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Managing Behavior and Interpersonal  Business After studying this chapter, students should be able to:

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Identify and discuss several basic perspectives on individual differences > in different cultures. Evaluate basic views of employee motivation in international business. > Identify basic views of managerial leadership in international business. Discuss the nature of managerial decision making in international business. Desc Descri ribe be group group dyna dynami mics cs and and disc discus uss s how how team teams s are are mana manage ged d acro across ss cultures.

LECTURE OUTLINE OPENING CASE: A CASE:  A Leadership Firestorm at Firestone

The opening case reviews the crisis at Firestone when its Wilderness tires (standard equipm equipment ent on the popular popular Ford Explorer) Explorer) were were found to be defect defective ive.. The case case describes differences in crisis management styles between U.S. (Ford) and Japanese (Firestone) managers. Key Points A Japa Japane nese se firm firm,, Bridg Bridges esto tone ne Corpo Corpora rati tion on,, acqu acquir ired ed Fire Firest ston one e in 1988 1988.. Firestone 's CEO, John Nevin (an American) stayed on as head of the acquired firm.

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Differences in management styles led Nevin to resign in 1989, and he was replaced by Masatoshi Ono, a Japanese executive from the home office.

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Ono's Ono's quiet quiet and reserv reserved ed style style helped helped Firest Firestone one build build revenu revenues es and market market share throughout the 1990's.

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When the crisis occurred in 2000, Ono's reserved and quiet management style (typical in Japan) was perceived as aloofness and indifference by Westerners.

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Ono was replaced by John Lampe, an American senior executive at Firestone, who immediately held a news conference, apologized on behalf of the company, and promised aggressive action to get Firestone's problems fixed. •

CHAPTER SUMMARY

Chapter 14 examines the behavior of managers and employees in different cultures, and the impact of managerial behavior on international business. The chapter begins with a discussion of Hofstede’s work concerning individual behavioral differences, then relates his ideas to motivation, leadership, and decision-making. Finally, issues related to creating and managing cross-cultural teams are discussed. I.

INDIVIDUAL BEHAVIOR IN INTERNATIONAL BUSINESS

Individual differences are reflected in personality traits. Attitudes, perception and stress also are factors in influencing individual behavior. Personality Differences across Cultures •

Personality is the relatively stable set of psychological attributes that distinguish

one person from another. Both biological factors and environmental factors are believed to be important influences on personality. It is important for international managers to recognize the existence of these differences and how they affect individual behavior. Five personality traits are especially important in organizations. The “big five” • personality traits are agreeableness (the ability of a person to get along with others); conscientiousness (the order and precision a person imposes on activities); emotional stability (the tendency of an individual to be poised, calm, resilient, and secure); extroversion (a person’s comfort level with relationships); and openness (a person’s rigidity of beliefs and interests). The texts provide several examples of how these traits differ across cultures. Discuss Figure 14.1 here. Other personality traits that also influence behavior include the locus of control • (the extent to which people believe that their behavior has a real effect on what happens to them); self-efficacy (a person’s beliefs about his or her capabilities to perform a task); authoritarianism (the extent to which an individual believes that power and status differences are appropriate within hierarchical social systems like business organizations); and self-esteem (the extent to which a person believes that she is a worthwhile and deserving individual). Attitudes across Cultures

Attitudes are complexes of beliefs and feelings that people have about specific ideas, situations, and other people. •

Discuss Wiring the World: Privacy at Work in Russia

Workplace privacy is an increasingly important issue (given the use of   e-mail, web surfing on company time, and so on). Under  Russian law, Internet service providers and telephone operators must install a device that reroutes traffic through law enforcement agencies so that such communications

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can be monitored. Nail Murzakhanov, a small local Internet provider has refused to comply with the law and has therefore become a folk hero. So far, at least, the government has not forced him to comply. •

Job satisfaction or  dissatisfaction is an attitude that reflects the extent to

which an individual is gratified by or fulfilled in his or her work. The text notes that research on job satisfaction indicates that expatriates who are satisfied with their  assignments and jobs are more likely to be loyal to their employer. The text also provides the results of a study indicating that Japanese workers are generally less satisfied than their American counterparts. Organizational commitment , which reflects an individual’s identification with • and loyalty to the organization, is another important job-related attitude. The text provides several examples of organizational commitment attitudes across cultures. Perception across Cultures •

