Nov 11, 2019 in Business

Individual Report

Contemporary tendencies for running a business lead companies to extend their influence across different countries. Moreover, the cases when businesses merge or form multinational corporations lead to incorporation of the representatives of various cultures. Therefore, cultural differences might be transferred into the differences of managing a company or its departments, which can cause confusion or misunderstanding between the colleagues or partners. Consequently, there is a need for a review of the studies of cultural aspects in the representatives of multinational businesses. Such studies should enhance an understanding of the peculiarities of international principles of running a business. Thus, revealing characteristic features of multinational corporations’ culture would enhance the theories and principles of managing such business structures. As a result, one presumes that it would be easy for the representatives of the top and executive management staff to interact with their international partners and colleagues.

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Theories of Understanding Multinational Business Research

Before discussing the peculiarities of the cultural attitudes and principles of running a business one should characterize the basic theories associated with this field. The proposed analysis would allow selecting an appropriate approach towards the investigation of values and norms of national communities in multinational corporate culture. Thus, according to Hofstede, culture can be regarded as a phenomenon that shapes mental programs. The scholar argues that this mental software shapes the patterns of thinking, acting and feeling. He states that culture is “the collective programming of the mind which distinguishes the members of one group or category of people from another. The benefit of this theory is in its relevance to the observed realities. People have not only visual but also behaviour differences depending on the behavioural patterns of their culture. Thus, the theory reveals a variety of interpretations of life phenomena and objectives, accustomed traditions, modes of communication and others. Additionally, Hofstede claims that people learn a culture and not inherit it, which strengthens his theory. Therefore, culture is expected to be connected with the traits is human nature as well as an individual’s personality. Since all cultures are unique and possess special features, they are in the relations of cultural relativism regarding one another. This notion means that all of them have equal rights and the representatives of one culture cannot be superior to the others.

Furthermore, scholars address several factors when differentiating the representatives of one culture from another. Such traits are symbols, heroes, rituals, and values. Each of these factors adds to the cultural aspect of a person shaping one’s personality regarding the cultural space of one’s existence. Also, one presumes that the behavioural patterns of representatives of any culture are being judged on the basis of prejudices. Consequently, these are two main matrixes for analysis that reveal the cultural difference through comparison and contrast of the domestic, “ideal” prejudiced and actual cultural models. Likewise, Hofstede claims that there are several layers of culture that correspond to the space of actualized mental programming models. They include national, regional/ethnic/religious or linguistic, gender, generation, social class and organizational layers of culture. One presumes that each national culture has its own views on business and the principles of its regulation, which can be traced through these layers. Therefore, the indicated interference would bear the characteristics of a related phenomenon in the national culture. For instance, the study conducted in around 50 countries of the world addressing the multinational corporation IBM has revealed the most common interfering issues. Hofstede argues that they represent the difference in the dimensions of cultures and names them as power distance, collectivism versus individualism, femininity versus masculinity, and uncertainty avoidance. Therefore, the scholar proposes using a four-dimensional model of differences among national cultures that considers the mentioned aspects. Presumably this theory has no weaknesses because it has a constructive approach towards the cultural identification of different nations.

Inglehart’s theory indicates that the cultural aspects of any society are tightly intertwined with its economic, social and political changes. The scholar introduces the model of characterizing national cultures through the shapes of modernization and postmodernization. Moreover, he highlights the fact that “technological and economic changes are linked with coherent and predictable patterns of cultural and political change”. Therefore, the strength of his theory lies in the revealed influence of the characteristics of national cultures on the principles of running a business through specific cultural rules. Additionally, Inglehart proposes applying the principles of functional analysis in order to trace the differences among the representatives of national and corporate cultures.

Although Inglehart’s principle of characterizing corporate cultures through the principles of modernization and modernization is applicable, it is assumed to be outdated. The reason for this assumption is that his study was conducted approximately 20 years ago. Therefore, its weakness lies in its non-relevance to the contemporary state of business sector. Modern international corporations are characterized with more rapid tempos of development and spreading, which indicates that the proposed models of modernizations and postmodernization are irrelevant. That is why the paper gives a priority to the methodological toolkit proposed by Hofstede. Among the strength of his approach is the stress on the basic components of the culture as well as defining its dimensions and layers. Therefore, this paper uses the indicated methodology as the basis for analyzing the culture of representatives of multinational corporations.

Values and Norms of National Communities and Their Implications for Business

The next part of the paper is the characteristic of the differences in norms and values of various national communities and their implications for multinational corporations. One presumes that the awareness of the indicated differences would allow establishing contacts with the representatives of different communities. This ability would be obtained through the knowledge of the norms crucial for the representative of a culture when managing the business and communicating with partners and colleagues. Since multinational companies operate in several countries, known as the host countries, they may face various cultural differences, which may impact the company’s operational aspects. Therefore, they should be aware of the customs and traditions of the host country as well as the cultural characteristics of the employees. For instance, it is irrelevant to perform Christmas associated operations in Muslim countries. At the same time, cultural aspects influence the patterns of people’s behaviour, shaping the principles of sales, management, and purchasing in the host countries.

