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 food at home. Having heard the answer, he decided to sit on the floor and eat Gujarati food, along with all the senior colleagues in the plant.

What was the Director General trying to do? He was trying to appreciate the cultural norms of the new place and show his willingness to accept. Such behavior on the part of the Managing Director obviously helped local management to open up more during subsequent discussions.

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

With “culture” being one of my areas of interest, I recently accepted an invitation to educate students in an International Business Management Diploma program 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 treasure trove of information contained in these books was invaluable and highly relevant.

This article is an effort to present some of the relevant issues 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 shapes 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 the egalitarian ideology?
• Social relationships – Are people more individualistic or do they believe in collectivism?
• environmental relations – Do people exploit the environment for their socioeconomic purposes or do they strive to live in harmony with the environment?
• work patterns – Are people doing one task at a time or doing multiple tasks at once?
• Uncertainty and social control – If members of society like to avoid uncertainty and be bound by rules or if members of society are more relationship-based and like to deal with uncertainties as they arise?

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

• inadequate trust – For example, on the one hand, a Chinese coach wonders why his Indian colleagues speak Hindi in the office and, on the other hand, his colleagues argue that when the coach is not around, why can’t they speak English?
• Perception – For example, people from advanced countries consider people from less developed countries inferior or vice versa.
• inaccurate biases – For example, “Japanese make group decisions” or “Indians don’t deliver on time” are overly generalized versions of cultural bias.
• lack of communication – For example, during discussions, the Japanese nod their head more as a sign of courtesy and not necessarily as an agreement on what is being discussed.

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 ‘Exact’ style, the speaker is precise with minimal repetitions and in the ‘Succinct’ style; the speaker uses fewer words with moderate repetitions and uses nonverbal 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 speaker’s individual achievements and there is minimal reference to hierarchical relationships.
• ‘Emotional’ or ‘Instrumental’ – In the ‘Affective’ style, communication is more relationship oriented and listeners need to understand meanings based on non-verbal clues. While in the ‘Instrumental’ style, the speaker is more goal oriented and uses direct language with a minimum of non-verbal cues.

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

• body contact – This refers to hand gestures (intended/unintended), hugging, embracing, kissing, shoulder tapping, firm handshakes, etc.
• interpersonal distance – It is the physical distance between two or more individuals. 18″ is considered intimate distance, 18″ to 4′ is treated as personal distance, 4′ to 8′ is acceptable social distance, and 8′ is considered public distance.
• artifacts – Refers to the use of tie clips, jewelry, etc.
• for language – These are speed of speech, pitch and volume.
• Cosmetic products – It deals with the use of powders, fragrances, deodorants, etc.
• time symbolism – It’s about timing. 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

“Intercultural Challenges in International Business Management” has become a very followed topic in the last two decades. There are enough examples of business bankruptcies or joint ventures stagnating or failing, due to management’s inability to recognize cross-cultural challenges and address them properly. There are also examples of companies having mandatory cultural management training or acculturation programs for employees sent abroad or recruited from other countries, to ensure cross-challenges are effectively addressed.

The world is getting smaller every day, 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 high. It is akin to the “Hygiene” factor of the “Two Factor Motivation” theory developed by psychologist Frederick Herzberg in the mid-1960s. In international business management, embracing the country’s cultural diversity may or may not bring success, 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 Richard M Hodgetts, Luthans & DOH)
• “Managing Across Cultures: Challenges and Strategies” by Richard Steer, Scnchez-Runde Carlos J, Nardon Luciara)
• “Bridging the Cultural Gap: A Practical Guide to International Business Communication” by Carte Penny and Chris Fox

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