International Organizational Behavior

INTRODUCTION

• The International OB examines from an international perspective and within the international context.

• Firstly, the impact of culture on International Organizational Behavior is discussed to understand International perspective of OB.

CULTURE

• Culture can be defined as the acquired knowledge that people use to interpret experience and generate social behavior.

• Its important to recognize the culture is learned and it helps people in the efforts to interact and communicate woth others in the society.

IMPACT OF CULTURE

• For eg, US business people are assigned to a foreign country, this expatriates quickly learn that the values of US culture are often quite different from those of other countries.

• Cultural differences are 2 way streets. So it should be clearly understood and managers must be sensitive to them in order to be successful in the global economy.

CULTURAL BEHAVIOUR ACROSS COUNTRIES- SOME EXAMPLES

1. The concept of an hourly wage plays a minor role in Mexico. Labor law requires that employees receive full pay for 365 days a year.

2. In Australia and Brazil, employees with one year of service are automatically given 30 days of paid vacation.

3. In Japan, remuneration levels are determined using the objective factors of age, length of service and educational background rather than skill, ability and performance. Performance doesn’t count until after an employee reaches 45 years of age.

4. In the UK, employees are allowed upto 40 weeks of maternity leave and employers must provide a government mandated amount of pay for 18 of those weeks. In India, a woman employee is entitled for full wages during previous 6 weeks and subsequent 6 weeks period of pregnancy.

5. In 87% of large Swedish companies, the heads of HR are on the board of directors.

THE DIFFERENCES ARE GLARING IN PERFORMANCE APPRAISAL- A SENSITIVE AREA IN OB.

INFLUENCE OF IOB• How culture affects human performance

• How cultural differences can be used to enhance key organizational functions

• Cultural values and major frameworks for understanding culture

• Motivation and work values, communications, negotiations and cross-cultural conflict resolution, groups & teams, leadership, decision making, ethics, and human resources management.

• The international context of OB is becoming increasingly significant as organizations expand beyond their national boundaries.

• Managers of multinational firms have to manage a variety of social, political and economic environments as well as unique individual differences.

• The differences at the level of the individual include individualism/collectivism, power distance, uncertainty avoidance, and masculinity/femininity, which are different in different countries.

SIGNIFICANCE OF IOB

• Managers need to be sensitive to cultural differences across different countries to achieve their goals in the global economy.

• The various aspects that differentiate cultures are people's perceptions, their relationship with their environment, the time dimension, and the importance attached to public and private space.

• Managerial leadership is the process of influencing others to direct their efforts towards the achievement of specific goals.

• Many factors influence the way in which managers lead their employees - personal values, interpersonal skills, background and the decision-making skills of the manager.

• Employees who travel to a foreign country for work find it difficult to adapt to the new culture because of factors like parochialism, ethnocentrism and culture shock.

• In some countries, the emphasis on production rather than productivity becomes a barrier to the improvement of the performance of the organization.

• It is not possible to transfer business practices directly from one country to the other.

• It is also not possible to use either the home country practices or the traditional practices of the host country. The best approach for expatriate managers would be to operate within the scope of home office policies, after adapting them to fit the culture of the host nation.

• Traditional and conservative approach to leadership cannot be used for organizations with a global presence.

• Globally competent managers have a good understanding of the worldwide business environment and try to learn about various cultures in order to carry out business operations in different countries successfully.

ORGANISATIONAL CHARECTERISTICS IN AN INTERNATIONAL CONTEXT

• Cross cultural influences are found to exist on-

1. Environment

2. Technology

3. Organizational structure and organizational change.

ENVIRONMENT ACROSS COUNTRIES

• Environment across countries varies.

• Dissolving borders, growing cross- border trade and investment, the rise of global products and customers, privatization of companies formerly owned by governments, the emergence of new market, rise of global standards of quality and production, and the growing sophistication of IT have not only brought global business to sharp focus but have altered the environment of business everywhere dramatically.

TECHNOLOGY AND INTERNATIONAL BUSINESS

• The technological environment is changing at lightening speed.• For eg, while semi-conductor while semi-conductor firms are now

working to develop new memory chips for personal computers, other high tech firms are creating technologies that will replace creating technologies that will replace the PC with an even better computing architecture. At the same time, computers, telephones, televisions, and wireless forms of communication are being merged to create multimedia products to allow users anywere in the world to communicate with each other.

• In addition, a growing number of people have access to internet, allowing them to obtain information from million of sources as the number of websites is increasing sharply.