Thus, Adler and Gundersen indicate that people of different cultures have a different perception of activity, time, and space. For instance, the dominant mode of activity of Americans is performing an action, whereas other cultures might be being-oriented. Therefore, the managers of action are oriented towards result, whereas the managers of being pursue control and are more relaxed in terms of the deadlines. At the same time, one can regard North-Americans as future-oriented and Europeans as past-oriented. In addition, Edfelt indicates that the European CEOs are more oriented towards long-term objectives, whereas the American ones expect to obtain results of their actions in a short time. Furthermore, there is a difference in the perception of the private space, which is demonstrated by the existence of private desks in the USA and shared working environment in Japan. This fact demonstrates that the Japanese culture is more public oriented, whereas the American culture values the importance of private space for an individual. Additionally, there is a need for the colleagues and partners to be aware of the differences in cultural metaphors, which differ from logic and deductive mental processes. One suggests that these metaphors correlate with the assumptions of a person about ethics, which is especially important when addressing the principles of ethics at workplace.

Moreover, it is important for individuals pursuing an international career to be aware of the perception of the community and business by the representatives of different cultures. At the same time, skills of intercultural communication are crucial for people attempting to integrate and collaborate with the representatives of another culture. In this sense, it is important for the HR specialists and managers to be aware of the dimensional model introduced by Hofstede. The information about the modes is important for understanding the basic principles of cross-cultural management. For instance, the awareness of the perceptions of time or responsibility is important when negotiating a contract or reaching an agreement with the partners which represent another culture. Moreover, this information would be useful when performing the activities of international taxation, relocation and orientation, administrative services for expatriates, host-government relations, and language translation services. These aspects are also crucial for large international companies such as IBM or General Motors, which have numerous departments in many countries. The major reason for them to consider the discussed topic is the fact that they attempt to establish corporate American culture within international community. Establishing American culture, similar to Silicon Valley, is easier for them because, as workers and managers, Americans share cultural dimensions. This means that when establishing a deadline or discussing the peculiarities of any project or partnership their visions of business generally coincide. At the same time, different cultural dimensions can restrain a business, which is not adopted for a particular culture due to its multicultural environment. For instance, Japanese culture places emphasis on maintaining close business relationships with suppliers and partners, whereas American culture disregards better offers in favour of experienced relationships. Moreover, one should be aware of the fact that Europeans and Asians might be more flexible and experience greater cultural diversity. The reasons for this are the ability to speak two or more languages and travelling a few hundred miles from one country to another. Therefore, their cultures might seem more sophisticated and take extra time for the Americans to understand it. That is why having partners in America, one should expect more time for them to adapt compared to those from Asia.

One more aspect to consider is the ability to work in groups. Thus, the studies show that the employees in the UK reveal greater job satisfaction as well as perceive greater work role complexity compared to workers from other countries. The reason for this was the format of a work group, which boosted the efficiency of the workforce. At the same time, one expects that the representatives of individualistic cultures, such as the American culture, would benefit from allowing them to work independently. Thus, multicultural intelligence and awareness may positively impact companies and employees.

Consequently, the analysis of the subject demonstrates that there is a significant difference in the perception of cultural dimensions in the representatives of various cultures. As a result, these differences might influence the modes of operation and the structure of a business as well as its international departments. Such changes might have impact on the socialization process or the efficiency of the workforce. Therefore, one presumes that management and HR staff of any multinational company should be aware of the crucial aspects of its function. Moreover, the paper suggests that some policies might be introduced in order to enhance the development of a multinational business.

Policies Enhancing the Development of a Multinational Business

It is presumed that companies may prepare and support expatriates and their families, which would foster the business growth. For instance, they may start with a smooth transition of scientific degrees or recognition of the specialties, which have different names or differ in certain aspects. Furthermore, they may initiate training courses to enhance the culture transition and awareness of the culture of the host countries. The examples of such policies are the measures implemented in the EU countries aiming to support New Technology-Based Firms. Moreover, recent studies indicate that many international businesses lack cross-cultural competence. Thus, scholars propose enhancing cross-cultural competence by means of creating environmental and contextual conditions assuring effective application of the requisite skills. They indicate that there is a gap between knowledge and practice, which could be eliminated through international courses raising the awareness of a wide multicultural context. Additionally, one presumes that such policies should include programs addressing teaching expatriates foreign languages and foreign cultures. Such programs should discuss a variety of critical topics such as traditions of management within a host country, ethical aspects and stereotypes. Consequently, the obtained cultural, ethical awareness and skills would enhance communication between managers and employees in the host countries. Shared cultural experiences would increase overall multicultural awareness of the staff, which would benefit the company’s operational efficacy. For instance, van den Born and Peltokorpi argue that “the coherent, tight alignment among the HRM practices, language policies, and MNC strategic orientation, in terms of ethnocentricity, polycentricity, or geocentricity, is beneficial.” Therefore, it would be useful for CEOs to learn and practice the skills of cross-cultural management as well as allowing managers participate in such initiatives. Such practice would enhance the efficiency of mergers and acquisitions as well as lead to the successful management of any multinational business. Moreover, these initiatives would decrease stereotypes through obtained awareness of the realities of other cultures relating to business within a multinational company.

Conclusion

Summarizing the presented information, it can be concluded that managing a multinational company requires cross-cultural competence as well as awareness of the differences of cultural dimensions. The performed research has revealed that the representatives of each culture have different perception of activity, time, space, obligations, and workplace. Therefore, companies that strive for international cooperation, merger or acquisition should develop the multicultural awareness of a company’s managing staff. This awareness would enhance the understanding of the representatives of different cultures and foster the growth and efficiency of the company. At the same time, it would stimulate the company towards implementing various policies aimed at helping expatriates adapt at the workplace and assuring their work efficiency. Therefore, cross-cultural competence is a crucial factor for the success of any multinational company.

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