Multicultural Behavior and Global Business Environments

Kamal Dean Parhizgar

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781135187125
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Resolve cross-cultural communication issues with your business suppliers, customers, and staff! Because of the rapid growth of multinational corporations and the World Wide Web, global interdependence is no longer a matter of ideology or choice, but an inescapable reality. Multicultural Behavior and Global Business Environments teaches managers both practical techniques and theoretical insights for working with people from diverse cultures in home and host countries. Managers who ignore or dismiss cultural differences may find themselves alienating customers and employees, fumbling negotiations, and ultimately losing sales. In contrast, those who are willing to see the world from different perspectives may spot fresh opportunities. Bringing multiple cultures together results in synergy, in which two combined energies multiply and reinforce one another. Multicultural Behavior and Global Business Environments tells you not only how to create synergy, but also how to profit from it.Multicultural Behavior and Global Business Environments offers practical features to help students and managers understand diverse cultures, including:

• charts, maps, and tables showing specific cultural divergences
• detailed discussions of relevant theories in psychology, management, and ethics
• exercises and self-tests
• clear, skill-based objectives for each chapter
• definitions of the terms and processes of multiculturalization

In the modern world, the key to prosperity--or failure--in the global marketplace is awareness of cultural differences. Multicultural Behavior and Global Business Environments offers a sweeping multidisciplinary inventory of facts, theories, and practical ideas for making multiculturalism work. This comprehensive volume is a crucial resource for every manager who belongs to a multinational organization, as well as students of both domestic and international business, political science, international relations, public administration, and educational administration.

Chapter 1

An Overview: Multicultural Behavior and Global Business Environments

Multiculturalism is a synergistic social chain which integrates all human synergies.

Chapter Objectives

When you have read this chapter you should be able to:

• develop conceptual skills to integrate all types of human behavior,
• indicate why managing people from diverse cultures is an essential task,
• understand the increased role of the level of organizational productivity through cultural synergy,
• develop a framework of analysis to enable a student to discuss how to manage multinational organizations,
• develop an understanding of the scope of multinational businesses and how they differ from domestic enterprises, and
• develop an ability to analyze and evaluate qualitative cultural value systems for multinational corporations.

Introduction

This chapter illuminates the evolutionary perspectives of multicultural management systems. It bears in mind that international management practices reflect the societies within which business organizations exist. Moreover, technological innovations, societal movements, political events, and economic forces have changed over time and are continuing to change human behavior. In today’s increasingly competitive and demanding international free market economy, managers cannot succeed on their understanding of domestic culture alone. They also need good multicultural interactive skills. This text was written to help both domestic and multinational managers develop people skills in this area.

In our contemporary marketplace, multiculturalism can have a profound impact on human lives. For example, some researchers project that in ten years, ethnic minorities will make up 25 percent of the population in the United States. Copeland (1988: 52) asserts that, “Two-thirds of all global migration is into the United States, but this country is no longer a ‘melting pot’ where newcomers are eager to shed their own cultural heritages and become a homogenized American.” In the United States in the 1990s, roughly 45 percent of all net additions to the labor force were non-European descendants (half of them were first generation immigrants, mostly from Asian and Latin countries) and almost two-thirds were female (Cox, 1993: 1). These trends go beyond the United States. For example, 5 percent of the population of the Netherlands (de Vries, 1992) and 8 to 10 percent of the population in France are ethnic minorities (Horwitz and Foreman, 1990). Moreover, the increase in representation of women in the workforce in the next decade will be greater in much of Europe—and in many of the developing nations—than it will be in the United States (Johnston, 1991: 115). Also, the workforce in many nations of the world is becoming increasingly more diverse along such dimensions as gender, race, and ethnicity (Johnson and O’Mara, 1992: 45; Fullerton, 1987: 19). For example, Miami-based Burger King Corporation recruits and hires many immigrants because newcomers to the United States often like to work in fast-food restaurants and retail operations for the following reasons:

1. flexible work hours (often around the clock) allow people to hold two jobs or go to school,
2. entry-level positions require little skill, and
3. high turnover allows individuals who have initiative and ambition to be promoted rapidly (Solomon, 1993: 58).

In a multicultural society such as the United States, businesses thrive by finding common ground across cultural and ethnic groups. But in more homogeneous cultures such as European and/or Asian countries, businesses are maintaining their local value systems. Although the concepts and principles of management in all cultures may be the same, the practice of management is different.

