Cross-Cultural Management in International Business - Essay Example

Cross Cultural management in International Business Student’s name Code & Course Professor’s name University City Date Cross Cultural management in International Business As the global business environment continues to open up, more companies and investors continue to set up international businesses. Globalization and market liberalization has opened up foreign markets to new entrants. However, with this comes competition and the need to understand new and unfamiliar circumstances. Culture is one of the most important business aspects that companies must look to understand. This paper speaks about the role of culture and its understanding in the success of international business. Literature review Culture In life, the term culture is often used to refer to such things as the arts, classical music or philosophy. The term culture, however, has a much broader meaning, going far beyond simple personal standards of refinement. Perhaps the most comprehensive definition of culture is that it is the collective description of everything people think, have and do as members of the society. The three important aspects of the definition are to have, do and as members of society. To have something implies the presence of certain physical or material aspects or objects. To think refers to the ideas, attitudes, values and beliefs of the people involved. To do requires people to behave in certain expected ways. The final phase of the definition, as members of society, indicates that culture is often shared between two or more people in a particular setting. Ferraro (2002) describes additional elements of culture, apart from the basic definition, and goes on to connect them to elements of international business. Culture is learned, and not connected to any genetic processes. It is a function of the learning and interacting process with one’s environment, making it essentially a store of all the society’s knowledge (Ferraro, 2002). What this means for international business is that an understanding of the culture can lead to greater levels of tolerance. More importantly, though, since everyone masters their culture through learning, it is possible to understand foreign culture if exposed for long enough to its important elements. Ferraro (2002) also describes culture as being able to influence biological processes. The non-tangible parts of culture such as ideas, values and beliefs have profound effects on the human body and how it operates. He also explores the subject of cultural universals, which are constant aspects that are common to all the cultures of the world. Cultural universals include marriage, economic systems, family, social control systems, educational systems and supernatural belief systems. He describes how cultures change, and expounds on the idea of ethnocentrism. Ethnocentrism refers to the tendency to evaluate the behavior of a foreigner based on standards of one’s own culture, believing it to be superior (p 35). There are numerous models that describe various elements of culture, giving a more in depth understanding. Hofstede’s model Hofstede describes the six elements and dimensions of culture (Hofstede, 2011). Power distance is the degree to which the less powerful people on the society accept and expect the unequal distribution of power. Power distance relates to the influence of culture on solutions to problems regarding human inequality. Uncertainty avoidance in this respect is different from risk avoidance. It is the extent to which the society is programmed to be okay with unstructured situations. These situations might be surprising, unknown or different from the usual. It is the measure of culture’s influence on the levels of stress in the face if unknowns. The Hofstede model also contrasts individualism and collectivism. This is the description of how strong group ties are in a society, versus the expectations of people to look after themselves in situations where individual ties are loose. This is essentially the influence of culture on how people integrate into groups. Masculinity versus femininity compares the societal distribution of power between the genders. It is the description of how culture influences the emotional role distribution between men and women. Hofstede (2011) also compares long versus short term orientation; the influence of culture on the focus of people’s attention to either the future or present. The indulgence versus restraint dimension is the description of culture’s influence on the decision between immediate gratification and control when faced with human desires central to enjoying life. Hall’s cultural theories are perhaps more appropriate in the context of international business. According to Hall (1976), culture is like an iceberg. Several elements are visible, above the water as in an iceberg, but the bulk of the elements are hidden beneath the surface. The only way to truly understand culture is to go beneath the surface and experience for oneself (Hall, 1976). Another common model is the Trompenar’s dimension theory, which divides culture into affective vs. neutral, universalism vs. particularism, diffuse vs. specific, individualism vs. communitarianism dimensions and achievement vs. ascription. Cross-cultural management Whether it is marketing, negotiation or in management, the success or failure of an organization depends