Cultural Barriers in International Business - Case Study Example

CULTURAL BARRIERS I. INTRODUCTION Globalisation is a relatively new phenomenon experienced by humanity only within the last fifty years (Soros, 2002). Generally, the term globalization connotes the development of global financial markets, the growth of transnational corporations, and their increasing dominions over national governments (Soros, 2002). Moreover, globalization is also about the massive migration of people, changing national identities and cultural belongings (Suarez- Orozco & Qin- Hilliard, 2004) shattering internal and external borders among and between nations. With its multifaceted connotations, globalisation has been broadly understood as a concept, policy and process casually used to describe a variety of phenomena that reflect increased economic interdependence of countries. Such phenomena include flows of goods and services across borders, reductions in policy and transport barriers to trade, international capital flows, multinational activity, foreign direct investment, outsourcing, increased exposure to exchange rate volatility, and immigration. These movements of goods, services, capital, firms, and people are believed to contribute to the spread of technology, knowledge, culture and information across borders (Fischer, 2003; Soros, 2002). And in this “ increasing amount of cross border trade in goods and services, the increasing volume of international financial flows and increasing flows of labour” (Fischer 2003, p 8) as transnational corporations and multinational operations are established beyond their own national borders, globalization has change the management of resources, specifically, human resources as companies and organizations respond to the concern posited by the global market –cultural differences. Cultural has numerous meanings and it is difficult to ascertain that there is only one and correct definition for it (Tihanyi et al, 2005). Nonetheless, culture can be understood as “in general, is the homogeneity of characteristics that separates one human group from another. Culture provides a society’s characteristic profile with respect to norms, values, and institutions that affords understanding of how societies manage exchanges” (Tihanyi et al, 2005: 271). And when transnational corporations enter a country whose culture is almost totally different from the home culture of the corporation, the reality of cultural barriers becomes one of the major concerns that the transnational corporation has to hurdle. Since, if the corporation will not address it, chances are the firm will fail (Bakerma & Bell, 1996). In light of this, this paper intends to identify the cultural barriers inherent in communication and etiquette in international business and to search for possible solutions that will build trust despite the presence of cultural differences. In this regard, the paper will be addressing the following questions:1) how communication and etiquette become cultural barriers in international business? 2) how can trust be established in the midst of the reality of cultural barriers? Being such, the paper will be having the following structure: the first part will be the introduction where the aim, questions and search method that have been used for the paper are presented. The second part will be a look at the how communication and etiquette are forms of cultural distance acting as cultural barriers. The third part will be dealing with establishing trust in the midst of cultural differences. In the end, the author hopes that although numerous scholarly works already exist regarding this topic, the understanding gained from this elucidation will help in any way it can in addressing the concerns pertinent to cultural barriers in international business. II. CULTURAL BARRIERS: COMMUNICATION AND ETIQUETTE IN FOCUS Firms’ decision to expand overseas is contingent with the nature of the market and the projected market profitability, philosophy of the corporation, managerial strategies and the resources of the corporation (Sakarya et al, 2007). As these variables motivate firms to go global, the decision entails that they have to cope with issues such as cultural distance, cultural differences, cultural barriers and the likes. This is a reality even if corporations often choose markets that exhibit similar market, economic and political structure (Sakarya, et al, 2007). Cultural barriers basically happen as a result of the cultural difference between the home culture of the firm and the national culture of the chosen overseas market. This difference is called the cultural distance. Cultural distance involves “differences in a country’s legal system, incentives, administrative practices and working styles that increase an international company’s cost of integration (Hofstede, 1980 as cited in Sakarya et al, 2008). It has been identified as a key factor in explaining foreign market attractiveness, expansion patterns, adaptation of marketing and retailing strategies, modes of entry and organizational performance (Sakarya et al, 2008). In this context, how can communication and etiquette act as cultural barriers. Communication. Communication is a process wherein ideas are exchanged and there is a conscious moving away from the individual utilization of language as communication requires the presence of a listener who is at the same time capable of apprehending, responding to the communication that is transpiring. It should be noted that in this process or exchange, the integral role of culture comes to the fore. The manner, the symbols, the style, the meanings, interpretation, delivery and all cultural structures and factors that come into play as persons communicate with one another (Baraldi 2006). The significance of communication takes a central role as communication is the means with which sharing and transfer of knowledge and culture among and between countries take form (Soley & Pandya, 2003). Furthermore, in the particular context of the organization, the manager to be successful has to effectively communicate at all levels of the operation and that they must “communicate in a new world of diverse colleagues, clients and customers of international operations” (Soley & Pandya, 2003: 207). Being such, the integral role of communication cannot be undermined and that despite seeming difference, there should be a conscious effort to maintain effective communication. Since, if this effective communication will not be consciously embarked then the following