Conflict in International Management:
Some Considerations on a Conceptual Framework for
Conflict Resolution

 

Prof. Dr. Brij Nino Kumar
Professor and Chair for International Management
University Erlangen- Nuernberg
Lange Gasse 20
90403 Nuernberg
Germany

Phone: 0049 – 911 –5302 452
Fax: 0049 – 911 – 5302 470

E-mail: Brij.Kumar@wiso.uni-erlangen.de

 

 

Dipl.-Kfm. Ina Graf
Lecturer, Chair of International Management
University Erlangen- Nuernberg
Lange Gasse 20
90403 Nuernberg
Germany

Phone: 0049 – 911 – 5302 471
Fax: 0049 – 911 – 5302 470

E-mail: Ina.Graf@wiso.uni-erlangen.de

 

 

Abstract

The task of coping with and resolving conflicts is of utmost importance for cross-cultural management in the service sector more than in the industrial sector. Conflict in cross-cultural management can arise from various situations, e.g. finding the balance between a globally integrated and a locally responsive strategy in multinational corporations or compromizing between culturally divergent managerial behavior in global cooperations.

This paper attempts to develop a conceptual framework for analyzing conflict resolution in cross-cultural management and offers some proposals to this effect. For this purpose we borrow the model of cross-cultural understanding from cultural philosophy and conceptualize this on the multinational organization level. We show that cross-cultural understanding is actually learning between individuals and organizations, that is to say the result of a process of knowledge creation and transfer. With this in mind we explicate the concept of cross-cultural understanding on the theoretical foundations of organizational learning. Thereby two main aspects of the theory of organizational learning offer viable underpinnings: goals and levels of organizational learning. The developed arguments on organizational learning are integrated into a concept of what can be called ‘cross-cultural organizational understanding’ in multinational corporations and management.

Finally the problem of implementation is addressed briefly. First some measures of cross-cultural organizational learning and understanding are discussed around the forms of organizational learning. Secondly the factors influencing the learning and understanding capacity of organizations are outlined.

Conflict in International Management:
Some Considerations on a Conceptual Framework for Conflict Resolution

Introduction

Due to its nature the Global Service Economy more than the industrial sector depends on the interaction between organizations represented by managers and local entities (Enderwick, 1992) embedded in culturally different settings. Interactions in general are seen to be prone to conflicts (Jost, 1998); we suggest that this holds true in particular for interactions in the service sector characterized by inseparability of production and consumption (Enderwick, 1992). Hence, the task of coping with and resolving conflicts is of utmost importance for cross-cultural management in the service sector.

Conflict in cross-cultural management has various interrelated sources and foci. For one, it is characterised by the incommensurability of the principles of economic rationality in connection with implementing standardised and co-ordinated strategies world-wide on one hand, and the demands of adaptation to cultural diversity on the other. The well known „global integration - local responsiveness"-paradigm conceptualises the problem on the strategy level (Bartlett/ Ghoshal, 1992; Levitt, 1983; Porter, 1989; Ohmae, 1990, 1991; Yip, 1992). Then conflict in cross-cultural management also arises in interaction between managers and organizations of varied cultural backgrounds involved in different types of cooperation with each other, e.g. in joint ventures, strategic alliances of various goals etc. (Harris/ Moran, 1991; Featherstone, 1990; Hall/Hall, 1990; Hofstede, 1980, 1989; Adler, 1986; Karmasin/Karmasin, 1997). Finally , in recent years conflict has increasingly become an issue in connection with ethics in international business (Donaldson, 1989; De George, 1993; Steinmann/ Scherer, 1998). Norms and moral values underlying behavior and policies of multinational corporations are being challenged in the global context and have given cause for many serious conflicts between multinational corporations (MNC) and host country stake-holders (Kumar, 1982; Kumar, 1991; Kumar/ Sjurts, 1992; Kumar/ Graf, 1998; Kumar/ Steinmann, 1998; Huntington, 1993).

