Globalisation and Business Cultures and Practices

Globalisation, generally defined as the economic, political, and cultural convergence of the world, is undoubtedly a major hallmark of the modern world (French, 2010). The world has increasingly become interconnected in terms of economic activities, communication, technology, social aspects, as well as politics. Indeed, the once diversified and distanced world has converged into a small global village because of globalisation. Globalisation has led to the interdependence of not only politics and economic activities, but also culture (Grewal, 2008). Cultural convergence is now a widely-recognised phenomenon (Cojocaru, 2011). Owing to increased contact amongst people from diverse cultural backgrounds, cultural practices have become ever more similar, consequently resulting in the convergence of business cultures and practices. Organisations now experience lesser cultural difficulties when doing business across cultures. As a result, the study of comparative business cultures may be becoming less relevant. While there is truth is this argument, differences between national cultures, and subsequently business practices, remain significant. This paper critically examines whether globalisation has led to a convergence of business cultures and practices.

Different cultural theories, notably Geert Hofstede's Cultural Dimensions Theory, suggest that significant cultural differences exist between countries (Hofstede, 2001). Values, beliefs, norms, traditions, and worldviews vary from one country to another. For example, while some countries value individualism, others emphasise collectivism and group harmony. Some view power and status as a source of recognition, while others consider individual accomplishments as the source of recognition. Generally, culture affects the behaviours, attitudes, and perceptions of a particular group of people (Luthans and Doh, 2012). It affects everything from language and communication to business. Indeed, the influence of culture on business is broadly acknowledged (Deresky, 2005; Browaeys and Price, 2008; Steers, Sanchez-Runde and Nardon, 2010). Culture influences management practices, employer-employee relationships, teamwork, task allocation, and virtually every other aspect of business; in turn, business practices tend to differ from country to country. In a high-power distance society, such as China, for instance, management practices may be more reflective of hierarchy and bureaucracy, while in a low power distance society such as the UK management practices would tend to portray democracy and inclusivity.

Hofstede's cultural model is one of the most seminal and cited theory on cultural differences. The theory has substantially influenced scholarly work on national cultures and provided valuable guidelines for international business management. Multinational organisations have been able to operate more effectively in foreign countries by adapting their management practices to local cultures. In fact, without proper acknowledgement of cultural differences between countries, an organisation may not succeed in its international operations (Cojocaru, 2011). Instances of organisations experiencing remarkable difficulties or even closing down in foreign countries due to cultural difficulties are not uncommon. Often, organisations that succeed in the increasingly globalised environment are those that design their management practices in recognition of the underlying national culture (Luthans and Doh, 2012).

A major shortcoming of Hofstede's model, and other cultural models at large, is that they have increasingly become irrelevant in today's world. Majority of cultural theories ignore the fact that cultures tend to converge over time as described in the cultural convergence theory. Over the years, cultures have become more similar, in large part due to globalisation (Grewal, 2008). For example, democratic ideals have traditionally been associated with Western countries such as the U.S. and the UK. Today, however, with increased contact between Westerners and the rest of the world, democracy has spread to other parts of the world. In essence, there has been increased cultural homogeneity across the globe, with values, beliefs, and ways of thinking becoming increasingly alike. Practices that were once exclusive to certain countries or regions are now evident in other parts of the world. Food, music, fashion, language, and other aspects of culture now reflect more uniformity across the globe than ever before. For instance, aspects of Western dressing and music, along with greater awareness of and loyalty to brands, are now amply evident in Asian countries and the rest of the world, mirroring increased homogeneity in consumer behaviour.

The homogeneity of attire is a particularly good example. Due to globalisation, the three-piece suit has become the global standard for executives as far as clothing is concerned. The attire is used across the globe to depict power and position. Even in meetings of cross-cultural organisations such as the United Nations (UN), virtually everyone puts on the same type of dressing as opposed to outfits that reflect their respective local culture.

One area that has been significantly affected by globalisation-fuelled cultural convergence is business. A closer look at business cultures and practices across the globe today reveals greater similarity than ever before (Gupta and Wang, 2003). The manner in which organisations are managed shows that cultural differences have faded over time, resulting in a single global culture. Today, organisations, sectors, and industries worldwide are guided by and/or subject to internationally recognised standards and practices. An ideal example is the banking industry. The Basel Accords (Basel I, Basel II, and Basel III) provides guidelines for best banking practices. Many countries around the globe, notably North America and Europe, rely on these guidelines to ensure the stability of their financial system. The guidelines have remarkably driven financial market efficiency across the globe. The increased uniformity of business practices is not restricted to the financial industry. The modern global manufacturing industry is now heavily influenced by practices that originated in Japan. Management practices based on models such as total quality management (TQM) and lean principles are now popular across the globe. This uniformity of business practices may not have been achieved without globalisation.

