Risk Management

Cross-Cultural Challenges in International Business Management

My company was acquired by a British multinational in the mid-1990s. During one visit to the plant, the newly appointed UK Managing Director asked how Gujarati people eat their food. After hearing the reply, he decided that he would sit down and eat Gujarati food with his senior colleagues at the plant.

What was the Managing Direct trying to do? He was trying understand and embrace the culture norms of his new home. This behavior from the Managing Director clearly helped local management to open up during future discussions.

Cross-cultural challenges in international business management are becoming more prominent over the last two decades as companies have expanded beyond the borders of their home countries. Many of India’s top management schools have begun to include cross-cultural issues in their curriculum for international business management.

Since “Culture” is a major interest of mine, I was invited to teach the Diploma program in International Business Management students on cross-cultural challenges. I read many books on the subject to prepare for my presentation. The wealth of information in these books was extremely relevant and invaluable, which enriched my knowledge base.

This article aims to highlight some of the issues that are relevant to cross-cultural challenges in International Business Management.

What is “Culture” exactly?

Culture is the “acquired knowledge that people use to anticipate events and interpret experiences for generating acceptable social & professional behaviors. This knowledge shapes values, influences attitudes and creates behaviors. Culture is learned by sharing experiences with others. Culture is also passed from one generation to the next.

What are the core components that make up “Culture?”

  • Power distribution – Does the society adhere to the egalitarian or hierarchical approach?
  • Social relationships – Do people believe in collectivism or individualism?
  • Relationships between environmental factors Are people trying to exploit the environment or live in harmony?
  • Work patternsWhat is the best way to determine if people can do one thing or take on multiple tasks?
  • Uncertainty & social control – Whether the members of the society like to avoid uncertainty and be rule-bound or whether the members of the society are more relationship-based and like to deal with the uncertainties as & when they arise?

What are the key issues that often arise in cross-cultural teams of people?

  • Inadequate trust– A Chinese manager asks his Indian colleagues why they speak Hindi in the office, while his team members argue that their teammates can only speak English when the manager isn’t there.
  • Perception– People from developed countries might consider those from less-developed countries inferior.
  • Inaccurate biases– Examples of cultural prejudices include “Japanese people make group decisions” and “Indians don’t deliver on time”.
  • False communications– Japanese people are polite and don’t necessarily agree to everything that is being said during discussions.

What communication styles are influenced most by the culture of the country?

  • Direct or indirect– In the Direct style, messages are clear and direct. However, in the ‘Indirect’ style, the messages are more implicit & contextual.
  • ‘Elaborate’, ‘Exact’, or ‘Succinct’ – In the ‘Elaborate’ style, the speaker talks a lot & repeats many times. In the ‘Exact’ style, the speaker is precise with minimum repetitions and in the ‘Succinct’ style; the speaker uses fewer words with moderate repetitions & uses nonverbal cues.
  • ‘Contextual’ or ‘Personal’ – In the ‘Contextual’ style, the focus is on the speaker’s title or designation & hierarchical relationships. However, in the ‘Personal’ style, the focus is on the speaker’s individual achievements & there is minimum reference to the hierarchical relationships.
  • ‘Affective’ or ‘Instrumental’ – In the ‘Affective’ style, the communication is more relationship-oriented and listeners need to understand meanings based on nonverbal clues. The ‘Instrumental style is more goal-oriented, and the speaker uses direct language with minimal nonverbal cues.

What are some nonverbal cues that can be used to communicate with cross-cultural teams

  • Body contact – These are hand gestures that can be used to hug, kiss, thump on the shoulder, or firm handshakes.
  • Distance between people This is the difference in physical distance between two people. 18″ is considered intimate, 18″ to 4″ is personal, 4″ to 8″ is acceptable social, and 8″ is public.
  • Artifacts Tie pins and jewelry are examples of this.
  • Para-language – This refers to the speech rate, pitch, or loudness.
  • Cosmetics This article is about powders, perfumes, deodorants, and other such things.
  • Time symbolism – This refers to the proper use of time. It is important to know when the right time to call, how to start, how to finish, etc. Because different countries have different time zones.

Epilogue

In the last 20 years, “Cross-cultural issues in international business management” has been a popular topic. There are many examples of joint ventures failing or going bankrupt due to inability of management to recognize and address cross-cultural issues. To ensure cross-cultural challenges are effectively addressed, there are many examples of companies that require employees to receive training in culture management or acculturation.

The world is shrinking every day. International managers will have to pay more attention to cultural and ethnic differences in their work environment.

Because the stakes can be high, it is dangerous to ignore cultural challenges when managing internal businesses. This is the “Hygiene” factor in the “Dual factor Motivation”, theory that Frederick Herzberg, a psychologist, developed in the 1960s. While it may bring you success in international business management, failure to embrace the cultural diversity of the country will only increase your chances of being unsuccessful.

Refer to:

  • Bhattacharya Dpak Kumar, “Crosscultural Management – Text and Cases”,
  • “International Management: Culture, Strategy and Behavior” by Hodgetts Richard M, Luthans & DOH)
  • “Management Across Cultures. Challenges and Strategies” by Richard Steer. Scnchez – Runde Carlos J. Nardon Luciara.
  • “Bridging Culture Gap”: A Practical Guide to International Business Communication by Chris Fox and Carte Peny

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