Cross Cultural Management

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Chapter 2: Literature Review

2.1 Cross Cultural Management

Cross-culture is a phenomenon that exists since the conquest of market globalization has started: companies expand out of the borders of their country to do business, but keep their culture and principles with them when they enter to another. Even if cultures and customs seem to be similar, they are not the same. Culture is different by its forms, such as language, behaviour, cuisine and dressing; and by its contents that are invisible: beliefs, value systems and social norms. (McClelland 1973)

Management is a concept easy to define: it is called the process of achieving organizational goals by effective planning, organizing, directing, coordinating, and controlling of resources owned by the organization in a particular environment. Leaders, managers, especially the human resource managers working in a cross-cultural environment have to understand the differences and similarities of the company’s own culture and the other nation’s customs so that the conflicts generated by background can be eliminated easily.

Cross-cultural management is not a new concept; it is originated from the ancient international trade and business exchanges. The Egyptians, Phoenicians and Greeks began trading overseas, and learned about business methods in different countries. During the 14th-16th century, the Danish, British, and other European merchants had established a trade union; so they had prepared to deal with people from other cultural backgrounds: could understand their language, knew their habits and could successfully avoid confrontation in

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order to achieve smooth and profitable transactions. Businesses and activities like these are the early forms of cross-cultural management, where the merchants and their personal experiences were the only source of information available. The reason why scholars started studying the field of cross-cultural management is lying at the negative experiences of the international trade-concerned giant corporations. Experts of global business activities have failed their theories of ideal management practices when they thought that for international success it is enough to follow the pattern, and just copy the techniques that were proven to work in their own countries. Meanwhile, the lack of cultural knowledge showed that good local results and a prosperous management plan do not guarantee the same revenue numbers in a totally different country. Experiences and various perspectives of other cultures were the basis of further explorations and research which resulted a new study field we call now cross-cultural management. (Wang 2009). The new field was based on theories and

researches from the following areas: international business, organizational behaviour, human resource, cross cultural psychology and even anthropology.

International business field is concerned with the issues facing international

companies and governments in dealing with all types of cross-border transactions. It consists of those activities private and public enterprises that involve the movement across national boundaries of goods and services, resources, knowledge or skills. International business resulted international managers, or in a bigger scale, global managers. By definition Global manager is someone who works with or through people across national boundaries to accomplish global corporate objectives. (Steers, Sanchez-Runde and Nardon 2011) By their different corporate lifestyle, we can distinguish three types of global managers:

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 Expatries: Managers who has long term assignment which involves relocation of the parent company to various countries to oversee the company operations or hired to bring special expertise to the foreign firm. They face-to-face meet colleagues and partners from the different cultures. For successful

cooperation, they need to deeply understand the culture and the culture-business relationship. Learning the local language is highly recommended, to better understand local issues – but at the same time they have to avoid to overemphasizes the regional tasks and goals and keep the overall corporate objectives in mind.

 Frequent Flyers: Managers with particular expertise who gets short time assignments to fly in and plan, implement or control a specific operation.

Often they deal simultaneously with partners from multiple culture, so

learning one language my no longer be efficient. The balance between face-to face and virtual communication and have a moderate understanding of the cultural differences and dynamics in general and culture-business relationship around the globe.

 Virtual managers: They perform most of their task and responsibilities via information networks and digital technologies. They often don’t meet with the people they work with and have only a modest or worst case no

understanding of cultural differences and variations of business practices.

Organizational behaviour studies, which is the he study of human behaviour in organizational settings, the interface between human behaviour and the organization, and the

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organization itself (Moorhead andGriffin,1995), inspired the how can be the cross cultural management be divided into three major categories regarding to this: macro, concept and micro levels. (Chen 2006)

 Multinational enterprises possess two different cultures from two different countries, and they can be influenced by unfavourable factors of cross-cultural behaviours. This is a cross-culture macro level.

 The concept level applies mostly in mergers, acquisitions, and corporate restructuring policies. When two companies decide to unify, their cultural backgrounds and their own regulations such as employee recruitment system or group work style, becomes a subject of negotiation, for the best possible future cooperation.

 Individual cultural differences. This is basically conflict-management in micro level: old and young, man and woman, positions, hierarchy, communication etc. the problems need to be faced every day.

