Cultural Influences on Multinational Companies - Literature review Example

Cultural influences on multinational companies Insert of Introduction Global networks are constantly expanding making it possible for various companies to expand their operations into far distant areas away from their home origins. The expansion of trade links and unions in far off lands is currently a common phenomenon with various companies seeking to establish their roots in nations considered virgin lands to their products. Even though the costs of production and market factors constantly drive these companies to expand their businesses into overseas nations, another factor that has equally prompted such expansions into these regions is the provision of cheap labor for reduced production costs. This aspect has led to the rise of multinational companies that have now spread all over the world. Multinational companies according to Guest & Peccei, (2001) refer to those companies that have their branches operating in different parts of the world other than in their countries of origin. Such include the Coca Cola Company, a soft drinks manufacturing company operating her businesses all over the world. Others include; the Barclays bank, Toshiba, Dell, Microsoft companies among others. Apart from operating their numerous branches all over the globe, multinational corporations also offer employment opportunities to several people in the regions where they operate their businesses. The challenges facing these multinational companies are numerous given the different cultural diversities present in different regions where their businesses are operated. One factor that has since favored the growth and proliferation of multinational companies are the rapid expansion and developments in the global interconnectivity due to technological developments in terms of roads and telecommunication networks. These, apart from creating viable business opportunities abroad, have as well resulted into internal chaos due to conflicting ideas and perspectives concerning the proper management and operations of the concerned business bodies. Cultural diversity is one factor that has greatly hindered the operations of the concerned companies making management in multinational companies a great challenge. According to Giacalone & Rosenfeld, (1991), organizational management is not mainly concerned with profit making but also involves the assurance of future prosperity and growth of the business. This is confined within the framework of how various business operations are conducted in these companies and the mode of internal and external coordination techniques adopted. It is, however, not very easy for the multinational companies to thrive in certain regions given the cultural differences in these regions. This paper will critically discuss the cultural implications for multinational corporations of different approaches to employees voice. The arguments presented here will be supported with empirical illustrations to validate the points raised herein. Proper management is a great task to be achieved by managers in a changing global business environment. Organizational management (Kelly, 2000) means managing the human resources within the company premises as well as those far off in order to enhance the corporation and proper coordination between various company organs. This is the key to the success of any organization operating her activities everywhere in the world. Various regions are inhabited by different people with significant differences in their cultural orientations and mode of operations. Proper management strategies (Goffman, 1986) involves the empowerment of all employees within an organization by ensuring there is a proper channel of communication between the management and the employees. This may also involve the exchange of ideas and opinions on varied issues affecting the organization at various levels well addressed and attended to at the appropriate time. Irrespective of the differences in cultural orientation of the people in different regions, either working for an organization or the esteemed customers to the same bodies, information flow is the most vital component of any organization. The process of communication in an organization can be envisioned at two levels. These include; top down communication and bottom up communications systems. Top down communication is a mode of communication whereby the employees receive commands and instructions from the higher authorities within the organization. In this type, the employees contribution or ideas concerning the issues being communicated to them is very limited rendering this mode of communication more of authoritative other than consultative. Top down communication in most cases as Hancke, (2000) notes are one way communication systems involving the passage of information from the top management authorities to the employees at the bottom rank. Contrary to the top down communication mechanism, bottom up communication involves the passage of information from the employees at the lower ranks to those in the managerial positions. These may be consultative or reports in nature. They may involve the employees consulting the management on the correct course to take concerning a given idea or rather giving reports on the various tasks they have carried out. These types of communication can be two- way as both the sender and the recipient of the concerned massage are involved in some opinion exchange. All in all, the two types of communication are greatly affected by the organization cultures which differ from one place to another and from one company to another. Multinational companies are, therefore, among the world organizations which experience the greatest difficulties in managing their human resources as far as the process of communication is concerned amidst the varying cultural divides. Organizational culture and the societal culture are two independent factor yet both influence one another. An organization exists within a society, and the society has to accommodate the organization for her well being and economic development. However, their cultural differences dont cease to influence one another. Depending on the dominant culture in any given region, the other cultural attributes brought about by foreign bodies will have to be realigned to the dominating culture. As Hyman, (1995:65) notes, the dominant culture in any region is that of a high class or from the regions that are economically stable. It is the preferred culture among the locals and every individual or organization strives to fit it. To illustrate this, the dominant cultures in the world today according to Kelly, (1996) are the British and American cultures. Every society and organization in the world is striving to adopt these cultural renditions in order to achieve social fulfillment. It is, therefore, very easy for multinational companies from these two societies to thrive in any society around the world since their cultures are preferred among the people. It is, however, hard for the other companies from other micro cultural societies to the contradictory cultural orientations prevalent in different regions of the world survive. Their efforts to survive are often met with a lot of resistance and opposition. As various organizations tend to expand their roots into foreign lands, they tend to come along with their cultures, Knutsen, (2004) notes that this culture is often associated with the culture of the origin lands. These cultures are often imposed on the people in the regions where these organizations finally establish themselves. The tussle begins from this moment whereby each contrasting cultural traits strive to exist alongside each other. Most organizations tend not to consider the cultural differences that their employees portray that are the culture in which they were brought up and developed. This results into resistance as the organization establishes her roots into these lands. Culture determines perception (Kochan & Osterman, 1994) which in