Экономические науки / 16.
Макроэкономика
Irina V. Onyusheva, PhD, Prof.1
Lalita Thammashote, Int. MBA
Program1
1Graduate School, Faculty of Business and Technology,
Stamford International University, Thailand, Bangkok
How Culture
Affects International Business and Challenges
Key Words: International
business, cross-cultural differences, effect, challenges, national variables,
sociocultural variables, cultural variables, attitudes, individual and group
employee job behavior.
While companies are
benefit from becoming global organization, multinational or cross-cultural teams are increasingly more common,
many of them are facing the several problems those are impacted from
international business contexts. Excellent practices and successful in one country may not be accepted
nor guarantee their success when it comes to global business. Lack of local knowledge and diverse knowledge
base or lack of awareness of potential forces can generate stumbling block and
approach to the failure (Hult News, 2017). This chapter will identify the environmental
variables and cultural dimensions those affecting business and management
functions including problem in international management derives from cultural
differences, Operational Value Differences and Communication.
Summary of Key Research
Findings. Environmental Variables Affecting Management
Functions. Environmental
variables refer to all external and internal forces that influence how the firm
makes decision on the operational management and affect to the functioning of
business which include national variables,
sociocultural variables, cultural variables, attitudes, and individual
and group employee job behavior.
National
variables.
National
variables have significantly and largely affect to the firms’
operations and performance
which hardly or unable to control. National variables can be positive and negative and
can be analyst by using PESTEL, one of the most analytical tools (Bush, 2016).
They include the followings: 1. Economic system. It is important that businesses make decisions
within the framework of
country’s economic system and refer to the economic system in
order to analyze business activities properly (University of Delhi, n.d.). 2. Legal
system. Legal system is the system that countries use to
interpret and enforce law (USLegal, Inc, n.d.). 3. Political system. Political
system is the set of legal institution that form a government (Heslop, n.d.). Various aspects of government policies affect business
institutes including the risk that might lead to the loss (Khaleej Mag, 2017).
4. Physical situation. There
are many physical situation factors that are not company control such as
weather (The Open University of Hong Kong, 2016). 5. Technological know-how. Rapid
change in technology generate both advantage and disadvantage to the business (Study.com, n.d.).
Sociocultural
variables.
Sociocultural is
one of the most forces that influence business at it affect to the belief,
traditions, practices, perception and behavior of people in given country (CEOpedia, 2016).
Followings are 3
major sociocultural factors. 1. Religion. Religion can
affect to business in various aspects such as rules or regulations in the company, holidays, belief or
practice that
employees and customers in their
daily lives, etc. (CEO Media Firm, LLC, n.d.). 2. Education. Education
directly affects to the way of thinking, decision making and productivity of
both employees and customers. Education influence the
competencies of workforces and competitiveness of the firms and also the growth
and development of society (Radcliffe, n.d.). 3. Language.
Language can have significant impact to the international business and
generate both advantages and barriers understand other people the organization
and obstacle for the information flows. Message can be
lost in translation when dealing in the multinational company or with foreign
markets (Vitesse Media Plc, 2012).
Cultural
variables.
Cultural
variables are different behaviors, norms and beliefs that are
shared in the same area or countries. Knowledge of cultural variables is vital for all
international companies as it has huge impact on business and its operation.
1. Values. Value
is the major principle people stand for that influences behaviors, beliefs,
attitudes shared by members of each cultures and significantly affected to the
way people act and making decisions and also drive business success (Queensland
Government, n.d.). 2. Norms. Norms are
the guidelines for what is correct and incorrect that members in the society
are expected and required to conform (WebFinance Inc., n.d.). 3. Beliefs. Beliefs are assumptions
we think how the things are or how we expect things to be. Beliefs
are also the basis of decision-making and highly affect
to people’s behavior (Kotelnikov, n.d.).
Attitudes. Attitude is the way people react or respond to any
situation based on their values, what they beliefs and assumption
(Kotelnikov, n.d.).
Attitude impacts
work performance, relationship among teams (Pirouz, 2016).
