International Business-The Challenge of National Cultures & Creation of Inclusive Work Environment

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Nations are characterized by their uniqueness of culture that creates a subtle identity even though it comprises varying subcultures. However, the core values and ethos remain unaltered at its deepest level over a long period though it does change over time. Though the cultures of different Nations differ, it is not easy to call out these variations.

A Culture determines social behavior and is acquired knowledge of values and beliefs. It is also a set of assumptions that carries through generations. National cultures are influenced by political ideologies, religion, economy, social affiliations, literature, customs, traditions, and today’s world through digital media’s soft power. As societies evolve, so do cultures. Ethnicity is the social definition of National culture and thus mostly associated with National culture, customs, religion, language, and national characteristics.

Race is a combination of social definition and physical characteristics and, thus, biological. It is, therefore, a self-identification based on affiliation with a group and is genetic in nature. Race and ethnicity are intervariable in use. Thus, race can be claimed in terms of multiple Nationalities. I may live in a country as a generation that has migrated yet claim my roots of originality with my ancestral National identity.  Thus, race and ethnicity are blurred in today’s world, owing to migration.

Migration in International Business is now a norm. Migration can happen because of:

  • Push factors: Migration owing to unfavorable causes like wars, famine, instability, etc.
  • Pull factor: Favorable causes that motivate migration like education, jobs, quality of life, etc.

Migration has multiple dimensions:

  1. Internal migration: Movement within a country.
  2. External migration (Emigration): Moving to a different country or a continent.
  3. Immigration: Leaving a country altogether with the intent of a new domicile.
  4. Return migration: Returning to home country as a post thought.
  5. Seasonal migration: This is in response to factors of production and climate.
  6. Refuge: Movement to ensure safety from a problem in a home country as a refugee status often leads to the human rights issue of being stateless.

Migration for any of the above reasons creates diversity challenges in the organization. Thus, diversity (mix) is defined as the differences in racial, ethnic, socio-economic, geographic, academic, and cultural reasons. Gender diversity also plays a critical role in international organizations. Age and other differences of any nature contribute to diversity. Therefore, diversity as a fundamental has innumerable dimensions, with each person also being unique. Sexual orientation and preferences are now emerging as an essential discussion in the management of diversity.

Stereotypes lead to the issue of racism, which can seriously impair the organization’s culture. Racism can be:

  1. Descriptive racism which are attitudes and actions that separate minorities.
  2. Evaluative racism is a negative value judgment with immoral intentions.
  3. Overt racism is proactively intended to discriminate against minorities.
  4. Institutional racism creates social and structural discrimination and legitimizes it.
  5. Official racism is legitimized by authorities.
  6. Unofficial racism is perpetuated by society though banned by Institutions.

The practice of racism at the workplace and in society leads to passive engagement, rebellious attitude, and hostility as an extreme case. In the globalized world, racism needs to be nipped in the bud, though the challenge is deep-rooted.

Thus, management of diversity is managerial and organizational processes and practices, evolutionary in nature to ensure a dimension of inclusivity at the workplace. Therefore, inclusion is the creation of an environment through diversity management to make the mix work. The intention of inclusion being overcoming the challenges that diversity poses through a deliberate act of diversity management programs.

Challenges associated with diversity can be identified as under:

  1. Destructive Conflicts.
  2. Personal Stresses.
  3. Lack of teamwork.
  4. Communication issues.
  5. Lack of ownership and accountability.
  6. Business risks.
  7. Customer dissatisfaction.

However, if diversity is ably harnessed, it can result in tremendous benefits:

  1. Increased innovation.
  2. Increased productivity.
  3. Ease in the understanding of cultures.
  4. Solutions on business practices for different countries.
  5. Alternative perspectives on business issues.
  6. Increased ability to cope with change and business expansion initiatives.
  7. Overcoming the managerial bounded thinking and groupthink.

Thus, diversity is the key to the enhancement of organizational creativity. However, stereotypes, discrimination, and racism inhibit the harnessing the power of diversity. Therefore, it is imperative to sensitize teams on facets of culture to understand the differences in thinking and behaviors and develop empathy. Greet Hofstede’s Cultural Dimension Theory gives insights into social behaviors. He did factor analysis to examine the results of a worldwide survey on employee values of IBM. The original theory proposed four dimensions, which later extended to six dimensions as under:

  1. Power distance: Signifies authority, influence, accessibility & control.
  2. Individualism Vs. Collectivism: I/we, decision taking, vs. decision making.
  3. Masculine Vs. Feminine: Heroism, achievement, material wealth Vs. Modesty, cooperation, work to live.
  4. Uncertainty Avoidance: Risk aversion dimension and flexibility of rules, ability to work in ambiguity.
  5. Long-term vs. Short-Term: Cause & Effect orientation of delayed gratification Vs. Face-saving instant gratification.
  6. Indulgence vs. Restraint: Gratification freedom & pleasure vs. Controlled feeling.

