Cultural Diversity Impact on Small

Cultural Diversity Impact on Small Multinational Companies

At times, in their ignorance of another country's cultural values, business leaders of one company operating in other countries may crash head-on with leaders and employees. Ruth Benedict (1887-1948), U.S. anthropologist, stressed that along with cooperating with the existing culture, to avoid head-on collisions in business, company leaders need to possess an intelligent understanding of any country they engaged in business with, as well as that country's ways of life (Columbia World..., 1996). The impact of culture and diversity in emerging markets, now as in the past, routinely challenges a company's success, simulating a barrier to be broken (U.S. Small Business Administration (SBA) Office of Advocacy, 2007). In today's global marketplace, to more effectively manage a small multinational company, business leaders need to understand the local mentality, beliefs, and even linguistic traits of the culture they conduct business in/with. During the proposed dissertation, the researcher plans to explore the impact of cultural diversity on small multinational companies in global markets.

Heart of U.S. Economy

Fifty years ago, as a matter of business, a number of nations, including the U.S., did not routinely, readily respond to other countries' appeals. Cultural clashes sometimes occurred when one country would not necessarily value the rewards another deemed irresistible (Columbia World..., 1996). In the 21st century, albeit as the global market evolved, multinational companies began to drive the growth of the U.S. economy. Consequently, exporting proved vital for many small multinational companies to achieve success.

Currently, small firms constitute the heart of the United States economy as they represent 99.7% of employers in the U.S., and generate 60 to 8O% new jobs annually, the U.S. Small Business Administration (2007) purports. Small businesses account for 97% of all U.S. exporters. In 2007, U.S. companies exported $1,1419 billion in goods and S497 billion in services for a total of $1,646 billion. These exports supported more than 16 million higher paying U.S. jobs, strengthened companies and farms, and improved citizens' tax base; while simultaneously sending export revenue to local communities through restaurants, retail stores, etc. (U.S. Small Business..., 2007). The U.S. SBA Office of Advocacy (2007) reports that small businesses currently create most new jobs in the U.S. In addition, they bring dynamic ideas, innovative services, and new products to the national and global marketplace. Small businesses also account for almost all of the U.S. employer firms and generate a non-farm private output. Basically, small business creation proves vital to the ability to increase gross national product, personal income, and total employment in the U.S. (U.S. Small Business..., 2007). Small global businesses make an important contribution to the U.S. role in the international community, as they serve as linkage among the community, national and the global economy (U.S. Small Business..., 2007).

In the business realm, as each country throughout the world traditionally reflects its unique culture, along with its own language, history, ideology, and perception, however, businesses may still clash. A business strategy in China, for example, may not work in United States (U.S.), just a one in the U.S. could merit disdain in China. In "Keeping Cultural Diversity Alive," a writer identified as "Anonymous"(2008) notes Marlene Ibsen, CEO and president of the Travelers Foundation in Saint Paul, Minnesota to state: "In today's diverse, global society, respecting cultural values and differences - and learning about them - is extremely important, as is promoting a culture within your organization and within your own community that is tolerant, open, and accepting" (Ibsen, as cited in Anonymous, ¶ 2). Diversity, the theme for a recent New Hampshire annual Diversity Conference and Expo for Business and Education purports, possesses the potential to make a company stronger. Diversity may also present an array of additional profitable opportunities ("Opportunity knocks...," 2008). Possibilities, Opportunities and Challenges Amidst the multitude of strengthening possibilities and opportunities, however, cultural diversity also presents a myriad of challenges for the small multinational company. To effectively counter these challenges, speakers at this conference stressed. Businesses need to embrace the diversity, along with its benefits. Companies need to increase their understanding of differences in cultures; promote cultural sensitivity and corporate social responsibility ("Opportunity knocks...," 2008). Cheryl Marihugh (2006) points out in "Corporate Social Responsibility: An Insider's View," that as companies currently face possibilities, opportunities and challenges relating to cultural diversity, more companies adopt corporate social responsibility (CSR) programs. "Broadly, CSR programs are supposed to assess and improve corporate operations in relation to a range of values beyond profit: human rights, environmental protection, contribution to local communities, and workplace diversity, among others" (Marihugh, 2006, ¶ 1). In response to activism around sweatshop conditions in a number of factories, CSR developed programs-codes of conduct which require monitoring of covered conditions. Controversy, however, currently shrouds CSR regarding the question of whether monitoring really be part of CSR.

