This chapter is divided into two sections. The first section defines culture, its importance in international business and the various cultural dimensions for working globally. The next section describes the culture of India and U.K. and reviews the impact of culture on the working of Hilton Hotel Group in both the countries. Finally, it ends with a brief summary.
Hofstede (2003) defines culture as “the collective programming of mind that distinguishes the members of one human group from another.” It is evident that people from diverse environment can misunderstand each other. When two people interact in an organization, culture characterizes their behavior and attitude towards others. When a company plans to start a business in abroad, employees with good communication skills and with the ability to adapt into new environment are chosen to travel and interact with people of various cultures and nationalities. (Mead, 1992) This table shows the division of world’s population according to Region, Language and Religion which are the major aspects of determining ones culture.
Taylor (1870) defines culture as “that complex whole which includes knowledge, belief, art, morals, law, customs, and other capabilities acquired by man as a member of society”. Culture plays a very important role in business. All civilizations have its own cultural elements like language, religion, values, attitude, customs, education, aesthetics and social institutions. (Czinkota, 2007) Culture passes from one generation to the other, however it can vary from one group to the other. Every society has its own point of view and opinion about various situations; however, it acts as a barrier to communication. (Daniels, Lee and Sullivan, 2004)
Geert Hofstede, a much known professor carried out the study of impact of culture on individuals at a workplace. It took him six years to complete this study as it consists of interviews of more than 100,000 employees from 70 countries. According to Hofstede 2004, “the UK has 35 points in power distance, 89 in individualism, 66in masculinity, 35 in uncertainty avoidance and 25 in long term orientation”. Power Distance – According to Hofstede, 2004, “Inequality exists in every culture; however the extent to which less powerful members of the society agree to the inequality differs from one culture to the other. Power distance is related to the different solutions to the basic problem of human inequality” High power creates less communication amongst the bosses and employees whereas when the power is low, employees communicate more with their superiors for the decision making purposes. Individualism vs. collectivism- Individualism is defines as the capability of a human being to only take care of himself or his family where as collectivism describes a group of people who look after each and every member of that group. (Hofstede, 2004)
These two dimensions describe the individualist or collectivist culture of a human being. Masculinity vs. Femininity – The third dimension is one of the most dominating factors of a culture. Countries where men are considered to be more strong and tough and women are considered to be more delicate and soft follow masculine culture where as countries where men and women are considered equal in terms of strength and tenderness follow feminine culture. (Hofstede, 2004) Uncertainty Avoidance – It is the level to which an individual can accept sudden changes and situations. Companies which have the tendency to admit unpredicted circumstances and dislike uncertainty have high uncertainty avoidance score culture whereas countries which take things as they come and are prepared for any change at any point of time have low uncertainty avoidance score culture. (Hofstede, 2004)
Long term vs. short term orientation – The fifth dimension known as the Long term vs. short term orientation was discovered quite later by Hofstede with the help of a survey intended by Chinese scholars. According to Hofstede (2004), “long-term orientation means focusing to the future whereas short term orientation is focusing on the present and past. In long term oriented societies, pragmatism, perseverance is valued more; in short term oriented societies, respect for tradition and return favours is valued more”.
HOME CULTURE VERSUS FOREIGN CULTURE
Tayeb (1998) says that the decision to become involved in international business depends, among others, on the size of the company’s domestic market, its production capacity and capability, and the financial and other resources that the foreign market requires. In that way, firms can be placed on an internationalisation scale ranging from domestic single nation to totally globalise. The extent to which national culture becomes relevant to a firm can be shown in the following table. The company’ own home country culture is of high relevance, though the managers and other employees may not be aware of its influence. The relevance of other people’s culture becomes greater for a firm as it spreads its activities and products past its national boundaries to reach foreigners with different value systems and tastes (Tayeb 1998).
