Henley Business School

The Effect of Cultural

Diversity in Global Program
Management
By

Ilkka Koskinen, ID 2077627

Dissertation submitted in partial fulfillment of

the requirements for the degree of

Master of Business Administration

2008
1 Abstract

During the past 15 years the speed and intensity of globalization has reached
unprecedented levels. Availability of mobile investment funds and inexpensive
communication has changed not only the way we live, but how businesses operate.
Multinational companies are transforming into truly globalized companies with
functions located in the most suitable locations. The new organizational structure and
heterogeneous operating environment present new challenges and opportunities to
globalized companies.

As companies become more dispersed and organizations flatter, global programs have
become critical in the execution of strategic and large scale initiatives in globalized
companies. These transitional and cross-cultural efforts require new skills from
program managers, team members and program stakeholders. This study explores the
effects of cultural diversity on global programs. The target is to identify general
themes, challenges, opportunities and effects of diversity in global programs.

The study was conducted in a large global insurance company by interviewing 11

program managers with experience of global programs. The study begins by
exploring literature concerning general themes related to global programs and the
internal dynamics of diverse groups. Specific topics about cultures and global team-
work are studied in depth. Then the study moves to semi-structured interviews.
Finally the interview results are compared to the literature study. The intent is to
confirm literature findings and identify new information.

It is concluded that cultural diversity increases the probability of failure in global

programs. This is due to the increased communication overhead and constant
misunderstandings. However, internal diversity of the program teams is a key enabler
for success. Diverse teams can create broader solutions and provide more approaches
to solving problems. These capabilities improve the fit of the end-product on a global
and local scale. Crucial for success is how diversity is managed.
In addition the study proposes a new framework for managing global programs. After
a universally accepted program goal has been formulated, the balance of program
management activities rotates between social integration and self-verification
activities. Crucial is that efforts are focused on out-groups. By applying the
framework, the program manager can overcome obstacles hindering program
performance and pursue the opportunities provided by cultural diversity.

The findings create knowledge that can be applied directly to program management
practices and improve the success rates of global programs in the company. The
results are not generalizable due to the small sample size and the interviewees being
from only one company. On a more general level the findings provide a starting point
for further research in the area of management of diverse transitional teams and
strategic initiatives on a global scale.

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TABLE OF CONTENTS

1 Abstract .................................................................... 2

2 Introduction.............................................................. 8

2.1 Study Objective......................................................8

2.2 Personal Objective .................................................9

3 Background............................................................ 10

3.1 The Unification Strategy.......................................10

3.2 Global Demand ....................................................10

3.3 Program Management .........................................11

4 Literature Study ..................................................... 13

4.1 Culture .................................................................13

4.1.1 National Culture ...................................................15

4.1.2 Subgroup Culture .................................................18

4.1.3 Globalization ........................................................19

4.1.4 Applying Dimensions............................................20

4.1.5 Ethnocentrism and Perceptions of Out-groups ....21

4.1.6 Trust.....................................................................22

4.1.7 Perceptions of Time .............................................25

4.2 Implications of Cultural Diversity ..........................27

4.2.1 Performance ........................................................27

4.2.2 Culture Shock ......................................................29

4.2.3 Risks ....................................................................31

4.2.4 Management and Leadership ..............................32

4.2.5 Communication and Collaboration .......................35

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4.2.6 Intercultural Effectiveness ....................................38

4.2.7 Conflict Management ...........................................41

4.3 Benefits Management ..........................................48

4.4 Stakeholder Management ....................................53

4.5 Governance .........................................................53

5 Research Design ................................................... 56

5.1 Conceptual Framework ........................................56

5.2 Research Question ..............................................57

5.3 Methods ...............................................................57

5.3.1 Qualitative Research............................................57

5.3.2 Capturing Data.....................................................59

5.3.3 Analysis................................................................62

5.3.4 Validity .................................................................63

6 Interview Results ................................................... 66

6.1 Cultures and situational context ...........................66

6.2 Globalization ........................................................67

6.3 Ethnocentrism and Perceptions of Out-groups ....67

6.4 Trust.....................................................................68

6.5 Perceptions of Time .............................................68

6.6 Performance ........................................................69

6.7 Culture Shock ......................................................71

6.8 Risks ....................................................................71

6.9 Management and Leadership ..............................72

6.10 Communication and Collaboration .......................72

6.11 Intercultural Effectiveness ....................................75

6.12 Conflict Management ...........................................77

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6.13 Benefits Management ..........................................79

6.14 Stakeholder Management ....................................81

6.15 Governance .........................................................82

7 Discussion and Conclusions ............................... 83

7.1 Culture .................................................................83

7.2 Implications of Cultural Diversity ..........................86

7.3 Benefits Management, Stakeholder Management and Governance

92

8 Answer to Research Questions ........................... 94

8.1 Question 1: Effect of Cultural Diversity on Global Programs 94

8.2 Question 2: Cultural drivers improving success of global programs

94

8.3 Question 3: Challenges facing culturally diverse global programs 94

8.3.1 Benefits management ..........................................94

8.3.2 Stakeholder management ....................................95

8.3.3 Governance .........................................................95

8.4 Question 4: Program Management Tools Methods and Skills 96

8.5 Question 5: Setting Up Culturally Diverse Global Programs 96

9 Recommendations ................................................ 97

9.1 Company Specific ................................................97

9.2 Global Programs ..................................................97

10 Future Research .................................................... 99

11 Personal Development........................................100

Appendix a) References ..................................................101

Appendix b) Reading .......................................................115

Appendix c) List of Exhibits............................................116

Appendix d) Glossary, abbreviations and acronyms...118

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Appendix e) Cultural Dimensions ..................................123

Word count: 17 969

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2 Introduction

This study was conducted in a top 5 global multi-line insurance company. The global
insurance company (later GIC) has 60 000 employees and operates in 170 countries.
GIC aspires to become the leading global insurance group in the general and life
insurance markets.

GIC is in a phase of change; from a multinational company to a truly global player.

The change is driven by new business reality where global financial services are in
increasing demand. Companies providing global insurance coverage through a single
point of contact have a competitive advantage in the global market. The change is felt
on the operational level with global programs spearheading the new reality.

Success of global programs is crucial for achieving the globalization targets of GIC.
Without successful global programs GIC will remain a multinational and will not be
able to leverage the opportunities of a global presence.

2.1 Study Objective

The field of this study, global program management, is mostly unresearched. The
target is to

• Identify themes related to cultural diversity that affect success of global

programs.

• Capture experiences and to identify how program managers make sense of

their surroundings and what reactions the sense-making creates.

• Identify program management processes that impact global programs with

cultural diversity.

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2.2 Personal Objective

The author works at GIC as a program manager. The study will improve the authors
understanding of his field of work. The personal objectives of the study are:

• Gain knowledge of challenges and opportunities a culturally diverse

environment provides.

• Gain ability to solve and avoid issues caused by cultural diversity.

• Improve the success rates of programs.

• Learn from the experience of others on how to deal with challenges and
exploit opportunities.

• Learn to understand the author’s cultural heritage and how other colleagues
may react to the generic responses the author’s cultural heritage prescribes.

• Share the knowledge with GIC.

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3 Background

3.1 The Unification Strategy

In the past functions and geographies in GIC operated independently; GIC was
known as “a conglomerate of independent companies”. During the 90’s GIC
experienced a period of growth through acquisitions. By 2002 the acquisitions phase
was over and consolidation was begun. The Unification Strategy (later TUS)
initiative was launched in 2004 to focus GIC on profit making by reducing
organizational segregation. The TUS is still in 2008 an on-going initiative targeting
the consolidation and globalization of GIC.

3.2 Global Demand

Global Business-to-Business (name changed) is the GIC unit managing corporate

customers on a global scale. It has experienced high growth in the past 5 years due to
increasing demand for global insurance services. The changes are driving GIC and
foremost Global Business-to-Business from a multinational corporation to what call
the final stage of globalization; a truly global company (Boyacigiller and Adler,
1991).

In 2007 GIC stated that the General Insurance business model is built on global
functions and practices, providing a global platform for local business delivery.
According to this statement, GIC top-level management is determined to globalize
GIC, while attending to local needs.

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3.3 Program Management

Programs are “a group of related projects managed in a coordinated way to obtain

benefits and control that would not be available from managing them individually”
(PMI: 2006). According to (IPMA: 2006) “a program is set up to achieve a strategic
goal. A program consists of a set of related projects and required organizational
changes to reach a strategic goal and to achieve the defined business benefits”.

Project Program Portfolio

The goal of a Is to produce Is to achieve strategic Is to coordinate,

deliverables. change. optimize and
align with
strategy.

Vision and Are related through Are realized by a Are aligned to

strategy the business case of program. and monitored in
the project. the portfolio.

Business Are largely Is usually included in Is excluded from

benefits excluded from a a program. the portfolio.
project.

Organizational Is often excluded Is usually included in Is excluded from

change from a project. a program the portfolio.

Time, cost Are defined in the Are roughly defined Are based on
business case and within the strategy; priorities and
are manageable in a are broken down to strategic targets
project. individual projects in the portfolio.
within the program.

Table 1. IPMA categories (IPMA: 2006)

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Common to both definitions is the large scale change and transitional nature of
programs.

The underlying themes in program management are (PMI: 2006):

• Benefits management.

• Stakeholder management.

• Program governance.

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4 Literature Study

4.1 Culture

“Culture is a generic solution to problems provided by the environment” (Fink et al,

2007). Trompenaars and Woolliams (2003) define culture as “a series of rules and
methods which a society or organization has evolved to deal with the regular
problems that face it.” Alas (2006) defines it as “a term used to mark a set of
parameters for collectives that differentiate each collective in a meaningful way”.
Triandis (2000) defines culture through language, time and geographic location:
“culture is a shared meaning system, found among those who speak a particular
language dialect, during a specific historic period, and in a determinable geographic
region”. (Foldy, 2004) expands this and sees cultures as “identities such as race,
ethnicity, nationality, religion, gender, and other dimensions of difference derived
from membership in groups that are socio-culturally distinct, that is, they collectively
share certain norms, values or traditions that are different from those of other
groups”. A widely used definition of culture is “a collective programming of the
mind” (Hofstede, 1984).

Depending on the situation an individual may act according to any cultural

programming in his/her heritage (Figure 1) creating a complex multilayered response
(Salk and Brannen, 2000) (Hofstede et al, 1990).

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 Level Place of Socialization

Nation Family

Values
Occupation School

Practices

Organization Workplace

Figure 1. Multilayered response (Hofstede et al, 1990).

Hofstede et al (1990) identify the variables and layers in culture (Figure 2). Notable
is that practices cut through all layers of culture except the values.

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 Symbols

Heroes
Rituals

Values Practices

Figure 2. Manifestations of culture (Hofstede et al, 1990).

4.1.1 National Culture

In culture research, scholars refer to cultural prototypes instead of stereotypes. A

prototype implies a distribution around a central tendency; a stereotype implies that
all members of a culture would act alike. (Alon and Brett, 2007)

A common way to describe the central tendencies is the usage of dimensions (general
rules and categories). Using dimensions allows comparing cultures. When a culture is
defined through dimensions it is assigned values on a range scale (e.g. collectivist to
individualist) (Brislin, 1976). Many studies have created dimensions (Appendix g).

Due to the large sample size in his research, the Hofstede (1980) four dimensions of
national value differences are commonly used in research.

15
Later Hofstede (1984) extended the dimensions to five:
• large vs. small power distance
• strong vs. weak uncertainty avoidance
• individualism vs. collectivism
• masculinity vs. femininity and
• long- vs. short-term orientation.

The divide between individualists and collectivist cultures has become a major
building block in understanding differences in cultures. The dimension has a strong
influence on thinking, knowledge management and communication; it is often
considered as the difference between the “western” world and Eastern and Latin
cultures (Perlitz, 1994). Ting-Toomey (1988) and (Hui, 1988) have found that
individualists represent only themselves and are concerned to preserve the dignity
and autonomy of themselves – the basic unit. Individualists respect the same for
others, but feel under no obligation to enhance or engage with others. Collectivists
see themselves interlaced and networked with “others” in so far that they are also an
extension of "others". They are obliged and concerned to save and protect both
themselves and also the “others”.

Triandis (2000) and (Chiou, 2001) use additional attributes horizontal-vertical further
describe the collectivism-individualism dimensions. Hofstede’s power distance and
the vertical-horizontal dimension are partially the same (Chiou, 2001).

The horizontal-vertical dimension plays an important role in predicting the outcome

of mixed-motive decision-making and tendency to co-operate with strangers.
Horizontal groups would always try to maximize their own benefit, but vertical
groups would try to beat their in-group in competition. Vertical groups would not co-
operate with strangers in situations, where co-operation is voluntary, business
partners were strangers to each other and the business situation concerns great deal of
uncertainty. (Chen and Li, 2005)

16
 Collectivist
Merge with in-groups (e.g. family,
tribe, co-workers, and nation).
Well-being of in-group is important.
Horizontal
Individualist
Seek individuality rather than
distinctiveness, i.e. “do their own
thing”.

Not sub-ordinate to in-group. Do not compare themselves to

Submit to the norms of their in-groups.
Willing to sacrifice personal identities
to in-groups.
Vertical
others.
Concerned with comparing
themselves with others.
Believe that competition is the

law of nature and desire to win in

all kinds of competitions.

Table 2. Collectivist versus Individualist and Vertical versus Horizontal Culture

(Chiou, 2001)

Hall (1976) divides cultures into low-context and high-context categories by their
ethno-linguistic characteristics. In high context cultures the message is dependent of
the situation, external environment and non-verbal behavior. In low-context cultures
a larger portion of the message comes through spoken language (Boyacigiller and
Adler, 1991). Research shows that low-context cultures tend to be analytic while
high-context cultures are holistic (Ishii et al, 2003).

High context cultures can change their communication style to low context style
(Adair, 2003) (Tjosvold and Wong, 2004), but low context cultures have difficulties
to change their behavior or understand high context communication (Adair, 2003).
The high-low context division is nearly the same as Hofstede’s individualist-
collectivist dimension (Adair, 2003).

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4.1.2 Subgroup Culture

Individuals belonging to sub-groups may act according to the subgroup culture,

instead of national norms (Salk and Brannen, 2000). Examples of such groups are
gender, generational, religious, linguistic groups. E.g. women have a tendency
towards collectivism and men towards individualism (Eaton and Louw, 2000).
Neglecting the effect of sub-group cultures would be a mistake, e.g. assuming that
Asian women behave like Asian men in conflict situations (Jehn and Chatman, 2000).

