The Omnipresence of Change

This is not to argue that global change is not occurring. It is just that change is not occurring universally, it is not as fast in some areas of a culture as in others, and it does not occur in as predictable a manner as the simplistic homogenization model would lead us to believe. And while the occurrence of change today may one day simplify the practice of cross-cultural business operations, at the present stage, it tends only to compound it. The significance of change for the multinational firm may be viewed from two perspectives. One is the change that is occurring in society and the impact of this change on the firm. The other is the change that the firm is able to introduce in the various societies in which it operates.

One major trend that has been noted by numerous authors is the accelerating turbulence in the technological, political, economic, and sociocultural environments. One charac- teristic of this type of environment is an inability to predict the changes that will occur as well as the impact of these unseen changes on the firm. While a firm encountering a crisis situation will tend to centralize authority for decision making through the crisis period, a continuing condition of turbulence in a complex environment (the environment of multinational firms) calls for decentralization. For the multinational firm, this calls for new organization structure responses. These structural responses are more fully discussed in a later article.

When a firm introduces something new into a society, whether it is a product, a service, or a practice, it is introducing cultural change. Whether this change will be accepted, as the firm intends, depends on a number of factors, all of which should be assessed before the introduction of the change itself. Of primary significance in the assessment is whether the change is beneficial or detrimental to the society, the element of the society being impacted, and the nature of the society. If the change is beneficial, it will be more readily accepted than if it is not. If it deals with an element of society that is not deeply rooted (such as food rather than religion), it will be more tolerated. If it is introduced into newer, modern societies, it will be more tolerated than if it were to be introduced into older, more traditional societies. And, lastly, if there are a great number of forces for change in the society — seen, perhaps, in a large number of multinational firms or other international influences — the more likely the change will occur.

The Popular Response to Global Cultural Diversity

Many authors and even more managers respond to this complex cultural diversity by a process of simplification. They see the trend toward global integration as one of homogenizing the cultural heterogeneity that has existed in the past. And when this is done, the appropriate response abroad is simply what would be the appropriate response at home. According to this view, a unique world culture is emerging. Advances in mass media, transportation, and travel are breaking down the traditional barriers among groups of peoples and their differing cultures, so that a homogenization process is underway. Global managers are alert to serving this commonality in human needs and markets with strategies that are transnational.

This is a dangerous strategy. There is enough truth in the idea of the homogenization of world cultures to be enticing, but relying on this as a universal condition will cause the firm to make many costly mistakes. The author, for example, has observed the apparent cultural similarity of youths in Atlanta, Guatemala City, Luxembourg, and Cairo as they listened to the same music and wore the same fashions. He has eaten in and observed the popularity of American fast food restaurants in Dallas, Mexico City, Paris, and Amman. But to conclude that these varied cultures are now the same (or even similar) because of these trends is to be misled.

Fayerweather has noted the variable receptiveness of societies to different “exports” from foreign societies. The ability of firms to transfer abroad their products, services, and practices depends to a large degree on the established cultural patterns in the receiving society. And these cultural patterns remain firmly entrenched. Naisbitt and Aburdene have recently noted the superficiality of this trend toward homogenization. They note, as do others, that trade, travel, and television have laid the foundation for a global lifestyle. This global lifestyle can often be seen in the food we eat, the clothes we wear, and the music we listen to. Japanese restaurants are in San Antonio and Mexican restaurants are in Paris. American businessmen wear Italian suits and Russian youth wear blue jeans. The Beatles started a music craze in America and Madonna has won the hearts of teens in Japan. And American television is watched and popular the world over. But these are superficial elements of a society’s culture. The adoption of these foreign cultural products does not require a significant commitment. Nor are they adopted by everyone. And, while this is occurring, we can see people everywhere holding tightly to the deeper values of their culture, the values expressed in interpersonal obligations, social organization, authority systems, religion, language, art, and literature.