IMPORTANCE OF CULTURE IN INTERNATIONAL BUSINESS
Understanding culture and its impact on international business is very important for the firm and its employees. Organizations differ not only on the basis of international culture but national culture as well. According to Ball et al. (1996), doing business with another culture is not an easy task and to be successful, every foreign company should be aware and follow some rules that make their business activity more compatible. They state that there are six rules of thumb for doing business in another culture. Even if these can be important when doing business in the home country, they become more crucial when going abroad. Johansson (2000) states that it should be kept in mind that even if adaptation to the foreign culture is good when it comes to future negotiations and co-operations, there is a limit for how far a manager should go to try to accommodate this foreign culture. Mistrust from the other part can be created if for example a manager is trying to adapt to the foreign culture and is doing this superficial and with lack of deeper meaning.
This can lead to misinterpretation and seen as matter of insincerity. When a company begins to work outside its national country, it encounters various environmental and cultural changes which is not the case in own country. If one does not understand these cultural differences, then he might to face barriers in the success of the organization globally. (Lane et al, 2001). More international operations lead to more interaction and communication with people and companies working in different culture. Therefore, in order to operate productively, it is a basic need to understand or have knowledge of different cultural attributes and contrast. (Adler 1983). Ferner and Quintanilla (1998), state that “companies need to operate as one organisation which face global environment although they are consisted of different subunits which carry the characteristics of the local environment they operate in and the companies also bring the cultural elements of the home countries which they originated in” Since the study of national and international cultures has become of the most acknowledged topic, therefore, it is important to learn culture, its importance and impacts in international business.
IMPACT OF CULTURE ON INTERNATIONAL BUSINESS
According to the article on Cultural impact on international Business, 2011, Culture influences international business in many ways. When culture and business interrelate with each other, it directs to the growth of fascinating circumstances or situation. When diverse cultures come together at an ordinary point with business as the podium, the spar is bound to happen. But most significantly, such circumstances assist us in becoming accustomed to demanding situations. Various societies or nations around the globe pursue different gestures and manners. The technique to see a difficulty might vary from country to country in the world. The global business culture, altogether, is an assembly of a variety of industry tradition, cultural power and the consideration development followed in different countries. Below are discussed the impacts of culture on an international business on the basis of body language, communication, time etc.
Every country follows a different culture, which can be clearly found or seen in the behaviour and body language of its people. In order to work internationally, accepting the facts about underneath gesture or motion becomes essential. There is likelihood that people can get the wrong impression about the actions of different cultures. Thus, it calls for an accomplished planner to handle tricky state of affairs for the duration of conference. (Moran et al,2011)
Communication is another aspect of culture that affects the international business. Different countries have different ways of communication. The words and vocabulary used by a few people might sound unkind to others. The pronunciation of some words could have a different impact on the cultural ways of communicating in the commercial sector. This can also act as an obstacle in the progression of business communication. (Moran et al, 2011)
The first thing that comes to mind when we talk about time in business in Punctuality. Britishers and Germans are very punctual and follow a time-bound schedule. The various ‘time-cultures’ could be one of the major factors for creating differences amongst people from miscellaneous ethnicity. Multinational Companies follow a schedule for meetings while doing a business and the way in which meetings are handles could also be the cause of having different point of views. (Moran et al, 2011) “It is necessary for corporate houses to understand the social conditions of different countries, to successfully tap the respective markets. Being sensitive to the values and beliefs of different cultures of the world is necessary”. (Leung 2005)
The marketing executives sent abroad to operate business out of the country go through various problems and difficulties in trading with the commercial tradition and customs of that country. To target the international market and customers is not an easy task. It requires qualified experts who are trained and talented to deliver the best of their capability to the clients.
CULTURE OF INDIA
India is a vast country which houses diverse cultures, ethnic groups and races. The immense population of more than a billion people has resulted from invasions, relocations and inter-marriages that took place over the centuries. According to an article published in the Inter science Management Review (2012), the various customs and traditions followed by people reflects in the business mores of India. With the advent of technology, the companies have now started to venture out into international markets. It has thus helped the human resources and the organizations to get exposed to diverse working environments across nations. India has greatly benefited by this turn of events as the gap in the work culture of India and other nations has thus decreased to some extent.
