The differences that arise out of cultural diversity are often inconspicuous or indirect. Therefore, they are difficult to determine the underlying causes.
Many individuals try to interpret information within their own context and might make various assumptions and judgement of behaviour which is different than from their culture.
The theory of Uncertainty Reduction says that effectiveness of communication is influenced by amount of uncertainty perceived by individuals. Western culture focuses on direct communication that gives absolute information without requiring contextual interpretation. However, in other cultures, indirect communication is used. And indirect communication requires comprehension of the fundamental meaning.
Although it is observed that contact across cultures is becoming more
widespread, international businesses are still constrained to a great extent by
cultural differences among nations.
MANAGING DIVERSITY WITHIN & ACROSS CULTURES
Culture: The sum total of beliefs, rules, techniques, institutions, and artifacts that characterize human populations
Learned - Culture is not inherited or biologically based; it is acquired by learning and experience.
Shared-People as members of a group, organization, or society share culture; it is not specific to specific individuals.
Enduring
Trans generational - Culture is Trans generational, passed from one generation to next.
Symbolic - Culture is based on the human capacity to symbolize or use one thing to represent another. Symbolic interaction- customs, habits, beliefs etc.
Adaptive - Culture is based on the human capacity to change or adapt, as opposed to the more genetically driven adaptive process of animals.
Patterned - Culture has structure and is integrated; a change in one part will bring changes in another.
Culture impacts behavior, morale and productivity at work, and includes patterns that influence company attitudes.
Supernatural Beliefs
Education
Language
Customs & Manners
Religion
Culture
Aesthetics
Attitudes
Elements of Culture:
Language: It includes speech, written characters, numerals, symbols & gestures of non-verbal communication.
Religion: Religion affects work habits of people. Religion affects work & social customs from the days of week people work to their dietary habits.
Religion also affects politics and business.
MAIN RELIGIONS IN ASIA
Hinduism
Buddhism
Jainism
Sikhism
Confucianism
Shintoism
Islam
Christianity
3. Aesthetics:
It relates to the artistic tastes of a culture.
Aesthetics values can be reflected in art, literature, music and artistic tastes.
For understanding culture, we need to study how such differences affect behaviors.
Another aesthetically related area is color.
4. Customs and Manners:
Customs are common established practices.
Manners are behaviors that are regarded as appropriate in a particular society.
Manners are pointers of an individual's character whereas customs are what society collectively expects its members to do.
Customs n manners differ from country to country.
Customs also dictate the way companies advertise & market their products
5. Education:
Education refers to the number of years an individual spends & examination he or she passes in schools, colleges, and university.
Countries rich in educational facilities attract high-wage industries.
Market potential of a country depends on education.
Education determines advertising, packaging, quality of market research & distribution systems.
Advantages of Diversity:
The main advantage is the generation of more and better ideas.
A culturally diverse group can prevent groupthink, which is social conformity and pressures on individual group members to conform and reach a consensus.
Multicultural diverse groups are able to avoid this problem, because the members do not think similarly or feel the pressure to conform; As a result they question each other, offer opinions and suggestions that are contrary to those held by others.
Unanimity is achieved only through a careful process of deliberation.
Decision making may be slow, but the decisions reached tend to be very effective.
Disadvantages of Diversity:
Inaccurate communication because of misunderstanding that may arise when words used by an individual is not clear to others.
Another problem is the way in which situations are interpreted. Many Japanese nod their heads when others talk, but this does not necessarily imply their approval.
Perceptual problem- when culturally diverse groups come together, they often bring preconceived stereotypes with them. Japanese firms, for example, depend on groups to make decisions.
Entrepreneurial behavior, individualism, and originality are downplayed.
Diversity may cause a lack of cohesion that result in the firm's inability to take collective action.
Managing Diversity- Some Practical Measures:
Focus on bringing in the best talent, not on meeting numerical goals.
Geocentric policy towards staffing should be the guiding principle.
Hold managers accountable for meeting goals of diversity.
Establish monitoring programmes among employees of same and different races.
Develop career plans for employees as part of performance reviews.
Develop an age, gender, and race/ethnic profile of the present workforce.
Promote minorities and other disadvantaged sections to decision making positions, not just to staff jobs
Diversify the company's board of directors.
Provide extended leaves, flexible scheduling, flexi time, job sharing, and opportunities to telecommunicate, particularly for disadvantaged workers.
