Culture And Its Impact On International Human Resource Management

The Cultural Context of IHRM

In today’s business environment and in the time of globalisation, internationalisation of business becomes more important for any business organisation for the future growth and development of the business organisation. However, for doing global operations of any business usually requires some changes and adoption in the human resource management. Especially it is essential when a business organisation operates their business in a different culture and social environment. It is essential for any business organisation to plan their business operation according to the culture in which it has been operated. Factors that require change and modifications during international operations of a business organisation are modifications in legal requirements and culture change. Cultural of a country includes value, norms, beliefs, attitudes, and behaviour of local people (Hofstede, Hofstede, & Minkov, 2010). However, these factors affect the policies and procedure of a company in their human resource practices. This research paper of Hofstede, Hofstede, & Minkov (2010), best analyse the concept of cross-cultural practices in different location of the world, thus it has been considered as the key research paper for this essay. This research paper also analyses the role of culture and its impact on international human resource management with the help of its six dimensional concept of culture and serve as the basis for other research.

Cultural and social factors affect international HRM. Culture can be defined as value, norms, perception, customs, beliefs, attitudes, and habits of people of a society that helps people to bind them together to form a social entity and they learn this from each other through language and other forms of symbolic languages. According to Fischer (2009), culture is not fixed in any society or country rather it gradually changes by adopting new ideas and thoughts and dropping old ones. Culture is (1) Prescriptive: Culture is prescriptive because it determines the behaviour of people and ensures which behaviour is acceptable or not in the society. (2) Socially shared: Culture is based on shared values and norms which is acceptable to the whole society and based on social interaction and creation. (3) Learned: According to Minkov & Hofstede (2011), culture is normally acquired by learning and it is not adopted by any people by birth neither can it be inherited genetically (Minkov & Hofstede, 2011). (4) Subjective: Every society or people have their own culture and thoughts. People who belong to different culture may have a different idea or opinion about same object or situation. (5) Dynamic: Culture is not immune to change rather new ideas are adopted by the people and old ones dropped by them.

Culture is determined by a set of factors that differ from each other and each set of factors has its own characteristics and culture such as the different climate of a region, behaviour of people, religion, economic conditions, and level of economy, type of people produce different cultures (Fischer, 2009). Basic needs like food, shelter, water, clothing, and security are common for everyone. Hence, their behaviour has common features, but there are disparities in these features due to the availability of various sources of food, clothing, house, and climatic conditions (Al-Sarayrah, Obeidat, Al-Salti, & Kattoua, 2016). Similarly, thinking of people, their living style, thoughts, behaviour pattern, and decision-making style are different country to country or we can say region to region.

What is Culture?

To get deep insight about the impact of culture on IHRM, Geert Hofstede’s theory is the base for all other research on culture and its impact on the organisation. According to Hofstede theory, there are six dimensions of national culture, which can also be considered and applied to the various international organisations and culture. According to Hofstede theory, culture can be elaborated as collective programming of mind of one group of people or category of people from another. Hofstede carried out a large number of surveys in more than 50 countries all over the globe on “the collective programming of mind” (Hofstede, 2011). He worked upon a statistical analysis, which is based upon the answers given by IBM employees in different countries (?or?evi?, 2016). He identified several problems across the countries where he researched about the culture such as social inequality, the relationship between a group and an individual, masculinity and femininity, and culture problems related to aggression and expression of emotions etc. Hofstede named those problems as a power distance, individualism vs. collectivism, Masculinity vs. Femininity, uncertainty avoidance, long-term and short-term orientation, and indulgence vs. restraint (Zhang, 2013). Hofstede studies shows significant characteristics of national culture and its impact on other culture (international culture) prepare a comparison scale to provide them rating acordingly.

                                 

                                                                 Source: CLEVERISM (2015)

Vaiman & Brewster (2015) describes in their article that Hofstede’s work serves as the basis for other researches in cross-culture psychology and helps to understand the different culture within and across the boundary of a nation. Hofstede theory suggests that people from different culture behave differently and the way they percept the object or situation may be different from other culture people. The result of Hofstede’s work was that culture has a positive connection between an individual and society as a whole.  

There are six dimensions given by Hofstede to determine the impact of culture in different countries with different people. Hofstede’s cultural dimensions theory provide basis for other cross-cultural communication and in its studies. (1) Power Distance Index:  According to Hofstede first cultural dimension, less power member of a family or of an organisation think or expect that power distributed unequally among them. However, people who keep low power distance expect and accept power relations that are consultative or democratic. (2) Individualism vs. Collectivism: This is the second dimension of Hofstede theory that focuses on the individual vs. collectivism approach of people. According to Brewer & Venaik (2011), the focus of this dimension is on the question that people want to live lone and take care of their self or want to live in a network or society (Brewer & Venaik, 2011). (3) Uncertainty Avoidance index: Through this third cultural dimension of Hofstede theory, he described the degree to which people in society are not at ease with uncertainty and ambiguity. (4) Masculinity vs. Femininity: Masculinity can be defined as the preference of people in society for achievement, well-reputed status, confidence, heroism, and other material rewards. In this dimension, the difference between male and female according to their need, preference, and value has been displayed. (5) Long-Term Orientation vs. Short-Term Orientation: This dimension is also known as pragmatic vs. normative. It displays the time horizon that society or people display in a country. Countries with long-term pragmatic, modest, and are more thrifty. In short-term oriented country people more focuses on legality, principles, rules, consistency, truth, and they are typically religious. One of the great examples of short-term orientation country is USA. Coelho (2011) said that the major benefit of short term-orientation is quick results, such as profit and loss statement of a company displayed on a quarterly basis (Coelho, 2011). (6) Indulgence vs. Restraint (IVR): Hofstede’s sixth dimension shows that people having low IVR, they more stress on overwhelming indulgence and give more priority to rules and regulations. These types of people strict in nature and very punctual about the work they are doing. People with high IVR, inspire themselves and others, and satisfied what they are doing in their life. These types of people inspire others and believe in enjoying life with fun and having fun all the time, no matter whatever the situation.  

