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Lecture 12Foreign Contexts:

Socio-Cultural Institutions

DR. VICTOR Z. CHENUNC CHARLOTTE

Languages as cultural genes

Picture scenarios for1)A hearty welcome2)A cordial reception3)A freshmen convocation

Who are these people giving it?What are they wearing?What are they drinking?What expressions are on their faces?What is the building/room like?

EarthyHugging and talking loudlyLumberjack shirts and jeansBeer

Classy and fineTalking elegantlyBlazers and skirtsWine and caviar

French-speaking aristocracy

Latin-speaking Roman Catholic clergymen

Old English (Anglo Saxon)-speaking peasants

Norman conquest 1066 - 1366

Formal, ritualCeremonialSacred

Languages as cultural genes (cont’d)

Japanese Chinese/Mandarin先生 [sensei] [xian1 sheng5]

勉强 [benkyō] [mian3 qiang2]

汤 [yu] [tang1]

娘 [musume] [niang2]

McDonald’s across cultures

McDonald’s across cultures (cont’d)




Cultures: Dimension, Distance, and Dos/don’ts

Hofstede’s cultural dimensions

Power distance index (PDI) Individualism versus collectivism (IDV) Masculinity versus felinity (MAS) Uncertainty avoidance index (UAI) Long term orientation versus short term orientation (LTO) Indulgence versus Restraint (IND) More at http://geert-hofstede.com/dimensions.html


Power distance index (PDI) The degree to which the less

powerful members of a society accept that power is distributed unequally Implications: People in high PDI

societies accept a hierarchical order in which everybody has a place and which needs no further justification, whereas people in low PDI societies strive to equalize the distribution of power and demand justification for inequalities of power.

Same as democracy vs. totalitarianism? More at http://geert-hofstede.com/dimensions.html


Individualism versus collectivism (IDV)

A preference for a loosely-knit social framework in which individuals are expected to take care of only themselves and their immediate families (the opposite being in-group and unquestioning loyalty). Implications: “I” or “We”. Same as individual- vs. family oriented?

More at http://geert-hofstede.com/dimensions.html


Masculinity versus femininity (MAS)

A preference for achievement, heroism, assertiveness and material rewards for success (the opposite being cooperation, modesty, caring for the weak and quality of life). Implications: competitive versus

consensus-oriented. More at http://geert-hofstede.com/dimensions.html


Uncertainty avoidance index (UAI)

The degree to which the members of a society feel uncomfortable with uncertainty and ambiguity. Implications: High UAI societies

maintain rigid codes of belief and behavior and are intolerant of unorthodox behavior and ideas, whereas weak UAI societies more relaxed attitude in which practice counts more than principles.



Long term orientation versus short term normative orientation (LTO)

Low LTO societies prefer to maintain time-honored traditions and norms while viewing societal change with suspicion, whereas high LTO societies are more pragmatic and encourage thrift and efforts in modern education as a way to prepare for the future.

Same as practicality vs. idealogicality?



Indulgence versus restraint (IND)

Indulgence stands for a society that allows relatively free gratification of basic and natural human drives related to enjoying life and having fun, where restraint stands for a society that suppresses gratification of needs and regulates it by means of strict social norms.


World Values Survey

Longitudinal and updated overtime compared to static/cross-sectional Hofstede’s.

Cultural distance

Simcha Ronen (Tel Aviv U) and Oded Shenkar (Ohio State U) reviewed 11 most important data on cultural dimensions (totaling 70 countries) and published a review in 2013 in Journal of International Business Studies.

Ronen, S., & Shenkar, O. (2013). Mapping world cultures: Cluster formation, sources and implications. Journal of International Business Studies, 44, 867-897.

Cultural distance (cont’d)

Simcha Ronen (Tel Aviv U) and Oded Shenkar (Ohio State U) reviewed 11 most important data on cultural dimensions (totaling 70 countries) and published a review in 2013 in Journal of International Business Studies.

Ronen, S., & Shenkar, O. (2013). Mapping world cultures: Cluster formation, sources and implications. Journal of International Business Studies, 44, 867-897.

Cultural distance (cont’d)

A linguistic-based measure: number of branches needed to connect local language(s) to English

Source: West, J., & Graham, J. L.. (2004). A Linguistic-based Measure of Cultural Distance and Its Relationship to Managerial Values. MIR: Management International Review, 44(3), 239–260. Retrieved from http://www.jstor.org/stable/40835991

Some previous findings

Based on 67 empirical studies before 2005: 1) US MNEs tend to be more sensitive to cultural distance than non-US MNEs:

e.g., more strongly negative relationship between cultural distance and entry ownership % (i.e., allowing higher ownership % by local joint venture partner).

2) High-tech MNEs are more cautious about cultural distance than others: e.g., the relationship between cultural distance and international diversification is negative for high-tech MNEs, but positive for other firms.

3) Developed-market MNEs benefit more from cultural distance than developing-market MNEs: e.g., the relationship between cultural distance and performance is weakly negative for developing-market MNEs, but strongly positive for developed-market MNEs.

