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RIDING THE WAVES OF CULTURE

Second Edition

RIDING THE WAVES OF CULTURE

UNDERSTANDING CULTURAL DIVERSITY IN BUSINESS

FONS TROMPENAARS

AND

CHARLES HAMPDEN-TURNER

NICHOLAS BREALEY

PUBLISHING LONDON

This new edition first published by Nicholas Brealey Publishing Limited in 1997

36 John Street 671 Clover Drive London Santa Rosa WC1N 2AT, UK CA 95401, USA Tel: +44(0)171 430 0224 Tel: (707) 566 8006 Fax: +44 (0)171 404 8311 Fax: (707) 566 8005

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Reprinted with corrections 1998

Text © 1993, 1997 Intercultural Management Publishers NV Charts © 1993, 1997 Nicholas Brealey Publishing Ltd

The rights of Fons Trompenaars and Charles Hampden-Turner to be

identified as the authors of this work have been asserted in accordance with the Copyright, Designs and Patents Act 1988.

ISBN 1-85788-176-1

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CONTENTS

PREFACE TO THE SECOND EDITION IX 1 AN INTRODUCTION TO CULTURE 1

The impact of culture on business 2 How proven formulas can give the wrong result 5 Culture is the way in which people solve problems 6 The basis of cultural differences 8 Structure of the book 11

REFERENCES 12 2 THE ONE BEST WAY OF ORGANISING DOES NOT EXIST 13

What the gurus tell us 13 Neglect of culture in action 14 Culture as a side dish? 16 An alternative approach 17 SUMMARY 19

REFERENCES 19 3 THE MEANING OF CULTURE 20

The concept of culture 20 The layers of culture 21 Culture directs our actions 24 Culture as a “normal distribution” 24 Cultures vary in solutions to common problems and

dilemmas 26 SUMMARY 27

REFERENCES 28 4 RELATIONSHIPS AND RULES 29

The universal versus the particular 31 Universalist versus particularist orientations in different

countries 33 Universalism versus particularism in international business 38 Reconciling universalism and particularism 43 Test yourself 47 Practical tips for doing business in universalist and

particularist cultures 48 REFERENCES 49

5 THE GROUP AND THE INDIVIDUAL 50

Concepts of individualism and communitarianism 52 Does modernisation imply individualism? 53 Which community? 54 Is individualism a corporate requirement? 56 Individualism versus communitarianism in international

business 59 Individualism, communitarianism and motivation 61 Differences in organisational structure 63 Reconciling individualism and communitarianism 63 Test yourself 65 Practical tips for doing business in individualist and

communitarian cultures 67 REFERENCES 68 6 FEELINGS AND RELATIONSHIPS 69

Affective versus neutral cultures 69 Degrees of affectivity in different cultures 72 Intercultural communication 74 Reconciling neutral and affective cultures 76 Test yourself 77 Practical tips for doing business in neutral and affective

cultures 79 7 HOW FAR WE GET INVOLVED 81

Specific versus diffuse cultures 81 Negotiating the specific—diffuse cultural divide 87 The effect of specific—diffuse orientation on business 90 The mix of emotion and involvement 94 Reconciling specific—diffuse cultures 97 Test yourself 98 Practical tips for doing business in specific and diffuse

cultures 100 REFERENCES 101 8 HOW WE ACCORD STATUS 102

Status-by-achievement and economic development 104 Ascription and performance 107 Achievement- and ascription-oriented cultures’ negotiations 108 Towards reconciliation 114 Test yourself 116 Practical tips for doing business in ascription- and

achievement-oriented cultures 118 REFERENCES 119

9 HOW WE MANAGE TIME 120 The concept of time 120 Orientations to past, present and future 122 Sequentially and synchronically organised activities 123 Measuring cultural differences in relation to time 125 Time horizon 126 Time orientations and management 129 Managing change in a past-oriented culture 133 Planned sequences or planned convergence? 135 Reconciling the sequential and the synchronic 137 Test yourself 137 Practical tips for doing business in past-, present- and

future-oriented cultures 138 REFERENCES 140 10 HOW WE RELATE TO NATURE 141

Controlling nature, or letting it take its course 141 Control and success 142 How important is a culture’s orientation to nature? 147 Managing between different orientations to nature 148 Is modern management a battle between private agendas? 150 Reconciling internal and external control 151 Test yourself 152 SUMMARY 154 Practical tips for doing business in internal- and external-

oriented cultures 155 REFERENCES 156 11 NATIONAL CULTURES AND CORPORATE CULTURE 157

