Key Issues for Expatriates Working in American and South Korean Business Environments - Term Paper Example

Title: A comparative study on the key issues for expatriates working in American and South Korean business environments. Student Name: Tutor: Institutional Affiliation: Date: Table of Contents Title: A comparative study on the key issues for expatriates working in American and South Korean business environments. 1 1.1 Key cultural differences between America and South-Korea 4 1.2 Leadership 6 1.3 Performance appraisal systems 8 1.4 Business negotiations 9 1.5 Conflict management and resolution 10 1.6 Organizational efficiency 12 1.7 Business communication 14 1.8 Conclusion 16 Business environments all over the world are shaped by the specific culture of the people within the business environment. Most importantly, national cultures are viewed as vital in dictating how people relate and how business is conducted within the boundaries of a country and also internationally. As such a lot of effort has been made over the years to understand and define national cultures with the sole aim of breaking the cultural barriers to business processes and relationship building (Alon & Higgins, 2005). Culture is defined by Hofstede (1991) as a people’s way of life; it dictates what is wrong and what is right. It is simply an unwritten code of doing things that has far-reaching influence on all spheres of life including business. Apart from culture, several other issues such as personality traits and societal norms influence business environment to such an extent that failure to understand such issues may limit the effectiveness of business within such societies (Chevrier, 2003). In light of this understanding, this paper seeks to exhaustively analyze the key issues facing expatriates working in American and South-Korean business environments, with an aim of suggesting the appropriate strategies expatriates can use to ensure they are effective and efficient while working in the two environments. These two economies are doing well economically particularly manufacturing technology products, however workers in these two countries are faced with different working environments. America is classified as a highly individualized society while south-Korea is a collectivist society (Hofstede G. , 1994). More differences are also evident while analyzing the societies from various dimensions as will be presented in this paper. This will be achieved under appropriate subheadings. 1.1 Key cultural differences between America and South-Korea According to Hofstede (1994), United States of America and several other Western European countries such as Germany and Great Britain are highly individualistic societies. The individual comes first before the in-group and the society and thereby raising the level of competition and aggressiveness in individuals as they seek success in different spheres of life. Emphasis in such cultures is on individual’s effort being rewarded by success and recognition as opposed to collective success and recognition. This characteristic is a key determinant of several issues relating to such societies such as conflict resolution, goal orientation, leadership and more. The American society is also low on power distance thus reducing the importance of hierarchy in leadership. This is the case with highly individualistic societies as individuals have respect for personal freedom and opinion. Followers view leaders as almost their equals and can challenge their leadership from time to time (Dugan, Peterson, & Leung, 1998). The American culture is low on uncertainty voidance thus leaving room for making mistakes and learning from them. In such societies, individuals are always prepared to handle unstructured environments and challenge existing views. The American society is medium on masculinity according to hofstede’s analysis; it is the best in the society that receives the best rewards according to this system which starts at the early stages of life through rewards systems in schooling. When it comes to long-term and short-term orientation, the American society tilts more on the latter (Hofstede G. , 1994). As such, the immediate gain of a transaction is more important to people as compared to long-term gains. This has great influence on how Americans negotiate (Metcalf, Bird, Shankarmahesh, Aycan, & Valdelamar, 2006). South-Korea on the other hand is a highly collectivist society which seeks to have the individual in total harmony with the rest of the society (Mente, 2013). As such the society’s interests are more important than the individual interests. The society seeks to succeed collectively meaning competition between individuals is unacceptable while cooperation for the good of the group is highly appreciated (Dugan, Peterson, & Leung, 1998). This may give the impression of individuals in such a society to be less aggressive, but on the contrary, they are aggressive especially when advancing the interests of the collective humanity in which they belong. There is high power distance in the South-Korean society which is typical of collectivist societies. Individuals are expected to respect the authority of the leadership; the leadership on the other hand is respected and trusted to deliver on its promises to the followers (Hofstede G. , 1994). There is high centralization and strong hierarchy in South-Korean institutions and as such subordinates and followers look up to the central authority for directions. Strong and visionary leadership is a key element in the South-Korean society. The Korean society is low on uncertainty avoidance meaning individuals can comfortably maneuver through situations which present unique challenges. The Korean society just like most Asian communities has a strong orientation towards long term benefits of a transaction. This means the society focuses first on building relationships which will result in beneficial engagements in the future as opposed to short-term transactions (Kenna & Lacy, 1995; Hofstede G. , 1994). From this short preview through different dimensions, it is evident that the American and south Korean societies have quite distinct features as Far as national culture is concerned despite both countries experiencing strong presence in the global economy. These differences influence a number of issues within the business environment which in turn effect how individuals within such environments relate with each other and respond to issues as will be presented in the subsequent headings. 