International Business and Cultural Diversity - Essay Example

Table of Contents Contents 1.0 Introduction 2 2.0 Cultural Changes 2 3.0 What are Variables? 3 3.1 What are Social Variables? 3 3.2 What are Economic Variables? 3 3.3 What are Political Variables? 4 4.0 Globalization in relation to Cultural Change 4 4.1 Effects of Globalization on Culture 5 5.0 Process of Cultural Changes 5 6.0 Factors that help facilitate Cultural Changes 6 7.0 Factors that Can Impede Cultural Change 7 8.0 Benefits of Cultural Change in Organizations 9 9.0 Conclusion 10 9.1 Recommendations that will help Ensure that Companies Promote and Benefit from Organizational Cultural Changes 10 10.0 Bibliography: 12 1.0 Introduction In the modern business world, the interaction between cultural change and the existing company socio-economic-political changes cannot be taken lightly (Bode 2008). The business environment is constantly being affected by these changes, and it is, therefore, important for an in-depth study of these effects especially in relation to international business to be carried out (Aswathappa 2010). This paper seeks to establish whether there is any direct relation between cultural change and socio-economic-political changes in an organization or company, the variables present that are to be encountered and how these variables, if present, can be able to effectively mediate or moderate the effects of culture in today’s business environment. 2.0 Cultural Changes In the modern, contemporary society, one of the most overused terms is culture (Samovar, Porter and McDaniel 2012). According to Schein 2010, culture can be divided into four broad categories. These are macro cultures, subcultures, organizational cultures and micro cultures (Bosshardt 2006). Culture is a dynamic phenomenon and a basic background structure that has the effect of influencing us in a wide variety of ways. It is constantly changing and reenacted by our constant interactions with other people and is progressively shaped by our own behaviour. The main connection between culture and leadership can clearly be seen in micro cultures and organizational cultures where the culture in such systems is usually thought of as the end result of the embedding that an organization’s founder or leader within the group has imposed upon it and it with positive results (Schein, 2010). Culture can also be broadly defined as a set of shared values like beliefs, norms, behaviours, attitudes, material objects and symbolic resources. Basically speaking it can be thought of as the basic rules for functioning and living within a given society (Samovar, Porter and McDaniel 2012). 3.0 What are Variables? Variables can broadly be defined as items that we can control, measure or even manipulate while performing research. They are viewed as characteristics that have the potential of having more than one value or score. They can be viewed as being relatively straight forward for instance when we consider variables such as income or age while sometimes they can be viewed as being relatively abstract such as when we are considering items such as degree of prejudice or even social class (Inglehart and Welzel 2007). Researchers constantly analyze variables in order to determine how they end up influencing each other. 3.1 What are Social Variables? Social variables can be viewed as logical sets of attributes. An attribute like a person being either male or female will have the main variable of gender or sex (Weinstein 2005). While a variable such as occupation will be attributed by items such as a truck driver, farmer or professor (Babbie 2010). 3.2 What are Economic Variables? Economic variables can be subdivided into endogenous variables, which are defined as economic variables which are dependent on the occurrences within a given economy such as inflation and employment rates, while exogenous variables are those variables, which are seen to be external to the economy of a given country and are mainly determined by the current global events and policies (Keillor 2011). Examples include exchange rates and international oil prices (Myers 2004). 3.3 What are Political Variables? Political variables are mainly concerned with the incentives and general welfare of the major actors concerned in the political process of a country or region. These main actors in the political process may not necessarily be political actors, but they could also happen to be administrative actors who take an active role in a political debate within a country or region (Berglund 2009). 4.0 Globalization in relation to Cultural Change It is important to look closely at globalization in relation to cultural change since the two elements happen to be closely interrelated. Globalization is an important factor since it happens to have an effect on the populace throughout the world. Some of these effects of globalization can be viewed as being beneficial while others can be viewed as being not so beneficial (Lum and Tehranian 2006). With the increasing advent in global technology, items such as symbols, images, values, information and beliefs are constantly being transmitted across the globe instantaneously (Ervin 2008). The rise in the rate of global communication has led to a general increase in global, cultural interaction. These interactions are causing there to be a coming together of different, diverse and relatively distinct cultures each having different cultural norms and messages that were once considered to be beyond the perception of the different individual cultures. This has had the general effect of some the cultures altering the norms and beliefs of other cultures (Ervin 2008) 4.1 Effects of Globalization on Culture There has been a contentious debate on the impact and effects of the increasing globalization on culture with different school of thoughts having different opinions on the matter. Institutionalists tend to believe that cultural globalization will have the overall effect of leading to better global networks of cooperation and understanding (Bosshardt, et al. 2006; Radovic 2012). Neo-liberals have been noted to argue that cultural globalization is an inherently positive process as it constantly allows free markets to be able to diffuse the best of their ideas (Mahajan 2006; Tehranian and Lum 2006). The Neoliberal view argues that freedom of choice on what to ignore or what to consume should be granted to individuals (Ervin 2008). 