Discuss about the Cultural Dimension of Global Business.
Investing in distinct market creates foreign affiliates or subsidiaries and engage with joint ventures or strategic alliances is the main business proposition of the multinational corporations. Using the overseas supplies they function as a system consisting of many subunits operating in a divergent business context, such as national cultures, recruiting multicultural workforce, dealing with foreign investors and accomplishing the needs of other groups of stakeholders in each country of operation. In this way, MNCs maintains stable relationships with the group of stakeholders in the cross cultural business environment. According to Malik and Zhao (2013) “if there are barriers to cross-cultural relationships in MNCs, the effectiveness of the multicultural workforce will be likely to drop due to obstacles to tasks realization” On the contrary, then cross-cultural interactions may definitely accelerate the employee learning and productive, enhanced communicational perspectives and increase the level of satisfaction of personnel. Understandably, communication between nations is largely influenced by global interactions between various people from different belonging and their cultures correspondently. This paper will address such understanding by developing theoretical concepts by reviewing relevant articles and explore the presentation of findings in the subsequent part.
The study of cross culture is the fundamental aspects of the intercultural management field. The crossing geographical boundaries by the companies give the birth of multinational companies have largely engaged in the expansion process to create international competitiveness by reducing the costs of production and exploiting the market opportunities. In this way, several businesses are engaged with trade liberalization and economic integration. By sharing an “effective knowledge and use of cross cultural diversity” can contribute towards developing unique ideas and experiences for enhancing the competitive position of organizations (Maheswaran and Shavitt 2014). This cross cultural management has thus significance in the modern business operations and greatly influenced in the growth of the business. Ferraro and Brody (2015) have reported that an oversea management of business is undividable from the spare of patterned cultural behaviors because culture is represented in terms of the enveloping and collaborative beliefs, values, norms an symbols that guide that everyday life of different groups of people. Several researchers have defined cultures in a diverse ways; for example, Chhokar et al. 2013 describes culture as “learned patterns of perception, values, behavior that is also dynamic and heterogeneous”. Emerging growth of intercultural business across the world increases essentialities for international managers to learn and adopt “other” cultural skills as well (Forsgren and Johanson 2014). Incorporating all aspects into the business, several nations are welcoming largest members of newcomers including the United States, Australia, and Canada. However, most of the Western European countries have now experiencing extensive waves of immigration. On the other hand, several Asian countries like Singapore, China, and Japan have also associated with the unprecedented journey of cross-cultural businesses and ensured the nation’s growth.
One of the most famous frameworks for analysis of “cross cultural issues in human resource management” was that offered by Greet Hofstede (1980a). The model displays five “bipolar dimensions” along with difference in culture could be analyzed: “high/low uncertainty avoidance”, “masculinity/femininity”, “individualism or collectivism”, “high/low power distance” and long/short tome orientation” (Hsu, Woodside and Marshall 2013). The main result was a “concise set of cultural scores describing national cultures and its effect of cultural diversity on several aspects of workplace-related behaviors and processes”. According to the thoughts of Hofstede, every person follows his own patterns of thinking, feeling and corresponding responses which are learned during his lifetime. Thus this can be understood that Hofsteade emphasized more on mental attributes while describing the culture in management literature (Steenkamp and Geyskens 2012). In other words, Hofstede identified the fundamental differences of the cultures which later named as systematic differences across culture by many researchers. For instance Chinese cultures are found to be collectivistic whereas individuals are often practiced the individualist approaches while negotiating with other cultures. On the contrary, several researchers have collectively summarized that culture directly impacts on the negotiation styles of international managers. There are a variety of elements create the culture of population or a country through time which includes social structure, religion, language, education, political and economic philosophy (Moran, Abramson and Moran 2014). International business managers need to adopt foreign businesses by following all cultural elements in the Griffin and Pustay’s approach. In all group of people, there is a social structure which defines the role of individuals, its satisfactions, and the mobility ion society. People are often influenced by family in society and this is the first aspects of social structure. For instance, majority of families of the United States are nuclear family and they eventually undergoes individual decision making process. In other words, those societies are centered in individualism. The international managers of United States, thus follows the individual work ethics and excelling their creativity and versatility by taking individual decisions over consensus. On the contrary, people belongs in the Japanese society has a large dependency on the group. Taking business decisions, in this context, international managers often face difficulties while negotiating with lack of individual freedom and showing low regards for rules and professional values. Those business societies believes in perusing harmony with reality, often faced cultural barriers while negotiating people who belongs into the more liberal business culture. According to Cohn, Fehr and Maréchal (2014), cultural sensitiveness must be in line with the business model. However, the cultural sensitivity does not mean giving up one’s own culture.
