Cross Cultural Business Management

Abstract

This report looks at the implications for cross-cultural management for a UK manager undertaking an international business assignment in China. Key ways of understanding cultural differences, particularly Hofstede’s and Trompenaars cultural dimensions, are discussed. Although the UK and China have some similarities, they are very different in several dimensions, and the ways these differences impact upon business practice are pointed out. Finally, key recommendations are made.

1. Introduction

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The following looks at the cross-cultural management implications for a UK manager undertaking an international business assignment to China. It uses a theoretical framework of cultural differences to explore the ways in which the two different countries have different business styles (including differences in style of management, communication and staff issues).The exploration of the differences between the UK and China is used to support a number of recommendations to the UK manager about best practice.

China offers unparalleled opportunities for business, and over the last 30 years has shown unprecedented economic growth, with a percentage rise of 8.7% in 2009, better than all other major economies (UK Trade and Investment 2012 [online]). China is large, both in terms of size (3.7 million square miles) and population (1.3 billion).Its capital is Beijing, and its population largely (92%) Han Chinese, with the remainder 55 different ethnic minority groups. Although officially an atheist country, Christianity, Islam, Buddhism and Daoism are practiced. Mandarin is the main language, although there are a number of local dialects, and the currency is the Yuan or Renminbi (Foreign and Commonwealth Office 2012 [online]).

China’s communist government have, over the last 30 years, brought about substantial change to bring about market-oriented economic systems (Gore 2011) in order to deliver the prosperity that it seemed the Marxist system could not provide (Grant 2005). The transformation has been built upon the large workforce, offering the possibility of cheap labour and hence low-cost manufacturing. It has seen economic reforms which have meant China have become a force in the global business market (Brandt and Rawski 2006). China is, however, culturally very different from the UK, and in order to conduct business successfully it is essential to understand these differences and the impact on management.

2. Cross-Cultural Theorists

Two theorists, Hofstede and Trompenaars, are particularly useful for understanding the differences between cultures. Hofstede has been very influential in contemporary management theory attempts to understand cross-cultural differences. His ideas were rooted in a large scale study of IBM (Matsumoto and Juang 2012), and involve five different dimensions which characterise a nation. Each country has a different value for each dimension, and a unique picture of the cultural nature of that country is built up through all five dimensions. The five dimensions are power distance, individualism / collectivism, masculinity / femininity, degree of uncertainty avoidance, and time orientation (Hofstede 1984).Power distance concerns the extent to which people are happy with an unequal society, and the extent to which the society is hierarchical with a large gap between the powerful and those without power. A low power distance country, for example, would be more egalitarianism and intolerant of power imbalance. Individualism / collectivism refers to the extent to which people think of themselves as individuals or as part of a group.Individualistic societies are competitive and value creativity for example (Phillips and Gully 2011). The dimension of masculinity and femininity expresses the extent to which the culture displays predominantly masculine values: gender roles are clearly defined, assertiveness and striving are praised. In a feminine culture roles are more fluid and more caring values respected (Tian 2004). Uncertainty avoidance refers to how comfortable people are with ambiguity. Cultures high on this like rules and regulations (Sorrentino 2005).Interestingly for the context of this report, Hofstede’s final dimension was based on data collected from China, with the help of Michael Harris Bond (Berry et al 1997).Time orientation concerns the way in which people think about time, with a distinction between short-term and long-term orientation. Cultures which are short-term oriented life in the moment, while long-term cultures are strong on planning (Daft and Marcic 2010).

Trompenaars (1993) model can be seen as a development of Hofstede’s ideas. He suggested seven different dimensions, again based on a large-scale study across many different countries. These dimensions cover three main areas: how people relate to others, their perceptions of time, and their experiences of the environment (Lane 2004). The seven dimensions overlap with Hofstede’s dimensions to some extent, with some being very similar and others new. The dimensions he specifies are:

Universal v. particular: whether the society is organised around set rules and procedures or whether the needs of the individuals come first
Individual v. collectivism: whether people predominantly act for themselves or think about the group
Affective v. neutral: whether people are predominantly demonstrative emotionally, or are controlled and rational
Specific v. diffuse: whether organisational systems determine employee behaviour, or systems arise out of the needs and perspectives of individuals.
Achievement v. ascription: whether achievement or background, education and other fixed variables assumed to be important about people
Sequential v. synchronous: whether time is seen fixed and linear or flexible and open
Internal v. external control: whether people believe that nature can be controlled through human will, or human beings are part of nature and subject to its laws.

(Trompenaars and Hampden-Turner 2004).