Different corporate cultures 157 The family culture 158 The Eiffel Tower culture 166 The family and the Eiffel Tower in conflict 171 The guided missile culture 172 The incubator culture 175 Which countries prefer which corporate cultures 177 SUMMARY 179

REFERENCES 181 General 181

12 TOWARDS INTERNATIONAL AND TRANSNATIONAL

MANAGEMENT 182 Problems for the cross-cultural manager 183 International and transnational companies 186 Human-resource management in the future 189 The growth of information 189 Implications for business strategy 191 Local freedom to prioritise employment values 192 Local freedom to reward 193 The error-correcting manager 194

REFERENCES 194 13 RECONCILING CULTURAL DILEMMAS 195

Awareness of cultural differences 195 Respecting cultural differences 197 Reconciling cultural differences 200

14 SOUTH AFRICA: THE RAINBOW NATION 212 Dilemma mapping in South Africa 213 Comparing African and western mental models 216

15 GENDER, ETHNICITY AND FUNCTIONAL DIVERSITY 221 Gender differences worldwide 221 Diversity in the USA 224 Universalism-particularism 225 The group versus the individual 226 To show or not to show our emotions 227 How far do we get involved? 228 Is high status earned through achievement or ascribed? 230 Control or be controlled: American belief in inner-

directedness 232 How is time organised in the USA? 233 Functional diversity 235 Diversity in industries 238 Database mining 240 GENERAL CONCLUSIONS 242

REFERENCES 242 APPENDIX 1 EXAMPLES FROM THE 16 QUESTIONS USED TO

MEASURE CORPORATE CULTURE 243 Question 9 Criticism 243 Question 11 Conflict 243 Question 13 Hierarchy 243 Responses 244

APPENDIX 2 THE TROMPENAARS DATABASE 245 Relative importance of attributes 248 How many dimensions? 249 Factor matrix and rotations 252 Further research 254

REFERENCES 255 APPENDIX 3 TROMPENAARS HAMPDEN-TURNER

INTERCULTURAL MANAGEMENT GROUP 257 Products 258 More information 258

INDEX 259

ix

PREFACE TO THE SECOND EDITION

Since the first edition of this book was published we have carried out a great deal more work for our database and it now consists of 30,000 par- ticipants who have completed our questionnaire. This new material has enabled us to refine and develop our ideas and we have included our latest thinking in this revised edition.

In addition to updating the original research findings, we have added three new chapters and a revised appendix. Chapter 13 analyses a methodology for reconciling cultural dilemmas and developing transcul- tural competence. Chapters 14 and 15 discuss diversity within rather than between countries, describing ethnic differences in South Africa and the USA and also considering the effect on culture of gender, age, functional background and organisational structure. Appendix 2 outlines our research methodology in more detail.

The first edition of this book took over ten years to complete. Many peo- ple whose paths Fons crossed during that time were very helpful. He would like to do justice to them all in chronological order, since he has a sequential approach to time: I am deeply indebted professionally to Frits Haselhoff for his insights into management and strategy. He also helped me to obtain a scholarship and to defend my PhD thesis in Philadelphia.

Thank you, too, Erik Bree and Rei Torres from the Royal Dutch/Shell Group for your sponsorship, both in money and in research opportunity during the difficult first years of my project.

I am also very grateful to the two gurus in my professional life. First of all Hasan Ozbekhan, who taught me the principles of systems theory in such a profound and stimulating way that most of the thoughts on which this book are based are drawn directly from his excellent mind. Second, Charles Hampden-Turner, who helped me to develop thinking about culture as a way of solving dilemmas. His creative mind encourages me continuously to stretch existing ideas to new levels. He made a major editorial contribution to the first edition of this book, while always respecting what I was trying to communicate. The additions to this second edition are so significantly influ- enced by Charles’s way of thinking that I invited him to become co-author.

I am very much obliged to Giorgio Inzerilli for his solid — at times provocative — translations from deep anthropological thinking to manage-

x

ment applications. His way of communicating the link between practice and concept has been very important not only to this book but also to the way my colleagues and I present workshops. Many of the examples used are directly or indirectly due to him, and he also put me on the track of defining the seven dimensions of culture.

I am grateful to our colleagues Kevan Hall, Philip Merry and Leonel Brug for help in developing more effective relationships with clients. They are some of the few people I trust to make presentations on major points of this book without feeling too anxious.

Many thanks to my colleagues in the Trompenaars Hampden-Turner Intercultural Management Group (formerly the Centre for International Business Studies/United Notions), Tineke Floor, Naomi de Groot, Vincent Merk, Oscar van Weerdenburg and Peter Prud’homme, for their continu- ous support and positive criticism.