Perception , the set of processes by which an individual becomes aware of and

interprets information about the environment, is an important attitude determinant. An individual’s perceptions may result in stereotyping. Perceptions also influence an individual’s attitude toward risk. The "Bringing the World into Focus" box describes a variety of stereotypes held by some Chinese about Americans. Discuss Bringing the World into Focus: The U.S. is Crowded with Liars who Prefer Pets to Kids

Recent findings in the Chinese press included claims that 3 out of 10 people killed by police in the U.S. threw themselves into the line of fire to commit suicide; that many Americans are addicted to lying; that bosses never want lasting relations with staff; and that Americans like to leave inheritances to their pets, instead of their children. Stress across Cultures Stress is an individual’s response to a strong stimulus. The stimulus is known as a stressor . It is important for international managers to consider the stress involved •

in managing international assignments, and also to recognize that people from different cultures may experience and handle stress in different ways. II.

MOTIVATION IN INTERNATIONAL BUSINESS Motivation is the overall set of forces that cause people to choose certain behaviors

from a set of available behaviors. Needs and Values Across Cultures

Understanding needs (the things an individual must have or wants to have) and values are a starting point in understanding motivation. Primary needs are things people need for survival, while secondary needs are more psychological and learned. •

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Motivational Processes Across Cultures

There are three basic categories of motivation: need based models attempt to identify the specific needs or set of needs that result in motivated behavior; processbased models focus on the conscious thought processes people use to select one behavior from among several; and the reinforcement model deals with how people assess the consequences of their behavioral choices and how that assessment affects the future choice of behaviors and incorporates the roles of rewards and punishment in maintaining or altering existing behavioral patterns. •

Need-Based Models across Cultures

Hofstede’s work can help international businesses understand differences in motivation across cultures. The text notes, for example, that individualistic societies are motivated by individually based needs and rewards. The text also provides examples of how motivation is affected by Hofstede’s other dimensions. Other motivation theories that have been tested in cross-cultural settings include Maslow’s hierarchy of five basic needs, McClelland’s learned needs framework, and Herzberg’s two factor theory. •

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Process-Based Models across Cultures

Expectancy theory suggest that people are motivated to behave in certain ways to the extent that they perceive that such behaviors will lead to outcomes they find personally attractive. Little empirical research has been done on expectancy theory, but it appears that it could have wide applicability, except when explaining behavior in collectivistic cultures. The text notes that the theory helps to explain Sony’s success. •

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The Reinforcement Model across Cultures

The reinforcement model, which states that behavior that results in a positive outcome will probably be repeated under the same circumstances in the future, has not been extensively tested in different cultures, but may be a useful tool for  managers as they try to understand motivation across cultures. •

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LEADERSHIP IN INTERNATIONAL BUSINESS •

Leadership is the use of noncoercive influence to shape the goals of a group or 

organization, to motivate behavior toward reaching those goals, and to help determine the group or organizational culture. Management and leadership are often mistakenly equated, but there are actually important differences between the two. Culture affects appropriate leader behavior. For example, the text notes that in • individualistic cultures leaders must focus on individuals, while in collectivistic cultures, leaders must focus on groups. Discuss Figure 14.2 here. Similarly, differences in power orientation, uncertainty orientation, and goal orientation across cultures will impact a leader’s behavior. The text provides examples of how a leader might act in different situations. •

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Cultural factors can be difficult and complex to assess, yet critical in determining leader effectiveness. Leadership behavior must fit the situation if it is to be successful. •

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DECISION MAKING IN INTERNATIONAL BUSINESS Decision making is the process of choosing one alternative from among a set of 

alternatives in order to promote the decision makers’ objectives. Models of Decision Making

