Cross cultural conflicts in multinational organizations

Last Updated: 17 Aug 2022
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Due to globalization, many firms have sought market beyond their normal locations. The search for markets in oversea locations is inevitable. The movement of a company and its product into new locations is rosy in the initial stages but cultural difference between the parent country and the new location presents a big problem to such organizations. The paper seeks to understand the causes and the nature of the cultural differences and how they initiate conflict in an organization. It further provides examples of multinational companies that have experienced the same problems after moving to international locations.

Cross cultural conflicts With the growing trend of globalization, many companies have found it profitable to spread their locations for expansion to overseas. An offshore business promises a lot to the parent companies. The competition at home for the parent companies may make them seek other unexploited areas that promise better chances of growth. The beginning years at the chosen places to work may be smooth but soon cultural conflicts set in as the organization experience cultural differences with the new environment.

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The difference may be caused by conflicting cultures of the expatriates or the product of the organization differ with the customs and the believes of the locals. Multinational corporations, are known for their consistency in the in their style of management and products from their countries of origin. Multinational businesses being located in different countries are likely to experience cultural conflicts among its employees. Their employee especially the expatriates from the countries of origin are moved to spice the setting of operations in new locations with different cultures including languages.

This shift in working places is likely to create conflict in the organizations as these employees don’t share the same base of believes as the host country. In order to understand the conflicts caused by cultures in organizations, it is important that one knows the importance of diversity. People’s culture always shapes the way they relate to each other in everyday life. It also shapes how we perceive, attribute and judge others and also ourselves. Culture comprise of language, dressing, eating habits and food types and other customs.

Culture may be shared by people across ethnic racial and geographical locations. Cultures may be the same but it has arisen from different political social and economic backgrounds that further reshape the culture of an individual. Sex and gender also affect culture in different ways. Every working place in multinational organization has people from different cultural backgrounds. The difference in their cultures makes their believes and the way they relate to each other overlap. With nobody ready to yield ground in the competition for scarce resources when their goals are not similar. Read about The Strong Culture Perspective

The difference in the perception of goals is breed by their individual difference in culture and personal ambitions and the need to control the resources over others in the same working environment. According to Kolb and Putnam (1992) conflict is a situation where there is actual or perceived competition between people that involve emotions. The competition may be over scarce resources, different goals and manner of achievement of the set goals and the ways of acquiring the resources and the power needed to acquire them.

Individuals’ character and perceptions on life greatly play a role in creation of conflict between individuals. In a working environment, conflict may be beneficial and in some cases it is seen as total disrespect to the management decision. Conflict can improve the effectiveness in operations of a company or can affect performance. The individual perception is influenced by culture and environment. A person’s culture links with environment to shape the way people relate with others in the society. Culture plays a role in creation of universality of behavior between people living under the same culture location.

From the knowledge of conflict, as long as people live under the same environment, there is bound to be misunderstanding between them. The cause is innate to humans; it is rooted to the fight for minimum resources for survival. Culture only adds to the differences that constitute to conflict by defining the ideal behavior to its members and closing the door to others so that what is common knowledge to the members of a given culture isn’t considered so by those not subscribing to it. Culture difference affects an organization in different ways.

At one level, an organization can decide to take a single manager from the parent country. It may also decide to employ individuals from different countries to work in the same place. The other level is when the company decides to use its human resource strategies from the parent company or combine them with those from many other countries. With employees form different locations of the world, different cultural backgrounds will be represented in the company. The different cultural backgrounds mean presences of different perceptions of the world.

Each employee will subscribe to the ideal management perspective prescribed by their culture. This will bring misunderstanding on the issue of management and best policies for the company. I cases where there is difference in language from the parent company and the host location, it will present a big problem to the management in deciding the best language of operation in the new territory. Breakdown in communication is bound to happen between employees in the company and decision making will be affected by the language barrier.

The change in the locations for operations should correspond with changes in strategies of management. The ideal management strategy should be harmonized with that prescribed by the new location culture. This will go a long way to prevent conflicts that arise from people in the company having different views on the management and policies related to the company. In a study in Malaysia by Jorun Titlestad Gjelsvik, on “the Influence of Islamic culture on Scandinavian management in Malaysia” in 2001, the different cultures offer different management relations in a company.

