Cultural Theories and Multinational Corporations - Example

Cultural Theories and Multinational Corporations Introduction Generally, the term culture can be defined as the way of life of a particular group of people, and culture is a very important aspect of a person’s life and identity since it shapes how individuals act and behave within their own cultural group and influences individuals’ expectations especially when communicating with people from other cultures. To understand how culture differs, Hofstede and Trompenaars have proposed cultural dimension theories, which they have proposed five, and seven dimensions of culture respectively. They carried a global study particularly on leadership and developed cultural dimensions for classifying and differentiating various countries globally (Jacob 2005, p.514). Cultural diversity and cultural difference are major challenges to various expatriates and the management of multinational corporations. Arguably, adjusting to a different and new culture is a challenge that expatriate managers are bound to face (Selmer, Chiu and Shenkar 2007, p.150). The capability to work or associate with others from a diverse culture is very essential for those individuals working away from their home country (Young, 2011). This paper provides a very thoughtful discussion on the understanding of different cultural theories and their application in the management of Multinational Corporations (MNCs). Hofstede’s Cultural Dimensions Geert Hofstede studied work-related values and developed a Cultural Dimension Theory which features five dimensions along which cultures differs, and these dimensions include power distance; individualism versus collectivism; masculinity versus femininity; doubt evasion, and long-term versus short-term orientation. Hofstede posits that power distance is the degree to which individuals particularly the less powerful members of a certain organization accept and expect that power is distributed unequally (Low and Yuquan 2002, p.8), and primarily, this dimension expresses how a society deals with inequalities among individuals. Ideally, societal members show a large degree of power distance and accept a hierarchical order in the society, but in societies with low power distance, individuals tend to equalize the distribution of power and demand justification for inequalities of power (Low and Yuquan 2002, p.9). Secondly, individualism can be defined as the strength of the ties individuals have towards others within society. In such communities, people take care of themselves, and immediate families only, and that high individualism reflects loose connection whereas low individualism shows strong group cohesion. On the contrary, collectivism refers to how much societal members stick together and conform to societal values including traditional male and female roles, and here, people look after each other in exchange of unquestioning loyalty. In high masculinity societies, there is a well-defined distinction between men and female roles, whereas in societies with low masculinity, women can do anything men can do. Additionally, uncertainty avoidance refers to the degree of anxiety that societal members feel in mysterious circumstances; it refers to the level to which societal members feel endangered by doubt or ambiguity (Low and Yuquan 2002, p.9), and lastly, long versus short-term orientations deal with whether a certain tradition favours the hunt for truth or devotion to other values or not. Trompenaars’ Dimensions of Culture Accordingly, Fons Trompenaars proposed seven cultural dimensions based on the relationship between people such as universalism versus particularism, individualism versus communitarianism, neutral versus affective, specific versus diffuse, and achievement versus ascription; time orientation including sequential versus synchronous; and lastly relationship to nature capturing internal versus external. Universalism versus particularism refers to the degree of importance a certain culture assigns to the law or personal relationships, in that, in a universalistic culture, individuals share the belief that general rules and values precede over the claims and needs of friends and other relationships. On the contrary, in a particularistic culture, individuals perceive culture in terms of friendship and intimate relationship, and even though rules exist in such societies, they rarely control how individuals relate with each other (French, Zeiss and Scherer 2001, p.146). Secondly, individualism versus communitarianism refers to the extent to which people see themselves function more as individuals or community. Arguably, in an individualistic culture, individuals place themselves before the community whereas in a communism culture, individuals place the community first then themselves (French, Zeiss and Scherer 2001, p.146). Thirdly, specific versus diffuse simply refers to the extent to which responsibility is specifically assigned or diffusely accepted by people. In a specific culture, individuals critically analyse the elements individually then place them together, and interactions between people in such cultures are well defined. In contrast, a diffusely oriented culture starts with the whole and determines individual elements from the perspective of the total, and here, the relationships between elements are considered important as compared to individual elements. Fourthly, affectivity versus neutrality is the degree to which people show their emotions whereby in an affective culture, people show their emotions and it is not considered necessary to hide feelings whereas in a neutral culture, individuals are encouraged not to display their emotions overtly, they have to control their feelings. Fifth, achievement versus ascription is the extent to which individuals prove themselves to receive status or status given to them, and in a culture with achieved status, individuals get their status from what they have accomplished while in a culture with ascribed status, individuals get their status from birth, gender, wealth among other factors. Additionally, sequential versus synchronic refers to the extent to which people perform tasks one at a time or at once. In a sequential culture, individuals structure time sequential and perform duties one at a time whereas in a synchronic time culture, individuals engage in several activities at once with the belief that time is flexible and intangible. Lastly, internal versus external is the degree to which people