.
68. Rene Vollgraaf, “Moody’s Says South African Debt
Could Surpass 50% of GDP,” Bloomberg Business,
February 4, 2016, www.bloomberg.com/news/
articles/2016-02-04/moody-s-says-south-africa-debt-
could-swell-to-over-50-of-gdp.
69. “Fool’s Gold—Black Economic Empowerment Has
Not Worked Well. Nor Will It End Soon,” The
Economist, April 27, 2013, www.economist.
com/news/briefing/21576655-black-economic-
empowerment-has-not-worked-well-nor-will-it-
end-soon-fools-gold.
70. “As South African Economy Falters, Fast-Food
Giant, Famous Brands, Seeks Fresh Pastures in
Nigeria,” International Business Times, September 16,
2013, www.ibtimes.com/south-african-economy-
falters-fast-food-giant-famous-brands-seeks-fresh-
pastures-1406294.
154
South Africa, as its name suggests, is located on the
southern tip of the African continent. The Atlantic Ocean
borders the country on the west and the Indian Ocean
borders on the east. South Africa’s neighboring countries
include Zimbabwe, Swaziland, Botswana, Namibia, and
Lesotho. Slightly smaller than twice the size of Texas in
area, the country’s natural resources are plentiful and
include gold, chromium, antimony, coal, iron ore, manga-
nese, nickel, phosphates, tin, rare earth elements, uranium,
gem diamonds, platinum, copper, vanadium, salt, and
natural gas.65
South Africa’s population is estimated at over 53 mil-
lion people and has a modest projected growth rate of
1.33 percent. South Africa has one of the most diverse
populations in the world, consisting of approximately
80 percent black African, 8.5 percent white, 9 percent mixed
race, and around 2 percent Indian. Several languages are
spoken in the country. The country’s main religions
include Protestantism, Catholicism, Islam, and numerous
indigenous religions. Approximately 90 percent of the
population is 54 years old or younger, with a median age
of 26.5 years old. Approximately 95 percent of the coun-
try is deemed literate.66
South Africa’s GDP was estimated at US$350.1 billion
in 2014 and per capita income was estimated at
US$13,100.67 After a relatively solid period of strong
growth, annual GDP growth has been slowing. In 2014,
the economy grew by just 1.4 percent. South Africa ranks
73rd out of 185 nations in “Ease of Doing Business,”
which is down four spots from its previous ranking. As
the country’s GDP growth slows, the country’s debt con-
tinues to grow. Moody’s Investor Services predict that the
government debt could exceed 50 percent of the country’s
GDP in the very near future.68
Unfortunately, the legacy of apartheid continues to exert
profound impacts on the country and its socioeconomic
environment. Apartheid was a system of legal racial segre-
gation that was enforced for approximately 50 years. In
response to the end of apartheid, South Africa installed a
program known as Black Economic Empowerment (BEE)
that seeks to redress the inequalities from the apartheid
system and give those previously disadvantaged groups
(essentially all groups besides the white South Africans)
economic opportunities. Specifically, the program includes
skill, ownership, management, and socioeconomic develop-
ment and, in some cases, preferential procurement. Critics
of this program say that it is unfair and a crude form of
affirmative action that is hurting the country’s economy.
These critics cite examples of “brain drain,” in which qual-
ified and talented white businesspeople leave the country
to avoid the alleged unequal treatment. Additionally, critics
argue that this program has helped to make primarily well-
connected black Africans more wealthy while the large
majority have not received any benefits.69
You Be the International
Management Consultant
Domestic South African companies appear to be search-
ing outside of their home market for stability and growth.
Famous Brands, one of South Africa’s largest food com-
panies, is seeking to grow by more than 200 percent by
expanding rapidly into the rest of Africa. Its initial focus
is Nigeria, now the largest economy in Africa, with the
goal of diversifying and spreading risk from its South and
Southern Africa operations. The fast-food chain announced
that it would buy a 49 percent stake in Nigeria’s UAC
Restaurants Limited, which includes 165 franchised eater-
ies. Famous Brands has long operated in surrounding
countries, but this recent move indicates a doubling-down
on its move into other countries.70
Questions
1. As a consultant looking for opportunities in Africa,
how would you gauge the prospects of moving a
business into South Africa?
2. What are your immediate concerns about this move?
3. What are the pros and cons of opportunities in
South Africa?
4. How does the fact that traditional South African
companies are increasing their presence in other
African countries factor into your decision?
Source: The Economist Intelligence Unit, Country Report: South
Africa (Kent, U.K.: EIU, 2009), pp. 7–10; “Still Everything to Play
For,” The Economist, June 5, 2010, pp. 15–16; “The Darkening of
White South Africa,” The Economist, May 20, 1995, pp. 18–20; Tom
Nevin, “The World Cup Retail Windfall—Myth or Reality?” African
Business, March 2010, pp. 58–59; “When the Whistle Blows,” The
Economist, June 5, 2010, p. 15; “Buthelezi Slams Affirmative
Action,” Mail & Guardian, February 1, 2007; “Tutu Warns of Poverty
‘Powder Keg’,” BBC, November 23, 2004, news.bbc.co.uk.
South AfricaIn the International Spotlight
156
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Chapter 5
MANAGING ACROSS
CULTURES
The World of International
Management
Taking a Bite Out of Apple:
Corporate Culture and an
Unlikely Chinese Start-Up
S ince first introducing the iPhone in 2007, Apple has achieved tremendous success in the smartphone industry.
User-friendly innovations, including the first touchscreen dis-
play, transformed the smartphone market. Through 2015, Apple
has sold over 800 million iPhones, becoming one of the most
admired and recognizable brands worldwide.2 Though Apple
has faced competition from traditional rivals Samsung and
Motorola for several years, new competition from unexpected
companies in developing markets is beginning to disrupt the
smartphone market. Xiaomi, a Chinese start-up formed in 2010,
is perhaps the largest and most successful of these new smart-
phone marketplace entrants. Xiaomi released its first phone in
2011; since then, sales have soared. By 2013, Xiaomi had sur-
passed Apple in terms of sales within China, the world’s largest
smartphone market. And in 2015, Xiaomi became the fourth
largest smartphone producer worldwide.
Though they are competing for the same customers, Apple
and Xiaomi could not be more different. Their approaches to
innovation, their supply chains, their product lines, and even
their ideas about intellectual property rights are diametrically
opposed. How have these two incredibly different companies
achieved success, and will Xiaomi’s corporate culture and
accompanying strategy ultimately propel the company to rival
Apple in the smartphone battle?
Individual versus the Collective
At Apple, individual achievement is highly regarded. Innovating
for the company, as an individual, is expected and required. In
fact, according to an urban legend, Steve Jobs allegedly once
fired an employee in the elevator for not having an answer to
the question, “So what have you done for Apple lately?” Per-
sonal excellence is required by every employee, with an over-
all focus on end results and exceeding corporate goals.3
Internal competition, and challenging others, is strongly
encouraged. Hierarchy exists, but individuals are encouraged
to speak up if it means achieving a better, more innovative
Traditionally, both scholars and practitioners assumed the uni-
versality of management. There was a tendency to take the
management concepts and techniques that worked at home
into other countries and cultures. It is now clear, from both
practice and cross-cultural research, that this universality
assumption, at least across cultures, does not hold up.
Although there is a tendency in a borderless economy to pro-
mote a universalist approach, there is enough evidence from
many cross-cultural researchers to conclude that the universal-
ist assumption that may have held for U.S. organizations and
employees is not generally true in other cultures.1
The overriding purpose of this chapter is to examine
how MNCs can and should manage across cultures. This chap-
ter puts into practice Chapter 4’s discussion on the meaning
and dimensions of culture and serves as a foundation and
point of departure for Chapters 8 and 9 on strategic manage-
ment. The first part of this chapter addresses the traditional
tendency to attempt to replicate successful home-country
operations overseas without taking into account cultural differ-
ences. Next, attention is given to cross-cultural challenges,
focusing on how differences can impact multinational manage-
ment strategies. Finally, the cultures in specific countries and
geographic regions are examined. The specific objectives of
this chapter are
1. EXAMINE the strategic dispositions that characterize
responses to different cultures.
2. DISCUSS cross-cultural differences and similarities.
3. REVIEW cultural differences in select countries and
regions, and note some of the important strategic
guidelines for doing business in each.
157
production expenses over the life of the product. While Apple
and other competitors retire their products nearly every year,
Xiaomi will continue to manufacture the same phone for nearly
two years.9 This flexibility also lowers inventory carrying costs.
Xiaomi owns no warehouses for long-term inventory holding,
considering itself more of an Internet-based merchant.10
Product Focus
Apple is dedicated to maintaining first-mover advantage. As a
result, Apple focuses narrowly on a few key products, with lit-
tle variation in features and price. The iPhone, for example, is
the only phone offered by Apple. When purchasing the latest
Apple product, customers know that they are buying the most
current technology on the market. By continually being the
first to market with new technology, Apple is able to maintain
a loyal customer base that is willing to put up with minor
defects and flaws in design. This narrow product focus has
created a trendy “brand” image for the company. However,
by only offering one product line, Apple sacrifices sales to
potential customers who are less concerned with the latest
technology.
Knowing that it cannot compete for the first-mover custom-
ers who want the newest technology fastest, Xiaomi focuses
on competing on price. Xiaomi aims to provide the best value
in the marketplace to its customers by not sacrificing quality to
meet consumer pricing demands; the hardware specifications
of Xiaomi phones rival those of Apple and Samsung but
remain at a fraction of the cost. Unlike Apple, Xiaomi offers a
wide array of products at multiple price points. In fact, Xiaomi
plans to introduce regionally specific models for every new
market it enters. With dozens of different phone products, for
example, customers can sacrifice features and the most cur-
rent technology for a phone within their budget. Xiaomi is will-
ing to quickly try multiple products, releasing slightly updated
models nearly every week.11
Intellectual Property
Apple, as a company that differentiates itself through innova-
tion, values its intellectual property as an important asset. This
culture starts at the top and permeates through the company:
Steve Jobs alone was listed as the inventor on over 300 pat-
ents.12 Having spent millions in research and development for
new technology and improved designs, Apple has accused
Samsung and others of essentially stealing patent-protected
technology. Apple has sued numerous companies to protect its
product. According to a former employee, “There’s a mentality
that it’s okay to shred somebody in the spirit of making the
best products.”4
Collectivism and group achievement, on the other hand,
permeate Xiaomi’s corporate culture. From initial design to
final production, collaboration between employees and the
public is more celebrated than individual creativity. Rather than
developing innovations in secret, Xiaomi takes an unconven-
tional approach to design by using crowd-sourcing as a key
element of its strategy.5 End users provide input and feedback
continuously to Xiaomi, shaping the direction in which Xiaomi
takes it products. This feedback results in continual product
evolution; rather than release new phones annually, like Apple,
Xiaomi actually releases new, incrementally better smartphone
models every week.6
Supply Chain Management
Apple has been able to maximize profits through its com-
plex, yet carefully doctored, supply chain. To minimize costs,
Apple outsources the majority of its production processes.
Nearly a thousand factories produce components for Apple
across the globe, with over 600 in Southeast Asia alone.7 As
a result of its low manufacturing costs, Apple is able to sell
the majority of its products with a 70 percent gross profit
margin. Relinquishing its control over the manufacturing
process, however, has led to some major negative conse-
quences for Apple. In 2012, Apple was unable to meet
customer demand for the iPad Mini due to supply chain
issues that resulted in lower-than-expected production
numbers.8 Furthermore, the lack of control over its suppliers’
actions has exposed Apple to criticism over human rights
violations. Highly publicized worker suicides and alleged
underage labor have tarnished Apple’s image, even though
the abuses occurred at the suppliers’ facilities.
Like Apple, Xiaomi works with a variety of suppliers
throughout Asia to produce its products. A key advantage for
Xiaomi’s approach to its supply chain, however, is its unique
ability to adjust production to meet demand. To achieve this,
Xiaomi maintains a strict policy with its suppliers that demand
alone drives the production quantity. This has allowed for
great flexibility in its supply. For example, in 2015, Xiaomi was
able to set the world record for most smartphones sold in
24 hours when it sold and shipped 2.1 million units. To keep
costs along its supply chain low, Xiaomi sells its products for
longer periods of time than its competitors, reducing
158 Part 2 The Role of Culture
intellectual property. In 2010, Apple sued HTC over 20 patent
infringements relating to its iPhone’s hardware and software.13
In 2012 alone, Apple and Samsung launched over a dozen
lawsuits against each other, primarily over patent infringe-
ments. Contested issues range from component technology to
software design. According to Apple, protecting its patents
allows it to provide “distinctive products that stand apart from
the masses.”14
Xiaomi’s approach to intellectual property mirrors its collec-
tive approach to design; exclusivity and secrecy are not seen
as important to its overall strategy. Little priority is placed on
protecting its own intellectual property, and the company often
skirts the line of violating other companies’ intellectual prop-
erty. For example, Xiaomi’s “MiPad” looks like, operates similar
to, and mimics the naming of Apple’s “iPad.” In fact, Xiaomi
will find it difficult, if not impossible, to sell its products in
many markets without facing lawsuits due to patent violations.
Most of the largest cell phone markets have strict intellectual
property protections in place. Xiaomi only holds two patents
from the United States, making it nearly impossible to defend
itself against lawsuits from Apple and other cell phone produc-
ers. It has been estimated that Xiaomi will need to spend as
much as US$100 million on lawsuits in the first two years if it
were to start selling products in the United States.15,16
Looking Forward—Which Strategy Is Working?
Whether or not Xiaomi can ultimately rival Apple in the smart-
phone battle is unclear. The first-mover advantage that Apple
has leveraged since 2007 has begun to deliver diminishing
returns. In the second quarter of 2016, Apple posted its first
decrease in revenue since the iPhone was first introduced.
However, while Xiaomi has surpassed Apple in sales within
China, Xiaomi’s global market share stands at only 5 percent,
far behind Apple’s 14 percent.17 Additionally, Xiaomi’s low-cost
strategy comes with low profits; in 2014, Xiaomi’s 2 percent
profit margin netted only US$56 million. Apple, on the other
hand, managed a 29 percent profit margin in the same year.18
The cultural differences of Xiaomi and Apple highlight how, within the same industry,
two companies can achieve success despite opposing strategies. This chapter provides
insight into uncovering similarities and differences across cultures and using those
insights to develop international management approaches that are effective and
responsive to local cultures.
■ The Strategy for Managing across Cultures
As MNCs become more transnational, their strategies must address the cultural simi-
larities and differences in their varied markets. A good example is provided by Renault,
the French auto giant. For years Renault manufactured a narrow product line that it sold
primarily in France. Because of this limited geographic market and the fact that its cars
continued to have quality-related problems, the company’s performance was at best
mediocre. Several years ago, however, Renault made a number of strategic decisions that
dramatically changed the way it did business. Among other things, it bought controlling
stakes in Nissan Motors of Japan, Samsung Motors of South Korea, and Dacia, the
Romanian automaker. The company also built a $1 billion factory in Brazil to produce
its successful Mégane sedan and acquired an idle factory near Moscow to manufacture
Renaults for the Eastern European market.
Today, Renault is a multinational automaker with operations on four continents.
The challenge the company now faces is to keep all these operations profitable. This has
not been easy. Nissan’s profits have a history of being unpredictable. In the years since
the global recession, Nissan has refocused its strategy by cutting costs and increasing
sales in the markets outside of Japan. These changes have resulted in a drastic turnaround;
Nissan experienced positive net incomes of 389 billion yen in 2013, 458 billion yen in
2014, and 535 billion yen in 2015.19,20,21 Similarly, Renault has rebounded to net incomes
of 1.99 billion euros and 2.82 billion euros in 2014 and 2015, respectively.22 Renault’s
quest for greater global market share continues to progress, with world market share up
to 3.1 percent in 2014. In the passenger car market, the Renault Group reported market
share of 3.3 percent.23 The Renault brand reclaimed the position of third-ranked brand
in Western Europe mainly owing to the success of the Mégane family and Twingo. In
the light commercial vehicle (LCV) market, the Renault brand has been the number-one
brand in Western Europe since 1998.
Chapter 5 Managing Across Cultures 159
Dacia has manufactured what some call a genuine world car, known as the Logan.
Now sold in 43 countries, this simple, compact vehicle is sold at an affordable price in
European markets and has recently been introduced in India. Renault maintains innova-
tive strategies by offering the Logan under either the Dacia, Renault, or Nissan name,
depending on the market. Constituting 31 percent of market share in Romania, 5 percent
of market share in France, and 2.5 percent of market share across Europe, Dacia sold
over 500,000 passenger cars in 2014.24 The decision to integrate its sales organizations
with those of Nissan in Europe, thus creating one well-integrated, efficient sales force
on the continent, and the decision to start producing Nissan models in its Brazilian plant,
so that it can expand its South American offerings by more efficiently using current facili-
ties, have led to continual growth year-over-year improvements in sales and efficiency.25
In 2015, Renault introduced the Kwid, its ultra-low-cost hatchback, for the Indian
market. Unlike Tata’s Nano and other low-price cars introduced into the Indian market
over the last several years, the Kwid is designed to offer features similar to more expen-
sive cars, including good gas mileage, generous leg and head room, and attractive design.
Initial pricing in 2015 started at only US$5,000.26 On the 15th year of the Renault-
Nissan alliance, the Group called attention to a number of milestones achieved over that
period:
∙ Growth in sales from 4.8 million units in 1999 to 8.3 million in 2014.
∙ The eight brands within the alliance account for 10 percent of all car sales
worldwide.
∙ Savings of over 2.8 billion euros in 2013 alone through strategic synergies
that led to cost reductions and cost avoidance, as well as increased revenue.
∙ Growth in proportion of total sales that were coming from BRIC nations,
from 1 percent in 1999 to 30 percent in 2014.
∙ Development of zero-emission technology, resulting in 134,000 zero-emission
vehicles sold by 2013.
