The document discusses several topics related to international human resource management and the impact of culture: - It summarizes Hofstede's study on cultural dimensions in different countries, finding significant differences between places like India, Germany, and the US. - It describes some cultural differences that affect cooperation between German and Indian employees, like communication styles, views of hierarchy, and perceptions of time. - It contrasts the US and Japanese approaches to areas like socio-economic systems, education, and human resource management. - It provides an overview of industrial relations practices in Germany, including collective bargaining, works councils, and co-determination requirements.

1. International Human Resource Management and the Impact of Culture Dodo zu Knyphausen-Aufseß August 2006

3. Economic Integration: trade, foreign direct investment, portfolio capital flows, and investment income Technological Connectivity: Internet users, Internet hosts, and secure servers Personal Contact: international travel and tourism, international telephone traffic, and remittances and personal transfers (including worker remittances, compensation to employees, and other person-to- person and nongovernmental transfers) Political Engagement: member- ships in international organizations, personnel and financial contributions to U.N. Security Council missions, international treaties ratified, and governmental transfers ATKearney‘s Globalization Index (2004) India is No. 61!

6. The opposite direction: American and European firms find India attractive

7. Germany relations to india – still potential for improvement Trade, bill. of € FDI, mill. of € German-Indian firms outperform the stock market * Mumbai stock exchange Source: DBResearch

10. Interacting spheres of culture Company Functional Professional National Regional Industry Geography, history, political and economic forces, climate, religion, language Resources, technology, product market, regulation, competitive Education, training, selection, socialisation External environment, nature of task, time horizon Founder, leader, administrative heritage, nature of product/ industry, stage of development Other cultures, e.g., family, associations, religion, etc.

11. Levels of Culture Artifacts and behaviour Beliefs and values Assumptions Methods for Discovery Observation Interviews and surveys Inference and interpretation

13. Power distance = the extent to which people accept that power is distributed unequally How frequently, in your experience, does the following problem occur: employees being afraid to express their disagreement with their managers? Source: based on Hofstede, 1991

14. Collectivism vs. individualism = the degree to which individuals are integrated into groups How important is it to you to have a job that leaves you sufficient time for your personal or family life? How important is it to you to have considerable freedom to adapt your own approach to the job? Source: based on Hofstede, 1991

15. Femininity vs. masculinity refers to the distribution of roles between the sexes Femininity: How important is it to you to have a good working relationship with your manager? How important is it to you to work with people who cooperate well with one another? Masculinity: How important is it to you to have an opportunity for high earnings? How important is it to you to get the recognition you deserve when you do a good job? Source: based on Hofstede, 1991

16. Uncertainty avoidance = the society’s tolerance for uncertainty or ambiguity Company rules should not be broken, even if the employee thinks it is in the company’s best interest? How long do you think you will continue working for this company? Source: based on Hofstede, 1991

18. Cultures can be very different Hofstede‘s study PD = Power Distance, IND = Individualisms, UA = Uncertainty Avoidance, MAS = Masculinity, LTO = Long-term Orientation Source: Frank, R./ Hofstede, G./ Bond, M., Cultural Roots of Economic Performance: A Research Note, in: Strategic Management Journal 12 (1991), Special Issue (Summer), S. 165-173 India PD IND UA MAS LTO USA 40 91 46 62 29 Europe Germany 35 67 65 66 31 France 68 71 86 43 30 England 35 89 35 66 25 Sweden 31 71 29 5 33 Asia Japan 54 46 92 95 80 Taiwan 58 17 69 45 87 South Korea 60 18 85 39 75

19. Cultures can be very different Hofstede‘s study PD = Power Distance, IND = Individualisms, UA = Uncertainty Avoidance, MAS = Masculinity, LTO = Long-term Orientation Source: Frank, R./ Hofstede, G./ Bond, M., Cultural Roots of Economic Performance: A Research Note, in: Strategic Management Journal 12 (1991), Special Issue (Summer), S. 165-173 India 77 48 40 56 PD IND UA MAS LTO USA 40 91 46 62 29 Europe Germany 35 67 65 66 31 France 68 71 86 43 30 England 35 89 35 66 25 Sweden 31 71 29 5 33 Asia Japan 54 46 92 95 80 Taiwan 58 17 69 45 87 South Korea 60 18 85 39 75

