Management of Cross Cultural Teams

Table of Contents

II. Index of Figures

III. Index of Abbreviations

1. Era of Globalization
1.1. Influence on Companies
1.2. Influence on Markets

2. Management of Teams
2.1. Four phases of Team-Building
2.2. Expectable Problems
2.2.1. Direct versus Indirect Communication
2.2.2. Norms for Problem-Solving and Decision-Making
2.2.3. Time and Pace
2.2.4. Differences in Work Norms and Behavior
2.2.5. Violation of Respect and Hierarchy
2.2.6. Lack of Language
2.2.7. Digital Teams
2.3. Interactions

3. Range of Influence
3.1. Structural Level
3.2. Personal Level
3.3. Cultural Level

4. Strategies
4.1. Adaption
4.2. Structural Intervention
4.3. Managerial Intervention
4.4. Exit

5. Conclusion

IV. List of Literature

II. Index of Figures

Figure 1: Progression of the rates of duty.

Figure 2: Project Team Performance Curve

III. Index of Abbreviations

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1. Era of Globalization

The 21. Century is the era of globalization. The growing number of the opportunities in the fields of international transport and communication infrastructure, the progressive deregulation of the international trade policy and the global deregulation of the financial markets were the primary forces of globalization.¹ In literature the process of globalization is structured by four theses: the novelty thesis, the thesis of return, the continuity thesis and the transformation thesis.² All these theses have one statement in common: globalization influences markets and companies. A lot of international operating companies have projects spanning a variety of nationalities, involving great geographical distance and a range of time zones.³

1.1. Influence on Companies

In the 90s, the three big German car producers (BMW, Daimler-Benz, Volkswagen) invested for a long term into advanced internationalization strategies. They recognized that it would be impossible to reach a quantitative increase only by the western European market. All of them decided to reinforce their presence of manufacturing in the respective countries.⁴ This fundamental strategically change had a massive influence on the organization of the companies. Within a short period of time they had to change the way to think and to work. Multi-cultural-teams (MCT) became necessary to transfer know-how to the new manufacturing locations. They were faced with a new, unknown situation.

1.2. Influence on Markets

After World-War II the trade barriers made it nearly impossible to trade across borders. This had a negative effect on the global wealth and stability. As a consequence, the General Agreement of Traffics and Trade (GATT) was signed in 1947. In this agreement, 23 states reached a settlement to deregulate the cross-border trade. As a consequence, during the years 1947 to 1994 the average rate of duty subsided by 80% (see Figure 1). The founding of the World-Trade-Organization (WTO) in 1995 solidified this trend. Nowadays the WTO consists of 159 member states, which amounts 90% of the total global trade volume. Multi-National-Companies (MNC) have learned to use this development for their business models. They used the benefits in the respective countries and they became the main actors in globalization.⁵ To give the responsibility completely to profit-oriented instututions involves the danger of abuse. To prevent this an intervene from the goverment was required. For example in 1983, as the European Community decided on a restrictive aggrement against Japanese products like video tape recorders and vans.

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Source: OECD (2007), OECD-Wirtschaftsausblick, issue 2007/1, OECD Publishing.

Figure 1: Progression of the rates of duty.

2. Management of Teams

Because of the change in organizations and markets, there were several challenges for managers how to manage MCTs. For them it is important to face the possible problems right from the beginning and react as soon as possible. Even during the phase of Team-Building, the manager can prohibit unnecessary problems. Also the digitization of teams and the cultural aspects of the team members can have influences to the team performance.

2.1. Four phases of Team-Building

In literature the development of a team is divided in four phases (see Figure 2).

Referring to: Defense AT&L (2008), Defense AT&L, Issue 2008/3, Defense AT&L Publishing.

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Figure 2: Project Team Performance Curve⁶

The first phase is the forming phase. At this stage of the process, team members meet, express their expectations and try to get an overview of the respective strengths and weaknesses. The primary function of this phase is orientation. Within this phase the team performance usually drops. The second phase is the storming phase. This stage is characterized by the heterogeneousness of the team members and by the problems, which come with diversity. This is the most difficult stage in the team-building process. Afterwards, the norming phase, determines over success or failure. In this phase the team members express their willingness to cooperate with each other. The following performing stage is the mature stage of development. In this final phase the team has functional norms and work methods to solve issues and make decisions. In each phase it is necessary to recognize the potential issues and develop apposite solutions.

2.2. Expectable Problems

In addition to the problems during the team building process, which are based on personality and can also appear in same cultural teams, there are several other problems within a team based on the cultural differences.

2.2.1. Direct versus Indirect Communication

In Western, low-context cultures the communication is typically explicit and direct. The meaning is not hidden in the context and there is no interpretation needed. In other cultures this is not true. For example, in the Japanese culture, the meaning is hidden in the way the message is presented. Those are a high-context cultures. In a MCT the high-context cultures can understand the direct way of low-context cultures, but the low-context cultures have problems with the indirect communication of the high-context cultures.⁷

2.2.2. Norms for Problem-Solving and Decision-Making

This category, describes the cultural difference when it comes to the decision making process. There are differences in how quick a decision is made and how much analysis is needed before the decision can be made. For example: “A Brazilian manager at an American company who was negotiating to buy Korean products destined for Latin America told, “On the first day, we agreed on three points, and on the second day, the U.S.-Spanish side wanted to start with point four. But the Korean side wanted to go back and rediscuss points one through three.”⁸ Some team members preferred to focus on “hard facts” while others are focused on “soft variables”. These kinds of challenges were more easily to identify and can be observed in MCT as well as in same cultural teams. Here, fusion is a possible solution to optimize the quality of the decisions through the combination of the focus on soft and hard facts.

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¹ Cf. Bamberger, I., Wrona, T. (2012), P. 142

² Cf. Bell, D. (2003), P. 803

³ Cf. Oertig, M., Buergi, T. (2006), P. 23

⁴ Cf. Pries, L. (2000), P. 4

⁵ Cf. Verdier, L., Huwart, J. (2014), P. 40-45

⁶ Cf. Edison, T. (2008), P. 15

⁷ Cf. Behfar, K. et al. (2006), P. 239

⁸ Cf. Brett, J. et al. (2006) P. 88