∙ Expansion globally, including in Russia through the acquisition of a majority
stake in the country’s largest car maker, AvtoVAZ.
∙ The longest-lasting and most productive alliance in the automobile sector.
∙ Employment of nearly a half of a million people worldwide.27
The Renault-Nissan Alliance has sought to foster multicultural management at
all levels. Each year, more than 30 teams with Renault and Nissan employees from
all regions and functions work together to identify synergies and best practices. Thou-
sands of people with cross-cultural experience have been in collaboration since the
beginning of the Alliance. Renault’s chief Carlos Ghoshen, who also serves as CEO
of Nissan Motor Co., is widely credited with both the operational and strategic
improvements at both Renault and Nissan. His multicultural and multinational upbring-
ing and career have convinced him of the value of cultural diversity and the creativity
they generate.
Renault’s recent experiences underscore the need to carefully consider different
national cultures and practices when developing international strategies.
Strategic Predispositions
Most MNCs have a cultural strategic predisposition toward doing things in a particular
way. Four distinct predispositions have been identified: ethnocentric, polycentric, regio-
centric, and geocentric.
A company with an ethnocentric predisposition allows the values and interests of
the parent company to guide strategic decisions. Firms with a polycentric predisposition
make strategic decisions tailored to suit the cultures of the countries where the MNC
operates. A regiocentric predisposition leads a firm to try to blend its own interests with
those of its subsidiaries on a regional basis. A company with a geocentric predisposition
ethnocentric
predisposition
A nationalistic philosophy
of management whereby the
values and interests of the
parent company guide
strategic decisions.
polycentric predisposition
A philosophy of
management whereby
strategic decisions are
tailored to suit the cultures
of the countries where the
MNC operates.
regiocentric predisposition
A philosophy of
management whereby
the firm tries to blend its
own interests with those of
its subsidiaries on a
regional basis.
geocentric predisposition
A philosophy of
management whereby the
company tries to integrate a
global systems approach to
decision making.
160 Part 2 The Role of Culture
tries to integrate a global systems approach to decision making. Table 5–1 provides
details of each of these orientations.
If an MNC relies on one of these profiles over an extended time, the approach may
become institutionalized and greatly influence strategic planning. By the same token, a
predisposition toward any of these profiles can provide problems for a firm if it is out
of step with the economic or political environment. For example, a firm with an ethno-
centric predisposition may find it difficult to implement a geocentric strategy because it
is unaccustomed to using global integration. Commonly, successful MNCs use a mix of
these predispositions based on the demands of the current environment described in the
chapters in Part One.
Meeting the Challenge
Despite the need for and, in general, the tendency of MNCs to address regional differ-
entiation issues, many MNCs remain committed to a globalization imperative, which
is a belief that one worldwide approach to doing business is the key to both efficiency
and effectiveness. However, despite this predilection to use home strategies, effective
MNCs are continuing their efforts to address local needs. A number of factors are mov-
ing companies to facilitate the development of unique strategies for different cultures,
including
1. The diversity of worldwide industry standards such as those in broadcasting,
where television sets must be manufactured on a country-by-country basis.
globalization imperative
A belief that one worldwide
approach to doing business
is the key to both efficiency
and effectiveness.
Table 5–1
Orientation of an MNC under Different Profiles
Orientation of the Firm
Ethnocentric Polycentric Regiocentric Geocentric
Mission
Governance
Strategy
Structure
Culture
Technology
Marketing
Finance
Personnel
practices
Profitability (viability)
Top-down
Global integration
Hierarchical product
divisions
Home country
Mass production
Product development
determined primarily by
the needs of home
country customers
Repatriation of profits
to home country
People of home country
developed for key
positions everywhere
in the world
Public acceptance
(legitimacy)
Bottom-up (each
subsidiary decides
on local objectives)
National responsiveness
Hierarchical area divi-
sions, with autonomous
national units
Host country
Batch production
Local product
development based
on local needs
Retention of profits in
host country
People of local nationality
developed for key
positions in their own
country
Both profitability and
public acceptance
(viability and legitimacy)
Mutually negotiated
between region and its
subsidiaries
Regional integration and
national responsiveness
Product and regional
organization tied through
a matrix
Regional
Flexible manufacturing
Standardized within
region, but not
across regions
Redistribution within
region
Regional people devel-
oped for key positions
anywhere in the region
Same as regiocentric
Mutually negotiated
at all levels of the
corporation
Global integration and
national responsiveness
A network of organiza-
tions (including some
stakeholders and com-
petitor organizations)
Global
Flexible manufacturing
Global product, with
local variations
Redistribution globally
Best people everywhere
in the world developed
for key positions every-
where in the world
Source: From Balaji S. Chakravarthy and Howard V. Perlmutter, “Strategic Planning for a Global Business,” Columbia Journal of World Business, Summer 1985, pp. 5–6.
Chapter 5 Managing Across Cultures 161
2. A continual demand by local customers for differentiated products, as in the
case of consumer goods that must meet local tastes.
3. The importance of being an insider, as in the case of customers who prefer to
“buy local.”
4. The difficulty of managing global organizations, as in the case of some local
subsidiaries that want more decentralization and others that want less.
5. The need to allow subsidiaries to use their own abilities and talents and not
be restrained by headquarters, as in the case of local units that know how to
customize products for their market and generate high returns on investment
with limited production output.
Responding to the cultural needs of local operations and customers, MNCs find
that regional strategies can be used effectively in capturing and maintaining worldwide
market niches. One example is Haier, which is discussed in the opening World of Inter-
national Management section at the beginning of Chapter 9. Another example is appli-
ance producer Whirlpool, which has manufacturing facilities spread across the United
States. Each plant is specialized and produces a small number of products for the entire
North American market; in this way, each can focus on tailoring products for the unique
demands of the various markets.
The globalization versus national responsiveness challenge is even more acute
when marketing cosmetics and other products that vary greatly in consumer use. For
example, marketers sell toothpaste as a cosmetic product in Spain and Greece but as a
cavity fighter in the Netherlands and United States. Soap manufacturers market their
product as a cosmetic item in Spain but as a functional commodity in Germany. Moreo-
ver, the way in which the marketing message is delivered also is important. For example:
∙ Germans want advertising that is factual and rational; they fear being manip-
ulated by “the hidden persuader.” The typical German spot features the stan-
dard family of two parents, two children, and grandmother.
∙ The French avoid reasoning or logic. Their advertising is predominantly
emotional, dramatic, and symbolic. Spots are viewed as cultural events—art
for the sake of money—and are reviewed as if they were literature or films.
∙ The British value laughter above all else. The typical broad, self-deprecating
British commercial amuses by mocking both the advertiser and consumer.28
In some cases, however, both the product and the marketing message are similar
worldwide. This is particularly true for high-end products, where the lifestyles and expec-
tations of the market niche are similar regardless of the country. Heineken beer, Hennes-
sey brandy, Porsche cars, and the Financial Times all appeal to consumer niches that are
fairly homogeneous, regardless of geographic locale. The same is true at the lower end
of the market for goods that are impulse purchases, novel products, or fast foods, such
as Coca-Cola’s soft drinks, Levi’s jeans, pop music, and ice-cream bars. In most cases,
however, it is necessary to modify products as well as the market approach for the
regional or local market. One analysis noted that the more marketers understand about
the way in which a particular culture tends to view emotion, enjoyment, friendship,
humor, rules, status, and other culturally based behaviors, the more control they have
over creating marketing messages that will be interpreted in the desired way.
The need to adjust global strategies for regional markets presents three major chal-
lenges for most MNCs. First, the MNC must stay abreast of local market conditions and
sidestep the temptation to assume that all markets are basically the same. Second, the
MNC must know the strengths and weaknesses of its subsidiaries so that it can provide
these units with the assistance needed in addressing local demands. Third, the multina-
tional must give the subsidiary more autonomy so that it can respond to changes in local
demands. The International Management in Action “Ten Key Factors for MNC Success”
provides additional insights into the ways that successful MNCs address these challenges.
162
■ Cross-Cultural Differences and Similarities
As you saw in Chapter 4, cultures can be similar or quite different across countries. The
challenge for MNCs is to recognize and effectively manage the similarities and differ-
ences. Generally, the way in which MNCs manage their home businesses often should
be different from the way they manage their overseas operations.29 After recognizing the
danger for MNCs of drifting toward parochialism and simplification in spite of cultural
differences, the discussion in this section shifts to some examples of cultural similarities
and differences and how to effectively manage across cultures by a contingency approach.
Parochialism and Simplification
Parochialism is the tendency to view the world through one’s own eyes and perspectives.
This can be a strong temptation for many international managers, who often come from
advanced economies and believe that their state-of-the-art knowledge is more than ade-
quate to handle the challenges of doing business in less developed countries. In addition,
many of these managers have a parochial point of view fostered by their background.30
A good example is provided by Randall and Coakley, who studied the impact of culture
on successful partnerships in the former Soviet Union. Initially after the breakup of the
Soviet Union, the republics called themselves the Commonwealth of Independent States
(CIS). Randall and Coakley found that while outside MNC managers typically entered
into partnerships with CIS enterprises with a view toward making them efficient and
profitable, the CIS managers often brought a different set of priorities to the table.
Commenting on their research, Randall and Coakley noted that the way CIS man-
agers do business is sharply different from that of their American counterparts. CIS
managers are still emerging from socially focused cultural norms embedded in their
parochialism
The tendency to view the
world through one’s own
eyes and perspectives.
International Management in Action
Ten Key Factors for MNC Success
Why are some international firms successful while oth-
ers are not? Some of the main reasons are that success-
ful multinational firms take a worldwide view of
operations, support their overseas activities, pay close
attention to political winds, and use local nationals
whenever possible. These are the overall findings of a
report that looked into the development of customized
executive education programs. Specifically, there are 10
factors or guidelines that successful global firms seem
to employ. Successful global competitors
1. See themselves as multinational enterprises and
are led by a management team that is comfort-
able in the world arena.
2. Develop integrated and innovative strategies
that make it difficult and costly for other firms to
compete.
3. Aggressively and effectively implement their world-
wide strategy and back it with large investments.
4. Understand that innovation no longer is confined to
the United States and develop systems for tapping
innovation abroad.
5. Operate as if the world were one large market
rather than a series of individual, small markets.
6. Have organization structures that are designed to
handle their unique problems and challenges and
thus provide them the greatest efficiency.
7. Develop a system that keeps them informed
about political changes around the world and the
implications of these changes on the firm.
8. Have management teams that are international in
composition and thus better able to respond to
the various demands of their respective markets.
9. Allow their outside directors to play an active role
in the operation of the enterprise.
10. Are well managed and tend to follow such impor-
tant guidelines as sticking close to the customer,
having lean organization structures, and encour-
aging autonomy and entrepreneurial activity
among the personnel.
Source: James F. Bolt, “Global Competitors: Some Criteria for
Success,” Business Horizons, January–February 1988, pp. 34–41;
Alan S. Rugman and Richard M. Hodgetts, International Business,
2nd ed. (London: Pearson, 2000), chapter 1; Sheida Hodge, Global
Smarts: The Art of Communicating and Deal Making Anywhere in the
World (New York: Wiley, 2000).
Chapter 5 Managing Across Cultures 163
history, past training, and work experiences that emphasize strategic values unlike those
that exist in an international market-driven environment. For example, while an excess
of unproductive workers may lead American managers to lay off some individuals for
the good of the company, CIS managers would focus on the good of the working com-
munity and allow the company to accept significant profit losses as a consequence. This
led the researchers to conclude:
As behavioral change continues to lag behind structural change, it becomes imperative to
understand that this inconsistency between what economic demands and cultural norms
require manifests problems and complexities far beyond mere structural change. In short,
the implications of the different perspectives on technology, labor, and production . . . for
potential partnerships between U.S. and CIS companies need to be fully grasped by all par-
ties entering into any form of relationship.31
Simplification is the process of exhibiting the same orientation toward different
cultural groups. For example, the way in which a U.S. manager interacts with a British
manager is the same way in which he or she behaves when doing business with an Asian
executive. Moreover, this orientation reflects one’s basic culture. Table 5–2 provides an
example, showing several widely agreed-on, basic cultural orientations and the range of
variations for each. Asterisks indicate the dominant U.S. orientation. Quite obviously,
U.S. cultural values are not the same as those of managers from other cultures; as a
result, a U.S. manager’s attempt to simplify things can result in erroneous behavior. Here
is an example of a member of the purchasing department of a large European oil company
who was negotiating an order with a Korean supplier:
At the first meeting, the Korean partner offered a silver pen to the European manager. The
latter, however, politely refused the present for fear of being bribed (even though he knew
about the Korean custom of giving presents). Much to our manager’s surprise, the second
simplification
The process of exhibiting
the same orientation toward
different cultural groups.
Table 5–2
Six Basic Cultural Variations
Orientations Range of Variations
What is the nature of people? Good (changeable/unchangeable)
A mixture of good and evil*
Evil (changeable/unchangeable)
What is the person’s relationship to nature? Dominant*
In harmony with nature
Subjugation
What is the person’s relationship to other people? Lineal (hierarchic)
Collateral (collectivist)
Individualist*
What is the modality of human activity? Doing*
Being and becoming
Being
What is the temporal focus of human activity? Future*
Present
Past
What is the conception of space? Private*
Mixed
Public
Note: *Indicates the dominant U.S. orientation.
Source: Adapted from the work of Florence Rockwood Kluckhohn and Fred L. Stodtbeck.
164 Part 2 The Role of Culture
meeting began with the offer of a stereo system. Again the manager refused, his fear of
being bribed probably heightened. When he gazed at a piece of Korean china on the third
meeting, he finally realized what was going on. His refusal had not been taken to mean
“let’s get on with business right away,” but rather “If you want to get into business with me,
you had better come up with something bigger.”32
Understanding the culture in which they do business can make international man-
agers more effective.33 Unfortunately, when placed in a culture with which they are
unfamiliar, most international managers are not culturally knowledgeable, so they often
misinterpret what is happening. This is particularly true when the environment is mark-
edly different from the one from which they come. Consider, for example, the difference
between the cultures in Malaysia and the United States. Malaysia has what could be
called a high-context culture, which possesses characteristics such as
1. Relationships between people are relatively long lasting, and individuals feel
deep personal involvement with each other.
2. Communication often is implicit, and individuals are taught from an early age
to interpret these messages accurately.
3. People in authority are personally responsible for the actions of their subordi-
nates, and this places a premium on loyalty to both superiors and subordinates.
4. Agreements tend to be spoken rather than written.
5. Insiders and outsiders are easily distinguishable, and outsiders typically do not
gain entrance to the inner group.
These Malaysian cultural characteristics are markedly different from those of low-
context cultures such as the United States, which possess the following characteristics:
1. Relationships between individuals are relatively short in duration, and in gen-
eral, deep personal involvement with others is not valued greatly.
2. Messages are explicit, and individuals are taught from a very early age to say
exactly what they mean.
3. Authority is diffused throughout the bureaucratic system, and personal
responsibility is hard to pin down.
4. Agreements tend to be in writing rather than spoken.
5. Insiders and outsiders are not readily distinguished, and the latter are encour-
aged to join the inner circle.34
These differences are exacerbated by the fact that Malaysian culture is based on
an amalgamation of diverse religions, including Hinduism, Buddhism, and Islam. The
belief is pervasive that success and failure are the will of God, which may create issues
with American managers attempting to make deals, as Malaysians will focus less on facts
and more on intuitive feelings.
At the same time, it is important to realize that while there are cultural differences,
there also are similarities. Therefore, in managing across cultures, not everything is
totally different. Some approaches that work at home also work well in other cultural
settings.
Similarities across Cultures
When internationalization began to take off in the 1970s, many companies quickly admit-
ted that it would not be possible to do business in the same way in every corner of the
globe. There was a secret hope, however, that many of the procedures and strategies that
worked so well at home could be adopted overseas without modification. This has proved
to be a false hope. At the same time, some similarities across cultures have been uncov-
ered by researchers. For example, a co-author of this text (Luthans) and his associates
studied through direct observation a sample of managers in the largest textile factory in
Russia to determine their activities. Like U.S. managers studied earlier, Russian managers
Chapter 5 Managing Across Cultures 165
carried out traditional management, communication, human resources, and networking
activities. The study also found that, as in the United States, the relative attention given
to the networking activity increased the Russian managers’ opportunities for promotion,
and that communication activity was a significant predictor of effective performance in
both Russia and the United States.35
Besides the similarities of managerial activities, another study at the same Russian
factory tested whether organizational behavior modification (O.B.Mod.) interventions
that led to performance improvements in U.S. organizations would do so in Russia.36,37
As with the applications of O.B.Mod. in the United States, Russian supervisors were
trained to administer social rewards (attention and recognition) and positive feedback
when they observed workers engaging in behaviors that contributed to the production of
quality fabric. In addition, Russian supervisors were taught to give corrective feedback
for behaviors that reduced product quality. The researchers found that this O.B.Mod.
approach, which had worked so well in the United States, produced positive results in
the Russian factory. They concluded that the hypothesis that “the class of interventions
associated with organizational behavior modification are likely to be useful in meeting
the challenges faced by Russian workers and managers [is] given initial support by the
results of this study.”38,39
In another cross-cultural study, this time using a large Korean sample, Luthans and
colleagues analyzed whether demographic and situational factors identified in the U.S.-
based literature had the same antecedent influence on the commitment of Korean employ-
ees.40,41 As in the U.S. studies, Korean employees’ position in the hierarchy, tenure in
their current position, and age all related to organizational commitment. Other similari-
ties with U.S. firms included (1) as organizational size increased, commitment declined;
(2) as structure became more employee-focused, commitment increased; and (3) the more
positive the perceptions of organizational climate, the greater the employee commitment.
The following conclusion was drawn:
This study provides beginning evidence that popular constructs in the U.S. management and
organizational behavior literature should not be automatically dismissed as culture bound.
