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Executive Summary

With almost 70,000 international organizations in the world, there are a lot of individuals that work in international environments, with the number only increasing every year as individuals recognize the benefits it offers. This report details the advantages and disadvantages of working in international organizations and stresses the need for diversity management. It defines culture and uses Hofstede’s cultural dimensions as the foundation for comparing different cultures at the country level. These theories are supported by the findings derived from interviewing an individual working in an international organization. An analysis of these findings shows the attitude and personality of the employee are important and how studying and understanding different cultures prevents misconceptions and improves the ease of doing business.

1. Introduction

In today’s globalized world, more and more people are opting to work for international companies. This is because of the competitive nature of jobs; people carefully select organizations that can help them further their career and grow. Working for an international company can help employees broaden their horizons, tackle new challenges and professionally grow in ways working for a smaller, domestic company does not allow (Kokemuller, 2018). Not only does it make employees aware of the different cultures and norms of countries, but also increases the value of employees on the labour market. This is because meeting new people helps employees expand their understanding of people, become a better team player, be empathetic and get insight into how individuals make decisions (Smith, 2019). Another benefit of working for a global company is the opportunity for job movement within the organization as well as increased exposure to the different areas of the business (Thomas, 2015). They invest in the career development of employees through on the job training and internal and external continuing education which enables employees to apply the best practices related to strategies and policies and expand their knowledge of the international market.

However, it comes with its challenges. Miscommunication can arise as a result of working with people with different customs. It can also become difficult for employees from different countries and cultures to build shared values (Wasserman, 2019). Such differences can lead to conflicts amongst employees and make it hard to implement effective culture-building systems (Anderson, 2019). Therefore, successful management of diversity in international organizations is essential. Successful management makes the business a stronger and more competitive entity. It is necessary to have an inclusive and diverse environment that does not create obstacles to teamwork or promotions (Harvard Business Review, 2015). Organizations that proactively address diversity have a competitive advantage and it helps the organization attract and retain good employees (Poole, 1997). Additionally, it also helps them identify with diverse consumer bases and improve organizational effectiveness. Research shows that diverse teams generate more ideas which lead to the generation of new products and services (Capowski, 1996). Approaching diversity from a strategic point of view, developing training programs with business needs in mind and getting the top management involved will help organizations manage diversity better.

The aim of this report is to explain the benefits and limitations of working in an international organization and show how culture can impact the business through findings obtained from interviewing an individual working in an international organization. It uses Hofstede’s cultural dimensions as a theoretical framework to link these findings to literature.


2. Literature

2.1 Overview

Geert Hofstede is known for conducting one of the most comprehensive studies on how culture influences values in the workplace (Hofstede insights, n.d). He defines culture as ‘the collective programming of the mind distinguishing the members of one group or category of people from others.’ Hofstede studied people that worked for IBM in more than 50 countries and initially identified four dimensions of culture. He added the fifth and sixth dimension after working with Drs Michael Minkov and Michael H. Bond. Based on the collective research by Geert Hofstede, Michael Minkov and Gert Jan Hofstede, there are

six dimensions of national culture, power distance index (PDI), Individualism vs collectivism, masculinity vs feminism (MAF), indulgence vs restraint (IDV), long term orientation and uncertainty avoidance index (UAI).

As the focus of his research was solely on IBM employees, he attributed the patterns of similarity and difference along the dimensions to national difference and minimized the impact of company culture (Mind Tool, 2019). This literature review will examine the definition of culture and the cultural dimensions of Hofstede.

2.2 Culture: A definition

Culture shows the commonly accepted values, norms and the traditional behavior of a group. It exists in shared values, assumptions and behaviors and is usually experienced through the expectations of a group. According to Schein, Schwartz, Hofstede (as cited in Harvard Business review, 2018) culture has four commonly accepted attributes, it is shared, pervasive, enduring and implicit. Additionally, there are three levels of cultural values, they are universal, individual and collective. They play a vital role in business and impacts its direction. These values shape technical dimensions, political institutions and social makeup, which mirrors and underpins beliefs and values together (Hofstede, 1999 as cited in Matusitz & Musambira, 2012).

2.3 Hofstede’s Cultural Dimensions: A theoretical framework

Hofstede created a six-dimensional framework for discerning the phenomenon of cultural difference.

Firstly, conceived by Hofstede, power distance expresses the degree of inequality that exists and is accepted amongst people with and without power. It describes the way people from different cultures view power relationships such as superior-subordinate relationships (Study, 2018). Individuals that demonstrate a high-power distance tend to be deferential to authority figures and usually accept the unequal distribution of power and have complex hierarchies (fig 1). Whereas individuals in cultures that demonstrate low power authority have flatter organizations with almost equal relationships between superiors and subordinates, they question authority and actively participate in discussions concerning them.

