For international business with operations in different countries, of considerable importance is how a society’s culture affects the values found in the workplace. Management process and practices may need to vary according to culturally determined work-related values. For example, If the cultures of the united States and France result In different work-related values, an International business with operations In both countries should vary Its management process and practices to take these differences into account.
International business is different from national business because countries and societies are different. Societies differ because their cultures vary. The cultures vary because of profound differences in social structure, religion, language, education, economic philosophy, and political philosophy. Three important implications for international business flow from these differences. The first is the need to develop cross-cultural literacy. There is a need not only to appreciate that cultural differences exist, but also to appreciate what such differences mean for International business.
A second Implication looks at the connection between culture and ethics In decision making. A third implication for international business centers on the connection between culture and national competitive advantage. 2. Across-Cultural Literacy One of the biggest dangers confronting a company that goes abroad for the flirts time is the danger of being ill-informed. International businesses that are ill-informed about the practices of another culture are likely to fail.
Doing business in different cultures requires adaptation to conform with the value systems and norms of that culture. Adaptation can embrace all aspects of an international firm’s operations in a reign country. The way in which deals are negotiated, the appropriate incentive pay systems for salespeople, the structure of the organization, the name of a product, the tenor of relations between management and labor, the manner in which the product Is promoted, and so on, are all sensitive to cultural differences.
What works in one culture might not work in another. To combat the danger of being Ill-Informed, International businesses should consider employing local citizens to help them do business In a particular culture. They must also ensure that home-country executives re cosmopolitan enough to understand how differences in culture affect the practice of international business. Transferring executives overseas at regular intervals to expose them to different cultures will help build a cadre of cosmopolitan executives.
An international business must also be constantly on guard against the dangers of anthropocentric behavior. Ethnocentrism is a belief in the superiority of one’s own ethnic group or culture. Hand in hand with ethnocentrism goes a disregard or contempt for the culture of other countries. 2. Culture and Competitive Advantage The value systems and norms of a country influence the costs of doing business in that country. The costs of doing business in a country Influence the ability of firms to establish a competitive advantage in the global marketplace.
Japan is a good example of how culture can Influence competitive advantage. Some scholars have argued that the culture of modern Japan lowers the costs of doing business relative to the costs in most Western nations. Japan’s emphasis on group affiliation, loyalty, reciprocal The emphasis on group affiliation and loyalty encourages individuals to identify tryingly with the companies in which they work. This tends to foster an ethnic of hard work and cooperation between management and labor for the good of the company.
Similarly, reciprocal obligations and honesty help foster an atmosphere of trust between companies and their suppliers. This encourages them to enter into long-term relationships with each other to work on inventory reduction, quality control, and Joint design, all of which have been shown to improve an organization’s competitiveness. In addition, the availability of a pool of highly skilled labor, articulacy engineers, has helped Japanese enterprises develop cost-reducing process innovations that have boosted their productivity.
Thus, cultural factors may help explain the competitive advantage enjoyed by many Japanese businesses in the global marketplace. For the international business, the connection between culture and competitive advantage is important for two reasons: First, the connection suggests which countries are likely to produce the most viable competitors. Second, the connection between culture and competitive advantage has important implications for the choice of countries in which to locate production facilities and do business.
But as important as culture is, it is probably less important than economic, political, and legal systems in explaining differential economic growth between nations. Cultural differences are significant, but their importance in the economic sphere should not be overemphasized. For example, Max Weber argued that the ascetic principles embedded in Hinduism do not encourage entrepreneurial activity. While this may be the correct academic interpretation, recent years have seen an increase in entrepreneurial activity in India.