1.2 Leadership Leadership is the ability to influence people towards a certain vision and direction. Leaders are therefore people who posses this ability and assume leadership position through different means and lead through different styles but the constant factor is for the group to reach pit predetermined destination. As such, leadership is a very important element in any society as it determines whether a society succeeds or fails in achieving it dreams; everything rises and falls with leadership (Alon & Higgins, 2005). Having noted that, leadership within the contexts of United States and South-Korean societies is viewed and exercised differently particularly due to the power distance and collectivist/individualistic mindset of the people. The American society is said to have a low power distance between the leadership and the subjects. This means the leadership has to lead in a more consultative way. Any attempt to institute an authoritarian, non-democratic leadership is usually met with defiance by the subjects. Managers and business leaders are therefore expected to adopt a more inclusive leadership where hierarchical tendencies are not welcomed as ideal form of organizational structures. A resourceful democrat is highly likely to succeed, in an American organization than a hard to reach authoritarian leader (Dorfman, Hibino, Lee, Tate, & Bautista, 1997). The individualistic nature of the culture also creates the notion that everybody decides what is good for them, as such every opinion is to be respected and individuals do not subscribe to a sole opinion. In such a society individual opinions are respected and given a room to be expressed. It is the only way to lead an individualistic society (Hofstede G. , 1994). Subordinates therefore play an active role in the running of an institution. Creativity and innovation can therefore be welcomed from bottom-up or up-down the hierarchy (Alon & Higgins, 2005). The south-Korean society to the contrary has a high power distance which means power is highly centralized at the leadership and hierarchies are very much respected. The leaders are trusted by followers to care for their wellbeing and their authority is therefore not questioned. The collectivist mindset also influences leadership in the sense that having a harmonious group relationship demands that there should be a central source of directives which happens to be the leadership as opposed to the individualistic phenomenon in American cultures, which erodes the power of leadership as individuals’ value autonomy and freedom (Mente, 2013; Dorfman, Hibino, Lee, Tate, & Bautista, 1997). Visionary leadership is a key factor in the success of an organization in south-Korea; a leader has to be supportive to the followers and directive towards a desired outcome to which he/she is committed to achieve. Leaders are therefore expected to consult less but to be all-knowing. Decisions are usually made from top down the hierarchy with subordinates having minimal if any direct influence on decision making. This type of leadership thrives mostly due to the need to maintain harmony in the collectivist institutions of South-Korea and also due to the high power difference that exists in this society. Being a highly feminine society, the desired leadership is one which shows concern for the people and thus good managers in South-Korea achieve objectives through consensus and inclusivity (Johngseok, Rowley, & Sohn, 2012). 1.3 Performance appraisal systems Performance appraisals systems aim at ensuring organizations continually improve their efficiency and effectiveness towards achievement of their objectives through their human resources. The appraisals therefore focus on encouraging good performance and discouraging negative performance. Through performance appraisals, the best workers who have performed exceptionally towards the attainment of organizational goals as defined by the management are rewarded. The management also lets the poor performers know what the management thinks about tem through statements or actions such as demotion meant to make them improve. This system is very popular in western countries including the US (Chevrier, 2003; Hofstede G. , 1994). South-Korea and most Asian countries however don’t advocate for performance appraisal systems as used in the US and other western European countries. Such direct and personal feedback to employees is viewed as a disruption to the harmonious nature of the collectivist systems and as such it is not desired. The management therefore hopes to communicate dissatisfaction in performance through mutually trusted individuals between the management and the employees or through statements directed towards a group and not an individual. Through such a strategy, the management aims at making the group analyze their performance and align it with the expectations of the whole institution without destroying the interpersonal relationships. This is very important to understand for managers who have gone through western education systems that openly advocate for strict performance appraisal systems which might not achieve their intended result in the South-Korean society (Hofstede G. , 1994; Johngseok, Rowley, & Sohn, 2012). 1.4 Business negotiations Businesses have to be involved in some form of negotiations with individuals or other organizations as they seek to attain their strategic objectives. Negotiations are not as difficult for a business leader to deal with another group which share the same culture as his as it would be for a group that conforms to a different culture (Ma & Jaeger, 2010). Business leaders have to therefore explore ways of holding successful negotiations with others from different cultures from theirs now that globalization makes it a strategic direction for businesses to go global (Friedman, 2007). How Americans put their interest across a negotiation table is not the same as south-Koreans will do. Of course this is influenced by difference in culture and orientation. Americans are particularly interested in getting down to business once the niceties between negotiating teams have been exchanged. Americans will not be much interested in rituals or formalities such as a particular form of welcoming partners on the negotiation when it comes into business negotiations. This is very different from how south-Koreans hold their negotiations. South-Koreans are very much interested in creating strong relationships which will then be used as a basis towards reaching an agreement in negotiation. As such, formality is highly respected although it is not so