are convinced that the environment can be controlled, or the environment can control them. In an internal culture, people perceive nature as complex, and that it can be controlled. Here, individuals believe that they human beings can dominate culture. On the other hand, an external culture, humans are perceived as one of nature’s forces and so, they are expected to live in harmony with the environment and adapt to external situations. Why People Differ in Terms of Culture and Importance of Understanding Culture The term culture can simply be defined as individuals’ ways of life including all that we have learn, shared or transmitted from one generation to the other; it is a way of life of a particular group of people and may involve the beliefs, behaviours, and values among others. Culture is a defining feature of an individual’s identity, and it determines how people view themselves, and language very essential to cultural identity. Arguably, people are different in terms of culture because different people have very different believes, values, symbols, language among other aspects. Language is valued because it transmits and preserves culture. A person is socialized to a particular culture where they are brought up to learn and embrace that society’s way of life. Globally, different people have different cultural believes, values, symbols and speak different languages, dress different, practice different cultural practices among others and this explains why people differ in terms of culture. As individuals internalize culture throughout their lives, the way they think, behave, view their surrounding and other people is largely influenced by the culture. The symbols, values as well as rituals serve as the most important aspects of individuals’ culture; therefore, in this globalized world. It is important to understand own culture as well as other people’s culture as a way of enhancing effective interactions and developing good relationships with different people from diverse cultures. Understanding and appreciating cultural differences is very important to all organizations in order to build an effective diverse workforce. It is important to understand different cultures in order to create and maintain a professional and harmonious environment t in the place of work. Moreover, understanding different cultures enables people to communicate effectively with each other. It is important to understand culture in order to know more about your own culture, keep traditions, and pass them down. Having a broader perspective of culture and knowing more about other people’s culture enables us to avoid culture shock especially when travel or interact with different people from different cultures. Cultural Theories Arguably, cultural theories focus on individuals within a certain culture and try to understand how they behave and interact. As mentioned above, some of the theories talking about culture include Hofstede’s and Trompenaars’ cultural dimensions theories. They developed these dimensions to measure culture (Jacob 2005, p.516). Hofstede suggests five cultural dimensions and Trompenaars proposed seven dimensions of culture, and these cultural dimension theories assume that culture is an important aspect in an organization and understanding and respecting different cultures enables various organizations including multinational corporations to operate effectively. Moreover, they assume that individuals’ cultures largely differ and so it is important to understand the impact of culture in interactions between members of a diverse workforce. Hofstede conducted this research and proposed the cultural dimension theory in order to enable various organizations to understand the impact culture has on employees and manager interactions and operation in a multicultural environment. Accordingly, Trompenaars developed his cultural dimension theory in order to explain national cultural differences in organizations and also to illustrate how managing these cultural differences in a multicultural business environment challenge international managers. Proper understanding and application of these dimensions helps in minimizing cultural misunderstandings and conflicts. Arguably, these two cultural dimension theories have enabled various expatriate to manage various multinational corporations properly and effectively. Moreover, they have helped various organizations to establish and maintain a diverse workforce. In addition, these theories are very important because they address cultural differences and how different cultures operate. Therefore, these theories play a very significant role in ensuring that people, both employees and managers understand other people’s culture and avoid cultural stereotype. Furthermore, these cultural dimensions theories present a critical analysis of culture and cultural aspects and this makes them the most appropriate choice in studying culture and understanding diverse cultures. Multinational and the Role of Expatriates Due to globalization of businesses, different companies are faced with various challenges and this has led to increased use of expatriates, and managing expatriation effectively has become a very a major concern for multinational corporations (Holopainen and Bjorkman 2005, p.37). Multinational corporations operate in distant markets and so they have to employ multicultural workforce in order to satisfy their customers in different countries where they operate (Rozkwitalska 2013, p.100). Studies reveal that multinationals have appointed many expatriates for their overseas operations to meet their global business motives (Bhatti et al 2013, p.695). Arguably, Hofstede’s and Trompenaars cultural dimension theories can be applied in informing expatriate how to manage Multinational Corporations. Truly, Multinational Corporations employ different people from different cultures and conduct their activities in various parts of the world and so they deal with different customers from different cultures. Managing cultural differences especially when dealing with a diverse workforce can be a major challenge to many global managers, and so, expatriates are expected to have the ability to live and work effectively in a multicultural environment. These theories provide a critical analysis of cultural difference and so by understanding all the proposed dimensions, any expatriate can effectively manage multinational companies because they will have an idea of many and different cultures. Expatriates can use