Acknowledgements
Abstract
List of Figures
List of Tables
1.0 Chapter One: Introduction
Chapter 1 introduces the concept of cross-cultural management in reference to the situation in Kazakhstan. The history of the region is briefly introduced with reference to the phenomena of globalization. The framework of the research is based on the seven organization constraints. The seven organizational constraints are listed and briefly defined. Research questions are listed with the research objectives. The rationale for the research is offered.
1.1 Introduction
Cross cultural business and trade is not a new global phenomenon; a historical example is the Silk Road that passed through China, south eastern Asia and into India. On the other hand, ‘globalisation’ has new connotations in the contemporary business world. The subject of the research is cross-cultural business management in a globally-connected Kazakhstan. International corporations have created joint ventures with Kazakh businesses and established subsidiaries in Kazakhstan.
Minbaeva, Hutchings and Thomson (2007) report that post-Soviet Eastern European countries are internationalized at an increasing rate due to investments by multinational corporations. Originally the investments were from corporations with headquarters in North American and Western European. After mid-2000, “other transition economy multinationals” began establishing business investments in Kazakhstan (Minbaeva et al. 2007) Cross cultural working environments for Kazakh managers and employees is a topic that reverberates beyond the borders of the country. The framework for the study applies the seven constraints to Kazakh organizational culture when working with foreigners; Stability, Innovation and Risk Taking, Attention to Detail, Outcome Orientation, People Orientation, Team Organization and Aggressiveness (Robbins and Coulter 2007). The research objectives include evaluating the similarities and differences in the perceptions of Kazakh managers and employees on cross-cultural communication.
Kazakhstan is an especially interesting case because of two levels of foreign impacts. The first level is internal; from similar cultures internally, and the second level is from external cultures due particularly to foreign-owned subsidiaries in Kazakhstan. The internal cross-cultural dynamics were originally due to migration, but more recently the large degree of urbanization is causing new dynamics between cultures. Diverse cultures are entering the cities in large numbers from rural areas. Kazakhstan is a vibrant country with many assets. The transitions the country is going through at the moment are well-suited for evaluating cross cultural management in the business sector. Mooij and Hofstede (2010) predict that as cross cultural trends in global business continues, understanding how diverse cultures interact between individuals and within groups will be needed more than ever. Very little academic literature is available on human resource development in Kazakhstan since independence in 1991 (Minbaeve et al. 2007).
1.2 Globalisation
The Mongols ruled almost all of Asia during the 13th century. Mongol rule broke down borders enhancing the exchange of ideas, goods and individuals. Compared to the modern world of nation-states, the borderless world of the Mongols sits almost at the opposite end of the cross-cultural spectrum. “The nation-state is new to Asia and borders even more so” (Dickerson and Pole 2013). Countries wishing to make investments in post-Soviet countries rate Kazakhstan as potentially a good place for investment based on the willingness to welcome international societies, low number of regulations, and political stability (Dickerson and Pore 2013). Kazakhstan was considered high in government efficiency compared to other countries in the region by South Korean investors (Dickerson and Pore 2013). Kazakhstan is attractive in terms of natural resources including oil, gas, and minerals. Kazakhstan allows foreign companies and foreign individuals to own land. The transportation infrastructure is good in Kazakhstan, “ample distribution systems exist” and the country has “a high rate of wire and wireless penetration” (Dickerson and Pore 2013). The impacts of economic globalisation are only expected to increase over time in Kazakhstan (Brewer and Venaik 2010).
The issue of cross cultural work environments may create high tension and become highly contentious is the issues are not addressed in a timely manner. As the global economy interconnects and intra-connects across community, state, national and international boundaries the influence of diverse culture working together becomes more pronounced. International business communications are affected by cultural attitudes including the following.
(a) How does a culture understand conflict?
(b) What are the strategies used to resolve conflict?
(c) What is the attitude to authority? and
(d) What are the components of an individual in a culture to self, such as to the “ego identity” (Shi and Wang 2011: 93)?
1.3 Cross Cultural Business Management
Cross cultural conduct includes the “hidden . . . behaviours and actions of people from different cultural backgrounds and value-orientations” (Branine 2011: 4). In order compete in the global business world constructing a strong and stable workforce requires a mix of nationals and foreigners in both “indigenous and international companies” (Branine 2011: 4). Today’s business manager must find a competitive edge to keep their company successful. People can be the assets that add value and maintain a company’s readiness for whatever is necessary to stay ahead.
Dickerson and Pore (2013) highly recommend that post-Soviet countries develop management models that reflect the “embedded ethnocentric contexts of shared beliefs, values and cognitive structures.” The issue is important because adopting Anglo-American, European or other models are not culturally sensitive (Dickerson and Pore 2013).
