Daniel Millsap MBA School Research
CHOOSING A MANAGEMENT ORIENTATION FOR A GLOBAL COMPANY
ABSTRACT
Culture is an important topic for organizations to understand because of its effect on consumer preferences. As science advances, the study of culture becomes more specific, objective, and informative. The more objective information becomes, the better organizations are able to implement it into their corporate strategy. The appreciation of and ability to adapt to culturally distinct areas of the world enables organizations to adapt and perform well in a globalized marketplace. The ability and willingness of organizations to do so depends upon the type of management orientation chosen by the company. The purpose of this paper is to point out some of the interesting scientific findings concerning cultural differences. Various management orientations are analyzed and a geocentric management orientation is recommended for global organizations. Lastly, strategies organizations can use to successfully adapt within the global marketplace are made and examples are given to illustrate types of miscommunication and ways of preventing them.
INTRODUCTION
What is Culture? Culture is a concept describing “’ways of living’ built up by a group of human beings, which are transmitted from one generation to another” (Keegan, 2002). Culture includes proper ways of behaving in business, educational, familial, and religious situations. Organizational anthropologist Geert Hofstede defined culture as being “the collective programming of the mind that distinguishes the members of one category of people from those of another” (Keegan, 2002). Culture is difficult to understand because both conscious and unconscious beliefs and values influence the formation of its rules and value systems. When people think of culture, they often picture a type of person different from themselves, whether in physical appearance or in language used to communicate. However, culture is much more than that. It also encompasses consumer preferences. For example, in some countries consumers prefer certain products to others. In the Middle East, consumers prefer their soft drinks sweeter than consumers in the United States do. In addition, in some countries, certain physical aspects of the products sold have a large impact on whether consumers buy or not. In the West, the color white represents purity and cleanliness whereas the same color signifies death in Asian countries. In a business context, there are many important activities, the appropriateness of which may vary from culture to culture. Such activities may include: correct behavior within business meetings, interviewing for jobs, negotiating, accepted behaviors in the workplace, and the giving/accepting of feedback. In order to perform well in these differing circumstances, people must be able to successfully adapt to the specific cultural demands.
CULTURAL VARIABILITY
In the past, describing cultural differences was a purely subjective experience. The only way to document differences was for someone to interact in a different culture and then to describe that culture in relation to his/her own culture. The problem with this is that it is a subjective description and does not necessarily describe true cultural differences and similarities. How can comparing cultures using a subjective description really describe the objective reality of either culture? After all, one person’s experience might differ from another person’s experience. If both observers described a particular culture and each person’s description was fundamentally different, then which one would be correct? As to the question of whether or not cultures are different or not there can be little doubt as to the answer. Anyone who has traveled abroad has most likely experienced certain things that not normally experienced within his/her home country. Whether it is the type of food eaten or the ways in which people interact with one another, differences abound. An explanation of cultural differences might be based on observation and description. Though descriptions of cultures based on personal experience can be potentially useful, there are situations in which descriptions might not apply. Furthermore, though descriptions show that cultures vary in their beliefs and behaviors, they do not explain why they do so and what to do to successfully adapt within a culture.
With the advent of more powerful scientific measuring devices, such as neuroimaging, scientists are able to more objectively study cultures. For example, recent research shows that culture has a direct impact on the organization of neural pathways. Scientists studied two groups of people, one from the West and the other from Asia. Subjects were further subdivided into generations- one subgroup consisted of older participants and another of younger ones. Subjects were shown a picture of an elephant in a jungle while having their brains scanned. The results indicated that a particular portion of the brain for object recognition was active in Western subjects but not in Asian subjects with the following implication: “An Asian would see a jungle that happened to have an elephant in it. Meanwhile, a Westerner would see the elephant and might notice the jungle” (Binns, 2007). Of even more interest were the results of the subgroups. While both old and young Western subjects showed similar activity in their brains, there was a marked difference between old and young subjects in the Asian subject group, indicating that the results are not due to genetic factors but rather environmental ones. As Western culture has spread across the world, it has changed the way in which people live their lives. Students in China today idolize professional athletes on television whereas students 20 years ago might not have even had access to this. Furthermore, the same article indicates that research has shown that even the structure of a particular culture’s language has an impact on members of that culture’s perceptive processes. Tested was the speed of color differentiation between Russian subjects, who mandatorily had a distinctive word for light blue and dark blue, and English speaking subjects who did not necessarily have to make this distinction. Russian speakers were able to more quickly distinguish between hues of color than Western subjects were. The results of these studies indicate that certain things in the environment are of greater importance to members of one culture than members of another culture and this importance determined whether members of a particular culture would even pay attention to a detail of the environment. “With an infinite number of ways to perceive the world, every culture’s guidebook helps to focus our brain’s attention on the characteristics most important to our life” (Binns, 2007). A theoretical example pertaining to organizations might be a job interview where both interviewer and interviewee are from different cultures. The interviewee notices that the person doing the interview frequently interrupts the interview to answer his phone. The interviewee may perceive this as an indication of disinterest and dislike by the interviewer whereas the interviewer may not even think twice about it. After all, it is part of his job description to answer the phone and cannot see why it is inappropriate to do so, even during a job interview.