MULTICULTURAL MANAGEMENT
Multiculturalism means that people from many cultures (and frequently many countries) interact regularly. An MNC has a home country (head office) and a host country where the subsidiaries are located. They have to deal with several cultures and subcultures. Managing multiculturalism is essential for every international firm. Four tasks are crucial:
Spreading cross-cultural literacy
Culture and competitive advantage
Managing diversity
Strategy culture fit
Spreading cross-cultural literacy
Culture & Competitive advantage
Multi-culture
Compatibility between strategy & culture
Managing diversity
Spreading Cross-cultural Literacy: International businesses that fail to understand host-country cultures are likely to fail. An international manager has to bear in mind that local people often expect higher standards of behavior and tolerate far less deviation from local manners and customs from foreign companies than from a native firm.
Removing Cross-cultural Illiteracy: One way is: to appoint local citizens to do business in a particular culture. Firms should also ensure that home-country executives are cosmopolitan enough to understand how differences in culture affect the practice of international business. Transferring executives overseas at regular intervals to expose them to different cultures will help build a cadre of cosmopolitan executives. An international business must also be constantly on guard against the dangers of ethnocentric behavior. The ethnocentric person sees his or her own group as the center of defining point of culture and views all other cultures as deviations from what is normal.
Culture and Competitive advantage: Culture (values and norms) affects the cost of doing business in a country. These costs influence the ability of enterprises to establish a competitive advantage in the global marketplace. Japan presents us with an example of how culture can influence competitive advantage. The country's emphasis on group affiliation, loyalty, reciprocal obligations, honesty and education all boost the competitiveness of Japanese companies. The emphasis on group affiliation and loyalty encourages individuals to identify strongly with the companies in which they work. This tends to foster an ethic of hard work and cooperation between workers and management for the good of the company.
A different picture is found in Britain. Here, the class-based conflict between workers and management has disrupted industrial relations, raising the cost of doing business. Similarly, the ascetic principles of Indian culture have not been highly supportive of its business growth. Also, Islamic laws banning interest payments may raise the cost of doing business by constraining a country's banking system.
The relationship between culture and competitive advantage has important implications for the choice of countries in which to locate production facilities and do business. Obviously a country that has strong cultural support attracts a vast inflow of FDI.
Managing diversity
Culture-strategy compatibility: A culture and strategy fit is essential for the success of an international business. But achieving the balance between strategy and culture is extremely difficult because an MNC operates in different parts of the globe, each country being culturally different from the other. Cultural differences provide challenges to international managers in marketing products, managing workforces, and dealing with host-country governments. But fortunately, similarities do exist among many cultures, thereby reducing some of the needs to customize business practices to meet the demands of local cultures.
Tackling the Culture Factor-Strategies
Many international businesses utilize the country-clustering approach in formulating their international strategies. Many firms from New Zealand focus their first exporting efforts on Australia. Similarly, Hong Kong firms have been very successful in exploiting China's markets.
Firms either use a worldwide integration strategy or local (national) responsive strategy. In the worldwide integration strategy, standardized products are developed and are sold throughout the world with few alterations.
National Responsive Strategy
A national responsive strategy allows subsidiaries to enjoy substantial latitude in adopting products and services to suit the particular needs & cultural realities of the countries in which they operate.
Types of National Responsiveness:
Product adaptation (2) Individual adjustment and (3) Institutional adaptation
Product Adaptation:
This refers to the differentiation of a firm's product to capture a particular niche in the market. Product differentiation also means adapting the product to suit cultural differences in the host-culture by modifying its characteristics, as for example, Coca Cola changing the name of its Diet Coke to coke Light in Japan because the word diet has a disagreeable connotation.
Individual Adjustment
This is sought to be accomplished through training. Training should be provided to all personnel and their families going on international assignments, as they would be exposed to cultural environment which may be very different from their own. The managers and their families will face daily challenges, excitement, frustration, uncertainty and anxiety. The degree of success with which they respond to these feelings and emotions and their ability to handle them effectively will depend on the success of their training and more importantly on their skills, stamina, linguistic and communicative competence, intelligence, level of interest and knowledge of the host-culture.
A successful manager is one who communicates in the host's language, behaves in an appropriate manner, observing all the local manners and customs and relates to everyone in a manner that enables the local people to accept him as one of them.
Institutional Adaptation
An international firm seeks institutional adaptation by adopting an appropriate organizational structure and policies to fit into the host-culture. An organizational design in one culture may be totally inappropriate in another. Human resource practices need to be modified to take into account the differences in remuneration, employment, promotion and training methods. In Islamic countries, for instance, work scheduling would have to allow sufficient time and provide suitable facilities for employees to pray at certain times of the day. Recruitment policies would have to recognize class and ethnic distinctions in order to avoid causing offence to employees and customers from different class and ethnic backgrounds.
