Cultural diversity as a source of competitive advantage in business

Author: Iloka Benneth Chiemelie 
Published: 13/12/2013

Cultural diversity as a source of competitive advantage

The basic understanding of a diverse culture in workforce is a workforce that comprises of people from different culture (Harrison & Klein, 2007). The need to create a culturally diverse workforce is inevitable considering the increase in globalization and in internationalization of firms. Even on a national level, managing cultural diversity is still important. For instance, a Nigerian company operating in Nigeria will likely get applications for open job positions from different cultures, and their target market will also comprise of different cultures from the 350 ethnic groups in the country. Thus, the question is, how can cultural diversity be used to attain competitiveness?

Higgs et al. (2005) conducted a study designed to understand the influence of cultural diversity on team performance and his study found that diverse culture is positively related to increased performance in complex task and negatively related to increased performance in straightforward tasks. The study made known that diversity offers a great opportunity as well as an enormous challenge for the organization. Diversity in team provides the needed opportunity for increased creativity and innovation as people come with their different views and solutions for a given problem (Milliken & Martins, 1996).

There are existing evidence to this case as research have proven that diversity in workforce will lead to enhanced effectiveness within the system (Cox & Blake, 1991; Cox 1993; Miroshnik, 2002), and this is based on the hypothesis that contact between employees from diversity background will lead to the development of a novel solution in the course of undertaking designated tasks (Jehn et al., 1999; Watson et al., 1993). This is still in line with earlier discussion that cultural diversity will lead to different views and opinions about a problem, enhance the engagement of more thorough critical analysis on a given issue, and as such enhance the quality of decisions (Shaw & Barret-Power, 1998).

Realising the potentials of cultural diversity and expected challenges

Cox & Blake (1991) conducted a research which also found that the views with respect to benefits of cultural diversity as discussed above are corrected. In their argument, this is because the workforce will offer solutions on how to handle people from their own culture and it will lead to a more detailed and influential solution in the system. However, they made known that these benefits can only be realized through cultural synergy and collaboration (Cox & Blake, 1991). The organization need to create synergy by bringing these cultures together under the umbrella of the corporate culture and goals. This collaboration should be regulated to ensure that the workforce are undertaking their individual tasks with the common set goals and that differences in culture doesn’t influence their interpretation of issues differently (Friday & Friday, 2003; Wentling, 2000).

In any case, there are numerous dysfunctional diversity views in the literature that have proposed that cultural diversity can lead to poor performance outcomes (Richard et al., 2004). The argument is that workforce diversity will lead to problems in communication and increase dysfunctional conflicts, with negative implications for the performance of the individuals and the company at large (Guzzo & Dickson, 1996; Jehn et al., 1999; Milliken & Martins, 1996; Pelled et al., 1999; for a review, see Williams & O’Reilly, 1998). A good example is that in a diverse workforce, Muslims expect to be given necessary time to pray on Fridays and that the company will not conduct its business in a non-Halal way (including the view that all employees must also understand and apply this too). Thus, if these expectations are not meet, it will result to dysfunctional conflicts – with a direct negative impact on the commitment, increase in employee turnover and reduction in organizational citizenship behaviour. Therefore, the company needs to understand how to handle the issue of mixed cultural conflicts and communication issues in order to ensure that the outcome of such diversity is nothing less than success.

Ethical leadership in diverse culture

Ethical leadership has been discussed in numerous literatures with respect to what constitutes an ethical leader (e.g., Hunt & Vitell, 1986; Leidtka, 199; McDevitt, Giapponi, & Tromley, 2007; Ferrell & Gresham, 1985; Ferrell & Fraedrich, 1989; Dubinsky & Loken, 1989). The understanding is that it is such a leadership that is based on morality (Liedtka, 1991; Hunt & Vitell, 1986, Trevino, 1986, 1992; Trevino et al., 2005; Kelly & Elm, 2003). An ethical leader, the person must understand the moral view of issues in company, analyse these issues morally and produce solutions based on the moral ethics (Rest, 1986; Jones, 1991; Ferrell & Gresham, 1985; Trevino, 1986) that will reflect the diverse cultures of all people in the workforce.

The basic understanding is that the leader in order to be considered ethical, must not put any culture high against others, or considered some culture low when compared with others. The leader must be conscious of cultural differences and understand that all cultures deserve to be observed in the course of any decision making, in order to ensure that such decisions don’t affect certain cultural views negatively. The leader must see all cultures as equal and important, and provide them with equal opportunities to excel in the company by offering them equal chances for promotion, equal wages, equal task, equal management opportunities and other benefits emanating from the company (Jones, 1991; Weber, 1996; Douglas et al., 2001; Fritzsche & Becker, 1983; Kish- Gepnant et al, 2010).

Conclusion

The above discussion has demonstrated that culture is an aspect of human understandings with respect to how things are done and it differs between people from different cultures. However, the diversity of culture has also been linked to competitive advantage but such advantage is only possible through collaboration and creation of cultural synergy.

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