Importance of Cultural Intelligence in Multinational Companies

It is vital for companies to understand cultural concepts as they thrive to reach global markets. Business managers/individuals have to know how to interact with suppliers and customers from different cultural background to ensure success in foreign market place. The success of multinationals companies is dependent on understanding the culture of the area of interest. Specific norms govern different cultures (Cowperthwaite, 2010). It is difficult to penetrate a new market that considers that your business practice goes against their religion. It is critical for a business to conceptualize multiculturalism, cultural intelligence (CQ) and diversity.

Cultural Intelligence

Cultural intelligence is the ability to maintain effective functioning in a different setup. It is achieved by testing and developing a working relationship between different cultures (Ang & Dyne, 2015). Cultural Intelligence (CQ) has four dimensions namely, cognitive, metacognitive, behavioral and motivational. Cultural intelligence is essential to ensure organizations and companies function effectively in cultural heterogeneity. It explains why some organizations get success as compared to others which experience failure. It shows the competence of a person to get success in different cultural setup or where there is the existence of a diverse culture. The four dimensions constitute mental capabilities. Metacognitive is the capability to access and understand cultural knowledge. It is essential in analyzing current cross-cultural conditions to improve awareness. The last dimension in CQ, behavior, is the ability of an individual to act efficiently and promptly during a cross-cultural exchange. It involves both non-verbal and verbal actions. Motivational cultural intelligence shows one desire to penetrate and adapt to a particular culture. Various scholars have summarized CQ to entail behavior knowledge, knowledge, and mindfulness. Education is responsible for understanding cultural behaviors like rituals and greetings. It gives an insight into the history of a specific culture. Culturally intelligence people are mindful. They pay attention to the difference in culture and form a hypothesis in cultural knowledge basis. Behavior shows the ability to choose the best course of action to react to an intercultural circumstance.

Cultural Diversity

The differences in language, ethnicity, sexual orientation, religion, nationality, and race are Cultural diversity. A place is termed as culturally diverse when there exists more than one group of people (Mclaren 2018). Workforce and organization diversity have gained massive traction because of recognition of cultural differences. The differences in cultures mainly comprise of behaviors, beliefs, and values among ethnic setups. The primary objective of recognizing cultural diversity is to improve and meet organizational goals (Cowperthwaite, 2010). The objectives and goals of a firm are the responsibility of all stakeholders of the organization. Understanding how to work together to achieve the organizations is mandatory.   It is critical for organizations to perform diversity and self-assessment training in organizations. The workforce should be in synch to accomplish its goals and objectives as set in its mission statement.

Multiculturalism

A multicultural organization is a situation or place where the workforce comprises of people from different cultures. Many organizations have workers from a various cultural background. It is challenging to build multicultural teams cultures (Ang & Dyne, 2015. The variety of individuals’ styles, knowledge values, and cultural history makes it difficult to come up with a multicultural group. The main advantages of multicultural groups include, Respect and understanding of cultural differences, the spread of globalization, increased creativity, learning new concepts and languages and improved service delivery to customers.

Methods of Doing Business in Different Countries

Different countries and cultures have different ways of doing business. The conventional methods of conducting international trade include international trade, sales to distributors, direct sales, direct foreign investment, licenses and franchises, and Joint ventures. The United States (US) prefers direct sales. They sell directly to clients across the globe using media platforms. The US employs the use of licenses and franchise. Some countries like to associate with American brands and this grants the particular brand a competitive edge (Cowperthwaite, 2010). They allow third parties to use their intellectual property for a fee. They license brands, operational plans, and intellectual properties. They give the rights to third parties who operate them as their own for a price. Franchising method is an effective way of penetrating global markets because it provides a sense of ownership to cultures involved. The MacDonald’s brand an excellent example of a US business that has infiltrated different places across the globe. Its presence spreads across Europe, Asia, and Africa.

In South Korea the business people expect one to engage in Karaoke or commonly known as Norebang. It is a common practice for business dinners. However, they do not discriminate if one does not understand their language.  In France business is conducted in French. They expect one to apologize for their lack of knowledge in the literature. France usually gets translators for their global market. They hire managers who can speak French and the language of the particular area of their interest. In Italy, business is relationship driven or personal. One has to establish a good business relationship with their partners and other stakeholders to be successful. Business in Italy relies on trust. People shy away from brands that they do not trust.

Demographics of Today’s Workforce

Today’s workforce is all-inclusive. It comprises of people from different races. There is an increase in some women taking up roles in organizations. The demographics are also hugely influenced by globalization.

Cultural conflicts

Cross-cultural conflicts arise from miscommunication. Different words might have a different meaning in a different culture. Non-verbal forms of communication have different meanings in various cultures (Mclaren 2018). Avoiding eye contact is a sign of disrespect in multiple cultures. However, in certain cultures, it is a sign of respect. The method by which different cultures make a decision is a significant source of conflict. Some cultures prefer using task-oriented decision making while other prefer relationship based.

Methods of Improving Cultural Intelligence, Understanding Multiculturalism, and Diversity

There are three main methods of improving cultural differences and understanding cultural diversity (Adekola & Sergi, 2016). The methods involve understanding cultural history, acquired through learning a new language and experiencing a new culture. It is essential for a person to follow their religion before trying to learn a new culture. It is critical to take an inventory of one’s values and what governs their behavior. It is difficult or next to impossible to understand a different culture without doing self-assessment. Knowledge and understanding of one’s cultural background are essential in governing cross-cultural interactions.

The experience gained by exploring a new culture is informative. It provides an opportunity to learn and analyze cross-cultural boundaries. Cultural boundaries are essential when interacting with a new culture. It fosters the peaceful co-existence between different religions. Learning new language aids in CQ and understanding of cultural diversity. Various cultures can speak different languages. The use of English as the official learning and business language has improved cultural intelligence significantly around the world. Other methods for improving cross-cultural diversity include diversity training, cultural training, reducing social embarrassments, appreciating cultural differences, respecting all cultures and workers, individual focus instead of group focus and enhancing cultural sensitivity.

Effective CQ will require one to be alert and aware of the existence of cultural differences.  It is essential to understand the reasons for specific cultural behavior. A sensitive person will be able to recognize the irrelevant features of their own culture. Multicultural interactions hinder stereotyping. Treating people as a group should not take place. Everyone is entitled to receive individual treatment. The most effective method of achieving an active multicultural environment is respecting the workforce and their cultures. Organizations should engage their employees in cultural training. It is essential to learn about different employees’ traditions, customs, cultures, and beliefs. It is also necessary to minimize incidences/actions that would make people from different cultures to feel embarrassed.

Conclusion

 Finally, understanding cultural diversity and intelligence are crucial for the growth of international business. The difference in cultures should not become a hindrance to global trade but an opportunity for new opportunities.

References

Cowperthwaite, P. (2010). Culture Matters: How Our Culture Affects the Audit*. Accounting Perspectives, 9(3), 175-215. doi: 10.1111/j.1911-3838.2010.00010.x

Ang, S., & Van Dyne, L. (2015). Handbook of cultural intelligence. Routledge.

McLaren, P. (2018). Revolutionary multiculturalism: Pedagogies of dissent for the new millennium. Routledge.

Adekola, A., & Sergi, B. S. (2016). Global business management: A cross-cultural perspective. Routledge.