Culture governs and it has a lot of influence on all of the facets of life through affecting behaviours, attitudes, and values of a society. The organizational culture is linked with the specific modes of doing the tasks. Along with it, there is a very heavy influence of cultural orientations which are being developed by the people who made it onto the organizational culture (Björkman, Stahl and Vaara, 2007). Observed as the socially transferred values, beliefs, norms, patterns and behaviours are quite often observed as a conflict source as compared to synergy (Farndale, Scullion and Sparrow, 2010). When different people of various cultures interact with each other, then this conflict arises. According to this, the index of culture of organization which can be parallel or different from the related cultural orientations; would be responsible for determining the failure or success of the multinational business (Hutzschenreuter and Voll, 2008). This essay is about some cultural implications that arise due to the activities multinational corporations. In this essay, the importance of understanding international culture for multinational firms has been discussed. In addition to this, some cultural challenges that are needed to be addressed have also been discussed. The importance of people management in case of multinational firms is also addressed in this essay.
The definition of culture can be “the total artifacts, institutions, techniques, rules and beliefs that do the characterization of the human populations” or “the combined programming of human mind”. The other definition can be like “Sociologists mainly talk regarding the process of socialization, and they refer to the effects of education, friends, parents and interaction with other people which are the members of some specific society as the basis of one culture. All of these effects concluded in some learned behaviour patterns which were common for some members of a society. The basic elements of culture are norms, customs, attitudes, values, religion, and language of a society or group (Muzychenko, 2008).
Perhaps, the most significant tool for interpreting the culture generally is language. Language plays an important role in making understand the opinions, attitudes, and beliefs, values of some specific group or individual. The widely accepted language for businesses today is English; most of the global organizations and institutions have chosen English as their official language. For a large number of firms like IBM Japan, Hitachi, NEC and Toyota, English-speaking ability is kept as the main basis of promotion. Although, any perception like if a same language will be spoken then it will remove the cultural differences is quite dangerous, basically it just hides them. Along with it, a dependency on English through managers of America and British, and less language skills, can actually decrease the ability to stay with and adoption of other cultures (Lucas, 2006).
At the basic level, culture just deals with the conduct and lifestyle of some particular group of people, therefore the term corporate culture is used in order to do the characterization of how employees and managers of some specific organizations will behave. But this term is also utilized by senior management and people management while they make attempts to shape the behaviour kinds (dynamic, open, innovative etc) they wish get nourished in the companies. Promotion of some particular corporate culture also increases the community sense and shared identity does the underpinning of effective companies (Dowling, 2008).
Culture plays a central role in the management of recent worldwide workforce dynamics. Li and Scullion (2006) have done the division of culture into two of the distinct but termed as overlapping groups; national cultures and organizational cultures. Organizational and natural cultures have powerful and pervasive effect in the organizations and in different approaches of global workforce management.
Every culture is quite unique and the people who find themselves in some specific culture actually imbibe it and it becomes the most important part of their lives. All of these cultures are slightly different or they are different from other cultures. The prosperity of acquisitions and mergers including multinational organizations to a very large extent are based on the management of different cultures which come into being from these types of ventures. Because of this reason, companies which are engaged in acquisitions and cross-border mergers should consider the cultural problems if they are to be prosper (Zhu and Huang, 2007). In the management of human resources in some worldwide setting, some of the problems related to the paramount significance are; exit strategies, remuneration strategies, and retention, training, selection and recruitment strategies. Culture is the main factor and assumption regarding the failure or success. The assertion like if multinational organizations want to get prosperity and maintenance of competitive advantage in worldwide domain, they should adopt the organizational culture which is most appropriate in the index of national culture, which is operated by them is premised on this belief that such behaviours and styles of leadership are culture bound (Kuada, 2010).
It is in opposed with the backdrop that styles of leadership look forward to observe the problems related to culture dependent on the cultural dimensions of Hofstede in order to explore the components within the national culture that affect the performance of the companies. It does the assessment of the affects of culture, both organizational and national, has onto worldwide practices of people management and in the submission of this, reveals that there is an analogy between human resources exercises and national culture tends to augment the performance of the organization (Cantwell, Dunning and Lundan, 2010).
Despite of different processes and patterns of globalization, cultural differences have still a lot of importance. Even through larger common access, through internet and different media, to the similar sports stars, rock icons and brand, there were differences. Some of the terms like Americanization or cultural convergence (the homogenization of preferences of customers with the help of ubiquity of Ford, Coca-Cola, and McDonald’s) overstate the similarities in between the people in the surrounding (Luo and Shenkar, 2006). Cultures are different from each other and because of these differences there are important and real differences in the manners the organizations perform the operations and the way people work. Along with it, through globalization most of the organizations are competing with each other with much more difficulty of doing business internationally, which is rooted from a large amount of types in the world that are still present in the world (and will be present in future) (Buckley, Clegg and Tan, 2006).