According to the author, he notes that Malaysian employees wait for instructions from their managers on how to do a given task. The Scandinavian view is different as employees work with their personal initiative. Issues of time management also differ in the two cultures. Scandinavians do not care talking about personal things before contacting business talks. The Malay culture requires that personal talks begin before business. From this study it was also found that people in Malaysia do not work in the same working environment for a long time.

Issues like clothing, food, and general working hours of companies were affected because of the Islamic culture. Companies for example had to make an extra room for its employees for prayers. They also had to reduce working hours on Fridays to allow workers attend prayers. All these were done to accommodate the religion of the people which is part of culture. Another example of cultural conflicts affecting organizations in new territories is the case of Daimler-Chrysler merger. They realized that the effectiveness of a company needs more than just money to operate in their new territories.

The differences in the employee’s cultures had to be harmonized by extensive training and showing them how to work together for their mutual benefits. The difference in work ethics between the cultures of the two countries was a threat to the general performance of the merger. Cultures define the way people communicate and how they use different languages. Gibson (1999) “the difference in language use caused by culture breeds misunderstanding” (from Luo, Jackson, and Schuler) Luo, Jackson, Schuler, give an example of how culture difference can affect effective working.

beside careful planning by Davidson-Marley IJV the US engineers who designed the Dutch manufacturing company sent the Dutch engineers measurements in feet, inches, gallons . the Dutch locals had to convert all the measurements before they are given the contract and given the approval by the government. Cultural difference between employees in an organization also determines their level of cohesiveness. This is generated especially when the differences are demographic. The conflicts are bound to increase when there is diversity in age, sex, gender, race, education and others.

Isen and Baron (1991) show that the low level of understanding and cohesiveness between employees in an organization tends to be detrimental to bonding and corporation between employees in the same company, increased cohesiveness improves interaction between employees which will boost cooperation between them. Another example of cross cultural conflicts is the joint venture of Corning-Vitro of 1992. Vitro is a Mexican firm manufacturing drink ware and other products like automobile windshields, washing machines and other products Corning Inc. is known for ready glass.

It also has ventures into fiber optic, environmental products and also laboratory equipments. Both companies shared same corporate cultures and customer oriented philosophies. The merger was soon to be a failure because of cultural difference between the two countries. Vitro was not as aggressive as Corning Inc. thought it should be. Mexicans are too polite and the Americans thought that this was a waste of time. In terms of decision making, Corning administration made decisions jointly after general discussions while the vitro’s waited it from the top executives.

This difference led to their collapse of the merger with Corning agreeing to return Vitro its money. After the breakdown of the alliance, cultural difference were still visible, the CEOs of both companies reacted differently with Corning being frank and Vitro being protective. (from Professor Cara Okleshen- University of Georgia) Conclusion The definitions of culture Though globalization promises a ready market for organizations and also chances for expansion, this is never fully realized by those organizations that do not critically consider cultural difference between the parent company and the host location.

A lot of effort should be spent to ensure total harmony between the organizational products and management styles to that favored by the host location culture. This can be achieved through proper research and extensive cross cultural marketing training by the parent company, cross cultural awareness training of its employees, cross cultural team building, Reference Hall, Edward T. (1976). Beyond Culture. Garden City, NY: Doubleday. Patric Colin. (2005). Organizational psychology in cross-cultural perspective. Silverthorne: NYU Press. Roch, E. M. (June 1996).

“Multinational Corporations- the Emerging research Agenda”, Journal Of Strategic Information Systems, (5:2) Luo Y. , Jackson S. E, Schuler R. S. (2002). managing Human Resources in cross- border Alliances. Hamdorf D. (2006). Towards Managing Diversity- Cultural Aspects Of Conflict Management In International Business Environments. Vdm Verlag. Jorun Titlestad Gjelsvik, (2001) the Influence of Islamic culture on Scandinavian management In Malaysia. Institute for Classical Philology, Russian and the History of Religions The University of Bergen, Norway.

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Cross cultural conflicts in multinational organizations. (2018, Feb 10). Retrieved from

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