INDIAN WORK CULTURE
First and foremost, the Indian etiquette calls for Namaste being a fundamental mode of greeting or saying goodbye. Recently though, education has brought about a reform in this practice as men and women now prefer to shake hands. Due to their politeness and respect towards their guests, Indian people have trouble saying no. This aspect of their nature may act as a hurdle in sealing of contracts or doing negotiations. Paramount respect, courtesy and generosity is showered upon guests in India. It is a utopia for the international travellers. (Rai and Neelankavil, 2009) Rai and Neelankavil, 2009 also state that one of the major drawbacks of the Indian work culture is that there is no management of time. Indians don’t score too well in terms of punctuality; long delays in meetings, cancellation or rescheduling of the same are a common sight. This has found its roots in the basic mindset of people and the Indian culture.
Another major failing of the Indian work system is the general slack of work in the Government offices which leads to delays in meting out results, excess of the red tape baggage that leads people not to have confidence in the system. Therefore, any transactions in India call for a huge amount of patience to be able to meet with the results. The article published in Inter Science Management Review, 2012 also states that Despite other shortcomings, Indians fare well in matters of the English language. The adeptness of the average middle class over the language is laudable. There is absolutely no hitch in sending and receiving of official letters, emails or faxes. The office environment in India is usually very formal and there are no personal relationship between the bosses and the subordinates. The decision making in almost all of the private companies is from top to bottom, which may take a long time for the decision to be made and implemented. This accounts for the general lack of management inside the working sector. Most of the Indians carry their work pressure home.
They put in extra hours at work hence losing the work-life balance. This creates more pressure on them as the workplace demands are entirely different from that of the family. All this is done in an effort to earn monetary benefits and climb higher on the ladder of hierarchy of the workplace. Indians generally don’t make good mentors, they are soft critics and don’t stand up against something wrong as much as they should. This is thought to be because of the process of appraisal, the appraiser demands positive feedback despite the gaping holes in management and work. The lack of dexterity of the appraiser is usually the main reason behind lack of the much needed critical review. Indians have a hard time coping with changes of any sort, be it changes in management or work timings. A lot of time and energy is required for Indians to bring the change to practice.
IMPACT OF CULTURE ON HILTON HOTEL, INDIA
One such new path is the concern with national culture. Whereas traditional IB research has been concerned with economic/legal issues and organizational forms and structures, the importance of national culture – broadly defined as values, beliefs, norms, and behavioural patterns of a national group – has become increasingly important in the last two decades, largely as a result of the classic work of Hofstede (1980). National culture has been shown to impact on major business activities, from capital structure to group performance Gibson (2002). Cross-cultural experimental literature examining the influence of individual characteristics has evolved, yielding greater sophistication and specification to our understanding of culture’s influence. Much early cross-cultural work tested only for the main effects of culture – often using national culture as a proxy variable for a given cultural orientation.
That work, exploring the influence of the presence (a main effect) of a given cultural orientation, laid the groundwork for more complex experiments to follow, which test how differences in the levels (a moderating influence) of a cultural orientation (even a primed, temporary one) influence behaviours or perceptions. The research of Gelfand et al. (2002) examined both the main effects and the moderating effects of individual characteristics on the Hilton Hotel in India. Using national culture as proxy for cultural orientation, their results support robust findings of self-serving biases in individualist cultures (Thompson and Lowenstein, 1992), where ‘the self is served by enhancing one’s positive attributes to stand out and be better than others’, but find relatively less bias in a collectivistic culture, in which ‘the self is served by focusing on one’s weaknesses to blend in and maintain interdependence with others’.
However, they also measured individual self-construal, and demonstrate that independent self-construal are higher in India and are positively related to self-serving biases. Thus, not only is a main effect of culture on the working of Hilton Hotel in India, but the examination of individual self-construal helps to explain why such an effect exists. Research of this type is especially valuable given that much of the theory underlying business research has been developed and tested exclusively in Western contexts. Diversity: Most organizations in the India, particularly large ones, strive for consistency, standardization, and agreement, largely from the misleading assumption that the elimination of divergence/diversity automatically results in efficiency and success. This traditional view of organizational structure assumes that contradictions are to be first prioritized, and then eliminated, so that everything will run smoothly.