Managers may make decisions in two very different ways. The normative model of decision making suggests that managers apply logic and rationality in making the best decisions. In contrast, the descriptive model argues that behavioral processes •

limit a manager’s ability to always be logical and rational. Show Figure 14.3 here. The normative model suggests that managers make decisions by initially recognizing that a problem exists and a decision has to be made. Second, they identify potential solutions. Third, they evaluate each alternative in light of the original problem. Fourth, they select the best alternative. Fifth, they implement the chosen alternative. Finally, they follow-up and evaluate. The text provides an example of the process by examining a recent decision made by Shell. The descriptive model suggests that in reality managers are affected by two behavioral processes. First, the model suggests that individuals are limited by bounded rationality, that they are constrained in their ability to be objective and rational by limitations of the human mind. Second, the model suggests that managers satisfice, that they sometimes adopt the first minimally acceptable alternative they identify, even though there may be a better alternative. •

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The Normative Model across Cultures Step 1: Problem Recognition. Culture may influence the way in which an individual recognizes and defines a problem. The text provides examples of  differences in the way that problems might be recognized depending on individuals’ social orientation and uncertainty orientation. Step 2: Identifying Alternatives. Alternatives may also be identified in different • ways depending on a manager’s culture. The text provides an example of how alternatives might be identified depending on a manager’s power orientation and social orientation. The text notes, for example, that in Japan’s ringi system decisions cannot be made unilaterally because that would be too individualistic and could destroy group harmony. Step 3: Evaluating Alternatives. Culture can also affect how managers • evaluate alternatives. The text provides examples of how goal orientation and uncertainty orientation affect the evaluation of alternatives. Step 4: Selecting the Best Alternative. The actual selection of an alternative • may also be affected by culture. The text notes, for example, that an individualistic manager would probably select the alternative that has the most positive impact on him or her personally. How problems are solved and decisions are made can be troublesome in cross-cultural joint ventures and strategic alliances. Step 5: Implementation. A culture’s power orientation and uncertainty • •

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orientation will impact the implementation of an alternative. Step 6: Follow-Up and Evaluation. Power orientation is most likely to affect the • follow-up and evaluation process. The Descriptive Model across Cultures

At this point, there is little research exploring the behavioral process of bounded rationality and satisficing across different cultures. However, all managers need to understand that different modes of decision making may not be effective in other  cultures. •

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GROUPS AND TEAMS IN INTERNATIONAL BUSINESS

It is important that international managers understand the behavioral processes associated with groups and teams since much of an MNC’s work is accomplished by people working together. The Nature of Group Dynamics

The use of teams is attractive to companies because theory suggests that people working together should accomplish more than they can working alone. A mature team generally has certain characteristics: it develops a well-defined role structure; it establishes norms for its members; it is cohesive; and some teams identify informal leaders among their members who can lead and direct the team. If a team has these characteristics, then it will be effective from the firm’s point of  view. The text provides an example of an effective team, Sony’s computer  development group. •

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Managing Cross-Cultural Teams

A homogeneous team is generally considered to have less conflict, better  communication, less creativity, more uniform norms, higher cohesiveness, and clear  informal leadership when compared to its heterogeneous counterpart. The text provides an example of Japan's teams. Managers who are creating teams should try to match the composition of the team to the nature of the task at hand. •

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Discuss Venturing Abroad: Mixing and Matching in a New Joint Venture

This box describes obstacles faced by a joint venture between IBM (U.S.), Siemens (Germany), and Toshiba (Japan). A team of scientists from the three firms was to develop an advanced type of computer chip. Though the chip was developed eventually, the team had to overcome many difficulties created by the different perspectives and attitudes of scientists from different cultures. Teams may also be affected by other cultural factors including members’ social orientation, power orientation, uncertainty orientation, and goal orientation. •

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 Adidas-Salomon Runs to Catch Up

Adidas, a German apparel company founded in 1948, once dominated the athletic sportswear business. However, a series of mistakes caused the company to lose its leadership position to Nike and Reebok. Key Points Adidas’ first big problem arose when family squabbles resulted in both the founder’s brother and son leaving the company to start their own companies. Although the founder and son later reconciled, their reconciliation came too late. The son died two years after he took over the company, leaving a critical void. The company was sold to a French financier in 1989. •

The company however, was losing market share at an incredible rate, dropping from 70% to just 2%. The new owner promised to inject a substantial amount of  capital into the firm, but failed to do so. He was later found guilty in a soccer fixing scandal, and landed in jail where he declared bankruptcy. •

