US Multinational Company: Organizational Behavior

Executive Summary

Globalization continues to change the way people conduct business in the contemporary world. It presents rapid changes in many aspects of our lives, including communication and consumption patterns. Most importantly, doing business on a global scale stands to benefit significantly from globalization. However, research shows that this assumption does not hold much due to the existence of communication obstacles across national, regional, and international cultures.

The disheartening fact forms a focal point of examination in this paper. People of different cultures have continued to move across geographical boundaries to look for career pursuits, medications, tourism, and immigration, among other reasons. Therefore, there is a need to address the barriers to efficient communication and its effects on international business with a view of recommending various ways of eradicating such hitches to facilitate the success of global scale organizations. The essay provides an analysis of a case study involving a US multinational company that has ventured into Russia’s emerging economy.

Key Words: Cross-cultural communication, Globalization, Multinational Company, Culture

Problem Statement

Organizational behavior (OB) forms a vital part in the success of organizations. The handling of the workforce has been empirically proven to have a great influence on the overall performance of organizations. Lenartowicz and James define organizational behavior as the study of what people do in an organization and how their behavior affects its performance.³ It is primarily concerned with employment-related situations such as jobs, work, absenteeism, employee turnover, productivity, performance, and management. It encompasses various core issues that include discussions, motivation, leadership behavior, power, interpersonal communication, and group structure as well as attitude development, perceptions, change processes, conflicts, negotiations, and work design, among others.³ Communication is an essential component in not only organizations but also in all aspects of human life.

It has been addressed in different disciplines, including communication studies, sociology, business and communication, psychology, and anthropology, among others. In the organizational dimension, it has been regarded as the basis for business operations. Lenartowicz and James reveal that various obstacles pose significant challenges to organizations that fail to address the elements of organizational behavior.³

This set of circumstances results in deteriorated performance. Among the key aspects of organizational behavior is cross-cultural communication. Substantial literature shows that organizations face a tough challenge in communication due to cultural and multilingual differences amongst the employees. The scenario accelerates from the international business perspective because of the diverse communities that cross-national, regional, and global boundaries in search of jobs, education, and medication, among other interests. This paper presents a critical examination of the barriers to cross-cultural communication and its influence on international business through an empirical analysis of case studies and various theories of cross-cultural communication. In addition, the paper looks at the role of managers in addressing such barriers in an attempt to improve the performance of organizations.

Cross-cultural Communication Theories

Various theories have been put forward to explain the essence of cross-cultural communication in organizations. In the context of this paper, two theories of cross-cultural communication will be reviewed to provide a framework for the in-depth analysis of the barriers to intercultural interactions. The theories include social identity and cultural context communication theories.

Social Identity Theory

Tajfel and Turner conceptualized the social identity theory in 1979.³ The theory was based on the desire to investigate the various psychological factors that drove individuals to cultural alienation. In their research and development, Lenartowicz and James aimed at identifying the minimal conditions that influenced the discrimination of out-groups in favor of the in-group in which they belonged.³

In their findings, the theorists realized that human beings continually endeavor to identify themselves with their immediate world. They concluded that the aspect of constant evaluation of one’s self-based on the characteristics of the members surrounding them led to social categorization and identity. Moreover, social identity functions as a vital component of a person’s self-concept that leverages communicative interaction with strangers from an outside culture. Culture is deemed as a closed system of beliefs, values, and attitudes, among other aspects that define distinct groups. The social identity theory borrows the phenomenon of culture closure. For this reason, international managers need to be aware of cultural diversity among their subordinates. This theory puts forward several social identities such as culture, race, ethnicity, gender roles, personality, class, disability, and/or age that exist in different backgrounds based on a global and transnational perspective.

Culture Context Communication Theory

This theory perceives the culture as either low or high context. It is seen as the peoples’ preference based on information dissemination. It provides a proper link between management styles and workforce behavior in cross-cultural organizational environments.³ Numerous researchers attest that cultures cannot be categorized into high-context (HC) or low-context (LC). However, to some degree, some cultures seem to be more prominent than others are in the continuum. In such cultures, there are increased interactions that create mutualism among the members. As a result, there is widespread sharing of information that has potential meaning throughout the world. In contrast, Lenartowicz and James affirm that a low-context culture depicts people as having a tendency to individualism, alienation, and fragmentation.³

People are perceived as introverts since they seldom involve each other in interactions. In HC communication, people share information indirectly among each other. On the other hand, in LC communication, ideas are shared directly. In an LC culture, theorists posit that individuals from different cultural backgrounds have shown to adapt to this way of life. However, people who are characterized by low-contexts cannot easily match high-context conspiracies.³

Those who developed this theory held that high-context communication is substantially economical, fast, efficient, and satisfying. Nevertheless, Lenartowicz and James attest that programming can be time-consuming.³ On the other hand, low-context messages are deemed more context-free than high-context communication. Less influence is experienced on people’s character, background, and values with respect to decisions that pertain to business deals. However, the creation of collaborative teams amidst diverse cultures is explicit communication.

