Cross-Cultural Issues in International Business - Iloka Benneth Chiemelie

CROSS-CULTURAL ISSUES IN INTERNATIONAL BUSINESS

Due to rise in globalization, service providers have shifted to high international marketing (Malhota et al., 2005; Zhang et al., 2008). This have created numerous opportunities for marketing managers in terms of market development, but it also presents many cross-cultural issues (Ueltschy et al., 2007). Since subjection to cultural norm is essential for in determining the value orientation of the individuals in a group, culture is expected to be a major determinant of consumer’s attitudes and behaviours (Cleveland and Laroche, 2007). Although they are not always aware of the ways in which their cultural backgrounds influence their lives.

The most widely recognized as well as strongly criticized cross-cultural dimensions are those proposed by Hofstede. Hofstede’s (1980) original study was based on a survey of IBM managers and employees in over 40 countries. Bhagat et al (2002) presented a clear analysis of all cross-cultural issues faced by business around the world. There are (1) language differences, (2) individualism and collectivism, (3) level of cooperation, (4) uncertainty avoidance, (5) masculinity and femininity, (6) conflict resolution, (7) work group characteristics, and (8) motivation system. Further emphasis will be played on five of these issues below.

Conflict resolution

They are many studies and theoretical models on conflict resolution among groups. With respect to these issues, a two orthogonal dimension typology was developed by Rahim and Bonoma (1979) – concern for self and concern for others – to differentiate between four styles of conflict resolution. The first style is cooperating (integrating) style: it is characterized by openness. People with this style are more usually tend to exchange information and look for alternatives. The second style is contenting (dominating): these people are self-centred and as a result ignore other people’s needs. Avoiding style is another style of conflict resolution mong different cultures which have been associated with withdrawal or sidestepping. People who use this style don’t satisfy either their own self or others (Rahim, 2002). Last is thethird-party resolution style which seeks the help of an intermediary to negotiate between parties in conflict (de Dreu and van Vianen, 2001).

From the four conflict resolution style above, it is easy to understand the reason why understanding cross-cultural issues are critical for international business. Firms that globalize will definitely face cases of conflicts between members of a team or co-workers with different cultural values. It is necessary to understand these issues so that no individual is victimized at the benefit of the others. For instances a conflict between an American man and a Chinese man. The American might be contenting (dominating because he seems to know his right), while the Chinese man could be avoiding because he wants to cover his face and not be embarrassed.

Individualism vs collectivism

In cross-cultural business psychology, there is a clear distinction between horizontal and vertical orientations in cultural values (Singelis et al., 1995; Triandis and Gelfand, 1998; Triandis et al., 1993). This distinction is based on Markus and Kitayama’s (1991) classification of independent-interdependent vies same-different self-construal.  Based on this ideology, it can reflect those individualists are independent/same self-construal: they see everybody as equal but independent being; they want to be unique and do things their own way. On the other hand, collectivists are interdependent on other people, seeing everybody as unequal but interconnected.

Individualism and collectivism are often treated as two distinct cultural patters, existing at a parallel end of single continuum. However, Triandis (1995) argued that they are different forms of individualism and collectivism. A good illustration is the distinction between ‘‘horizontal’’ and ‘’vertical’’ patterns in individualism and collectivism based on the reflective emphasis on horizontal and vertical social relationships. Horizontal patters are of the assumption that everybody is more or less the same as. While on the contrast, vertical pattern is of the assumption that people are different others and exercises hierarchy.

Similar to conflict solving to some extent, individualism vs collectivism is also a major cross-cultural issue in international business. Different individuals from different nation, influenced by the culture of their society tend to differ from each other. When you apply this in global business it is easy to see that reason why Japanese are more loyal to the companies they work for as compared to other countries. For instance, America as an individualistic nation tends to be self-centred, salary conscious when working with a company as compared to the Japanese who are more achievement conscious. This is the major reason why many Americans will quite their job for a higher paying one compared to the Japanese. When you apply this to team leadership, then its real consequences comes into play as individualistic managers tend to make decisions on their own; either ignoring the suggestion of their subordinates or not allowing them to suggest at all.

Uncertainty avoidance

In accordance with Hofstede (1980), uncertainty avoidance deals with the ability of a nation’s culture to stand ambiguity. People from cultures with high uncertainty are more rigid and dogmatic, they live life with perceived risk; thus, hey rely upon such mechanism like rules, customers, laws and religion as a means of security. On the other hand, individual with low uncertainty avoidance tend to live life on a free well, and are high risk takers.

Uncertainty avoidance describes a society’s reliance on social norms and procedures to eliminate the unpredictability of future. This is the extent a society fell threatened by uncertain situations and tries to avoid these situations through believe in absolute truth and attainment of expertise, more established formal rules, rejection of deviant behaviours and ideas, and provision of greater stability through career development.