In regard to cultural diversity, nevertheless, most companies appear to concur that a number of common concerns challenge their success. Michelle Porter (2003) points out in "Culture-savvy leaders: essential to expat management teams," that for companies operating in the global market to succeed, managers need knowledge and experience of the culture where they conduct business.

On behalf of the European Commission, in "Effects on the European Union Economy of Shortages of Foreign Language Skills in Enterprise," Stephen Hagen (2008) recounts a number of points regarding language and marketing. Hagen asserts that alongside linguistic competence, other components contributing to a successful exporting include organizational factors and environmental conditions. In their quests for global success, businesses experience a number contemporary cultural concerns which include, but may not be limited to variances in/of:

Compliance with a country's laws (Marihugh,2006);

Cultivating language competence (Hagen, 2008);

Managers' knowledge and experience of the culture (Porter, 2003).

PROBLEM STATEMENT

The failure of the manager of the small multinational company to intelligently understand cultural diversity constitutes a challenging concerns, and potentially putrid problem.

The forthcoming qualitative phenomenological study will enhance the reader's intelligent understanding of cultural diversity, which serves as a vital factor contributing to the small multinational company's ability to establish and maintain operations, a 2000 report to then U.S. President William Jefferson Bill Clinton, regarding the small business economy, noted the increase in small business failures as a result of the challenges small business owners face in establishing and maintaining operations. (SBA Office of Advocacy, 2004).

Prior to moving into global markets, some small multinational companies may not possess the resources that provide immediate access to global market research and cultural information. According to Maccoby (2006), as culture and diversity matters, multinational companies should be aware of the cultural differences and expectations before venturing into global markets. The SBA (2000 a) asserts that a lack of cultural sensitivity and consideration may adversely affect the small multinational company's market entry, as well as the acceptance of the business in global markets (U.S. Small Business..., 2007).

PURPOSE STATEMENT

The purpose of the proposed qualitative phenomenological study, the researcher contends, will be to explore the impact of culture and diversity on small multinational companies in global markets, which will simultaneously increase awareness of the value of understanding the social and cultural aspects of the global market prior to entering. Maccoby (2006) purports that as a culture shapes personality, attitudes, and values, businesses should be aware of the cultural differences in expectations before venturing into global markets. Although the proposed study primarily focuses on small multinational companies in the U.S., considerations regarding global markets throughout the world expand its horizons to likely stimulate interest in other countries.

Research Methodology (N.d.) explains that in qualitative research methodology, numerous kinds of studies share common aspects. Rather than proving or disproving a hypothesis, qualitative studies, which are descriptive, examine a particular aspect of the human experience in depth. During the proposed study, the researcher will describe particular human aspects relating to the study's focus. The sample size for the upcoming study will range from a minimum of three small multinational companies to a maximum of five. Instead of comparing identified groups of people, qualitative studies propose to develop ideas and theories regarding human experience(s). In the forthcoming phenomenological research effort, the researcher plans to attempt to 'bracket out' personal biases and expectations, and though not fully possible, the researcher will strive to be to what the data will reveal. The researcher may also include a number of in-depth interviews with several small business owners.

SIGNIFICANCE to RESEARCH

The researcher purports the proposed study to be significant as its examination of the challenges and impact of culture and diversity on small multinational companies in global markets will help fill the dearth evident in current research relating to this subject. From the literature reviewed in planning for the following stud, the researcher noted the challenges and impact of culture on companies in global markets has not been fully researched. As small multinational companies fill a vital position in the U.S. economy (Ibrahim, Angelidis & Parsa, 2004), more studies need to investigate and examine the challenges and impact that culture have on multinational companies working in emerging markets.

Significance of the Study to Leadership a leader's ability to adapt to change within global markets determines the multinational company's success (Handley & Levis, 2001). Affective adaption to cultural changes, albeit depends upon available information; essential to the leadership decision-making (Kontoghiorghes & Hansen, 2004). If leaders of multinational companies better understand the challenges and impact of culture and diversity in global markets, they may use the information to improve planning and global decision-making (Lip*****z & Mann, 2005). Ultimately, improving decision-making may help promote effective cultural communication, and build effective global business relations.