Global interconnectedness in terms of economic activities often implies that events occurring in one part of the globe can quickly spread other parts of the world. The recent global financial crisis and the ongoing Eurozone crisis are perfect examples. A great deal of similarity has been observed in how governments, banks, and organisations in the affected countries responded or have responded to the crises. This further demonstrates how globalisation has harmonised business cultures and practices across the globe.

The impact of globalisation on the convergence of business cultures and practices can further be observed in the increased similarity of organisational structures and practices around the world (Bhattacharyya, 2010). Traditionally, hierarchical, autocratic, and centralised organisational structures were the norm in both the West and the rest of the world. Today, however, there has been greater shift towards flatter and more decentralised organisational structures across the globe. Businesses in various parts of the world increasingly recognise the importance of a democratic and inclusive organisational environment. At present, it is not quite unusual for organisations in historically high power distance societies such as China to involve employees in decision making. Further, human resource practices such as compensation, recruitment, as well as training and development exhibit greater similarity across nations than ever before (Lucas, Lupton and Mathieson, 2006). More interestingly, the increased influence of multinational corporations (MNCs) such as McDonald's has evidently led to a considerable degree of standardisation of organisational life across the globe. It is, however, important to note that there is no single approach that fits all organisations. Indeed, as put by French (2010), organising or managing is influenced by not only culture, but also contingent factors such as attributes of the inherent political-economic system.

The standardisation of organisational behaviour, coupled with the homogeneity of consumer behaviour, has meant increased standardisation in products and services (Steers, Sanchez-Runde and Nardon, 2010). Though marketing practices may differ from country to country, MNCs deliver products and services to a global audience. Automobile products offer a perfect example. For instance, Japanese or European car manufacturers deliver vehicles with similar specifications (in terms of design, functionality, engine performance, and so forth) to consumers all over the world. Also, electronic devices such as smartphones, tablets, television sets, and music players are sold in precisely identical configuration throughout the globe. The standardisation of consumer products and services demonstrates that the needs and wants of consumers across the globe have become more homogenous, subsequently resulting in the uniformity of business practices.

Recent research has also confirmed that globalisation has indeed resulted in the convergence of business cultures and practices. For instance, a Hofstede's model-based study of approximately 400 Chinese and Anglo-Saxon managers working in the Chinese construction industry found that there were no significant differences in managerial behaviour as the model would lead one to expect (cited in French, 2010). Contrary to expectations, the study particularly found that managers from the two theoretically different contexts exhibited quite similar behaviour in terms of collectivism and cooperation. The similarity in managerial behaviour can be attributed to cultural convergence. In other words, as a result of globalisation, Chinese managers may have embraced the Anglo-Saxon way of doing things. On the other hand, Anglo-Saxon managers may have adapted their management practices to the Chinese context.

The phenomenon of increased cultural convergence, however, raises a fundamental question: is it still relevant to study comparative business cultures? Whereas business cultures and practices may have converged over the years, significant differences in cultural and lifestyle practices remain from country to country (French, 2010). The theory of cultural divergence actually asserts that cultural diversity still persists amidst cultural commonality (Grewal, 2008). Indeed, cultural convergence and cultural divergence have occurred simultaneously. Countries still demonstrate significant differences in laws, institutions, and policies; most of which are influenced by culture. These differences mean that differences in organisational life across countries are still evident.

The simultaneous occurrence of convergence and divergence means that globalisation has harmonised cultures only at the surface. As put by French (2010), the deeper layers of culture still remain intact. For instance, though Asians may embrace Western dressing and music, or McDonaldization, they still possess their core values and beliefs. Equally, though Western management practices may have been influenced by the Japanese, Westerners still espouse their historical norms and traditions. The example of electronic devices cited above also provides a good illustration of cultural divergence. Even though television sets and music players may be standardised, the television programs viewed or music listened to, differ from one context to another. For instance, Indian consumers may favour Bollywood products, while American consumers may be biased towards Hollywood products. Essentially, culture tends to be a deeply-rooted characteristic of a given society, making it quite difficult to vanish completely.

The U.S., UK, Canada, and Australia ideally demonstrate the occurrence of cultural divergence. These countries are evidently multicultural societies, in large part due to globalisation and immigration (Grewal, 2008). Immigrant communities living in these countries do not necessarily lose their values, beliefs, and traditions in the process of immigration. While there may be convergence, these communities bring with them their unique cultural identity, meaning that there may be no full convergence of business cultures and practices. Organisations in multicultural societies still have to take into account the cultural identity of immigrant communities when making business decisions.

