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OUM Business School

Cross-Cultural Management

Copyright © Open University Malaysia (OUM)

Dr Sabariah Yaakub
Dr Nik Abdul Halim
Mohd Haniff Jedin
Nursafinas Mohd Saad
Mustafa Zakaria

Copyright © Open University Malaysia (OUM)

Project Directors: Prof Dato’ Dr Mansor Fadzil
Prof Dr Wardah Mohamad
Open University Malaysia

Module Writers: Dr Sabariah Yaakub

Dr Nik Abdul Halim
Mohd Haniff Jedin (Leader)
Nursafinas Mohd Saad
Mustafa Zakaria
Universiti Utara Malaysia

Moderators: Ayub Nasir

Universiti Industri Selangor

Prof Dr Wardah Mohamed

Open University Malaysia

Developed by: Centre for Instructional Design and Technology

Open University Malaysia

First Edition, November 2007

Second Edition, December 2010
Third Edition, August 2013 (rs)

Copyright © Open University Malaysia (OUM), August 2013, BBSB4103

All rights reserved. No part of this work may be reproduced in any form or by any means without
the written permission of the President, Open University Malaysia (OUM).

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Table of Contents
Course Guide xi- xvi

Topic 1 Undertow of Culture 1

1.1 Culture and Business 2
1.2 Definition of Culture 3
1.3 Elements of Culture 5
1.3.1 Values and Norms 5
1.3.2 Social Structure 6
1.3.3 Language 8
1.3.4 Communication 9
1.3.5 Religion 9
1.4 What is the Direction of Culture? 10
1.4.1 The World is Getting Smaller 10
1.4.2 Management is Management 13
1.5 Culture and Businesses 13
1.5.1 Culture Shock 14
1.5.2 Competitive Advantage 14
Summary 17
Key Terms 18

Topic 2 Cultural Spheres of Influence 19

2.1 Cultural Spheres of Influence 20
2.1.1 Regional Culture 21
2.1.2 Industry Culture 27
2.1.3 Professional Culture 28
2.1.4 Functional Culture 30
2.1.5 Corporate Culture 32
2.2 Creating Competitive Advantage: Interacting Spheres 34
Summary 37
Key Terms 38

Topic 3 Exploring Culture 39

3.1 Framework of Culture 40
3.2 Artefacts 42
3.2.1 Architecture 43
3.2.2 Interior Design 43
3.2.3 Dress Code 44
3.3 Behaviour 46
3.3.1 Greeting Rituals 46

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3.3.2 Forms of Address 48

3.3.3 Making Contact 49
3.4 Belief 50
3.5 Values 51
3.6 The Role of Beliefs and Values in Organisation 51
3.7 Value Orientation 53
3.7.1 Relationship with Nature 54
3.7.2 Human Activity 55
3.7.3 Human Nature 56
3.7.4 Relationship with People 57
3.7.5 Relationship with Time 57
Summary 59
Key Terms 60

Topic 4 Culture and Organisation 61

4.1 Organisational Culture 62
4.2 Characteristics of an Organisational Culture 63
4.3 Culture and Structure 64
4.4 Culture and the Workplace 65
4.4.1 Power Distance 66
4.4.2 Uncertainty Avoidance 66
4.4.3 Individualism/Collectivism 67
4.4.4 Masculinity/Femininity 68
4.5 Culture and Organisational Processes 70
4.5.1 Decision Making 70
4.5.2 Policies and Procedures 71
4.5.3 Systems and Controls 71
4.5.4 Information and Communication 72
4.6 Transfer of Best Practices 72
4.7 Corporate Culture 73
4.7.1 Definition of Corporate Culture 75
4.7.2 Categories of Corporate Culture 76
4.8 Workforce Diversity and Multicultural Teams 77
4.8.1 Advantages and Disadvantages of Workforce 78
4.8.2 Managing Multicultural Groups and Teams 80
Summary 83
Key Terms 83

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Topic 5 International Manager 84

5.1 General Role of an International Manager 85
5.2 Traits of International Manager 86
5.3 Culture Shock 88
5.4 Emphasis on Cultural Adjustment 92
5.5 Managing Cultural Differences in Foreign Countries 95
5.5.1 Interpersonal Skills 96
5.5.2 Linguistic Ability 96
5.5.3 Motivation to Live Abroad 97
5.5.4 Tolerance for Uncertainty and Ambiguity 97
5.5.5 Patience and Respect 98
5.5.6 Cultural Empathy 98
5.5.7 Strong Sense of Self 98
5.6 Preparing Managers for Foreign Assignments 99
5.7 International Manager Training and Development 99
5.8 Repatriation 101
5.9 Strategies to Help Managers in the Transitional Period 102
Summary 105
Key Terms 106

Topic 6 Global Organisation 107

6.1 Definition of Global Organisation 108
6.2 Strategies for Managing Cultural Differences 109
6.3 Ignoring Cultural Differences 109
6.4 Minimising Cultural Differences 112
6.5 Utilising Cultural Differences 117
Summary 120
Key Terms 121

Topic 7 Leadership Across Culture 122

7.1 Leaders 123
7.2 Leadership Behaviours and Styles 124
7.2.1 Authoritarian Leadership 124
7.2.2 Participative Leadership 125
7.2.3 Delegative Leadership 126
7.3 Leadership Across Cultures 127
7.3.1 United States Leadership Styles 127
7.3.2 Japanese Leadership Styles 128
7.3.3 Chinese Leadership Styles 128
7.3.4 Middle Eastern Leadership Styles 129
7.3.5 European Leadership Styles 130
7.3.6 Latin American Leadership Styles 131

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7.4 Type of Leaders 132

7.4.1 Transformational Leaders 132
7.4.2 Transactional Leaders 133
7.4.3 Charismatic Leaders 133
Summary 135
Key Terms 135

Topic 8 Cross-cultural Communication 136

8.1 Definition of Cross-culture Communication 137
8.2 Communication Process 137
8.3 Cross-culture Communication Procedures and Guidelines 139
8.3.1 Being Prepared by Learning and Improving 139
Communication Skills
8.3.2 Being Prepared to Accept Differences and 141
Understand other Cultures
8.3.3 Adjusting to Requirements and Practices of other 142
8.3.4 Identifying Value or Moral Differences 142
Among Cultures
8.4 Cultural Variation in the Communication Process 143
8.4.1 Language Variation 144
8.4.2 Time Variation 148
8.4.3 Social Behaviour Variation 150
8.4.4 Contract Enforcement Variation 153
8.4.5 Distance Variation and Interaction Space 153
8.4.6 Formality Variation 154
Summary 157
Key Terms 157

Topic 9 Negotiation Across Cultures 158

9.1 Negotiation Process 160
9.1.1 Preparation 161
9.1.2 Relationship Building 162
9.1.3 Exchanging Task-related Information 163
9.1.4 Persuasion 163
9.1.5 Concessions and Agreement 164
9.2 Factors to Consider in Intercultural Negotiations 165
9.2.1 The Players and the Situation 165
9.2.2 Decision-making 166
9.2.3 National Character 166
9.2.4 Cultural Noise 167
9.2.5 Use of Interpreters 168
9.3 Cross-cultural Negotiation Tactics 168

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9.3.1 Location 169

9.3.2 Time Limits 170
9.3.3 Authority 170
9.4 Negotiation Styles in Several Countries 171
9.4.1 American Negotiators 172
9.4.2 Japanese Negotiators 173
9.4.3 Indian Negotiators 173
9.4.4 Middle Eastern Negotiators 174
Summary 176
Key Terms 177

Topic 10 Globalisation: Cultural Issues and Challenges 178

10.1 A Borderless World 179
10.2 Meaning of Globalisation 180
10.3 Globalisation Factors 183
10.4 Effects of a Borderless World on Culture 186
10.5 Advantages and Disadvantages of a Borderless World 187
10.6 Clash of Cultures 190
10.7 Overcoming Cultural Clash 193
Summary 195
Key Terms 196

Answers 197
References 204

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Copyright © Open University Malaysia (OUM)


Copyright © Open University Malaysia (OUM)

Copyright © Open University Malaysia (OUM)


You must read this Course Guide carefully from the beginning to the end. It tells
you briefly what the course is about and how you can work your way through
the course material. It also suggests the amount of time you are likely to spend in
order to complete the course successfully. Please keep on referring to the Course
Guide as you go through the course material as it will help you to clarify
important study components or points that you might miss or overlook.

BBSB4103 Cross-Cultural Management is one of the courses offered by the
Faculty of Business and Management at Open University Malaysia (OUM). This
course is worth 3 credit hours and should be covered over 8 to 15 weeks.

This is a core course for Bachelor of Management students and a major core
course for Bachelor of Human Resource Management students. This course is
also an elective course for Bachelor of Business Administration students majoring
in International Business.

As an open and distance learner, you should be able to learn independently and
optimise the learning modes and environment available to you. Before you begin
this course, please confirm the course material, the course requirements and how
the course is conducted.

It is a standard OUM practice that learners accumulate 40 study hours for every
credit hour. As such, for a three-credit hour course, you are expected to spend
120 study hours. Table 1 gives an estimation of how the 120 study hours could be

Copyright © Open University Malaysia (OUM)


Table 1: Estimation of Time Accumulation of Study Hours

Study Activities
Briefly go through the course content and participate in initial discussion 3
Study the module 60
Attend 3 to 5 tutorial sessions 10
Online participation 12
Revision 15
Assignment(s), Test(s) and Examination(s) 20

By the end of this course, you should be able to:
1. Explain the cultural aspects which influence the operations and decisions of
2. Analyse the situations experienced by organisation managers of different
cultural backgrounds;
3. Review the different concepts and practical aspects of planning,
management, organisation, control and leadership in international and
multicultural organisations;
4. Evaluate value differences that exist in a culture; and
5. Summarise the aspects of culture in the era of globalisation.

This course is divided into 10 topics. The synopsis for each topic is presented

Topic 1 introduces the undertow of culture and explains culture in terms of

management. It also introduces the definition of culture, elements of culture,
competitive advantage of cultures and the two enduring myths about culture.

Topic 2 discusses the cultural spheres of influence. You will learn each cultural
sphere, the competitive advantages created by each cultural sphere, and finally

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evaluate the various cultural spheres of influence and the complex interaction in
implementing an efficient cultural management.

Topic 3 explores culture in detail. It touches on artefacts, rituals and behaviour,

beliefs, values and others. This topic also highlights the basic underlying
assumptions used by scholars of culture and management.

Topic 4 dwells on culture and organisation. It looks at cultural practices in

organisations, value dimensions, cultural influences which form the structure and
processes in organisations and corporate culture.

Topic 5 concentrates on international managers. Issues such as role of international

managers, culture shock and cultural adjustment are also discussed.

Topic 6 explores global organisations. It touches on cultural differences and

competitive advantage created by the cultural differences. Cross-cultural
management is discussed as well.

Topic 7 focuses on leadership across cultures. It gives the definition of leadership

and explains leadership styles, behaviour across cultures and different types of
leaders. This topic also elaborates on the different leadership styles across

Topic 8 explains cross-cultural communication issues. It explores the cross-

cultural communication process, procedures and guidelines as well as cultural

Topic 9 explains international business negotiation. You will learn about

negotiation stages, procedure of negotiations, factors which must be considered
in cross-cultural negotiations, tactics used in negotiations and different
characteristics of negotiators from various countries.

Topic 10 discusses the cultural issues and challenges of globalisation. It touches

on the definitions, factors and effects of globalisation on culture. This topic also
touches on the advantages and disadvantages of globalisation and cultural clash.


Before you go through this module, it is important that you note the text
arrangement. Understanding the text arrangement will help you to organise your
study of this course in a more objective and effective way. Generally, the text
arrangement for each topic is as follows:

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Learning Outcomes: This section refers to what you should achieve after you
have completely covered a topic. As you go through each topic, you should
frequently refer to these learning outcomes. By doing this, you can continuously
gauge your understanding of the topic.

Self-Check: This component of the module is inserted at strategic locations

throughout the module. It may be inserted after one sub-section or a few sub-
sections. It usually comes in the form of a question. When you come across this
component, try to reflect on what you have already learnt thus far. By attempting
to answer the question, you should be able to gauge how well you have
understood the sub-section(s). Most of the time, the answers to the questions can
be found directly from the module itself.

Activity: Like Self-Check, the Activity component is also placed at various

locations or junctures throughout the module. This component may require you
to solve questions, explore short case studies, or conduct an observation or
research. It may even require you to evaluate a given scenario. When you come
across an Activity, you should try to reflect on what you have gathered from the
module and apply it to real situations. You should, at the same time, engage
yourself in higher order thinking where you might be required to analyse,
synthesise and evaluate instead of only having to recall and define.

Summary: You will find this component at the end of each topic. This component
helps you to recap the whole topic. By going through the summary, you should
be able to gauge your knowledge retention level. Should you find points in the
summary that you do not fully understand, it would be a good idea for you to
revisit the details in the module.

Key Terms: This component can be found at the end of each topic. You should go
through this component to remind yourself of important terms or jargon used
throughout the module. Should you find terms here that you are not able to
explain, you should look for the terms in the module.

References: The References section is where a list of relevant and useful

textbooks, journals, articles, electronic contents or sources can be found. The list
can appear in a few locations such as in the Course Guide (at the References
section), at the end of every topic or at the back of the module. You are
encouraged to read or refer to the suggested sources to obtain the additional
information needed and to enhance your overall understanding of the course.

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Learners of this course are required to pass the BDPP1103 Introductory
Management course.

Please refer to myINSPIRE.

Deresky, H. (2003). International management: Managing across borders and
cultures. New Jersey: Prentice Hall.
Edgar, H. S. (1997). Organisational culture and leadership. San Francisco: Jossey
Bass Wiley.
Farid Elashmawi, & Haris, R. P. (1998). Multicultural management 2000.
Houston: Gulf Publishing Company.
Hodgetts, M. R., & Luthans, F. (2003). International management: Culture strategy
and behaviour. Boston: McGraw Hill.
Hofstede, G. (1997). Cultures and organisations: Software of the mind. New
York: Mc Graw Hill.
Md Zabid Abdul Rashid, & McLaren, C. M. (2002). Issues and cases in cross-
cultural management: An Asian perspective. Selangor: Prentice Hall.
Schneider, S. C., & Barsoux, J. L. (2003). Managing across cultures. Essex:
Prentice Hall.
Seelye, H. N., & Seelye, J. A. (1995). Culture clash: Managing in a multicultural
world. Lincolnwood: NTC Business Books.


The TSDAS Digital Library has a wide range of print and online resources for the
use of its learners. This comprehensive digital library, which is accessible through
the OUM portal, provides access to more than 30 online databases comprising e-
journals, e-theses, e-books and more. Examples of databases available are
EBSCOhost, ProQuest, SpringerLink, Books24x7, InfoSci Books, Emerald
Management Plus and Ebrary Electronic Books. As an OUM learner, you are
encouraged to make full use of the resources available through this library.

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Copyright © Open University Malaysia (OUM)

Topic Undertow
1 of Culture
By the end of this topic, you should be able to:
1. Define culture;
2. Explain all the elements that constitute culture;

p 3. Discuss how culture can give an organisation a competitive

advantage; and
4. Identify two enduring myths in the direction of culture.

Read the following story.

Ahmad was very excited about his first business assignment, which was in Jordan. He
was going to negotiate a joint venture project in Amman with a company there.
However, upon his arrival at the airport in Jordan, Ahmad became upset because no one
came to pick him up. Instead, he had to take a taxi to his hotel. Ahmad had expected the
Jordanian company to send someone to fetch him like Malaysian companies usually do
for their business partners.

Later, Ahmad had a meeting at 2pm with the representatives of the Jordanian company.
He arrived at 2.10pm. In Malaysia, people usually arrive 10 to 15 minutes later than the
scheduled time. To AhmadÊs surprise, the representatives were already at the meeting
venue and had been waiting there since 1.55pm. Ahmad felt embarrassed and
apologised. He offered a handshake to his business partner but the Jordanian spread out
his hands and gave Ahmad a hug and tried to kiss him on both cheeks. Ahmad felt very
uncomfortable being hugged and kissed by another man while the Jordanian felt Ahmad
was not friendly as he seemed to distance himself when he was about to be hugged.

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After reading the above story, answer the following questions:

(a) What does „culture‰ mean?
(b) Why is it important to study culture?
(c) What could Ahmad have done before going to Jordan in order to avoid the
(d) In your opinion, is culture important in our daily life?
(e) Does culture reflect the civilisation of a nation or community?

With these questions in mind, this topic will give you insight into the meaning,
elements, direction and myths about culture, as well as, the relationship between
culture and business.


Each community in this world has a culture of its own, which comprises its
artefacts, clothes, language, food, place of dwelling, thoughts, lifestyle and
behaviour. Let us look at Figure 1.1 which shows the symbolic greeting used by
Middle Eastern people.

Figure 1.1: Two individuals exchanging a Middle Eastern greeting


Clothes are said to be a form or representative of culture. The Vietnamese, for

example, wear ao dai and the Japanese are well known for their kimono. In
Malaysia, there are many types of traditional costumes worn by the various
ethnic groups such as the baju kurung, cheongsam and saree. These costumes
reflect the existence of the different cultures in this country (refer to Figure 1.2).
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Figure 1.2: Different dresses reflect different cultures

How do we make a connection between culture and business? How does culture
make an impact on a business organisation? You may wonder about these
questions when you are reading this topic. So, let us find out the role of culture in

Culture plays an important role in business management. It forms the identity of

employees and gives a perception about the environment of an organisation.
Schneider and Barsoux (2003), an author on culture in organisations, states that
cross-culture management in organisations is like a manager who jumps into a
sea of business. According to them, not only does the manager have to fight the
waves, but what is more important, is that he or she must dive to the seabed.
Thus, the first step a manager must take in managing cross-cultures is to identify
all important aspects of business that involve culture.

In todayÊs global business environment, it is essential for us, especially for

managers, to learn about different cultures, in order to develop a cross-cultural
literacy. By having this cross-cultural literacy, managers will become more aware
of the similarities and differences of cultures in different countries and use the
right business strategy to suit a particular culture.


What does culture mean? There is no single definition which accurately and
completely defines culture as it is very subjective. Kroeber and Kluckhohn (1952)
said that they have found more than 160 different definitions of culture and some
are shown in the following Table 1.1.

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Table 1.1: Definition of Culture

Source Definition
Edward (1871) Culture⁄. is that complex whole which includes knowledge,
belief, art, morals, law, custom and any other capabilities and
habits acquired by man as a member of society.

Ferraro (1998) Culture is everything that people have, think and do as

members of their society.
Geert Hofstede (1991) The collective programming of the mind which distinguishes
the members of one group or category of people from

Terpstra and David A learned, shared, compelling, interrelated set of symbols

(1991) whose meaning provides a set of orientations for members of

One of the most recent definitions of culture by Luthans and Doh (2009)
refers to culture as the acquired knowledge that people use to interpret
experience and generate social behaviour. This knowledge will form values,
create attitudes and influence the behaviour of individuals or society. To know
more about culture, it is better to look at these characteristics of culture:
(a) Learned
Culture is acquired by learning and experience, it is not inherited;
(b) Shared
People as members of a group, organisation or society share a culture;
(c) Transgenerational
Culture is passed down from one generation to the next;
(d) Symbolic
Culture is based on the human capacity to symbolise or use one thing to
represent another;
(e) Patterned
Culture has structure and is integrated; a change in one part will bring
changes in another; and
(f) Adaptive
Culture can change or adapt according to other cultures.

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Do an online search on definitions of culture by other scholars. Next,

write your own interpretation of culture. Present your work during
your tutorial.


What are the elements that form culture? When constituted together, the
elements that form the bedrock of culture are:
(a) Values and norms;
(b) Social structure;
(c) Language;
(d) Communication; and
(e) Religion.

Let us take a look at each of these elements in the following sections.

1.3.1 Values and Norms

Some people say that values and norms refer to the same things. However, each
of these has its own characteristics. Let us look at them in detail:

(a) Values
Values refer to abstract ideas about what a group believes to be right and
acceptable such as attitudes towards justice, individual freedom, truth,
honesty, loyalty, collective responsibility, role of women, love, sex and
marriage (Hill, 2010). One example of values is a societyÊs attitude towards
same-gender marriage (refer to Figure 1.3). In some cultures, it is acceptable
while in other cultures, it is shameful and even against the law.

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Figure 1.3: Same-gender marriage


(b) Norms
Norms are social rules and guidelines that prescribe appropriate behaviour
in particular situations (Hill, 2010). Usually, violations of norms are
considered less serious than violation of values. For example, it is a
violation of norms if a Westerner enters the house of an Asian with shoes
on or an Asian eats dinner with his hands in a Western country.

1.3.2 Social Structure

Now that we have looked at values and norms, let us move on to social structure.
This is the basic organisation of a society. It consists of two dimensions:

(a) Individual or Group Orientation

(i) Individual
The individual culture stresses on individualism and emphasises
personal achievements and social standing of individuals. Success in
this type of culture is determined by performance and achievements.
This type of social structure is usually associated with Western

Individualism explains the success of people like Bill Gates (founder

of Microsoft), Steve Jobs (founder of Apple), Jeff Bezos (founder of and Larry Page (founder of Google). Figure 1.4 shows
two of these individualists.

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Figure 1.4: Gates (left) and Page (right)

(ii) Group
In some societies, especially in the East, more emphasis is placed on
group orientation. The social status of an individual is determined by
the status of the group the person belongs to. The group could be in
the form of a family, a village, a team or an organisation where people
work. This type of culture encourages members to work together for
the common good of the whole society.

In countries like Japan, people usually work for a lifetime at the same
company because of their close associations with the company.
Japanese managers feel proud to introduce themselves together with
the company they work for, such as „Mr Saito of Fuji‰ or „Mrs
Chiyaki of Sony‰, due to their strong feeling of belonging to the

(b) Social Stratification

People are different in terms of family background, occupation and
income. Some cultures stress very much on social strata and people in
these cultures might be very reluctant to communicate with people from
other strata.

For example, IndiaÊs caste system is an example of a social strata system.

It is based on the family into which a person is born. Caste is a closed
stratification system, whereby individuals will never have the
opportunity to change their caste. Class system is another type of social
stratification. It is less rigid than the caste system as individuals can
change their class through their own achievements.

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1.3.3 Language
At the mention of language, what comes to your mind? Basically, language
comprises two categories:

(a) Verbal Language

Verbal language enables people to communicate with each other. At the
same time, it helps to distinguish between different cultures. Countries
with more than one language often have more than one culture. For
example, in Malaysia, there are many ethnic groups such as Malays,
Chinese, Indians, Kadazan, Iban, Bidayuh and others. These different ethnic
groups have their own language system and culture.

(b) Non-verbal Language

Non-verbal language refers to non-verbal cues or body language. Some of
these cues are universally understood such as a smile, which is a sign of joy
and happiness. Some non-verbal cues, however, have different meanings in
different cultures. Showing the thumbs up in America (refer to Figure 1.5),
Europe and Asia means „good‰ or „everything is all right‰. However, in
Greece and Italy, for example, the gesture might be considered as obscene
or rude.

Figure 1.5: A man giving a thumbs up


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1.3.4 Communication
Communication differs across cultures as some societies have the following aspects:

(a) High Context Culture

In a high context culture, context plays a major role in communication and
the behaviour of individuals. For example, Asians usually prefer an indirect
answer such as „That might be difficult‰, which is virtually a polite „No‰ to
a certain request.

(b) Low Context Culture

In a low context culture, communication is straightforward and context has
less impact on how information is likely to be spoken and interpreted
(Ahlstrom & Bruton, 2010). For example, Americans and the British
generally value direct and clear communication.

1.3.5 Religion
Now, let us look at this last element of culture. You may wonder why religion is
one of the elements involved in the formation of culture. Let us find out why.

Religion is an element of culture because it shapes the values, ethics and behaviour
of people in a society. There are four major religions in the world: Christianity,
Islam, Hinduism and Buddhism. So how does religion influence culture?

Christianity encourages individuals to work hard and create wealth for the glory
of God. It creates a value system that stresses capitalism. It spurs the
entrepreneurial activities and economic growth in society.

Islam also encourages its people to work hard and seek wealth but reminds its
followers that wealth is temporary in nature. The main objective for Muslims
should be to gain the greater treasure, which is to enter paradise. In Islam, wealth
is a blessing from God and should be shared with the needy by giving donation
and zakat (alms).

1. Briefly explain, using your own words, each of the elements that
constitute culture; and
2. Give one example for each element.

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After defining culture, let us find out the effects of culture. Culture changes
constantly with the change of time and the preferences of each different race or
ethnic group. Cultural change is evidenced not only in fashion, architecture and
decorations but also in terms of a shift from poverty to modernity and luxury.
This phenomenon can be seen in Malaysia.

Previously, Malays usually lived in rural areas or villages. But now, many have
migrated to big cities such as Kuala Lumpur in search of better living. This is also
the case with the Chinese and Indian communities. The Tionghuas (a Chinese
ethnic group), who were previously known for engaging in business, now prefer
to be employed by others. On the contrary, some Indians, previously farmers or
rubber tappers, have become successful businessmen today.

According to Schneider and Barsoux (2003), there are two enduring myths in the
direction of culture (refer to Figure 1.6). We will concentrate on one of these
myths in the coming section. The term „global village‰ will be discussed as well
in the following sections.

Figure 1.6: Two myths of cultural direction


What are the two myths associated with cultural direction?

1.4.1 The World is Getting Smaller

It is often claimed that the world is getting smaller. Does this mean the earth is
shrinking and experiencing changes due to tsunamis, earthquakes and others?
No, it does not.

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In the context of culture, the world is described as „getting smaller‰ not due to
physical changes but due to rapid development in the information and
communication network. How do you relate the claim that the world is getting
smaller to the information and communication network? What is the actual
meaning behind this myth?

TodayÊs world is said to be at our fingertips. Just with a click or a phone call, a
person can contact another within a few seconds. The information and
communication network, which includes the telephone, radio, computer,
Internet, satellite and so on, enables you to send and receive information. These
communication gadgets, as shown in Figure 1.7, even allow you to attend a
meeting without having to spend much time and money.

Figure 1.7: Communication gadgets such as mobile phones


The myth that the world is getting smaller is illustrated in Figure 1.8.

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Figure 1.8: Myth that the world is getting smaller

According to Marshall McLuhan (1968), the world today seems like one Global
Village. National boundaries are diminishing and peopleÊs tastes and
preferences are becoming much more similar to one another. This view gives the
impression that everything is becoming the same worldwide, such as eating at a
McDonaldÊs fast food restaurant, wearing Adidas apparel or using an ACER
computer. This means that culture is no longer influenced by societies.
However, all of this is nothing but a myth because the culture of a society is
still preserved no matter where the place is (e.g. China Town). It will only
change according to the preferences of a given time. Furthermore, people tend to
adopt other cultures as long as they are not against the local values and norms.

We can take the United States, for example, as the American society is made of
various ethnic groups from all over the world. These various races and ethnicities,
however, still preserve their own cultures. Take for instance, the existence of
China Town for example, where a majority of the occupants are Chinese
communities. The communities in these China Towns still practise their own way
of life and embrace the Chinese culture even though they have been living in
America for centuries. These people preserve their culture and language so that
they can be more competitive. This shows that there are still a few layers of
cultural barriers that exist which prevent total assimilation of other culture.


Discuss in depth with your colleagues the meaning of the term

„Global Village‰.

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1.4.2 Management is Management

Management experts are of the view that management remains management
regardless of where it is being practised. It contains techniques and principles
such as „management by objectives‰ that can be universally applied anywhere in
this world.

There is, however, a contrasting view which says that this universal management
is a myth because there are differences in culture such as in Malaysia, compared
to Portugal or African countries. In fact, the differences are so obvious due to
economic, technological and management gaps. It is not necessary for the
development of an economy, technology and management to follow either the
Western or Asian management practices as each society has its own management
culture identity. If we compare between a Japanese firm and an American firm,
or a French firm with a British firm, we will find out that various systems such
as accounting, marketing, human resource practices, economic policy and
management approaches practised by each firm varies from one to another.

Rosabeth Moss Kanter, the former editor of Harvard Business Review said that
management practice is not a practice which can be considered totally global. In
her latest research, it was concluded that „the idea of a corporate village
where a common culture of management unifies the practice of business around
the world is more dream than reality.‰


There are a few ways in which culture and business interact with each other.
Firstly, this interaction can cause a problem in business, particularly when it
involves meetings or negotiations between people from different cultural
backgrounds. As more and more businesses are involved in international
business activities nowadays, the importance of understanding another societyÊs
culture is becoming much more important than before.

The example shown in the introduction of this topic (Ahmad and the Jordanian)
clearly shows how important cross-cultural understanding is because it can
influence the outcome of a business meeting or negotiation.

Secondly, cultural influence on business is evident in the workplace itself. As

firms seek the best professionals worldwide to work in their companies, people
from different countries and cultural backgrounds are working together, thus
creating workplace diversity. Managements will face challenges in managing

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these diverse workforces in order to create a harmonious organisational culture

that encourages cooperation, creativity and innovation.

