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How Globalization Can Affect International Business Essay

In today’s ever globalizing economy, global managers must utilize specific skills in order to navigate and overcome the cross-cultural situations which affect international business practices. Dependant upon the situation, both native and expatriate managers can be qualified to handle these cross-cultural challenges.

There are a plethora of cultural differences that can have an affect on how business is done internationally. These differences can be any number of actions that we take for granted when interacting in one’s own culture. Every culture has deep structures built upon religious, social and ethical values which will influence the way in which another will reason and react as well as how they will listen or what they will expect from us (Burnam 1998).

An example of a cultural difference that could affect international business is the misinterpretation of hand gestures. In the United States the “thumbs up” hand gesture is a common sign relaying a positive meaning usually meant to convey the message “good” or “OK”. This is different than in the Arab culture where the same hand signal is the equivalent to one of our more negative hand gestures here in the United States. Therefore using this signal with someone from an Arab culture would most certainly not produce the desired positive effect but rather a negative one. One skill a manager could develop to combat the ignorance of another culture with whom he is doing business with is to immerse himself into that culture and learn their customs through observation and interaction, becoming aware of how to adapt to the situation.

This developed ability to observe and adapt would no doubt aid a manager in future cross-culture settings. This type of adaptation is evident in Cassandra Hayes’ article “The Intrigue of International Assignments”. One of Hayes’ subjects in the article, J. Eric Wright, describes how by immersing himself into the South African culture, he was able to learn through observation one of the local customs concerning respect for elders, which was detrimental to his success while there (Hayes 1996). This communication hurdle is better suited for a native manager as they already possess the knowledge of the local customs, traditions and social norms. They would be better equipped to handle challenges in which proper and appropriate communication are paramount to an organizations success.

Another example of a cross-cultural conflict is the overstepping of boundaries involving another culture’s code of etiquette. The social interactions we take for granted in our own culture may be considered rude or out of line in another culture. Hayes’ article also touches upon a situation relevant to this. Another of Hayes’ subjects, Belinda Miller, received a shocking reaction from an employee after giving advice. Miller was transplanted in China and received a first class education in cross-cultural differences and how they could affect working with someone from another culture.

After greatly upsetting her employee by offering criticism in a direct manner, Miller learned that this situation was very different than dealing with an American employee and that advice or criticism must be subtly given in this culture. Having awareness and being culturally sensitive are extremely pertinent to an overseas assignment (Hayes 1996). Again in this situation it seems that a native manager would be much more prepared and able in preventing cross-cultural conflicts such as this, the reason being that they are already engrained into the culture and possess a working knowledge of social and professional do’s and don’ts.

One more example of how a cross-cultural difference can affect how an organization’s success internationally is the improper translation of language. In an example cited in the Touro University International’s College of Business Administration MGT 501 CD-ROM mistranslation is demonstrated. The Intercultural Communication page states that, “One American airline operating in Brazil advertised that it had plush “rendezvous lounges” on its jets, unaware that in Portuguese (the language of Brazil) “rendezvous” implies a special room for having sex.” (Intercultural Communication). It is Obvious to see the fundamental lapse in meaning, which could be interpreted quite inappropriately.

Skills that a good manager could develop in an attempt to prevent these type of mistake is to develop good habits of researching another culture and its language translation as well as always possessing the awareness of the message being conveyed. Proficiency in another foreign language would be an important critical skill a global manager could add to their improvement. Yet again this looks to be another cross-cultural situation in which the native manager is favored as a result of his already being fully aware of the cultures norms and language. The native manager would possess the knowledge to identify the misinterpretation before it was too late.

Cross-cultural differences can affect doing business internationally in a number of ways. Through misunderstanding, misinterpretation and being unaware, cross-cultural differences can affect organizations business across borders by causing a deal not to be finished, accomplishing an agreement without establishing a long-term relationship and by causing an escalation in tension or confrontation while negotiating. It is evident that in today’s world, globalization demands cultural awareness and the ability to adapt in the international business world. This can be perfectly summed up in a saying used by Josephine Song in her article “Transcending Borders”. It says, “If you are going to do business with people who are in different parts of the world, you had better understand and speak their language”.

A better understanding of these cultural differences can be reached with the aid of the Hofstede Model. The Hofstede Model helps to explain some of the discrepancies inherent when comparing respective culture values to one another. Four of these variables are masculinity/femininity, tolerance or avoidance of uncertainty, power distance and individualism versus collectivism (Louis). Masculinity and femininity deal with the values of achievement, material possessions or wealth and aggression as opposed to relationships, compassion and quality of life. Tolerance or avoidance of uncertainty is the extent to which people must have certainty in order to feel secure.

The less tolerance a culture has for uncertainty the more likely they are to have and maintain a rigid structure of rules establishing a code of conduct. Power distance is the level of acceptance that a culture has for its social, economic and political separation and power distribution. Individualism versus collectivism is exactly what it sounds like, the extent to which a culture is concerned with individual achievements or collective success (Beebe, Beebe and Redmond 1996). Through the juxtaposition of these different degrees of values in international business, inefficiency is created which must be bridged by cultural awareness and adaptation in order to achieve success.

There are many specific skills that global managers could utilize in order to address these differences. Cultural awareness training could be the most relevant and most helpful aid to global managers in overcoming cultural divides through the development of pertinent skills. A program like this could help global managers train for specific scenarios and common pitfalls met in cross-cultural situations (Burnam 1998). Foreign language proficiency is definitely a skill that would greatly benefit global managers, allowing them to better communicate with their counterparts and help to avoid awkward misinterpretations or misunderstandings that could make or break a business relationship.

A high tolerance for the unknown and curiosity to learn is detrimental to a global manager’s growth as a professional in the international business community as they will no doubt encounter many new customs and situations. This will enable a global manager to use patience to understand and adapt to his surroundings. This can be associated with the extremely important skills of being generally aware and having keen observation. A global manager could avoid awkward or potentially relationship ending situations solely by picking up on them beforehand. Perhaps the most important skills for a global manager to possess are the abilities to be both flexible and adaptive. As the global manager is continually introduced to new experiences they will be able to overcome cross-cultural differences in order to cement a new relationship or deal.

Although in the three specific examples of cross-cultural differences cited above native managers were favored, it is probably more important than ever that organizations send expatriate managers out across borders to gain experience and knowledge. This is truly the most effective way to secure the globalization of an organization. Expatriated managers can return to train other members of the organization.

This in turn will allow an organization to utilize loyal employees who most likely bear greater allegiance to them rather than a native homeland (Burnam 1998). The organization would also have a manager with a better knowledge and understanding of the organization embedded in the culture. An organization that could train the majority of its managerial workforce to become more aware and sensitive toward other cultures would be heavily prepared for the continual evolvement of globalization as well increasing its effectiveness in the global market.

Both native and expatriate managers are well equipped to handle an organization’s international business. Whether native or expatriate managers are more qualified or better equipped depends on the situation and an organization’s goal. By utilizing specific skills which pertain to enhancing cultural awareness and communication barriers, today’s global managers can better prepare themselves to meet the challenges of the many cross-cultural situations in our ever globalizing economy.


1. Beebe, S. A., Beebe, S. J., & Redmond, M. V. (1996). Interpersonal Communication: Relating to Others. Needham Heights, MA: Allyn & Bacon. 345-365.

2. Burnam, E. “Managing Cultural Diversity in a Global World”. Workinfo.com, 1998. http://www.workinfo.com/free/downloads/299.htm3. Hayes, C. (1996) “The Intrigue of International Assignments”. Black Enterprise, (26)10, 98

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