Cross-cultural management issues

Introduction

“Thoughts lead on to purposes; purposes go forth in action(s); actions form habits; habits decide character; and character fixes our destiny”.

~Tyron Edwards(Khurana, S. 2009)

The quote above is one way to define a very important characteristic in any organization either in a national or in a cross-culture one; which is ‘Decision-Making’. This characteristic will be discussed and explained thoroughly in Latin American organizations and specifically in Mexicans organizations.

In addition to that, the report will highlight many points which affect business in general and decision making in specific in Mexican business. Those points will be supported by evidence from different references and from an online interview with many Mexicans who worked in either local Mexican organizations and multi-national ones. Centralization and Decentralization and their affect of the process of decision making will be illustrated in this paper as well.

At the end, a conclusion will follow consisting of the implications to organizations for managing global and multicultural workforce and teams.

2 MGMT 978

Country-Based Assignment Aysha Ali Al Kaabi

3560016

Cross-Cultural Management Issues

Every country in this world has it’s own culture and cultural values and beliefs. Those traits could be sensed at the society, homes and organizations either national organizations or cross-cultural ones. Mexican organizations have their own managerial styles, cultural values and beliefs. Mexico is considered a cross-cultural country because it consists of (Figure1) Indian pure blood ancestry, European heritage and other mixed groups. ( Moran et al, 2007, p. 354)

This mixture of heritages and race affects the managerial styles and even the life style in general in this country and most importantly it affects the decision making process.

From few readings it was explained that cultural values count a lot. Friendships and distant family relationships and word of mouth play a strong part in the choices a company makes. There is a special relationship that mexicans call “compadrazgo”, this is when people in the catholic faith invites a close friend to sponsor a young child of their family, usually a baby. This person will become your compadre and has the moral obligation to look after your child and guide it in life. Therefore a compadre can also become a business partner. This bond continues all your life. People with many children will have many compadres and therefore a lot of strong relationships that will help strengthen their business (Starkman, A. 2009). This explains that Mexicans are collectivistic according to Hofstede’s dimensions.

From researching and reading about decision making process in Latin American countries including Mexico it turned out that there are general decision making aspects followed by those countries which are: (Becker & Palmer, 2009, p.6-10)

Rationality:

It is basically about the use of reason and logic and building decisions on what makes sense to everyone or even to the top manager all the time.

Political behavior:

Comes from the fact that different people with different statuses and cultural values tend to interfere with decisions and their process, and that is really opposing goals and conflicting preferences; which eventually will affect outcomes of decisions.

Intuition:

From the title its is obvious that decisions or choices are made intuitively by decision makers relying not on fact but on previous experience or knowledge in a certain field.

There are about three main indicators come from intuition which are:

– Reliance on judgment (there are no numbers to rely on but judgment and experience need to be employed)

– Reliance on experience (there must be a deep knowledge of problems related to specific job environment)

– The use of gut feeling (decision makers know when they are right or they have a strong feeling about a decision)

(Becker & Palmer, 2009, p.6-10)

Another factors that affect the Mexican business are ‘centralization’ and ‘decentralization’. Both centralization and decentralization improve the decision making process in Mexican organizations. From a personal perspective, a mixture of the two drive this process to be easier and more reliable, since not only one person carries the weight of the entire process, so it is made by several candidates that probably will not think just in themselves but in the company as a whole. However, this action in Mexico could end up affecting the process, this is because the modus operandi or method of operating falls down to never agree with those surrounding locals, that is why there are lots of “never-approved” reforms in the government. (Bonnal, J. 2009)

Cross-Cultural Framework/Theories

When discussing any cultural values and business, Hofstede’s dimensions should be also mentioned because they have a great effect on business in local and multi-cultural contexts. Those dimensions are: Power Distance, Collectivism vs. Individualism, Uncertainty Avoidance, Masculinity vs. Femininity and , Long-term vs. Short-term orientation.

Large Power Distance: (Paternalism)

Mexicans rely on authority and have leadership is often in a paternalistic manner (Salter et al. 2004) and that paternalism is in fact expected from workers (Pelled & Hill, 1997). There are often loyalty and the assumption that all accountability and authority is at a higher level (ibid).

Collectivism:

It’s when the interests of the group wins through the interests of an individual. After all the political changes, innovations and other issues, Mexicans still remain a collectivistic and group oriented country and that is because of the strong family bonds that exist in Mexico. In a collectivistic society people are willing to take risks in decisions, because they believe and guarantee that there is a backup group who will protect the decision maker from expected or unexpected consequences (Becker & Palmer, 2009, p.6-10).