Whereas some organizational behavior concepts and techniques do indeed seem to be culture
specific . . . a growing body of literature is demonstrating the ability to cross-culturally
validate other concepts and techniques, such as behavior management. . . . This study con-
tributed to this cross-cultural evidence for the antecedents to organizational commitment.
The antecedents for Korean employees’ organizational commitment were found to be similar
to their American counterparts.42
Many Differences across Cultures
We have stressed throughout the text how different cultures can be from one another and
how important it is for MNCs to understand the points of disparity. Here, we look at
some differences from a human resources perspective, a topic that will be covered in
depth in Chapter 14. We introduce human resource management (HRM) here as a way
to illustrate that the cultural foundations utilized in the selection of employees can further
form the culture that international managers will oversee. In other words, understanding
the HRM strategies before becoming a manager in the industry can aid in effective per-
formance. The focus here is more from a socially cultural perspective; the organizational
perspective will be discussed further in Chapter 14.
Despite similarities between cultures in some studies, far more differences than sim-
ilarities have been found. MNCs are discovering that they must carefully investigate and
understand the culture where they intend to do business and modify their approaches
appropriately. Sometimes these cultures are quite different from the United States—as well
as from each other! One human resource management example has been offered by
Trompenaars, who examined the ways in which personnel in international subsidiaries were
appraised by their managers. The head office had established the criteria to be used in
these evaluations but left the prioritization of the criteria to the national operating company.
166 Part 2 The Role of Culture
As a result, the outcome of the evaluations could be quite different from country to coun-
try because what was regarded as the most important criterion in one subsidiary might be
ranked much lower on the evaluation list of another subsidiary. In the case of Shell Oil,
for example, Trompenaars found that the firm was using a HAIRL system of appraisal.
The five criteria in this acronym stood for (a) helicopter—the capacity to take a broad view
from above; (b) analysis—the ability to evaluate situations logically and completely;
(c) imagination—the ability to be creative and think outside the box; (d) reality—the ability
to use information realistically; and (e) leadership—the ability to effectively galvanize and
inspire personnel. When staff in Shell’s operating companies in four countries were asked
to prioritize these five criteria from top to bottom, the results were as follows:
Netherlands France Germany Britain
Reality Imagination Leadership Helicopter
Analysis Analysis Analysis Imagination
Helicopter Leadership Reality Reality
Leadership Helicopter Imagination Analysis
Imagination Reality Helicopter Leadership
Quite obviously, personnel in different operating companies were being evaluated
differently. In fact, no two of the operating companies in the four countries had the same
criterion at the top of their lists. Moreover, the criterion at the top of the list for operat-
ing companies in the Netherlands—reality—was at the bottom of the list for those in
France; and the one at the top of the list in French operating companies—imagination—
was at the bottom of the list of the Dutch firms. Similarly, the German operating com-
panies put leadership at the top of the list and helicopter at the bottom, while the British
companies did the opposite! In fact, the whole list for the Germans is in the exact reverse
order of the British list.43
Other HRM differences can be found in areas such as wages, compensation, pay
equity, and maternity leave. Here are some representative examples.
1. The concept of an hourly wage plays a minor role in Mexico. Labor law
requires that employees receive full pay 365 days a year.
2. In Austria and Brazil, employees with one year of service are automatically
given 30 days of paid vacation.
3. Some jurisdictions in Canada have legislated pay equity—known in the
United States as comparable worth—between male- and female-intensive jobs.
4. In Japan, compensation levels are determined by using the objective factors of
age, length of service, and educational background rather than skill, ability, and
performance. Performance does not count until after an employee reaches age 45.
5. In the United Kingdom, employees are allowed up to 40 weeks of maternity
leave, and employers must provide a government-mandated amount of pay for
18 of those weeks.
6. In 87 percent of large Swedish companies, the head of human resources is on
the board of directors.44
These HRM practices certainly are quite different from those in the United States,
and U.S. MNCs need to modify their approaches when they go into these countries if
they hope to be successful. Compensation plans, in particular, provide an interesting area
of contrast across different cultures.
Drawing on the work of Hofstede (see Chapter 4), it is possible to link cultural
clusters and compensation strategies. Each cluster requires a different approach to for-
mulating an effective compensation strategy:
1. In Pacific Rim countries, incentive plans should be group-based. In high-
masculinity cultures (Japan, Hong Kong, Malaysia, the Philippines,
Singapore), high salaries should be paid to senior-level managers.
Chapter 5 Managing Across Cultures 167
2. In EU nations such as France, Spain, Italy, and Belgium, compensation strategies
should be similar. In the latter two nations, however, significantly higher salaries
should be paid to local senior-level managers because of the high masculinity
index. In Portugal and Greece, both of which have a low individualism index,
profit-sharing plans would be more effective than individual incentive plans,
while in Denmark, the Netherlands, and Germany, personal-incentive plans
would be highly useful because of the high individualism in these cultures.
3. In Great Britain, Ireland, and the United States, managers value their individ-
ualism and are motivated by the opportunity for earnings, recognition,
advancement, and challenge. Compensation plans should reflect these needs.45
Figure 5–1 shows how specific HRM areas can be analyzed contingently on a
country-by-country basis. Take, for example, the information on Japan. When it is con-
trasted with U.S. approaches, a significant number of differences are found. Recruitment
and selection in Japanese firms often are designed to help identify those individuals who
will do the best job over the long run. In the United States, people often are hired based
on what they can do for the firm in the short run because many of them eventually will
quit or be downsized. Similarly, the Japanese use a great deal of cross-training, while
the Americans tend to favor specialized training. The Japanese use group performance
appraisal and reward people as a group; at least traditionally, Americans use manager-
subordinate performance appraisal and reward people as individuals. In Japan, unions are
regarded as partners; in the United States, management and unions view each other in a
much more adversarial way. Only in the area of job design, where the Japanese use a
great deal of participative management and autonomous work teams, are the Americans
beginning to employ a similar approach. The same types of differences can be seen in
the matrix of Figure 5–1 among Japan, Germany, Mexico, and China.
These differences should not be interpreted to mean that one set of HRM practices is
superior to another. In fact, recent research from Japan and Europe shows these firms often
have a higher incidence of personnel-related problems than do U.S. companies. Figure 5–1
clearly indicates the importance of MNCs using a contingency approach to HRM across
cultures. Not only are there different HRM practices in different cultures, but there also are
different practices within the same cultures. For instance, one study involving 249 U.S.
affiliates of foreign-based MNCs found that in general, affiliate HRM practices closely fol-
low local practices when dealing with the rank and file but even more closely approximate
parent-company practices when dealing with upper-level management.46 In other words, this
study found that a hybrid approach to HRM was being used by these MNCs.
Aside from the different approaches used in different countries, it is becoming
clear that common assumptions and conventional wisdom about HRM practices in
certain countries no longer are valid. For example, for many years, it has been assumed
that Japanese employees do not leave their jobs for work with other firms, that they
are loyal to their first employer, and that it would be virtually impossible for MNCs
operating in Japan to recruit talent from Japanese firms. Recent evidence, however,
reveals that job-hopping among Japanese employees is increasingly common. One
report concluded:
While American workers, both the laid-off and the survivors, grapple with cutbacks, one in
three Japanese workers willingly walks away from his job within the first 10 years of his
career, according to the Japanese Institute of Labor, a private research organization. And
many more are thinking about it. More than half of salaried Japanese workers say they would
switch jobs or start their own business if a favorable opportunity arose, according to a
survey by the Recruit Research Corporation.47
These findings clearly illustrate one important point: Managing across cultures
requires careful understanding of the local environment because common assumptions
and stereotypes may not be valid. Cultural differences must be addressed, and this is why
cross-cultural research will continue to be critical in helping firms learn how to manage
across cultures.48,49
168 Part 2 The Role of Culture
• Prepare for long
process
• Ensure that your
firm is “here to
stay”
• Develop trusting
relationship with
recruit
• Make substantial
investment in
training
• Use general training
and cross-training
• Training is everyone’s
responsibility
• Use recognition and
praise as motivators
• Avoid pay for
performance
• Treat unions as
partners
• Allow time for
negotiations
• Include participation
• Incorporate group
goal setting
• Use autonomous
work teams
• Use uniform, formal
approaches
• Encourage
co-worker input
• Empower teams to
make decision
Recruitment and
selection
Training
Compensation
Labor relations
Job design
• Obtain skilled labor
from government-
subsidized appren-
ticeship program
• Reorganize and
utilize apprenticeship
programs
• Be aware of govern-
ment regulations on
training
• Note high labor
costs for
manufacturing
• Be prepared for high
wages and short
workweek
• Expect high pro
ductivity from
unionized workers
• Utilize works councils
to enhance worker
participation
• Use expatriates
sparingly
• Recruit Mexican
nationals at U.S. col-
leges
• Use bilingual
trainers
• Consider all aspects
of labor cost
• Understand changing
Mexican labor law
• Prepare for increas-
ing unionization of
labor
• Approach participa-
tion cautiously
• Recent public
policy shifts
encourage use of
sophisticated
selection procedures
• Carefully observe
existing training
programs
• Utilize team training
• Use technical training
as reward
• Recognize egalitarian
values
• Use “more work,
more pay” with
caution
• Tap large pool of
labor cities
• Lax labor laws may
become more
stringent
• Determine employ-
ee’s motives
before implementing
participation
Japan Germany Mexico China
Source: From Fred Luthans, Paul A. Marsnik, and Kyle W. Luthans, “A Contingency Matrix Approach to IHRM,” Human Resource Management Journal 36, no. 2 (1997), pp. 183–199.
A Partially Completed Contingency Matrix for International
Human Resource Management
Figure 5–1
■ Cultural Differences in Selected Countries
and Regions
As noted in Part One and in Chapter 4, MNCs are increasingly active in all parts of the
world, including the developing and emerging regions because of their recent growth and
future potential. Chapter 4 introduced the concept of country clusters, which is the idea
that certain regions of the world have similar cultures. For example, the way that Amer-
icans do business in the United States is very similar to the way that the British do
Chapter 5 Managing Across Cultures 169
business in England. Even in this Anglo culture, however, there are pronounced differ-
ences, and in other clusters, such as in Asia, these differences become even more pro-
nounced. The next sections focus on cultural highlights and differences in selected
countries and regions that provide the necessary understanding and perspective for
effective management across cultures.
Using the GLOBE Project to Compare Managerial Differences
Examination of the GLOBE project has resulted in an extensive breakdown of how
managers behave and how different cultures can yield managers with similar perspec-
tives in some realms, with quite divergent opinions in other sectors. One example, as
illustrated in Figure 5–2, shows how the value scores for managers in China compare
to those of managers in the United States and Argentina. The web structure, based on
factors such as individualism, consciousness of social and professional status, and risky
behaviors, can be used to show both similarities and differences between multiple
cultures at once, indicating potential areas of cultural misunderstanding when conduct-
ing business. As can be seen through the web structure shown, Chinese managers
typically score higher than their Argentine and U.S. counterparts in the area of uncer-
tainty avoidance. This indicates that Chinese managers prefer structured situations,
rules, and careful planning, while their counterparts in the U.S. and Argentina are more
open to looser restrictions and more unplanned situations. When managers from the
U.S. and Argentina are conducting business in a culture with high uncertainty avoid-
ance preferences, like China, it is suggested that they give their employees a clear plan
and a structural framework to complete their assigned tasks. Interestingly, all three
countries score similarly low in the area of power distance, indicating that managers
Figure 5–2
GLOBE Analysis:
Comparing Values in
China, the U.S., and
Argentina
Source: Original graphic by Ben Littell under supervision of Professor Jonathan Doh based on data from the GLOBE project research.
U.S.China Argentina
Assertiveness
Institutional Collectivism
In-Group CollectivismPower Distance
Performance Orientation Future Orientation
Gender EgalitarianismHumane Orientation
Uncertainty Avoidance
0
1
2
3
4
5
6
7
170 Part 2 The Role of Culture
in these cultures prefer structures with less hierarchy and more equality—even if, in
practice, the opposite is true within their country.50
As shown in the figure, Chinese managers tend to value assertiveness significantly
more than managers from Argentina, indicating that aggressive or confrontational
behavior in a business negotiation, for example, would not be viewed in a negative way
by Chinese businesspeople but might well by Argentine businesspeople. A Chinese
businessperson may walk away from intense negotiation feeling as though things went
well, while an Argentine counterpart across the table might view the same meeting as
unproductive and detrimental.51
One interesting development is the increasing frequency of managers and execu-
tives from one part of the world assuming leadership roles in another. For example, in
2015, Takeda Pharmaceutical Company named Christophe Weber as its new CEO,
becoming the first non-Japanese CEO in the company’s history. He joins the ranks of
the few—but increasing—number of foreign heads of Japanese firms, who now include
Brian Prince of Aozora Bank, Eva Chen of Trend Micro, and Carlos Ghoshen of Nissan
Motor Co. Foreign CEOs still face cultural difficulties, however. At Nippon Sheet Glass,
for example, American Craig Naylor resigned suddenly in 2012 after just two years as
CEO. Naylor cited “fundamental disagreements with the board on company strategy” as
the key reason for his departure.52 Chapters 13 and 14 provide an in-depth discussion of
leadership and human resource management across cultures, respectively. Because of the
increasing importance of developing and emerging regions and countries in the global
economy, knowledge of these contexts is more and more important for global managers.
In a study by the China Europe International Business School’s Leadership Behavioral
Laboratory and the Center for Creative Leadership, executives identified critical charac-
teristics in their careers that contributed to their development as managers in emerging
markets settings. These included setting an example for junior employees and learning
to thrive in unstable environments.53 In addition, managers emphasized the importance
of learning about their business and the emerging markets environment, through formal
classes, mentoring, and direct experience.
Managing Culture in Selected Countries and Regions
More specific insight on cultural practices specific to the BRIC countries, Arab countries,
and France are presented below.
Before this discussion, however, it is important to provide a word of caution on
overgeneralizing about cultures. Businesspeople from all cultures are individuals with
unique personalities and styles; there are always exceptions to the general cultural char-
acteristics discussed in the following sections. Stereotyping in cross-cultural dealings is
unwarranted. In this chapter, we review general cultural characteristics, but from your
own experience, you know the importance of an understanding of the particular individuals
or situations you are dealing with.
Managing Culture in China The People’s Republic of China (China, for short) has
had a long tradition of isolation. In 1979, Deng Xiaoping opened this country to the
world. Although his bloody 1989 put-down of protesters in Tiananmen Square was a
definite setback for progress, China is rapidly trying to close the gap between itself and
economically advanced nations and to establish itself as a power in the world economy.
As noted in Chapter 1, China is actively trading in world markets, is a member of the
WTO, and is a major trading partner of the United States. Despite this global presence,
many U.S. and European multinationals still find that doing business in China can be a
long, grueling process.54,55 Foreign firms still find it difficult to make a profit in China.
One primary reason is that Western-based MNCs do not appreciate the important role
and impact of Chinese culture.
Experienced executives report that the primary criterion for doing business in
China is technical competence. For example, in the case of MNCs selling machinery,
Chapter 5 Managing Across Cultures 171
Chinese businesspeople tend to want to know exactly how the machine works, what its
capabilities are, and how repairs and maintenance must be handled. Sellers must be
prepared to answer these questions in precise detail. This is why successful multination-
als send only seasoned engineers and technical people to China. They know that the
questions to be answered will require both knowledge and experience, and young, fresh-
out-of-school engineers will not be able to answer them.
A major cultural difference between China and many Western countries is the issue
of time. Chinese culture tends to value punctuality, so it is important that those who do
business with them arrive on time, as discussed in Chapter 4. During meetings, such as
those held when negotiating a contract, Chinese businesspeople may ask many questions
and nod their assent at the answers. This nodding usually means that they understand or
are being polite; it seldom means that they like what they are hearing and want to enter
into a contract. For this reason, when dealing with Chinese businesspeople, one must
keep in mind that patience is critically important. Chinese businesspeople will make a
decision in their own good time, and it is common for outside businesspeople to make
several trips to China before a deal is finally concluded. Moreover, not only are there
numerous meetings, but sometimes these are unilaterally cancelled at the last minute and
rescheduled. This often tries the patience of outsiders and is inconvenient in terms of
rearranging travel plans and other problems.
Another important dimension of Chinese culture is guanxi, which means “good
connections.”56 In turn, these connections can result in such things as lower costs for
doing business.57 Yet guanxi goes beyond just lower costs. Yi and Ellis surveyed Hong
Kong and Chinese managers and found that both groups agreed that guanxi networking
offered a number of potential benefits, including increased business, higher sales revenue,
more sources of information, greater prospecting opportunities, and the facilitation of
future transactions.58 In practice, guanxi resembles nepotism, where individuals in author-
ity make decisions on the basis of family ties or social connections rather than objective
indices.59 Additionally, outsiders doing business in China must be aware that Chinese
people will typically argue that they have the guanxi to get a job done, when in reality
they may or may not have the necessary connections.
When conducting business in China, one must realize that the Chinese are a col-
lective society in which people pride themselves on being members of a group. Chinese
people are very proud of their collective economic accomplishments and want to share
these feelings with outsiders. This is in sharp contrast to the situation in the United States
and other Western countries, where individualism is highly prized. For this reason, one
must never single out a Chinese employee and praise him or her for a particular quality,
such as intelligence or kindness, because doing so may embarrass the individual in the
presence of his or her peers. It is equally important to avoid using self-centered conver-
sation, such as excessive use of the word “I,” because it appears that the speaker is
trying to single him- or herself out for special consideration.
In negotiations, reciprocity is important. If Chinese partners give concessions,
they expect some in return. Additionally, it is common to find them slowing down
negotiations to take advantage of Westerners’ desire to conclude arrangements as
quickly as possible. The objective of this tactic is to extract further concessions.
Another common strategy used by Chinese businesspeople is to pressure the other
party during final arrangements by suggesting that this counterpart has broken the
spirit of friendship in which the business relationship originally was established.
