Globalisation and Business Cultures and Practices Essay

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Globalisation Led to a Convergence of Business Cultures and Practices?

Globalisation, generally defined as the economic, political, and cultural convergence of the world, is undoubtedly a major hallmark of the modern world (French, 2010). The world has increasingly become interconnected in terms of economic activities, communication, technology, social aspects, as well as politics. Indeed, the once diversified and distanced world has converged into a small global village because of globalisation. Globalisation has led to the interdependence of not only politics and economic activities, but also culture (Grewal, 2008). Cultural convergence is now a widely-recognised phenomenon (Cojocaru, 2011). Owing to increased contact amongst people from diverse cultural backgrounds, cultural practices have become ever more similar, consequently resulting in the convergence of business cultures and practices. Organisations now experience lesser cultural difficulties when doing business across cultures. As a result, the study of comparative business cultures may be becoming less relevant. While there is truth is this argument, differences between national cultures, and subsequently business practices, remain significant. This paper critically examines whether globalisation has led to a convergence of business cultures and practices.

Cultural Differences

Different cultural theories, notably Geert Hofstede's Cultural Dimensions Theory, suggest that significant cultural differences exist between countries (Hofstede, 2001). Values, beliefs, norms, traditions, and worldviews vary from one country to another. For example, while some countries value individualism, others emphasise collectivism and group harmony. Some view power and status as a source of recognition, while others consider individual accomplishments as the source of recognition. Generally, culture affects the behaviours, attitudes, and perceptions of a particular group of people (Luthans and Doh, 2012). It affects everything from language and communication to business. Indeed, the influence of culture on business is broadly acknowledged (Deresky, 2005; Browaeys and Price, 2008; Steers, Sanchez-Runde and Nardon, 2010). Culture influences management practices, employer-employee relationships, teamwork, task allocation, and virtually every other aspect of business; in turn, business practices tend to differ from country to country. In a high-power distance society, such as China, for instance, management practices may be more reflective of hierarchy and bureaucracy, while in a low power distance society such as the UK management practices would tend to portray democracy and inclusivity.

Hofstede's cultural model is one of the most seminal and cited theory on cultural differences. The theory has substantially influenced scholarly work on national cultures and provided valuable guidelines for international business management. Multinational organisations have been able to operate more effectively in foreign countries by adapting their management practices to local cultures. In fact, without proper acknowledgement of cultural differences between countries, an organisation may not succeed in its international operations (Cojocaru, 2011). Instances of organisations experiencing remarkable difficulties or even closing down in foreign countries due to cultural difficulties are not uncommon. Often, organisations that succeed in the increasingly globalised environment are those that design their management practices in recognition of the underlying national culture (Luthans and Doh, 2012).

Globalisation and Cultural Convergence

A major shortcoming of Hofstede's model, and other cultural models at large, is that they have increasingly become irrelevant in today's world. Majority of cultural theories ignore the fact that cultures tend to converge over time as described in the cultural convergence theory. Over the years, cultures have become more similar, in large part due to globalisation (Grewal, 2008). For example, democratic ideals have traditionally been associated with Western countries such as the U.S. and the UK. Today, however, with increased contact between Westerners and the rest of the world, democracy has spread to other parts of the world. In essence, there has been increased cultural homogeneity across the globe, with values, beliefs, and ways of thinking becoming increasingly alike. Practices that were once exclusive to certain countries or regions are now evident in other parts of the world. Food, music, fashion, language, and other aspects of culture now reflect more uniformity across the globe than ever before. For instance, aspects of Western dressing and music, along with greater awareness of and loyalty to brands, are now amply evident in Asian countries and the rest of the world, mirroring increased homogeneity in consumer behaviour.

The homogeneity of attire is a particularly good example. Due to globalisation, the three-piece suit has become the global standard for executives as far as clothing is concerned. The attire is used across the globe to depict power and position. Even in meetings of cross-cultural organisations such as the United Nations (UN), virtually everyone puts on the same type of dressing as opposed to outfits that reflect their respective local culture.

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One area that has been significantly affected by globalisation-fuelled cultural convergence is business. A closer look at business cultures and practices across the globe today reveals greater similarity than ever before (Gupta and Wang, 2003). The manner in which organisations are managed shows that cultural differences have faded over time, resulting in a single global culture. Today, organisations, sectors, and industries worldwide are guided by and/or subject to internationally recognised standards and practices. An ideal example is the banking industry. The Basel Accords (Basel I, Basel II, and Basel III) provides guidelines for best banking practices. Many countries around the globe, notably North America and Europe, rely on these guidelines to ensure the stability of their financial system. The guidelines have remarkably driven financial market efficiency across the globe. The increased uniformity of business practices is not restricted to the financial industry. The modern global manufacturing industry is now heavily influenced by practices that originated in Japan. Management practices based on models such as total quality management (TQM) and lean principles are now popular across the globe. This uniformity of business practices may not have been achieved without globalisation.