In the following sections, we will take an in-depth look at two elements which
play a part in business:
(a) Culture shock; and
(b) Competitive advantage.

1.5.1 Culture Shock

As businesses go overseas, there is a tendency to send workers from the home
country to manage or complete assignments at the foreign subsidiary. These
workers are also known as expatriates.

The ability of expatriates to complete their tasks and assignments depends very
much on their ability to respond and adjust to the local culture. Failure to do so
will result in culture shock, a situation where expatriates feel upset, confused,
disoriented and face emotional upheaval. Those experiencing culture shock
might fail to assimilate into a different culture and return to their home country
without completing their given tasks.

1.5.2 Competitive Advantage

Before we embark further, let us explore the definition of competitive advantage
as shown below.

Competitive advantage is defined as an advantage that a firm has over its competitors,
allowing it to generate greater sales or profit margins and retain more customers than its
competitors. There can be many types of competitive advantages such as the firm's cost
structure, product offerings, distribution network and customer support.

Competitive advantage gives a company an edge over its rivals and an ability to generate
greater value for the firm and its shareholders. The more sustainable the competitive
advantage, the more difficult it is for competitors to neutralise the advantage.


Culture can be a source of competitive advantage. An organisation is said to

have competitive advantage over rival organisations if the rival organisations
are unable to imitate the advantage enjoyed by it. A leading authority on
competitive strategy, Michael Porter, mentioned that the drivers or forces in

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achieving competitive advantage in a country are determined by several factors

such as:
(a) Mining substances;
(b) Market size;
(c) Intervention of government; and
(d) Strategic business network.

Japanese management refers to the effective working culture of the Japanese

people. It has been proven to be the reason there are many successful
international Japanese firms such as Sony, Honda, Mitsubishi and Toyota.

The Japanese have a concept called Keiretsu. It involves a set of companies with
interlocking business relationships or a strong relationship between the client
and the supplier. This business culture is rarely found because it requires a
strong value of trust between one another. Such a relationship creates a unique
strength which provides competitive advantage for firms, especially in todayÊs
environment which is full of uncertainties and high risks due to issues such as
terrorism, economic crisis, globalisation and e-commerce.

Malaysia has its own competitive advantage through the intervention of the
government in protecting local firms. This is very important because these firms
are still young and need the governmentÊs assistance. For instance, Proton, the
first local car manufacturer, still needs the assistance of the government to
strengthen its operations and management. A good relationship between these
two parties is crucial to create a competitive advantage in producing the cars.

After looking at several cultural examples of competitive advantages of some

firms and countries, you, as a future manager must be able to evaluate how
far local culture can influence the management of a firm or country in achieving
strategic successes.


1. Explain the meaning of competitive advantage.

2. How does culture give an organisation competitive advantage?
3. From a cultural perspective, competitive advantage offers more
advantages than disadvantages. List the advantages of competitive

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Multiple Choice Questions

1. Who is of the view that culture refers to everything that people

have, think and do as members of society?
A. Geert Hofstede
B. Richard M. Hodgets and Fred Luthans
C. Gary Ferraro
D. Edward Hall

2. There are two main myths with regard to the direction of culture.
Which myth talks about the global village?
A. The world is getting bigger
B. The world is getting smaller
C. Management is management
D. Management is business

3. Japanese organisations are well known for their success. There is a

term used in Japanese organisations which refers to the strong
relationship among clients and suppliers. What is this term?
A. Sogo sosha
B. Chaebol
C. Kumikawa
D. Keiretsu

4. Which of the following is not an element of culture?

A. Values and norms
B. Social structure
C. Technology
D. Language

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5. It consists of two dimensions which is either the society is based

on an individual or group orientation, and the level of
stratification. Which among the following refers to the explanation
A. Religion
B. Social structure
C. Technology
D. Borderless world

Culture plays an important role in business management.

• Culture not only can be learned and shared but is also transgenerational,
symbolic, patterned and adaptive.

• Culture consists of multiple elements such as values and norms, social

structure, religion, language and communication.

Two enduring myths in the direction of culture are:

– The world is getting smaller; and
– Management is management.

Culture has a positive effect on an organisation as it creates competitive


A culture which creates competitive advantage could enhance an

organisationÊs uniqueness.

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Competitive advantage Norms

Context culture Social stratification
Global village Values

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Topic Cultural
2 Spheres of
By the end of this topic, you should be able to:

1. Explain the cultural spheres of influence which exist in cross-

culture management;
2. Link each cultural sphere with the current business scenario;
3. Analyse the competitive advantages created by some of the
cultural spheres; and
4. Evaluate the various cultural spheres of influence and the complex
p interaction in implementing an efficient cultural management.

Have you noticed how Proton, our national car-maker, has a business culture
that is different from the business culture of Royal Selangor, our internationally-
acclaimed pewter producing company? Why should there be differences in the
business culture when both companies are local? You may find the answer by
reading the following paragraph.

The influence of culture in business can be explored in several cultural spheres.

These cultural spheres of influence interact in complex ways, notably when
doing business in a foreign country. In France, for example, the pharmaceutical
business culture is very different from that of the tyre producers such as Michelin
(refer to Figure 2.1). Different locations and types of industry in France have
different business cultures and practices, although they are all in the same

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Figure 2.1: The Michelin tyre company


As such, culture can be discovered in many places: regional cultures within

nations (urban versus rural, north versus south) and among groups of nations.
Culture can also be distinguished based on heritage and history. However, it is
difficult to identify which of the many spheres of culture is more dominant
regardless of whether there is a boundary which separates a country, company or
function from one another.

In this topic, we will learn about cultural spheres of influence. Each sphere of
influence has its own set of artefacts (such as building and architecture),
behaviour, beliefs and values. These influences can be dealt with through
external adaptation and internal integration. You will also learn how various
spheres can create problems or possibilities for gaining competitive advantage in
businesses which involve businessmen from different cultural backgrounds.


According to Schneider and Barsoux (2003), there are five cultural spheres of
influence, as shown in Figure 2.2.

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Figure 2.2: Cultural spheres of influence

Let us explore each of the spheres of influence in the following section.

2.1.1 Regional Culture

Have you ever realised that doing business in a particular country is different
from doing business in another? This is due to cultural differences. Likewise,
there are also cultural differences within states in a country, such as the culture of
people in Kelantan and Kedah, even though both are located in Malaysia. For
example, people residing in Kedah place more emphasis more on their menÊs
contribution while Kelantanese men depend much on their womenfolk. There is
even a market in Kelantan which is predominated by women.

Think of the culture practised by you and your family. There is no doubt that you
have your own culture. You might realise that the culture of people in your
society is somewhat unique and different from that of other societies in the other
areas of your country. This is known as regional culture. Now, let us see what is
meant by regional culture as shown below.

Regional culture refers to the spatially defined communities that share values,
attitudes, opinions, lifestyles, symbols and behaviours that are unique to a
particular community.

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Regional culture evolves from time to time. We will look at some of the factors
that result in this evolution as shown in Figure 2.3.

Figure 2.3: Factors for regional evolution

In order to elaborate more on the factors that result in the regional evolution of a
state or country, let us take the example of Perak, the most developed state in
Malaysia after Selangor.

(a) History
Based on the history of Perak, it was at the peak of development in the past
due to its mining activities and vast resources such as tea plantations and
limestone hills. The British settlement in Perak also brought glory and fame
to the state.

(b) Politics
Politics in Perak has always been stable due to its loyalty to Barisan
National, the leading political party in Malaysia.

(c) Economy
Tin-mining, trading, tourism and many other activities have been
developed to make Perak a developed state. PerakÊs evolution mainly lies
in its vast natural resources which have been generating profit and stability.

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(d) Language
The stateÊs emphasis on English as one of the languages which need to be
learned has also made Perak more developed than states like Kelantan and
Terengganu which put more emphasis on the Malay language.

(e) Religion
PerakÊs official religion is Islam, similar to other states in Malaysia. Even
though religion does not play a big role in the evolution of Perak, it helps
Perak deal effectively with other states which have adopted Islam and other
Muslim countries.

(f) Geography
The state is located strategically along the Straits of Malacca. This
encourages trading activities and the promotion of beaches and islands
located along the straits as tourist destinations for Perak.

Why do you need to know the culture of a given place? Knowing the culture of a
given place will give you a picture of why an industry thrives in certain areas.
Cultural influences according to area can be divided into two categories: within
national borders and beyond national borders.

(a) Within National Borders

Knowledge and understanding of cultural differences between one area
and another is very important although both areas are located in the same
country. Operating a business in the state of Kelantan is different from
operating it in the state of Selangor. Retail stores in Kelantan, for example,
have to provide separate payment counters for males and females, which is
not the case in Selangor.

These differences in the operation system of businesses may create

problems if the culture of an area is not identified properly. As mentioned
earlier, if a company decides to open a branch in Kelantan and provides
non-separate counters for customers, the state government can sue the
company due to its insensitivity in dealing with the culture of the
government who prefers any business organisation operating in the state to
have separate counters for men and women.

There are also countries which are divided into two parts, causing cultural
differences. It could be a north-south divide, as in the case of North Korea
and South Korea, or an east-west divide, as in the case of East Germany and
West Germany. South Korea is regarded as more liberal and welcoming to
visitors compared to North Korea which is ruled by a very strict regime and
is quite conservative in dealing with outsiders.

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If we look at history, Malaysia was divided into several confederated and

non-confederated states. Today, the confederated states such as Perak and
Selangor enjoy better economic development than non-confederated states
such as Perlis and Kedah.

Table 2.1 shows the differences that exist in a country with more than one

Table 2.1: Example of Countries with more than one Division

Country Area Differences

Portugal North (Lisbon) Language: Arabic influence in the Oporto
South (Oporto)
India Mumbai Business/commercial centre

New Delhi Administrative centre

Kolkata Cultural and arts centre

Companies located in Kuala Lumpur, Paris, London or Tokyo, for example,

have cultures which are different from companies located in smaller cities
or urban areas. Multinational companies such as Toyota and Honda (refer
to Figure 2.4) are known to be the catalyst of the economy of villages. These
companies operate factories to manufacture car parts in rural areas in the
United Kingdom and United States. Many companies have moved their
headquarters from large urban centres to rural areas, which improved the
quality of life of the rural people.

Figure 2.4: Multinational companies, Toyota and Honda


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In terms of corporate culture, we can see how Michelin, a leading tyre

company in France, managed to preserve its image as a leading tyre
producer in the world. This company opened its headquarters in a remote
area outside Paris. Michelin also recruits engineers from local universities
in the said area and is very careful about protecting the secrets of its
product development. When this firm opens a branch abroad, it chooses
isolated and rural sites for the location of its new branch. This is part of
MichelinÊs culture in order to preserve the operation system of the business
and the knowledge involved in product development.

Regional culture is always evolving from time to time. There are a couple
of factors that have resulted in this evolution as shown in Figure 2.5.

Figure 2.5: Regional evolution factors

(b) Beyond National Borders

What is meant by cultural influence beyond national borders? Based on a
research by Ronan and Shenkar (1985), the world may be divided into
several clusters of countries and independents based on their relative
cultural similarities. Clustering of these countries helps managers to
understand the similarities and differences between the countries. This may
provide the basis for expatriate placement, establish compatible regional
units and predict the results of policies and practices across national
boundaries (Ronen and Kraut, 1977).

In order to better understand the points above, look at Table 2.2. It shows
countries distinguished according to particular categories.

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Table 2.2: Categorisation of Countries

Category Countries
Germanic Germany, Switzerland and Austria
Nordic Finland, Norway, Denmark and Sweden
Near East Turkey, Iran and Greece
Arab Bahrain, United Arab Emirates, Oman and Kuwait
Far East Malaysia, Vietnam, Singapore, Taiwan, China, Thailand,
Philippines, Indonesia and Brunei
Latin America Argentina, Venezuela, Mexico, Peru, Chile and Colombia
Latin Europe France, Belgium, Italy, Spain and Portugal
Anglo United States, Canada, New Zealand, Ireland, Britain,
Australia and South Africa
Independents Brazil, Japan, India and Israel

Source: Ronan & Shenkar (1985)

These countries are categorised according to area and cultural similarities

in terms of geography, language, wealth and religion. For example,
Malaysia is located in Far East Asia and its population mostly comprises
Malays. The Malay ethnic and linguistic heritage crosses national borders to
include other countries of Far East Asia such as Brunei, Indonesia, Thailand
and so on, forming one regional culture as there are some similarities in the
cultures of these countries. For example, these countries share similar
cultural practices such as eating using hands, taking off shoes when
entering a house (refer to Figure 2.6) and respecting the elderly.

Figure 2.6: The practice of taking off shoes before entering a house

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1. In your own words, write about the influence of culture within
national borders.

2. Find out whether there are any other factors which may cause the
evolution of a regional culture.

2.1.2 Industry Culture

Industry culture can be identified by looking at various firms involved in various
industries. Organisations within the same industry are expected to share similar
norms and values. Different industries will have different cultures and it is due
to different task environments such as:
(a) Nature of decision-making;
(b) Nature of products or services;
(c) Rate of technology change;
(d) State intervention; and
(e) Market characteristics.

According to Gordon (2001), the industry culture evolves from various sources
such as:
(a) The industry environment and characteristics such as customer
requirements, competitive environment and societal expectations, and
„right things to do‰ in the industry;
(b) Strategies, structure and business process developed by management of
organisations in the industry; and
(c) The outcomes of demand for performance and survival in the industry.

Firms in the banking industry, for example, have a different culture from firms in
the insurance industry. Let us look at the comparison of these two industries as
shown in Table 2.3.

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Table 2.3: Banking Industry and Insurance Industry

Banking Industry Insurance Industry

Customer-driven and (a) Performance-driven;

(b) Workers who emphasise on client network; and
(c) Workers who are more aggressive in securing
clients individually.

Meanwhile, in high-technology industries, innovation is very important. In these

industries, exchange of information and interaction among members are necessary.
Technological advancement is more important than client requirements.

2.1.3 Professional Culture

Professional culture is related to the principles of workers. It is a complex
ensemble of values, attitudes, symbols, rules and practices, emerging as people
react to the requirements and situations they confront as members of a different
professional group.

What is meant by professional? A professional is an expert who has certain skills

such as doctors, lawyers, engineers, consultants, designers and scientists as
shown in Figure 2.7.

Figure 2.7: Professionals are experts who possess certain skills

Professional cultures also include the „proper behaviour‰ and distinctive image
of a profession. In the United States and Malaysia, for example, professionals
such as doctors or lawyers are not allowed to advertise their services through the
mass media. Professionals also have their own dress code which reflects their

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For example, a doctor wears a white coat and a judge wears a black robe (refer to
Figure 2.8). Professionals also differ in their values and beliefs. For example,
medical doctors and lawyers differ in their missions and methods.

Figure 2.8: Professionals like doctor must adhere to their dress code

Do you know there is a connection between the professional and national

cultures of a country? For instance, we can get the best medical experts from the
United States, trained engineers from France, computer experts from India and
so on. The growing need for professionalism is pushed even further by the trend
for organisations to become networks of specialists. The difference between
general and specific skills is becoming an important issue in determining which
level of professionalism is higher. As decision-making is pushed down the ranks
and as workers are being empowered, there is greater autonomy and
responsibility. Therefore, workers must adhere to professional principles.

How do professionals acquire judgement? Professionals acquire judgement

through these three methods:
(a) Intensive training;
(b) Supervision; and
(c) Socialisation.

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Organisations which require professionals include hospitals, government bodies,

universities, engineering firms, law firms and so on. They recruit the best trained
professionals who have the skills required. Often, recruitment is done based on
the criteria fulfilled by candidates.

The simplest example is the recruitment of graduates from various universities.

An employee who has been trained at Universiti Malaya has a perspective which
is different from that of an employee trained at Universiti Sains Malaysia.
Meanwhile, from an international perspective, Professor John Van Maanet, a
professor from the Massachusetts Institute of Technology (MIT), said that MBA
graduates trained at Harvard are more likely to have a generalist approach and
work well in teams. On the other hand, MBA graduates trained at MIT are more
likely to be specialists and perform well in individual assignments.


In your opinion, is professional culture more influential than national

culture? Discuss with your classmates during the tutorial session.

2.1.4 Functional Culture

Functional culture is becoming more important nowadays in firms. The various
divisions of a firm such as finance, production, marketing and research and
development have different cultures.

We can clearly see the differences when we compare these two divisions:

(a) Production Division

The production division is physically more active and operates using
energy to produce products. The employees operate in dirty and noisy
places and are occasionally exposed to hazards as seen in Figure 2.9.

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Figure 2.9: The environment in a production division


(b) Finance Division

Employees of the finance division work in an office which is quieter and does
not require much physical energy. They manipulate numbers rather than
machines. The reasons for the differences that exist in a finance division can
be found in the external environment, such as stakeholder demands.

Figure 2.10 depicts the environment of a finance division such as in banking

and insurance institutions.

Figure 2.10: Environment in a finance division


For example, the marketing function is more concerned with customer

demands or needs, while research and development (R&D) is more
concerned with state-of-the-art technology. In terms of tasks and

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responsibilities, each division has different functional tasks. For production,

tasks are more routine and specific.

Which functions are most highly valued is in part determined by the nature
of the industry. In pharmaceutical companies, R&D may be the most
valued. For consumer goods, marketing has the biggest say.

The interaction between functional and national culture can be seen in the
way functions are valued by different countries, as reflected in the salaries
of department heads. For example, in Britain, the head of the finance
department heads the list, whereas in Germany, it is ranked fifth. In
Germany, the highest salary is paid to the head of R&D. Holland, on the
other hand, pays the highest salary to the head of the sales department.

2.1.5 Corporate Culture

What is corporate culture? Let us look at the definition below.

Corporate culture is a blend of the values, beliefs, taboos, symbols, rituals and
myths all companies develop over time. It is influenced by the industry,
business and product of a given company.

The concept of corporate culture emerged in the early 1980s when Americans
tried to follow in the steps of the Japanese to gain competitive advantage. It is
believed that the JapaneseÊs corporate culture was the secret weapon responsible
for the success of Japanese firms.

However, Peters and Waterman (1982) in their book, In Search of Excellence, said
that we do not have to be like the Japanese to achieve excellence. They provided
examples of strong corporate cultures in US companies such as IBM, Disney and
Delta. Many multinational firms focused on strategic planning, structure and
systems in the previous decade. These firms have now changed their directions
and determined their mission and philosophy in order to create greater
coordination and integration.

Corporate culture derives from the influence of the following elements:

(a) Founding Figures and Turnaround Leaders

The founder of a company plays an important role in making a company a
success. The founder influences and shapes the companyÊs culture through
his or her personal values and beliefs.

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For example, the late Anita Roddick, who founded The Body Shop,
demonstrated her personal values in her actions through innovation and a
strong sense of social responsibility (see Figure 2.11). Leaders can also
influence and change the culture of a given organisation such as Sir John
Harvey-Jones who changed the meaning of Imperial Chemical Industries
(ICI) to Innovative, Competitive and International.

Figure 2.11: Roddick in front of one of her stores


(b) Unique Company History and Stage of Development

Administrative heritage also influences the culture. Different structures,
standard operating procedures or routines that evolve over time shape
culture by prescribing specific behaviour and reinforcing certain values and

For example, the Ford Motor Company started with a functional structure
and grew through vertical integration in order to have better control over
supply and distribution. At Ford, control was highly centralised.
Meanwhile, General Motors began with a divisional structure as it was
created by merging several of its subsidiaries and grew through related

National culture interacts with corporate culture in ways which may converge to
create opportunities for competitive advantage, such as the corporate culture of
BMW and Audi which is influenced by German engineering, and the culture of
McDonaldÊs which was established in the United States.

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Even though corporate culture can provide opportunities, it can also cause
difficulties as shown in the example below.

Disney, which managed to attract many tourists to Disneyland, California,

opened two other Disneyland branches in Japan and France. Disneyland in
Tokyo was so successful that it was visited by 50 million tourists in 1998.
Meanwhile, Disneyland in France was less successful due to the culture of the
Europeans who find it hard to accept foreign cultures, particularly American
culture. As a result, the French Disneyland sustained losses amounting to $1.5
billion in 1994.

This huge amount of losses not only brought failure to Disneyland but also made
a long-term impact on DisneyÊs effort to establish itself in a country. The failure
to adapt the corporate culture of an organisation according to the culture of a
particular country not only creates minor problems but can even bring a huge
impact to an organisation, such as illustrated in the Disney example.


How will you apply the five cultural spheres of influence in your own


(a) Explain briefly the five cultural spheres of influence.

(b) What are the six factors for regional evolution?
(c) What are the methods used by professionals to acquire
(d) What are the elements that influence corporate culture?


You have learnt about five main cultural spheres – regional, industry,
professional, functional and corporate cultures. All these cultures are interrelated
and interaction among spheres can create competitive advantages. In todayÊs
business world which is full of challenges, strategies and added values are

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important assets for an organisation. The combination of different spheres may

improve competitive advantage and also create better opportunities for firms.

For example, a smart partnership between firms from different countries, cultural
backgrounds and industries allows them to share expertise, technologies and
costs associated with a project. People from different cultural backgrounds
provide a blend of creativity that might not exist if firms work alone.

Let us look at companies which have more than two cultural spheres
incorporated in them and how this helps the companies create a competitive
advantage. One example is Proton Holdings which formed a partnership with
Mitsubishi Motors Corporation. They shared the industry and functional
spheres, which helped them to strengthen their competitive advantage. The
Proton Inspira, a Proton-Mitsubishi car, shows how partnerships between
companies with different approaches but which share the same spheres can
create outstanding products.

However, interaction among spheres can also create problems, as shown below.

A company named AT&T entered into partnership with another company

named Olivetti. Both companies faced significant cultural differences as one was
an American company, while the other was Italian.

In terms of industry culture, AT&T was in the communications industry while

Olivetti was in the computing industry. Cross-cultural differences between both
firms resulted in the failure of the partnership as they failed to recognise and
accept the different spheres they were dealing with.

As could be seen from the above examples, it is important for companies to

recognise the different spheres they will face when considering a partnership.
Companies with similar cultural spheres will face fewer problems than
companies with different cultural spheres as each sphere plays a role in
strengthening or weakening a companyÊs competitive advantage.


In your opinion, will the merging of a bank and an insurance institution

experience the interaction of cultural spheres, therefore creating a
competitive advantage?

Give an example for this merger and post your opinion in the myVLE

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Multiple Choice Questions

1. Which among the following is not a cultural sphere?

A. Professional
B. Functional
C. Nationality
D. Corporate

2. What is meant by regional cultures within national borders?

A. The culture of the Malay community in Brunei and Malaysia.
B. The culture of the Malaysian Chinese community and the
Chinese community in China.
C. The Indian community in Pulau Pinang and the Indian
community in Kuala Lumpur.
D. The Minangkabau community in Sumatera and the
Minangkabau community in Negeri Sembilan.

3. The study done by Ronan & Shenkar (1985) found that cultures
beyond national borders are divided into several categories.
Which among the following is CORRECT?
A. Eastern Europe – France, Belgium and Italy
B. Nordic – Finland, Norway and Denmark
C. Far East – Malaysia, Vietnam and Taiwan
D. Germanic – Switzerland, Austria and Germany

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4. There are two elements associated with corporate culture. Which

among the following is one of the elements which plays a major
role in corporate culture?
A. Socialisation
B. Founding figures
C. Supervision
D. Intensive training

5. In a multinational firm, the R&D function is the driving force

behind the innovation and production of new products which are
more consumer-friendly. In which category does R&D belong in
terms of cultural spheres of influence?
A. Professional
B. Functional
C. Corporate
D. Industrial

There are five cultural spheres of influence – regional culture, industry

culture, professional culture, functional culture and corporate culture.

Regional culture is the most critical as each organisation has a comprehensive

culture of its own. This culture is controlled by the local population, e.g.
Japan is known for its discipline, harmonious environment and the practice
of joint decision making between workers and factory or industry owners.

Industry culture depends on the environment of an organisation. If the

organisation is an office or administrative centre, the employees will dress
smartly. However, for those working as engineers and in workshops,
informal attire is more appropriate.

Professionals such as doctors, engineers, lawyers and judges have their own

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In every organisation, the functions of divisions are very important in

ensuring smooth operations. The organisation has a functional culture.
Functions in a company depend on the type of sector and products produced.
It also depends on the size of the company.

Corporate culture elevates a company to a higher level of efficiency and

creates a better vision. This culture depends on current trends and
developments as well as rival companies.

Organisations have different cultural spheres and some might have more
than two cultural spheres. These spheres can bring about changes in
companies and make them more dynamic and productive.

Corporate Professional
Functional Regional

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Topic Exploring
3 Culture

By the end of this topic, you should be able to:
1. Explain the two frameworks of culture;
2. Discuss the external cultural dimension;
3. Elaborate how beliefs and values can lead to organisational success;
4. Examine the basic underlying assumptions used by scholars of
culture and management.

Imagine you are a businessman trying to market your products in a foreign
market such as Japan. After carrying out an in-depth research about the country,
you feel there are various cross-cultural differences and problems that might
arise when you deal with your potential business partners in Japan. List the
potential problems and think about what you can do to overcome them. Identify
what you have to do to adjust to the Japanese culture, which is known for its
uniqueness. Imagine the effect on your business if you failed to explore and
understand the culture of others.

Let us look at Figure 3.1 which shows one of the possibilities when someone
approaches a person from a different culture.

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Figure 3.1: Differences in culture

You need to realise that culture has a great effect on businesses especially when
people operate outside their home country. Due to cultural differences,
companies are usually cautious about doing business with foreign businessmen.
Knowledge and understanding about the culture of potential business partners
are very important when doing business at the international level. In order to
develop understanding, managers must first conduct research and explore the
culture of potential business partners because their business could suffer great
losses if they make a wrong move.

In this topic, you will learn in detail the framework of culture from two different
dimensions: external and internal. This framework will explain several cultural
dimensions which are very useful for company managers.


What is the biggest challenge in managing an international business? Do you
know that the most difficult thing is to adapt to culture in the most effective and
suitable manner? Some of these adaptations and adjustments require deep
understanding of cultural diversity, views, values and the like. Now, you will
look at some important aspects which you must know in order to understand
culture in a more detailed manner.

According to Schneider and Barsoux (2003), exploring culture can be compared

to exploring the ocean (refer to Figure 3.2). Above the ocean or at the surface is
the external level of culture which can be visually observed such as artefacts and
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behaviours. Underneath the ocean is the internal culture which requires more in-
depth study for better understanding and it consists of beliefs and values. This
framework by Schneider and Barsoux (2003) will assist you in understanding in
detail the dimensions of culture.



Figure 3.2: Exploring culture is like exploring the ocean

Source: Schneider & Barsoux (2003).

This framework states that culture has two dimensions as depicted in Figure 3.3,

(a) Surface (External Culture)

Let us concentrate on the external part of the cultural dimension which
comprises two aspects:
(i) Artefacts; and
(ii) Behaviour.

You can observe artefacts and behaviours in fashions, lifestyle, language,

food and tradition. These surface aspects which can be identified by
observation will eventually provide clues as to what lies beneath the

For example, different cultures have different traditional costumes. Thus, a

Malay lady wears baju kurung, a Chinese lady wears cheong sam and an
Indian lady wears a saree. These traditional dresses reflect the identity and
different beliefs and values of different races.

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(b) Beneath the Surface (Internal Culture)

For the second dimension, there are two internal aspects beneath the
surface, which are:
(i) Beliefs; and
(ii) Values.

Beliefs and values are difficult to assess and need to be inferred through
sophisticated interpretation such as attitude towards women who work.

Figure 3.3: The two cultural dimensions

Each of the aspects involved in both dimensions will be discussed in detail in the
following sections.

Artefacts refer to anything created by humans which give information about the
culture of its creator and users. It can be discovered easily through the societyÊs
architecture, interior design, dress code, contracts and others. You may begin
learning about the culture of a society by studying and observing the artefacts
and the way of life of its people.

Now, let us take a look at examples of artefacts in the following sections:

(a) Architecture;
(b) Interior design; and
(c) Dress code.

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3.2.1 Architecture
The most obvious artefacts that symbolise culture are the architecture and
interior design of a building. A country is not only identified by its people and
government but by its architecture as well. Through architecture, it is possible to
gauge many things about a culture, such as lifestyle, artistic sensibilities and
social structure. For example, when someone mentions India, we will
straightaway think of the Taj Mahal (see Figure 3.4a). Without IndiaÊs unique
culture, would the Taj Mahal be designed that way or would it look different?
The Egyptians are another amazing example as their environment and culture
produced the great pyramids (see Figure 3.4b).

(a) Taj Mahal (b) Pyramid

Figure 3.4: World-renowned architecture

3.2.2 Interior Design

Interior design also reflects different cultures. Have you ever seen the office of a
Japanese organisation? The boss shares a space with his workers. Based on your
work culture, would you feel comfortable sharing office space with your boss?
You might not. Table 3.1 shows the differences that exist among some countries
in terms of the interior design of the workplace.

