In Order For MNCS To Develop Commerce Essay

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In order for MNCs to develop and manage its operations internationally implies developing and managing people who can think, lead, and act from an international perspective, and not one, two, or a dozen international specialists, but a multitude of executives, managers, and professionals are needed to form the core of a global agency and they must possess a global mindset as well as global skills, as globalization of business implies that firms have created international, multinational or global companies (Hamel et al 1989). As a result, multinational companies (MNCs) now have the chance to stay competitive. However, the resultant workforces are diverse in interests, backgrounds, training, and nationalities (De la Torre, 1990). The mosaic of cultural diversity presents a major challenge both in global and domestic work settings, as there is growing recognition that the skills and core competencies required by the home company will also be required in the host company (Tung, 2008).

The process of internalisation or globalisation by MNCs requires a progressive transformation of views about the role and tools of human resource management practices. The main argument here is that human resource management can and should make a meaningful contribution to the competitive strategy of MNCs global initiatives. This paper attempts to review the importance of understanding dimensions and main issues in cross culture management in IHR and the needs to apply these importance of culture in the management of MNCs in order for MNCs to achieve its desired competitive advantage in global economy.

A comprehensive definition of culture was first formulated in (1871) by British anthropologist Sir Eward Burnett Taylor (Haviland, 1994, p.304) cited in kokt (2003) which states that culture is that complex whole which includes knowledge, belief, art, law, moral, custom and other capabilities and habits acquired by man as a member of society, 'the collective programming of the mind which distinguishes the members of one human group from another. Hofstede in his study (1980) cited in Browaeys and Price (2008) also identified culture as the interactive aggregate of common characteristics that influences a group of people's response to its environment.

Culture influences are influenced by the total range of activities and ideas of people which MNCs must take into account in managing people as, Weaver (1998) describes some common conceptions such as "good taste", "art or music", or "something that people in exotic foreign lands had". However, culture in the context of international assignments relates to how people perceive the world and the influence this perception has on their actions. It is culture on the interpersonal level. Different cultures can perceive the same thing differently, which leads to miscommunication and misunderstanding when one crosses into another culture which is not their own.

Weaver (1998) cited in Liu and Lee (2008) defines culture again from an interpersonal perspective, as a system of values and beliefs which we share with others, all of which gives us a sense of belonging or identity. He states that it can be discussed in terms of typical ways in which people in a society, group or organization behave, communicate, think or perceive reality. Each culture has differing value and belief systems, which affect how people perceive reality and their following reactions to situations.

However, for effective and efficient management of MNCs, all dimension of HRM must be duly considered as Storey, (1995) has identified it as a distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable work force, using an integrated array of cultural, structural and personnel techniques. Changes in the contemporary global economy highlight many of the emerging challenges facing the management of human resource in MNCs and for MNCs to remain successful in this era of global age, they must commit their activities to trans-nationalism, internalize strategies that are likely to succeed in global competition.

Furthermore, implementing successful global strategies requires careful attention to the paradoxes created in the management of human resources and the maintenance of multifaceted organizational cultures, which mean that for MNCs to be successful in it management activities in this 21st century, they must adapt a global mind-set and transforms leadership to be globally competitive. MNCs and their managers must learn to manage such transformations or they will inevitably lose their competitive edge and organisational strategic direction (Barlett and Ghoshal, 1990), Therefore in the management of MNCs activities managers must have the capacity to turn threats or stumbling blocks into opportunities; to motivate people to excel, not just to survive; to accelerate innovations in competitions; and to operate globally through cross-cultural problem solving and team building (Torrington, 1994; Scholes et al. 2008 ).

Furthermore, the ability of MNCs to have full understanding and knowledge of the importance of culture in its operations and management style is the key requirement for them to succeed in today's business world as familiar aspects of organizational life such as organizational structure, leadership styles, motivation patterns, training and development models, and the very important concept of human resource management, are culturally relative and, therefore, need to be considered when national boundaries are crossed.

Hence in the management of MNCs it is imperative that managers in multinationals companies must take into consideration the level of difference between cultures, which according to Hofstede (1993) in his cultural model (dimensions of cultures) has identified that dimensions of culture has many consequences for management practices. For instance, both power distance and individualism affect the type of leadership most likely to be effective in a country e.g. United Kingdom and the USA. Whereas, in collectivist cultures (e.g. India, Africa, China) leadership respect and encourage employees' group loyalty; incentives are given collectively, and their distribution are left up to the group. In individualist cultures, individuals tend to be more mobile, and incentives will be given to individuals.