Secondly, uncertainty avoidance describes the extent to which societies are disturbed by change and uncertainty and considers how unexpected events and situations are dealt with (Reservation, 2020) Individuals from countries with high uncertainty avoidance scores place more emphasis on long-held social conventions. A high UAI indicates a low tolerance for ambiguity, risk-taking and uncertainty with the unknown being minimized through regulations and strict rules. Strong uncertainty avoidance is represented by a respect for authority, delineated structures, written rules and several standardized rules in organizations (Belyh, 2019). Similarly, a low UAI indicates a high tolerance for ambiguity, risk-taking and uncertainty with fewer rules are regulations as the unknown is more openly accepted (Corporate Finance Institute, 2019). It is characterized by flexible morals and tolerance towards different behaviour and opinions (Fig2).

Thirdly, individualism versus collectivism, refers to society’s perceived dependence on groups and obligations and the extent to which societies are integrated into groups (Corporate Finance Institute, 2019). It is characterized by an emphasis on self-sufficiency and independence with self-interest placed over collective interest. Rather than vertical relationships, stress is on horizontal relationships. On the other hand, collectivism places more importance on the well-being and goals of the group. There is an emphasis on hierarchy and harmony within the group. Another characteristic of collectivism is the willingness to put collective interest above personal interest and sharing resources (Belyh, 2019).

Masculinity versus femininity is the fourth cultural dimension by Hofstede. It revolves around the emotional role distribution between genders and considers the preference of society for achievement and their attitude towards equality, behaviour and sexuality (Corporate Finance Institute, 2019). Masculinity is defined by assertiveness, distinct gender roles and concentration on material achievements. Femininity is characterized by societies concerned with the quality of life, fluid gender roles and modesty. There is an emphasis on non-materialistic angles of success.

In continuation, long term versus short term is the fifth dimension based on the Confucian dynamism. Long term orientation is defined by an emphasis on perseverance, persistence and possessing a sense of shame. There is a positive association with economic growth and individuals possess a dynamic, futuristic mentality (Belyh, 2019). The short-term orientation is represented by an orientation towards the past and the present with a respect for tradition and saving face. Stability and personal steadiness are emphasized and there is a negative association with economic growth.

Lastly, the sixth cultural dimension of indulgence versus restraint (IVR) focuses on happiness. It considers the degree and tendency of society to fulfil its desires. A society practising indulgence allows relatively free gratification of basic and natural human drives linked to having fun and enjoying life. Restraint describes a society that tries to control the need for gratification through stringent social norms. Countries with high indulgence scores have social structures that acknowledge human desires and encourage individuals to pursue their fulfilment. Countries with low IVR scores have social structures built to suppress emotion and equate duty with destiny. They view the fulfilment of one’s obligations as the fulfilment of one’s life purpose (Reservation, 2020).

2.3 INTERVIEW FINDINGS AND ANALYSIS

After interviewing Mr A, an employee working in international company X in India, the following findings were discovered.

Given that he does business with multiple countries that have their own culture and diverse views, he had to do research into their culture, history and way of doing business in order to adjust working with them especially in the case of South Korea, Myanmar and Israel(figure 10). He realized that though it was easier to work with countries with a similar culture as his own, he preferred working with Asian countries with distinct cultures as he got to broaden his knowledge and learn from them.

South Korea and India

Given the different cultures of countries, they had their own ways of doing business. India and South Korea are both countries with strongly established cultures and doing business with South Korea was a learning experience. In South Korea saving face is a big thing in their culture, they follow Hofstede’s short-term orientation which is why they do not openly disagree with the points in a formal meeting, making analyzing their spoken words difficult. One has to read between the lines and look for non-verbal cues such as body language, expressions and eye contact. This also supports Hofstede’s cultural dimension of uncertainty avoidance. South Korea is one of the countries with the highest uncertainty avoidance (figure 7), they place a high value on control and prefer everything to be structured and organized.

Another point of difference is the time orientation. It is very low in India as compared to South Korea whose time orientation tends to be high as they strictly adhere to schedules and deadlines (figure 8).

However, despite their formal nature, South Koreans tend to form interpersonal relations and strong bonds and only do business with people they like and trust, it is not transactional. Trust is prerequisite to business dealings and must be established and nurtured over time, recourse to law is secondary to honouring any commitments to a partner. Mr A recounted how his colleague that had worked on the proposal before him was not able to do business with them. It took Mr A three months to get into business with them as they took time to gauge whether they liked and trusted him.

Experience with Myanmar

Secondly, he has also worked with people from Myanmar. Based on his experience, it was easy to do business with them after getting an understanding of their culture. He read books on Myanmar by both local and western renowned authors and visited historical cities such as their old capital Mandalay which helped give insight into their rich culture and sense of history. He did face a few challenges initially as his partners in Myanmar were on a financial crunch leading to delays, making execution of projects difficult. However, it came with its benefits. Myanmar’s hierarchy was like India’s but seemed more rigid in some places. For instance, when working with Myanmar, he had to go through the proper channels which involved the local Burmese companies. Mr A’s partners in Myanmar understood the local organizational structure better and helped him gain access to the local market as Myanmar’s government preferred dealing with them. Additionally, during the meetings and interactions, he observed how only the senior-most person spoke while others only spoke when directed, showing high power distance.