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Table 3.1: Differences of Interior Design at the Workplace

Country Interior Design of Workplace

Japan The offices are large, open and not partitioned. Employees and their
managers sit facing each other and work together.
European The offices are noisy, open, cramped and have intense interaction with
everyone knowing what everyone else is doing.
United Open space designs are popular for offices but the space is more likely
States to be partitioned off by half-walls (refer to Figure 3.5).
Germany The offices are private with closed doors bearing official titles. Germans
do not like working in open offices, since being able to hear others is
regarded as a lack of privacy.

Figure 3.5: An American office which has half-wall partitions

Source: http//

3.2.3 Dress Code

Have you ever attended a party in your office attire? Dress code is the first
element taken into consideration when you want to go out. Appropriate clothing
for work and leisure may vary across cultures and it is commonly understood by
the members of society. Therefore, dress code is considered as a cultural artefact.
When doing business overseas, managers must observe the appropriate dress
code for a particular occasion in order to avoid the embarrassment that results
from wearing the wrong clothes.

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Figure 3.6 shows the different dress codes for men in the following situations:
(a) Leisure Street wear;
(b) Informal Casual;
(c) Sporting events such as golf Business casual;
(d) Office environment Smart casual;
(e) Business meeting, informal business negotiation Business/Informal; and
(f) Function Black tie/Semi-formal.

Figure 3.6: Dress code for men


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Let us look at the dress code used by the different countries in Table 3.2.

Table 3.2: Dress Code of Different Countries

Country Dress Code

Northern Europe Prefer to dress more informally.
France Prefer to dress formally and consider rolled up shirt sleeves
as a sign of relaxing on the job.
Latin America Emphasise on personal style.
Anglo and Asia Prefer not to stand out or attract attention to their clothes.
America Consider rolled up shirt sleeves as a sign of getting down to
Germany Prefer to wear a tie and a suit even at a resort.

There are also some firms which encourage their workers to dress in ways that
match the customersÊ style. For example, the employees of Levi Strauss & co. wear
jeans to work.

Behaviour refers to the cultural conduct of a particular society and forms the
social characteristics of the membersÊ personality. It covers greeting rituals,
making contact, forms of address, moral norms and rules of religion, folk and
traditional etiquette. These differ from one cultural group to another.

Now, let us take a look at the examples of behaviour in the following sections:
(a) Greeting rituals;
(b) Forms of address; and
(c) Making contact.

3.3.1 Greeting Rituals

You may be aware that in your own daily routine, greetings play a significant
role. Greeting rituals are one of the behavioural elements that symbolise the
culture of a society. Many clues can be found in the exchange of greeting rituals
that are vastly different from one society to another. These clues should not be
taken lightly as they can affect the outcome of a business negotiation.

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For example, let us say an Indian businessman is having a meeting in New

Zealand. As he arrives at the airport, his business counterpart is already there
waiting for him. Instead of the usual handshake, the New Zealander greets the
Indian by rubbing his nose against his. The Indian is shocked as he does not
know this is the Maori form of greeting (refer to Figure 3.7). Now, let us have a
look at other interesting examples of how greeting rituals differ according to
society (refer to Table 3.3).

Figure 3.7: Maori greeting rituals


Table 3.3: Greeting Rituals of Various Societies

Greeting Rituals
United States (i) Americans tend to pay less attention to protocol.
(ii) Greeting by shaking hands is sufficient.
Japan (iii) Protocol is very important.
(iv) Carefully exchanging and inspecting business cards signify respect
(failure to do so can get business off to a very bad start).
France (v) Greetings are highly personal and individual.
(vi) Greetings must be done individually and by name.
Muslim (vii) Uttering the Salam is encouraged (it is a universal greeting
used by all Muslims across the world regardless of their origin).

Other greeting rituals include body contact in greeting. Each body movement
reflects the intention of the greeter. Are women supposed to shake hands with
men? Can men embrace or kiss one another? This phenomenon has caused many
misunderstandings among international businessmen. For example, a female
student from Hong Kong was quite distressed when her French male colleagues

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insisted on kissing hello and goodbye. As for Brazilians, shaking hands and
kissing is a farewell ritual known as the abruca (two-armed hug).

3.3.2 Forms of Address

When doing business with people from other countries, be careful of how you
address them. You might ask why. Remember that there are certain rules on how
to address a person from a different culture. Never assume that you can address
the person the same way you address a person in your country. This might cause
serious problems.

In a society where the level of class consciousness is high, for example, titles such
as Professor, Doctor, Your Majesty, Sir and so on must be mentioned during
conversation. Even in Malaysia, students address their teachers or lecturers as
Ms, Madam, Dr or Prof. In the context of Malaysian culture, it is rude to just call
these persons by their name.

The form of address might be different if it is for a friend, family member, elderly
person, business counterpart, teacher and so on. Now, let us look at some of the
ways to address people from Europe, Japan and China (see Table 3.4).

Table 3.4: Forms of Address Used in Different Countries

Country Forms of address

European (i) A businessman may be addressed by using his first name in
informal situations in order to create a friendly atmosphere.
(ii) However, Europeans may be put off by the use of the first name
as they consider such form of address as excessive familiarity.
(iii) In general, the use of first name (or Christian name) is
reserved for family and close friends only.
(iv) The use of the first name is the norm at office for Americans.
(v) Germans prefer to be greeted by their last names. You must
remember to address Germans by their last names even in informal
Japan (i) The first name is used for formal occasion while the last name is
used when people are addressed in the informal occasion.
(ii) Example of name: Sumi Takeshita
(iii) Formal form of address: Sumi
(iv) Informal form of address: Takeshita-San
China (i) Example of name: Ooi Yeng Keat
(ii) Formal form of address: Ooi
(iii) Informal form of address: Yeng Keat

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1. Malaysia has moved another step forward with the presence of

many skyscrapers. Discuss how the architecture of a building can
reflect the national culture of a country.
2. Discuss the benefits and insights gained from the framework of
3. Discuss briefly the external cultural dimension.

3.3.3 Making Contact

There are rules involved in making contact or having a discussion. One of the
most important considerations is the amount of physical space allocated.
Personal space is the comfortable amount of distance between you and someone
you are talking to (Hill, 2010). Invasion of personal space might make people feel
discomfort in a situation.

Every culture has a different distance of personal space and it is important for
managers to understand it. Do you know the distance preferred by Malaysians
when talking to another person? Do Malaysians prefer large personal space
distance or do they prefer to get very close to each other? Figure 3.8 shows you
an example of how distance is maintained between people.

Figure 3.8: Personal distance


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The topic chosen to be discussed also plays an important role in establishing a good
relationship. For example, French people do not appreciate inquiries into their
personal lives and family circumstances. They consider their professional life and
their personal life as quite separate domains. Topics such as sports, weather and
travel would be suitable when communicating with people from Latin American
countries but avoid discussions on local politics and religion with them.

What about the European, Middle Eastern and American society? How do they
maintain their physical space? Table 3.5 will answer your questions.

Table 3.5: The Physical Space of Different Countries

Country Physical Space

Northern European Require large, personal and comfortable space compared to the
Southern Europeans.
Southern European Prefer moving in closer in order to feel the connection.
Middle Eastern Prefer to be close to each other as it reflects the sincerity of both
North American Maintain quite large distance, about five to eight feet between
each other.


What are the two frameworks of culture?

In contrast to artefacts and behaviour which have been discussed before, belief is
the internal aspect of culture that you cannot directly observe. Let us look at the
definition of ÂbeliefÊ in relation to culture before delving into the explanation
given for it.

Beliefs are the assumptions we make about ourselves and about others, and
about how we expect things to be.

It also includes statements, principles or doctrines that individuals choose to

acknowledge as true. For example, people have different political views and their
affiliation to certain political parties is due to their belief in the leaders of that
party and they are confident that it is the right thing to do.

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Values are deeply held-ideas about what is good, right, and appropriate. We
accumulate our values from childhood based on teachings and observations of
our parents, teachers, religious leaders, and other influential and powerful
people. Acquired values will eventually influence peopleÊs personal and work
behaviours, decision-making skills, contributions, and interpersonal interactions.
People from different cultures will demonstrate different values.


As for business organisations, beliefs and values can become the catalyst for their
success. Beliefs and values, however, are not constant and can change over time.
Some action that may not have been acceptable before might be accepted as a
common belief or value nowadays. For example, women going out to work in
the 1960s was not commonly accepted. But nowadays, woman workers
contribute a lot to the economy and this has become a commonly accepted value
everywhere in the world. For the business organisations, beliefs and values can
become the catalyst for success. A good belief and value system, if properly
communicated to workers, will create harmony at the workplace as all
employees know how to behave in the organisation.

How do companies communicate their beliefs and values to their workers? The
answer is through their objectives, mission and vision of the company.
Objectives, missions and visions which are clearly employee-centred, will foster
beliefs and values among the workers and they will do their best towards
achieving these goals.

Beliefs and values exist in an organisation because of the existence of three

elements. What are these three elements? Figure 3.9 will answer it.

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Figure 3.9: Elements which form the beliefs and values of an organisation

These three dynamic elements are the stakeholders of the organisation namely
the shareholders, employees and customers. Different stakeholders have
different criteria for success. Therefore, beliefs and values differ in terms of what
is considered to be important to the stakeholders, be it product integrity,
technological leadership, market share, customer satisfaction or shareholder

In the United States, a company exists for the benefit of the shareholders. On the
other hand, in Japan, a company exists to fulfil the needs of the customers. While
in Germany, it may be the employees who have the divine rights, such as right to
job security, social welfare and others. These different beliefs and values actually
dictate the relevant corporate success factor in different countries.

In order to aid your comprehension, let us observe Table 3.6 which explains how
product quality, technological leadership and market share are relevant to
corporate success in different countries.

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Table 3.6: Corporate Success Factor in Different Countries

Country Corporate Success Factor
Germany Product Quality (i) German companies are known for
producing products with good design and
high quality.
(ii) Their success is based on product quality and
not profit or market share.
(iii) They stress on product integrity and customer
France Technological (i) For French companies, belief in the supremacy
Leadership of technology is a source of national pride.
(ii) Their success in producing sophisticated
technologies is evident: aeronautic and space
industries, nuclear energy, telecommunications
and railways.
(iii) Their education system supports the high
technology orientation.
Japan Market Share (i) Japanese companies regard market share as
the road to success.
(ii) Limited domestic market encourages emphasis
on the customer and searching for markets
(iii) For example, HONDA and SONY have
many branches abroad in order to secure
cheaper production resources and manpower.


Understanding different peopleÊs values is important especially if you want to
work with people of other cultures. Anthropologists, Kluckholn and Strodtbeck
(1961) introduced a Value Orientation Theory that provides a way to understand
core cultural differences related to the basic human concerns, or orientations.
Kluckholn and Strodbeck analysed the findings of several culture scholars such
as Hall, Hofstede, Schein, Adler and Trompenaars as can be seen in Figure 3.10.

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Figure 3.10: Key dimensions of culture

Source: Schein, E. (1997)

Kluckholn and Strodbeck conclude that the value orientation as suggested by the
other researchers can be grouped into five important value orientations in society
and they are:
(a) Relationship with nature;
(b) Human activity;
(c) Human nature;
(d) Relationship with people; and
(e) Relationship with time.

Let us take a look at the explanation provided for each of the value orientations.

3.7.1 Relationship with Nature

As can be seen in Table 3.7, there are three types of value orientation with regard
to nature:
(a) Subordinate;
(b) Harmony; and
(c) Dominant.

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Table 3.7: Relationship with Nature

Subordinate Harmony Dominant

Societal belief that nature Belief that humans should Societal belief that humans
cannot be changed. Life is live in harmony with should exercise total control
determined by external nature. Humans should over the forces of nature
forces such as fate and live in balance with natural and the super-natural.
genetics. What happens is forces by having partial and Example: Invention of air
meant to happen. Example: not total control of them. conditioning to overcome
Muslim belief in Allah and the forces of weather.
Qada and Qadar (Belief in
divine will and decree).

3.7.2 Human Activity

Now, let us look at the second component of value orientation (refer to Table 3.8).
Human activity has three value orientations:
(a) Being;
(b) Becoming; and
(c) Doing.

Table 3.8: Human Activity

Being Becoming Doing

Belief that it is enough to The main purpose of People should work hard
just „be‰. Quest for greater being placed on this as their efforts will be
accomplishment is not earth is for oneÊs own rewarded. Making things
necessary as what you have is inner development. happen is assumed to be
enough for you. Not a risk- the way to survive, just
taker. When confronted with like the Americans who
a problem during his bossÊ are more likely to initiate
absence, a manager with this actions and to make
kind of belief would rather decisions quickly. They
do nothing than do tend not to fear making
something and risk the mistakes.
possibility of upsetting or
disappointing his boss.

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3.7.3 Human Nature

Societies have different views of people as they look at the basic nature of
humans in the form of the following as shown in Table 3.9:
(a) Evil;
(b) Mixed (a mixture of evil and good); or
(c) Good.

Table 3.9: Human Nature

Evil Mixed Good

Belief that most people There are both good and Most people are born good
cannot be trusted and are evil people in this world. and are basically good at
basically bad. As a result, Have to check in order heart. Managers are more
they need to be to find out which likely to give this kind of
controlled. If people are category they fall into. people greater autonomy
assumed to be evil, then Evil people, however, and allow them to work in
there is a greater need for can be changed with the their own way without close
external controls and right guidance. supervision.

Let us look at a study by Douglas McGregor (1960) which is related to this human
nature orientation. According to McGregor, there are two types of workers:
(a) Theory X (Evil); and
(b) Theory Y (Good).

These theories are explained in Figure 3.11.

Figure 3.11: Worker categories

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3.7.4 Relationship with People

This value orientation, as can be seen in Table 3.10, looks at the social structure of
society and can be in the following forms:
(a) Hierarchical;
(b) Collateral; or
(c) Individual.

Table 3.10: Relationship with People

Hierarchical Collateral Individual

There is a natural order in The best way to be All people should have
the society as some people organised is as a group, equal rights and complete
are born to lead and some to where everyone shares control over their own
follow. Decisions should be the decision-making destiny. In group decision
made by those in charge. process. It is important making, it should be „one
not to make important person one vote‰.
decisions alone.

3.7.5 Relationship with Time

It refers to the time orientation of people in a particular culture, which is based
on the following as can be observed in Table 3.11:
(a) Past;
(b) Present; or
(c) Future.

Table 3.11: Relationship with Time

Past Present Future

People should learn and The present moment is Focus on the future, plan
draw the values they live everything. Let us make ahead to accomplish
by from history. They the most of it. Enjoy miracles, change and
should strive to continue today and do not worry grow. Seek new ways to
past traditions, teachings about tomorrow. replace the old and make
and beliefs into the future. some sacrifices today for
a better tomorrow.

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1. Explain how beliefs and values can lead to success for an

2. What are the five value orientations that exist in society?


1. Discuss the basic underlying assumptions used by scholars of

culture and management.
2. After discussing the assumptions found in culture, give your own
interpretation of culture.


Multiple Choice Questions

1. The framework of culture is divided into two dimensions. What

are these?
A. Basic assumptions and artefacts
B. External and internal cultures
C. Interpretation and basic assumptions
D. Beliefs and values

2. What is meant by theory Y which is associated with the ethics of

A. Lazy workers
B. Workers need constant supervision
C. Proactive and consistent workers
D. Workers who work according to the time specified

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3. Which among the following is not one of the value orientations
introduced by Kluckholn and Strodtbeck?
A. Relationship with nature
B. Relationship with time
C. Relationship with God
D. Human nature

4. Beliefs and values exist in an organisation because of the influence

of three elements. What are these elements?
A. Customers, shareholders and employees
B. Customers, buyers and suppliers
C. Employees, managers and shareholders
D. Negotiators, practitioners and interpreters

5. Which group of people prefers to be close to each other during

conversation as a way of reflecting the sincerity of both parties?
A. Northern Americans
B. Middle Easterners
C. Northern Europeans
D. South Americans

Exploring culture is not an easy task. Many aspects must be studied and
examined as cultures differ from one country to another.

The framework of culture is divided into two dimensions external and


The framework of culture can assist in identifying the level of culture:

whether it can be seen physically such as dress codes, or cannot be seen
physically such as customs and beliefs.

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Artefacts also demonstrate cultural differences such as architectural

differences. Today, many buildings in Malaysia, notably in Putrajaya, are
designed with Islamic architecture incorporating mosque-like domes. In
India, on the other hand, the buildings are more artistic and use statues as

In any given culture, values and beliefs play a big role, particularly in leading
companies towards success, such as producing quality products and using
modern technology.

There are basic value orientations which play an important role in exploring

These orientations, which are derived from several studies on culture, include
relationships with time, nature, people, human activity and human nature.

Artefacts External culture

Behaviour Internal culture
Belief and values Value orientation theory

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Topic Culture and
4 Organisation

By the end of this topic, you should be able to:
1. Review several views found in the studies conducted on organisational
2. Analyse four value dimensions which influence organisational
structure and processes;
3. Explain the influence of culture in organisational processes; and
4. Examine four categories of corporate culture and how to use the
said culture for organisational success.

Read the following case study.

In the early 1990s, Chrysler had terrible customer service and press relations, with a
history of innovation but a current reputation for outdated products. Its market share
was falling, and its fixed costs and losses were high. Bob Lutz, then the president, wanted
Chrysler to become the technology and quality leader in cars and trucks; a clear, globally-
applicable vision. A programme of cultural change, Customer One, was built around it.

The results were impressive as overhead was cut by $4.2 billion in less than four years,
the stock price quadrupled and the company reversed its slide into bankruptcy and
became profitable. A completely new and competitive line of cars or trucks has appeared
each year since. New engines produce more fuel economy and power as new cars
provide more comfort, performance and space. They did this with the same people but
by working in different ways.


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Based on the case study, can you answer the following questions:
(a) What is the meaning of „an organisational culture‰?
(b) Why is organisational culture so important, especially to a firm?
(c) Does organisational culture differ among firms?
(d) Should organisational culture follow national culture?

You will be able to find the answers by reading through until the end of this

So, let us find out what this topic is all about. It highlights the meaning of
organisational culture. Studies on organisation management from across the
world have shown that there are unique national differences from one country to
another in terms of organisational culture. We will discuss several views of
culture and structure as well as value dimensions which influence organisational
structure and processes. We will also discuss the definition, features and
categories of corporate culture.


What is organisational culture? This refers to the general culture within a
company or organisation. There are many definitions of organisational culture,
such as these below:

„The set of beliefs, values, and norms, together with symbols like dramatised
events and personalities that represents the unique character of an
organisation, and provides the context for action in it and by it.‰

-Gareth Morgan

"A pattern of shared basic assumptions that the group learned as it solved its
problems that has worked well enough to be considered valid and is passed
on to new members as the correct way to perceive, think and feel in relation to
those problems."

-Edgar Schein

ational -culture.html)

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Although, there are many definitions of organisational culture, they can be

summarised as the shared values and beliefs that enable members to understand
their roles and the norms of the organisation. These are learned and re-learned,
passed on to new employees and continue on as part of a company's core


Now, let us figure out the characteristics of an organisational culture. Luthans
and Doh (2009) identified six characteristics of an organisational culture and
these are:

(a) Behavioural Regularities

The first characteristic is observed behavioural regularities, as typified by
common language, terminology and rituals.

(b) Norms
Norms are reflected by things such as the amount of work to be done and
the degree of cooperation between management and employees.

(c) Dominant Values

Dominant values are the main values that the organisation advocates and
expects participants to share, such as high product and service quality, low
absenteeism and high efficiency.

(d) Philosophy
A philosophy relates to how employees and customers should be treated in
an organisation.

(e) Rules
Rules dictate the dos and donÊts of employee behaviour relating to areas
such as productivity, customer relations and inter-group cooperation.

(f) Organisational Climate

Organisational climate, or the overall atmosphere of the enterprise, is
reflected by the way the participants interact with each other, conduct
themselves with customers, and feel about the way they are treated by
higher-level management.

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While many managers are ready to accept that culture may influence the way people
relate to each other, they are less convinced that it can really affect the structure,
systems and processes of an organisation. There are many different arguments on
factors which form the structure, systems and processes of an organisation.

Among these arguments which specifically discuss culture and structure are the
(a) The culture-free (Etic);
(b) The structuralists (Emic); and
(c) The culturalists.

You can find the detailed explanations of all these arguments in Table 4.1.

Table 4.1: Arguments which Discuss Culture and Structure

Culture and
Structure Argument
Culture-free (etic) This argument states that structure is determined by
Argument organisational features such as size and technology.

For example:
The Aston studies conducted in the 1960s in the United
Kingdom state that size is the most important factor
influencing structure. Larger firms tend to have a greater
division of labour and more formal policies.
Structuralists (emic) This argument argues that structure creates culture.
Culturalists argument The culturalists argue that culture creates structure.

Basically, culture is a basic dimension for the formation of suitable management

techniques for a country. From the historical perspective, theories about the best
way to organise, such as the following models, reflect societal concerns and
cultural backgrounds:
(a) Bureaucracy model (Max Weber);
(b) Administrative model (Henri Fayol); and
(c) Scientific management model (Frederick Taylor).

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The modern management models, such as performance management team

approach and empowerment, all have their roots firmly embedded in a particular
historical and societal context. These management models have diffused across
countries at different rates. For example, mass-production techniques were
quickly adopted in Germany, while management practices associated with
human relations transferred more readily to Spain. Therefore, the historical and
societal context needs to be considered to better understand the adoption of
different forms of organisation at different rates across countries.

What are the views or arguments presented in the studies conducted on
organisational structure?


In the 1960s, Geert Hofstede conducted an important study which attempted to
establish the impact of societal culture or national culture on the workplace. This
study was based on an employee opinion survey involving 116,000 IBM
employees in 40 different countries. From this study, Hofstede identified four
value dimensions in which countries differed as shown in Figure 4.1.

Figure 4.1: HofstedeÊs value dimensions

Now, let us explore these four value dimensions identified by Hofstede in the
following sections.

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4.4.1 Power Distance

Power distance indicates the extent to which a society accepts the unequal
distribution of power in institutions and organisations. There are differences
between countries having low and high power distances as shown in Table 4.2.

Table 4.2: Differences between Countries with High and Low Power Distance

Countries with High Power Distance Countries with Low Power Distance
Centralised decision-making. Decentralised decision-making.
Have many hierarchy levels of Have flatter organisation structures.
organisation structures.
Power and status are motivating factors. Smaller proportion of supervisory
personnel and promoting empowerment.
People blindly obey the orders of their Encourage and promote cooperation
superior. between people at different levels.

When it comes to power distance, how does Malaysia fare? Malaysia scores the
highest in power distance with an index score of 104. This explains the reason
workers in Malaysia have very high respect for their superiors. Table 4.3 shows
the index scores obtained by other countries in terms of their power distance.

Table 4.3: Country Index Score for Power Distance

Countries Index Score Power Distance

Israel 13 Low
Denmark 18
Sweden 31
India 77 High
Indonesia 78
Panama 95
Malaysia 104

4.4.2 Uncertainty Avoidance

Uncertainty avoidance refers to a societyÊs discomfort with uncertainty and
instability. People feel threatened by ambiguous situations and have created
beliefs and institutions that try to avoid this uncertainty. As can be seen in

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Table 4.4, there are differences between countries having low and high
uncertainty avoidance.

Table 4.4: Differences between Countries with High and Low Uncertainty Avoidance

Countries with High Uncertainty

Countries with Low Uncertainty Avoidance
People are concerned with job security, People are laid-back and have a more risk-
career patterns, retirement benefits and taking attitude.
so on.
Organisations have a high level of Organisations have less structuring of
formality as there are many written activities and fewer written rules.
rules and regulations.
Managements will avoid taking risks as More risk-taking managers, higher labour
stability and safety are priorities. turnover and more ambitious employees.

We have looked at our countryÊs performance in power distance. Now, let us

see how Malaysia performs in uncertainty avoidance. Table 4.5 shows the
index scores obtained by Malaysia and other countries in terms of uncertainty

Table 4.5: Country Index Scores for Uncertainty Avoidance

Countries Index Score Uncertainty Avoidance

Denmark 23 Low
Sweden 29
Malaysia 36
Argentina, France, Spain 86 High
Japan 92

4.4.3 Individualism / Collectivism

Individualism/collectivism reflects the extent to which people prefer to take care
of themselves and their immediate families only. As can be seen in Table 4.6,
there are differences between countries having low and high individualism/

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Table 4.6: Differences between Countries with High and Low


Countries with High Collectivist Countries with Low Collectivist

Orientation/Low Individualism Orientation/High Individualism
There is preference for group decision- Individual decision-making is much
making. valued.
Consensus and cooperation are more valued Individual achievements and freedoms are
than individual initiative and effort. highly valued.
Organisational structure is teamwork The organisational structure is more
oriented. The main motivation is the success individual based.
of the team.

As can be seen in Table 4.7, Malaysia scores 26 in individualism score which

shows that we are a group-oriented society. The table also shows the index scores
obtained by other countries in terms of individualism/collectivism.

Table 4.7: Country Index Scores for Individualism/Collectivism

Countries Index Score
Panama 11 Low/High
Indonesia 14
Thailand 20
Malaysia 26
Great Britain 89 High/Low
Australia 90
United States 91

4.4.4 Masculinity/Femininity
Masculinity/femininity refers to the relationship of masculine or feminine
characteristics and their influence on work responsibilities. The definitions for
the two aspects are as follows:
(a) Masculinity is a situation in which the dominant values in the society are
success, money and materials; and
(b) Femininity is the situation in which the dominant values in the society are
caring for others and quality of life.

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There are differences between countries having low and high masculinity/
femininity as shown in Table 4.8.

Table 4.8: Differences between Countries with High and Low Masculinity/Femininity

Countries with High Masculinity/ Countries with Low Masculinity/

Low Femininity High Femininity
Management is likely to be more There is emphasis on quality of life and
concerned with task accomplishment social interaction.
rather than quality of life.
Motivation is based on acquisition Greater importance is placed on
of money, wealth, recognition, cooperation, friendly workplace
advancement and challenge. atmosphere and employment security.
The workplace atmosphere is stressful There is little stress at the workplace and
and managers place less emphasis on managers give employees more credit for
employeesÊ contribution. being responsible and allow them more

Let us find out what position Malaysia ranks in the masculinity/femininity

aspect. Malaysia scores 50 in the index score of the aspect of masculinity/
femininity as shown in Table 4.9. Table 4.9 also shows the index scores obtained
by other countries in terms of masculinity/femininity.

Table 4.9: Country Index Scores for Masculinity/Femininity

Countries Index Score Masculinity/Femininity

Sweden 5 Low/High
Netherlands 14
Malaysia 50
Mexico 69 High/Low
Japan 95

HofstedeÊs dimension provides a basis for understanding the effect of national

culture at the workplace. His model, however, must be used cautiously as it
involves only one company (IBM) in one type of industry only. This model also
uses the assumption that there is only one culture for each country. As we all
know, there are countries with more than one race and culture such as Malaysia,
Indonesia and Singapore.

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Analyse the four cultural values given by Hofstede. By using a mind

map, present your findings to the class.


The influence of culture can also be seen in organisational processes such as:
(a) Decision making;
(b) Policies and procedures;
(c) Planning and control; and
(d) Information processing and communication.

Let us explore each of the processes in the following sections.

4.5.1 Decision Making

The nature of decision making is heavily influenced by the culture found in
society and organisation. The person who makes the decision, the person who is
involved in the process and the level of decision making depend on the cultural
assumptions of the organisation.

Let us look at how decision making is made in countries which differ in their
emphasis on power and hierarchy:

(a) Weak Emphasis on Power and Hierarchy

There is greater tendency towards worker participation in decision making
in countries where power and hierarchy are played down. Everyone has the
right to contribute to a decision.

(b) Strong Emphasis on Power and Hierarchy

In countries which have a strong emphasis on power and hierarchy,
decision making is likely to be centralised. Workers or mid-level managers
do not have any right in decision making.

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How fast a decision is made also depends on the culture. Table 4.10 shows
the timeframe of decision making between the Japanese and the Americans.

Table 4.10: Timeframe of Decision Making

Japan United States

Each proposal will be studied in detail Decisions are made quickly to reflect
before a decision is made. decisiveness and the ability to analyse

If you refer to Table 4.5, you will realise that Japan scores very high on
HofstedeÊs uncertainty avoidance dimension. This explains the detailed study for
each proposal by the Japanese, unlike the Americans. The American manager
will complain about the „slowness‰ of Japanese managersÊ decision making
while the Japanese managers will think that American managers make decisions

4.5.2 Policies and Procedures

Now, let us move on to policies and procedures. There are two sides employed
by companies when it comes to policies and procedures and these are:

(a) Strict Standardised Company

The formalisation and standardisation of policies and procedures of a
company may reflect low tolerance for uncertainty, as they can be clearly
predicted. Such companies do not like to take risks and each job will have
detailed policies and procedures which must be followed by the workers.

