Global business world
In low power distance cultures it could be estimated that employees are more involved in decision – making processes as an effect of decentralisation of authority (Davies, 2004) and a higher appreciation for equality among people. This implies that people are given more power for individual decision – making and thus responsibility whereas in high power distance cultures authority tends to be centralised and employees are more directed by the leaders of an organisation. (Hofstede, 1997, pp. 35, 36, 37)
These people might therefore have a greater need for obtaining instructions and tasks to fulfil. At the same time, as they are used to an authoritarian style they might show a great respect for authority and follow the given tasks and instructions with the utmost care which expresses a disciplined behaviour. Being aware about these differences can be useful when it comes to the composition of a multicultural work group: a person with acceptance of responsibility is more likely to fit in a leading position whereas a disciplined person is reliable and can ensure, for example, to keep time schedules.
Joynt and Morton (1999, p. 192) point out that cultural diverse group members need to understand their group roles which should correspond to their skills and accommodate their mental programs in order to achieve group effectiveness. That is to say, the selection of the right group members for the right positions becomes a prior importance for gaining advantageous outcomes. Having group members which show both low and high uncertainty avoidance could turn out to be a competitive advantage for companies in the development of new products for example. Following Hofstede’s point of view low uncertainty avoidance cultures tend to be more innovative as the “unknown” is not perceived as being threatening. Therefore, they might be more encouraged to search for new ideas.
Nevertheless, this high motivation for developing new ideas could result in neglecting or overseeing single issues which might negatively influence innovations resulting in failures or low quality. High uncertainty avoidance cultures by contrast tend to have a greater need for control and structures. In order to be able to control situations they prefer thorough examination and analysis. This imposes the idea that there is a high degree of precision in work processes. The commitment of failures in the development of new products might be therefore considerably reduced or discovered at an early stage. Combining these two cultural dimensions in a product development department might lead to new high quality products and thus could contribute to higher productivity in a company.
In this case the company would have gained an advantage through cultural synergy which is “[…] the behaviour of whole systems that cannot be predicted by the behaviour of any parts taken separately […]”. (Fuller, 1981, cited by Adler, 2002, p. 116) Adler (2002, pp. 107) argues that the prerequisite for achieving cultural synergy is the recognition of cultural differences within the organisation. In this context gaining real synergistic effects might considerably depend on how it is dealt with these differences within the organisation which renders the role of leaders of vital importance as they can ignore, minimise or utilise them. (Davies, 2004)
Utilising them in the right way might turn out to be beneficial as shown in the above example whereas ignoring them can be a waste of potential resources or even worse, it could result in reduced business performance as shown in the merger of the German Daimler – Benz with Chrysler Corporation of the United States in 1998 to form Daimler – Chrysler Aktiengesellschaft. It was proclaimed as “one of the most significant events that we have seen in the last 50 years or even more years” by Cole. (Web 5) However, Daimler-Chrysler has not yet achieved the expected profitability and continues to struggle in their performance. Cultural issues may have a vital impact on this slight performance. The company is basically run from Germany. The Management board consists exclusively of Germans with Jrgen Schrempp as the German Chairman and CEO of Daimler-Chrysler. (Web 5)
The company has 362,100 employees – Germans and Americans. Hofstede’s cultural dimensions (2001) show differences between these two nationalities regarding individualism versus collectivism. The USA has the highest index score for individualism and a low one for uncertainty avoidance whereas Germany is also individualistic but less than the USA. It has a relatively high index score for uncertainty avoidance. In fact, it is well known that Germany has numerous laws and regulations for nearly every situation. The setting of laws and regulations in order to avoid uncertainty expresses also an appreciation for having control.
Americans, in contrast, are more used to living with uncertainties. For example, they are known for having a “hire and fire culture”,thus they are accustomed to loosing jobs. Hofstede found that individualistic countries with high uncertainty avoidance tend to show antagonism against minorities and a lack in the relationship dimension. In the Daimler-Chrysler example it could be argued that the Americans represent the “minority” in this merger. The composition of the Management Board reflects the dominance of the Germans. Having dominance in a collaboration may influence the willingness for cooperation and thus the relationship between the partners.
The dominant partner may oversee or even ignore the other’s differences which may lead to an ethnocentric approach to the merging strategy. The highly individualistic character of Americans indicates a need for independence and autonomy. This, for example, is reflected by the fact that they are given more responsibilities in individual decision- making whereas in Germany important business decisions are mainly subject to top management (Davies, 2004). This in turn, reflects the high uncertainty avoidance and the German’s high sense for control. When an American person works for a German the result may be that the former may feel suppressed – he is likely to have less freedom in decision – making, for example. This feeling of suppression may lead to a worse work performance.
Marx (1999, pp. 99, 100) argues that the different attitudes in the American organisational culture and in the German one collide related to attitudes towards pay and benefits for their chief executives. This is because Germans are more focused on equality in pay, which reflects the more collectivistic approach in Germany, while in the U. S. payment is more dependant on individual performance. Significant series of events after the merger may be a result of these incompatible business cultures: many senior Chrysler key executives departed (Marx, 1999, p.100) and significant losses in the U. S. Chrysler Group were reported.
