Impact of Cultural Diversity on Innovation and Creativity in Multinational Organizations

This essay explores the impact of cultural diversity on the performance, creativity, and innovation of employees in multinational organizations. It includes a literature review, analysis of the study, and recommendations for organizations to appoint cross-cultural teams, provide cross-communication training, and learn about clients' cultures.

Managing in the Global Context

Table of Contents
Introduction......................................................................................................................................1
Importance of the issue- cultural diversity......................................................................................2
Literature review..............................................................................................................................2
Analysis of the study.......................................................................................................................4
Recommendations............................................................................................................................6
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

Introduction
The current essay is based on the impact of cultural diversity on the performance,
creativity, innovation of the employees in the multinational organizations.
The topic of the study- Managing in the Global context
Research question- How culturally diverse employees affecting creativity and innovation in
multinational corporations?
Brief description- For the purpose of the study, the importance of cultural diversity has been
assessed and a literature review has been done along with relevant references. In this regard, it
has been identified that diversified cultural workforce has a contribution to the achievement of
competitive advantage at the international level.
Definition- According to Ang & Van Dyne (2015), cultural diversity refers to the involvement
of sub-cultures in a society or in the organization which is used for the overall working and
achievement of global objectives. In this regard, the developing countries focus on the
involvement of cultural diversity in the organizational environment to understand and gain the
knowledge about every culture's traditions, specific uniqueness etc.
Scope- The study is based on cultural diversity and its impact on the innovation in the global
corporations. Cultural differences are the significant factor for the upcoming organizations
because diversified people remain more creative in the context of the business along with further
activities. Further, cultural diversity helps to generate huge business opportunities and grab the
competitive advantage at the international level. Owing to this, findings extracted from the
current study that culturally diversified workforce is supportive for the multinational
organizations because it is based on the integration of ideas, experiences and knowledge of the
employees. On the other hand, the issues of the organizations can be easily resolved with
optimum collective thinking by selecting the best solutions from diversified employees. Apart
from this, the results of the study can be useful for those people working in the field of research.
In this context, it can be helpful for those organizations which are dealing with the issues of
cultural barriers because the diversified workforce would be able to resolve the barriers of
overseas culture.
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Importance of the issue- cultural diversity
Cultural diversity is important for international organizations because it helps to create
awareness and understanding regarding the diversified cultural environment at the global level
(Adamczyk, 2017). In this regard, it is beneficial for the global business because it minimizes the
effects of cultural barriers in the organization. Cultural diversity has an important role in the
successful transaction of business activities. Further, it also affects the inter-relationships with
counterparties of the organizations which are consisted with varied cultural background
employees. In this manner, one organization would be able to understand the cultural
environment of another organization which is associated with the business.
Cultural issues are also linked with communication barriers which can be resolved through
internationalization because it has an extensive support for the small firms to enter into
globalization and eliminate the communication barrier (Ray, 2014). For example, if a small
organization is entering into the foreign market then there will be the issue of communication
with foreign parties and the employees would not be able to interact with sub-parties of business.
However, it is helpful for the organization to reduce the communication barrier by involving the
diversified employees in the firm for internationalization. Apart from this, cross-culture
communication is affected by the several risks involved language, specific law of a country,
cultural differences, time, diverse mentality of workforce etc. (Nederveen Pieterse, Van
Knippenberg & Van Dierendonck, 2013). By considering this, it is necessary for the
organizations to assess the cultural diversity in the organizational environment because it
develops the opportunities to accept the change and deal with the cultural diversification at the
international level. Further, culturally diverse employees help to develop the innovations and
creativity in working by using the collective ideas and experiences.
Literature review
Relationship between cultural diversity and productivity
According to few studies, there is a linkage between organizational cultural diversity and
performance of the firm because the productivity depends on the innovations which come from
the diversified group’s cultural environment (Stahl, Maznevski, Voigt & Jonsen, 2010; Mazur,
2010). Similarly, Anderson, Potočnik & Zhou (2014) stated that diversity of teams leads to
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produce the effective outcomes for the organizations and provide wider knowledge regarding the
innovation and creativity for the specific targets. On the other hand, Zhou & Hoever (2014)
argued that cultural diversity develops many issues such as a lack of integration, mismanagement
of complex activities, inadequate management of workforce etc. Furthermore, Ozgen, Nijkamp
& Poot (2013) asserted that diversity affects social integration as well as the performance of the
employees in the organization because it reduces the level of collaboration among workers.