(b) Informal Entrepreneurship-Oriented Company

In companies with entrepreneurship orientation, policies and procedures
are vague so as to encourage workers to be creative and innovative.

4.5.3 Systems and Controls

Do you know that systems and controls differ from one culture to another? The
level of control depends on how the worker is evaluated. There are two forms of
theory associated with the evaluation:

(a) Theory Y
When workers are seen as capable and self-directed, the level of control will
be low.

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(b) Theory X
When workers are seen as lazy and require direction, the level of control
will be higher.

Planning also differs from one culture to another. In the United Kingdom, for
example, planning practices are more strategic, more long-term with more
participants in the process. In France, on the other hand, planning is more short-
term with fewer participants involved in the process.

4.5.4 Information and Communication

Information is very important in decision making, communicating policies and
procedures as well as coordinating units. Yet, the type of information and the
method of communicating and sharing information depend very much on the
organisational culture as shown below:

(a) More emphasis on hierarchy and formalisation

In organisations which have preference for hierarchy and formalisation,
information is considered a source of power. Thus, information cannot be
shared or easily given away. Information sharing among departments is
limited and occurs only when necessary. Information is passed through
personal connections.

(b) Less emphasis on hierarchy and formalisation

In cultures which are more egalitarian, where very little attention is paid to
formal structure or hierarchy, information will be shared through open and
informal communication. Information can be shared with anyone who has
an interest in it as it is considered a source of enhancing knowledge and


By pulling together various research studies, we have demonstrated how culture
affects organisational structure and process. Organising models differ in terms of
structure and process due to different cultural beliefs. The question now is
whether there are „transferable best practices‰.

Some believe that best practices can be transferred anywhere. This is because
they consider management as universal. This might be the rationale behind the
WestÊs rush to copy Japanese management practices and the current attempt by

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organisations across the world to imitate Western management such as

restructuring and reengineering.

However, the transfer of Japanese management practices which emphasise

collectivism was not a success in the West, which preferred individualism.

The process of management transfer takes into account cultural differences

which influence the way of thinking and attitude of workers. Before the process
of transfer takes place, comparison must be made to understand how culture can
be absorbed in management practice.


1. Does your organisation have any Western or Japanese

management practices?
2. If yes, does it imitate these practices as they are or adjusts the
practices by taking into consideration the cultural factors of your
3. Discuss the above questions with your classmates and post your
findings in the myVLE forum.


What is corporate culture? Do you know what it means? If you donÊt, read the
following sentences and find out.

Corporate culture is an abstract concept which plays an important role in any

organisation. It influences the behaviour of employees and the entire
organisational operation system. At the foundation of any company culture are
the standards that govern the operation of the business. These standards are
usually expressed in terms of policies and procedures that define how the
company will operate.

This will include how different departments or functions relate to one another in
the production process, the line of communication established between
management and departmental employees, and rules governing acceptable
conduct of everyone who is part of the company. This basic organisational
culture makes it possible to develop other layers of corporate culture based on
these foundational factors.

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Above and beyond organisational and procedural factors, corporate culture is

further influenced by the attitude of everyone involved with the organisation.
When executives, managers, and rank and file employees are all on the same
page on basic corporate values, it becomes possible to have a general agreement
on the relationships that must be in place to accurately reflect the desired
corporate culture.

For example, when employees are provided with ways to make suggestions that
could improve the productivity or the general working environment of the
company, it can be said that the corporate culture is inclusive, as it allows for free
communication between everyone employed by the business.

As with many types of cultures, corporate culture usually involves some rites or
rituals. This can be something as simple as annual holiday bonus, a week in the
summer when the entire company shuts down or even the naming of an
employee of the month (refer to Figure 4.2). These rites help to bond people
together and provide some sense of collective identity, which is very important
to the creation of a positive corporate culture (

(a) Summer holiday (b) Naming of the employee of the

Figure 4.2: Rites conducted by companies

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4.7.1 Definition of Corporate Culture

Now, let us look at the definition of corporate culture. Since corporate culture is
influenced by various factors such as type of industry, location, history,
employee personality and how employees interact, it is quite difficult to give an
accurate definition. The following, as shown in Table 4.11, are some formal
definitions of corporate culture.

Table 4.11: Definitions of Corporate Culture

Source Definition
Greenberg & A cognitive framework consisting of attitudes, values,
Baron (1997) behavioural norms, shared beliefs and expectations.
Clemente & Collective thoughts, habits, attitudes, feelings and patterns of
Greenspan (1999) behaviour.
Ahmed et al. (1999) Material or behaviour which has been adopted by a society
(corporation, group, or team) as the accepted way of solving

In other words, corporate culture based on values, assumptions, attitude and

belief will be reflected in the process and routine of organisations, language used,
symbols, logos and artefacts found in organisations. Thus, corporate culture can
be considered as a set of behaviours, rules or norms which can be used to control
or determine the behaviour of employees in an organisation.

Corporate culture can be categorised as follows:

(a) Positive/Strong Corporate Culture

A positive corporate culture tends to bring about success to an organisation.

(b) Negative/Weak Corporate Culture

A negative corporate culture is likely to result in the destruction of an

From the above definitions and based on your own understanding,
describe what is meant by corporate culture.

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4.7.2 Categories of Corporate Culture

An attempt to categorise corporate culture was made by Sonnenfeld (1988) who
suggested the following four categories, as depicted in Figure 4.3.

Figure 4.3: Corporate culture categories

(a) Academy
In the academy category, employees are exposed to various types of works
so that they can be transferred to any division within the organisation. This
culture is usually found in new companies where employees share jobs and

(b) Club
The club category focuses more on adjusting the employees in the
organisation. Employees regard the organisation as their home and co-
workers as family. Work is done through subcultures in the organisation.

(c) Baseball Team

Organisations in this category have talented and capable employees who
are highly paid for their successes. However, these employees would not
hesitate to leave their organisations for better jobs.

(d) Fortress
This category is concerned primarily with survival. The employees work
independently and seldom interact with co-workers. This culture is
normally found in law firms and organisations which are reducing the
numbers of employees.

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Managers may use these categories to assist them in understanding the

advantages or weaknesses of the corporate culture of their organisations.
Based on this categorisation, managers will be able to determine the most
suitable candidate for recruitment in order to preserve a positive culture.
These categories can also assist managers in the process of changing and
improving the corporate culture of their organisations.


What are the four categories of corporate culture? Explain briefly each
of the categories.


Do you know how diversity plays an important role in an organisation? Let us
first look at the definition of the term „diversity‰.

Diversity is taking people from different backgrounds, with different

expectations and at different stages of life and putting them into a force that
will drive the companyÊs profitability and competitiveness.

Success of firms, especially in an international business environment, depends

very much on the firmsÊ ability to manage their workforce, who come from
various cultural backgrounds.

However, it is not only firms which do business at the international level that
encounter workforce diversity nowadays, as culturally different workers can be
found even in domestic-based firms. For example, a Malaysian firm usually
consists of different ethnic groups such as Malays, Chinese, Indians and other
groups as shown in Figure 4.4. This different ethnicity creates workforce
diversity in an organisation.

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Figure 4.4: Different ethnicities


4.8.1 Advantages and Disadvantages of Workforce

As with other aspects, diversity has its advantages and disadvantages. Let us
concentrate first on the advantages of workforce diversity before venturing into
the disadvantages.

Most American companies say that managing diversity is to integrate women

and ethnic minorities in the workforce. Some lessons can be taken from
managing national diversity. For example, being a minority means being the only
French manager in a German group or an American manager in a Japanese firm.
The most common excuse given to use cultural differences is that it can increase
sensitivity to different markets.

A product development team of various cultural backgrounds is more likely to

develop a product that appeals to the different tastes of customers. Diversity can
also increase problem solving skills, innovation and creativity. Top management
teamsÊ designing strategy requires different perspectives to reflect the complexity
of operating in an international arena, emphasising national differences while
providing the forum for integrating those perspectives.

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Let us take a look at the advantages of cultural diversity as shown in Table 4.12.

Table 4.12: Advantages of Cultural Diversity

Aspe Advantages
Marketing Increases the ability to respond to cultural preferences of local markets.
Resource Increases the ability to recruit employees of different national
acquisition backgrounds, and host country elites.
Cost Reduces cost incurred by turnover of non-home country managers.
Problem-solving Improves decision-making through wider range of perspectives and
more thorough critical analysis.
Creativity Enhances creativity through diversity of perspectives and less
emphasis on conformity.
System flexibility Enhances organisational flexibility and responsiveness to multiple
demands and changing environments.

Diverse teams, in meetings, come up with broader solutions. With a workforce

which is more diverse, productivity will be enhanced. Among the benefits of
using cultural diversity is that it creates systems flexibility. Learning about other
cultures gives us the ability to understand and analyse other cultures. It means
being able to assess views of our own and othersÊ culture, to evaluate the
effectiveness of interaction and to develop strategies for dealing with differences.

Training seminars provide the opportunity for face-to-face interaction among

different nationalities and for developing problem-solving skills in multicultural
teams. The challenge is to find ways to capitalise on differences, to utilise cultural
differences in order to gain competitive advantage. These differences must be seen
as opportunities and not threats to efficiency. Multinational companies must
understand that changes need to take place in order for them to become global.

Workforce diversity may have disadvantages such as the following:

(a) Lack of Understanding

Lack of understanding of other workersÊ values and beliefs may result in
confrontation that hinders the creation of a conducive workplace

(b) Stereotyping
Stereotyping other cultures, for example, managers from wealthy advanced
countries are often perceived as more knowledgeable and superior than
those from less advanced countries.

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(c) Inaccurate Communications

Inaccurate communication as people misunderstand each othersÊ messages
when words used by a speaker are not clear to the other members due to
different language proficiency and slang.

(d) Non-verbal Cues

Failure to understand non-verbal cues may also result in
miscommunication. For example, Japanese managers always nod their
heads when others talk but this does not mean they agree with what is
being said.

Figure 4.5 shows a non-verbal cue expressed by the former president of the
United States, George W. Bush.

Figure 4.5: Non-verbal cue


4.8.2 Managing Multicultural Groups and Teams

How do we manage a multicultural workforce? This is an important question for
managers. Listed below are some expert opinions on how to create and manage
an effective, harmonious multicultural group and team:

(a) Set a Good Example

Managers must set a good example as it can wield significant control over
the business' basic outlook and atmosphere.

(b) Establish a Healthy Environment

Managers must establish a healthy environment for people of different
cultural backgrounds to work together.

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(c) Policies on Prejudice Should be Communicated and Written

Company policies that prohibit acts of prejudice and discriminatory
behaviour towards others should be communicated and even included in
employee manuals, mission statements, and other written communications.

(d) Training or Orientation Programme

Training or orientation programmes should be conducted, especially for
new workers, to educate them on the companyÊs policy towards the
treatment of other workers regardless of their cultural or ethnic

(e) Reinforce Importance of Effective Diversity Management

The firm's performance appraisal and reward systems should reinforce the
importance of effective diversity management. This includes ensuring that
minorities are provided with adequate opportunities for career

(f) Conduct Social Events

Company-sponsored social events such as picnics, softball games,
volleyball leagues, bowling leagues, parties and so on can be tremendously
useful in getting members of different ethnic and cultural backgrounds
together and providing them with opportunities to learn about each other
(refer to Figure 4.6).

Figure 4.6: Social events


Search the Internet for ways to manage multicultural groups and teams.
Present your findings to other learners.

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Essay Questions

1. State the school of thoughts on culture and structure. What are the
differences between these views?

2. In HofstedeÊs studies, he found that there were several dimensions

of cultural values which distinguished one country from another.
State and explain briefly the features of each dimension.

3. What is meant by corporate culture?

4. What type of corporate culture exists in your organisation?

Give some examples of the corporate culture practised in your

Multiple Choice Questions

1. What is the etic argument in cultural diversity?

A. Structure is determined by organisational features such as
size and technology
B. Structure creates culture
C. Culture creates structure
D. Culture in influenced by structure, leadership and politics in
the organisation

2. This culture is considered as the set of behaviour and norms that

can be used to control the behaviour of all employees in the

What type of culture does the above statement describe?

A. Corporate culture
B. Industry culture
C. Functional culture
D. Regional culture

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3. In SELF-CHECK 4.3 are people more willing to accept the risks

what type of culture
associated with the unknown?
A. Masculine
B. Individualism
C. High Power distance
D. Low uncertainly avoidance

• The views which form the structure, systems and processes of an

organisation are the culture-free (etic) argument, structuralist (emic)
argument and the culturalist argument.

• The value dimensions identified by Hofstede are power distance, uncertainty

avoidance, individualism/collectivism and masculinity/femininity.

• Corporate culture is a set of behaviours that can be used to control or

determine the behaviour of employees in an organisation.

• The influence of culture can be seen in organisational processes such

as decision-making, policies and procedures, planning and control, and
information processing and communication.

• Four categories of corporate culture are academy, club, baseball team and

Academy Fortress
Baseball team Individualism
Club Masculinity
Collectivism Power distance
Culturalists Structuralists
Culture-free Uncertainty avoidance

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Topic International
5 Manager

By the end of this topic, you should be able to:
1. Explain the roles of an international manager;
2. State three categories of culture shock reactions;
3. Examine three phases of cultural adjustment;
4. Analyse the skills and abilities needed to manage cultural
differences; and
5. Examine the strategies required to help managers in the transitional

Read the following story:

John Nash is a successful senior executive at a textile manufacturing company in

the United States. His track record has earned him a foreign assignment where he
is now appointed as a manager to manage his companyÊs new subsidiaries in
Mexico. It has been two weeks since he set foot in Mexico and things are not going
well for him. At the workplace, he is facing factory workers who always come late
to work, play truant or go missing during working hours without giving notice.

The productivity level of the workers is very far behind that of their American
counterparts. The workers union is so strong that any action he takes towards the
problematic workers will result in a strike. At the individual level, John finds it
hard to adjust to the Mexican lifestyle. The food is too spicy, the public
transportation uncomfortable and the people at the market cannot communicate
in English. All these things are making him upset. The thought of leaving and
returning to the United States is growing stronger by the day.

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After reading the story, you may have formed some of these questions:
(a) What is NashÊs problem?
(b) How can a successful manager such as Nash face these kinds of difficulties?
(c) How can he avoid such problems?

As you may be aware, big companies need people who are capable of
representing them in the international market. They need people who can
expand and manage their businesses at the global level. These people are known
as international managers or commonly known as expatriates. It is not an easy
job, as it requires someone with skills and in-depth knowledge of management
systems and cultures of foreign countries. Adequate physical and mental
preparation are also necessary to avoid failure.

Nevertheless, not many people know how complex international business

management is, particularly in terms of culture. Cultural awareness can assist
international managers in performing their work with multicultural colleagues,
groups or teams. Hence, in this topic, we will discuss how individuals, groups
and organisations involved in international business manage cultural differences
which represent an important instrument in their business activities. We will also
touch, in depth, on roles, traits and matters related to the international manager,
cultural shock and cultural adjustment.


Now, let us look at the types of roles assumed by international managers.
According to Schneider and Barsoux (2003), international managers are
synonymous with expatriate managers. TodayÊs situation has prompted the call
for international managers who are multi-lingual and operational across national
borders. Apart from expatriates sent to foreign/host countries, international
managers also include three other categories:

(a) Host Country Managers

Managers who are nationals of the host country recruited by the company.

(b) Third Country Managers

Managers who are nationals of a third country (other than the home
country and host country).

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(c) Inpatriates
Managers from the host country or third countries recruited to work in the
home country. This group is also known as inpatriates.

Do you know that the role of an international manager is so important and

crucial for the management of international businesses across the globe? Below
are the general roles of international managers:

(a) Manage Operations and Ensure CompaniesÊ Goals are Achieved

Businesses have become more international and interdependent for a few
decades now. Thus, international managers have an important role to
assume in managing operations abroad and ensuring that all the goals and
objectives of their companies are achieved.

(b) Initiate the Management, Process and Technology Transfer Process

Usually, managers are the ones who make the first move in the company.
They initiate the management, process and technology transfer process as the
company tries to transfer its core competencies to the foreign subsidiary.

(c) Fill in Positions

International managers are expected to fill in positions in countries where
qualified people are not available.

(d) Secure Headquarter Control over Foreign Subsidiaries

Managers are expected to secure the headquarterÊs control over foreign
subsidiaries, especially in the context of management, administrative,
financial and corporate culture.

(e) Learn Foreign Cultures and Acquire New Knowledge

Managers need to learn foreign cultures and environments as well as
acquire new knowledge and skills from foreign countries that might be
useful and applicable to the headquarters itself or the other subsidiaries.


Look at the quote below which shows the characteristics required by a leader.

„Reason and judgement are the qualities of a leader‰

– Tacitus

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You may have heard another quote that says talented individuals are not born
but made. The same goes for international managers. They are not born but
groomed through proper training. However, there are some existing traits of
people that can determine whether a person can become a good international
manager. International managers must act based on the current situation and
take into account the source of problems in making a decision. Listed below are
some traits of a good international manager:

(a) Management Principles

International managers must not depend solely on universal management
principles as a guideline for their behaviour and conduct in foreign
countries. This is because management principles were created by Western
theorists such as Peter Drucker and Michael E. Porter, while societies in
other countries have different cultures and ideologies.

Besides this, in multinational companies, managers interact with people

from several cultures from time to time. Such conditions constitute a
challenge for managers to perform their duties and solve problems in
different situations. Therefore, the ability to manage differently in other
countries based on the situation is an important trait for international

(b) Contingency Leadership

In terms of leadership, international managers must have the contingency
role. The contingency leadership concept suggests that good international
managers will always prepare a management plan or alternative leadership
method to overcome unexpected situations in the event of the failure of the
original plan. With this concept, managers will be more prepared with a
backup plan which will support the original plan. This effective method can
help international managers to act rationally in critical times.

(c) Cultural Adjustment

The ability to adjust oneself to the culture of a foreign country is another
main trait needed in the selection of international managers. An
international manager must be able to be part of a multicultural team, have
tolerance for uncertainty and demonstrate interest to work in foreign
countries. Studies have shown that the selection and training of
international managers in Japanese and European companies focused more
on the sociological aspects of cultural adjustment.

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Before we go in depth, read the quote below to get an idea of what is meant by
culture shock.

Culture shock is the psychological disorientation experienced by people who

suddenly find themselves living and working in radically different cultural

– Kalvaro Oberg

Why does culture shock happen? Culture shock among international managers
occurs when they find that life in a foreign country is not like what they had
expected. The environment in a foreign country might be very different from
their home country. These differences will make it difficult for them to adjust and
might lead to various traumas and conflicts.

Furthermore, they will experience stress, worry and depression easily, making it
difficult for them to control situations. They will feel unable to perform their
duties and become dependent on others. This problem can be solved if
international managers are given initial training such as performing short-term
international tasks in a foreign country in order to give them brief exposure to
the culture of a particular country.

You may ask whether culture shock happens to managers only. Under certain
circumstances, the family members of the managers such as their spouse and
children will also experience culture shock. The spouse might find it hard to
communicate with neighbours if they speak a different language or might feel
lonely as there are no family members or friends to talk to. The children might
find it hard to adjust to the new environment.

Basic facilities, education system and the surrounding community which are
different will make it quite difficult to adjust. Most times, the spouse and
children are the main reason why international managers fail to perform their
duties effectively.

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There are also expatriates who are asked to return home although they have yet
to complete their term abroad. They are asked to come back as they fail to
perform their assignment due to the reasons shown in Table 5.1:

Table 5.1: Reasons for Failing to Perform Assignment

Reasons for Failing to Perform Assignment

They want their children to attend school in the home country.

They are not happy with the international assignment, sometimes due to lack
of support from the headquarters.

The manager or family members fail to adjust to the new culture and local

The manager Ês personality contradicts the new environment.

The international assignment carries too many responsibilities.

The manager is not equipped with adequate technical skills.

The manager has neither motivation nor interest in carrying out the
international assignment.

To further understand the reason and process of culture shock faced by

international managers, refer to Figure 5.1 as it explains several dimensions of
culture shock among international managers. The dimensions are classified into
several aspects such as:
(a) Environmental effects;
(b) Acceptance of managers;
(c) Reaction categories; and
(d) Types of culture shock.

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Figure 5.1: The international manager and culture shock

Source: Craig, J. (2005). Culture shock. Singapore: Times Book International.

Copyright © Open University Malaysia (OUM)


An international manager who is given a new task in a foreign country which he

or she has never been to before will face new experiences, which could be
positive or negative. It is the negative experiences that will result in culture shock
as managers will be exposed to things which are different from home country.
These include physical, cultural and sensory differences.

For example, if an American manager who has never been to India is assigned to
work there, he will feel awkward in the beginning due to the differences in
infrastructure such as inadequate public transport, poor hygiene, spicy food,
different religious practices and different daily customs from those practised in
the United States.

These differences will cause stress to international managers. The attitude of the
managers will change as they start to feel frustrated, angry and unable to control
themselves. The psychological signs which indicate that the managers are
experiencing culture shock are stress, anger, loneliness, fear of being deceived
and suspicion. These differences and stresses will cause the managers to react
consistently with the culture shock they are facing.

Let us look more closely at the three culture shock reaction categories as shown

(a) Withdrawal
In this category, managers will demonstrate an aggressive reaction such as
rejecting the new culture, being aggressive and angry. This situation is
classified as encapsulator culture, where managers will have the following

(i) Minimal contact with the local culture

The managers try to adjust with the local people and culture but at a
minimal rate.

(ii) Maximum contact with the expatriate culture

The managers make maximum contact with the expatriate community
and culture which exist in that foreign country.

(b) Cultural Empathy

The managers will give a more open and positive reaction towards the
culture of the foreign country. They will be tolerant and try to accept the
differences that exist in a foreign country. This is known as the
cosmopolitan culture, which means that the managers will keep a foot in
both camps and adjust to both the expatriate lifestyle and the local society.

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(c) Local Adjustment

The managers fully accept the differences found in the new country and
adjust to the local culture. This category is known as absconder culture,
which means having minimal contact with the expatriate lifestyle and
maximum contact with the local community.


Truly global leaders need a set of core values that will guide them in
whatever environment they may find themselves.

– Kets de Vries

As you may be aware based on the above saying, in a different cultural

environment, international managers must change their attitude and behaviour
in order to adjust themselves. They must have knowledge of the management
system from the perspective of their own culture as a basis to face problems
which might arise in foreign cultures. Without knowledge and adequate
preparation, managers will easily experience culture shock which is a main factor
in the failure of an international manager.

Do you know that adjustment to a particular culture can make a difference in the
success or failure of an international manager? Cultural adjustment is a very
important process for an international manager. If adjustment is not made, the
mission of achieving the international assignment objective will fail.

For many international managers, international assignments turn out to be the

most memorable career experience. Working abroad gives them the opportunity
for greater challenge and responsibilities, and for personal as well as professional
development. However, for some, it is a nightmare, as depicted below.

In the United States, studies conducted show that failure rates up to 30% within
US multinational companies reveal the difficulties of adapting to new cultures.
This failure is estimated to cost US business $2 billion a year.

We will learn the phases and stages of adjusting to a foreign culture in order to
help us understand the process of cultural adjustment. There are three phases of
cultural adjustment as depicted in Table 5.2.

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Table 5.2: Phases of Cultural Adjustment

Phase Cultural Adjustment

Honeymoon Period of elation and optimism

Morning after Period of irritability, frustration and confusion (also known as

the period of culture shock)

Happily ever after Period of gradual adjustment to the new environment (also
known as the adjustment stage which is followed by the mastery

Source: Lysgaard, S. (1955). Adjustment in a foreign society: Norwegian Fulbright

grantees visiting the United States. International Social Sciences Bulletin, 7.

(a) Honeymoon Stage

In this initial stage, international managers will consider cultural
differences as new and interesting. They will have an open and positive
attitude and look at difficulties as a challenging constructive experience.
This can be seen when the managers first arrive in a foreign country to
begin a new assignment. There is a feeling that the cultural gaps and
differences can be easily handled because the managers feel physically and
mentally prepared to adjust to the new culture and new workplace which
are quite different and complicated.

(b) Morning After Stage

After being in the foreign country for a while, the manager starts to feel that
the different environment and culture are now a major problem in his or
her work and daily life. Unrealistic expectations and gaps will make
managers feel frustrated and confused. Such a situation occurs because in
the initial stage, the managers consider the new atmosphere and culture as
interesting and challenging. All the cultural training and research
conducted before makes them confident that all problems and confusions
can be solved easily.

However, after facing the problems hands-on, they discover that it is not an
easy task, after all. The situation becomes even more complicated and
confusing if the problems affect their values and principles. All the
symptoms of culture shock, as discussed before, will start to appear at this
stage. Those who fail to cope with the pressure will eventually give up and
return to their home country without completing the assignment.

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(c) Happily Ever After Stage

After facing the difficulties of managing cultural differences, some
managers with strong personal traits will finally understand how to
overcome the problems. They are now in the happily ever after stage as
they are able to adjust to the environment and culture of the foreign
country. The managers have gone through various experiences and after
making various mistakes, a process known as learning by doing will take

At the same time, the managers might also gain more knowledge on the
culture and language of the foreign country. The relationship with the
foreign workers might improve. Since the managers are now able to adjust
to the culture and lifestyle, it means they have undergone cultural
adjustment and managed to assimilate into the new culture successfully.


Read the following:

You are an international manager who has been sent to

China and the first itinerary is a meeting over dinner with a
Chinese government official. Your chances that the proposed
project will be approved depend very much upon the approval of
the official.

Before going for the dinner, your colleagues advise you to take a
souvenir for to the Chinese official because according to them, the
Chinese culture requires you to give a souvenir to build trust and
friendship. You do not agree because you see the gift as an act of
bribery which goes against your values and principles.

After reading the above situation, answer the following questions:

(a) Will you sacrifice your principles for the sake of the project or will
you adjust yourself to the local culture that encourages gift
giving? Explain your reason.
(b) What would be the appropriate solution for the above situation?

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1. Explain briefly the three roles of an international manager.

2. What are the three culture shock reaction categories?
3. What are the three phases of cultural adjustment? Explain each
phase briefly.


As you may realise, international managers do not try to avoid management
problems in foreign countries. In the process of solving these problems, they will
face a dilemma whether to solve the problem based on their culture or based on
the culture of the foreign country. However, before making a decision, they must
equip themselves with skills and abilities to manage cultural differences.

According to Scheneider and Barsoux (2003), there are seven skills and abilities
which are needed to manage cultural differences in a foreign country as can be
seen in Figure 5.2. Each of the skills will be elaborated in the following sections.

Figure 5.2: Competencies for managing cultural differences

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5.5.1 Interpersonal Skills

Have you realised the importance of interpersonal skills in helping a manager to
settle down peacefully in a foreign country? Interpersonal skills help the
manager to integrate into the social fabric of the host culture. Not only does it
satisfy the need for friendship and intimacy, it also facilitates the transfer of
knowledge and improves coordination and control. Establishing relationships
and building trust allows the manager to tap into critical information, thus
reducing the stressful uncertainties surrounding both work and personal life.

The need for more people-oriented managers is emphasised by multinational

companies. According to a director of ICI (a chemical and pharmaceutical
company in England), an important factor in the selection of managers for an
assignment abroad is to look for people who are good at getting along with
colleagues at home. This is deemed as essential because any problems a manager
has in dealing with colleagues will be magnified in a foreign setting due to the
complexity of the cultural differences. Those who are unable to communicate
effectively and solve any domestic issues with their colleagues are definitely not
supposed to be candidates for international assignments.

The former co-chairman of Unilever agrees that it is important for international

managers to have interpersonal skills. This company looks for people who can
work in teams and understand the value of cooperation and consensus. Thus, the
ability to get along with others is considered to be an important passport to
international business.

5.5.2 Linguistic Ability

You may wonder about the role played by language in the process of adapting to
a culture. Let us find out the role of language by reading the following sentences.

Linguistic ability is important for international managers. However, what is

more important is trying to develop a feel for what matters to others while
communicating with the local workers. Efforts to speak the local language
may have more symbolic than practical value but the impact is highly significant.

Perhaps, you may have experience of conversing with foreigners. For example,
when those whom you think do not know the Malay language suddenly say
„Selamat pagi‰ or „Apa khabar‰, you will feel impressed with them. Likewise, if
you were assigned to work in China and greeted the locals in Mandarin, they will
be impressed with your ability. If you do not want to try to use their language,
it will be difficult for you to gain the trust and respect of the local workers.

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What is the significance of learning various languages particularly

when you have been assigned as a manager abroad?

5.5.3 Motivation to Live Abroad

Based on the quote below, you will realise the significance of motivation in
driving a personÊs spirit to overcome all hurdles in the process of adapting to a
new culture.

I do not believe in team motivation. I believe in getting a team prepared so it

knows it will have the necessary confidence when it steps on a field and be
prepared to play a good game.
– Tom Landry

Motivation to live and work abroad is a key ingredient for the successful
adaptation of expatriates and their families. They should be selected based on
genuine interest in other cultures and enthusiasm to gain new experiences.

