Challenges & Opportunity: Cross-Culture Management - Essay Example

Challenges & Opportunity: Cross-Culture Management In this paper, the researcher is performing the role of HR head for a company that is eying for business expansion in the target cultures of China, Nigeria and Brazil. As HR head, top level management of the company has asked the researcher to produce an internal report that addresses the potential opportunities and possible challenges when seeking to expand the cooperation internationally. Therefore, the researcher has assessed opportunity or threat of cross-cultural management and international business expansion with the help of existing literature. Findings of the literature have been compared in context to practical scenario of the company. In most of the cases, the researcher has found congruency between theoretical arguments and practical implications. Cultural dimensions of the proposed countries have also been examined in the paper. In the last section, suitable recommendations have been proposed by the researcher that can help the company to manage cross-cultural business operation in a more efficient manner. Table of Contents Table of Contents 3 Introduction 4 Theoretical Exploration 4 Cultural Dimensions 4 Opportunities and Challenges 6 Practically Relevant Scenario 8 Conclusion and Recommendation 9 Reference List 11 Appendices 13 Appendix A: Cultural Comparison 13 Figure 1: United Kingdom in comparison with Brazil and China 13 Figure 2: United Kingdom in comparison with China and Nigeria 13 Figure 3: United Kingdom in comparison with Brazil and Nigeria 14 Introduction In the last twenty years, composites of organizational structure, team dynamics and business environment have changed rapidly with the rise of globalization and cross-country knowledge transfer (Cullen, 2002; Dong and Liu, 2010). In modern business context, domestic companies are expanding business internationally in order to drive business growth by catering to large base of international customers. Jamal (2005) and Lysonski and Durvasula (2013) stated that domestic companies expand business internationally due to three reasons, 1- earning more business revenue from diversified business portfolio, 2- diluting business risks of market saturation in a particular geographic region and 3- cross-cultural knowledge gathering and using the knowledge to drive innovation in order to achieve sustainable competitive advantage. Similar to the argument, company of the researcher is contemplating to expand internationally in countries like, Brazil, China and Nigeria. The researcher is working at a managerial position in HR department of the company, which is headquartered at London, United Kingdom (UK). The company is embedded in British working culture because UK is its home country; therefore, it will be challenging for the company to manage cultural differences in China, Nigeria and Brazil, while expanding business internationally. The company has decided to recruit local people of the mentioned countries in operational roles; whereas, managerial positions will be held by expatriate managers who are currently working in the company in its UK based operation. These managers will perform as expatriates in the country, given that they not have much experience in working with Chinese, Brazilian or Nigerian professionals. So, there are possibilities that cultural clash might occur between expatriate managers of the company and hired local professionals in countries of Nigeria, Brazil and China (Chen and Francesco, 2000; Chen and Francesco, 2003). Theoretical Exploration Cultural Dimensions Hall (1955; 1966) was the first scholar to highlight the importance of cross-cultural management and the scholar had taken help of anthropology theories in order to develop the theorem. However, actual development of the topic of cross-cultural management happened with seminal research works of Hofstede (1980; 2000). Hofstede (1991; 1993) identified five cultural dimensions that can set two countries apart; on the other hand, Trompenaars (1993) identified seven similar kinds of dimensions in order to distinguish countries. These five cultural dimensions can be defined as, 1- individualism versus collectivism, 2- masculinity versus femininity, 3- uncertainty avoidance, 4- power distance and 5- long-term versus short-term orientation (Hofstede, 1980 and 2000). While working as HR head with the company, the researcher found that the company has not undertaken any previous international expansion movements and managers are mostly from UK and other EU (European Union) nations. Therefore, while expanding business in countries like, China, Nigeria and Brazil, the abovementioned five dimensions can create both challenges and opportunities in cross-cultural management. For example, Chen, Tsui and Farh (2002) and Cheng, Jiang and Riley (2003) conducted research on Chinese cultural differences and had realized that most European countries find it difficult to understand collectivism aspects of Chinese employees. So, the researcher will compare cultural dimensions of the home country of the company with its next venture countries like, China, Nigeria and Brazil. Individualism versus Collectivism- Kirsch, Chelliah and Parry (2012) and Cheng, et al. (2004) pointed out in case of individualistic culture; people tend to live for fulfilling personal objectives and care very less about collective interest of surrounding groups. In case of collectivist society, people prefer to live with families and care more for collective interest of groups. UK (home country of the company) has been classified as an individualistic society; while China, Nigeria and Brazil are classified as collectivist society. In case of collectivist society, people prefer to live within secure environment of strong cohesive groups and expect social security in return of their loyalty (Kirsch, Chelliah and Parry, 2012). Masculinity versus femininity- masculine society is dominated by praising “tough and competitive” male characteristics. In such societies, people care more for winning, success and achievement and are ready to sacrifice quality of life in order to achieve success. UK has been found to be a relatively masculine society. In case of feminine society, people care more for personal values, quality of life and empathy towards other people, instead of achieving success only (Kirsch, Chelliah and Parry, 2012). Except Brazil, China and Nigeria are characterized with