Effective subgroups can be formed intentionally even when they strongly contradict
the prevailing national culture, e.g. team-work based manufacturing plants in the
United Kingdom (Mueller, 1994).

From a national perspective organizational cultures are small pockets of subgroup

culture inside a nation (Perlitz, 1994). Organizational culture is “a hidden yet
unifying theme that provides meaning, direction and mobilization that can exert a
decisive influence on the overall ability of the organization to deal with the
challenges it faces” (Trompenaars and Woolliam, 2003). In multinational companies
organizational culture has a unifying effect over borders, making processes and
structures more similar (Muller, 1994).

Organizational culture has been studied extensively; however the definition of

organizational culture has severe gaps (Allaire and Firsirotu, 1984). Most
organizational theory is based on studies of one national culture, mainly American,
which cannot be expanded to a global setting (Hofstede, Boyacigiller and Adler,
1991) (Triandis, 1982) (Allaire and Firsirotu, 1984) (Suk, 1999). Cultural dimensions
inside an organization may vary, e.g. the engineering department sees the culture as
rigid and top-management sees it as flexible (Johnson-Cramer et al, 2007).
Organizational culture can also be understood as a mutual-equivalence structure
where organizations are convenient means through which participants seek to achieve
their varied ends (Allaire and Firsirotu, 1984). This view is almost opposite to the
conventional meaning of culture: “shared values, beliefs and norms”.

18
4.1.3 Globalization

The drivers for globalization are today the “instantaneous and inexpensive
communications; abundant, readily accessible information; and plentiful, highly
mobile investment funds” (Boatright, 2000). Globalization is not a new phenomenon,
e.g. immigration peaked already in the early 20th century (Ghemawat, 2007b).
However, the nature of globalization has changed in the past 15 years and impacts
local cultures with unprecedented speed and intensity (Prasad and Prasad, 2007).

The efficiency of internal communication systems is the source of competitive

advantage for multinational corporations (Gupta and Govindarajan, 2007), which
would indicate that globalization drives the rise of multinationals. The rise of
multinationals is often seen as a negative consequence of globalization. Ghemawat
(2007a) points out that consolidation and the rise of multinationals is a perception
mistake; some industries are consolidating while others are dispersing due to
globalization.

In order to survive truly global companies must operate globally as “top-quality,

least-cost, state-of-the-art service providers”. Operational functions are no longer
confined to national borders; functions are located flexibly in the best possible
location. In truly global companies strategic coordination is global and integrated,
while high differentiation and local responsiveness are retained. As a result cross-
cultural work is no longer an exception; it is a part of the daily routine. (Boyacigiller
and Adler, 1991)

Global presence makes available five value-creation opportunities: to adapt to local

market differences, to exploit economies of global scale, to exploit economies of
global scope, to tap optimal locations for activities and resources, and to maximize
knowledge transfer across locations (Gupta and Govindarajan, 2001).

19
Globalization is often described as the Americanization of the world. Globalization
invites all organizations to acquire some attributes from the west (Carr, 2005);
although western ethics and culture may not be greeted by all cultures (Triandis,
2003). Ghemawat (2007b) contends that American corporations are under equal
pressure to change.

Not only companies, but also private people are enjoying the cheaper communication
and travel. Cross-cultural entertainment and global tourism have reached extents
never experienced before (Prasad and Prasad, 2007). Due to the intense cross-border
exchange, also American culture is being changed by foreign cultures (Prasad and
Prasad, 2007).

4.1.4 Applying Dimensions

Dimensions by themselves cannot answer questions such as why Swedes behave

mostly according to the feminine dimension, but sometimes in a masculine fashion
(Nielsen and Gannon, 2006), why Americans are the most individualistic, but have
also the highest rate of charity work, why Japanese have a high tendency of
uncertainty avoidance, but make contracts with intentional open ends, why Chinese
appear to be extremely respectful and deceptive at the same time (Osland and Bird,
2000). The afore-mentioned are examples of cultural paradoxes that cannot be
understood through cultural dimensions. Dimensions are a poor indicator of how
cross-cultural co-operation works, because they do not consider the social setting or
context, such as power-relations (Hyunghae and Ybema, 2005) (Osland and Bird,
2000).

Cultures move with time on the dimensions (Chiou (2001), (Valdiney et al, 2003)
(Whiteoak et al, 2006). Certain dimensions remain unchanged through time, but
these dimensions have not been clearly identified in current research (Nielsen and
Gannon, 2006).

20
Not all individuals can be expected to always act according to dimensions. The
differences between individuals are greater than differences between national
cultures. (Osland and Osland, 2006)

4.1.5 Ethnocentrism and Perceptions of Out-groups

All cultures are ethnocentric, which limits our cognitive perceptions, i.e. causes
“culture blindness” (Triandis, 2003). Individuals expect that what their culture
dictates as “good or bad” can be used as a standard for comparing other cultures.

When observing other cultures people tend to commit the “fundamental attribution
error”. People see the success of their in-group to be due to internal factors and the
failures of their in-group due external factors. With out-groups the opposite is
observed, success is due to external factors and failure is due to internal factors.
(Triandis, 2003) (Kanter and Corn, 1994)

There is also a tendency to favor the in-group and devalue other groups. In addition
to simply favoring in-groups, people remember perceived stereotypical behavior
better than non-typical behavior, i.e. positive behavior of others is more easily
forgotten than the positive behavior of their in-group. (Kanter and Corn, 1994)

In large cultural groups (e.g. USA, China, Japan, Latin America) people have little
international experience and cross-border exchange. In these groups cross-cultural
skills are less developed and they have more difficulties to work with other cultural
groups. Members of such cultures are likely to be “monolingual, ethnocentric, to
rank their culture above other cultures, and to see a large difference between us and
them”. (Triandis, 2003)

21
4.1.6 Trust

Effective workplaces are characterized by high levels of trust (Golesorkhi, 2006)

(Gill et al, 2005). Trust enables people to take risks (Jarvenpaa et al, 1998).
Employees trust each other according to the perceived level of trustworthiness (Gill
et al, 2005) (see also Figure 3). A commonly used set of determinants for
trustworthiness are: integrity, ability, and benevolence (Gill et al, 2005) (Jarvenpaa et
al, 1998) (Mayer et al, 1995).

In a cross-cultural setting cultural similarity plays a key role in trust (Golesorkhi,

2006). It is natural for all cultures to trust their in-groups and distrust dissimilar
groups (Triandis, 2003). In high power-distance cultures others are more likely to be
considered a threat than someone to trust (Casimir et al, 2006). High context cultures
define trustworthiness through the context of the situation and events surrounding the
situation (Tan and Chee, 2005) (Casimir et al, 2006).

Perceived risk

Ability
Outcome

Risk taking in a
Trust

Benevolence
relationship
Integrity

Trustor’s
propensity

Figure 3. Model of Trust (Mayer et al, 1995)

22
When the trustor does not have knowledge of the subject and must rely on an expert
(trustee), cultural similarity becomes the most important factor (Siegrist et al, 2000).

Often the managerial response to not having knowledge is tightening control and
monitoring. Tightening control and monitoring reduces the perception of
trustworthiness of the manager (Whitener et al, 1998) and reduces trust in the
organization (Schoorman et al, 2007).

Trust propensity varies according to the trustor’s culture, developmental experiences,

and his or her personality traits (Bird and Osvald, 2006) (Brown et al, 2004) and
becomes especially important in cross-border knowledge exchange (Roberts, 2000).

In collectivist cultures trust is built only over time. Some cultures prefer the use of
intermediaries to lend trust to the relationship in the beginning (Bird and Osland,
2006). When dealing with collectivist, high power distance, high context and high
uncertainty avoidance cultures, trust building exercises are required before and
during interaction (Elahee et al, 2002).

Individualists tend to trust strangers until otherwise proven (Bird and Osland, 2006)
(Alon and Brett, 2007), but will never trust their partners as deeply as collectivists.
Individualists are also more prone to use information to pursue opportunistic targets
(Griffith et al, 2006). In high power-distance cultures distrust between supervisors
and sub-ordinates is customary, because in these cultures superiors do not actively
build trust; they create stability through inequality (Casimir et al, 2006).

“Mutual trust is most likely to occur when people are positively oriented to each
other’s welfare” (Brown et al, 2004). Richness of face-to-face communication helps
to reduce difficulties caused by cultural differences and hence expedites the process
of building trust (Roberts, 2002). When communicating electronically it is difficult to
judge benevolence, hence integrity and ability play a more important role in virtual
teams (Jarvenpaa et al, 1998).
23
Trust is pivotal in preventing geographical distance from leading to psychological
distance in a global team (Jarvenpaa et al, 1998). Globally dispersed teams have less
possibilities to reflect and develop trust (Sauders et al, 2004) (Maloney and Zellmer-
Bruhn, 2006); the global and virtual context constrain and impede the development
of trust (Jarvenpaa et al, 1998). The resulting trust gap undermines credibility, saps
enthusiasm and commitment, often leading to mediocrity and teams failing to meet
even that modest level of performance (Walker, 2002). Reduced communication
increases also burn-out and reduces overall agility of the project team (Walker,
2002).

At the on-set of virtual collaboration ability is a leading factor in creating trust, with
time benevolence becomes more important (Jarvenpaa et al, 1998). Jarvenpaa et al
(1998) found that members in high trust teams exhibited individual initiative,
volunteered for roles, met their commitments and the team dealt decisively with
“free-riders”. The high trust teams in the research by Jarvenpaa et al (1998) used
confrontation to deal with “free-riders” and informed the project coordinator of non-
active members. These are typical modes of operation in individualist cultures.

Building trust in a relationship requires that one party makes the first move. Whitener
et al (1998) suggest that building trust should be initiated by the manager.
Impediments for the manager to make the move are:

• Motivational complexity: tension between building a relationship and

reduction of risk of opportunism

• Social dilemmas: conflict between self-interest and collective good

• Cultural values: trust propensity and individualism-collectivism dimensions

of the manager

(Whitener et al, 1998)

24
Jarvenpaa et al (1998) found that teams that start with actions and remain task-
oriented, have high levels of trust. If the members of the team become non-active e.g.
due to inability to fulfill tasks or unclear roles, the trust in the team will be low.

In a manager-employee relationship Whitener et al (1998) suggest that the

employee’s perception of the manager’s trustworthiness is influenced by the
manager’s:

• Behavioral consistency,

• Behavioral integrity

• Sharing and delegation of control

• Communication (e.g. accuracy, explanations and openness) and

• Demonstration of concern

Caldwell and Hayes (2007) state that three leadership traits are essential to building
trust: relationship development, resource utilization and image management. Image
management plays an important role in developing trust; it assures of the integrity
and consequently the trustworthiness of the manager (Caldwell and Hayes, 2007).

4.1.7 Perceptions of Time

In planning, actions and events must be sequenced. The key to sequencing is the
ability to answer precisely when actions and events occur (Hayden, 1998).
Differences in time visions vary between cultures (Saunders et al, 2004); time is a
societal construct (Hayden, 1998). Roughly time perceptions can be divided into
three: linear, cyclical and pendulum (Hayden, 1998). Without a common time
perception the ability to answer precisely when is more difficult.
25
Of the three types cyclical time is the most common. In cyclical time activities repeat
in loops, which can run parallel or move forwards. Events in cyclical time are not
distinct episodes with causal effect, they are repeatable. Cyclical time is used e.g. in
India. Linear time originates from Christianity and is most common in western
countries. In linear time people try to do all activities in a limited amount of time;
before time ends. Events are unrepeatable and ordered into sequences, which do not
move backwards. For people in neo-classical linear time the present is most
important. For people in cyclical time the past or the future might be much more
important. (Hayden, 1998)

Individualist cultures typically have events scheduled by the clock; other cultures
have events schedule people (Alon and Brett, 2007). E.g. do we eat at 12:00 or when
the food is ready? In event-driven time events like before work and after work
synchronize the time on a micro scale. Religious feasts etc set the time on the major
scale e.g. before Christmas or after Christmas.

In linear time, processes can be described in stages. Especially in conjunction with

international research the stage models have been criticized. Is time moving
backwards, when something moves back to its original stage? (Hayden, 1998)

In some languages it is more difficult to describe sequences from the past or in the
future, because they lack the past or future tense (Hayden, 1998). In some cultures
the future is owned by God and suggesting that humans can plan and shape the future
is impossible and disrespectful (Alon and Brett, 2007).

26
4.2 Implications of Cultural Diversity

4.2.1 Performance

The changing competitive environment forces companies to become flatter and more
dispersed. In these organizations culturally diverse teams are playing a major role
(Gupta and Govindarajan, 2001).

Laboratory studies show that diversity within work groups increases effectiveness
(Richard et al, 2004) due to the work groups networks breadth and depth, (Hislop et
al, 2000), wider array of information and knowledge (Reagans et al, 2004) and
tendency to think in the broader context (Foldy, 2004). Diverse groups make bolder
decisions (Hambrick, Cho, & Chen, 1996), have greater decision-making
comprehensiveness (Simons, Pelled, & Smith, 1999) and produce more creative
ideas (O’Reilly, Williams, & Barsade, 1998)

Cultural differences cause many difficulties, e.g. high emotional conflict,

misunderstandings, high member-turnover and slow decision-making (Brannen and
Salk, 2000) (Foldy, 2004) (Hambrick et al., 1996) (O’Reilly, Caldwell, & Barnett,
1989). Field studies show that diversity is associated with negative performance
(Richard et al, 2004) because “diverse teams are unlikely to assume a cohesive,
community-like character; demographic diversity reduces internal coordination,
which hinders a team’s ability to succeed” (Reagans et al, 2004). The minority
members are less committed in teams (Kirchmeyer and Cohen, 1992). Earley and
Mosakowski (2000) prove that performance in teams has a U-shaped relationship to
heterogeneity: homogenous and highly heterogeneous teams have the highest
performance.

The specifics of global programs create a complex management setting. Unlike e.g.
expatriates on international assignment were a manager is sent to manage a foreign,
but culturally homogenous, local team, global programs are the collaboration
27
platform of multiple nationalities over long distances. Applying the Tuckmann
(1965) model for team building: forming, storming, norming and performing, it takes
longer for a diverse team to reach the performing phase (Earley and Mosakowski,
2000). Differences in cultures do not create poor performance; poor performance is a
result how the differences are managed (Brannen and Sal, 2000). Global presence
allows the manipulation of team heterogeneity. Due to skill requirements or political
reasons, the manager’s ability to manipulate diversity is restricted (Reagans, 2004).