Why do Cultures differ?

In any MNC company, there is always a chance of making new policies and strategies. Some of such policies or strategies involve risk factor to which company has to decide whether they should continue with such a plan or opt out for a particular objective or goal of the organisation. Taking leaders into considerations, those leaders who bear high power distance cultures have a tendency to be much authorised and that create problems. Especially this problem arises when these type of leaders are dealing with followers from low power distance culture who expect leaders to come to the same level. Group or teamwork is the essential key activities performed in many business organisations (Khastar, Kalhorian, Khalouei, & Maleki, 2011). For this purpose it is essential to know the Hofstede’s theory and its all the six dimension to handle the different cultural difference in the organisation. If in a team both individualistic and collectivist type of people working together then it creates problems for the team goals and they may face many challenges as their culture is different and each side handles the issue with a different approach. For example, a person who belongs to individualistic culture may want to have their views implemented regardless of other strategy, views, or thoughts. This might cause problems for the whole team. Those people who belong to collectivist cultures would like to solve any issue or problem mutually and in collaboration with all team members. Thus, a manager should aware about the role of Hofstede theory and its implications on international human resource management. Thus, for a manager,  it is essential to know each and every person and their culture. Again, if we consider the long-term and short-term orientation dimension of Hofstede’s theory, we observe the approach of the organisation to deal with the situations and their human resources. Short-term orientation or goal of the organisation needs more dedication and hard work from the employees to achieve the objective of the organisation (Lee, Lin, & Huang, 2017). The short-term and long-term orientation depending on whether the persons in the organisation are a masculine or feminine-cantered culture in nature.

Hofstede is one of the best sociologists of culture and anthropologist if we consider international business and culture. He shows how culture matters in international business organisation and human resource management. His theory helps to promote international business and to understand the cultural sensitivity. It helps people when they interacting with each other form different country and form different cultures. It is also essential for an organisation to manage its human capitals according to their culture and make coordination among a different group of people having a different culture. Thus, the goal of the organisation can be achieved effectively (Jackson, 2014). The Hofstede’s theory assists in understanding the culture and promotes international communication among the organisational members. People who interact in any MNC with different culture people, Hofstede theory provide insights about other cultures. Actually, Hofstede theory helps a manager to understand the different culture and communication style of people that is needed for inspiring and motivating people in the organsition.

Hofstede Theory and Its implications on Contemporary IHRM

As we now that what may be considered perfectly acceptable, authentic, and real in one country, can be confusing or even offensive in another country. To manage this type of situation and conflicts arises in the organisation the Hofstede theory provides help to the HR manager to effectively handle the situation using the six dimensions of the theory (Brewster& Bennett, 2010). Apart from this, Hofstede theory promotes international negotiation and international marketing of the organisation by providing an adequate understanding of different culture and their bargaining power, about their beliefs, values, and norms.

Even though Hofstede’s model is a globally accepted model on cultural differences and cross-cultural organisations, it has some limitations as well which has been extensively criticized by other scholars. One of the major drawbacks of this model is that it is based on inconclusive research. This model has low validity and accuracy levels. According to Venaik, & Brewer (2013), other weakness of this model is that the research of this theory is based on a questionnaire and very small sample data, which might not apply everywhere in the world. One of the most important drawbacks of this model is that Hofstede’s theory believes that location does not affect employees’ reactions that might be wrong because people behave differently in different places (Venaik & Brewer, 2013).

When a company or business organisation operate their business in different places or countries, then these companies have to face a large number of problems, which arises because of cultural differences among people. In such an environment, the organisation has to face a number of conflicts. Thus, it is essential to manage the situation with a better analysis of the different culture and their value systems. Hofstede’s model is playing a key role in understanding the multicultural environment by analysing the culture on six dimensions of culture. Even though it is one of the acceptable models in the world and all other researches on culture based on this theory, some scholars criticize this model for its limitations and validity. Although, it is the most effective and crucial model manage the people in the multi-cultural organisations.

References

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Brewster, C., & Bennett, C. (2010). Perceptions of business cultures in Eastern Europe and their implications for international HRM. The International Journal of Human Resource Management, 21(14), 2568-2588.

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Khastar, H., Kalhorian, R., Khalouei, G. A., & Maleki, M. (2011). Levels of Analysis and Hofstede’s Theory of Cultural Differences: The Place of Ethnic Culture in Organizations. In International conference on financial management and economics (Vol. 11, pp. 320-323).

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