• That technology is changing very fast, accordingly organizations are changing.

ORGANIZATIONAL STRUCTURE

• International managers deal with many different types of organizations in IB dealings. Surprisingly, there are similarities between organization designs in different cultures. At the same time there are differences.

• LIKE ORGANISTATIONS ACROSS CULTURES- Different societies can be similar. These are explained in the convergence and culture free theories.

• CONVERGENCE-

Many management practices, specially those related to strategy and structure, are becoming increasingly similar. These growing similarity mgt practices is called convergence. Firms competing in the same industry tend to have similar structures and strategies.

• THE CULTURE FREE THEORY-

The second theory on similarities in organizational designs relates to organizational contextual factors. Such factors include an organization's size, technology, and strategy.

• ORGANIZATIONAL CHANGE-

The additional environmental complexities global business face, it follows that organizational change may be more critical to them than to purely domestic business.

A second factor to be noted is that acceptance of change varies across cultures.

INTERNATIONAL ORGANISATIONAL

BEHAVIOUR

INTERNATIONAL ORGANISATIONAL BEHAVIOUR

• “The modern business enterprise has no place to hide. It has no place to go but everywhere”

• The worlds has entered an era of unprecedented global economic activity, including worldwide production, distribution and increasingly large number international joint ventures, multinational mergers and acquisitions and global strategic alliances

E.g.:• A new global operation and alliance abound, with most major firms

earning from their international; operations than from domestic markets• MNCs such as ABB, Honda, British petroleum, Seimens, Motorola and

Eastman Kodak each do business in more than 50 countries• The assets of most MNCs are owned by different nationalities and their

employees hail from different countries

• Thus the modern business enterprise has no place to hide. It has no place to go but everywhere

CULTURAL DIFFERENCES AND SIMILARITIES

Four generalizations can be made in this context:

• Behavior across cultures

• Culture determines behavior

• Cultural clusters

• Cultural diversity

Behavior across cultures

• Behavior in organizational settings varies across cultures. Human resource practices too vary across cultures. Here are some representative examples

• The concept of an hourly wage plays a minor role in Mexico. Labor law requires that employees receive full pay for 365 days a year

• In Australia and brazil, employees with one year of service are automatically given 30 days of paid vacation

• In Japan, remuneration levels are determined using the objective functions of age, length of service and educational background rather than skill, ability and performance. Performance doesn’t count till an employee reaches 45 years of age.

Behavior across cultures

• In UK, employees are allowed up to 40 weeks of maternity leave, employees must provide a government mandated amount of pay for 18 of those weeks

• In India, a woman employee is entitled for full wages during previous six weeks and subsequent six weeks of period of pregnancy and the employee is bound to Pay the amount

• In 87% of large Swedish companies, the heads of human resources are on the board of directors

• The differences are glaring in performance appraisal- a sensitive area in OB

Culture determines behavior

• Culture is an important factor for variation in behavior. true, there are other factors like differing standards of living and varied geographical condition which can cause variations in behavior, but culture is a determining factor

• Culture maybe understood as the pervasive and shared beliefs, norms and values that guide the everyday life of individuals. These beliefs, norms and values are passed on to future generation through cultural rituals, stories and symbols.

Culture determines behavior– Cultural values tell us what is most dear to our hearts. For e.g.:

American, value freedom most –freedom to choose one’s own destiny-whether it leads to success or failure.

– Japanese culture on the other hand, finds a higher value; in belonging; one must belong to and support group in order to survive. Belonging to group is more important than individualism.

– Arab culture on the other hand is less concerned with individualism or group belonging, concentrating instead don their own family security and relying on god for destiny. Individual identity is usually based on the background and position of each person’s family

– Cultural symbols, stories and rituals-it are most important to communicate the norms, values and beliefs of a society or a group to its members. Culture is passed from one generation to another through its symbols, stories and rituals (religious ceremonies).

Culture determines behavior

• Culture is continuously reinforced when people see symbols, hear stories and engage in rituals

• Marriage in India for e.g.: makes a woman wear certain things like mangal sutra which a married woman in western or American culture is not expected to do.

• Cultural values also have a major influence on the way people relate to each other and also to what they aspire for in a job.

Cultural clusters

• Though cultures across countries vary, there are similarities nevertheless. To the extent that there are similarities, the need to customize products to meet local demands is minimized.