Adidas was taken over by its creditors in 1993. The company at this point was losing $100 million a year. The creditors found a new leader, Robert Louis-Dreyfuss, another French financier. The new leader, shocked at the archaic management practices followed by the firm, promptly fired the firm’s top management team, and began to streamline the business. •

High cost European factories were closed in favor of cheaper Asian operations, and marketing efforts were stepped up. Today, the company is once again an important player in the athletic apparel business. •

In 1997 Louis-Dreyfuss decided Adidas was sufficiently re-established and acquired Salomon, a French firm that leads the market in snow ski and golf  equipment. He changed the company's name to Adidas-Salomon and the combined firm is doing well. •

Case Questions 1. What role has leadership played in both the decline and recovery at AdidasSalomon? 

It can be argued that the company’s success and failures seem to go hand-in-hand with its corporate leadership. The company was initially a dominant force in the marketplace, but family squabbles resulted in the departure of both the founder’s brother and son. After their departure, the company began to go downhill. Upon the return of the son to the company, Adidas briefly showed signs of a turnaround, however his death created more difficulties. The company, after being sold to a French financier, suffered from neglect, and probably would have gone out of  business entirely had its creditors not hired Louis-Dreyfuss to lead it.

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2. Contrast Adidas-Salomon’s former and current approach to decision making to what  you know about the normal German approach.

When responding to this question, students may find it easier to establish a clear  perspective of German decision making, and then compare and contrast activities at Adidas to that perspective. 3. How do you think Adidas-Salomon’s current success is affecting the motivation of its employees? 

Most students will probably suggest that motivation at Adidas should be up. The company has evidently survived a critical downturn, and is now nipping at the heels of Reebok, the number 2 firm in the market. However, other students may point out that despite its current success, Adidas will probably continue to try to improve its market position, and that effort might involve further plant closings and layoffs, and additional management streamlining. Consequently, some employees might be wary of Louis-Dreyfuss and his management practices.  Additional Case Application

Louis-Dreyfuss has proved to be an ideal person to bring Adidas back to a position of  dominance in the market place. In a short period of time, he has completely altered the firm, disposing of poor management practices and instituting a new sense of  leadership into the firm. However, it would appear that Louis-Dreyfuss will not stay with the firm for long. He has built a career on helping firms turn around, and now that Adidas is “back in the race,” it may be time for him to seek new challenges. Students can be asked to play the role of the company’s board of directors and discuss this situation. Students should develop a set of criteria the board can use when interviewing individuals to take Louis-Dreyfuss’ position.

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1. Define personality and explain how personality differences affect individual behavior.

Personality is the relatively stable set of psychological attributes that distinguish one person from another. Five fundamental personality differences (agreeableness, conscientiousness, emotional stability, extroversion, and openness) affect individual behavior. In addition, locus of control, self-efficacy, authoritarianism, and self-esteem are important influences in an individual’s personality. 2. Explain how attitudes vary across cultures.

Attitudes, the complexes of beliefs and feelings that people have about specific ideas, situations, or other people, are important because they are the mechanism through which people express their feelings. Attitudes can vary greatly across cultures; for example, the text provides the results of a study that shows that Japanese workers are less satisfied than their American counterparts. Students may also bring out points from the opening case in their response to this question.

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3. Discuss basic perceptual processes and note how they differ in different cultures.

Perception is the set of processes by which an individual becomes aware of and interprets information about the environment. Stereotyping is one common perceptual process that occurs when an individual makes inferences about someone because of one or more characteristics they possess. Perceptions also influence how an individual feels about political or other forms of risk. The text provides numerous examples of how perceptions differ across cultures, and students will probably be able to generate additional examples. 4. Explain how attitudes and perception can affect each other.

Perception, the set of processes by which an individual becomes aware of and interprets information about the environment, is an important attitude determinant. An individual’s perceptions may result in stereotyping. Perceptions also influence an individual’s attitude toward risk. 5. Discuss stress and how it varies across cultures.

