Cross-Cultural Perspectives
Based in the US, and headquartered in New York, International Business Machines Corporation (IBM) has a global presence. Since it was founded, IBM has always embraced a culture of diversity and inclusion. IBM take diversity as a strategy and they link diversity to their business goal (Thomas, 2004). IBM has a strong commitment to driving a cultural change through its innovative policies and principles as one way of providing employees with a workplace where they feel valued and welcomed for who they are. The company operates in 170 countries spanning nine time zones where more than 70 languages are spoken (IBM, 2008). The company believes that diversity is where its greatest strength lies. As it expands its operations beyond the US, the company has continued to promote diversity where it operates. The global expansion has resulted in the increased changes in workforce profile which comprise workers who exhibit differences associated with demographics and other characteristics. Diversity has become an increasingly complex phenomenon since discrimination can easily occur in a diverse workforce. Some of the criteria which can be used to discriminate worker groups include ethnicity, geographic origin, age, race, educational background, gender, language, cognitive and physical ability, beliefs, sexual preference, economic category, cultural background, lifestyles, and tenure with the organization (Aytemiz, 2006). The recruitment of workers from various cultural backgrounds which resulted in a diverse workforce created a cultural diversity within the company. Cultural diversity presented another challenge given that workers from various cultural backgrounds have a way they identify and perceive each other. Cultural diversity also brought in differences in organisational attitude patterns, management styles, communication styles, and behaviour characteristics.
The cross-cultural perspectives surrounding IBM and other multinational companies has been studied and documented by Hofstede. In fact, Hofstede carried out his studies within IBM where he collected, processed, and analysed a huge database of employee value scores between 1967 and 1973 which covered over 70 countries. Hofstede major focus in his studies was on the impact of one’s culture on workplace values. Hofstede defined culture as a mutual programming of the mind which differentiates members of one category or group of people from others (Hofstede, 2016). Extensive research by Hofstede (Marcus & Gould, 2000; Hofstede, 1983) eventually yielded the six dimensions of national culture. Results from Hofstede studies suggest there is six cultural dimensions including power distance, individualism, uncertainty avoidance, masculinity, indulgence, and long-term orientation (Hofstede, 2016). These national cultures present challenges for IBM as it expands to other nations because nations have different national cultures. The national culture of IBM’s home country is different from, say, China’s national culture. As a result, exporting the US national culture without taking into account the national culture of China presents a great problem for the company.
One of the most recent IBM’s challenges on cross-cultural issues became evident when its PC division merged with Chinese based Lenovo. Although the synergies between IBM and Lenovo looked great on paper, there were certain roadblocks which prevented Lenovo from becoming a global leader in the PC market. Besides the stiff competition and different business models, there was the issue of cross-cultural differences which span 12 time zones (Stahl & Koster, 2013). First, there was a language barrier. Almost all Chinese executives only knew Basic English, which cannot help much in fruitful business transactions and conversations. On the other hand, no US executive understood anything mandarin. The immense huge language barriers resulted in frequent misunderstandings and lengthy meetings. It was reported one of the most senior executive members did not speak English language and therefore there was a need to bring in a translator. The next barrier was communication style.
Communication style between Chinese and US counterparts is totally different. In conference calls, the problem was further accentuated because there were no visuals which could assist the participants to interpret true meanings from other participant’s verbal comments. It was observed that while IBM executives do most of the conversation, their Lenovo counterparts do most of the listening. On the cultural viewpoint, the Chinese, and Asian cultures are relatively more silent in conversations. The Asians first think about what they need to say, then say it afterwards. The problem was further convoluted by the fact that the Chinese had first to translate English into the native language. This resulted in 5-7 seconds gaps during the conversation. A 5-second gap to a Western person is like an eternity and as a result, they fill up the gaps. It was found out that the differences in communication styles were not only frustrating, but it also affected problem-solving and decision-making (Stahl & Koster, 2013). To minimise communication challenges, the company established a committee responsible for cultural integration who instituted some programs aimed at overcoming such barriers. The executives of Lenovo and IBM were taught foundations of American and Chinese cultures. Besides communication, there was also other cultural differences that were noted. While Lenovo was a hierarchically oriented company, IBM was process oriented. In Lenovo’s hierarchy, leadership is revered, and authority is not challenged. In contrast, IBM leadership accepts challenges as well as bottom-up thinking. These cross-cultural issues affected the merger’s performance.