Cultures thus become a variety of combinations of the above facets on a scale of 0-100 for each country for each dimension. Simply put, understanding that each culture has its uniqueness and the need to empathize with it minimizes the cultural collision. Most businesses wind up operations because they cannot adjust to cultures. Also, many a time, product and brand communication can create cultural issues. Thus, understanding of cultures becomes crucial to International Business.

Language plays a crucial role in cross-culture communication. High context and low context are the two concepts of cross-culture communication. High context language is metaphorical with implied meaning, whereas the low context is as-is. This can lead to severe communication caused conflicts. Body language adds to it as some cultures are very animated during conversations, and some are controlled. Translation at times creates ambiguity owing to the unavailability of exact words, thus creating conflicts in interpretations.

MNE’s have to take conscious action to develop the global cultures of professional organizations as this could be a new dimension of work culture for local employees. Resistance is common. Thus, applying Design Thinking principles of low hanging small changes is the right thing to do. This leads to inclusion as it is a deliberate choice of making the diversity mix work. Application of Neuro-Linguistic Framework is the best here. It is about designing the environment so that new behaviors are practiced by shaping new values and beliefs. Organization Culture Building Interventions are the key to the success of inclusion. But they also come with their own risks as they can further emphasize risks.

Diversity in the workplace means that a company’s workforce includes people of differing gender, ages, religions, races, ethnicities, cultural backgrounds, sexual orientations, religions, languages, education, abilities, etc. Inclusion means that all people, regardless of their abilities, disabilities, or health care needs, have the right to be respected and appreciated as valuable members of their communities and participate in recreational activities in neighborhood settings.

Diversity and inclusion research brings out some interesting facts:

  1. Many endeavors to build a diverse workforce have backfired. However, when diversity works, it can be the most engaging workplace.
  2. Equality and fairness to all provide a celebration platform for diversity. Each must thus be allowed to express from own’s beliefs and must be respected.
  3. As a learning organization, an emphasis must be given that diversity creates a learning paradigm in every organization and thus results in a global leadership grooming approach.
  4. Diversity must never be a number-driven approach as it further strengthens biases.
  5. Minorities must be permitted community work to let go of psychological fears and create a space of acceptability.
  6. Successful minority members must be made Mentors to transfer experience.
  7. Women and men must be given a fair chance based on competence.
  8. Reengage the retiring workforce, which is a must in young Nations. It also retains wisdom.
  9. Many people with neurological conditions such as autism, dyspraxia (muscle coordination), dyslexia (reading issues) have extraordinary skills, including pattern recognition, memory, and mathematics. The neuro-diverse population must be tapped.
  10. Make LGBTIQ inclusion visible. This enables diversity and inclusion in a community message. Please also note it is not easy for them to call out their gender unless it is safe.

Sexual orientation is now gaining momentum in corporate diversity management policies. Freedom of practicing personal sexual orientation is also gathering velocity. However, a lot needs to be done to enable the LGBTIQ community. There are fears associated with sexual preferences that can lead to isolation and thus decreased collaboration. This community is not always open about themselves, and thus there is a fear of calling out their preferences. Integration of LGBTIQ in diversity programs is an essential component in today’s world.

There is no specific model to make the mix work. I have concluded that each organization operating in the International space must build its own culture, which is the creative aspect of diversity management.

However, a non-discrimination-policy ensures zero-tolerance against racism and harassment of any employee at the workplace either directly or indirectly. Breaches must be immediately dealt with through disciplinary procedure in adherence to employment laws of the land.

21st Century is of knowledge and technology. It is essential to focus on skills and collaborative technologies while creating inclusion frameworks. If an organization has to succeed in global operations, it must make each culture a best practice of business model. Empathy and co-creation are the two elements that need to be nurtured across organizations—also, the more exposure to multiple cultures, the better the cultural intelligence and sensitivity. Diversity & Inclusion must thus become core values of all International Business transactions.

Copyright 2020 Niket Karajagi International Business Blogs Series. 

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