International Management: Effect of Regional and National Essay

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International Management: Effect of Regional and National Culture on MNCs

Culture refers to the institutions, folklore, history, customs, beliefs and traditions shared by a group of people. People who belong to the same religion, nationality, language or ethnic group share a common culture (University of Kansas, 2013). Organizational culture refers to the customs, assumptions, beliefs, values, procedures and policies that govern the way an organization is run and managed (University of Kansas, 2013). MNCs operate in different countries, and therefore, encounter diverse, distant cultures in their international operations. Cross-cultural relations are inevitable and MNCs have to develop organizational cultures that can effectively manage such relationships, so as to establish good relations both within and without the organization (Rozkwitalska, 2013).

The Effect of the Parent Country's Culture

It has been found that the operations of MNCs' subsidiaries are largely influenced by the culture of the parent company (George, 2011). MNCs are known for diffusing cultural values across borders. Taking for instance, a MNC headquartered in Paris, France, but with subsidiaries in India, Germany and Australia; the organizational culture of the subsidiaries will heavily incorporate elements of the French culture. However, in as much as this may be so, the MNC still has a duty to engineer change in the systems of employment in the host countries, as well as to maintain its own competitive position (George, 2011). This it can only achieve by varying its practices to suit different cultures. The effect of national and regional culture on the international operations of MNCs, as enumerated in the subsequent sections of this text, arises from this particular aspect.

The Effect of National and Regional Cultures on MNCs

The cultural practices of people in host countries affect the organizational culture of MNCs in a variety of ways. I will dwell on four of these; the leadership style, human resource practices, language, and management.

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The focus of this text is to show how the above organizational practices are influenced by the cultural practices of the people of India, Germany and Australia.

The Effect on the Style of Management

There are four cultural predispositions that MNCs tend to adapt, with regard to the management of cross-cultures. These are geocentricism, polycentricism, and ethnocentricism (George, 2011). Ethnocentricism perceives one's culture and beliefs as superior, and does not allow for the appreciation of cultural diversity (George, 2011). Polycentricism, on the other hand, is the tendency to appreciate the cultures of others, and view them as equal to one's own. Geocentricism pushes for cosmopolitan arrangements. It involves accepting the best, regardless of its origin (George, 2011).

France is known for the stratification of the society into classes. Managers are perceived as belonging to a higher class of individuals, who achieved that particular status by attending the best schools and educational facilities (Hofstede, 1992). They, therefore, deserve honor from the rest of the society. The French culture, in this regard, exhibits ethnocentricism. Germany, India and Australia are known to possess high numbers of technical institutions and qualified individuals (George, 2011). Managers are, therefore, not considered cultural heroes in these host countries, which would advocate more for societal equality (Hofstede, 1992).

In order to succeed in the three host countries, therefore, the France-headquartered MNC has to, to a large extent; give up the ethnocentric style of management associated with the French culture, and take up the more inclusive geocentric and polycentric styles.

The Effect on Human Resource Practices

Human resource practices, for instance performance management,….....

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