It concerns the following components. 1. Work. Work
attitude is a set of evaluation towards one’s work that constitute one’s feeling both positive commitment to the firm or
negative dissatisfaction to the company
(Boehlke, 2017). 2.Time. Different
culture understand time differently. For the U.S. or profit-oriented society, time is precious and flows fast,
while in other country, Mexico for instance, time is employed in such opposing
manners (Lewis, 2014).
3. Materialism. Materialism
is the belief that goods and money are important as the central path to happiness
and social progress (Kamal, Shu-Chuan, &
Pedram, 2013). 4.Individualism. Principle
or belief in the benefit of individual rather than the collective interest (Dictionary.com, LLC., n.d.). 5. Change.
People’s reaction toward changes at work that influenced by their
own attitudes and reflect in the way they manage or work (Chaudhary,
Luss, & Shriram, 2015).
Individual and group employee job behavior. Individual members are the core element of the
organization. Each member has different and complex behavior
influenced from different factors. Their individuality and uniqueness affect the way they
behave at work and the way they interact with the group.
Group performance can be
measure by the efficiency they can work together.
It is very important to balance
their competencies and behaviors to create productive teams
(WorldPress.com, 2015).
It reffers to: 1. Motivation. Different
people have different motivators. It is important to identify the what can motivate each
individuals and groups to approach positive outputs for the organization
(Authenthicity Consulting, LLC, n.d.).
2. Productivity. As mentioned above,
individuals are the element of organizations, individual productivity
contributes to group and organizational productivity. However,
productivity also affect the competitiveness and other aspects too (Ruch,
1994). 3. Commitment. Degree of work commitment highly
related to organization performance. Success of failure of the organization directly
related to the effort and motivation of employees (Redmond & Alderton, 2016).
4. Ethics. Ethics
not only affects to group behavior but also effectiveness of organizations,
social, economic and political stability (Hosmer, 1995).
Cultural Differences.
Cultural
differences can generate several barriers to international business success. Different belief, norms, and different values can lead to
misunderstanding, miscommunication, and serious conflict. Understanding cultural differences can help to enhance cultural
competencies and competitive advantages. Geert Hofstede and Globe research
provided cultural value dimensions and measurement tools on the cultural
dimensions as following details.
Cultural
Value Dimensions. Geert Hofstede
proposed the 6 dimensions of cultural that affect how people behave,
international business and communication.
They are: 1. Big Power Distance vs. Small Power Distance. The
degree that less powerful members in the organization or society accept and
expect that power are distributed unequally and degree that authorities are
centralized (Anastasia, 2015).
2. High Uncertainty Avoidance
vs. Low Uncertainty Avoidance. Degree
that people are not at ease with risk or uncertainty
(Anastasia, 2015). 3. Individualism vs. Collectivism. Degree that people have preference for being alone or
remain in the group (Anastasia, 2015).
4. Masculinity vs. Femininity. Masculinity
implies for assertiveness, heroism, achievement and material, while femininity
implies for modesty, cooperation, quality of life
(Anastasia, 2015). 5. Long-term vs. Short-term Orientation. Degree
that people concern and carefully living to ensure the stability of society (Anastasia, 2015).
6. Indulgence vs. Restraint. Degree
that focus on happiness or degree that society can control over impulses and
desires (Anastasia, 2015).
Globe Research Project Dimensions. The well-known and often-used nine units of measurement on cultural dimension
explains the similarities and differences among organizational cultures
(Grove, 2005). These units are: 1. Assertiveness. Degree of assertive, confrontational and aggressive in
relationship with other people. Straight to the point, and not afraid of confrontation
(Grove, Worldwide Differences in
Business Values and Practices: Overview of GLOBE Research Findings,
2005).
Low:
Sweden, Japan, Switzerland. High:
Greece, Austria, Germany. 2.