these cultural dimension theories to understand different societies and diverse cultures in order to communicate effectively and interact accordingly as a way of promoting the company’s development. This way, dealing with employees from different cultural backgrounds will not be a major problem to them. Arguably, there is increased use of the host country nationals, and this reflects the internalization of the multinationals (Boyacigiller 1990, p.358). Expatriates can adapt to other cultures and improve the management of organization through cultural awareness and by having the ability to resolve ethical dilemmas. Cultural awareness entails the understanding of how an individual’s culture may influence their values, behaviour, beliefs as well as their basic assumptions, and notably, cultural awareness recognizes that their cultural background shapes everyone and that individuals’ cultures significantly influence how they perceive and interpret themselves, the world around them and how they relate with other people. Upon the entry of the host country, expatriates are likely to experience culture shock (Young, 2011), and so they need to understand that the behaviour and beliefs of individuals within each culture can vary considerably. Cultural awareness assist expatriates to explore cultural issues that affect relationships in organizations as well as the operation of the organization. Therefore, expatriates can successfully manage multicultural organizations when they are culturally aware and sensitive about other people’s cultures. Personal characteristics of successful expatriates include stress tolerance, rational ability, communicational ability among others, the ability to deal with stressful situations is necessary, and this quality positively relates to the performance of expatriate. More so, expatriates should have rational ability and this refers to the ability to effectively interact with a diverse group of individuals and develop close relationships especially with host nationals (Holopainen and Bjorkman, 2005, 40). Accordingly, expatriates should effectively engage in communication with the host nationals in order to understand the host country’s cultures as well as the country’s nationals (Holopainen and Bjorkman 2005, p.41). Cross-cultural interactions involve internal and external, direct and indirect contacts of individuals in every subsystem of multinationals (Rozkwitalska 2013, p.101). More so, other qualities such as cross cultural capabilities and having a global mind-set and global leadership contribute significantly in predicting good adjustment. The three models of expatriate adjustment include an adjustment to work, associating with host nationals, and the general non-work environment (Selmer, Chiu and Shenkar 2007, p.152). Various studies have been focusing on the performance and adjustments of expatriates to assist multinationals to operate effectively in the international market (Bhatti et al 2013, p.695). Multinationals can ensure that they manage expatriates successfully by ensuring that expatriates are culturally aware and have all the necessary qualities to enable them adjust effectively to the new environment. More so, expatriates should be recruited based on their possession of the above qualities. Trainings such as cross-cultural training that will provide the expatriate with valuable information about the host country and enable them to develop realistic expectations (Holopainen and Bjorkman 2005, p.42). The companies can assess expatriate performance by monitoring and evaluating their performance as well as observing how they interact with individuals from different cultures. Expatriates success involves their adjustment, job performance, commitment among others (Johannes et al 2009, p.834). Multinational corporations should ensure that increase cultural diversity awareness and minimize or eliminate cases of ethnocentrism. Cultural diversity is the where different cultures are incorporated and different individuals from diverse cultures work together, whereas cultural stereotype or ethnocentrism can be defined the belief that one’s culture is better or superior than the other. Conclusion Culture is a very important aspect of individual’s life, and it influence how we behave, perceive ourselves, the environment around us as well as how we relate with others. Various cultural theories proposed to help individuals analyse and understand culture include Hofstede’s five cultural dimensions and Trompenaars seven cultural dimensions. These theories are very useful as they provide a critical analysis and grounds in which culture differs and so proper understanding of these theories help in eliminating cultural misunderstandings and conflicts in organizations. Dealing with cultural differences is a major challenge to expatriates and the management of multinationals, and adjusting to different cultures is a challenge that the expatriate managers need to face. Therefore, expatriates need to informed and aware of other cultures and have necessary qualities such as stress tolerance, rationality and communicational ability to enable them adjust effective and interact with the host nationals in a required manner. Moreover, they need to undergo cross-cultural trainings in order to be aware of the host country’s culture. References Bhatti, M. A., Battour, M.M., and Ismail, A. R., 2013, Expatriates adjustment and job performance: An examination of individual and organizational factors, International Journal of Productivity and Performance Management, Vol. 62 No. 7, pp. 694-717. Boyacigiller, N., 1990, The Role of Expatriates in the Management of Interdependence, Complexity and Risk in Multinational Corporations, Journal of International Business Studies, Vol. 21, No. 3, 3rd Qtr. pp. 357-381. 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Rozkwitalska, M., 2013, HRM Practices, Organizational Cultures, Solutions and Managers to Overcome Barriers to Cross-cultural Interactions in MNCs, GSTF International Journal on Business Review (GBR), Vol. 2 No. 4, pp. 100- 105. Selmer, J., Chiu, R., and Shenkar, O, 2007, Cultural Distance Asymmetry In Expatriate Adjustment: A Critical Review Of The Literature and an Empirical Investigation, Cross Cultural Management: An International Journal, Vol. 14 No. 2, pp. 150-160. Young, R., 2011, Cross-Cultural Skills: Essential for Expatriate Success, The Chronicle Article. [Online] Available at: https://chronicle.com/article/Cross-Cultural-Skills-/128782/ Read More