Introduction
Complex cultural realities are a common phenomenon for global business systems. The paradigm shift of the business world as a result of globalization has resulted in a mixture of cultures that make up a society. For example, the numbers of employees working in international companies has risen in the recent past, bringing the totals to an approximate 73 million people working in foreign companies.
It is worth noting that in all these business ventures, humans and all that is encompassed in humanity form the bedrock of discourses handling corporate social responsibility, human resource management, corporate governance, and sustainability (Palthe, 2008). Recognizing the importance of the person as a driving force in any organization is very essential. Culture is one of the parameters that define a human person.
Therefore, understanding the different cultures that define the different classes of people has become a rising concern for managers because they need to be aware of the different beliefs, preferences, and values of the different people. This is important for the successful running of any organization and this paper will focus on culture at an international level in the business context.
Understanding Culture
The definition of culture is very complex as is evident from the various definitions by different scholars. Engelen (2010) denotes that Kluckhohn’s (1951) definition of culture is the most renowned and consists “in patterned ways of thinking, feeling and reacting, acquired and transmitted mainly by symbols, making up the discrete achievements of human groups, including their embodiment in artefacts’”.
The question whether a society is made up of one culture is very relative because different traditional ideas and their attached values are the fundamental principles of culture. Practically, there is no single society consisting of a single culture in the contemporary society.
However, such a society ideally exists, and may have existed, when people lived and were restricted to their specific cultures centuries ago, probably before colonization. In the contemporary world where globalization is the order of the day, a society is made up of numerous cultures and an example is the United States where people from all walks of life with different cultures are found.
Hofstede’s Dimensions
Hofstede’s dimensions have been at the forefront in describing culture and these have been extensively accepted by management and entrepreneurship scholars for application in the business world (Marino, Strandholm, Steensma & Weaver, 2002).
Different cultures are defined on the basis of these dimensions and are used to govern management of international businesses. These dimensions are four and they are used to define different cultures. They are power distance, individualism vs. collectivism, uncertainty avoidance, and masculinity vs. femininity (Hofstede, 1980).
Importance of understanding cultural variation in International ventures
It is important that international managers effectively manage their human resources because this is regarded as the key to competitive success (Rodrigues, 2009).
The human resources are essential factors that keep an organization running, and if poorly managed, the involved organization would be headed for a downfall. The human resources however are influenced by traditional values and norms stemming from the cultural background, which is responsible for shaping the character, beliefs, personality, and behaviour of the human resource fraternity.
Decision making is very important in companies and this is greatly affected by poor management of organizational variant culture (Parboteeah & Cullen, 2011). When effective management and appreciation of cultural variation is lacking in a company, the degree of centralization in that company is very high, and is an impediment to the success of the company.
When the structure in an international company is decentralized, then every person in the organization is empowered enough to air out their views and opinions. In so doing, they will be bringing in innovative ideas into the company since idea generation is likely to happen at lower hierarchical levels as indicated by Henard & Szymanski (2001).
Appreciation of cultural variation leads to cross-functional integration, which is the “interaction, communication, information-sharing, and coordination across departments in an organization” (Engelen, 2010).
Cross-functional integration is very essential during the launch of a new product when all the staff within an organization need to come together and give their views, ideas and opinions on how to bolster the new product. When cultural variation is not accorded the attention it deserves, there is a lot of potential from the employees that goes unrecognized hence untapped due to lack of harmony and poor interpersonal relations within the organization.
Cultural variation also affects the manner in which a company/organization is run. When a manager goes to a foreign land, he or she is expected to run the company in a way that is culturally sensitive to the lives of the local people in the foreign land (Mead & Andrew, 2009).
This is because issues like culture shock may occur if the international manager just imposes his or her ideas and opinions as borrowed from his/her previous area of work/stay. Consequently, this negatively affects the daily operations of the company/organization. The figure below shows the various ways through which culture influences business contexts:
Cross-cultural business contexts
When international managers fail to address these parameters that are affected by cultural variation, the resultant are the marketing mistakes and communication blunders that define marketing folklore. An example is when Ford’s low-cost truck was marketed using the brand “Feira”, a Spanish name which apparently means ugly old woman.
