creating cultural competence

Cultural Differences and Consequencesby

Huib Wurstenhuib@itim.org

Challenges US and European senior executives say they face when managing across different countries

Changing individual behavior 69 %

Cultural differences 65 %

Business practice differences 52 %Headquarters too remote 44 %Labor law differences 41 %Accounting and tax differences 36 %

Source: PricewaterhouseCoopers

Going global has potential problems

“HOW They do it is embedded in their tradition and culture”

“WHAT Managers do is the same the world over..”

Peter Drucker

Source: The Wall Street JournalMay 2008

Development of the 5-D Model

• 40 years of research - Professor Geert Hofstede• IBM Surveys 1967 to 1973

– 116.000 questionnaires, 72 countries, 20 languages• Chinese Value Survey 1979 - Michael Harris Bond

– 22 countries• +/- 60 repeats by others. • 4 times worldwide• A recent replication was carried out by including Hofstede's

questions in the EMS, the European Media & Marketing Survey

• No convergence

• Trade, Travel, Radio, TV, Telephone, have not reduced cultural differences.

• Entertainment & Internet won´t either.

After certain level of income:

• The new generation of young consumers will not introduce one all encompassing world culture !!

Low High

Collectivist Individualist

Feminine Masculine

Low High

IDV

MAS

PDI

0 50 100

UAI

The 5-D Model

• Value differences between countries can be explained by five “dimensions of national culture”

Low HighLTO

Power distance

• The extent to which the less powerful members of institutions and organisations accept that power is distributed unequally.

Power distance IndexSome scores

0 10025 75

China80

Germany35

Spain57

Low PDILow PDI High PDIHigh PDI

50

USA 40

Sweden31

France69

Belgium65

Russia93

UK35

Denmark18

Netherlands38

Power Distance (PDI)

100750 25« PDI low » « PDI high »

- Hierarchy is for convenience

- being independent is encouraged early on

- No inherent respect for old age

- Decentralization

- Approach to feedback: “no news is good news”

- Matrix management possible

- Hierarchy means existential inequality

- subordinates have to express respect towards superiors and older people

- Centralization

- Approach to feedback: “people respect what you inspect”

- Matrix management “uneasy” People prefer to report to one person

50

Uncertainty Avoidance (UAI)Some scores

0 10025 75

SpainFrance86

Low UAILow UAI High UAIHigh UAI

Germany 65

50

Russia95

USA46

Italy 75

Canada48

Sweden29

IrelandUK35

Mexico82

Netherlands

53

Denmark 23 Japan 92

Uncertainty avoidance (UAI)

1000 25« weak » «strong»

Inductive thinking.- “Just do it”- Best practices- Pragmatism- empiricism

- Belief in generalists and common sense

- Stronger belief in lay competence (Zagat)

-Emotions not shown

- Risk taking to become successful is positive

- Deductive thinking- “Think before you do”- “The philosophy of….”- “The principles behind…”.

- Belief in experts and their knowledge

- Stronger accent on expertise- Michelin guide

- Showing of emotions is accepted

- Concern for security in life and avoidance of failure

Uncertainty avoidance (UAI)

1000 25« weak » « strong»

- Functionality most important

- Customers accept I don’t know, but I will find out

- ‘practitioners‘ are giving credibility for marketing messages

- Style and fashion very important

- Customers expect you to have all the answers

- For credibility it is needed to show formula’s, laboratories, A ”white coat”

-

Credibility varies across culturesSource : André Laurent

20 30 40 50 6010 70 80 % Percentage in agreement

Great Britain

SwedenNetherlandsUSADenmark

SwitzerlandBelgiumGermanyFranceItalyIndonesiaJapan

1718

2327

384446

5366

7378

It is important for a managerto have at hand precise answers tomost of the questions that hissubordinates may raise about their work

10

6 culture clusters©

Contest Network FamilyPyramidSolar systemMachine

PDI IDVMASUAI PDI IDVMASUAI PDI IDVMASUAIPDI IDVMASUAIPDI IDVMASUAIPDI IDVMASUAI

The egalitarian group;empowerment, decentralization

The hierarchical group;centralized,

USAUK

IrlandNw Zealand AustralieCanada

SwedenNetherlands

NorwayFinland

DenmarkBaltics

GermanySwitzerl.(G)Czech rep.HungaryAustria

GuatemalaBrazilRussiaTurkey

PortugalS.Korea

FranceBelgium

Switzerl. (FR)Italy (Nd)

PolandSpain

SingaporeHong Kong

ChinaThaïland

IndiaMalaysia

Competition

Autonomy

Decentralisation

Risktaking

Results

Ambition

Innovation

Consensus

Cooperation

Decentralisation

Risktaking

Well being

Reliability

Social ethics

Structure

Autonomy

Decentrali

sation

Procedure

s

Expertise

Expert

needs

Hierarchy

Rules

Centralisation

Formalism

Analyses

Honour

Well being

Hierarchy

Loyalty

Centralisa

tion

Formalism

Procedure

s

Respect

Indirect

Comm-

tion

Hierarchy

Loyalty

Centralisation

Harmoniy

Flexibility

Indirect

Communication

NETWORKPDI_;IDV+;MAS_;UAI-(+/_)

• -Strong emphasis on equality• -Autonomy• -4C’s: consensus, cooperation, collegial

administration and co-optation• -Sympathy for underdog• -Suspicious about winners and heroes• -”Emerging insight”• -“Truth is found in the middle”• -Decisions based on “shared interest”• -“Reflect before you act”• -”Good wine does not need a crown”• -Reluctance to enforce rules In Nl: “Gedogen”-

CONTESTPDI-;IDV+;MAS+;UAI-

• Competition• Risk taking• Accountability• Winning/losing• Success breeds success• Sympathy for winners• „The best“• Inductive thinking

„pragmatism“, „best practices“

• Focus on practitioners

Sayings and slogans around this way of thinking:

-Just do it-Whatever works-You have to walk the talk-The proof of the pudding is in the eating

And…….”best practices”

MACHINEPDI_;IDV_;MAS+;UAI+

• Autonomy• Deductive thinking• “The principles behind”• High need for• structures, process • Standardisation• Keyword: planmaessig

handeln (structural consistent approach)

• Experts highest esteem• Formula’s, white coat,• Laboratories• “Reflect before you act”• Die Wahrheit triumphiert

nie, ihre Gegner sterben aus.

(Thruth never triumphs. Her adversaries fade away)

PYRAMIDPDI+;IDV-;UAI+

• Hierarchy• Formality, Procedures• Expert approach,• Top down,• People respect what you inspect• Impression behaviour by white

coat, scientific evidence from laboratories

• Old = wisdom• High context = civilized• Mas/Fem can make a small • difference

SOLAR SYSTEM PDI +IDV +UAI +• Top down• -Impersonal bureaucracy• -Empowerment within limits of mandate• -”System D”• -People respect what you inspect• -Deductive thinking The philosophy of....• -Cogito ergo sum• -Legalistic thinking• -Expert approach• -Intellectualism

FAMILYPDI+;IDV_;UAI_

• Old = wisdom• Loyalty• Hierarchy• Simple structure, • more flexibility• Hierarchy• Practical approach• Top down,• High context = civilized