Vern Terpstra, Professor Emeritus of international business at the Ross School of Business, University of Michigan, and Kenneth David, Ph.D., M.B.A, a teacher of Anthropology, University of Michigan, have specifically discussed five “critical factors” that MNCs should take into consideration when expanding “into a new global area”: 1. Cultural variability 2. Cultural complexity 3. Cultural hostility 4. Cultural heterogeneity and 5. Cultural interdependence.
1.Cultural variability: refers to the range of volatility of a organization's culture within the host culture. According to Geert Hofstede, a Dutch social psychologist, who developed Hofstede's cultural dimensions theory , Cultural variability includes five major dimensions that are formed by the dominant values, principles, beliefs, attitudes, and ethics:
(a) Individualism vs. collectivism: Individualistic culture emphasizes the individual rights and achievements while collectivistic culture greatly values the loyalty to groups, and the benefits and achievements of groups.
(b) Masculinity vs. femininity: Masculine cultures' values are competitiveness and materialism while feminine cultures highly value relationships and quality of life.
(c) Power distance: “Power distance is the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally."
(d) Uncertainty avoidance: People in cultures with high uncertainty avoidance are not open to changes unless there is a clear and step by step plan. People in cultures with low uncertainty avoidance feel more comfortable to changes.
(e) Indulgence vs. restraint: “The extent to which member in society try to control their desires and impulses.”
2.Cultural complexity: refers to the high and low in the context of cultures. In international communication, high context cultures require meaningful words, better word choice, and more profound messages whereas low context cultures require direct, simple, and specific messages.
3.Cultural hostility: represents the range of local burdens to the values of an international organization and its employees. Cultural hostility is caused by the lack of understanding of local people's beliefs and cultures, as well as ethnic stereotyping. As a result, the values of an international organization and its employees need to be translated in a way that they appear to be as ‘friendliest’ as possible to the values of the host culture.
4.Cultural heterogeneity: is the level of difference between the organization culture and the host culture. If these two cultures are heterogeneous- meaning different- it will be more difficult to centralize communication and policy. This situation requires a management style that diversifies the forms of communication as well as decision making to make them more suitable for different members of the host culture.
5.Cultural interdependence: means the extent to which the organization depends on different members of the host culture in order "to obtain resources such as raw materials, equipment, technological support, etc."
Subject: Cultural Factors: Five Critical Factors (Part 2) 
Thu Apr 24, 2014 8:31 pm