It can be argued that this could have been prevented when both parties would have taken their cultural diversity seriously and analysed it in the attempt to find out where problems could arise but also what opportunities this diversity offers. On the other hand it could be for equally good reasons argued that relying too much on cultural differences could end up in stereotyping. The Hofstede framework obviously stereotypes cultures which in turn might put obstacles to differentiated thinking about single individuals in the cultural diverse workforce as “a stereotype is an exaggerated belief associated with a category […]” whose “[…] function is to justify our conduct in relation to that category”. (Allport, cited by Copeland, 2003)
Not every employee coming from a low uncertainty avoidance culture might tend to be innovative as well as not everyone from a high uncertainty avoidance culture might show a strong sense for precision, for example. This implies that cultural frameworks have to be used with caution when attempting to gain advantages from cultural diversity (Joynt and Morton, 1999, pp. 188,199) and awareness about stereotypes is necessary when judging individuals as well as assessing individual skills.
Having a cultural diverse workplace in a global business world can be an advantageous resource as international employees contribute the ability to speak different languages. This can be very helpful when operating in foreign markets. A company which is negotiating with a foreign company can seek the help of employees which might come from this country. Negotiation is a communication process through which we exchange meaning. Meanings are translated in words and behaviour. The receiver of the message will translate the latters back again into meaning. (Davies, 2004)
This process is highly based on the persons’ cultural backgrounds. According to these backgrounds different meanings will be attached to particular words and behaviours. The ability not only to speak but to really understand the language and thus the meaning prevents misunderstandings and misinterpretations. Involving employees in the negotiation who originally come from the country of the party with whom the company negotiates can thus be beneficial and reduce the risk of misunderstandings and misinterpretations.
Similarly, international employees can be helpful when marketing products across national borders. The use of humour in advertising campaigns, for example, is a very sensitive issue as what is perceived as being funny in one culture can be regarded as offending in another one. International employees having the necessary cultural background can prevent businesses from committing such failures which could otherwise result in high and wasted marketing expenditures.
In this context it can be said that those employees who are closest in the way of thinking, feeling and acting to the way of the customers targeted by a company are also likely to be those who understand the best what these customers require. Since the success of businesses is highly dependant on understanding and satisfying the diverse customer needs having international employees with inside perspective can be estimated as being a vital competitive advantage.
Problem – solving might be facilitated as pointed out by Wanous and Youtz (1986, cited by Ely and Thomas, 2002, p. 3) and supported by Adler (2002, p. 109, 110). The different perspectives, styles, skills and points of views might enhance the ability to discover and solve problems quicker when having cultural diverse employees than when having homogeneous which Sullivan expresses well by stating “when you are surrounded by sameness, you get only variations on the same.” (Web 6)
For the same reasons a company could gain more flexibility as alternatives are more easily provided for changing situations. But nevertheless at the same time particularly these advantageous resources might lead to problems when decisions have to be taken, that is to say when one single agreement has to be achieved. The different points of views, attitudes and perspectives enhance the complexity and could contribute to confusion among group members. (Adler, 2002, p.109) When decisions have to be taken it is necessary to compromise attitudes, points of views and beliefs. This implies that diversity in this aspect has a more challenging character for companies. Taking decisions requires close interaction between the cultural diverse group members and the converging of meanings. (Adler, 2002, p.109)
Consequently communication becomes once again of vital importance. Not being able to get the right meaning of the words expressed by foreign colleagues can result in misinterpretations and stereotyping. This can be for example the case when low context cultures and high context cultures are confronted with each other. In the former ones information is given explicit and precise whereas in the latter ones information is implicit and words have deeper meanings, that is to say they are put in a higher context. (Tayeb, 1996, p. 56, 58)
Employees being accustomed to low context communication might become confused or might even judge their counterparts coming from high context cultures as incompetent to examine a given situation thoroughly. They might perceive them as not discussing the matter because of their less precise choice of words. As the team might not really understand each other discussions could result in lengthy discourses and frustration could arise. This in turn would negatively affect the performance of the group and result in reduced productivity.
This discussion implies that homogeneous groups find more easily a consensus and that decision – making is less time – consuming. Nevertheless, this does not automatically imply that the quality of the decisions is also higher. It can be argued that when misunderstandings and conflict can be overcome and therefore the barriers to mutual exchange of ideas are diminished decisions might result in high quality outcomes which supports the view of Wanous and Youtz (1986, cited by Ely and Thomas, 2001, p. 3)
Differing attitudes towards ethics might also cause problems as in the following example (Copeland, 2003) where a new foreign employee wanted to thank her manager for having been chosen for the job by given him a present. The manager rejected the present explaining that this contradicts to the company’s policy. The employee felt offended and quit the company. In this case the company could have lost a skilled employee because of different attitudes towards ethics.
The above discussion leads to the following implications: a cultural diverse workplace in today’s global business world can give vital opportunities for companies if diversity is managed adequately. Cultural diverse employees are an important resource as they can provide a company with specific skills and insight perspectives which in turn can enable a business to operate efficiently in foreign markets. Nevertheless these opportunities remain useless if leaders and managers lack for cultural sensitivity, that is to say ignore cultural differences instead of utilising them to gain potential competitive advantages.
Furthermore cultural diverse employees need also awareness and tolerance for their counterparts in order to gain synergistic advantages and avoid misunderstandings and stereotyping. The absence of an effective diversity management can lead to negative outcomes such as time – consuming decision – makings, low employee morale, frustration and confusion which in turn put constraints on creative and innovative thinking reducing profitability and market share. But successful management of a cultural diverse workplace can result in innovations, enhanced creativity and flexibility, facilitated problem – solving, high quality decisions, higher productivity and thus in a highly competitive positioning of a company in a global business world.