Cross-cultural challenges in international business management

The company he worked for was taken over by a British multinational in the mid-1990s. The newly appointed UK Managing Director, during one of his visits to the plant, asked how Gujarati people eat at home. Hearing the answer, he decided to sit on the ground and eat Gujarati food, along with all the senior colleagues on the floor.

What was the Managing Director trying to do? He was trying to appreciate the cultural norms of the new place and show his willingness to embrace. This behavior of the Managing Director obviously helped the local administration to open up more during the subsequent discussions.

In the last 2 decades, cross-cultural challenges in international business management have become prominent as companies began to expand beyond territorial borders. Even leading management schools in India have started incorporating cross-cultural challenges as part of the international business administration curriculum.

With “culture” one of my areas of interest, I recently accepted an invitation to educate the students of a Diploma program in International Business Management, on the subject of intercultural challenges. For my preparations, I leafed through many books on the subject. My knowledge base was substantially enriched as the wealth of information contained in these books was invaluable and highly relevant.

This article is an effort to present some of the relevant topics related to intercultural challenges in International Business Management.

What is culture?

Culture is the “acquired knowledge that people use to anticipate events and interpret experiences to generate acceptable social and professional behaviors. This knowledge forms values, creates attitudes, and influences behaviors.” Culture is learned through experiences and is shared by a large number of people in society. Furthermore, culture is transferred from one generation to another.

What are the core components of “Culture”?

• Power distribution – Do members of society follow the hierarchical approach or egalitarian ideology?
• Social relationships – Are people more individualistic or do they believe in collectivism?
• Environmental relations – Do people exploit the environment for their socio-economic purposes or do they live to live in harmony with the environment?
• Work patterns – Do people perform one task at a time or take on several tasks at the same time?
• Uncertainty and social control – If members of society like to avoid uncertainty and be bound by rules or if members of society are more based on relationships and like to deal with uncertainties as they arise?

What are the critical issues that generally arise in cross-cultural teams?

• Inadequate trust – For example, on the one hand, a Chinese coach wonders why his Indian teammates speak Hindi in the office and, on the other hand, his teammates argue that when the coach is not around, why can’t they speak in English?
• Perception – For example, people from advanced countries consider people from less developed countries inferior or vice versa.
• Inaccurate biases – For example, “the Japanese make group decisions” or “the Indians do not deliver on time”, are too generalized versions of cultural prejudices.
• False communication – For example, during discussions, the Japanese nod their heads more as a sign of courtesy and not necessarily as an agreement with what is being talked about.

What are the communication styles that are influenced by the culture of the nation?

• ‘Direct’ or ‘Indirect’ – Messages are explicit and direct in the ‘Direct’ style. However, in the ‘Indirect’ style, the messages are more implicit and contextual.
• ‘Elaborate’ or ‘exact’ or ‘succinct’ – In the ‘elaborate’ style, the speaker talks a lot and repeats many times. In the ‘Exacto’ style, the speaker is precise with a minimum of repetitions and in the ‘Succinto’ style; the speaker uses fewer words with moderate repetitions and uses non-verbal cues.
• ‘Contextual’ or ‘Personal’ – In the ‘contextual’ style, the focus is on the speaker’s title or designation and hierarchical relationships. However, in the ‘Personal’ style, the focus is on the individual achievements of the speaker and there is minimal reference to hierarchical relationships.
• ‘Affective’ or ‘Instrumental’ – In the ‘affective’ style, communication is more relationship-oriented and listeners must understand meanings based on non-verbal clues. Whereas in the ‘Instrumental’ style, the speaker is more goal-oriented and uses direct language with minimal non-verbal cues.

What are the important non-verbal cues related to communication between cross-cultural teams?

• Body contact – Refers to hand gestures (intentional / unintentional), hugging, hugging, kissing, hitting on the shoulder, firm handshakes, etc.
• Interpersonal distance – It is the physical distance between two or more individuals. 18 “is considered intimate distance, 18” at 4 ‘is treated as personal distance, 4’ to 8 ‘is acceptable social distance, and 8’ is considered public distance.
• Artifacts – This refers to the use of tie pins, jewelry, etc.
• Para-language – It’s about the speed, pitch and volume of speech.
• Cosmetic products – It involves the use of powders, fragrances, deodorants, etc.
• Symbolism of time – It’s about the suitability of time. For example, when is the right time to call, when to start, when to end, etc. because different countries are in different time zones.

Epilogue

“Cross-cultural challenges in international business management” has become a very followed topic in the last two decades. There are enough examples of business failures or stagnation or failure of joint ventures, due to the inability of management to recognize cross-cultural challenges and address them appropriately. There are also examples of companies that have mandatory culture management training or acculturation programs for employees sent abroad or hired in other countries, to ensure that cross-challenges are addressed effectively.

The world is getting smaller and smaller, and therefore managers involved in international business will need to become more sensitive to the challenges emanating from the cultural and ethnic landscape of the countries in which they work.

Ignoring cultural challenges while managing internal business is a risky proposition because the stakes are so high. It is akin to the “Hygiene” factor of the “Two Factor Motivation” theory developed by psychologist Frederick Herzberg in the mid-1960s. In managing international business, embracing the cultural diversity of the country can bring success or no, but failing to do so will surely increase the chances of stagnation or failure.

Reference:

• “Intercultural Management: Text and Cases” by Bhattacharya Dipak Kumar
• “International Management: Culture, Strategy and Behavior” by Hodgetts Richard M, Luthans & DOH)
• “Management Across Cultures: Challenges and Strategies” by Richard Steer, Scnchez-Runde Carlos J, Nardon Luciara)
• “Bridging The Culture Gap: A Practical Guide to International Business Communication” by Carte Penny and Chris Fox

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