masculine culture (Geert-Hofstede, 2014). Uncertainty avoidance- uncertainty avoidance refers to tendency of particular cultures to avoid unstructured problems or feel uncomfortable while facing uncertain situations. In uncertainty avoiding countries, people do not accept new products easily and prefer to wait and gather knowledge from prior user experiences in order to become certain about outcome of using the new product. Nonetheless, the researcher has found that Brazil has the highest level of uncertainty avoidance characteristics in comparison to countries like, UK, China and Nigeria (Geert-Hofstede, 2014). Power distance- this cultural dimension is defined as the extent to which unequal distribution or power or decision making authority is accepted among people. In countries with high power distance difference, most commoners are dominated by individuals who have access to power or have decision making authority. In UK, the society is more democratic in nature and small level employees can participate in important decision making. However, high power distance index in countries like, China, Nigeria and Brazil, implies that general employees are not taken into account during critical decision making. Long-term versus short-term orientation- in case of a country with long-term orientation, people are ready to wait for results of their effort and focus more on building strong relationships with stakeholders in order to achieve future benefits. In case of country with short-term orientation, people are not ready to wait for benefits of their actions and desire immediate gratification of their needs. In UK and Brazil, employees are characterised with short-term orientation and want immediate fulfilment of their needs. On contrary, in case of China and Nigeria, people are characterised with long-term orientation and concentrate more on developing relationship in order to gain benefits in future (Geert-Hofstede, 2014). Opportunities and Challenges Molinsky (2007) and Rarick, Olin and Winter (2007) identified three types of opportunities while managing business in cross-cultural manner, such as, 1- accessing culturally diversified talent pool who can help the company to drive business growth, 2- a learning organization can study key strategic decision points while accessing cross-cultural information and 3- cross-cultural management turns managers into competent leaders who can help an organization to drive future success. While expanding cooperation internationally, top level management with learning attitude can use open mind to gather benefits of cross-cultural aspects and use these macro-environmental information in order to make more robust strategic decisions. These opportunities can be defined in a more detailed manner so as to provide more depth to the discussion. Opportunity 1- while expanding business internationally, a company needs to rely on local employees in those foreign countries because the latter are accustomed to cultural dimension of their countries. Employees in foreign countries might have unique skill set that are absent among those from home country. Hence, managing employees in cross-cultures not only can fulfil talent gap for the company, but also help them to address macro or micro environmental uncertainties in better manner (Schneider and Barsoux, 2003). Opportunity 2- from strategic perspective, while expanding business internationally in emerging markets, multinational corporations (MNCs) of developed nations can gather knowledge about reverse innovation and use it to attain strategic advantages in home country (Govindarajan and Ramanurti, 2011). Lessons learned from international environment can often help MNCs to adjust their strategic positioning or integrate new technological innovation to drive business growth. Opportunity 3- from leadership perspective, managing a cross-cultural team requires more leadership skills for global managers as opposed to managing business in home country (Schneider and Barsoux, 2003). For example, in order to manage cross-cultural business effectively, global managers need to understand cultural context of each country and adjust the leadership skills as per cultural requirements as well as overcome communication barriers (misunderstanding caused by failure to comprehend foreign languages). As a result, managers become more competent and the company gains a future leader who can facilitate future success. Schwartz (2006) and Oertig and Buergi (2006) found that cross-cultural management or expanding business can posit certain challenges for companies such as, 1- leading or managing people with equal efficiency in different countries, 2- selecting suitable communication style that can be understood by employees in those countries and 3- developing trust among cross-culture employees. Challenge 1- Dalton, et al. (2002) pointed out that global managers often fail to understand cultural differences and variance of expectation of people in different countries. As a result, they use same set of rules to manage people for all countries and face hostile attitude from employees there who fail to trust leadership capabilities of the global manager. It is a challenge for global managers to adjust their leadership style in accordance with different cultural contexts and expectations of employees in different countries (Walumbwa, Lawler and Avolio, 2007). Challenge 2- an important thing to remember is that English is the mother language in every country across the globe. There are countries where English is treated as a second language, provided the local people in these countries are more comfortable in their local languages like, Arabic, Chinese, Hindi and others. Therefore, it becomes challenging for companies to communicate vision statement or performance objectives to cross-cultural employees in understandable manner. Challenge 3- Friedman, Dyke and Murphy (2009) found that developing trust becomes a challenge for companies because trust is generated through face-to-face contact; but in case of cross-cultural management, companies often use virtual communication techniques such as, video calling or online employee portal, to communicate with employees in different countries. Tele-calling and formal meetings are also used by companies to convey vision and objectives to employees in different countries. In such settings, it becomes difficult to put across their feelings to top level management due to absence of communication in a face-to-face