Ibelieve that the greatest challenge facing companies in globalizationis cultural differences. Focusing specifically on ethical issues,what is considered a normal business practice in some countries isunethical and in some cases illegal in the US. According toEisenbeiÃ and Brodbeck (2013), the accepted definitions of ethicalleadership are based on American-based perspective, and the researchwas conducted on American companies. With the concepts of ethical andunethical behavior being shaped by the society and culture in whichthe enterprise is based, applying a western standard to all may notbe the best comparison. If every ethical concern is resolved bybasing the outcome solely on the western assumptions the participantsin the host country are left feeling marginalized. To be successful,Companies must seek to find areas of agreement between the homecountry and the host country in order to identify common perceptionsof ethical leadership among executives in both countries (EisenbeiÃ& Brodbeck, 2013). Geert Hofstede created an excellent referencetool in his book Cultural Consequences (1980) which took his researchconducted for IBM and used to create a comparative tool that has beenused by many companies in their forays into new countries (Hofstede,2015).
Culturaldifference is one of the greatest challenges facing globalization.There is a significant difference in ethical considerations amongcountries. Some business practices may be considered ethical in onecountry and unethical in a different country. Certainty is alwayselusive especially when companies cross borders and initiate businessin countries without acquainted laws and judicial processes thatdefine standards of ethical conduct. Executives must alwaysreconsider about business practice in foreign countries. Countriespossess different values of ethical behavior hence the standardsavailable in a company’s home country can fail abroad (Ferraro andBrody, 2015). Managers must be aware of suitable ways to deal withthe pertinent issue of cultural differences following possible codesof conduct that facilitate globally ethical business practices (Ng,2009).
Culturalrelativism considers all cultures to be equal, and no one culturalethics is superior to those of other cultures. However, theinadequacies of cultural relativism are apparent when the practiceunder consideration are more damaging. Inadequate regulations andineffective enforcements in most countries contribute to theunethical behaviors of most unprincipled companies. Companies mustuphold the fundamental values that cross cultures (Hofstede,2011).Another outstanding issue is ethical imperialism it guides people toconduct activities in different countries in a similar fashion to howthey do business at home. Absolutism is the theory describing ethicalimperialism. Absolutist approach is not the most appropriate forcompanies to follow especially in cultures with different values onethical behaviors and different ways of tackling unethical practices.Respect for local customs, beliefs and core human values are some ofthe principles that should guide companies (Ferraro and Brody, 2015).
Ferraro,G., & Brody, E. K. (2015). CulturalDimension of Global Business.Routledge.
Hofstede,G. (2011). Dimensionalizing cultures: The Hofstede model in context.Onlinereadings in psychology and culture,2(1),8.
Ng,K. Y., Van Dyne, L., & Ang, S. (2009). From experience toexperiential learning: Cultural intelligence as a learning capabilityfor global leader development. Academyof Management Learning & Education,8(4),511-526.
Companiesengaging in global commerce quickly learn that their management andpractices for conducting business often conflict against those ofhost markets. Namely because parent and host countriesâ culturesrarely align. Organizational culture is simply the values, beliefs,norms and tacit assumptions that organizational members share(Cameron & Quinn, 1999 Chatman & Eunyoung, 2003).Recognizing and understanding cultural differences are essentialsteps to prepare for global operation. Albeit challenging, it ispossible for organizations to operate in many different countries andhave a cohesive corporate culture comprised of shared values,beliefs, norms and practices.Consequently,companies need to be intentionally concerning how they pursue closingthe cultural gaps stemming from differences in management practices,ethics, values, and laws. Striving to create and maintain a sharedculture helps organizations increase their local embeddedness andreduce forced cultural assimilation. Local embeddeness is the homeorganizationâs level of interaction with local suppliers,distributors, laborers, and buyers. This relational andinterdependence embeddedness with locals, who embody regionalcultural values, increases the level of interaction and integrationbetween the two cultures (Gupta & Yoshikawa, 2014).Howorganizations manage and adjust forced and voluntary assimilation canaffect performance outcomes. Pirozek and Drasilova (2013) state thatsuccessful parent organizations can reduce cultural gaps by balancingthe centralization of key strategic processes and thedecentralization of less important practices. This can beaccomplished by allowing the local branch to maintain parts of itsorganizational culture, thereby eliminating possible conflicts andcoalescing cultures through manuals, rules, values, norms andpractices.
Inglobal companies, the management and practices for conductingbusiness often conflict with those of host markets due to thenon-alignment of the parent and host countries. Global operationsrequire an in-depth understanding of the cultural differences.Companies need to reorient their mindsets to have a cross-culturalunderstanding of issues. Human nature restricts the view of the worldto our cultural shades (Ralstonetal.,2014).Organizational culture is unique to every organization, and itincludes aspects such as dress codes, employee value and perceptionsand the decision-making process. In order to close the cultural gap,companies should have a detailed focus on cultural issues that arerelevant to the strategic goals of the enterprise. A strategiccompetitive advantage is a critical approach when it comes to closingcultural gaps. It seeks to leverage rather than diminish divergentcultures and recognizing them as inconsistencies (Meyeretal.,2011).
Culturalincorporation contributes significantly towards the success oforganizations as it encourages shared values, trust, focus onopportunities and celebration of diversity. Organizations shouldinvolve locals in their operations through inclusion into varioussectors of the organizations. There is a need to integrate theculture of the parent company with that of the host country. In amanner, that will assert its attitudes and opinions. Balancedcentralization and decentralization systems are the best approachesas noted in most successful companies (Pirozek and Drasilova, 2013).
Pirozek,P., & Drasilova, A. S. (2013, November). Selected Views on theOrganizational Culture of Multinational Corporations. In EuropeanConference on Management, Leadership & Governance(p. 231). Academic Conferences International Limited.
Ralston,D. A., Egri, C. P., Furrer, O., Kuo, M. H., Li, Y., Wangenheim, F.,and Fu, P. P. (2014). Societal-level versus individual-levelpredictions of ethical behavior: A 48-society study of collectivismand individualism. Journalof business ethics,122(2),283-306.
Meyer,K. E., Mudambi, R., & Narula, R. (2011). Multinationalenterprises and local contexts: the opportunities and challenges ofmultiple embeddedness. Journalof management studies,48(2),235-252.