Is Cultural Diversity Relevant Commerce Essay

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This work is written to evaluate the impact of cultural diversity in relation to the workforces in organisations and its necessity in view of the globalisation of the world market and international expansion. It also aims to argue the influence of cultural diversity on organisational workflow, innovation, growth, creative process and competitiveness. This work also aims to examine the available evidence in support of or against the effectiveness of cultural diversity with a view to the positive and negative aspects of it in an organisational structure. This will be supported by an overview of some available research documents and empirical data/evidence. The aim is not to provide an exhaustive analysis or review, but merely to provide an overview of the emerging evidence.


Globalisation has brought different people from all nuke and cranny of the world to work internationally in organisations or multinational businesses. Cultural diversity has gotten to an extent that it cannot be avoided in organisations and it makes emphasis on the fact that we need every part of the world to put heads together to make a business progress, an example to this fact is: in situations where a company needs to start up something new they have to involve expatriates from other parts of the world to come and train them on the processing and production procedure of that business Zakaria (2000); Montagliani and Giacolone (1998), as cited by Seymen (2006). Cultural diversity is an on-going concern in the world and cannot be neglected. based on the the importance of the term cultural diversity to organisations we will be looking at a few examinations on the relevance of diversity, positive and negative impact of cultural diversity, effects of diversity and also how cultural diversity can be managed in innovative places but before we get to the main reason of this study we have to understand the meaning of the term "culture". 

    Blumenthal (1940) proposed that given the ambiguous nature of the term "culture" it is important to first understand the concepts; symbol, idea, personality, functional and relationship, in context of culture. Hofstede (1984) defines culture as "the collective programming of the mind which distinguishes the members of one category of people from another." (Hofstede, 1984, p. 51). According to Aston et al. (2008)  Culture can be explained as the way an individual or people live and behave instinctively to what their environment offers as a norm of practice which could be learnt from their family, religion and schools  highlighting  that Culture as we all know is the way people live and there are ways in which we can be classified to a particular culture, they could be through language, race , country, tradition etc. this are what people belief in and it is been past-on by our ancestors. Explaining further Culture is the combination of intelligence, beliefs, rules and regulations, religion, language, norms which are distributed between the people in a community, these qualities makes them differ from other people and also there are some sort that are acquired such as abilities, attributes and practices (Miroshnik,2002; Danisman, 2000; Zel, 2000; Mutlu, 1999) as cited by Seymen, (2006).

    According to Loden, M. and Rosener, J. (1991), cultural diversity is when there is dissimilarity in people's age, gender, nationality, ethnicity and race etc. when people from different cultural backgrounds meet it brings about innovation and creativity, in other to adapt to that one has to accept and imbibe in other peoples culture. Kanter's (1983) view of innovation in organisations shows that organisations that are creative with an aim of success always adopt a diverse workforce team which is beneficial because it brings about Cultural diversity.



There are three (3) perspectives of cultural diversity on the individuals in organisation, these perspectives reduces the level of inferiority complex and misunderstanding in organisation. Ely and Thomas (2001)

• The integration and learning perspective: this perspective deals on diversity being a generator for acquiring knowledge/ideas and innovation from training in organisations.

• The access and legitimacy perspective: organisations practising this perspective disregard the use of diverse human resource in the day to day activity but only when they related to different targeted consumers or markets

• The discrimination and fairness perspective: this perspective is based on scrapping inequality in organisations; the organisations that apply this perspective are for the welfare of employee that are maltreated, and unjustly criticized based on racial, age, language, national differences.

The three perspectives points out on how beneficial it is for organisations to diversify their human resource and how it is managed by giving everyone a sense of belonging and equality not minding the race or nationality which is based on how diversity is generally managed in organisations.


   According to Seymen (2006)  Cultural diversity has a denoting impingement on individual workforce belief and disposition, Diversity has positive and negative influence on workforce operations such as the transmission and translation of information, team resourcefulness and the way issues are been tackled in organisations. In a situation where cultural diversity is adequately managed in an organisation there will be perfect results arising from the good performance of the diverse workforce (Cox, et al 1991; Mendall and Kohler-Gray, 1990;  Marmer-Solomon, 1989; Copeland 1988) as cited by Cox(1991).

