Nowadays, the pressures of increased foreign competition can lead a company to expand its business into global environment, which usually includes different cultures. Therefore companies need to know how to handle global opportunities and build-up teams from diverse countries for successful outcomes. Effective cross cultural teams can bring experience and innovative thinking to enhance the competitive position of organizations. However, cultural differences can also interfere with the successful completion of projects in today’s multicultural business. To achieve the goals of managers and avoid cultural misunderstandings, managers who are in charge of intercultural community, should be culturally intelligent and promote creativity and motivation through leadership. In this paper, first part will deal with what exactly intercultural differences mean and what it all involves. On the behalf of this, we will continue with the Hoftede´s cultural model theory, which describes dimensions of differences within cultures. In next sections, we will further elaborate the issue of intercultural differences and try to suggest the common ways to avoid such misunderstandings. Then, we will focus on the impact of intercultural differences on management performance and we also provide you a failed multicultural project and the reasons of this failure.
„Intercultural differences is the way culture imprints itself on the manner a person thinks, acts, perceives the environment and reacts to things around him/her.“(Swallow, 2009). In common life, when we meet with people from other countries, we might recognize some basic differences, for example in greetings, personal space or eye contact. However, as we are living in globalized world, we have to be aware of differences even in doing business and creating proper conditions for management performance. Hofstede´s cultural model
There might occur several cultural differences, which more precisely describes the most well-known and accepted theory of cultural differences made by Geert Hofstede. Hofstede´s cultural model divides five dimensions of differences between national cultures. It includes namely 5 dimensions: Power Distance, Individualism, Uncertainty Avoidance, Masculinity and later added Long-term orientation. (ITIM international,2009)
Power distance is „the extent to which the less powerful members of organizations and institutions accept and expect that power is distributed unequally. “(Anbarri,n.d) We distinguish here low power distance and high power distance. In Hofstede’s research, power distance is measured in a Power Distance Index (PDI). For clarification, lower power distance illustrates the fact of inequality among people, interdependence between less and more powerful people, narrow salary range and decentralization in these areas is popular. Low PDI was measured in countries like Denmark and Austria. High power distance is on the other hand areas in which inequality among people are both expected and desired, less powerful people should be dependent on more powerful, centralization here is popular and there is wide salary range. To this category, we can assign to this category countries like Malaysia and Mexico. (Anbarri,n.d)
“Uncertainty avoidance refers to the extent to which members of a society feel threaten by uncertain or unknown situation.”(Dicu A, 2009) It is also divided into weak and strong uncertainty avoidance. In Hofstede’s study, it is measured by a score on Uncertainty Avoidance Index (UAI) which is dealing with rule orientation, employment stability, and stress. According to research made by Higgs M., more aspects, which are taken into consideration, when we are analysing uncertainty avoidance, are worked out in Table 1.
Individualism, versus its opposite, collectivism, is „the degree to which individuals are supposed to look after themselves or remain integrated into groups, usually around the...
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