In today’s globalized era, MNCs contribute considerably to industrialization in various economics. As a result, MNCs are effective in rapidly transferring features of one society to another, perhaps a very different society. They are uniquely capable of forcing cultural change. MNCs transmit their home country values in two different ways:
1. Through the vast network of affiliates which introduces, demonstrates and disseminates new behavior.
2. Increasing and shaping the manufacturing sector of host countries through the business services structure, including business education.
There are several ways to describe culture. E. Adamson Hoebel, a renowned American professor of anthropology from the University of Minnesota defined culture as “The integrated sum total of learned behavior traits that is shared by a member of a society.” Culture, in my opinion, includes learned behavior and values that are transmitted to an individual living within a society, through shared experience.
Three vital characteristics are integral to definition of culture –
- It is learned – It is acquired by people over time through their membership in a group that transmits culture from generation to generation.
- It is interrelated – One part of the culture is deeply connected with another part, such as religion, marriage, business and social status.
- It is shared – The tenets of a culture extend to other members of the group.
Elements of the culture – Language, aesthetics, religions and education.
In order to understand the cultural environment in the international business scenario, it is vital to analyze the various cultural setups in different countries. Cultural analysis can be based upon any of these three approaches.
Ethnocentrism approach – Companies following this approach adopt a strategy which is more appropriate to the domestic marker. They assume that what is good at home would also work the same way in foreign markets.
Assimilation approach – Most companies consider that the US is a cultural melting pot. They assume that the cultural traits demonstrated in the US market should work everywhere in the world. They believe that if the product or the services click in the US market, the same will click in any other part of the world.
Primary of host country approach – This approach is based on the assumption that the home country’s cultural traits are inappropriate for successful operation in markets outside the home country.
Hall’s Map of Culture –
According to him, a person interested in the cultural analysis of a particular region need not necessarily study all the ten aspects, but can study any one of them and grasp adequate understanding of culture. Here are the 10 aspects –
1 Interactions – Interactions with the enviroment through various modes of speech and writing.
2. Association – Structure and organization of the society and its various components.
3. Subsistence- Activities through which the society satisfies the basic needs of people such as food and water, and the attitude towards such needs.
4. Bisexuality – Differences between the roles and functions of men and women.
5. Territoriality – Ownership, use, and protection of land territory.
6. Temporality – Division and allocations of time and its use for various activities.
7. Learning – Pattern of transmitting knowledge.
8. Play – Process of enjoying through relaxation and recreation.
9. Defense – Protection against natural and human forces in the environment.
10. Exploitation – Using skills and technology to turn natural resources to people’s needs.
I hope this piece has helped you learn a bit about the nature of culture and its essence in relation to Multinational companies. If you have any questions drop them below.