5.5.4 Tolerance for Uncertainty and Ambiguity

Ability to tolerate and cope with uncertainty and ambiguity is important in
managing cultural differences at the workplace in a foreign country.
Circumstances change unexpectedly, and the behaviour and reaction of local
employees might be unpredictable. Therefore, the international manager who has
shown the ability to tolerate and cope with uncertainty at the home office is the
one who could possibly adapt almost instinctively in a foreign country. The
international manager has to be someone who is well prepared to face any
possible uncertainties and difficulties which might arise from multiple

Companies such as AT&T (a major telecommunication company in the United

States) and Colgate acknowledged the importance of the ability to cope with
uncertainty. AT&T conducted trainings and assessments to train and evaluate
their workersÊ ability to cope with uncertainties.

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5.5.5 Patience and Respect

Patience is very crucial in management because each worker has a different
attitude and behaviour. This is even more important when it involves a different
country and cultural setting as it takes time to learn the ropes. It is important to
select expatriates who demonstrate this attitude because those who do not might
have the tendency to benchmark the new culture against the home culture. Those
with patience and respect will instead try to understand the local reasons for the
way things happen and not complain about them. While patience and respect
may be the golden rule of international management, these seem to be the ones
most often broken in the process of adaptation.

5.5.6 Cultural Empathy

Managers must try to truly understand a given matter from the perspective of
other cultures. It must be remembered that the most important thing is to respect
the ideas and differences of others. Some individuals find it easier to appreciate
the thoughts, feelings and experiences of others based on their ability to listen
and consider the views of others.

Empathy is a skill which cannot be easily acquired as it is deeply rooted in oneÊs

character. There are international managers who are narcissistic. They often find
it difficult to understand the attitudes and behaviours of others. These managers
see others as objects or instruments to satisfy their own needs. In their effort to
prove their worthiness, they fail to identify the values and needs of others.

5.5.7 Strong Sense of Self

As an international manager, an expatriate needs a strong sense of self such as
the ability to solve problems, technical skills and vast experience. In other words,
the manager needs to have a positive ego. This allows interaction with another
person from different culture effectively without fear of losing oneÊs own
identity. This also enables the manager to respond to any failure and treat it as
part of the learning experience.

A positive ego will reinforce the ability to handle stress, particularly in critical
situations, when the manager is far from the headquarters. All uncertainties and
frustrations of international experiences need to be appropriately handled. If the
chosen manager is someone with a high mental resistance, he or she will be able
to face all problems rationally.

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The traditional approach of preparing expatriates for international assignments
focuses on cultural briefings, language training and reading books or surfing the
Internet. Doing so will increase the international managerÊs level of acceptance
for the foreign culture, especially when he or she is exposed to the culture
through the media, travelling, training, education and through experience with
international business ventures.

Knowledge and experience of foreign cultures are two important factors in

handling international affairs, particularly during negotiation with various
parties in a foreign country. If the negotiating party is unfamiliar with the culture
of its counterpart, then it is better that the said negotiation includes a third party
or a mediator who is familiar with the culture of both sides.

When carrying out an assignment in a foreign country, you must emphasise on

the appropriateness of the action you are about to take. The appropriateness
depends on experience and circumstances such as time-constraint and
environment. If you understand the importance of appropriateness, it will be
easier for you to adjust yourself to the new culture.

For example, if you attend a formal event in which alcohol is served as the main
drink and you do not consume such drink for the reason of religion, then you are
not obliged to do so. The reason is that it goes against your cultural values and
personal principles. Muslims for example, are admonished from taking alcohol
as it is against the religion.

Adjusting oneself can be made easier by preparing a profile on both the foreign
and home cultures. From here you will be able to identify the cultural similarities
and differences and form a basis for international management. However, in
reality, the international manager should not depend totally on the information
gained through reading and training. This is because the clash of culture can be
handled through negotiation which requires your skills to be modified and
adjusted from time to time.


International managers play an important role in ensuring the firmÊs foreign
operations are effectively managed. Therefore, it is important for managers to
enhance their ability through proper training programmes that will enable them
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to adjust themselves easily and interact effectively with the workers and
community of the host country.

There are six types of cross-culture training programmes which can be provided
to managers who have been selected for international assignments. Apart from
possessing the technical skills and abilities mentioned in Subtopic 5.5, these
training programmes will help managers to adjust their attitude and behaviour
in order to be able to perform their international assignment successfully. These
programmes are:

(a) Foreign Environment Briefing

Briefing on the foreign environment provides information on the
geography, climate, accommodation and schooling facilities in the foreign

(b) Cultural Orientation Programme

Cultural orientation programme aims at adjusting the manager to the
cultural institution and value system of the host country.

(c) Cultural Assimilators

An effective cross cultural approach, cultural assimilators use a planned
learning method to provide experiences of certain situations. For example,
when a candidate will be sent to Venezuela, several assimilators involving
cultural issues in Venezuela will be designed and the candidate will be
asked to give his or her interpretation and reaction. If the candidate gives
awrong reaction, he or she must try to give another different reaction.
Different assimilators can be designed for different countries as required.

(d) Language Training

Language training in English as it the main language used in international

(e) Sensitivity Training

Sensitivity training is held to build a flexible attitude when faced with
different cultural situations.

(f) Actual Living Experience

Actual experience is conducted by sending the manager to the foreign
country. The aim is to allow him or her to experience the pressure of
working with people of different cultural background for a specified

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Most expatriates will return to their home country after spending two or three
years abroad. Firms usually stress on training for expatriates before they leave for
an overseas assignment but overlook the importance of preparing the same
expatriates for re-entry into their home countryÊs organisation. Upon returning to
their home country, managers might face another problem, which is adjusting their
families and themselves to the home countryÊs culture, as well as returning to their
old job.

Regardless of the reason for their repatriation, many companies fail to make the
necessary planning to assist managers in re-adjusting themselves to the setting of
the home country. Many managers feel that the position given to them upon their
repatriation is a demotion as they are not given the opportunity to use their
experience abroad, and they have not been informed clearly about their new
position. Some of them even tender their resignation immediately upon their

Studies have also shown that the following are the main causes of why managers
sometimes quit the organisation upon their return:

(a) Less Emphasis on their Importance

It is as if they have been forgotten because they are seldom seen as an
important person at the foreign subsidiary.

(b) Changes in Organisation

Changes in the organisation during their assignment abroad made them not

(c) Technological Advancement

The technological advancement at the headquarters has made their
knowledge and skills obsolete.

(d) Adaptation Difficulties

Difficulties in the form of adapting to the new position.

(e) Lower Standard Life

A lower standard of life due to a smaller compensation package.

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What are the strategies employed in order to ease the repatriation process? Some
managers need between six months to one year after repatriation to demonstrate
an effective performance. In order to assist managers to re-adjust themselves
easily and smoothly, the company may take the following steps:

(a) Repatriation Agreement

Companies provide a repatriation agreement which specifically states the
period of assignment abroad and the position given upon repatriation.

(b) House Maintenance

Companies rent out or maintaining managerÊs house during the period of
their assignment abroad. This will lessen the financial burden of purchasing
a new house upon their return.

(c) Appointment of Senior Managers

Companies appoint senior managers at the headquarters as sponsors for the

(d) Provide Information on Development and Projects

Companies provide information on the latest development at the headquarters
and involving them in projects at the headquarters when their return for

(e) Provide Proactive Support System

Companies provide a proactive support system such as:
(i) A mentor programme where the manager is coupled with a top
management officer at the headquarters;
(ii) Create a department which is responsible of managing their needs; and
(iii) Continuous relations between the headquarters and the manager.

(f) Provide Counselling Facilities

Companies provide counselling facilities to managers and their family

(g) Conduct Special Session

Companies conduct a special session to identify the knowledge, skills and
new views of the managers.

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(h) Conduct Interview

Companies conduct an interview with the managers and their spouses to
review their opinion on the assignment carried out and arising issues.

(i) Organise Event

Organise a formal or an informal event to celebrate their return.

Discuss the following questions with your classmates.
1. If you have visited a foreign country, list out some of the different
and unique practices of people in that country. Present your
findings in the class.
2. Analyse the skills and abilities which are needed to manage
cultural differences.
3. Examine in detail the strategies required to help managers in the
transitional period.


Essay Question

1. Explain the factors which cause international managers to fail in

performing their duties effectively.

Multiple Choice Questions

1. Which factor does not cause culture shock to international

A. Cultural differences
B. Language differences
C. Sensory differences
D. Physical differences

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2. Which type of international manager has a maximum relation
with the foreign culture and a minimal relation with the expatriate
A. The absconder
B. The encapsulator
C. The initiator
D. The cosmopolitan

3. During the process of cultural adjustment, the international

manager will feel frustrated and confused and get angry easily.
What is this stage known as?
A. Honeymoon
B. The morning after
C. Maturity
D. Happily ever after

4. What stage is an international manager in when he has positive

attitude towards a new culture?
A. Honeymoon
B. Morning after
C. Maturity
D. Happily ever after

5. What is the ability of the international manager who recognises

and understands the situation of others, notably the foreign
culture, known as?
A. Tolerance for uncertainty
B. Interpersonal skills
C. Cultural empathy
D. Patience and respect

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• The role of an international manager is indeed challenging and requires

exposure and preparation as the setting of a foreign country is far different
from that of the home country.

• Training an international manager on aspects such as building trust, respect,

communication skills, and inculcating patience is considered easy. However,
implementing each strategy is quite complicated and difficult to understand.

• International managers might argue about their duties in the foreign country
when they feel that their identity and belief are threatened.

• Accepting or adjusting to a new culture does not mean that international

managers will lose their personal values and identity.

• The roles of an international manager are as follows:

– Manage operations and ensure companiesÊ goals are achieved;
– Initiate the management, process and technology transfer process;
– Fill in the positions;
– Secure the headquarter control over foreign subsidiaries; and
– Learn foreign cultures and acquire new knowledge.

• The personal values and identity of international managers are considered an

important guideline which can be used when facing difficulties during their
assignment abroad.

• The three culture shock reaction categories are as follows:

– Withdrawal;
– Cultural empathy; and
– Local adjustment.

• There three phases of cultural adjustment are as follows:

– Honeymoon;
– Morning-after; and
– Happily ever-after.

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• The success or failure of the international manager depends on the training

and personal abilities and skills.

• While technical skills are needed, the ability to manage workers of different
cultural background, to control oneself and to cope with uncertainties is far
more important.

• If all these abilities are integrated with technical skills, the international
manager will be able to handle whatever problems in any new environment.

Absconder Happily ever-after

Cosmopolitan Honeymoon
Cultural empathy Local adjustment
Empathy Morning-after
Encapsulator Repatriation
Expatriates Withdrawal

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Topic Global
6 Organisation

By the end of this topic, you should be able to:
1. Explain how global organisations exist by adjusting to the local
2. Analyse the importance of cultural differences and the competitive
advantage created by these differences;
3. Assess nine ways of reducing cultural differences; and
4. Formulate cross-cultural management best practices for global

What do companies such as Shell, Tesco, INTEL, Microsoft, Procter & Gamble,
Unilever, Honda, Sony, Hyundai, Nokia, Proton and Allianz have in common?
Can you spot the similarities between them? Basically, all of them are few
examples of true global organisations as shown in Figure 6.1.

Based on the term „global organisation‰, the following would be the questions
asked in order to enhance our knowledge on global organisation:
(a) Can you determine the birthplace of these companies?
(b) Why did they become global organisations?
(c) How did they survive in various countries with different cultural

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Figure 6.1: Examples of global organisations

This topic will discuss why global organisations, more commonly known as
multinational corporations (MNC), are important and how they manage and
adjust their operations according to the local environment. We will also look at
some strategies used in managing cultural differences and how to gain
competitive advantage from cultural differences across nations.


Before we discuss strategies to manage cultural differences, it will be better if you
know the definition of global organisations, more commonly called multinational
companies (MNC).

A multinational corporation (MNC) is a business enterprise with

manufacturing, sales or service subsidiaries in one or more foreign countries.
These corporations originated in the early 20th century and proliferated after
World War II. Typically, a multinational corporation develops new products
in its native country and manufactures them abroad, often in Third World
nations, thus gaining trade advantages and economies of labour and
materials. Almost all the large multinational firms are American, Japanese or
West European. Such corporations have worldwide influence over other
business entities and even over governments, many of which have imposed
controls on them.

(Source: /Multinational +comp


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Now, let us move on to find out the strategies employed by the multinational
companies in managing cultural differences.


Do you know that different multinational companies use different strategies to
manage cultural differences? The following are strategies used in managing
cultural differences:
(a) Ignore the cultural differences;
(b) Minimise the cultural differences; and
(c) Utilise the cultural differences.

However, it is not really easy to find a company which uses cultural differences
to create competitive advantage. The „ignore, minimise‰ and „fully utilise‰
strategies have implications for relationships between headquarters and
subsidiaries as well as for managing conflicting demands for global integration,
local responsiveness and organisational innovation.

Let us look in depth at each of the strategies used to manage cultural differences
in the coming sections.


Even in this era of globalisation, we can still see global products like LeviÊs jeans
and McDonaldÊs burgers or a 200-year-old global organisation which has no
indication of an international mindset. Head offices and most of the product/
business unit heads often remain firmly planted in the home country. When
companies choose to ignore cultural differences, they are operating on the
assumption that business is business and that managers, engineers or bankers are
the same throughout the world.

Companies assume that policies and practices developed in the home country are
readily transferable. The host country subsidiaries feel that they have to maintain
product quality to uphold customer service and technological standards, and
ensure that the corporate culture is shared by all employees. Such companies
might even create their own training centres or universities to inculcate the
necessary management practices and behaviour, core beliefs and values.

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While compliance may be achieved at the surface level of behaviour, values and
beliefs, it is not evident that underlying assumptions are truly shared. Some
companies develop their own beliefs, values and identity. For example, IBM
managers worldwide share the same dress code.


In your own words, explain the term „multinational companies‰.

Do you know that some companies prefer to bring their work culture and ethics
to other countries without considering the cultural differences? They will practise
their own culture although it goes against the local culture, hoping that their
employees in the said countries will follow their way.

For example, Japanese firms usually prefer to enforce their organisational

culture, work organisation and management techniques at their subsidiaries in
Malaysia. As a result, Malaysian workers have to adhere to their Japanese
managersÊ practices. Although these companies may make some concessions to
satisfy their customers, they are often less willing to adapt to their employeesÊ
local practices. Local adaptation is only made under pressure.

Figure 6.2 illustrates a common situation that occasionally occurs in an

international company operating in Malaysia. A majority of companies fail to
recognise that Muslims perform their Friday prayers at noon and continue with
their business.

Figure 6.2: EmployerÊs lack of awareness

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The prevailing attitude of headquarters to subsidiaries is one of universalism,

which refers to the idea that there is only one best way to do things, which is the
home countryÊs way. They also embrace ethnocentrism, that is a belief that what
has been tried and tested at home is better and will work best in the host country.
According to Nancy Adler, this universalist view of business is parochial or

As you may realise, this ignorance towards cultural differences may lead the
management to implement standardised procedures in all host countries. Indeed,
there are multinational companies which succeed although they do not pay
much attention to cultural differences. In fact, their competitive advantage is
derived from this standardised way of operating worldwide. This may be
particularly true in industries which are engineering-driven, such as oil or
construction, or rely on high technology such as telecommunications.

You need to realise that sensitivity towards cultural differences and willingness
to solve related problems are only considered important for the purpose of
improving communication among one another. Companies like Coca-Cola (refer
to Figure 6.3) are able to sell standardised products worldwide because people
around the world prefer the same original taste of Coke and there is no need for
any product customisation to local taste and preferences.

Figure 6.3: The award-winning brand, Coca cola


The assumptions of „one best way‰ means that management practices just
require fine-tuning for optimal effectiveness. A study of eight foreign
acquisitions of US firms found that while cultural differences were easy to
identify, they did not seem to have important operational consequences.

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Problems were more readily attributed to contextual, structural and political

factors. This finding led to recommendations to follow the universal rules,
finding the right strategy and structure, the right amount of interpersonal
sensitivity and communications, limiting politics and preserving managerial


Explain the existence of global organisations through the means of

adapting to the local environment.


Although many companies choose to ignore cultural differences, another strategy
for managing subsidiaries with cultural differences is by minimising the impact.
This approach recognises cultural differences as important, but mainly as a
source of problems or threats to efficient and effective operations. Minimising
cultural differences means findings ways of homogenising them by looking at the
similarity of both cultures and at the same time, trying to reduce the potential
conflict between the two different practices.

Let us look at some of the ways to reduce cultural differences as shown in

Table 6.1:

Table 6.1: Ways to Reduce Cultural Differences

Ways to Reduce Cultural Differences

Create a corporate culture
Assign senior management from the parent company
Provide intensive training to local workers
Implement the polycentric approach between the headquarters
and subsidiaries
Use standardised systems and procedures
Create regional headquarters
Produce global products
Encourage global cooperation through structural mechanism

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(a) Create a Corporate Culture

This can be done by developing a corporate culture globally but this is
difficult to accomplish. Companies believe that a strong corporate culture
can be designed to be a melting pot to reduce cultural differences. They also
assume that subsidiaries can implement it on their own (polycentric
approach), provided that they can show good results.

However, implementing similar systems and procedures or creating a

global corporate culture which does not reflect the practices and culture of
the headquarters is quite difficult. For this reason, global corporate values,
systems and practices are often unacceptable.

(b) Assign Senior Management from the Parent Company

Senior management from the parent company can be assigned to head up
the local subsidiary to serve as a cultural transfer agent. Parent company
executives may frequently visit subsidiaries and meet with local managers
to discuss how things are going. In this way, problems can be resolved
immediately. Local managers, on the other hand, must adapt themselves to
the policies and procedures of the parent company so that they can
understand the attitude and values practised by the parent company.

Creating a strong corporate culture to reduce cultural differences is

challenging as the culture of the parent company is seen as permanent and
dominant. This makes local managers feel isolated in their own country.

For example, many Japanese companies have tried to minimise the

influence of local cultural differences by combining frequent personal
interaction between the head office and expatriate Japanese with strong
socialisation practices for locals. The heads of the subsidiary, who are
mostly Japanese nationals, will remain in close contact with the

It is vital to keep informed and to maintain the network of contacts in order

to get things done, mainly by making frequent trips back to the home
country. Local nationals are carefully screened to ensure that they match
the companyÊs values and behaviour.

(c) Provide Intensive Training to Local Workers

Local workers are given intensive training not only in work techniques but
also in company philosophy. They are often sent to the companyÊs home
country to observe and experience the way things are done at the

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For example, Sony sends managers from their subsidiary in Malaysia to Japan to
learn the latest Japanese quality practices in manufacturing. However, success is
not always guaranteed as non-Japanese managers, even those who speak fluent
Japanese, are not able to develop the necessary personal network. They also
would never really be able to understand the Japanese way of doing things.

Local managers would not have the essential experience that is needed to build
relationships and understand management processes. While these approaches
may take into account national cultural differences, they aim to assimilate these
differences into an overriding corporate culture. Efforts to create a strong
corporate culture in order to reduce cultural differences often meet with
resistance because the parent company culture remains dominant.


What are the ways to reduce cultural differences?

(d) Implement the Polycentric Approach between the Headquarters and

Another way of minimising the impact of culture is to isolate the different
cultures, thus, avoiding clashes between the two. This approach reflects
apolycentric approach to headquarter-subsidiary relations, where each
subsidiary has the autonomy to make operating decisions. In other words,
the parent company determines what has to be done and the local
subsidiary is free to do it as it sees fit, provided targets are met.

While the polycentric approach acknowledges cultural differences and

allows local firms to work their way, which encourages pluralism, many
firms are finding this approach costly and are discovering a greater need
for regional integration and rationalisation. This is particularly evident now
within Europe where the single market and currency allows for a greater
flow of goods, capital and people across 16 member countries.

This approach is only used when foreign businesses are considered

important due to historical or strategic reasons. Strategy formulation is
centralised while strategy implementation is a local decision.

(e) Use Standardised Systems and Procedures

Firms have their own standard operating procedure and this is shared
between both the headquarters and subsidiaries. Cultural differences are
minimised through the harmonisation of systems and procedures. Using

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standardised and sophisticated reporting procedures and systems is a

normal practice among multinational US companies.

European managers often complain that they spend most of their time
gathering information for the head office and that they are judged solely on
results without concern for local conditions. They also complain that this
leads to an obsession with numbers and short-term thinking.

(f) Create Regional Headquarters

In order to balance the need for global integration and at the same time,
remain sensitive to local conditions, many multinational companies have
created regional headquarters (regiocentric approach). Regional
headquarters, which act as a „buffer‰ between national units and head
office cultures, help to do the following:
(a) Improve coordination between national organisations;
(b) Seek out potential synergies between the organisations; and
(c) Reconcile local responsiveness and global integration.

For example, many senior managers complain that the regional

headquarters was „too American‰. In particular, marketing and human
resource management divisions which are run by Americans are not
considered sufficiently sensitive to the different local market and labour

Whether using regional headquarters as buffers or creating complex

matrices to resolve balancing demands for global integration and local
responsiveness, the logic remains one of reducing the impact of national
cultural differences. This tends to ignore the potential of local units to add
value in terms of innovation, not just in products and technology, but also
in management practices. Strategic thrust, transfer of technology, and
learning are still seen as a top-down affair.

(g) Produce Global Products

Global products have different consumer perceptions. While consumer
preference may be the same, many companies deny that these products
lead to homogenisation. Many multinational companies are trying to
improve integration between national companies by developing global
business areas or product lines.

National organisations are matrices with these global business or product

lines, creating a dual reporting structure, to a country manager and a
business/product manager. While country heads are seen to be very

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important to preserve local responsiveness, business or product heads are

responsible for optimising global integration.

(h) Give Full Commitment to a Global Perspective

Efforts to achieve greater integration may be sabotaged unless local
managers are committed to a regional or global perspective. So it is
necessary to involve country heads in developing global plans and
enlarging their sphere of influence. This may include giving them
responsibilities for coordination as well as career opportunities outside
their local operations.

Cultural differences are brought into the mainstream. However, local

managers cannot be expected to work successfully with other nationalities
if they are not provided with appropriate language and cultural training.
Nor can they be expected to cooperate with people in other units if there is
no mechanism or incentive to do so.

(i) Encourage Global Cooperation through Structural Mechanism

Cross-border cooperation can be encouraged through structural
mechanisms. Companies can build interdependencies into their structures.
Refer to the example below in order to enhance your knowledge.

Nestle has a network of some 20 research and technology centres dotted

around the world. Managers from different countries need the skills to
operate across country boundaries, so that cultural advantages can be
utilised. The skills needed are like cultural and language skills, and an
infrastructure (such as structures and incentives).

They also need to understand and create interdependencies among units,

as well as have an important role in the broader organisation, so that they
can use cultural differences to find proper balance between responsiveness
to local needs and central control.

As portrayed above, this is an ongoing dilemma for most multinational

companies today. For historical and cultural reasons, the balance is
different between Europe, the United States and Japan. Therefore,
multinational companies must be more aware of and responsive to local
needs while trying to become more global. Most Japanese firms have run
into difficulties in internationalising their companies and are now striving
to enhance local responsiveness. American companies, on the other hand,
focus more on global integration.

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These differences may be in part culturally-driven. American expansion

overseas, particularly in Europe, was intended to be regiocentric, where a
company's international business is divided into international geographic
regions, in part due to the lack of understanding of the different cultures
existing in Europe.

Many American companies have in some ways treated Europe as one

country, a mistake which some say may now serve as a competitive
advantage. Many European firms consider themselves in the best position
for going global and incorporating cultural differences, as they are more
accustomed to living closely with neighbours of different cultures.

Explain in detail each of the ways to reduce cultural differences that
you have learnt so far by using your own words.


You may wonder how firms fully utilise cultural differences. Perhaps the best
model to understand how international firms fully utilise cultural differences is
through strategic alliances and joint ventures. This model, in which each
company retains its ownership in the venture, allows firms to combine their
competitive advantage and seeks alliances to accomplish difficult or expensive
assignments. Thus, companies retain a local identity by avoiding anti-trust
regulations, and keeping political ties and the facility to raise capital. In creating
this alliance, one of the most important tasks to accomplish is to make clear to
each partner the benefits of cooperating.

Do you realise that one of the key concerns that must be addressed is preserving
the autonomy of each partner? Clearly, boundaries between sectors and nations
are becoming less distinct. Companies can engage in joint ventures or strategic
alliances with other companies worldwide, sometimes even with rival
companies. Both joint ventures and strategic alliances will result in a new entity,
which will make use of the best cultural aspect from all parent companies to
create its own organisational culture.

What is geocentric management? Global organisations that fully utilise cultural

differences use geocentric management, which involves a global view of the
organisation's international operations. Rather than orienting themselves

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towards either the home country or host country, top managers consider the
organisation's goals, plans and performance from a broader, worldwide

The best managers, regardless of their nationality or location, are selected for the
assignments that fit their skills and abilities. The various units are connected by a
coordinated plan that allows for local needs and actions in the context of overall
organisational performance. Although this is the most complex of the three
international management approaches (ethnocentric, polycentric and regiocentric),
managers who apply geocentric management can make the most effective use of
their resources, regardless of origin or location, and achieve the highest possible
overall performance.

Let us look at the example below on how geocentric management plays a

significant role in the management of an organisation.

Asea Brown Boveri (ABB), an organisation created by the merger of Sweden's

ASEA and Switzerland's Brown Boveri, uses geocentric management to achieve
consistently high global performance from more than 1,000 companies operating
in 140 countries. ABB produces electrical power equipment, robots, locomotives,
anti-pollution control systems, and other industrial goods, and its local operations
around the world act both independently and cooperatively. Local managers are
free to react to conditions in their countries, but they must also share information
and resources with other units and strive to achieve ABB's overall goals. In this
way, top ABB managers can balance local needs with the concerns of reaching
global goals.


Top management in this type of organisation openly talks about cultural issues
and encourages each team to define its own culture. Expatriates are chosen based
not solely on job competence but on being adaptable and having a sense of
adventure and good problem-solving skills. Support is provided before and after
expatriation by outside consulting firms. Training is provided based on the needs
of expatriates and organisations. The training itself is globalised, using methods,
materials and trainers from different cultures.

How does one establish closer relations between headquarters and
subsidiaries by fully utilising cultural differences?

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Essay Questions

1. If a company becomes global, must the corporate culture of the

company become global too?
2. Will a subsidiary succeed just by adjusting to the culture of
the parent company without considering local responsiveness?

Multiple Choice Questions

1. What is the best model to understand how firms fully utilise

cultural differences in international business?
A. Strategic alliances and joint ventures
B. Training and internship
C. Observation and argument
D. Franchising and licensing

2. One way of minimising the impact of culture is to isolate the

different cultures, thus avoiding clashes between them. What
is the approach that reflects the above statement?
A. Geocentric
B. Regiocentric
C. Polycentric
D. Ethnocentric

3. Which of the following statements correctly explains the practice

of firms which fully utilise cultural differences?
A. Managers from the firmÊs home country are assigned to
manage their subsidiaries overseas.
B. The best managers, regardless of their nationality or
location, are selected for the assignments that fit their skills
and abilities.
C. The firms assign host country managers to manage their
subsidiaries overseas.
D. The firms let local managers at the subsidiaries appoint their

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• Managers of multicultural teams must be sensitive towards organisational

needs and make sure that everything runs smoothly.

• They have to adopt several new approaches to ensure that the organisation is
not faced with any problems. Cultural differences have various effects on

• Companies could totally ignore, minimise or fully utilise cultural differences

for their own benefit.

• Companies that ignore cultural differences will bring their work culture and
ethics to other countries without considering the cultural differences.

• Companies that recognise cultural differences as important see these

differences as a source of problems or threat to efficient and effective
operations. They try to minimise cultural differences by looking at the
similarities of both cultures and reduce the potential conflicts between the
different practices.

• There are several ways to reduce cultural differences, such as:

– Creating a corporate culture;
– Assigning senior management from the parent company;
– Providing intensive training to the local workers;
– Implementing the polycentric approach between the headquarters and
– Using standardised systems and procedures;
– Creating regional headquarters;
– Producing global products; and
– Encouraging global cooperation through structural mechanism.
• Global organisations that fully utilise cultural differences use geocentric
management, which involves a global view of the organisation's international
operations, rather than orienting themselves towards either the home country
or the host country.
• Managers must act wisely in handling problems if the organisations want to
preserve harmony among members of the group and in the organisations.

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Ethnocentric Polycentric
Geocentric Regiocentric

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Topic Leadership
7 Across
By the end of this topic, you should be able to:
1. Explain the term „leader‰;
2. Explain different leadership styles and behaviour across cultures;
3. Compare leadership practices in different countries; and
4. Analyse three types of leaders.

Managers nowadays cannot escape from working with people from different
cultural backgrounds as globalisation and regional integration increase. Even
firms that do not have businesses abroad might face challenges in managing a
culturally diverse workforce. This creates a need for leaders who are well-versed
in cross-cultural management and its impact on the workplace.

