Dangers of Poor Intercultural Understanding and Management

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June 25, 2012 by Nabanita Chaudhuri

Michelle Mielly, Programme Director – MSc in Management Consulting, GGSB  

Stated simply, the biggest danger of poor intercultural understanding and management is failure. Failure in business ventures is often attributed to incompatibilities in strategy, business models, operational technicalities, or management styles. However, when one looks at some of the most spectacular failures in international business, the hidden dimension of culture is often the origin.

The examples are multiple: Disney’s implantation strategy in France and in Hong Kong, the Daimler-Chrysler merger, Lucent-Alcatel’s missed mission, Schneider Electric’s difficulties with a number of its foreign subsidiaries, and many more. Some of these examples illustrate that cultural issues create great obstacles, but the good news is that you can overcome them with hard work and the investment of time.

Another danger is missed opportunities. Creating a bad first impression takes a long time to correct, so it’s better to go into international business with an open mind and conscientious preparation. Many opportunities are lost due to individual cultural differences that inhibited the establishment of a long lasting and productive relationship.

When people don’t feel respected, if they perceive a lack of interest on the part of the other, if they lack the fundamental trust at the foundations of the relationship, or if they think they are being stereotyped negatively, they go into defensive mode. Most of the time they actually start behaving in ways that may confirm the other’s stereotypes!

It must be stressed that in speaking of cultural differences in the corporate context, we often talk about corporate and not national or regional cultures. There are dozens of examples of mergers or acquisitions between the same national cultures, but the corporate cultures involved were profoundly imprinted and elusive to change.

Cultural differences exist between any two cultures: just looking at Western Europe’s dazzling diversity is overwhelming! Statistically speaking along national cultural dimensions, there are much greater differences between France and Denmark for example than there are between France and the US.

Often due to excessive and sustained commercial and popular culture exposure, there is an incorrect perception that many cultures are familiar, superficial, and that there is not much more to know about them.   Upon closer examination, however, one finds differences of deep and significant import. For instance, when it comes to North American cultures, it is one thing to watch American sitcoms, eat at McDonald’s, study the English language, visit Toronto or the Grand Canyon for two weeks. It is absolutely another to work, communicate, and negotiate with North Americans on a daily basis. One example: the perception of time. First, is time a disposable resource? What is an acceptable turnaround time in responding to an email (reactivity levels)? What is the best way to organize time allocation for a project, or just for a meeting? How does one divide one’s personal time from professional time and is this necessary? Should people be available during vacation periods? How much vacation is necessary? What are the expected working hours in companies?

Globalization has simultaneously simplified and complicated our work environment. And this environment has an impact on our personal lives as well (increased travel, the need to work odd hours to accommodate conference calls internationally, etc.). Managers now have teams working 24/7 on their global projects, so deep integration through collaborative technology is a reality today. An industrial project, for example, involves teams in multiple time zones with multiple local environments that contrast sharply from one site to another.

While technically we have the means to run long and short term projects across the globe, on a personal and individual level, we often simply do not have the intercultural tools at our disposal to sustainably manage the complexity of the different cultural realities that each site and international counterpart presents throughout the project lifetime.

This is where training becomes significant. Organisations that recognise these challenges well in advance and not when issues due to intercultural differences begin to appear and start impacting relationships and work environment are in a far better position to succeed. Creating and investing in continuous training helps organisations acquire greater intercultural competency.  It is not a one-off exercise but a sustained process and has to be supported by top management.


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A blog by Grenoble Graduate School of Business students.

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June 2012
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