When facilitating efficient team work two dimensions need to be considered: social
integration and self-verification (Maloney and Zellmer-Bruhn, 2006). Social
integration is needed to create a safe environment for individuals to express
themselves and self-verification is required to assure that individuals keep their
individual perspective when contributing to the input.

28
 High Failure to Effective
capitalize fully on Global Team
deliberate
Social Integration

heterogeneity

Ineffective Unlikely
global team
Low

Low Self-Verification High

Figure 4 Valuation and verification as dimensions of team effectiveness (Maloney

and Zellmer-Bruhn, 2006).

4.2.2 Culture Shock

Culture shock is “the situation where an individual is exposed to new ways of

thinking and acting. It is a mixture of reactions to stress from being exposed to a new
environment, cognitive fatigue from trying to decipher spoken, behavioral,
contextual and social communications, role shock from changes in and elimination of
one’s social role and finally personal shock from loss of interpersonal contact with
significant others” (Winkelman, 1991).

29
 Contextual and personal Mediating psychological states Experienced emotions
variables

Cultural
Knowledge

Psychological Experienced face threat / Embarrassment

safety norms validation or Pride
Psychological
Toll
Performance
Norm Experienced performance Increased by
anxiety or
complexity difficulty / efficacy negative emotions
Confidence
Decreased by
Guilt, distress,
positive emotions.
Norm Experienced identity conflict anxiety or
discrepancy / fit Contentment,
excitement

Personal values

Figure 5. Determinants of psychological toll (Molinsky, 2007).

Working with other cultures increases stress, because of the uncertainty of social
roles and how to comply with them (Shaffer et al, 2006). To cope in culture shock
situations individuals resort to cultural code-switching; they accommodate the foreign
culture by acting in a way that contradicts their culture (Molinsky, 2007). This is
emotionally depleting, but through experience individuals can learn to manage the
situation in a less burdening ways. (Molinsky, 2007)

30
4.2.3 Risks

Certain cultures have a tendency to systematic overconfidence when judging the

result of a risky activity (Weber and Hsee, 2000). E.g. Chinese will take higher risks
than Americans (Fung, 1999), but the Japanese will evaluate the probability more
correctly than Europeans and Americans (Weber and Hsee, 2000). The difference is
explained by the differences in world-views, experience in critical thinking and social
factors (Weber and Hsee, 2000).

World-view differences could be the divided between the probabilistic-causal view

and a deterministic view. The former searches for causes and effects and the probable
paths events would take; finally coming to a conclusion of what is most likely to
happen. A deterministic view takes all end-results as equally likely; something might
happen or it might not. (Alon and Brett, 2007)

Depending on their culture children are taught to follow traditions and precedents or
to think critically. Critical thinking reduces over-confidence (Weber and Hsee, 2000).
In some cultures solutions must be based on precedence and tradition; innovation is
strongly discouraged or even forbidden (Alon and Brett, 2007).

Cultures assess risk exposure differently. Individualist cultures judge risk according
to the probability of the downward risk, but collectivist cultures base decisions on the
size of the downward risk. Weber and Hsee (2000) assume that the difference is due
to the collectivist’s social network working as a “cushion”; it is expected that any
negative outcome is born by the social network of the decision-maker. The lack of a
“cushion” makes individualists more risk-averse as they bear the negative outcome
alone. The theory is supported by the fact that the difference between collectivists and
individualists disappears for risks without a “cushion” e.g. personal health (Weber
and Hsee, 2000). The risk of losing “face” is in fact weighted much more severely in
China than in the west (Tse et al, 1988).

Cultures pick some risks as relevant and others are ignored. What one culture
perceives as an opportunity another may perceive as a threat. E.g. people from
31
hierarchically structured societies see technological advancements as opportunities
while other types of societies perceive them as threats (Weber and Hsee, 2000).

Hsee and Weber (1998) suggest that when differences in perceived risk are the
driving force behind preferences for the way the parties define and perceive the risk,
an exploration of cognitive and perceptual variables is required. If the driver is the
attitude towards risk the preferred affective response towards the risky choice needs
to be explored.

4.2.4 Management and Leadership

Leadership expectations vary and contradict between different cultures (Javidan et al,
2006). Leadership traits that are respected in certain cultures may be regarded as poor
in others (Weaver, 2001).

32
 Cultural Leadership Dimension

Value-Based
Charismatic /

Oriented
Team-

Participative

Oriented
Humane

Autonomous

Protective
Self-
Societal Cluster

Eastern Europe M M L M H H
Latin America H H M L L M
Latin Europe M M M L L M
Confucian Asia M M L M M H
Nordic Europe H M H L M L
Anglo H M H H M L
Sub-Sahara Africa M M M H M L
Southern Asia H M L H M H
Germanic Europe H M/L H M H L

Middle East L L L M M H

Table 3. Comparison of leadership dimensions (Javidan et al, 2006). H=high rank;

M = medium rank; L = low rank. H or L (bold) indicates highest or lowest cluster
score for a specific Cultural Leadership Type dimension.

The cultural environment constrains common management functions such as:

defining goals, planning, selecting people, training, controlling people and motivating
people (Triandis, 1982). The managerial response is a result of many factors; culture
among others (Lindell and Arvonen, 1997). The ability to cope flexibly and positively
with cultural relativity has become a key requirement for global managers (Suk,
1999) (Javidan and House, 2001). Globally dispersed teams that are together only for
a transient period of time are the most difficult to manage (DeRosa et al, 2004).

33
According to Javidan et al (2006) there are universal facilitators of leadership
effectiveness:
• Being trustworthy, just, and honest (integrity)
• Having foresight and planning ahead (charismatic-visionary)
• Being positive, dynamic, encouraging, motivating, and building confidence
(charismatic-inspirational)
• Being communicative, informed, a coordinator, and a team integrator (team
builder)

Similarly Javidan et al (2006) list universal impediments to leadership effectiveness:

• Being a loner and asocial (self-protective)
• Being non-cooperative and irritable (malevolent)
• Being dictatorial (autocratic)

Culturally contingent endorsements of leader attributes are according to Javidan et al

(2006):
• Being individualistic (autonomous)
• Being status conscious (status conscious)
• Being a risk taker (charismatic, self-sacrificial)

Liddell (2005) identifies six global leader behavior dimensions: the transformational-
charismatic leader, team-oriented leader, self-protective leader, participative leader,
humane style leader and the autonomous leader. Of these leadership dimensions the
transformational-charismatic leader was universally strongly endorsed. This is also
the most difficult leadership dimension to learn (Liddell, 2005). Casimir et al (2006)
contend that transformational leadership is not necessarily appropriate in collectivist
cultures, because it may jeopardize group harmony. Casimir et al (2006) further
suggest that in collectivist cultures leadership plays a less important role and
performance is driven through the groups norm setting, e.g. how hard to work and
external factors e.g. unemployment rate.

34
Members of a sub-group do not necessarily conform to the dimensions of their
national culture; generalizations about effective leadership in a sub-group setting do
not always hold true (Salk and Brannen, 2000). The applicability of management
principles stemming from national culture theory to a cross-cultural setting is under
serious questioning (Suk, 1999).

According to Liddell (2005) leaders with certain traits have to be selected according
to the culture of the people they will be leading. (Murtha et al, 1998) (Gupta and
Govindarajan, 2001) and (Maloney and Zellmer-Bruhn, 2006) indicate that successful
global leadership requires a global mindset. According to Maloney and Zellmer-
Bruhn (2006) this requires that managers are able to attend to local needs and respond
to global demands of scale and scope. The mindset requires also that individuals have
gathered international experience that makes them sensitive to other cultures and
allows them to treat individuals as people instead of stereotypes of national cultures
(Gupta and Govindarajan, 2001).

4.2.5 Communication and Collaboration

The internal knowledge transfer system in a multinational corporation is the source

of their competitive advantage (Gupta and Govindarajan, 2000), because
collaboration and knowledge sharing is what makes multinationals better than their
competition. Cultural factors are the most important inhibitors for usage of
knowledge management systems in a multinational corporation environment
(Damodaran and Olphert, 2000). The willingness of local contributors to share their
knowledge is dependent on the geographic and cultural distance (Li and Scallion,
2006) (Child et al, 2002). With rising cultural diversity, intra-team openness of
communication and the intensity of knowledge transfer are reduced (Puck, 2006).
.
On the other hand the limited role of information technology in knowledge-sharing is
not due to cultural or social factors, but the fundamental character of knowledge

35
itself (Hislop, 2002). Current technical solutions are able to transfer only partially the
explicit component of knowledge (Hislop, 2002) (Roberts, 2000) and have almost no
capabilities to transfer the tacit component (Bhagat et al, 2002). Notable is that
collectivist cultures are more likely to capture and have interest in tacit knowledge
(Bhagat et al, 2002).

Collaboration is promoted by trust (Hislop, 2000), especially in the case of virtual

collaboration and knowledge transfer (Brown et al, 2004) (Roberts, 2000) and cannot
be based only on a formal contract. Griffith et al (2006) state that trust is the first step
to sharing of information (Figure 6).

Relationship Resources Knowledge Resources

Trust Commitment Information Problem

Sharing Resolution

National Culture

Figure 6. Conceptual model of relationship and knowledge resources (Griffith et al,

2006).

36
Any technological implementation of knowledge management systems will fail
unless the organization has a knowledge-sharing culture (Damodaran and Olphert,
2000). Griffith et al (2006) describes a knowledge-sharing culture as commitment to
the relationship. Cultures that target building long-term relationships, roughly
collectivist cultures, are more successful at sharing information once trust and
commitment has been secured in the relationship (Elahee et al, 2002) (Griffith et al,
2006).

The way information is conveyed is culturally based (Triandis, 2000) (Triandis,

2003). Individualists present one fact after another; collectivists start with the
conclusion and then progress through an interrelated series of relationships. Also
assumed consequences differ between cultures; according to individualists good is
followed by more good, but according to collectivists good is followed by bad
(Triandis, 2003).

The limitations of modern communication tools also benefit communication, because

they reduce majority influence and the need for normative behavior (Zhang et al,
2007). This results in slower decision-making, but allows teams to leverage diverse
opinions when creating solutions. Virtual communication creates also new rules for
communication, which break through the culturally defined politeness barriers
(Morand, 2003), hence improving team work.

All individuals try to accommodate and adapt in cross-cultural communication

situations (Tjosfold and Wong, 2004). In mixed-culture settings high-context
cultures can change to low-context communication to facilitate information exchange
(Adair, 2003).

37
4.2.6 Intercultural Effectiveness

To adapt to new cultures one must learn to suspend at least some culturally based
reactions. This does not mean that one should give up one’s identity, values or
culture. But one must learn to manage culture shock. To effectively operate in a
cross-cultural environment one must have the ability to:

• “Deal with psychological stress

• Communicate effectively

• Establish interpersonal relationships

• Understand and adjust to another culture and

• Deal with different social systems”

(Winkelman, 1991)

To achieve the above one must have cultural intelligence (Molinsky, 2007). Cultural
intelligence is a mixture of:

• Cognitive capabilities: ability to recognize cultural differences, e.g. values,

and to understand that one is in a situation of cultural difference (Molinsky,
2007) (Osland and Bird, 2000) (Winkelman, 1991),

• Motivation and energy to learn about and how to function in cross-cultural

situations (Molinsky, 2007)

• Behavioral capabilities: the ability to perform new skills properly in a foreign

environment. (Molinsky, 2007)

In addition resistance to emotional stress is required to manage code-switching

situations (Molinsky, 2007) (Winkelman, 1991).

38
Shaffer et al (2006) found that “emotionally stable, outgoing and agreeable
expatriates, who are high in openness to experience”, function better. Osland and
Osland (2006) found that expatriates manage the situations in the following ways:

1. Look for reasons to explain the situation and understand why the other culture
behaves as it does, i.e. understand the “foreign” side of the paradox.

2. Determine what ones role is in the particular situation and gauge whether you
can influence or change it. And determine whether the foreigner has the right
to initiate change.

3. Weigh the contingencies of the situation: What would happen if one chose to
act on either side?

4. Discern the critical factors (norms or actions) essential for success.

5. “Pick battles” in headquarters vs. local conflicts and avoid losing causes.

6. Accept what one cannot change.

7. Learn from the experience and apply it to the next situation.

According to Winkelman (1991) the above steps are possible only when the
individual enters the adaptation phase of culture shock. Prior to the adaptation phase
individuals try to confront, flee or isolate them from the cause of shock. The
adaptation phase can be expedited or made more comfortable with training and
preparation (Winkelman, 1991) (Osland and Bird, 2003) (Triandis, 2003).
Winkelman (1991) states that it is important to recognize the differences between
own cultural values and the new culture. However, in anxiety producing situations
individuals tend to fall back into their cultural behavior models, i.e. in the most
difficult situations lessons from cultural training are not applied (Molinsky, 2007).

Defining cultures through dimensions does not provide much value by themselves
(Morand, 2003). No individual exactly represent their culture and cannot be managed
simply as a stereotype (Tjosvold and Wong, 2004). Winkelman (1991) states that

39
individuals who valued their intercultural experiences positively illustrate that
intercultural effectiveness skills do not only remediate culture shock, but also
facilitate cultural adaptation. Experience and contact with other cultures plays an
important role in learning how to deal with culture shock, and a new culture. (Dow,
1998) (Kanter and Corn, 1994). Triandis (2003) suggests that people should simply
get to know other cultures to reduce “culture blindness”. It is especially important to
have an opportunity to compare the defects and limitations of ones national culture
with the advantages and triumphs of other cultures.

(Osland and Bird, 2000) and (Bird and Osland, 2006) see that understanding can be
created through a framework of sense-making (Figure 7).

Figure 7. Osland and Bird framework for cultural sense-making (Bird and Osland,
2006).

The sense-making framework requires skills from the users and understanding of
seeming cultural paradoxes. (Osland and Bird, 2000) and Osland (2000) suggest the
value of using mentors and coaches with insight of the foreign culture. Also using

40
cultural assimilation is proposed. In assimilation students are presented with a
problematic situation and the student tries to solve the situation with the guidance of a
mentor.

4.2.7 Conflict Management

Culturally diverse groups are more prone to conflict (Foldy, 2004). Conflict has also
a more negative effect on culturally diverse teams (DiStefano and Maznevski, 2000).
Conflict drives heterogeneous teams to compromise so strongly that their
performance becomes less than average or the teams turns in on itself with such
power that the team collapses.