• Countries that are cultural similarities form cultural clusters. Not that a cluster doesn’t have differences, but the similarities are predominant.

Cultural clusters• International businesses utilize the culture-clustering

approach in formulating their global strategies.

• Many firms from New Zealand focus their first exporting efforts on Australia. Hong Kong firms have been very successful in exploiting Chinese markets. Canadian firms are more comfortable working with British partners than are Japanese firms

• Improvements in communication and transportation have made clustering possible. Thanks to cable and satellite TV, people in different parts of the world watch and enjoy the same entertainment programs and serials

• Lower air fares generated by increased airline competition mean that more tourists can learn fast about other culture

Cultural diversity-source of energy

• Cultural diversity can be an important source of energy in enhancing organizational effectiveness

• More and more organizations are realizing the virtues of cultural diversity, but surprisingly, little do they know how to manage it

• Organizations that adopt multinational strategies can become more than a sum of their parts

• Operation in each culture can benefit from operations in other cultures through an enhanced understanding of how the world looks and works

Multicultural teams• Can be divided into three types• Token teams- only one member is form another culture. Eg: Japanese retailers

and a British attorney who are looking into the benefits and shortcomings of setting up operations in Bermuda

• Bicultural teams-have members form two cultures: 4 Mexican and 4 Canadians who have formed a team to investigate the possibilities of investing in Russia

• Multicultural teams-have members from three or more cultures. Eg: a group of 3 Americans, 3 Germans, 3 Uruguayans and 3 Chinese managers who are looking after mining operations in Chile

• Managing culturally diverse teams-properly managed diverse groups can result in several benefits such as better hiring efforts, increased sales and market shares, increased innovation and creation and higher productivity

• Some of the ways to better manage multicultural teams are task related selection, establishing a vision, equalizing power and creating mutual respect.

Negotiating globally

• Negotiation is the process of bargaining with one or more parties to arrive at a solution that is acceptable to all

• Business negotiation often involve one party attempting to influence another to make a particular decision or sign a contract

• Negotiation is not always the best approach to doing business. Many times, such strategies as ‘take it or leave it’ or bargaining become more effective

• Negotiation is generally the preferred strategy for creating win-win solution in global business

Steps in negotiation

• The negotiation steps include• preparation, • building the relationship,• exchanging information and• present the first offer, • persuasion, • concessions and • agreement

Communicating across cultures

• Successful international negotiations require effective cross cultural communication

• Additionally, in global business, activities such as leading, motivating, decision making, problem solving and exchanging ideas and information depend on the availability of employees and managers from one culture to communicate successfully with colleagues, clients and suppliers form other cultures

• General crucial invest in international communication are: language and culture, differences between high and low context cultures, use of interpreters, non verbal communication and attribution errors

• If these are taken care of, inter cultural communication will be effective

Leadership across cultures• A multinational leader needs to posses certain unique

qualities apart from those listed in trait theory to become successful in global settings

• What an international manager needs is emotional intelligence• Emotional intelligence refers to a set of five individual and

social competencies including-1.self awareness 2.self regulation 3.motivation 4.empathy 5. Social skills

• Self awareness-is the ability to recognize and understand one’s moods, emotions and drives as well as their effects on other people

• Self regulation-the second quality, is the ability to control or redirect disruptive impulses and moods-ability to think before doing. leaders with a high level of self regulation exhibit trustworthiness, integrity, comfort with ambiguity and openness to change

Leadership across cultures• Motivation –this is reflected in passion to work that go beyond

money or status. Leaders high on motivation exhibit remarkable organizational commitment, drive to achieve and optimism (even in circumstances of failure)

• Empathy- refers to understanding the emotional make up of other people and skill in treating people according to their emotional reaction. Leaders with high level of empathy exhibit an ability to build and retain talent in their organization, how cross cultural sensitivity and become known for offering great service to clients and customers

• Social skills-refers to proficiency in managing relationships and building networks, along with an ability to find common ground and to build support. Leaders with a high level of social skills are effective at leading change, show a superior ability to build and lead teams and become known for their persuasiveness

Universalism in leadership

• Transformational leadership is projected as an approach which can cut across all cultural barriers and be effective in any organization anywhere in the world and represents a higher level of leadership

• Specially the transformational leader– Articulates a vision– Breaks form status quo (current affairs)– Provides goals and plans– Gives meaning or purpose to goals– Takes risk– Builds a power base-expertise, respect and the

admiration of followers– Demonstrates high ethical and moral standards