For a large number of times, the universality of human resource exercises has been interrogated. Policies of human resources that may be prospering in one jurisdiction can be unsuccessful in the other jurisdiction. For example, in human resource when one wishes to reach to some conclusion, the structures of salary can be effective in a particular country and they tend to be ineffective in some other country. Same like this, some of the circle programs related to the quality which are prosperously utilized in Japan are not this much effective in US (Dunning, 2006).
Some of the problems related to the cross-cultural management do arise in a large number of indexes of business. Within the individual organizations, for instance, managers from some foreign parent organization should interpret that local employees from the host countries should get various structures of the organization and HRM strategies. Mergers and acquisitions (M&As) in cross-border, identifying the assumed synergies rarely based on the establishment of strategies and structures that includes both of the cultures in a balanced manner. Buyer-supplier, cross-border joint ventures and alliances links between two or more than two organizations also need a compromise based on culture. Finally, in order to sale organizations to the foreign customers successfully, there should be sensitive adoption of advertisements, services, marketing and products (Ang and Massingham, 2007).
National culture affects the styles of leadership and strategic decisions along with the practices of people management like performance appraisal. The cultures having high power distances, obedience and loyalty to those who have higher authorities is needed, in fact it is the basic norm. Management basically uses performance appraisal for this case which is dependent on the criteria of behaviour rather than the criteria of particular outcomes. Along with this, making upon the topology of Hofstede, it is not much difficult to observe that how the culture of any nation affects the practices linked with the performance (Johnson, Lenartowicz and Apud, 2006). For instance, the score of US on power distance is 40, which implies that moderate acceptance of hierarchy and status differences, while the score of India on power distance is 77 when the measurement was made in opposed to the average of 56.5 Hofstede (1980). This recommends that individuals tend to accept the things without argument. As such any multinational organization which operate in both of the nations will need to adopt the most suitable practices of management and mechanism of feedback, for instance as the managers tend to be less willing to get any negative feedback in India. Same like this, in some of the countries which are famous for their collectivist values such as China, people mostly prefer the work done in group as compared to individually-targeted training and in accordance with Chakrabarti, Gupta-Mukherjee and Jayaraman (2009) may provide more suitable feedback to group-based, as compared to individual-targeted response.
Research done by Farndale, Brewster and Poutsma (2008) depicted that the performance of the organization is quite better in those organization where the human resources exercise and national culture are parallel. At the business level, where a lot of attempts are made in order to adapt to the policies of human resource that are more in conformity with the assumptions and values of a country, the business performance of such organizations is better in terms of return on sales and return on assets, and it may be reflected in better and bigger bonuses for employees. In accordance with the Sapienza et al (2006) if the practices of people management will not be properly aligned with some particular tenets as shared by the workers, it will cause dissatisfaction, discomfort and less commitment among the workers of the organization. As compared to this, when the practices of human resources gets fit with all of the values as shared by the workers, the performance of the organization gets improved.
In case of multinational companies, employee voice is a major challenge that needs to be catered for in order to enhance performance of employees and to manage people in an effective way. There is a significant role played by culture in international business as well as international people management and this culture has a major effect on employee voice. Employee voice is an effective way of communication within an organization through which employees can share anything that they want in case of mistreatment or mismanagement. In contemporary business world, the competition among organizations depends on their cultural benefit with the help of effective people management. Due to having cultural difference among employees, the issues in communications might be faced by the organization. The success or failure of business depends on protection of credibility, enhancement of goodwill, encouragement of employees and growth of marketable product. With this respect, in order to gain competitive advantage, it has become important for multinational firms to formulate an organizational culture in international countries and conduct proper measures regarding employee voice (Lavelle, Gunnigle and McDonnell, 2010).
Employee voice can be achieved through two ways; direct voice and indirect voice. In direct employee voice, the normal conversation among employees and employers is included like through email, meetings, and notice board or employee surveys. While in indirect employee voice the employee raises voice through councils, supervisory board, unions and collective bargaining. The direct voice is considered to be one of the most appropriate forms in which ideas and issues of people are clearly heard by employers. In indirect voice, there is high quality involved, with high cost effectiveness (Budd, Gollan and Wilkinson, 2010).