Conflicts start with poor communication (Triandis, 2000). Most types of group
conflict stem from the tendency to form hierarchies; keep “us” on the top and “them”
on the bottom (Triandis, 2003). When grouping according to dissimilarity has been
accomplished, people are more likely confront or avoid each other, do not target
“win-win” situations and go for zero-sum, win/lose situations (Brewer, 1968)
(Tjosvold and Wong, 2004) (Triandis, 2003).

Hierarchy conflicts are more common in hierarchical societies; one does not want
make amends with something seen as “lesser” group, e.g. Mexican speakers in the
USA (Triandis, 2003). Furthermore the divide between “us” and “them” is stronger in
collectivist cultures (Triandis, 2003). Collectivist cultures also expose their dislike for
out-groups openly, while in individualist cultures the dislike is kept hidden and
conflict based on dissimilarity is not desired (Doucet and Jehn, 1997)

41
 Societal and Institutional Context

A C D E

Essential and Initial Contact Established Unified Group

Facilitating Contact
De-categorisation Re-categorisation
Situational
Salient
Factors
Categorisation

Initial Anxiety. Optimal Optimal

B
Optimal Situation Leads Situation Leads
Participants’ Situation Leads to Reduced to Maximum
Experiences to Liking Prejudice with Reduction in
and Without Generalization Prejudice
Characteristics Generalization

Time

Figure 8. Re-categorization and de-categorization (Pettigrew, 1998).

Sub-groups which dissolve the in-/out-group borders can be created to reduce conflict
(Wilson, 2000). However, superfluous differences between individual’s values may
prevent the formation of a sub-group (Salk and Brannen, 2000). Formation of a sub-
group requires the creation of a collectivist culture. All people have both individualist
and collectivist cognitions (Triandis, 2000), which allow the sub-group formation.

Hewstone et al (2002) note that the re-categorization and de-categorization (Figure 8)

may be short-lived or unrealistic when powerful ethnic or racial categorizations exist,
there is a history of antagonism between groups, or belonging to a super-ordinate
category constitutes a threat to the minority group. Creating a common in-group
culture restricts also the individual’s social identities and is considered an unstable
solution (Hewstone et al, 2002).

42
Impoliteness causes much of the confrontation in a cross-cultural environment
(Morand, 2003). Politeness is less important than personal freedom in individualist
cultures, but in collectivist cultures face-saving through politeness is valued (Weaver,
2001). Cultural dimensions can be applied to understand polite behavior: high social
distance and power distance require increasingly polite behavior (Morand, 2003).

Conflict in itself is not a problem; it is the way that conflict is managed that makes a
difference in team work (Walker, 2002). The absence of conflict is not beneficial to
individual or group performance (Jehn and Chatman, 2000). According to
Kirchmeyer and Cohen (1992), constructive conflict is the way to get heterogeneous
groups to generate better quality and more innovative results than homogenous
groups.

The type of conflict plays an important role on team performance. Relationship-

conflict is detrimental to performance (Jehn, 1997), but cooperative conflict promotes
productive teamwork, quality service, and effective leadership (Tjosvold and Wong,
2004) (Griffith et al, 2006). Without controlled conflict the benefits of diversity
cannot be realized in global teams (Maloney and Zellmer-Bruhn, 2006). Constructive
conflict brings the input of minority members to the same level as majority members
(Kirchmeyer and Cohen, 1992). According to Jehn (1997) the “optimal profile for
high-performance groups includes moderate task conflict, no relationship conflict,
little or no procedural conflict, with norms that consider conflict as acceptable,
perceptions that conflict is resolvable, and with little emotionality.”

43
 Acceptability
Norms Emotionality
Task Conflict

Group Performance
Relationship
Conflict

Process Conflict
Resolution Acceptability Importance
potential Norms

Figure 9. Model of group conflict and performance (Jehn, 1997).

Task and process conflict increase with the cross-functionality of the team.
Relationship conflict is affected by diversity, but the mechanism is complex and
impact on performance is difficult to identify (Pelled et al, 1999). Jehn and Mannix
(2001) have studied high-performance groups and note that the conflict profile
changes over time (Figure 10). Groups with the ideal conflict profile have: “similar
pre-established value systems, high levels of trust and respect, and open discussion
norms around conflict during the middle stages of their interaction” (Jehn and
Mannix, 2001).

44
 Legend
Conflict
Process conflict

Task conflict

Relationship
conflict

Project Time

finished

Figure 10. Conflict in high-performance groups (Jehn and Mannix, 2001).

Individualists tend to confront and resort to dominating styles, while collectivists

avoid disrupting group harmony and avoid bringing the conflict out into the open
(Weaver, 2001). Individuals from collectivist cultures feel especially unsure about
how to handle diverse multicultural demands in conflict situations (Tjosvold and
Wong, 2004). Open discussion is a western approach to conflict management and not
always suitable (Tjosvold and Wong, 2004). Rewards and punishments vary between
cultures, e.g. personal rewards and threatening with firing are deemed inappropriate
in collectivist cultures. In collectivist cultures the threat of breaking the psychological
contract between GIC and the employee has a much greater impact on job motivation
(Probst, 2005)

If the conflicting parties could conclude that achieving “their” goals moves also “us”
closer to goal attainment, the conflict situation would be resolved (Triandis, 2003).

45
This is a self-verification strategy, which may resolve and prevent conflict, but does
not facilitate the benefits of team diversity (Maloney and Zellmer-Bruhn, 2006). The
usage of super-ordinate goals may also fail because they are being interpreted
according to the team member’s cultural background (Maloney and Zellmer-Bruhn,
2006). The self-verification strategy is often seen as applicable only in individualist
cultures. However, the approach can be applied also to collectivist cultures, as long
as the managers feel confident in the situation and team members felt that conflict is
positive (Tjosvold and Wong, 2004).

Kanter and Corn (1994) suggest that cultural tension is decreased when the
relationship between groups is made desirable, uncertainty is reduced, respect for
other groups is shown, communication channels are created, and business success is
ensured.

DiStefano and Maznevski (2000) suggest that conflict should be proactively managed
before it happens:

1. Teams map their diversity

2. Knowing their diversity mapping team members make a mental effort to
bridge opposing opinions
3. Teams members try to integrate different cultural behavior to allow maximum
creativity
4. The effort of their mapping/bridging/integration approach is so great that it
makes only sense when the team is working on high stakes targets or complex
problems that require a high level of creativity (DiStefano and Maznevski,
2000).

46
In the (Maloney and Zellmer-Bruhn, 2006) approach social integration is increased
by:

• Faultline bridges: designing teams with deliberate heterogeneity to prevent the

creation of sub-groups

• Swift norms: building of team norms and rules that make collaboration
structured

Self-verification is increased by creating:

• A global mindset: upper management promotes a mindset where operational

employees can attend to geographically local needs with global demands for
scope and scale

• Thought world windows: to proactively drive the team members towards a

shared reality through face-to-face meetings in different locations and the
rotation of meeting places

47
 Faultline Bridges
Social
Integration
Swift Norms

Heterogeneity
Global Team
and Distance
Effectiveness

Global Mindset
Self Verification

Thought World
Windows

Figure 11. Methods to improve effectiveness of diverse teams (Maloney and Zellmer-
Bruhn, 2006).

4.3 Benefits Management

The idea of program management is that the program manager identifies the
benefits and aligns projects to the creation of benefits. If the preferences of the
organization are to change the program manager re-aligns the projects with the
benefit of the organization.

48
 The Program
Discrete Benefits

Benefit
Project A

Program Management
Project A
Coordinated
Project B
Benefits
Project C Benefits
Project
Project D delivery Benefit
Project E
A…n
Project n

Benefit
Project n

Figure 12. Program Benefits Management (PMI 2006)

The benefits of a program can be tangible and / or intangible (PMI 2006). PMI (2006)
states the benefits management activities as:

• Assess the value and organizational impact of the program

• Identify the interdependencies of benefits being delivered among various

projects within the program

• Ensure that targeted benefits are specific, measurable, actual, realistic, and
time-based

• Analyze the potential impact of planned program changes on benefits

outcome

• Assign responsibilities and accountability for the actual benefits required from
the program

(PMI 2006)
49
To successfully complete the above tasks the program manager is assumed to have
knowledge of the environment and is able to create a well-organized and structured
system of preferences. The program manager would then understand and
communicate the costs and pay-offs in a universally accepted message. The strategic
orientation of an executive is strongly influenced by his/her cultural background;
benefits have multiple culturally based interpretations (Hitt et al, 1997). Also the
valuation of tangible and intangible benefits varies, e.g. collectivist cultures place
higher value on maintenance of harmony and westerners focus on hard facts like
revenue increase (Hitt et al, 1997) As Rippl (2002) states, “values frame the
interpretation of information”.

PMI (2006) benefits management activities presume certain responsibilities and

powers for the program manager. The authority to make decisions is culturally
dependent, e.g. the decision-making authority is not always delegated to the person
looking for the alternatives (Schramm-Nielsen, 2001). Feminine cultures on the other
hand prefer bottom-up planning in their decision-making (Hoffman, 2007).

The point in time when a decision is made varies between cultures (Schramm-
Nielsen, 2001) (Hitt et al, 1997). In some cultures the decision is made well before
execution, in others decisions are left to a time when execution has already been
started (Schramm-Nielsen, 2001). The time horizon differs between the cultures on
which benefits are targeted to be achieved (Hoffman, 2007).

The point the decision is made has also an effect on the ability to control; precise
upfront decisions are easier to measure than high-level dynamic decisions (Schramm-
Nielsen, 2001). Cultures with high uncertainty avoidance tend towards stricter control
(Hoffman, 1987). Some cultures prefer to leave the plan flexible while others prefer
rigid plans for execution (Hoffman, 2007). Planning increases the performance of
cultures with high power-distance and high level of uncertainty avoidance, while in
low power-distance and low uncertainty cultures the effect on performance is the
opposite (Hoffman, 2007).

50
The process of getting to a decision varies, between pragmatic emotional decisions to
thoroughly analyzed Cartesian decisions and variations between the two extremes
(Figure 13) (Schramm-Nielsen, 2001) (Hoffman, 1987). Individualist cultures allow
diversions from the process, while collectivist cultures require that all follow the
same process (Hoffman, 2007). Cultures with a feminine culture try to affect the
decision through negotiation, while other cultures prefer using position authority
(Hoffman, 1987).

Economic Administrative Muddling Accidental

Man Man Through Decisions

Full Bounded Incremental Intuition

rationality rationality rationality

Reason logic Routine Past Imagination

deduction experience creativity

Figure 13. Continuum of rational-irrational decision-making (Schramm-Nielsen,

2001).

In a mixed-motive situation also the cultural background affects the likely preferred
option. In a mixed-motive situation maximum gains are realized through mutual trust.
In a culturally diverse setting the decision-maker has to overcome his/her distrust
while not being able to determine the choice of the other decision-makers due to the

51
uncertainty of the foreign individual’s choice. A mixed-motive situation creates high
tension on the decision-maker. (Chen and Li, 2005)

Siegrist et al (2000) state that in communicating benefits and risks the similarity of
values plays a key role on how the receiver reacts to the sender’s message. This
implies that culturally similar groups accept the benefit and risk assessments.
Dissimilar cultures would be less accepting to the assessment. Trust is the intention
(Gill et al, 2005) and willingness (Mayer et al, 1995) to take risk in a relationship and
thus a key factor in the program manager’s ability perform benefits management
activities.

Figure 14. Model of value similarity's effect on perception of benefit and risk.
(Siegrist et al, 2000)

52
4.4 Stakeholder Management

The program manager creates and maintains relationships with stakeholders. This is
an inevitably political mediation task (PMI 2006) (Boatright, 1996), due to its nature
of trying to balance sometimes conflicting interests. Boatright (1996) sees the role of
the managers as of “a neutral referee” when trying to coordinate through the maze of
conflicting stakeholder interests.

Freeman and McVae (2001), define stakeholders as "any group or individual who is
affected by or can affect the achievement of an organization’s objectives”. In global
programs this is a large and varied group of individuals. However, the actual practice
varies; in the USA key stakeholders are stockholders while in France the group is
much broader (Hitt et al, 1997).

The way to manage stakeholders is dependent on the contract between the

stakeholder and the organization. Depending on the culture, implicit or explicit
contracts are preferred. In collectivist cultures the agreement between an individual
and a firm is a relationship between the in-group of the individual and the firm, i.e.
the in-group (e.g. family or community) of one employee could be a stakeholder.

However, even in collectivist cultures it is not always expected that stakeholders

should affect corporate decisions, i.e. the boss is not a “neutral referee” in all cultures.
In high power distance cultures, the boss is the ultimate expert (Weaver, 2001) and
makes decisions without consulting the in-group (Javidan et al, 2006).

4.5 Governance

According to Boatright (1996) governance mechanisms address wrongful harms,

misallocations and misappropriations. In a cross-cultural setting, all rules are under
constant multiple interpretations (Suk, 1999) and control systems vary between
subsidiaries due to the nature of the global organization (Gupta and Govindarajan,
1991).

53
Any form of co-operation entails the full range of ethical responsibilities (Boatright,
1998). Ethics are embedded in cultures and the interpretation of “good” varies across
cultures (Gonzalez, 2003) (Sarwono and Armstrong, 2001) (Cherry and Lee, 2003)
(Alas, 2006). E.g. hiring based on relationships common in a collectivist culture, but
in individualist cultures hiring decisions are based on the individual’s achievements
(Boyacigiller and Adler, 1991).

According to (PMI 2006) program governance is “the process of developing,

communicating, implementing, monitoring, and assuring policies, procedures,
organizational structures, and practices associated with a given program. The result is
a framework for efficient and effective decision-making and delivery management
focused on achieving program goals in a consistent manner, addressing appropriate
risks and stakeholder requirements”.

The above implies explicit contractual agreements; a preference of individualist

cultures. By other cultures explicit contractual agreements may be ignored or
regarded as a sign of distrust (Weaver, 2001).

According to Boatright (1998) organized activity requires a set of rules or established

expectations to guide each person's behavior. These rules and expectations would be
more or less formalized depending on the cultural dimensions of the team. Weaver
(2001) notes that in individualist cultures, shared values do not exist and formal rules
replace shared values. In collectivist cultures rules are less formal, although high
ethical standards may be the norm (Weaver, 2001). In low-context cultures written
information is better understood, but in high-context cultures the formal codes and
procedures may be ignored (Weaver, 2001).

