The Global Transfer of Management Knowledge

1. The Global Transfer of Management Knowledge Naveen Kumar, Team 5

2. Outline • Importance of Knowledge sharing across the globe and the challenges involved • Review of 5 papers and 3 cases by AME • Paper 1: “Five Steps to Creating a Global Knowledge-sharing System: Siemens ShareNet” • Paper 2: “Transferring Management Knowledge to Russia: A Culturally-based Approach” • Paper 3: Transfer of Managerial Practices by French Food Retailers to Operations in Poland • Paper 4: “Transferring a Lean Production Concept from Germany to the United States: the Impact of Labor Laws and Training Systems” • Paper 5: “Cross-border Transfer of Knowledge: Cultural Lessons from Project GLOBE” • Case 1 Cultural Counterpoints - challenges of transferring U.S. management know-how to a Norwegian MNC in the energy sector • Case 2: “The Shortcomings of a Standardized Global Knowledge Management System: The Case Study of Accenture,” - Asia to the USA • Case 3: “Applying Knowledge Management Concepts to the Supply Chain: How a Danish Firm Achieved a Remarkable Breakthrough in Japan,”

3. Key Learnings • Paper 1: “Five Steps to Creating a Global Knowledge-sharing System: Siemens ShareNet” • What are the challenges ? Any ideas ?? • Global knowledge management systems needs to include local and regional knowledge components (e.g., regional knowledge platforms). • Cultural Differences needs to be taken into account • Case 2 “The Shortcomings of a Standardized Global Knowledge Management System: The Case Study of Accenture,” - Asia to the USA • Alternative knowledge management systems may emerge locally

4. Key Learnings • Paper 2: “Transferring Management Knowledge to Russia: A Culturally-based Approach” • What are the challenge of doing business in Russia? • Transition from communist mindset to a free market economy is a challenge • Any takers??? Transfer of Knowledge to a non-western country needs new set of tools and people with specific personalities who fit culturally with the tool. • Awareness of cultural and institutional back ground - needs time and experience • Need to create an atmosphere conducive to cross-cultural knowledge sharing

5. Key Learnings • Paper 3: Transfer of Managerial/Production Practices by French Food Retailers to Operations in Poland • Strong resistance initially but later adjusted to comply with local culture • After few years Successfully implemented the intended management practices • Transfer of management know-how evolves through time.

6. Key Learnings • Paper 4: “Transferring a Lean Production Concept from Germany to the United States: the Impact of Labor Laws and Training Systems” • Difficult to transfer production processes rigid to flexible societies, and vice versa. • Optimum way of adjusting production processes to suit the behavioral norms of other cultures?

7. Summary • The transfer of management know-how from any cultural base is not straightforward and follows the step by step process for the implementation of knowledge transfer systems • The transfer of management knowledge takes time. A more detailed process suiting all the stakeholders has lesser implementation problems • requires a reduction of complexity i.e. attitudes, structures and processes at corporate headquarters and needs to take into account the cultural differences in managing the international operations • heavily dependent on how the values, attitudes, competences, and personality traits of the people involved in order to handle the cultural issues • Uniform transfer process may not be effective. If is the case, regional management are likely to establish its own subsystems and process

8. Thank you Next case –> GLOBE Project

9. Cross-Border Transfer of Knowledge: Cultural Lessons from Project GLOBE

10. Foreign Direct Investments have increased from $55 Billon in the early 1980’s to almost $1.3 Trillion in 2000. • International electronic payments have increased from $7.5 billion to $60 billion. • In 2000 41% of all M&A activities were cross-border. Cross-Border Transfer of Knowledge When information is inadequate Billions can be Lost • GM was losing $2 billion a week in production cost after acquiring a Japanese production process. • GM Failed to take into account the culture of the Japanese workers.

11. Problems that can occur • Example (NORDED and TAI BANK) • Hierarchical culture and authoritarian style • Resistance to Change • Lack of collaboration “Cross-border transfer of knowledge is often affected by foreseeable cultural differences that are typically underestimated, regardless of the good intentions of all members of the parties.”

12. Cultural Practices and Cultural Values • Tells us the current perceptions of the culture. • Tells us the aspirations and the direction that culture wants to go and develop into. “As Is” Cultural Practices “Should Be” Cultural Values “Should Be” can be used to determine a cultures desire to change. Two Cultures can have different “As Is” but if the values are close “Should Be”, the transfer of knowledge will be easier.

13. Walmart in China • Walmart has 189 units in 101 cities, and created over 50,000 job opportunities across China. • local sourcing. We have established partnerships with nearly 20,000 suppliers in China. Over 95% of the merchandise in our stores in China is sourced locally. • All stores in China are managed by Chinese local talent. • The company established the “Walmart China Women’s Leadership Development Commission” for driving women’s career development. Walmart in Germany • Walmart Failed to Understand the Culture • Germans did not understand the idea of buying in bulk • Failed to give the German managers the courtesy of speaking to them in German while in Germany. • Not prepared to deal with the German government and the price restraints that they placed on certain goods.