We have all known managers and executives who need their subordinates to agree with their decisions, tell them they are doing a terrific job, and avoid challenging their authority. While this may be organizationally neat and psychologically comforting, it is stifling, stagnating, and, over the long haul, counterproductive. Experimental research focusing on the moderating influence of individual characteristics contributes to this literature because it directly tests whether these processes, biases, and behaviours are indeed universal phenomena, or whether they are specific to Western populations. As Oyserman et al. (2002b) point out in their Meta-analysis of research on collectivism/individualism, cultural priming is one of the most promising areas of cross-cultural research. The theoretical underpinnings of priming stem from social cognition research, which shows that accessible knowledge influences behaviour, and that temporarily accessible and chronically salient knowledge produce equivalent effects in the laboratory.
Thus, priming techniques ‘create an experimental analogue of chronic differences between cultural groups by temporarily focusing participants’ attention on different cultural content or values’. (Hong et al., 2000) Examples of this research would be the study mentioned in an earlier section, as well as which primed participants with cues that were or were not congruent with their cultural orientation (e.g., using pronouns such as ‘I’ and ‘me’ for an independence priming or ‘we’ and ‘our’ for an interdependent priming) and examined the influence on factors such as cognitive speed and accuracy, memory, and attitudes. Results across all the experiments indicate the existence of a chronic cultural orientation, and one that is more malleable in the face of a primed orientation.
CULTURE OF U.K
There are about 3.7 million businesses in the U.K which includes 75% of jobs in service industry like hotels, restaurants, travelling, shopping, computers and finance. This sector consists of more than 20 million employees and 22 percent of British workers work more than 48 hours a week. (Pryce, 2007) According to the Central Intelligence Agency (2007), the United Kingdom is one of the most developed countries in the world and being a leader in trade as well as the leader as the financial centre. It is seen as one of the largest five economies in Europe, with banking, insurance and other business services being an integral part of it. As the United Kingdom is a part of the EU, most of the institutions and policies are in accordance with the regulations laid out by the EU. As the UK has a monarchical constitution, the government rarely gets involved in the matters of economy, its main concern is with improving public services like education and health (The Economist, 2007).
A large number of international and global enterprises find home in the United Kingdom (Ferner and Varul, 2000). Due to diverse work environments provided by these global enterprises, the British companies get to experience the work culture provided by the international markets and manage it efficiently. An argument provided by Ferner and Varul (2000) states that the British enterprises have a niche above other companies in terms of development of customer friendly policies and structures. Also, these enterprises play an integral role in globalization of industries, thus placing UK in the top realm to play the role of international operations armed with international companies. Hence, the UK could be expected to be the place with the most number of globalized companies with leading role of international operations.
KEY CONCEPT AND VALUES OF BRITISH CULTURE
According to an article on International Business Negotiations 2005, United Kingdom consists of a blend of four cultural and ethnic backgrounds named as England, Scotland, Northern Ireland and Wales. Such a multicultural country persists to bring together its rich culture and modern attitude. The understanding of the basic principled business standards of the United Kingdom is very important for any company that wishes to operate business in such an inherited and reputable country. Indirectness – The most important aspect of British culture is its way of approach and communication. In the U.K, people are known well for their graciousness and good manners like courtesy, politeness and civility. While undertaking business in the UK, it is seen that straight questions obtain indistinct answers and the exchange of dialogues takes place in detail. In order to understand what one really means to say, it is necessary to take note of the nature of voice and facial expressions. (Whittaker, 2009) ‘Stiff upper lip’ – “The term ‘stiff upper lip’ is often used to describe the traditionally British portrayal of reserve and restraint when faced with difficult situations”.