Stress is an individual’s response to a strong stimulus. The stimulus is known as a stressor. It is important for international managers to consider the stress involved in managing international assignments, and also to recognize that people from different cultures may experience and handle stress in different ways. The text notes, for example, that Swedish executives experienced lower stress as compared to their British, U.S., and West German counterparts. 6. Identify some of the basic issues managers must confront when attempting to motivate employees in different cultures.

Motivation refers to the overall set of forces that encourage people to select certain behaviors from a set of available behaviors. Managers attempting to motivate employees in different cultures face a complex task because the factors that motivate individuals in one culture may be very different from the factors that motivate individuals in another culture. Managers must determine whether employees are individualistic or collectivistic, what their  beliefs are about power and uncertainty orientation, and whether they demonstrate aggressive or passive goal behaviors before motivation techniques can be implemented. 7. How do needs and values differ in different cultures? 

Understanding needs (the things an individual must have or wants to have) and values are a starting point in understanding motivation. Primary needs are things people need for  survival, while secondary needs are more psychological and learned. Values are influenced by family, peers, experiences, and culture. Consequently, both needs and values will reflect local social and cultural norms. 8. Summarize the steps in the normative model of decision making and relate each to international business.

The normative model of decision making implies that managers make logical and rational decisions. The model starts with the identification of a problem and the realization that a decision needs to be made, then possible alternatives to address the problem are identified

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and evaluated, and finally, the best alternative is selected. Students may relate the model to the example given in the text or to some other situation. 9. Why are teams so important? What are the basic implications of teams for an international  business? 

Companies consider teams to be important because, at least in theory, people working together can accomplish more than people working independently. Teams have several implications for international business. Teams serve to develop role structures, establish norms of behavior for team members, and promote cohesiveness among employees. In addition, informal leaders typically emerge from teams, and efficiency may emerge from the role structure of the team. Teams may be homogenous or heterogeneous. The former  generally have less conflict, better communication, less creativity, more uniform norms, higher cohesiveness, and clear informal leadership when compared to the latter. Questions for Discussion 1. Which do you think is a more powerful determinant of human behavior, cultural factors or  individual differences? 

Students will probably respond to this question in one of two ways. Some students will probably argue that individual differences are at the root of human behavior, and are therefore a more powerful determinant of how an individual will act. Other students, however, may suggest that an individual’s differences will be influenced by and reflect the local culture. Students taking this perspective will argue that cultural factors are a more powerful predictor of human behavior. Teaching Note:

Instructors may want to ask students to identify traits within themselves that are clearly a reflection of their local culture, as well as traits that they feel are a result of their own individual differences. Students can then discuss their analyses with others, and look for  similarities and differences in interpretations of culture and behavior. 2. Think of two or three personality traits that you believe are especially strong in your culture, and two or three that are especially weak. Relate these to Hofstede’s cultural dimensions.

Most U.S. students will probably identify individualism and personal achievement as particularly strong traits in the U.S. culture. Responses by foreign students are likely to be different. 3. Assume you have just been transferred by your company to a new facility in a foreign location. Which of your own personal dimensions do you think will be most effective in helping you deal with this new situation? Does your answer depend on which country you  are sent to? 

Most students will probably suggest that the best way to assess the foreign country’s culture is through either direct or indirect research. Depending on which country students analyze, most will propose that depending on their findings, their behavior should be modified when negotiating, leading, motivating, and so forth, to adapt to the new culture. Students may also note that being transferred to a fairly similar culture will require less adaptation than being sent to a very different culture.

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Teaching Note:

Instructors may want to rephrase this question to identify a specific country or countries so that students can actually assess another  country’s culture along Hofstede’s dimensions. 4. How might perception affect motivation in different cultures? 

Perception is the set of processes by which an individual becomes aware of and interprets information about the environment. An individual’s cultural background will play a role in how a person interprets their environment. Thus, for example, while an American may see money as a clear way to motivate employees, people from other cultures that do not value money in the same way an American does, may see a raise as a poor way to motivate workers. 5. How might organizations in different cultures go about trying to enhance leadership capabilities? 