NATURE of the STUDY

Research Design Synopsis

As referred to earlier in this proposal, rather than comparing identified groups of people, qualitative studies propose to develop ideas and theories regarding human experience(s). The following five qualitative research methods denote the options the researcher considered for the proposed study:

Ethnographic:

Case Study:

Phenomenological:

Hermeneutic:

Heuristic. (Research Methodology, N.d., pp. 3- 6)

Five Qualitative Research Methods

In Ethnographic research methodology, the researcher attempts to fully describe a culture or social group in a complex manner through immersion with the group at a personal level. Ethnographic research methodology, which evolved in anthropology and sociology, involves the researcher entering into the field, completing fieldwork, gathering information through direct observation, interviews, photographs, and utilzing materials and artifacts available to members of the group or culture. This frequently informal method may appear unsystematic, however as the researcher observes events as they arise, over time previously apparently obtuse things may become clear. Researchers strive to locate key informants who may direct them toward filling their research needs, or they may choose those in the sample group deemed to be appropriate members of the group, creating "judgmental sampling." Ultimately, the researcher organizes the data into a portrait to convey a holistic cultural impression. (Research Methodology, N.d.).

The utilization of case study research methodology, with roots similar to ethnographic studies, also developed in anthropology and sociology fields. Contrary to ethnographies that study entire social systems or cultures, albeit case studies traditionally focus on smaller units such as an individual or a specific program. In case studies, an exploration over time through detailed, in-depth data collection, it proves vital to clarify the rationale behind the choice of the case being studied. This is known as purposeful sampling, as the researcher collects data through observations, interviews, documents, audio-visual material, artifacts, or archival records. The researcher contextualizes case studies within their physical, historical, and socio-economic setting (Research Methodology, N.d.).

Phenomenological research, as noted earlier in the Purpose Statement section of this proposal, the researcher's choice for the proposed study's research methodology is both experiential and qualitative. In this type study, the researcher's detachment is important. The focus in phenomenological research is not on describing the experience of one person in a more total manner, but generally more on a particular aspect of human experience as it occurs in several people. Attaining immediacy also proves significant in this research approach (Research Methodology, N.d.).

When/if the researcher conducts interviews, he/she chooses participants for their close involvement with the subject being studied. The subjects themselves, nevertheless do not serve as the primary focus in the process of descriptive analysis. Instead, phenomenological research attempts to engage with the essence of the experience. The researcher attempts to find the meaning of the experience, as well as seek general and more universal meanings from the explorations. Phenomenological research permits the researcher to arrive at more definitive conclusions than attainable though heuristic research methodology (Research Methodology, N.d.).

Hermeneutic research received its name from Hermes, the reported Greek god of communication. In traditional hermeneutics, the researcher searches for meaning in and between different contexts including texts, stories individuals relate about themselves, films, and art. Through exploring one relationship to another, hermeneutic methodology places concepts in dialogue to search for deeper meaning. It also involves the comparative study of various source materials. Theoretical theses utilize hermeneutic methodology, and may frequently focus on philosophical questions concerned with rational structures, organizing principles, as well as the nature of the relationship existing between the researcher and the researched. Theoretical theses may also assess existing theories, or propose new theories.

Robert Romanyshyn proposed alchemical hermeneutics, a new research framework which posits research chooses the researchers rather than, the other way around; noted in traditional hermeneutics (Research Methodology, N.d.).

Instead of encouraging detachment, heuristic research encourages relationship and connectedness. In heuristic research, the researcher examines a particular phenomenon in person; over time. The approach, more autobiographical than in phenomenological research, seeks immediacy and meaning for the individual. The researcher then synthesizes the experience, and records (writes/types) the structure and meaning of the entire study. Whatever presents itself to the researcher in heuristic research may be considered data. The researcher serves as both the object and subject of the research as he/she travels back and forth from experience to witnessing to experience. This particular methodology requires the researcher develop the capacity to be objective about self, while alternatively delving deeper into subjectivity (Research Methodology, N.d.).

Quantitative Research Methodology Not Choice

The researcher did not choose a quantitative study for the proposal as this type study must possess a testable hypothesis; with the hypothesis including concepts measurable by numbers. "In quantitative studies the experimental methods must be appropriate and well designed and the statistical applications and tools must be appropriate" (Research Methodology N.d., p. 1). The qualitative phenomenological research design, the researcher asserts, best suits the proposed study as it examines the impact of cultural diversity on a number of small multinational businesses.

The process of descriptively analyzing cultural diversity, instead of the individuals will relate the essence of the study's focus. Along with providing more universal meanings relating to cultural diversity from the explorations, phenomenological research will permit the researcher to arrive at reasonably definitive conclusions.

HYPOTHESIS/RESEARCH QUSTIONS

Lip*****z & Mann (2005), the research reveals, contend that a better understanding of the challenges and impact of culture and diversity in global markets possess the potential to enhance the planning and global decision-making for small multinational companies (Lip*****z & Mann, 2005).