Significance of Intercultural Communication in Global Business

According to Beckers and Mohammad, communication is one of the most priorities of organizations that greatly form the foundation of internal and external business success.² In the wake of globalization, multinational corporations have become an accepted feature of the contemporary business world. Borderless business involves players from diverse cultural backgrounds. However, this phenomenon attracts communication barriers.

Overcoming cross-cultural communication barriers in organizations is a crucial function of managerial teams that has become both a short-term and long-term triumph in the realization of successful international businesses. In MNCs, real-time systems are utilized for timely international dissemination of information on time. Evidence indicates a relationship between interpersonal communication and culture.² Communication is perceived as a medium that facilitates the transmission and sharing of social values and company norms among various stakeholders. Shared meaning and communication mechanisms facilitate collective organizational actions; hence, they foster a sense of coordination and cooperation.

Beckers and Mohammad affirm that communication is a vital function of organizational leaders that leverage the performance of the contemporary business world that is characterized by increasingly competitive markets, particularly stakeholders who operate on a global scale.²

Intercultural communication is paramount to the development of teams that influence the successfulness of organizations. Nevertheless, MNCs managements tend to overlook the effect of latent obstacles to cross-cultural communication. Cultural and behavioral differences exist in business roles such as reputation campaign and advertising. Therefore, cultural aspects are responsible for the invisible obstacles in communication. Although the world is becoming significantly globalized, cultural differences remain prevalent across transnational borders. Various researchers attest that national culture is a significant factor that influences economic development, demographic behavior, and business principles around the globe. Those claims are deemed vital at the macro-level in the formulation of trade guiding principles, safeguarding intellectual property rights, besides developing resources that are beneficial to the country as a whole.

At the micro-level, these claims are sometimes unnoticed impediments for the enterprises operating or wishing to enter the borderless business. There has been concern for cultural rights advocacy in the last few years with an aim of calling for cultural preservation and respect. As a result, companies who do international business have increasingly come across by additional test in the cultural diversity. For businesses to thrive in the international business, they will have to devise apt strategies for facing up to cultural differences. Beckers and Mohammad posit that the failure to adopt robust communication strategies in the cross-cultural context of the countries where the firms conduct business operations attracts undesirable image.²

In such set of circumstances, poor performance is the ultimate result. As globalization continuous to heighten, cross-cultural processes will continue to be inevitable. As the world becomes homogenous, international business aspects such as marketing and communication become world-encompassing disciplines. In contrast, it is worth noting that, cultural differences will continue to grow strong in countries, regions, and ethnicities. This situation means that international marketing communications and cross-cultural processes call for organizations’ managers to be properly knowledgeable about cultural differences nationally, locally, and ethnically in a bid to triumph in global business. Differences do exist in the language, values, customs, and ways of thinking. These differences affect communication and result in miscommunication. According to Ainsworth, the prevalence of disregard and disrupted flow of information between cultures results in organizational conflicts that increase the probability of failure.

A Case Study Analysis of Cross-cultural Challenges encountered by U.S MNCs in Russia

Organizational behavior differs greatly between the Russian emerging and the US developed economies. Tenzer, Pudelko, and Harzing reveal that Russian leadership is transitioning from the historical pragmatic and autocratic characteristics to a more inclusive democratic leadership.⁵

Organizational vertical structures and authoritarian decisions are deemed effective in modern transitional Russia. I addition, business men in the country attribute their triumph in business to personal connections, which are solely contingent on bureaucracy. Subordinates sometimes have no say on key decisions as the organizations’ management does not involve them in policy formulation stages. Participative orientation is limited in Russian organizations. The organizational culture is mainly characterized as one of use of force and bureaucracy. On the other hand, the U.S leadership acknowledges democracy as an important aspect of effective management. With the difference in leadership and values in leadership that are rooted in the traditional history of Russia, it is hard for democratic MNCs to venture into the emerging economy.⁵

Barriers to Effective Cross-cultural Communication in International Business

Communication in the borderless business faces several challenges due to the intense diversity of cultural backgrounds, behavior, and practices in different countries. Organizations that do international business confront cross-cultural communication. According to Beckers and Mohammad, barriers exist in the context of thinking, understanding, and communicational diversity.² Additionally, cross-cultural problems that arise in organizations in the international arena include first-class standards. Different countries have different work standards in terms of wage rates, benefits, and practice among other factors.