All international business activity involves cross-cultural communication. While communicating with cross-cultural people in establishing business negotiations in oversea markets, international managers are often come across “activities such as exchanging information, sharing innovative ideas, decision making and provides motivations to others”. According to Thomas and Peterson (2014), communication includes any behavior that another human being recognizes and interprets: it is all about the level of understanding one person sharing with others. Thus both verbal and non-verbal messages are conveyed with each other while dealing with cross cultural business activities. In this context, communication plays a large role in establishing the long lasting relationship with the global clients. Parke and Ladd (2016), however, contradict that cross cultural miscommunication is the biggest threat in creation of cross cultural management within the workplace. International managers need to maintain communicational transparency not only with the clients of overseas but in managing internal culture-driven workforce as well. Interestingly, communication does not necessarily result in understanding (Ang and Van Dyne 2015). It often mislead by getting less appropriate responses from the receiver sides in the cross-cultural programs and thus results business failure in establishment of the cross-cultural partnership. Budhwar and Debrah (2013) opined that culture-driven communication repeatedly involves misunderstanding caused by “misinterpretation”, misperception” and “misevaluation” between oversea partners. For instance, a Japanese businessman wants to tell to their Norwegian client that he is less interested in a particular sale. Maintaining that politeness, the Japanese says, “This will be very difficult” However, the Norwegian may interpret this comment as that there are still “resolved problems” not that the deal is off. Thus, it is often evaluated that the “greater the differences between the sender’s and the receiver’s cultures, the greater chance for cross-cultural miscommunication” (Thomas and Peterson 2014). One should, therefore, assume difference until similarities is proven in approaching cross-cultural situations. In addition, an international manager needs to be recognized that organizational culture makes sense by noticing the behavior of the person and that the logic and rationale are culturally relative.
In the phase of globalization, the culture profoundly influences how people manage their business maintaining certain thinking patterns, preferring a particular style of communication and showcasing the behavioral approaches (Cavusgil et al. 2014). For instance, between a Chinese executive with the private sector managers of Shanghai - can create barriers that may encumber the process of negotiation. Despite the fact that cross-cultural interactions of managers are certainly increases the end productivity of organizations, however, the most challenging part is to gaining the skills and experiences about the world’s cultures (Ferraro and Brody 2015). Apart from communication barriers, emotionalism plays a large role in developing business process or negotiation with client parties. According to Cohn, Fehr and Maréchal (2014), managers of Latin America show their emotions at the negotiating table, while the Asian culture does not permit to show their emotion in front of others (Adekola and Sergi 2016). Asian managers can hide their emotions or feelings which help in making the appropriate decisions during the process of negotiation. The partner begins by presenting the maximum deal if the other side accepts all the stated conditions under the approach of building down. On the contrary, “one side begins by promising a minimum deal that can be widen and increased as the other party accepts additional conditions” (Forsgren and Johanson 2014). Thus, managers often finds problem in understanding the emotional quotient of other business partners.
In short, the international managers faced difficulties in negotiating with business partners for fundamental cross-cultural differences in terms of cultural values, norms, traditions, social structure, religion, language and individual patterns of thinking process (Dunning 2014). All these aspects are considered and largely influenced while taking sound business decisions or interacting with one business partners with another. In establishing an international partnership business and negotiating with other countries, culture influenced largely while establishing business contracts with cross culture or third culture parties. Due to the cultural differences, American people tend to be accurate and believe in more detailing regarding the legal part of the activities of the business. Other cultures, on the other side, give preferences on mutual understanding and satisfied with shorter period of contracts. Therefore, managers need to invest their time for understanding more about different cultural dimensions. It is indeed significant to develop cross cultural business partnership or any form of strategic alliance.
The space language is one of the useful dimensions which can transform different culture of the organization (Adekola and Sergi 2016). In this regards, business managers keep maintain distances while developing the face to face interactions. This distance can be varied from one culture to another and can be easily observed (Moran, Abramson and Moran 2014.). In this way, partners can manage businesses by giving space to each other in a “formal” and “informal” context. Simultaneously, the use of material goods is another aspect of diverse cultural dimensions. In most of the American companies, managers give values the acquisition and possession of material goods in a secular position of the business. Distinct from American companies, executives share their office premises with other employees and the differences in salaries in smaller. In addition, European companies disclose the existence of more even scale of salaries between highest and lowest. Thus it would be better to grant less importance to the aspects of material and status in the organization.
In this way, partners of the international business can understand the cross cultural dimensions and individual perspectives.
To increase the capacity of competing outside the national frontiers, cultural adventurers should be likened with tourists. Tourist can take an active interest in other culture. Secondly, partners of the business should be keen to know about other cultures for gaining the level of understanding during the business negotiation. In that case, partners will be playing the role of cultural sensitizer who can perceive the behavior, norms of other cultures as well. Thirdly, it is indeed important to negotiate contracts with other partners without any bias. By acquiring an in-depth knowledge about the other cultures, the partners can deal with smooth operations without facing any cultural obstacles. The cross cultural communication proficiencies will eventually be increased which enforcing frequent business interactions among business partners. By inferring general laws and developing new functional concepts, partners can develop third cultures that can be understood by both the negotiating partners. In this way, cross-cultural business partners can establish their international business collaborations and ensure smooth communicative operations for the long term.
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