In all of the above cases conflict is the clash between two or more modes of management and thinking about management, each conditioned and influenced by different cultures. While the cultural relativity of management has long been the focus of cross-cultural management research, the immanent conflict and conflict resolution have not been addressed in a convincing theoretical manner so far. The antagonistic position between „global integration" and „ local responsiveness" is dealt with quite arbitrarily in that four generic strategies are delineated without theoretical justification of the demarkation within the coordinate system defined by both dimensions (Bartlett/ Ghoshal, 1989; Dunning, 1988; Kumar, 1987, 1988, 1992; Meffert, 1986; Taggart, 1997; Prahalad/ Doz, 1987). Conflict arising out of managerial interaction in international management is invariably narrowed down as a problem of cross-cultural negotiation (e.g. Ghauri, 1996; Moran/ William, 1991). And, as of lately, conflict in multinational ethical behavior is analysed through a philosophical perspective justifying culturally contradicting norms from both the transcendental pragmatic view (Apel, 1973, 1987, 1996; Habermas, 1981, 1983, 1987) and the culturalistic angle (Kambartel, 1989, 1998; Lorenzen, 1989; Lueken, 1992). However, this debate boils down essentially into discussing the fundamentals of cultural relativism and identifying „moral loosers" and economic costs in the course of the argumentation process, without making suggestions viable for multinational ethical practice. Also models of cross-cultural learning that are proposed for all of the three above situations in cross-cultural conflict remain on a high level of abstraction (Rähme, 1998).

A different approach all together propounded recently to tackling problems of cross-cultural conflict in various areas is the model of cross-cultural understanding by Wohlrapp (1998a, 1998b). Although vague and unprecise in its contents, the model in its basic elements offers a comprehensive paradigm which can be applied to describe and resolve cross-cultural management conflict.

The basic assumption underlying the model is, of course, that knowledge and understanding of foreign cultures are functional for conflict resolution in cross-cultural situations described above (Black/Mendenhall, 1990; Kammel/ Teichelmann, 1994, p. 28; Bühner, 1994, p. 282). Although the terms „understanding" and „cross-cultural understanding" have been used in connection with cross cultural communication as well as cross-cultural competence and cross-cultural learning (Bredella/Christ, 1993; Kallenbach, 1996; House, 1996), they really never has been conceptualized to the extent that they could be applied to problem-solving in multinational management. This would naturally imply projecting the concept to multinational organizations. What does cross-cultural understanding mean for a multinational corporation interacting in culturally variant environments and faced with the sort of conflicts described above? What concrete measures can be derived and prescribed for solving cross-cultural conflict in multinational companies?

In the following paper we attempt to conceptualize Wohlrapp’s model of cross-cultural understanding on the multinational organization level. What does cross-cultural organizational understanding mean, how can it be promoted for conflict resolution? We will offer a conceptual framework and some proposals to this effect.

MNC of the Service industry and intercultural conflicts

Multinational corporations per definitione are distinguished by intercultural interactions facing diversity and heterogeneity as they are characterized by cross-border transfer of resources in form of direct investment in two or more countries for the purpose of setting up long-term business activities (production operations, marketing affiliates, R&D facilities etc.) within the framework of corporate policies and objectives.

Multinational operations moreover are characterized by two strategic options that implement conflict on the corporate level of multinational activity. First, management has the choice, in many cases is even forced, to adapt operations and managerial functions to the foreign environment. Adaptation or local responsiveness becomes necessary in the light of different culture, laws, political systems etc. in foreign locations. Not responding with adequate means leads to dysfunctionality and conflict in the host-environment. Second, management has the option to coordinate and integrate foreign operations within a central strategy. The motivation for this approach is the economic imperative of achieving synergies in connection with world-wide transfer of resources while taking into account the specific locational advantages. Multinational management in practice is in most cases a combination of both strategic orientations organized in corporate global networks which have the capacity to combine both dimensions in different variations. In the proportion in which each of the two options are mixed and in its transfer to any managerial function different modes of management and thinking about management collide. It is the incompatibility of the underlying settings of objectives and interests in multinational business activities conditioned by different cultural backgrounds that in the end can arise conflict situations in any cross-cultural interaction of an organization.