Hofstede (1993: 83) invited readers to take a trip around the world. He indicates that about two-thirds of German workers hold a Facharbeiterbrief (apprenticeship certificate), and German workers must be trained under foremen’s supervision. In Germany, a higher education diploma is not sufficient for entry-level occupations. In comparison, two-thirds of the workers in Britain have no occupational qualification at all. However, these workers hold formal education certificates to some degree.

American businesses are constantly changing—their images, headquarters, products, services, and the way they do things. To Americans, change is good; change is improvement. However, European cultures and companies will not easily discard their long and proud histories. Europeans believe that patience and an established way of doing things are virtues, not weaknesses (Hill and Dulek, 1993: 51–52). Accordingly, Americans believe that businesses that try to target different demographic groups separately will be stunted by prohibitive marketing costs. Others will meet this challenge through the use of a multicultural consumer mix (Riche, 1991: 34).

From another perspective, in 1992, the European Union (EU) removed all tariffs, capital fund barriers, and people movement barriers from among its member nations. It has created a potential trading block in the industrialized world including at least 327 million people with many different cultures and languages (Fernandez, 1991: 71).

In 1997, the total monetary value of all worldwide exports was recorded in the International Financial Statistics by the International Monetary Fund (IMF) as $US5,469.5 billion (see Table 1.1). Out of that sum, the developed nations exported $US3,628.1 billion and the developing nations exported $US 1,841.4 billion. In the same year (1997), the developed nations imported $US3,624.7 billion and the developing nations imported $US 1,989.9 billion (see Table 1.2).

Table 1.1. Total Exports (in Billion $US)

Source: International Finance Statistics. International Monetary Fund (1998). Ll(2), February. Washington, DC.

Table 1.2. Total Imports (in Billion $US)

Source: International Financial Statistics. International Monetary Fund (1998). Ll(2), February. Washington, DC.

By looking at Table 1.3, we may find that the total balance of payments (BOP) of the world, developed nations and developing nations, is not consistent with the balanced trends of imports and exports. This fact indicates that most nations are more dependent on imports than exports. Consequently, they have been faced with trade deficits. The term affordability in the international economy refers not simply to the raw materials and components and the abilities of production capabilities of nations, but also to the solvency of the debtors paying for their debts and compounded interest. In third world countries (TWCs), solvency refers to the acquisition of cash or monetary resources by exploring or trading off more valuable goods. Solvency would also mean that the country is able to appreciate burdens of individual citizens’ educational, health, and welfare deficiencies, nation-states’ weaknesses, and national-international trade transactional deficits (Parhizgar, 1994: 109).

Table 1.3. Total Balance of Payments (BOP) (in Billion $US)

Source: International Financial Statistics. International Monetary Fund (1998). Ll(2), February. Washington, DC.

The North American Free Trade Agreement (NAFTA) among the United States, Canada, and Mexico has created another trading potential, some $212.5 billion annually, a base which should increase considerably (Gordon, 1993: 6). The Association of South East Asian Nations (ASEAN) is another organized intercontinental trading agreement among Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand that was formed to promote cooperation in many areas, including industry and trade. These and other intercontinental trade cooperatives have changed the competitive international marketplace drastically.

In the area of international business, no perceptual approach pays as much explicit attention to the conceptual bases of thoughts and normative actions as multicultural evolution. We are witnessing the emergence of multicultural alliances that rightly could be called global. This indicates that nations are closer to each other, and they need to establish a synergistic strategy to integrate the needs of all nations. As the United States manifested domestic growth, the incentive also increased for companies to move branches of operation outside the home country in the form of strategic business subsidiaries (SBS). By the mid-1990s, companies based in the United States had nearly 20,000 affiliates around the world (Jackson, Miller, and Miller, 1997: 173). In addition, today more than 37,000 companies worldwide have foreign direct investments (FDI) that encompass every type of business function—extracting raw materials from the earth, growing crops, manufacturing products or components, selling outputs, rendering various commercial services, and so on. The 1992 value of these investments was about $2 trillion. The sales from investments were about $5.5 trillion, considerably greater than the $4 trillion value of the world’s exports of products and services (World Investment Report, 1993: 1–4). Considering the scope and magnitude of such international operations, the demand for multicultural understanding for more effective international transactions is high.