We would also like to thank Martin Gillo from Advanced Micro Devices and RS Moorthy for their guidance in the applicability of our thoughts. A great deal of work was done for the revised edition by Professor Peter Woolliams of the University of East London. His help was not limited to the production of our interactive educational tools but extended to complex statistical analysis of our database. His insights have been very enlighten- ing. Thank you, Peter.

Chapter 14 on South Africa came to fruition with the significant help of Louis van de Merwe (Trompenaars Group South Africa) and Peter Prud’homme (United Notions in Amsterdam). Thank you, Louis and Peter.

Chapter 15 on diversity in the USA was very much improved by the comments of Dina Raymond of Motorola. We needed her female sensitiv- ity to check our male conclusions. Thank you Dina.

And obviously we could not be stimulated more than by the comments of Geert Hofstede. He introduced Fons to the subject of intercultural manage- ment some 20 years ago. We do not always agree, but he has made a major contribution to the field, and was responsible for opening management’s eyes to the importance of the subject. By defending his 25-year-old model, we found an extra impetus to go beyond “plotting” differences, to develop a method of taking advantage of these differences through reconciliation.

We also want to thank Nicholas Brealey Publishing for their support, in particular Sally Lansdell who edited the revised edition.

Fons Trompenaars Charles Hampden-Turner

September 1997

1

1 AN INTRODUCTION TO CULTURE

This book is about cultural differences and how they affect the process of doing business and managing. It is not about how to understand the French (a sheer impossibility) or the British (try, and you will soon give up). It is our belief that you can never understand other cultures. Those who are married know that it is impossible ever completely to understand even people of your own culture. The Dutch author became interested in this subject before it grew popular because his father is Dutch and his mother is French. It gave him an understanding of the fact that if some- thing works in one culture, there is little chance that it will work in another. No Dutch “management” technique his father tried to use ever worked very effectively in his French family.

This is the context in which we started wondering if any of the Ameri- can management techniques and philosophy we were brainwashed with in many years of the best business education money could buy would apply in the Netherlands or the UK, where we came from, or indeed in the rest of the world.

Both authors have been studying the effect of culture on management for many years. This book describes much of what we have discovered. The different cultural orientations described result from 15 years of aca- demic and field research. Many of the anecdotes and cases used in the text have come up in the course of more than 1000 cross-cultural training programmes we have given in over 20 countries. The names of the com- panies used in most of the cases are disguised.

Apart from the training programme material, 30 companies, with depart- ments spanning 50 different countries, have contributed to the research. These include AKZO, AMD, AT&T, BSN, Eastman Kodak, Elf Aquitaine, SGS/Thom- son, CRA, Glaxo, Heineken, ICI, Lotus, Mars, Motorola, Philips, Royal Dutch Airlines KLM, the Royal Dutch/Shell Group, Sematech, TRW, Van Leer, Volvo and Wellcome, to name a few. In order to gather comparable samples, a min- imum of 100 people with similar backgrounds and occupations were taken in each of the countries in which the companies operated. Approximately 75% of the participants belong to management (managers in operations,

AN INTRODUCTION TO CULTURE

2

marketing, sales and so on), while the remaining 25% were general admin- istrative staff (typists, stenographers, secretaries). The database now num- bers 30,000 participants. This is twice as much as four years ago when the first edition was published. The empirical results are, however, just an illus- tration of what we are trying to say.

This book attempts to do three things: dispel the notion that there is “one best way” of managing and organising; give readers a better under- standing of their own culture and cultural differences in general, by learn- ing how to recognise and cope with these in a business context; and provide some cultural insights into the “global” versus “local” dilemma facing international organisations. Possibly the most important aspect of the book is the second of these. I believe understanding our own culture and our own assumptions and expectations about how people “should” think and act is the basis for success.

The impact of culture on business

Take a look at the new breed of international managers, educated accord- ing to the most modern management philosophies. They all know that in the SBU, TQM should reign, with products delivered JIT, where CFTS distribute products while subject to MBO. If this is not done appropriately we need to BPR. (SBU = strategic business unit; TQM = total quality management; JIT = just-in-time; CFT = customer first team; MBO = management by objectives; BPR = business process reengineering.)

But just how universal are these management solutions? Are these “truths” about what effective management really is: truths that can be applied anywhere, under any circumstances?

