Affect of Culture on International Business - Essay Example

Affect of culture on international business Contents Contents Introduction 3 Discussion 3 Importance of cross-cultural studies 3 Application of theoretical frameworks 4 Impact of cross-culture on business performance 7 Conclusion 9 References 10 Introduction This study shall be centred towards studying the impact of cultural aspect on international business. Culture plays an important role in terms of efficiently executing business operations. To be more precise individuals should be able to understand one’s culture well in order to perform business operations. Culture comprises of knowledge, moral, belief, custom, art, capabilities and law which is acquired by human being from the society. Culture is a set of values, customs or traditions of a community or society, which is referred to as a nation or an ethnic group. In this study two cultures will be taken into consideration that is Germany and Mexico. Cross cultural aspect shall be studied in order to identify impact of these two cultures on international business relationship. Discussion Importance of cross-cultural studies In highly competitive market place it is essential to possess sufficient knowledge and skills for survival. This is not only confined to technical expertise but also a thorough understanding about cultural aspects. Managers and businessperson has to understand the concept that strategy effective in one culture might fail completely in another culture (Ember and Ember, 2001). Large sample is accessed in case of cross cultural studies so as to draw correlation between different cultural entities (Chhokar, Brodbeck and House, 2007). Statistical analysis is drawn through cross cultural studies. Knowledge, skills and data can be obtained through conducting cross-cultural studies. Culture is all about values and beliefs that changes across regions. In current scenario business organizations are not confined to a particular location rather business expansion is considered as a natural phenomenon (Earley, 2006). For instance, Mexican culture is different from that of German culture. German culture is job oriented whereas Mexican culture focuses on relationship building approach. Cross cultural studies on these two cultures would be inclined towards understanding differences between these two cultures and developing strategies. Organizations operating in Germany needs to focus on task oriented approach in order to efficiently handle their team members. On the contrary, international business in Mexican culture would be successful only through maintaining long term relationship with employees. Application of theoretical frameworks Hofstede’s cultural dimension model is able to denote different components of cultural groups such as Mexico and Germany. Figure 1 highlights the application of model on Mexico and Germany. Figure 1: Application of Hofstede Model (Source: Hofstede Centre, 2015) As per the power distance factor, Mexico has a score of 81. This indicates a hierarchical society in which there are specific job positions along with responsibilities. On the other hand, Germany has a score of 35 indicating there is less of hierarchical structure and all team members are given equal importance. The German history plays a vital role in this form of behaviour since individuals have gone through a phase of strict disciplinary norm and high degree of injustice or inequality (Sergi and Adekola, 2012). World War had altered political map of Europe. The Central Powers were defeated encompassing Germany, Ottoman Empire and Austria-Hungary. Russian empires were also disrupted. Adolf Hitler had adopted innovative strategies in German war. When the peace accord in context of Britain had failed, there were immediate offensive strategies developed for West. Adolf Hitler had always been focused on implementing different strategies so as to strengthen overall power. This aspect of Hitler governs the current behaviour of people living in Germany. They are more conscious about executing allocated tasks rather than developing long term relationship with others. In the individualism dimension, Mexico has secured 30 score. This denotes Mexico has a collectivist society where there exists long term commitment and strong relationships with team members. On the contrary, high score of 67 portrays an individualistic society of Germany, where more importance is given to individual interests. Mexico and Germany both have high scores on masculinity dimension. This clearly states that they are masculine societies where managers are assertive and decisive by nature. In this kind of society, emphasis is given on performance, competition and equity (Hofstede, 2006). Mexico possesses a score of 82 on uncertainty avoidance. This reflects a rigid culture in which rules are an important part and there is less scope for innovation. People belonging to Mexican culture prefer to be busy at work and are punctual. In this cultural dimension, Germany has a score of 65. It indicates that German culture also avoids uncertainties but it is comparatively less than Mexico. Rules are also structured in Germany but equal importance is given to innovation. Mexican culture has a score of 24 in long term orientation. This outlines a normative society where inclination is towards establishing truth. As per normative cultural dimension, traditions are given higher preference. Germany has a high score of 83 in context of long term orientation (Hofstede, 2000). This indicates that German culture takes into consideration long term aspects. For instance, companies need to frame rules for employees belonging to Mexican culture since they do not believe in innovation or creativity. On the other hand, German people can be handled only through allocating them tasks and giving them flexibility in terms of enhancing their innovative or creative skills. In context of indulgence cultural dimension, Mexico encompasses a high score of 97. People belonging to this cultural background focus on leisure time, maintains a work life balance and are optimist by nature. Germany has lower score of 40 in this dimension and it indicates pessimist nature of people (Mulder, 2007). Individuals belonging to German culture are more concerned about their work rather than on leisure time. Globe orientation model also highlights key cultural