There is a direct link between national culture and the success of a business model. Venaik and Midgley (2015) argue that national culture, in relation to business, can influence purchasing behaviors, consumer patterns and even use of disposal income. Additionally, national culture influences organizational culture, which can in turn, determine the success or failure of an institution. Grossmann and Varnum (2015) argue that numerous companies and multinationals do not consider the importance of local cultures when trying to penetrate a market. Organizational culture theory focuses mainly on the culture adopted inside an organization. This is often what a significant number of companies focus on in their strategy. Some of the things that can be affected by national culture include staffing, decision-making and even timing. Venaik and Brewer (2016) argue that the importance of national culture should not focus on the home country, but rather the host country. It is arguable that intercultural communications and relations are important for proper penetration into a new market. Therefore, one can argue that these components should be included not only in the multinationals communications strategy but also their marketing plan as well. This essay will look into how national culture affects different aspects of an organization.
Cultural dimensions have to be considered when any type of company wants to enter a new market. Sometimes, it also has to be considered when an already present and thriving organization wants to introduce a new product or service into the market. Hofstede identified six cultural dimensions that have to be considered when dealing with national culture, with the first dimension being power distance. The other dimensions are collectivism vs. individualism; uncertainty avoidance; femininity vs. masculinity; and short vs. long-term orientation. The first dimension, power index, considers whether inequality and its opposite, power, are distributed and tolerated within a country. Luthans and Doh (2015) argue that a high power dimension slows for bureaucracy and significant power differences. In such countries, therefore, it is common to find extremely wealthy individuals living across extremely poor people. For example, Angola is known to have similar challenges.
The second dimension is collectivism vs. individualism. Beugelsdijk and Welzel (2018) explain that this dimension measures selflessness vs. selfishness. Ideally, organizations that thrive support and are set in cultures that tend to lean towards collectivism. It can be argued that the dimension has a high impact on MNCs as it can affect employee relations. The third dimension is the uncertainty index, which according to Aléman and Woods (2016), measures the community’s tolerance for risk and ambiguity. Countries like Italy and Belgium are known to have high uncertainty index, meaning that they have very low tolerance for risk. One limitation of this is that they have numerous strict regulations that might affect the flexibility of an MNC. On the other side, one advantage of having high uncertainty index is that it ensures competition is fairly managed within the sectors.
Fourthly, the femininity vs. masculinity index measures how tender a community or culture is. Masculine societies have strict gender roles while feminist ones are more flexible (Minkov and Bond, 2015). For example, Saudi Arabia has a higher masculinity index than the USA. One can argue that one of the elements that clearly shows this is the fact that for decades, women could not work in Saudi Arabia. One challenge of a highly masculine host country, especially if the home country is considered a feminist society in this aspect, is staffing. The MNCs might not be able to hire women or even establish gender balance, which is a key aspect of American based MNCs. Further, indulgence with women in such societies will be difficult.
The last dimension, as stated is short vs. long-term orientation. Minkov (2018) defines this orientation as the view or perception of the time horizon. As the name suggests, short-term orientation focuses on immediate results and implications. The opposite is true for long term orientation. For instance, Japan has long term orientation. This can be attributed to the fact that they also happen to lead in innovations and technology. It can be argued that an MNC from a host country that has long-term orientation cannot thrive in a market with short term orientation. This is due to the fact that the revolutionary ideas the company will want to bring forward in the future will not be appreciated. Further, this will affect the organization culture as staff in the host country will not be motivated to think ahead and improve the bottom line. It is critical that MNCs figure out the different orientations of their target markets before moving to those host countries.
Reference List
Aléman, J. and Woods, D. (2016) ‘Value orientations from the world values survey: how comparable are they cross-nationally?’, Comparative Political Studies, 49, pp. 1039-1067.
Beugelsdijk, S. and Welzel, C. (2018) ‘Dimensions and dynamics of national culture: synthesizing Hofstede with Inglehart’, Journal of Cross-Cultural Psychology, 49(10), pp. 1469-1505.
Grossmann, I. and Varnum, M. E. W. (2015) ‘Social structure, infectious diseases, disasters, secularism, and cultural change in America’, Psychological Science, 26, pp. 311-324.
Luthans, F. and Doh, J. (2015) International management: culture, strategy and behavior. New York: McGraw-Hill Irwin.
Minkov, M. (2018) ‘A revision of Hofstede’s model of national culture: old evidence and new data from 56 countries’, Cross Cultural & Strategic Management, 25, pp. 231-256.
Minkov, M. and Bond, M. H. (2015) ‘Genetic polymorphisms predict national differences in life history strategy and time orientation’, Personality and Individual Differences, 76, pp. 204-215.
Venaik, S. and Midgley, D. F. (2015) ‘Mindscapes across landscapes: archetypes of transnational and subnational culture’, Journal of International Business Studies, 46(9), pp. 1051–1079.
Venaik, S. and Brewer, P. (2016) ‘National culture dimensions: the perpetuation of cultural ignorance’, Management Learning, 47(5), pp. 563-589.