Hofstede (1993), has shown that in countries with lower power distance scores, there is considerable acceptance of leadership styles and management models that are even more participative than those that presently exist.

Hofstedes (1980) empiriccally drived theory on cultural values and they relate to organisational life instituted a conceptual frame work and methodology which has provided a standard for subsquent studies. Although this has attracted some criticism over the years,and has been at least partially superceded, it has gone a long way in guarding against approach pure description of a national culture


The interesting aspects managers face operating in strange societies is that they have to work with people who have different cultural heritage. As a matter of fact cultural differencies should be taken into account when communicating and interacting with people across nations and cross cultures in emerging countries eg, Brazil, India and Africa.

Multinational companies are supra nationals in operations and strategy, people within them do not necessarily share the same cultural values and views on people and life.

Managers must build a frame work approach on the level of acculturation in the foreign assignment may well determine the level of success of expatriates. Mendenhall and oddou (1985) point at the four dimensions that relate to successful expatriate acculturation:

Self-oriented dimensions, managers are expected to exhibits managerial skills, technical ability, cultural empathy, adaptability and flexibility also further maintain diplomatic skills, language aptitude, personal motives, emotional stability and maturity and adaptability of family outline by Dowling and Schuler(1990).

The dimensions identified by mendenhall and oddou (1985) and re variables of Tung (1981) may be part of a cultural general approach to development that equips managers and key staff to be flexible managing across cultures.



The field of international human resource according to Dowling et al (1993) has been characterised by three broad approaches which are cross-cultural, comparative industrial relation and the third approach which seek to focus on multinational firms.

The multinational approach of the study of IHRM according to the work of Touron (2008) investigates clearly which activities of HRM changes when HRM goes international. As a result of increase globalisation process during the past decades, developments of multinational companies have been on the increase and their activities are expanding across countries and continents. One of the major debate or issues facing this approach of the study of IHRM has always been to find the right balance between the local autonomy between subsidiaries and the control of the corporate headquarters (Banai, 1999; Tourn, 2008).

According to the scholars (Schuler et al., 2002; Sparrow, P. and Wu, P., 1998; Perlmutter and Heenan, 1999) multinational corporation management strategies have been categorise into ethnocentric, polycentric, region-centric and geocentric. The ethnocentric nature associated with multinational approach have been known to have influence on the IHR polices and practice as these are influenced by the company structure and strategy, it institutional and cultural environment, national and country of origin. Multinational companies always maximize their parent company control in order to incorporate subsidiaries at the expense of local responsiveness. Furthermore, it has been a known fact that as foreign subsidiaries is growing; they are always resource independent and are less dependent upon parent company (Tung, 1982).

This brings about parent company introducing expatriate to handle key positions in their overseas establishment with the sole aim of encouraging their corporate culture worldwide. There has also been query about the effectiveness and efficiency of the ethnocentric method which is associated with multinational approach as scholars (Tung, 1982; Ondrack 1985) have reviewed that it tends to make multinationals companies parochial, as it has been known that when position in their foreign subsidiaries are not staffed by expatriate, they will be staffed either by third country or host country which is always beneficial as host country employee's are already familiar with the culture of the country, in terms of norm, value and resources thereby making operations of subsidiaries easier, unlike relocation cost associated with bringing expatriate ( Stroh and Caligiuri, 1995). However, with the polycentric strategy Multinational Corporation uses more of local responsiveness with little corporate integration in empowering the host-nationals employee's in the management of the foreign subsidiaries with little or no use of expatriate involvement.

More so, from the regiocentric strategy host- country nationals and third county-nationals are involved in terms of been recruited, selected and developed on a regional basis. It ensures that there is always presence of national boundary such as the European Economic Community or the Middle East in regions, but may still be limited in headquarters (Stroh and Caligiuri, 1995).


A second approach was develop from comparative industrial relations, and various human resource management literature sees it as the approach that seek to describe, compare and analyse human resource management system in various countries (Brewster et al., 2007) cited in CIPD report (2002).

Boxall (1995) also identifies it to explore the extent to which HRM differs between different countries or occasionally between different area within a country or different regions of the world. There has been an ongoing debate about the comparative approach study of IHRM in terms of it convergence and divergence philosophy that is associated with it. (Brewster and Larsen 2000) cited in CIPD report (2002).