Performance Orientation. Value placed on
performance, working hard for the best result
(Grove, Worldwide Differences in Business Values and Practices: Overview of GLOBE Research Findings, 2005). Low:
Russia,
Argentina, Italy. High: U.S., Hong Kong,
Singapore. 3. Future Orientation. Save now future, thinking of
contingency plan and consequence of actions
(Grove, Worldwide Differences in Business Values and Practices: Overview of GLOBE Research Findings, 2005). Low:
Russia,
Argentina, Italy. High: Netherlands,
Switzerland, Singapore. 4. Human Orientation. The
degree that organizations pay attention on individuals feeling, well-being, caring
and encourage fairness, friendly (Grove, Worldwide Differences in Business Values and Practices: Overview of GLOBE Research Findings, 2005). Low:
Germany,
Spain, France. High: Japan, Malaysia,
Ireland, Philippines. 5. Institutional Collectivism. Group
or organization loyalty, critical or important decisions are made by group and
pursuit organization’s goal (Grove, Worldwide Differences in Business Values and
Practices: Overview of GLOBE Research Findings, 2005). Mid:
Canada,
Ireland, South Africa. High: Japan,
Philippines, Indonesia. 6. In-group Collectivism. Organization
encourage teamwork. Individuals have
pride, loyalty, and cohesiveness in their organizations, groups or families (Grove, Worldwide Differences in Business Values and
Practices: Overview of GLOBE Research Findings, 2005). Low:
Austria,
Switzerland. High: Turkey, Kuwait,
Singapore. 7. Uncertainty Avoidance. Groups or organizations rely on
rules, policies, norms, strongly resistance to change and risk.
Low:
Canada,
USA, Sweden. High: Thailand,
Argentina, Bolivia. 8. Power Distance. Status privileges,
hierarchical structure, people accept command and power differences (Grove, Worldwide Differences in Business Values and
Practices: Overview of GLOBE Research Findings, 2005). Low:
Denmark,
Czech Republic. High: Iran, Namibia,
Ecuador. 9. Gender Egalitarianism. Degree that organization minimize
gender inequality. Equal role of
men and women in the organization and society (Grove, Worldwide Differences in Business Values and
Practices: Overview of GLOBE Research Findings, 2005). Low:
Zambia,
Eqypt, El Salvador. High:
Hungary,
Denmark, Slovenia, France.
Speaking about challenges affected from cultural
differences we would like to define both different
communication styles and different
operational values. In
different culture, some words or phrases are used in different ways and
different meaning. Degree
of assertiveness in communication can lead to misunderstanding.
For instance, direct communication of the Western or
European are considered as aggressive, show-off
for Asian while indirect of the Asian found it was annoying for the Western (DuPraw &
Axner, n.d.).
Language barriers derives from different languages can
be a serious obstacle to understand each other and create gabs among teams.
Trouble with accent and
fluency can create dissatisfaction or underestimation
(Brett, Behfar, & Kern, 2006). Different communication styles can create unsatisfied
working environment and separate to groups and subgroups.
Lack of
information flows in the organization when groups and subgroups cannot
communicate smoothly nor understand correctly.
Superior cannot get the
necessary information for their decision making.
Different attitudes toward conflict in different
culture.
For Western
countries, conflict is viewed as positive thing.
People are encouraged to
deal with conflict directly face-to-face. In contract, for many Eastern countries, open conflict
is embarrassing and feel more comfortable to avoid conflict (DuPraw & Axner, n.d.).
Different attitudes toward hierarchy from different
culture can be problems. People from Eastern countries might expect to treat
differently according to their status or seniority while members from the
Western countries emphasis more on performance
(Brett, Behfar, & Kern, 2006). Young generation staff can be in the higher position.
Conflicting
decision-making norms in how quick they analysis information
and make decisions. For instance, Japanese take longer time to make
decisions as they need to make decisions based on teams’
opinion and consideration.
Americans may frustrate as
decision can be made quicker and individually (Brett, Behfar, & Kern, 2006).
To
conclude, managing
multicultural teamwork is really important as well as the way of communication
which is essential factor to understand.
The developing of global
awareness among team members will help to improve relationship, so they will
work together well. The number of problems can happen anytime due to the
misunderstanding and ineffective adaption.
When people try to accept and respect of different cultures, they
will gain new opportunities and experience. Importantly, they might learn new way to solve
problem and make better decision making.
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