5.0 Process of Cultural Changes As has been pointed out above, through the effects of the process of globalization, cultures are constantly influencing each other and changing though it is not yet quite certain if these changes will have the net result of causing a cultural convergence. (Hofstede 2001) argues that culture has been noted to evolve very slowly. As a result of its slow evolution, it is thought to be relatively stable which has led to reduced ambiguity in international business in relation to culture and more control over any expected behavioral outcomes (Eicher 2009). Most of the currently existing models developed to analyze work behavior and culture have taken to assuming the pre-existing aspect of work behavior and culture and tend to emphasize on ensuring that there is a general fit between certain motivational and managerial practices and a given culture (Erez and Earley 1993). This supposition is only applicable provided that there aren’t any environmental changes that cause for there to be an adaptation or any cultural change (Martell 2010). However, it must be pointed out that towards the end of the 20th century and at the start of the current century, there were myriad of changes that were greatly characterized by sometimes extremely turbulent economical and political changes, which were key in the instigation of major cultural changes globally (Mirjana 2012). Currently, there are relatively very few theories of culture that have been developed that focus on the mainly dynamic aspect of culture, but after the drastic changes at the end of the past century and at the start of the current one, several theories emerged with this model in mind. One of these models is the ecocultural model that was modeled by (Berry, Poortinga, Segall and Dasen 2002). The model seeks to view culture as a set of evolving adaptations to the external forces of socio-political and ecological influences. 6.0 Factors that help facilitate Cultural Changes There are various features that serve to either facilitate or impede cultural change. Some of the factors that play a key role in the facilitation of cultural change include, the development of better policies in government that will both promote and encourage cultural change within organizations. A good and stable political climate is also a critical factor in the promotion of positive cultural change within organizations. If a country has a stable political climate, more international companies will be encouraged to invest in the country, as a result of these, companies will be seen to import their own brand of culture into the country and hence promote cultural changes in the country. Another factor that helps in the facilitation of cultural change include, the creation of open information channels within an organization, having a better educated and trained workforce, there also needs to be adequate political stability within a region or organization to be able to sustain cultural change (Harrison and Huntington 2000). For there to be adequate facilitation of cultural change within an organization, management of the company or organization needs to ensure that it formulates clear – cut and winning strategies in all its departments. The organization also needs to ensure that it establishes a modernization drive that is both visible and consistent. The human resource department of the organization needs to develop and establish rapid and good feedback from the company’s younger workforce whose feedback is normally sidelined in most organizations in favor of feedback from the older workforce (Grancelli 1995). A country’s general economy can also play a key role in the promotion of cultural change within the given country. If a country’s economy is stable or is steadily improving, more foreign investors will end up being attracted to come and invest in that given country. The human resource that the foreign company imports into the country to come and work with the local population and in the process there will be a net effect of the promotion and facilitation of cultural change within that specific organization as the two cultures interact and start adopting each other’s elements before reaching a cultural common ground from which both the two cultures can be comfortable in. 7.0 Factors that Can Impede Cultural Change If a country’s economy starts to go on a decline, less foreign organizations will be willing to invest in that country. This will deny the organizations based in that specific country the opportunity of benefiting from the chance of adopting the different cultures that could have been afforded by the foreign investments an the resulting cultural changes that come with it. There are more than a few aspects that can cause the overall impediment of cultural change within an organization, chief among them is cultural change is being actively resisted by both the middle management and the company’s administrative personnel (Kaplan and Manners 2007). Any overtures designed to facilitate cultural change within an organization should take into consideration input from all the affected levels of the organization’s job hierarchy so as to prevent any active resistance. If a company consistently relies on and is keen on using stagnant and outdated technology, any efforts to facilitate cultural change will also be greatly impeded. A change in a country’s laws and policies that either result in the inhibition or the total illegalization of some of a company’s policies and guidelines that are seen to encourage cultural organizational change can also seen to inhibit organizational change in the given country. If an organization or country chiefly relies on an uneducated workforce, the company runs a high chance of impeding cultural change. If a country is experiencing any threat of or actual recession in