The understanding of the term "hypothesis," which the Glossary of Key Terms (N.d), notes, contends it to be: "A tentative explanation based on theory to predict a causal relationship between variables"(hypothesis).

M.E.F.Highfield (N.d.) asks, as well as answers the question "What is a hypothesis?." According to Highfield, researchers only craft hypotheses for quantitative studies, as they are not to be included in qualitative studies.

Yet another source, "Advice on writing up a qualitative study," (N.d.) concludes that the researcher will not likely conclude his/her introduction with a hypothesis. According to this particular source, in qualitative work, one will not be likely to conclude with a hypothesis, as he/she is not likely to be testing a prediction, but exploring some things. The focus for the exploration may be "constructions, speech acts, language use, experience etc.," ("Advice on writing...," Introduction, # 6), however the researcher should present a paragraph which summarizes his/her rationale. The researcher also needs to re-iterate what he/she hopes to discover more about. Instead of the researcher crafting a hypothesis, according to "Advice on writing up a qualitative study," the researcher may perceive this step to be clarifying his/her research question.

Other investigators, albeit purport that hypothesis-testing, deductive research may, in fact, benefit from the utilization of qualitative research methods. "Using Qualitative Research Methods" (2008) argues that using a hypothesis may be considered consistent with contemporary accepted standards of validity and rigor. The researcher concurs with the contention that the "strength and unique contribution of qualitative methods in developing insights into actors' values, beliefs, understandings and interpretations of events and other phenomena, or in explaining historical occurrences, can enhance 'conventional; forms of empirical research" ("What is the role...," section ¶ 2). Qualitative research methods prove valuable" in providing rich descriptions of complex phenomena; tracking unique or unexpected events, illuminating the experience and interpretation of events by actors with widely differing stakes and roles" ("Using Qualitative Research...," sidebar). Qualitative research also give voice to those whose views rarely heard, as it completes initial explorations. It develops theories to generate and then test hypotheses. Qualitative research help moves understanding toward explanations. As reported at the start of this proposal, the researcher aims to explore the impact of cultural diversity on small multinational companies in global markets. In light of the dearth in literature relating to this particular focus, the researcher purports the following hypothesis: When the leader of the small multinational company develops and maintains an intellectual understanding of cultural diversity in the global market, he/she will more likely overcome challenges to enhance his/her company's possibilities and opportunities.

Just as no plain prescription relates exactly how the researcher may write an informative, interesting opening proposal paragraph, Paul T.P. Wong (2004), Ph.D., C. Psychology, Research Director, Graduat Program in Counselling Psychology, asserts, no hard or fast rules dictate how the researcher may best frame his/her research question. Proposed research questions the research plans to address during the ensuing study include, but may not be limited to:

What primary cultural diversities occur in the global business arena?

What challenges do small multinational companies currently counter?

What factors contribute to success in global markets?

CONCEPTUAL or THEORETICAL FRAMEWORK

Linguistics

Although, as the researcher noted earlier, a dearth of literature exists regarding the proposed study's focus, the researcher did find a limited number of credible publications with relevant information. Hagen (2008) reports results from the British Chambers of Commerce language survey (2004) explicitly examined the impact of language skills on export performance. The four different profiles of export managers identified in this study aptly apply to managers in the U.S. Considering the export managers' ambitions, education, motivations, and individual language competence, they fell into the following four groups:

Opportunist, developer, adaptor and enabler (Hagen, 2008 Internationalisation Studies section, ¶ 5).

As Hagen (2008) linked these categories of managers with the differing types of export performance in their companies, the researchers of the British Chambers of Commerce language survey found:

direct correlation between the value an individual export manager placed on language skills within their business and their annual turnover. Only 33% of Opportunists, who valued language skills the least, had an annual export turnover above €750,000. This increased to 54% for Developers, 67% for Adapters and 77% for Enablers, who placed the most value on language skills within their business. Moreover, export sales by Opportunists were declining by an average of €75,000 a year per exporter, while Enablers' exports were increasing by an average of €440,000 a year per exporter (Hagen, 2008 Internationalization Studies section, ¶ 6).