Moral standards are not set by authoritative bodies (Alas, 2006), but the validity of a
moral standard is based on the reasoning provided by the authoritative body. How
much an authority is respected in a country is dependent on the cultural dimensions
(Javidan et al, 2006) (Weaver, 2001).

54
Dimension Ethical behavior

In-group collectivism Higher

Individualism Higher

Uncertainty avoidance Higher

High power distance Lower

Masculinity Lower

Table 4. Cultural dimension’s effect on ethical behavior (Alas, 2006) (Armstrong,

1996) (Ruhe and Davis, 2003).

Hofstede’s dimensions of national culture are limited when applied to ethics, because
ethical conduct is more strongly affected by subgroup culture, e.g. religion,
generation, gender, education, peers etc (Nyaw and Ng, 1994) (Barnett and Karson,
1989) (Lysonski and Gaidis, 1991) (Sarwono and Armstrong, 2001) (Armstrong,
1996) (Westerman et al, 2007). When an individual is immerged into another
subgroup they may change their reaction to unethical conduct as well as their
perception of ethical conduct depending on the conduct of their peers (Westerman et
al, 2007).

Ethical behavior changes for collectivist cultures depending on whether they are
working with in-group or out-group individuals (Elahee et al, 2004). This is seen
when stricter standards are applied to individuals from other cultures (Tsalikis and
Nwachuku, 1991). Ethical behavior is also affected by the severity of punitive
actions, which varies among cultures (Sarwono and Armstrong, 2001). Standard
rewards and punishments, from individualist cultures, e.g. threatening with firing, are
deemed inappropriate in collectivist countries due to disruption of group harmony
(Weaver, 2001). Hence, the ethical standard is dependent on the status of the sub-
group and the situation.
55
5 Research Design

5.1 Conceptual Framework

The conceptual framework was developed “on the job”; the author works as a
program manager of global programs. The author created a list of issues he has
identified on the job and discussed findings with colleagues. The issues were
organized around the PMI framework. Later the framework was extended through a
literature research (see also chapter 4) as presented in Figure 15. The framework
served only as a starting point for the field research.

Program Mgmt

Program outcome
Benefits Mgmt

Stakeholder Management

Governance

Diversity
Subgroup cultures

National Cultures
Communication and Management and
collaboration Leadership

Conflict Management Risk perceptions

Group Performance Culture Shock

Time Perceptions Intercultural

Trust Effectiveness

Figure 15. Conceptual framework of the study.

56
5.2 Research Question

The research question is formulated below.

What are the effects of cultural diversity in global program management?

The research question was broken down into the following sub-questions:

Q1. What are the cultural drivers that improve success of global programs?

Q2: What are the challenges facing culturally diverse global programs in the three
core areas:

o Benefits management

o Stakeholder management and

o Governance?

Q3: What are the program management tools, methods and skills that facilitate
success of culturally diverse global programs?

Q4: What factors need to be considered when setting up global programs in a

culturally diverse environment?

5.3 Methods

5.3.1 Qualitative Research

Due to the nature of the topic, schedule restrictions and geographic constraints, the
results of the study are of limited internal and external validity (see Table 5).

57
Validity target Constraint

Internal validity: the extent to which
causal conclusions can be drawn
The causality of the results is weak. With
the limited time frame and geographic
constraints it is not possible to obtain
sufficient data to compare programs and
their cause-effects mechanisms.

External validity: the extent to
which it is possible generalize from
the data and context to broader
populations and settings
The sample is from a specific field and
industry, which limits the sample size and
applicability of the results to a broader
context. The time and geographic
constraint limited the sample size.

Construct validity: the extent to The variables in the conceptual

which the constructs in the framework cannot be measured.
conceptual framework are
operationalized in the research study

Statistical conclusion: the extent to
which the study has used
appropriate design and statistical
methods to enable it to detect the
effects.
The independent variables in the study are
non-quantified and the sample is small. It
is not possible use statistical methods to
detect effects.

Table 5. Validity targets and constraints, adopted from (Bickman et al, 1998).

The target of the study was to explore the effect of cultural diversity in global
program management and hence balancing towards internal and external validity is
acceptable.

58
The target of “drawing a picture” of the phenomenon “cultural diversity in global
program management” indicates that descriptive research methods are to be used
(Bickman et al, 1998) (Miles and Huberman, 1994). The research also includes
description of subjective nature, which might be difficult to respond to in a
questionnaire. Hence, interview techniques are preferred (Crano and Brewer, 2002).
Descriptive research cannot be used to make causal inferences and generalization will
be difficult (Bickman et al, 1998) (Miles and Huberman, 1994). Accepting all the
above, it was decided to proceed according to Maxwells (1998) qualitative research
project framework.

An approach of iterating the research design and questions during interview execution
was adopted, as suggested by Miles and Huberman (1994) and Maxwell (1998).

The validity of the results was improved with the following methods:

• External validity: the questions are tied to the PMI standard of program
management.

• Construct validity: usage of a semi-structured interviewing technique

• Using a three-phased interview

The improvements were driven by the suggestion of Maxwell (1998) to balance free-
form exploration and structure in a qualitative research, when time is limited.

5.3.2 Capturing Data

Primary sources of data were targeted and the format was self-report data. Program
managers from global and culturally diverse programs were interviewed and the
interviews were captured with an audio recorder. The interviewees described
experiences according to a flexible question agenda. Diversions to explore a topic
further were allowed. In the end of the interview the question list was checked to
make sure that all questions have been answered. The interviews were conducted
face-to-face and via telephone by one interviewer. The telephone was used due to
59
time and geographical constraints, but this does not have an effect on the research
quality (Crano and Brewer, 2002).

The interviewees were asked to recommend other interviewees. This is what Maxwell
(1998) calls “purposeful sampling” individuals are “deliberately selected for the
important information they can provide that cannot be gotten as well” by applying
probabilistic sampling. However, the sample size was not predefined; the sample was
expanded until “there was nothing new” as proposed by Ezzy (2002). As Ezzy (2002)
states “this sort of research provides a much more sophisticated understanding of the
issues, will facilitate the formulation of more effective policy, and is politically and
ethically sensitive.”

The literature research provided all the secondary data for the study. Data from extant
databases, observational data and documents were not gathered due to time
limitations of the research; this research is based on self-reports.

The research was limited to program managers due to data relevance reasons.
Expanding to other groups jeopardizes the construct validity of the data, because the
theme requires program management knowledge.

The interviews were split into three (see Table 6). It was expected that more than
three interviews would not be tolerated. Less than three interviews would not allow
capturing the themes and testing the findings.

60
Interview Target

1. Interview set-up, • Introduce the interviewee to the topic,

background information and project targets and methods.
exploration of general themes
• Gain understanding of the interviewee’s
experience, cultural background the
environment.

• Discuss general themes.

• Gain knowledge of possible further

interviewees.

2. Explore specific themes • Explore themes found in first interview.

3. Test validity of findings • Test findings with interviewees.

Table 6. Interview targets.

To assess the level of cultural diversity the interviewees are asked to provide samples
of cultural mixes they commonly encounter in their programs. Less direct questions
were applied to assess cultural intelligence, e.g. “In how many languages are you
comfortable in ordinary conversations?” (Triandis, 2003)

Similar to the work of Alas (2006) the common behaviors, institutional practices,
proscriptions and prescriptions were discussed through the usage of “What is” and
“What are“-questions. Values are discussed through questions “What should be”,
which should express the interviewees’ values concerning the practices.

61
The questions were designed according to the guiding principals by Crano and
Brewer (2002):

• Questions are short

• Questions are direct

• Double-barreled questions are avoided

• Jargon is avoided

• Items are pre-tested

5.3.3 Analysis

Analysis of the results was started immediately after the first interview and continued
through the interview process as recommended by Ezzy (2002) and Maxwell (1998).

The analysis used four methods:

• Categorizing: splitting data in to categories that allow comparison inside the

category and between categories

• Contextualizing: identification of relationships in the data and understanding

the context of the data

• Memoing: was used to stimulate thinking and capture ideas

• Checking interpretations with participants.

Interviews did not proceed to the next phase before the analysis of the first phase was
completed. The interviews of the following phase were based on the analysis results
of the previous interview round. The systematic research approach guarantees the
quality of the research (Ezzy, 2002).

62
5.3.4 Validity

The interview approach had three phases. In the final interview the theories were
tested on the interviewees. The testing approach removed the possibility of drawing
conclusions that the interviewees do not agree with. This is known as the “member
check” method (Maxwell, 1998). However, the member check method does not
validate the correctness of the conclusions in general, only within the group. It does
also not completely remove the effect the author has on the results; the results are an
interpretation of the data made by the author. In this study 11 GIC program managers
formed the group. They were interviewed between June and October 2008. The group
represents all GIC business divisions and geographies. During the interviews the
financial industry was in turmoil. With another group or during another time period
the results could have been different. But for this period of time and this group the
results are valid and applicable within GIC.

Triangulation (Maxwell, 1998) was used to validate the transferability of the

conclusions. Results were compared to findings from the literature review (see 7).

The main study questions were framed before starting interviews. To avoid the
possibility that important areas of the research are not identified, the second round of
interviews was left open until interviewees had stated the themes they find important.
This did not create significant new themes. It is to be assumed that the topics in the
literature research cover the research topic sufficiently.

The research did not target measurable data and answers with no metrics were
allowed, e.g. feelings and intentions. This was necessary to explore the themes the
program managers experience in their environment and allows theorizing about
phenomena that is not directly observable (Maxwell, 1998). The approach sets
constraints concerning the validity of the research. However, the research targets are

63
aligned with the approach and responsibility is on the reader to not apply the research
results beyond the boundaries of validity.

The interview questions were tested by three valuators to avoid leading questions and
assumptions. Also variance questions were avoided; the focus was on process
questions (“How…?” and “Why…?”).

The study sample was created by asking interviewees for suitable candidates. The
captured experiences where therefore not controlled by the interviewer. With this
technique there is danger of working within a network of similarly thinking
individuals, e.g. close friends. Considering the small sample this risk is high.
However, as Maxwell (1998) states, sampling based on typicality and relative
homogeneity “provides far more confidence that the conclusions adequately represent
the average members of the population than does a sample of the same size that
incorporates substantial random or accidental variation”.

The sample size was based on the rule by Ezzy (2002): “keep expanding the sample
until you hear nothing new”. The interview results began repeating already after 6
interviews. Adding interviewees was continued until 11 interviewees to verify that
the sample was sufficient. Additional interviewees increased depth to program
management answers, but did not present new themes. The group opinion converged
much earlier than expected, but Ezzy’s criterion was fulfilled.

The research was made by a GIC employee on GIC employees. Most likely the
interviewees did not always describe the situation as they see it, but as the situation
requires them to. For this reason a three phased interview approach was applied, so
general themes could be collected from the test group and then rephrased and fed
back to the test group. The approach improves the accuracy of the results but does not
completely remove the effect of the situational context.

It is likely that the interviewees underreport problems, because unsuccessful

management is viewed with disapproval by the working community (Crano and
Brewer, 2002). The research therefore concentrated, first of all to affirm the

64
interviewees that the results are untraceable. Secondly, the research urged program
managers to report success stories in order to capture the root cause of issues being
solved.

65
6 Interview Results

The results of the interviews are presented in this chapter. The results have been
grouped under specific topics to help the reader. The author has not added his own
conclusions to the results, i.e. this chapter presents filtered and categorized raw data
produced by the interviewees.

6.1 Cultures and situational context

In the context of program management the GIC environment comprises of three

inseparable factors: national culture, sub-group culture and situational context (Figure
16). E.g. “local regulatory standards drive the behavior of people” but “an American
sales rep will change his behavior in order to be accepted in Switzerland, but he is
still an American sales rep and will never be Swiss.”

Figure 16. Cultures and situational context mix when observed from the outside.

66
6.2 Globalization

Most interviewees were cognizant of the threat globalization has on individual

company locations, e.g. outsourcing of services to other countries. Most interviewees
recognized that global programs drive globalization in GIC. One interviewee vocally
objected to taking part in globalization. The value-creation opportunities from
globalization were not clearly recognized by the interviewees.

Globalization in GIC was not perceived as “Americanization”, but almost the

opposite; more cultures e.g. Indian are being introduced to GIC. “Globalization is not
a culture, it is the absence of cultures” as one interviewee stated.

Some interviewees missed personal incentive for globalization or to change

functional silos or locations.

6.3 Ethnocentrism and Perceptions of Out-groups

Some interviewees displayed signs of cultural blindness. They perceived cultural

diversity as a challenge and never an opportunity. They prepared for challenges that
cultural diversity causes, but opportunities were not actively pursued. These
interviewees used terms like “put a stake in the ground” when describing how the
projects should be executed.

Other interviewees noted that the value of cultural diversity generates broader
solutions and provides more approaches to solving problems. Some interviewees
pursued cultural opportunities actively e.g. by placing certain cultures into strategic
program roles and by creating “local ambassadors”. Other program managers did not
pursue the opportunities actively, but exploited the opportunity when it presented
itself.

67
Without specifically asking to do so, most interviewees pointed out traits of other
nationalities that cause challenges, e.g. “US team members are not co-operative”,
“Spaniards are always late”, “Italians are chaotic”, “the Swiss are uncommunicative”
and “Germans are confrontational”.

Minorities stated that “having a different background makes life tougher, because
expectations are higher” than for the majority.

6.4 Trust

Trust towards program managers was not perceived as an issue. However, most
interviewees told how difficulties can be overcome through trust building exercises. It
was also noted that effective program management relies on the ability to build
trusting relationships.

The interviewees reported that a program manager should “never assume anything
and always check everything”. In practice program managers apply stricter methods
of monitoring and control on off-site and out-group individuals. Increased monitoring
and control was believed to reduce consequences of constant misunderstandings.

6.5 Perceptions of Time

Time perceptions were mentioned as an issue when working with Latin cultures and
Indians. Their event driven and circular time perceptions did not meet the
expectations of the program managers working in linear and clock time.

One interviewee noted that for a Swiss stakeholder group timely delivery is more
important than the content of the delivery.

68
The interviewees accepted the usage of linear time as the norm and responded to
variations with stricter monitoring and control.

6.6 Performance

Most interviewees stated that the performance of a program is directly related to the
clarity of the goal; a clear goal drives performance. A clear goal is a goal that can be
communicated globally with little possibility for misunderstanding.