Hands-on organizational activities vary among people, enterprises, cultures, and nations. In addition, the implementation of organizational ethical standards across the international cultural context is both challenging and complex. Furthermore, legal procedures vary substantially among countries. This situation creates operational barriers that hinder the entry of some business in emerging markets. Moreover, management systems vary contingent on the organizations’ size, profile, and tasks. This difference is based on the organizational systems that are implemented in different countries. In addition, socioeconomic diversities impede organizational development and management since additional costs prevail when miscommunication arises. Diversity in the workforce in the different foreign markets also poses a great challenge to managers when it comes to addressing the different ways of thinking. According to Beckers and Mohammad, culture is a collection of superficial assumptions that govern the existence of people in groupings.²

For this reason, it can be divided into national and organizational culture that exhibit differences in terms of values and practice. Values come from the national culture, which is learned through socialization agents such as schools, families, and prisons among others. On the other hand, practice is derived from organizational experience, mainly through working. Therefore, at the organizational level, culture differences arise because of the practice. Due to the misconception, a conflict exists between the domestic and foreign multinational cultures that characterize individuals. The parent country’s culture is often retained in multicultural firms. However, the national culture of the parent company is often challenged by the philosophies of subordinate firms due to the influence of foreign rules.

National culture instilled in people in that country form the basis of employee expectations in working provisions, ways of approaching company goals, and how foreigners should treat them. The failure of the organization’s management to match the deeply held values often results in employee frustration and dissatisfaction. This situation further leads to adverse influences on the organization’s performance. Additionally, the effectiveness of the organization drops tremendously since the chances of employee resistance remain high. As long as inconsistency prevails between employee values of the parent country and those that the foreign firms hold, friction and disruption of work processes become frequent. This situation affects the firms’ image in the foreign country adversely besides the plummeting performance.

Styles of Management

Beckers and Mohammad attest that culture significantly influences organizational management.¹ The methods that management utilizes in resolving organizational conflicts differ based on countries. For instance, the US managers employ competing style whilst their counterparts use the avoiding style. This difference in management styles is highly attributed to cultural differences between the nations. According to Ainsworth, management styles significantly leverage the success of information transmission and organizational communication.¹ Russian management adopts autocratic and authoritarian form of leadership. This pragmatic leadership is self –centered. Therefore, employees feel alienated as they work under stringent rules. As a result, the US MNCs venturing into the country cannot recruit Russian managers into their firm because of divergent leadership ideologies. This cultural incongruence causes friction between subordinates and top management, a situation that in turn results in low performance.

Organizational Staff Behavior

Employees form the backbone of the every organization’s operations. Therefore, their levels of motivation and contentment significantly influence the efficiency and performance of organizations. A research that was conducted by Beckers and Mohammad to investigate the perceptions of various employees in both a US corporation operating in Russia and a Russian subsidiary company revealed that cross-cultural differences profoundly influenced the operations of the two establishments.²

Employees in the US firm expressed a feeling of gratification and were proud of their roles in the company. In contrast, the staff in the Russian subsidiary expressed a sigh of discontentment. As a democratic society, the US MNC was more concerned with the needs of the community. However, the Russian people who embrace autocracy in leadership hold that command and power are vital for the success of their organizations. The Russian population values competition and performance. A similar discrepancy exists in the wage rates of the two firms under study. Despite the fact that the firms are situated in the same geographical scene, the wages of the US staff was significantly higher than that offered by the Russian Subsidiary. In this regard, due to staff behavior that is deeply rooted in cultural beliefs, it is undoubtedly difficult for the US citizens to work in a Russian organization. Working in Russia, particularly for workers who value democracy and freedom in their workplace, is not easy.

For instance, a manager coming from the low-context culture in the US will feel the insufficient communication in the organization and will eventually try to address the issue. As the manager tries to communicate with the Russian employees, they show a degree of fear of expressing themselves. On the other hand, the counterpart manager in the Russian subsidiary is unwilling to engage the US in communication since it is against the Russian culture that does not value the opinions of other parties. Engaging the low-context culture differences within the high-context culture is time-consuming. Therefore, the US manager does not see the point of wasting time in resolving the cultural differences.