Thus, it reveals that diversified cultural employees affect the level of innovation and creativity in
the organization because it enhances the chances to gather more knowledge about the social
environment and apply in the company. However, it also generates problems for the management
of organizations because it is difficult to manage the huge workforce in multinational
corporations.
Cultural behavior and competitive advantage
Lambert (2016) mentioned that cultural diversity is helpful to deal the challenges of
dynamic environment and unexpected risk of the organization because diversified workers offer
the variety of solutions to resolve the issues. Additionally, it is helpful to obtain the optimum
outcomes for the multinational firm because collective intelligence has a contribution in offering
more productive results. In this context, Guillaume, Dawson, Otaye‐Ebede, Woods & West
(2017) asserted that cultural diversity has a competitive advantage for the organizations in the
form of organizational flexibility, creativity, availability of more skilled resources etc. Apart
from this, Bouncken, Brem & Kraus (2016) examined that multi-cultural experience is beneficial
for the multinational organizations because it develops a behavior to maintain collaboration with
diversified societies and expand the opportunities to integrate the creative concepts of the varied
workforce. Therefore, it shows that cultural diversity enhances the chances to build huge
opportunities for the expansion of the business by involving diversified cultural people in the
organization. Moreover, it also helps to minimize the external challenges which hinder the
success and growth sectors of the firm.
Cultural diversity and organizational expansion
Several studies revealed that constraint to a single cultural environment in the
organization block the opportunities of expansion and innovations; however, multicultural
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experience has a large contribution in fostering the more creative ideas for the development of
the businesses (Maddux, Adam & Galinsky, 2010; Tadmor, Satterstrom, Jang & Polzer, 2012).
Besides this, Leung & Chiu (2010) mentioned that the involvement of foreign culture in the
organization is supportive to grab the foreign market because employees have deep knowledge
regarding overseas. Additionally, it generates the chances to enhance the level of innovation by
using the knowledge of foreign culture in organization’s expansion. On the other hand, Zhou &
Hoever (2014) stated that working in culturally diversified group delivers the higher quality and
create a performance for the multinational organizations because it enhances the level of
knowledge, perspective of businesses, free cultural environment etc.
For example, brainstorming is helpful to derive the more productive ideas, innovations
and creativity in the thoughts which can be fostered through the diversified cultural workforce.
Moreover, heterogeneous groups are more able to generate effective alternatives to resolve the
issues in the organizations. Nonetheless, it is a difficult task for the management to engage the
diversified people in a group because it maximizes the level of conflicts among employees and
management (Zhang & Bartol, 2010). It indicates that cultural diversity has both the aspects such
as positivity and negativity because it maximizes the huge chances to incorporate the innovation;
however, it also generates the issues for the management to handle the heterogeneous groups in a
single environment.
Analysis of the study
Cultural diversity has a positive impact on innovation and problem-solving
On the basis of secondary data, it has been analyzed that cultural diversity has a positive
impact on the innovation and productivity because culturally diversified employees provide the
valuable ideas to resolve the problems within the organization. In this regard, the views of
diversified workforce take the form of integrated thinking which provides the chances to increase
the productively (Ochieng & Price, 2010; Lambert, 2016). On the other hand, it has also been
identified that stick to involvement of same cultural employee in the organization instead of
multi-cultural workforce is not beneficial because it reduces the opportunities to deal in
competitive environment. Moreover, single cultural workers not be able to perform more
innovatively for the organization due to lack of awareness about other cultures. Apart from this,
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creativity comes from the integration of diverse cultural employees because they have a wide
knowledge and experience regarding the external cultural environment of business. Further, it
has been derived that any problem and issues in the firm can be easily solved with the help of the
multicultural employees because the shared ideas will be screened out then the final solution will
be applied to achieve the productive outcomes. Moreover, cultural diversity leads employees to
work in a team and deliver the quality work which consequently affects the productivity of the
workforce in a positive manner (Ukachukwu & Iheriohamma, 2013).
Cultural diversity develops the huge opportunities for expansion of business
According to secondary analysis, it has been examined that creativity is an integral part
of the organization' s growth and expansion because it involves all the employees for innovative
thinking. In this regard, cultural diversity is the main driver of the creativity which leads the
innovations in the organizations (Ukachukwu & Iheriohamma, 2013). On the other hand, as per
the collected data, it has been recognized that the diversified workforce develops the more
chances for the organizations to take a step of expansion of business at the global level.
