Human and Cultural variables in Global Organization


KP Kanchana
Faculty OB/HR
ICFAI National College

This episode is one of the many other similar ones which underscore the HR Challenges in preparing people for Cross Cultural working. Organizational culture is one of the latest concepts in the fields of management and Organizational Theory. Culture which is popularly called as "Shared values and Beliefs" fulfills important functions.

1. It conveys the sense of identity for organizational members.
2. It enhances social system ability.
3. It facilitates the generation of commitment to some thing larger than self.
4. It serves as a sense of making device that can guide and shape behavior.

As business become more globalize, developing and training people across cultural boundaries is becoming increasingly important. Culture of the country is an important determinant of behavior of people, and not being sensitive to these differences can often result in misunderstanding and embarrassments and even in loss of efficiencies. For instance cultures differ widely in terms of concepts of time. Besides the obvious implications for punctuality, the difference also lies in how people from different cultures use their time. An understanding and sensitivity to such cultural differences in behavior and orientations is necessary perquisites to develop cross cultural competencies.

The roots of cultural differences in the business practices lie much deeper. Business cultures in different countries are molded not just by the behavior of culture, such as social institutions, public system, public policy, legal frameworks and culture specific social values. Since these provide the cultural context, in which business is conducted, they are as much if not more important in understanding the culture differences in business practices.

Factors affecting cultural variables.

1. Social Institutions
:- Countries differs considerably in the kind of social institutions they have e.g., the way their education system functions, the way financial system works, the structures of governance etc. which have a direct impact on how business is conducted in that country. These social institutions are important artifacts of the culture and often embody its basic values and assumptions.

Example- Education System in Germany has a heavy emphasis on technical and apprenticeship training, which can be historically traced back to the artisan's guides of the Middle Age. This system focus on imparting hands on technical skills in which the students get assigned at the very early age, beside this it also influences the business practices by bringing the specific set of skills into job market.

Similarly one finds the cultural values of individualism and entrepreneurship embodied in the American Venture Capitalist System. This system legitimizes and encourages risk taking and going it alone behavior, but also creates a business environment in which investors have a major impact on how business is run.

2. Public Policy and legal framework:- The government policies and legal frameworks of different countries also reflects the cultural values of the country. These influences the business practices in 2 ways;

a) They determine the broader framework for doing business in the country.
b) They influence and circumscribe the management practices with in the company.

Cultural values also influence the interpretation and implementation of the laws. It determines the nature of the laws, which have direct implication for management practices within the company.

Example: - Lifetime employment in Japan which is rooted  in the literal interpretation of Article 27 of Japanese Constitution. It is supported by its cultural values Shakaisei (Social Consciousness) and Tate Shakai (Social Hierarchy and paternalism). In contrast US Constitution also guarantees the right work,, the right cultural value of self reliance and " each for him" does not support it.

3. Societal Cultural Values:- The most pervasive impact on the business culture and practices in a country comes from the broad cultural values of the society. These values influence the business in different ways at different levels.

At macro level cultural values allow certain kinds of business to flourish, while not providing the right climate for others.

Example: - French culture is known for its emphasis on elegance, criticism and concern for Norms.

The cultural values of the society define the meaning and reason of business and how it is organized. In many cultures, high profits and market capitalization are not the criteria for doing business.

Such cultural difference has direct impact on the Strategic Orientation of companies across cultures.

Example: - While US Companies emphasizes more on the profit dividends

And stock prices, Japanese companies focus more on new product development and market share.

The cultural values also influence how the business is organized and conducted in the societies. In collective societies for instance, personal contacts play an important role in conducting business. In China people conduct business based on personal relationship ( Guanxi - Interpersonal relationship).

At the end the cultural values have a major influence on the way people relate to each other and what they aspire for in a job. In many hierarchical cultures (e.g. India, Japan etc) the meaning and value of job lies in the status more than in the pay packet. In these countries people also expect to be recognized for their seniority and age. ON the other hand in more egalitarian cultures ( USA, Germany etc) people expect rewards and compensation for their performance than their seniority.

Therefore it is evident that developing people to adapt to and operate across business cultures of different countries, require an appreciation of aspects which are deeper and more pervasive than just cross cultural differences in behavior. While an understanding of differences in behavioral orientation and etiquettes help people in becoming cross culturally literate but to develop truly cross culturally educated global managers, it is essential to provide an understanding into the deeper structures which mould the culture.

KP Kanchana
Faculty OB/HR
ICFAI National College

Source: E-mail June 2, 2006


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