Increasing similarity in organisation and managerial practice around the globe is typically associated with convergence philosophy, which tends to focus on contextual contingencies (McGaurghey and De Cieri, 1999). The convergence philosophy associated with comparative approach to the study of IHR centres on the argument that the common requirement of management or a common logic of industrialism disregards the importance of cultural differences. In this regards convergence philosophy only tends to compare like for like and similarities regardless of culture differences.

However, the convergence hypothesis lend more support to the divergence hypothesis, in which organisation are believed to maintain their culturally based dissimilarities (Abegglen, 1957; Adler et al., 1986; Lincoln et al., 1978) cited in McGaurghey and De Cieri, 1999). In contrast to the convergence philosophy, the divergence philosophy postulate that the form and content of functional specialization that develops with growth would vary according to culture. Hofstede and Bond (1998) assessment of co-ordinating mechanism in organisations of different countries illustrates the divergence philosophy. Comparative approach to the IHR has also been identified to be associated with parochialism which means it seems to be largely insulated from earlier work on and critiques of cross-national and international management/organisation literature, as reviewed by Roberts,1970; Peng et al., 1991; Adler, 1992; Bartholomew 1997) cited in Montgomery et al., (1999). As a consequence of this, it has been suggested that only small progress has been made and that most studies examining the management of human resource from the comparative approach perspective have failed to draw on a number of highly relevant debates and developments in related areas for instance debates concerning the definition of culture and cross-national methodology. It has also be noted that for progress to be made comparative to the study of IHRM need to move away from a parochialism inherent within Anglo-America research towards a more plural perspective which is based on openness to other perspective (Boyacigiller and Adler, 1991; Redding, 1994, Clark, 1996) cited in Montgomery et al., (1999).


An early research studies into the field of international human resource has emphasised that the third approach which is, cross-cultural management approach is involve with the examination of human behaviour within organisations from an international perspective (Adler, et al. 1986; Hazing and Ruysseveldt, 2004). The approach has also been identified by Brewster et al., (2007) cited in Keating and Thompson (2004) to deal mainly on the cultural differences between nations, differences in national value and attitude.

This approach further emphasised that an awareness of cultural difference is therefore an essential part of international human resource manager's brief, as the normal human resource activities such as recruitment and selection, training and development, reward and performance appraisal, may all be affected by cultural values and practices in the respective host countries. As a result of this, according to Stoeberl et al (2007) cited in Murphy et al (2009) identified that the approach always calls for cross-cultural training as it can ease the intensity of culture shock of employees, by providing foreign employee or expatriate with the cultural behaviour norms or laws that will facilitate their immediate adjustment. However, it has also become a well known fact that the intensity of the culture shock is different for each individual depending on his/her home culture, individual differences and nature of work and immediate family situation as Oberg(1960) cited in Murphy et al (2009) has identified that the ability of foreign employee or expatriate to understand and master a new culture is an important determinant of their success, this therefore implies that great care must be taken when organisations are deciding whether or not to adopt standardised HR policies and practices throughout the world. Although according to the research study of Sparrow and Pei-Chuan Wu (1998) methodological problems has always been an issue with the three approaches to the study of IHRM as various literature on the topic does not give a clear understanding, meaning or distinction between cross-cultural management and cross- national management.

More so, researchers in comparative HRM also reviewed that national difference do not connect with culture difference and that culture has been known to be a difficult concept to define for decades now. However, cross-cultural management have also been identified to focus more on similarities rather than difference, which makes it tend to or try to show that a particular theory developed in one cultural environment will also applies in one or more different cultural environments ( Brewster and Hegewisch, 1994; Easterby-Smith et al., 1995).

The power of Trampenaars (1993) contribution lies in its applied focus whereby existing or future international managers are presented with a clearly defined framework within which to consider their own actual or anticipated work experiences.

Hofstede (2001) who has claim that Trampenaars dimensions are based on literature emanating from the USA in 1950s,the critical comments is that his dimensions are rooted in a particular cultural context which cast doubt on their applicability in a worldwide model.

Hofsted (2002) has also questioned the seven dimensions identified by Trampeenars are self standing or subsets of one Dimensions, the validity of Hofstade reservation it is apparent that both Hofsted, Trampenaars and hampden-Turners certainly expected that in awareness of their approach would result in practical terms believing that they could help managers structure their real life experiences and give them insight into frequently experience difficulties might occur when dealing with people from diverse culture.