The English Language Currently, English language, in its American form, serves as the koine of the emerging global culture, with no rival seen on the horizon. Millions of individuals worldwide increasingly choose to learn to speak English do so to improve their job prospects. Each culture's language, however, possesses "a cultural freight of cognitive, normative, and even emotional connotations....The American language, even apart from the beliefs and values propagated through the American mass communication media [includes]...terms like "religious preference" or "sexual orientation, " or phrases like "I cannot express... " (Berger & Huntington, 2003, p. 3). Along with stressing the value of communication in a common language, Hagen (2008) notes the following five traits necessary for businesses to build effective transcultural relationships while they also minimize cultural impact in negotiations:

Being willing to adapt

Being aware that interpreters influence meaning

Being aware of cultural blocks to translation.

Avoiding negative stereotyping

Good prior preparation in inter-cultural understanding. (Usunier, as cited in Hagen, 2008, Research on cultural and intercultural factors section)

Hagen (2008) recounts a number of international studies, one; Westhead et al. (2002) conduct a multivariate statistical analysis; to explicate the propensity of a firm to be successful as an exporter. Although no foreign languages is referred to in this study, "Westhead's analytical frame provides a model within which language competence could be incorporated as a separate variable (Hagen, ¶ 1). Alongside linguistic competence, the study by Wolff and Pett previously suggested, organisational factors and environmental conditions prove vital in successful exporting (Hagen, 2008, ¶ 2). Lachenmaier and Wossmann report empirical evidence for Germany regarding links between innovation and exports, albeit other literature, for example in the study by.Debaere and Mostashari denote "causality in the opposite direction: the opportunity to sell into overseas markets increases the returns to investment in innovation, and thus motivates increases in such investment" (Hagen, ¶ 3). Evidence confirms that high tech or innovation-intensive businesses may internationalize their products and/or services from the outset of their business, as they become exporters at an early stage of development. These companies, Harris and Li note, are "born global' firms" (Hagen, 2008, ¶ 3). A number of researchers have conducted several small-scale studies of small multinational companies failing in the global market. The study by Smallbone et al. focuses on internationalization in the Central and East European countries transitional economies. During this study, SMEs in the transition economies noted the following to contribute to the primary price advantage:

Price;

product uniqueness;

quality;

establishing customer relationship, in the Baltic SMEs;

Languages;

Culture. (Hagen, 2008, ¶ 4)

Impact on Driving Marketing Growth

National identities matter worldwide in the business realm, Winfried Ruigrok, a professor of international management at the University of St. Gallen, Switzerland, and academic director of its MBA program, along with Peder Greve (2008), a PhD candidate at University of St. Gallen, Switzerland, purports in "The lack of mobility in the international executive labour market proves that where senior management is concerned nationality still matters a great deal," Ruigrok and Greve (2008) relate considerations regarding legal concerns/issues in cultural diversity. The global outsourcing world, in particular, falls short in efforts to attain legal compliance, Ruigrok and Greve point out.

Scientific Approach to Diversity Issue

Stephen Chapek. (2007), Contributing Reporter, to the San Fernando Valley Business Journal relates considerations regarding taking a scientific approach to the diversity issue. Diversity relates to more than the person a manager hires to work for his/her company. Chapek stresses that diversity may also impact a person's health and notes reasons to primarily relate to numerous complex cultural issues, including the individual's lifestyle, diet and education. Businesses in Canada need to manage cultural diversity in the workplace better, John McFerran (2006) asserts in "Cultural diversity linked to global success." The first step, McFerran purports, would be to begin recognizing the difference between equity and equality. Equality involves ignoring differences altogether. Equity acknowledges different cultural identities; values and perceives them to be an advantage. True equity creates a fair system; equitable for each individual. The following practices denote a number of ways leaders may create equitable environments while they also utilize their people potential:

Examining internal hiring practices -- Some managers only consider new hires or successors who fit their own mirror image, creating an invisible barrier for job seekers with different backgrounds or ethnicity. Protecting the status quo is dangerous, as it stagnates progress, fosters prejudice and shuts out suitable candidates.

Accepting new management techniques -- Different cultural groups have different values and styles that impact the way they carry out the same tasks. But rather than stifling diverse management styles, embrace the notion that new or atypical approaches can achieve the same results as traditional methods.

Introducing diversity training -- Managers and employees may benefit from becoming better educated on systemic discrimination and other potential obstacles faced by co-workers.

Blending corporate culture and cultural diversity -- Employees should be encouraged to wear their distinct cultural identity with pride. However, they also need to realize that any employee hoping to climb the company ladder must pay attention to the mindset of the business. Team players, regardless of colour, culture or circumstance, need to demonstrate that they are willing to adapt to performance standards, attitudes and social norms accordingly.