Managing Cultural Diversities in Internationalization of Business

International Journal of Enterprise Computing and Business Systems
(Online)
http://www.ijecbs.com
Vol. 1 Issue 1 January 2011
MANAGING CULTURAL DIVERSITIES IN

INTERNATIONALIZATION OF BUSINESS
Sonal Pathak
Assistant Professor
Manav Rachna International University
Faridabad, Haryana, India
E-mail : [email protected]
Abstract
In the liberalized economic environment, Management of mixed culture is all set to play a highly critical
role in the process of business development. While diversity is a problem to most organizations,
successful corporations learn to manage to their full advantage. Organizations are managed to acquire a
competitive advantage in the global market place. The whole purpose of managing diversity is to bring out
the best of employees Talent, Abilities, Skills and Knowledge for the benefits of individual employees as
well as the well-being of the corporations. When workforce diversity is well managed, no employee in the
organization feels disadvantaged.
Business firms are beginning to recognize the power of workforce diversity as a competitive tool. This
paper examines the process of adopting new structures and work practices that are radically different
from those traditional minded management,. It notes the beneficial impact to the management system
consequent upon the reforms and highlights the current weaknesses in the traditional system. Against
this traditional management , this paper identifies the emerging challenges and discusses ways in which
they could be tackled. This paper presents an approach to the need of organization to train their
employees about diversity and its usefulness to the well being of the corporation. Diversity training is a
critical part while managing diversity. This Paper discusses about various areas of need for employees
to 'understand and value' the differences among them. The Paper Highlights the role of managers as a
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regulatory bodies with their effective position in handling the current situation of the global market. It also
traces the several measures taken by Government to improve the integrity of the global market.
Conclusively, the presented paper is an effort to review the concept of International business &
management of cultural diversities which is a sensitive area in global human recourse management.
1. Introduction
Globalization has been identified by many experts as a new way firms organize their activities and as the
emergence of human capital as the new stakeholder of the firm.
The variety of experiences and perspective which arise from differences in race, culture, religion, mental
or physical abilities, heritage, age, gender, sexual orientation, gender identity and other characteristics.”
So why is it when many people think of diversity, they think first of ethnicity and race, and then gender?
Diversity is much broader. Diversity is otherness or those human qualities that are different from our own
and outside the groups to which we belong, yet present in other individuals and groups.It's important to
understand how these dimensions affect performance, motivation, success, and interactions with others.
Institutional structures and practices that have presented barriers to some dimensions of diversity should
be examined, challenged, and removed. Globalization is quickly reshaping the international economic
landscape, resulting in an increasing global supply of science and technology (S&T) resources and
capabilities. China and India, for example, have taken their place as important players with a growing
capacity for research and innovation.
As global competition intensifies and innovation becomes riskier and more costly, the business sector is
internationalizing knowledge-intensive corporate functions, including R&D. Firm’s increasingly offshore
R&D activities to other countries to sense new market and technology trends worldwide. Overall, the
internationalization of a firm’s R&D promises substantial benefits (cost efficiency, learning potential, etc)
but also creates serious challenges for many countries (such as the loss of R&D jobs and knowledge).
workplace diversity can provide tremendous benefits in terms of improved morale, outside-the-box
thinking, greater teamwork, and an atmosphere of mutual understanding and respect.The diversity at
workplace is increasing very rapidly. In fact because of the boom of multinational companies and
extension of businesses across the national boundaries, it has become a very common practice to see
cross culture diversity at workplace. There are both the benefits and the demerits of cross culture at the
workplace.
The benefits includes that it increases the interpersonal skills of the employees. As people belonging to
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various cultures work together therefore, they understand the views of different people. It increases the
teamwork skills in the people. Employees belonging to various cultures also increase the skills available
to the company. People can better interact with each other and they develop the patience and
competencies to compete with each other. On the other hand the demerits of cross cultures in work place
increases the conflict of interest. It can create biased and favoritism in the office environment because
may be minority feel suppressed by the majority of the people. Moreover, cultural conflicts can also arise
like language problems, dress code etc. But still I think cross cultural diversity at work place is really
encouraging for the employees.
2. Business Environment
A business is a legally recognized organization designed to provide goods and/or services to consumers.
The etymology of "business" relates to the state of being busy either as an individual or society as a
whole, doing commercially viable and profitable work. The process of starting up and developing a
business is not just an adventure, but also a real challenge. In order to help entrepreneurs with this, it is
essential to create a favorable business environment.
Ensuring easier access to funding, making legislation clearer and more effective and developing an
entrepreneurial culture and support networks for businesses are all instrumental as far as the setting up
and growth of businesses are concerned.
However, creating a favorable business environment does not mean simply improving the growth
potential of businesses. In this way, the promotion of corporate social responsibility is contributing to
making business in countries more attractive.
Small and medium-sized enterprises (SMEs) make up 99% of businesses. Their small size makes them
very sensitive to changes in the industry and environment in which they operate. It is therefore vital for
their well-being to be a focus of political attention.
3. The Competitive Business Environment
The major step in this is that we need to have a secure understanding of how and why markets differ,
how markets are changing and how and why governments affect markets. Following are the important
areas of marketing for competitive business.
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• Commodity markets, e.g. oil, rubber, diamonds

