Cultures effect on international business

Topics: Culture, Management, Business ethics Pages: 15 (4838 words) Published: September 29, 2013
As businesses have grown and expanded to the international level; certain aspects of business have become abundantly clear. One thing that has become the norm when doing business on the international level is dealing with different cultures. Culture, as defined by Geert Hofstede is “the collective programming of the human mind that distinguishes the members of one human group from those of another. Culture in this sense is a system of collectively held values.” The concept of a culture has been around for a very long time; in-fact, when people exist in the same place together they end up following a set of rules. These rules can be called a “social norm” or culture and can be made up of simple things like how to act in certain situations all the way to a very devout set of beliefs or values. This paper will focus on the role that culture plays on multinational businesses around the globe and the differences that culture plays from one area of the globe to the next. An in-depth look will be taken on the obstacles that may arise due to culture, adjustments that need to be made, and any ethical conundrums that may arise due to different cultures.

Literature Review
D. Elenkov and d. Kirova, state that “MNCs should not underestimate the importance of the cultural specificity of the host countries because different staffing, selecting, training, motivating and compensating practices should be applied in accordance with the characteristics of the local cultural context,” (2008, p. 71).

A unique perspective on culture is taken by Hill, Hynes, and Johnson by analyzing the international student in the American business culture. “A relatively unrecognized challenge is knowledge of contemporary American business customs and culture. International students enrolled in two business schools formed focus groups to discuss the impact of their unfamiliarity with U.S. business on their learning,” (2011, p. 17).

On the other side of things Lung-Tan gives a unique view on how to measure culture; “How to measure culture has been a fundamental challenge for scholars in the field of international business and still is in debate (Gould & Grein, 2009; Venaik & Brewer, 2010; Leung et al., 2011). It is necessary to understand the concept of culture in order to discuss the relationship between culture and international business,” (2012, p. 109).

Prašnikar, Pahor, and Svetlik state “corporate cultures will continue to be important. For managers, the key to making business decisions is business interests. However, there will not be only one corporate culture (i.e. US-dominated), but instead diversified corporate cultures as multinational companies (‘MNCs’) will originate from more than one country,” (2008, p. 23).

Mahoney James is under the belief that, “Claims of widespread corruption in international business has stimulated a considerable amount of activity both in academia and in international organizations," although strong arguments have been made that bribery and corruption are not cultural characteristics, as they have so often been called, but symptoms of cultural breakdowns under the pressures of a malfunctioning economy,” (2012, p. 13).

Li preformed an analysis determining, “We hypothesized that, overall, Chinese students would be more likely to make less ethical decisions than their American peers due to the differences in four cultural dimensions: (a) small versus large power distance, (b) individualism versus collectivism, (c) difference in socioeconomic values, and (d) rule of men versus rule of law. The logit regression results strongly support the hypothesis,” (2011, p. 15).

Almhedie, Baruch, and Iles bring the concept of different managing systems for HR in the Middle East, “Arab management faces an ever-increasing challenge to keep up with management in developed countries due to globalization; the introduction of MNE operations can result in the "transfer" of best practices in HRM, as in Israel. A...
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