Some interviewees perceived culturally diverse programs more prone for failure.
They felt that the programs fail often because of the high communication overhead.
In general all interviewees considered communication slow and cumbersome. English
is the GIC corporate language and many can speak it. Not all non-native English
speakers are fluent in written English. This may cause documentation tasks to take
longer and quality issues. Also document reviews may sometimes be ineffective and
time consuming.

According to other interviewees success or failure was not determined by cultural

diversity, but how diversity is managed. Key step to good performance in programs
was “the acknowledgement of existence of cultures and cultural diversity”.

Some interviewees had structured approaches to management of diversity. They

prepared a thorough analysis of the cultural environment during program initiation.
The preparations included assessments of cultural risks and mitigation planning. The
management of cultural risks continued throughout the program.

Some indicated that the higher risk inherent to global programs is due to the
complexity of the programs. Differences in local standards add complexity and slow
down solution creation.

Global program teams take longer to form. This is partially due to distance, but also
due to people not understanding each other. Longer running programs were told to
69
have better performing project teams later in the program. One interviewee reported
having used controlled conflict to speed up team forming processes; she let the
cultures clash, which led faster to the performing stage.

The motivation to take part in culturally diverse programs is very high, which has a
positive effect on performance. “The richness of the environment makes work
interesting.”

Decision-making processes vary across cultures, which slows down programs. E.g.
Germans were described to prefer a Cartesian decision process and US Americans
preferred an approach of incremental rationality.

There are also cultural preferences for setting up projects; some cultures prefer
Cartesian up-front planning and structured execution others prefer agile projects with
intensive risk management. The interviewees had also noticed differences in
preferences to use top-down or bottom-up planning: the Swiss prefer bottom-up and
US Americans top-down planning.

The decision-making and project set-up preference was identified as a practice; i.e.
not deeply rooted in the value-system of a culture. This means that one or the other
practice can be chosen as long as the individuals are aware of the need to decide.
Before decisions can be made or a project planned the approaches must be agreed.

Some interviewees were very straightforward about combinations of cultures that

were more prone for difficulties. Such a combination was e.g. Swiss program
manager, with German line manager and US stakeholders. Also the suitability of
Indian culture on the supplier side was questioned. Other interviewees felt that this
type of categorization might be true in some cases, but is a too extreme statement.

Poor performance was accepted by many interviewees. Few interviewees actively

mitigated issues detrimental to performance. All interviewees noted that although the
performance overhead is significant and known it is usually not planned for.

70
6.7 Culture Shock

Only few interviewees used the term culture shock, but most described unpleasant
surprises caused by language issues, differences in social norms and incompatible
standards.

Typical for global programs is a constant fluctuation of staff, which puts the program
manager and the program team through multiple cycles of culture shock.

Face threat was not mentioned often. Program managers work in a transitional role
with little formal authority. Authority questions are not targeted at the program
managers but the sponsor. It could be also that the interviewees did not want to
present personal humiliation to a peer.

Performance difficulties were mentioned by every interviewee. They stem from the
difficulty to decipher spoken, behavioral, contextual and social communication. E.g.
the German formal and non-formal usage of you is not apparent when speaking
English, but the behavior of the German-speaker indicates first formality and later in
the relationship non-formality although the language stays the same. The change is
difficult to understand.

Role shock was apparent, because governance structures are not clear. When asked
who is responsible for governance each interviewee answered according to his/her
national culture. In a global environment the governance roles are not the same
everywhere.

6.8 Risks

Differences in risk aversion and risk management were noted. As one interviewee
stated: “the Americans have always much more ambitious programs”.

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6.9 Management and Leadership

The interviewees described the most suitable leadership type as the charismatic value-
driven leader. Also the team-oriented leader received positive comments.
Authoritarian leadership was described in a negative context.

The interviewees preferred to use face-to-face communication when leading projects.

Active listening and participative team work were described in positive terms.

It was reported that often program managers manage via emails and do not
necessarily ever communicate directly with their teams. Because progress cannot be
followed on-site they set up extensive monitoring and controlling frameworks.

6.10 Communication and Collaboration

Global programs have extensive communication overheads, caused not only by

distance and time zones, but mainly by language issues. Underestimation of the
communication overhead was identified as one of the leading factors for trouble in
programs. Communication in global programs was described as constantly confusing;
every word has multiple interpretations.

72
Misunderstandings were e.g.

• “There is no common agreement for what is a deadline; e.g. is it exactly on

the agreed date or close to it”,

• “Each location and function has its own interpretation of standard terminology
like User Acceptance Testing, Confidentiality Agreement or Market Launch.

• Foreign language speakers cannot identify a difference between “we do not

have an issue in the process” and “we do not have an issue with the process”.

For non-native English speakers written communication in English is slower and of

reduced quality. This affects both email communication and communication via
written documents e.g. specifications.

The interviewees identified that communication tools like email or telephone are not
suitable in culturally diverse situations. The program manager needs visual cues to
send and receive messages correctly; i.e. the tools do not convey the tacit component
of communication.

The situational context plays a strong role in communication and is present only in
on-site and face-to-face communication. Videoconferencing utilities are not usable in
normal program management situations; the connections are unreliable. Other
methods of visual communication, e.g. web conferencing, are not available in GIC.
The interviewees considered them potentially beneficial. Also the need to create
though-world windows; i.e. understand the environment on-site, is required. This
means in essence that team members need to travel between company locations to
understand the true content of the message. It was noted that GIC travel policy has
been devised to reduce travel and increase reliance on electronic communication. The
efficiency focused travel policy was perceived detrimental for building thought world
windows and a global mindset.

Multicultural meetings need more structure than single-culture meetings. Structure

assists the non-native speakers understand when a decision is made. Often native-

73
speakers think that agreement has been reached; later non-English speakers will try to
revisit the decision. The non-native speakers need more time to think through the
discussions, which causes English speakers and non-English speakers to run out of
synch.

Drivers for effective communication

Drivers for ineffective communication

Communication effectiveness and efficiency

Structured meetings

Reliance on written communication

Fluency in writing and speech

Negligence of situational context Workshops

Decisions clearly stated

Time zone differences

Corporate Culture

Lack of common glossary Face-to-face meetings

Co-location
Tight schedules

Communication planning

Figure 17. Communication drivers in global programs.

74
6.11 Intercultural Effectiveness

Many interviewees stated that the most important factor to intercultural effectiveness
is the “acknowledgement that cultures and cultural diversity exists”. Most
interviewees expressed that they change their behavior according to culture. Many
stated that “other” program managers did not understand or adjust to cultures. Some
interviewees stated that they do not change their behavior because “everyone must be
treated in the same way” and “the program manager determines how things are
done”.

Some interviewees indicated that certain cultures lack the motivation and energy to
learn and adjust to cross-cultural situations. The cultures mentioned were American,
French and German. The interviewees did not identify such behavior in their own
culture.

Interviewees noted that in-group stakeholders tend to get more attention than out-
group stakeholders, because program managers like to spend more time managing the
easier relationships. It would be beneficial for the program manager to spend more
time with the out-group stakeholders, because misunderstanding and resistance are
more likely in these groups.

Most interviewees found that living abroad and international assignments were
beneficial for participants of global programs. The experience would help
“understand what makes people tick”. Experience helps also to put communication in
the right context. One interviewee noted that experience helps in respecting other
cultures, while being proud of one’s own identity. It was proposed that travel between
company locations must be added to program plans.

Most interviewees made it clear that individuals are not to be treated as stereotypes.
Some interviewees believed that treating one person differently than the majority is
discrimination. Some interviewees considered very specific needs of different
cultures, e.g. food, need for prayers and holidays.

75
Reading about cultures to meet expected norms and understand possible sources of
conflict was common. Most interviewees referred to training as a way to gain
knowledge, but felt hesitant, because the content of the training was unclear. None of
the interviewees mentioned the cultural knowledgebase available on the GIC intranet.

Some interviewees described structured methods of managing cultures. The methods

included:

• Knowledge gathering prior to the program.

• Identification of possible challenges and opportunities.

• Mitigation planning for cultural risk.

• Realization planning for cultural opportunities.

• Systematic monitoring and mitigation of cultural risk during program

execution.

Drivers for ineffective intercultural co- Drivers for effective intercultural co-
operation operation

Acknowledgement of cultures
Communication difficulties
Intercultural effectiveness

Working and living abroad

Ability to perform in new environment

Consideration for specific needs

Inability to recognize the situation

Training

Motivation to learn and adjust

Reading about cultures

Managing only “easy” relationships

Structured management of cultures

Figure 18. Drivers and obstacles for intercultural effectiveness.

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6.12 Conflict Management

The main sources of conflict in global programs are communication difficulties,

resistance to change and process gaps in GIC enterprise standards (e.g. cross-border
budgeting rules).

Constant misinterpretations drive to high amounts of task conflict; it is never quite

clear what needs to be done and how. Differences in social norms create relationship
conflict. People feel often that “they are not liked”. Process conflict is very common,
because programs operate in a non-standard environment with overlapping local
standards and practices.

The distance makes identification of conflict and resolution difficult. People resort to
avoidance strategies instead of bringing the conflict out in the open.

One interviewee stated that in programs, the first project is most conflict prone. Later
team members understand each other better and conflict is less frequent. Another
interview stated that conflict can erupt in any of the projects, “because what works in
one country may not work in another”.

Global programs have often an element of threat to local operations, which drives
resistance and politically motivated “trouble-making”. The source of this conflict is
disagreement on the goals.

The interviewees did not express out-right dislike towards any group. A divide
between Europe and America was often mentioned, with interviewees describing the
situation in terms of “us” and “them”.

Impolite communication was mentioned often as the cause of conflict. Many

interviewees stated that short and blunt emails create perceptions of impoliteness and
aggression. In the absence of agreed upon social norms it is difficult to estimate what
is impolite. Often the message format is more important than the message the content.
Not having agreed rules of social conduct causes confusion and people easily
conclude that the “person does not like me” or that others are showing disrespect.
77
Program managers have very limited ability to use punishments or rewards to resolve
conflict. Popular conflict management strategies included the creation of super-
ordinate groups (the program team), consensus building, confrontation, negotiating,
bargaining with favors, threatening and escalating. One interviewee stated that using
neutral “arbitrators” from the foreign culture helped in conflict resolution. One
interviewee stated that conflict without material consequences does not need to be
resolved. Many stated that showing respect to other groups, e.g. personal visits,
reduces conflict

Some interviewees managed conflict “playing it by the ear”. Others preferred

planning escalation paths upfront, using issue lists to voice concern and guide
resolution activities. The latter approach included sometimes sophisticated
monitoring-analysis-response frameworks. Both methods require an effective
relationship with key decision-makers and estimating the reactions of different
cultures. . All interviewees stressed the importance of face-to-face communication in
conflict situations.

Many interviewees told that they “dress up the message” and hence create “buy-in”.
They would emphasize how achieving “our” goals will move also “the others” closer
to “their” goal attainment; i.e. self-verification strategies. Sometimes “dressing up the
message” would include telling only what the audience wanted to hear. Some
interviewees perceived this practice as dishonest. On the other hand, one interviewee
stated that self-verification is not possible when the program targets conflict with
local interests. Conflicting interests is usually the case for global programs.

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 Drivers for increase in conflict Drivers decrease in conflict
Team worked together longer

Communication difficulties Confrontation, negotiation, bargains and threats

Controlled conflict

Amount of conflict
Threat of globalization
Super-ordinate groups and goal

Process gaps Relationship with decision-makers

Alignment with global strategy

Impoliteness
Immediate escalation

First project in program Clear organization structure

Expressing benevolence

Figure 19. Factors driving and reducing conflict.

6.13 Benefits Management

Benefits in GIC are primarily measured in financial terms, e.g. internal rate of return.
Some interviewees felt that positive or negative effect of cultural diversity is not
sufficiently considered in GIC, although most interviewees noted that diversity is
causing many challenges.

What is meant by specific, measurable, actual, realistic and time-based (SMART) is

culturally dependent (Table 7). Therefore agreeing on and communicating a
universally accepted goal is challenging.

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 Cultural Challenge GIC Standard
Specific What is specific: Financial facts
E.g. Germans need to understand the logic
before something is considered specific. For
others less will suffice.
Measurable What is the measure: Financial
• Most measures have local variations measures
What is measured:
• The US-style is to measure everything
• The European style is to measure only
what has relevance and data quality
Actual What is actual depends on the local situation. Corporate
strategy
Realistic Depends on the risk adversity of the group. No standard
Time- Depends on the time system: No standard
based • Clock-time vs. event-time
• Linear time vs. cyclical time

Table 7. Challenges in defining SMART objectives.

The process of defining a benefit is culturally dependent; some cultures prefer a

Cartesian decision-making process while others use an incrementally rational
approach. The point a final decision is made is unclear and especially the point when
can the decision be reversed.

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6.14 Stakeholder Management

There was no agreed definition for “stakeholder”. For some, stakeholders were only
the key executives with interest in the program, for others stakeholders were all
impacted parties including end-users, team members and line managers.

Unstructured approaches to managing stakeholders were often stated as the cause for
troubled programs, because ad-hoc methods failed to identify stakeholders.

To manage stakeholders effectively trust is required. All interviewees created trusting

relationships via ad-hoc trust building exercises.

Some saw the program manager’s role as “neutral referee”. Some thought the
program manager was responsible for implementing strategy and should not care
about impact. These individuals thought caring about impact and creating “buy-in”
was an upper management concern.

Global programs tend to have more senior stakeholders. GIC corporate talk is well
understood by this group.

Some interviewees noted that certain stakeholder groups are not motivated by hard
benefits. For these groups the program manager must translate the benefit in a
meaningful way for that group.

The situational context plays a role how stakeholders are managed; a line manager
who is losing resources is managed differently than a manager who is gaining
resources. How they react to the situation depends on their cultural background.

During one-to-one communication most interviewees treated individual stakeholders

according to the stakeholder’s culture. But in mass communication all interviewees
resorted to a unified GIC corporate communication styles. But some interviewees
phoned the stakeholders immediately before or after the message to check that the
message was received correctly.

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6.15 Governance

The interviewees had differing opinions of who is responsible for program

governance, proposals ranged from team members to the CEO.