Leaders need to have competency in leading and managing people of different

cultures as depicted in Figure 7.1. They need to listen to workers and understand
what they are saying. These are challenges for leaders as workers perceive the
world, communicate and view their leaders in different ways.

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Figure 7.1: Managing a diverse workforce


This topic will introduce the meaning of leadership, followed by leadership

behaviour and styles. Then, we will discover different leadership styles across


Good leaders are made not born. If you have the desire and willpower, you
can become an effective leader. Good leaders develop through a never-ending
process of self-study, education, training and experience
– Jago, 1982

Now, what do you understand from the above quote? Well, it says that in order
to become a leader, you need to be willing and make the effort to be an effective

What is meant by the term „leader‰? Leaders are people who hold a dominant or
superior position within their field, and are able to exercise a high degree of
control or influence over others. Leadership can be defined as the process of
influencing people to direct their efforts towards the achievement of some
particular goal or goals (Luthans & Doh, 2009). In the context of global business,
leaders are those who have the ability to inspire and influence the thinking,
attitudes and behaviour of people everywhere in the world (Deresky, 2007).

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What are the definitions given for the term „leader‰?


Behaviours and styles of leadership may be divided into three commonly
recognised styles which are shown in Figure 7.2:
(a) Authoritarian leadership;
(b) Participative leadership; and
(c) Delegative leadership.

Figure 7.2: Styles of leadership

Let us explore each of the styles in the coming sections.

7.2.1 Authoritarian Leadership

Authoritative leaders provide clear expectations of what needs to be done, when
it should be done and how it should be done. There is also a clear division
between the leader and the followers. Leaders make decisions independently
with little or no input from the rest of the group.

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This leadership behaviour typically involves the use of a one-way

communication from manager to subordinates. Authoritarian leadership is best
applied to situations where there is little time for group decision-making or
where the leader is the most knowledgeable member of the group.

There are a few problems with this style:

(a) Decision-making is less creative as the majority of the ideas come from the
leaders themselves without asking and considering the opinion of the
(b) It is difficult for firms to move from an authoritarian style to a democratic
style and vice versa; and
(c) Leaders who abuse this style are usually viewed as controlling, bossy and

7.2.2 Participative Leadership

Now, let us concentrate on the second style of leadership. Participative
leadership is generally the most effective leadership style. Democratic leaders
offer guidance to group members. They also participate in the group and allow
input from other group members as shown in Figure 7.3. Using this style is not a
sign of weakness; rather, it is a sign of strength as most employees will respect
the leaders.

Figure 7.3: Leaders involving workers in decision making


You need to realise that even though participative leaders encourage group
members to participate, they retain the final say over the decision-making
process. Group members feel engaged in the process and are more motivated

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and creative. This leadership style is normally used when managers have part of
the information and employees have other parts.

The leader is not expected to know everything and this is why decision-making
is shared with more knowledgeable and skilful employees. Using this style is of
mutual benefit as it allows employees to become part of the team and allows
managers to make better decisions. This kind of leadership is usually associated
with managers from technologically-advanced countries such as the United
States, the United Kingdom and Scandinavian countries.

7.2.3 Delegative Leadership

In this type of leadership, the leader allows the employees to make the decisions.
Delegative leaders offer little or no guidance to group members and leave
decision-making up to group members.

However, the leader is still responsible for the decisions made. This is used when
employees are able to analyse the situation and determine what needs to be done
and how to do it. Leaders will only make important decisions based on the pre-
determined set of priorities and at the same time, will delegate certain tasks to
the employees.

Using this leadership style does not mean that the leaders can blame others when
things go wrong. Instead, this style is used when leaders fully trust and have
confidence in the people below them. Leaders should not be afraid of using this
style. However, it must be used wisely.

Usually, this leadership behaviour satisfies some employee needs, and in turn,
subordinates tend to exhibit loyalty and compliance. While this style can be
effective in situations where group members are highly qualified in an area of
expertise, it often leads to poorly defined roles and a lack of motivation. Studies
have shown this behaviour can be seen throughout Latin America.


(a) What do you think is the leadership style of the manager at your
(b) Is your managerÊs style the best or should it be changed? Discuss
with your classmates.

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Explain briefly the different leadership styles that exist across cultures.


Do you know how leadership looks like in China, Japan and Latin America? Do
they have the same style as in Malaysia? If you have these questions in your
mind, you can clear your doubts by looking at the following sections on
leadership styles in:
(a) The United States;
(b) Japan;
(c) China;
(d) Middle East;
(e) Europe; and
(f) Latin America.

7.3.1 United States Leadership Styles

The United States is a highly individualistic and masculine-oriented country
where the culture emphasises the active recognition of their peopleÊs roles and
contributions. In reference to the collected literature, the American leadership
style is seemingly participative and supportive as it provides strong support in
carrying out organisational objectives and targets. The participative leadership
style involves strong roles played by subordinates.

American leaders are able to use this style, specifically in the decision-making
processes. There are four types of participation approaches:
(a) Quality circle;
(b) Self-directed work teams;
(c) Quality of work-life programme; and
(d) Scale on gain-sharing plans.

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These classifications have provided American organisations with a model to

encourage staff participation. By using the participative leadership style,
American leaders consult their subordinates and solicit valuable suggestions. It is
also found that large US firms tend to be more democratic than small ones. Such
unions will lead to full political integration by creating a union of countries of
various races and cultures (

7.3.2 Japanese Leadership Styles

Do you know that Japan is well known for its paternalistic approach to
leadership? Japanese leaders will usually try to establish an atmosphere of
respect and obedience from their subordinates. However, they do not impose
more rules and laws on their subordinates that affect overall working
relationship and conditions. Their paternalistic history emerges in the manner
they manage their subordinates.

While most Japanese organisations are highly hierarchical and rigidly organised,
the leaders have an outstanding concern for the personal lives of their
subordinates. Trust plays a vital role as most Japanese leaders leave their
subordinates with a set of instructions and it is up to them to carry out the work.
Most Japanese managers believe that their employees are so motivated by
teamwork that they want to share in the responsibility for attaining group goals.
Thus, Japanese workers seek opportunities to participate in the management
process. In terms of decision-making, they similarly acknowledge the consensus
of everyone particularly during extensive consultation.

In addition, the leadership process used by Japanese managers places a strong

emphasis on ambiguous goals. Subordinates are typically unsure of what their
managers wants them to do and as a result, they spend more time preparing their
assignments. Though it seems like wasting the subordinatesÊ time, it gives the
leaders stronger control over the followers because the latter do not know with
certainty what is expected from them. Therefore, the workers will prepare
themselves for every eventuality (Luthans & Doh 2010).

7.3.3 Chinese Leadership Styles

Have you ever realised that organisational leadership behaviour is reflective of
political surroundings? Leaders in China are said to be more authoritarian, which
could have been influenced by the Chinese communist ideology as depicted in
Figure 7.4. However, the countryÊs economic progress is creating a new cadre of
leaders whose styles are different from those of past leaders. More Chinese
leaders are graduating from Western countries. They are integrating Western

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best practices with Chinese wisdom and this is one of the most important
differences that has led to business leadership success in Chinese companies

Figure 7.4: Influence of Chinese communist ideology


Many Western leadership best practices are imported to China because they have
been proven in the West. But they often fail in China unless they are modified in
some ways. An example of this is the empowerment concept. This Western
concept is always mentioned in Western leadership books. It works very well in a
Western environment where employees are looking for more independence from
their bosses and „ownership‰ of their jobs. In China, however, a society founded
on Confucianism, where hierarchy is advocated and roles are clearly defined,
empowerment needs some explanation before it can be applied effectively.

7.3.4 Middle Eastern Leadership Styles

The Middle Eastern style of management is highly authoritarian. Most Middle
Eastern managers believe that their employees are lazy by nature. Coercion is
often needed to get Middle Eastern workers to perform. Consequently, Middle
Eastern managers take a strong work-centred approach to ensure that
subordinates complete their tasks. Because of this authoritative philosophy,
Middle Eastern countries are often used as examples for Douglas McGregorÊs
Theory X motivational leadership style (to learn more on Theory X, refer back to
subsection 4.5.3 in Topic 4).

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Because of this authoritative style, Middle Eastern organisations are

characterised by a one-way downward flow of information and influence from
authoritarian leader to subordinates. Decision making flows from the top to the
bottom, known as a top-down approach, as illustrated in Figure 7.5.

Figure 7.5: Top-down approach used by Middle Eastern leaders

Not only are leadership attitudes in many Middle Eastern countries highly
authoritative, their organisational structures are bureaucratic, over-centralised
with authority and power unequally distributed at the top. This results in a slow
business environment, with lots of time taken to make decisions or get approval
for projects.

Decisions are made only at the highest levels. Performance evaluation and
control are informal, with routine checks on performance. This is due in part to
the fact that personnel policies depend on personal relationships. Contacts and
social networks are more important than finding the strongest candidate through
more formal channels.

7.3.5 European Leadership Styles

There are some differences in leadership styles among European countries.
British managers, for example, tend to use a highly participative leadership style
as the political background of the country favours it. Furthermore, British
managers are not highly involved in day-to-day affairs of the business. Managers
prefer to delegate authority and let much of the decision-making be handled by
middle and lower-level managers. This preference is in contrast with the French
and Germans who prefer a more work-centred, authoritarian approach.

Scandinavian countries, however, make wide use of participative leadership

approaches, with worker representation on the boards of directors and high
management-worker interaction regarding workplace design and changes. As a
general statement, most evidence indicates that European managers tend to use a
participative approach (Luthans & Doh, 2008).

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7.3.6 Latin American Leadership Styles

Now, let us focus on the leadership styles adopted by Latin America. A study
that compared Latin American leadership styles indicates universality among
countries. Mexican leaders have a combination of authoritarian and participative
behaviours. Leaders in Chile, Argentina and Bolivia also show signs of
authoritarian behaviours. Managers who welcome input from workers are
viewed as incompetent or weak.

However, the results of the Globe project state that organisations in Latin
America tend to value the following:
(a) Flexibility to face uncertainty;
(b) Vertical hierarchy;
(c) Work groups;
(d) Good personal relations over performance;
(e) Management with masculine characteristics; and
(f) Short-term results.

Therefore, the most accepted leadership style is participative or inclusive. This

style allows the executive to maintain personal relationships with subordinates.
This change of leadership style is largely due to the fact that the more
economically advanced the nation is, the more participative leadership may gain
in importance.

1. Based on your own observation, state the leadership style of
Malaysian managers.
2. How different is the leadership style of Malaysia compared with
all the leadership styles of the other countries that we have
3. Look through all the leadership styles of the other countries and
choose which would be the best option for Malaysia.

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There are many types of leaders based on their personal traits or characteristics.
These traits determine whether a person can be a good leader. Studies have
shown there are three types of leaders as shown in Figure 7.6:
(a) Transformational;
(b) Transactional; or
(c) Charismatic leaders.

Figure 7.6: Types of leaders

Let us look at the explanation given for each type in the following sections.

7.4.1 Transformational Leaders

This type of leader can be associated with visionary agents with a sense of
mission and capable of motivating their followers to accept new goals and new
ways of doing things. They always build commitment to the mission and always
try to achieve the objective of the organisation. Working for a transformational
leader can be a wonderful and uplifting experience as they put passion and
energy into everything and care about subordinates and their need to succeed.

Leaders also guide or motivate their followers in the direction of established

goals by clarifying role and task requirements. At the same time, they will try to
create awareness of issues by helping subordinates to look at old problems from
a new perspective, and they are able to excite and inspire followers to put in
extra effort to achieve group goals.

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7.4.2 Transactional Leaders

This type of leader focuses on rewards in exchange for motivation, productivity
and effective task accomplishment. This type of leader believes that the prime
purpose of subordinates is to do what their manager tells them to do, and could
either be rewarded or punished for the job they do. Rewards could be in terms of
work for pay, promotion or other psychological rewards such as pride, status,
recognition and self-esteem.

The transactional leader will create clear structures to indicate what is required of
their subordinates, and the rewards they will get for following orders.
Punishments are not always mentioned but they are well-understood and formal
systems of discipline are usually in place. When work is allocated to the
subordinates, they are considered to be fully responsible for it, whether or not
they have the resources or capability to carry it out. When things go wrong, the
subordinates are considered to be personally at fault and punished for their
failure (just as they are rewarded for their success).

7.4.3 Charismatic Leaders

Now, we will look at the third type of leader. Charismatic leaders inspire and
motivate employees through their charismatic traits and abilities. Leaders
demonstrate charm, grace and self-belief, which are needed to create followers as
people follow others whom they personally admire. There is a personal
magnetism among these leaders that contributes to remarkable ability to get
other people to endorse to their vision and promote it passionately.

Charismatic leaders use a wide range of methods to manage their image and, if
they are not naturally charismatic, may tirelessly practise developing their skills.
They may engender trust through visible self-sacrifice and taking personal risks
in the name of their beliefs. Charismatic leaders will always show these traits:
(a) Inspire great confidence in their followers;
(b) Very persuasive; and
(c) Make very effective use of body language and verbal language when

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1. Analyse all three type of leaders; and
2. Present one example for each type of leader. You may choose a
living person or a historical figure.


Essay Questions

1. Explain the differences between American and Middle Eastern

leadership styles.

2. Explain three types of leaders.

Multiple Choice Questions

1. What is leadership?
A. The process of implementing a good management system in
the organisation.
B. The process of influencing people to direct their efforts
towards the achievement of some particular goal or goals.
C. The process of replacing incompetent managers with good
D. The process of creating a new product.

2. Which of the following is NOT a recommended behaviour and

style of leaders?
A. Authoritarian leadership
B. Participative leadership
C. Delegative leadership
D. Aggressive leadership

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3. What type of leaders focus on rewards in exchange for motivation,
productivity and effective task accomplishment?
A. Transformational
B. Transactional
C. Charismatic
D. Authentic

• Leaders are people who hold dominant or superior positions within their
fields and are able to exercise a high degree of control or influence over

• Leadership is the process of influencing people to direct their efforts towards

the achievement of some particular goal or goals.

• Behaviours and styles of leaders may be divided into three commonly

recognised styles – authoritarian, participative and delegative.

• Managers from different cultural backgrounds will display different

behaviours and styles.

• There are three types of leaders – transformational, transactional and


Authoritarian Leadership
Charismatic Participative
Delegative Transactional
Leaders Transformational

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Topic Cross-Cultural
8 Communication

By the end of this topic, you should be able to:
1. Differentiate between cross-culture communication and
normal communication;
2. Apply procedures and guidelines which must be observed in cross-
culture communication; and
3. Explain six cultural variations that exist in several cultures in cross-
culture communication.

Read the following situation:

Honda introduced its new car "Fitta" in Nordic countries in 2001. If they had
conducted cross-cultural marketing research, they might have discovered that
"Fitta" was an old vulgar word used to refer to a woman's body part in
Swedish, Norwegian and Danish. In the end, they renamed it "Honda Jazz". In
another example of cross-cultural communication issues, even pictures or
symbols are not interpreted the same across the world. Once, staff at the
African port of Stevedores saw the "internationally recognised" symbol for
"fragile" (the broken wine glass picture) and presumed it to mean a box of
broken glass. They decided not to waste space and threw all the boxes into the

Do you know that many companies from around the world are now conducting
their businesses across the borders of their countries in order to gain more profits
or raw materials? The increase in multinational operations requires company
managers to communicate with their counterparts from different parts of the
world. How to properly communicate with people from other countries is an

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important consideration nowadays, as failure to do so will result in embarrassing

mistakes just as the example of the Honda car and the African port workers. The
word „communication‰ originates from the Latin word ÂcommunicareÊ which
means to share views, hopes or knowledge with others. In this topic, we will
discuss how culture influences the process of global communication.


Look at the definitions given for cross-culture communication. You can notice the
definitions are given in two sets:
(a) Definition for the words ÂcultureÊ and ÂcommunicationÊ; and
(b) Definition for the term Âcross-culture communicationÊ.

Culture can be defined briefly as a set of values shared by a group.

Communication is a process of conveying information (in the form of concepts
or ideas) from the sender to the receiver.
Cross-culture communication refers to communication between people of
different cultures.

Do you know that cross-cultural communication is communication between two

parties which transcends national borders and involves different languages and
cultures? Since it involves at least two different cultures, global communication is
considered as cross-culture communication. For managers, understanding ways
of communicating across cultures is very important. Communication can be
divided into two parts:
(a) Good communication which will create good relationships and result in
increased productivity and profit; and
(b) Weak communication which will result in conflicts between two parties,
inefficiency and losses.


Do you know that information can be conveyed in three forms? It is conveyed
through speaking, writing and by non-verbal signs such as gestures and facial
expressions. The communication process consists of several levels as illustrated
in Figure 8.1.
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Figure 8.1: Levels in the communication process

Each communication process level is explained in Table 8.1.

Table 8.1: Communication Process Levels

Communication Explanation
The information to be conveyed to the receiver is identified by
the sender.
Encoding The sender converts an idea into words or expressions.
The sender identifies the suitable channel of transmission:
verbally, in writing or gestures.

The receiver listens, reads or sees the information sent by the

Decoding The receiver tries to understand the information received.

The receiver acts on the information received (whether or not

the information has been understood).

The communication process will then be repeated by the receiver who becomes
the sender. The communication process will become more difficult when the
sender and receiver look at the information from different angles. The intended
idea transmitted by the sender may be interpreted or decoded from a different
perspective by the receiverÊs culture. This will result in the actual meaning of the
communication not being achieved.

Thus, managers who will be communicating across cultures must have adequate
understanding of the environment and values which form the local culture. The
main thing which must be stressed is good and effective style of speech. For
example, certain messages may be considered as rude and ineffective in other
cultures. To address this problem, especially when you meet a foreign
counterpart for the first time, both parties must know the procedures and
guidelines on how to communicate across cultures.

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Football is a very popular game worldwide.

However, there are different terms used in
different countries. For example, in the United
States, football is known as „soccer‰. This can
cause misunderstanding when someone from
Malaysia communicates with someone from the
United States about football.

Have you ever encountered such problems? Share

your experience with your classmates.


Now, we will concentrate on the procedures and guidelines which must be
known prior to or during cross-culture communication:
(a) Being prepared by learning and improving communication skills;
(b) Being prepared to accept differences and understand other cultures;
(c) Adjusting to the requirements and practices of other cultures; and
(d) Identifying value or moral differences among cultures.

Let us look at the elaboration for each of these guidelines in the coming sections.

8.3.1 Being Prepared by Learning and Improving

Communication Skills
Managers must make some preparation before getting involved in
communication across cultures. Being prepared is important because the
individual involved in the process of cross-culture communication must have
basic knowledge of the country and local culture so as to improve his or her
ability to communicate with a foreign counterpart, whether verbally or non-
verbally. There are three skills which must be polished when communicating
across cultures as shown in Figure 8.2.

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Figure 8.2: Personal skills for cross-culture communications

(a) Understanding the Message

This refers to the ability to understand the context of the local language and
provide a feedback. The meaning of the language used in a country may
have a different meaning in another country.

(b) Behaviour Flexibility

This refers to the ability to behave appropriately according to specific
situations. Flexibility is needed because the way people communicate with
others in meetings, while eating, playing sports and the like differs from
one situation to another.

A person who is able to interact pleasantly will set a pleasant atmosphere in

the communication process, and enhance the relationship between both

(c) Social Skills

These skills are divided into two types:

(i) Empathy
It is the ability to understand and somehow feel the emotions of

(ii) Identity Adjustment

It is the ability to adjust, act and behave according to the context of a
specific culture. This is in terms of dealing with different cultures and

Apart from the skills mentioned above, language skills also play an
important role in the process of cross-culture communications.
Although English is now considered the main medium of
communication in international business, the ability to speak the
language of the receiver is an advantage to the speaker. Such ability
will create a more pleasant atmosphere and show that you are serious
in doing business together.

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1. Have you ever been interviewed in a foreign country?

2. If yes, what are the preparations that you made to ensure that the
communication process will run smoothly?


Compare the differences between cross-culture communication and the

normal communication used in your daily life.

8.3.2 Being Prepared to Accept Differences and

Understand Other Cultures
Now, let us move on to the second guideline. After making the necessary
preparation by learning and improving their skills, managers must open up their
minds and be prepared to accept any differences that exists in other cultures. In
other words, managers must understand why people act differently in another
culture and at the same time, respect the culture of the host country. Problems
often arise when a person is ethnocentric (refer to the explanation below).

Ethnocentrism is the belief that oneÊs culture is superior to that of others.

An ethnocentric individual feels there is no need to learn the culture of others

because his or her culture is better. It is the other people who should learn and
adjust to his or her culture. This happens when people from wealthy or advanced
countries visit poor or developing countries.

It is not impossible to understand other cultures, as cultures can be learnt.

– Varner & Beamer (1995)

As illustrated in the quote, willingness to accept new cultures does not mean that
managers must change the values from original culture and totally practise a
different culture. Instead, they must create cultural awareness within themselves.
Awareness of social values of a given society will enable managers to understand
how others think and act, factors which promote the behaviour, attitude and

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values practised by the counterpart. This understanding will help an individual

evaluate mutual priorities and interests and search for a way to cooperate in a
different cultural environment.

8.3.3 Adjusting to Requirements and Practices of

Other Cultures
You must realise that preparing to accept changes and understand other cultures
is not enough. Managers must also adjust to the cultural differences and practices
of the other country as much as possible. For example, one is required to take off
his or her shoes when entering a Malay personÊs home in Malaysia. Such customs
must be observed as it shows that managers are serious about doing business
and respect the local culture and customs. In some cases, managers might have to
do some physiological changes such as in the way they dress, walk, eat and the
like in order to adjust to a foreign culture.

What is the consequence of failing to adapt to other cultures? It may cause

personal conflicts such as culture shock and feelings of stress, frustration and
isolation. Those who are successful in adjusting will feel they have become part
of the new culture and will act according to the practices of the said culture
without forgetting their own culture.

For example, businessmen from Malaysia doing business in Japan must adjust
themselves to the practices of their Japanese counterparts and vice-versa. But
when they are in their own countries, they will return to the practices of their
own cultures.

8.3.4 Identifying Value or Moral Differences Among

Apart from understanding and adjusting to other cultures, managers must also
know the good values shared among different cultures. There are values which
are acceptable and may be practised daily in some cultures but not in others.

For example, offering alcoholic beverages is a culture practised in the West,

where the majority of the population is not Muslim. This practice is not suitable
in Muslim-dominant countries such as Saudi Arabia, Malaysia, Brunei and
Indonesia as alcohol consumption is prohibited in Islam.

Therefore, managers have to be sensitive to these differences in values. There are

many other differences in values between different cultures. Thus, it is important
to do some research on these differences and consult an expert on the values
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practised in a given country or culture. This is to ensure that the managers will
not commit any mistake which might damage their reputation and jeopardise the
chances of getting a potentially profitable business opportunity.


1. What are the procedures and guidelines which must be observed

in cross-culture communication?
2. Based on what you have read, how can you apply these


As mentioned earlier, the traditions or values practised in a given culture might
differ from or be unacceptable to another culture. Such cultural variations will
surely influence the cross-cultural communication process. Therefore, both sides
must know the variations that exist in order to avoid saying or doing the wrong
thing so that the communication process can take place smoothly.

Figure 8.3 lists six cultural variations in the communication process. These
variations influence the outcome of the communication process and will be
discussed further in the following sections.

Figure 8.3: Cultural variations in the communication process

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8.4.1 Language Variation

What is language variation? Language variation, also called language difference,
is the cultural component with the most noticeable difference in the cross-
cultural communication process. Language difference does not only refer to
spoken languages such as English, Malay and Spanish but also to non-verbal
language (body language). Differences in both types of languages may cause
confusion and represent an obstacle to cross-cultural communication.

Let us look at the two types as shown below:

(a) Verbal Communication

The spoken language is the main element of any culture. It shows the
culture of a country is different from that of another. If there are two
languages used in one country, then it means there are two different
cultures in the country. However, the culture of the two different countries
is not necessarily the same, even though they speak the same language. For
example, Brunei Malays and Malaysian Malays use the same language,
which is Bahasa Melayu, but the culture of both nationalities differ in some

Let us look at the example below in order to get a clearer picture of what
this means.

The culture of the American people is very different from that of the
British. Although both use the English language, their culture differs. It is
the same for the Spanish language which is used by 21 countries in Latin
America due to colonisation. It is not accurate to assume that the cultures
of these countries are similar to each other or are similar to the Spanish

Although differences in terms of verbal language can be dealt with by using

the English language, problems such as different dialects, idioms, proverbs
and slang may make it difficult for the other party to understand the
intended message. In fact, a word may carry different meanings in different
cultures. Even in English, there are many obvious differences in the
meaning of English words used by people from different countries as
shown next.

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The word „homely‰ is used to refer to someone who is friendly in Britain.

However, in the United States, it implies plain or boringness.

The word „bloody‰ is commonly used in Australia to stress or put

emphasis on a situation. For example, terms like „bloody hot‰ or „bloody
busy‰ means it is too hot or too busy. In European and Asian countries,
however, the word „bloody‰ is considered rude and should not be uttered
in public.

Do you know that a word from one language when translated into another
language might also result in a funny or negative meaning? Multinational
companies are among the guilty parties who commit such translation

Let us look at the hilarious meanings derived from the words used in the
advertisement as shown in Table 8.2. The translation errors damaged the
reputation of the companies shown below.

Table 8.2: Translation Errors by Multinational Companies

Word Used in
Company Meaning in Local Language
Pepsi Pepsi brings you back In Chinese, the translation means: Pepsi
to life brings your ancestors back from the
Chevrolet Nova In Spanish, ÂnovaÊ means Âit wonÊt goÊ.
Parker Bola In Latin, ÂbolaÊ means ÂrevolutionÊ.
Hawley & Darkie In Malay, it sounds as ÂdakiÊ which refers
Hazel to ÂdirtÊ.
KFC Finger lickinÊ good In Chinese, it means Âeat your fingers offÊ.
Volkswagen Jetta Letter "J" does not exist in the Italian
alphabet, so Jetta is pronounced as "Ietta",
which means ÂmisfortuneÊ.

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Figure 8.4 shows the logo of KFC which says ÂItÊs finger lickin good!Ê. This
is one of the advertisement examples which can mean different things to
different people.

Figure 8.4: KFCÊs famous advertisement slogan


(b) Non-verbal Communication

What is meant by non-verbal communication? Refer to the following quote
in order to gain insight into the meaning.

Non-verbal communication is „those actions and attributes of humans that

have socially shared meaning, are intentionally sent or interpreted as
intentional, are consciously sent or consciously received, and have the
potential for feedback from the receiver‰

– Burgoon, Boller & Woodwall (1998)

Do you know that non-verbal communication, also known as body

language, plays an important role in the communication process? It is very
effective in conveying messages related to feelings and emotions, and is
helpful is explaining the intended meaning of verbal messages.

Non-verbal communication includes facial expressions, eye contact, tone of

voice, body posture and motions, and positioning within groups. It may
also include the way we wear our clothes or the silence we keep.

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Eye contact is one of the most important elements of non-verbal

communication as illustrated in Figure 8.5. It performs numerous functions
and it has different implications in different countries. For example, eye
contact is essential in Australia, England, Germany, Italy and the United
States, but it should be used carefully in Taiwan where prolonged eye
contact is considered an offensive gesture.

Figure 8.5: Eye contact


There are many forms of non-verbal communication which share the same
meaning in some cultures, such as nodding the head to mean agreement.
However, nodding carries a different meaning in other cultures. You have
to be careful with your body language as some non-verbal cues might carry
a negative meaning in another culture.

Facial expressions, hand movements, how you walk, sit down, touch
something and look may carry different meanings for different people.
What follows are some examples of cultural variations in non-verbal
(i) Turning your thumb upwards means „OK‰ in Malaysia and most
other countries. However, in Australia, Greece and Italy, the „thumbs
up‰ sign is an insult.
(ii) Colour can also give different meanings in different cultures. Black,
for example, reflects prestige and happiness in the United States. In
China, it reflects death, grief and misfortune (refer to Figure 8.6).

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(a) In China, black is used to show (b) In America, black is used to

sadness show elegance

Figure 8.6: Black represents a different meaning in different cultures


(iii) Italian, Colombian and Chinese people wave goodbye by moving

their wrists and fingers forward and backward. This gesture in the
United States and Malaysia is used to call or instruct someone to come


To further enhance your understanding of cultural variation, provide

several variations of non-verbal communication which exist between
Malaysian and European cultures.

8.4.2 Time Variation

Do you know that each culture has a different perception of time? In some
cultures, punctuality is an indicator of the level of commitment and interest in
work. Some cultures consider time as very valuable, hence, the existence of
proverbs such as „Time is gold‰, „Time is money‰ and the like.

This is prevalent among Westerners, where in their cultures, time must not be
wasted. All tasks, activities or appointments are scheduled properly so that time
can be fully utilised. Each task carried out must be completed within a specified

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period. Those who are brought up in such cultures are educated from the very
beginning about the importance of punctuality. Failure to observe a deadline or
to be punctual for an appointment is the wrong thing to do, and the person is
considered undisciplined as shown in Figure 8.7.

