Culture: Source of Conflict or Synergy

‘Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster.’ (Hofstede) Do you agree? Discuss how cultural differences can affect international business. Evaluate several strategies that multinationals may use to manage effectively and make the best of cultural differences.

Introduction

Cultural diversity can be defined as “an individual’s affinity or identification with a particular cultural dimension which may include, but is not limited to, the following: race, ethnicity, nationality, colour” (Hopkins, 1997, p. 5) . As this definition indicates, cultural dimension may include race, ethnicity, nationality and colour, but it is not limited to these concepts. Therefore, the idea of culture is very subjective in nature and is open to interpretations and variations in how it is evidenced in the interpersonal relations between the members of an organisation. The one static factor is that cultural diversity relates to individual’s affinity or identification with any cultural dimension. This brings into play complexities in interpersonal relations between the members of an organisation. Perhaps, Professor Hofstede’s statement that “Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster” is to be seen in the context of the complexity that these differences bring to the society and to organisations. However, there may be a more optimistic way to look at cultural differences. These differences may actually become the source of better decision making due to the availability of cross cultural ideas and experiences, which add a richness to the organization.

Culture: Meaning, concepts, problems

Culture is a very strong influence in an individual’s life and it permeates all aspects of life, including the professional spaces that the individual may be involved in. Cultural misunderstandings can and do happen. This is reflected by the misunderstanding surrounding the Geely’s chairman, Li Shufu. In 2010, Geely bought out the struggling Scandinavian car maker Volvo. Shufu made a statement on Scandinavian television that he thought the inside of the Volvo was “too Scandinavian”. These comments were not appreciated in the Scandinavian press, but Volvo staff explained these comments away as ‘cultural differences’, but Geely clarified that what Shufu meant was that the Volvo brand as well as the management was too Swedish and linguistic barriers with the Chinese Geely, led sometimes to ‘cultural differences’ (Vance & Paik, 2015, p. 46) .

International Business: Can cultural differences impede business?

Crowley-Henry (2005) conducted a qualitative study with twenty in-depth interviews of international managers from multinational organisations. Interestingly, the findings of the study indicate that all respondents were positive about the learning experience that came with living and working in a different country, and experiencing a new culture (Crowley-Henry, 2005) . Another study by He and Liu (2010) reflects on the barriers of communication that are derived from the national culture’s influence on the work place and behaviors of people with different identity (He & Liu, 2010) . Using a case study of a Swedish parent company and its subsidiary in China, the study shows how differing cultural perspectives, such as consulting superiors on every issue due to the respect accorded to them (China) and independent thinking (Sweden), can sometimes lead to undesired outcomes in terms of decision making (He & Liu, 2010) .

The Multinational experience in different cultural settings

Multinational companies by their very definition as multinationals, face certain challenges that more localised companies would not face. MNCs work and are profitable by forming strategic partnerships that are not limited to national borders. In that sense, MNCs are global in nature. Cultural diversity is more prevalent in the MNCs and therefore, the complexities that come with this diversity are also more common. Culture is in fact a central and essential facet for effectively managing a global workplace. National culture is pervasive in the MNC setup, and therefore, culture exudes a strong influence on MNCs (Vance & Paik, 2015) .

Hofstede has identified a strong equaliser in the development of ‘organisational culture’ as opposed to national culture. Hofstede says that organisational culture relates to the employees’ conscious identification with the common beliefs, values and priorities of the organisation (Hofstede, 2009) .

Cross cultural management contains three key aspects: communication system, management style and staff behaviour (He & Liu, 2010) . With respect to communication system, two influential theories in cross cultural context are: high context and low context communication theories. In the former, “people interdepend on each other” (He & Liu, 2010, p. 7) . In the latter, there is lesser interdependence and more individuality. The problem with the high context communication cultures is that people coming from the low context communication cultures would not find it easy to adapt to its norms, whereas in the converse case, people coming from high context communication culture would find it easier to adapt in the low context. In MNCs, which operate in both high as well as low context cultures, with staff that frequently interacts across all cultural spectrum, cross cultural management becomes challenging.

Bibliography

• Hopkins, W., 1997. Thousand Oaks, Ca, London, New Delhi: Sage.
• Vance, C. M. & Paik, Y., 2015. Managing a Global Workforce By. New York: Routledge.
• Hofstede, G., 2009. Research on Cultures: How to use it in Training. European Journal of Cross Cultural Competence and Management, 1(1), pp. 14-21.
• Crowley-Henry, M., 2005. Cultural diversity in multinational organisations. Galway, Irish Academy of Management Conference.
• He, R. & Liu, J., 2010. Barriers of Cross Cultural Communication in Multinational Firms --- A Case Study of Swedish Company and its Subsidiary in China. [Online] Available at: http://www.diva-portal.org/smash/get/diva2:344618/FULLTEXT01.pdf [Accessed 27 October 2016].