Comparative Management

Many theorists believe that management style loses its effectiveness when applied in a different culture. With the increasing trend toward globalization in many organizations, therefore, there is a concomitant increase in the study of management practices in different countries and how they relate to organizational effectiveness. Cultural norms, assumptions, and values need to be understood by a manager who desires to be effective in a cross-cultural situation. This understanding can be helped through cross-cultural training for expatriate managers as well as by ensuring that the management team in an offshore operation includes members who understand the local culture and its implications.

Keywords Cross-Cultural Training; Culture; Expatriate; Globalization; Intercultural Sensitivity; Management Style; Motivation; Offshoring

Management > Comparative Management

Overview

Practitioners and theorists alike spend significant time examining organizations to determine what differentiates those organizations that succeed from those organizations that fail. Significant time and energy is expended to determine the best practices and how these practices can be generalized or extrapolated to become universal truths that help other organizations to succeed. This impetus led to the Industrial Revolution and to the development of novel ways to mass produce goods. As a result, contemporary businesses are able to produce goods more effectively and efficiently than ever before. This impetus also led to the Technological Revolution with its burst of new technologies and their application to both the home and workplace. As a result, many tiresome or routine tasks have been eliminated, and employees are better supported in the design and development of even more and better goods and services. What such technological innovations cannot change, however, is the human factor.

No matter how high tech or automated a contemporary organization is, it still is dependent on the inputs and work of human beings. Human beings are necessary not only to run the machines on which a business relies, but to design, develop, and repair them. Wherever there are human beings in an organization, their activities need to be coordinated and supervised to optimize their performance and increase the success of the organization. Management is the process of efficiently and effectively accomplishing work through the coordination and supervision of others.

When management first became a recognized field of study, the goal was to reduce the empirical observations of successful practices in isolated cases to simple lists of practices a manager should or should not do in order to be effective. When these practices were unsuccessfully applied in another organization, a new list was promulgated. Leadership theories were developed that described the differences between successful leaders and unsuccessful leaders and posited the characteristics or practices that differentiated between the two. However, human behavior is a complex and multifaceted thing, and it was found that such universal truths were apt to be neither universal nor truths.

Eventually, this discrepancy was recognized and the study of management became a multidisciplinary effort; drawing on the insights from scientific research rather than isolated or casual observation and incorporating the insights and practices of other fields of study including psychology, sociology, and anthropology. Insights gained from empirical research eventually led to the conclusion that there is not one best way to lead. Rather, effective management requires the consideration of numerous factors including the nature of the job to be done (routine, mechanized vs. creative, artistic), the readiness of the workers to do their jobs (experience, degree of training), personality and work style of the workers, as well as the ability and personality of the manager. Further, it was found that as some of these variables changed (the workers became more experienced as they learned on the job), the most appropriate management style also changed (experienced workers require less close supervision than those who are new to the job).

The effectiveness of a management style is also based on the type of organization in which it is used. The large organizations that came into being following the Industrial Revolution were often production facilities where a military command and control model was effective. Many of today's organizations, on the other hand, do not follow this model. Today, more organizations offer services rather than goods and the educational levels of employees are rising in many fields. Each type of organization and its concomitant workers requires a different type of management in order to be effective. An engineering organization, for example, where workers are hired to develop new ideas or products, cannot be managed on a piecework philosophy as can be done in some production facilities. Rather, different types of organizations require different styles of management in order to be effective.

The changing landscape of organizations today is made even more complex by the increasing globalization in many industries. In particular, the practice of offshoring — relocating part of an organization's business to another country with lower costs — can present significant challenges to an organization as it works in a foreign culture with different assumptions, practices, and laws. In particular, culture can play a significant role in the expectations on managers and the effectiveness of management practices. Cultural differences also can affect how people communicate, what assumptions they make, and how they perceive the world in general. For example, many cultures — including both Germany and Japan — tend to be more formal than US culture. If a manager acts without sensitivity to this fact, s/he can appear to local workers as rude, and can quickly lose effectiveness.

Comparative management is the study of management practices in different countries and how they relate to organizational effectiveness. To do this, comparative management theorists look at how managerial practices are similar and how they differ in order to accommodate the needs of the local culture. By looking at management styles and techniques that work well in different venues, it is possible to gain insight into which management issues are universal and how local culture and conditions require adaptation of management practices. Specifically, the field of comparative management seeks to help organizations and their managers to better understand the impact of local culture — the consciously or unconsciously held shared assumptions, beliefs, norms, and values held by a group of people — on the way that people and processes need to be managed.