While Trompenaars is clearly influenced by Hofstede’s work, Hofstede has criticised the former for lacking the intellectual rigour he believes the five dimensional model possesses. Hofstede has also attracted criticism, for example that five dimensions are inadequate to fully capture the complexity of cultural differences (Browaeys and Price 2008). Despite criticisms, however, both these models are useful to help understand how cultures differ from each other, and will influence the next section.

3. Discussion / Analysis

According to Hofstede (Geert-hofstede.com 2012 [online]) (see appendix), China and the UK show fairly different cultural styles. They are, however, identical for masculinity / femininity (66) and near-identical for uncertainty avoidance.Both the UK and China tend towards masculinity in society, with drivenness and competition valued. Additionally, both are low for uncertainty avoidance, in other words, both societies are happy with ambiguity and believe rules should be followed flexibly and selectively. Both societies are adaptable, which encourages entrepreneurship.

China is higher than the UK for power distance (80 v. 35), that is, China is comfortable with hierarchy, power structure and wide gaps between people. There is more likelihood of abuse of power, and authority is important. Aspiration above ones status is unacceptable. In the UK, people see each other as equals to a greater extent, have less respect for authority, do not tolerate abuses of power, and aspire to change their status.

There is also a gap between the UK and China in regards to individualism, with the UK scoring much higher (89 v. 20). In other words, in China there is a much higher degree of interdependence between people, with people defining themselves as part of a group. In the UK the tendency is to think about oneself, and one’s family before society as a whole. Chinese people act to serve the group rather than themselves, and are likely to have much higher organisational commitment, as well as feeling it acceptable for closer groups (e.g. family) to get preferential treatment at work. Whereas UK people tend to be generally agreeable to those outside the preferred group, in highly collectivist societies those outside their group may be demonised.

China are much more long-term oriented than the UK. There is a greater value placed on persistence and long-term goals. They are happy to save and be economical with resources, and have great respect for the past and for tradition. By contrast, people in the UK are more able to enjoy the moment, and can be flexible with regards to goals.

According to Trompenaars, China is one of the most particularist of the countries he looked at (Rugman and Collinson 2008), meaning that they look at the particular case and take all circumstances into account, rather than looking at general principles. For example, an employer in a particularist culture might excuse poor work behaviour if the individual’s circumstances offer a good reason. In addition, China scores highly for affectivity, level of diffuseness and external control (Aswathappa 2010).That is, people conduct business in an emotional way, displaying emotions openly, do not have a strong sense of the barriers between public and private life, and feel that fate plays a stronger role in what happens to an individual or organisation than choice and self-motivation.

While there are some similarities, China and UK have a very different cultural make-up, according to both sets of dimensions. What impact does this have on business styles This can be considered in terms of different areas. For team work, for example, the high-power distance might mean that Chinese staff are uncomfortable with sharing feedback and frank discussions. However, their low individualism suggests that they would put the team before themselves, and would therefore be motivated by team-based rewards. UK staff, by contrast, might find sharing opinions as a team fairly easy, as they have a lower power distance, but might put their own interests before those of the team or organisation as a whole.

In terms of communication, China have high affectivity, which suggests they might work better if communication styles are emotional rather than neutral. For example, written communications in the UK tend towards formal business English: a more open and friendly style might suit the Chinese market more. Additionally, China scores highly for diffuseness against specificity. That is, there may be a tendency for communications to be more roundabout, with things left unsaid or communicated non-verbally. Diffuse cultures also have a higher degree of overlap between work and home (Amant 2007), which may mean that there is a greater reliance on shared experience upon which to base communication amongst the Chinese.

There is also a need for a different management style, to take into account the greater power distance in China. Whereas UK workers respond better to power sharing and partnership styles, in China there may be a need to confirm the hierarchy, making it clear who is in charge, and defining roles carefully.However China also score highly for particularism, which suggests that management needs to take into account the details of each situation, rather than rigidly follow rules. Employees are likely to expect that rules can be bent to suit circumstance.

Motivation and performance management are also likely to differ across the cultures. As mentioned, China scores much lower for individualism, which suggests that team-based rewards would be more motivating for them than in the UK. China are also markedly more long-term oriented, which means employees are likely to respond to goals set for the distant future, rather than needing near-instant reward. There is also an issue here for motivating teams which consist of employees from both China and the UK, as each employee group is likely to have a different perspective on what is a motivating factor.

