PROJECTS BEYOND CULTURES & CULTURES BEHIND PROJECTS Master of Science Thesis in the Master’s Programme International Project Management MEHRSHAD AKBARI Department of Civil and Environmental Engineering Division of International Project Management CHALMERS UNIVERSITY OF TECHNOLOGY Göteborg, Sweden 2014 MASTER’S THESIS 2015:3 sis 2015:3 MASTER’S THESIS 2015:3 PROJECTS BEYOND CULTURES & CULTURES BEHIND PROJECTS Master of Science Thesis in the Master’s Programme International Project Management MEHRSHAD AKBARI Department of Civil and Environmental Engineering Division of International Project Management CHALMERS UNIVERSITY OF TECHNOLOGY Göteborg, Sweden 2014 Projects Beyond Cultures & Cultures Behind Projects Master of Science Thesis in the Master’s Programme International Project Management MEHRSHAD AKBARI © MEHRSHAD AKBARI, 2014 Examensarbete / Institutionen för bygg- och miljöteknik, Chalmers tekniska högskola 2015:3 Department of Civil and Environmental Engineering Division of International Project Management Chalmers University of Technology SE-412 96 Göteborg Sweden Telephone: + 46 (0)31-772 1000 Chalmers reproservice / Department of Civil and Environmental Engineering Göteborg, Sweden 2014 CHALMERS, Civil and Environmental Engineering, Master’s Thesis 2015:3 I Projects Beyond Cultures & Cultures Behind Projects Master of Science Thesis in the Master’s Programme International Project Management MEHRSHAD AKBARI Department of Civil and Environmental Engineering Division of International Project Management Chalmers University of Technology ABSTRACT This research intends to highlight the effects of cultural differences as well as consequences of impacts on project and organization. It will identify and analyze why it is really important with motivation and interaction within an international team, the importance of competency and skills required of an international PM, for instance, awareness, conflict management and avoiding impacts on project caused by cultural differences, but also equally important to understand each other and avoid, prevent and eliminate prejudices. This research also highlights understanding the link between managing an international project, influencing people with different culture and behavior who are globally located at different sites in an international project. In an era of global changes, there the amendments shape artistically and rapidly our world as well as we are going with an incredibly fast speed towards to globalism, becomes increasingly common to do almost everything in the form of project and likely the most projects extends across international boundaries. Likewise, it contributes to creating a greater need of competencies within a number of large and various areas in which much greater demands are made on a PM that will lead an international project. However, the increasing need appears immediately to provide demands on knowledge, competence and a qualified PM is vital to eliminate and avoid delivering a fragile project. One consistent unclear and quite invisible area is the absence of cultural awareness and shortage of competencies within this area. This research even turns the unspoken and perhaps unwritten dimensions of aspects of managing a cross culture project. One of the other major focusing fields here is to delve project managerial issues from a behavioral, psychological and cultural perspective. Furthermore, it studies basic theoretical concepts combined with the complexity of project management in an int. context, and increase the understanding of the consequences of leading multicultural groups from a Saab perspective with focus on different area as Asia (Far East, Middle East). The main questions are how strongly can an international counterpart´s culture affects a joint project and what can the impact and the consequences mean for a project as well as how does a performance driven organizational culture (PDC) influence global projects within Saab. The main theoretical fields are management of multinational projects, and the impact of cultural diversity within the projects. Another question is how to highlight flaws and potential improvements within the projects as well as preventing cultural misunderstanding by gaining competencies. Key words: Culture, Cross-Culture, International Projects, Competence, motivation, communicating across cultures, Leadership. CHALMERS, Civil and Environmental Engineering, Master’s Thesis 2015:3 II Projekt bortom kulturer & Kulturer bakom Projekt Examensarbete inom International Project Management MEHRSHAD AKBARI Institutionen för bygg- och miljöteknik Avdelningen för IPM Chalmers Tekniska Högskola CHALMERS Civil and Environmental Engineering, Master’s Thesis 2015:3 III Contents ABSTRACT I CONTENTS III ABBREVIATIONS V PREFACE VII 1 INTRODUCTION 1 2 PROJECTS BEYOND CULTURES & CULTURES BEHIND PROJECTS 4 2.1 Global Project Management 4 3 CULTURE IN 360 DEGREES 6 3.1 Cultures behind international projects 8 3.2 National Culture 9 3.3 Organizational Culture 16 3.4 Personal and individual Culture 20 3.5 Cultural Challenges, Clashes or Opportunities? 21 3.5.1 Equality and Diversity as a challenge 24 3.6 Cross-cultural Competencies 25 4 PDC (PDOC) AND CHALLENGES 28 4.1 Challenges concerning PDC global (PDOC) 29 5 METHODOLOGY 32 5.1 Research design and data collection 32 6 FINDINGS 35 6.1 The result of the interviews and Findings 37 6.2 Culture, competency and motivation 42 6.3 PDC (PDOC) 43 6.4 AXIOM (Self-explication) and Prejudices 45 7 DISCUSSION 47 7.1 3 Dimensions of cultural competency in leadership 47 7.1.1 D1 – Management Competencies 48 The first dimension of competence 48 7.1.2 D2 – Social & Culture in General competencies 49 The second dimension of competence 49 7.1.3 D3 – Personal/individual competencies 49 CHALMERS, Civil and Environmental Engineering, Master’s Thesis 2015:3 IV The Third dimension of competence 49 7.2 Recommendations 50 8 PROPOSALS FOR FUTURE RESEARCH 53 9 CONCLUSION 54 10 LIMITATIONS 56 11 LIST OF FIGURES 57 12 LIST OF TABLES 58 13 REFERENCES 59 14 APPENDICES/ANNEX 62 APPENDIX 1 63 SAAB in brief 63 APPENDIX 2 64 Interview Questions 64 APPENDIX 3 65 GLOBE Leadership (and the GLOBE project) 65 CHALMERS Civil and Environmental Engineering, Master’s Thesis 2015:3 V Abbreviations D1-D3 First Dimension-Third Dimension EDS Electronic Defense Systems GLOBE Global Leadership and Organizational Behavior int. International IP International Project/s et al. et alia, and others (when referring to a number of people) PDC Performance Driven Culture PDOC Performance Driven Organizational Culture PM Project Manager SAAB Svenska Aeroplan Aktie Bolaget (Swedish Aeroplane Ltd) SaaS Software as a service TOT Transfer of Technology Vs Versus https://www.google.se/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CCgQFjAA&url=http%3A%2F%2Fen.wikipedia.org%2Fwiki%2FSoftware_as_a_service&ei=0ErnU_FA5-bJA7y_gOAB&usg=AFQjCNF0MCPFDd4JBZppfaVezfnVwTGdyg&bvm=bv.72676100,d.bGQ CHALMERS, Civil and Environmental Engineering, Master’s Thesis 2015:3 VI CHALMERS Civil and Environmental Engineering, Master’s Thesis 2015:3 VII Preface Globalization has made cultural challenges more important for international business environments. While projects within Saab extends across borders and despite the "Code of Conduct" , cooperative relationship with many different countries around the world and diversity among employees, still absence of cultural competencies and lack of awareness in some important areas is perceived, not only among project leaders, but also many employees and consultants involved in projects within Saab AB. For this reason, the need for this research in the particular cultural issues became relevant and essential. It is critical for international companies to consider cultural risks. If the cultural issue is not recognized, it can result to ineffectiveness and in many cases very costly for the company or perhaps in a worst case can be excluded from the int. market without knowing why. A society’s culture determines the rules that govern how companies operate in the society. The culture is a learned behavior and it is adaptive, that’s why it is a challenge to adapt the project to the culture of the country, were the project is taking place. So, the reason to bring up this research was the need of a wide study within the topic which prompted this research. The study was performed and executed at Saab EDS, Department of Industrial Engineering, Section of the Test development. Without any hesitation and doubt must be mentioned all support from my supervisor at Chalmers, Dr. Petra Bosch, my supervisor at Saab Mr. Michael Svedberg and the Head of Production EDS in Gothenburg Mr. Anders Krohn with his tremendous support along this journey made it possible to carry out and complete this research. I want also to thank and say how grateful I am for having this opportunity to make this research. I would also like to thank all those who directly or indirectly contributed to this work, especially all the program managers, project managers and supervisors with their enormous knowledge within international Project Management that brightened up the road and could lead to this result, which in turn make it essential to extend my best appreciation and thanks towards to Mr. Urban Lennheimer, Mrs. Maria Fagerberg, Mr. Lars Edmark, Mr. Fredrik Sämfors, Mr. Martin Labecker, Mrs. Åsa Berntsson, Mr. Joakim Bernhardsson, Mr. Nicklas Forsmark and many more, and also my dear friend Mrs. Roya Lotfkhah who contributed with help to find relevant literature that has been used as ref. in this research, thence it was not easy to find relevant references. *It is strongly recommended to listen to your favorite music during the reading of this thesis. Mehrshad Akbari Sweden - Gothenburg 2014 CHALMERS, Civil and Environmental Engineering, Master’s Thesis 2015:3 VIII CHALMERS Civil and Environmental Engineering, Master’s Thesis 2015:3 1 1 INTRODUCTION In recently years, many researchers in their empirical works have come up with criteria to access how well a robust and successful international project can be developed to prevent the impacts of possible issues, and how an international project manager can create relation to a customer as well as project members to finally create motivation to fulfill project goals within a cross-culture project. As a global working environment becomes the norm, cross-cultural studies of this type become increasingly important as such research may help to improve our understanding of the development of acquired motives (Van Emmerik, Gardner, Wendt and Fischer 2010). With the increasing trend for outsourcing, off-shoring and globalization, many organizations are taking advantage of geographically distributed skills, round-the- clock operations and virtual teams. Small and medium sized businesses are linking up with major companies, forming supplier networks to deliver products and services, and customer networks of distributors, resellers and end-users. Global projects are now the operating units that establish an initial link among these cross-border networks and rely on information flows across the different partners and stakeholders (Binder Jean 2007). As Hofstede mentions (Hofstede 2010) our world is full of confrontations between different nations, people who act differently, but at same time these people, groups, and nations, are exposed to mutual problems that demand collaboration for their solution. Hofstede claims that "Ecological, economical, political, military, hygienic, and meteorological developments do not stop at national or regional borders". (Hofstede 2010, p.4). Accordingly, this research intends to highlight and describe the concept of cultural values, and relate some of the international differences, similarities, and behaviors occurring in terms of working as a team member and managerial values in cross- cultural projects. Since there has not been a similar research within multi-national projects of the same