The Importance of Understanding National Culture

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Although some people would like to think that individuals approach economic relations exclusively in a rational manner, it is unwise to disregard the role of national culture. It explains why conducting international business and entering different markets, one cannot have the same expectations or rely on identical principles. These days when more and more organizations strive to operate globally, it is essential that managers understand the specificities of each country their company sells to or establishes a brunch in.

There are multiple dimensions that are affected by national cultures: they have a significant influence on consumer behaviour, work ethic, negotiation styles and other important factors that managers should take into account. Being unaware of these differences may lead to various complications. For instance, it might be difficult for employees from low power distance countries to adapt to an organization with a strict hierarchical structure and vice versa. Therefore, experts suggest taking into consideration “the fit between the organizational culture and the host country’s cultural values” when making decisions regarding international trade (Eisend et al., 2016).

It does not mean that only nations with similar profiles should develop economic relations but highlights the necessity to address this problem. For instance, managers can ensure that organizational structures can differ between the countries. This explains why leaders who conduct international business should be aware of the most prominent approaches to understanding national cultures (such as Hofstede’s cultural dimensions theory or The GLOBE research project). Moreover, in order to make effective decisions, they should be able to connect theoretical information and recent research data with their practice.

To conclude, there are several reasons why managers need to understand international cultures. Many companies these days prefer to explore global markets as opposed to operating domestically. Hence, they increasingly often have to conduct business with people who have mentalities, traditions, and expectations that significantly differ from their own. These cultural characteristics affect business in various ways: from a typical organizational structure to consumer behaviour. Therefore, managers need to educate themselves on these differences to make effective decisions. It is also important to note that they should not refer to stereotypes but use well-established approaches and reliable research data.

References

Eisend, M., Evanschitzky, H., & Gilliland, D. I. (2016). The influence of organizational and national culture on new product performance. Journal of Product Innovation Management, 33(3), 260-276.

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IvyPanda. 2022. "The Importance of Understanding National Culture." September 21, 2022. https://ivypanda.com/essays/the-importance-of-understanding-national-culture/.

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IvyPanda. "The Importance of Understanding National Culture." September 21, 2022. https://ivypanda.com/essays/the-importance-of-understanding-national-culture/.

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