The challenge of management between cultures has existed since the presence of ancient civilisation (Hickson and Pugh, 1995). From the governance of populations, the commanding of armies and the management of religions; the problem of management across cultures has been present for thousands of years. Business and corporations in recent decades have been exposed to the globalisation of various cultures and philosophies. Many organisations have welcomed this and attempted to buy and sell products outside of their domestic market, whilst others have been more reluctant to face the challenge. Understanding the cultural norms and behaviours of new environments, whilst showing signs of sensitivity, can be the difference between the success and failure of a business operating abroad (Hannagan, 2005a). Improvements in the technology of communication and transportation, and the decreasing costs of production, result in more and more businesses taking advantage of the growing accessibility of global markets (Adler, 1983). The increase in overseas operations for businesses has seen new strategies implemented internally as there needs to be an improvement of communication between the employees and management of different cultures. Hofstede et al (2005a) argues that if we want to understand the management styles of different cultures, we first have to understand their society; for example, how families function and what effects does the government and political system have on citizens. It is understandable why some businesses maybe reluctant to diverse into new cultures, as there is a considerable amount to comprehend about the market; but this is a risk that some large-scale businesses have to take in order to compete in the global market. The growing importance of cultural differences, internally and externally to multinational organisations, is calling for new styles of management to be introduced which follows the norms and behaviours of that society.

Contemporary Cultural Issues in International Management

There are a number of issues that businesses need to consider when internationalising and expanding their operations into new cultures. They may need to reconsider their marketing and human resource management, or even reconsider their product in order to comply with social-cultural norms (Brooks et al, 2004). With these considerations many businesses are changing their management practice in order to conform to the cultural norms within their place of operations. Ways in which many contemporary businesses are approaching this is to create inter-cultural managers, someone who can operate in a variety of different cultures (Hofstede, 2005b). One of the many benefits to inter-cultural managers is that it an break down the cultural barriers and bring people from different cultures and sub-cultures together through means of communication. These managerial development programmes have been implemented into American businesses since the mid-twentieth century, but many businesses operating abroad have found it difficult implementing these programmes. International participants have struggled to take advantage of these development programmes, as the cultural and communication barriers have taken effect. Hofstede et al gives an example of businesses operating in Japan; many participants found it difficult receiving personal feedback on their performance as they feel they insulted the giver of the feedback. This would come down to the variance in cultural norms; in Japanese business culture, the relationship between the employee and manager are more personal than Western practice. Another downside to developing inter-cultural managers is that many managers these days are not willing to spend long periods of time abroad (Daniels & Radebaugh, 2001). But Daniels et al identify a trend in managers spending short periods in international markets, which is something businesses encourage as through this they can become more culturally sensitive through the experience and further training. With regards to marketing management, Brooks et al believe that many businesses face the issue of whether to go with the 'Convergence Perspective' (global marketing campaigns) or adapt their marketing strategy and product to the cultural norms and behaviours (Divergence Approach) of the country in question. The contemporary approaches to cultural issues in management help identify the new trend of approaches to management which consider the cultural behaviours of the internal and external environment to the business.

Culture in International Business Management

There are many different definitions of national culture relevant to the international business environment; beginning with Kroeber and Kluckhohn (1985). During their study into the definition of culture they came across over 160 various definitions of the sociological aspect of culture. Originally, national culture was defined and regarded as a sociological term but with the development of globalisation, the term has become widely acknowledged by business people working in foreign markets (Brooks et al). The most common and well-known definition of national culture, which can be related to business comes from Hofstede, G. (1984) 'The collective programming of the mind which distinguishes the members of one human group from another... Culture, in this sense, includes systems of values; and values are among the building blocks of culture.' Obviously this definition emphasises the importance of values, and it is the difference between these sets of values which shape a national culture and understanding what would be classed as acceptable and non-acceptable behaviour in society. Gert Hofstede conducted a further study into the relationship between national cultures and values, between 1967 and 1973. In the end he was able to identify four key dimensions that help differentiate a country's national culture from another (Hofstede, 1983):

  1. Power Distance- this index focuses on differentiating a country's wealth and power of individuals. A high score represents a broad difference between these two variables.
  2. Uncertainty Avoidance- this index measures to what extent a country establishes formal rules or patterns of life such as career structures.
  3. Individualism- this index measures how tightly linked societies in a country are. The higher end of the scale are those societies where the ties between individuals are very loose, whereas on the other end of the scale are what is known as 'collective' societies.
  4. Masculinity- this index measure the masculinity and femininity of a society. The more masculine a society is, the more it values 'assertiveness' and outcomes, whereas femininity relates to the process of caring and concern for people.

This Youtube clip illustrates the use of Hofstede's four dimensions in context to marketing management and advertising. It's a useful video as it helps understand each individual dimension by applying it to existing marketing campaigns.
Figure 1: Elements of Culture (Source: Hannagan, 2005)

Hannagan (2005a) argues against Hofstede's use of four dimensions when analysing different cultures. He states that the four dimensional approach fails to give much of an insight into the workings of society as a whole, a
s it doesn't clarify the behavioural norms of a culture. Hannagan argues that frameworks, such as figure 1, offer alternative means of understanding the different elements that make up a culture by extending the understanding beyond just the business, to customers and different markets. This allows managers to identify the similarities and differences between the cultures of two countries, helping to create 'clusters' for targeting their marketing campaigns and sales. The issue which most contemporary managers are facing these days is not to be aware of the individual cultures of countries they are operating in, but to understand the extent and the nature of diversity in the different cultures. For international managers, the main challenge is to find the right balance between the understanding of different behaviours of the consumer, such as their needs and values within the cultural clusters, and the understanding the diversity of cultures within their target market. Finding the right balance between these two elements would result in a successful strategy for the business to move forward. The changes in cultural norms between 'clusters' can be best exampled by Bloom et al (1994) who looks at the diversity of cultures of European States compared with those of Japanese and American. Bloom et al argues that Europeans are better at dealing with diversity with respect to businesses and sociologically. As Europe has been exposed to a wide array of cultures, European businesses have utlilised this more effectively than other continents. Bloom et al suggests that the Japanese business culture is developed in a highly homogeneous market, whereas the American business seek to integrate various cultures into a new unique culture which follows the behavioural norms of America. He also suggest that Europe sees the managing of diverse cultures as a way of life, whereas the Japanese and Americans see it as a major obstacle.