The Uniqueness of Culture

While the issue of complexity and the knowledge base needed by the global manager grows exponentially as additional countries are added to the organization’s domain, not all environmental factors require the same familiarity. Some are more easily dealt with than others. For example, the legal environment is relatively tangible and specific. It is easily viewed and evaluated. And the appropriate corporate response to it is generally relatively clear. The same is true to different degrees for other elements of the environment.

The cultural aspects of the environment, however, are quite different. They are less tangible and less measurable. Even when seeking a definition of the concept, little consensus is found. Kroeber and Kluckhohn, for example, noted 166 definitions of culture. Yet culture permeates the entire organization and all aspects of its operation. The products or services that a firm can successfully offer are culturally determined. Management styles that are effective are culturally determined. Appropriate relations with suppliers, competitors, and government officials are culturally determined. Acceptable public behavior of an organization’s management is culturally determined.

Responding to these cultural dictates is difficult enough within one’s own home society. Nationals often have difficulty getting a clear reading of their own culture, especially when they are in a plural culture society. When attempting to operate in a multicultural situation, there is an exponential magnification of problems with which the firm must deal.

The Ethnic Components of National Culture

To appreciate the extreme degree of cultural adaptation necessary when operating internationally, it is helpful to look at the cultural distinctiveness of different parts of the United States that need to be dealt with if a firm is to be as successful as possible when operating here. Los Angeles, for example, has many of the characteristics of a Third World market. Spanish and Korean are the second and third most spoken languages, and multicultural influences are strong. In San Antonio, Texas, more than half the population speak Spanish in addition to English, have Spanish surnames, and identify strongly with the Mexican-American culture. The same is generally true for all of South Texas. Miami has a strong Cuban cultural influence. The same can be said for different cultures in different parts of the country.

The United States as a melting pot is changing to the United States as a mosaic of many cultures. In such a setting, cultural adaptation of products, services, or processes is often required. As noted by Harris and Moran, where the Hispanic attitude toward fatalism is strong, there is reduced appeal of product guarantees and warranties, while appeal to family motives creates stronger product appeal. Weiner, as well as others, has noted the variable and strong influence on operations of the ethnic composition of different nations. The present author visited one large manufacturing plant in Luxembourg in which the labor force was fairly evenly divided among five different nationalities, all with different languages and cultures.

“Natural” Groupings of Countries

Europe is often thought of as a group of culturally similar firms. However, firms that are successful there recognize clearly that Europe is made up of distinct countries, each requiring individual adaptations if the firm is to reach its full potential. IBM World Trade Europe/ Middle East/ Africa Corporation is very successful in Europe due to its “Europeanness”. Not only do they not treat their European operations in the same manner as the U.S. operation, they have learned that they must treat each European country separately. Consequently, among the various things the firm does that are particular to each country, they maintain a separate national marketing organization in each country, which includes local hiring.

David E. McKinney, head of IBM Europe, reflected a similar view when speaking at The Europe Business Outlook 1991 Conference at The University of Tennessee in April, 1991. According to McKinney, the markets of Europe will not be homogeneous. Diversity will continue to flourish in these markets with different legislation, tax laws, languages, and so on. Roland Magnin, executive vice-president of Xerox, speaking at the same conference stated that this is the reason there are few pan-European advertising campaigns.

In a like manner, other geographically associated countries are culturally grouped. The Middle East is often thought of as composed of countries that are Arabic, Islamic, and similar. However, they are not all Arab. Even when viewing just the Arab countries, there are significant differences. Jordan and Saudi Arabia, in many respects, are more different than they are similar. Also, within the Islamic religion, there are significant differences among the dominant sects.

Latin America, too, is often thought of as composed of similar countries. They, for the most part, speak the same language, Spanish, and to a large extent, have a similar heritage. Even here, however, successfully operating foreign firms have realized that beneath all of the similarities, significant differences arise due to, among other things, an alteration of the culture resulting from political and social conditions. Bolivia and Argentina are worlds apart. U.S. firms have also found that they cannot treat their Canadian operations as mere extensions of their domestic operations. Not only are national adaptations necessary here, but different parts of Canada must be treated in significantly different ways. One member of Pierre Trudeau cabinet said, “Canada is less a country than a collection of little worlds”.