Thus the nature of conflicts emerging in multinationals is complex. Both on the individual interaction level between managers and local entities and on the institutional level between the organization and pressure groups or state institutions conflicts evolve effecting economic and social efficiency (Achleitner, 1985; Regnet, 1992). Varied interests and objectives clash in internal relationships (e.g. corporation – employees, parent company – subsidiary, expatriate – local manager) as well as between the organization and external stakeholders (e.g. subsidiary – customer, corporate strategy – economic policy of the host country, corporate strategy – the foreign public).

Referring to the specific characteristics of the service industry (e.g. Dunning, 1989; Enderwick 1989a, 1989b, 1992; Nusbaumer, 1987) the considerable conflict potential of MNC in this sector can examplary be outlined. First, it is the inseparability of production and consumption of global services that presupposes a higher degree of interaction between the multinational corporation and its customers and hence the management, e.g. Marketing & Sales, is prone to conflicts to a higher extent than the management in the less interactive industry sector. The heterogeneity of services that can be attributed again to the labour and interaction intensity of services implies a higher conflict potential than the standardizable industrial production. Thus more fundamental conflicts e.g. between headquarters and subsidiaries stemming from different conceptions of quality arise. Moreover the intangibility of services entails the need for differentiation and the creation of tangible attributes like a unique corporate image. Creating a global corporate image however, assumes the clash of cultural features as well as different settings of interests of the parent company and the subsidiaries. Due to the service specific fluctuations in supply and demand – e.g. for transportation - the global service industry in particular is seen to be prone to cooperation strategies to manipulate the service supply (e.g. code sharing in the airline industry). The conflicts that arise in all types of cooperation are well-known (e.g. Harrigan, 1988; Kogut, 1988; Lei/ Slocum, 1991; Lorange/ Roos 1992; Schauenberg, 1991; Sydow; 1993; Wurche, 1994) and MNCs in the service sector face them especially in strategic alliances of various goals represented by managers of varied cultural backgrounds. Finally, the service industry is exposed to intense interactions and thus conflicts with the host-country due to the high degree of regulations in services. As the know-how in services is not that specific and unique the host country’s endeavor to protect the national market from global competition by regulating the service industry; thus the host country’s interests clashes with the multinational’s growth path resulting in fundamental conflicts.

The Cross-cultural Understanding Paradigm

Theoretical Background

It is not sufficient just to know the culturally divergent behavioral patterns to realize and functionally resolve cross-cultural conflict (Löber, 1992, p. 8). Rather it is essential to have understanding of the cultural background and its influence on behavior. The philosophy of hermeneutics has devoted attention to the concept of understanding which is seen as explaining something that is not accessible from an outside perspective, but only from within by reconstruction of human action through interpretation of underlying intention and reason (Brugger, 1992, p. 435). In order to understand cross-cultural conflict it does not suffice to just trace it back to divergent interests and cultural norms and to adapt one’s own behavior pattern to the functional relationships. In cross-cultural interaction it means over and above to sense and grasp the order of norms and the cultural system of thinking and orientation (e.g. axioms of logic in western culture) (Schwarz, 1997, p. 198).

Understanding means listening to reason. Foreignness is a matter of perspective. Nothing in its own nature is alien, but only when seen from a certain point of view (Kallenbach, 1996, p. 1). This double perspective is an important element in the theory of cross-cultural understanding (Ropers, 1990). Remaining rooted in one’s own rationale makes understanding difficult and means demanding adaptation by the foreign subject and „colonising its norms and behavior". Rather understanding requires the willingness to - at least temporarily - surrender one’s own norms and to participate in the opposite point of view (Habermas, 1989).

The Wohlrapp Concept of Cross-cultural Understanding

Cross-cultural understanding

Wohlrapp (1998b) conceptualises cross-cultural understanding on these premises as a learning process through which involved parties in interaction with each other absorb one anothers cultural values and norms leading to lower tension and conflict between themselves. Cross-cultural understanding is then a state of mind implying the recognition of each others cultures; it is not an a priori transcendental pre-condition as required by discourse ethics, but rather a consensual outcome of cross-cultural interaction (Priddat, 1994, p. 274). According to Wohlrapp (1998b) the process consists of three consecutive phases (1) Experiencing alien cultures (experiential phase), (2) reflecting on alien cultures (reflection phase) and (3) conciling of alien cultures with one’s own culture (conciliation phase). In this sequence the concept implies gaining incremental in-depth insight into the alien culture with the objective of conflict resolution.