character which has main focus on cross-cultural issues to recognize impediments and improvements from a perspective of Saab as well as in general, and as the same time offer an overview of many experienced project managers point of view with many years worldwide experiences within international projects at the Saab EDS Gothenburg. Therefore, with the intention to improve the cultural relationship with the counterparts and cooperation partner as well as internal within the projects and in the company as well, the main theoretical fields in this research target the impacts and consequences of working with foreign cultures, and while wearing PDC (Performance driven culture), what is required in the backpack when international project managers meet other cultures and diversity in their project. Hence, there is always room for improvement within management of multinational/international projects to find a better way to tackle the impacts of cultural diversity and trying to reducing CHALMERS, Civil and Environmental Engineering, Master’s Thesis 2015:3 2 consequences as much as possible and preventing cultural misunderstanding by gaining competencies. According to Creating a Performance-Driven Culture, Tate (2014) argues that to avoid punishing high performers in an organization with PDC , , performance standards should address the level of performance that is reflected in the performance standard scale and not against the “expectations” of the employee (Tate et al. 2014). Highlighting the most important cultural elements, impacts and consequences as mentioned in this paper may help international project managers to think further and perhaps attempt to enhance themselves in this front in terms of skills and awareness, especially when their projects are run by an organization that has already implemented the PDC. It will also try to contribute to a better global behavior regarding global management, as well as highlighting many particular details on how a manager face a foreign culture and successfully passes cultural boundaries, responds smoothly to make more than adequate reliable connections and to succeed as a result. Due to culture has characteristics such as it’s learned, shared, adaptive, heritable, patterned in generations and many more, then the idea and the necessity of such research appeared as vital. This study also foregrounds and addresses the PDC which is implemented in Saab and will try to identify what are the consequences or effects on the company as well as it´s projects. Since the PDC is a kind of organizational culture, it is not obvious that all business counterparts are working with it, therefore there is a need to discuss the PDC and its possible effects on an International Project. Problem statement (research questions)  What is the impact and the consequences of working with an international counterpart culture for a project and PM?  How does a performance driven organization culture (PDC) influence global projects?  What are potential improvements within current international projects but also in the future international projects? As our discussion of culture from a motivational perspective emphasizes a person’s values, efficacy expectations, and goals as central, then we should even look closer to the values as we do in this document. The value and preference structure gives rise to particular motives, and these are, in turn, the impetus for setting goals and direction of action. Motives are in relation to a person’s desire to integrate and implement into her/his work unit as well. Finally and accordingly along with this introduction, for a better understanding of how this document is structured, a brief description as a short guide through the contents of this thesis is followed here. In chapter 2 Global project management is discussed and why it is important to create relations and have motivation as pillar to CHALMERS Civil and Environmental Engineering, Master’s Thesis 2015:3 3 carrying project forward and make progress. Furthermore, a little more about culture in brief until we dig deeper about culture in chapter 3. Here we try to emphasize the connections between most important elements of culture and how these elements are connected to an international project and why it concern project manager. In chapter 4, we bring up and go through PDC (PDOC), which is a type of organizational cultural. In chapter 5 we look deeper at cross-cultural competencies and what elements are included in this area. Thereafter, chapter 6 explains the methodology, process of design and data collection. Chapter 7 offers the findings of this research. In chapter 8 we will find what is retrieved of this research and try to conclude the outcome from this study and what do we got along the journey of this work. CHALMERS, Civil and Environmental Engineering, Master’s Thesis 2015:3 4 2 PROJECTS BEYOND CULTURES & CULTURES BEHIND PROJECTS Every project has its own unique culture or value set, and different global projects may have their own comprehension of culture meaning. In studies of international projects, the ethnic cultures in projects, organizations as well as national and individual cultures, the effects of society’s cultural beliefs and values have been examined by many researchers around the World. As one of the main stable factors, the Culture within an international project or global organization is playing a critical role. Although, every country might choose a specific kind of management or leadership system, but it cannot reflect the cultural priorities of nation, individual or a general kind of leadership. The culture of an international project is typically created unconsciously, based on the values of the top management or the founders of an organization. As Hofstede argues (2010), managers as well as leaders and the people they work with, are always part of national societies. Understanding these people is understanding and their behavior and their societies (Hofstede 2010, p.25). 2.1 Global Project Management In general, project management can be is perceived as a universal term. However, the meaning of project management and the way it is being executed is far from universal. Sharon De Mascia (2012), place a question in her literature that asks about which skills and attitudes can normally be associated with being a Project Manager. Then she in a comparison table compare a Line Manager to a Project Manager and conclude that a Project Manager is involving building close working relationships in order to meet project milestones and project goals. In addition she mentions that it is perhaps more useful to look at the types of skills and attributes that can be essential for a PM. Sharon De Mascia (2012) suggests the following attribute in international project managers are significantly associated with successful projects. Here apparently the word ‘motivate’ stands out that are directly related to the different types of culture. This skill to create motivation may be the reason that project management and project leadership are not the same. Moreover, Schein (2004) argues that management and leadership are two different sides of the same coin. But if someone desiderates to distinguish leadership from management, one can assert that leadership is created and can change cultures, while management and administration act accordingly within a culture (Schein 2004). Furthermore, as Early (2003) claims, an important learning aspect of upgrading international management skills involves capitalizing on one’s experiences to solve problems in a new culture and to quickly automatize procedures. Many high competence individuals are skillful and insightful when processing new information. CHALMERS Civil and Environmental Engineering, Master’s Thesis 2015:3 5 The efficient processing of new information allows high cultural intelligence individuals the mental resources to learn and automatize the information in the new culture in the fastest possible manner. They are able to spontaneously select, encode, and compare information from a previous experienced cultural situation to solve a problem in a new cultural encounter. By the same token, as Binder (2007) mentions, the adoption of a holistic approach for communication, providing different levels of information to various stakeholders from distinct culture backgrounds, can improve understanding and reduce conflicts. 4-Step Framework for Effective Cross-Cultural Project Management (ref. Binder 2007)  Learn the definition and different types of culture — the cultural differences exist across countries, but are also influenced by a diversity of age, gender, regions, religions and many other types of social groups. Consider the dimensions presented in this chapter as a starting point to build your own cross-cultural knowledge.  Understand the cultural differences — use the cultural dimensions to know what differences to expect between people from different cultures. Employ a team building exercise to identify how your team and colleagues view these differences.  Respect the cultural differences — keep the differences in mind when confronted with opposite views of the world. You must accept them and show respect for the different standpoints. Vive la différence means enjoy the richness of a multi cultural team, and Binder (2007) implies that we should remember that we can build on the differences in order to identify and mitigate the potential risks, finding alternative methods and attain the project objectives more effectively, and may enhance the grade of the quality and innovation of a project deliverables.Binder (2007) claims also that Project managers make advantage of already demonstrated methods ensuring project activities and monitoring significant elements such as time, cost, quality and possible risks. Bodies of knowledge such as the PMBOK® Guide, ICB and PRINCE2® is a good examples of these management practices which has been presented. Project management can be a kind of these practical applications by using special competences as controlling, contrive and estimating etc. Project management Adds To The leadership styles and methods and even can involve creating motivation, to Achieve The Project's Objectives and to acquire commitment from the most qualified team members and main stakeholders. Project management can be seen as a soft competence creating commitment and can be used to deal with conflicts, creating customer satisfaction and even enhancing the quality of the project. A good leadership creates the possibility of reducing the need for control in projects and even overriding control of major projects. (Binder 2007). CHALMERS, Civil and Environmental Engineering, Master’s Thesis 2015:3 6 3 CULTURE IN 360 DEGREES A society’s culture determines how its members communicate and interact with each other. Culture is often represented as icebergs or onions, the basic elements of culture are social structure, language, communication, religion, and values and attitudes. The interaction of these elements affects the local environment in which international businesses operate (Griffin & Pustay. 