Socio-cultural forces and International Business
Amicably, those business firms who decide to undergo expansion of business in international milieu need have to modify their management style by means of global management ways. Certainly, this management must adapt their on functions to diverse framework of business development. The national culture being one cardinal factor and an essential component in success equation of worldwide companies. The culture, as well as habits and also attitude became points of major interests in market and such importance is obvious as success of in international business, economy is free but, economic freedom is influenced by the national culture (2005). Moreover, such undertaken activities of managers are accessible to cultural environment and company is due to negotiate with dissimilar worldwide organisms wherein, negotiations can fall flat as the managers need to understand cultural environment of negotiator and have such cross-cultural competence. Globalization is seen as a confrontation between the economic and financial interests and the national states as culture as well as social and economic entity ( 2001). Furthermore, the acknowledgement of various ways of thinking and culture facilitate the consideration among persons involved in growth of activities which are beyond the borders of country or the limits of culture (2002). Thus, from views of Hofstede in his cultural dimensions implying that culture is imperative factor as culture, the customs and attitudes have become point of interest in global market.
Thus, such factors apparently without importance as the form and the color of packing or literally translation of promotional phrases can cause major conflicts in international transaction (1999). Thus, good working of any company depends on the acting way of the people interests when there are differences of culture, these have to be understood target the required behavior and results. The national culture and their influence on management had been evidenced by many experts but the remarkable and well-known was by Hofstede, such as the distance between great and small power. Then, managers have to anticipate the consequences of the influence regarding cultural particularities of each nation on the management practice of diverse cultures that are acting in different ways (2002). It is then, necessary to develop culture profile for the country, for context, for culture in which they are going to make business and be involved in management domain (2003). Many times business environment can diminish the culture differences which exist or can exist as globalization and economic environment tendency of expansion is in middle of affirmation. Thus, new technologies have made globalization possible whereas multinational companies have transposed it into practice. Through adopted decisions in acquisitions, production and investment domain, were created global markets and was offered the impetus for the growth of interdependencies (2003).
Aside, multinational companies bring to consumers and to worldwide economies huge benefits. Developing economies have progressed faster than the access to capital and to technology associated with direct foreign investment. All in all, multinational companies represent extensive economic power concentration and, alike all vast and powerful social institutions, they may adopt corrupt, arrogant and irresponsible attitudes. Where power is, there is also an abusive use of it. Competition between firms contributes at diminishing unwanted behaviors and antitrust national politics ( 2005).
Moreover, culture is principal explication of this fact that some countries are developing faster than others. A country development may be influenced by its culture, but there is no cultural model that can assure the success, that means that there is no possible combination of Hofstede’s cultural dimensions, which applied can guarantee the country develop. American culture, characterized by strong individualism, reduced distance toward power, medium masculinity, does not represent way of success ( 2005). For example, the Japan success is guaranteed by high masculinity, collectivism and great uncertainty control.
Within the context, the convergence between national cultural and economic liberty is the one which creates positive effects in general on business environment and on companies. In country with big distance toward power and marked character of collectivism, the economic liberty is reduced and without an economic liberty multinational companies cannot become global because they come against the cultural barriers of the hostess country. Another example, Arabian countries, where the distance toward the power is higher, has average economic liberty that offers possibilities to expand despite cultural differences that exist (2003). Management is strategy to make the business run effectively, set of principles to manage such organization as many factors determine effective management and one of them is culture. Managing business to integrate within specific culture might be difficult since customers have different belief system, different norms, morale and religion ( 2003). For instance, there are cases of foreign companies in China that are being managed by Westerners to ensure that the company will retain its identity even in a foreign land.
However, those managers usually face the problem of culture within the company. On the other hand, local management of foreign company in China may well know how to manage their fellow citizens and might be able to handle sensitive cultural issues on negative side, they may face the problem of not being able to adopt and uphold the Western management style of the company ( 2003). Aside, ( 2002) stated that differences in national culture influence not only the entry mode but also the perceived difficulty surrounding the integration of foreign personnel into the organization. Furthermore, management styles are tempered by cultural characteristics as national and organization culture of family-owned business can be reflected through Hofstede's framework for evaluating dimensions of culture process as founded five dimensions culture in such study of Hofstede national work related values that Chinese family-owned business can think over and perceive possibilities for running the business successfully. The focus of Chinese management style may preferably relate to Hofstede’s fifth culture dimension that is more inclined with the long versus. short term orientation with the idea of describing the importance values that can be attached to the Chinese family-owned business management style for better future as against to the past and the present styles of management (1984 and 1991).
Thus, Hofstede’s analysis for the Western country say, England for instance, illustrate strong feelings toward individualism and masculinity as power distance and uncertainty avoidance are ranked lower and long-term orientation ranks the lowest, indicating that change in England can be achieved more rapidly than in many other countries. In analyzing Western countries, the primary correlation between religion and the Hofstede dimensions is a high Individualism ranking. There indication that Western country has strong belief in individuality, with individual rights being paramount within the society (1990). In addition, individuals in these countries may tend to form a larger number of looser relationships. ‘Hofstede’s depiction of enduring and powerful national cultures or national cultural differences is famous (2002 ;1994 ). If his findings are correct they have immense implications for management within and across countries and for future of nation states including prospects for greater European integration. However, closer examination of his research reveals that it relies, in my view, on fundamentally flawed assumptions that are crucial as necessary for plausibility of Hofstede’s identification claims. It is argued that they are flawed and that therefore such national cultural descriptions are invalid and misleading.
Generalizing about national population on the basis of miniscule number of questionnaire responses is equally absurd. If national culture was common to national individuals and survey responses could identify those cultures there would not have been significant intra-country differences in individuals’ questionnaire responses’. (2002;1994) Another illustration is that, several Chinese organizations have struggled to westernize by sending younger family members abroad for Western education, hoping that the eventual successors can bring Western concepts and technologies to the organization. Although such changes could have some positive outcomes, the attempt to integrate Western management concepts into Chinese management often engenders many problems. How Chinese management is going to evolve depends on how it copes with the changing value dimensions in the larger culture as well as within its business organizations. However, they may not realize that they cannot produce such change simply by adopting the management style of another culture (1982).
Chinese managers need to understand the Chinese culture and the managerial paradigms which it has created. Chinese managers may not appreciate the importance and enormous impact that decisions to adopt Western practices and models might have. Chinese cultural values are often seen as important factor in determining Chinese business organizational and managerial practices since, the influence of Chinese cultural values on managerial practices is so significant that it has created the distinguishing characteristics of the Chinese managerial system (1982). The unique characteristics of Chinese organizations include highly centralized decision-making, low structuring of activities, paternalistic style of leadership, strong emphasis on collectivism and group behavior, and strong family management and ownership.