Additionally, international level demanded the innovative thinking and creativity in business that
fosters by integrated cultural environment in the organization. On the other hand, cultural
diversity creates the challenges in the workplace that leads to conflicts and demotivation among
the employees; ultimately the productivity of the employees goes down as well as chances of
expansion also reduces for the organization due to lack of creativity (Jensen, Arnett &
McKenzie, 2011; Bouncken, Brem & Kraus, 2016). Besides this, cultural distance negatively
affects the global business expansion because it maximizes the overall cost for the organizations
(Audretsch, Dohse & Niebuhr, 2010). Diversified people require the training to communicate
with other cultural employees that incur the training cost for the firm and hinder the expansion of
businesses. Thus, the overall discussion explained that involvement of diversified workforce is
helpful to expand the business with creativity; however, maximizes the entire cost at
international level for the organizations.
Cultural diversity generates issues for management
On the basis of secondary sources, it has been analyzed that diversified cultural
employees generate the several issues for the management such as conflicts, demotivation, lack
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of knowledge of internationalization, the absence of integrated environment in the organization
etc. On the other hand, it is not necessary that every employee feel comfortable to work in a team
due to nature of individualism which emphasizes on the personal welfare instead of group
thinking which is not acceptable in the diversified teams (Patrick & Kumar, 2012). Apart from
this, cultural diversity creates the problem of time management because it is difficult for the
management to bound the diversified employees in a single team. Moreover, varied cultural
people remains on own standards instead of organizational values which creates the issues in the
adjustment of activities.
Recommendations
The organizations suggested to appoint the cross-cultural teams at the workplace to deal
with the cultural barriers. Cross-cultural teams have a deep knowledge regarding each other’s
culture that would be supportive to provide the products as per the culture. On the other hand, it
may increase new opportunities to work at an international level and contact with overseas
organizations for the expansions of the current businesses. Furthermore, diversified cultural
teams would be able to deal with the challenges of the organizations which occurs at the time of
interaction with other countries parties such as language, knowledge, religion, communication
etc. Hence, the involvement of cross-cultural teams would be helpful to attain the competitive
advantage at the global level.
On the basis of issues of cultural barriers, it has been recommended that the organizations
can provide the cross-communication training to the workforce to grab the overseas
opportunities. However, to provide the training, the employees should at least have a little
knowledge about co-cultures. But offering training by experts to the workforce would be
effective to develop the knowledge of cross-communication. In this manner, it would have a
contribution in reducing the communication barriers. Apart from this, in the absence of cross-
cultural training, the diversified workforce would not be able to communicate with each other
and deal with international companies cannot be done.
The organizations face the problem of cultural barriers which hinders the opportunities
of internationalization. In this context, it has been suggested that the organizations should learn
about the diversified cultures to bring the business at the peak level of success on the global
economy. It would be helpful for the organizations to bring new innovations for the business.
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However, it is not easy to learn all about the different cultures because it requires close
interactions with cross-cultural people or to hire the diversified workforce in the organization.
But the gap between diversified cultures can be filled through learning about varied cultures of
the economy.
For considering the importance of the cultural differences, it has been recommended that
the organization should know about the client’s culture. The clients related to different locations
along with diversified cultures that would be helpful for organizations to be aware of their
cultures. In this manner, if the organization is operating the business at international level then a
greater number of clients would be associated with the firm. Ultimately, it can increase the
chances to know about all the client’s culture and reduces the issue of cultural barriers in the
organizations.
Conclusion
On the basis of the essay, it has been concluded that cultural barriers affect the businesses
in negative as well as positive forms. Involvement of cultural diversity maximizes the cost of
training of the employees within the organization. However, cultural diversity develops the
opportunities for the expansion of the business through the integration of diversified cultural
workforce because it opens the new ways of innovation and creativity. On the other hand, it has
been summarized that the involvement of diversified cultural employees in the organization
helps to improve productivity due to diverse knowledge. It has been found that there is a positive
relationship between cultural diversity and productivity. Apart from this, it has been recognized
that cross-cultural knowledge is important for the organizations because it generates the chances
to take a competitive advantage and maintain the cultural behavior with others. Besides this, it
has also been concluded that cultural diversity increases the chance of conflicts among
diversified team because they do not have adequate knowledge regarding other’s culture. At the
end, it has been identified that by providing cross-cultural training, the issues related to cultural
diversity can be reduced.
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