1.4 Nomadic Kazakh Roots
Contemporary culture still reflects the nomadic culture at the roots of Kazakhstan culture until approximately the fifteenth century. Three large nomadic tribes remain at the top of the hierarchy with other smaller tribes organized within the structure. The pursuit of global integration is a necessity as Kazakhstan’s natural resources are in high demand by the developed countries. Therefore, successful cross-cultural management is needed so that Kazakhstan can manage the infrastructure and industries to profit the people of the country.
1.5 Knowledge for Kazakhstan Business Management
Cross cultural management in Kazakhstan is still a young field so the research will add needed knowledge. Other countries wishing to trade with Kazakhstan must respect the culture of the country in order to negotiate appropriately. Management is a term that assumes employees or employees are being managed, yet the worker is rarely considered in research. The research proposes to develop a better understanding of the relationship of Kazakhstan managers and employees with foreigners based on cross-cultural experience.
1.6 Research Objectives and Research Questions
The goal of the research project is to answer the following overarching research question. ‘What are the differences and similarities between the perceptions of Kazakh managers and employees of cultural differences when communicating with foreigners involved in joint projects?’ The objectives are based upon the seven constraints to management with organizational culture: Stability, Innovation and Risk Taking, Attention to Detail, Outcome Orientation, People Orientation, Team Organization and Aggressiveness (Robbins and Coulter 2007). The research objectives and research questions are identified below.
The objectives include evaluating the similarities and differences in the perceptions of Kazakh managers and employees on cross-cultural communication when working with foreigners based on the seven constraints to organizational culture. The research aim is to develop a better understanding of the relationship of Kazakh managers and Kazakh employees with foreigners based on cross-cultural experiences. A literature review and two surveys are the main research strategies employed. One questionnaire is designed for Kazakh managers and one is designed for Kazakh employees.
1.7 Research Rationale
The research rationale is based on the need for cross-cultural studies in Kazakhstan are needed due to the increasing number of foreign corporations and foreign individuals bring businesses into the country (Minbaeve et al. 2007). Kazakhstan meets the needs of many multinational corporations, better than other post-Soviet countries (Dickerson and Pore 2013). Economic globalisation is only expected to increase over time in Kazakhstan (Brewer and Venaik 2010). Therefore the research is timely and necessary.
1.8 Research Context
Kazakhstan is not new to globalisation because it was part of the more or less borderless Mongol Empire in the 13th century. The borders of today’s nation-states make the cross-cultural management of business relationships far more difficult. The research aim is to develop a better understanding of the relationship of Kazakhstan managers and employees with foreigners based on cross-cultural experience based on a review of the literature and on two surveys, one designed for Kazakh managers and one designed for Kazakh employees. The objectives include evaluating the similarities and differences in the perceptions of Kazakh managers and employees on cross-cultural communication when working with foreigners based on the seven constraints to organizational culture listed below.
Organizational culture is the business environment composed of the shared values, practices, symbols, rituals and myths of the leaders, managers and employees. The framework for the research is based on the seven constraints to management). The culture of an organization determines how people act based on the beliefs and meanings they share (Robbins and Coulter 2007). The seven constraints are listed below with brief introductory definitions.
Stability refers to the level an organization can maintain decisions and actions that continue the status quo.
Innovation and Risk Taking The extent employees are allowed to take risks independently and explore innovations.
Attention to Detail The amount of precision and analysis employees must meet.
Outcome Orientation View the managers take on the importance of outcomes alone, without paying attention to the way the goals are achieved.
People Orientation The amount of attention management gives to how employees are affected when decisions are being made.
Team Organization The degree the culture of an organization is structured around teams instead of individuals.
Aggressiveness is a measure of how much employees are competitive with each other rather than cooperative.
2.0 Chapter 2: LITERATURE REVIEW
2.1Introduction
Chapter two is a literature review of the most pertinent information about cross-cultural interactions that face Kazakhstan managers and employees. The chapter is addresses the seven organizational constraints and information that relates to Kazakhstan.
2.2 Culture Metaphors
Culture metaphors are the topics or issues that are commonly linked to a country and its business culture. For example, Japan is linked to Gardens (Gannon 2011), the USA is strongly linked to Football (Seyduk ; Gannon 2011), and China is linked to the Family Altar (Gannon 2011). Kazakhstan is a popular location for foreign investments in business. Many subsidiaries of multinational companies are located there, but no Kazakhstan metaphor is included in the literature. Instead of a unique country metaphor the country, when mentioned at all, is grouped with other Eastern European countries.