2003). Using the analogy of the way computers can be programmed, is called by Hofstede (2010), the patterns of thinking, feeling, and acting mental programs for human being. Indeed, we should keep in mind that Hofstede doesn't mean that people are programmed the way computers are, but people´s behavior is only partially pre- determined by their mental programs (Hofstede 2010). Despite a behavior is counted as an element of culture, not all behaviors count as culture, and some behaviors might be the result of a special upbringing or a temporary impact of the environment in which a person is at the moment. Global Culture typically in intercultural communication, people will encode and decode based on their own cultural background and framework. Therefore unless the cultures are relatively similar, intercultural communication can pose great challenges. If the cultures of the interacting parties are very diverse in language, values, and belief systems, then interacting parties will experience a great deal of difficulty communicating (Earley et al. 2003). Culture is not only summed up in one word you can see it in a simple point of view, but which resembles a sea for a sailor to be explored in order to cope with the stormy days. By definition, culture is what a group learns over a period of time as that group solves its problems of survival in an external environment and its problems of internal integration. Such learning is simultaneously a behavioral, cognitive, and an emotional process. Extrapolating further from the deepest level of culture will be the cognitive in that the perceptions, language, and thought processes that a group comes to share will be the ultimate causal determinant of feelings, attitudes, espoused values, and overt behavior. In an analogous way, the word culture means different to different individuals. A number of factors affect a leader's leadership style, but few exert more influence than culture. Many leaders base their leadership on a combination of organizational and personal cultures, and cultural factors can affect the direction and overall success of the company. Culture can also cause friction when a leader's style runs contrary to established principles, and some leaders might attempt to change an existing organizational culture. (Evans 2014). In spite of the importance of culture, climate and behavior in an international project and the challenges, which arise project manager to tackle, it is sometimes easy to forget these elements and the culture related issues. It is extremely important to be mindful all the time that these are cornerstones for a PM to succeed in his/her project. CHALMERS Civil and Environmental Engineering, Master’s Thesis 2015:3 7 Most definitions indicate attitudes, beliefs and the way people behave towards others outside their field. The area can be defined geographically, politically or organizationally, etc. There is no definite boundary or borders between cultures. Cultures go partially into each other as different rings with common areas. Taylor (1871) defined culture as a complex whole, which includes knowledge, beliefs, art, morals, law, customs, and any other capabilities and habits acquired by man as a member of society. There are many more authors with similar definition of culture. All of these definitions have common cores as we recognize culture in  Words, gestures, object that carry out a particular meaning etc.  Ideas, values, attitudes and beliefs: the essence of a culture.  Expected patterns of behavior: family culture, social culture, law, organizational culture, etc.  A collective phenomenon: shared by at least two or more people who live in the same social environment. Figure 3-1 Common cores of Culture When it comes to language, it can serve as a wide window on the culture of a society. Normally, most companies have an interpreter or a native person as an employee who can help with interpretation or translation. Although most people speak several languages including English, which solves and helps to eliminate language as a problem. Culture has different forms, levels and areas. There are many different levels of culture and even a number of definitions of these levels. For instance, national culture, regional culture, urban culture, corporate culture, and even within the same company can be subcultures, department culture, work culture and many more. Moreover, Gesteland (2012) argues that no two people of any culture are exactly alike; there are regional, generational and individual differences, among others. Van Emmerik et al. (2010) emphasize that implicit motives involve learned pleasurable or CHALMERS, Civil and Environmental Engineering, Master’s Thesis 2015:3 8 emotional associations with a specific set of stimuli along with possible genetic influences. Although all these common cultural cores drops into different kind of culture. 3.1 Cultures behind international projects Understanding the differences in the ways these leaders and their followers think, feel, and act is a condition for bringing about worldwide solutions that work (Hofstede 2010, p.4). As Schein claims the most important message for managers and leaders is to try understanding culture can confer its due, and you may ask yourself how well you can begin to understand the culture in which you are embedded (Schein 2004). Boddy (2002) argues that the team members work effectively when their individual interests are in line with the collective ones of the project itself. In fact, gathering people to create a team and achieving the project´s objective on its own is never a guarantee for reaching to a high level of performance and absolutely no sign to succeed. Normally, one of the major issues is a lack of knowledge and information about other people and their culture, and this concerns the project both internally and externally. Regardless who we are or who is our counterpart in a different culture, we should address and identify possible issues such as Religion, Communication, Values & attitudes, social structure and language and never forget to take into account the impact of these issues. Regarding the connection between culture and motivation and its importance in an international project, Schein claims (2004), knowing the culture can facilitate creating motivation which in itself is the driving force for a company or a project forward. Thus, to create a common culture in which all involved are united and directed toward the same goals regardless of their personal culture. Boddy argues that influencing people is a core skill for a project manager. As surely “the team” is included here, obviously in order to keep the commitment and motivation of the team members. That what Boddy (2002) calls “across” is that a project manager also needs to influence the other departments of the company, joint venture partners, suppliers and even customers. The third direction is managing “staff and users” to ensure that people concerned by the change are involved in the project and that they understand the objectives of the project. And a project manager has to manage “up” which means influencing senior management to keep their support (Boddy, 2002). Regardless to how experienced people are at this company, but there is always room for development in the area of how to behave, communication and motivation. In recently years, This Company has not been so ambitious to encourage their employees in an appreciable way, and the reason can be the tough global economic situation. By referring to Boddy (2002), which refers to the different models used to motivate employees, but he also refers to them - are affected by internal team factors and wider CHALMERS Civil and Environmental Engineering, Master’s Thesis 2015:3 9 organizational factors. However, these imperfect results can be affected by organizational stress and its impacts on employees, which in turn can gradually have a dysfunctional effect on the project. Boddy mentions the importance of identifying sources of power for a project manager, which he divides it in physical, economic, knowledge and normative power (Boddy, 2002). 3.2 National Culture Hofstede (2010) argues that "Nations should not be equated to societies. Societies are historically, organically developed forms of social organization. Strictly speaking, the concept of a common culture applies to societies, not to nations" (Hofstede 2010, p.21). Values as an important element of culture Differing value systems may create and cause conflict at a workplace. According to Merriam-Webster’s Online Dictionary, Values are those things (such as a principle or quality) that are intrinsically valuable or desirable. All individuals develop a set of values, or value systems, which provide a road map for their behavior in a variety of situations. Your values evolve from the influences of your family, society, religious training, and personal experiences. Not only do individuals have their own value systems, but organizations do as well. Underlying every decision made at work is a corresponding value. Because these values may be so ingrained in you, you are usually not aware of them as you make decisions. In diverse groups, many more value systems are at work, which can cause conflict in decision making (Dalton, Hoyle, Watts 2011). As Hofstede (2010) mentions, "Countries and regions differ in more than their cultures". The figure below distinguishes the differences as identity, values, and institutions between different countries, all parts have root in history. (Hofstede 2010, p.22). Figure 3-2 Sources of Differences between Countries and Groups (Hofstede 2010, p.22) Regarding dimensions of culture, it becomes almost impossible to not mention the well-known cultural national dimensions of the pioneer Hofstede. Geert Hofstede is CHALMERS, Civil and Environmental Engineering, Master’s Thesis 2015:3 10 probably one of the best known sociologist of culture and anthropologist in the context of applications for understanding global business. Many research papers and articles refer to his research and publications, Geert Hofstede´s cultural dimensions theory 1 comprises four (six) dimensions of national cultures that helps to understand how and why people from different culture behave as they "normally" do. 1. Power distance (PDI) 2. Uncertainty avoidance (UAI) 3. Individualism/collectivism (IDV) 4. Masculinity/femininity (MAS) 5. Long-term orientation/ short term orientation (LTO) 6. Indulgence/restraint (IVR) Apparently, all these points create the elements that are the basis for being able to work with a customer or an International team. Indeed, it requires a hard work as well as competency to create an understanding of how national cultural differences influence management of an international project, worth mentioning that this has a direct impact mainly on the results of the project, including the communication and transmission channels in cross-organizational knowledge transfer and more. Power distance index (PDI): "Power distance is the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally." Individuals in a society that exhibits a high degree of power distance accept hierarchies in which everyone has a place without the need for justification. Societies with low power distance seek to have equal distribution of power. [6] Cultures that endorse low power distance expect and accept power relations that are more consultative or democratic. Individualism (IDV) vs. collectivism: "The degree to which individuals are integrated into groups". In individualistic societies, the stress is put on personal achievements and individual rights. People are expected to stand up for themselves and their immediate family, and to choose their own affiliations. In contrast, in collectivist societies, individuals act predominantly as members of a lifelong and cohesive group or organization (note: "The word collectivism in this sense has no political meaning: it refers to the group, not to the state"). People have large extended families, which are used as a protection in exchange for unquestioning loyalty. Uncertainty avoidance index (UAI): "a society's tolerance for uncertainty and ambiguity". It reflects the extent to which members of a society attempt to cope with anxiety by minimizing uncertainty. People in cultures with high uncertainty avoidance tend to be more emotional. They try to minimize the occurrence of unknown and unusual circumstances and to proceed with careful changes step by step 1 Hofstede's cultural dimensions theory is a framework for cross-cultural communication, developed by Geert Hofstede. It describes the effects of a society's culture on the values of its members, and how these values relate to behavior, using a structure derived from factor analysis. The theory has been widely used in several fields as a paradigm for research, particularly