Global interconnectedness in terms of economic activities often implies that events occurring in one part of the globe can quickly spread other parts of the world. The recent global financial crisis and the ongoing Eurozone crisis are perfect examples. A great deal of similarity has been observed in how governments, banks, and organisations in the affected countries responded or have responded to the crises. This further demonstrates how globalisation has harmonised business cultures and practices across the globe.

The impact of globalisation on the convergence of business cultures and practices can further be observed in the increased similarity of organisational structures and practices around the world (Bhattacharyya, 2010). Traditionally, hierarchical, autocratic, and centralised organisational structures were the norm in both the West and the rest of the world. Today, however, there has been greater shift towards flatter and more decentralised organisational structures across the globe. Businesses in various parts of the world increasingly recognise the importance of a democratic and inclusive organisational environment. At present, it is not quite unusual for organisations in historically high power distance societies such as China to involve employees in decision making. Further, human resource practices such as compensation, recruitment, as well as training and development exhibit greater similarity across nations than ever before (Lucas, Lupton and Mathieson, 2006). More interestingly, the increased influence of multinational corporations (MNCs) such as McDonald's has evidently led to a considerable degree of standardisation of organisational life across the globe. It is, however, important to note that there is no single approach that fits all organisations. Indeed, as put by French (2010), organising or managing is influenced by not only culture, but also contingent factors such as attributes of the inherent political-economic system.

The standardisation of organisational behaviour, coupled with the homogeneity of consumer behaviour, has meant increased standardisation in products and services (Steers, Sanchez-Runde and Nardon, 2010). Though marketing practices may differ from country to country, MNCs deliver products and services to a global audience. Automobile products offer a perfect example. For instance, Japanese or European car manufacturers deliver vehicles with similar specifications (in terms of design, functionality, engine performance, and so forth) to consumers all over the world. Also, electronic devices such as smartphones, tablets, television sets, and music players are sold in precisely identical configuration throughout the globe. The standardisation of consumer products and services demonstrates that the needs and wants of consumers across the globe have become more homogenous, subsequently resulting in the uniformity of business practices.

Recent research has also confirmed that globalisation has indeed resulted in the convergence of business cultures and practices. For instance, a Hofstede's model-based study of approximately 400 Chinese and Anglo-Saxon managers working in the Chinese construction industry found that there were no significant differences in managerial behaviour as the model would lead one to expect (cited in French, 2010). Contrary to expectations, the study particularly found that managers from the two theoretically different contexts exhibited quite similar behaviour in terms of collectivism and cooperation. The similarity in managerial behaviour can be….....

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Bhattacharyya, D., 2010. Cross cultural management: text and cases. New Delhi: PHI Learning.

Browaeys, M. and Price, R., 2008. Understanding cross-cultural management. Harlow: Prentice Hall.

Cojocaru, M., 2011. Cultural globalisation in the context of international business. Review of International Comparative Management, 12(5), 993-999.

Deresky, H., 2005. International management: managing across borders and cultures. 5th international edition. Indianapolis: Pearson Education.

French, R., 2010. Cross cultural management. London: Chartered Institute of Personnel Development (CIPD).

Grewal, D., 2008. Network power: the social dynamics of globalisation. U.S.: Yale University Press.

Gupta, V. and Wang, J., 2003. Globalisation and convergence-divergence debate: strategic perspectives for emerging markets. Journal of Business and Economics Research, 1(2), 69-76.

Hofstede, G., 2001. Culture's consequences: comparing values, behaviors, institutions, and organizations across nations. 2nd Edition. Thousand Oaks: Sage.

Lucas, R., Lupton, B. and Mathieson, H., 2006. Human resource management in an international context. London: CIPD.

Luthans, F. and Doh, J., 2012. International management: culture, strategy, and behavior. 8th edition. New York: McGraw-Hill.

Rodrigues, C., 2009. International management: a cultural approach. Los Angeles: Sage.

Steers, R., Sanchez-Runde, C. and Nardon, L., 2010. Management across cultures. Cambridge: Cambridge University Press.

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