Essay Paper on Culture and International Business

The efficient transaction of international business is made more challenging because of several kinds of obstacles—geographical, financial, legal/political, and cultural. Cultural barriers include several factors that make human interactions more difficult—differences in language, values, and behaviors. In many ways this last category is the most daunting because cultural differences are often hidden and are certainly the most difficult to quantify. Miles, time zones, exchange rates and such are easily measured. Laws and policies are stated in black and white, although enforcement is obviously a key issue. Alternatively, cultural differences are often not obvious and associated problems are neither easily diagnosed nor corrected. The focus here is on these ‘mushy’ cultural issues that often have a huge impact on the efficiency of international enterprise, and particularly on the management of people.

Every year for the last seven years senior executives of 250 southern California firms have been surveyed regarding their firms’ international business activities. Through these years executives have identified ‘cultural differences’ as the most serious and persistent problem affecting their international sales and operations. ‘Financial considerations’ were particularly important during the Mexican and Asian financial crises during 1994-5 and 1998-9, respectively. ‘Foreign government regulations’ were also consistently mentioned as problem areas. But, the problems associated with cultural differences have been most salient for these American executives managing mostly high technology companies.

This was found to be so even though, as mentioned above, the cultural barriers are often hidden. The good news in the data is that during these years the ‘heights’ of all these barriers have been apparently shrinking. International business is becoming easier to conduct. The interviewees suggest that the Internet is helping overcome time and distance barriers and is making communications, even the cross-cultural ones, more efficient. European unification has also played a role. These trends are very encouraging. Although, it may be that the unusually large cash flows typical at southern California companies in the late 1990s has made all problems seem less severe.

Culture has a pervasive impact on the management of human resources. Culture influences how blue- and white-collar workers respond to pay and non-pay incentives, how international firms are organized, and even how executives compose and implement business strategies. Thus, the remainder of this chapter is organized as follows: First, the central notion of culture will be defined including discussion of its dimensions and measurement. Next, culture’s influences on interpersonal behaviors and negotiation styles are presented. Third, human resources policies are outlined that take into account cultural differences in employee groups. The final section focuses on culture’s impact on managers’ strategic thinking…

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