aspects of Mexico and Germany. On the basis of nine cultural dimensions, Mexican culture has high uncertainty avoidance, greater power distance, are performance oriented, collectivist society, and possesses greater orientation towards human beings (Brewer and Venaik, 2010). German culture can be denoted through decentralized structure, less of uncertainty avoidance, individualistic culture and more of future orientation. Impact of cross-culture on business performance Cross-culture perspectives have a significant impact on international business operations. Mexican culture is highly contradictory to German culture. In Germany, individuals are more concerned about their long term survival and are inclined towards individual goals. Hence companies while operating in Germany needs to develop performance appraisal schemes based on individual performance (Tang and Koveos, 2008). This is simply because risk factors are totally avoided by Mexico in comparison to Germany (Aycan and Kanungo, 2000). All these aspects hinder business operations in global market place. Lewis model also describes various cultural types and its impact on business performance. Figure 2: Lewis Model (Source: Parboteah, Bronson and Cullen, 2005) As per figure 2, it can be stated that Germany is linear active and Mexico is multi-active. There is one factor which can draw in correlation between international business and cross cultural dimension. In Germany people are job oriented, less emotional and believe in keeping social and professional life separate (Appel, Thomas and Schmid, 2007). On the contrary, Mexican culture reflects high emotional content; develops strong relationship with team members, does multiple things at the same time and displays feelings. International business will face a challenge if long term relationship is not developed with Mexican people (Pramila, 2009). The above analysis clearly indicates that German and Mexican cultures are highly distinct (Tierney, 2008). It can be stated that business settings between these cultures would vary since Mexican culture shall demand for long term commitment whereas German culture will highlight only job based activities (James and Szeman, 2010). Business performance can be affected when business strategies are not incorporated in accordance with different cultural aspects. For instance, in German culture there is no inequality noticed in workplace. Managers can comfortably work in such scenario because equal importance is given to both males and females. On the contrary, Mexican culture is a conservative or male dominative society. This form of workplace environment is not suitable for business managers since there shall be less of flexibility and more of rules. Another cultural issue which can adversely affect business performance is timing. Time is highly valued by German people. Punctuality is an important aspect to be taken into consideration while expanding business operations in Germany. However Mexican culture denotes working at ease. Clients in Mexico do not have such time pressure and this causes delayed completion time of assigned tasks. Conflict in workplace would arise when individuals belonging to Mexican culture are assigned time specific tasks and German people are facilitated to work in a loosely controlled operational framework. These forms of conflicts can be eradicated when there are inter-cultural conversations and relationship can be built through balancing potential differences between cultural groups. Conclusion In this study, Mexican and German culture have been properly analyzed in order to outline impact of culture on international business relationship. These cultures are totally different from one another. Lewis model states that Mexican culture is multi-active by nature whereas German culture is linear active. International business operations are affected when management is not able to understand such cultural components. Impact of culture is high on global business operations and this can be addressed through proper analysis on cross cultural aspects. References Appel, G., Thomas, S. and Schmid, V., 2007. Impact of culture on the style and process of management and leadership. Germany: GRIN Verlag. Aycan, Z. and Kanungo, R.N., 2000. Impact of culture on human resource management practices: a ten-country comparison. Applied Psychology: An International Review, 49(1), pp. 112-134. Brewer, P. and Venaik, S., 2010. GLOBE practices and values: A case of diminishing marginal utility? Journal of International Business Studies, 41, pp. 1316–1324. Chhokar, J., Brodbeck, F. and House, R., 2007. Culture and leadership across the world: the book of in-depth studies of 25 societies. Mahwah, NJ: Lawrence Erlbaum Associates. Earley, P.C., 2006. Leading cultural research in the future: a matter of paradigms and taste. Journal of International Business Studies, 37, pp. 922–931. Ember, C. R. and Ember, M., 2001. Cross-cultural research methods. Lanham, MD: AltaMira Press. Hofstede Centre., 2015. Mexico in comparison with Germany. [Online] Available at: [Accessed 16th May 2015]. Hofstede, G., 2000. Culture’s consequences: comparing values, behaviours, institutions, and organizations across nations. Thousand Oaks: Sage Publications. Hofstede, G., 2006. What did GLOBE really measure? Researchers’ minds versus respondents’ minds. Journal of International Business Studies, 37, pp. 882–896. James, P. and Szeman, I., 2010. Globalization and culture. London: Sage Publications. Mulder, M., 2007. Power equalization through participation. Administrative Science Quarterly, 22(1), pp. 212-234. Parboteah, P., Bronson, J. and Cullen, J., 2005. Does national culture affect willingness to justify ethically suspect behaviours? International Journal of Cross-Cultural Management, 5(2), pp. 125-38. Pramila, R., 2009. The role of national culture on Mexican staffing practices. 2009 Employee Relations, 31(3), pp. 295-311. Sergi, B. S. and Adekola, A., 2012. Global business management: a cross-cultural perspective. England: Ashgate Publishing, Ltd. Tang, L. and Koveos, P. E., 2008. A framework to update Hofstede’s cultural value indices: economic dynamics and institutional stability. Journal of International Business Studies, 39, pp. 1045–1063. Tierney, W. G., 2008. The impact of culture on organizational decision-making. New York: Stylus Publishing, LLC. Read More