All business meetings and deals are done with entire regulations and customs. Any positive or negative form of emotion should be neglected in the british work environment. (Whittaker, 2009) Humour – A vital element in all aspects of British life and culture is the renowned British sense of humour. The importance of humour in all situations, including business contexts, cannot be overestimated. Humour is frequently used as a defence mechanism, often in the form of self depreciation or irony. It can be highly implicit and in this sense is related to the British indirect communication style. (Whittaker, 2009) The United Kingdom is renowned for its colourful history and strong sense of tradition that has been shaped by a colonial empire, both civil and European war and a constitutional monarchy. The fourth largest trading nation, the UK is fast becoming Europe’s leading business centre. Supported by a long-established system of government and economic stability, the UK is an attractive base for overseas business, offering skills in areas such as research, development and technology. However, in order to operate successfully in the UK business environment, there are a number of important issues to take into consideration both before and during your time there. (Kenna and Lacy, 1995)
IMPACT OF CULTURE ON HILTON HOTEL, U.K.
There are quite a few Hilton Hotels in the U.K. The most important cultural factors that affect the business of Hilton Hotel in U.K. are as follows:
Price plays a key role in creating customer value and building customer relationship, as well is one of the four elements of the marketing mix and an indicator that affects buyer choice. Many companies today compete with each other with different prices in both the domestic and the international market. Price is the only element in the marketing mix that produces revenue; all other elements represent cost (Kotler et al. 2007). Pricing is one of the most complicated decision areas encountered by Hilton Hotel, U.K. Market prices at the customer level are much more difficult to control in international markets than in domestic market. The pricing of the Hilton Hotels in the U.K. in general is more complex and critical than those located in India. According to Chee et al. (1998), the price is critical because it affects the firm’s ability to stay in the market. The price is also complex, because of the diversity of markets, with their different environment such as, political, legal, social, technological, consumer characteristics, etc. Thereby, price is an issue that can affect the international business and the company’s co-operations in the foreign country
According to Tayeb (1998) language is one of the major issues when it comes to negotiations with trade partners from other cultures. Although it is not always indispensable to know the partner’s language, several studies shows that a link exists between successful company performance in winning new business in foreign markets, and the ability of the company to conduct its business in the language of the customer. Tayeb (1998) also states that there are some aspects of culture that manifest themselves in a negotiation situation. Foreign partners not only speak languages other than one’s own, but also have a tendency, for cultural reasons, to think in different ways and have different priorities in the way in which they do business. For example, some people prefer to do their business meetings with foreigners in a formal way, and would be offended to be addressed by their first name; some might believe that the use of an informal style and first name would signal to the partners that they are trusted. Two partners from these different cultural backgrounds could easily misunderstand each other if they negotiate without a previous knowledge of one another’s assumptions and values.
In today’s time of globalisation, international business is getting bigger and escalating for both multinational as well as local companies. Due to this, cross cultural matter have gained a lot of importance. In this literature review, the main focus has been to discuss culture, its importance and impact on Hilton Group of Hotel in India and U.K. This chapter has been presented to help the reader understand the basic theoretical concepts which helps in the findings of the case study and answering the research question. This part of the thesis helped us in understanding the relationship between culture and international business. Development in the fields of technology and communication etc, companies from various cultures have started working together, thus making culture an important subject of discussion in International Business. This chapter discussed the Hofstede’s five cultural dimensions named Individualism, Power distance, Uncertainty, Masculinity and Long-Term orientation.
It also explains the working culture of India and U.K and the impact of culture on the business of Hilton Hotel, India and Hilton Hotel, U.K. In international business negotiations, it is important to learn about the counterparts‟ culture and thus ameliorate the problems that can arise in the course of the negotiations. From this study, we can see that there are marked differences in the Indian and British negotiation styles which stem from cultural differences among the two countries. Knowledge of these differences will enable negotiators understand the negotiation behaviour of their counterparts with a view to making negotiations proceed with more ease. However, it is also important not to allow cultural stereotypes to determine the relationships with the potential business partners. This is because individuals may have their own distinct culture which does not always mirror the country’s perceived culture.