manner and intervention of intangibility. Thus, it is challenging for companies to engage employees in different countries through development of trust and belief between employee and employer. Practically Relevant Scenario As HR head of the company, the researcher has found that most of previously discussed opportunities or challenges fit into the underlying relevant scenario for the UK based company planning to expand business in countries like, China, Nigeria and Brazil. At least two of the previously discussed challenges in the literature have practical consequences for the company of the researcher. For example, Cheng, Jiang and Riley (2003) mentioned that UK based company managers face difficulties in communicating with Chinese employees who are more comfortable in Chinese, instead of English. In the similar context, as the company is planning to expand in China, managers are bound to encounter hardships in understanding Chinese language or even in conveying the performance objectives to Chinese employees in English. In case of Nigeria and Brazil, English is widely used; hence, the company managers will not face much difficulty due to language barriers. Time difference exists between home country of the company and other three countries of China, Nigeria and Brazil. So, it will be challenge for the company to communicate all information in real time manner to its strategic business units in abovementioned countries. On the other hand, another example can be cited in order to show congruency between opportunities or challenges in the literature and actual business context for the company. Consideration of research works of Cheng, et al. (2004) and Dalton, et al. (2002) reveal the fact that employees in countries like, China, Nigeria and Brazil, prefer certain communication styles due to collectivist nature of their society. For example, Chinese employees prefer face-to-face communication over virtual communications; they believe that while communicating directly, feelings are expressed in unconstrained manner, thereby even engaging in informal conversation with other members (Cheng, et al., 2004). In case of Nigeria and Brazil, they also prefer face-to-face communication over virtual communications, besides their preference to engage in group chatting (Geert-Hofstede, 2014). Now, it will be a challenge for the UK based company to establish direct communication channel, instead of virtual communication tools like, Skype, video calling and tele-calling, for communicating in real time manner with the employees in China, Nigeria and Brazil. On opportunity grounds, certain level of congruency exists between arguments in literature and practical context of the company. For example, as mentioned in the literature, the company can also use educated and talented Chinese, Nigerian or Brazilian human resource pool in order to address macro-environmental uncertainties and create buffer against business risks in those countries. Another point of congruence is that the company can develop future leaders by suggesting and preparing global managers to manage cross-cultural challenges effectively. Even so, the researcher has found specific contradictions with literature in context of practical scenario for the company. For example, in the literature, it has been mentioned that MNCs have opportunities to learn new things from macro-environment of different countries; but, the researcher has found that the company can only learn from processing macro-environmental information by managers. Hence, there is no certainty or validity in this assumption and neither can it be classified as an actual opportunity for the company. Conclusion and Recommendation It is evident from the above discussion that cross-cultural management provides both opportunities and challenges to companies. In such context, the sample company in the study can count on the opportunities, while expanding business in countries like, China, Nigeria and Brazil, for facilitating future business growth. On contrary, they also need to take proactive steps in order to address challenges and invest resources to convert challenges into potential opportunities. In this context, the researcher will state three recommendations that can help the company to manage cross-culture diversity in an effective manner. Recommendation 1 (leading or managing people)- in the initial phase, the company might use expatriate managers; but proper training and development program should be developed so as to transform talented local employees in these countries into future managers for strategic business units in their country. Mentoring and coaching techniques should be used to nourish talents of local employees; and in future context, these local talents would be elevated to important managerial positions by replacing expatriates. Recommendation 2 (communicating) - top level managers from company headquarters should visit the offices in China, Nigeria and Brazil and communicate with employees in face-to-face manner. The company should also take help of language interpreters for overcoming language barriers. The company should sent expatriates with the knowledge of the local language in foreign countries as they can successfully make employees in these countries understand perspectives of the company clearly; and Recommendation 3 (creating global managers) - the company should use cross-border knowledge transfer program by gathering potential managerial candidates from offices of each geographic region and rotating their job responsibilities in order to prepare a set of global managers who can act as future leaders of the company. Therefore, in conclusion, it can be said that the company needs to make strategic investment in order to uphold cross-cultural management as a platform for achieving sustainable future growth. Reference List Chen, Z. X. and Francesco, A. M., 2000. Employee demography, organizational commitment, and turnover intentions in China: Do cultural differences matter? Human Relations, 53, pp. 869-87. Chen, Z. X. and Francesco, A. M., 2003. 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Applied Psychology, 56(2), pp. 212-30. Appendices Appendix A: Cultural Comparison Figure 1: United Kingdom in comparison with Brazil and China (Source: Geert-Hofstede, 2014) Figure 2: United Kingdom in comparison with China and Nigeria (Source: Geert-Hofstede, 2014) Figure 3: United Kingdom in comparison with Brazil and Nigeria (Source: Geert-Hofstede, 2014) Read More