Again, through this strategy, the Chinese partners are trying to gain additional conces-
sions. Because negotiating can involve a loss of face, it is common to find Chinese
businesspeople carrying out the whole process through intermediaries. This allows
them to convey their ideas without fear of embarrassment.60 During negotiations, it is
also important not to show excessive emotion of any kind. Anger or frustration, for
example, is viewed as antisocial and unseemly. Negotiations should be viewed with
a long-term perspective. Those who will do best are the ones who realize they are
investing in a long-term relationship.61
guanxi
In Chinese, it means “good
connections.”
172 Part 2 The Role of Culture
While these are the traditional behaviors of Chinese businesspeople, the transition-
ing economy (see Chapter 1) has also caused a shift in business culture, which has
affected working professionals’ private lives. Performance, which was once based on
effort, is now being evaluated from the angle of results as the country continues to
maintain its flourishing profits. While traditional Chinese culture focused on family first,
financial and material well-being has become a top priority. This performance orientation
has increased stress and contributed to growing incidence of burnout, depression, sub-
stance abuse, and other ailments. Some U.S. companies have attempted to curb these
psychological ailments by offering counseling; however, this service is not as readily
accepted by Chinese culture. Instead of bringing attention to the “counseling” aspect,
firms instead promote “workplace harmony” and “personal well-being services.”62 This
suggests that while some aspects of Chinese culture are changing, international managers
must recognize the foundational culture of the country and try to deal with such issues
according to local beliefs.
Managing Culture in Russia As pointed out in Chapter 1, the Russian economy has
experienced severe problems, and the risks of doing business there cannot be overstated.
Recent tensions between the governments of Russia and the G7 nations, resulting from
Russian intervention in Crimea and Syria, have made business dealings even more com-
plicated. At the same time, however, by following certain guidelines, MNCs can begin
to tap the potential opportunities.
When conducting business in Russia, it is important to build personal relationships
with partners. Business laws and contracts do not mean as much in Russia as they do in
the West. When there are contract disputes, there is little protection for the aggrieved
party because of the time and effort needed to legally enforce the agreement. Detailed
contracts can be hammered out later on; in the beginning, all that counts is friendship.
Local consultants can be valuable. Because the rules of business have changed so
much in recent years, it pays to have a local Russian consultant working with the com-
pany. Russian expatriates often are not up to date on what is going on and, quite often,
are not trusted by local businesspeople who have stayed in the country. So the consultant
should be someone who has been in Russia all the time and understands the local busi-
ness climate.
Ethical behavior in Europe and the United States is not always the same as in
Russia. For example, it is traditional in Russia to give gifts to those with whom one
wants to transact business, an approach that may be regarded as bribery in the United
States. In recent years, large companies such as IKEA have faced repercussions in their
home markets due to bribery allegations from their business conduct in Russia (see Brief
Integrative Case 4.1 at the end of Part 4).
When conducting business in Russia, businesspeople should be careful about com-
promising or settling things too quickly, as this is often seen as a sign of weakness.
Because of the history of complexity during the Soviet Union days, Russians today tend
to be suspicious of anything that is conceded easily. If agreements are not reached after
a while, a preferred tactic on their part is to display patience and then wait it out. How-
ever, they will abandon this approach if the other side shows great patience because they
will realize that their negotiating tactic is useless.63
Conducting business in Russia requires careful consideration of cultural factors,
and it often takes a lot longer than initially anticipated. However, the benefits may be
worth the wait. And when everything is completed, there is a final cultural tradition that
should be observed: Fix and reinforce the final agreements with a nice dinner together
and an invitation to the Russians to visit your country and see your facilities.64
Managing Culture in India In recent years, India has begun to attract the attention of
large MNCs. Unsaturated consumer markets, coupled with cheap labor and production
locations, have helped make India a desirable market for global firms. The government
continues to play an important role in this process, although recently many of the
Chapter 5 Managing Across Cultures 173
bureaucratic restrictions have been lifted as India works to attract foreign investment
and raise its economic growth rate.65,66 In addition, although most Indian businesspeople
speak English, many of their values and beliefs are markedly different from those in
the West. Thus, understanding Indian culture is critical to successfully doing business
in India.
Shaking hands with male business associates is almost always an acceptable prac-
tice. U.S. businesspeople in India are considered equals, however, and the universal
method of greeting an equal is to press one’s palms together in front of the chest and
say, “namaste,” which means “greetings to you.” Therefore, if a handshake appears to be
improper, it always is safe to use “namaste.”
For Western businesspeople in India, shirt, trousers, tie, and suit are proper attire.
In the southern part of India, where the climate is very hot, a light suit is preferable. In
the north during the winter, a light sweater and jacket are a good choice. Indian busi-
nesspeople, on the other hand, often will wear local dress. In many cases, this includes
a dhoti, which is a single piece of white cloth (about five yards long and three feet wide)
that is passed around the waist up to half its length and then the other half is drawn
between the legs and tucked at the waist. Long shirts are worn on the upper part of the
body. In some locales, such as Punjab, Sikhs will wear turbans, and well-to-do Hindus
sometimes will wear long coats like the rajahs. This coat, known as a sherwani, is the
dress recognized by the government for official and ceremonial wear. Foreign business-
people are not expected to dress like locals, and in fact, many Indian businesspeople will
dress like Europeans. Therefore, it is unnecessary to adopt local dress codes.67
Finally, it is important to remember that Indians are very tolerant of outsiders and
understand that many are unfamiliar with local customs and procedures. Therefore, there
is no need to make a phony attempt to conform to Indian cultural traditions. Making an
effort to be polite and courteous is sufficient.68
Managing Culture in France Many in the United States believe that it is more difficult
to get along with the French than with other Europeans. This feeling probably reflects
the French culture, which is markedly different from that in the United States. In France,
one’s social class is very important, and these classes include the aristocracy, the upper
bourgeoisie, the upper-middle bourgeoisie, the middle, the lower middle, and the lower.
Social interactions are affected by class stereotypes, and during their lifetime, most
French people do not encounter much change in social status. Additionally, the French
are very status conscious, and they like to provide signs of their status, such as knowledge
of literature and the arts; a well-designed, tastefully decorated house; and a high level
of education.
In the workplace, many French people are not motivated by competition or the
desire to emulate fellow workers. They often are accused of not having as intense a work
ethic as, for example, Americans or Asians. Many French workers frown on overtime,
and statistics show that on average, they have the longest vacations in the world (four to
five weeks annually). On the other hand, few would disagree that they work extremely
hard in their regularly scheduled time and have a reputation for high productivity. Part
of this reputation results from the French tradition of craftsmanship. Part of it also is
accounted for by a large percentage of the workforce being employed in small, independ-
ent businesses, where there is widespread respect for a job well done. In general, French
employees do not derive much motivation from professional accomplishment. Rather,
they believe that quality of life is what really matters. As a result, they attach a great
deal of importance to leisure time, and many are unwilling to sacrifice the enjoyment of
life for dedication to work.
Most French organizations tend to be highly centralized and have rigid structures.
As a result, it usually takes longer to carry out decisions. Because this arrangement is
quite different from the more decentralized, flattened organizations in the United States,
both middle- and lower-level U.S. expatriate managers who work in French subsidiaries
often find bureaucratic red tape a source of considerable frustration. There also are
174 Part 2 The Role of Culture
marked differences at the upper levels of management. In French companies, top manag-
ers have far more authority than their U.S. counterparts, and they are less accountable
for their actions. While top-level U.S. executives must continually defend their decisions
to the CEO or board of directors, French executives are challenged only if the company
has poor performance. As a result, those who have studied French management find that
they take a more autocratic approach.69
Managing Culture in Brazil Brazil is considered a Latin American country, but it is
important to highlight this nation since some characteristics make it markedly different
to manage as compared to other Latin American countries.70 Brazil was originally colo-
nized by Portugal, and remained affiliated with its parent country until 1865. Even
though today Brazil is extremely multicultural, the country still demonstrates many at-
tributes derived from its Portuguese heritage, including its official language. For exam-
ple, the Brazilian economy was once completely centrally controlled like many other
Latin American countries, yet was motivated by such Portuguese influences as flexibil-
ity, tolerance, and commercialism.71 This may be a significant reason behind its success-
ful economic emergence.
Brazilian businesspeople tend to have a relaxed work ethic, often respecting those
who inherit wealth and have strong familial roots over those seeking entrepreneurial
opportunities. They view time in a very relaxed manner, so punctuality is not a strong
suit in this country. Overall, the people are very good-natured and tend to avoid confron-
tation, yet they seek out risky endeavors.
In Brazil, physical contact is acceptable as a form of communication. Brazilian
businesspeople tend to stand very close to others when having a conversation, and will
touch the person’s back, arm, or elbow as a greeting or sign of respect. Additionally,
face-to-face interaction is preferred as a way to communicate, so avoid simply e-mailing
or calling. Do not be surprised if business meetings begin anywhere from 10 to
30 minutes after the scheduled time because Brazilian culture tends to not be governed
by the clock.
Appearance can be very important to Brazilian culture, as it will reflect both you
and your company. When conducting business, men should wear conservative dark suits,
shirts, and ties. Women should dress nicely but avoid too conservative or formal attire.
Brazilian managers often wonder, for example, if Americans make so much money, why
do they dress like they are poor?
Patience is key when managing business in Brazil. Many processes are longer and
more drawn out than in other cultures, including negotiations. Expressing frustration or
impatience and attempting to speed up procedures may lose the deal. The slow processes
and relaxed atmosphere do not imply that it is acceptable to be ill-prepared. Presentations
should be informative and expressive, and consistency is important. It is common for
Brazilian businesspeople to bring a lot of people to attend negotiations, mostly to observe
and learn. Subsequent meetings may include members of higher management, requiring
a rehashing of information.72,73
Managing Culture in Arab Countries The intense media attention given to the Iraq
War, terrorist actions, and continuing conflicts in the Middle East have perhaps revealed
to everyone that Arab cultures are distinctly different from Anglo cultures.74,75 Europeans
and Americans often find it extremely hard to do business in Arab countries, and a
number of Arab cultural characteristics can be cited for this difficulty.
One is the Arab view of time. In the United States, it is common to use the
cliché, “Time is money.” In Arab countries, a favorite expression is Bukra insha
Allah, which means “Tomorrow if God wills,” an expression that explains the
fatalistic approach to time common to many Arab cultures. As a result, if Arab
businesspeople commit themselves to a date in the future and fail to show up, they
may feel no guilt or concern because they believe they have no control over time in
the first place.
Chapter 5 Managing Across Cultures 175
When conducting business in an Arab country, it is important to understand that
culture generally holds that destiny depends more on the will of a supreme being than
on the behavior of individuals. A higher power dictates the outcome of important
events, so individual action is of little consequence. Also of importance is that, in the
culture of many Arab countries, social status is largely determined by family position
and connections, not necessarily by accomplishments. This view helps to explain why
some Middle Easterners take great satisfaction in appearing to be helpless. This
approach is quite different from that in the United States, where the strong tend to be
compensated and rewarded. If a person was ill, such as in this example, the individual
would be relieved of his responsibility until he or she had regained full health. In the
interim, the rest of the group would go on without the sick person, and he or she
might lose power.
In Arab countries, initial meetings typically are used to get to know the other
party. Business-related discussions may not occur until the third or fourth meeting.
Also, in contrast to the common perception among many Western businesspeople
who have never been to an Arab country, it is not necessary to bring the other party
a gift. If this is done, however, it should be a modest gift. A good example is a
novelty or souvenir item from the visitor’s home country. Also, Arab businesspeople
tend to attach a great deal of importance to status and rank. When meeting with
them, one should pay deference to the senior person first. It also is important never
to criticize or berate anyone publicly. This causes the individual to lose face, and
the same is true for the person who makes these comments. Mutual respect is required
at all times.76
The World of International Management—Revisited
Management at many companies and in many countries is becoming more and more
multicultural, yet individual corporate cultures persist. Apple and Xiaomi are both exam-
ples of highly successful companies with radically different approaches to strategy and
management. Apple prides itself on groundbreaking innovation, individual achievement,
and excellence. At Xiaomi, the emphasis is on extending innovations and applications
and on group achievement and collective responsibility, all geared toward companywide
success. The two companies even take a very different approach to their supply chains,
with Apple outsourcing the entirety of its production and only manufacturing its new
phone models for about a year, while Xiaomi produces its new phone models for a lon-
ger period of time and maintains contracts with suppliers who can adjust production
based on frequent changes in demand. In terms of products, Apple is a first-mover with
a universal product focus, while Xiaomi is a “fast follower” with a variety of phones for
its different markets. In some ways, these two companies epitomize the cultures from
which they emanate, but both are now global players.
Cross-border investments by Chinese, Indian, and other developing-country firms
have prompted investing firms, especially in Europe and North America, to more thought-
fully consider cultural issues as they seek to integrate local companies and employees
into their global organizations. As we saw in Chapter 4, East Asian, U.S., and Western
European cultures differ on many dimensions, which may pose challenges for companies
seeking to operate across these geographical/cultural boundaries.
Now that you have read this chapter, you should have a good understanding of the
importance and the difficulties of managing across cultures. Using this knowledge as a
platform, answer the following questions: (1) Which aspects of Apple’s culture have
helped it succeed in its global growth and which may have impeded it? (2) Which aspects
of Xiaomi’s culture have helped it succeed in its global growth and which may have
impeded it? (3) How would you characterize Apple and Xiaomi in terms of the four
basic strategic predispositions? (4) What might Apple learn from Xiaomi and Xiaomi
learn from Apple?
176 Part 2 The Role of Culture
1. One major problem facing MNCs is that they some-
times attempt to manage across cultures in ways
similar to those of their home country. MNC dispo-
sitions toward managing across cultures can be
characterized as (1) ethnocentric, (2) polycentric,
(3) regiocentric, and (4) geocentric. These different
approaches shape how companies adapt and adjust
to cultural pressures around the world.
2. One major challenge when dealing with cross-
cultural problems is that of overcoming parochialism
and simplification. Parochialism is the tendency to
view the world through one’s own eyes and per-
spectives. Simplification is the process of exhibiting
the same orientation toward different cultural
groups. Another problem is that of doing things the
same way in foreign markets as they are done in
domestic markets. Research shows that in some
cases, this approach can be effective; however,
effective cross-cultural management more com-
monly requires approaches different than those used
at home. One area where this is particularly evident
is human resource management. Recruitment, selec-
tion, training, and compensation often are carried
out in different ways in different countries, and
what works in the United States may have limited
value in other countries and geographic regions.
3. Doing business in various parts of the world
requires the recognition and understanding of cul-
tural differences. Some of these differences revolve
around the importance the society assigns to time,
status, control of decision making, personal accom-
plishment, and work itself. These types of cultural
differences help to explain why effective managers
in China or Russia often are quite different from
those in France, and why a successful style in the
United States will not be ideal in Arab countries.
SUMMARY OF KEY POINTS
KEY TERMS
ethnocentric predisposition, 159
geocentric predisposition, 159
globalization imperative, 160
guanxi, 171
parochialism, 162
polycentric predisposition, 159
regiocentric predisposition, 159
simplification, 163
REVIEW AND DISCUSSION QUESTIONS
1. Define the four basic predispositions MNCs have
toward their international operations.
2. If a locally based manufacturing firm with sales of
$350 million decided to enter the EU market by set-
ting up operations in France, which orientation would
be the most effective: ethnocentric, polycentric, regio-
centric, or geocentric? Why? Explain your choice.
3. In what way are parochialism and simplification
barriers to effective cross-cultural management? In
each case, give an example.
4. Many MNCs would like to do business overseas in
the same way that they do business domestically.
Do research findings show that any approaches that
work well in the United States also work well in
other cultures? If so, identify and describe two.
5. In most cases, local managerial approaches must be
modified for doing business overseas. What are
three specific examples that support this statement?
Be complete in your answer.
6. What are some categories of cultural differences
that help make one country or region of the world
different from another? In each case, describe the
value or norm and explain how it would result in
different behavior in two or more countries. If you
like, use the countries discussed in this chapter as
your point of reference.
Haier is a China-based multinational corporation that sells
a wide variety of commercial and household appliances in
the international marketplace. These range from washers,
dryers, and refrigerators to industrial heating and ventila-
tion systems. Visit Haier.com and read about some of the
latest developments in which the company is engaged:
(1) What type of cultural challenges does Haier face when
it attempts to market its products worldwide? Is demand
universal for all these offerings, or is there a “national
responsiveness” challenge, as discussed in the chapter, that
must be addressed? (2) Investigate the way in which Haier
has adapted its products in different countries and regions,
especially emerging markets. What are some examples?
(3) In managing its far-flung enterprise, what are two cul-
tural challenges that the company is likely to face and
what will it need to do to respond to these?
INTERNET EXERCISE: HAIER’S APPROACH
Chapter 5 Managing Across Cultures 177
1. Nancy J. Adler, International Dimensions of Orga-
nizational Behavior, 5th ed. (Cincinnati, OH:
Southwestern, 2007).
2. Evan Niu, “How Many iPhones Has Apple Sold?”
The Motley Fool, November 14, 2015, www.fool.
com/investing/general/2015/11/14/iphones-sold.aspx.
3. Dylan Love, “At Apple, They Really Are After
You,” Business Insider, January 9, 2013, www.busi-
nessinsider.com/apple-corporate-culture-2013-1.
4. Adam Lashinsky, “This Is How Apple Keeps the
Secrets,” Fortune, January 18, 2012, http://fortune.
com/2012/01/18/the-secrets-apple-keeps/.
5. Parmy Olson, “How China’s Xiaomi Does in a
Week What Apple Does in a Year: Update
Devices,” Forbes, October 22, 2013, www.forbes.
com/sites/parmyolson/2013/10/22/how-chinas-
xiaomi-does-in-a-week-what-apple-does-in-a-year-
update-devices/2/#15201d7b2c16.
6. Ibid.
7. David M. Barreda, “Who Supplies Apple? (It’s Not
Just China),” China File, February 14, 2013, www.
chinafile.com/who-supplies-apple-it-s-not-just-china-
interactive-map.