There are several different theoretical approaches to studying comparative management. The socio-economic approach primarily examines variations in economic development between two or more countries and how these variations affect what constitutes effective managerial practice. Unfortunately, this approach is not easy to test empirically. In addition, this approach cannot account for differences in management style or effectiveness within a given country because it rests in part on the assumption that organizations operating at the same level of industrialization would have similar management practices. This assumption, however, is not borne out in fact.

Another approach to the study of comparative management is the environmental approach. This approach emphasizes the external factors — environmental factors and constraints — under which the organization must operate. As with the socio-economic approach, however, the environmental approach cannot explain differences between organizations operating within the same environment. This is due in part because both approaches fail to take into account the internal factors that can affect managerial effectiveness.

On the other end of the spectrum is the behavioral approach which focuses on the psychological factors (beliefs, values, attitudes, assumptions) that affect individual and group behavior within organizations. Although this approach rectifies the major shortcoming of the socio-economic and environmental approaches, it fails to consider the external factors that can also affect organizational and managerial effectiveness.

To make up for these shortcomings, various eclectic models have been proposed that take into consideration both the broad societal issues that affect organizational effectiveness as well as the organizational factors. Some of these models also consider the possible interaction between the two sets of variables.

Applications

The comparison of international differences in effective management is of more than heuristic interest. The trend toward globalization spurred on by the search for lower personnel and production costs means that increasing numbers of organizations are offshoring parts of their operations. To be able to do this successfully, both executives and managers need to understand the differences in culture and how these differences affect management styles.

Cross-Cultural Comparisons

Comparative management is an emerging field, and models for predicting the success of managers in foreign operations are works in progress. However, theorists and practitioners have been observing the cultural differences and concomitant managerial imperatives associated with different cultures for years. These observations are not only helping to form newer and better models of comparative management, but are also providing clues for how to manage more effectively in a foreign culture.

One of the reasons that it is important for the manager to understand the culture in which s/he works is to better understand what motivates the employees. This understanding can help a manager achieve the objectives of the organization by being better able to reward the employee for desired behavior. Workers tend to be motivated by rewards that support their cultural patterns. For example, in sub-Saharan Africa, cultural values include respect for elders and for authority, family orientation (including the extended family), and collectivism. These traits have significant implications for how sub-Saharan Africans can most effectively be managed. Although African cultures tend to support absolute obedience to authority, the manager cannot count on this alone to force local employees into a foreign way of thinking. The collectivist nature of the sub-Saharan African culture means that local employees tend to be more comfortable working in a group than working alone. So, the incentive of a private office as a reward for high performance may not have the effect expected by a Western manager. The family orientation of these cultures may help bond work groups together, but it may also mean that it is difficult to reach agreement between teams or work groups. Further, motivating employees to work overtime or to not take time off for family obligations may be difficult. Such considerations tend to be more important to African workers than meeting organizational goals. It is perhaps for this reason that sub-Saharan African organizations rarely implement formal performance appraisal systems.

Another cultural pattern affecting sub-Saharan African organizations is resistance to change and aversion to risk taking. As a result of these patterns, managerial insistences on new techniques such as reengineering, just-in-time practices, or total quality management that are successful in Western organizations are unlikely to be met with enthusiasm or success. In fact, the respect for tradition prevalent in African cultures may result in a workforce that is neither flexible nor easily adaptable. Although workers ascribing to these cultural patterns can be managed effectively, they are unlikely to respond well to American independence or rugged individuality. To be effective, managers need to understand these cultural values and reward and encourage employees within those parameters.

East Asia also has cultural patterns that vary widely from those in the West. Chinese culture, for example, is also collectivistic in nature and emphasizes social interests and downplays personal goals and accomplishments. In fact, in China there tends to be an emphasis on harmony and conformity that governs all interpersonal relations. These cultural patterns can result in disagreement with Western management styles where conflict is taken as a matter of course. In Japan, the organization's goals are widely shared throughout the company, leaving top executives free from day-to-day management while middle managers carry out both operational and strategic activities. Although to the Japanese mind this management approach is a tribute to the competence of the middle managers, to the American mind it is indecisive and incompetent. This also means that the Japanese organizational chart is often little more than a listing of job titles rather than a formal definition of roles and responsibilities. As in the other cultures described above, Japanese management style also relies heavily on consensus resulting from extensive verbal consultation, a concept foreign in most US businesses. In addition, cultural norms in Japan do not accept the unpleasant face-to-face confrontations that Americans frequently think are a normal part of any interpersonal relationship. This means that the façade of the organization as a "happy family" is important in Japan. As a result, communication patterns rely much more heavily on nonverbal messages so that the façade can be maintained. Since an organization is dependent upon good communication for success, it is essential that this fact be recognized for a Western manager working in the Japanese culture.