in cross-cultural psychology, international management, and cross-cultural communication. (Source: Wikipedia: http://en.wikipedia.org/wiki/Hofstede's_cultural_dimensions_theory ) http://en.wikipedia.org/wiki/Sociology_of_culture http://en.wikipedia.org/wiki/Anthropologist http://en.wikipedia.org/wiki/Geert_Hofstede#Publications http://en.wikipedia.org/wiki/Indulgence http://en.wikipedia.org/wiki/Hofstede's_cultural_dimensions_theory#cite_note-6 http://en.wikipedia.org/wiki/Geert_Hofstede http://en.wikipedia.org/wiki/Geert_Hofstede http://en.wikipedia.org/wiki/Hofstede's_cultural_dimensions_theory CHALMERS Civil and Environmental Engineering, Master’s Thesis 2015:3 11 planning and by implementing rules, laws and regulations. In contrast, low uncertainty avoidance cultures accept and feel comfortable in unstructured situations or changeable environments and try to have as few rules as possible. People in these cultures tend to be more pragmatic, they are more tolerant of change. Masculinity (MAS), vs. femininity: "The distribution of emotional roles between the genders". Masculine cultures' values are competitiveness, assertiveness, materialism, ambition and power, whereas feminine cultures place more value on relationships and quality of life. In masculine cultures, the differences between gender roles are more dramatic and less fluid than in feminine cultures where men and women have the same values emphasizing modesty and caring. As a result of the taboo on sexuality in many cultures, particularly masculine ones, and because of the obvious gender generalizations implied by Hofstede's terminology, this dimension is often renamed by users of Hofstede's work, e.g. to Quantity of Life vs. Quality of Life. Long-term orientation (LTO), vs. short term orientation: First called "Confucian dynamism", it describes societies' time horizon. Long-term oriented societies attach more importance to the future. They foster pragmatic values oriented towards rewards, including persistence, saving and capacity for adaptation. In short term oriented societies, values promoted are related to the past and the present, including steadiness, respect for tradition, preservation of one's face, reciprocation and fulfilling social obligations. Indulgence versus restraint (IVR): The extent to which members of a society try to control their desires and impulses. Whereas indulgent societies have a tendency to allow relatively free gratification of basic and natural human desires related to enjoying life and having fun, restrained societies have a conviction that such gratification needs to be curbed and regulated by strict norms. Since Hofstede´s cultural dimensions theory is a framework for cross-cultural communication and as PDC is a sort of organizational culture, it will be affected by cultural diversity regarding to Hofstede´s cultural dimensions. For instance the implication of power distance on PDC can be mentioned as stated by Hofstede (2011) that "the less powerful members of organizations and institutions accept and expect that power is distributed unequally" and "It suggests that a society's level of inequality is endorsed by the followers as much as by the leaders" (Hofstede 2011, p.9), which probably can make it almost impossible for an organization with PDC to run a project with a non-PDC organization cross-borders which in turn can be a hindrance for an international project manager that leads to an unsuccessful and fragile project. By the same reason a PDC organization can strongly be affected by different national dimensions which in other words can change or create motivation among a global project team or eventually jeopardize any kind of progress in a global project. CHALMERS, Civil and Environmental Engineering, Master’s Thesis 2015:3 12 To create this understanding we will check the Project GLOBE's nine cultural dimensions mentioned by many authors and researchers around the world, for instance House (1999) and it hopefully contributes only and least with insights into how cultural differences influence the work process, the planning, the virtual team and foremost project management across borders. More about Influence of national cultural differences on communication and transmission channels in cross-border knowledge transfer can be found in the GLOBE project. Hofstede (2011) has even six dimensions of Organizational culture. More about these dimensions will be presented in the next chapter "Organizational Culture" in this thesis. The 9 Dimensions of the GLOBE Project 2 : – Uncertainty avoidance – Power distance – Collectivism I: Social collectivism – Collectivism II: In-group collectivism – Gender egalitarianism – Assertiveness – Future orientation – Performance orientation – Humane orientation See more about the GLOBE project in appendix 3. So in comparison and as a result, we can consider that:  Different from Hofstede in that many more researchers with varied perspectives were involved (vs. Hofstede working alone); studied many companies vs. Hofstede’s IBM.  GLOBE provides a present and valid comprehensive overview of general stereotypes that can be further analyzed for better insight. In accordance with Van Emmerik (2010), who adverts multiple hypotheses and compare them with each other to investigate what actually applies and if the relation is true. Humane Orientation is the degree to which individuals are encouraged and rewarded for being fair, altruistic, friendly, generous, caring, and kind to others. Moreover, by referring to Kabasakal and Bodur (2004), Van Emmerik (2003) note that in high Humane Orientation societies that the need for belonging, rather than self- realization, pleasure and material possessions are likely to be the dominant motivating bases. As the Power motive brings up a desire to exert impact, control, or influence over another people, team or even the world at large. Van Emmerik even refers to 2 The GLOBE (Global Leadership and Organizational Behavior Effectiveness Research) project took Hofstede’s original 1980 research findings (Hofstede, 1980) and dedicated an entire academic effort into exploring the differences of cultures (Hofstede, 1980). “Conceived in 1991 by Robert J. House of the Wharton School of the University of Pennsylvania, and led by Professor House, the GLOBE Project directly involved 170 “country co-investigators” based in 62 of the world’s cultures as well as a 14- member group of coordinators and research associates. This international team collected data from 17,300 middle managers in 951 organizations. They used qualitative methods to assist their development of quantitative instruments.[4]” The research identified nine cultural competencies and grouped the 62 countries into ten convenient societal clusters (Javidan & Dastmalchian, 2009). Source: http://en.wikipedia.org/wiki/Global_Leadership http://en.wikipedia.org/wiki/Wharton_School http://en.wikipedia.org/wiki/University_of_Pennsylvania http://en.wikipedia.org/wiki/Cultures http://en.wikipedia.org/wiki/Middle_manager http://en.wikipedia.org/wiki/Survey_methodology http://en.wikipedia.org/wiki/Global_Leadership#cite_note-4 http://en.wikipedia.org/wiki/Convenient http://en.wikipedia.org/wiki/Global_Leadership CHALMERS Civil and Environmental Engineering, Master’s Thesis 2015:3 13 Schmidt and Frieze (1997) who found that people with a high Power Motive do things to draw attention to themselves as they want to be noticed in an effort to influence others. People with a high Power Motive are more likely to seek positions of authority, reflecting a preference for Power Distance (Van Emmerik et al. 2003). Power Distance according to Gupta (2004) can be defined as the degree to which people agree that power should be unequally shared Individuals socialized in high as opposed to low Power Distance cultures tend to learn to respect legitimate authority and the implication that leaders with high Power Motives will be more likely to exhibit initiating structure and less likely to display consideration is the base of their concerns with the task and authority (Carl, Gupta, & Javidan, 2004; House et al. 2002). More work is welcome on the unexplored relationships between these universal motives and their associations with effectiveness in the work situation. Moreover, given the evidence we obtained of complex interactions between personality and the manifestation of these motives across cultural contexts, additional research into the moderating effects of cultural is especially important. As Sternberg and Grigorenko (2006) argue, people from Western countries have shown a certain kind of arrogance in assuming that concepts/results obtained in one culture apply anywhere. This study also ignores differences in corporate culture. As such, differences in corporate cultures that may be important to cross-border acquisitions are not considered. With the increase of multinational organizations, we recommend future studies that include the organizational culture in the analysis. Finally, because the data were collected by a Western culture–oriented consultant firm, respondents with an international or even Western orientation may have been overrepresented. (Van Emmerik 2010). Nevertheless important to be attentive that all the collected data or surveys does not need to be true, or absolutely right as Van Emmerik argues it is possible that the cultural differences measured by the GLOBE study and by personality instruments at the societal level do not reflect people’s dispositions to think, feel, and behave in certain ways, but are instead culturally endorsed styles of responding to surveys (Van Emmerik 2010). This knowledge and competence stands as the foundation for creating motivation likewise get all the members from different cultures gathered under the same roof of the one project to work together as a team in an efficient and satisfactory manner. Although, perhaps it is totally wrong to generalize all western countries and non- Western countries and their culture and behavior which is definitely not the same, not even among those countries that are known as for Western countries, the culture is not exactly similar. CHALMERS, Civil and Environmental Engineering, Master’s Thesis 2015:3 14 Gesteland (2012) discusses the “Great Divide” regarding business cultures, which in turn is connected to the national culture. What does he mean by that? Gesteland uses the term The Great Divide to describe the different business cultures around the world. To be more precise it is the difference between the Relationship-focused (RF) (Asia, Arab, and most Africa) and Deal-focused (DF) (N-Europe, Australia, N- America) cultures. The great divide affects the way we make business globally, from beginning to start. For starters, the way we make the first approach to potential buyers or partners depend upon whether they are Deal focused or Relationship focused. DF deal with strangers and do not need to become friends, they make straight contact to the person and if they are trying to deal with RF that can be a problem while RF deal with family, friends, persons they know and can be trusted. They are uncomfortable to do business with strangers. The Introduction to the cultural pattern in brief by Gesteland (2012). 1. Deal-Focused (DF) vs Relation-Focused (RF) Behavior Gesteland claims that there is a Great Divide between business cultures all over the world. Deal-Focused (DF) people - for example USA - tend to be fundamentally task- oriented, while Relationship-Focused folks - Southeast Asia - tend to be more people- oriented. Of course, relationships are important in business everywhere, it´s a question of degree (Gesteland 2012). 2. Direct (low-context) vs Indirect (high-context) communication People from DF-business (such as Australia, NZ) tends to use direct language, while RF-people (such as South Asians) often employ indirect, vague language, especially when what they have to say could cause offense or lose of face. This difference in communication tendencies continues to cause misunderstandings when RF business people communicate with their DF counterparts (Gesteland 2012). 