maybe experienced. First, no sharing and transfer of knowledge will happen. Second, nothing will be achieved as ideas are not exchanged, received, apprehended and responded properly (Baraldi, 2006). Third, the situation of nobody understanding anybody may happen thus it may result to misunderstanding (Glaser, 2005). Finally, this will definitely lead to the failure of the company (Bakerma & Bell, 1996). There are two theories that accounts for cross-cultural communication. These are the convergence and the divergence theories. Under the convergence theory of cross cultural communication argues that there is an increased cultural uniformity through increased communication between home and host country. Here “cross-cultural communication is defined as a process of creating, maintaining,or bridging racial, ethnic, or national boundaries. The emphasis is on sharing knowledge, leading to mutual understanding, mutual agreement, and collective action”(Soley & Pandya, 2003: 207). While, divergent theory holds that as there is an increased cross-cultural communication, there should be a greater recognition and respect for the existing cultural difference (Soley & Pandya, 2003). Nonetheless, the important thing that should be given weight is the fact that as there is an increase communication between two different cultures the ethos must not be developing uniformity but that the increase in communication can be perceived as the possibility of finding a commonality in the midst of plurality. This is so, for in the condition of increase communication, the main problem is “no longer sharing and coherence but attention to coordination of conflicting diversities” (Baraldi, 2006 p 67). Etiquette. Culture and communication go together. As such the manner, the delivery, the symbols, the meanings and interpretation of the language use for communication is culture bound as language in itself together with communication are both human constructs (Hobbes, 1991). In this reality, it can be claimed that communication goes beyond verbal articulations; but that as clear and as distinct is the relaying ideas through the utilization of bodily languages that serves as cues, and symbols for proper interaction. In fact, it is etiquette that enables the ‘outsider of the culture to understand and even explain why some groups of people perceive things on their own way and perform things differently from other groups (Soley & Pandya, 2003). For instance, among people in the West a firm hand shake is sign that the person is somebody that can be trusted and good mannered. In the East, generally, they are reticent when it comes to handshake but that to show their respect they bow. Another example, Westerners look straight into the eyes of the person they are talking with to show that they are honest. In the East, especially among women and children, it is common that when they talk to others they do not look straight into the eyes because it is a sign of disrespect. These cues are important to know because if not understood in its context, it is a clear and prominent cause of miscommunication and misunderstanding which leads to cultural barrier. III. ESTABLISHING TRUST The reality of global firms is here to stay in the contemporary period for a long time. The decision to go global is one of the sure ways with which corporations can create their niche in the global market and reach a wider market base. But as the decision in becoming a global firm entails benefits, one of the major concerns that global firms have to face is establishment of trust in the midst of cultural distance and differences. But, how can trust be established? The concept of trust is fragile (McGeer, 2008) as it entails hope and yet affords at the same time the probability of being betrayed and abused. And this is a recognized danger when people trust. Nonetheless, trust is necessary if social relations are to be established and culture and civilization will developed. In the light of cultural differences and cultural distance in the global market, trust can be established through: first, open-mindedness to the existing difference (Barkerma & Bell, 1996). If all the players in the global firm anchors initial relation unwillingness to accept the existing dissimilarities then nothing can be achieved. Second, in addressing the problem of communication, utilized the developments in intercultural communication. Intercultural communication in the globalised world has entered into the phase wherein occurrence of communication necessitates a sharing of a common ground. With the appreciation of culture and community as open, emergent, contingent and performative system, communication is now appreciated as ”dialogical interaction between social practices and semiotic practices in a particular culture, it may be seen not only as a product of, but also as a metaphor for dialogic emergence and performance, maturity in language and culture” (de Souza, 2006:111). And that this dialogue should always be undertaken as it recognizes the authentic exchange that transpires in a communication among equals (Capurro, 2005). Third, all players in the global firm should move away from stereotyping. Stereotyping is the preconceived characteristics of people coming from a particular country or place. For example, if person A is Swiss the first impression that comes to mind is precision. The danger with this is that the impression regarding a particular nationality becomes the defining identity of the actual human persons belonging to that country. This is a problem because if they veer away from our general picture of their character or trait, the person is now considered as deviant. Fourth, respect the inherent and existing differences. Increasing communication may be viewed as increasing commonality or it maybe deemed as the concrete manifestation of the intrinsic differences among and between culture (Soley & Pandya, 2003). Nonetheless, regardless of how it will be viewed, what is of primordial importance is that through globalization via global firms cultural barriers like communication itself and etiquette are consciously bridge using the view that communication is a dialogue, a sharing transferring of ideas. CONCLUSION: Global firms are motivated by variables such wider market base as they expand their business overseas. But, the decision for expansion also entails certain difficulties such as cultural barriers manifested in communication and social decorum and interactions. 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