Explication with reference to cross-cultural management

There are two ways of looking at management as a cultural phenomena. It is an expression of culture, e.g. the Japanese Ringi System of management is a cultural trait, and it is also an outcome of culture, e.g. the Japanese Ringi System is a result of the collectivist Japanese culture (Kumar/Steinmann/Dolles, 1993). Whatever the view, in order to penetrate the cultural dimension analytically, an idea about the concept of culture is required as it intermingles with management. Several concepts of culture have been proposed in cross-cultural management literature (Hofstede, 1984, 1989, Trompenaars, 1993). For our purpose we draw on Schein (1984) who proposes penetrating the cultural dimension of organizations on the basis of a 3-tier model which in descending order uncovers the relationship in depth: (1) cultural (managerial) artefacts, (2) underlying manifest social structures and processes and (3) basic assumptions, values and norms. In the following we connect this concept with the 3-phase model of cross-cultural understanding (Figure 1).

 

The first phase is experiencing artefacts of management in foreign cultures. It means opening the organization without prejudice to managerial practice and behavior beyond its own horizon. For instance, the foreign subsidiary experiences in interaction with local suppliers some management patterns that are different, unexpected, strange or even shocking, e.g. ‘bribery’ offers in some Asian countries (e.g. Jahn, 1995, p.14). At this stage, experiencing is merely description of manifest artefacts in the foreign culture, of the ‘cultural iceberg’ as it were (Gibson, 1994).

The second phase is reflecting about manifest societal structures and processes which interact as they explain the artefacts of foreign management. It means becoming conscious of commonly known management related societal phenomena, e.g. role of ‘presents’ in interorganizational relationships in Asian companies (Noonan, 1987; Pohl, 1994; Moody-Stuart, 1997). Wohlrapp (1998b, p. 160) realises that in alien cultures it is not easy to identify such specific cultural phenomena because of organization’s own differing referential system. Drawing on the philosophy of understanding he suggests seeking corresponding (management) behavioral patterns in the organization’s own culture to articulate the difference. Cross-cultural understanding in this phase means confronting organization’s own perspective and meaning of management with apparent alien patterns. Only through this confrontation is introspection about organization’s viewpoint possible which in itself is a prerequisite for reflecting on foreign management practices (Hüni, 1998, p. 20). Through such reflections the international corporation in this stage can enhance its capacity for understanding management in foreign cultures in view of its apparent underlying societal influences.

Experience and reflection however alone do not suffice for cross-cultural understanding. Rather, in the third phase, also conciliation between alien and own management patterns must be achieved. This implies gaining still deeper insight into the cultural underpinnings of foreign management. It means going beyond interpretation of experienced management through manifest societal phenomena alone, but rather also on the basis of explicit and implicit values and norms. According to Wohlrapp (1998b, p. 161) amicable action in the event of dissent is only possible when opposite underlying norms are known and respected, when one is even prepared to question and surrender one’s own values system for the sake of constructive conflict resolution. Of course, gaining knowledge of norms and values underlying foreign management is even more difficult than identifying relevant manifest societal phenomena. Scholars of cross-cultural management have developed concepts which enable to clarify values systems relevant to management in cross-cultural setting (Hofstede, 1989, 1991, 1992; Trompenaars, 1993). With reference to specific cultures these values can deepen the understanding of the particular management practice. For instance, bribery in Asian countries can be explained not only by certain modes of interorganizational relationships, but in more depth by underlying values like ‘power distance’ (Hofstede, 1988/1989) in Asian societies. Replicating foreign norms and values means paying tribute to these cultures. Esteem and recognition are constitutive of human personality, qualities that are transcendental and universal, and therefore suitable as reference points for conflict resolution and mutual conciliated action in cross-cultural context (Priddat, 1994, p. 218) and cross-cultural management.