Kazakhstan is most often considered as part of an Eastern European cluster containing Kazakhstan, Georgia, Greece, Russia, Slovenia, Albania, and Hungary. The cluster is described as gaining high Scores in collectivism, assertiveness, and gender egalitarianism (Gannon and Rajnandini 2013: 14). Low scores were measured in the culture for performance orientation, future orientation and uncertainty avoidance/ acceptance of risk (Gannon and Rajnandini 2013: 14). Gannon (2011) defines cultural metaphors as some activity, phenomenon or nationally famous institution that the residents view as essential towards their identity. The cultural metaphor for a country offers a symbol or point of identification that a nation’s citizens understand and relate to on a cognitive or an emotional level (Gannon 2011). The nation’s citizens may relate to their country’s metaphor on both the cognitive and emotional level (Gannon 2011).
2.2 Cultural dimensions
Hofstede (2010) developed the idea that an organization’s culture has a pattern or a certain dimension. The mind acts like the software of a computer, because the way thinking, feeling and the choice of taking certain actions are programmed into our minds. Our minds have unconsciously embedded the national culture during development and maturation. We are not necessarily conscious of beliefs and rituals that we use or understand that those beliefs and rituals have no meaning in other parts of the world. The embedding of the national cultural dimensions happens during daily life experiences learned from our parents, at school, in work environments and in our communities. The GLOBE project is a model developed to identify the dimensions in specific cultures (House and GLOBE 2004).
Hofstede developed a large survey that encompassed managers and employees from IBM located at subsidiaries in 53 different countries. The constant factor for all the participants was the uniform policy for personnel set by IBM. The Hofstede five dimensional model has characteristics that are similar to the seven organisational constraints. The major characteristics of basic cultural values are accounted for in Hofstede’s five-dimensional model in the following ways. The power distance index takes into account how the unequal distribution of power or the use of a hierarchy is accepted in the organization. The Hofsted model measures the degree of individualism measured against the amount of collectivism. In other words, the individuals in an organization may feel free to work alone or they may feel pressured to conform to group norms.
2.3 Introducing time and space
Gannon and Pillia (2010) developed a method that includes time and space in the characteristics used to compare cultures. The Gannon (2010) approach to understanding different cultures gives each nation a cultural identity based on features of the society; includes social stereotypes and the embedded beliefs towards male and female. The Gannon method reaches a closer resemblance to the reality of cultures than the Hofstede approach. More of the social complexities are included in the Gannon methodology. It is the Gannon and Pillia (2010) understanding of American business culture that labels the American metaphor as football. Competition between individuals is encouraged and rewarded. Aggressiveness, similar to that necessary in football is also rewarded. The winner in football and in business is most favourably viewed when the competitor has been destroyed (Gannon and Pillai 2010). Canidates for a job are hand selected. They are carefully and thoroughly trained for the specific position they will fill. A mentor helps enhance the employees understanding of the organizational culture of the particular company.
2. One size does not fit all
Serdyuk (2009) warns that globalization does not make selling items in different cultures as some managers assume. Joint ventures require an understanding of cultural differences, particularly the management styles that work well. A management style needs to be developed that allow leaders and managers to work within the context of the belief and value systems of the employees. The purpose of Serdyuk’s (2009) study was to take a different approach to the research design, instead of focusing on values and belief of followers, her article investigates the variables in leadership across nations with different cultural value orientations. The variables include management styles reflecting the local values, market philosophies and markets as well as public and private space and temporal orientation in terms of past, present, and future and interactions with others relationship. The similarities of all business include the intention to make a profit and develop a professional staff (Serdyuk 2009). On the other hand, examples of international cross-cultural perceptual differences include the following.
- North American behaviours are based on ‘doing.’
- Latin American behaviours are based on ‘being.’
- Japanese business managers have become more adaptability and able to accept uncertainties as do American managers.
- American managers are learning how Japanese best business practices can be applied.
- Russian management is catching up and still is characterized by “more autocratic (hierarchy and power relations between boss and employees) than democratic, with flat organization” (Serdyuk 2009 2).
Gleason (2013)
seven constraints to organizational culture:
Stability
The Republic of Kazakhstan established independence in 1991 and in the years immediately after Kazakhs’ works to find a stable balance while dealing with trading partners holding conflicting interests in the country’s natural resources (Kozyrev 2012). The foreign policy is termed “multi-vector” because the relatively young republic strives to keep a balanced relationship with China, Russia and the USA regardless of how they are interacting with each other (Kozyrev 2012 25). Given the geographical location of Kazakhstan at the “central point in Eurasia” and contain a large amount of natural resources that are in demand now. The stability in organizations are influenced by the instability between the major trading partners in the world as well as with Turkic countries that experience varying dynamics with China, Russia and USA. Turkey is an example of a paradoxical relationship, because “Kazakh people had a great interest in Turkey as a sister country but also a considerable fear of a ‘new big brother’” (Kozyrev 2012: 26). The potential of Turkey as a “bridge to the Western world” is a potentially advantageous position to many in Kazakhstan (Kozyrev 2012: 26).