Practical Concerns for Expatriates

Understanding of the cross-cultural considerations associated with management in foreign countries arises from two sources: the intellectual knowledge of cultural and managerial differences and the practical knowledge of these things that can only be acquired through immersion in the culture. There are a number of things that the organization can do on a micro level to help make the transition for expatriates — employees who are not citizens of the country in which they are working — easier. Language training alone is insufficient: Expatriates also need to be sensitive to the culture in which they work so that they can interpret situations and events in the same way as persons native to the culture in which they take place. This will prepare them to make better and more effective management decisions.

Fortunately, intercultural sensitivity is a learned process. Therefore, it is important that the organization provide cross-cultural training to help orient the prospective expatriate manager to the conditions that will be encountered as a manager in the foreign operation as well as more general orientation to the assumptions, values, and norms of the local population in general. Cross-cultural training programs are designed to help employees deal effectively with persons from a different culture by familiarizing them with various cultural differences including values, assumptions, and communication styles. In this way, cross-cultural training attempts to reduce potential misunderstandings that might arise. For example, the unacceptability of direct confrontation in Japan could be inadvertently breached by an American not used to this norm. Similarly, ignorance of the comparatively high level of formality in communication (using formal pronouns and titles for those one does not know well, particularly when higher in the organizational hierarchy) that one encounters in Germany could lead not only to misunderstandings, but to a larger inability to be effective in one's job.

There are several general objectives to most cross-cultural training programs. First, potential expatriates are taught about the reality of cultural differences and how these differences can impact managerial effectiveness or other business outcomes. Trainees are also familiarized with the process by which attitudes and stereotypes — both positive and negative — are formed and how such assumptions can unconsciously influence how a person interacts with those from a different culture. In addition, cross-cultural training usually provides specific information about the country in which the person will work, including any skills needed for business success. Cross-cultural training may also include intensive or advanced language skills training or other cultural adjustment skills.

In addition to helping expatriate managers acquire an intellectual appreciation for and empathy with both the general culture and the managerial culture in which they will work, comparative management theorists have also noted a number of practical actions that can be taken on an organizational level to help increase the managerial effectiveness of expatriates working in offshore operations. Many of the problems that arise in cross-cultural management situations can be resolved simply and do not require changes in corporate policy. For example, although it may be tempting to put a person from the home country in charge of the foreign subsidiary, it is more important that the foreign subsidiary be run by someone who understands the needs and assumptions of the local culture. This will not only enable the subsidiary to better deal with any cultural clashes that may occur, but will help prevent them from occurring in the first place. In addition, because of the relatively smaller size of offshore operations in relation to corporate headquarters, it must be remembered that the person in charge of a foreign subsidiary will more than likely need to run the entire local operation and will not have the same infrastructure available as when running a part of a larger operation. Top management in foreign operations, therefore, also needs to have an entrepreneurial spirit and the psychological ability to adapt to the new culture.

There are other practical steps that can be taken to help ensure the effectiveness of expatriates. Due to the prevalence of culture shock for expatriate employees and their families, many find themselves living in enclaves within the larger culture. Although this may seem like a good idea, it does not help one to understand the new culture better and also tends to reinforce an "us-them" attitude that is counterproductive to being a good manager. In addition, performance appraisal of the expatriate should be done by the local supervisor rather than by the corporate supervisor. This is because the local supervisor will be better able to understand how effective the expatriate manager is in working within the norms of the new culture and whether or not his/her outcomes are within the expected outcomes for that locality.

Terms & Concepts

Comparative Management: The study of management practices in different countries.

Cross-Cultural Training: A training program designed to help employees to deal effectively with persons from another culture by familiarizing them with various cultural differences including values, assumptions, and communication styles. One of the purposes of cross-cultural training is to increase intercultural sensitivity.