8. Peter Cohan, “Apple Can’t Innovate or Manage
Supply Chain,” Forbes, October 26, 2012.
http://www.forbes.com/sites/petercohan/2012/10/26/
apple-cant-innovate-or-manage-supply-chain/.
9. “Xiaomi & the Supply Chain Behind the World’s
Highest Valued Startup,” Elementum News, April
16, 2015, http://news.elementum.com/how-supply-
chain-is-building-xiaomis-empire.
10. Ibid.
11. Devindra Hardawar, “What China’s Xiaomi Can
Teach Apple, Google, and the Western Tech
World,” Venture Beat, September 1, 2013, http://
venturebeat.com/2013/09/01/what-xiaomi-can-teach-
google-apple-and-the-western-tech-world/.
12. Miguel Helft and Shan Carter, “A Chief Executive’s
Attention to Detail, Noted in 313 Patents,” The New
York Times, August 25, 2011, www.nytimes.
com/2011/08/26/technology/apple-patents-show-
steve-jobss-attention-to-design.html?_r=2.
13. Nick Bilton, “Bits: What Apple vs. HTC Could
Mean,” The New York Times, March 2, 2010,
http://bits.blogs.nytimes.com/2010/03/02/what-apple-
vs-htc-could-mean/.
14. Leo Kelion, “Apple v Samsung Patent Verdict
Reconsidered in Court,” BBC, December 6, 2012,
www.bbc.com/news/technology-20615376.
15. Parmy Olson, “Xiaomi May Have a Major Patent
Problem,” Forbes, January 29, 2015, www.forbes.
com/sites/parmyolson/2015/01/29/xiaomi-patent-
problem/#37415e5322ec.
16. Salvador Rodriguez, “Why Xiaomi Is Not Coming
to America Anytime Soon: It Only Has 2 US Pat-
ents,” International Business Times, March 30,
2015, www.ibtimes.com/why-xiaomi-not-coming-
america-anytime-soon-it-only-has-2-us-pat-
ents-1863838.
17. “Smartphone Vendor Market Share, 2015 Q2,” IDC,
http://www.idc.com/prodserv/smartphone-market-
share.jsp.
18. Carrie Mihalcik, “Xiaomi Made Only $56M Last
Year, Filing Shows,” CNet, December 16, 2014,
www.cnet.com/news/upstart-phone-maker-xiaomi-
values-growth-over-profit/.
19. Nissan Motor Corporation, “Nissan Reports Net
Income of 389 Billion Yen for FY2013,” news
releases, May 12, 2014, www.nissan-global.com/
EN/NEWS/2014/_STORY/140512-01-e.html.
20. Nissan Motor Corporation, “Nissan Reports Net
Income of $4.2 Billion (¥457.6 billion) for
FY2014,” news release, May 13, 2015, http://nissan-
news.com/en-US/nissan/usa/releases/nissan-reports-
net-income-of-4-2-billion-457-6-billion-for-fy2014.
21. Yuro Kageyama, “Nissan Reports 38 Percent Rise
in Profit, Raises Forecasts,” AP, November 2, 2015,
http://bigstory.ap.org/article/80dda8efe70041f4b8aa3
12b14d67996/nissan-reports-38-percent-rise-profit-
raises-forecasts.
22. “New models lift Renault profit despite Russia
writedown.” Reuters, February 12, 2016. http://
www.reuters.com/article/us-renault-results-
idUSKCN0VL0KP.
23. “World Motor Vehicle Production,” OICA, February
2016, www.oica.net/category/production-statistics/.
24. “Dacia Exceeded the Threshold of 500,000 Vehicles
Sold Worldwide,” Dacia Group, January 19, 2015,
www.daciagroup.com/en/press/press-releases/2015/
dacia-exceeded-the-threshold-of-500000-vehicles-
sold-worldwide.
25. Luca Ciferri, “How Renault’s Low-Cost Dacia Has
Become a ‘Cash Cow,’” Automotive News Europe,
January 2, 2013, http://europe.autonews.com/arti-
cle/20130102/ANE/312259994/how-renaults-low-
cost-dacia-has-become-a-cash-cow.
26. Greeshma M, “5 Reasons Why Renault Kwid Will
Be a Game Changer,” Economic Times of India,
September 26, 2015, www.ibtimes.co.in/5-reasons-
why-renault-kwid-will-be-game-changer-648139.
ENDNOTES
178 Part 2 The Role of Culture
27. “Renault-Nissan Alliance Celebrates 15th Anniver-
sary as Four Key Business Units Prepare to Con-
verge,” Renault Nissan, March 27, 2014, www.
media.blog.alliance-renault-nissan.com/news/renault-
nissan-alliance-celebrates-15th-anniversary-as-four-
key-business-units-prepare-to-converge/.
28. Lisa Hoecklin, Managing Cultural Differences:
Strategies for Competitive Advantage (Workingham,
England: Addison-Wesley, 1995), pp. 98–99.
29. Marcy Beitle, Arjun Sethi, Jessica Milesko, and
Alyson Potenza, “The Offshore Culture Clash,”
AT Kearney Executive Agenda XI, no. 2 (2008),
pp. 32–39.
30. Matt Ackerman, “State St.: New Markets Key to
Growth,” American Banker, May 3, 2004, p. 1.
31. Linda M. Randall and Lori A. Coakley, “Building a
Successful Partnership in Russia and Belarus: The
Impact of Culture on Strategy,” Business Horizons,
March–April 1998, pp. 15–22.
32. Fons Trompenaars and Charles Hampden-Turner,
Riding the Waves of Culture: Understanding Diver-
sity in Global Business, 2nd ed. (New York:
McGraw-Hill, 1998), p. 202.
33. See, for example, Anisya S. Thomas and Stephen L.
Mueller, “A Case for Comparative Entrepreneurship:
Assessing the Relevance of Culture,” Journal of
International Business Studies, Second Quarter
2000, pp. 287–301.
34. Adapted from Richard Mead, International Manage-
ment (Cambridge, MA: Blackwell, 1994), pp.
57–59.
35. Fred Luthans, Dianne H. B. Welsh, and Stuart A.
Rosenkrantz, “What Do Russian Managers Really
Do? An Observational Study with Comparisons to
U.S. Managers,” Journal of International Business
Studies, Fourth Quarter 1993, pp. 741–761.
36. Diane H. B. Welsh, Fred Luthans, and Steven M.
Sommer, “Organizational Behavior Modification
Goes to Russia: Replicating an Experimental Analy-
sis Across Cultures and Tasks,” Journal of Organi-
zational Behavior Management 13, no. 2 (1993),
pp. 15–35.
37. Diane H. B. Welsh, Fred Luthans, and Steven M.
Sommer, “Managing Russian Factory Workers: The
Impact of U.S.-Based Behavioral and Participative
Techniques,” Academy of Management Journal,
February 1993, pp. 58–79.
38. Welsh, Luthans, and Sommer, “Organizational
Behavior Modification,” p. 31.
39. The summary of positive (17 percent average) per-
formance from O.B.Mod. for U.S. samples can be
found in Fred Luthans and Alexander Stajkovic,
“Reinforce for Performance,” Academy of Manage-
ment Executive 13, no. 2 (1999), pp. 49–57.
40. Steven M. Sommer, Seung-Hyun Bae, and Fred
Luthans, “The Structure-Climate Relationship in
Korean Organizations,” Asia Pacific Journal of
Management 12, no. 2 (1995), pp. 23–36.
41. Also see Steven Sommer, Seung-Hyun Bae, and
Fred Luthans, “Organizational Commitment Across
Cultures: The Impact of Antecedents on Korean
Employees,” Human Relations 49, no. 7 (1996),
pp. 977–993.
42. Sommers, Bae, and Luthans, “The Structure-
Climate Relationship in Korean Organizations.”
43. Trompenaars and Hampden-Turner, Riding the
Waves of Culture, p. 196.
44. Shari Caudron, “Lessons for HR Overseas,” Person-
nel Journal, February 1995, p. 92.
45. Richard M. Hodgetts and Fred Luthans, “U.S. Mul-
tinationals’ Compensation Strategies for Local Man-
agement: Cross-Cultural Implications,”
Compensation and Benefits Review, March–April
1993, pp. 42–48.
46. Philip M. Rosenzweig and Nitin Nohria, “Influ-
ences on Human Resource Management Practices in
Multinational Corporations,” Journal of Interna-
tional Business Studies, Second Quarter 1994,
pp. 229–251.
47. “Disillusioned Workers Cost Japanese Economy up
to $180.18 Billion,” The Wall Street Journal,
September 5, 2001, p. B18.
48. Also see Richard W. Wright, “Trends in Interna-
tional Business Research: Twenty-Five Years Later,”
Journal of International Business Studies, Fourth
Quarter 1994, pp. 687–701.
49. Also see Schon Beechler and John Zhuang Yang,
“The Transfer of Japanese-Style Management to
American Subsidiaries: Contingencies, Constraints,
and Competencies,” Journal of International Busi-
ness Studies, Third Quarter 1994, pp. 467–491.
50. Mansour Javidan, Peter W. Dorfman, et al., “In the
Eye of the Beholder: Cross Cultural Lessons in
Leadership from Project GLOBE,” Academy of
Management Perspectives 20, no. 1 (2006),
pp. 67–90.
51. Ibid.
52. Jacob M. Schlesinger, “Another Foreign CEO
Leaves Japan’s Executive Ranks,” The Wall Street
Journal Online, April 18, 2012, http://blogs.wsj.
com/japanrealtime/2012/04/18/another-foreign-ceo-
leaves-japans-executive-ranks/.
53. Jean Lee, “Emerging Need: How Companies in
Developing Markets Can Cultivate the Leaders
Chapter 5 Managing Across Cultures 179
They Lack,” The Wall Street Journal Online, May
24, 2010, www.wsj.com/articles/SB10001424052748
704878904575030901196923746.
54. John Boudreau and Brandon Bailey, “Doing Business
in China Getting Tougher for U.S. Companies,”
Mercury News, March 27, 2010.
55. Emily Rauhala, “Q. and A.: Doing Business in
China,” The New York Times online, June 16, 2010,
www.nytimes.com/2010/06/17/business/global/17iht-
chinqa.html.
56. Eric W. K. Tsang, “Can Guanxi Be a Source of
Sustained Competitive Advantage for Doing Busi-
ness in China?” Academy of Management Executive
12, no. 2 (1998), p. 64.
57. Stephen S. Standifird and R. Scott Marshall, “The
Transaction Cost Advantage of Guanxi-Based Busi-
ness Practices,” Journal of World Business 35,
no. 1 (2000), pp. 21–42.
58. Lee Mei Yi and Paul Ellis, “Insider-Outsider Per-
spective of Guanxi,” Business Horizons, January–
February 2000, p. 28.
59. Rosalie L. Tung, “Managing in Asia: Cross-Cultural
Dimensions,” in Managing Across Cultures: Issues
and Perspectives, ed. Pat Joynt and Malcolm War-
ner (London: International Thomson Business Press,
1996), p. 239.
60. For more on this topic, see Philip R. Harris and
Robert T. Moran, Managing Cultural Differences,
3rd ed. (Houston: Gulf Publishing, 1991),
pp. 410–411.
61. Ming-Jer Chen, Inside Chinese Business (Boston:
Harvard Business School Press, 2001), p. 153.
62. Michelle Conlin, “Go-Go-Going to Pieces in
China,” BusinessWeek, April 23, 2007, p. 88.
63. For additional insights into how to interact and
negotiate effectively with the Russians, see Richard
D. Lewis, When Cultures Collide (London:
Nicholas Brealey, 1999), pp. 314–318.
64. William B. Snavely, Serguel Miassaoedov, and
Kevin McNeilly, “Cross-Cultural Peculiarities of the
Russian Entrepreneur: Adapting to the New
Russians,” Business Horizons, March–April 1998,
pp. 13.
65. “The AU: Challenges for India,” Chicago Tribune,
May 27, 2004, p. 28.
66. Amy Waldman, “In India, Economic Growth and
Democracy Do Mix,” The New York Times, May
26, 2004, p. A13.
67. Adapted from Harris and Moran, Managing
Cultural Differences, p. 447.
68. Also see Lewis, When Cultures Collide,
pp. 341–346.
69. Jean-Louis Barsoux and Peter Lawrence, “The
Making of a French Manager,” Harvard Business
Review, July–August 1991, pp. 58–67.
70. T. Lenartowicz and James Patrick Johnson, “A
Cross-National Assessment of Values of Latin
America Managers: Contrasting Hues or Shades of
Gray?” Journal of International Business Studies
34, no. 3 (May 2003), p. 270.
71. Reed E. Nelson and Suresh Gopalan, “Do Organi-
zational Cultures Replicate National Cultures?
Isomorphism, Rejection and Reciprocal Opposition
in the Corporate Values of Three Countries,”
Organization Studies 24, no. 7 (September 2003),
pp. 1115–1154.
72. Derived from Raul Gouvea, “Brazil: A Strategic
Approach,” Thunderbird International Business
Review 46, no. 2 (March–April 2004), pp. 183–184.
73. David Hannon, “Brazil Offers the Best of Both
Worlds,” Purchasing, October 5, 2006, pp. 51–52,
https://www.highbeam.com/doc/1G1-152695481.html.
74. Sean Van Zyl, “Global Political Risks: Post 9/11,”
Canadian Underwriter 71, no. 3 (March 2004),
p. 16.
75. Marvin Zonis, “Mideast Hopes: Endless Surprises,”
Chicago Tribune, January 18, 2004, p. 1.
76. Adapted from Harris and Moran, Managing Cul-
tural Differences, p. 503.
77. CIA, “Poland,” The World Factbook (2016), https://
www.cia.gov/library/publications/the-world-factbook/
geos/pl.html.
78. Ibid.
79. “Poland: Selected Indicators,” Organization for Eco-
nomic Co-operation and Development, https://data.
oecd.org/poland.htm.
80. CIA, “Poland.” This is Op. cit of Endnote 77.
81. “Poland: Selected Indicators.” This is Op. Cit of
Endnote 79.
82. CIA, “Poland.” This is Op. cit of Endnote 77.
83. Ibid.
84. Deyana Ivanova, “Tesco Share Price: Grocer’s
Polish Business at Risk,” Invezz, February 10, 2016,
http://invezz.com/news/equities/22323-Tesco-share-
price-Grocers-Polish-business-at-risk-.
180
Poland is located in Central Europe and is bordered by
Germany, the Czech Republic, Slovakia, Ukraine, Belarus,
and Lithuania. The Baltic Sea is located to the northwest.
Slightly smaller than New Mexico, the country’s terrain
is largely flat with mountain ranges along its southern
border. Its climate is relatively cool, with moderately
severe winters and mild summer temperatures. Poland’s
natural resources include coal, sulfur, copper, natural gas,
silver, lead, salt, amber, and arable land.77
Poland’s population, estimated at 38,562,000, has
remained steady for the last several years. Poland, with a
median age of 40 years old, has an older-than-average
population. The country is essentially entirely made up of
native Poles. Immigrants do not comprise a significant
proportion of the population. Poland has no citizenship
by birth; instead, citizenship is awarded by descent, which
requires both parents to be citizens of Poland. The coun-
try is almost exclusively Roman Catholic.78
Poland’s GDP stands at US$545 billion, or US$24,952
per capita. Unlike most of Europe, Poland has seen years
of steady economic gains. In 2015, the economy expanded
at 3.5 percent.79 Poland was one of the only countries in
the European Union to avoid a recession during 2008–
2009: The government of Prime Minister Donald Tusk
steered the Polish economy through the economic down-
turn by skillfully managing public finances and adopting
controversial pension and tax reforms to further shore up
public finances. Once a largely agricultural nation, the
country’s economy has transitioned to one based primar-
ily on industry (41 percent) and services (56 percent).80
The labor force, with 18.29 million people, ranks 34th in
the world in size.81 Poland’s main export partners include
Germany, the UK, the Czech Republic, France, Italy, the
Netherlands, and Russia. Machinery and transportation
equipment, intermediate manufactured goods, miscella-
neous manufactured goods, foodstuffs, and live animals
are all major exports.82
Poland has adopted a republic form of government. It
was one of the first ex-communist countries to embrace a
capitalistic economy with privatization and economic lib-
eralization. The country’s economic success following the
fall of the Soviet Union was largely attributed to the gov-
ernment’s success at privatizing most of the small and
medium state-owned companies and encouraging foreign
direct investment. Poland’s major difficulties lie in
its somewhat deficient infrastructure, its rigid labor codes,
a burdensome commercial court system, its extensive
government red tape, a lack of energy mix, and its
burdensome tax system.83
You Be the International
Management Consultant
Tesco, a multinational grocery and general merchandise
retailer, operates over 6,000 stores around the world and
442 stores in Poland. Tesco has a large online presence
and handles online orders for customers in its various
markets. The company has enjoyed considerable success
across the world but has faced some recent difficulty with
its Polish investments.
The Polish government has recently announced a plan
to increase revenues to pay for various initiatives, includ-
ing the proposed imposition on large retailers of a
1.9 percent tax on gross revenue. This tax is targeted at
“foreign-dominated industries” like supermarkets and
banks. Moody’s estimates that this new tax could cost
Tesco as much as 3.5 percent of earnings.84
Questions
1. If you were a consultant for Tesco, how would you
advise Tesco to deal with the new tax?
2. Would this new tax be enough for you to advise the
company to end business in Poland?
3. Does the fact that this regulation is specifically
targeted at foreign-dominated industries and
businesses create concern for future regulations
should you choose to continue operations in
Poland?
PolandIn the International Spotlight
262
Despite the frustrations, Eisner was tirelessly upbeat
about the project. “Instant hits are things that go away
quickly, and things that grow slowly and are part of the
culture are what we look for,” he said. “What we created
in France is the biggest private investment in a foreign
country by an American company ever. And it’s gonna
pay off.”
