The Importance of Cultural Difference to International Management

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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. Kawar (2012) divided culture into two types; the first is generic culture which refers to a shared culture of all humans living on Earth. The second is local culture that is a particular social group share symbols and schemas. Dowling & Liesch (2009) define the term of ‘society’ is a group of people who share a common set of values and norms. A country may equal to a society while some countries retain several societies, for example a country with multiple cultures and some societies include more than one country (Dowling and Liesch 2009). America is a multicultural society because ethnic minorities has fuelled its growth (Levy cited in Watchravesringkan 2011). Epstein (2009) points out that some countries are still holding strong concept of multiculturalism or cultural pluralism, one representative example is the United States. According to the concept, Multiculturalism is a diversity of different and self-sufficient cultures, with their own traditions which are not only independent but also incommensurable, hardly understandable and penetrable for each other. Davis (2009) states that around 47 million Latinos presently live in the United States and the USA is a different nation in terms of culture, society and demographic from just 30 years ago. Its own central values have been changed completely and greatly by the changes caused by immigration and ethnicity. Peters (2010) states that social integration is serious discussion of issues in recent years since Western societies have developed multicultural societies. For instance, the population of the Netherlands currently is multiethnic, with people from Turkey, Morocco, Suriname, and the Dutch Antilles making up the largest minority groups. Dowling and Liesch (2009) point out that a single culture or several cultures may be contained in nation-states. There are significant cultural differences between tribal groups in many African countries. Dowling and Liesch (2009) also mention that not just Africa has this...
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