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How does culture affect international business

The difference in various management styles and operational elements has caused delays in synergising and sometimes catastrophic losses especially in firms conducting business in markets outside their geographical origin. Culture has been cited as one of the main reasons which could either help the new company settle well in the region or result in losses like internal conflicts etc.

Culture is the collective programming of the human mind that distinguishes the members of one human group from those of another. Culture in this sense is a system of collectively held values (Geert Hofstede). Culture is the deeper level of basic assumptions and beliefs that are shared by members of an organisation that operate unconsciously and define in a basic ‘taken for granted’ fashion an organization's view of its self and its environment (Edgar Schein).

Culture is very much about groups, and a basic need of groups is to be able to communicate, both at a superficial level (for which ordinary language largely suffices) and also at a deeper level of meaning (Brown, 1995). At this deeper level, words, actions and things can become imbued with special and specific meaning for the group, for example:

A group-specific jargon and language, for example derogatory descriptors of outsiders.

Rituals for greetings, meetings, punishments and other group processes.

Artwork and artefacts that symbolize and remind the group of their history.

People and roles that help share

The definition of culture entails subordinate social structures. Furthermore, as is often claimed by anthropologists, culture can be seen as super ordinate to social structure in those cultural beliefs shape and integrate the expectations that pattern the relationships among a social structure’s constituent statuses and roles (Ember & Ember, 1973). These definitions presuppose that culture and social structure, although causally and ontologically related, represent different levels of reality. The concept of levels of reality implies that phenomena are arranged hierarchically with respect to levels of integration, differentiation, and organizational complexity and those higher levels are more than simple quantitative accretions. Rather, levels represent qualitative changes in the complexity of integration so that each new level has its own properties and principles. Nevertheless, subordinate and super ordinate levels of phenomena can affect each other.

Thus, just as the characteristics of the super ordinate cultural level may affect the characteristics of the subordinate social-structural level, the characteristics of the component social-structural level can affect the super ordinate cultural level. More generally, causal paths can go both from and to biological, psychological, social-structural and cultural levels of phenomena. Given the intricacy inherent in such a pattern of possible causal pathways, what instruments can we use to cut the Gordian knot of causal interconnections among cultural, social-structural, and psychological strands of phenomena?

Some of the methodologies available to scientists studying more micro level phenomena are impractical for cross-national sociological and social psychological comparisons (for a fuller discussion of how the levels of phenomena with which a science deals can affect its canons of proof, see Schooler 1994). For example, we generally cannot randomly assign countries to different experimental conditions and then measure the effects of these conditions. In some circumstances, however, we can develop theoretical or empirical justifications that sufficiently constrain the number and pattern of causal connections among the relevant phenomena so that we can then generate structural equation models to test the possibility of reciprocal effects among the different levels of phenomena (Ember & Ember, 1973). Many of the cross-national comparisons we describe of the causal relationships between social-structurally determined occupational conditions and psychological functioning are based on such analyses (Pearlin & Kohn, 1966). The existence of a temporal distinction in the relative speed of the effects of social structure and personality on each other is suggested by the evidence from this research program that, although the effects of social-structurally determined occupational conditions on psychological functioning are generally contemporaneous, the effect of psychological functioning on occupational conditions is generally lagged. These findings imply that, although there is a reciprocal effect between the two, psychological functioning is more quickly affected by occupational conditions than the reverse.

The ensuing cultural conservatism often has the result that ideologies and customs formed under an earlier set of conditions continue to affect people’s behaviors in later, but quite different conditions. Such a cultural time lag may continue unless or until the dysfunctional repercussions of the resulting behavior lead to either modification of the relevant cultural elements or extinction of the relevant statuses and roles (Chomsky & Lightfoot, 1990). Evidence suggests, for example, the persistence over generations of lagged effects on an ethnic group’s culture of historical conditions restricting the individual’s autonomy. Americans from ethnic groups with a more recent history of serfdom exhibit the non-self-directed orientation and lack of intellectual flexibility characteristic of American men working under conditions limiting the individuals’ opportunity for self-direction (Schooler 1976).