Figure 8.7: The importance of being punctual

Have you ever heard that in Germany and Japan, arriving late is considered as
rude and unacceptable? The Americans emphasise punctuality very much, too,
and it plays a very important role in their daily lives. Thus, it is normal for them
to feel stressed and uncomfortable when they have to wait for someone who is
late for an appointment. In some other cultures, however, failure to observe
punctuality is not considered a serious mistake and is quite commonplace as
shown below.

Being 30 minutes late might be considered as „too much‰ in the United States.
However, it is a normal thing in South America and many developing
countries. In fact, if you want to set an appointment with an executive from
Brazil at noon, you must indicate clearly that the time meant is noon „English
time‰. If you do not indicate so clearly, the Brazilian executive will show up
any time between noon and 2pm.

During discussions, those who are concerned about time will strictly discuss
business and would not be interested to have leisurely conversations in order to
save time. Such behaviour might be construed as rude by their business
counterparts; particularly those from Asian countries who tend to begin
discussions by talking about family, current and personal affairs first. The
objective is to establish better relations and a friendly atmosphere before
discussing a much more serious business issue. As a result, the discussion will
take more time than what is expected by those who are concerned about time.

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1. Have you ever been asked „the Malay time‰ or the „English time‰
when making an appointment?
2. How do you relate such question to the culture of time?
3. How do you rectify negative nuances with relation to punctuality
and culture?

8.4.3 Social Behaviour Variation

A business discussion often goes beyond the formal setting of a negotiation table
to a less formal setting such as at the dining table and at the golf course. In such
situations, many social behaviour such as the following will differ from one
culture to another:

(a) Dining Ethics

As shown in Figure 8.8, dining ethics must be observed in order not to give
a negative impression to the business counterpart. While habits such as
making sounds while chewing food and burping might not be seen as a bad
habit in some cultures, other cultures might find these manners rude. In
certain cultures, if a person burps, it shows he or she fully appreciates and
enjoys the food served. This is a norm in Japan.

Hence, burping is a sign of appreciating the efforts of the host who served
you the food. In such cultures, failing to burp might be considered as a sign
that you do not appreciate the food or that you are implying the food is not

For Asians, eating using hands is common. Westerners, however, might feel
uncomfortable using their hands because they are not used to it or are
unsure whether it is hygienic. Another important rule to know is that when
eating with the French, do not change the position of the fork and spoon
from one hand to the other as doing so is regarded as rude and impolite.

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Figure 8.8: Social behaviour variation in dining ethics


(b) Gift Giving

Gift giving is another important aspect for businessmen during cross-
cultural communication. Participating in sports such as golf, tennis and
entertainment activities after office hours is common during business trips
overseas. In some countries, exchanging gifts are part of the process to
build closer relationships, as illustrated in Figure 8.9, and in some
countries, it is a must. However, in some other cultures, it is seen as
insulting and an act of bribery. This is true in many countries such as in
North America and the United Kingdom.

Figure 8.9: Gift-giving between businessmen


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In Japan, for instance, giving gifts is part of the relationship-building process

which reflects sincerity and seriousness. Exchanging gifts usually takes place
during the first meeting. Gifts such as scissors and knives, however, should not
be given in Japan as they indicate severance of a relationship. While in India,
there are no strict rules for gift-giving. There are also cultures where gifts are
given privately such as at dinner parties or while playing golf and not during
meetings or formal discussions.

The type and colour of gift may also reflect different meanings. Gifts which
come in white are normally avoided in many Asian countries as they
symbolise death. The type of hamper or gift which is suitable for all
cultures are chocolates, books or items which can be used in the office.
Giving alcoholic beverages as a gift in countries where Muslims form the
majority population must be avoided as it goes against their religion.

(c) Greeting Rituals

We have covered this particular aspect in Topic 1 but we will elaborate
more on this point here. Greeting is a way to intentionally communicate
awareness of each other's presence, to show attention to and to suggest a
type of relationship or social status between individuals or groups of
people coming in contact with each other. As with many forms of
communication, greeting habits are highly culture and situation specific.
These may change within a culture depending on social status and the
relationship between the persons involved.

How people greet and welcome their guests is important as it will create a
first impression and build relationships. People of most cultures greet
guests with a hand shake, light embrace or both. However, there are also
cultures which have their own unique way of greeting guests with the hope
that they will respond in a similar manner.

As depicted in Figure 8.10, the Japanese people, for example, will greet a
person by bowing. Thais do it by putting their hands together and saying
„Sawasdee‰ which means „welcome‰. Arabs, on the other hand, greet each
other with an embrace and cheek-to cheek kissing, while the Maoris of New
Zealand rub noses.

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Figure 8.10: Greeting rituals of the Japanese (left) and Thais (right)

8.4.4 Contract Enforcement Variation

You must realise that businessmen from developed and developing countries
always regard the contract as very important and valuable. Therefore, all the
provisions of the contract will be fully observed and enforced according to the
law and if any party breaches the contract, legal action will be taken.

Nevertheless, in poorer and less developed countries such as Somalia and

Afghanistan, contracts are not seen as important and breaching a contract is not
considered a very serious matter. The extent to which a contract is enforced and
protected by the law also differs from one country to another. In some countries,
the courts do not give priority to cases involving the breach of contracts.

American businessmen, for example, consider weaknesses in enforcing contracts

as a threat. Therefore, it is very risky for American companies to do business in
countries which take lightly the matter of contract enforcement.

8.4.5 Distance Variation and Interaction Space

Another important variation in cross-culture communication is the space and
distance in face-to-face interaction. In general, a culture will determine the
informal spaces that surround individuals and the distance between the two
parties in face-to-face interaction.

For example, in the Middle East, people of the same sex stand much closer to
each other than North Americans and Europeans, while people of the opposite
sex stand much further apart. Japanese men stand four or five feet apart when

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having a discussion, while Europeans and North Americans would probably

regard having a conversation at this distance rather odd.

Figure 8.11 shows how gender plays a role in peopleÊs preference to stand closer
to or apart from each other.

Figure 8.11: People of the same sex tend to stand closer


Please refer to Table 8.3 on the comparison about appropriate distances when
talking in different countries.

Table 8.3: Appropriate Distances in Different Countries

Country Close Far

United States Considered as pushy Preferred
and impolite
Italy, Asian and Preferred The person is considered as trying to
Arab countries distance himself or herself, unfriendly, cold
and uninterested in interacting.
Britain Impolite Preferred

8.4.6 Formality Variation

Do you know that in some cultures, such as in Latin American countries,
business discussions often take place in less formal settings? Informality signifies
that a person is more sincere in discussing. In such cultures, people will feel
uncomfortable if they are forced to follow certain protocols or social behaviours

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in terms of dress code, dining ethics and others which are common practices in
European countries and the United States.

In general, a business visitor to a foreign country should dress well. Men should
dress in a suit and tie in most foreign countries. Businesswomen who go to an
Islamic country should wear dresses with slightly lower hemlines than in the
West and with the shoulders and arms covered to the wrists as depicted in
Figure 8.12. As a visitor, managers are also expected to be patient, punctual and
not overly demonstrative in personality or mannerisms.

Figure 8.12: Proper attire for women managers when doing business in a
Muslim country

Another important aspect of formality is that a person must know whether it is

appropriate to make jokes during discussions. For US and European managers,
making jokes is important to create a more pleasant and friendlier atmosphere,
provided that these jokes are not offensive to anyone. However, for those coming
from a culture which considers making jokes during business communication
unacceptable they will consider it offensive. For example, in the Japanese culture,
formality, politeness, face-saving and subtle power are revered values.


1. What are the six cultural variations that exist in cross-culture

2. Explain briefly each of the variations.

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Essay Question

1. Explain how the following variations influence cross-cultural

(a) Non-verbal communication variations;
(b) Social behaviour variations; and
(c) Time variations.

Multiple Choice Questions

1. Which of the following gifts is not appropriate to be given to

a b us i n e s s counterpart in Saudi Arabia?
A. Chocolate
B. Russian whisky
C. Parker pen

2. Where is the enforcement of a contract not seen as

A. Developed countries
B. Developing countries
C. Less developed countries

3. Body language is very important in cross-cultural communication.

In most countries, extending the thumb upwards means „okay‰.
However, some countries find it offensive. Which country
considers it as offensive?
A. Greece
B. Malaysia
C. United States

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Business dealings at the international level require cross-cultural

communication which is more complex than regular communication.

Cross-culture communication refers to communication between people of

different cultures.

The following are procedures and guidelines in cross-culture communication:

– Being prepared by learning and improving communication skills;
– Being prepared to accept differences and understand other cultures;
– Adjusting to the requirements and practices of other cultures; and
– Identifying values or moral differences among cultures.

• There are six cultural variations:

– Language;
– Time;
– Social behaviour;
– Contract enforcement;
– Space and distance; and
– Formality.

Behaviour flexibility Gift giving

Cross-cultural communication Global communication
Cultural variation Greeting rituals
Dining ethics Identity adjustment
Empathy Social skills

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Topic Negotiation
9 Across Cultures
By the end of this topic, you should be able to:
1. Define the basic concept of business negotiation;
2. Explain five negotiation process stages in terms of cross-culture
3. Identify five important factors needed to achieve the best outcome
through the negotiation process; and
4. Formulate several suitable tactics that can be used during

Read the following situation:

George Mason, who is from the United States, was in India to have a negotiation
with Dharmendra Choudhury who is his new business colleague. Choudhury,
who used to study in California, watches American football and listens to rock
music and speaks excellent English. All this made Mason think Choudhury is just
like any American. During the negotiation, however, things did not go really well.
It even came to a screeching halt as Choudhury decided to take a break during the

What was the problem? Both parties had different perceptions of the negotiation
process and misinterpretations of the otherÊs behaviour. For Mason, negotiation is
about pushing through a quick deal. When Choudhury took a lot of time asking
about his family and life, Mason became increasingly impatient and pushy in the
meetings. Choudhury interpreted this with suspicion and assumed that Mason
was pulling a trick on him. He thought there was something not right and
therefore, he needed some more time to study MasonÊs proposals. Though the
negotiations concluded successfully, it took a longer time than Mason initially

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The above example shows how cultural differences are often ignored by both
parties in a negotiation and how it affects the process itself. It is said that over
two-thirds of the effectiveness of a negotiation is determined by non-verbal
communication. Body language, as shown in the above example, provides
valuable insight into a person's feelings and attitudes. Gestures and facial
expressions can communicate diverse emotions and attitudes. They are, however,
often misleading due to the marked cultural differences in the use and
interpretation of non-verbal cues.

Let us look at the definition of negotiation as shown below:

The process of discussion between two or more parties aimed at reaching a

mutually acceptable agreement.

Normally, negotiating parties negotiate with the aim of reaching an agreement

on a problem or business matter. The goal is to set up a win-win situation; that is
to bring about a settlement which is beneficial to all parties concerned. However,
there are also situations where only one party benefits. In general, the failure or
success of a negotiation is subject to the parties involved in it.

Now, let us examine the quote below:

Let us move from the era of confrontation to the era of negotiation.

– Richard M. Nixon

Do you agree that the above quote shows that negotiation is more effective
compared to confrontation? This is because finding a solution can be accepted by
all parties rather than finding a way to fight. Basically, negotiations are
conducted to solve a problem or conflict between two parties or to find an
alternative to an existing problem.

In this topic, we will discuss the process and important factors to be considered
in a cross-cultural negotiation. This is followed by explanation on the best
negotiation strategy to ensure success and some discussion on various styles of
negotiation among people from different countries.

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Some negotiations are successful while others are unsuccessful.

Based on the above statement and based on your own experience in

negotiations at your workplace, what are the features which determine
the outcome of a business negotiation?


In order to make all negotiating parties satisfied with the decisions made, proper
preparation must be made, particularly when it involves parties from different
countries and cultures. The negotiation process comprises five stages as
illustrated in Figure 9.1.

Figure 9.1: Negotiation process

Source: Deresky & Helen (2002). Global management: Strategic and interpersonal.
New Jersey: Prentice Hall.

Let us explore each of the stages involved in the negotiation process in the
following sections.

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9.1.1 Preparation
You can never overstate the importance of proper preparation for cross-cultural
negotiations. Distinct advantage can be gained if negotiators familiarise
themselves with the entire context and background of their counterparts because
most negotiation problems are caused by misinterpretation of the other partyÊs
culture, language and environment.

To avoid problems of cultural differences, managers must first understand

negotiating styles and determine how they differ from the norm in other
countries. This can be done by comparing profiles of those perceived to be
successful negotiators in different countries. Such profiles reflect the value
system, attitudes and expected behaviours inherent in a given society.

Do you know that there are several variables which must be studied by
managers in this planning process? These findings can help managers
understand the deep-rooted cultural and national motivations and traditional
processes underlying negotiations with people from other countries. Table 9.1
illustrates several variables which must be considered when planning a

Table 9.1: Variables in the Negotiation Process

Variables Questions to be Asked

Basic conception of Is it a competitive process or a problem-solving approach?
negotiation process
Negotiator selection Is selection based on experience, status, expertise, personal
criteria attributes, or some other characteristic?
Significance of type of Is it specific such as price, or is the focus on relationships
issues or the format of talks?
Concern with protocol What is the importance of procedures, social behaviours, and
so forth in the negotiation process?
Complexity of What degree of reliance is placed on nonverbal cues to
communicative context interpret information?
Nature of persuasive How do the parties attempt to influence each other?
arguments Do they rely on rational arguments, on accepted tradition, or
on emotion?
Role of individualsÊ Are motivations based on individual, company, or
aspirations community goals?

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Bases of trust Is trust based on past experience, intuition, or rules?

Risk-taking propensity How much do the parties try to avoid uncertainty in
trading information or making a contract?
Value of time What is each partyÊs attitude towards time?
How fast should negotiations proceed, and what degree of
flexibility is there?
Decision-making system How does each team reach decisions – by individual
determination, by majority opinion, or by group consensus?
Form of satisfactory Is agreement based on trust, the credibility of the parties,
agreement commitment, or a legally binding contract?

Source: Weiss, S. E., & Stripp, W. (1985). Negotiation with foreign business persons: An
introduction for Americans with propositions in six cultures. New York University
Faculty of Business Administration

After developing profiles of the other parties, managers should find out as much
as possible about the kind of demands that might be made, the composition of
the „opposing‰ team, and the relative authority that the members possess. With
these three things, you will be able to predict what the negotiators want and
determine the aim of the negotiation process.

9.1.2 Relationship Building

You need to acknowledge that building relationships must be emphasised
particularly when negotiating in countries such as China and Saudi Arabia. This
process is regarded with much more significance in most parts of the world than
it is in the United States. American negotiators are usually very objective about
the specific matter at hand and do not want to waste time getting down to
business and making progress.

This approach is well understood in the United States but it can be disastrous if
the foreign negotiators want to take some time to build trust and respect as a
basis for negotiating contracts. In such cases, American efficiency does not go
well with the Asian laidback approach in developing a mutually trusting
relationship, which is the cornerstone of an Asian business agreement.

Effective negotiators who understand cultural differences will allow plenty of

time in their schedules for such relationship building with bargaining partners.
This process usually takes the form of social events, tours and ceremonies, while
all parties get to know each another. It is usually recommended that managers
who are new to such scenarios use an intermediary.

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An intermediary is someone who already has the trust and respect of the the
foreign negotiator.

Middle Easterners, in particular, prefer to negotiate through a trusted

intermediary. Initial meetings for them are only to get acquainted. Arabs do
business with the person, not the company, and therefore, mutual trust must be
established. Trust is a very important factor in the negotiation process in
countries in Latin America, Asia and the Middle East.

9.1.3 Exchanging Task-Related Information

In this stage, each side usually makes a presentation and states its position. It
involves a question and answer session, followed by discussions on the

You may wonder how people from different countries make their presentations
or channel their queries during a negotiation process. To satisfy your curiosity,
Table 9.2 will show the characteristics of negotiators from different nationalities.

Table 9.2: Characteristics of Negotiators

Negotiators Characteristics
American  They are straightforward, objective, efficient and understandable.  
Mexican  They are usually suspicious and indirect, presenting little substantive
material and lengthier, evasive conversation. 
French  They enjoy debate and conflict and will often interrupt presentations to
argue about an issue even if it has little relevance to the topic being
Chinese  They ask many questions of their counterparts, and they delve
specifically and repeatedly into the details at hand. Conversely, the
Chinese presentations contain only vague and ambiguous material. 
Russians  They enter negotiations well-prepared and well-versed in the specific
details of the matter being presented. To answer their questions, it is
generally a good idea to bring along someone with expertise to answer
their gruelling technical inquiries. 

9.1.4 Persuasion
Do you know that the persuasion stage can be considered as the hardest to
implement? Typically, both parties try to persuade each other to accept more of
their position and to give up some of their own. Often, some persuasion has
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already taken place beforehand in informal social settings and through mutual
contacts. This will facilitate the actual negotiation and help in reaching an
agreement quickly.

International managers usually find this process of bargaining and making

concessions filled with difficulties because of the different uses and
interpretations of verbal and non-verbal behaviours. For example, what a Thai
manager wants to convey sometimes may not be understood by a Nigerian
manager due to cultural and educational differences. Even if both can speak
English, differences in slang can make it difficult for a negotiation to reach an

9.1.5 Concessions and Agreement

Let us concentrate on the last stage of the negotiation process. In this stage, well-
prepared negotiators are aware of various concession strategies and have
decided ahead of time what their own concession strategy will be. For example,
Chinese and Russian negotiators generally open their bargaining with extreme
positions, asking for more than they hope to gain.

Based on a research in the United States, better end results are attained by
starting with extreme positions. After a long process of bargaining, both parties
will agree on a certain concession that benefits both parties. If not, the negotiation
is considered as having failed and another round of negotiation might be needed
if both parties are still interested in doing business with each other.

If an agreement has been achieved, a contract will be signed by both parties.

Nevertheless, it is the cultural values that determine how these agreements will
be honoured. While Americans take contracts very seriously, Russians often
renege on their contracts. The Japanese, on the other hand, consider a formal
contract to be somewhat of an insult and a waste of time and money in legal
costs, since they prefer to operate on the basis of understanding and social trust.


The Japanese culture is very unique and different from other cultures.
Based on your knowledge of Japanese culture and society, list the main
reasons they rely on trust and understanding and not on contracts in
reaching a mutual agreement in negotiations.

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There are five important factors which must be considered before conducting
intercultural negotiations. These factors are shown in Figure 9.2.

Figure 9.2: Intercultural negotiation factors

Let us look at each factor in the coming sections.

9.2.1 The Players and the Situation

As a future manager, if you are selected to represent the company as a negotiator, you
have to know the basis of how the negotiators and negotiating teams are selected.
Managers must determine the background of the players in order to anticipate the
counterpartÊs behaviour. Determine the expectations of the other negotiators, their
negotiating style and the role they have played in past negotiations.

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Obtaining this information with business counterparts who have experience

dealing with the same negotiator is a good idea. Attempt to provide an
environment that is free of tension and conducive to an exchange of ideas and
problem resolution.

9.2.2 Decision-making
How the business counterpart chooses to negotiate and conduct decision-making
must be studied and understood. Sometimes, how a person makes a decision is
influenced by the culture of his or her home country.

For example, Asian negotiators are indirect in their words due to Asian culture
which stresses on politeness and face-saving value. They are reluctant to say a
straight „no‰ because it might hurt the other negotiatorsÊ feelings and they might
feel embarrassed. As a result, they will use words such as „We will think about
your proposal first‰ or‰ „Your proposal is interesting but I have to discuss with
the top management first‰. Negotiators who understand the style of Asian
negotiators will get the message directly that the negotiation has failed.

However, it is not only culture which influences the decision-making process.

Other factors are the political affiliation, authority, education and origin of the
negotiator. For American negotiators, democratic ideology and individualism are
synonymous with their culture. Therefore, they have the opinion that everything
is permissible except those prohibited by the country.

Negotiators from other countries that are group-oriented or do not enjoy such
freedom might have quite a different style. In contrast with what the American
managers believe, these negotiators might hold the view that nothing is
permissible except that which is allowed by the country.

9.2.3 National Character

Previous discussions on national culture have revealed that a pattern of
personality exists among group members who share a common culture.
Therefore, the best way to predict the other negotiatorÊs style is by looking first at
the countryÊs national culture. Then, the manager could further explore the
industry and organisational culture of the company he or she is working with.

In countries and regions rated feminine under HofstedeÊs national culture

dimension such as Scandinavian nations, Thailand and Portugal, values of
cooperation, nurturing and relationship solidarity with those less fortunate
prevail, and the ethic is more of "work to live." Of course, it is important to

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remember that associations with gender vary greatly across cultures, so that
elements considered masculine in one culture might be considered feminine in
another. Negotiators may find it useful to consider the way gender roles play out
in the cultural contexts of their negotiating partners.

Another example is in terms of uncertainty avoidance. North Americans, to a large

degree, are risk takers and believe they determine their own fate. Therefore, they are
usually more aggressive in negotiations compared to Latin Americans, who are less
concerned with time and stoically accept their fate. This is a clear example that the
common personality of the people of a country influences the negotiation process.

9.2.4 Cultural Noise

Cultural noise includes anything that distracts or interferes with a message being
communicated. It is a distraction that has nothing to do with the substance of a
message. Nevertheless, it has to be taken into account to understand
complications of the communication process between two sides to a negotiation.
Non-verbal messages, such as body language, space and gift giving can impede
or expedite negotiations.

The larger the differences between cultures, political orientation and

socioeconomic status of the participants, the larger the potential for distracting
noise. At the very best, this noise can delay and distract an effective negotiation
for both sides. At the very worst, it can threaten or derail an entire negotiation
over a completely extraneous issue.

Giving an inappropriate gift or one wrapped improperly is a form of cultural

noise. In addition, what a person says can result in cultural noise, such as
negotiators who criticise their competitor or make disparaging comments about
their competitorsÊ products. Even the noise itself can be a source of interference
as shown below.

During a crucial discussion of reciprocal property rights held in a bilateral

negotiation in Baku, Azerbaijan, an air-conditioner window unit gave some
problems. It produced so much noise that it made translation difficult.
Frequent requests from the translators for both teams significantly added to
the stress of the discussion.

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9.2.5 Use of Interpreters

Managers will definitely face some difficulties when negotiating with business
counterparts from a country with very different languages and culture. This is
always the case when managers have to travel and negotiate with someone from
France as shown below.

French people are very proud of their culture and language. Therefore, most of
them prefer to communicate in French. Even the number of French people who
can speak in English is very small. So, negotiations should be conducted in
French and for managers who do not speak French, there is no way that the
negotiation can take place.

So, what will you do if you were a manager trapped in the situation portrayed
above? In such situations, it is a good idea to use an interpreter to assist the
manager and his or her counterpart. Furthermore, it will give the managers more
time to think about their next statement while the previous statement is being
translated. However, there could also be a problem.

Since language and culture are intertwined, translators may not convey the
intended message due to the nuances of the languages involved. What the
managers say might be translated wrongly or out of context. Another thing to be
considered is that the body language of the translator might not reflect the
attitude of the managers. Such misinterpretations will negatively affect the


1. What is the concept of negotiation in business?

2. Identify the main factors which must be considered during a


There are a number of tips or tactics suggested by experts of cross-cultural
negotiation to ensure positive outcomes. Let us examine each tactic in detail in
the following sections.

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9.3.1 Location
These would be the questions forming in your mind while conducting a
(a) Where should the negotiation take place?
(b) Should it be at the office, golf club, hotel or restaurant?
(c) Should it be a formal or informal meeting?

Choosing the right place is very important because it reflects the sincerity of each
party in doing business with each other. In general, managers have four options
for the venue:

(a) Own Place

Most managers prefer to be in their own place during a negotiation because
they feel more comfortable and possibly more confident in their ability to
engage in meaningful negotiations at their own place of business.

In addition, if negotiators are at their own office, they will have easier
access to any documents or records they might need during the negotiation.
They will also have the benefit of support staff and access to computers and
other sources of information that may be important.

(b) Host Place

Negotiating in other negotiatorsÊ countries also has many benefits. First, it
reflects the image of the manager as people will perceive him or her as
someone with a good amount of self confidence. Willingness to go to the
other side's office, plant or place of business to conduct an important
negotiation creates a good aura for the managers. The business partner will
feel pleased for the managerÊs willingness to travel and it is also a sign of
respect. This will help build trust between them.

(c) Neutral Site

Choosing a neutral site might also be a good idea. For example, a Malaysian
who is having a meeting with a Japanese might consider Hong Kong or
China, where they can meet halfway. It saves some travel time for both
parties, so they will feel fresh during negotiations, rather than one party
feeling jet lag while the other is well-rested.

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Neutral sites might also include the golf course, service clubs or an
exclusive club. Deals can be negotiated without the pressure of an office
environment or any other disturbance. If the negotiation is held at some
place upscale, it gives the message to the other negotiator that "I think you
are special enough to invite you here," or "This is the way I do business".

(d) No Place
Finally, with the development in information and communication
technology, negotiation can be done through video conferencing. Both
parties have the advantage of being at home, so they can access all
necessary information, documents and advice needed during the
negotiation. The only problem with this kind of negotiation is both parties
cannot access the overall body language of others as the view is very

9.3.2 Time Limits

Do you know that time can be used as a good negotiation tactic especially when
negotiation is held at the managerÊs place and the other party is under a time
constraint? Most of the time, foreign negotiators usually already schedule a
return flight and therefore, it is important for managers to have the detailed
itinerary. Managers who know how long the business counterpart will stay can
plan their negotiation date and time accordingly. Good managers will schedule
the negotiation very close to the date when the other negotiator is leaving. The
visitors will be anxious to strike a deal during the negotiation and this gives a
huge advantage to the manager.

9.3.3 Authority
Now, let us move on to the last tactic used to bring success to the negotiation
process. Most people would like to end the negotiation process as quickly as
possible. Good managers with good negotiation skills will never follow the same
tune and let the other partyÊs impatience beat them. One great way of doing this
is to let them believe the person they are negotiating with is not actually the
manager but some other people with higher authority.

Managers should stress that they are not the person who can make a definite yes
or no decision and should say something like, "I will have to discuss your
proposal with my boss or partner before I can give our decision on this matter".
A skilled negotiator will want to talk to the person who makes the final decision
but do not allow this. Use whatever excuse such as the person with the authority
over the deal wants you to sort things out but still needs to have the final say or

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he or she is out of office. Then, managers should notify the other party that it will
be discussed and get back with an answer later. This is also a great strategy for
preventing people from rushing to make a decision.

1. Explain the five stages involved in a negotiation process.
2. What are the tactics you can use during negotiations?


If you were assigned to negotiate with managers from an African

company, you would surely need to devise some tactics to succeed in
the negotiation.

Draft your tactics and give your justifications for them. Share your
answers in the myVLE forum.


One of the important components in planning prior to negotiation is to research
the differences in the negotiating behaviour of the other party and the reason for
them. This section will summarise the negotiation styles of the following:
(a) Americans;
(b) Japanese;
(c) Indians; and
(d) Arabs.

Let us look at each negotiation style in the following sections.

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9.4.1 American Negotiators

According to Pierre Casse in his research entitled Training for the Cross-Cultural
Mind, a successful American negotiator acts as shown in Table 9.3:

Table 9.3: Characteristics of an American Negotiator

Characteristics of a American Negotiator 

Knows when to compromise. 
Takes a firm stand at the beginning of the negotiation. 
Refuses to make concessions beforehand. 
Keeps his or her cards close to his or her chest. 
Accepts compromises only when the negotiation is deadlocked. 
Has a good sense of timing and is consistent. 
Keeps a maximum of options open before negotiation. 
Operates in good faith. 
Respects the opponents. 
States his or her position as clearly as possible. 
Knows when he or she wishes a negotiation to move on. 
Is fully briefed about the negotiated issues. 
Sets up general principles and delegates the detailed work to associates. 
Lets the other negotiator come forward first and look for the best deal. 


You have been sent by your company to Canada as a negotiator to

discuss a proposal to cooperate with a furniture company there. To
fulfil the goal of your company, i.e. reach an agreement with a win-win
situation, you must make sure the negotiation is successful.

Give your ideas on the style and characteristics which you must present
as a successful and effective Malaysian negotiator.

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9.4.2 Japanese Negotiators

The Japanese are skilful negotiators. Among the characteristics of a Japanese
negotiator according to Casse are as shown in Table 9.4:

Table 9.4: Characteristics of a Japanese negotiator

Characteristics of a Japanese Negotiator

Emotional sensitivity is highly valued.
Hiding of emotions.
Subtle power plays.
Good of group is the ultimate aim.
Step-by-step approach in decision making.
Decision makers openly influenced by special interests.
Not argumentative as they prefer to be quiet.
What is down in writing must be accurate and valid.
Face-saving is crucial. Decisions are made often on the basis of saving
someone from embarrassment.
Loyalty to employers as employer takes really good care of the employee.
Cultivates a good emotional social setting for decision making such as get to
know the decision makers.