The above mentioned phases reflect increasing degrees of cross-cultural understanding in the course of which conflict potential in cross-cultural management decreases proportionately thus increasing the possibilities of reaching strived goals (Figure 2).

 

This insight allows us to make our first two propositions.

Proposition 1

Conflict potential and conflict resolution in international management depends on whether and as to how far in multinational corporations’ cross-cultural understanding is developed and applied.

Proposition 2

Multinational corporations, who in managing across cultures rely only on the first phase of cross-cultural understanding process, will possess higher conflict potential than multinational corporations who also command the second phase. Conflict potential in cross-cultural management will be smallest in multinational corporations that command all three phases of cross-cultural understanding.

Cross-cultural Understanding in Multinational Corporations-
A Process of Cross-cultural Organizational Learning?

The notion of cross-cultural understanding must now be embedded in the context of multinational corporations which with its help must resolve the conflicts described in the opening chapter. What is needed now is, therefore, a concept of what we may call cross-cultural organizational understanding.

From what we see, Wohlrapp (1998a, 1998b) considers cross-cultural understanding as a learning process. From the practical point of view, the underlying mode of interaction can be compared with organizational learning (March/ Olsen, 1976), generally seen as a feed-back-loop between system (organization) and environment with the ultimate goal of changing organizational behavior. For Schein (1985) culture and cultural understanding are indeed a result of learning between individuals or organizations (also Lepenies, 1995). With this in mind the concept of cross-cultural understanding can be explicated on the theoretical foundations of organizational learning. Thereby two main aspects of the theory of organizational learning offer viable underpinnings: goals and levels of organizational learning.

Theoretical Approaches and Goals of Organizational Learning

The term „learning" originates in the behavioral sciences in connection with the stimulus-response paradigm. Initially it was used in connection with the capability of an individual to learn, i.e. to react (respond) to one and the same stimulus in a different way than in a previous situation.

March/Olsen (1976) were the first researchers to use this theory for organizations and organizational learning. Several models have been propounded since then which vary from each other in basic assumptions, focus and complexity (Shrivastava, 1983; Pautzke, 1989, Reinhardt, 1993, Dodgson, 1993, Cohen/Sproull, 1996). The behavioral model is the nearest to the original idea of stimulus and response and focuses on change in the behavior of systems (Jelinek, 1979; Hedberg, 1981). Parameters like change of corporate strategy are considered as evident response to environmental stimulus, and organizational learning is adaptation to the environment.

Cognitive theories of organizational learning see the phenomenon as knowledge gaining in organizations (Cyert/ March, 1963/ 1995; Argyris/ Schön, 1978; Duncan/ Weiss, 1979). Organizations are considered as intelligent systems which have the capacity to collect, store and process experience and knowledge. Such learning processes are embedded in the cognitive structure of organizations, e.g. in the basic value system, and are manifest on the corporate artifact level, e.g. in philosophy and programs etc.

The interaction-systems theory approach combines behavioral and cognitive models to a comprehensive perspective of organizational learning (Fiol/ Lyles, 1985; Gomez/ Müller-Stewens, 1994). The assumption is that cognitive structures (e.g. value system) and (learned) behavior (e.g. planning system) are interdependent so that interaction between systems themselves become a crucial issue for organizational learning.

These three theories are in essence complimentary to each other and help to identify the basic characteristics of organizational learning:

Müller-Stewens/Pautzke (1994, p. 195) build on these characteristics to identify the major goals of organizational learning put together in a four-phase learning cycle. As seen in Figure 3 individual learning is transformed into a (new) collective knowledge base of organizations („collectivation of knowledge"). Following this, the subsequent changes in organizational cognitive structures must be „institutionalized". This (new) organizational learning base is then „activated" into new organizational behavior and action patterns. Finally, through the „feed-back" loop information is transported to the individual knowledge base for the ensuing organizational learning cycle. With the attainment of each learning phase and goal organizational learning increases incrementally. Based one these arguments we can formulate the following proposition:

Proposition 3

Multinational corporations committed to cross-cultural understanding in management must in each of its three phases implement the organizational learning cycle and strive towards attainment of the four learning goals.