All the three writers are within same methodological paradigm, Hofsted further criticise in contrast to trampenaas work did not establish a correlation between findings at the individual organisational and country wide levels

Koen (2005),in comparing the work of Trompenaars with both of Hofsted and Schwarz submits the conclusion that the work of the first named is over all less academically rigorous, in which largely comprises international managers.

Kluckhohn and Strodbeck (1961) these writers were influencial in identifying core elements of culture more generally which they consider arose from responses and ultimately solutions to eternal and universal problems face by all societies these anthropologist concluded that the problem of how to relate to others is resolved according to either a preference for hierarchical relations in which the emphasis is on consensus among people who are seen as largely equal their work can be found in cross-cultural management as the building blocks on which contemporary models of cross-cultural differences at work have been constructed Hills(2002) examine their model in greater detail and takes a perspective grounded in the discipline of psychology and no overview of cross cultural aspects of business can be complete without a thorough appreciation of their groundbreaking work.


South Africa has had a history of migrant workers so it may be help-full to use the country as a case study to explore cross-cultural issues for international human resource managers. south Africa as an emerging state is not devoid of the common challenges face by other emerging African countries which require appropriate macro-economic policies and the political will to address poverty, high unemployment rate and a serious lack of human resource development the redress of past unfair discrimination by colonial regimes and apartheid remain a key priority and still un-finish business. The second challenge is that competitiveness in both domestic and global markets through high performance and productivity improvement.

Africa has world class firms but not enough Human resource management and development to provide the key for unlocking africas human potential.

Cross-cultural variation in the labour market and skills supply for addressing market needs is an important consideration by MNCs managers in decisions regarding foreign direct investment (FDI). South Africa and its regional economy have an oversupply of manual, relatively unskilled workers and managerial skills.

Employment relations in South Africa have undergone major changes over the past two decades(Rajah,2000).An adversarial race based dualistic system evolved following labour legislation in 1924 which led to trade union rights which excluded Africans. Finding a productive balance between equity and work place justice imperatives on the other hand, and HR and employment relations strategies enhancing competitiveness on the other, is a vital challenge for IHR managers, SA is a society where affirmative actions to overcome past discrimination is accepted as an appropriate method to achieve equity. Decisions based on race or gender, unless they related to a genuine skills or occupational requirements, could found to be arbitrary and unfair labour practices Van Vuuren (1992).

The institutional environment remains a powerful influence on HRM in south Africa, mitigated to an extent by the competitive forces of global competition.

(CIPD, 2002) argued that individuals working in an international context need to be competent in interpersonal skills influencing and negotiating skills, analytical and conceptual abilities strategic thinking that will need a broader base of knowledge in such areas as

International business

International finance

International labour legislation

Local labour markets

Cultural differences

International compensation and benefits


The art of managing people and having sound knowledge of the importance of culture to organizations has been perceived as an important means for organizations to gain competitive advantage (Sparrow et al., 2004). While this is likely due to greater access organizations have to funds and technology, it is also likely due to a growing recognition that people do make a difference in terms of their cultural background. Thus, this relatively under-utilized resource called 'people' is likely to receive greater attention from organizations throughout this decade, at least for firms seeking to be effective and efficient in this era of highly competitive and turbulent business environments.

International human resource, focuses on the management of human resource on global perspective, an organisation's strategy will depend strongly on the approach it takes, as the approaches to international human resource management has been known to have great influence on the implementation of the major international human resource management function of recruitment and selection, development and training, performance evaluation, remuneration and benefit and labour relations., it is therefore imperative that the challenges of HRM professionals should be to understand the relationship between the drivers of IHRM and strike a balance of all stakeholders interest by integrating all of the three approaches of the study of IHRM with a possibility of creating a universal best practice of HR standards.

Although the under-utilized resource called people in other to receive greater attention is likely to vary across organizations, though it is not expected to vary widely concerning several key themes. These include the following, a greater emphasis on empowerment, equality and diversity management, flexibility in job design and assessment, flatter organizational structures, customer-based measures of performance and related remuneration schemes, flexibility in staffing decisions, training decisions and exiting decisions, and greater communication of the objectives and goals of the firm to all employees (Sparrow et al., 2004).

On a final note it will be worthwhile to state clearly that managing MNCs involves managing employees who are from different cultural background bring along with them to the organization education and skills, attitude towards work and organization with a general expectation about their role and responsibility in the organization, managers in MNCs should ensure that they have a good understanding of how to manage the interactions of employees drawn from diverse cultural backgrounds so as to achieve their organizational aim and object through their effective management of human resource.