The 21st-century business environment is complex for multinational corporations. One of the challenges which increase this complexity is a multitude of ethical issues. As organisations expand their global operations, they face these ethical challenges which they need to overcome to succeed in the new markets. Organisations are expected to employ ethical business practices in the markets they operate. They are therefore expected to carry the responsibility of making sure that they formulate a code of ethics and codes of conduct which every member in the organisation must follow and put them into action. Some of the ethical issues which are fundamental to every business are integrity and trust. However, issues such as governance, compliance, decision-making, and accommodating diversity add complexity to the business (Oster, 2016). One of the key issues that have been found to determine business success is trust and integrity. Customers who feel that the business practices are conducted with integrity develop a high level of trust with the organisation. Organisations practice integrity by treating its customers fairly and carrying out its business activities with honesty. Organisations promote diversity by treating its workers with respect. One of the ethical response to issues of diversity is when organisations give people from various cultural background an equal opportunity to employment. Further, employees ought to be respected and valued in their workplace. Companies face ethical dilemmas and occasionally, they get involved in decision-making processes. In circumstances where there is a need to make ethical decisions, the central focus is to protect the interests of the employees as well as the rights of customers. The idea is to ensure that the business practices are just and fair, the common good is protected, and that the individual beliefs and values of customers are protected. Another complex ethical issue faced by the multinationals is the need to ensure that they comply with relevant statutory requirements such civil rights laws, environmental laws, fiscal and monetary regulations/reporting, and safety regulations.
Different cultures perceive ethics differently. What is regarded good practice in one culture may not be accepted in another culture? Some of the issues that global organisations have encountered ethical challenges include issues to do with corruption, environment, employment, human rights, and pollution (Markgraf, 2016; Gangone, 2011). A multinational corporation whose home country have strict regulations governing issues to do with do with corruption, environment, employment, human rights, and pollution may expand into a market where either these regulations are now well established, not existing at all, or there is weak enforcement. Still, different countries have different perceptions on the role of enforcement of ethical codes, ethical values on business practices, and business performance (Vitell & Hidalgo, 2006). Enforcing the law as it is in the home country may not work for the business. For example, gifts may not be acceptable in the US, but they are acceptable in China. A business might also operate in a market where the government has a bad record of human rights. Another case is when an organisation where employment, decision-making, and training is skewed in favour of a certain gender or tribe or a particular family.
The myriad of ethical and social issues facing multinational corporations often pose some of the greatest challenges to managers who have to encounter a large variety of ethical issues. It has been found out that finding solutions to the challenges and operating within the ethical principles of business practices might lead to increased organisational goals and ultimately deficiency. However, in the long term, ethical business practices have been found to pay off. Studies suggest there is a positive correlation between ethical business practices and profitability (McMurrian & Matulich, 2011). Businesses which operate with strong ethical principles have been found to report large profits. To find an acceptable ground by all stakeholders, managers of global corporations need to formulate organisational policies as well as the standards by combining ethical business principles, law, organisational standards, and local cultural values (Gangone, 2011). When it come to decision-making processes pertaining ethical issues, a manager can arrive at an acceptable conclusion to all stakeholders by identifying a good approach. He should first recognise that an ethical issue exists, look at the facts, evaluate alternative actions he can take, make a decision, test the decision, and finally reflect on the outcome (Oster, 2016). The manager can do this with the involvement of others in the organisation.
References
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International Business Machines Corp (IBM). (2008). Workforce Diversity. Retrieved from: http://www-07.ibm.com/ibm/au/corporateresponsibility/pdfs/GL_9833_diversity_nocov.08.pdf
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Stahl, G.K. & Koste, K. (2013). Lenovo-IBM: Bridging Cultures, Languages, and Time Zones Integration Challenges (B). Retrieved from: http://epub.wu.ac.at/3872/1/IBM_Lenovo_Case-B_WU-CaseSeries.pdf
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