 

Levels of Learning and Cross-cultural Understanding

A further relevant aspect of organizational learning as proposed by Argyris/Schön (1978) is its classification according to levels of learning. Each level thereby specifies the contents of learning at a different degree of abstraction. Organizational learning presupposes building up problem-solving capability for all levels (Reinhardt, 1993, pp. 293-301). Argyris/Schön (1978) suggest a 3-tier level-model of organizational learning:

Single-loop-learning. This is a process through which organizations identify deviating patterns of behavior and action from prescribed standard practice. Single-loop learning suggests that organizations can pinpoint malfunction or deficiencies in prevalent behavior patterns ("theory-in-use") with reference to alternative construed modes of action ("spoused theory") (Argyris/Schön, 1978). Subsequently organizations learn to identify the potential for and also induce adaptation. Adaptation on this level, however, remains on the superficial level since single-loop-learning takes place within the existing frame of reference without changing underlying norms. For multinational corporations committed to cross-cultural understanding in management, single-loop-learning would mean experiencing and comparing foreign modes (artefacts) of management in light of own patterns without, however, attempting to explain in depth the deviation. It would mean experiencing the foreign manifest artefacts and identifying the scope of adaptation in order to achieve viability in the foreign environment. For instance, personnel management in Japanese subsidiaries of German companies would have to learn that locally practised incentive systems are different than those used in Germany. The difference becomes manifest latest when individual incentive systems prove to be ineffective in the Japanese context. Through comparison with applied concepts in Japan personnel management can judge as to how far adaptation is possible.

On these terms single-loop-learning can be seen as the learning process underlying the experiential phase of cross-cultural understanding.

Double-loop-learning. On this level the frame of reference itself is questioned. Learning on the second level means developing the cognitive capabilities of the organization and its members to reflect on the underlying goals, means and values of prevalent patterns of behavior and action (Nagl, 1997, p. 65; Probst/ Büchel, 1994, pp. 36-37). The higher degree of abstraction of this level of learning is defined in connection with the restructuring of the existing frame of reference ("theory-in-use") for single-loop-learning. Double-loop-learning is often seen as a first step in conflict resolution where contradicting means and goals are made visible and opened for discussion. According to Argyris/Schön (1978) successful double-loop-learning requires openness and unprejudiced thinking to be able to question values orientations. It is a process of "unlearning", making room for new judgements and concepts.

For multinational corporations striving for cross-cultural understanding in management, double-loop-learning means that the deviation between foreign and own management practice as questioned on the single-loop-learning level is now analysed on the level of underlying norms. It means that organizations not only learn to identify divergent management and adaptation potential in differing cultures, but also learn to explain the differences on the basis of manifest value orientations. In the example mentioned above, subsidiary management in Japan would seek to explain why individual incentive systems prove to be inefficient in the local context by analyzing the underpinning norms. The motivational structure of Japanese employees being rather group than individual based (Kumar/ Steinmann/ Dolles, 1993), also compensation and incentives must adhere to these orientations. On this level of organizational learning it becomes important for German organizations in Japan to "unlearn" traditional reward and incentive concepts in order to create room for Japanese perceptions. As such double-loop-learning can be seen as the learning phenomena connected to the reflection phase of cross-cultural understanding as defined above. Naturally, in the beginning organizations at this stage show resistance to change (Argyris, 1990), as do multinational companies when shifting or adapting home-country practice to host-country requirements (Kumar, 1987). Mechanisms must be developed here to soften the defensiveness of organizations for learning on this level.

Deutero-learning. On this third level, single-loop-learning and double-loop-learning themselves are the object of organizational learning. In this process in which learning of learning ("meta-learning") becomes important, organizations must review critically the preceding context, problems and success of learning. Deutero-learning means reflecting on the learning process whether and how far through the connection of single-loop-learning and double-loop-learning divergent behavior and action could be described and explained in such a way that reconciliation of the different positions becomes a real possible alternative. As defined by Wieland (1997) reconciliation, especially in the cross-cultural context, is a process describing transformation of divergent positions from incompatibility (conflict) through compatibility (adaptation) to complementarity (integration). As such deutero-learning implies the assessment of single-loop and double-loop learning in terms of this process that allows reconstruction and comparison of basic assumptions in foreign and own behavioral and action patterns.