• Consumer goods markets, e.g. sports goods, groceries and cosmetics
• Capital goods markets - machinery of some sort
• Industrial markets - when businesses buy from businesses
• End products markets - whatever is made in the end
• Services markets - banking, insurance - stuff that we buy but we can't see
Markets are places, real or virtual, where buyers and sellers meet. In order to understand how they work
we need to know about the following concepts.
• How markets change. Markets are never static, it keeps on changing due to new entrants in the
market due to globalization.
• Government effects on markets e.g. through changes in taxation and different rules. Markets
don't always work to everyone's advantage. Single Market,
• Globalization (the process by which we all become part of a series of world wide or global
markets).
This includes concepts such as free trade and trade barriers. They are a useful antidote to the
'everything is wonderful' image of many corporate websites.
4. What is Global Business?
Global business consists of transactions that are devised and carried out across national borders to
satisfy the objectives of individuals, companies, and organizations. These transactions take on various
forms, which are often interrelated. Primary types of international business are import export ,Trade and
foreign direct investment (FDI). The latter is carried out in varied forms, including wholly owned
subsidiaries and joint ventures. Additional types of international business are licensing, franchising, and
management contracts.
As a result, an increasing number of firms face immense pressures to compete on a global basis. This is
reflected both in the increase in the importance of international operations for many large firms and in the
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emergence of strategic alliances among often competing firms from OECD countries. Internationalization
of business has taken on many facets. Competitive activity has assumed an international dimension in:
Trade;
Investment and ownership;
Manufacturing and sourcing;
Markets and customers;
Finance; and
Technology and R&D.
Among the globetrotters, multinationals is spreading increasingly from the selling to the buying end of
marketing. Large-scale players like Ford and General Motors have long notified their thousands of
suppliers that, in the interest of the sustained viability of their industries, they are pursuing a policy of
global rather than national sourcing.
5. Major Problem In Global Business Is To Understand Culture
Culture can be understood as a shared set of attributes of any group, by which this group organizes its
living together, its environment and its solutions to the questions of the society.
The individual lives in a complex set of relationship with its environment: the individual is hence
influenced by the culture surrounding it, as well as influencing it. There are ten distinct features in which
cultures differ from each other: the national character/basic personality, perception, time concepts, space
concepts, thinking, language, non-verbal communication, values, behaviors and social groupings and
relationships.
Each of the distinct features are interconnected, and influence each other. Every change in a single
feature can cause changes in the others. what constitutes a 'culture', various concepts are often displayed
as the basic differentiation of cultures :
National character / basic personality

Perception
Time concept
Space concept
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Thinking
Language
Non verbal communication
Values
Behavior: norms, rules, manners
Social groupings and relationships
6. Cultural diversity
Cultural diversity is the variety of human societies or cultures in a specific region, or in the world as a
whole. The term is also sometimes used to refer to multiculturalism within an organization.. Since few
time Human beings have spread throughout the world, successfully adapting to widely differing
conditions and to periodic cataclysmic changes in local and global climate. The many separate societies
that emerged around the globe differed markedly from each other, and many of these differences persist
to this day .As well as the more obvious cultural differences that exist between people, such as language,
dress and traditions, there are also significant variations in the way societies organize themselves, in their
shared conception of morality, and in the ways they interact with their environment. By analogy with
biodiversity, which is thought to be essential to the long-term survival of life on earth, it can be argued that
cultural diversity may be vital for the long-term survival of humanity; and that the conservation of
indigenous cultures may be as important to humankind as the conservation of species and ecosystems is
to life in general. .Cultural diversity is tricky to quantify, but a good indication is thought to be a count of
the number of languages spoken in a region or in the world as a whole. By this measure, there are signs
that we may be going through a period of precipitous decline in the world's cultural diversity.
6.1 Four Approaches to Global Diversity

