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Cross Cultural Management Summary (IB RUG)
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Summary of the relevant literature for the 2nd year IB course Cross Cultural Management. Includes book chapters and articles.
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Chapter 1 from Thomas, D. C. and Peterson, M. F. (2018). Cross-cultural management: Essentialconcepts. Sage.
Søderberg, A. M., & Holden, N. (2002). Rethinking cross-cultural management in a globalizing
business world. International Journal of Cross Cultural Management, 2(1), 103-121.
Osland, J. S., & Bird, A. (2000). Beyond sophisticated stereotyping: Cultural sensemaking in
context. Academy of Management Perspectives, 14(1), 65-77.
LECTURE 1: INTRODUCTION TO CROSS-CULTURAL MANAGEMENT
What is cross-cultural management?
Three layers of analysis by Williamson (1996) - a general framework to better understand the meaning of
“cross-cultural”:
Solid lines: direct effect
Dotter lines: indirect effect
The institutional framework forms the framework in which human action takes places
Institutional framework refers to the background constraints or rules of the game which can be either:
1. Formal (explicit rules): constitutions, laws, regulations
2. Informal (implicit rules): social conventions, norms, values
a. Formal rules make up a small part of constraints that shape behavior, the governing
structure is overwhelming defined by informal rules
What are institutions?
- Institutions are the rules of the game in a society or, more fundamentally, are the humanly
devised constraints that shape human interaction
- An institution is a system of rules, beliefs, norms, organizations that together generate a
regularity of (social) behavior
- Institutions are a set of formal and informal rules, including their enforcement arrangements
- Institutions include social rewards and sanctions
- Institutions build the common grounds for interaction and decision-making
Managers need to know the implicit rules (informal institutions) of particular frameworks of the
individuals you interact with or the country you are doing business with.
,What is culture?
- Culture is a shared mental software, the collective programming of the mind that distinguishes
the member of one group or category of people from another
- While human nature is biologically innate and universal, culture is learned and may vary from
one society to another
- Individual behavior is guided by images and mental models individuals have in their minds and
these images and models are externally defined by the specific social group an individual is
embedded and the group’s cultural norms and values
- Cultural norms and values are created and transmitted via socialization
What happens when a firm crosses borders or interacts with individuals from different institutional
frameworks? Individual from a different country = individual from different institutional framework
- There are framework effects
- The same management tools might induce different effects in different environments
- Behavioral expectations can vary much when crossing framework borders
Coleman’s logic of purposive action (Coleman’s boat or bathtub)
A general framework on micro conditions and macro outcomes: going from macro (institutions) to the
micro conditions of individual actions, which then give rise to micro outcomes of individual actions that
in turn aggregate up to macro outcomes
Framework on how cultural values are related to
individual values and actions (1 macro-micro link)
,Framework on how cultural values are related to international management
Why is cross-cultural management important?
- Firm’s international business activities constantly increased in the last decades
- In NL, Germany and other internationally-oriented countries, every third person is working in an
internationally active firm
Is cross-cultural management still relevant during and after the COVID-19 pandemic? YES
- Is it possible to significantly reduce the internationalization of businesses?
- Is cross-cultural management still relevant in times of social distancing?
- What effect do other grand societal challenges have on the cross-cultural environment of firms?
- Previous natural disasters have in some cases resulted in an even stronger international
diversification (BMW)
Where does the encounter take place?
● Manager - manager / employee - employee
● Manager - employee
● Board member - manager
● Shareholder - board member
● Client - employee
● Expat family - local living conditions
● Offline - online
A variety of cross-cultural interactions with different challenges, dynamic, and specificities
- The pandemic has changed how we work and most likely will reduce the number of face-to-face
meetings and international business traveling
- Video conferences in an international context will crease new cross-cultural challenges
, CHAPTER 1: THE CHALLENGING ROLE OF THE GLOBAL MANAGER
Globalization is a process whereby worldwide interconnections in virtually every sphere of activity are
growing which have resulted in shifts in technological, political and economic spheres.
1. Growing economic interconnectedness which connects countries and organizations in a network
of international linkages that shape the environment in which global managers function
2. More complex and dynamic work environment: downsizing so workforce reductions, more
women migrants, privatization, movement toward team-based management
3. Increased use and sophistication of information technology
4. More and different players on the global stage: technology has facilitated the entry of small
business (SMEs) into the international arena, more firms part of the service sector
Environment of global management
● Economic, legal, and political aspects are the backdrop against which managers must function
● Culture is uniquely important to international management because:
○ Economic, legal, and political characteristics are a manifestation of a nation’s culture
○ Unlike the others, culture is largely invisible, so it’s influence is difficult to detect
○ The practice of management focuses on interpersonal interactions
What global managers do
Managers have formal authority over their organizational unit and this divides their activities into
interpersonal, informational, and decisional role categories.
Managerial work is characterized by brevity, variety, and fragmentation, with a high degree of
interpersonal interaction.
How global managers carry out their role: sources of guidance
Managers rely on other people, their role set, and norms to understand how to carry out their job
- Role set members: colleagues, superiors, staff departments, consultants, friends and family
- Norms: explicit organizational rules and procedures, governmental laws and also implicit norms
about “how we do things around here” that are well known and followed in an organization
Organizational context, culture, and managerial roles
Contextual factors such as environmental and technological complexity, the amount of uncertainty, and
the organization’s structure affects managerial roles.
- Environmental complexity results in informational roles
- Complexity and dynamism results in decisional roles
- Managers in centralized organizations emphasize downward communication
- Managers in decentralized organizations emphasize upward communication
Therefore the manager’s role relates to the constraints and demands of the national and organizational
environment and involves choices in which roles are emphasized. Managers may still have jobs with
similar demands and constraints but still differ in the roles emphasized
Culture also affects the roles and behavior of managers indirectly by for instance shaping the context in
which managers must perform.
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