Good leadership skills will vary by culture. In collectivistic cultures, the group is important, therefore an organization trying to enhance leadership capabilities might emphasize the development of skills that preserve group harmony. In contrast, in a culture that is individualistic, organizations might focus on developing leaders that are skilled in allowing employees to set their own goals. Similarly, in power oriented cultures, organizations may identify individuals that show direct, structured behaviors and place a lesser value on the development of caring and interpersonally oriented behaviors. 6. Do you think it will ever be possible to develop a motivation framework that is applicable to all cultures? Why or why not? 

Most students will probably agree that it would be difficult to develop a motivation framework that is applicable to all cultures simply because cultures place different values on different things. Americans, for example, are usually motivated by money; consequently, companies will frequently use pay raises as a means of motivating employees. However, this type of  motivating factor would not succeed in a culture that does not place a high value on money. 7. How do motivation and leadership affect corporate culture? 

Corporate culture refers to the idea of “the way we do things around here.” Two critical dimensions of corporate culture are motivation and leadership. To fully understand the role of these two dimensions, students may want to develop a chart depicting different types of  cultures (individualistic versus collectivistic, and so on), and then identify what types of  motivation and leadership one would find in an organization in each type of culture. Teaching Note:

The following two questions can generate a fair amount of interesting discussion (and usually laughter) if they are acted out in class rather than simply discussed. For example, instructors can ask students to play the roles of the Japanese, Australian, and Italian managers who are being transferred to the U.S.

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8. What advice would you give to a Japanese, an Australian, and an Italian manager just  transferred to the United States? 

Most students will probably focus on identifying the differences that Hofstede has suggested exist between the Japanese, Australian, Italian, and U.S. cultures. Students will probably use these differences to make specific suggestions relating to leadership, negotiating, motivating, and so forth. 9. Assume you are leading a team composed of representatives from British, Mexican, Brazilian, and Egyptian subsidiaries of your firm. The team must make a number of major  decisions. a. What guidelines might you develop for yourself for leading the team through its decision making process? 

Most students will probably focus on the idea that if they can learn as much as possible about the other cultures, they will be better prepared to handle each individual in the appropriate manner. Thus, many students will in effect suggest treating the foreign managers individually rather than as a group so that the leader can modify his/her behavior  according to each situation. However, other students will probably point out that these individuals are meant to be part of a team, and that the idea of teamwork should be stressed. b. What steps might you take to enhance the team’s cohesiveness? How successful do you  think such an effort would be? 

Most students will probably recognize that a team made up of British, Mexican, Brazilian, and Egyptian will be a heterogeneous one, and one that may have conflict, poor  communication, and so forth. Students may suggest that making team members aware of  the cultural differences that may impact their behavior would be a start to enhancing the team’s cohesiveness, but will probably conclude that such an effort will be difficult to manage.

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Essence of the exercise

This exercise requires students to identify information about individual behavior and interpersonal relations in five countries. Students are then required to make decisions about training programs that would be appropriate for a manager being transferred to one of the locations. Finally, students working in groups are required to compare their training plans with those of classmates.

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Essence of the exercise

This exercise is designed to show students the process of learning about another culture, and incorporating aspects of that culture into one’s own behavior. Students working in teams of two are asked to research a culture of their choice and, assuming the role of an individual from the other culture, negotiate a contract for the sale of a product.  Answers to the follow-up questions. 1. How easy or difficult was it to model the behavior of someone from another country? 

Most students will probably agree that it is not easy to model the behavior of someone from another country. Students will probably find that they forget certain aspects of the other  culture, and without thinking about it, revert to their own culture or self-reference criterion. 2. What other forms of advance preparation might a manager need to undertake before negotiating with someone from another country? 

Students will probably have various suggestions for how a manager could prepare for a meeting with someone from another country. Typically, suggestions include complementing library research with advice from someone from the other country, meeting with a consultant specializing in the other culture, and obtaining advice from a colleague whom has experience negotiating in the other country. Other Applications

This exercise deals with differences in cultural behavior that can affect international business. It asks students to identify another culture and model that culture’s behavior. An interesting exercise to complement this one is to ask students, working in groups of 4 or 5, to research a culture of their choice and then develop a skit to perform for the rest of the class. The rest of the class can then attempt to identify the particular culture being shown. In this manner, students can appreciate the difficulties an individual might have when confronted with a completely unknown culture.