Even with experienced international companies, many well-intended “universal” applications of management theory have turned out badly. For example, pay-for-performance has in many instances been a failure on the African continent because there are particular, though unspoken, rules about the sequence and timing of reward and promotions. Similarly, man- agement-by-objectives schemes have generally failed within subsidiaries of multinationals in southern Europe, because managers have not wanted to conform to the abstract nature of preconceived policy guidelines.

Even the notion of human-resource management is difficult to translate to other cultures, coming as it does from a typically Anglo-Saxon doctrine. It borrows from economics the idea that human beings are “resources” like physical and monetary resources. It tends to assume almost unlimited capacities for individual development. In countries without these beliefs, this concept is hard to grasp and unpopular once it is understood.

AN INTRODUCTION TO CULTURE

3

International managers have it tough. They must operate on a number of different premises at any one time. These premises arise from their cul- ture of origin, the culture in which they are working and the culture of the organisation which employs them.

In every culture in the world such phenomena as authority, bureau- cracy, creativity, good fellowship, verification and accountability are expe- rienced in different ways. That we use the same words to describe them tends to make us unaware that our cultural biases and our accustomed conduct may not be appropriate, or shared.

There is a theory that internationalisation will create, or at least lead to, a common culture worldwide. This would make the life of international managers much simpler. People point to McDonald’s or Coca-Cola as examples of tastes, markets and hence cultures becoming similar every- where. There are, indeed, many products and services becoming common to world markets. What is important to consider, however, is not what they are and where they are found physically, but what they mean to the people in each culture. As we will describe later, the essence of cul- ture is not what is visible on the surface. It is the shared ways groups of people understand and interpret the world. So the fact that we can all lis- ten to Walkmans and eat hamburgers tells us that there are some novel products that can be sold on a universal message, but it does not tell us what eating hamburgers or listening to Walkmans means in different cul- tures. Dining at McDonald’s is a show of status in Moscow whereas it is a fast meal for a fast buck in New York. If business people want to gain understanding of and allegiance to their corporate goals, policies, prod- ucts or services wherever they are doing business, they must understand what those and other aspects of management mean in different cultures.

In addition to exploring why universal applications of western manage- ment theory may not work, we will also try to deal with the growing dilemma facing international managers known as “glocalisation”.

As markets globalise, the need for standardisation in organisational design, systems and procedures increases. Yet managers are also under pressure to adapt their organisation to the local characteristics of the mar- ket, the legislation, the fiscal regime, the socio-political system and the cultural system. This balance between consistency and adaptation is essential for corporate success.

Paralysis through analysis: the elixir of the management profession Peters and Waterman in In Search of Excellence hit the nail on the head with their critique of “the rational model” and “paralysis through analy- sis”. Western analytical thinking (taking a phenomenon to pieces) and

AN INTRODUCTION TO CULTURE

4

rationality (reckoning the consequences before you act) have led to many international successes in fields of technology. Indeed, technologies do work by the same universal rules everywhere, even on the moon. Yet the very suc- cess of the universalistic philosophy now threatens to become a handicap when applied to interactions between human beings from different cultures.

Man is a special piece of technology and the results of our studies, extensively discussed in this book, indicate that the social world of the international organisation has many more dimensions to deal with.

Some managers, especially in Japan, recognise the multi-dimensional character of their company. They seem able to use a logic appropriate to machines (analytic-rational) and a logic more appropriate to social rela- tions (synthetic-intuitive), switching between these as needed.

In the process of internationalisation the Japanese increasingly take the functioning of local society seriously. They were not the first to observe “When in Rome, do as the Romans do”, but they seem to act on this more than westerners do. The Japanese have moreover added another dimen- sion: “When in Rome, understand the behaviour of the Romans, and thus become an even more complete Japanese.”

In opposition to this we have our western approach, based on Ameri- can business education, which treats management as a profession and regards emotionally detached rationality as “scientifically” necessary. This numerical, cerebral approach not only dominates American business schools, but other economic and business faculties. Such schools educate their students by giving them the right answers to the wrong questions. Statistical analysis, forecasting techniques and operational studies are not “wrong”. They are important technical skills. The mistake is to assume that technical rationality should characterise the human element in the organisation. No one is denying the existence of universally applicable sci- entific laws with objective consequences. These are, indeed, culture-free. But the belief that human cultures in the workplace should resemble the laws of physics and engineering is a cultural, not a scientific belief. It is a universal assumption which does not win universal agreement, or even come close to doing so.

