Cross-cultural Challenges in International Management

Bruno Amann, Jacques Jaussaud, Bruno Amann, Jacques Jaussaud

• Éditeur: Routledge
• Année: 2020
• ISBN:
  9781000194852
• Édition: 1
• Sujet: Business
• Sous-sujet: Management

The development of international business and of globalization in every field of activity requires the interaction of individuals and groups with diverse cultural, religious, ethnic and social characteristics in different institutional contexts. Cross-cultural Challenges in International Management addresses the various difficulties that may impede smooth communication and cooperation of those involved in such interactions. It examines what types of resources are mobilized to overcome such difficulties.

The cultural and societal challenges of international management must be considered at different levels, the one of strategy, which the first part of the book is devoted to, but also that of management and business practices, addressed in the third part of the book. Both strategic decisions and daily business practices, however, in the particularly fluctuating and incompletely defined international context, gain from being framed by ethical and corporate social responsibility, which the second part of this book is devoted to. Cross-cultural Challenges in International Management provides an analysis of specific situations revealing such cultural or societal challenges. Thus, the reader will benefit not only from advanced theoretical knowledge in the field, but also from practical applications in various professional context and various countries.

Practitioners, students in various fields of social sciences, particularly in management, communication, international relations, and researchers will widely benefit from this book.

1
Introduction and Overview

Bruno Amann and Jacques Jaussaud

International management involves considerable cultural and societal challenges, and this book aims to highlight and analyze the principal issues arising therefrom. The development of international activities requires the interaction of individuals and groups with diverse cultural, religious, ethnic and social characteristics in different institutional contexts. Therefore, the development of international activities will be susceptible to misunderstandings, to incomprehension between these individuals and groups and to rejection by collaborators, consumers or other local actors; it will also be susceptible to judicial sanctions for the non-respect of incorrectly identified or misunderstood legal rules (Bosche, 1993; Davel et al., 2008). As stated by Chanlat and Pierre (2018, p. 14), this international development is (in its intercultural meaning) fundamentally a source of tension, synonymous with resistance to change, with openness to the other and uncertainty; it is rarely euphoric, delightful or neutral.

The temptation is, however, considerable to imitate some competitors who take advantage of lesser institutional development in certain developing countries to exploit, without great consequential concern, human or natural resources. The extreme case of the tragedy that occurred in Bangladesh in April 2013, caused by the collapse of the unsafe Rana Plaza buildings, which housed numerous garment factories with workers toiling for famous brands in developed countries (1,127 deaths according to the official account), should not allow us to overlook the long list of other similar tragic cases that have resulted from such activities. Such incidents frequently cause irreparable damage, which is sometimes given significant media coverage, damaging the image and even the performance of the implicated international firms. Conversely, media coverage of such tragedies sometimes leads to the implementation of improved practices: the questioning of the operations methodology of Foxconn or Petragon in China under NGO pressure, for example; the introduction of social audits at sub-contractors’ production facilities—one can thus observe in certain sectors the existence of “best practices” benchmarking in which mimetic tendencies direct participants toward the best social protection practices. In addition, in the case of uncertainty as to which standards to apply, which is quite prevalent in international undertakings, organizations have a tendency to resemble each other (Bodet and Lamarche, 2007), at least in the construction of norms and practices, such as in CSR. We are now in the domain of soft law. In addition to soft law, this tendency will sometimes have legislative consequences like, for example, law no. 2017–399 of March 27, 2017 in France on the control obligations of parent companies and of order placing firms. As emphasized by Pereira (2018, p. 71), “between judicial and managerial rules one can see interactions relating to competition trends but also relating to coordination trends.”

Personnel in charge of the development of firms’ internationalization, whether home based or foreign based, thus have to be extremely careful. The intensification of international exchanges and the growing interpenetration of economies during the recent decades are leading to an increasing number of executives and operational personnel, in firms of all sizes, to be involved in firms’ internationalization. An increasing number of personnel from an increasing number of firms are thus becoming involved in intercultural interactions, dealing with different types of institutional frameworks that are unevenly developed and difficult to fully understand.