In examining both the successful and unsuccessful approaches to diversity, it’s helpful to break global
diversity approaches into four distinct archetypes: Isolationists, Idealists, Imperialists, and Globalists.
Let’s look at each of these groupings more in depth:
Fig: 1 Approaches to Global Diversity

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Imperialists Globalists
Power +
Power - Isolationists Idealists
Transnational Transnational
Cultural Ability Cultural Ability
In this diagram, definition fits within a matrix where the horizontal axis is the degree of the organization’s
transnational cross-cultural ability and the vertical axis is the degree of power of the diversity strategy
within the organization.
While transnational cross-cultural ability requiring the same skills as national subculture
cross-cultural ability, lack of exposure to other countries, including some well steeped in national diversity
and cultural issues, While members (individuals and/or organizations) in all four quadrants are highly
committed to diversity, the difference lies in how they approach global diversity.
Isolationists
Isolationists tend to have a limited view of the world outside the United States, and don’t tend to think very
much about diversity outside the 50 states. To them, diversity is exclusively defined in the common U.S.
terms of race/ethnicity, gender, sexual orientation, and physical ability, with a nod to secondary diversity
issues such as thinking styles. There is a chance that these organizations may also take a more
compliance-driven approach to diversity.
Idealists
Idealists acknowledge that diversity issues must be addressed abroad, but have a naïve understanding of
how that could and should play out. Idealists, both sentimental and not, tend to believe that programs that
wee successful in the United States will be equally so when implemented abroad. Neither the Isolationists
nor the Idealists have much powe in the global diversity arena, however, although some may have power.
Imperialists and Globalists

Imperialists and Globalists are the most interesting and powerful of the diversity groups. Members in both
groups are very experienced and highly committed to global diversity, but differ in their diversity missions.
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The Imperialists have earned their stripes through deeply committed work in forging cutting-edge diversity
strategies built around thoughtful metrics, tough accountability, minority and women leadership,
succession planning, etc. In fact, they have been so successful that they are now setting their sights
abroad, where they seek to bring to bear all they have accomplished stateside.
Figure 1: conceptual framework

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6.2 Corporate Culture as Weakness
Even within organizations where overt conflict has been banished, there is still frequently a tendency to
fight shy of anything that is seen to veer away from accepted business-speak. And whilst the specific
comment above is one that we would very often encounter, say, within professional practices, the
underlying sentiments are implicit throughout swathes of both the public and private sectors.
The common language of organisational development, human resources and management training too
frequently veers towards expressing all things with certainty, mathematical precision and a
depersonalised, emotion-free dryness.Again, the focus of The Cultureship Practice is not to threaten
performance by overly concentrating on people. On the contrary, we enhance performance by clearly
accepting that thinking and feeling people are the bedrock of superior productivity.
6.3 Defense or promotion of cultural diversity
The "defense of cultural diversity" can take several meanings:
• A balance to be achieved: thus, the idea of defense of cultural diversity through the promotion of
actions in favor of "cultural minorities" said to be disadvantaged;
• Preservation of "cultural minorities" thought to be endangered;
• In other cases, one speaks of "cultural protection", which refers to the concept of "cultural
exception", which is mainly used in France under the title "French exception". This makes the link
between the social vision of culture and the vision inherent in its commercialisation. The cultural
exception highlights the specificity of cultural products and services, including special recognition
by the European Union in its Declaration on Cultural Diversity. In this context, the objective is to
defend against what is seen as a "commodification" - considered harmful to a "disadvantaged"
culture - supporting its development through grants, promotion operations, etc., also known as
"cultural protectionism".
• This defense may also refer to incorporating "cultural rights" provisions, conducted unsuccessfully
in the early 1990s in Europe, into a layer of human rights.
6.4 How Our Business Benefits from Diversity