Israel

Thirdly, Israel is another country he has had business dealing with in the past. He referred to Israel as a melting pot of culture which made it easier for them to understand other cultures. From his experience, he found them to be innovative with out of the box yet practical solutions. He noticed how even the junior-most member was not only encouraged but also expected to speak his mind, which supports Hofstede’s dimension of power distance. Israel ranks low with a score of 13 as compared to India’s 77 (figure 9). This proves countries with low power distance scores have an almost equal superior-subordinate relationship.

Given the differences in cultures present in the countries he did business with, he faced a few hurdles. Mr A’s unique skillset helped him overcome these difficulties. He showed genuine interest in their culture, history and language, for instance, he learned Hebrew when he was doing business with Israel. His business trips to Israel and Myanmar helped him experience their culture firsthand and see things through their perspective. Additionally, his ability to connect with others helped him get past cultural barriers. He also got additional training to better understand the country he was doing business with.

3. Analysis

-These findings suggest that respect for culture and willingness to adapt is key in doing international business. Individuals that have an appreciation for culture and are willing to understand it will find doing business with people from different countries and cultures easier.

 -Furthermore, success appears to be primarily dependent on personal characteristics and as such, organizations should screen and identify personality traits that match the assignments.

 -Additionally, knowing the foreign language can lead to more successful negotiations and act as a competitive advantage, helping build strong relationships with the foreign company. They tend to appreciate it when someone takes the effort to learn their language and it brings them closer.

-Every country has its own way of doing business, it is important to keep this in mind while doing business and knowledge of their cultural norms can help minimize cultural shocks and miscommunication.

– Furthermore, as evident in the case of South Korea, in many cultures, people prefer building trust before they engage in business. In such instances, individuals that are patient and have a warm and open personality have a higher rate of success.

4. Conclusion

In conclusion, in today’s rapidly evolving world, working in international organizations is becoming more common as people recognize the benefits it offers. Working in an international organization exposes people to different cultures, languages and also teaches one how to deal with people having underlying views. While national culture cannot be changed, one should try to understand and respect it. Hofstede’s cultural dimensions were developed to understand the differences in culture across countries and understand the way business was conducted across different cultures. It also acted as the base for understanding the experiences of individuals that have worked with different cultures.

The interview findings showed how studying and understanding the culture of various countries like Israel, South Korea and Myanmar gave Mr A insight into how people from such countries thought, behaved and interacted within themselves and also with people from other countries. One can learn from such experiences by keeping an open mind and taking the initiative to learn about other cultures as it can help them later when doing business and also broaden their thinking. Thus, this report highlights how people working in international organizations are exposed to different cultures and how it plays an important role in business and shows their real-world application with Hofstede’s dimensions acting as a foundation.

REFERENCE LIST

Anderson, T. (2019, January). Global business advantages & disadvantages. Retrieved from https://bizfluent.com/info-8172773-global-business-advantages-disadvantages.html

Belyh, A. (2019, September 20). Understanding cultures & people with Hofstede dimensions. Retrieved from https://www.cleverism.com/understanding-cultures-people-hofstede-dimensions/

Corporate Finance Institute. (2020, June 1). Hofstede’s cultural dimensions theory – Overview and categories. Retrieved from https://corporatefinanceinstitute.com/resources/knowledge/other/hofstedes-cultural-dimensions-theory/

Capowski, G. (1996). DIVERSITY MANAGING DIVERSITY. Management Review, 85(6), 12. Retrieved from https://search.proquest.com/docview/1309756041?accountid=12528

Neeley, T. (2015). Global teams that work. Harvard Business Review. Retrieved from https://hbr.org/2015/10/global-teams-that-work

Jonathan Matusitz & George Musambira (2013) Power Distance, Uncertainty Avoidance, and Technology: Analyzing Hofstede’s Dimensions and Human Development Indicators, Journal of Technology in Human Services, 31:1, 42-60, DOI:10.1080/15228835.2012.738561

Kokemuller, N. (2018). Advantages & disadvantages of working for a multinational company. Retrieved from https://woman.thenest.com/advantages-disadvantages-working-multinational-company-21260.html

Managing diversity in the workplace. (1997). The Worklife Report, 10(3), 9. Retrieved from https://search.proquest.com/docview/205256991?accountid=12528

Martin, G. C. (2014). The effects of cultural diversity in the workplace. Journal of Diversity Management (Online), 9(2), 89. Retrieved fromhttps://search.proquest.com/docview/1636838973?accountid=12528

Reservation. (2020, February 17). Hofstede: The six dimensions of cultural difference [Overview + graphic]. Retrieved from https://www.reservations.com/blog/resources/power-distance-index/#infographic

Smith, B. (2018, August 22). The benefits of working for a global company. Retrieved from https://myventurepad.com/the-benefits-of-working-for-a-global-company/

Thomas, C. (2015, July). 6 great things about working in a multinational and multicultural company. Retrieved from https://www.iamexpat.nl/career/employment-news/6-great-things-about-working-multinational-and-multicultural-company

Wasserman, N. (2019, December 4). The benefits of working in a global organization. Retrieved from https://nyuwassermanblog.com/2018/08/27/the-benefits-of-working-in-a-global-organziation/

About the Author

Tanvi Asolkar (@nightshade09)

Bachelors of Business and Commerce, Monash University(Malaysia).

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