Leaving the post-Soviet years the goal for Kazakhstan is to integrate with its neighbours and establish a “single economic space throughout Eurasia” (Akimbekov 2013). In the 1990’s, Kazakhstan set the initiative to use integration as a way to lift economies in the region. The initiative clearly succeeded when Russia joined the Eurasian Economic Community. Kazakhstan did not bully or attack Russia but used the advantages of trade as the way to convince Russia to join. The overarching role of Kazakhstan in the wider community reflects the day to day business environment of cooperation and negotiating.
Team Organization
Dickerson and Chuhlomin (2005) discussed the problems that can arise when large manufacturing companies work with local independent distributors. Motorola is in this relationship with distributors and agencies in Eastern Europe. Problems that arise in this type of international distribution channels include organizational problems to coordinate the supply chain as well as “conflict between its members” (Dickerson and Chuhlomin 2005). The Motorola manufacturing company selling to wholesalers in Russia, overcame the rate of the problems by using of cross-cultural analysis proposed by A. Trompenaars ()and Charles Hampdenom-Turner ().The purpose of the research of Dickerson and Chuhlomin (2005) is to build upon using cross-cultural analysis by adding necessary enhancements. to ensure a long-lasting competitive advantage. A strategic risk that needs to be lessened is the problem of conflict along the distribution channels.
The distribution channel model does not take into account direct sales, but focuses instead on the manufacturer (in this case Motorola) or the manufacturer’s “sales division, the independent distributor, and the end user” (Dickerson and Chuhlomin 2005: 1). Many levels in the supply chain are analyzed and the cross-cultural model can accommodate a large number of players. The players include the distributors of both retail and wholesale items and the dealers. The supply chain is divided into the stage design and operational management. The company leader in charge of managing distribution channels needs to put supply chain efficiency before customer segmentation. The distribution chain is respected as part of the value chain. The cross-cultural problems arise within the operational management sector.
Dickerson and Chuhlomin (2005) have observed that the culturally learned thinking and values of managers and policymakers during the operational sector. Conflict arises between the value system of the managers and the value system of the distributors in the supply channel. When conflict cannot be resolved the operational management (sector), the problems generally enter the system entering when linking the supply chain with the distributors (Dickerson and Chuhlomin 2005). Conflicts are the cause of diverse problems with customers, so must be avoided to reach the goal of all players, making a profit. The stability of the whole system decreases.
Western corporations like Motorola make a mistake when using a plan that works in the USA in Eastern Europe. Often the strategy for another country is only based on the national economy in that country. Therefore when conflicts arise, no institutional mechanisms are in place to account for cultural differences. Dickerson and Chuhlomin (2005: 6) conclude that “the theory of management of distribution channels in an international context should be substantially supplemented by a section on how to mainstream institutional and cross-cultural factors in the process of strategic and operational management of distribution channels.” The researchers’ view is not universally accepted, some insist that USA management can fit anywhere (Rosenblum 2004).
Many intercultural communication problems arise and then lead to conflict. Dickerson and Chuhlomin (2005) list some of the major problems arising at Motorola. Firstly, when company managers including the distribution managers assume that competition issues are resolved by the adage ‘survival of the fittest’ regardless of the culture and degree of development of the country, then developing a network of dealers is not likely to be organized successfully. Secondly, at Motorola the managers retained the value orientations of the Chicago headquarter. Thirdly, the distribution managers do not take time to evaluate their choices of distributors. Fourth, the parent company establishes relationships with numerous distributors, and this “undermines the foundations of profitable activities of those companies who have long been in this business” (Dickerson and Chuhlomin 2005 11). Fifth, Motorola initiated differentiated prices and in that way the market divided into “three different pricing conditions” ((Dickerson and Chuhlomin 2005 11). Sixth, ethical norms were not set to alleviate problems among Motorola’s distributors, so distributors of the same Motorola products continually competed with each other. Seventh, Motorola only uses a one-way communication, from the top to the level of distributors, ignoring the expertise of the distributors. The hierarchal strategy causes Motorola mangers to miss valuable information about local economic conditions and other marketing developments. An eighth major problem is the development of “gray” markets by the distributors; the illegal and unofficial sale of scarce items. Finally, Motorola retailers end up “competing with their own dealers” (Dickerson and Chuhlomin 2005 11).
The above problems need to be discussed with reference to cross cultural value differences and perspectives. The discussion needs to be managed so that causes of conflict are discussed openly. And then, the goal of setting up measurements to establish a regional strategy by Motorola can be initiated. Dickerson and Chuhlomin (2005 12) concluded from their research that in cultures similar to Russia, an American corporation needs to resolve cultural problems from two directions; by both the control distribution channels and distributors. Chicago-based Motorola headquarters took the measures suggested by the research conclusions and the European headquarters, headed by a German, integrated cultural characteristics and behavior of Russian distributors in the supply chain channel. The Russian market is also taken into account when policy-making.