3. Informal (egalitarian) vs Formal (hierarchical) Business Problems also occur when informal business traveler´s relatively egalitarian cultures cross paths with more formal counterparts from hierarchical societies. Breezy informality can offend high-status people from hierarchical cultures, just as the status- consciousness of formal people may offend the egalitarian sensibilities of informal folks (Gesteland 2012). 4. Rigid-Time (monochronic) vs Fluid-Time (polychronic) Some of the world´s societies seem to worship the clock. Others are relaxed about time and scheduling, focusing instead on interpersonal relations. Conflicts arise because some rigid-time visitors regard their fluid-time brothers and sisters as lazy, undisciplined and rude, while the latter may regard the former as arrogant martinets enslaved by clock and arbitrary deadlines (Gesteland 2012). Monochronic – clock-obsessed, schedule-worshiping cultures. In a monochronic cultures it is very important to be on time and on schedule. CHALMERS Civil and Environmental Engineering, Master’s Thesis 2015:3 15 Very monochromic. Nordic and Germanic Europe, North America, Japan. Monochronic: Russia, Eastern – Central Europe, Southern Europe, Singapore, New Zealand, Hong Kong, Taiwan, South Korea. Polychronic cultures, where people place less emphasis on strict punctuality and are not obsessed with deadlines. The Arab World, Africa, Latin America, South and Southeast Asia. In the polychromic cultures punctuality is less important. There is even a culture between these two cultures which is called Variably Monochromic. 5. Emotionally Expressive (EE) vs Emotionally Reserved (ER) Business Behavior EE-people communicate differently from their more reserved counterparts. This is true whether they are communicating verbally, paraverbally - through tone and volume of voice, for example - or nonverbally (with gestures). The resulting confusion can spoil our best efforts to market, sell, source, negotiate or manage people across cultures. The expressive/reserved divide creates a major communication gap, one largely unexplored in most books on international business. (Gesteland 2012). In addition, Gesteland describe an expressive culture as when a person from an expressive culture is more expressive in the three types of interpersonal communication:  Verbal communication – words and meaning of the words (lots of them)  Paraverbal language – how loudly we speak, meaning of silence etc (loud voices and never silent which in other cultures is considered very rude). Paraverbal negotiation behavior is when both sellers and buyers have to know enough about their counterpart´s culture to be able to close the business culture gap and adapt to each other culture.  Nonverbal communication – body language (big movements) Expressive cultures are Mediterranean Region, Latin Europe and Latin America Variably expressive cultures are found in North America, Oceania, Eastern Europe, south Asia and Africa. Reserved culture is the opposite of expressive culture. People are more calm, do not speak with a loud voice or with their hands and body. They speak very soft and calmly in a reserved manner. Reserved culture is common in east and southeast Asia, Nordic and Germanic Europe (Gesteland 2012). To emphasize the importance of the personality, which in turn is one of the cornerstones of culture, Van Emmerik (2010) in his research, concludes that today, mergers across borders, collaborations, and relocation decisions are becoming common experiences for many employees, creating challenges to employee integration within the organization as well as knowledge transfer .Van Emmerik (2010) in addition, mentions that from a group and organiza- CHALMERS, Civil and Environmental Engineering, Master’s Thesis 2015:3 16 tion perspective, people are still attracted to work environments that are compatible with their personality characteristics and that match their own norms and values. 3.3 Organizational Culture Hofstede predicate that "organizational, cultures have been a fashionable topic in the management literature since the early 1980s. At that time, authors began to popularize the claim that the “excellence” of an organization is contained in the common ways by which its members have learned to think, feel, and act. Corporate culture is a soft, holistic concept with, however, presumed hard consequences" (Hofstede 2010, p.47). Hofstede et al. (2011), apart from his well-known national cultural dimensions has even identified six independent organizational dimensions, resembling distinctions known from organization sociology, were identified that describe the larger part of the variety in organization practices. These six dimensions can be used as a framework to describe organization cultures, but their research base in twenty units from two countries is too narrow to consider them as universally valid and sufficient. For describing organization cultures in other countries and/or in other types of organizations, additional dimensions may be necessary or some of the six may be less useful. However these six dimensions can basically work as a tool to identify obstacles and implications between PDC organizations and non-PDC organizations. The six dimensions found in Hofstede´s (et al.) study are: 1. Process-oriented versus results-oriented Process-oriented cultures are dominated by technical and bureaucratic routines, results oriented by a common concern for outcomes. This dimension was associated with the culture's degree of homogeneity: in results-oriented units, everybody perceived their practices in about the same way; in process-oriented units, there were vast differences in perception among different levels and parts of the unit. The degree of homogeneity of a culture is a measure of its 'strength': the study confirmed that strong cultures are more results- oriented than weak ones, and vice versa (Peters & Waterman, 1982). 2. Job-oriented versus employee-oriented The former assume responsibility for the employees' job performance only, and nothing more; employee-oriented cultures assume a broad responsibility for their members' wellbeing. At the level of individual managers, the distinction between job orientation and employee orientation has been popularized by Blake and Mouton's Managerial Grid (1964). The Hofstede et al. study (1990) shows that job versus employee orientation is part of a culture and not (only) a choice for an individual manager. A unit's position on this dimension seems to be largely the result of historical factors, like the philosophy of its founder(s) and the presence or absence in its recent history of economic crises with collective layoffs. 3. Professional versus parochial In the former, the (usually highly educated) members identify primarily with their profession; in the latter, the members derive their identity from the organization for which they work. Sociology has long known this dimension as 'local' versus CHALMERS Civil and Environmental Engineering, Master’s Thesis 2015:3 17 'cosmopolitan', the contrast between an internal and an external frame of reference (Merton, 1949). 4. Open systems versus closed systems This dimension refers to the common style of internal and external communication, and to the ease with which outsiders and newcomers are admitted. This is the only one of the six dimensions for which a systematic difference was found between Danish and Dutch units. It seems that organizational openness is a societal characteristic of Denmark more than of the Netherlands. This shows that organization cultures also contain elements from national culture differences. 5. Tight vs loose control This dimension deals with the degree of formality and punctuality within the organization; it is partly a function of the unit's technology: banks and pharmaceutical companies can be expected to show tight control, research laboratories and advertising agencies loose control; but even with the same technology some units may still be tighter or looser than others. 6. Pragmatic versus normative The last dimension describes the prevailing way (flexible or rigid) of dealing with the environment, in particular with customers. Units selling services are likely to be found towards the pragmatic (flexible) side, units involved in the application of laws and rules towards the normative (rigid) side. This dimension measures the degree of 'customer orientation', which is a highly popular topic in the marketing literature. The research grounding of these dimensions is documented extensively in Hofstede et al. (1990). Applications and implications can be found in Hofstede et al. (2010) and (Hofstede 2011). Hofstede also divided culture into four layers (or four main elements): symbols, heroes, rituals and values. Far researching at the four layers is critical for organizational managers, because it can affect global projects, international business or operation at different degree, and in many different ways. An onion diagram model of organizational culture was developed by Hofstede et al. (1997), which is presented here below. Figure 3-3 Onion Diagram ( source: Hofstede 1997, p.9) CHALMERS, Civil and Environmental Engineering, Master’s Thesis 2015:3 18 Additionally, as organizational culture has come of age. Not only did the concept have staying power but it is even being broadened to occupational cultures and community cultures. Intentionality is a potent and necessary force in cross-cultural training, not only for the individual but also for the organization. Cross-cultural training in the globalized economy also means that organizations need to set new and higher standards of selection, assessment, training, and motivation of people (Bhagat et al. 1996). As Dalton (2011) mentions, an organizational culture is defined as a combination of beliefs, values, ethics, procedures, and atmosphere of an organization. It’s mostly a mix of the beliefs and values of society at large, the individuals who participate in the organization, and the organization’s leaders and founders. The culture determines what goals the organization wants to accomplish and how it will go about accomplishing them. In addition, Dalton (2011) argues that it is important to remember that subcultures in an organization may exist in the different departments or functions. Understanding cultural differences is valuable and important to reaching the success of firms that working in an international environment. However, leadership, very often, is understand as a critical variable in defining of the success or failure of an organization or international project, it becomes all over more and more important to look at the other side of the coin of leadership, how leaders can create culture in a project or an organization ( Schein 2004). Management and creating culture in an organization goes hand in hand as Schein argues" These dynamic processes of culture creation and management are the essence of leadership and make one realize that leadership and culture are two sides of the same coin(Schein 2004). A society’s culture affects the political, economic, social, and ethical rules a firm must accept to follow in its business environment when dealings within that society (Griffin Ricky W. & Pustay Mike W. 2003). Firms and businesspeople venturing beyond their familiar domestic markets soon recognize that foreign business customs, values, and definitions of ethical behavior differ vastly from their own. Firms that rely on their familiar home culture to compete in a new market can jeopardize their international success. (Griffin Ricky W. & Pustay Mike W. 2003). Increasingly, companies are taking into account employee needs and goals, personal and work related. Employers strive for win–win situations that allow both employees and the company to succeed. Organizations know they will be more productive and their employees more satisfied when effective human relations skills are used. (Dalton, Hoyle, Watts 2011). CHALMERS Civil and Environmental Engineering, Master’s Thesis 2015:3 19 Organizational Culture Levels according to Schein divided at three levels. Figure 3-4 Illustration of Schein's model of organizational culture Schein's model of organizational culture originated in the 1980s. Schein (2004) identifies three distinct levels in organizational cultures: 1. Artifacts and behaviors 2. Espoused values and beliefs 3. Assumptions These three levels refer to the degree to which the different cultural phenomena are visible to the observer. 