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Our business will need people with many different skills and experiences. By choosing people of varying
backgrounds our business can benefit from the different experiences these people have gone through.
The cultures they wee raised in can prove to be very important to we company. If we have employees
with a variety of backgrounds then we have people with a much different point of view than our own. It’s
that different point of view that we need to have.
6.5 A Different Perspective
A different point of view can be invaluable to we business. The cultures that people come from can
provide we company with opportunities that we may have not seen or known about. Ideas for products
that cater to a particular culture or community of people can come from we employees. By hiring a diverse
set of people we give we company a better chance to tap into markets that we might not have realized
even existed.
6.6 Business Is about Opportunity
Small business is about finding opportunities and taking advantage of them. we need every edge we can
get as a small business owner and the source of the opportunity or bit of insight should not matter to we
as much as the results do. People come from a great many backgrounds and there is no reason that we
business shouldn’t benefit from it. The question is will we hold we business back or embrace the idea of
cultural diversity in we workforce?
We must stop seeing diversity as a problem, and start seeing it as an advantage. To succeed,
organizations must understand and use the skills, traditions and backgrounds of a diverse workforce.
In reality, diversity gives businesses a key advantage in the world marketplace. Our wider range of
viewpoints offers a spectrum of talents—meticulous craftsmanship, for example—which can improve
many aspects of product and process research.
Diversity helps when:
• We are marketing internationally
• We are negotiating with people from abroad

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• We are launching a campaign to a new population (whether domestic or
international).
In situations like these, it’s an asset to have someone from that population on we planning team?
Couldn’t the person whose accent made we uncomfortable during a job interview have just the
perspective we need to help we R&D efforts?
7. Approaches To Manage Cultural Diversity in the Workplace
Organizations around the world has been realizing the cultural diversity within organization is not a
negative aspect, rather can facilitate organizational stalk for glory. However it is not an easy task to
manage employees with different cultural backgrounds. Nevertheless there are many policy guidelines
that can make task easy. There are many different innovative ways that organizations have adopted to
manage diversity. cultural diversity can be managed effectively, there is a potential to use diverse
workforce for organizational benefits. asserts that multi-culturist is directly linked to organizational
success as Effectively managed multi culture companies have cost effective competitive edge .It helps in
promoting minority friendly reputation among prospective employees
Diverse cultural corporations help to get better customers which has a variety of people
Diverse group of employees are perceived to be more creative and efficient in problem solving as
compared to homogenous group.
The gist of it is: There are three components of Cultural intelligence that one need to master to
manage people and thus enable lateral and bottom up communication globally
Some Other Important Aspects:
1. Knowledge:
Ability to engage in learning other's culture, getting historical and different perspective of a nation,
religion, culture or ethnicity.
2. Skills:
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Ability to master Cross cultural communication and become an effective communicator
3. Mindfulness:
Capacity to continuously learn from our own actions and to reflect on them.
7.1 Management Style
Many people are motivated by feeling that they are being heard and respected, that they are making a
meaningful contribution. Receiving incentives and recognition as part of a team may be more important,
or more comfortable, than as an individual.
Relationships become more important as the workplace grows larger. Allow sufficient time to
communicate with individuals and groups. The purpose of communication for males seems to be to
transmit and receive information. But for most women as well as culturally diverse populations,
communication also establishes and maintains relationships. If we're concerned about employee
retention and effectiveness, take the time to build rapport with individuals and support team spirit.
7.2. Managing Diversity
To address diversity issues, consider these questions: what policies, practices, and ways of thinking and
within our organizational culture have differential impact on different groups? What organizational
changes should be made to meet the needs of a diverse workforce as well as to maximize the potential of
all workers.
Most people believe in the golden rule: treat others as we want to be treated. The implicit assumption is
that how we want to be treated is how others want to be treated. But when we look at this proverb through
a diversity perspective, we begin to ask the question: what does respect look like; does it look the same
for everyone? Does it mean saying hello in the morning, or leaving someone alone, or making eye
contact when we speak?
It depends on the individual. We may share similar values, such as respect or need for recognition, but
how we show those values through behavior may be different for different groups or individuals. How do
we know what different groups or individuals need? Perhaps instead of using the golden rule, we could
use the platinum rule which states: "treat others as they want to be treated." Moving our frame of
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reference from what may be our default view ("our way is the best way") to a diversity-sensitive
perspective ("let's take the best of a variety of ways") will help us to manage more effectively in a diverse
work environment.
7.3. Role
A good Manager have a key role in transforming the organizational culture so that it more closely reflects
the values of our diverse workforce. Some of the skills needed are:
• an understanding and acceptance of managing diversity concepts