On the contrast Cox (1991) argued that with cultural diversity in an organisation there will be a very high level of abnormality and negative results derived from employees not being able to transmit and translate information adequately and he also added that cultural diversity reduces team work in organisations which he explained to come as result of the bad communication and conflict which will arise in the organisation. Another agreement to this was from Andre (1995)  saying that when cultural diversity is on a higher level in an organisation it calls for what she tagged "diversity stress" which she explained to be a mood where employees find it on-easy to operate in an organisation due to the operating diverse cultures in the organisation. On the other hand Caproni (2011) says that a chance has been created for every organisation worldwide to buy into the diverse rich ideas, experiences and knowledge of individuals from different cultures, When we choose not be ignorant of the changes in our environment and all that surrounds it we tend to find out that we gain a lot of knowledge from the skills people exhibit and their experiences, by conversing with them  and also working as a team with them  in which the concept of this great move to innovation starts from accepting people from diverse cultures and ideas. Daft (2003) says that one of the sole target of every business organisation in this recent globalised world which Preaches on cultural diversity as a competitive advantage over the homogeneous organisations will want to "dominate pluralism for single cultures and ethno-relativity for ethno-centralism" for easy and perfect management.



• Recruitment and development retention: Caproni (2011) said that an over prospective organisation with a strategy aims to achieve maximum success by adopting a diverse workforce and also targeting a wide range of multinational talents. He further explains that organisations attract and retain the best human resource quality of mangers or apprentices from different parts of the world this is because they believe that everyone has what they champion at so it will only be an added advantage when they have opportunities to recruit, develop and retain people of diverse total quality which is referred to as the utilisation of multinational skills in the achievement of organisational goals.

• Effective decision making and problem solving

Thomas and Ely (1997) says that diverse groups with a distinct view, ideas, knowledge and experience contributes a great sum of to the achievement of organisational goals, communicating this ideas and experiences to the growth and development of organisations and in carrying out relevant task. Cox (1993) also viewed that organisations operating with a multinational human resource tends to make the best decision by applying the wide knowledge, ideas, perspectives and experiences of this heterogeneous groups to the solving of organisation problems and also to outline task in firms.

• Enhancing team performance

According to caproni (2011) cultural diversity has really created a great Impact on organisations in terms of task performance this is because when the diverse workforce are handling technical and complicated problems that are sparingly on the regular schedule of activities in the organisation, such that the diverse individual skills and abilities of the heterogeneous group generates concrete solutions in meeting the expectation of an assignment that is appointed to them.

• Lower legal cost

Globalisation has taken a fair share of the world hereby making cultural diversity an extra advantage to organisations, The Civil Right Act of 1964 amended in 1972, the Americans with disabilities Act 1990 has stressed on discrimination hereby outlining  the relevance of equality amongst employees despite if they are classified as a majority or minority groups, this is drawn from the discrimination and fairness perspective; where all members of a workforce are treated equally and when organisations do otherwise they will be sued for discrimination, it saves organisations the fees paid to the court or individuals when they are sued for discrimination by embedding consciousness in organisations and the superiors Caproni (2011).

In Nigeria, a country with a vast multi-cultural, multi-lingual, multi-religious population and highly diverse population, with about 230 languages and ethnic groups, every nation-wide organisation must-as a recipe for growth and survival- incorporate a culturally diverse workforce. The multi-cultural situation in Nigeria is like a sneak peek into what it is like to deploy and operate in a wide range of market. The staffs of the local branches of banks in Nigeria for example are comprised of individuals from all part of the country (with a slight bias to the availability of qualified personnel from geopolitical and cultural location of the base of the branch). This is to ensure that customers are comfortable when dealing with the bank, and will always have somebody with whom they can relate with.


A culturally diverse organisation can take advantage of the different perspective on issues facing the firm and approach to problem solving as a result of different ideas from different individuals. This is a clear advantage that can be had when compared to an organisation that is based on homogenous staff assembly.



International organisations do grow faster and develop more efficiently as a result of the influx of ideas from individuals from different countries and cultural background. It is to be noted that a multi-national organisation's advantage is not just based on its ability to adapt to a multi-cultural workforce but its ability to properly gather, collate and implement ideas from said workforce. In other words, its ability to maximise its human resources. This is a significant advantage enjoyed by multi-national firms over their home or local based competitors.


By hiring some local work force who are able to help the firm deploy successfully in the new market. This can help an organisation customise and tailor its products and services to the need of the (a) new market, although product customisation is not applicable to all products, e.g. Coca Cola, which is universally accepted with little to no modification to the original product. But still, the personnel involved, even the marketing involved will be influenced by the local culture prevalent in the new market. It really is impossible for organisations who want to be relevant in the new world to be able to exist and compete without incorporating a culturally diverse workforce. Local knowledge of a new market is gained through the assimilation of individuals from different culture. Cultural diversity can also indirectly save resources by reducing the cost of deploying into a new market.


Diversity in the work place brings about the generation of ideas, the generation of better solutions and the ability to offer a wide range of perspectives and problem solving process.