Change and transformation are the key points of cross-cultural human resource management. In different stages of international operations, human resource management has different tasks and goals. During the initial and developing stage of internationalization, there are two types of strategies implemented: the first one is called human resource

management under parent company strategies. Here, the multinational enterprises focus on directing personal assignments sent by the headquarters, for example, the recruitment, job analysis, work performance assessments, and salaries management are set for the expatriates from the parent company or a third party. The second one is called human resource

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management in multi-nations strategies. In this kind of strategy, the focus is on the development of multi-national markets and pays more attention to the local or destination countries’ management. In the following, globalization stage, multinational enterprises implement global strategies of human resource management, where international recruitment and personnel management are the main tasks. (Xu, 2006)

In the course of international operations, characteristics of the company’s management and the attitude of its staff forms two important features: diversity and transforming. In the study of cross-cultural management, diversity refers to the variety of national cultures in the operating environment of multinational enterprises. From the human resource manager’s perspective, internationalization of an enterprise, or just an office is a process that mixes single, independent organizational cultures into a multicultural

environment. As the objects of this process have different backgrounds and different cultural features, the mission of cross-cultural management is also the diversification of the methods and contents used by the manager.

It is very important for managers of multinational companies to recognize the role of culture and its influence on the employees who work in foreign organizations. With the learning from the cross cultural psychology, one can understand and try to gain more insights of people’s motivations to work, ethics in the workplace, leadership styles and the employees’ ability of learning in different societies under different conditions, that will be profitable for both the company and the individuals. In other words, if a manager has a good notion about the factors and leading methods that effectively motivate the employees, then he is able to move one big step closer to making them constant outstanding performance.

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Literally speaking, the manager and subordinates need to be “in the same page” to have a fruitful cooperation, and for this, they must be clear about the cultural variations and the given nation’s character.

Effective communication and mutual understanding is crucial in group work: it makes people motivated about their job, helps them to form a sense of belonging, and enhances the employees’ loyalty to the company. But the channels of communication are closely related to culture and language, thus influenced by value orientations, habits, behaviours – all the things different in every country and cultural region.

For example, some countries are more hierarchical than others, and in addition, there could be variations even within a region due to corporate ethics and regulations. There is a question here worth to ask: why is not yet developed a body of practical insights in terms of utilizing scientific knowledge in creating innovative techniques that are made to be suitable for specific industrial growth, organizational effectiveness and individual satisfaction?

(Bhagat, Triandis and McDevitt 2012) This would require a useful data bank to summarize all those science-based findings containing country-specific, industry-related information;

which could be used as a basis of research about the different fields, in order to make manager’s work more effective, and create an enjoyable working environment that also fits the needs of the corporation and industrial development. This body should have variations depending on the country/region/industry monitored, and there could be various columns regarding the major factors that are possibly responsible for differences, such as geography, climate, language, culture, religion, historical background and so on.

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From anthropologies’ studies we can understand that history can also affect a certain country or area, in terms of cultural variations and the ability to change, and the welcoming or rather refusing attitude towards any foreign impact – in this case in the form of an international company. Since the 15th century, Islam culture has been the most influential part of life in the Middle-Eastern Arabic countries. Despite the fact that now 20 percent of the world’s population belongs to this cultural region, it is a closed society and has not seen any considerable amount of technological innovation in recent years – in contrary to the 12th century, when Arabic, as the language of science, inherited the ancient Greek philosopher’s work and then preserved the new discoveries of algebra and medicine to the rest of the world.

(Bhagat, Triandis and McDevitt 2012) On the other hand, some countries with different socio-political and cultural background are very effective in innovation and accepting various, new technologies and ideas. As living in a globalized world, the constant need of information, development and further research make a major portion of a corporation’s life, and the most important conditions of survival in a fierce competition. For example,

Scandinavian countries have developed a successful model of modern social system, which has turned into a supportive and also profitable environment for various organizations and scientific innovations. In this case, the low level of population was not a problem in reaching goals, but dealing with an economy in a relatively poor status might not be this easy.

Recessions and the constant lack of resources are usually become the seedbed of talented workforce immigrations. On the other side, this flow of talented people made other, more prepared countries successful: in America, the immigrant labours have long been the underpinning of the country’s economic success. (Han 2012)

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