Over the past few years, multinational businesses have emerged and are doing business at nearly every corner of the world. Numerous businesses involved in consumer products and services in, particular financial and management services, have taken advantage of globalization to build huge business empires. China and the other emerging Asian ‘tiger’ economies present a good business location for manufacturing based. The Middle East is taking the bunch of financial services multinational companies to facilitate trade between the East and the West (Hitt, Ireland, & Hoskisson, 2010). Oil firms are investing in remote locations in the world as oil exploration leads the oil industry. This massive globalization of business is not without its share of hurdles. Several factors such as political influences, government regulation, stiff competition,, incoherent consumer behavior, different marketing strategies, differentiated human resource management strategies and culture are examples of few factors that affect international businesses. Culture is perhaps one of the most influential aspects that affect the success of business at a global stage. This research evaluates the impact of culture on international business from two facets. The research will examine the impact of culture on human resource management and strategies for the same. Secondly the research will also examine the impact of culture on marketing strategies employed by international firms.
Theoretical review of Culture
The term culture is a multifaceted concept that is somewhat difficult to define in simple terms. Social scientists have developed several definitions of the term culture. However, the simplest definition terms culture as a combination of accepted character among the people living within a community (Aycan, Mendonca, Yu, Deller, Stahl, & Kurshid, 2000). In general, every community has an accepted character defined by personal perceptions, attitudes, motivation, background, social class and personality. All these factor the behavior of an individual. Aycan, et al, (2000, 42) argue that such factors tend to be similar in cases where a community shares similar traditions, religion, perceptions, heritage and motivation. The result is a sought of collective programming of the minds of the people within the community and thus a shared tradition. This collective perspective on several aspect of life may be defined the culture of a community.
However, geographical location seems to have a greater influence in religion and thus definition the culture of the people. For instance, the Middle East is predominantly a Muslim territory and thus teachings in Islam tend to define most of the social structure in the region. In the United States, there is general perception of liberty to do and believe in anything of interest, thus the ‘American culture’ is one of social liberty . International companies understand this fact very well and thus adopt customized solutions to fit each and every location.
Impact of Culture on Human Resource Management (HRM)
Human resource management has been termed by scholars as a kind of business management whose paradigms is in continual transformation. Particularly, human resource management has now introduced a new kind of management referred to as Strategic Human Resource Management (SHRM) (Budhwar & Katou, 2005). According to Budhwar & Katou Strategic management is defined as the kind of management that involves executive decisions and actions that seek to ascertain the competitive advantage of the company based on the performance of the company’s human resource. This kind of management involves evaluating the existing and the future industry environment, formulating a strategy in line with that knowledge of the environment and eventually implementing that strategy. To ensure that the strategy works, performing evaluation and controls allows the management to administer its implementation .
As each international organization sets up businesses in different locations in the world, they are faced with the challenge of blending the strategic human resource management strategies in line with the culture of the location. International organizations have most of their human resource management strategies based on developed economies and their culture. For instance, traditional US-based HRM strategies are based on individualistic orientation and their emphasis on free will (Hitt, Ireland, & Hoskisson, 2010). One the hand developing nations have a more different HRM strategies. Empirical research and assessment of culture provides organization with insights into the national culture. This helps international organizations set up of new business and help in formulating SHRM policies. Appreciating the national culture of a people is paramount for the success of company.
Social theorists have argued that each culture is different in the manner in which people relate to each other in the society. Understanding social relation helps in formulating SHRM strategies. These theories are social individualism versus collectivism. The two social theories try to determine the degree to which individuals feel a belonging to a social stratification or groups such as families. This characteristic also extends to workplaces in determining the nature of working protocols. It determines whether group psychology would yield more results or individual performance will work best.
Researcher and sociologist have developed an index matrix called the Individualism Index (IDV) which helps determine whether a population prefers individual independence over group performance (Panayotopoulou, Bourantas, & Papalexandris, 2003). Highest independence indices were found in the United States, Australia, and Great Britain. Here most of the population preferred a more secluded lifestyle and individual business performance is preferred. On the other hand, lowest IDV scores were found in Ecuador, Guatemala, India and East Africa.
Therefore, in this location, an international organization would employ divergent SHRM policies depending on the IDV indices. For instance, in the United States, it would be appropriate to foster individual performance over group performance. In the other economies, team work is the best way to improve human resource performance.
Each culture has a different way of viewing aspect regarding motivation based on what leads a community to seek improvement. Singh (2003) asserts that social motivation can either be masculinity, femininity or the amount of uncertainty avoidance.
Masculinity and feminism can be viewed as directly opposing theories. By definition, these two theories attempt to define the distribution of emotional roles between genders in the society. Masculinity defines the nature in which each gender has a stratified role in the society while feminism allows non-defined role for each gender . Duality of the sexes is one of the most fundamental aspects that define cultures and respecting this definition is fundamental.