9.4.3 Indian Negotiators

According to Casse, Indians often follow GandhiÊs approach to negotiation,
which is called „satyagraha‰ which means „firmness in a good cause.‰ This
approach combines strength with love of truth. The successful Indian negotiator,
thus, acts as depicted in Table 9.5:

Table 9.5: Characteristics of an Indian Negotiator

Characteristics of an Indian negotiator

Looks for and says the truth.
Is not afraid of speaking up and has no fears.
Exercises self-control.
Seeks solutions that will please all the parties involved.
Respects the other party.
Neither uses violence nor insults.
Is ready to change his or her mind if necessary.

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Is humble and trusts the opponent.

Is patient, and consistent.
Learns from the opponent and avoids the use of secrets.
Goes beyond logical reasoning and trusts his or her instinct.

9.4.4 Middle Eastern Negotiators

Majority of Arab negotiators are Muslims and they follow Islamic traditions,
such as using mediators to settle disputes. A successful Arab negotiator acts in
the following ways as shown in Table 9.6:

Table 9.6: Characteristics of a Middle Eastern Negotiator

Characteristics of a Middle Eastern Negotiator

Protects all the partiesÊ honour, self-respect, and dignity.
Avoids direct confrontations between opponents.
Is respected and trusted by all.
Does not put the parties involved in a situation where they have to show
weakness or admit defeat.
Has the necessary prestige to be listened to.
Is creative enough to come up with honourable solutions for all parties.
Is impartial and can understand the positions of the various parties without
leaning toward one or the other.
Is able to resist any kind of pressure that the opponents could try to
exercise on him.
Uses references to people who are highly respected by the opponents to
persuade them to change their minds on some issues (such as agreeing to
cooperate out of respect for the ruler of the country).
Can keep secrets and in doing so, gains the confidence of the negotiating
C ontrols his or her temper and emotions.
Is able to cope with the ArabÊs disregard for time.
Understands the impact of Islam on the opponents.

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Multiple Choice Questions

1. Of the five stages in the negotiation process, which stage is

least favoured by American negotiators?
A. Preparation
B. Relationship building
C. Information exchange
D. Persuasion

2. Negotiators from this country favour debates and conflicts in the

negotiation process. If they are not satisfied with the information
given, they will interrupt the presentation session and pose questions
to their counterpart. Where do these negotiators come from?
A. Saudi Arabia
B. United States
C. France
D. United Kingdom

3. Which of the following is not a cultural noise in a negotiation

A. Criticising the counterpart
B. Giving a souvenir to the counterpart
C. Giving a negative comment to the counterpart
D. Looking at the watch frequently

4. Listed are the advantages of having a negotiation at your business

counterpartÊs place EXCEPT:
A. It reflects well on the manager as people will perceive him or
her as someone with self confidence.
B. Creates a good aura and strength for the managers.
C. The business partner will feel pleased about the managerÊs
willingness to travel and it is also a sign of respect.
D. Managers will have easy access to any documents needed.

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5. Which negotiators prefer to cultivate a good emotional social
setting for decision making by getting to know the other parties
A. Saudi Arabia
B. Mexico
C. Japan
D. Germany

• Many people are not aware that they go through the negotiation process
every day in their daily life, such as negotiating for a salary increase, to get a
low price for a piece of land, bargaining for accident compensation, and
negotiating to sell a used car.
• These are all negotiations which involve various processes and decisions.
• If you understand that the basic purpose of negotiation is to obtain what is
desired from others, it would be easier for you to use negotiation strategies to
help you achieve your goals.
• As time passes by, there are more and more matters which require
negotiations. This is because, conflicts in matters which involve various
cultures are increasing from time to time. Such situations occur because each
culture has its own style of managing problems and reaching an agreement.
• The best way to reach an agreement is an agreement which benefits both
• Each negotiation is different due to differences in culture, negotiators,
negotiation purposes, negotiation atmosphere and how negotiations are
conducted. Thus, in order to bridge the gap, negotiators must first study their
• Such preparations will facilitate the negotiation process as strategies can be
organised beforehand, conflicts can be reduced and agreements can be
reached quickly.
• If all negotiating parties understand one another, the likelihood of a win-win
situation is greater.

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• There are five stages in a negotiation process:

– Concessions and agreement;
– Persuasion;
– Exchanging task-related information;
– Relationship building; and
– Preparation.

• There are five important factors in a negotiation:

– The players and the situation;
– Decision-making;
– National character;
– Cultural noise; and
– Use of interpreters.

• There are several tactics used in a negotiation:

– Location;
– Time limits; and
– Authority.

Cross-cultural negotiation Negotiation tactics

Negotiation process Negotiator
Negotiation style Win-win situation

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Topic Globalisation:
10 Cultural
Issues and
By the end of this topic, you should be able to:
1. Explain the concepts of globalisation and a borderless world;
2. Analyse three factors of a borderless world and the influence of the
global culture on the culture of a given society;
3. Point out the advantages and disadvantages of globalisation; and
4. Summarise the term „cultural clash‰.

Read the following situation:

Rahim is a young Malaysian executive working with a multinational company in

Kuala Lumpur. Every morning at 7.30am, he will have an egg burger with a cup of
cappuccino at McDonaldÊs. He rarely has the time to have lunch with his
colleagues, so he usually asks the dispatch at his office to buy a box of doughnuts
from DunkinÊ Donuts. In the evening after work, he usually mingles with his
friends at a restaurant nearby, where he would have a a roti canai and a cup of tea.

After reading RahimÊs story, do you have friends or relatives who have a similar
habit? Rahim is a perfect example of a new generation of workers who live
differently from those in the 1970s and 1980s. Young workers nowadays are very
much exposed to other cultures and have no problem embracing these types of
food as part of their daily life. Traditional Malaysian breakfasts such as nasi

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lemak and nasi goreng are now replaced with American or European breakfasts
such as burgers, pizzas, fried chicken, doughnuts and sandwiches as shown in
Figure 10.1. These foods have become the preference for lunch instead of rice.

Figure 10.1: American-style breakfast food

These following questions may be bothering you after reading the above
(a) Does this mean that culture is evolving?
(b) Will the new culture replace the current national culture?
(c) Is there any implication of this cultural change to business?

This topic will discuss globalisation and its impact on culture, followed by a
couple of issues regarding culture such as culture clash and ethics in the current
global business environment.


You must have realised that the world nowadays has been moving away from
previously distinct and separate national markets towards one that is integrated
where national borders seemingly become less important. There is a rapid flow
of people, resources, products and information across borders due to the
development in transportation and information technology. We are heading
towards what is called a borderless world where people seem to be living in one
huge global village (this has been discussed in depth in Topic 1) and distance no
longer is a barrier. The whole process is usually referred to as globalisation.

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What is globalisation? Why are people all over the world talking about it? Why
are people going crazy with the idea of globalisation on the Internet, in
newspapers, on radio and television? What is the reason for all this unwanted
attention on globalisation? If you want to know the answers to these questions,
read the following paragraphs carefully.

Globalisation has become a very popular term this decade. The topic has become
the centre of discussion in many aspects of life by the writers, politicians,
businessmen, academicians and even regular workers, as almost everybody now
feels the effect of globalisation as illustrated in Figure 10.2. It is a global
phenomenon as the world is experiencing great changes with the emergence of
new economic, political and cultural environments.

Even though globalisation is a popular topic discussed everywhere, there is no

single definition which can be accepted by everyone at this time. The term
„globalisation‰ can be used in different contexts by different individuals for
different purposes. Globalisation can be discussed from various points of views:
political, ideological, economic, environmental and cultural. It cannot be denied
that business activities are the main forces behind the process of globalisation.

Figure 10.2: Everyone knows and feels the impact of globalisation

Nevertheless, it is not true that the effects of globalisation are limited to the
commercial arena. Many things can be globalised such as products, services,
human beings, information, or even abstract things such as ideas, traditions and

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The following are two definitions of globalisation which are often used as
depicted in Table 10.1:

Table 10.1: Definition of Globalisation

Source Definition
Hill, (2001) A shift towards a more integrated and interdependent
world economy.
Ceglowski, (1998) A world in which goods, services, capital and information
flow across seamless national borders.

Based on the above definitions, it can be said that globalisation is about

geographical and political fusion which leads to the integration of the human
way of life and culture. Thus, it is not surprising that globalisation has created
many reactions among the worldÊs population whether in developed countries,
developing countries or poor countries.

Some welcome globalisation as a revolution which makes this world a safer place
and provides the world with an economic environment which is more stable and
equitable, while others regard globalisation as a new form of colonisation which
exploits poor countries.

Let us look at Figure 10.3 which reflects the opinion of people from various
countries. A majority of them view globalisation as mostly good. It is, however, a
surprise to see that people from the United States and France are among those
who say that it is mostly bad.

Regardless of any opinion given by supporters or opponents of globalisation,

nothing will stop this process from occurring. The effects of globalisation can be
seen everywhere. The effects can be seen and heard through the mass media,
they are reflected in the food we eat and can be seen in the products we buy at
the market.

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Figure 10.3: Public opinion on globalisation

Source: PIPA, April (2007)

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1. Write down your opinion about globalisation.

2. How far does globalisation influence your daily life whether at
work or at home?


Do you know there are various factors that contribute towards globalisation? The
three main factors are elimination of trade barriers, technological development
and competition among international firms.

(a) Elimination of Trade Barriers

Currently, countries across the world are more inclined towards reducing
trade barriers, which consist of tariffs (like import duties) or non-tariff
barriers (such as administrative and inspection restrictions). The
elimination of trade barriers, also known as the process of deregulation,
allows the free flow of products, capital and labour from one country to
another. Furthermore, deregulation has also reduced time, costs and
constraints experienced all this while by companies in international

Deregulation can occur at all levels, whether national or regional. Today,

there are also those who are more inclined towards the social integration of
the global community through regional economic cooperation. The
population of a regional cooperation area can move freely from one country
to another within the area. Trade barriers in these countries are being
eliminated gradually.

The development of the World Trade Organisation (WTO), a forum where

member countries sit down together and discuss trade terms, together with
the creation of regional economic integration such as the European Union
(EU), the North American Free Trade Area (NAFTA), the ASEAN Free
Trade Area (AFTA) has sped up the elimination of trade barriers. The
European Union, being the most aggressive in such integration efforts, has
created a single European currency for its member states, that is, the Euro.
Thus, it is not impossible that one day such unions will lead to full political
integration by creating a union of countries of various races and cultures.

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(b) Technological Development

Science and technology have created integration in the process of
communication and dissemination of global information. The rapid
development of computers and communication technology has enabled
information and ideas to flow extensively across borders. In fact, many hold
the view that technological development is the main factor for globalisation
(refer to Figure 10.4).

Figure 10.4: Technological development

Modern technology also enables producers to market their products to

customers regardless of their location. Satellite television transmission
nowadays enables the population of the entire world to enjoy television
programmes which show the culture of other countries.

Viewers in Russia can now enjoy entertainment programmes from the

United States, while Asian residents can watch CNN as their main source of
news and a World Cup football match taking place in Japan can be viewed
by viewers throughout the world. The Internet is also an ever-expanding
global phenomenon. Residents in different countries are now able to
communicate with each other through e-mail in a faster and more efficient

Apart from the development of computer and telecommunication

technology, the rapid development of transportation technology is also
supporting the process of globalisation. The development of aviation, road
and maritime technologies has facilitated the movement of human beings,
products, materials and others, allowing them to move faster from one
place to another.

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(c) Competition among International Firms

Competition among companies from across the world to secure market
opportunities is ever increasing. New firms from developing countries are
also taking part in the search for new business opportunities including
markets for high technology products such as vehicles, electronic
equipment, microchips and the like which were previously dominated by
developed nations. Limiting business operations within the local market
can no longer secure the future of companies. This has made multinational
companies compete against each other to enter foreign markets as
illustrated in Figure 10.5.

Figure 10.5: Competition among international firms

At the same time, companies which succeed locally might not succeed in the
international market if they fail to look at the differences in culture between both
countries. When a company enters a foreign market, rival companies will follow
suit to avoid losing competitive advantage. The sudden increase in international
competition among international firms has resulted in rapid globalisation, as
they bring product, people (expatriates), organisational culture and practices
from their home country to the other markets.

For example, McDonaldÊs brings with it the culture of its home country, whether
in terms of management, processes or technology, when expanding its business
to China. Similarly, LeviÊs will do the same when entering the Indian market, and
Sony when entering the African market and so on.

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What are the effects of a world without borders on culture? Let us find out by
reading the following sentences. Culture is not permanent. It changes according
to time. However, the changes experienced by the cultural system of a country is
now said to be faster and more drastic, consistent with the process of
globalisation, that is creating a borderless world.

The world is said to be experiencing a phenomenon of cultural uniformity where

national cultures, which were previously very different one country from
another, are now becoming more similar to each other due to the following
(a) Development;
(b) Mass media influence; and
(c) Advancement of communication technology.

The decrease in the cultural gap among countries has created a form of
unification in consumer preferences and tastes worldwide, more commonly
addressed as the global village. With this unification, multinational companies
are able to offer uniformed products in the market. Companies no longer have to
bear the cost of modifying the products according to the taste of each local

Various proofs have shown that globalisation has created a global village and
brought along with it a culture which is almost universal. Brand names such as
McDonaldÊs, Sony, Mercedes and Burger King have become synonymous with
the daily life of people worldwide, including the Malaysian community.

Do you know that the main concern among cultural scholars is the possibility
that the cultural identity of a country might disappear due to the presence and
influence of the global culture? Governments are no longer able to prevent global
culture, which is mostly based on Western culture, from entering our culture and
identity. It spreads freely through communication technology, is absorbed into
the minds of the local community and finally, erodes cultural identity and
values, thus drastically changing the way of life of a particular society.

Do you eat local delicacies such as karipap, samosa, popiah and other traditional
food items? If you do not, global culture could be one of the reasons. The
influence of global culture on local culture and its effects is evident everywhere,
including in Malaysia. Many Malaysian citizens nowadays prefer eating

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Kentucky Fried Chicken instead of ayam percik and pizza instead of roti canai;
they also buy imported clothes and cars. What is even more disturbing is
globalisationÊs influence among youths who are becoming less interested in
practising traditional Malaysian culture. They imitate negative Western trends in
terms of dressing and music preferences. They also imitate destructive habits
such as having intercourse out of wedlock, taking drugs, consuming alcohol and
so on.


1. List products which are results of global culture which influence

your daily life.
2. How would your life be without the products and culture which
accompany globalisation?


Do you know that a borderless world has its own advantages and disadvantages
in a society? These are still being debated by scholars. Both the supporters and
opponents of a borderless world have their own arguments. Anti-globalisation
and anti-borderless world demonstrations are organised frequently, especially
during related conferences. The advantage of globalisation is that it can help
eliminate intercultural conflict and give exposure to other cultures.

According to Rothkopf (1997), intercultural conflicts can be divided into three


(a) Religious Conflict

Conflict of religions may occur between Muslims and Christians, or
between Christians and Jews, Protestants and Catholics, and so on.

(b) Ethnic Conflict

Ethnic conflict may occur due to racial differences such as between the
Chinese and the Japanese, the Serbs and the Bosnians, the Hutus and the

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(c) Civil Conflict

Civil conflict of the same culture may occur due to fight over territories or
natural resources such as between Britain and France, and between Iraq
and Iran.

Globalisation and the concept of global culture can prevent conflicts from
occurring or continuing to occur through political and cultural integration
between the involved parties. When each party understands the otherÊs
culture, or practises a unified global culture, religious and ethnic
differences will not be that obvious and any disagreement can be resolved
through tolerance.

Thus, many people regard globalisation and the borderless world as an

important step towards a more stable world and better life for the entire
humanity as portrayed in Figure 10.6.

Figure 10.6: Communities of various cultures unite through globalisation

Are you aware that globalisation also allows people from around the world to
learn about each otherÊs cultural elements, such as the norms and behaviour of
communities? When everyone understands each otherÊs culture, they will try to
adjust themselves and practise tolerance towards other cultures. Intercultural
conflicts can be eliminated. As for firms, cultural uniformity will assist them in
offering uniformed products across the world. ConsumersÊ tastes and needs can
be easily understood due to the fact that they are becoming more and more
similar. Furthermore, product modification or marketing techniques will no
longer be considered as against the ethics or norms of a given culture.

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Discuss how intercultural conflicts can be eliminated through


Cultural colonisation is one of the disadvantages of globalisation according to the

opponents of globalisation. It is a threat to the local culture and tradition as it
brings with it a global culture which is based on the Western culture that
contradicts the traditional culture of a given country. Communities have no
choice but to slowly accept this global culture and allow it to be absorbed into
their life. Soon, it will eliminate the noble values which represent the core of the
traditional culture of a nation.

Whether by force or voluntarily, consciously or unconsciously, the values of the

global culture have been assimilated into peopleÊs daily lives. Therefore, it is
considered a new form of colonisation by the West. What is of greater concern is
that the global culture of globalisation challenges the existence and sanctity of the
religions practised by local communities. As a result, many religious groups have
opposed globalisation.

Another disadvantage of globalisation is the effect it has on the national

sovereignty of a country. Undeveloped and developing nations are forced to
submit to the pressure of foreign powers to open their borders to the global
market. As a result, the population of these countries are directly exposed to the
elements of competition and foreign cultures. GovernmentsÊ authority to control
the movement of products, capitals, population, information and culture will
decline. In fact, governments are compelled to submit to the resolutions of
international bodies such as the World Trade Organisation and regional
cooperation, although these resolutions are against their aspirations.

Figure 10.7 depicts the situation of developing nations, which face the threats
posed by the global market, in a lighter perspective.

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Figure 10.7: Developing nations face threats posed by the global market

This is evident in MalaysiaÊs automobile manufacturing industry. The Malaysian

government is compelled to adhere to the resolutions agreed upon under
ASEAN Free Trade Area (AFTA) agreement pertaining to the reduction of tariffs
imposed on imported vehicles, although the tariffs are intended to protect the
producers of local cars, particularly, Proton and Perodua. This example clearly
shows how a country can lose its authority to determine its own policy due to the
pressure of external parties which support globalisation.


One of the issues raised by opponents of globalisation is environmental

pollution. Give your opinion on whether globalisation causes
environmental pollution.


There is no doubt that any business that has discussions with foreign firms may
experience cultural conflicts and misunderstanding. According to a researcher on
culture, Michael Seelye, culture clashes occur when two people with different
cultural backgrounds meet each other to discuss something. Sometimes, the
culture clash occurs even before they get to know each other.

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Figure 10.8 shows how culture clash might happen.

Figure 10.8: Possibility of culture clash

A research carried out by a consulting firm from Europe found that cultural
differences are the biggest source of difficulty in integrating European
acquisitions. Cultural differences are obvious between one country and another.
Therefore, problems and misunderstandings often happen among businessmen
as shown below.

Shoe designers at shoe-making firm in Leicester, England, designed a shoe with

the writing „There is no god but Allah‰ in order to attract Muslim buyers to buy
the product. However, this was strongly opposed by the Muslim community in
England. Some of them even went to the extent of destroying the shops which
sold the shoes. Although the idea behind the design of the shoes was to attract
Muslims to buy the product, from an Islamic perspective, placing the name of
Allah on a shoe was an act which disgraces Islam.

Such ignorance and lack of comprehension must be avoided in order to prevent

conflict among multi-religion races. Managers of manufacturing firms must learn and
know about other cultures and traditions in order to avoid mishaps similar to the one

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Companies which want to expand operations to foreign countries must learn first
the customs of the local people in order to avoid undesired incidents as
portrayed below.

An American oil company on a Pacific Island recruited foremen with suitable

qualifications for oil-drilling operations. However, most of these foremen were
too young and were put in charge of workers who had served the company for
very long periods. After one week, all the foremen quit their jobs as they could
not stand the harassment received from the senior workers. After the incident,
the management realised that hiring younger men as foremen to supervise senior
workers was not acceptable to the local community.

Let us have a look at some culture clash issues which often occur in business as
shown in Table 10.2.

Table 10.2: How to Avoid Culture Clash Problems

How to Avoid Culture Clash Problems

Know how to deal with businessmen from different countries and cultures.
Give priority to something which must be remembered.
Realise how time is given priority and managed in a host country.
Acknowledge the customary matters such as the usage of „Lah‰ in Malaysia.
Realise the gender function, such as in the Islamic countries.
Know how to deal with the distance, whether far or near, between areas in the
host country.
Be independent and committed in socialising in a host country.


Based on your experience on culture, list the three things that can
prevent the occurrence of a culture clash (apart from those mentioned
above). Discuss with your course mates and present your answers in

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There are various ways to avoid or reduce cultural clash. However, the best way
is to interact more often in order to familiarise ourselves with the people around
us. The more interaction and communication, the faster and easier it is to learn
the culture of others.

However, there are certain things which managers must know when coping with
a cultural clash. Table 10.3 shows some tips on overcoming cultural clash.

Table 10.3: Tips that Help to Soften Cultural Clash

DoÊs DonÊts
Take care of your friends and invite them Avoid judging a culture by comparing it
to your parties. with your own culture.
Socialise with locals and participate in their Do not brag about the country which you
activities. have just visited.
Learn the micro behaviour practised Do not ever interrupt your friendÊs
locally. conversation, particularly when he or she is
talking about an internal political issue.
Provide community services to the Do not decline anything straight away. Do
locals. it politely.


List five cultural problems often faced by a society and then

identify how your local culture can solve the culture clash problems.
Post your answer in the myVLE forum and respond to postings by your
course mates.

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1. What is meant by the term „globalisation‰?

2. What are the three effects of globalisation?
3. What is the influence of global culture on a societyÊs culture?
4. Briefly state the advantages and disadvantages of globalisation.
5. Based on your own understanding, explain the term „cultural


Multiple Choice Questions

1. „The world nowadays has been moving away from previously

distinct and separate national markets towards one that is
integrated where national borders seemingly are becoming less

What does the above statement explain?

A. Quality leaders
B. Borderless world
C. Culture clash
D. Multinational corporations

2. Which of the following is NOT a factor for globalisation?

A. Elimination of trade barriers
B. Technological development
C. War against terrorism
D. Competition among multinational firms

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3. Which of the following is an advantage of globalisation?
A. Eliminates intercultural conflict
B. Increases conflict between different ethnic groups
C. Results in unemployment in some countries
D. Eliminates small firms from the market

4. What might occur when two people with different cultural

backgrounds meet each other to discuss something?
A. Global village
B. Culture clash
C. Sovereignty
D. Expatriate

5. Which among the following is NOT TRUE about things to

avoid when dealing with culture clash?
A. Do not ever interrupt your friendÊs conversation,
particularly when he is talking about an internal political
B. It has a huge workforce from the whole of European Union.
C. Do not be too proud when talking to a person who comes
from the same country as yours.
D. Do not judge a culture by comparing it with your own

• Globalisation has a huge impact on our daily life.

• Three factors that speed up globalisation are:

– Elimination of trade barriers;
– Technological development; and
– Competition among multinational companies.

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• The advantage of globalisation is that it can help eliminate intercultural

conflict and give exposure to other cultures.

• Threat to local culture and religion is a disadvantage of globalisation.

• In cross-culture communication, culture clashes do occur. There are various

forms of culture which are practised in each country in the world.

• In businesses which engage in international transactions, culture clashes

often occur due to differences in culture, religion, heritage and lifestyle. They
must be dealt with wisely as they also occur in our multiracial society.

Borderless world Globalisation

Cultural clash Multinational companies
Global village

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Exercise 1.1
Multiple Choice Questions

1. C
2. B
3. D
4. C
5. B


Exercise 2.1
Multiple Choice Questions

1. C
2. C
3. A
4. B
5. B

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Exercise 3.1
Multiple Choice Questions

1. B
2. C
3. C
4. A
5. B


Exercise 4.1
Essay Questions

1. Schools of culture and structure:

(a) The culture-free (etic) school;
(b) The structuralist (emic) school;
(c) The culturalist school

Differences among these schools:

• The culture-free (etic) school – states that structure is determined by
organisational features such as size and technology.
• The structuralist (emic) school – argues that structure creates culture.
• Culturalist school – argues that culture creates structure.

2. Culture value dimensions:

• Power distance – indicates the extent to which a society accepts the
unequal distribution of power in institutions and organisations.
• Uncertainty avoidance – refers to a societyÊs discomfort with
uncertainty instability.

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• Individualism/collectivism – reflects the extent to which people prefer

to take care of themselves and their immediate families.
• Masculinity/femininity – refers to the relationship of masculine or
feminine characteristics and their influence on work responsibilities.

3. According to Greenberg and Baron (1997), the corporate culture is a

cognitive framework consisting of attitudes, values, behavioural norms,
shared beliefs and expectations.

4. A corporate culture of an organisation might include the employee being

exposed to various types of work and transferable within the organisation.
However, there are various types of corporate culture which are practised
and they depend on the type of organisation.

Multiple Choice Questions

1.  A 
2.  A 
3.  D 


Exercise 5.1
Essay Questions

1. Factors which might cause international managers to fail in carrying

out their responsibilities effectively are as follows:
(a) Family members fail to adjust to the new culture and local setting.
(b) The manager fails to adjust to the new culture and local setting.
(c) The managerÊs personality.
(d) The international assignment carries too much responsibility.
(e) The manager is not equipped with adequate technical skills.
(f) The manager has neither motivation nor interest in carrying out the
international assignment.

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Multiple Choice Questions

1.  B 
2.  A 
3.  B 
4.  A 
5.  C 


Exercise 6.1
Essay Questions

1. If a company becomes global, its corporate culture must become global

too. This is to standardise between the parent company and its
subsidiaries. However, a global culture must take into consideration the
responsiveness of the local people. If the culture to be practised suits the
culture of the local community, then it can be implemented. If not, the
local community and the subsidiaries will not accept the new culture.
Culture is something that cannot be changed. Thus, parent companies
must be sensitive to changes and try to adjust them. A global culture of an
organisation can be a source of attraction and can enhance the companyÊs

2. It is difficult for subsidiaries to succeed if they can only adjust themselves

to the culture of the parent company and not to that of the local
community. It is important to establish a subsidiary which is accepted by
the locals. If the locals cannot accept it, problems will arise as it may not be
able to function properly due to the resistance. Parent companies will
ensure that the locals will accept their subsidiaries. Hence, they will try to
adjust themselves to the local culture. If they succeed and the locals
accept their culture, it will be easy for them to operate in the said area.

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Multiple Choice Questions

1. A
2. C
3. B


Exercise 7.1
Essay Questions

1. The United States is a highly individualistic and masculine-oriented

country where its culture includes the active recognition of its peopleÊs
roles and contributions. In reference to the collected literature, the
American leadership style is seemingly participative and supportive as it
provides a strong support in carrying out organisational objectives and
targets. Participative leadership style involves the role of subordinates. It is
also found that large US firms tend to be more democratic than small ones.
Such unions will lead to full political integration by creating a union of
countries of various races and cultures.

The Middle Eastern style of management is highly authoritarian. Most

Middle Eastern managers believe that their employees are lazy by nature.
Coercion is often needed to get Middle Eastern workers to perform.
Consequently, Middle Eastern managers take a strong work-centred
approach to ensure that subordinates do their assigned task.

2. Transformational Leaders, Transactional Leaders and Charismatic Leaders.

(Refer page 132–133 for detailed explanations.)

Multiple Choice Questions

1. B
2. D
3. B

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Exercise 8.1
Essay Question

1. (a) Non-verbal Communication Variations

• Very effective in conveying messages related to feelings and
emotions and is helpful in explaining the intended meaning of
verbal messages.
• There are many forms of non-verbal communications which share
the same meaning in some cultures and different meaning in some
other cultures.
• One must be careful with t h e ir body language, because some
of the most commonly used body language cues might carry a
negative meaning in another culture.

(b) Social Behaviour Variations

A discussion often goes beyond the formal-setting of a negotiation
table to a less formal-setting such as at the dining table and the golf
course. In such situations, social behaviours such as eating, giving
gifts and welcoming guests differ from one culture to another.
(c) Time Variations
• Some cultures consider time as something very valuable. Failure
to observe a deadline or to be punctual for an appointment is a big
• In some other cultures, failure to observe punctuality is not
considered a serious mistake and is something quite commonplace.
• During discussions, those who are concerned about time will
strictly discuss on their respective business. Such behaviour might
be construed as being rude by other cultures.

Multiple Choice Questions

1.  B 
2.  C 
3.  A 

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Exercise 9.1
Multiple Choice Questions

1. B
2. C
3. B
4. D
5. C


Exercise 10.1
Multiple Choice Questions

1. B
2. C
3. A
4.  B  
5.  B

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If you have any comment or feedback, you are welcome to:

1. E-mail your comment or feedback to


2. Fill in the Print Module online evaluation form available on myINSPIRE.

Thank you.

Centre for Instructional Design and Technology

(Pusat Reka Bentuk Pengajaran dan Teknologi )
Tel No.: 03-27732578
Fax No.: 03-26978702

Copyright © Open University Malaysia (OUM)

Copyright © Open University Malaysia (OUM)