on how well employees utilize their skills in new environments. This ability depends on two factors; the individual’s skills on the job and their ability to adapt to elements of the new culture. Research shows that insensitivities to the cultural aspects of foreign cultures is the leading cause of undesirable results (Ferraro, 2002). Learning to manage and adopt to different aspects of culture in different settings is important to the inclusive success of the business. A lot of studies in management rely on statistical inference (Warner-Søderholm, 2013). However, it is important to have such surveys which establish the importance of cross cultural management. Case study This paper will compare the cultural inclinations of Japan and China, two of the world’s most important business countries in using the Hall cultural model of high vs. low context communication, and through Hofstede’s Model. China and Japan through Hofstede’s cultural dimensions Power distance In terms of power distance, the value are lower for the Japanese than they are for the Chinese. This might be traced all the way back to the ancient ways and traditions of the two. Hofstede compares the difference between the inheritance laws of Germanic and Latin Europe when mentioning the difference in power distances between the Chinese and the Japanese the Chinese. The Chinese had similar inheritance practices to Latin Europe, where the inheritance was divided equally among all the heirs. Japan, on the other hand, had a one son inheritance tradition. Another Cultural aspect that might affect the power distances is the fact that the Japanese emperors had unimpeachable power, while in Chinese tradition, the people could judge rules (Hofstede, 1980). Uncertainty avoidance The Chinese and Japanese are at different ends of the uncertainty avoidance scale. The Chinese have a very low sense of uncertainty avoidance while the uncertainty avoidance values for japan are high. This could be because of the Japanese tendency towards religious ancestor worship, making it easy for them to cope with uncertainty. This is evident in the structure and behaviors of their organizations. For instance, studies of Japanese organizations show that they are characterized by less formalized rules, less standardization and managers that are people oriented. The Chinese, on the other hand, have a high relativistic sense of morality (Yeh, 1988). Individualism There is evidence that the Chinese are more individualistic that the Japanese. Japanese culture generally does not have the idea of personality, one which is distinctly separate from the society. Instead, the Japanese often refer to Jen, which is the concept of the human constant, and involves both the person and their environment. The Japanese tend to be loyal to their organizations than the family. They will end up transferring part of their allegiance to the clan or extended family to the organizations they work. The Chinese, on the other hand, do not have their kinship expanding further than the clan. The clan itself has limited size because it is rooted in the principles of marriage and birth. On the other hand, the Japanese kinship system allowed for the men to be integrated into much larger groups across kinship lines. The Kinship system also allowed for voluntary entry into any group one desired. This kinship system, called the Kin-Tract system, gave Japanese firms a distinct advantage in terms of diversification when hiring, and fostered their faster modernization and industrialization after contact with western cultures, as opposed to the Chinese who stayed with their traditions. Among the Chinese, there has always been a conflict between the concepts of loyalty and filial piety. According to their culture, it is impossible to be loyal to the family, and at the same time remain loyal to the country or society. In fact, according to some researchers, it is their stance on individualism that makes these cultures fundamentally different (Kelley, et al., 1987). Japanese firms in Taiwan, considered largely Chinese, often have their executives complaining of a general lack of loyalty to the organization (Negandhi, 1973). China and Japan through Halls model The Chinese and Japanese cultures are both consistent with what one would consider high context communication styles (Kim, et al., 1998). In high context countries, the communication is influenced by the structured social hierarchy, close human relations and strong behavioral norms, all of which are present in both Japanese and Chinese culture. In high context cultures, listeners are expected to read between the lines to infer what is being said, as not everything is spelled out. Messages are in high context communication are either in the physical context or are internalized into the listening individual. Very little is immediately apparent from the coded or explicit part of the transmitted message (Hall, 1976). Communication in China and Japan is deeply rooted in the language. These languages are classified as agglutinating, containing many separable elements attached to the words. The Japanese language is especially known for its system of humility and respectfulness. In terms of phonetics, the Japanese language has a restricted number categories classified by syllable weight, called moras, resulting in multiple homonyms. About 35 per cent of words in the language belong to one of these homonyms (Tokuhiro & Hiki, 2005). It often is difficult to discern the true meaning of Japanese conversation without the deep understanding of the context. Changes in the past decades One of the fundamental aspects of culture is the fact that it changes gradually over time. Cultural changes occur through the process of innovation, which is the introduction of new thoughts, material items or trends. Most innovations brought into other cultures are a result of borrowing from other cultures (Ferraro, 2002). The Chinese and Japanese cultures have experienced a lot of change in the past few years. These two countries have some of the richest traditions in the form of culture. However, modernization has resulted in changes that they have not managed to escape. For instance, in China, the 2008 Olympics hosting was considered by many a symbol of the conformity and change of the Chinese culture (Brennan, 2009). There have been dramatic cultural changes in China in the recent past. There still might remain some continuity with the past, mostly in form of stability and allegiance to the family. However, lifestyle and value changes have taken place. The Chinese no longer endorse Confucian elements such as harmony and tolerance. The Chinese are exhibiting a new trend of assertiveness. In Japan, cultural change in the past few decades can be viewed in terms of cause and effect. One can consider the Japanese culture’s low levels of individualism to have fostered the rapid growth of modernization and industrialization trends, especially compared to the Chinese. On the other hand, Japan’s industrialization and economic clout has further led to the push away from the country’s remaining ties to collectivism. The general increases in wealth and per capita income as a result have, for instance, resulted in a trend where new generations plan their own career paths rather than depending on employment at one company for life. This led to a new culture of individualism and liberty, in contrast to Japan’s traditions of collectivism in business, family and the clan. Increases of education and the dismantling of class hierarchy systems are another huge source of change in Japanese culture. With higher levels of education and the abandonment of the class system, the lowest class of peasants became more involved in the day to day concerns of government. In the old Tokugawa era, it would have been unheard of for one to question their master or complain (Jamison & Schalow, 2011). The trend of westernization affecting cultural practices in Japan started as far back as the end of the Edo period and the start of the Meiji period. It may not seem like it, but to many people, the changes in culture, arts, government and education were as a result of western influence. For instance, Europeans played a key role in the creation of the new government and the Meiji constitution of 1889. In the same way the Meiji constitution was based on European style of government, the education system was also based on European models. Conclusion In the minds of many, the cultures of Japan and China are not too different from one another. In fact, there are many related aspects of both cultures and traditions. However, more importantly, there are important fundamental differences between the two. In a world where global expansion and competition are increasingly shaping business environments, it is important to understand differences in culture to be able to work in environments that involve either culture in isolation, or both cultures. It is important to understand the cultural basics and the traditions behind them, as well as the ways in which both cultures have experienced growth in the past few years. Reference list Brennan, K. L., 2009. Modernization and Cultural Change in China: Links to the 2008 Summer Olympics. Links to the 2008 Summer Olympics, Volume 10, pp. 81- 102. Ferraro, G. P., 2002. The Cultural Dimension of International Business. New Jersey: Prentice hall. Hall, E. T., 1976. Beyond Culture. 1 ed. New York: Doubleday. Hofstede, G., 1980. Culture's Consequences: lnternationat Differences in Work Related Values. Beverly Hills: Sage Publications. Hofstede, G., 2011. Dimensionalizing Cultures: The Hofstede Model in Context. Online Readings in Psychology and Culture, 2(1), pp. 1- 26. Jamison, C. & Schalow, P., 2011. Hagakure: The Book of the Samurai. [Online] Available at: http://www.washingtonindependentreviewofbooks.com/bookreview/hagakure-the-manga-edition Kelley, L., Whatley, A. & Worthley, R., 1987. Assessing the Effects of Culture on Managerial Attitudes :A Three Culture Test. Journal of International Busines Studies, 19(2), pp. 17- 31. Kim, D., Pan, Y. & Park, S. H., 1998. High- Versus Low-Context Culture: A Comparison of Chinese, Korean, and American Cultures. Psychology and Marketing, 15(6), pp. 507- 521. Negandhi, A., 1973. Management and Economic Development." the Case of Taiwan. Hague: Martinus Nijhoff. Tokuhiro, Y. & Hiki, S., 2005. Effects of mora phonemes on Japanese word accent. Logico-Linguistic Society of Japan, s.n. Warner-Søderholm, G., 2013. Beyond a Literature Review of Hall’s Context Dimension: Scale Development, Validation & Empirical Findings within a Norwegian Study. International Journal of Business and Management, 8(10), pp. 27- 40. Yeh, R.-s., 1988. On Hofstede's Treatment of Chinese and Japanese Values. Asia Pacific Journal of management, 6(1), pp. 149-160. Read More