20. German/Indian experiences: An interview with Cornelia Schultheiss, DaimlerChrysler (1) MM: Are there any differences in the form of communication ? Schultheiss: Yes, most certainly. This is definitely where most problems arise. Mainly this is due to different basic communication needs. Germans, for example, communicate in a very direct way whereas Indians tend to use an indirect approach. As well as this, the German teams are used to an impersonal form of communication. Indians, on the other hand, talk far more often, in greater depth, for a longer time but then also more personally with each other. This comes from the fact that Indian colleagues have a greater need for communication and it’s tremendously important for them to establish a personal level. A personal level like this helps develop trust and paves the way for a good working relationship.

21. German/Indian experiences: An interview with Cornelia Schultheiss, DaimlerChrysler (2) MM: What role does an understanding of hierarchies play in this context? Schultheiss: Hierarchies are much more important in India than in Germany. You can observe this particularly clearly in meetings. In Germany you may well find in a meeting chaired by a person with a democratic leadership style that the conversation tends to be fairly spontaneous and comes from all directions. When Indian workers are in a meeting attended by their supervisor, they will generally wait until their supervisor has finished speaking. Yet for us Germans, this taking it in turns to talk according to the hierarchy is not always visible at first sight.

22. German/Indian experiences: An interview with Cornelia Schultheiss, DaimlerChrysler (3) MM: Are there any other cultural differences that affect the cooperation? Schultheiss: The feeling for time! The German sense of time has a linear nature. We work on a time line where all the different events are defined as fixed points. Indians, on the other hand, have a circular conception of time. The idea of cycles, whether for the day, year of life cycle, is a very strong feature among Indians. Indian people therefore tend to think of phases within these cycles rather than of fixed points in time. It is also matters more to Indians whether the person they’re talking to is young or old, whether the appointment is taking place in the morning, evening or at a particular time of year. The exact date or the precise time of the meeting is less important to them.

23. The U.S and Japan as polar types (1) Source: Pudelko, M., A Comparison of HRM Systems in the USA, Japan and Germany in their Socio-Economic Context, Working Paper, University of Edinburgh, 2005 USA Cultural context Japan Individualistic, self-assertive, individual freedom, opposing interests General characteristics Collective, consensus and cooperation oriented, embeddedness in society, harmony Low power distance, low uncertainty avoidance, very high individualism and high masculinity Geert Hofstede: Culture’s Consequences High power distance, very high uncertainty avoidance, low individualism and very high masculinity Universalism, individualism, emotional relations, specific culture Fons Trompenaars: Riding the waves of cultures Particularism, collectivism, neutral relations, vague culture

24. The U.S and Japan as polar types (2) Source: Pudelko (2005) USA Socio-political context Japan Little government interference in the market, distrust of powerful institutions, adversarial relations among and no shared responsi-bility of all economic players Economic system Much government interference in the market, trust of powerful national institutions, cooperation among and shared responsibility of all economic players Job market requires little stabil-ity of socio-demographic factors, little conformity to traditional roles, strong heterogeneity of employees Socio-demographic factors Job market requires much stabil-ity of socio-demographic factors, high conformity to traditional roles, relative homogeneity of employees Stress on creativity and inde-pendent thinking, top universi-ties and top-educated graduates responsible for high competitive-ness in tech sectors, neglect of mass education responsible for lower competitiveness in low tech sectors Educational system Stress on group integration, in-sufficient top universities and top-educated graduates respon-sible for lower competitiveness in high tech sectors, good mass education responsible for high competitiveness in middle tech sectors

