Cultural Diversity in a Global Business Context

 

 

Cultural Diversity in a Global Business Context

 - J. Lee

 

             The rise of multinational enterprises has to do with both internal and external factors. Successful MNEs have their own effective management strategy, but their success depends much on external factors including globalization that enabled trading, foreign direct investment, technological transfer to name a few. In the process of expanding their businesses, globalization was not an option but inevitability for those global enterprises. With global integration of businesses and industries, cultural diversity in a business enterprise is much anticipated. Thus, the importance of culture cannot be ignored in planning the success of multinational enterprises. In order to manage cultural diversity in a global context, it is important to find common ground between localization and globalization and develop cross-cultural management that goes beyond the realm of cultural classifications.

             Cultural diversity in business enterprises is a by-product of globalization. The MNEs with cultural diversity are beneficiaries of globalization that allow the transfer of resources, language adaptation, technological advances and transfers, foreign direct investment, and wireless mobile communications. Globalization has contributed positively to cultural diversity in a business organization for several reasons. First, globalization gave rise to faster language adaptation. Businesses expand their activities in a “global village” communicating in the “global language” or English. The uniformity in business ｅxpressions and technical jargons in English can speed up business transactions without having to have all documents translated back and forth in related languages of business partners. This does not mean to disrespect each other’s culture, and if needed, the language of a related business party can supplement English. Cultural diversity and fast language adaptation allow high speed in transferring ideas and facts with more objectivity. Globalization not only allows cultural diversity, but it helps firms to pick the best business practice available. For example, the internal study of Korean Air on its crash incidents found out that aspects of Korean national culture such as respect for authority was accounted for power distance in the cockpit preventing lower-level crew members from challenging the captain’s wrong decisions (WSJ, 1999).  After revising pilot training modules to encourage co-pilots to speak up and offer advice to the captain and hiring outside experts from Western cultures, where hierarchy is less common, the airline could eventually achieve excellent safety record (Shenkar and Luo, 2008, p. 163). Cultural diversity eliminated power distance and hierarchy that were detrimental in the cockpit as seen in the KAL example. Globalization also encourages cultural diversity in business enterprises respecting uniqueness of ideas and values coming from different culture (Mead and Andrews, 2009, pp. 5-7). And this in the end allows diversity and flexibility coming from different management styles. When diverse cultural management styles are understood and accepted, better business strategies, solutions and ideas can be formed to target a wider range of global customers as well.

             However, just like opponents of globalization would argue that only rich countries benefit from globalization at the expense of poor countries, economic and financial globalization in the business world could also benefit only those wealthy MNEs at the cost of small and medium-sized firms or fledgling domestic businesses. Instead of valuing cultural business practice of a small firm, powerful global enterprises often impose cultural imperialism of “Westernized business practice” in disguise of cultural diversity. The organic nature of culture in its diverse, idiosyncratic and unique form could be pushed towards a common ‘global’ cultural ecology that is common, globally interrelated, and non-idiosyncratic (Bird and Fang, 2009). When common cultural business practice based on Western business philosophy is believed to be a ticket to uniform global business practice, cultural learning of business differences in values and practices can easily be ignored. Cultural imperialism will be misused as a justified means of preventing cultural clashes in business practice or as Samuel Huntington puts it cultural imperialism can bring about its own “clash of civilization.” This inhabits cultural learning from different business practices and ethics.

             In order for managers and employees to manage cultural diversity successfully in a global environment, they should be able to develop cross-cultural management skills and create values and learning experience by respecting cultural diversity. In understanding cultural diversity, globalization and localization may seem contradictory, but they are in fact two sides of the same coin and should be the basis of cross-cultural management. In order to manage cultural diversity in a fair and productive manner, a case-by-case approach in each case of a cultural aspect of business practice is necessary. Culture is not to be imposed but to be learned with flexibility, and true management independence comes when related business parties are truly independent from their cultural biases so as to genuinely create culturally transfusioned relationships (Lindridge, 2005). Furthermore, respect for other culture comes from understanding merits of both localization and globalization. Localization embraces uniqueness of local culture, whereas globalization advocates respecting other cultures and the global culture.  In sum, when managing cultural diversity in a global business context, attitudes, skills, and strategies should be chosen and created that go beyond the realm of culture. Going back to the Korean Air example, the Western style communication method was chosen not because it is “superior to” the Korean hierarchy, but because in the context of communicating inside the cockpit, it is the best communication method proven in the industry. This does not and should not mean that Western culture of direct communications work the best in all cases. Culture is important, but it should not be overused, misused, or manipulated as trite rhetoric of global business practice.

As Bird and Stevens (2003) implies it might be irrelevant to talk business in terms of national cultures in a global business context. Cultural differences coupled with generation gaps make 21^st century management ever more challenging. However, understanding both pros and cons of globalization and respecting cultural diversity, a business enterprise will be able to foster fair and profitable business practice of cross-cultural management.

 

References:

 

Bird, A. & Fang, T. (2009) 'Editorial: cross cultural management in the age of globalization', International Journal of Cross Cultural Management, 9 (2), pp. 139–142, Sage Premier Database [Online]. DOI: 10.1177/1470595809335713 (Accessed: 1 July 2009).

 

Bird, A. and Stevens, M.J. (2003) ‘Toward an emergent global culture and the effects of globalization on obsolescing national cultures’, Journal of International Management, 9(4), pp. 395-407.

 

Lindridge, A. (2005) ‘Galton’s problem’ In The Blackwell encyclopedia of management, vol. IV.

 

Mead, R. & Andrews, T.G. (2009) International management. 4th ed. Chichester, England: John Wiley & Sons.

 

Shenkar, O. and Luo, Y. (2008) International Business. 2^nd ed. California: Sage Publications.

 

WSJ. (1999) ‘Korean airlines faulted on safety by internal study’. Wall Street Journal, 8 April 1999.