Impact Of Culture On International Business Management: Analysis Of Hofstede And Trompenaars Theories And Strategies To Manage Cross-Cultural Situations

Levels of Culture and Hofstede Theory

The culture has significant impact on the international business management as observed in last two decades. Major impact of culture has been observed to impact the group performance of employees (Stahl & Tung, 2015). Ethno relativism has been defined as a phenomenon where a particular culture is not superior to another. This phenomenon, accepts, adapt and integrate other cultures and these can be observed as the Steps Of Ethno Relativism (Bennett & Hammer, 2017). In this paper, impact of culture on the international business will be discussed. Analysis of levels of culture as well as hofstede theory will also be discussed. Moreover, the impact of culture on the international business and strategies to manage cross cultural situations at workplace will also be highlighted.

In general culture has been defined as the norms, values and traditional behaviour of people or group of people. However, culture has been identified to be dynamic as it changes with time. Culture could be seen as an important aspect to run a business efficiently as it influences management, decisions and functioning of business (Passport to trade, 2019). However, it is more important to have ethno relativistic approach for the business to work efficiently. Based on this idea, Hofstede a Dutch psychologist developed cultural dimension theory which defined the cross-cultural communication at workplace. He stated four dimensions to compare the national cultures of different countries (Sent & Kroese, 2022). First one is Power distance which state that people in the society believes that power in any organization has been distributed in an unequal manner. This also impacts the organizational hierarchies as the leadership becomes more autocratic and employees loose the power to participate in decision making in the organization. Second one is uncertainty avoidance which defines the overcoming of day-to-day uncertainties of life by the people. For instance in Japan, Argentina and France there is high uncertainty avoidance as importance is given on rituals, routines in the organization. Whereas Denmark and UK show less uncertainty avoidance as they emphasised on informality and flexibility (Lu, et al., 2014). The third one is individualism relates to the belief that a person is independent emotionally and could take care of themselves. The last one is Masculinity where people are inclined more towards the success than over modesty or concern for other people for instance observed in Japan, UK and Germany (Lu, et al., 2012).

Another theory came into existence in which more emphasis has been laid on management inference of cultural variations by Fons Trompenaars. He stated that existence of cultural extremities and misunderstandings can arise while doing business with people having different cultures even if they are working for same organization. He sated seven relative dimensions to define the problems that could occur in international business management (Clayton, 2015). First is Universalism v. particularism, where the rules and regulations of the company are applied to every individual in every situation. Second is individualism v. collectivism, which compares the rights of the individual to be dominated or subordinated to the collective society. Third is Neutral v. emotional which defines the relation between the effective decision makings based on the emotional or subjective form in a company. In some organizations decision are based on the data, facts and reports while some give importance to intuitions, gut feelings. Fourth is specific v. diffuse which defines the professional relationship in and out of the workplace. In this context Australia is seen to observed specific relationship whereas countries like china, Japan, Singapore have diffused one (Cacciattolo, 2014). Fifth is achievement v. ascription relates to define the characteristic of an organization where credibility, authority and status are based on merit whereas in some organizations merit has been defined by caste, age, gender and education. Sixth dimension relates to the time where punctuality, meetings and deadlines are given importance in organizations defined under sequential v. synchronic. Last one relates to the relationship of people with the nature or environment, in which some subjugate the nature whereas some tends to work with nature (Ogbuigwe, 2013). Thus from this view it can be observed that many religious and philosophical aspects are present around the world that impacts the international business.

Analysis of Hofstede and Trompenaars Theories

The analysis of these two theories will be helpful in determining the impact of culture on the international business. According to Hofstede theory there has been observed 50% of variations between the attitudes, beliefs and values of managers thus it might influence the success and progress of the business (Budur, 2020). The main problem that impacts the working and performance of any international business is the communication, teamwork, encouragement or coordination between the employees of the same company due to difference in culture. This is possible when here is lack of shared norms and values thus impacting the communication. This disturbance in the communication eventually leads to disruption of learning and collaboration between the business partners (Wang, 2013). However, according to Hofstede culture of the organization based on shared beliefs plays an important role in practice and process of organization as it increases the learning, satisfaction and enhances the effective interaction thus lays positive impact on the organization. Another important impact based on the Hofstede theory relates to the national culture dimension of long term orientation leads to positive impact on the business. For instance Wuhan city approached a Hong Kong developer to work out on loan procedures for airport-linking project. They focused on developing long-term relations thus prove to be beneficial for Wuhan city to get the loan which could be difficult to get if the hofstede dimension of long-term was not followed (Bukowski & Rudnicki, 2019). Besides this Trompenaars view can also be helpful in determining the organizational characteristic of a company based on the dominating nationalities it possess thus intern help in maintaining good relations with that company. Using the Trompenaars theory variations in the cultural values and behaviours with time could also be understood. For instance China and Japan are moving towards achievement dimension with some portion of individualism dimension (Komatsu, et al., 2019). Thus it can lay positive impact on the business as merit will be decided on the basis of credibility, authority rather than caste, religion that will expand the business to many folds.

Team is defined as the association of synergies having different minds and skill set that come together to work for common motive. Implementation of certain strategies could be helpful in managing the cross-cultural situations in workplace. Due to Globalization it has been observed that companies are talking to the colleagues across the globe thus increasing the variations in culture among the company. Thus managing cross-cultural team can enhance the profit of the company as observed from statistic that culturally diverse organizations are 35% more productive that non-diverse (Rock & Grant, 2016). Strategies are- first, it is required to know the team mate that might help in knowing some special skill of the person which intern could prove to be profitable for the company. Second, flexibility can be an asset for the company as flexibility is directly proportional to the productivity of an individual. Third, promoting good communication will help in enhancing efficiency else employees will feel under-appreciated and dominated. Fourth, as there are many people with different cultures in a company it is most important to conduct team building activities so that those people could come closer, thus forming bonds despite of differences. Fifth, due to difference in the cultures it is required by the managers or team leader to develop proper norms so that each team member work in a similar way that intern will enhance their bonding. Sixth, cross-cultural awareness program can also be conducted in the organization which will help in resolving the tensions and increasing awareness of the prevalent cultural styles of other members of the team (All Things Talent, 2019).

Managing Cross-Cultural Situations at Workplace

Conclusion

In the end it can be concluded that culture lays positive as well as negative impact on the international business. Moreover, after analysing both the theoretical aspect it is required that international companies must use them in positive way in order to enhance overall profit. They must ensure that every employee of the company must get equal opportunity to plan and make the decision if required irrespective of the cultural differences. To effectively manage the international business is also important to make some appropriate policies that should be cultural sensitive. Additionally, the international market is very competitive, some factors like the quality of product, customer service, reputation in the market which impact the working. Thus integration of culture in the working of the company seems to be a significant aspect to sustain in the global market. Communication is also acts as an important factor that impact the efficient working of the business thus despite of change in economic or political environment in this era of globalization some companies show changes in the positive direction just because of good communication among the employees irrespective of difference in culture.  

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