Caliente was used in Mexico to market the Ford Comet but apparently, this word is a local slang for prostitute (International Culture, 2008). Such misconception can gravely impede the performance and productivity of an organization, and consequently affect the general achievement of the organization’s objectives.
Means to Understanding cultural variation by International Managers
The first and most important means through which international managers can gain understanding on appreciating cultural variance when running overseas ventures is to learn the different cultures in the area where the venture is located. Hofstede’s dimensions are a means of enabling the managers to be aware of the different cultures that exist.
These dimensions can be presented to the managers in form of a model during a workshop as a means to create awareness and show case examples of incidences where cultural variation has affected the success of companies if not handled effectively and professionally. Hofstede’s dimensions provide a means that can be used by international managers in cross-national comparison since national cultures are perceived as core entities that define organizational culture (Shimoni, 2011).
Language is another important means that can be used to understand culture in general. An example is that of Chinese and American cultures where differences in language are obvious. Language may be a barrier in such a situation since Chinese mainly speak in Chinese and have to go to class to learn English.
The same case applies to the Americans in as far as the Chinese language is concerned. International managers should ensure that a formal language, one that is understood by everyone, is adopted in the organization.
This is because speaking the same language by a people with a similar cultural orientation hides the cultural differences that prevail and these differences may gradually accrue to culminate in detrimental effect to the organization. In addition, the use of a common language within an organization facilitates good interpersonal relations (Voigt, 2001).
International managers can ensure that cultural variation does not become a threat to the overall productivity of an organization through effective management, as well as establishing standards to govern corporate social behaviour (Palthe, 2008). Effective management of human resources within international organizations is achieved by engagement in ethically acceptable activities.
A company that upholds such ethical norms is perceived to be socially responsible and is associated with success like high returns due to its ability to attract customers, and recruit great talent and investors (Vance & Paik, 2011). The impact of corporate social responsibility is a means through which managers can understand the essence of international cultural variation.
Such impact include profitability as indicated in a 2007 Grant Thornton survey of U. S. Business Leaders and Fortune companies, which showed a comparative $2.5 million increased annual revenue in companies with CSR reputation as opposed to those without CSR reputation (Palthe, 2008). When managers witness such impacts, their understanding of cultural variation and why it should be appreciated is enhanced.
The pressure from stakeholders and the general public alike is an impetus drive for international managers to understand the importance of cultural variation. This is because these two groups of people have a heavy input to the success of the business since the public are the customers whereas the stakeholders are the resources that shape up an organization.
The success of any international company is dependent of the ability of the international managers to understand their employees in relation to culture. According to Thomas (2000), it was not until two pharmaceutical companies from the same advanced and industrialized world merged, that the involved managers realized the essence of cultural variation in determining the success of international companies.
Management cultures are used by international managers as a guide to gain understanding and act in companies in stated time and space. The means by which international managers manage the existing cultures within their companies is very important. In an example of Swedish and American companies in Thailand and Israeli, the manner in which the different cultures within the organizations are managed determines the success of the organization.
In this example, Thai and Israeli managers review and appraise the management cultures within these multi-national companies instead of simply absorbing them (Cohen 1991; Frenkel & Shenhav, 2003). This way, the managers are able to embrace those cultures that are congruent to the companies’ goals and sideline those that appear not to augur with these goals.
The result is a hybridization of management, which is not a complete hybrid form, but one which is characterized by temporal and not clearly demarcated boundaries. The Thai offices are governed by local practices that are characterized by harmonious personal relations and maintenance of healthy interpersonal relations. In addition, the corporations’ practices are defined as active, assertive and involving every person in the organization.
Conclusion
The increase in global activity has resulted in the need for international managers to have a clear understanding of culture. This is due to the cultural influence on people’s work and interactions with others. International mergers should develop structures and procedures that are accommodative to both the local and foreign cultures within the organization.
The success of any international business venture is dependent on the ability of the involved managers to balance the effect of involved cultures without highly regarding one over another. The human resource workforce in the organization is imperative regardless of hierarchy. International managers should learn to adopt a neutral approach that is not influenced by their own cultural standing when running multi-national organizations.
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