• recognition that diversity is threaded through every aspect of management
• self-awareness, in terms of understanding we own culture, identity, biases, prejudices, and
stereotypes
• willingness to challenge and change institutional practices that present barriers to different groups
It's natural to want a cookbook approach to diversity issues so that one knows exactly what to do.
Unfortunately, given the many dimensions of diversity, there is no easy recipe to follow. Advice and
strategies given for one situation may not work given the same situation in another context.
Managing diversity means acknowledging people's differences and recognizing these differences as
valuable; it enhances good management practices by preventing discrimination and promoting
inclusiveness. Good management alone will not necessarily help we work effectively with a diverse
workforce. It is often difficult to see what part diversity plays in a specific area of management.
The Office of Affirmative Action, Equal Opportunity and Diversity is experienced in providing help with
training and advice on the variety of situations that occur, tailored to we specific environment.
7.4 Specific Strategies To Manage Diversity
• Specify the need for skills to work effectively in a diverse environment in the job, for example:
"demonstrated ability to work effectively in a diverse work environment."
• Make sure that good faith efforts are made to recruit a diverse applicant pool.
• Focus on the job requirements in the interview, and assess experience but also consider
transferable skills and demonstrated competencies, such as analytical, organizational,
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communication, coordination. Prior experience has not necessarily mean effectiveness or

success on the job.
• Use a panel interview format. Ensure that the committee is diverse, unit affiliation, job
classification, length of service, variety of life experiences, etc. to represent different perspectives
and to eliminate bias from the selection process. Run questions and process by them to ensure
there is no unintentional bias.
• Ensure that appropriate accommodations are made for disabled applicants.
• Know we own biases. What stereotypes do we have of people from different groups and how well
they may perform on the job? What communication styles do we prefer? Sometimes what we
consider to be appropriate or desirable qualities in a candidate may reflect more about our
personal preferences than about the skills needed to perform the job.
Fair vs. Same Treatment
Many people think that "fairness" means "treating everyone the same." How well does treating everyone
the same work for a diverse staff? For example, when employees have limited English language skills or
reading proficiency, even though that limit might not affect their ability to do their jobs, transmitting
important information through complicated memos might not be an effective way of communicating with
them. While distributing such memos to all staff is "treating everyone the same," this approach may not
communicate essential information to everyone. A staff member who missed out on essential information
might feel that the communication process was "unfair." A process that takes account of the diverse levels
of English language and reading proficiency among the staff might include taking extra time to be sure
that information in an important memorandum is understood. Such efforts on the part of supervisors and
managers should be supported and rewarded as good management practices for working with a diverse
staff.
7.5 Managing Diversity is Different from Affirmative Action
Managing diversity focuses on maximizing the ability of all employees to contribute to organizational
goals. Affirmative action focuses on specific groups because of historical discrimination, such as people
of color and women. Affirmative action emphasizes legal necessity and social responsibility; managing
diversity emphasizes business necessity. In short, while managing diversity is also concerned with under
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representation of women and people of color in the workforce, it is much more inclusive and
acknowledges that diversity must work for everyone.
8. Conclusion
Ignoring diversity issues incorporate costs, time, money, and inefficiency. Some of the consequences can
include unhealthy tensions; loss of productivity because of increased conflict; inability to attract and retain
talented people of all kinds; complaints and legal actions; and inability to retain valuable employees,
resulting in lost investments in recruitment and training. Thus it's important to understand how these
diversity affect performance, motivation, success, and interactions with others. Institutional structures and
practices that have presented barriers to some dimensions of diversity should be examined, challenged,
and removed. Globalization is quickly reshaping the international economic landscape therefore it must
be managed intelligently & carefully.
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International Journal of Enterprise Computing and Business Systems

Vol. 1 Issue 1 January 2011