Especially the transformation to "complementarity" in the above reconciliation concept assumes integrating divergent positions to an optimal utility function, which is possible only through harmonization of basic assumptions.

For a German multinational corporation committed to cross-cultural understanding in subsidiary management in Japan, deutero-learning would mean assessing how and to how far conflict of reward systems could be established and explained and whether on this basis reconstruction of basic assumptions for reconciliation becomes possible. For instance, German management in the experiential phase (single-loop-learning) may find - contrary to original expectations – little or no conflict between Japanese and German incentive systems, presumably explained in the reflection phase (double-loop-learning) by the shift of traditional Japanese group orientation toward more individual achievement values in recent years. However, when management fails to realize expected efficiencies in connection with transferred German rewards practices, deutero-learning may conclude that observations originally made by single-loop-learning about harmony between German and Japanese systems were superfluous and the explanations advanced by double-loop-learning prejudiced by assuming superiority of Western values in modern Japan. Hence, deutero-learning would uncover the deficiencies in the previous levels of organizational learning to the effect that the explanation of artefacts was rather based on manifest "modern" social values that are often en vogue than on the relevant underlying basic assumptions in Japanese culture. Deutero-learning thus not only makes the process of learning transparent, but also confirms the role of basic assumptions in the reconciliation process. As such deutero-learning can be seen as the learning phenomenon underlying Wohlrapp’s (1998a, 1998b) reconciliation phase of cross-cultural understanding.

Based on these arguments about the levels of organizational learning, the following proposition can be derived.

Proposition 4

The three phases of cross-cultural understanding each correspond to the three levels of organizational learning. Multinational corporation committed to cross-cultural understanding in management must implement organizational learning at all three levels.

Concept of Cross-cultural Organizational Understanding

The developed arguments on organizational learning can now be integrated into a concept of what can be called cross-cultural organizational understanding (Figure 4 )

 

 

As shown in the figure, each phase of cross-cultural understanding is characterized by the corresponding level of organizational learning as described above in connection with penetrating the cultural dimension of management. On each level of organizational learning all four goals of organizational learning must be attained with respect to the three cultural dimensions of management.

Cross-cultural learning in the experiential phase

The experiential phase of cross-cultural understanding in cross-cultural management is focussed on single-loop-learning in the foreign culture. The objective lies in identifying differences in cross-cultural management and the potential for adaptation. In terms of organizational learning goals, such identified phenomena must be subjected to collectivation, institutionalization, activation and feed-back on achieved efficiency. The next proposition summarizes the gist of arguments.

Proposition 5

The success and effectiveness on the experiential phase of cross-cultural understanding will depend upon whether and how far multinational companies are in a position to achieve the goals of organizational learning on the single-loop-learning level with respect to divergent management practise in cross-cultural context.

Cross-cultural learning in the reflection phase

In the reflection phase organizations must go through double-loop-learning which means identifying visible norms and values which according to Schein’s concept explain divergent managerial behaviors. In order to make such knowledge organizationally effective, the established explanation patterns must be consolidated according to the goals of organizational learning and be subjected to collectivation, institutionalisation, activation and feed-back of achieved efficiency.

Proposition 6

The success and effectiveness of the reflection phase of cross-cultural understanding will depend on whether and as to how far for multinational corporations are in a position to achieve the goals of organizational learning on the double-loop-learning level pertaining to manifest societal norms and values in the cross-cultural context.

Cross-cultural-learning in the reconciliation phase

Reconciliation of reflected artefacts in foreign cultures follows the learning model as well. From the point of view of deutero-learning it means assessing single- and double-loop-learning in terms of their effectivity in reconstructing basic assumptions which according to Schein are the underpinnings of manifest norms and values and can be seen as the fundamental explanation of (divergent) managerial behavior in cross-cultural context. Furthermore, in terms of organizational learning goals, such basic assumptions must again be subjected to collectivation, institutionalization, activation and feed-back of achieved efficiency.

