The Importance of Cultural Difference to International Management

Multiculturalism, Diversity (business), Globalization

The distance between people is smaller during the past two decades because of globalization and the development of information technology. Asian people can purchase the products from America, European countries and India or vice versa. There is not just distribution of goods but also doing business with people around the world. Enterprises enter foreign markets in order to expand the market or look for resources or reduce cost etc. However, Multinational Enterprises (MNEs) not only need to know the political, legal and regulatory environment in host country but also the culture difference which is very important to lessen the cultural problems and know how to solve it wisely. Companies may be abandoned by customers or spend a lot of money to recover their reputation if MNEs’ managers do not understand the cultures of the countries they deal with. The influence of international trade liberalization has presented not only substantial opportunities but also some challenges for domestic and international companies (Watchravesringkan 2011). The aim of this essay is to discuss the importance of culture difference to MNEs. In this essay, culture and society will be discussed in the first part. The following part is about the importance of cultural difference to international managers. Finally, it will discuss the methods to understand cultural difference. Dowling & Liesch (2009) state that culture is a system of values and norms those is shared among a group of human beings and form a pattern for living when brought together. Culture is gained knowledge that human beings use to explain experience and develop social behaviour and this knowledge forms values, generates attitudes, and affects behaviour (Luthans and Doh 2012). Moreover, culture influences the way of people’s thoughts and behaviour, for instance, the type of handshake is very different to western and eastern cultures (Luthans & Doh 2012). Other scholars provide different perspectives of culture....
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