Companies create innovative teams that pull individuals from different cultural background. These multicultural teams are so formed as to pool the different experiences, knowledge, skill (both personal and acquired) and initiatives of these individuals and channel them into the creation of innovative products and services, and coming up with original solutions to the organisation's problems.


Cultural diversity is a way through which an organisation can bring about great and original innovations which can drive an organisation forward. Innovation as defined by the Oslo Manual (OECD, 2005) "An innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations." ECPESS (2010) defined innovation as the "generation and introduction of new ideas, which lead to the development of new products and services, processes, and systems in all areas of business activity". From the above definitions it is clear that innovation is concerned with two major concept (at least from a business/organisational perspective): the generation of new ideas, and the development of new products, services etc. as the case may be. Generating new ideas sometimes involve breaking from the status quo or seeking a new input stimulus. These are both natural benefits that can be had as a result of cultural diversity in and organisation's workforce.

While there have been papers and studies on the relation between diversity and innovation, most have not been able to provide empirical evidence to support it as it is not easily quantifiable nor is it easy to qualify. Despite this, there are a few research and comments from business leaders who have successfully associated a positive link between diversity and innovation. Several example include:

Adler (2002) notes that diversity in multicultural teams is associated with positive group outcomes such as increased levels of innovation, creativity and problem solving.

Hennessey & Amabile (1998) suggest that diversity, when combined with an understanding of individual strengths and weaknesses, and working relationships that are founded upon sensitivity and trust, enhances creativity and problem solving capability.

Niebuhr (2006) found higher levels of research and development and innovation in regions of Germany that had higher levels of cultural diversity than regions with lower levels of diversity.

In a most comprehensive study of 1000 international teams, Gratton (2007) found that innovation was positively correlated with equal gender ratio within work teams and negatively correlated with an unequal ratio.

Moreover, the internationalisation of innovation renders cultural diversity a reality for innovative teams

Measuring the impact of cultural diversity on innovation is, among several factors, a matter of perspectives and mind set. As noted by Ozbilgin (2008) "Flexibility, creativity, and the ability to innovate are enhanced by the existence of dissimilar mind sets, that is to say that like-minded people make like-minded decisions, [limiting] the breadth and depth of innovative and creative thinking". In other words cultural diversity adds to the creative energy and resources an organisation can draw upon. Diversity can contribute to more effective decision-making and problem solving capability by providing a diverse range of perspectives, a broader spectrum of expertise, and more robust critical evaluation (Bassett-Jones, 2005)

A work force or team that is made up of culturally diverse individuals can has other indirect benefit. For example, they have the more varied external social network. Cultural diversity also assist in vertical integration; a culturally diverse organisation will find it easier to integrate into other levels of production especially if the organisation in question is a multinational company. Mergers and acquisition also fall into this category - especially if it is with a local company - as it involves an understanding the cultural of the company being acquired or merged with. Here, having individuals who share the same cultural value in the acquiring company will make it easier to interface with the individual in the acquired one.


The main challenges and barriers are overcome through good management

DiStefano and Maznevski (2003)3 carried out research on 73 teams in companies from six different countries. Their findings suggest that "diverse teams tend to perform either better or worse than homogeneous ones, with more performing worse than better. They set out to determine what distinguished the poor performers from the high performers and to develop ways of helping culturally diverse teams at the bottom of the performance graph leapfrog the homogeneous teams and create value.

Reviewing both the literature and business practices suggests that the main challenge to linking diversity and innovation is that differences between members of teams in organisations may lead to reduced cohesion, increased conflict, problems of communication and participation, and employment relations problems, creating a negative impact on the value chain. These problems may also in turn erect certain forms of "cultural dominance" that can lead members of non-dominant groups to remain "voiceless." In this way, the innovation potential of diverse workforces remains dormant.

The key determinant of success is the effective management of diversity. Not only,

then, does the application of equality and diversity policies in such contexts reduce the negative effects of cultural dominance, but they also help to release the latent innovation potential of diverse staff. In other words, the innovation potential of diversity are best harnessed when efforts to maximise such potential is coordinated with more general approaches to equality and diversity management. The application of strategies that are designed to foster good equality practices, trust and inclusiveness through effective leadership, when combined with creativity and innovation techniques that capitalise on diversity to deliver innovation, provide a basis for increased business and economic productivity and competitive advantage

Cultural diversity can lead to a dilution of organisational work structure/ethos. The high number of changes which comes as a result of the infusion of cultural diversity can lead to the loss of organisational culture. A solution to this is to device a system in which new individual can be brought into an organisation with clear instruction on the company's structure. Effectively the solution or prevention lies in the management's ability to manage diversity of its workforce.