its economy, political instability or trade union militancy, it runs a high risk of impeding any cultural change on its part (DuBrin 2009). If a company’s information channels are blocked, the company will also run a high risk of impeding cultural change within the organization since it will lack the necessary information it requires to facilitate cultural change. If the company is not making adequate sales and profits but is instead drifting and fighting for survival in a tough market environment, it is considered be experiencing impediments in its efforts at cultural change (Welzel and Inglehart 2007). A company also needs to establish and maintain market feedback from its older workforce so as to ensure that it is able to facilitate adequate cultural change, without this, the company runs a high risk of impeding any cultural change on its part (Ferraro 2008). A company or organization should also strive to ensure that its production management system is not petrified by any occurrences or threats, this can have the adverse effect of ensuring that a company’s efforts at striving for greater cultural change is greatly impeded (Grancelli 1995). 8.0 Benefits of Cultural Change in Organizations In every organization, a good culture can be seen to play an extremely vital and crucial role in the overall promotion and creation of an innovative and adequate learning environment. It helps create an organizational climate that helps employees respond adequately to new social, political and economic opportunities, competitive threats and challenges. A strong culture in any organization that keenly tries to encourage both adaptation and change can be seen to enhance organizational performance by both motivating and energizing the company’s employees. The right culture in an organization can be seen to drive high performance within the organization or company (Daft, 2010). If an organization or company happens to have a strong culture that is not keen on adaptation and change, the strong culture can be seen to effectively be hurting the company. Most large successful organizations are facing a danger as their cultures are set and are unable to adequately adapt to the political, social and economic variances affecting it. This is because most of the large companies try to maintain the values, practices and ideas that helped make them successful. The general institutionalization of these ideas and practices can become detrimental to the company’s performance as the social, political and economic climate in a given location changes hence making the company a victim of its own success (Daft, 2010). 9.0 Conclusion It is apparent that business environment is constantly being affected by socio-economic-political changes. In regard to connection between culture and leadership, the relationship is seen in micro cultures and organizational cultures. Variables can be viewed being relative abstract especially when considering items such as degree of prejudice or even social class. Social variables can be viewed as logical sets of attributes. Economic variables are dependent on the occurrences within a given economy. Political variables focus on incentives and general welfare of the major actors concerned in the political process of a country. Globalization affects culture due to increasing advent in global technology. Cultural globalization is an inherently positive process as it constantly allows free markets to be able to diffuse the best of their ideas. Development of better policies in government facilitates culture change. Cultural change is being actively resisted by both the middle management and the company’s administrative personnel. However, cultural change plays a crucial role in the overall promotion and creation of an innovative and adequate learning environment. 9.1 Recommendations that will help Ensure that Companies Promote and Benefit from Organizational Cultural Changes As demonstrated in this paper, cultural change is closely intertwined with existing socio-economic-political variables. These variables have consistently been proven by the research indicated to be able to closely mediate and moderate the effects of an organization’s overall cultural change (Inglehart and Welzel 2007). It is important for both the government and the various companies and organizations within a given country to try and work together towards the promotion of cultural change within the country. This can be done by the government conducting adequate consultations with the key stakeholders in business within a given country before they create policies or enact legislations that may impede the promotion of cultural change within the country (Erez and Earley 1993). The different governments within the different countries play a key role in the creation of a stable political climate that will be beneficial to all businesses within the country and will help them promote cultural change within the country. Companies can also create policies and guidelines within them that will be crucial in the promotion of cultural change (Erez and Earley 1993). Globalization should also continue being encouraged as it is seen to play a pivotal role towards the overall creation and promotion of cultural change globally (Lum and Tehranian 2006). Governments should have a goal of ensuring that the country has a stable economy. A stable economy plays a vital role in promoting foreign investments into the country and in the overall general promotion of cultural change within the organization (Erez and Earley 1993). 10.0 Bibliography: Adair, W. L., Okumura, T. and Brett, J. M. 2001. Negotiation behavior when cultures collide: the United States and Japan. Journal of Applied Psychology, 86 (3): 371-385. Aswathappa, K., 2010. International business. New Delhi: Tata McGraw Hill Education. Babbie, E. R., 2010. The practice of social research. Belmont, Calif: Wadsworth Cengage. Berglund, S. 2009. Putting politics into perspective: a study of the implementation of EU public utilities directives. Delft: Eburon. Berry, J. W., Poortinga, Y. H., Segall, M. 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