There is a global governance structure for programs, but in addition local governance
frameworks need to be adhered to. Some felt that the global governance process does
not always support programs. Some interviewees thought that a global governance
process is achievable, but must be kept simple. Some interviewees stated that the
decentralized company structure prevented global governance rules from being
created. Some interviewees also noted that a global governance process is possible to
create, but the process must have local variations due to cultural and situational
differences. One interviewee stated that it is the most difficult activity set up
governance in a diverse environment, because all cultures have different practices and
expectations.

It is expected that program managers coordinate the creation and application of

governance also in their programs. This requires understanding of rules, standards
and norms and the ability to set standards. It was advised to baseline the governance
to one company location. Having a baseline in a foreign location causes resistance,
because local actors are used to local rules. One interviewee noted that the challenge
for program managers is to get a single status report for the program, but manage
each culture differently when acquiring the relevant information. Other interviewees
stated that rules must be obeyed independent of cultural aspects. Hence, they made no
adjustments or exceptions to governance processes.

Most interviewees thought that rules must be stated in writing. This is not a cultural
preference, but a consequence of constant misunderstandings in communication.
Creating and maintaining governance documentation needs to be a considered in
program budgets.

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7 Discussion and Conclusions

The key conclusions concerning the effects and underlying themes of cultural
diversity in global programs are presented in this section.

7.1 Culture

All interviewees had an opinion of what culture is, but a common definition was not
found. The usefulness of stereotypes was criticized by the interviewees, because
stereotypes do not represent average individuals sufficiently (Osland and Osland,
2006). Some interviewees recognized the benefit of using cultural prototypes to
prepare for the unexpected and to understand multicultural situations as suggested by
Alon and Brett (2007). The interviewees recognized the interplay between national
cultures, sub-group cultures and the situational context (Hyunghare and Ybema,
2000) (Osland and Bird (2000), which further complicates the correct evaluation of a
culturally diverse situation. The presence of a GIC company culture was often
mentioned, although it was also noted that the dispersed company structure made
shared practices and values uncommon.

Ethnocentrism was present in some form in all interviewees as predicted by Triandis

(2003). The fundamental attribution error was often present, where program
managers acted as if their local practice was the only way to execute a program and
success by other approaches was due to luck. Many interviewees stated that out-
groups need to be controlled more than in-groups, which indicates that cultures tend
to trust their in-groups and distrust dissimilar groups (Triandis, 2003). According to
the interviewees this was not as much due to distrust, but more often due to the
inability to forecast what would happen; dissimilar groups caused often surprises and
the interviewees increased monitoring and control to identify the situation in a timely
manner. The interviewees did not perceive the negative behavior of out-groups more

83
severely than negative behavior of in-groups, which is the opposite of what is
proposed by Kanter and Corn (1994).

Trust or lack of trust was never mentioned directly, but all interviewees engaged in
trust building activities. The general trust between GIC employees could be due to the
individualist’s tendency to trust everyone until otherwise proven (Bird and Osland,
2006) (Alon and Brett, 2007). Especially benevolence was mentioned as a key
attribute for program managers in global programs. It was often noted that
benevolence is difficult to achieve because global programs pose a local threat.
Integrity was also often mentioned in program governance activities and as a general
objective to “treat everyone the same”. Ability was not mentioned, otherwise than
that global program managers must be more skilled and experienced than other
program managers. Avoiding discussions about abilities could be due to the peer
status of the interviewer. All interviewees admitted that creating trustful relationships
was difficult in a diverse environment (Gill et al, 2005). Although the importance was
recognized they lacked structure and methods for building trust in relationships.

Figure 20 presents the worst case scenario of a program manager unknowingly

leading an out-group into a cycle of increasing distrust and decreasing performance.
Noteworthy is how the performance of the in-group has a negative effect on the out-
group. The key mechanism in the chain of events is the lack of self-verification on the
part of the out-group. To end the spiral of decreasing performance the program
manager should increase stakeholder management activities on the out-group and
display integrity in governance of both groups.

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 Out-group

Negative results Increased

Unpredicted results Decreased
emphasized monitoring Distrust
performance
and control
Positive results
Predicted results de-emphasized

Fundamental Lack of
Integrity
Attribution Error

Negative results
Unpredicted results
de-emphasized
Decreased
Increased
monitoring Trust
performance
and control
Positive results
Predicted results emphasized

In-group

Figure 20. Differences in the management of in- and out-groups and the effect on
performance.

As suggested by Triandis (2003) certain large cultural groups where perceived

difficult to work with in cross-cultural situations, because they lacked motivation to
adjust to other cultures.

“Us and them” was often used when describing Europeans and US citizens. This
indicates that Europeans see themselves as a part of the European GIC while US
citizens perceive themselves as a part of the US GIC. The “us and them” is also
indicative of the work that needs to be still done in creating one globalized GIC.

The effect of various time perceptions was causing stress in programs. The highest
distress was indicated by individuals with linear clock-time culture. Program
managers from a linear or event time culture were annoyed, but not outraged by
others not having the same time perception.
85
7.2 Implications of Cultural Diversity

It was verified that diversity increases the solution scope and possible approaches
(Hislop et al, 2000), (Reagans et al, 2004) and (Foldy, 2004). The increase in creative
ideas was also mentioned like suggested by O’Reilly, Williams & Barsade (1998).
However, diversity also creates overheads and complexity, through communication
difficulties and constant misunderstandings (Brannen and Salk, 2000) (Foldy, 2004)
(Hambrick et al, 1996) and (O’Reilly, Caldwell, & Barnett, 1989). The slower team
forming process was also verified (Early and Mosakowski, 2000).

The amount of culture shock due to continuous stakeholder turnover was unexpected.
How program managers experienced norm discrepancy seems to depend on how they
react to the situation. Interviewees that had a clear view of how programs are to be
executed described more guilt, distress and anxiety. Interviewees that described an
approach of managing only issues with “material consequences” described more
contentment and excitement. The difference seems to be between task-orientation
(how things are done) and value-orientation (what must be achieved). The mechanism
of emotional toll in a program management environment complies with Molinsky’s
(2007) framework.

86
 Figure 21. Psychological Toll in Global Program (adopted from Molinsky, 2007).

The variances in risk aversion between cultures were as expected. The results verify
the common perception that US Americans have more risk appetite than Europeans
(Weber and Hsee, 2000).

Global leadership preferences of the interviewees are aligned with the work of
Javidan et al (2006). Management of dispersed and transitional teams was indicated
to be difficult as expected (DeRosa et al, 2004). New information is the need for
program managers to increase monitoring and control to identify misunderstandings
and “keep on top of the situation”. Balancing charismatic value-driven leadership and
tight monitoring and control is one of the key challenges for program managers. This
is what (Suk, 1999) and (Javidan and House, 2001) described as the ability to cope
flexibly and positively with cultural relativity.

Three types of leadership were identified: authoritarian, comfort zone and diversity
management. Authoritarian management was described as a common cause leading to
program failure. Authoritarian leadership relies heavily on email and has little direct
87
contact with the teams or stakeholders. The focus of this style was not specifically on
controlling the team. But due to the insufficient communication the management
paradigm becomes that of telling and controlling.

Management in the comfort zone is a balance between stakeholder management and

governance, but only for the in-group. The manager leads the in-group efficiently, but
leaves out-groups unmanaged. The group with most misunderstandings and highest
need for support receives the least amount of the program manager’s time.

Managed diversity acknowledges that out-groups require extra focus. More effort is
put on managing the “difficult” groups than the “easy” groups. Diversity management
was supported by all interviewees, although all acknowledged that it is time
consuming, emotionally depleting and requires additional budgets. The Brannen and
Sal (2000) theorem of cause for poor performance, i.e. poor management creates poor
results in diverse teams, was verified.

Out-group Stakeholder Mgmt

Diversity Out-group Governance

Management In-group Stakeholder Mgmt

In-group Governance

Out-group Stakeholder Mgmt

Comfort Zone Out-group Governance

Management In-group Stakeholder Mgmt

In-group Governance

Out-group Stakeholder Mgmt

Authoritarian Out-group Governance

In-group Stakeholder Mgmt

Management
In-group Governance

Program Mgmt Effort

Figure 22. Management styles.

88
The program managers need information about the situational context, but it is not
delivered via email or phone. The main issue with communication is not lack of trust
or the tools as proposed by Hislop (2002), but the language skills. Especially written
communication is impeded because of gaps in English skills. Lacking a common
language is major impediment when creating a global company, because without a
language people cannot share a meaning system (Triandis, 2000) and the
multinational company loses a part of its competitive edge (see Gupta and
Govindarajan, 2000).

The program managers describing the most distress did not modify their behavior to
accommodate the cultural situation. These interviewees seemed to lack behavioral
capabilities to perform in a foreign environment, see (Molinsky, 2007).

Native English speakers did not always recognize that speaking English does not
mean that the speaker would apply English social norms or share English values. This
suggests a gap in cognitive capabilities; inability to recognize the situation (Molinsky,
2007) (Osland and Bird, 2000) (Winkelman, 1991).

The interviewees called self-verification activities as the creation of “buy-in”; a key

activity in stakeholder management. Essential in “buy-in” activities is the resolution
of conflicts of interests, i.e. maximizing the stakeholders positive self-view resulting
from supporting or participating in the program. These activities create positive
orientation towards each other’s welfare, which according to Brown et al (2004) is a
pre-requisite for trust. Social integration on the other hand was sought by setting up
governance. Setting up governance is prerequisite for the program manager to display
integrity in activities; also a pre-requisite for trust. Mastering both social integration
and self-verification were identified as essential for program success.

89
 High Effective
Global Team

Stakeholder Mgmt
Self-Verification

The Program Manager balances

Self-Verification and Social
Integration in small increments.

Ineffective Governance
Low global team

Low Social Integration High

Figure 23. Self-verification and social integration in a global program setting

(adopted from Maloney and Zellmer-Bruhn, 2006)

Neglecting social integration or self-verification was reported to lead to increasing

difficulties (Maloney and Zellmer-Bruhn, 2006). The implementation of the two
needed to be executed in small steps. Balancing the two components results in a
perception of integrity (structured governance) and benevolence (understanding of
local needs), which creates trust. Notable is that especially self-verification is not a
given in global programs, because they often target locally non-beneficial objectives.
The interviewees suggested that in non-beneficial situations (i.e. in a zero-sum
situation) the program manager must translate the program need and goal to locally
acceptable terms. This changes the situation from zero-sum to mixed-motive
situation, which requires trust in the relationship with the decision-maker; see Chen
and Li (2005).

90
The combination of managed diversity and balanced self-verification / social
integration resembles the strategies of expatriate managers (Osland and Osland,
2006), with the difference that the environmental complexity in global programs is
multiplied by the number of sub-groups. E.g. instead of considering the contingencies
of the situation for one country the program manager considers it for every location
and function impacted by the program.

Culturally blind program managers emphasized governance activities and did not
consider the cultural background when managing stakeholders. As they also reported
higher failure rates it can be assumed that the required balance suggested by Maloney
and Zellmer-Bruhn (2006) is not achieved. It seemed that neglecting self-verification
creates an atmosphere where diversity is considered a cause of friction and not an
opportunity. This would indicate that a global mindset has not been achieved
everywhere in GIC; see (Gupta and Govindarajan, 2001) (Maloney and Zellmer-
Bruhn, 2006).

Of the Maloney Zellmer-Bruhn (2006) approach to social integration and self-

verification the programs managers identified only the creation of norms and thought
world windows. However, implementation of norms often was considered difficult
and actually task of central management. Deliberately heterogenic teams are usually
not created in GIC and the interviewees did not feel that a global mindset would be
promoted by upper management.

Most program managers did not mention receiving any kind of training, preparation
or incentive for increasing cross-cultural effectiveness. Living and working in foreign
countries and with foreign people was perceived as beneficial for diversity
management. GIC does not have incentives for people to gain experience outside
their country or functional silo. The gaps in training and incentives suggest that GIC
has still some improvement opportunities in the implementation of the globalization
strategy.

As expected (Foldy, 2004), conflict was more common in diverse groups. As stated
by (Triandis, 2000) conflict begins with poor communication; global programs are
91
plagued by poor communication. The interviewees used actively re-categorization to
reduce conflict. De-categorization was not mentioned directly. The interviewees did
not seem to systematically dissolve in-/out-group borders. However, together benefits
management, stakeholder management and governance activities target de-
categorization. Most interviewees noted that their programs present a threat to local
sub-groups and the program teams are therefore unstable (Hewstone et al, 2002).
Unlike stated by Morand (2003), usage of electronic tools does not create new
cultures that break through politeness barriers. People pay more attention to the
message format when they do not completely understand the content, i.e. electronic
communication in diverse teams must be more polite than usual.

Most interviewees listed Kanter and Corn’s (1994) methods for decreasing tension:
the relationship is made desirable, uncertainty is reduced, respect for the other group
is shown, communication channels are created and business success is ensured. It was
also noted that the program managers should not need to be in the position to make
relationships desirable; this is an executive management task. In addition it was noted
that often the relationship with programs cannot be made desirable, because global
programs are non-beneficial locally.

7.3 Benefits Management, Stakeholder Management and Governance

The interviewed program managers applied traditional project management methods,

but emphasized the soft side: communication management and conflict management.
In addition a new management area was identified: the management of cultural risk.
The theoretical framework based on the literature research (Figure 15, pp. 56) was
modified according to the new findings (Figure 24).

92
 Factors Decreasing
Factors Increasing Program Success
Reason for
Program Success
Change

Social Integration Benefits Management Decision-making

preferences
Governance

Program Outcome
Communication
Ethnocentrism
Management
Management
Cultural Risk
and Culture Shock
Management
Conflict Leadership
Management Time Perceptions

Risk Perceptions

Stakeholder Management
Communication
Self Verification Difficulties

Environment National Cultures Sub-group Cultures Situational Context

Figure 24. Program Management in a diverse setting.

The framework emphasizes the fact that in global programs the focus of program
management is in aligning the organization to the program outcome. Essentially this
is the act of combining multiple cultures and various situational contexts into one
agreed upon goal and way of working.

The program manager must create global and local understanding of the relevance of
the goal. The need for change provides a context for stakeholder management and
governance activities. The center pieces of the framework are the management and
leadership activities providing the program manager the tools to control the situation
and pursue cultural opportunities.

93
8 Answer to Research Questions

8.1 Question 1: Effect of Cultural Diversity on Global Programs

Global environments are diverse by nature. Increasing diversity increases also

complexity of the program and consequently the probability of failure. In a global
environment the program teams need breadth and depth of knowledge to fit the end-
products to various cultural groups. Due to their broadness of knowledge and
multiple solution approaches culturally diverse teams working on global programs are
more likely to be successful than homogenous teams. However, overheads and risk
stemming from cultural diversity must be considered in the program set up. A key
element in successful programs is how the internal and external diversity is managed.