The cultural and societal challenges of international management need to be considered at different levels: naturally, from a strategic perspective, which the first part of the book addresses, but also from a management and business perspective, which the third part of the book addresses. The second part of this book addresses strategic choices relating to issues, such as daily management practices, which, in the constantly changing and not fully defined international context, benefit by being shaped by the ethical decision-making and corporate social responsibility of firms; otherwise, serious managerial mistakes may occur.

If by strategy one understands a set of choices and decisions that enable firms to integrate into their environment and to take advantage of it, one readily perceives the cultural and societal challenges that arise at this primary level. The environment in its international dimension is extremely diverse and complex and thus the source of considerable risk. The first problem that arises is to identify the pertinent information in respect of the relevant environment. A certain French industrial group, which transferred to China at the beginning of the 2000s some activities in respect of which European environmental regulation had become too “restrictive,” found itself a few years later—when it had already started production in China—subject to local Chinese regulations directly inspired by the regulations applicable in Europe. Therefore, what was pertinent were not the gaps between regulatory frameworks at the time of the transfer of production, but the future direction of Chinese regulations in this area. Furthermore, the problem of the acceptability of such goods in particular markets occurs. Equally, the issue arises of the acceptability of firms’ practices that firms plan to develop in the host country in respect of sales, advertising or human resources management, even in respect of industrial site location, firms’ alliances or competitive strategies. Broadly speaking, a certain number of “liabilities” (handicaps, difficulties) identified in the academic literature is indicative of the variety of difficulties that can occur in terms of acceptability. Studies on international management have for a long time underlined that the international development of firms is confronted by different costs from multiple sources (Hymer, 1976; Kindleberger, 1969). These costs can arise, for example, from unfamiliarity with the local host environment, from economic and political differences, from the lack of longevity and level of experience associated with the firms, from being outside the host countries’ networks, from the size of the firm or even from the level of distrust felt by the host country. These “liabilities” exist for all firms that internationalize, but have particular characteristics when the internationalizing firm is from an emerging country. According to Chittoor et al. (2015), international expansion by acquisition gives rise to significant risks in general, but particularly where the acquiring party is from an emerging country that is exposed to numerous problems that may hamper their international expansion. They are confronted with the difficulty of being a foreign firm (liability of foreignness (LOF)), with the handicap of being a new firm on the international market (liability of newness (LON)), with the potential difficulty of not being part of a host country network (liability of outsidership (LOO)) and with the disadvantage that they are from an emerging country (liability of emergingness (LOE)).

All fields of management are involved, as all imply interactions with local individuals and groups, with local institutions, or even with international or third party country institutions. Third country firms, as epitomized by the firms engaged in Iran in 2018, attracted the anger of the president of the United States and the threat of penalties because they were using US dollars in transactions. Furthermore, we can see the difficulties posed for the French company Alstom in the United States in respect of corruption allegations in Indonesia (Pierucci and Aron, 2019). The arrest in Canada of Meng Wanzhou, Huawei’s chief director of finance, on charges of violation of Iran embargo sanctions, is another example of the extraterritoriality of some US legislation. All possible reactions, positive but especially negative, by individuals, groups and established bodies need to be planned for and incorporated into strategic thinking; otherwise, it gives rise to grave risks and even further, it gives rise to the risk of terminal failure.

Beyond making strategic choices, it is at application and even more so at operational level that the various challenges to be confronted need to be considered. It is, in effect, at application level, in the concrete realization of activities that the interactions multiply in extremely varied local situations. Beyond the strategic choices, these interactions may suffer from mutual incomprehension or conscious or unconscious inappropriate behaviors, which at best are merely a source of inefficiency but which frequently are the source of conflict, failure, blockages or accidents. This, of course, this gives rise to the delicate question of the adequacy of the preparation of the executives and other personnel responsible for working in an international context, both from the intercultural dimension and from the perspective of institutional otherness. In relation to the intercultural dimension, two often opposing approaches can be undertaken (Davel et al., 2008; Chanlat and Pierre, 2018): one aims at increasing awareness of the differences in respect to the culture of the country concerned, with the risk of incompleteness of such awareness and the reinforcing of stereotypes that such an approach implies; the other approach aims to develop the competence of the personnel involved in these intercultural interactions (i.e., with people of other cultures and in unexpected situations).