1. Artifacts include any tangible, overt or verbally identifiable element in an organization. Artifacts are the visible elements in a culture and they can be recognized by people not being part of the culture e.g. furniture, dress code, logos, slogans etc. 2. Espoused values and beliefs are the organization's stated values and rules of behavior. Thus it is how the members represent the organization both to themselves and to others. This is the stated values and rules of behavior of an organization. This is often expressed in official philosophies and public statements of identity. It can sometimes often be a projection for the future, of what the members hope to become. Examples of this would be employee professionalism, or a "family first" mantra. Trouble may arise if espoused values by leaders are not in line with the general assumptions of the culture. I.e. a very clear CSR strategy or a self-image of an organization as one big family. 3. Shared Basic Assumptions are the deeply embedded, taken-for-granted behaviors which are usually unconscious, but constitute the essence of culture. These assumptions are typically so well integrated in the office dynamic that they are hard to recognize from within. (source: Wikipedia) Schein provides an accessible framework to understand a culture and the complexity of transformation of it to another, he also claims changing culture through primary embedding mechanisms and secondary reinforcing mechanisms. Then he presents culture as a series of assumptions a person makes about the group in which they participate. These assumptions are grouped into three levels. (Schein 1990). CHALMERS, Civil and Environmental Engineering, Master’s Thesis 2015:3 20 3.4 Personal and individual Culture Professional and personal goals in the context of the global economy can be successfully accomplished in cross-cultural training (Bhagat et al. 1996). As almost everyone belongs to a number of different ethnicity, group and categories at the same time, we inescapably carry several layers of a mental programming inside ourselves, corresponding to different levels of culture. In particular:  A national level according to one’s country (or countries, for people who migrated during their lifetimes)  A regional and/or ethnic and/or religious and/or linguistic affiliation level  A gender level, according to whether one was born as a girl or as a boy  A generation level, separating grandparents from parents from children.  A social class level, associated with educational opportunities and with a person’s occupation or profession.  For those who are employed, organizational, departmental, and/or corporate levels according to the way employees have been socialized by their work organization The mental programs from these various levels are not necessarily in harmony (Hofstede 2010, p.18). As Gesteland (2012) signifies that no two people of any culture are exactly alike and there are regional, generational and individual differences among others. Although, he dissuade against creating stereotypes, he divides people in different groups that seem to be inevitable according to him, though, perhaps his division of the business cultures in this case is not completely true, but not completely wrong neither, indeed. It is important to emphasis that McClelland’s motives are based on the conceptu- alization of motives as being learned. However, they are placed to make variation in durability among individuals as a function of their socialization. Culture can shape the values and norms among its members, where these values are shared and conducted between generations through some kind of social learning processes of observation (Erez & Gati, 2004). Moreover, a project manager should consider that the biological factors which can affect individual behavior and personality are important and they should take these factors into account. With this in mind, accordingly, Van Emmerik (2010) together with other authors predicate that, personality traits (along with other individual level attributes such as intelligence) such as the five factors of Neuroticism or Emotional Stability, Extraversion, Openness to Experience, Agreeableness, and Conscientiousness, are conceived as biologically based tendencies that influence the rest of the personality system, but are not determined by it. Together, these basic tendencies interact with the environment (including culture) to produce characteristic adaptations (e.g., culturally conditioned phenomena such as attitudes and personal strivings/motives) that in turn interact with the situation to create the output of the system, the individual’s “objective biography.” (Van Emmerik, et al. 2010). CHALMERS Civil and Environmental Engineering, Master’s Thesis 2015:3 21 3.5 Cultural Challenges, Clashes or Opportunities? The historical expansion of human societies to millions of individuals has changed the nature of relatedness. Today, many people feel related to people with whom they share a symbolic group membership, not necessarily a genetic one (Hofstede 2010, p.15). There are a number of identified challenges when discussing culture. The most well- known challenges in an international project include the time differences, replacing the face-to-face meetings with video meetings, dealing with various cultures that includes all types and levels of cultures, to create relationships and many more. Leveraging a time zone isolate further increased the flexibility in finding times to interact across sites (Tang, Zhao, Cao, Inkpen 2011). Griffin (2003) mentions that we should SEE THE FOREST, NOT THE TREES, and with this he means elements of national culture like status, religion, education, age, time, values and attitudes, communication etc. affect the behavior and expectations of managers and employees in the workplace. International businesspeople, who face the challenge of managing and motivating employees with different cultural backgrounds, need to understand these cultural elements if they are to be effective managers. Their efforts make it easier for international managers to understand the big picture regarding a country’s culture and how it affects their ability to manage their firms. In this section, we present the work of several of these scholars (Griffin 2003). Moving across cultures is a difficult challenge. It requires a certain adjustment and adaptation that is not found in any other type of social interaction, since so numerous aspects of the new situation differs from the previous ones. Many of the rules we learn in a specific culture may not be useful in another culture. In fact, alot of what is learned in a specific culture is often of no use in a new culture. Cultural adaptation is a dynamic objectives that requires a set of highly complex cognitive (even metacognitive) competencies (Earley and Ang. Soon 2003). The importance of making and developing a Personal Relationship As Gesteland (2012) makes out, a project Manager may concern the importance of building a sustainable relationship with a costumer or counterparts. Hence, in a RF (Relationship-focused) business the relationship that builds with counterpart can have a strong personal component in addition to a company-to-company component. Your personally, as well as your company, are committed to the to the success of the venture. Because of this personal elements it is important that continuity is maintained as far as possible throughout the relationship. To emphasize personal relationship, Early (2003) refers to Fiske that presents four elemental ways people structure their social relations, including social motives, thoughts, and values that could be used to explain patterns of cultural variations in social behaviors. According to Fiske (1991), the four elemental forms of structuring reflect four basic rules: sharing in communal CHALMERS, Civil and Environmental Engineering, Master’s Thesis 2015:3 22 sharing (CS); hierarchy in authority ranking (AR); equality in equality matching (EM); and proportion in market pricing (MP) (Earley and Ang. Soon 2003). The importance of Face-to-Face Contact The telecommunications revolution permits rapid correspondence with business partners around the world now. All equipments allow and enable us to stay in touch constant and continuously with customers and counterparts around the world regardless time or place (Gesteland 2012). And it means the opposite of face-to-face meeting. According to E-Culture (communication by electronic devices or internet), Griffin (2003) claims that the rise of the Internet is altering the world’s business cultures. It is affecting attitudes toward risk taking, decision making, organizational hierarchy, compensation, and education. For example, compared to their U.S. counterparts, many Asian and European firms are much more risk adverse (Griffin & Pustay 2003). But these technological marvels have not eliminated the need for face- to-face contact with our Relationship-Focused counterparts. RF business people are very often uncomfortable discussing important issues in writing or over the phone. They expect to see their suppliers and partners in person more often than would be necessary in deal-focused market (Gesteland 2012). This cultural difference has assumed increased importance in recent years. The cultural cluster approach is another technique for classifying and making sense of national cultures. Similarities exist among many cultures, thereby reducing some of the need to customize business practices to meet the demands of local cultures. A cultural cluster comprises countries that share many cultural similarities, although differences do remain. Closeness of culture may affect the form that firms use to enter foreign markets (Griffin & Pustay 2003). The importance of communication Referring to Dalton (et al. 20011), "definition of Communication is the process by which people exchange information through a common system of symbols, signs, or behavior". This process sends messages from one person as a transmitter to another as a receiver. Symbols as well as signs can be written or spoken as words to communicate. Signs might be shapes and colors can be created. Behavior can be any non-verbal communication, such as body movements or many kinds of facial expressions. Listening, speaking, writing, showing or reading are the all among the basic skills which can be used in a communication. Of these skills, listening and speaking are the most frequently used (Dalton, Hoyle, Watts 2011). Crucial issues in inter-cultural communications are:  Language and culture  High and low context languages in low/high content culture  Use of interpreters  non-verbal communication CHALMERS Civil and Environmental Engineering, Master’s Thesis 2015:3 23 According to Norman (2010) who highlights one of the most common challenges that is management and communication across time zones. As he claims one of the significant obvious challenges facing the development of a communications plan for an international project is determining the best way for communicating across time zones within the project. This is a problem which changes in complexity and impact as the time zones spread out, but, regardless of the distance and difference, it is one which can have very a serious impact on the way the project is managed and commu- nications