Thesis on "Cultural Diversity in Organizations Organization Behavior Today"

Thesis 17 pages (4681 words) Sources: 10

[EXCERPT] . . . .

Cultural Diversity in Organizations

Organization Behavior

Today, globalization is a widely spread phenomenon making boundaries between countries fade away. It has a great impact on organizations and consumers because it provides the means to all countries to work in one large network, instead of separate smaller ones. In the one large network, the competition becomes tighter, the technology diffusion becomes faster, learning curves are shorter and shorter, manufacturing costs have a decreasing trend, the demands of the consumer tend to expand, workforce mobility expands as well and so on. On the social side, there are numerous challenges multinational enterprises (MNEs) due to globalization, because the former are forced to learn how to deal with cultural diversity. Global organizations have to reach a point in which understanding and respecting different cultures, mentalities, values and norms is a survival must.

Cultural diversity has a strong impact on the organizational communication processes. The fact that individuals communicating to each other come from different places implies that they have different ways of perceiving facts and words, regardless of the communication flow being between different hierarchical levels or similar ones.

On the positive side of cultural diversity, it has been suggested that diversity-oriented working environments stimulate innovation and effective learning. The innovation and learning translate into a knowledge advantage later on and the organization's profits increase proportionally.

To take advantage even more of the workplace diversity, some organizations design their marketing strategies for specific ethnic groups based on the fact that specific ethnic knowledge is embedded in their people. In some instances these strategies target fast-growing minorities, which gain more and more interest as their average income is rising and they represent higher potential sales for those organizations.

This paper is aiming to discuss the increasing impact of cultural diversity on the internal activity of organizations and their change in attitude towards the customer/market.

About globalization

The phenomenon has been defined in several ways, the definitions covering a wide range of domains, from cultural differences between nations to foreign exchange risk:

Definition 1: "It describes the process by which events, decisions, and activities in one part of the world can come to have significant consequences for individuals and communities in quite distant parts of the globe" (McGrew, 1992, p. 23).

Definition 2: "Globalization is defined here as a set of economic and political structures and processes deriving from the changing character of the goods and assets that comprise the base of the international political economy -- in particular, the increasing structural differentiation of those goods and asset" (Lawrence, 1996, p. 8).

Definition 3: "Globalization is first of all a political and only in the second place a business location strategy: a company following a strategy of globalization will localize activities abroad (1) only if the company otherwise risks being treated as an 'outsider' or being hit by trade or investment barriers thus losing market share, and (2) to the extent that the company can exert more control over its host governments than vice versa" (Ruigrok & van Tulder, 1995, p. 179).

Definition 4: "Globalization refers to a world in which, after allowing for exchange rate and default risk, there is a single international rate of interest" (Brittan, 1996).

Definition 5: "Globalization is, in essence, a process that creates opportunities for faster growth and more rapid poverty reduction in those poor countries in which the domestic economic and political environment is conducive," (Srinivasan, 2002, p. 3)

The editors of Strategic Communication Management magazine (2001) discussed how 3 successful multinationals - Reebok, Barclay Global Investors - BGI and Ericsson - managed to rise to the challenge brought by globalization. Reebok made all strategic decisions around the communication process. The sportswear marketer focused on designing a global communication strategy and a consistent global brand, which reflected local cultures, combined global and local priorities, recognized human rights -- as part of its social responsibility actions and so on. A key success factor in BGI's globalization quest was a strong and consistent communication strategy. The organization's managers understood that their employees' needed to connect to each other worldwide, so in order to smooth down the internal communication, the organization made intensive use of technology. Ericsson, one of the larges players in telecommunication, also used communication as a key factor to manage in the globalization challenges. The organization's managers believed it was essential to have a globally integrated communication process in order to generate as much value as possible for their stakeholders. The study notes that the relations between the media and investors are closer, so organizations have to be careful to send consistent messages across different countries.

The same editors of Strategic Communications Management identified 5 interconnected cultural dimensions that have a heavy influence on multinationals in their internationalization process. Those dimensions refer to:

Corporate level -- all cultures within the organization;

National level -- all internal and external cultures, including the external environment in which the organization works;

Industrial -- the culture of the industry in which the organization has its activity;

Functional -- the culture of professional and vocational groups within the organization;

Ethnic -- ethnic cultures in the external environment of the organization.

One other case study realized by Strategic Communication Management (2000) on Royal Energy Corp pointed out how important is to have a positive attitude towards change when trying to define a global corporate strategy. The authors mentioned that although diversity is a great challenge for all multinationals, it is also a valuable commodity, as it is a live source of new ideas and methods that fit local cultures.

There is a strong reason for globalization to be one the most popular phenomenon among economist researchers today. Every day more and better technologies are discovered, this phenomenon becomes more present in every place in the world. Economically and socially this fact impacts the organizations heavily. Both external and internal environments become more complex. The external environment expands and the competition is stronger as more organizations have access to the same market and the same consumer. The internal environment increases in complexity because people and processes have to switch from national to international levels, across different cultures and mentalities and organizational communication becomes an important tool for a successful corporate strategy.

The globalization has a considerable impact on diverse workplaces, the former being both cause and effect. That being said, multinational companies have to learn how to manage work places with increasing diversity, especially as many authors suggested that globalization is a process that slowly homogenizes cultures and mentalities, which also suggests that globalization is slowly reducing diversity. However, the current situation hasn't reached this level yet. Diversity is increasing as companies become more "global." Perhaps because there is a learning curve associated to globalization: in the beginning, diversity is increasing as organizations learn how to become globally efficient to decrease later on when these learn how to deal with it more efficiently.

Workplace diversity and competitive advantage

Among organizational drivers of innovation, the employees are the most important. In the first place, they have an active role in the learning process, in which they bring along their distinctive sets of knowledge. In the second place, after they learn the processes they generate innovations. An organization that employs individuals with diversified mental models, experiences and cultures has better chances to generate more innovative products than one employing limited diversity. The key factors to an organization successfully exploiting its employees' capacity to innovate include:

Having a culture of social inclusion. A few years back, workplace diversity was about anti-discrimination compliance. Today, the focus is on more complex issues, such as social inclusion and its impact on organizations (Lockwood, 2005). At the operational level, the one-size-fit-all approach on people and processes evolved into a more flexible and adaptive one as the marketplaces were permanently changing and organizations needed to generate competitive advantage in order to survive;

Value difference. As diversity increases with the spread of globalization it is essential not to let differences between individuals sharing the same workplace create mental and behavioral gaps. To prevent that from happening, organizations should promote their interaction in order to stimulate innovation and create competitive advantage;

Letting employees know that their knowledge and learning is respected. Individuals need to be assured that their efforts are not meaningless. If this doesn't happen they loose the incentive to learn new things and further improve their knowledge.

According to O'Flynn et.al. (2001), diversity has three major components: primary personal characteristics, secondary personal characteristics and organizational-related characteristics:

Figure 1 -- Major components of workplace diversity

Source: O'Flynn et.al., (2001)

primary personal characteristics, which include born characteristics (e.g. gender, race, nationality, etc.).

secondary personal characteristics, which include acquired personal characteristics (e.g. background, education, marital status, etc.).

organizational-related characteristics, which include characteristics that have been acquired within the organization (e.g. tenure, hierarchical position, etc.).

Learning is the factor that provides value to diversity. As different mindsets, knowledge sets and experiences are challenged, the chances that they will generate effective learning increase. Therefore workplaces of increased diversity are… READ MORE

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