What Are Cultural Differences In Management Commerce Essay


The pioneer in the research of cultural differences in management, Hofstede holds the view that no such things as universal management theories exist. In his article, he shows that other countries management theories deviate from the American management approach, while using 5 bipolar dimensions to explain the cultural differences in management at the national level. The 5 dimensions result from Power Distance which describes the degree of inequality, Individualism/ Collectivism depicts the extent to which individuals are integrated into groups, Masculinity/ Feminity shows the assertiveness and competitiveness versus modesty and caring, Uncertainty Avoidance expounds the magnitude of risk taking and tolerance of uncertainty. The fifth and last dimension, which was taken into consideration after a survey called the Chinese Cultural Connection, is the Long-term/ Short-term Orientation. These Dimensions helped Hofstede categorise cultural tendencies of a nation. Moreover, it has been suggested that culture at the national level is different from culture at the organizational level. The existence of a Multinational Company is enabled by this difference. Employees with extremely different national culture values can keep together because of corporate culture based on common practices (Hofstede, 1993). Hofstede's research is undoubtedly the platform of theories for many scholars.

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One of these scholars is Binna Kandola, who explained cultural intelligence applying Hofstede's cultural dimensions. He created awareness of cultural interaction between Asian business people through illustrating the different values of British and Indian culture. Realising cultural differences in management is essential for Managers working cross-borders, and missing to address it causes severe problems in business (Kandola, 2008). Kandola's research is context-free and does not attain serious results and advice for managers. It is more likely a cursory hint for them.

Cursory hints are also given by Judge (2001) with his first systematic examination of the inner character of CEO's of America and Taiwan. In 3 dimensions of leadership character i.e. personality, values and spirituality, he compares the influence of national culture. He puts two approaches up against one another. Those who believe that leadership is influenced by culture (culture bond) and those who do not (culture free). The author add to this that the evidence for either view point depends on how it was researched. If you look at individuals and their attitude you will find cultural differences. But if you look at the macro level you may not find the differences. He finds out that there are considerable culture bound differences between the character traits of CEO's in Taiwanese and American firms. American CEO's tends to be intuitive, individualistic and Taiwanese CEO's leans to be sensing oriented, collectivistic. Similar to Hofstede's bipolar dimensions his 3 dimensions are deterministic towards national culture and context-free as well. Following Hofstede's path makes Judge's work unreliable of critical action research.

According to McSweenie (2002) in her professional critical action research on Hofstede's theory she questions his methodology, definitions and assumptions. She disapproves of Hofstede's questionnaire, in which just IBM sales and marketing employees were surveyed worldwide. The close view of response has answered on already given items referring to the bipolar Dimensions (McSweenie, 2002). It is a warning for managers to use Hofstede's theory for a profound understanding of culture. She strongly refuses the conceptualization of national culture and its determinism regardless to its subcultures. Excluding the coexistence of the 5 bipolar dimensions leads to a context-free theory. As cited in McSweenie (2002) Triandis (1994) supports the view of a context-based ideology, wherein the dimensions are emphasized more or less. The usage of mono-causal, context-free theory has been an issue to Osland and Bird as well.

Osland and Bird (2000) use cultural intelligence in order to explain the complexity of culture. They refute Hofstede's theory that national culture helps to define a nation's culture. Thus they did not disagree with all of Hofstede's views and proposes scholars use the 5 dimensions as well as the sophisticated stereotyping as basic diagnostic tool. To understand the culture in its complexity, the authors introduced 6 sources of paradoxical cultural behaviour which is the platform of the Cultural Sensemaking Model. The emic approach (Osland and Bird, 2000) is the most useful instrument to make expatriates understand how a culture works within itself in order to maximize their understanding of a culture. Furthermore managers should develop additional knowledge. They can derive from personal experience, cultural observation, behavioural flexibility and cultural mentoring. This advanced cultural intelligence, which enables a manager to behave and analyse the cultural context-based, can be of significant success in his career. The next paragraph will explain another context-based theory which criticizes Hofstede's context-free theory.

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Terence Jackson (2011) casts doubts on the transferability of management and organizational principles from one country to another by pointing out the shortcomings of Hofstede's theory. His research on Sub-Saharan Africa aims at determining whether an African management theory exists or not. There is a view that Hofstede's cross cultural theory doesn't apply to Africa. His theory does not include global dependency, and is not able to analyse local dependency within a context e.g. the colonization of African countries and its impact on their culture. The African Continent resulted in a hybrid culture after colonization, which makes the crossvergence theory the key of understanding culture. As cited in Jackson (2011) Flyvberg (2001) suggests Aristotle's' phronesismic (context-based) way of analysing. It should be used in order to understand the interfaces between different cultural influences. For managers, it can be helpful to use a phronesismic way to analyse differences in culture as the emic approach makes. A hybrid of context-based and context-free theory is presented in the following paragraph.

Gopalan and Stahl (1998) explained the American management theory throughout Kluckhohn and Strodbeck's cultural profile (1961) and showed its applicability. Furthermore, they introduced three perspectives of universal transferability of management theories. The Convergence theory expects the same level of industrialization and standards of living in order to implant the same management theory. The Divergence theory suggests the national culture to be the driving power of shaping values, beliefs and attitudes, and therefore also the key point of using the same management approach. The Divergence theory is supported by Hofstede as cited in his article as the national culture is the most relevant condition of the transferability of a management concept (Hofstede, 1993). Similar to Jackson, the author prefers the crossvergence ideology, which takes, besides local, also foreign elements into consideration. The differences between America and India are displayed. The analysis links important historical factors together e.g. India and USA differ in terms of religions. This guides whether they think you can change yourself by training/education or whether it is determined by faith or past life activities. An interesting point about MNC's are mentioned in their research. It says since culture is a process where old inspires young but also vice versa, of course a national culture may affect a foreign organization. The opposite is also true. E.g. if MNC's have proactive policies in terms of women e.g., then this will enhance their independence and may slowly change their status within Indian society. The author advocates that Indian business environment will be a crossvergence hybrid.

Cultural Differences in Management can be seen from 2 major points of view. The context-free approach evidenced by Hofstede (1993), Kandola (2008) and Judge (2001) exposes a skin-deep view of cultural differences between countries. It can be of use for international management meetings, to make the managers aware of the other cultures. But to prepare a manager for a expatriation it needs more than a between culture awareness. It is an essential requisite for expatriate managers to internalise context-based knowledge such as the emic approach, phronesismic Analysis and the Sensemaking Model (Osland and Bird,2000; Jackson, 2011) in order to get the successful ability to work in another culture. In any circumstances of our globalised world it is compulsory for managers to acquire cultural intelligence. The evidences showed us that there are cultural differences in management and they should be taken seriously in business environments.