The emergence of multicultural communication began to take place as multinational corporations made a shift in their perspectives from solely domestic maximization of profitability to joint optimization of internationalization of individuals and organizational performances. Still, some political thinkers and business owners are generally prone to highlight the alienating influence of multiculturalism on their workplace. Marquardt and Engel (1993: 59) report that: “Based on the number of unsuccessful adjustments and early returns of American business expatriates, both government and private studies agree that more than 30 percent of U.S. corporate overseas assignments fail.” Some corporate managers typically believe that for synergization of their corporation’s wealth and maximization of their profits, it would necessitate that institutions exploit consumers and/or sacrifice workers. However, the modern philosophy of multiculturalism rejects this view of either/or reasoning and envisions that under reciprocal justness, corporate workers’ and consumers’ satisfaction can synergize the corporate wealth and elevate their level of profitability. This belief is anchored in multicultural assumptions about all workers and organizations that power sharing and democratic processes facilitate corporate survival toward more profitability.

There are rational reasons why multinational corporations should make an effort to synergize multiculturalism in their organizations. One of the most important views is the fact that policies concerning the workplace and marketplace affect the quality of lifestyles, the economic well-being of working populations, the social status of employees, and the synergy of technological innovations.

However, corporate managers must recognize that corporate opportunities are limited. They must also recognize that we do not live in an international meritocractic environment and that multinational corporate bureaucracies are partially political. Operating in a competitive free market economy will not allow one to escape these realities. Corporate managers and workers of the multinational corporations must truly understand and interact effectively with people from other cultures. They must understand both home and host countries’ formal and informal values, rules, structures, norms, and attitudes of people and the real cultural criteria for solving social issues. For example, a multinational corporation operating in India must recognize the traditional priorities of social castes of that country in terms of appointing a manager, e.g., a person from a lower caste should not supervise employees from the higher castes.

Status-determining criteria generally have quite different meanings in regard to time, place, and conditions from culture to culture. In some gerontocratic cultures, the older persons are, the higher their status (e.g., France, Germany, Saudi Arabia, China, Russia, and many other countries). However, in a meritocractic culture, once a person reaches a certain age, the status goes downhill.

Historical Transitions in International Business

As Western society shifted from an agricultural to an industrial-based economy in the eighteenth century, scientists and scholars began to realize that traditional cultural philosophies were not effective enough to be useful for Western society. In 1776, Adam Smith proposed the notion of national productivity as the determinant of national wealth. Smith reasoned that nations should export those goods that they could produce at a lower cost than others (absolute advantage theory) and suggested that this labor-productivity advantage could be determined by the percentage of population at work and the “skill, dexterity, and judgment by which labor is generally applied,” (Smith, 1776). In 1933, Bertil Ohlin, following the pioneer work of his teacher, Eli Heckscher (1919), provided an approach which both (a) incorporated more than one kind of input and (b) purported to account for the conditions necessary for trade (Allen, 1967: 27).

Eli Heckscher and Bertil Ohlin presented a new theory based on the work of Smith and David Ricardo. They presented the comparative advantage theory, which argues that all nations have access to the same technology but other factors determine their economic success. Natural resources, capital, land, and the quality of the labor force are among these factors. The main focus of the theory of comparative advantage is to exploit one’s advantages and exchange goods with those that have different advantages. The idea that each nation should exploit what it had and trade for what it lacked made sense with the traditional theories of international trade. These theories were not congruent with a great deal of what already existed in the contemporary international marketplace. Today, there is an entirely new paradigm for multinational corporations based on global markets and invisible national borders. Multinational corporations that understand the paradigm and exploit it will succeed; the others will fail.

Today, the traditional competitive efforts for “resources exploitation” has been shifted to “resources discoveries” for finding productive labor and effective materials. This new method has resulted in the exploration of innovative knowledge and technologies. Such a synergistic integ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• About the Author
• Table of Contents
• Foreword
• Acknowledgments
• Introduction
• Chapter 1. An Overview: Multicultural Behavior and Global Business Environments
• Chapter 2. Multicultural Understanding
• Chapter 3. Understanding Global Environments and Cultural Value Systems
• Chapter 4. Contemporary Multicultural Behavior
• Chapter 5. Foundations of the Individual Identity: Quiddity and Kinetic Needs, Motives, and Drives
• Chapter 6. Sensation, Perception, Conception, Attribution, and Attitude
• Chapter 7. Understanding and Managing Individual Personality
• Chapter 8. Moral and Ethical Behavior
• Chapter 9. Multicultural Paradigm Management Systems and Cultural Diversity Models
• Chapter 10. Multicultural Philosophies
• Chapter 11. International Religions
• Chapter 12. Expatriate and Repatriate Employees: Multicultural Training Programs
• References
• Person Index
• Subject Index