Role of Culture in International Business

Running head: ROLE OF CULTURE IN INTERNATIONAL BUSINESS
Role of Culture in International Business
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Introduction
Globalization has entirely transformed the operational management of the business across
the world. In the present days, as the organizations are becoming more globalized, people from
different national and professional cultures come together for the accomplishment of
organizational goals and objectives. In the multinational organizations, diversity is one of the key
factors that affect the corporate culture significantly. As the companies are now expanding across
the borders and the accessibility of the global market place has been increasing significantly for
both small and large businesses, the opportunities of work is expanding internationally (Shenkar,
Luo and Chi 2014). The companies are now able to seek talent from all across the world, which
makes the cross cultural and multinational teams common in the workplaces. This is beneficial
for the companies as they can access and utilize diverse base of knowledge and ideas as well as
get insightful business approaches for different types of business problems. However, Forsgren,
and Johanson (2014) highlighted that along with benefits, the cultural differences often create
stumbling obstacles for the global businesses, especially, in terms of gestures, approaches to
work, cooperation and coordination among the teams. This literature review will present a
comprehensive discussion on the role of cultures in the international business and its benefits and
challenges that affect the global business culture and operations.
Discussion
Cultural differences: benefits and challenges for international businesses
International business includes the integration of different cultures. Steers and Nardon
(2014) highlighted that globalization has opened up many new avenues of integration of different
aspects of life, among which the key beneficiary aspects are technology, business operations,

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tourism and cultures. All the giants in different business sectors are now expanding globally and
employing a diverse workforce. For example, the airline companies, information technology
service companies, such as, Cognizant, Deloitte, Genpact, Accenture, etc, Product manufacturing
companies, such as, Microsoft, Facebook, Amazon, etc., auditing firms like
PricewaterhouseCoopers, entertainment businesses, like, Disney and Universal Studio, which has
opened theme parks in almost all the major cities of the world, are multinational companies that
adopted the strategy of employing local workforce along with cross cultural workforce to cater to
the international client base in a more efficient manner (Kernen and Lam 2014).
However, it has also been found that cross cultural work environment also brings many
challenges. As stated by Piekkari, Welch and Welch (2014), language is a major barrier in
cultural integration in the international businesses. For example, while the primary business
language is English, yet in some countries, people prefer to use their mother tongue as the
professional business language, such as, in the East Asian countries, like, China, Japan and
Korea. Hence, while working in a cross –cultural business environment, the language difference
often creates a challenge for the businesses as due to language barrier, many unintentional
miscommunication and misinterpretation of content occurs, resulting in a different outcome than
expected.
Thus, Brannen, Piekkari and Tietze (2017) focused on the role of language in the
development of international business. The authors opined that as language is one of the core
elements of international business activities, it is essential for the businesses to consider the
language differences of different countries as that plays a major role in shaping the professional
communication of the organizations. Understanding and incorporating the local language helps
the companies grow in the local as well as global market as they have to interact with the

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transcontinental intermediaries, foreign institutions and distinct government agencies and
institutions that practice different languages. Professional communication is required for
maintaining business operations, exercising powers and establishing hierarchies across different
nations and cultures and hence, for facilitating the integration, the multinational businesses must
focus on the language barriers in the markets.
Turró, Urbano and Peris-Ortiz (2014) opined that diverse cultural perspectives can inspire
the workforce to drive creativity and innovation and enhance productivity. According to the
authors, people from different cultural backgrounds have different perspectives regarding one
specific matter and those different ideas, perspectives and personalities come together to give
rise to an out-of-the-box idea for innovation and creativity. A diverse workforce often opens new
windows to think about an issue in various different ways to reach to an optimized solution. For
example, L’Oreal, the French cosmetic giant has achieved huge success in the emerging markets
due to its multicultural product development and marketing teams that could capture the precise
needs and tastes and preferences of the consumers in those markets and address those (Reynolds
2017). Hence, according to Korzilius, Bücker and Beerlage (2017), multicultural work
environment provides a platform for open exchange of ideas and culturally diverse perspectives
to business issues, which leads to creativity and innovation and helps in the growth of the
business.
Moreover, as emphasized by Noe et al. (2017), multicultural workforce is highly
beneficial during business expansion in any new market. To gain a competitive edge in a new
market, businesses must have a thorough knowledge about the country culture, tastes and
preferences of the people, local rules and regulations, customs and the local competitive
landscape. Hence, the native language skills, local connections with the governments and