Globalization is the latest buzzword in the business world today. Many organizations are indulging into cross border operations in the race to gain competitive gains. For example, US firms like Coca Cola, General Electric, etc. today operate beyond the boundaries of US and derive a large part of their profits from those new markets. Similarly, Toyota, a Japanese firm has grown its market share and jobs in US, North America. However, the competitive advantage that the organizations gain by diffusing across different organizational and geographical boundaries can be successfully adopted by other firms as well (Teagarden & Von Glinow, 1997). One of the most significant factors that help organizations to face the inherent challenges of a competitive, global business environment is the capability of the organization’s human resources as they are not easily replicable (Yeung & Ready, 1995). Proper management of human resources is growingly becoming critical for the success and sustainability of the organisation. Although organizations are benefiting from global operations, the flip side to this globalisation process is the increase in the Cultural differences within an organization. These differences lead to concern on the managerial functions regarding interaction between employees of different cultures and their effective management. This report gives an insight into the aspects of national and corporate cultures. Further, the relevance of various theories of cultural dimensions are discussed from the point of view of modern global manager.
The concept of culture has been described in a number of ways in the literature. In general terms, Culture is nothing but a sense of belonging in the minds of people which defines the way they behave in a given situation. According to Hofstede (2001), Culture is a “collective programming of the mind” which differentiates one culture from another. According to Trompenaars (1993) culture is the collective way in which groups of people of a nation understand and interpret the world. Many researchers have argued that culture can be examined or analysed at different levels (Schien (1985). National culture shapes an individual’s beliefs, values, attitudes and behaviours. Hofstede argues that ‘culture’ is like an onion: consisting of different layers. Values form the core of Hofstede’s model of culture and are the most hidden layer of the model. He defines them as “broad tendencies to prefer certain states of affairs over others” (Hofstede, 1994). Values represent the people’s perception of the way different things should be. Other three layers of Hofstede models are more clearly visible and are:
- Rituals, like ways of greeting
- Heroes, persons admired for their behaviour
- Symbols, such as words, color that carry a special meaning
Trompenaars and Hampden-Turner (1997) also presented a similar onion-like model of culture which had basic assumptions at the core level similar to the ‘values’ in Hofstede’s model. Other layers included values, attitudes and behaviour. Thus, we see that national culture is a shared set of basic assumptions and values, with resultant behavioural norms, attitudes and beliefs. Culture is shared among members of one group or society. Culture is not genetic, and is learned. Individuals acquire those set of values as a part of a bigger group which transmits them from one generation to another.
Organisational culture is formed by a set of individuals who have their own beliefs and values and share experience in a particular organisation. Case (1996) defined corporate culture as “the value, attitude that permeates a business” (Case, 1996, p. 42). Corporate culture thus identifies the important and unimportant aspects of the business. According to McCune Values form the core of an organization’s corporate culture and therefore provides the employees right directions to get things done (McCune, 1999, p.52). Corporate culture supports the business strategy and helps the organization in achieving its goals and objectives. Different organizations have different cultures and some of them are clear and distinctive as opposed to those of the competitors. Corporate culture is unique for any particular organization and decides the way its employees will behave or act. Case argues that asuccessful culture gains “its power from specific practices that employees understand as symbolizing and representing the culture” (Case, 1996, p. 42).
An organization’s culture is greatly influenced by the national culture of the country in which it starts its business. Today, with the advent of Globalisation, more and more organizations are deciding to start operations across the borders. This leads to conflict as organization’s culture, which is more of a reflection of the parent country is different from that of the host country. People from different cultures approach problems differently and have different ways to approach and resolve and apply solutions to problems. (Abramson, Lane, Nagai and Takagi, 1993, Silverthorne Colin, 2005). For successful management of a multinational corporation, it is important that the management strikes the right balance between the national and corporate culture components (Hofstede, 2000). Thus, it is important that global managers are aware of different dimensions of culture. By being aware of cultural differences, mangers and organizations can reduce the probability of failure when operating outside their home culture. (Tung , 1987, Silverthorne Colin, 2005) One of the major dilemmas that the multinational firms face is the management of human resources across the boundaries, based on organizational culture or the national culture. Since the national culture of countries differ from one another, multinationals that decide to follow exactly the same organizational culture across all boundaries bear serious consequences arising as a result of miscommunication between the organizations. It is important that the managers adapt to the national culture of the host country while transferring best practices between nations (Morden (1999) and Rodrigues (1998). For example taking the case of hospitality industry, Teare investigated (1993) and found that Hyatt chains recognise the needs to adapt procedures when operating in different countries. Further, Go and Pine (1995) suggest that it has been accepted by international hotel companies that there is a need to adapt their strategies to meet the particular socio-cultural, economic and environmental form at local level.