Proposition 7

The success and effectiveness of the reconciliation phase of cross-cultural understanding will depend on whether and as to how far multinational corporations are in a position to achieve the goals of organizational learning on the deutero-learning level with reference to reconciling divergent basic assumptions in cross-cultural context.

Implementation of Cross-cultural Organizational Understanding

Having explicated the constitutional elements of cross-cultural organizational understanding for cross-cultural management, the problem of implementation remains to be solved. Two questions have to be answers: 1, What are the measures, and 2, what are the contingencies of cross-cultural organizational learning and understanding?

Forms of Organizational learning and Cross-cultural Understanding

The first question must be answered around the forms of organizational learning. Organizational learning theory identifies four basic varieties (Steinmann/Schreyögg 1997:458): (1) experiential learning, (2) imparted learning, (3) incorporated learning and (4) self-referential learning.

Basically all four forms of learning can be applied to all three phases of cross-cultural organizational understanding. Of course, one could assume that certain forms are more appropriate for a particular phase with reference to learning goals and levels of learning than others. For instance „experiential learning" in that it draws on past problems and adversities with respect to felt differences in cross-cultural management and conflict could be more helpful in the experiential phase where in single-loop-learning management artefacts must be effectively identified by „learning-by-doing" and through own observation than imparted learning where experiences of others have to be first modified for one’s own situation. On the other hand „imparted learning" in the sense of getting cues from other organizations or concrete instructions from knowledge-agents can be more effective in the reflection phase where an inexperienced organization may not find it easy to go through double-loop-learning in pinpointing cultural norms underlying managerial behavior in foreign environments. Finally, for instance, self-referential learning which basically rests on knowledge creation through restructuring of the existent knowledge configuration in organizations (e.g. internal information and communication system) may be most appropriate for the reconciliation phase where deutero-learning e.g. restructuring for assessing efficiency in the other two phases for purposes of generating basic assumptions of managerial behavior in the cross-cultural management is the central issue. In a similar fashion the issue must be analyzed which forms of learning are more appropriate for achieving which learning goal.

Contingencies of Cross-cultural Organizational Learning and Understanding

The second issue centers around the problem that the learning and understanding capacity of organizations can vary according to certain influencing factors. One can assume that some organizations have better conditions for cross-cultural understanding while in others barriers may prevent achieving the goals. Two sets of variables can be considered as important: 1, MNC organizational characteristics like structure, culture and processes, and 2, the organizational environment in the cross-cultural setting.

The corporate characteristics in question are essentially those which define „learning organizations" (Steinmann/ Schreyögg, 1997, p. 460). For instance, it can be argued that certain organization structures may be more congenial for fulfilling the requirements of specific phases of cross-cultural understanding than others. Or, that unstructured organizations have a better potential for cross-cultural understanding in general or according to specific phases than structured organizations. Characteristics of „learning organizations" must be evaluated against the requirements of the phases of cross-cultural learning and understanding.

The organizational environment basically pertains to the divergence of the cross-cultural setting and its influence on the difference of management practices. In general it can be argued the greater the divergence the more difficult cross-cultural organizational learning and understanding becomes. This could also vary according to the phases of cross-cultural understanding. For instance, while it may be easier in a high divergent cultural context to contrast apparent managerial differences in the experiential phase, explaining them in the reflection phase can become a problem because of lack of reference norms. Similarly, must be addressed which contingencies are more favourable for achieving the learning goals.

Conclusion

The framework as developed here outlines the general elements of the concept of cross-cultural understanding in management. In a specific case study the concept can be applied and operationalized with respect to conflict in any functional area in international management, e.g. international personnel management or cross-cultural quality management. In each case hypotheses with regards to specific conflict potential and learning goals must be developed. The framework combines a positivistic and prescriptive-normative approach through which not only analysis of cross-cultural conflict in management is possible, but also the identification of conditions needed for efficient conflict resolution.


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