performed. Adding an additional wrinkle to the whole thing, is when the project is not simply spread between two different time zones, but multiples, in these instances, a great deal of planning must go into how the meetings and communications are structured both to be fair to the attendees and also to get the most efficiency from the meetings, it may, for instance, be better to have several sub-meetings, each between only two parties, to let them work on their discussion points, then have an overall coordination meeting with only key players from each location at a separate time, this may make the meet- ings more time efficient for the attendees and allow more people to participate in each, though clearly the structure finally arrived at will be unique to both the project and the phase the project is at. Motivating as a challenge As Early (2003) signifies adjusting to new cultural circumstances has often been viewed as a motivational issue by researchers in organizational behavior in addition to the cognitive and job-related skills needed for adjustment. What are the characteristics that help predict someone who will adjust successfully to another culture? Anecdotes and observation provide some insights from various training institutes. In a foundational study of expatriate selection, Tung (1981a) identified four general areas of competencies needed for successful expatriate adjustment, including technical job competence, personality traits or relational abilities, environmental variables, and family situation (Earley, Christopher and Ang. Soon 2003). Although the client / customer plays a crucial role, perhaps the most important element in a project are activities, time, budget and resource planning, etc., but motivating the team, use the potential within the team, directing forces in the same direction, and clarify that the key to success are happy employees and a functioning interaction seems to be most important. In the light of importance of motivation, Binder (2007) refers to motivation that concerns those processes that give behavior its energy and direction. Energy implies that behavior has some kind of strength that is relatively intense and persistent. Direction of motivation implies that behavior has purpose that is aimed toward achievement of a particular goal. CHALMERS, Civil and Environmental Engineering, Master’s Thesis 2015:3 24 3.5.1 Equality and Diversity as a challenge Christopher (2012) predicate that "The international management moral of all can be the importance of treating everybody as individuals while making allowance for cultural commonalities". We should not forget the importance of the role of women and minorities in international business. When a person observes people from other cultures, they are likely to make generalizations of individual actions to the entire group from whom the member comes. Earley (2003) mentions that a person who has a high cultural intelligent, can be able to separate idiosyncrasy from a cultural pattern. The same point can be made in a diversity context. Additionally, the actions and their ascribed meanings are likely to be closer and more easily recognized by a person from the same country than a foreigner. So the individual diversity situation reflects a person’s ability to understand the actions and intents of another person based on a partially shared meaning system. The degree that these shared meanings are imperfect suggests that high cultural intelligent project manager will provide additional benefits for figuring out what is going on in another subculture (Earley et al. 2003). Intercultural equality and diversity A strong intercultural competence is the key to a successful career. As author of Human Relation (Dalton, Hoyle, Watts 2011) purposefully claims Diversity refers to differences. In people, these differences can be thought of in four layers. Hofstede (2010) predicates that gender differences usually, doesn´t use to be described in terms of cultures, it can disclosure to be like that. If we recognize that in every community there is a masculine culture that differs from a feminine culture, this recognition may helps to understand why it is so difficult to reform traditional gender roles in a society. Hofstede (2010) adds that "in some cultures, women are not considered suitable for jobs traditionally filled by men, not because they are technically unable to perform these jobs, but because women do not carry the symbols, do not correspond to the hero images, do not participate in the rituals, or are not supposed to foster the values dominant in the men’s culture, and vice versa". (Hofstede 2010, p.45-46). Early (2003), claims that a significant challenge facing modern organizations is how best to utilize and integrate the various talents brought forth by members coming from diverse backgrounds and experiences. How can organizations best make use of the diversity that exists in most work organizations? How do individuals use their own knowledge and skills about interpersonal awareness to avoid potential pitfalls in social encounters? Organizations rely increasingly on teams diverse on multiple characteristics including membership backgrounds and traits. Earley (2003) refers to Stryker (2000) who mentions that as a result, employees face complexity in how to define those with whom they work. Identities, or psychological representations of diversity characteristics, are what employees rely on in identifying, and relating to, other employees involved in their work encounters (Earley 2003 et al.). A highly diverse workforce implies that many possible identities exist for team members; therefore, numerous identities can be used to classify fellow team members. CHALMERS Civil and Environmental Engineering, Master’s Thesis 2015:3 25 Furthermore, members of a diverse team may differ in their perceptions of what are the key identifiers of fellow team members (Earley and Mosakowski 2000). Earley (2003) mentions that team members who share a common perspective achieved enhanced performance as a result of trust and positive affect generated within the team. Although a single identifying characteristic may be pertinent in describing others, multiple characteristics may be used as well.For example, a team member might view fellow members based primarily on functional background and secondarily on characteristics such as race or gender (Earley 2003). Earley et al. (2003), means that organizational research does not typically acknowledge that multiple diversity characteristics influence people’s perceptions in social situations even though evidence suggests that organizational members themselves do consider such multidimensionality. 3.6 Cross-cultural Competencies Cultural competence can basically be defined as a process there individuals and systems respond effectively to people of all cultures, languages, classes, races, ethnic backgrounds, religions, and other diversity factors in a manner that recognizes, affirms, and values the worth of individuals, families, and communities. Thus, cultural competence can be viewed as a set of behaviors, attitudes, and policies that acts together in a system among professionals enabling a system to work effectively in a cross-cultural situations. As Earley (2003) mentions, "Operationally defined, cultural competence is the integration and transformation of knowledge about individuals and groups of people into specific standards, policies, practices, and attitudes used in appropriate cultural settings to increase the quality of services, thereby producing better outcomes". Competence in cross-cultural function may mean learning new behaviors and practical application of them in the proper settings. This kind of cultural competence does not come natively and perhaps requires a kind of high level of professionalism and knowledge. Cultural competence is also not static and requires frequent relearning and unlearning about cultural diversity (Earley et al. 2003). In general, this conceptual fuzziness of cross-cultural competencies has bedeviled cross-cultural training programs. If cross-cultural competencies are not well-defined, then it is immensely difficult for individuals to acquire the specific competencies necessary to become culturally intelligent. Cross-cultural training programs would be less efficacious in producing culturally intelligent individuals. Thus, we seek to make an important distinction in clarifying and identifying the specific cross-cultural competencies for cultural intelligence training. We adopt the stance that cross-cultural competencies do not include dispositional traits, which we assume to be non-trainable. We distinguish between competencies that are predisposed to cultural training (trainable) and competencies that reflect personality (non-trainable). We focus our attention only on trainable competencies (Earley, et al. 2003). Cross-cultural training is fast becoming not only a significant but also a strategic component in the world of international business and management (Earley, et al. 2003). CHALMERS, Civil and Environmental Engineering, Master’s Thesis 2015:3 26 Dalton et. al (2011) argues that understanding cultural patterns and core values are elements of Global intercultural competence. In today’s global organization you may work in a virtual global team or perhaps interacting face to face with team members from other countries, either here or abroad. In these situations, you will be expected to show a high degree of intercultural competence at the global level. This area of competency is not limited to learning other languages, but also includes understanding how cultural patterns and core values impact the communication process, even when everyone is speaking English. By understanding how people from different cultures communicate with one another, you can raise your intercultural competency. An important first step in sharpening your global intercultural competency is realizing that people from different cultures express their thoughts in different ways and words alone are not enough to discern meaning. Important but complex variables are time and space, fate and personal responsibility, face and face-saving and nonverbal communication (Dalton, Hoyle, Watts 2011). As Gesteland (2012) mentions the vast majority of the world´s market is relation focused, for instance Arab world and most of Africa, Latin America and Asia/Pacific region. There are markets where people tend to avoid doing business with "strangers". Instead they expect to get things done through networks of personal contacts, i.e. family, friends or persons or groups well-known to them (Gesteland, 2012). Additionally, Gesteland mentions that when we go to the east, most people prefer to avoid as less conflicts as possible. As a traditional eastern proverb says: "harmony brings wealth", has always been described as first rule of business behavior in Far- East. Moreover, Compromising, which is one of the best ways for solving cultural conflicts in eastern countries, has been utilized a very long time in Japan, Southeast Asia and China including its related cultural areas such as HK and Taiwan. Furthermore, Gesteland divided countries into, formal culture and, informal culture. The Formal cultures tend to be organized in more hierarchies, while the informal cultures value equalitarian attitudes with smaller difference of power and status. In this case, it is easy for us to understand why people in China prefer compromising, in America likes problem solving and in Germany they combine the two while they live in China for a few years under project time. When a project manager meets a conflict, which is between staff and a line manager, the western PM would use arbitration to solve it. However, most of the PM have eastern background would choose mediation because he/she never want to displease anybody and make them loose face, which is significant in eastern areas. Cultural differences often create ethical dilemmas for