25. The U.S and Japan as polar types (3) Source: Pudelko (2005) USA Economic context Japan Remuneration is based on market forces, resulting in low unemployment but also in ‘working poor’ Macro economic factors: Distribution of work and income Remuneration and employment for the core workforce is based on the collective will to be fair to all Consumer orientation, pursuing the ‘American Dream’, lower average standard of product and production technologies in middle value-added industries, but high standard in high value added and service industries because of high performers, high importance of shareholder value, innovative start-ups Market characteristics Producer orientation, promoting ‘Japan Inc.’, high average stand-ard of product and production technologies in middle value-added industries, but lower standard in high value added industries because of lack of high performers, little importance of shareholder value due to bank lending, few innovative start-ups Strongly adversarial, formalised and standardised industrial relations Industrial relations Cooperative, little formalised and standardised industrial relations

26. The U.S and Japan as polar types (4) Source: Pudelko (2005) USA Managerial context Japan High importance of short-term financial objectives in order to increase shareholder value, management strategies, structures, systems and techniques as well as top- managers of importance Management principles Financial and non-financial ob-jectives of importance in order to secure long-term survival, inde-pendence and growth of the company which is in the interest of all stakeholders, all those in the production process are valued High importance of top-management and individual decision making responsibility allows for quick strategy changes, functional specialists, pyramid corporate structure Organizational structure Top management mediates between various proposals, status quo and stability orientation, cross-departmental thinking, network-like corporate structure Low importance of HR depart-ment compared to other depart-ments and compared to line management, stress on management, less on the human resources themselves Significance of HRM for overall management High importance of HR depart-ment compared to other depart-ments and compared to line management, stress on both management and on the human resources

27. The U.S and Japan as polar types (5a) Source: Pudelko (2005) USA HRM Japan Finding the best qualified person for a specific job (job-oriented), high labour turnover Recruitment and release of personnel Finding the person who fits best for the company (people-oriented), lifelong employment Training focused on specific, limited knowledge for individuals for narrowly defined tasks (specialist training) Training and development Widespread, extensive and group-oriented training for broadly defined tasks (generalist training) Individual achievements and quantifiable criteria of importance (results oriented), specialist career path Employee assessment and promotion criteria Seniority and contribution to collective achievements of importance (behaviour-oriented), generalist career path

28. The U.S and Japan as polar types (5b) Source: Pudelko (2005) USA HRM Japan Primarily material incentives, pay based on individual achievements, significant pay differences Employee incentives Material and immaterial incentives, pay based on seniority, little pay differences Primarily vertical, structured and efficient Communication within the company Primarily horizontal, unstructured and extensive Top-down, authoritative, individual, confrontational and based on hard facts Decision making within the company Bottom-up, participative, collective, consensus-oriented and based on soft facts Specific, task-oriented, based on regulations Superior-subordinate-relationship Holistic, person-oriented, based on common values

29. The U.S and Japan – and Germany and India in-between? Recall, for example, Hofstede‘s dimensions!

35. Corporate Governance: An American Definition “ Corporate Governance deals with the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment. How do the suppliers of finance get managers to return some of the profits to them? How do they make sure that managers do not steal the capital they supply or invest it in bad projects? How do suppliers of finance control managers?” Source: Shleifer, A./ Vishney, R., A Survey of Corporate Governance, in: Journal of Finance 52 (1997), pp. 737-782 (737)  Very different mindset in Germany!!

43. Matrix of international communicators Gone Native (lose-win) Ugly Tourist (win-lose) Isolationist (lose-lose) Global Communicator (win-win) Low Courage High Low Consideration High Source: Davis et al. 1997

44. Components and activities for a comprehensive expatriate program Preparation: Predeparture activities Adaptation: Host-country activities Repatriation: Reentry activities Source: Holt, 1998: 565

46. How to execute cultural training DEGREE OF INTEGRATION LEVEL OF RIGOR High Low Length of Training 1-2 months+ 1-4 weeks Less than a week Length of stay 1 month or less 2-12 months 1-3 years Source: Mendenhall/Oddou, 1986 CROSS-CULTURAL TRAINING APPROACHES INFORMATION-GIVING APPROACH Area briefings Cultural briefings Films/books Use of interpreters „ Survival-level“ language training IMMERSION APPROACH Assessment center Field experiences Simulations Sensitivity training Extensive language training AFFECTIVE APPROACH Culture assimilator training Role playing Critical incidents Cases Stress reduction training Moderate language training Low Moderate High

49. Appendix