In the Beginning
Disney’s story is the classic American rags-to-riches
story, which started in a small Kansas City advertising
office where Mickey was a real mouse prowling the
unknown Walt Disney floor. Originally, Mickey was
named Mortimer, until a dissenting Mrs. Disney stepped
in. How close Mickey was to Walt Disney is evidenced
by the fact that when filming, Disney himself dubbed the
mouse’s voice. Only in later films did Mickey get a dif-
ferent voice. Disney made many sacrifices to promote his
hero-mascot, including selling his first car, a beloved
Moon Cabriolet, and humiliating himself in front of Louis
B. Mayer. “Get that mouse off the screen!” was the movie
mogul’s reported response to the cartoon character. Then,
in 1955, Disney had the brainstorm of sending his movie
characters out into the “real” world to mix with their fans,
and he battled skeptics to build the very first Disneyland
in Anaheim, California.
When Disney died in 1966, the company went into
virtual suspended animation. Its last big hit of that era
was 1969’s The Love Bug, about a Volkswagen named
Herbie. Today, Disney executives trace the problem to a
tyrannical CEO named E. Cardon Walker, who ruled the
company from 1976 to 1983, and to his successor, Ronald
W. Miller. Walker was quick to ridicule underlings in pub-
lic and impervious to any point of view but his own. He
made decisions according to what he thought Walt would
have done. Executives clinched arguments by quoting
Walt like the Scriptures or Marx, and the company even-
tually supplied a little book of the founder’s sayings. Mak-
ing the wholesome family movies Walt would have wanted
formed a key article of Walker’s creed. For example, a
poster advertising the unremarkable Condorman featured
actress Barbara Carrera in a slit skirt. Walker had the slit
painted over. With this as the context, studio producers
ground out a thin stream of tired, formulaic movies that
fewer and fewer customers would pay to see. In mid-1983,
a similar low-horsepower approach to television production
On January 18, 1993,
Euro Disneyland
chair Robert
Fitzpatrick announced he would leave that post on April
12 to begin his own consulting company. Quitting his
position exactly one year after the grand opening of Euro
Disneyland, Fitzpatrick with his resignation removed U.S.
management from the helm of the French theme park and
resort.
Fitzpatrick’s position was taken by a Frenchman, Philippe
Bourguignon, who had been Euro Disneyland’s senior vice
president for real estate. Bourguignon, 45 years old, faced
a net loss of FFr 188 million for Euro Disneyland’s fiscal
year, which ended September 1992. Also, between April
and September 1992, only 29 percent of the park’s total
visitors were French. Expectations were that closer to half
of all visitors would be French.
It was hoped that the promotion of Philippe Bourgui-
gnon would have a public relations benefit for Euro
Disneyland—a project that had been a publicist’s night-
mare from the beginning. One of the low points was at a
news conference prior to the park’s opening when protest-
ers pelted Michael Eisner, CEO of the Walt Disney Com-
pany, with rotten eggs. Within the first year of operation,
Disney had to compromise its “squeaky clean” image and
lift the alcohol ban at the park. Wine is now served at all
major restaurants.
Euro Disneyland, 49 percent owned by Walt Disney
Company, Burbank, California, originally forecasted 11
million visitors in the first year of operation. In January
1993 it appeared attendance would be closer to 10 mil-
lion. In response, management temporarily slashed prices
at the park for local residents to FFr 150 ($27.27) from
FFr 225 ($40.91) for adults and to FFr 100 from FFr 150
for children in order to lure more French during the slow,
wet winter months. The company also reduced prices at
its restaurants and hotels, which registered occupancy
rates of just 37 percent.
Bourguignon also faced other problems, such as the
second phase of development at Euro Disneyland, which
was expected to start in September 1993. It was unclear
how the company planned to finance its FFr 8–10 billion
cost. The company had steadily drained its cash reserves
(FFr 1.9 billion in May 1993) while piling up debt (FFr
21 billion in May 1993). Euro Disneyland admitted that
it and the Walt Disney Company were “exploring poten-
tial sources of financing for Euro Disneyland.” The com-
pany was also talking to banks about restructuring its
debts.
In-Depth Integrative Case 2.1a
Euro Disneyland
In-Depth Integrative Case 2.1a Euro Disneyland 263
“I knew that would hang a ‘For Sale’ sign over the com-
pany,” said Gold.
By resigning, Roy pushed over the first of a train of
dominoes that ultimately led to the result he most desired.
The company was raided, almost dismantled, greenmailed,
raided again, and sued left and right. But it miraculously
emerged with a skilled new top management with big
plans for a bright future. Roy Disney proposed Michael
Eisner as the CEO, but the board came close to rejecting
Eisner in favor of an older, more buttoned-down candidate.
Gold stepped in and made an impassioned speech to the
directors. “You see guys like Eisner as a little crazy . . .
but every studio in this country has been run by crazies.
What do you think Walt Disney was? The guy was off
the goddamned wall. This is a creative institution. It needs
to be run by crazies again.”
Meanwhile Eisner and Wells staged an all-out lobbying
campaign, calling on every board member except two,
who were abroad, to explain their views about the com-
pany’s future. “What was most important,” said Eisner,
“was that they saw I did not come in a tutu, and that I
was a serious person, and I understood a P&L, and I knew
the investment analysts, and I read Fortune.”
In September 1984, Michael Eisner was appointed
CEO and Frank Wells became president. Jeffrey Katzen-
berg, the 33-year-old, maniacal production chief, followed
Fisher from Paramount Pictures. He took over Disney’s
movie and television studios. “The key,” said Eisner, “is
to start off with a great idea.”
Disneyland in Anaheim, California
For a long time, Walt Disney had been concerned about
the lack of family-type entertainment available for his two
daughters. The amusement parks he saw around him were
mostly filthy traveling carnivals. They were often unsafe
and allowed unruly conduct on the premises. Disney envi-
sioned a place where people from all over the world
would be able to go for clean and safe fun. His dream
came true on July 17, 1955, when the gates first opened
at Disneyland in Anaheim, California.
Disneyland strives to generate the perfect fantasy. But
magic does not simply happen. The place is a marvel of
modern technology. Literally dozens of computers, huge
banks of tape machines, film projectors, and electronic
controls lie behind the walls, beneath the floors, and
above the ceilings of dozens of rides and attractions. The
philosophy is that “Disneyland is the world’s biggest
stage, and the audience is right here on the stage,” said
Dick Hollinger, chief industrial engineer at Disneyland.
“It takes a tremendous amount of work to keep the stage
clean and working properly.”
Cleanliness is a primary concern. Before the park
opens at 8 a.m., the cleaning crew will have mopped,
hosed, and dried every sidewalk, street, floor, and counter.
led to CBS’s cancellation of the hour-long program The
Wonderful World of Disney, leaving the company without
a regular network show for the first time in
29 years. Like a reclusive hermit, the company lost touch
with the contemporary world.
Ron Miller’s brief reign was by contrast a model of
decentralization and delegation. Many attributed Miller’s
ascent to his marrying the boss’s daughter rather than to
any special gift. To shore Miller up, the board installed
Raymond L. Watson, former head of the Irvine Co., as
part-time chair. He quickly became full time.
Miller sensed the studio needed rejuvenation, and he
managed to produce the hit film Splash, featuring an
apparently (but not actually) bare-breasted mermaid,
under the newly devised Touchstone label. However, the
reluctance of freelance Hollywood talent to accommodate
Disney’s narrow range and stingy compensation often
kept his sound instincts from bearing fruit. “Card [Cardon
Walker] would listen but not hear,” said a former executive.
“Ron [Ron Miller] would listen but not act.”
Too many box office bombs contributed to a steady
erosion of profit. Profits of $135 million on revenues of
$915 million in 1980 dwindled to $93 million on revenues
of $1.3 billion in 1983. More alarmingly, revenues from
the company’s theme parks, about three-quarters of the
company’s total revenues, were showing signs of leveling
off. Disney’s stock slid from $84.375 a share to $48.75
between April 1983 and February 1984.
Through these years, Roy Disney Jr. simmered while
he watched the downfall of the national institution that his
uncle, Walt, and his father, Roy Disney Sr., had built. He
had long argued that the company’s constituent parts all
worked together to enhance each other. If movie and tele-
vision production weren’t revitalized, not only would that
source of revenue disappear, but the company and its
activities would also grow dim in the public eye. At the
same time, the stream of new ideas and characters that
kept people pouring into the parks and buying toys, books,
and records would dry up. Now his dire predictions were
coming true. His own personal shareholding had already
dropped from $96 million to $54 million. Walker’s treat-
ment of Ron Miller as the shining heir apparent and Roy
Disney as the idiot nephew helped drive Roy to quit as
Disney vice president in 1977 and to set up Shamrock
Holdings, a broadcasting and investment company.
In 1984, Roy teamed up with Stanley Gold, a tough-
talking lawyer and a brilliant strategist. Gold saw that the
falling stock price was bound to flush out a raider and
afford Roy Disney a chance to restore the company’s for-
tunes. They asked Frank Wells, vice chair of Warner
Bros., if he would take a top job in the company in the
event they offered it. Wells, a lawyer and a Rhodes
scholar, said yes. With that, Roy knew that what he would
hear in Disney’s boardroom would limit his freedom to
trade in its stock, so he quit the board on March 9, 1984.
264 Part 2 The Role of Culture
complexes: Future World, a series of pavilions designed to
show the technological advances of the next 25 years, and
World Showcase, a collection of foreign “villages.”
Tokyo Disneyland
It was Tokyo’s nastiest winter day in four years. Arctic
winds and 8 inches of snow lashed the city. Roads were
clogged and trains slowed down. But the bad weather
didn’t keep 13,200 hardy souls from Tokyo Disneyland.
Mikki Mausu, better known outside Japan as Mickey
Mouse, had taken the country by storm.
Located on a fringe of reclaimed shoreline in Urayasu
City on the outskirts of Tokyo, the park opened to the pub-
lic on April 15, 1983. In less than one year, over 10 million
people had passed through its gates, an attendance figure
that has been bettered every single year. On August 13,
1983, 93,000 people helped set a one-day attendance record
that easily eclipsed the old records established at the two
parent U.S. parks. Four years later, records again toppled
as the turnstiles clicked. The total this time: 111,500. By
1988, approximately 50 million people, or nearly half of
Japan’s population, had visited Tokyo Disneyland since its
opening. The steady cash flow pushed revenues for fiscal
year 1989 to $768 million, up 17 percent from 1988.
The 204-acre Tokyo Disneyland is owned and operated
by Oriental Land under license from the Walt Disney Co.
The 45-year contract gives Disney 10 percent of admis-
sions and 5 percent of food and merchandise sales, plus
licensing fees. Disney opted to take no equity in the proj-
ect and put no money down for construction. “I never had
the slightest doubt about the success of Disneyland in
Japan,” said Masatomo Takahashi, president of Oriental
Land Company. Oriental Land was so confident of the
success of Disney in Japan that it financed the park
entirely with debt, borrowing ¥180 billion ($1.5 billion at
February 1988 exchange rates). Takahashi added, “The
debt means nothing to me,” and with good reason. Accord-
ing to Fusahao Awata, who co-authored a book on Tokyo
Disneyland: “The Japanese yearn for [American culture].”
Soon after Tokyo Disneyland opened in April 1983,
five Shinto priests held a solemn dedication ceremony
near Cinderella’s castle. It is the only overtly Japanese
ritual seen so far in this sprawling theme park. What
visitors see is pure Americana. All signs are in English,
with only small katakana (a phonetic Japanese alphabet)
translations. Most of the food is American style, and the
attractions are cloned from Disney’s U.S. parks. Disney
also held firm on two fundamentals that strike the Japanese
as strange—no alcohol is allowed and no food may be
brought in from outside the park.
However, in Disney’s enthusiasm to make Tokyo a brick-
by-brick copy of Anaheim’s Magic Kingdom, there were a
few glitches. On opening day, the Tokyo park discovered
that almost 100 public telephones were placed too high for
Japanese guests to reach them comfortably. And many
More than 350 of the park’s 7,400 employees come on
duty at 1 a.m. to begin the daily cleanup routine. The
thousands of feet that walk through the park each day and
chewing gum do not mix; gum has always presented
major cleanup problems. The park’s janitors found long
ago that fire hoses with 90 pounds of water pressure
would not do the job. Now they use steam machines, razor
scrapers, and mops towed by Cushman scooters to literally
scour the streets and sidewalks daily.
It takes one person working a full eight-hour shift to
polish the brass on the Fantasyland merry-go-round. The
scrupulously manicured plantings throughout the park are
treated with growth-retarding hormones to keep the trees
and bushes from spreading beyond their assigned spaces
and destroying the carefully maintained five-eighths scale
modeling that is utilized in the park. The maintenance
supervisor of the Matterhorn bobsled ride personally walks
every foot of track and inspects every link of tow chain
every night, thus trusting his or her own eyes more than
the $2 million in safety equipment that is built into the ride.
Eisner himself pays obsessive attention to detail. Walk-
ing through Disneyland one Sunday afternoon, he peered
at the plastic leaves on the Swiss Family Robinson tree
house, noting that they periodically wear out and need to
be replaced leaf by leaf at a cost of $500,000. As his
family strolled through the park, he and his eldest son
Breck stooped to pick up the rare piece of litter that the
cleanup crew had somehow missed. This old-fashioned
dedication has paid off. Since opening day in 1955,
Disneyland has been a consistent moneymaker.
Disney World in Orlando, Florida
By the time Eisner arrived, Disney World in Orlando was
already on its way to becoming what it is today—the most
popular vacation destination in the United States. But the
company had neglected a rich niche in its business: hotels.
Disney’s three existing hotels, probably the most profit-
able in the United States, registered unheard-of occupancy
rates of 92 percent to 96 percent versus 66 percent for the
industry. Eisner promptly embarked on an ambitious
$1 billion hotel expansion plan. Two major hotels, Disney’s
Grand Floridian Beach Resort and Disney’s Caribbean
Beach Resort, were opened during 1987–89. Disney’s
Yacht Club and Beach Resort along with the Dolphin and
Swan Hotels, owned and operated by Tishman Realty &
Construction, Metropolitan Life Insurance, and Aoki Cor-
poration, opened during 1989–90. Adding 3,400 hotel
rooms and 250,000 square feet of convention space made
it the largest convention center east of the Mississippi.
In October 1982, Disney made a new addition to the
theme park—the Experimental Prototype Community of
Tomorrow, or EPCOT Center. E. Cardon Walker, then
president of the company, announced that EPCOT would
be a “permanent showcase, industrial park, and experimen-
tal housing center.” This new park consists of two large
In-Depth Integrative Case 2.1a Euro Disneyland 265
James B. Cora and his team of some 150 operations
experts did a little calculating and pointed out that it
would take 100,000 pigs to do the job. And then there
would be the smell . . .
The Japanese relented.
The Japanese were also uneasy about a rustic-looking
Westernland, Tokyo’s version of Frontierland. “The Japa-
nese like everything fresh and new when they put it in,”
said Cora. “They kept painting the wood and we kept
saying, ‘No, it’s got to look old.’” Finally the Disney crew
took the Japanese to Anaheim to give them a firsthand
look at the Old West.
Tokyo Disneyland opened just as the yen escalated in
value against the dollar, and the income level of the
Japanese registered a phenomenal improvement. During
this era of affluence, Tokyo Disneyland triggered an inter-
est in leisure. Its great success spurred the construction
of “leisurelands” throughout the country. This created an
increase in the Japanese people’s orientation toward
leisure. But demographics are the real key to Tokyo
Disneyland’s success. Thirty million Japanese live within
30 miles of the park. There are three times more than the
number of people in the same proximity to Anaheim’s
Disneyland. With the park proven such an unqualified hit,
and nearing capacity, Oriental Land and Disney mapped
out plans for a version of the Disney-MGM studio tour
next door. This time, Disney talked about taking a
50 percent stake in the project.
Building Euro Disneyland
On March 24, 1987, Michael Eisner and Jacques Chirac,
the French prime minister, signed a contract for the build-
ing of a Disney theme park at Marne-la-Vallee. Talks
between Disney and the French government had dragged
on for more than a year. At the signing, Robert Fitzpat-
rick, fluent in French, married to the former Sylvie
Blondet, and the recipient of two awards from the French
government, was introduced as the president of Euro
Disneyland. He was expected to be a key player in wooing
hungry customers found countertops above their reach at the
park’s snack stands.
“Everything we imported that worked in the United
States works here,” said Ronald D. Pogue, managing
director of Walt Disney Attractions Japan Ltd. “American
things like McDonald’s hamburgers and Kentucky Fried
Chicken are popular here with young people. We also
wanted visitors from Japan and Southeast Asia to feel they
were getting the real thing,” said Toshiharu Akiba, a staff
member of the Oriental Land publicity department.
Still, local sensibilities dictated a few changes. A Jap-
anese restaurant was added to please older patrons. The
Nautilus submarine is missing. More areas are covered
to protect against rain and snow. Lines for attractions had
to be redesigned so that people walking through the park
did not cross in front of patrons waiting to ride an attrac-
tion. “It’s very discourteous in Japan to have people cross
in front of somebody else,” explained James B. Cora,
managing director of operations for the Tokyo project.
The biggest differences between Japan and America have
come in slogans and ad copy. Although English is often
used, it’s “Japanized” English—the sort that would have
native speakers shaking their heads while the Japanese
nod happily in recognition. “Let’s Spring” was the motto
for one of their highly successful ad campaigns.
Pogue, visiting frequently from his base in California,
supervised seven resident American Disney managers
who work side by side with Japanese counterparts from
Oriental Land Co. to keep the park in tune with the Dis-
ney doctrine. American it may be, but Tokyo Disneyland
appeals to such deep-seated Japanese passions as cleanli-
ness, order, outstanding service, and technological wiz-
ardry. Japanese executives are impressed by Disney’s
detailed training manuals, which teach employees how to
make visitors feel like VIPs. Most worth emulating, say
the Japanese, is Disney’s ability to make even the lowliest
job seem glamorous. “They have changed the image of
dirty work,” said Hakuhodo Institute’s Sekizawa.
