International human resource managerment semester 2 group project case study 1

Long Term:...9 III - CASE STUDY ANALYSIS...10 3.1 CEO's Hansen's surprising explanation when using Hofstede's cultural dimension...10 3.2 Analyze the differences between cultural dimensi

BUSINESS MANAGEMENT

-INTERNATIONAL HUMAN RESOURCE MANAGERMENT

SEMESTER 2 2023-2024 GROUP PROJECT: CASE STUDY 1

Lecturer: Ms Phạm Thị Thanh Hưng

Ho Chi Minh City, April 2024

Trần Phạm Ngọc Châu 721H0737 Huỳnh Thục Mỹ 721H0406

Đinh Thanh Nhã 721H0419

Đoàn Lâm Khả Thy 721H0642

MỤC LỤC

I - INTRODUCTION 3

II - THEORETICAL BASIS 4

2.1 Approaches of iHRM 4

2.2 Polycentric in HRM approach 4

2.3 Hofstede’s cultural dimension 5

2.3.1 Power Distance Index 5

2.3.2 Individualism and Collectivism 5

2.3.3 Masculinity - Femininity 6

2.3.4 Uncertainty Avoidance 7

2.3.5 Long-term - Short-term Orientation 8

2.3.6 Indulgence/ Restraint 8

2.4 Dimensions case study using 9

2.4.1 Power Distance: 9

2.4.2 Individualism vs Collectivism: 9

2.4.3 Uncertainty Avoidance: 9

2.4.4 Short Term vs Long Term: 9

III - CASE STUDY ANALYSIS 10

3.1 CEO's Hansen's surprising explanation when using Hofstede's cultural dimension 10

3.2 Analyze the differences between cultural dimensions in Vietnam that affect managers' decisions to leave or stay: 11

3.3 Apply the model in Vietnam 13

3.4 Limits of a cultural explanation 14

IV - CONCLUSION 16

TÀI LIỆU THAM KHẢO 17

MỤC LỤC HÌNH ẢNH

Figure 1 Hofstede's cultural dimensions theory 11 Figure 2 Hofstede's cultural dimensions theory Comparison of 4 countries:

US, China, Germany and Brazil in all 6 dimensions of the model 13

I - INTRODUCTION

Globalization has become a worldwide trend This trend has affected and spread to many countries, changing the business strategies, human resources strategies, of companies globally To keep up with the trend, large and small corporations tend to expand branches across neighboring countries and even branches in countries half a hemisphere away from the parent company Therefore, the need for multinational linkages is extremely great To integrate into this multinational trend, international human resource management is a factor to compete and determine the success of the effective operation of that multinational company Human resource managers have flexibly applied Hofstede's cultural dimensions model and Cultural approach to international human resource management strategies, helping businesses better integrate into globalization and multinational trends

Vietnam has also integrated into the general trend of the world, into the global economy Therefore, to integrate well into this trend, Vietnam needs to have effective international human resource management strategies Especially applying Hofstede's cultural model and Cultural approach to the company's human resource management strategies

In this essay, our team wants to understand the differences between the personnel of multinational companies based on Hofstede's cultural dimensions model and Cultural approach This model has influenced the behavioral and decision-making characteristics of each character from different countries as well as their different perspectives in the human resource management process

II - THEORETICAL BASIS

2.1 Approaches of iHRM

Three approaches:

● Market-based approach

● Cultural approach: This approach sees the transfer of employment practices as

a process shaped primarily by the legacy of national and corporate cultures

- MNCs’ corporate culture is informed by the national culture of the country

of origin

- MNCs with strong corporate culture must adapt their desired practices to local conditions rather than implement common practices across their operations

- The transfer of practices is not so much a process governed by the forces of

‘competition’ built

● Political approach

2.2 Polycentric in HRM approach

The polycentric approach is a hiring and staffing method in which international subsidiaries of a country find team members from the host country, rather than from the parent company's location

The rationale behind this approach is that the locals of the host country know their culture and understand local needs better Therefore, they can run the business more efficiently as compared to their foreign counterparts

Example: A garment company in France decided to open a branch in the UK, the company decided to use a Polycentric approach to recruit British personnel to work at the UK branch