Studies of nonverbal behavior also show marked differences between cultures. For example, these studies show that people from different cultures are attuned to different types of nonverbal cues. “The group found that Americans, who tend to express emotion overtly, look to the mouth to interpret others’ true feelings. Japanese, who tend to be more emotionally guarded, give greater weight to the eyes, which are less easily controlled” (Carpenter, 2007). From these results, it is easy to see how misunderstandings might arise from non-deliberate miscommunications. A possible explanation uses the complexity of social networks as an indicator of the amount of attention paid to the context of communication. “East Asians live in relatively complex social networks with prescribed role relations. Attention to context is, therefore, important for effective functioning. In contrast, Westerners live in less constraining social worlds that stress independence and allow them to pay less attention to context" (Chua et al., 2005). Thomas et al (2003) go on to state: “research indicates that social cognitions such as perceptions of events and attributions made about their causes both vary across cultures. Later on, they argue: “Different priorities for what stimuli deserve attention (selective attention), and the meaning we attach to these perceptions (encoding), are formed by gradual internalization of prevailing cultural patterns” (Thomas et al., 2003). With all of these subtle and diverse cultural differences, how are organizations to function in a globalized market place? Clearly, organizations must be sensitive to culture in order to perform well. An organization’s management orientation is one indication of how it strives to do so.
MANAGEMENT ORIENTATION
An organization’s choice of response within the environment depends on its beliefs about the environment and its beliefs on whether or not its actions can have an effect on the environment. For example, one company may think that it does not need to take into account potential differences in customer preferences around the world. Since Americans like product X Y or Z in the color blue, consumers in China will like the same color. What they fail to take into account is that the importance of something seemingly as seemingly trivial as color can vary enormously between cultures. When its product performs poorly, this company will be likely to misunderstand the reason why and will probably fail to rectify the problem in the future. On the other hand, another company with a different viewpoint of the marketplace might realize that cultures vary and will strive to understand the differences and similarities of each culture. Before selling a product, management will already understand things such as color preference within a certain culture. This way, this particular firm will avoid the costly mistake of the other company and will increase its probability of success in that marketplace in the future. These “viewpoints “ are described as management orientation and can be broken down into the following categories:
ETHNOCENTRIC MANAGEMENT ORIENTATION
Management holding an ethnocentric orientation believes that its home country is superior to any other country in the world regardless of any evidence to the contrary. An ethnocentrically oriented manager may think: “since a product or a service performed well at home, it should also perform well abroad. Since this is so obvious, no further research is necessary on foreign markets and no adaptations need to be made to the products or services to tailor them to global customer preferences and needs.” Some companies are so ethnocentric that they choose to ignore foreign opportunities in the first place. These companies are called domestic companies. Other companies holding an ethnocentric orientation do choose to conduct business outside of their home country and are called international companies. Ethnocentrically oriented international companies believe that anything that has worked at home must also work abroad. A company holding this viewpoint would be likely to ignore local managers within different countries who voiced an opinion contrary to the norm of the home-country. For example, a local manager may wish to change an advertisement’s background-color from white to red since, in his country, white signifies death whereas red signifies wealth. An ethnocentrically oriented company might ignore this valuable piece of information. Since white was chosen over red in focus groups inside of the United States, white must be preferred to red universally regardless of where the product is being sold.