Another challenge that the managers face while going global is the communication. As suggested by Dhir and Pariola (2002) Cultural distance in multinationals is greatly increased by the language difference between nations. Language is important to send the right message to not only the employees but to the company’s customers. Global managers need to have the understanding of the local culture to interact with their colleagues effectively and to develop plans to attract more local customers (Boella and Goss-Turner (2005). Further, For example, in a hotel industry it is very important that the customer care staff at the counter maintains an eye contact as a part of the communication process in Western cultures. However, in case the hotel chain decides to enter certain Asian markets, they need to adapt their strategies in line with the local culture where maintaining eye contact with women is not usually acceptable. Many global managers find it difficult to deal with their foreign counterparts and encounter severe problems understanding their counterparts, and interpreting correctly what their counterparts want to convey. The hospitality industry has been greatly bitten by the Globalization bug and as a result of the process the need for high quality and effective management of human resources is felt. If an International Hotel firm decides to enter foreign markets, the employer will confront cultural differences. Go and Pine argue that “the challenge for international hotel firms is to develop hotel managers who understand the local situation but are able to interface with local clients and a worldwide network of hotel and personnel” (Go & Pine, 1995, p. 293). For example, Many Chinese still think of their employers more as family than as employers, and may expect employers to provide for their social welfare (Purdum, 2005). Human resource practices affect organizational performance and thus it is important that the managers understanding the differences in behaviours and know what to expect (Law, Tse, and Zhou, 2003). Another aspect that creates issues for employers in a global environment is the management style. Management style is greatly influenced by cultural values and thus one often witnesses differences in style across boundaries. For example: Chinese managers are reluctant to take responsibility. Child and Markoczy (1996) reported that in half of 30 joint ventures in China, Chinese managers refused to implement decisions until the written authorization of the general manager. Researchers like Hofstede and Trompaneers have put forward theories to understand the dimensions of culture. These theories are highly relevant for global managers to understand the dimensions for an efficient management.
Hofstede’s theory of culture
In international management, Hofstede’s framework holds high importance. (Hofstede, 1991.) His work provides a valuable insight into the various dimensions of cross-cultural relationships.The findings from Hofstede’s research are four independent dimensions of values: (Hofstede 1980) Power distance, which describes the extent to which hierarchies and unequal distribution of power is accepted. Uncertainty avoidance, which indicates the extent to which a society feels threatened by ambiguous situations and tries to avoid them by providing rules. Masculinity versus femininity, which describes the relationship between the two genders in any society. Individualism versus collectivism, which describes the relationship between the individual independence and the collective interdependence of a group. Hofstede and Bond (Hofstede 1991b) conducted a later study and introduced a fifth element ‘Confucian Dynamism’ or ‘Long/Short Term Orientation’. This was an attempt to fit the uncertainty avoidance dimension into the Asian culture. Researchers have been very critical of Hofstede’s work and have argued whether this work holds any importance in today’s modern environment. According to a number of researchers these studies as outdated as most of them are from 1980s and cannot be applied by today’s modern global manager. (Harrison and McKinnon (1999). It is believed that culture of any nation is a continuous learning process which keeps changing over a period of time. Since, Hofstede’s research was conducted two decades ago there is a room for discussion about its relevance. For example, as argued by Schmidt (1993) over a period of time, there has been a noticeable change in the French business style. Earlier French handled business tasks in a more authoritative and bureaucratic way and the lower and middle levels of organisation had lesser powers. Now there is an evident change in the way the processes are executed. The pre-existing structures of national cultures are undergoing tremendous changes. Thus it is important that global managers take into the dynamics of the nationality while managing their employees in different markets.
Hofstede’s research is mainly of US based organisations. In today’s global environment, there is a dramatic increase in the new business markets and US firms no longer dominate the markets. Multinational enterprises are venturing into unknown territories. Hofstede’s research (1980) was based on the data collected from MNCs based in fifty countries and three regions and little attention is given to less developed countries. Today’s modern multinational enterprise has its operations in a number of nations which are not even a part of Hofstede’s research. Thus, adhering to Hofstede’s research for the basis of managing employees in such organisations is not completely realistic. However, Bollinger (1994) proved that Hofstede’s hypothesis on countries that were left out holds completely true. For example, according to Hofstede findings Russian employees would be characterized by high power distance, high uncertainty avoidance medium range individualism, and low masculinity. This was supported by few of the latest researches conducted. (Elenkov, 1998). Further, Bailey (1997) describes the different attitudes of different groups towards individual feedback, which is very important for any manager to effectively deal with the employees. Research suggest that US managers tend to believe more in individual feedback as opposed to the nations like Japan, where collectivism is given much importance. So there will be a huge misunderstanding and miscommunication if a multinational organisation tries to apply an individual assessment tool in a country like Japan which exhibits collectivism attributes. This further suggests that Hofstede’s research is still very much applicable for a modern global manager as the basic characteristics of the nations remain unchanged.
On careful examination of literature, we notice that the importance of the theories of culture cannot be ignored and termed as outdated. These theories of dimensions of cultures go a long way in training the managers regarding the cultural issues. It is important for managers to be cross culturally trained while doing business across the boundaries. These training programs help corporate executives and managers by offering them the most relevant, practical, and up-to-date knowledge and tools. Management of employees would become very difficult for managers if they do not realize that there are differences in perspective on how different people approach work – their daily routines of attending meetings, conversing, performing tasks, and meeting expectations. In conclusion, global managers must understand the dimensions of culture as suggested by theories discussed above, and strike the right balance between the corporate culture and the local culture for effective and smooth running of operations.