8.2 Question 2: Cultural drivers improving success of global programs

The key cultural driver for success is the individual team member’s motivation to
adjust to different cultures. Motivation to adjust may depend on the national culture
of the individual.

8.3 Question 3: Challenges facing culturally diverse global programs

8.3.1 Benefits management

In the absence of universally agreed upon SMART criteria program managers need
to translate the global program goal into a locally meaningful objectives. Especially

94
the relevance of the initiative must be presented in a locally acceptable way, which
includes describing the path to change.

8.3.2 Stakeholder management

Identifying stakeholders is challenging. In a culturally diverse environment, the

program manager might be working with very influential people or a person with no
decision-making power or access to it. A key challenge is to identify and gain access
to the correct group of stakeholders.

A generic approach to stakeholder management does not apply in a diverse

environment. Each stakeholder has different expectations, depending on their
situation and background.

Stakeholder management is based on trusting relationships. Creating trusting

relationships over cultural boundaries and in a conflict prone environment is
challenging.

8.3.3 Governance

Global programs operate in an environment of unclear governance. Each rule has

multiple interpretations. Most employees feel that find local norms and standards
most appropriate. The challenge for the program manager is to rise to a position of
authority and create a baseline norm that is applied across the program. This requires
modifying rules and governance expectations according to global and local practice.
The program manager must create the balance. Understanding corporate targets and
local needs is required. With multiple locations the balancing act becomes more
complex and change management skills become increasingly important.

95
8.4 Question 4: Program Management Tools Methods and Skills

In a diverse environment the ability to apply the framework presented in 7.3 is a

crucial skill for the program manager. First formulating and communicating a
universally accepted goal and then balancing stakeholder management and
governance are crucial. In addition the management of communication, conflict and
cultural risk is crucial. Applying the framework in a systematic and structured manner
is crucial for success. The framework provides the basis for creating trust in
relationships, which in the end is the most important skill for program managers.

General methods are presented in chapter 6.

8.5 Question 5: Setting Up Culturally Diverse Global Programs

The program goal must be very clear, because it has multiple interpretations.

The communication overhead must be mitigated or budgeted for and considered in

the schedules. The complexity of communication restricts also how complex the
general goal can be.

Communication and collaboration cultures must be analyzed to get input also from
withholding cultures and minorities. Communication must be started very early.
Communication must be participative from the beginning.

Certain cultural mixes are more prone for dysfunction in certain situations. The
cultural mix must be considered and mitigation planned before start. Also cultural
aspects like holidays, food etc need to be addressed.

The diversity of the environment and beneficiaries must be matched in the program’s
organizational diversity. This includes identifying impacted locations and
implementing local ambassadors.

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9 Recommendations

The recommendations have been split to two: recommendations specific to GIC and
recommendations specific to any global program.

9.1 Company Specific

Global programs implement GIC strategy and, hence require strong sponsorship. This
is not only sponsorship for a specific benefit, but also the cultural transformation
objectives the programs have. The programs should not be creating buy-in for the
globalization strategy of GIC as sometimes is the case; this should in general be in
place when programs are initiated.

The program managers are change agents for the GIC transformation. The training for
change agents should be intensified for the new way of working; to create
understanding of global value-creation opportunities and to create global mindsets.

The lack of language competence is a challenge for global programs. Improvements

in communication tools cannot make up for gaps in English skills. It is recommended
that English courses are increased and incentives for learning are created. Native
speakers should be made aware of the communication difficulties and more training
about improving cross-cultural communication should be given. It is recommended
that GIC creates incentives for program managers to gain experience about cultures
and diversity.

9.2 Global Programs

A culturally diverse environment has high likelihood for misunderstandings, hence

communication management requires focus. The management activities include
budgeting for sufficient communication, including travel for all team members, and
planning communication according to the cultural preferences of the recipients.
97
Acknowledging the constant nature of misunderstanding in global programs requires
that feedback loops and quality checks are considered. As a consequence it must be
understood that diverse programs require more time.

Pursuing cultural opportunities and mitigation of cultural risks must be considered

during planning and implementation of activities. The situation can be analyzed
correctly only when cultures are acknowledged and understood. Acknowledgement
and understanding are results of experience and training. Building thought world-
windows in the beginning of programs must be budgeted for, i.e. travel of individual
team members is required. It is also proposed that cultural training is made a
mandatory initiation phase activity for global programs.

The sponsor must be active providing support and creating the alignment with
corporate strategy. Additionally networks of local sponsors must be created. Strong
global and local sponsorship will allow the execution of the program in global, but
locally responsive fashion.

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10 Future Research

More detailed research in the areas of cultural risk management, re-categorization

techniques in programs and structured techniques for building trust in relationships.
The three suggested topics are crucial for the success of global programs. Program
managers are very capable and well trained in the mechanical side of program
management, while the soft side does not have a similar level knowledge, tools and
frameworks.

It was interesting to notice that the responses of program managers are very similar.
It would be interesting to study to what extent program managers form a sub-group.
The results could be compared to the requirements of the profession and to focus
program management training.

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11 Personal Development

The study was a great learning experience. I feel that during the interviews I learned
more than during my entire professional career. Not only did I learn about program
management, but I also the realized the power of sharing experiences.

The level of knowledge I gained concerning the challenges and opportunities has
risen immensely. Certain interviews have led to deep evaluation of my own values
and practices. Realizing as one interviewee stated “what you think is normal might
not be normal elsewhere” was a key moment in my personal development.

The tools provided by the interviewees were straight-forward and I have started using
them in my work.

The study has raised questions in GIC about how global programs are executed and
the questions have led to improvement ideas. I strongly believe that in the future we
will see improved success in global programs.

I feel that I am in great dept to the interviewees for the information they shared with
me. I will do my best to pay the debt by consolidating the results and presenting it at
GIC.

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Appendix c) List of Exhibits

Figures

Figure 1. Multilayered response (Hofstede et al, 1990). 14

Figure 2. Manifestations of culture (Hofstede et al, 1990).15

Figure 3. Model of Trust (Mayer et al, 1995).......22

Figure 4 Valuation and verification as dimensions of team

effectiveness (Maloney and Zellmer-Bruhn, 2006). 29

Figure 5. Determinants of psychological toll (Molinsky, 2007). 30

Figure 6. Conceptual model of relationship and knowledge

resources (Griffith et al, 2006). ......................36

Figure 7. Osland and Bird framework for cultural sense-making

(Bird and Osland, 2006). ...............................40

Figure 8. Re-categorization and de-categorization (Pettigrew,

1998). ............................................................42

Figure 9. Model of group conflict and performance (Jehn, 1997).

......................................................................44

Figure 10. Conflict in high-performance groups (Jehn and Mannix,

2001). ............................................................45

Figure 11. Methods to improve effectiveness of diverse teams

(Maloney and Zellmer-Bruhn, 2006). .............48

Figure 12. Program Benefits Management (PMI 2006) 49

Figure 13. Continuum of rational-irrational decision-making

(Schramm-Nielsen, 2001)..............................51

Figure 14. Model of value similarity's effect on perception of benefit

and risk. (Siegrist et al, 2000) ........................52

Figure 15. Conceptual framework of the study. ..56

Figure 16. Cultures and situational context mix when observed from
the outside. ....................................................66

Figure 17. Communication drivers in global programs. 74

116
 Figure 18. Drivers and obstacles for intercultural effectiveness. 76

Figure 19. Factors driving and reducing conflict. 79

Figure 20. Differences in the management of in- and out-groups

and the effect on performance.......................85

Figure 21. Psychological Toll in Global Program (adopted from

Molinsky, 2007). ............................................87

Figure 22. Management styles............................88

Figure 23. Self-verification and social integration in a global

program setting (adopted from Maloney and Zellmer-Bruhn,
2006) .............................................................90

Figure 24. Program Management in a diverse setting. 93

Tables
Table 1. IPMA categories (IPMA: 2006)..............11

Table 2. Collectivist versus Individualist and Vertical versus

Horizontal Culture (Chiou, 2001) ...................17

Table 3. Comparison of leadership dimensions (Javidan et al,

2006). H=high rank; M = medium rank; L = low rank. H or L
(bold) indicates highest or lowest cluster score for a specific
Cultural Leadership Type dimension. ............33

Table 4. Cultural dimension’s effect on ethical behavior (Alas, 2006)

(Armstrong, 1996) (Ruhe and Davis, 2003)...55

Table 5. Validity targets and constraints, adopted from (Bickman et

al, 1998). .......................................................58

Table 6. Interview targets....................................61

Table 7. Challenges in defining SMART objectives. 80

Table 8. Cultural Dimensions (adopted from Bird and Osland, 2006)

....................................................................124

117
Appendix d) Glossary, abbreviations and acronyms

Definition

Ability Group of skills that enable a trustee to be perceived

competent within some specific domain. (Jarvenpaa et
al, 1998)

Attitude 'a relatively enduring organization of beliefs around an

object or situation predisposing one to respond in some
preferential manner' (Rcriceach 1972: 112). (Hofstede,
1980)
Benevolence Extent to which the trustee is believed to feel
interpersonal care and concern, and the willingness to
do good to the trustor beyond an egocentric profit
motive. (Jarvenpaa et al, 1998)

Buy-in Display of commitment and positive attitude towards

an initiative.
Effective The focused usage of resources to achieve relevant and
only relevant goals.

Efficient The optimal usage of resources.

Explicit knowledge Explicit knowledge represents knowledge that can be

codified in a tangible form, for example scientific
theories published in documentation. (Hislop, 2002)
(Nonaka and Takeuchi, 1995).

118
 Definition

Global Global means that the international division is not a

subdivision of a domestic division (Boyacigiller and
Adler, 1991). According to Rhinesmith (1991):

• International companies export products to

international markets

• Multinational companies create miniatures of

themselves in multiple countries

• Global companies disperse company functions

into several countries

In-group The set of individuals with whom an individual feels

similar. Based on salient demographic characteristics
like gender and ethnicity. (Doucet and Jehn, 1997)

Integrity Adherence to a set of principles (such as study or work

habits) thought to make a trustee reliable according to
the trustor. (Jarvenpaa et al, 1998)

IT Information Technology

Mixed-motive In a mixed-motive situation a stakeholder must cope

with conflict arising from a clash of intrapersonal
motives and interpersonal conflict. When stakeholders
co-operate in the benefits per stakeholder are higher
than the total sum of benefits when the stakeholders
would not co-operate. A pre-requisite for co-operation
is trust in the other stakeholders. Also known as
variable outcome situation.
Organizational Culture 'the collective programming of the mind which

119
 Definition

distinguishes the members of one organization from

another' (Hofstede 1991: 262)
Out-group The set of individuals with whom one feels dissimilar.
Out-group members are treated differently than in-
group members. (Doucet and Jehn, 1997)

Process conflict Disagreements about task strategy, delegation of duties,

who is capable of doing what and how resources should
be allocated. (Jehn and Chatman, 2000) (Jehn and
Mannix, 2001)

Program A program is sequence of projects grouped together to

realize a benefit or a set of benefits while managing the
uncertainty of the outcome. Characteristic for programs
is coordination of activities over functional and
divisional borders.

Project A coordinated team activity targeting to create

deliverables within a set timeframe and budget.

Project Portfolio Is a set of projects and programs grouped together to

optimize resource usage.

Propensity to trust General personality trait that conveys a general

expectation of how trusting one should be. (Jarvenpaa
et al, 1998)

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 Definition

Relationship conflict Disagreements based on personal and social issues that

are not related to work. Typically in relationship
conflicts group members avoid each other or spend time
resolving interpersonal issues. (Jehn and Chatman,
2000)

Self-categorization The usage of social characteristics, including

organizational membership, to define psychological
groups and to promote a positive self image.

Self-verification The desire to seek appraisals from others that verify

that they perceive the individual as he/she sees
himself/herself. Includes also the verification of status in
a group situation.

SMART Criteria used to check the completeness of program

objectives. Abbreviated from Specific, Measurable,
Actual, Realistic and Time-bound.

Tacit knowledge Tacit knowledge represents knowledge that people

possess, but which is inexpressible and incorporates
both physical skills and cognitive frameworks (Hislop,
2002) (Nonaka and Takeuchi, 1995).

Task conflict Disagreements about the work that is being done in the
group. Differences in viewpoints and opinions about
tasks void of intense interpersonal negative emotions.
Includes also constructive debate. (Jehn and Mannix,
2001)

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 Definition

Trust The willingness of a party to be vulnerable to the

actions of another party based on the expectation that
the other will perform a particular action important to
the trustor, irrespective of the ability to monitor or
control that other party’’ (Mayer et al., 1995, p. 712).

Value 'a broad tendency to prefer certain states of affairs over

others' (Hofstede, 1980)
Zero-sum situation A situation where the benefits gained by a stakeholder
or a group of stakeholders and costs born by another
stakeholder or group of stakeholders equals zero
independent of co-operation between the stakeholders.

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Appendix e) Cultural Dimensions

Dimension Explanation Value

Environment How individuals view and relate to the people, Control – Harmony – Constraint
objects, and issues in their sphere of influence Internal locus of control – External local of control
Trustworthy human nature – Untrustworthy human nature
Mutable human nature – Immutable human nature
Time How individuals perceive the of time and its Single-focus – Multi-focus
use Fixed – Fluid
Past – Present – Future
Space How individuals demarcate their physical and Private – Public
psychological space
Individualism How individuals define their identity Individualistic – Collectivist
Achievement – Ascription
Universalistic – Particularistic
Power How individuals view differential power Hierarchy – Equality
relationships
Competitiveness How individuals are motivated in relationships Competitive – Cooperative
with others
Dimension Explanation Value
Structure How individuals approach change, risk, Order – Flexibility
ambiguity, and uncertainty Tight – Loose
Action How individuals conceptualize actions and Being – Doing
interactions Relationship – Task
Thinking How individuals conceptualize Deductive – Inductive
Linear – Systemic
Communication How individuals express themselves High context – Low context
Direct – Indirect
Expressive – Instrumental
Neutral – Informal
Self-effacement – Self-enhancement
Status-oriented – Person-oriented
Elaborate – Exacting – Succinct

Table 8. Cultural Dimensions (adopted from Bird and Osland, 2006)

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