The internationalisation of business life requires more knowledge of cultural patterns. Pay-for-performance, for example, can work out well in the cultures where these authors have had most of their training: the USA, the Netherlands and the UK. In more communitarian cultures like France, Germany and large parts of Asia it may not be so successful, at least not the Anglo-Saxon version of pay-for-performance. Employees may not accept that individual members of the group should excel in a way that reveals the shortcomings of other members. Their definition of an

AN INTRODUCTION TO CULTURE

5

“outstanding individual” is one who benefits those closest to him or her. Customers in more communitarian cultures also take offence at the “quick buck” mentality of the best sales people; they prefer to build up relationships carefully, and maintain them.

How proven formulas can give the wrong result

Why is it that many management processes lose effectiveness when cul- tural borders are crossed?

Many multinational companies apply formulas in overseas areas that are derived from, and are successful in, their own culture. International management consulting firms of Anglo-Saxon origin are still using simi- lar methods to the neglect of cultural differences.

An Italian computer company received advice from a prominent inter- national management consulting firm to restructure to a matrix organi- sation. It did so and failed; the task-oriented approach of the matrix structure challenged loyalty to the functional boss. In Italy bosses are like fathers, and you cannot have two fathers.

Culture is like gravity: you do not experience it until you jump six feet into the air. Local managers may not openly criticise a centrally developed appraisal system or reject the matrix organisation, especially if confronta- tion or defiance is not culturally acceptable to them. In practice, though, beneath the surface, the silent forces of culture operate a destructive process, biting at the roots of centrally developed methods which do not “fit” locally.

The flat hierarchy, SBUS, MBO, matrix organisations, assessment centres, TQM, BPR and pay-for-performance are subjects of discussion in nearly every bestseller about management, and not only in the western world. Reading these books (for which managers happily do not have much time any more) creates a feeling of euphoria. “If I follow these ten command- ments, I’ll be the modern leader, the change master, the champion.” A participant from Korea told us in quite a cynical tone that he admired the USA for solving one of the last major problems in business, i.e. how to get rid of people in the process of reengineering. The fallacy of the “one best way” is a management fallacy which is dying a slow death.

Although the organisational theory developed in the 1970s introduced the environment as an important consideration, it was unable to kill the dream of the one best way of organising. It did not measure the effects of national culture, but systematically pointed to the importance of the mar- ket, the technology and the product for determining the most effective methods of management and organisation.

If you study similar organisations in different cultural environments,

AN INTRODUCTION TO CULTURE

6

they often turn out to be remarkably uniform by major criteria: number of functions, levels of hierarchy, degree of specialisation and so on. Instead of proving anything, this may mean little more than that uniformity has been imposed on global operations, or that leading company practices have been carefully imitated, or even that technologies have their own imperatives. Research of this kind has often claimed that this “proves” that the organisation is culture free. But the wrong questions have been asked. The issue is not whether a hierarchy in the Netherlands has six levels, as does a similar company in Singapore, but what the hierarchy and those levels mean to the Dutch and Singaporeans. Where the meaning is totally different, for example, a “chain of command” versus “a family”, then human-resource policies developed to implement the first will seriously miscommunicate in the latter context.

In this book we examine the visible and invisible ways in which culture impacts on organisations. The more fundamental differences in culture and their effects may not be directly measurable by objective criteria, but they will certainly play a very important role in the success of an interna- tional organisation.

Culture is the way in which people solve problems

A useful way of thinking about where culture comes from is the following: culture is the way in which a group of people solves problems and

reconciles dilemmas.1 The particular problems and dilemmas each cul- ture must resolve will be discussed below. If we focus first on what culture is, perhaps it is easiest to start with this example.

Imagine you are on a flight to South Africa and the pilot says, “We have some problems with the engine so we will land temporarily in Burundi” (for those who do not know Burundi, it is next to Rwanda). What is your first impression of Burundi culture once you enter the airport building? It is not “what a nice set of values these people have”, or even “don’t they have an interesting shared system of meaning”. It is the concrete, observ- able things like language, food or dress. Culture comes in layers, like an onion. To understand it you have to unpeel it layer by layer.

On the outer layer are the products of culture, like the soaring skyscrap- ers of Manhattan, pillars of private power, with congested public streets between them. These are expressions of deeper values and norms in a soci- ety that are not directly visible (values such as upward mobility, “the more-the-better”, status, material success). The layers of values and norms are deeper within the “onion”, and are more difficult to identify.

But why do values and norms sink down into semi-awareness and

AN INTRODUCTION TO CULTURE

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unexamined beliefs? Why are they so different in different parts of the world?

A problem that is regularly solved disappears from consciousness and becomes a basic assumption, an underlying premise. It is not until you are trying to get rid of the hiccups and hold your breath for as long as you pos- sibly can …

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