This paper is about the development of a deep understanding of the concepts of international business and global management by giving a broaden exploration of inter-cultural and cross-cultural management and the idea of doing business across cultures. The paper presents a brief commentary on the broad range of issues facing firms doing business across cultures and, in particular, the obvious differences observed or/and encountered in doing business in United States as opposed to doing business in Europe-including some cross-cultural communication issues, management development issues, interacting with American customers and ethical issues.
In fact, this document attempts to compare how business is done in the US to how business is done in Europe. The paper borrows mainly from Elishmawi (2001), Francesco & Gold (2005) and from several other sources that are indicated at the end of this document in the “List of References”. 2. Managing Cross-Cultural Differences in International Business Elishmawi (2001), Czinkota et al (2002), and Mead (2004) claim, separately, that as companies become increasingly global, clashes between managers of different cultures are occurring with greater and greater frequency.
Many of these clashes could be avoided if people were simply more aware of how people from other cultures perceive them and how those cultures differ from one another. Two distinct tasks become necessary: First, to understand cultural differences and the ways they manifest themselves, and, second, to determine similarities across cultures and exploit them in strategy formulation. – Success in new markets is very much a function of cultural adaptability: patience, flexibility, and appreciation of others’ beliefs.
Laroche (1999) and Elishmawi (2001) warn that differences in approaches, values and expectations between customers, suppliers and team members with different cultural backgrounds have lead to many projects failures. Laroche (1999) insists that miscommunication across cultural lines is usually the most important cause of cross-cultural problems in multinational projects. Elements of culture are language (verbal and non-verbal), religion, values and attitudes, manners and customs, material elements, aesthetics, education and social institutions.
Different scholars, including Laroche (1999), Elishmawi (2001), Czinkota et al (2002), and Francesco & Gold (2005) agree on six fundamental patterns of cultural differences: – Different communication styles, different attitudes toward conflict, different approaches to completing tasks, different decision-making styles, different attitudes toward disclosure, and different approaches to knowing. They give some guidelines for inter-cultural success: learn from generalizations about other cultures, but don’t use those generalizations to stereotype, write-off, or oversimplify your idea about others.
“Practice, practice and practice”; that is the first rule in order to get a better cross-cultural communication. Don’t assume that there is one right way (yours!! ) to communicate or to do business. Don’t assume that breakdowns in communication occur because other people are on the wrong track. Listen actively and empathetically. Try to put yourself in the other person’s shoes. Use this as an opportunity to develop an understanding from the other point of view. Remember that cultural norms may not apply to the behavior of any particular individual.
We are all shaped by many, “many different factors”. Be aware of possible current power imbalances-and have openness to hearing each other’s perceptions of those imbalances. It is necessary to understand each other to work together. 2. 1 National Culture, Attribution and Ethics: Gopalan & Thompson (2003) assert that cross-cultural management researchers have observed that when presented with similar ethical dilemmas, managers raised in different cultural environments exhibit divergence in their perceptions, interpretations, and eventual solutions.
Cross-cultural management scholars have noted that managerial values, beliefs, norms, and attitudes are impacted by national culture causing managers to conceptualize human natures, relationship to natures, work, time, inter-personal relationships, space, and language very differently (Adler 1986, Hofstede 1993, and Francesco & Gold 2005). It works as follows: Source: Figure 1: Gopalan & Thompson 2003, page: 314 2. 2 What international business managers should do:
International business managers should understand that cultural competence must be recognized as a key management skill. Cultural incompetence, or inflexibility, can easily jeopardize millions of Euros or dollars through wasted negotiations, lost purchases, sales, and customers; and poor customer relations. Cultural risk is as real and vital as commercial or/and political risk during expansion and beyond expansion of international firms. Ethical issues are differently perceived from one culture to another.
And ethical issues may really affect business and other management aspects. 3. Psychological Contracting and Human-Resource Development. Sparrow 1998 explores the role of human-resource development managers in defining and maintaining employees’ psychological contracts. This approach has received a great attention, mostly in US and UK, because it was discovered that cross-cultural differences in HRD processes are associated with contracting. Studies of the psychological contract tend to raise as many questions about the dynamics of employee behavior as they answer.
And, they provide a good tool for understanding the management of workforce across cultures. Failure to insure internal work cohesion may destroy any firm. Rousseau 1990 defines the psychological contract as the set of expectations held by the individual employee that specifies what the individual and the organization expect to give and receive in the working relationship. Contracts are open-ended agreements concerned with the social and emotional aspects of exchange between employer and employee. They represent a set of unwritten reciprocal expectations.
And, they are viewed increasingly as deep drivers of motivational theories because changes in the contract are assumed to have implications for employee behaviors in response to organizational attempts to manage careers, rewards, and commitment. Therefore, the issue for HRD practitioners is no longer just one of managing careers, but one of dealing with breaches in the psychological contract (Rousseau, 1995). 3. 1 . The Psychological Contract in its Broader Social Setting: Rousseau 1995 claims that the impact of national culture and institutions would be normally equated to the notion of social contract.