Culture: The basic shared assumptions, beliefs, norms, and values held by a group of people. These may be either consciously or unconsciously held.

Culture Shock: The psychological toll experienced by expatriates after approximately four to six months living in another country. Symptoms of culture shock include homesickness, irritability, hostility toward local nationals and ineffectiveness at work.

Expatriate: A person who is not a citizen of the country in which s/he is working.

Globalization: Globalization is the process of businesses or technologies spreading across the world. This creates an interconnected, global marketplace operating outside constraints of time zone or national boundary. Although globalization means an expanded marketplace, products are typically adapted to fit the specific needs of each locality or culture to which they are marketed.

Intercultural Sensitivity: The ability to interpret situations and events in the same way as persons native to the culture in which they take place.

Management Style: The way in which a manager supervises his/her employees. Different management styles (coercive, permissive, persuasive) are appropriate depending on the ability and needs of the workers, the situation in which they are working and the personality of the manager.

Motivation: The needs and thought processes that determine a person's behavior. Motivating factors do not necessarily remain constant, but may change with the individual's current circumstances.

Norms: Standards or patterns of behavior that are accepted as normal within the culture.

Offshoring: The practice of relocating part of an organization's business to another country with lower costs. Off-shore work is performed by local employees in the new country and was previously performed by domestic employees.

Performance Appraisal: The process of evaluating an employee's work performance and providing feedback on how well s/he is doing (typically against some standard of performance for that job).

Bibliography

Beugré, C. D. & Offodile, O. F. (2001). Managing for organizational effectiveness in sub-Saharan Africa: A culture-fit model. International Journal of Human Resources Management, 12, 535-550. Retrieved April 5, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=4480300&site=bsi-live

Campbell, J. P., Dunnette, M. D., Lawler, E. E. III, & Weick, K. E. (1970). Managerial behavior, performance, and effectiveness. New York: McGraw-Hill Book Company.

Dessler, G. (2005). Human resource management (10th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.

Endenich, C., Brandau, M., & Hoffjan, A. (2011). Two decades of research on comparative management accounting - achievements and future directions. Australian Accounting Review, 21, 365-382. Retrieved October 31, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=69662939&site=ehost-live

Landy, F. J. & Conte, J. M. (2004). Work in the 21st century: An introduction to industrial and organizational psychology. Boston: McGraw Hill.

McShane, S. L. & Von Glinow, M. A. (2003). Organizational behavior: Emerging realities for the workplace revolution (2nd ed). Boston: McGraw-Hill/Irwin.

Neelankavil, J. P. (2001). Determinants of managerial performance: A cross-cultural comparison of the perceptions of middle-level managers in four countries. Journal of International Studies, 31, 121-40. Retrieved April 5, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=3188515&site=bsi-live

Newman, W. H. (1978). Comparative management: A resource for improving managerial adaptability. Columbia Journal of World Business, 13, 5-6. Retrieved April 5, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=5543643&site=bsi-live

Tsurumi, Y. (1978). The best of times and the worst of times: Japanese management in America. Columbia Journal of World Business, 13, 56-61. Retrieved April 11, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=5544507&site=bsi-live

Tung, R. L. (1978). The use of the organizational climate construct in comparative management models. Academy of Management Proceedings, 292-296. Retrieved April 5, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=4977143&site=bsi-live

Suggested Reading

Hattori, I. (1978). A proposition on efficient decision-making in the Japanese corporation. Columbia Journal of World Business, 13, 7-15. Retrieved April 5, 2007, from EBSCO Online Database Business Source Complete. http://web.ebscohost.com/ehost/pdf?vid=31&hid=14&sid=b1bfaefe-52b9-4923-83e7-bb423ac4c490%40SRCSM2.

Jackson, G. & Moerke, A. (2005). Continuity and change in corporate governance: Comparing Germany and Japan. Corporate Governance, 13, 351-361. Retrieved April 5, 2007, from EBSCO Online Database Business Source Complete http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=17065349&site=bsi-live

Teagarden, M. B. & von Glinow, M. A. (1995). Toward a theory of comparative management research: An idiographic case study of the best international human resources management project. Academy of Management Journal, 39, 261-287. Retrieved April 5, 2007, from EBSCO Online Database Business Source Complete http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=9512044534&site=bsi-live

Thomson, A. (2001, Jul). The case for management history. Accounting, Business & Financial History, 11, 99-115. Retrieved April 5, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=5180418&site=bsi-live