If we accept that a society’s history affects its social structure through its lagged effect on that society’s culturally normative role expectations, the question remains, what besides historically determined culture affects a society’s social structure? At least part of the answer stems from the above-mentioned postulate of stability in the absence of some force for change (Schooler 1994). To the extent that a society’s historically derived cultural norms need to have been supplemented or modified to account for its continued existence, non historical elements have to have been incorporated into an existing society’s norms and role expectations. Thus, at a social-structural level, the continued existence of a society implies that its roles and statuses were so structured and modified that its modes of production, distribution, and status reproduction were functional enough for it to continue (Caudill, 1973).

The above theoretical review provides evidence of culture impacting communication skills and personality.

2. Literature review

According to Maslow human behaviour is motivated by a set of basic needs. Which needs are most active in driving behaviour depends on two principles: (1) a need which is satisfied is no longer active: the higher the satisfaction, the less the activity (the exception to this rule is the need for self-actualization (2) needs can be ordered in a hierarchy, such that from all the non-satisfied needs, the one which is lowest in the hierarchy will be the most active (Maslow, 1970). A lower need is more "urgent" in the sense that it must be satisfied before a higher need can take over control. The lowest level of needs may be called physiological needs. These are needs of the body as a physiological system which tries to maintain homeostasis (Maslow, 1970). They consist of the need to breath air, hunger, thirst, avoidance of extreme heat and cold, etc. These needs are such that if they are not satisfied the organism dies. If the threat of dying because of perturbation of the physiological equilibrium has vanished, the organism can direct its attention to more indirect threats, such as the danger of being caught by a predator, and try to avoid them (Maslow, 1970). This corresponds to the second need level: the need for safety. Once safety and physiological needs are met, higher, more typically "human" needs come to the foreground, in the first place the need for love and belonging (Maslow, 1970). This is the basic social or affiliation motive, which drives people to seek contact with others and to build satisfying relations with them. Satisfaction of belongingness needs triggers the emergence of the esteem need (Maslow, 1970). In this stage of need gratification, persons also want to be esteemed, by the people they are in contact with, as well as by themselves: they want to know that they are capable of achievement and success (Maslow, 1970).

Employee relations with other people, society and culture are characterized first of all by their autonomy (Maslow, 1970). They do not really need other people, and they make their decisions for themselves, without having to rely on the opinions of others, or on the rules, conventions and values imposed by society (Maslow, 1970). They like solitude and detachment, and have a need for privacy and independence. Their world view is generally independent of the particular culture or society in which they live, and they pay little attention to the social conventions, though they will superficially respect them if transgressing the rules would bring about needless conflicts (Maslow, 1970). The most widely accepted explanations of motivation have been propounded by Victor Vroom. His theory is commonly known as expectancy theory. The theory argues that the strength of a tendency to act in a specific way depends on the strength of an expectation that the act will be followed by a given outcome and on the attractiveness of that outcome to the individual to make this simple, expectancy theory says that an employee can be motivated to perform better when their is a belief that the better performance will lead to good performance appraisal and that this shall result into realization of personal goal in form of some reward.

Hofstede developed the original four dimensions of culture while working for IBM Corporation between 1967 and 1973. His factor-analyzed over 116,000 responses to a survey instrument from 66 countries, resulting in the four dimensions:

uncertainty avoidance,

power distance,

masculinity/femininity, and

individualism/collectivism.

Hofstede’s work represents the largest study attempting to classify nations based on broad value differences. His work still impacts research; in fact, most research on culture uses his work. Even researchers, who disagree with his dimensions and attempt to create other scales, compare their findings to his (e.g., Maznevski et al., (2002)).

