Understanding Cultural Differences in Successful Global Businesses - Essay Example

?Understanding Cultural Differences in Successful Global Businesses Introduction In the current age of globalization, interactions with other cultures are inevitable. In most activities, in business and in social and political interactions, cultural differences are an expected part of the global community. As the world moves more towards the globalization of activities, these differences would become more apparent. For businesses and corporations, their ability to manage and understand such cultural differences will eventually spell the difference between success and failure. This paper shall discuss the thesis that understanding cultural differences is fundamental to success in global business. This paper shall first discuss the common differences apparent in various corporations and businesses. Secondly, it shall then review how corporations are dealing with these differences. Thirdly, a deeper understanding of cultural differences and how they impact on successful global businesses will be presented. Lastly, this essay will provide a summary and conclusion of the discussion. This article is being carried out in order to establish a clear and deeper understanding of globalization as well as the impact of cultural differences in relation to this phenomenon. Body In the current business context, cultural differences have a significant impact on the way businesses are carried out. Culture refers to shared values which impact on perceptions, attitudes, as well as responses (Hofstede, 1980). These qualities are very much apparent in the workplace and marketplace (Want, 2003). Language is one of the main elements of culture and although English is considered the universal language, not all states speak it. Despite the universality of English however, corporations have sought to expand their language functionality, noting the marked increase in the number of languages being used in the business world, including Chinese, Spanish, and Japanese (Group, 2008). For most international companies, most of them have understood that in order to be globally competent, they need to establish at least two versions of their websites. Japanese companies, for example, have adopted two versions of their websites – one in their native language and another one in English (Scholtens and Dam, 2007). Through these adjustments, these companies have managed to be accessible to their country and to the international community. Hofstede (1980) discusses how other elements of culture also impact on the effective globalisation of businesses. These elements include: power distance, uncertainty avoidance, individualism, masculinity, and long-term orientation. Power distance refers to the extent by which the less powerful members of society accept power (Hofstede, 1980). Cultures of Japan, Asian, and other Latin countries have high power distance relationships, however, this is low for the Nordic, Anglo, and German cultures (Robbins and Stylianou, 2008). Uncertainty avoidance is seen based on how people adjust to uncertainties, with some cultures having weak uncertainty avoidance and others having strong uncertainty avoidance. The Anglo and Nordic areas are known to have weak uncertainty avoidance, and the Latin, German, Asian, and Japan cultures have strong uncertainty avoidance (Robbins and Stylianou, 2008). As for individualism and collectivism, those which are individualistic are usually those who stick to rights of privacy and individual freedom; for those with collectivist cultures, their press is often controlled by the state and private lives are within public realms of interest (Robbins and Stylianou, 2008). Anglo, Nordic, Latin, and German cultures portray individualist qualities, while Asian cultures have collectivist cultures. In relation to gender divisions, the masculine-dominated cultures are those which have aggressive and assertive males and have strong material success goals; on the other hand, feminine cultures tend to focus on preservation, conservation, and sympathy for the weak (Robbins and Stylianou, 2008). Masculine cultures belong to the Anglo, German, and Japanese clusters; and Nordic, Latin, and Asian cultures are more feminine in orientation. Finally, in terms of short/long term dimensions, short-term orientations put a prime importance on the respect of traditions and concerns on appearances, and for long-term orientation, the focus is on large savings and thrift (Robbins and Stylianou, 2008). The Anglo, Nordic, Latin, and German cultures focus on short-term orientation; and in contrast, the Asian cultures have a long-term orientation. The above elements indicate the current cultural differences and how various states and cultures lie within the corporate context (Usunier, 2011). In order for cultural competence to be gained by businesses, an improved understanding of cultural differences needs to be undertaken. For corporations who are able to primarily get past the language barriers with the countries they do business with, major advantages are often gained (Vaara, et.al., 2005). For corporations who adopt multilingual applications in their processes, the chance for gaining more success is significantly higher. Language is a strong source of power, with English being one of the dominant languages which can lend greater adaptability for corporations. Managers and corporate leaders who have strong English language skills can often facilitate better communication with other corporations (Welch, et.al., 2001). Moreover, for corporations adopting a more multilingual approach in their subsidiaries, better success can be gained because the corporation would usually have a stronger affinity with its host country. Furthermore, these countries would also have a strong facility for global integration as well as local responsiveness (Harzing and Pudelko, 2012). For many Asian countries, this is an aspect of corporate management which many of them have to reconsider if they are seeking global competence. Adjustments in terms of individualism/collectivism approaches also have to be made by corporations (Robbins, et.al., 2008). Corporations who are able to understand the individualist/collectivist culture of other businesses and the country where they are doing business would likely be able to blend well into specific corporate cultures (Hooker, et.al., 2008). There is also a reciprocal element in the adjustments which need to be carried out. For corporations coming from an individualist culture, their ability to make the adjustments when dealing with collectivist cultures (and vice versa) would help them exist and subsist in the global business setting (Kania, 2002). These same principles apply to elements like power distance, where corporations who are able to make the necessary adjustments in their corporate processes are more likely to gain more power and presence in the global corporate world. Corporations who are also able to understand the specific cultural qualities of their host countries are likely to gain stronger patronage and investors (Rautamaa and Hautala, 2008). Understanding the East and Western disparities in culture is especially crucial. The simply matter of greeting a Japanese businessman is different from greeting an American businessman, or holding a meeting with a Chinese investor is also different from meeting an American investor (Kawar, 2012). Knowing the taboos and the specific qualities, as well as the appropriate nonverbal gestures for each culture is all part of the establishment of the successful corporate culture. With these elements, a successful corporate process can be established and more strides can be gained for businesses that make the effort to understand corporate culture (Kawar, 2012). Conclusion Based on the above discussion, it is apparent to note that corporations who are able to understand the diversity of cultures are the corporations who can gain greater global competence. In effect, this essay declares that understanding the culture of other countries, including their language, gender-based qualities, communication, and similar qualities can help ensure improved economic performance and global competence for corporations. References Group, M., 2008. Internet growth and stats [online]. Available at: www.internetworldstats.com/stats7.htm [Accessed 28 July 2012]. Harzing, A. and Pudelko, M., 2012. 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