The distinctive beliefs, norms, customs, behaviours, and values which are shared by a population in a sovereign country is referred to as national culture. It constitutes characteristics such as ethnic and racial identity, religion, language, traditions, and the cultural history (Beugelsdijk and Welzel, 2018). The behaviour of individuals living in such a nation is shaped by the shared cultural traditions common to them, but are distinct from those of other states. It is certain that a nation’s culture plays an important role in influencing the management of international business.
The cultural systems of a certain country coupled with individual cultures have a significant impact on the corporate cultural system. For instance, it affects an organisational decision making and styles of leadership, and the practices of human resource. Other managerial functions directly affected include motivation, reward systems, communication, and the work design (Daniels John, 2007). Various national institutions, including vocational training centres, labour laws, and industrial standards also influence organisational policies. However, there are other factors affecting international trade which include technological changes and economic growth in developing countries (Daniels John, 2007). The extent to which national culture is useful and the level to which it is imperfect is discussed in the section below.
Usefulness of National Culture
To ensure the success of a business, it needs to adjust its products so that they can fit the local cultural context. The chances of failing internationally are considerably high if an organisation does not put into consideration the national culture. Following the process of globalisation and the increasing economic interdependence among different countries, national culture is eventually becoming an important aspect in business operations (Beugelsdijk and Welzel, 2018). Accepting and understanding it is a key prerequisite for the success of a business. It puts the business in a better position of embracing and utilising all the competitive advantages which are brought about by the modern business environment.
For a successful operations of multinational corporations, the managers should be aware of the existence of cultural differences and similarities. They should also understand that if one decides to advance beyond borders, the way the business was conducted in the home country cannot be adopted in the host country (Peng and Meyer, 2016). However, by reconciling the cultural diversity and taking into account the similarities, it is possible to run an effective business.
The key issue in this is to keenly identify the behaviour which is diverse in the organisation. By so doing, the management can guide the other employees in integrating the cultural values. There is no cultural group which is successful or unsuccessful than the other, and thus cultural blindness prevents a business from profiting from the diversity. Differences in cultures are constant and persistent, posing several challenges, especially for multinational companies (Covas and Pirlog, 2019). Organisations which adapt effectively attain an advantage in the cultures of their operation, and at the same time extend their own source of strengths across borders; at other times, the cultural diversity itself becomes a gain.
The cultural impact on the management of a business can best be expressed by the fact that globally, managers play a similar role in an organisation, but how every manager does his work is different. Therefore, having a deep understanding of the cultural influences on organisational variables is of crucial importance in the already expanding multinational businesses (Collinson, Narula and Rugman, 2016). This knowledge determines the success or failure of a particular organisation, especially those operating globally. Comprehending national cultures equips an individual with an idea of facing the challenges which are encountered by modern businesses. Recognising the importance of, and identifying cultural differences gives managers an insight on how to deal with their competitors and international partners (Tambovtsev, 2018). In addition, they are in a better position of enhancing their managerial skills by grasping ideas from various cultures. Since cultural diversity impacts the operations of a business, it is imperative to manage it adequately so as to ensure better results.
The Extent to Which National Culture is Useful
The core functions within an international enterprise such as marketing, finances, organisational structures, and decision making are influenced by national culture. The prevailing cultural variations are clearly reflected in the decisions made by the management. Tangible business benefits are yielded if the analogy between cultural contexts and management practices are improved (Szkudlarek et al., 2020). While some organisations benefit from the national culture, its imperfect side is felt by others. For example, participative management is bound to increase returns in low power distance cultures, but the same is likely to cut profitability in high power distance cultures (Damić, Rajšić and Smetiško, 2018). Similarly, quick fixes may upsurge profits in short-term oriented cultures, but lower returns in long-term oriented cultures. Pays based on merits and promotions also improve production in more masculine cultures, but reduce the same in more feminine cultures (Damić, Rajšić and Smetiško, 2018). Putting more emphasis on individual contributions increases profits in individualistic cultures and the same worsens in collective cultures.
To be able to develop and implement various strategies, organisations need to have a close assessment of their internal capabilities and their external environment. Most managers, when making strategic decisions, are usually challenged by environmental uncertainty and the prevailing political and social environments. In such a scenario, these managers are forced to react in accordance with the subjective reality. Cultural roots affect the kind of information which should be considered important, the models to be used in analysing it, the person to be involved and the kind of decision to be made (Al Mubarak, Al Alawi and Razzaque, 2016). For global businesses, it is important to choose a management which has the ability to support the laid down strategies, because the impact caused by national cultures does go beyond the management style, affecting other organisational functions.
Reference List
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