However, even at the individual level, the content of psychological contract and the management frames of reference that create, socialize, sustain, or breach it clearly bear an impact of each society’s social contract. 3. 2 . Cross-Cultural Differences: Lachman (1997) demonstrates how culture acts as an explanatory factor. His work gives a proof that Sparrow’s approach is scientific and that the contracting model and concept deserves our serious attention. And that the same approach can be applied even to any other business management across-cultures.
Comparative HRD academics draw attention to some marked social differences in the expected attractiveness of the concept. There are three most distinctive European Management Models: Anglo-Saxon, French and Germanic. To a common perceived threat, the main European national business systems will follow different trajectories of response. Sparrow 1998 asserts that within Europe, the strong and culturally distinctive (homogeneous) management models in France, Germany, and Scandinavia stand opposed to the Anglo-Saxon model.
The Anglo-Saxon model would include UK, US and Canada. However, example “e” in 5. 1 (Kim Samuel Johnson of Canada) demonstrated that we must be careful because there exist differences within the Anglo-Saxon countries, themselves. In fact, as Elishmawi (2001) advises us clearly, there are no two identical business models between two countries. Some brief examples: 1. Scholars, including Elishmawi (2001) and Sparrow (1998) claims that in the US and UK, management is seen as essentially an interpersonal task focusing on getting things done.
In rejection of elitism, people are seen as having primary importance as individuals. Personal experience rather than experience codified in the national culture forms the basis of effectiveness and performance. 2. Lawrence (1993) argues that German managers have difficulty with the idea that management is something that can be analyzed and generalized across the whole firm. So, they do not “manage” in general, but are instead seen to “manage something”. They like formal authority and value very mach technical competence and functional expertise.
3. Sparrow (1998) sustains that French organizations are staffed by a highly bright cadre of technical experts and are managed by the application of rationality. They apply less charisma, pugnacity, capacity to communicate and motivate. 3. 3 Recommendation to International Managers There are different and distinctive management models within Europe, itself, and between Europe and US. Furthermore, the internal efficiency of Argogen Biotech SA may be weakened if managers and workers in the new markets are not on “the same wavelength”.
The firm should take those differences into consideration when expanding. The French model will never work in US, if unchanged and re-adapted. It would not work in the rest of Europe, England, Japan or Canada, either. 4. Different National Cultures and Diversity Francesco & Gold (2005) assert that some countries, such as the United States, have a long history of dealing with people who are different, and as a highly individualistic country, US values these differences. Other countries, such as Japan, have been isolated from other cultures, and today are relatively homogeneous.
Elishmawi (2001) notes that doing business with Europeans requires many skills: proper etiquette, a keen business sense, and the ability to read nuances of verbal and nonverbal communications, to name a few. In addition, the diversity of European cultures forces the foreign businessperson to acquire skills they possibly never had before. It might seem for many that dealing with all Europeans is the same. It is definitely not however, as for example, French, German, British, Italian, Swiss, Dutch cultural values are very distinctive.
Strangely, for example, Americans, French and Russians highly value self-reliance, while Germans, Swiss and Spanish place high emphasis on reputation! Thus, when dealing with Europeans, it is useful to be aware they are various. 4. 1 Recommendation to International Managers: The firm Leadership needs to know that the perception of diversity in each of its new foreign markets is different. Failing to make required strategic arrangements to utilize diversity as a competitive advantage may end up with considerable losses of money, time and deals for the firm.
In the United States, there are fundamental traditions of valuing equality and equal opportunity. And, although relationships among members of different racial and ethnic groups have not been always harmonious-and are not even today-law, social, and corporate policies over 50 years have made numerous attempts to address equity and diversity issues. So, the US legal system has more experience in dealing with racial and ethnic issues than most of European countries. 5. Doing Business with Americans and Expanding into US Market
Elishmawi (2001) finds that since the end of the Second World War, US have played an important and influential role in the development of the global economic system. Consequently, American cultural values are prevalent throughout the globe, and countries and cultures that have wanted to do business with or compete against American companies, have sometimes found it necessary to adopt American business culture values and norms. Elishmawi (2001) argues that doing business with Americans, however, or adopting American methods of conducting business, is not always easy.
Czinkota et al (2002) assert that the significant importance of the US economy and the subsequent respect for the US economic model has been accompanied by a corresponding fall-off in the efforts by US companies and their managers to understand and respect other ways of conducting business. Misled by the sense that the world is becoming even more “American” and reassured by the increasingly universal ability of counterparts to speak English, many US managers do not fully comprehend how cultural misunderstandings can sour relationships and sabotage deals”.