The higher score for China on external control suggests that employees are less likely to enjoy spontaneous decision making. As they feel that the forces which drive business are located outside of themselves, this removes some of the responsibility for making decisions, and places it in the hands of fate, or higher authorities in the organisation. This is confirmed by the high power distance in China, which suggests that employees are very comfortable with letting decision making be carried out by those higher in the corporate hierarchy. By contrast, UK employees are likely to desire more participation in decisions.

Negotiation should also be handled with care. The higher affectivity and diffuse culture in China may mean that great attention needs to be paid to the non-verbal cues when negotiation takes place.The higher power distance might also mean that negations need to be carried out between staff perceived to be at similar levels. In addition to the dimensional analysis of culture, Tian (2007) suggests that negotiation in China is determined by a set of core traditional values including the importance of sincerity and trust, respect for age and hierarchy, maintaining social harmony and avoiding getting angry or being unpleasant to others. This might mean that negotiation between two people of very different ages might be tricky, for example.

4. Conclusions

Although they have some common areas, for example similarly masculine cultures and a similar tolerance of uncertainty, China and the UK have key cultural differences which are likely to impact attempts to manage a diverse work team. In particular, China employees are likely to be much more comfortable with hierarchy and unequal distribution of power, to value the group over the individual, to be focussed upon the long-term (but less likely to react spontaneously to the moment). They are also more likely to expect rules to be bent to the particular case, to attribute the cause of events to circumstances or agents external to themselves, and to prefer styles of communication which heavily emphasise the non-verbal and tacit. While, to a certain extent, globalisation has meant that cultural diversity is threatened, (Homann et al 2007), to be successful management needs to anticipate and plan for difference.

5. Recommendations
Recognise that hierarchy has a more important role in China
Adapt communication styles to pay attention to context, body-language and assumed information
Plan team-work to incorporate two very different perspectives on the relative importance of the individual and the group
Ensure Chinese employees are kept fully informed about the long-term perspective
6. References

Aswathappa, K (2010) International Business (4th edn.), Tata McGraw-Hill Education, India.

Berry, J W, Portinga, Y H and Pandey, J (1997) Handbook of Cross-cultural Psychology: Social behavior and applications (2nd edn.), John Berry.

Brandt, L and Rawski, T G (2006) China’s Great Economic Transformation, Cambridge University Press, Cambridge and New York.

Browaeys, M-J and Price, R (2008) Understanding cross-cultural management, Pearson Education, Harlow, Essex

Daft, R L and Marcic, D (2010) Understanding Management (7th edn.), Cengage Learning, Belmont, CA.

Foreign and Commonwealth Office (2012) ‘China: Country Information’ [online] (cited 22nd February 2012), available from

http://www.fco.gov.uk/en/travel-and-living-abroad/travel-advice-by-country/country-profile/asia-oceania/china

Geert-hofstede.com (2012) ‘What about China?’, [online] (cited 22nd February 2012), available from

http://geert-hofstede.com/china.html ‘What about china?’,

Gore, L (2011) The Chinese Communist Party and China’s capitalist revolution: the political impact of the market, Taylor & Francis, Oxon.

Grant, R G (2005) Communism: Systems of government, Evans Brothers.

Hofstede, G H (1984) Culture’s consequences: international differences in work-related values (2nd edn), SAGE, Thousand Oaks, CA

Homann, K, Koslowski, P and Luetge, C (2007) Globalisation and business ethics, Ashgate Publishing, Ltd, Aldershot, Hants.

Lane, H W (2004) The Blackwell handbook of global management: a guide to managing complexity, John Wiley & Sons / Blackwell, Oxon.

Matsumoto, D and Juang, L (2012) Culture and Psychology (5th edn), Cengage Learning, Belmont CA

Phillips, J and Gulley, S M (2011) Organizational Behavior: Tools for Success, Cengage Learning, Belmont, CA.

Rugman, A M and Collinson, S (2008) International Business (5th edn.),

Pearson Education, Harlow, Essex

St. Amant, K (2007) Linguistic and cultural online communication issues in the global age, Idea Group Inc, Hershey PA

Sorrento, R M (2005) Culture and social behaviour, Routledge, UK

Tian, Q (2004) A transcultural study of ethical perceptions and judgements between Chinese and German businessmen, Martin Meidenbauer Verlag, Germany

Tian, X (2007) Managing international business in China, Cambridge University Press, Cambridge.

Trompenaars, F (1993) Riding the waves of culture: understanding cultural diversity in business, Economist Books.

Trompenaars, F and Hampden-Turner, C (2004) Managing people across cultures, Capstone.

UK Trade and Investment (2012) ‘China’ [online] (cited 22nd February 2012), available from

http://www.ukti.gov.uk/export/countries/asiapacific/fareast/china.html

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