MOTIVATION ACROSS CULTURES
Motivation refers to the way an individual engages himself or herself in need fulfilling activities. At the heart of motivation is felt needs which drive the individual to act. Which needs activate the individual to act, what course of action he or she engages in and what rewards the person expects, vary from culture to culture?
Rich country citizens tend to be more motivated by higher order needs like achievement, growth and realizing one's potential than spend energy and time on fulfilling lower level needs, such as foods, clothing and shelter. It is the other way round in the developing countries where base level needs are the main motivators.
With regard to the goal directed behavior at work, the impact of national cultures is striking. A Japanese worker, for instance, is not expected to boast bout his or her work performance. For an Indian, work is not just means of living, it is worship. For a US citizen, work is only means of living.
National culture and social institutions also influence the levels of satisfaction also influence the levels of satisfaction workers expect to receive in an organization, and how committed workers are to their organization and its social goals.
Management Styles: Management styles are effective motivators in each culture. American styles are characterized by professionalism and friendliness. Japanese managers motivate employees through continuous counsel and persuasion. The Arab manager will be most effective in a parenting-type role that includes coaching and personal attention.
Control: All people are motivated by the power of being in control of their own lives or work space. Americans feel good about being independent and in control of their own destinies. Japanese motivation comes through group harmony and consensus, whereas the Arab manager strives for control of others through a parenting relationship.
Emotional Appeal: Americans respond to available opportunity. Sentiments may not evoke response. The Japanese are motivated by reputation and company success, which ar4e allied with their cultural values of belonging and group achievement. Arab motivation comes from an appeal to the sense of self within the authority structure.
Recognition: Americans want to be directly recognized for their individual contributions and achievements. Japanese recognition comes through identification with the group. Recognition of Arab cultures generally results from the individual's status in the hierarchy. When a department reaches its goal, the recognition will first go to head and then percolate down to the lowest level employees.
Material Reward: The American rewards that are culturally appropriate reflect the values of the culture. Americans measure individual success more in terms of material possessions. Monetary rewards motivate Americans. The Japanese are motivated by rewards shared among the group, such as bonuses, social services and fringe benefits available to group members. Arabs are motivated by gifts for the individual and family, which reflect admiration or appreciation for the individual's achievement.
Threats: Threats motivate people for the wrong reasons. Since the Americans identities are often directly linked to their jobs, the threat of being fired is significant to them. For the Japanese, the greatest threat is the fear of exclusion from the group. To the Arab's, a de4motion is a threat to one's reputation and status.
MANAGING CULTURALLY DIVERSE TEAMS
Multicultural teams comprise members coming from more than one culture. Multicultural teams have members from three or more cultures. An example is a group of three Americans, three Germans, three Uruguayans, and three Chinese mangers who are looking after mining operations in Chile.
Organizations can create awareness of the cultural differences and sensitivity to the work values, prevalent in countries that the MNC's require to interact with, either as a customer or as a host unit.
The challenge in managing multicultural teams effectively is to recognize underlying cultural causes of conflict, and to intervene in ways that not only get the teams back on track but empower their members to deal with future challenges effectively.
STRATEGIES FOR MANAGING TEAMS
4 strategies have been suggested to tackle problems of multicultural teams:
Adaptation: Acknowledging cultural gaps openly and working around them.
Structural intervention: Changing the shape of the team
Managerial intervention: Setting norms, or bringing in a higher level manager
Exit: Removing a team member when other options have failed.
The other ways of managing culturally diverse teams are:
Task-related selection: Leaders should select team members based on their task-related abilities rather than on ethnicity. Team members should be homogenous in ability levels but heterogeneous in attitudes. Such members help maximize team effectiveness.
Establishing a vision: Members of diverse teams have more difficulty agreeing on their purpose and task than do members of homogenous groups. Global alliances often become troubled because partners from different cultures do not clearly understand each other's intent, their purpose, goals and strategy, because they are initially unable to communicate with each other.
Equalizing power: Cultural dominance is counterproductive because it stifles non-dominant team member's contributions. In multicultural teams, leaders must guard against vesting power in host country members, members of the home country, members from the most technologically advanced or economically developed countries. Team leaders should manage the distribution of power according to each member's ability to contribute to the task.