turn changes the way people, both employees and the management view different ideas. One thing that needs to be considered is how to empower various employees with a view of incorporating their ideas into management agenda. As Lane, (1995) noted, the societal and organizational culture interact at some level presenting great complexities in the management system. The local employees in multinational organizations have the whole idea on how various issues can be addressed in an environment of operation. To this extent, therefore, their inclusion into management and coordination aspects of these companies is of great importance not only the management but also for the financial and economic benefit of these companies. However, most multinational corporations tend to be dogmatic in their operations irrespective of their multicultural composition making management in foreign lands a nightmare to those operating these branches. Most of these companies do not empower the local employees or just welcome them on board in the management process. Some companies have achieved much by bringing the local employees on board and making them assist in decision making while others have suffered huge losses due to continued suppression. The aspect of empowering the employees by incorporating them into the management and the activities related to the smooth running of the companies for which they work is what refers to as hearkening to the Lecher, Platzer, Rub, & Weiner, (2001) employees’ voices. Burchell Lapido, & Wilkinson (2002) define employees voice as “A whole variety of processes and structures which enable, and at times empower, employees, directly and indirectly, to contribute to decision-making in the firm. These processes according to Burchell, Lapido, & Wilkinson, (2002) include; team briefings, problem-solving groups, quality circles; performance appraisals. These activities can be achieved in three main ways namely: through trade unions, representation, or through direct employees’ involvement (Buschak, 2004). Besides, Barber, (1983) groups these modes into two main categories namely; direct representation by direct employee involvement and indirect representation through unions and selective representation (Wills, 2000). For instance, the European works councils and the company councils tend to facilitate for direct involvement of the employees by addressing their grievances at local/ company levels. These efforts, however, seem to fail tremendously in most occasions as the employees loose their voices due to suppression by strict laws and rules governing the operations of these companies. As Wills, (2001) records, many of the multinational companies have tended to suppress the voices of their employees to make them submissive to their ideas and foreign agenda. This is aimed at achieving proper desires in managing the human resources. In the United States of America for instance, the perception that the formation of trade council in any company often mean a failure on the part of the management is held to date. As a result, many trade councils in America in close association with any multinational company owned by Americans have suffered suppression often leading to their collapse. This has continued to weaken the voices of the employees working for these companies making them vulnerable only susceptive to the demands of the companies for which they work. However, this has often resulted into poor returns as the employees are forced into contrary opinions. Most, such as the European multinational companies, have tended to favor the trade unions at the expense of their individual employees tremendously abusing the employees’ rights. The trade unions often operate based on the voice of the majority through collective bargaining processes. This has incapacitated some employees with specific and touchy issues which they feel should be equally addressed by their unions. Moreover, some companies have even begun making preferences to certain trade unions at the expense of the others and local bargaining is becoming more oppressed and compressed. The levels of demands for various employees tend to differ based on their conditions of work (Burchell, Lapido, & Wilkinson, 2002), collective bargains sometimes do not favor effective address to such problems and result into poor management and coordination within such companies. According to Giacalone & Rosenfeld, (1991) addressing the employee problems at a localized level leads to a proper understanding and accordance of the employees rights. The key functions of enhancing the employee voice within a company is to help them willfully and freely express their voices to the management and prompt their participation in the decision making process. Even though some scholars such as Hancke, (2000) have argued that employees’ voice can as well be represented through trade unions, the ineffective management of these unions does not accurately comply with the overall employees’ demands thus unrepresentative. In order for some employees to observe loyalty for the sake of securing their jobs, it has been realized that some of these employees tend to suffer in silence since their grievances cannot be met through collective bargains. Surveys on the effectiveness of certain employees’ recognition indicated that the use of various trade unions to represent the employees grievances to the employers have suffered a great deal with these unions threatened with decreasing memberships due to their ineffectiveness. Most employees feel that their ideas are being sidelined and grievances not fully addressed by their trade unions. This lack of trust has only inflicted silent sufferings among different employees in a bid to sustain their employments. In addition, collective bargains through joint consultations, which were previously favored in representation, have as well lacked valid support in some regions. Today, the most preferred mode of expression advocated for by most employees is through direct employee involvements which are concerned with employees being directly involved in the management affairs of the organizations in question (Goffman, 1986). Besides, some of these multinational companies have as well realized the need to incorporate their employees in board management and coordination techniques in order for them to be able to address the impending problems effectively. Even though some people have argued that employees in multinational companies have totally lost their voices to their employers, others have maintained that the contrary is true but without any valid explanation to this. Most employees are continuing to suffer in silence as their demands and wishes are trampled upon by their employers. There is, however, a remarkable difference in the manner in which European companies views employee representation contrary to that of other nations around the globe. Most European companies tend to offer affordable platforms for their employees to be able to express their grievances without fear or intimidation of any kind. The positive perception held by most European companies in the past about advocating for the employees rights and freedom within their premises has seen the acute proliferation of most European companies’ across the world over the recent past. Conclusion In conclusion, I would like to restate here that the aspect of employees’ representation in many multinational companies has suffered a number of drawbacks leading to the constant suffering of the employees in most of these companies. While economic success has been attained in some companies irrespective of the unfair representation and management as far as human resource management is concerned, this aspect has continued to pose great challenges in many organizations. As a result, many multinational companies are currently facing mass employees’ resignation due to suppression and oppression of their voices by strict and dogmatic rules and laws governing their operations in these companies. 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