Masculinity:

In Mexico men are considered more self-assured, tough, and focused on material success, whereas women are more modest, tender and concerned with the quality of life than being involved in politics and business. This factor affects the role of women in business. Even if there has been developments, changes and innovations in Mexico, still men have the main role in making decisions (Becker & Palmer, 2009, p.6-10)

Uncertainty avoidance:

Mexicans are very pessimistic in any situation that has an amount of risk. They feel threatened by ambiguous and unknown situations. If the situation is unfamiliar to them it induces stress where there is high uncertainty avoidance. So there will be an emotional need of rules and formalizations even if these will not work (Becker & Palmer, 2009, p.6-10).

Long term vs. short term time orientation:

Talking about the process of decision making whether it’s long or short, it all leans on the size of the organization, normally big companies have strong processes, which will drive them to decision making; this is part of the business planning process, where at the end the board of directors will meet up to make decisions based on results made by the delegates, more or less like in the US, nevertheless, at the end someone has to be responsible for the decision being made ( Moran et al, 2007, p. 354). On the other hand, small companies usually rely on their superior, which normally is only one person. That person take decisions based on what he or she thinks is better for the company at that time, barely they think in a long-term process (Becker & Palmer, 2009, p.6-10).

2 MGMT 978

Country-Based Assignment Aysha Ali Al Kaabi

3560016

Methodology and Analysis

It was hard to meet up with the targeted interviewees , so an online interview via emails was conducted with five Mexicans who work in local organizations in Mexico and multi-cultural ones. Surprisingly the outcome of the interviews differed from each other although the interviewees were all Mexicans. However, most of them agreed on some of the statements and questions in the interview.

When interviewees were asked whether Mexicans tend to have long term relationships with their business partners and clients, they agreed and stated that sometimes they actually do, and it all depends on the kind of transaction they are dealing with; Mexicans are really friendly and they end up having a friendship with their counterpart; it’s a part of their culture, to be polite and sociable with those they are doing businesses with. So basically a long term business relationship probably will finish with a tight friendship which is going to reinforce the negotiations and make them easier for both parts. However, Armando G. who works in a business administration, disagreed with the previous point and stated that “this is an old-fashioned idea people have” (appendix 1) and nowadays companies do not work the same way as the past; where they only tend to have business relations with partners they know or people they like. But still those kinds of relationships may or may not exist in traditional organizations or ‘family companies’.

To have a clear idea of the decision making process in Mexico, interviewees where asked and all of them agreed that it is a hierarchical or as some stated a pyramidal process. Usually decisions are made by the top management. Victor Casas , Master in international business gave a very interesting explanation of the decision making process. He stated that “Normally, the ideal way that should make the decision making process is as follows: (appendix 2)

1. Determine the need to cover the decision.
2. Identify the decision criteria.
3. Assign a weight to each criterion.
4. Develop alternative solutions based on the criteria.
5. Evaluate alternatives.
6. Select the best alternative.

When it comes to the main issue of this report which is basically about ‘centralization’ and ‘decentralization’ and which of them could improve the decision making process in Mexican business; most of them agreed on the fact that centralization is the most common way to act. However, they explained that decentralization could improve the process of decision making because it has the tendency to distribute the decision-making authority in an organized structure. Moreover, It is important to note that centralization and decentralization are trends, but that there can be neither absolutely.

2 MGMT 978

Country-Based Assignment Aysha Ali Al Kaabi

3560016

Conclusion and Lesson to Learn

Mexico is going through a very long financial crisis. The financial system is controlled by foreign banks (American, Spanish and Chinese) and the world bank. The great majority of Mexicans are extremely poor. Decision making is often in the hands of non-Mexicans with other approaches. I think it is moving towards a more Americanized system, with great reluctance( Moran et al, 2007, p. 355).

I believe, lots of companies lack of the suitable planning and organizing, I think these two concepts are really important for every single organization in the world and the impact they have in the results are essential for the success of it. More to that, the decision making process is a procedure that should be done carefully by experienced people, and I believe that management is something you learn throughout practice and the experiences from others.

Finally, Mexico is a country full of people with different outlook of how businesses should be done; this is really hard for those who are being taught how to follow a plan or a way to do things according to an author. I think Mexicans have changed a lot for good, it is going to take them a lot to overcome their fails but this process they all are involved in, Those changes in the country will surpass it and it will succeed in a near future.