Source: Tihanyi, L., Griffith, D. A., & Russell, C. J. (2005). The effect of cultural distance on entry mode choice, international diversification, and MNE performance: A meta-analysis. Journal of International Business Studies, 36(3), 270-283.

How to turn cultural distance from a cost into a benefit?

Based on 118 US MNEs’ international acquisitions: 1) Knowledge similarity between acquirer and target

turns CD into benefit 2) Effective communication between acquirer and

target turns CD into benefit 3) Key employee retention (e.g., top mgmt.), which is

usually believed to be a moderator, has no impact Source: Reus, T. H., & Lamont, B. T. (2009). The double-edged sword of cultural distance in

international acquisitions. Journal of International Business Studies, 40(8), 1298-1316.

Westerners vs. Easterners

Western vs. Eastern thinking

Western vs. Eastern thinking

Are you thinking like a westerner or an easterner by personal culture?

Are you thinking like a westerner or an easterner by personal culture? (cont’d)






RenaissanceReason – RatioScience – Sceadan (to separate/divide)Analysis – Analyein (to unloose)


Contexts and languages:tone, time, objects vs. personal relations

English is toneless, has grammatical tenses, and emphasizes objects (e.g., singular/plural) rather than personal relations. Good (up) vs. Good (down) Past, present, and future Ball, balls Grandmother vs. Grandmother

Tonal languages: e.g., most Sinitic languages (primarily Chinese), Punjab and Lahnda (only two in Indo-Euro family)…

Tenseless languages: e.g., Chinese, Burmese, …

Languages without singular/plural differences but with very finely defined personal relations: e.g., Chinese …

Elder: Ge1 Ge5Younger: Di4 Di5

Elder: Jie3 Jie5Younger: Mei4 Mei5

Elder/Male/Paternal: Tang2 Ge1Elder/Male/Maternal: Biao3 Ge1

Elder/Female/Paternal: Tang2 Jie3Elder/Female/Maternal: Biao3 Jie3Younger/Male/Paternal: Tang2 Di4Younger/Male/Maternal: Biao3 Di4

Younger/Female/Paternal: Tang2Mei4Younger/Female/Maternal: Biao3 Mei4

Paternal: Ye2 Ye5Maternal: Wai4 Gong1 Paternal: Nai3 Nai5

Maternal: Wai4 Po2

Elder/Paternal: Gu1 Gu5Maternal: Yi2

Elder/Paternal: Bo2 Bo5Younger/Paternal: Shu1 Shu5

Elder/Maternal: Jiu4 Jiu5

Discussion: A cultural assimilator practice (Cont’d)

Gong (2003), based on a survey of 695 Japanese MNEs.

Cultural distance and expatriation of home nationals

Higher cultural distance, more likely to expatriate home

nationals to be managers and employees, especially with few

years of operations.

Selection for expatriation

Cultural adaptability Men tend to adjust slightly faster than women People over 35 have somewhat higher levels of satisfaction after the first

year

Checklist for adaptability Work experiences with cultures other than one’s own Previous overseas travel Knowledge of foreign languages The ability to solve problems within different frameworks and from different

perspectives Overall sensitivity to the environment

Selection (cont’d)

Self-reliance and independence Age, experience, and education Health and family status

52% of US MNEs interview both managers and spouses. A study of 332 repatriates and spouses found most dissatisfaction with

MNEs resulted from lack of employment support for the trailing spouse. Motivation and leadership

Relatively more motivated people Unmarried Married couples without children at home or those with non-teenage children Prior international experiences More committed and loyal employees Careers and attitudes of spouses High leadership potential

Wells Report 2Same format/style (10-12 pages)

Part 1 - A transit hub proposal What is (are) the common market(s) that your selected foreign HQ can serve as a transit hub? Find evidence for the four economic benefits of a transit hub (e.g., you can attach your version of the Table from

lecture 10, slide 26, see data sources in slide 40). Now re-estimate the total size of your client market into/out of this common market (e.g., inward/outward or two-

way US FDI; or US M&A). Part 2 – Legal-political risks in the common market

Read the section of “country conditions: climates for investment & trade” in the political risk reports (http://goo.gl/GoQom4) of the member states in your common market and identify the major political risks relevant for your business (US M&A services) in the coming future in each of these member states

For each political risk, identify its scope (macro/micro) and its source (legal/gov vs. non-legal/extra-gov). For each political risk, provide a strategic response and estimated cost (if possible).

Part 3 – Socio-cultural differences Measure 1: Language differences (e.g., # of branches to connect local language(s) to English) Measure 2: Look into Hofstedes’ dimensions to estimate the major cultural differences from US

Make your judgment and estimate overall cultural distance between US and each member state in the common market(s) in order to evaluate in each member state of the common market(s) if: 1) it is necessary to give high control/autonomy to a local partner (e.g., minority-owned JV vs. controlling JV vs. wholly

owned branch); 2) it is important to find a partner with similar knowledge/experience (e.g., another US bank vs. a local partner); 3) it is important to expatriate home nationals to foster effective communications.

ContactVictor Z. ChenBelk College of BusinessUNC Charlotte

+1 (704) 687-7645

[email protected]

www.ChenZitian.com

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