much of an issue in American style negotiations. Americans dwell much on the material issues of a negotiation such as legal aspects (Hofstede G. , 1994; Metcalf et al, 2006). Americans will expect a quick conclusion to negotiations which are mutually benefiting while Koreans are not so fast to conclude a negotiation as they take time to know their partners at the negotiating table. Americans are quite aggressive and want to get the deal signed as early as possible while south-Koreans value trust building first and then a deal can be signed. It is important for individuals in negotiating positions in these two countries understand these differences to avoid getting into disagreements. An American or any other person who has been influenced largely by individualistic societies should focus on building a strong relationship with South-Korean partners so that decision making becomes easy (Adachi, 2010). The issue of centralization of power also affects how South-Koreans conduct negotiations. Power is highly centralized in Korean institutions where a few people at the top hold the most power in organizations. Decisions are only made after consensus has been made. Americans on the other hand devolve power to their juniors who are trusted to make intelligent decisions on behalf of their superiors at the negotiating tables. This means the pace of decision-making is different as far as Americans and South-Koreans are concerned (Johngseok, Rowley, & Sohn, 2012). 1.5 Conflict management and resolution The modern work place is made up of diverse groups of people according to religion, ideology, ethnicity, culture, gender and more. Due to this diversity and [particularly differences pin opinions, conflict is an inevitable reality that faces organizations today. Conflict may have negative or positive contribution depending on how it is handled. A positively handled conflict should allow an organization to foster better relationships between its people and enhance dynamism in how an organization relates with its immediate environment. To solve, a conflict though, it is important that both parties understand the individual differences that characterize the conflicting parties (Maunde, 2011; Gudykunst, 2003). How conflicts are handled by Americans is not necessarily the same way they are handled, by South-Koreans as argued by (Tong-wŏn & Johngseok, 2004) The American society is a highly individualized society which allows individuals to hold personal opinion and challenge the existing contentions and schools of thought. This makes such a society to prepare individuals to ask critical questions during instances of uncertainty and offer creative solutions. Conflict in such a society is not viewed within the premise of disrupting an already perfect system of doing things but rather as a way of improving how things are done. Conflict within American organizations is viewed as healthy for the organization as the leadership will have a chance to assess what the organization is not doing right and thus continuously innovate to stay ahead of the competition which is a daily reality in the American society and business context. As such there are no predetermined ways of handling conflict although it has to be guided towards the common good of the organization at the end (Chevrier, 2003). A conflict as argued by Dugan, Peterson, & Leung (1998) therefore presents a better opportunity for the people in the organization to bond for as long as they stay focused on the greater goal of making the organization successful and not ruin it. It is therefore common to have employees and midlevel managers expressing their dissatisfaction with the top management and offering a different perspective which the management may consider. Open criticism and praise characterize the American work place as managers seek to reward good performance and improve poor performance. This should however not be viewed as a conflict but rather a normal way of doing things in a society that does little to save face in such situations. The South-Korean society scores high on collectivism unlike the highly individualized American society. In collectivist societies, there is always the need to have the individual in harmony with the rest of the society; conflict is not always desired as it is viewed as a disruption to this harmony which is highly valued by the society (Hofstede G. , 1994). Collectivist societies like South-Korea will therefore hope to avoid conflict as much as possible and when it occurs, it has to be handled through arbitration and non-confrontational manner. This attitude towards conflict may also be influenced by the need for the society to operate in structured environments which might not be the case when conflict and divergent opinions come into the equation (Zhu, Nel, & Bhat, 2006). The South-Korean society embraces the idea of unquestionable authority exercised through hierarchical systems where power is centralized, and decisions come from above. Nothing much can be done to challenge the decisions from above as the leadership is viewed as charismatic and well-meaning. Of course this tells of a society that scores high on the power distance dimension where leaders receive less resistance when it comes to decision making and implementation. Handling conflict in such a society is almost predetermined then where predefined rules are used to decide who is in the right and who is in the wrong as regards a conflict. The leadership is bestowed with the responsibility of setting the agenda regarding change of rules and strategic orientation through charisma and intelligence. Indirect ways of solving conflicts such as mediation and consultations are favored more than individual openness and opinionated arguments (Zhu, Nel, & Bhat, 2006). 