Geert Hosfstede is a Dutch psychologist; he did a research on the famous cultural studies in management, in 70 countries on IBM’s operations all around the world. One of the significant dimensions as described by Hofstede is;
The main target of this dimension is on the limit to which the integration of individuals is done into groups. As a concept, individualism implies that people protect and seek all of their own interests over the major target of society and the role played by them in the society. People find it more comfortable to make the decisions on their own, depending on what they find best for themselves in an individualistic culture. Employees are given larger autonomy and personal freedom in an individualistic society. Although, people do belong with their collectives and groups in a collectivistic culture and they care for each other in turn of loyalty. Therefore collective cultures do not basically permits the independence and freedom needed by members of organization to think more creatively, and therefore they fail in creating an environment that nourishes an innovative spirit. Along with it, the unconscious and overwhelming pressure for uniformity and conformity in group cultures does not make any suitable environment for diversity, and it does not have much room for the people to deviate from created norms, therefore impeding the process of innovation (Brewer and Venaik, 2011).
There are occasions in multinational organizations that call for some of the new policies. Some of these policies include risk to which the business should decide that whether to continue such policies or to start up any other opt out or venture. Whenever the strategists or directors are of less uncertainty avoidance orientation, they tend to follow the deal even when it is risky. On contrary to this, the ones with high certainty avoidance orientation would actually like to avoid the loss and so they will not try to make a deal. While considering the leaders, the ones from high power distance culture, they are authoritative, and this can cause a large number of issues, particularly when these leaders deal with the managers from low power distance culture, who want their leaders to be at the same position as their subordinates are. Team work or group is the main activity which is considered as the most important element in most of the businesses. In the case, when individuals from both collectivist and individualist cultures are brought together and are asked to work as a team, they face a large number of challenges due to the reason that every side would reach up to the problems at hand. For example, while the ones from the individualistic culture would like to implement their own observations no matter what others think, the ones from collectivist culture would want mutuality and collaboration (Dowling, 2008).
Again, when there is a point of working out the long-term goals of companies, observes as to what is the major objective can be different, based on whether the person is feminine or masculine-centered orientation or culture. Therefore, the focus of feminine culture will be holistic approaches; the focus of masculine culture will be emphasizing quantifiable realities, social status, achievement and success. In the global environment, the business have not any other option except for dynamic (change) if they want to be linked with the fast moving times specially in the business. Therefore it is suggested that at an instant the things done by the business should change (Tsui, 2007). The acceptance level of this change is based on the people orientation in the organization. In this situation, those with the long-term orientation would like to adapt to all of the new conditions while the ones with the short-term orientation would maintain the present situation of culture and therefore they would resist the efforts of changing. All of the above problems arose to a point that in any of the conditions that includes human resource like risk taking and team work, leadership, respond to change may arise many cultural issues, particularly in multinational business that are being created through various countries, therefore there are various cultural orientations. The most significant asset of business is human resource with which the success of an organization can be acquired, the cultural problems that are directly in link with the people should not be ignored. It should be stressed that in the cultural diversities event, prosperity can be acquired with the help of effective management of culture problems (Soares, Farhangmehr and Shoham, 2007).
In the entire world, multi-national organizations look at themselves in cultures which are quite different from the cultures of parent country and this is the reason that call for these types of organizations should deal with various orientations of culture. There is influence of handling on the success of these organizations. Because of the reason, that human institutions like business cannot even exist without any culture, it is defined as “how-we-do-it-here” process. Therefore, it is significant that all of the problems related to the culture should be given proper attention, as if these firms need prosperity in a competitive business environment.
The organizational culture of “acquire” or the acquiring firm (in case of acquisition and mergers) or of subsidiary or parent company (in case of multinational business), as admitted by the related parties, it can be institutionalized as corporate culture which should be followed by everyone. While avoiding all of such considerations and through targeting on potential financial acquirements which are more likely to be oil that drives the investment wheel both at international and domestic levels can spell the business doom with some repercussions. Another aspect to handle and to address such challenges that are posed by cultural problems onto the organization is “Development of new culture”. This can be seem as the more extreme type of making organizational culture through which procedures, rules and systems, along with the norms are developed. While purchasing this aspect, there is no compulsion to pay attention to the present cultures but all of the efforts should be made in creating a culture with strategic intent of making multinational business enough able to get its long term objectives and goals. It is worth focusing on the major objective of organizational culture and to make sure that there is a uniform and agreed way of doing things in firms, which will result in decreasing the conflicts because of the cultural differences. Therefore planned interventional should be placed properly in order to make sure that where deviations from the norms, some better actions are should be taken as soon as possible. Such considerations cannot be ignored by multi-national organizations if they want to operate successfully.
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