POLYCENTRIC MANAGEMENT ORIENTATION
Management holding a polycentric orientation, on the other hand, believes that each country is unique and therefore it allows its subsidiaries to have more control in developing strategies that will work in a particular country. “Since each country is so unique, complete control should be given to local managers since they obviously know what is best for the company in that country.” As long as these subsidiaries are profitable, headquarters is apt to leave them alone. “Let the Romans do it their way. We really don’t understand what is going on here, but we have to have confidence in them. As long as they earn a profit, we want to remain in the background” (Perlmutter, 2001). Though an improvement over a purely ethnocentric view, a purely polycentric one has its flaw in that headquarters and subsidiaries are somewhat cut off from one another. Headquarters steps aside in the belief that it can not possibly understand local business processes and foreign subsidiaries are glad that headquarters does not “interfere” as they can not possibly understand the local market. So while a polycentric viewpoint is an improvement over an ethnocentric one in that a company realizes that strategies should be tailored for specific markets, it does not take into account the potential benefits of taking a more active role in the running of subsidiaries in those differing markets. Lastly, it should be noted that though it is realized that each country is different, the polycentric viewpoint often leads to ethnocentricity within each region where the company operates. Thus, though a company based in New York will gives its India-based subsidiary complete control over a project, management still believes that the home-country is superior.
GEOCENTRIC MANAGEMENT ORIENTATION
Management holding a geocentric orientation believes that the entire world is a potential market and strives to develop strategies that will work in every market. Instead of stating that things are inherently different in each market and thus must be handled in a distinctive manner, a geocentrically oriented company will look for universal as well as local best practices to help a company thrive in all markets. For example, in a Polycentric company, management would allow full reign over decision making to take place at the local level. If that same company began to operate in Switzerland, it would recreate all business processes based on what the local managers thought. But what if there were certain things that would work well in both countries? Would it not be more efficient to leave those processes alone while custom tailoring the processes that really needed to be differentiated? In geocentrically oriented companies, authority is not simply placed with headquarters at home or with subsidiaries abroad, but rather a is dispersed more equally between the two so that a collaboration is formed. Also, a view of superiority is not based on nationality. A geocentric orientation seeks to find a compromise between allowing headquarters to do things its way and allowing local managers to do it theirs. Geocentrism “involves a collaborative effort between subsidiaries and headquarters to establish universal standards and permissible local variations, to make key allocation decisions on new products, new plants, new laboratories” (Perlmutter, 2001).
ARGUMENT FOR USING A GEOCENTRIC MANAGEMENT ORIENTATION
In relation to cultural similarities and differences, management orientation is important to the success and efficiency of an organization. Should management run things the same way regardless of which country it is operating in? Should management give complete control to local management in different countries with a view that only local people can possibly understand the local culture? Or should management seek a way to identify business processes that work universally while at the same time seeking to identify cultural differences and allow local control over certain processes accordingly? The best company is the one that is able to consistently take in more money than it spends. In order to do this, it must be able to satisfy customers and ensure that these customers will remain loyal to the company. In addition, no company can operate without employees, so a successful company must be able to train efficient employees and keep them loyal to the company as well. An ethnocentric orientation simply does not work anymore because consumers can choose a different supplier that is willing to take their preferences into account. In addition, the usefulness of a polycentric orientation is also in question when the goal is global competitiveness. A company which relinquishes complete control over subsidiaries to local management is in a way cut off from those subsidiaries. If a company has no means of taking in meaningful feedback from these subsidiaries, does not make an effort to integrate this feedback into its business processes, or if the company does not seek ways in which to universally improve its business practices using foreign experiences, then how competitive can that company be when compared to a company that does? A geocentrically oriented organization seeks to find the best person for the job and the best business process for a particular market. A geocentrically oriented company is able not only adapt, but to shape business processes within different markets so that they are both more efficient and more productive. Geocentrically oriented organizations are able to perform well because they are able to implement successful strategies for adapting taking culture into account.