Disney Company did encounter a few unique cultural
problems when developing Tokyo Disneyland:
The problem: how to dispose of some 250 tons of trash that
would be generated weekly by Tokyo Disneyland visitors?
The standard Disney solution: trash compactors.
The Japanese proposal: pigs to eat the trash and be
slaughtered and sold at a profit.
Exhibit 1 How the Theme Parks Grew
1955 Disneyland
1966 Walt Disney’s death
1971 Walt Disney World in Orlando
1982 Epcot Center
1983 Tokyo Disneyland
1992 Euro Disneyland
Source: Stephen Koepp, “Do You Believe in Magic?” Time, April 25, 1988, pp. 66–73.
Exhibit 2 Investor’s Snapshot: The Walt Disney Company
(December 1989)
Sales (latest four quarters) $4.6 billion
Change from year earlier Up 33.6%
Net profit $703.3 million
Change Up 34.7%
Return on common stockholders’ equity 23.4%
Five-year average 20.3%
Stock price average (last 12 months) $60.50–$136.25
Recent share price $122.75
Price/Earnings Multiple 27
Total return to investor
(12 months to 11/3/89) 90.6%
Source: Fortune, December 4, 1989.
266 Part 2 The Role of Culture
40 percent foreign, with Disney taking 16.67 percent.
Euro Disneyland was expected to bring $600 million in
foreign investment into France each year.
As soon as the contract had been signed, individuals
and businesses began scurrying to somehow plug into the
Mickey Mouse money machine—all were hoping to ben-
efit from the American dream without leaving France. In
fact, one Paris daily, Liberation, actually sprouted mouse
ears over its front-page flag.
The $1.5 to $2 billion first-phase investment would
involve an amusement complex including hotels and res-
taurants, golf courses, and an aquatic park in addition to
a European version of the Magic Kingdom. The second
phase, scheduled to start after the gates opened in 1992,
called for the construction of a community around the
park, including a sports complex, technology park, confer-
ence center, theater, shopping mall, university campus,
villas, and condominiums. No price tag had been put on
the second phase, although it was expected to rival, if not
surpass, the first-phase investment. In November 1989,
Fitzpatrick announced that the Disney–MGM Studios,
Europe, would also open at Euro Disneyland in 1996,
resembling the enormously successful Disney–MGM Stu-
dios theme park at Disney World in Orlando. The new
studios would greatly enhance the Walt Disney Compa-
ny’s strategy of increasing its production of live action
and animated filmed entertainment in Europe for both the
European and world markets.
“The phone’s been ringing here ever since the
announcement,” said Marc Berthod of EpaMarne, the
government body that oversees the Marne-la-Vallee
region. “We’ve gotten calls from big companies as well
as small—everything from hotel chains to language inter-
preters all asking for details on Euro Disneyland. And the
individual mayors of the villages around here have been
swamped with calls from people looking for jobs,” he
added.
Euro Disneyland was expected to generate up to 28,000
jobs, providing a measure of relief for an area that had
suffered a 10 percent–plus unemployment rate for the pre-
vious year. It was also expected to light a fire under
France’s construction industry, which had been particularly
hard hit by France’s economic problems over the previous
year. Moreover, Euro Disneyland was expected to attract
many other investors to the depressed outskirts of Paris.
International Business Machines (IBM) and Banque
National de Paris were among those already building in
the area. In addition one of the new buildings going up
was a factory that would employ 400 outside workers to
wash the 50 tons of laundry expected to be generated per
day by Euro Disneyland’s 14,000 employees.
The impact of Euro Disneyland was also felt in the
real estate market. “Everyone who owns land around here
is holding on to it for the time being, at least until they
know what’s going to happen,” said Danny Theveno, a
support from the French establishment for the theme park.
As one analyst put it, Disney selected him to set up the
park because he is “more French than the French.”
Disney had been courted extensively by Spain and
France. The prime ministers of both countries ordered
their governments to lend Disney a hand in its quest for
a site. France set up a five-person team headed by Special
Advisor to Foreign Trade and Tourism Minister Edith
Cresson, and Spain’s negotiators included Ignacio Vasallo,
Director-General for the Promotion of Tourism. Disney
pummeled both governments with requests for detailed
information. “The only thing they haven’t asked us for is
the color of the tourists’ eyes,” moaned Vasallo.
The governments tried other enticements too. Spain
offered tax and labor incentives and possibly as much as
20,000 acres of land. The French package, although less
generous, included spending of $53 million to improve
highway access to the proposed site and perhaps speeding
up a $75 million subway project. For a long time, all that
smiling Disney officials would say was that Spain had
better weather while France had a better population base.
Officials explained that they picked France over Spain
because Marne-la-Vallee is advantageously close to one
of the world’s tourism capitals, while also being situated
within a day’s drive or train ride of some 30 million peo-
ple in France, Belgium, England, and Germany. Another
advantage mentioned was the availability of good trans-
portation. A train line that serves as part of the Paris
Metro subway system ran to Torcy, in the center of
Marne-la-Vallee, and the French government promised to
extend the line to the actual site of the park. The park
would also be served by A-4, a modern highway that runs
from Paris to the German border, as well as a freeway
that runs to Charles de Gaulle airport.
Once a letter of intent had been signed, sensing that
the French government was keen to not let the plan fail,
Disney held out for one concession after another. For
example, Disney negotiated for VAT (value-added tax) on
ticket sales to be cut from a normal 18.6 percent to
7 percent. A quarter of the investment in building the park
would come from subsidized loans. Additionally, any dis-
putes arising from the contract would be settled not in
French courts but by a special international panel of arbi-
trators. But Disney did have to agree to a clause in the
contract that would require it to respect and utilize French
culture in its themes.
The park was built on 4,460 acres of farmland in
Marne-la-Vallee, a rural corner of France 20 miles east of
Paris known mostly for sugar beets and Brie cheese.
Opening was planned for early 1992, and planners hoped
to attract some 10 million visitors a year. Approximately
$2.5 billion was needed to build the park, making it the
largest single foreign investment ever in France. A French
“pivot” company was formed to build the park with start-
ing capital of FFr 3 billion, split 60 percent French and
In-Depth Integrative Case 2.1a Euro Disneyland 267
problems to their countryside. Such a public relations pro-
gram was a rarity in France, where businesses make little
effort to establish good relations with local residents. Dis-
ney invited 400 local children to a birthday party for
Mickey Mouse, sent Mickey to area hospitals, and hosted
free trips to Disney World in Florida for dozens of local
officials and children.
“They’re experts at seduction, and they don’t hide the
fact that they’re trying to seduce you,” said Vincent Guar-
diola, an official with Banque Indosuez, one of the 17
banks wined and dined at Orlando and subsequently one
of the venture’s financial participants. “The French aren’t
used to this kind of public relations—it was unbeliev-
able.” Observers said that the goodwill efforts helped dis-
sipate initial objections to the project.
Financial Structuring at Euro Disneyland
Eisner was so keen on Euro Disneyland that Disney kept
a 49 percent stake in the project, while the remaining
51 percent of stock was distributed through the London,
Paris, and Brussels stock exchanges. Half the stock under
the offer was going to the French, 25 percent to the Eng-
lish, and the remainder distributed in the rest of the Euro-
pean community. The initial offer price of FFr 72 was
considerably higher than the pathfinder prospectus esti-
mate because the capacity of the park had been slightly
extended. Scarcity of stock was likely to push up the price,
which was expected to reach FFr 166 by opening day in
1992. This would give a compound return of 21 percent.
Walt Disney Company maintained management control
of the company. The U.S. company put up $160 million of
its own capital to fund the project, an investment that soared
in value to $2.4 billion after the popular stock offering in
Europe. French national and local authorities, by compari-
son, were providing about $800 million in low-interest loans
and poured at least that much again into infrastructure.
Other sources of funding were the park’s 12 corporate
sponsors, and Disney would pay them back in kind. The
“autopolis” ride, where kids ride cars, features coupes
emblazoned with the “Hot Wheels” logo. Mattel Inc.,
sponsor of the ride, was grateful for the boost to one of
its biggest toy lines.
The real payoff would begin once the park opened. The
Walt Disney Company would receive 10 percent of admis-
sion fees and 5 percent of food and merchandise revenue,
the same arrangement as in Japan. But in France, it would
also receive management fees, incentive fees, and 49 per-
cent of the profits.
A Saloman Brothers analyst estimated that the park
would pull in 3 to 4 million more visitors than the 11 mil-
lion the company expected in the first year. Other Wall
Street analysts cautioned that stock prices of both Walt
Disney Company and Euro Disney already contained all
the Euro optimism they could absorb. “Europeans visit
spokesperson for the town of Villiers on the western edge
of Marne-la-Vallee. Disney expected 11 million visitors
in the first year. The break-even point was estimated to
be between 7 and 8 million. One worry was that Euro
Disneyland would cannibalize the flow of European vis-
itors to Walt Disney World in Florida, but European
travel agents said that their customers were still eagerly
signing up for Florida, lured by the cheap dollar and the
promise of sunshine.
Protests of Cultural Imperialism
Disney faced French communists and intellectuals who
protested the building of Euro Disneyland. Ariane
Mnouchkine, a theater director, described it as a “cultural
Chernobyl.” “I wish with all my heart that the rebels
would set fire to Disneyland,” thundered a French intel-
lectual in the newspaper La Figaro. “Mickey Mouse,”
sniffed another, “is stifling individualism and transform-
ing children into consumers.” The theme park was damned
as an example of American “neoprovincialism.”
Farmers in the Marne-la-Vallee region posted protest
signs along the roadside featuring a mean-looking Mickey
Mouse and touting sentiments such as “Disney go home,”
“Stop the massacre,” and “Don’t gnaw away our national
wealth.” Farmers were upset partly because under the
terms of the contract, the French government would
expropriate the necessary land and sell it without profit
to the Euro Disneyland development company.
While local officials were sympathetic to the farmers’
position, they were unwilling to let their predicament inter-
fere with what some called “the deal of the century.” “For
many years these farmers have had the fortune to cultivate
what is considered some of the richest land in France,” said
Berthod. “Now they’ll have to find another occupation.”
Also less than enchanted about the prospect of a magic
kingdom rising among its midst was the communist-
dominated labor federation, the Confédération Générale du
Travail (CGT). Despite the job-creating potential of Euro
Disney, the CGT doubted its members would benefit. The
union had been fighting hard to stop the passage of a bill
that would give managers the right to establish flexible
hours for their workers. Flexible hours were believed to be
a prerequisite to the profitable operation of Euro
Disneyland, especially considering seasonal variations.
However, Disney proved to be relatively immune to the
anti-U.S. virus. In early 1985, one of the three state-
owned television networks signed a contract to broadcast
two hours of dubbed Disney programming every Saturday
evening. Soon after, Disney Channel became one of the
top-rated programs in France.
In 1987, the company launched an aggressive com-
munity relations program to calm the fears of politicians,
farmers, villagers, and even bankers that the project would
bring traffic congestion, noise, pollution, and other
268 Part 2 The Role of Culture
In Fantasyland, designers strived to avoid competing
with the nearby European reality of actual medieval towns,
cathedrals, and chateaux. While Disneyland’s castle is based
on Germany’s Neuschwanstein and Disney World’s is based
on a Loire Valley chateau, Euro Disney’s Le Château de la
Belle au Bois Dormant, as the French insisted Sleeping
Beauty be called, is more cartoonlike with stained glass
windows built by English craftspeople and depicting Disney
characters. Fanciful trees grow inside as well as a beanstalk.
The park is criss-crossed with covered walkways.
Eisner personally ordered the installation of 35 fireplaces
in hotels and restaurants. “People walk around Disney
World in Florida with humidity and temperatures in the
90s and they walk into an air-conditioned ride and say,
‘This is the greatest,’” said Eisner. “When it’s raining and
miserable, I hope they will walk into one of these lobbies
with the fireplace going and say the same thing.”
Children all over Europe were primed to consume.
Even one of the intellectuals who contributed to Le
Figaro’s Disney-bashing broadsheet was forced to admit
with resignation that his 10-year-old son “swears by
Michael Jackson.” At Euro Disneyland, under the name
“Captain EO,” Disney just so happened to have a Michael
Jackson attraction awaiting him.
Food Service and Accommodations
at Euro Disneyland
Disney expected to serve 15,000 to 17,000 meals per hour,
excluding snacks. Menus and service systems were devel-
oped so that they varied in both style and price. There is a
400-seat buffeteria, 6 table service restaurants, 12 counter
service units, 10 snack bars, 1 Discovery food court seating
850, 9 popcorn wagons, 15 ice-cream carts, 14 specialty
food carts, and 2 employee cafeterias. Restaurants were, in
fact, to be a showcase for American foods. The only excep-
tion to this is Fantasyland, which recreates European fables.
Here, food service will reflect the fable’s country of origin:
Pinocchio’s facility having German food; Cinderella’s,
French; Bella Notte’s, Italian; and so on.
Of course recipes were adapted for European tastes.
Because many Europeans don’t care much for very spicy
food, Tex-Mex recipes were toned down. A special coffee
blend had to be developed that would have universal
appeal. Hot dog carts would reflect the regionalism of
American tastes. There would be a ball park hot dog
(mild, steamed, a mixture of beef and pork), a New York
hot dog (all beef, and spicy), and a Chicago hot dog
(Vienna-style, similar to bratwurst).
Euro Disneyland has six theme hotels, which would offer
nearly 5,200 rooms on opening day; a campground (444
rental trailers and 181 camping sites); and single-family
homes on the periphery of the 27-hole golf course. Exhibit 4
provides an overview of the size, and main features of Euro
Disneyland. Exhibit 5 compares daily pass and accommoda-
tion prices of Euro Disneyland with Disney World Orlando.
Disney World in Florida as part of an ‘American experi-
ence,’” said Patrick P. Roper, marketing director of Alton
Towers, a successful British theme park near Manchester.
He doubted they would seek the suburbs of Paris as eagerly
as America and predicted attendance would trail Disney
projections. Exhibit 3 summarizes the history and major
milestones of Euro Disneyland.
The Layout of Euro Disneyland
Euro Disneyland is determinedly American in its theme.
There was an alcohol ban in the park despite the attitude
among the French that wine with a meal is a God-given
right. Designers presented a plan for a Main Street USA
based on scenes of America in the 1920s because research
indicated that Europeans loved the Prohibition era. Eisner
decreed that images of gangsters and speakeasies were too
negative. Though made more ornate and Victorian than Walt
Disney’s idealized Midwestern small town, Main Street
remained Main Street. Steamships leave from Main Street
through the Grand Canyon Diorama en route to Frontierland.
The familiar Disney Tomorrowland, with its dated
images of the space age, was jettisoned entirely. It was
replaced by a gleaming brass and wood complex called
Discoverland, which was based on themes of Jules Verne
and Leonardo da Vinci. Eisner ordered $8 or $10 million
in extras to the “Visionarium” exhibit, a 360-degree movie
about French culture that was required by the French in
their original contract. French and English are the official
languages at the park, and multilingual guides are available
to help Dutch, German, Spanish, and Italian visitors.
With the American Wild West being so frequently cap-
tured on film, Europeans have their own idea of what life
was like back then. Frontierland reinforces those images.
A runaway mine train takes guests through the canyons
and mines of Gold Rush country. There is a paddle-wheel
steamboat reminiscent of Mark Twain, Indian explorer
canoes, and a phantom manor from the Gold Rush days.
Exhibit 3 Chronology of the Euro Disneyland Deal
1984–85 Disney negotiates with Spain and France to cre-
ate a European theme park. Chooses France as
the site.
1987 Disney signs letter of intent with the French
government.
1988 Selects lead commercial bank lenders for the
senior portion of the project. Forms the Société
en Nom Collectif (SNC). Begins planning for the
equity offering of 51% of Euro Disneyland as
required in the letter of intent.
1989 European press and stock analysts visit Walt
Disney World in Orlando. Begin extensive news
and television campaign. Stock starts trading at
20–25 percent premium from the issue price.
Source: Geraldine E. Willigan, “The Value-Adding CFO: An Interview with Disney’s Gary
Wilson,” Harvard Business Review, January–February 1990, pp. 85–93.
In-Depth Integrative Case 2.1a Euro Disneyland 269
with the earring’s diameter no more than three-quarters of
an inch. Neither men nor women can wear more than one
ring on each hand. Further, women were required to wear
appropriate undergarments and only transparent panty
hose, not black or anything with fancy designs. Though a
daily bath was not specified in the rules, the applicant’s
video depicted a shower scene and informed applicants
that they were expected to show up for work “fresh and
clean each day.” Similar rules are in force at Disney’s three
other theme parks in the United States and Japan.
In the United States, some labor unions representing Dis-
ney employees have occasionally protested the company’s
strict appearance code, but with little success. French labor
unions began protesting when Disneyland opened its “casting
center” and invited applicants to “play the role of [their lives]”
and to take a “unique opportunity to marry work and magic.”
The CGT handed out leaflets in front of the center to warn
applicants of the appearance code, which they believed rep-
resented “an attack on individual liberty.” A more mainstream
union, the Confédération Française Démocratique du Travail
(CFDT), appealed to the Labor Ministry to halt Disney’s vio-
lation of “human dignity.” French law prohibits employers
from restricting individual and collective liberties unless the
restrictions can be justified by the nature of the task to be
accomplished and are proportional to that end.
Degelmann, however, said that the company was “well
aware of the cultural differences” between the United
States and France and as a result had “toned down” the
wording in the original American version of the guidebook.
He pointed out that many companies, particularly airlines,
maintained appearance codes just as strict. “We happened
to put ours in writing,” he added. In any case, he said that
he knew of no one who had refused to take the job
because of the rules and that no more than
5 percent of the people showing up for interviews had
decided not to proceed after watching the video, which
also detailed transportation and salary.
Fitzpatrick also defended the dress code, although he
conceded that Disney might have been a little naive in
presenting things so directly. He added, “Only in France
is there still a communist party. There is not even one in
Russia any more. The ironic thing is that I could fill the
park with CGT requests for tickets.”