High uncertainty avoidance can result in other strategic risks in companies. For instance, companies operating in countries influenced by high uncertainty avoidance tend to keep more cash than those in low uncertainty avoidance nations. Cash is high seen as an advantage against a potentially risky failure (Ramirez and Tadesse, 2009). If things are seen on the opposite direction, countries with low uncertainty avoidance are more likely to be more innovative (Sing, 2006) as they don’t like to take risk in business.

On a customer bases, customers with high uncertainty avoidance have more brand loyalty (Desmond, 2007; Lam, 2007). They are very suspicious and critical of new products, and see new products as less favourable in comparison with customers with low uncertainty avoidance (Lee et al., 2007). Reimann et al (2008) also supported this argument by stating that in the event of product failure, customers with high uncertainty avoidance are more like to be less satisfied compared to those with low uncertainty avoidance.

Power distance

Leadership both in the societal and business world involves disproportionate influence, and is associated with power and status. Therefore, the way power and status are accorded in the society of obviously relevant to the leadership role. Hofstede (1980, 2001), defined power distance as the extent to which a society accepts the fact that power in institution and organisation is equally distributed. In countries with high power difference between individuals, organisations are likely to have more layers and the chain of command is seen as being more important.

Continuing from Hofstede’s ideology, Schwartz (1999), in contrast highlights that hierarchical and egalitarianism emphasises the chain of authority and structure. He is of the proposition that unequal distribution of power is expected and accepted. For instance in hierarchical cultures, employees are expected to comply to directions without question them, and they must accept these directions as they are keen on keeping their job. In contrast, individuals in egalitarian society view themselves as being equal, and employees have a role to play in decision making by contributing ideas and sharing in goal-setting activities (Sagiv and Schwartz, 200).

On a management level, power distances and hierarchical orientation have an impact on management system. For instance, power distance in a society has a negative relation to employee stock ownership plan in organisations and the associated authority that makes decisions (Schuler and Rogovsky, 1998). This means that in a society where there is high power distances, companies are less likely to sale out their stocks to their employees, as they would see it as a means of decreasing their decision making power and control over these employees. It also influences individual preference and attitudes. For instance, job level in low power distance society is less related to job satisfaction compared to countries with high power distance context (Robie et al., 1998). It basically means that in countries with low power distance, employees are ready to take any job they enjoy and their satisfaction is based on their individual contribution to the company, rather than the position they occupy in the organisation.

Masculinity vs femininity

Hofstede (1998a, b, c, 2001) also described a culture dimension called masculinity vs femininity. In accordance with Hofstede, masculinity is the dominant value in a society where assertiveness and toughness, acquisition of wealth, and lack of care to other people’s quality of life are of high importance. While as, in feminine society, values such as social relationships, quality of life, and care for the weak is of high importance.

Research supports this idea by linking managers to be stereotypically viewed as more similar to men than to women in attributes considered critical to effect work performance; such as leadership ability, self-confidence, ambition, assertiveness and implementation of force as found in The USA, Japan, China, UK, Germany etc. (Schein, 2001). Motivation to be successful and an acceptance of Machismo style of management is expected to be higher n countries with high masculinity than in those with low masculinity (Triandis, 1994).

On a management level, Hofstede (2001) holds that masculine and feminine cultures create different kinds of managers. Managers in masculine cultures are decisive, assertive, and aggressive while managers from feminine culture are less visible, seeks consensus, intuitive and cooperative. Nevertheless, some studies do not support this. For instance, Helgstrand and Stuhlmacher (1999) compared a leadership prototype of American and Danish participants. The expectation was that individuals would rate a leadership quality that reflects their own culture than a leadership that did not match their culture. Unexpectedly, the highest rating was not in relation with individual culture and leadership candidate. Participants from both cultures (American and Danish) see feminine leadership as being more favourable effective.

Conclusion

Cross-cultural issues with no doubt influences business performance virtually all organisations across the globe. This is mainly attributed to globalization, as companies and individuals alike move abroad for a new start or expansion. Differences in cultures as highlighted above have different ways of influencing performance of individuals in the organisation which will in turn influence the performance of the organisation. For instance, Japanese collectivist nature ensures that more Japanese people are likely to stay with the same company for their whole working life compared to the individualistic Americans.

In conclusion, considering that some of these cross-cultural dimensions have been examined; it is of course true that different cultural dimensions can be simultaneously active in influencing leadership and followership. All of these cross-cultural difference influences both individuals and organisations in their day to day activities. Thus, understanding these issues is essential for improving productivity and corporation among employees and the organisation at large.

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