14. Emphasizing Similarities • Minimizes negative consequences of the “As Is” • Understanding cultural differences McDonalds Wal-Mart • Drive-in • Live Aquatics Grocery Selection Ford GM • Fiesta • Buick

15. Nine GLOBE Cultural Dimensions • Help with foreseeing cultural difficulties South Asian Culture and North European Culture • Power Distance • Degree to which a culture’s people are separated by power • South Asia had the highest ranking • North Europe had the lowest ranking • Uncertainty Avoidance • Degree to which a culture should seek orderliness and structure • South Asia ranked low • North Europe ranked 1st Dimensions can be used to help with the transfer of knowledge

16. Nine GLOBE Cultural Dimensions, Cont. In-Group Collectivism: South Asia ranked (1) while Nordic Europe ranked (10) Institutional Collectivism: South Asia ranked (1) while Nordic Europe ranked (10) Future Orientation: South Asia ranked (2) while Nordic Europe ranked (10) Why does this matter? Knowledge transfer across cultures is difficult, not to mention how to disseminate the information once received • In-Group Collectivism • Degree to which a culture’s people (should) take pride in and (should) feel loyalty toward their families, organizations, and employers • Institutional Collectivism • Degree to which individuals are (should be) encouraged by institutions to be integrated into broader entities with harmony and cooperation as paramount principles at the expense of autonomy and individual freedom • Future Orientation • Degree to which a culture’s people are (should be) willing to defer immediate gratification for future benefits • Gender Egalitarianism • Degree to which a culture’s people (should) support gender equality • Assertiveness • Degree to which a culture’s people are (should be) assertive, confrontational, and aggressive • Humane Orientation • Degree to which a culture’s people are (should be) fair, altruistic, generous, caring, and kind toward others • Performance Orientation • Degree to which a culture’s people (should) encourage and reward people for performance

17. NORDED set up a motivational leadership program for TAI BANK’s managers • NORDED had wanted to convey a low power distance and high institutional collectivism; i.e. they promoted an open feedback system with TAI BANK. • TAI BANK, with their high power distance and high in-group collectivism, did not take full advantage of the consultation. They believed their employees should follow NORDED’s advice without discussion.

18. High Power Distance vs. Low Power Distance • In countries where the sense of organizational hierarchy is strong, like France and Mexico, change is brought about from the top and employees at all levels expect new direction from their managers. The employees expect guidelines to be set up for them and to follow them without question. What power distance do they perceive? HIGH POWER DISTANCE

19. National Culture Differences and Knowledge Transfer • Tacit information (such as leadership skills and management know-how) is not easily codified and depends on human intuition. In addition, it’s often considered the most valuable knowledge which poses a problem. • It’s one thing to see the advantages of adopting knowledge and it’s quite another thing to overcome cultural boundaries and use the knowledge effectively

20. Perceived value of knowledge • Differences in cognitive structures, values, and practices, as well as language and communication barriers, all raise the costs involved in knowledge transfer • What if there isn’t any perceived value of knowledge?

21. National Culture and Cultural Differences Shapethe Motivational Disposition of the Source Unit • The source country’s management must spend time and resources to provide relevant knowledge to the target unit. Their willingness to do this is affected by their own national culture. • Ex. “Mexicans tend to require more structure and definition of their role and responsibilities than do Canadians. When a Canadian corporation acquires a Mexican company, its Mexican employees are often looking for information and structure that is not forthcoming, because their new Canadian managers deem it unnecessary. The Mexican organization often grinds to a halt, since Mexican employees are unlikely to go and ask for the information they need, since this may be viewed in Mexico as questioning management's authority.”

22. NORDED TAI BANK • High uncertainty avoidance: • NORDED spent a high amount of time and effort to ensure the success of their program • Low uncertainty avoidance: • TAI BANK sent emails to NORDED about changes taking place within the program as the program was about to start • High in-group collectivism: • TAI BANK almost certainly was not used to working with outside partners even though the intentions were good

23. How to Manage Cross Cultural Issues Advice on Cross-Border Knowledge Transfer: • Define common goals • Map the cultural profiles • Assign relationship managers • Learn from knowledge transfer

24. Define Common Goals Hewlett-Packard/Compaq Paramount • Same name, different company after merger. • New vision is needed internally. • New identity must be formed externally. • Organizational Culture Inventory Ideal. • Culture can be achievement oriented. • Culture can also be based on strong interpersonal relationships.

25. Map the Cultural Profiles • What should the focus of a cultural profile be on? • Why is doing this essential for success? • Examples

26. Assign Relationship Managers Position specific: • Job duties? • Ideal characteristics? • Constraints?

27. Learn From Knowledge Transfer • Why is it important? • What are methods of execution?

28. Conclusion In one sentence only… • “Be proactive and systematic.” • Questions?