STRATEGIES FOR CULTURAL INTEGRATION
CULTURAL SENSITIVITY
Cultural sensitivity is important because, though humans share similar traits, they also differ in certain respects based on the culture in which they were brought up. It is easy to ignore or play down the importance of this fact. Because people from different cultures perceive the world differently, they also perceive certain situations within the business context as being different. So it is important for organizations to impart a clear and intended meaning when communicating across culture. Though a manager might perceive his/her instructions as being clear enough, an employee on the receiving end may perceive the message incorrectly by either taking in more than was really encoded in the message or paying attention to parts of the message which are intended to be irrelevant. For example, the organization wants to tell the employees that they are doing a great job and so they call everyone together. Certain employees may view the fact that everyone was called in together as opposed to individually as a sign that the organization does not value employees enough to give them personal attention when in fact the organization intended to show that it valued its employees by telling them all at once. So whereas the original goal of the organization was to praise employees and boost their morale, the very opposite may occur. If the organization is not receptive to the fact that employees of different cultural backgrounds are experiencing similar situations in a different way, then it runs the risk of being unable to control the outcome. These types of misunderstandings can spiral out of control until both organization and employee lose faith in one another and end their relationship with one another. On the other hand, custom-tailoring business processes so that they take into account every culture is time-prohibitive and unnecessary. A proper communicative method should be employed so that both organization and employee are clear in motive and in message. Misunderstandings should be anticipated and accounted for. This active role allows people to begin to look for things in the environment which they may not have looked for before. An understanding of and a sensitivity to cultural similarities and differences can make the difference between success and failure in the global market place. It is especially important for management to understand and be sensitive to cultural differences when interpreting a situation. For example, a reserved employee may be seen as being a poor “team player” until it is revealed that he/she is from a country in which employees are expected to focus exclusively on their task. This explanation can be the determining factor between seeing this person as an excellent employee or a poor employee. In addition to being sensitive to cultural differences, organizations should be able to adapt within cultures as well.
CULTURAL ADAPTATION
Once organizational members understand that cultures vary and begin to feel an understanding as to why they vary in certain situations, they will be able to more easily adapt to cultural variations. In addition, the more experience organizations and its members have with different cultures, the better they will become at adaptation."As individuals learn the rules for appropriate behavior in a foreign setting, they repeatedly face discrete situations involving cultural differences that test their ability to function successfully in the new setting and their comfort with new cultural rules" (Molinsky, 2007). Sometimes it is not easy to adapt to another culture. “Experienced performance difficulty is the extent to which an individual experiences the task of producing a cross-cultural code-switch as a challenge to his or her cultural knowledge and skill” (Molinsky, 2007). Thus, some situations are easier to adapt to than others, depending on how much the expected behaviors vary from what the performers are used to. Molinsky goes on to define the method in which people consciously make an effort to adapt to novel cultural situations with certain behavioral expectations. "Cross-cultural code-switching is the act of purposefully modifying one’s behavior in an interaction in a foreign setting in order to accommodate different cultural norms for appropriate behavior" (Molinsky, 2007). In living within one culture, we internalize the specific rules for acting within specific situations. While these rules may result in optimal consequences in one culture, they can have disastrous effects in another.
Cross cultural code switching refers to the ability of a person to consciously adapt one's behavior and thus behave differently and appropriately within another cultural situation even if these alternative behaviors conflict with what may naturally be comfortable for that person to do. An organization that has employees that are adept at code switching will experience less turbulence in performing within a truly global marketplace.
OTHER STRATEGIES
(Francis, 2007) writes a list of multi-cultural team working tips, including giving people feedback in private to ensure that there is no loss of face, and having employees put directives into their own words so as to make sure that they understand them. This second point is attractive in that it allows management to understand how its intended message is being perceived by employees. Furthermore, Bird and Osland (2006) give the reader strategies for effective collaboration across cultures. These authors place large emphasis on the concept of compromise. The term that they use is “build joint frames.” The authors believe that it is of great importance for a firm to make an explicit effort to make sure that both parties are not experiencing confusion before moving on in any discussion. Making sure that each party is clear on the intended message is one of the safest and most efficient methods of ensuring that meanings are understood by all parties involved.
CONCLUSION
Successful Global companies are the ones that are able to adapt to any cultural variation present in the global marketplace. These firms are able to adapt their strategies to any and all marketplaces. In order to do so, these firms must be able and willing to take cultural similarities and especially cultural differences into consideration when making important organizational decisions. As scientific testing methods advance, firms are able to better understand exact causes and effects of cultural differences. Rather than focus on these differences, however, firms should focus more on their own ability to accept and adapt to the global marketplace. A firm is equal to the sum of its parts and its parts consist of its employees. Keeping in mind particular qualities such as the ability to culturally “code switch when hiring employees is one effective method of insuring that an organization consists of the right parts. Global firms using a geocentric management orientation find it imperative to have a good understanding of culture and strategies for adaptation for its employees.
REFERENCES
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Carpenter, S. (2007 Aug/Sep). Unspoken Accents. Scientific American Mind, 18, 13.
Chua, H., Boland, J., Nisbett, R. (2005). Cultural variation in eye movements during scene perception. PNAS, 102(35), 12629-12633.
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Molinsky, A. (2007) Cross-Cultural Code-Switching: The Psychological Challenges of Adapting Behavior in Foreign Cultural Interactions. Academy of Management Review, 32(2), 622-640.
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