Preparing personnel to work in foreign countries or in an international context is essential. It is equally essential to develop adequate systems of control (Schaan, 1983, 1988; Geringer and Hebert, 1989). This consists of ensuring that the processes and the behavior they engage in will remain controlled and that the results are in line with expectations. Deploying international control systems requires the considerable expansion of the types of control and the linkage of all available resources, due to the diversity of the contexts and situations where the personnel will work in different parts of the world (Schaan, 1983, 1988; Geringer and Hebert, 1989; Ghoshal and Nohria, 1989; Jaussaud and Schaaper, 2006). This might equally give rise to a rethinking of the organizational structure of the multinational firm, with the creation of regional offices in response, in particular (but not solely) to control requirements (Enright, 2005; Ambos and Schlegelmilch, 2010; Amann et al., 2014).

For Geringer and Hebert (1989, p. 236) control can be defined as “the process by which one entity influences, to varying degrees, the behaviour and output of another entity through the use of power, authority and a wide range of bureaucratic, cultural and informal mechanisms.”

If one accepts this definition, particularly in relation to international management, then ethical decision-making and corporate social responsibility, when they are strongly embedded and widespread in a multinational firm, become part of the system of control, in the sense that they aim to influence the behavior of personnel. In international management, the question of social responsibility is particularly sensitive due to the multiplicity of stakeholders, countries and different cultural perspectives (Cournac, 2015). What might be regarded as innocuous behavior in the home territory of a multinational could be regarded as unacceptable in another country. Multinationals need to address this difficulty with pragmatism and their own political rationale; otherwise, they may be held to account sooner or later.

We also ascertain at this stage the challenges facing multinationals. Employees can only take ownership of the ethical behavior of firms on the basis of shared values. Yet, the most significant cultural differences, it should be recalled, are the differences in values, or more precisely, the differences in the distribution and hierarchy of values (Schwartz, 1992, 2006; Schaaper and Zhen, 2013). How, then, to decide on ethical values, in particular, in a framework of the requirement of social responsibility, capable of gaining the support of all, across cultures and borders? Before even posing the problem in such global terms, numerous firms are confronted with the difficulty of transmitting their values or even engaging with the issue and are constrained by the requirement of obtaining the agreement of all, to adapt rather than to transmit values (D’Iribarne, 2012; Barmeyer and Davoine, 2013). Besides, a global, universalist approach, even if it seems necessary to impose grand ethical principles at an abstract level, is confronted by such practical difficulties that the nature of the social responsibility of multinational firms is frequently differentiated according to geographic zones (Arthaud-Day, 2005), and more precisely according to territories (Cournac and Gatignon-Turnaud, 2013; Cournac, 2015).

Cross-cultural Challenges in International Management offers in its various chapters an analysis of specific situations containing such cultural and societal challenges. It studies what sort of responses are harnessed to overcome these challenges. Among these situations, we highlight the following:

• Strategic decision-making in an unstable environment and in a specific cultural environment, and where appropriate, in an inter-organizational context.
• The contribution and the limitations in a Muslim or Indian context, for example, of ethical input in management in general and in international management.
• The management of local or multicultural employees, in particular, in difficult situations.

The list of cases highlighted allows analysis of the cultural and societal challenges facing international management. The chapters in the first part of the book analyze these challenges from the perspective of strategic decision-making, be it in a particularly volatile context (Tunisia after the Jasmine revolution, for example, in Chapter 2 by Alya Charfi and Jamil Chaabouni)...

Table des matières

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Contents
• List of Figures and Tables
• Acknowledgements
• List of Abbreviations
• List of Contributors
• 1 Introduction and Overview
• Part I Cultural and Societal Challenges in Strategic Decision-Making
• Part II Ethical and Social Responsibility Issues in International Management
• Part III The Challenges of Cross-Cultural Issues in International Management
• Index