Globalisations Impact on Cultural Management

Brooks et al (2004) argue that the increasing importance of national culture in the business environment can be a direct result of globalisation. More and more businesses are looking at entering new markets, especially abroad, which means they are discovering new cultures and markets to direct their sales at. Going back to the convergence/divergence debate, this is crucial for businesses when understaning the process of globalisation. Kerr et al (1960) and Levitt (1983) suggest that the convergence perspective reinforces the arguement that globalisation is leading to more and more global brands being made available to customers. Brands such as McDonald's or Coca-Cola can be recognised in a majority of cultures globally, meaning the potential global market is quite substantial. Through these means of 'global domination', brands are paving way for huge opportunities in terms of economies of scale through the use of highly effective marketing strategies. The Divergence perspective on the other hand, argues that expansion of operations into global markets may not be as simple for businesses. Many companies have failed this step due to a certain naivety surrounding the cultural differences of countries. Just because a strategy works in the domestic market, it does not mean it will work in new countries and cultures. Some cultures are very much similar (USA and UK) whereas others may entirely different (UK and China). Halliburton & and Hunerberg (1987) concludes that with the emergence of these 'global villages' or neighbouring cultures, it doesn't suggest that these cultures are looking to converge by any means. His answer to this debate, whether convergence or divergence, is 'it depends'. One can only assume that it all depends on the nature of the strategy and implementation in these cultures and that it can vary from case to case.

Case Study: The Toyota Way

The Toyota Way: a typical chain of production for Toyota in the UK (Source: The Telegraph, 2012)

'Since Toyota’s founding we have adhered to the core principle of contributing to society through the practice of manufacturing high-quality products and services. Our business practices and activities based on this core principle created values, beliefs and business methods that over the years have become a source of competitive advantage.These are the managerial values and business methods that are known collectively as the Toyota Way.' Fujio Cho, President of Toyota (Anon., 2003)
Toyota's philosophy is that of 'Continuous improvement and quality' in the manufacturing of its products. Through the means of Lean manufacturing (an emphasis on the reduction of waste and effective utilisation of resources [Hannagan, 2005b]) they have managed to implement 'The Toyota Way'. As the quote above shows, 'The Toyota Way' is a collection of beliefs held by the managers and workforce of Toyota to value the practice of providing a high-quality product through the means of Lean production and continuous improvement. They emphasise the importance of the workforce and their input into processes, without which they believe that the toyota way wouldnt be possible.

In their executive summary, Toyota issue 14 principles of the Toyota Way which are divided into four catergories: 1) Long-term philosophy 2) The right process will produce right results 3) Add value to the organisation by developing your people and 4) Continuously solving root problems drives organisational learning.Themost important principles for Toyota are:

  • Basing management decisions on long-term philosophy- Toyota wants the whole organisation to move in the same direction, through everyone knowing their history and place within the company.
  • Create a continuous process flow to bring problems to the surface- in order for problems within production are highlighted immediately they link processes and move materials and information quickly along the chain of production.
  • Building a culture of stopping and fixing problems in order to get quality right first time- 'Build into your culture the philosophy of stopping or slowing down to get quality right the first time to enhance productivity in the long run'.
  • Growing leaders who understand the work, live the philosophy and teach it to others.

The video above shows how Toyota have implemented their approach on the 'Toyota Way' into UK car manufacturing. You can see that their philosophy has been implemented successfully, which represents a good example of cross-cultural management as the cultures of the UK and Japan are considerably different.

To Conclude...

Over the last fifty years we have seen the convergence of a number of different cultures, which many businesses have attempted to utilise and expand into. Many businesses have succeeded in understanding the importance of culture when implementing their marketing strategies, whereas the less-successful businesses may have been guilty of arrogance or naivety.

Where else can National Culture be Applied in Business?

The Hofstede model on National Culture gives us a useful insight into where else in business management and strategy, culture can be applied. Here are a few examples:
  • Leadership- which many organisations being exposed to such diverse cultures, many managers may have to come to terms with the fact that the leadership style adopted may not be suitable for the culture in that country. For example, Chinese management is very hierarchical, whereas a small minority of Western businesses have a more democratic leadership. Japanese may not be used to these cultural norms of western businesses. The main challenge facing inter-cultural management is that there is no 'one way to lead'.
  • Recruitment- When recruiting in unknown cultures, managers need to be aware that the skills or traits that may be desirable in one business culture may not be so desirable in another. There may also be an issue when recruiting management; if they have their own leadership style, this may not comply with the cultural norms of the international workforce.
  • Outsourcing materials and resources- Obtaining resources from different countries maybe a cost-effective and a more efficient way of operations, but when outsourcing from another culture it may not be so effective and may be counter productive.

Discussion Questions

Here are a few questions to get you thinking about the topic of cross-cultural management:
  1. What company, would you say, has adopted the best practice of cross-cultural management and why are they so successful in doing so?
  2. Regarding different cultures, what points do businesses need to consider when seeking to expand into new markets abroad?
  3. Can you think of any failed attempts made by businesses to expand into alien markets abroad and why did it fail?


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