2.3 Hofstede’s cultural dimension

2.3.1 Power Distance Index

The power distance index considers the extent to which inequality and power are tolerated

● Individuals in societies that have a high degree of power distance accept hierarchies where everyone has a place in a ranking without the need for justification

● Meanwhile, societies with low power distance seek to have an equal distribution of power The implication of this is that cultures endorse and expect relations that are more consultative or democratic, or egalitarian Example:

● Bangladesh, China, India, Singapore, Malaysia, and Arab countries have very high power distance scores People from the following countries easily accept the inequalities between people with high and low power status People in these countries do not complain; they admit it as a social order

● Austria, Israel, Denmark, New Zealand, Norway, Germany, and the United Kingdom are examples of low power distance countries People from these countries do not accept the inequity between high and low-influential people in society, community, and organization They also raise their voices against injustice and discrimination in society

2.3.2 Individualism and Collectivism

Individualistic societies stress achievement and individual rights, focusing on the needs of oneself and one’s immediate family In this culture, tasks prevail over relationships in the workplace People in individualistic cultures do not want to work

in groups, so they set independent goals and appreciate freedom Thus, they are

assertive, reliant, competitive, and value individual achievement A person’s self-image in this category is defined as “I.”

In contrast, collectivist societies place greater importance on the goals and well-being

of the group, with a person’s self-image in this category being more similar to a “We.” Collectivist members like to work in groups and try to help each other They like to work in groups instead of working alone In this culture, relationships prevail over tasks in the business setting They also highlight group identity and group success Hence, they are cooperative, obedient, and self-sacrificing

Example:

● The United States, Australia, United Kingdom, Canada, Netherlands, New Zealand, and Ireland are individualistic countries People from these countries prefer to work alone and foster independent achievement

● Guatemala, Ecuador, Venezuela, Indonesia, Pakistan, Taiwan, South Korea, China, Bangladesh, and Malaysia are considered the most collectivistic nations globally people from these countries prefer to work in groups and intend to achieve shared goals

2.3.3 Masculinity - Femininity

A masculine society values assertiveness, courage, strength, and competition; a feminine society values cooperation, nurturing, and quality of life (Hofstede, 1980)

● Masculinity pertains to traits associated with assertiveness culture in society According to Geert Hofstede’s cultural dimensions, men focus on personal tasks and material success in masculine culture The role of men and women overlap less than in feminine society The men are more assertive, decisive, dominant, and focused on success In business settings, masculinity refers to the rough culture in the organization The Boss does less discussion with employees to make- decisions

● Femininity denotes traits associated with nurturing culture in society The members of feminine society focus on relationships and quality of life They are nurtured, cooperative, modest, and caring to other members of society They also maintain modest behavior in the community and organization In the business context, femininity refers to the tender culture in the organization The Boss does great discussion and intuitive analysis to make decisions

Example:

● Slovakia, Japan, Hungary, Austria, Venezuela, Italy, Mexico, and China are considered masculine countries So, the gender role of these countries is specific and overlaps very little

● Sweden, Norway, Netherlands, Denmark, Costa Rica, and Finland are considered the most feminine countries globally So, the gender role of these countries is fluid that overlaps significantly

2.3.4 Uncertainty Avoidance

This concept refers to the extent to which an organization or a country tends to accept

or avoid facing uncertainty and risk In a high uncertainty avoidance environment, employees often prefer stability, adherence to rules and clear procedures, and have a high need for job security and assurance

Example:

 In a high uncertainty avoidance culture, such as Germany, employees may prefer clear job descriptions, well-defined roles, and structured processes to minimize ambiguity and risk

 In contrast, in a low uncertainty avoidance culture, such as the United States, employees may be more comfortable with flexible job responsibilities, adaptability, and embracing change

2.3.5 Long-term - Short-term Orientation

This concept relates to employees' attitudes and behaviors towards time and the future Long-term orientation emphasizes shaping the future, long-range planning, and investing in sustainable development On the other hand, short-term orientation focuses more on the present and promotes quick responses to short-term situations

Example:

 A company with a long-term orientation, like Toyota in Japan, may prioritize employee development, loyalty, and sustainable growth over immediate profits They invest in training programs and offer long-term career advancement opportunities

 In contrast, a company with a short-term orientation, like a startup in Silicon Valley, may focus on quick innovation, rapid growth, and short-term goals They may offer more flexible work arrangements and emphasize immediate results

2.3.6 Indulgence/ Restraint

This concept is about the extent to which a country or organization allows or restrains the fulfillment of individual needs and desires Indulgence emphasizes self-expression and satisfaction of individual needs while accepting personal freedoms In contrast, restraint focuses more on rule compliance, collective rights, and control of individual needs

Example:

 In a culture that leans toward indulgence, such as the Netherlands, employees may have more freedom to express their individuality, work-life balance is encouraged, and personal needs are prioritized

 On the other hand, in a culture that leans toward restraint, such as Japan, there may be more emphasis on collective harmony, adherence to social norms, and self-control in expressing personal desires in the workplace

2.4 Dimensions case study using

2.4.1 Power Distance:

German companies have a relatively low power distance, which means there is less hierarchy and more interaction between executives and local American employees Peter Hansen followed a polycentric approach that wasn't centered on any particular nationality, allowing American managers to take on senior positions

2.4.2 Individualism vs Collectivism:

The German MNC's polycentric HRM approach expanding to the United States shows

a focus on recruiting and promoting local managers, creating quick career opportunities This reflects a value for independence and personal achievement, corresponding to Hofstede's Individualism dimension John Miller's acceptance of the competitor's offer indicates his interest in immediate opportunities and short-term benefits

2.4.3 Uncertainty Avoidance:

Germany has a higher level of risk avoidance compared to the US Consequently, the German company focuses on training investments and adopts a long-term career perspective to minimize uncertainty and risk in the workplace

2.4.4 Short Term vs Long Term:

The German company provided John Miller with extensive high-level training programs and a long-term career plan, demonstrating their focus on his long-term development and knowledge base

Peter Hansen's efforts to transfer valued HR practices, such as training investments and a long-term career perspective, highlight his long-term vision and goals for the company

III - CASE STUDY ANALYSIS

3.1 CEO's Hansen's surprising explanation when using Hofstede's cultural dimension

German MNCs have adopted a polycentric HRM approach to recruitment and promotion Therefore, the managers of the company in the United States (John Miller) have US citizenship, in this case the conflict of cultural dimensions is expressed between two cultures: Germany and the United States

Surprise CEO Hansen's nature can be explained through the following cultural aspects of Hofstede:

 Short term orientation - Long term orientation: The benefit packages

offered by the company in Investment in training and development for the US branch are oriented towards long-term development However, employees and managers in the United States are short-term oriented and desire to meet current needs just as they expect to see immediate results from their investment

- the problems that the company's benefits and orientation did not meet - so, even though the company operated effectively, grew and progressed, the US manager still left

 Uncertainty avoidance: Germany has a high tendency to avoid uncertainty,

while the United States views uncertainty as normal and has a low level of uncertainty avoidance The United States often looks for opportunities in risk, but Germany does not like uncertainty, so there will easily be conflicts in the way the two sides work and make decisions On the other hand, because the United States has a low level of risk avoidance, it will be more open to risks and accept change Therefore, when managers in the United States decide to leave, it is partly because of the different orientations between them and the company, and instead of worrying about the disadvantages that will come such

as financial difficulties, loss of Leaving close relationships at the old company, they are willing to look for other places and change their workplace to meet most of their needs

 Individualism/Collectivism (Individualism and Collectivism):The United

States is a country with a highly individualistic culture, focusing on the interests of each individual instead of the collective The benefits provided by the US headquarters are aimed at common benefits for collective development rather than emphasizing individual benefits Therefore, after the training, American employees and managers left because they did not receive personally appropriate benefits

3.2 Analyze the differences between cultural dimensions in Vietnam that affect managers' decisions to leave or stay:

Figure 1 Hofstede's cultural dimensions theory

a Power Distance: The Power Distance in Vietnam is high, which means that

people accept a hierarchical order in which everybody has a place and which needs no further justification Challenges to the leader are not well-received