Uncertainty avoidance determines the degree to which individuals feel threatened by, and try to avoid, ambiguous situations by establishing more formal rules and rejecting deviant ideas and behaviours. People scoring high on this dimension attempt to avoid uncertainty in all forms. Individuals from cultures scoring high on this dimension – for example, Greece, Portugal, Guatemala, Uruguay, and Belgium (Hofstede, 1980) - would tend to seek ways to reduce uncertainty. The opposite is true of individuals from countries scoring low on this dimension – for example, Singapore, Jamaica, Denmark, Sweden, and Hong Kong (Hofstede, 1980).

Power distance is “a measure of the interpersonal power or influence between (a superior) and (a subordinate) as perceived by the (subordinate)” (Hofstede, 1991, p.71). The PD dimension refers to the extent to which inequality, often as in a hierarchy or other “pecking order,” is seen as significant, salient, and real. Essentially, it is the degree to which individuals accept that their boss enjoys more power than they do. Superiors are seen as correct just because of their position. For cultures scoring high on this dimension – for example, Malaysia, Guatemala, Panama, Philippines, and Mexico (Hofstede, 1980) - employees would be likely to complete a task given by superiors even if they were unsure of its merit or ethical values. The opposite would be true of those countries scoring low on this dimension – for example, Austria, Israel, Denmark, New Zealand, and Ireland (Hofstede, 1980), where employees who do not agree with a directive might more easily question or even refuse to carry it out.

According to Hofstede's (1980; 1984; 1991; 2001) definition, masculinity/feminity is not related to the gender of subjects examined, but is a characteristics of the culture itself. A culture that ranks high on masculinity – for example, Japan, Austria, Venezuela, Italy, and Switzerland -emphasizes and values assertiveness and work goals such as earnings and promotions. On the other hand, cultures that rank low on masculinity (high on femininity) – for example, Sweden, Norway, the Netherlands, Denmark, and Costa Rica - stress personal goals, such as nurturing of others, and creating a friendly, congenial environment. People scoring high on masculinity believe in independent decisions, are more strongly motivated to achieve, and experience higher job stress. They excel by trying their best and are focused on money and other material things. People from countries scoring low on masculinity believe in group decisions, are less motivated to achieve, and suffer lower job stress. In general, people in these countries focus less on money and material objects, but relish their relationships with other people (Hofstede, 1991).

Individualism/Collectivism describes the interactions between individuals and a group. It refers to the extent to which individuals' self-interests are prioritized over the concerns of a group. In cultures that rank low on individualism (high on collectivism) – for example, Guatemala, Ecuador, Panama, Venezuela, and Colombia (Hofstede, 1980) - individuals tend to see themselves as members of a group. Their group is a main source of their identity and the unit to which they owe lifelong loyalty (Hoecklin, 1995). In a high collectivist culture, the last thing one wants to do is stand out from the crowd. The opposite is true for cultures scoring high on individualism (low on collectivism) – for example, the United States, Australia, the United Kingdom, Canada, and the Netherlands. In individualistic cultures, people are more self-oriented; individual initiative is encouraged and people believe in individual decisions.

Bottom line: Hofstede’s four dimensions further validate that communication skills of residence of a particular country depends on the culture i.e. norms, values or philosophies embedded in the society (depending upon individualism/collectivism, power distance, uncertainty or masculine/feminine). Hofstede has further quantified the scores for each country on the basis of the four dimensions which can provide some stereotyping of individual residing in a particular company. Example countries high on power distance scale can have aggressive communication style due to power play in personal or professional life.

3. Analysis

Using Hofstede’s cultural dimensions framework and other theoretical models it can be seen that culture has substantial influence on individual’s communication skills. The negative or positive effect depends upon the countries score on four cultural dimensions and as perceived by home of host nations. In globalisation era mobility of human capital has increased. A person emigrating from high power distance country can have aggressive communication style which can be perceived negative in low power distance like Norway, Sweden or Denmark (egalitarian society). The quantifying of cultural issues as well as the dimensions can sometimes hamper validity of research which has been criticised by many academics. This also remains the same case for various companies entering different regions with an entirely different culture thus creating culture clash possibilities. The employees of the parent firm may be working with newly hired employees in a foreign region either in person or remotely however culture would play a key role if the new development has to take place smoothly.

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