international businesspeople. Behaviors that are acceptable in the home country culture may be deemed inappropriate by the host country culture. Such cultural conflicts commonly arise among persons from different cultural backgrounds, and international businesspeople must be prepared to deal with any ethical conflicts that result (Griffin Ricky W. & Pustay Mike W. 2003). CHALMERS Civil and Environmental Engineering, Master’s Thesis 2015:3 27 Successful international businesspeople traveling abroad must remember that they are the foreigners and must attempt to behave according to the rules of the culture at hand. There are numerous ways to obtain knowledge about other cultures to achieve cross-cultural literacy. The best and most common means, not surprisingly, is personal experience that results from conducting business abroad, as part of either a business trip or a long term assignment, or from non-business travel (Griffin Ricky W. & Pustay Mike W. 2003). Moreover, Griffin (2003) argues that Cross-cultural literacy is the first step in acculturation, the process by which people not only understand a foreign culture but also modify and adapt their behavior to make it compatible with that culture. Acculturation is of particular importance to home country managers who frequently interact with host country nationals—for example, a plant manager from the home country or a marketing director working overseas at a foreign subsidiary (Griffin Ricky W. & Pustay Mike W. 2003). Cross-Cultural Training Methods Kealey and Protheroe (1996) claims that training in general can be defined as any intervention aimed at increasing the competence or skills of the individual. Kealey and Protheroe (1996: 145) defined training as “any intervention aimed at increasing the knowledge and skills of individuals, so as to help them cope better personally, work more effectively with others, and perform better professionally” (1996, 145). In general, cross-cultural training may be defined as any procedure used to increase an individual’s ability to cope with and work in a foreign environment (Tung 1981a). There are many types of trainings that can be given to people to be sent abroad, depending on their objectives, the nature of their responsibilities and duties, the length of their stay, and their past experiences (Zakaria 1999). The effectiveness of various types of training will depend on the time and resources available for undertaking them, the quality of trainers, and the possibilities for in-country training (Kealey and Protheroe 1996). Training can involve many techniques and methods, ranging from the experiential (for example, role-playing) to the documentary (for example, reading literature) (Earley 1987; Shear 1993). Some of the types of cross-cultural training available are practical information, area studies, cultural awareness, intercultural effectiveness skills, and interpersonal sensitivity training (Kealey and Protheroe 1996). Early (2003) refers to Brislin and Hovarth (1997) who provide a comprehensive review of cross-cultural training methods in their evaluation of cross-cultural training (see also Fowler and Mumford 1995, 1998). In their review, they categorized five approaches in cross-cultural training: (1) cognitive; (2) attributional; (3) experiential; (4) self-awareness; and (5) behavioral. In general, there has been a lot of emphasis on cognitive and attributional training, and some emphasis on experiential approaches in cross-cultural training. However, there has been scant or no mention of motivational and metacognitive training (Earley et al. 2003). CHALMERS, Civil and Environmental Engineering, Master’s Thesis 2015:3 28 4 PDC (PDOC) and CHALLENGES In the daily work and most cases, a project manager usually tackle many challenges that are normally not perceived unmanageable. However, these challenges, can be resolved very often but it only requires time, experience and competence that can be obtained through education or advices, for instance, creating and developing a Personal Relationship to the customer and stakeholders, using management tools, economy, Cultural differences and managerial approaches, conflict Management, etc. Along with seeing the motivating other people as a major challenge, It feels as there is no other choice but keeping up with author of Human Relations (Dalton, Hoyle, Watts 2011) who predicate Managers and supervisors in today’s workforce are faced with motivating a diverse group of employees. Making people of all ages and cultural backgrounds feel important, connected, useful, and motivated is a major challenge. In these highly competitive times of shrinking budgets, some unconventional and cost- effective means are necessary to increase staff motivation and retention. Performance Driven (Organizational) Culture (PDC) can be a good culture to bring performance and efficiency to a company, although it has its dark side and dilemma to manage it without creating some disturbance in the culture and organizational environment. A reason for creating of motivation is intentionally creating a Performance Driven Culture or sometimes called Performance Driven Organizational Culture. Referring to Van Emmerik (2010), who emphasizes the importance of this subject by referring to Weber’s (1904/1998) classic analysis, The Protestant Ethic and the Spirit of Capitalism, in which Weber argues that—in contrast to the focus of Catholicism on “good works”—the Protestant idea of work as a “calling” produced higher levels of achievement. Striving and economic development are noted among societies that embrace the Protestant ethic of hard work and worldly performance. Despite the intuitive appeal of Weber’s and McClelland’s arguments, Hofstede (1980, 2001) did not conceptualize or measure a corresponding cultural dimension in developing his model of cross-cultural work values. In recognition of this shortcoming, the GLOBE study included a measure, Performance Orientation, which is defined as the “degree to which an organization or society encourages and rewards group members for performance improvement and excellence” (House & Javidan, 2004, p. 13). Societies that score high as opposed to low on Performance Orientation tend to emphasize results more than people, reward performance, value assertiveness, competitiveness, and materialism, expect demanding targets, reward individual achievement, and have appraisal systems that emphasize results. (Van Emmerik, Gardner, Wendt and Fischer 2010). As Van Emmerik mentions: "exploring the interrelationships between aggregate levels of personality and culture and individual motives is provided by McCrae and Costa (McCrae, 2000, 2001; McCrae & Costa, 1996, 2008) in advancing their Five Factor Model (FFM) of personality (also known as the Big Five). Specifically, these authors posit that biological bases (e.g., genes) and external influences (e.g., cultural norms) serve as fundamental inputs to the personality system (Van Emmerik, Gardner, Wendt and Fischer 2010). Almost CHALMERS Civil and Environmental Engineering, Master’s Thesis 2015:3 29 all researchers agree, and the result of their investigation, clearly indicates that a project manager must have skills and competency within certain area in order to perform and contribute to create, develop or implement a Performance Driven Culture in the organization and projects. To evaluate certain types and elements of these skills, there are many tools such as Psychometric Tests 3 . Psychometric tests can contribute by identifying more accurately a number of the required skills and attributes to the selection of a PM or team members. More and more cross-boarders firms are working with a performance driven culture. Carmichael (2014) claims that at the core of every successful company and organization you can recognize a culture that strives for better or improving performance every day. Organizations or companies which excel in their domain are nothing but the result of their leaders painstaking efforts to instill a performance driven culture, and a performance driven culture is spread over all levels in the organization, successful organizations have a focus on the better performance of their PM, managers and employees. Here employees can be rewarded based just on their performance Their performance targets are explicitly defined and formally communicated to them. It will help employees feel motivated and accountable for their performance and strive to achieve/exceed the targets set for them. The only thing that pleases the PM and managers is still higher achievements and performance delivery. Carmichael (2014) means that performance management does not need to be only an HR responsibility but even all departments, PM and managers own the performance management system. Carmichael (2014) mentions even that employees at lowest level take take their own initiatives to improve significantly in the so-called PDC, and they are often engaged in some kind of a "sacrifice themselves" competition with their colleagues, and and increase performance stacks at regular intervals until they have met or exceeded industry comparative index (Carmichael 2014). 4.1 Challenges concerning PDC global (PDOC) Evidently, all improvements require change and as they say there is no improvement without change. Obviously, all changes are tied to any kind of challenges, so in other words there are challenges beyond every step taken towards changes. Thus, aside from the regular international cultural challenges there are also organizational challenges such as challenges that concern PDC. According to Carmichael (2014) who calls these challenges "a bumpy road", indicate and highlights some challenges concerning PDC and states that “the road to success in performance driven culture is not smooth and easy. Here are some of the challenges that an organization faces while 3 Psychometric tests are objective tests which aim to measure one or more areas of human behavior. Psychometric tests are standardized, which to say they utilizes a common administrative procedure and scoring mechanism for all candidates on each occasion that they are used. They are generally based on years of research. These tests are reliable and valid tools, and aim to be fair and not to disadvantage any group or individual. These tests are commonly used in employment situations both as coaching aids and to select and develop people and there are several types of these tests. For instance, aptitude tests(Clerical skills, IT skills), ability tests (verbal, numerical), interest/motivation inventories, culture/climate inventories and personality measures/emotional intelligence. (www.BPS.org.uk). CHALMERS, Civil and Environmental Engineering, Master’s Thesis 2015:3 30 nurturing a performance driven culture (Carmichael 2014). Challenge 1: Defining performance metrics The first challenge that organizations face is in clearly defining the performance metrics, also called goals, tasks and measures. The challenge lies in finding the quantifiable parameters for many tasks. The best discoveries can be done through discussions among the top leadership and the managers to decide what parameters/ guidelines should be set at all levels of employees. Key employees should be consulted before setting targets for them and their peers. Once the guidelines are set, a goal setting exercise engaging all employees should be conducted to ensure mutual consent of employees and their managers to set and define performance metrics. Managers should also ensure that a balance between quality of delivery and the quantity of delivery is maintained. For example: No sale should be done based on extreme promises of delivery or if the delivery efforts make the sale unprofitable. Challenge 2: Collection, Reporting and analysis of performance evaluation data The second challenge for a performance driven culture is managing the huge employee performance data that employees and managers feed into the system. There should be an easy mechanis