Cultural differences between countries are particularly evident in terms of beliefs about the role of managers and the degree of delegation (French, 2010). In Germany, for instance, employees value autonomy, mainly due to greater preference for delegation on the part of managers as well as the country's system of industrial democracy. In China, a culturally different country as predicted by Hofstede's model, clear recognition of authority and status in organisational life remains important. Failure to recognise these differences may significantly hinder organisational success in foreign countries even though there has been greater uniformity in organisational life. This perhaps explains why the adage "think global, act local" has gained increased prominence in recent times. It has increasingly become important for MNCs to adapt their practices to the local culture. For instance, a UK company doing business in China must understand the behaviour of the Chinese consumer as well as local regulations, communication styles, negotiation approaches, and so forth. Business practices must then be adapted to reflect the local culture.

From a cultural convergence perspective, globalisation has resulted in the standardisation of consumer products and services (Gupta and Wang, 2003). The cultural divergence perspective, however, suggests that consumers increasingly prefer customised or localised as opposed to standardised products (Deresky, 2005). This demonstrates that globalisation has resulted in increased diversity in the marketplace. Consumers desire organisations that are flexible and more responsive to their needs and wants. This means that the uniformity of business practices may be disadvantageous to an organisation as what may work in one cultural context may not work in another. In essence, though consumer needs and wants may be identical, cultural variations may differentiate the manner in which individuals or societies fulfil them. Accordingly, business organisations must carefully segment their markets and serve them based on their unique tastes and preferences.

McDonald's, one of the largest fast food chains in the world, is one organisation that thinks globally, but acts locally. Based on a franchise model, the organisation has operations all over the world. The organisation has succeeded largely because of its responsiveness local tastes and preferences. Though the organisation delivers the same core product across the globe, its menu is subtly adjusted to reflect local preferences. This means that a McDonald's menu would be quite different in the U.S., UK, China, Brazil, and South Africa; further showing that complete cultural convergence is yet to be achieved.

More fundamentally, it has become important for organisations to embrace cultural diversity. Indeed, cultural diversity is a hot topic in today's business world, particularly in the UK (French, 2010). As organisations increasingly serve culturally and geographically diverse populations, they can benefit more from a culturally diverse workforce (Browaeys and Price, 2008). Such a workforce places an organisation in a better position to incorporate cultural differences in decision making. Therefore, even though cultures have become more similar, the importance of acknowledging cultural differences in business decision making is imperative, meaning that it is still relevant to study comparative business cultures. Organisations must understand how culture varies from one context to another, and consequently reflect those variations in their decision making. This largely explains why intercultural training and/or competence has become a crucial ingredient of success in today's international business (Cojocaru, 2011). MNCs now invest in preparing their employees for assignments in foreign countries by taking them through cross-cultural training. The training equips individuals with the knowledge of foreign cultures and their implications for business practices.

By bringing cultural diversity into more limelight, French (2010) argues that globalisation fuels cultural convergence while at the same time reinforcing local differences. Globalisation can in fact increase the importance of culture to an organisation. In an increasingly globalised world, an organisation must acknowledge cultural differences across the globe, and the implications of those differences on organising. This is what diversity or cross-cultural management is all about. It encompasses managing cultural differences as well as sharing the knowledge and experiences obtained from a culturally diverse workforce with a view to creating value for the organisation and its key stakeholders (French, 2010). Also, diversity management entails ensuring justice and equality for everyone at the workplace regardless of cultural background. Diversity management further involves addressing and preventing victimisation, bullying, harassment, prejudice, discrimination, and stereotyping motivated by differences in cultural background.

In the contemporary workplace, organisations have increasingly paid attention to inclusiveness and fairness in decision making and human resource practices. This is particularly true for the UK, Australia, and New Zealand, where immigrants comprise a significant portion of the population (French, 2010). Managers in such environments -- whether they oversee international operations or not -- must effectively manage cultural differences and extensively take advantage of the benefits diversity may bring. Creating such an inclusive and fair work atmosphere is crucial for motivating employees and getting the most out of them, thereby increasing job satisfaction and minimising turnover rates. Indeed, though difficult to quantify, diversity management has been shown to be an important driver of organisational productivity and performance (French, 2010). The benefits of cross-cultural management are particularly important for MNCs (Rodrigues, 2009; Bhattacharyya, 2010). In fact, regardless of increased cultural convergence, MNCs cannot afford to ignore cultural differences. French (2010) expressly points out that diversity management for organisations with cross-border operations is a necessity.

The persistence of cultural differences amidst globalisation means that the study of comparative business cultures is still important. French (2010), however, urges that the focus of cross-cultural management studies should shift from emphasising the experiences of expatriate workers to understanding day-to-day realities in an increasing number of locally established organisations affected by globalisation via their members' cultural identities. In other words, rather than focusing on cross-cultural comparisons, attention should be paid to the dynamics inherent in cultural interfaces with regard to culturally-diverse teams, negotiation styles, mergers and acquisitions, and so on. The discourse should be more on where diversity or cross-cultural management is relevant in the real world. A different focus of scholarly work in cross-cultural management is likely to lead to more informed decision making on the part of managers.