Another big challenge lay in getting the mostly French
“cast members,” as Disney calls its employees, to break
their ancient cultural aversions to smiling and being
consistently polite to park guests. The individualistic
French had to be molded into the squeaky-clean Disney
image. Rival theme parks in the area, loosely modeled on
the Disney system, had already encountered trouble keep-
ing smiles on the faces of the staff, who sometimes took
on the demeanor of subway ticket clerks.
The delicate matter of hiring French citizens as opposed
to other nationals was examined in the more than two-year-
long preagreement negotiations between the French govern-
Disney’s Strict Appearance Code
Antoine Guervil stood at his post in front of the l,000-
room Cheyenne Hotel at Euro Disneyland, practicing his
“Howdy!” When Guervil, a political refugee from Haiti,
said the word, it sounded more like “Audi.” Native French
speakers have trouble with the aspirated “h” sound in
words like “hay” and “Hank” and “howdy.” Guervil had
been given the job of wearing a cowboy costume and
booming a happy, welcoming howdy to guests as they
entered the Cheyenne, styled after a Western movie set.
“Audi,” said Guervil, the strain of linguistic effort
showing on his face. This was clearly a struggle. Unless
things got better, it was not hard to imagine objections
from Renault, the French car company that was one of the
corporate sponsors of the park. Picture the rage of a
French auto executive arriving with his or her family at
the Renault-sponsored Euro Disneyland, only to hear the
doorman of a Disney hotel advertising a German car.
Such were the problems Disney faced while hiring some
12,000 people to maintain and populate its Euro Disney-
land theme park. A handbook of detailed rules on accept-
able clothing, hairstyles, and jewelry, among other things,
embroiled the company in a legal and cultural dispute. Crit-
ics asked how the brash Americans could be so insensitive
to French culture, individualism, and privacy. Disney offi-
cials insisted that a ruling that barred them from imposing
a squeaky-clean employment standard could threaten the
image and long-term success of the park.
“For us, the appearance code has a real effect from a
product identification standpoint,” said Thor Degelmann,
vice president for human resources for Euro Disneyland.
“Without it we wouldn’t be presenting the Disney product
that people would be expecting.”
The rules, spelled out in a video presentation and
detailed in a guide handbook, went beyond height and
weight standards. They required men’s hair to be cut above
the collar and ears with no beards or mustaches. Any tat-
toos must be covered. Women must keep their hair in one
“natural color” with no frosting or streaking, and they may
make only limited use of makeup like mascara. False eye-
lashes, eyeliners, and eye pencil were completely off lim-
its. Fingernails can’t pass the end of the fingers. As for
jewelry, women can wear only one earring in each ear,
Exhibit 4 The Euro Disneyland Resort
5,000 acres in size
30 attractions
12,000 employees
6 hotels (with 5,184 rooms)
10 theme restaurants
414 cabins
181 camping sites
Source: Roger Cohen, “Threat of Strikes in Euro Disney Debut,” New York Times, April
10, 1992, p. 20.
270 Part 2 The Role of Culture
below 25,000, less than half the park’s capacity and way
below expectations. Many people may have heeded the
advice to stay home or, more likely, were deterred by a
one-day strike that cut the direct rail link to Euro Disney-
land from the center of Paris. Queues for the main rides,
such as Pirates of the Caribbean and Big Thunder Moun-
tain railroad, were averaging around 15 minutes less than
on an ordinary day at Disney World, Florida.
Disney executives put on a brave face, claiming that
attendance was better than at first days for other Disney
theme parks in Florida, California, and Japan. However,
there was no disguising the fact that after spending thou-
sands of dollars on the preopening celebrations, Euro Dis-
ney would have appreciated some impressively long
traffic jams on the auto route.
Other Operating Problems
When the French government changed hands in 1986, work
ground to a halt, as the negotiator appointed by the Conser-
vative government threw out much of the groundwork pre-
pared by his Socialist predecessor. The legalistic approach
taken by the Americans also bogged down talks, as it meant
planning ahead for every conceivable contingency. At the
same time, right-wing groups who saw the park as an inva-
sion of “chewing-gum jobs” and U.S. pop culture also
fought hard for a greater “local cultural context.”
On opening day, English visitors found the French
reluctant to play the game of queuing. “The French seem
to think that if God had meant them to queue, He wouldn’t
have given them elbows,” they commented. Different cul-
tures have different definitions of personal space, and
Disney guests faced problems of people getting too close
or pressing around those who left too much space between
themselves and the person in front.
Disney placed its first ads for work bids in English,
leaving small- and medium-sized French firms feeling like
foreigners in their own land. Eventually, Disney set up a
data bank with information on over 20,000 French and
European firms looking for work, and the local Chamber
of Commerce developed a video text information bank
with Disney that small- and medium-sized companies
ment and Disney. The final agreement called for Disney to
make a maximum effort to tap into the local labor market.
At the same time, it was understood that for Euro Disneyland
to work, its staff must mirror the multicountry makeup of
its guests. “Casting centers” were set up in Paris, London,
Amsterdam, and Frankfurt. “We are concentrating on the
local labor market, but we are also looking for workers who
are German, English, Italian, Spanish, or other nationalities
and who have good communication skills, are outgoing,
speak two European languages—French plus one other—
and like being around people,” said Degelmann.
Stephane Baudet, a 28-year-old trumpet player from
Paris, refused to audition for a job in a Disney brass band
when he learned he would have to cut his ponytail. “Some
people will turn themselves into a pumpkin to work at
Euro Disneyland,” he said. “But not me.”
Opening Day at Euro Disneyland
A few days before the grand opening of Euro Disneyland,
hundreds of French visitors were invited to a preopening
party. They gazed perplexed at what was placed before
them. It was a heaping plate of spare ribs. The visitors
were at the Buffalo Bill Wild West Show, a cavernous
theater featuring a panoply of “Le Far West,” including 20
imported buffaloes. And Disney deliberately didn’t provide
silverware. “There was a moment of consternation,” recalls
Fitzpatrick. “Then they just kind of said, ‘The hell with
it,’ and dug in.” There was one problem. The guests
couldn’t master the art of gnawing ribs and applauding at
the same time. So Disney planned to provide more napkins
and teach visitors to stamp with their feet.
On April 12, 1992, the opening day of Euro Disney-
land, France-Soir enthusiastically predicted Disney
dementia. “Mickey! It’s Madness” read its front-page
headline, warning of chaos on the roads and suggesting
that people might have to be turned away. A French gov-
ernment survey indicated that half a million might turn
up with 90,000 cars trying to get in. French radio warned
traffic to avoid the area.
By lunchtime on opening day, the Euro Disneyland car
park was less than half full, suggesting an attendance of
Exhibit 5 What Price Mickey?
Euro Disneyland Disney World, Orlando
Peak Season Hotel Rates
4-person room $97–$345 $104–$455
Campground Space
$48 $30–$49
One-Day Pass
Children $26 $26
Adults $40 33
Source: BusinessWeek, March 30, 1992.
In-Depth Integrative Case 2.1a Euro Disneyland 271
thought about these and other problems, the previous
year’s losses and the prospect of losses again in the cur-
rent year, with their negative impact on the company’s
stock price, weighed heavily on his mind.
Questions for Review
1. Using Hofstede’s four cultural dimensions as a
point of reference, what are some of the main cul-
tural differences between the United States and
France?
2. In what way has Trompenaars’s research helped
explain cultural differences between the United
States and France?
3. In managing its Euro Disneyland operations, what
are three mistakes that the company made? Explain.
4. Based on its experience, what are three lessons the
company should have learned about how to deal
with diversity? Describe each.
Source: This case was prepared by Research Assistant Sonali Krishna under the direc-
tion of Professors J. Stewart Black and Hal B. Gregersen as the basis for class discus-
sion. It is not intended to illustrate either effective or ineffective managerial capability
or administrative responsibility. J. S. Black, and H. B. Gregersen, “EuroDisneyland,” in
Cases in International Organizational Behavior, ed. G. Oddou and M. Mendenhall
(Malden, MA: Blackwell Publishers, 1998). Copyright © 1998 by J. Stewart Black and
Hal B. Gregersen. All rights reserved. Used with permission.
through France and Europe would be able to tap into. “The
work will come, but many local companies have got to
learn that they don’t simply have the right to a chunk of
work without competing,” said a chamber official.
Efforts were made to ensure that sooner, rather than
later, European nationals take over the day-to-day running
of the park. Although there were only 23 U.S. expatriates
among the employees, they controlled the show and held
most of the top jobs. Each senior manager had the task
of choosing his or her European successor.
Disney was also forced to bail out 40 subcontractors
who were working for the Gabot-Eremco construction
contracting group, which had been unable to honor all of
its commitments. Some of the subcontractors said they
faced bankruptcy if they were not paid for their work on
Euro Disneyland. A Disney spokesperson said that the
payments would be less than $20.3 million and the com-
pany had already paid Gabot-Eremco for work on the
park. Gabot-Eremco and 15 other main contractors
demanded $157 million in additional fees from Disney for
work that they said was added to the project after the
initial contracts were signed. Disney rejected the claim
and sought government intervention. Disney said that
under no circumstances would it pay Gabot-Eremco and
accused its officers of incompetence. As Bourguignon
A Further Look at Euro Disneyland in
Recent Years:
As discussed in In-Depth Integrative Case 2.1a, Euro
Disneyland faced major hurdles in its early years. In
May 1992, roughly 25 percent of Euro Disney’s work-
force (approximately 3,000 people) resigned from their
jobs citing unacceptable working conditions. As a
result, the Euro Disney Company stock price declined
and Euro Disney announced an expected net loss in its
first year of operation of approximately 300 million
French francs in July of 1992.1 Since then, Euro Dis-
neyland has enacted some major changes—many with
great success.
In an effort to improve attendance, Disney began
serving alcoholic beverages with meals inside the Euro
Disneyland Park in June of 1993.2 In March of 1994,
Disney offered the banks a deal: Disney would provide
additional capital to ensure that it continues to operate
if the banks agreed to restructure the US$1 billion of
debt. If the banks did not agree, Disney was prepared
to close the park and default on the loans. Disney put
additional pressure on the banks by publicly announc-
ing the possible closure of the park unless the debt was
restructured. The banks agreed to Disney’s demands
and wrote off the next two years of interest payments
along with a three-year period where loan repayments
would be postponed. In return, The Walt Disney Com-
pany agreed to restructure its own loan arrangements
at the new park valued at US$210 million.3
A turnaround began to blossom shortly after restruc-
turing. In 1995, Disney reported that attendance had
increased 21 percent from 8.8 million to 10.7 million
year over year with hotel occupancy also increasing
from 60 percent to 68.5 percent.4 The Euro Disney
Resort was renamed to Disneyland Paris in 1994 and,
in July of 1995, the company reported its first quarterly
profit of US$35.3 million. Disneyland Paris ended 1995
with a profit of US$22.8 million. Disney opened a sec-
ond theme park in France, Walt Disney Studios Park, in
March of 2002.5 The two combined parks had a total
attendance in 2015 of over 14.8 million, making it
Europe’s most visited themed attraction.6
In January 2015, Euro Disney S.C.A. shareholders
approved a one billion euro recapitalization plan.
Funded by the Walt Disney Company, the plan aims to
improve the long-term cash position of Disneyland Paris,
putting an end to the reoccurring debt crises that have
plagued Euro Disney S.C.A. over its two-decade history.
Per the terms of the deal, the existing debt held by Walt
Disney Company will be converted to equity, further
increasing the American company’s investment in the
European operations.7
272 Part 2 The Role of Culture
1. Anna Willard, James Mackenzie, James Grubel,
Wayne Cole, Tova Cohen, Alan Raybould, and Jon-
athan Thatcher. “FACTBOX: Who’s Next? Coun-
tries at Risk of Recession,” Reuters, March 3,
2009, www.reuters.com/article/financial-recession-
risk-idUSSP40009620090304.
2. “Euro Disney Adding Alcohol,” New York Times,
June 12, 1993, www.nytimes.com/1993/06/12/
business/euro-disney-adding-alcohol.html.
3. “The History of DisneyLand Paris,” Solarius, July 4,
2006. www.solarius.com/dvp/dlp/dlp-history.htm.
4. Christian Sylt, “Magic Results: Euro Disney Plans
New Hotels,” August 17, 2008, www.independent.
co.uk/news/business/news/magic-results-euro-disney-
plans-new-hotels-899529.html.
5. Euro Disney S.C.A., “Euro Disney S.C.A. Reports
Fiscal Year 2011 Results,” November 9,
2011, http://corporate.disneylandparis.com/CORP/
EN/Neutral/Images/uk-2011-11-09-euro-disney-sca-
reports-annual-results-for-fiscal-year-2011 .
6. “Disneyland Paris Visitor Numbers Down Since
Attacks,” RFI, February 10, 2016, http://en.rfi.fr/
france/20160210-disneyland-paris-visitor-numbers-
down-attacks.
7. Euro Disney S.C.A., First Quarter Announcement,
January 16, 2015, http://disneylandparis-news.com/
wp-content/uploads/2015/01/uk-2015-01-16-cp-Q1-
revenues .
ENDNOTES
4 The Meanings and Dimensions of Culture�����������������������������������������������
The World of International Management: Culture Clashes in Cross-Border Mergers and Acquisitions������������������������������������������������������������������������������������������������������
The Nature of Culture����������������������������
Cultural Diversity�������������������������
Values in Culture������������������������
Values in Transition���������������������������
Cultural Dimensions��������������������������
Hofstede���������������
Trompenaars������������������
Integrating Culture and Management: The GLOBE Project������������������������������������������������������������
Culture and Management�����������������������������
GLOBE’s Cultural Dimensions����������������������������������
GLOBE Country Analysis�����������������������������
The World of International Management-Revisited������������������������������������������������������
Summary of Key Points����������������������������
Key Terms����������������
Review and Discussion Questions��������������������������������������
Internet Exercise: Renault-Nissan in South Africa��������������������������������������������������������
Endnotes���������������
In the International Spotlight: South Africa���������������������������������������������������
5 Managing Across Cultures���������������������������������
The World of International Management: Taking a Bite Out of Apple: Corporate Culture and an Unlikely Chinese Start-Up����������������������������������������������������������������������������������������������������������������������������
The Strategy for Managing across Cultures������������������������������������������������
Strategic Predispositions��������������������������������
Meeting the Challenge����������������������������
Cross-Cultural Differences and Similarities��������������������������������������������������
Parochialism and Simplification��������������������������������������
Similarities across Cultures�����������������������������������
Many Differences across Cultures���������������������������������������
Cultural Differences in Selected Countries and Regions�������������������������������������������������������������
Using the GLOBE Project to Compare Managerial Differences����������������������������������������������������������������
Managing Culture in Selected Countries and Regions���������������������������������������������������������
The World of International Management-Revisited������������������������������������������������������
Summary of Key Points����������������������������
Key Terms����������������
Review and Discussion Questions��������������������������������������
Internet Exercise: Haier’s Approach������������������������������������������
Endnotes���������������
In the International Spotlight: Poland���������������������������������������������
7 Cross-Cultural Communication and Negotiation�����������������������������������������������������
In-Depth Integrative Case 2.1a: Euro Disneyland������������������������������������������������������
Endnotes���������������
Question and writing rules
Module 04: Cultural Dimensions in Decision-Making
Euro Disneyland
In the Euro Disneyland case study (p. 257 in the textbook), many of the issues Disney had from the start related to cultural challenges expanding into France.
Questions
· Using Hofstede’s four cultural dimensions as a point of reference,
How would you make the following decisions using the Business Problem Solving Model in the course content?!
· Discover-Identify the problem:
1. What were two of the three main issues described in the case that were problematic?
· Investigate-Gather information to define the problem:
2. What were the cultural challenges posed by Disney’s expansion into France?
· Brainstorm-Produce Alternatives: In your opinion,
3. How could Disney have resolved these issues?
· Implement-Put the best solution into effect: Of your alternatives,
4. Which one do you think would work out best?
5. Why?
· Review-Assess the effects of the solution: Based on Disney’s experience,
6. What are the lessons the company should have learned about how to deal with cultural issues when expanding?
Describe each.
Required:
· Chapters 4 & 5 in International Management: Culture, Strategy, and Behavior
Chapter 4 PowerPoint slides Chapter 4 PowerPoint slides – Alternative Formats in International Management: Culture, Strategy, and Behavior
· “In-Depth Integrative Case Study 2.1a: Euro Disneyland” (p. 257) in International Management: Culture, Strategy, and Behavior
· Kotler, P., Manrai, L., Lascu, D., & Manrai, A. (2019). Influence of country and company characteristics on international business decisions: A review, conceptual model, and propositions. International Business Review, 28(3), 482-498.
· Sobol, K., Cleveland, M., & Laroche, M. (2018). Globalization, national identity, biculturalism and consumer behavior: A longitudinal study of Dutch consumers. Journal of Business Research, 82, 340-353.
Recommended:
Botone, D., & Grama, B. (2018). Cultural dimensions of openness as a personality factor. Cross-Cultural Management Journal, XX(2), 139-145.
Essay should meet the following requirements:
· Be 5-6 pages in length, which does not include the title page, abstract, or required reference page, which is never a part of the content minimum requirements.
· Use APA (7th ed) style guidelines.
· Support your submission with course material concepts, principles, and theories from the textbook and at least seven scholarly, peer-reviewed journal articles.
Writing rules
· Use a standard essay format for responses to all questions (i.e., an introduction, middle paragraphs, headline (and conclusion).
· Make sure to include all the key points within conclusion section, which is discussed in the assignment. Your way of conclusion should be logical, flows from the body of the paper, and reviews the major points.
· I would like to see more depth for the question
· Responses must be submitted as a MS Word Document only, typed double-spaced, using a standard font (i.e. Times New Roman) and 12 point type size.
· Plagiarism All work must be free of any form of plagiarism.
· Written answers into your own words. Do not simply cut and paste your answers from the Internet and do not copy your answers from the textbook
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