Socioeconomic Systems

The state of social and economic situations of different nations has a direct impact on both the existing and entrant organizations. The attributes of social systems in different countries manifest in business activity. Therefore, a special adaptation by the organizations that opt to cross borders ought to be embraced. For this reason, the organizations will understand the different socioeconomic systems under which employees thrive for them to make critical decisions on recruitment procedures and requirements.

Solutions and Recommendations

To overcome problems that arise from multiculturalism, players are advised to embrace robust management practices. The role of cross-cultural management includes prevention of multicultural differences in enterprises to avoid the formation of barriers that hinder trade. As the wave of globalization continues to sweep across the entire world, multinational organizations ought to create environments that allow cultural integration.¹

Enterprise managers in the new country will need to acknowledge the need to conduct surveys with a view of understanding the cultural differences that dominate in that country. This strategy will help them to gauge the level of integration that can be achieved. In addition, it will help them come up with ethical standards that do not underestimate the resident cultural settings. This global culture will be seen in different settings if international managers can influence employees to accept foreign business practices that come with multinational companies. In the present day, international organizational leaders encounter challenging business environments that are characterized by ever-shifting technological, competition, and consumption patterns.

The challenges that are presented by the economic, legal, and political aspects of the international business sphere are centrally defined by the cultural attributes of the diverse communities. Cultural management is the most difficult to deal with because it has profound influences on organizational behavior. In areas where cross-cultural communication prevails due to language barriers, managers of the newly entrant firms need to involve people from that country to facilitate translation and gradual training of employees to acclimatize them with the new business setup.

In addition, from a theoretical point of view, possible effective solutions of cross-cultural problems can be knowledge transfer and dissemination. Successful transfer of useful information involves the understanding of employee development and communication management. In this case, the knowledge culture of the organization is vital. Within the organization, essential values should be proliferated profoundly. This strategy widens the circumference of informational dissemination and cultural inclusions campaigns. Moreover, virtual teams can help overcome the distance challenges across different countries. Modern technology has played an undisputed role in developing communication among virtual teams.

As a result, information can be whisked from one part of the globe to the other upon the click of a mouse button using mobile telephony and internet. As a result, language capabilities can be improved significantly since employees can communicate to the masses through social media activities such as advertising and brand image campaign. Today, many organizations have successfully overcome geographical distances through encouragement of virtual teamwork.

Stephen and Timothy hold that effective management systems can help prevent cross-cultural problems.⁴ Management differences are increasingly becoming extinct in the present-day due to the rate of global convergence. Therefore, managers should abandon traditional decision-making processes with a view of adopting technology-based management systems that facilitate managerial functions such as establishment of robust communication frameworks to close cultural and geographical gaps.⁴ As a result, performance will ultimately improve as cross-cultural differences continue to reduce. Furthermore, understanding the differences in managerial practices in other countries promotes learning and integration. Cultural differences ought not to impede performance in the era of an informational revolution.

Many skills acquired from bicultural families. Indeed, people who conform to different cultures develop varying perceptions that are significant to the development of an understanding of the cultures of world’s communities. In addition, collective parties can play a significant role in connecting employees of diverse cultures. Acquisition of foreign language skills can help improve skills that are useful for direct duties. Cultural programs that are planned by the enterprise bring about integration of diverse work teams. Cultural instructing can also help resolve cross-cultural problems besides creating a comfortable environment for the enterprise to succeed. As a result, international organizations should aim at developing apt business frameworks that recognize the significance of diversity inclusion. They should establish training programs to create awareness of cultural importance and virtual teamwork.

References

1. Ainsworth J. Business Languages for Intercultural and International Business Communication. Business Communication Quarterly 2013; 76(1):28-50. Web.
2. Beckers A, Mohammad Z. An Analysis of Intercultural Business Communication. Journal of Business & Behavioral Sciences 2014; 26(3):143-153. Web.
3. Lenartowicz T, James P. The application of learning theories to improve cross-cultural training programs in MNCs. International Journal of Human Resource Management 2014; 25(12):1697-1719. Web.
4. Stephen P, Timothy A. Organizational Behavior: Student Value. Upper Saddle River, NJ: Prentice Hall; 2012. Web.
5. Tenzer H, Pudelko M, Harzing A. The impact of language barriers on trust formation in multinational teams. Journal of international business studies 2013; 45(5): 508-535. Web.