In the same respect, several scholars and social theorists have undertaken research on the issue of masculinity vs. Feminism. It was found that both men and women are supposed to be modest and value the quality of life (Aycan, et al, 2000). A similar index that evaluates the definition of gender roles at the work place was used. This index is referred to as Masculinity Index (MAS). Sonja & Phillips (2004) state Japan was found to be the country with the highest MAS score, implying that the Japanese population has distinct definition of the role of each gender within an organization. German speaking nation such as Germany, Switzerland and Austria also reported high MAS scores. Anglo nations such as the United Kingdom, United States, South Africa and Canada had fairly average MAS score. At the lower end of MAS index scores Netherlands, Norway and Sweden have less definitions of the role of each gender (Budhwar & Katou, 2005). This implies that these nations with lower MAS score have no problem with women at leadership position as compared to countries with high score such as Japan. Appreciating such intricate aspects of cultures and traditions of the people is principal for success of SHRM. Getting the right leaders at the right position will be helpful in providing plausible leadership within the organization.
With regard to uncertainty avoidance, Freitag (2005) illustrates that this is the manner in which a society react and deals with unstructured situations. Such situations are unknown and surprising and thus different cultures have different methods of attempting to bring the situations under control. Each region has different methods of dealing with uncertainty.
There are other numerous social aspects that define cultural values and customs of many countries. Each of these cultures is different and thus it would be impossible to have a universal SHRM policy. An international organization needs to identify key pointers in cultural settings of the nation that affect human resource and consider such aspects while developing the SHRM policy. Ideally, customizing human resource policies will be the only option to secure a competitive edge in getting talent and eventually reporting profits.
Impacts of Culture on Communication
Culture has a great impact on communication. Each culture tends to provide to the society with express knowledge on how to behave and articulate issues on different situations. International businesses have the challenge of understanding how different cultures define acceptable communication protocols.
Social theorists have identified two theories that affect communication in the society. These are individualism and collectivism. As earlier discussed each of these tendencies defines how individuals view themselves in the precepts of the society. While individualism allows one to be self-expressive and articulate matters of concern at any level, collectivism calls for a consensus on matters before passing a communication . Collectivism simply stratifies the employees into one unit and articulate matters as a unit.
Different cultures prescribe different behaviors for males and females. Such differentiated character is instilled from a young age and continue to direct behavior throughout the lives of a particular cultural group. In general however, males are expected to be assertive and aggressive while females are expected to be more sensitive and nurturing. In most cultures, these ideals affect the manner in which communication may be carried in an organization. In some cultures, women may not be able to articulate their issues even though they have issues.
On the other hand, the times are changing the socio-economical condition of men and women. The effect is a more assertive women-folk and thus organizations must provide room for women to express themselves. For instance, in India the communication mechanism of both sexes is quite different. While men were given priority in articulating issues, cultural changes have now provided women with ability to speak out .
The most important aspect about multinational business communication is the issue of language. Each culture has different language and a very unique way of expressing different issues. Developing a means of communication between the expatriates and the employees from the local culture is very important. Additionally, organizations should attempt to understand the culture of communication in the new frontier. This due to the fact an expression in one language may have a totally different meaning in another language (Freitag, 2005, 25). Employees must be very keen to ensure that communication intended is what passes to the local employees.
Cross-cultural communication is further aggregated by biases of social, political or spiritual issues inherent in different cultures. Finding a common ground for communication between these diverse cultures is a major challenge that international organizations face. For instance in Japan disagreement and argument is seen as deeply offensive and disrespectful of the management and is highly discouraged. On the other hand, in the Netherlands people see arguments as a very important tool in arriving at constructive solutions (Singh, 2003, 28). Such communication difference in culture means that a Japanese multinational organization may have difficulties operating in the Netherlands and vice versa.
Moreover, communication is also varied when it comes to dealing with suppliers, customers and business partners. Each region in the world has a somewhat accepted means of business communication. However, a multinational organization has suppliers, customers and business partners from any part of the globe. Managers have the responsibility of studying cultural eccentricities of these diverse business partners before passing communication. For instance, when dealing with a Chinese business partner, firmly shaking the hand in asserting arrival at a good deal may not be the best way of showing Chinese appreciation. Slightly bowing and smiling is good way of passing appreciation in Chinese.
Finally Singh (2003, 28) argues power distance is perhaps one of the most important aspect of person to person communication. Good business practices direct organizations to foster person to person communication between employees and thus build a good team. However, person to person communication varies according to power distance as defined by the culture. In the United States for instance a collegial mode of communication between employees without regard to position in the company hierarchy is encouraged. This is said to foster team building and openness. On the other hand, in Japan a senior employee must be addressed in official terms and casual situations are discouraged (Aycan, et al , 2000, 25). Appreciating the power distance of a culture provides the organization with an accepted mode of communication. Each culture expressly defines this and it is upon the management to assist expatriates blend into the system.
Conclusion
The twenty first century has seen massive improvement in information and technology making the world such a small ‘village’. Big multinational corporations have expanded their businesses to diverse geographical locations to improve their balance sheet assets and profits as well. However, such massive expansion has its challenges. Businesses have to put cultural difference into consideration. These cultural differences affect the manner in which businesses approach human resource management and communication. Strategic human resources management policies have to adapt to the cultural values of these new frontiers. Similarly, cultural differences have a big impact on the mode of communication within the organization. Understanding these cultural differences would help in ensuring a successful venture for a multinational organization.
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