1.6 Organizational efficiency Organizations are made up of people with common goals and aspirations. For the organization to reach the goals there has to be an acceptable level of efficiency which will in turn result in effectiveness as regards progress to the goals. It follows then that, strategic orientation is indeed a fundamental element that needs to be incorporated into any origination’s culture so that its people may understand what is expected of them (Chevrier, 2003). The American business environment is one composed of highly qualified professionals trained to behave in a certain way. Each and every professional in an organization therefore has his/her role clearly cut out for them. Their performance is measured on how we’ll they are able to fulfill the objectives set out by their roles. Organizational efficiency will thus be achieved only when autonomous sub-units perform optimally. High level of autonomy is therefore common in such a society. Employees are expected to be self motivated to align their objectives with those of the organization as at the end of the day they will be judged against their performance. The society then happens to be of less concern to an employee but rather it is the organizational goals that matter (Dorfman, Hibino, Lee, Tate, & Bautista, 1997). Korean organizations on the other hand carry with them the collectivist mindset that is characteristic of the South-Korean society. This mindset focuses on having the whole system function in harmony to the benefit of the society. The South-Korean organizations will focus much of their attention on having their employees enjoy working as it is a noble contribution to societal development (Mente, 2013). The top leadership will always lead from the front with charisma and pragmatism. This is evidenced by the high capital stake that leaders of most organizations have in their organizations. They feel their organizations are very much connected with their lives and would dedicate a lot of time, effort, and creativity to help the organization succeed. Efficiency is not measured by short term goals such as profitability but rather on ambitious long term goals such as large market share and product improvement. This long term definition of success in turn eliminates the idea of judging individuals as individuals cannot single handedly deliver long-term success in the end the organization focuses on improving society while at the same time achieving its specific objectives (Johngseok, Rowley, & Sohn, 2012). 1.7 Business communication Effective communication is critical towards performance of business processes. People in an organization should be able to effectively communicate with those within and without the organization in various business engagements. Even though this may sound easy to achieve, one has to be aware of the fact that communication may be affected by various barriers including cultural issues. What seems polite in one culture may be rude in another culture. Body language and certain behaviors are also perceived differently in different societies (Gudykunst, 2003). Having noted this, it is important to note that South-Koreans communicate differently as compared to Americans even though both societies are guided by similar interests of helping their businesses and institutions succeed at the global level. The American society is perceived to be highly masculine and as such does not care much about the soft interests of people such as people being caring of each other and being responsible for each other’s success (Hofstede G. , 1994). The form of communication preferred in such a society is impersonal. Impersonal communication is largely detached from personal feelings and involvement; it focuses on the material elements of a relationship. Such communication does not target intrinsic rewards or long-term relationship building but rather focuses on short term rewards that are mutually benefiting in the short term. Such communication will therefore not use unique predefined and irreplaceable strategies to achieve its objectives since there is no need to maintain harmonious relationships for the future (Maunde, 2011). The South-Korean society to the contrary prefers to communicate in a highly interpersonal way that is unique and irreplaceable. This is particularly the case in countries with high power distance. This way of communicating focuses much on establishing a special long-term relationship. The relationship can be relied upon to execute business decisions based on trust between the parties. This is the direct opposite of the American style communication that is detached and highly egalitarian. It is important to note that individuals in highly individualistic societies don’t believe self disclosure is vital in establishing a beneficial business relationship. It follows then that, the collectivist society communicates in such a way that the engagement will lead to both tangible and intrinsic goals while the individualist society focuses on the tangible goals of a relationship when communicating (Soares, Farhangmehr, & Shoham, 2007). This two communication strategies if not well understood may put the parties that subscribe to each into a conflict or a situation where communication collapses. This is very much the case when partnerships and agreements are being negotiated. Marketing efforts maybe frustrated by lack of understanding these different cultures as, South-Koreans will mostly buy when the seller is interested in their personal feeling and not just selling to them. The Americans on the other hand will not mind being supplied with the important information to make a one-off decision to buy, personal relationship notwithstanding (Soares, Farhangmehr, & Shoham, 2007). 1.8 Conclusion From the analysis of the American and the South-Korean business environments, it is clear that national cultures, values and norms of the two societies have a profound effect on how business is conducted in these countries. The American society ranks high up in individualism and low in power distance. The society too has less preference for structured environments. These factors make the American society highly aggressive and focused on short-term gains in any transaction. In the American society, the individual’s interests are more important to them than the society’s which is different from the South-Korean society where the interests of the society are more important than the individuals. In the south-Korean society, there is a high power distance where leaders are highly respected by the followers making their authority unquestionable. This is not the case in America where a brand of democratic and approachable leadership is favored thus the society scores low on power distance. Being a collectivist society, the South-Korean society values certainty and structured systems of addressing issues and conducting business, as such rituals and formalities are part of business in South-Korea unlike in America. These differences of course determine what can work in the respective cultures and what cannot.. Appraisal systems as they are cannot do well in a South-Korean institution which are focused more on maintaining harmony and thus avoid personal criticism in appraisals which can ruin the interpersonal relationships present. 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