The process of organizing and successfully running a business in a culturally diverse setting – especially carrying out serious projects – is not only laborious and painstaking but also quite complex in terms of cross-cultural management. Roberson (2019) states that “both researchers and practitioners have strived (and struggled) to understand the concept, its effects in and on organizations, and strategies for managing such effects” (p. 69). Nowadays, the business culture has transcended national boundaries, drawing into itself more and more people with cultural differences. Eventually, cultural diversity begins to play an increasing role in organizations and more strongly influences the maximum performance of entrepreneurial activities. This is where cross-cultural problems arise in international business – various kinds of disagreements caused by the differences in cultural standards of certain groups of people. Cultural differences between employees negatively affect the processes existing in the organization. The implementation of the main values and mission of the company becomes impossible due to communication failures at the stage of transferring values. Cultural diversity greatly impacts the possibilities of a project’s success, especially in terms of finishing it on time, by creating barriers to employees’ mutual understanding and timely coordination.
The imperative meanings of culture are set by the shifts that accompany the global transformation of the modern world order. The business possibilities are changing as the boundaries of everyday experience are shifting, and in turn, social mobility accelerates. Shore et al. (2018) state that “scholars are increasingly focusing on inclusion to enhance work environments by offering support for a diverse workforce” (p. 176). With each study, it becomes clear that culturally diverse team experiences serious challenges regarding the ability to accomplish their collective work in time. Kühlmann and Heinz support the claim, stating that “the results may consist of ad-hoc solutions that are not adapted to the specific internal and external environment of the organization” (p. 8). Of course, the ability to choose between talented professionals from different countries does give a business huge benefits, after all, but the issues are also plenty. Experience shows that cultural diversity in an enterprise will inevitably lead to conflicts and difficulties in mutual understanding if it is not taken seriously and not controlled. Therefore, this aspect requires special attention and discernment from the entrepreneurs.
Among the main problems related to the topic are differences in religious and cultural customs, foreign employees’ poor knowledge of the state language, and inflexible company policy in relation to national and cultural differences. As a result of these issues, the potential labor productivity decreases, creativity and innovative activities are reduced, staff turnover is growing, and employees might even avoid doing their work. For example, Gupta (2021) specifically expresses “the need to keep the workforce engaged while taking into consideration the diverse backgrounds of employees” (p. 1). Moreover, several studies suggest that even diversity training does not resolve these issues, failing to deconstruct different biases in people’s behavior towards each other. Dobbin and Kalev (2018) state that “two-thirds of human resources specialists report that diversity training does not have positive effects, and several field studies have found no effect of it on women’s or minorities’ careers” (p. 49). World business practice shows that companies are often faced with problems associated with people with intercultural conflicts, which often result in incorrect or belated management decisions. This leads to significant economic and personnel losses.
The experience of solving cultural diversity problems presents concepts of managing social and cultural diversity and cross-cultural management. Its development is of great interest for world businesses since the issue of integrating representatives of individual nationalities is currently time-relevant, as are the problems of interaction with labor migrants, foreign partners, and investors. In many studies, the management of socio-cultural diversity is recognized as a key strategic aspect of international companies. Roberson et al. (2017) claim that “diversity became recognized as an important contextual variable, or unit-level characteristic, which influences employee attitudes and behavior” (p. 493). However, the challenges that cultural diversity presents are not to be overlooked, as they continuously impact timely problem solutions. Dover et al. (2019) suggest that “diversity initiatives have the potential to negatively affect the performance of the employees from underrepresented groups” (p. 26). Diverse initiatives in business, when applied, often create stereotypes that people targeted by these initiatives are less competent and need help to get a job, and that, in turn, might greatly impact their abilities.
Cultural differences play an important role and affect the efficiency of business activities of companies, which is directly a consequence of the emerging cross-cultural problems in international business. Holck (2017) argues that “applying contingency thinking to the organization of a diverse workforce directs the attention towards a coordination of effort by means of varied integrative methods to deal with the problems of increasing differentiation” (p. 9). The multinational workforce combines different professional skills and values, worldviews, and work attitudes, which have a great impact on the functioning of the company in general and the communication process in particular. Jain and Pareek (2019) suggest that “people might think that organizations from the country where they originate operate with the same scope of responsibilities as the international businesses that they are engaging in” (p. 26). This is a good example of a cultural issue where the experiences of people’s native business practices clash with the expectations they face in a foreign multicultural environment. The problem needs to be resolved as soon as possible, for it might lead to a significant delay in the completion of the project due to the employee’s misunderstanding of their responsibilities.
One of the features of cross-cultural management of human resources is the management of mismatches in the values of employees, who daily form a model of organizational culture. The difference in understanding of values negatively affects the stability of the organization. Poor-quality communication channels may appear, and an atmosphere of misunderstanding and mistrust may ripen. Values and beliefs that are inherent in different cultures underlie the interpretation and understanding of organizational events. Lozano and Escrich (2017) state that “taking into consideration these cultural differences and harmonizing them is a human rights issue and a central dimension of corporate social responsibility” (p. 679). For example, a person put into a foreign work setting might experience a culture shock, which would arise while interacting with representatives of other business cultures. Culture shock is a state of disorganization and helplessness due to the loss of values and a lack of understanding of how to behave in an unfamiliar environment, and it affects the person’s performance greatly. This, in turn, could result in the team’s ability to deliver a project in time and, ultimately, lead to even more misunderstandings and issues.
Another problem that arises in culturally diverse teams is the manifestation of xenophobia. In business, xenophobia manifests itself in the perception of someone else’s culture as incomprehensible and inflexible and, therefore, impossible to work with. The atmosphere in such an environment is very difficult to resolve or control, as it affects the employees directly, making any teamwork uncomfortable for them. Velten and Lashley support this claim, stating that “working in a culturally diverse field, the tendency of employees to get entangled in interpersonal conflicts is intensified” (p. 107). With the rise of migration processes, the need to understand the proper patterns of interaction in a culturally diverse team has become overwhelming. Cultural diversification of personnel in different-sized enterprises supplies questions about the correction of traditional personnel management systems, taking into account intercultural differences. Birdie (2021) states that “while understanding the facts of culture and its influence, two aspects needs to be deliberated, that is, the culture an individual belongs to and that of the workplace” (p. 230). Proper diversity management might lead to a decrease in cross-cultural conflicts. However, some of the issues, such as xenophobia, can only be resolved radically – by disbanding the problematic team and assembling it anew.
Large international organizations confirm that properly structured work in a multinational work environment has significant advantages. The attraction of different cultural representatives to work in a team opens up new opportunities for progressive business. Cultural and institutional diversity may well contribute to the achievement of corporate goals. However, it requires taking into account a wide range of specifics of interethnic relations and intercultural differences. Lack of attention to these differences can leave a negative imprint on the activities of the entire department. Therefore, the study of cultural traditions, customs, and peculiarities of the religion whose representatives work in a particular company should become a mandatory process for the management of branches. However, it is clear that in some cases, even proper diversity management cannot predict or successfully solve the problems that arise in a culturally diverse team. Xenophobia, political and religious views, or questionable customs may become a significant barrier on the way to success and hinder the timely development of a project. Consequences of the project lateness could result in business losses, economic decrease, partner relationship injury, and an increase in internal conflicts, and are to be avoided at all costs.
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Dobbin, F., & Kalev, A. (2018). Why doesn’t diversity training work? The challenge for industry and academia. Anthropology Now, 10(2), 48-55.
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