Multicultural Globalized World

10 November 2014

Globalization
Today, the present wave of globalization driven by the Internet has
made the world more interconnected than ever before (The United
Nations Alliance of Civilizations, 2009, p. 14). As the Internet becomes
more globally universal, the number of mobile users continues to rise,
enabling digitization to become more profoundly entrenched into the
fabric of our lives (The United Nations Alliance of Civilizations, 2009, p.
15). As a result of these technological advances enabling us to be
constantly plugged-in, in todays world we are likely to encounter
more people and cultures than we would have ever experienced a
generation, or even a decade ago. Individuals from all over the world
have been brought together with extraordinary proximity. Fifty percent
of the worlds population today lives in big cities. By 2050 that number
is expected to rise to 75 percent (Green, 2014). The world economy is
continually becoming more interconnected. This can be seen in the
growing diversification in the direction of global foreign direct
investment flows (The United Nations Alliance of Civilizations, 2009, p.
15). Digitization has created a profound impact on our personal and
professional lives and has transformed everything we do. We dont yet
understand the significance of its impact, but it is likely to influence
how we think of ourselves and interact with one another (Green, 2014).
Meaning of Values in a Multicultural Business World
As the world is becoming more interconnected, businesses are finding
it necessary to adjust in order to be successful in an inter-connected
world. Today, small businesses are capitalizing on expansion
opportunities, in finding it easier to cross borders. On the other hand,
multi-nationals are also experiencing rewards as a result of
globalization. The good news for multinationals is that globalization is
creating more universal standards of business conduct, and these are
becoming more rigorous (Olaru, S. D and Guru, 2009, p. 113).
Regardless of the business size, or the county in which the business
operates, todays businesses are all finding themselves having to
compete in diverse multi-cultural environments. Todays corporations
have become, a critical force in supporting cultural understanding and
building bridges between people (The United Nations Alliance of
Civilizations, 2009, p. 1). Behind this idea, is the concept of values.
As businesses have increasingly become more globalized over the last
several decades, the role of incorporating business values has become
more important than ever before. Through commerce, investment,
trade, and the exchange of ideas and knowledge, business have
become a major actor across cultures and people (The United Nations

Alliance of Civilizations, 2009, p. 1). As culture is becoming a more

prominent aspect of businesses and organizations today, companies
are having to create and adopt different business values compared to
what existed several decades ago. Milton Friedmans capitalist
viewpoint that the purpose of business is to solely make a profit no
longer applies (Green, 2014). This can be seen in a study by McKinsey
and Associates, where executives prodigiously stated that corporations
must balance shareholder needs while also making strong
contributions that benefit society. Additionally, most executives
overwhelmingly disagreed with Milton Friedmans capitalist stance on
the responsibility of corporations (Smith, 2011, p. 6). Due to
globalization, specific values a business creates and adopts today are
much more broad and play a greater significance in determining the
success of an organization.
In a globalized world, business success today is greatly influenced by a
companys ability to respect and understand the societies in which it
functions (The United Nations Alliance of Civilizations, 2009, p. 1).
Today, corporate leaders are having to pay greater attention to
managing the organizational character and its reputation. As more and
more companies are crossing borders, competition has increased
globally. As a result of this, in order to stay competitive companies
must be successful and implement strategies to have a competitive
advantage. Todays success cannot only be solely dependent upon
corporate profits and fiscal incentives. Todays business success is
dependent upon a wider set of responsibilities, and these
responsibilities of businesses today have a more long-term view.
Businesses today must be more value-driven in their strategies
(Green, 2014).
As more companies adopt [this viewpoint], it becomes
increasingly important for every multinational to establish
companywide core values, standards of behavior, and relevant
policies that are in tune with the rest of the worlds ethics and
compliance environment (Olaru and Guru, 2009, p. 113).
Today this approach to business is increasing in relevance and practice,
as there are more than 6,000 participants from over 130 countries who
are involved in the United Nations Global Compact. These 6,000
participants not only embrace universal values, but they also respect
cultural diversity by incorporating programs to support cultural
understanding and dialogue as well as multi-cultural management
teams within their global organizations (The United Nations Alliance of
Civilizations, 2009, p. 1).

Based on findings such as these, todays globalized world has clearly

generated a shift away from Milton Friedmans capitalist approach. The
way in which we measure business success and create corporate
strategies has transformed. Today, the benefits of an ethical culture (or
set of values), outweigh the costs. Globally ethical companies built on
a solid framework of values will be better able to achieve long-term
sustainability, and success. These corporations will be those that
maintain a solid and respected reputation within all of the operating
markets in which they function, experience greater employee
dedication, satisfaction, and loyalty, have a greater competitive
advantage to attract new customers, and as a result, generate superior
levels of performance (Olaru and Guru, 2009, p. 113). While
establishing a broader strategy is imperative to global corporate
success, doing so is not an easy task. Businesses today have to
manage diversity amongst employees, customers, and stakeholders.
In order to achieve optimal success, global managers are having to
create corporate teams, operating in different cultures whose values,
beliefs, and attitudes are likely to be extremely different (Damodaran
and Kumudha, 2014, p. 1). Additionally, these personal values may
conflict with professional values, or the corporate values an
organization has implemented.
Personal Values and Professional Values / Their Reconciliation
Personal [values] refers to the values that a person identifies
with in respect to people and situations that they deal with in
everyday life. Professional [values] refers to the ethics that a
person must adhere to in respect of their interactions and
business dealings in their professional life. In some cases,
personal and professional values may clash, (Immigration
Advisers Authority, 2014).
According to Social Psychologist, Rokeach (1973), the personal values
one has play a significant role in influencing behavior. As a result of
this, personal values are likely to impact the type of decisions we make
in organizations (Crane and Matten, 2010, p. 156). With global
businesses becoming more prominent, and our inter-connectedness,
there is a great challenge today to align personal values with
professional ones. Additionally, according to Rokeachs (1973)
research, individuals have over 70 operative values, and the degree to
which these values influence behavior, and thereby, our decisions, is
almost impossible to determine (Crane and Matten, 2010, p. 156).
Additionally, when paring this philosophy with the knowledge that
different groups have different value systems (Fredrick and Weber,
1990), and Hofstetes (1984, 1991, 2001) approach to cultural

dissonance (indicating that people in different cultures vary across five

dimensions: power distance, uncertainty avoidance, individualism,
collectivism, masculinity and femininity, and long versus short-term
orientation), there is a necessity for cross-cultural examination of the
concept of work values (Sidani, 2006).
As a result of this, it is crucial for global businesses to establish a
strong set of cross-cultural corporate values in order to have better
control over the ethical decisions their employees choose to make.
This idea is based on the finding that ethical decisions in an
organization are influenced by three key elements including individual
moral standards, influence of managers, and coworkers, and the
opportunity to engage in misconduct (Ferrell, 2011, p. 39) (see
Appendix 1). Therefore, it is important for corporations to establish a
clear set of corporate values and ethics in which employees can act as
examples as they are able to understand the rules and policies of the
organization (Ferrell, 2011, p. 39). Ensuring that global corporations
are successful in establishing an integrated culture that adheres to a
high level of business behavior in all global operations, while at the
same time recognizing its local workforces and their traditions, can be
a challenge. Due to this rising challenge, an association of top
managers from five hundred companies have created the Ethics
Officer Association. The managers representing Australia, Canada,
France, Germany, Great Britain, India, and Japan have come together
to align cultural, social values with multi-national values (Ferrell, 2011,
p. 39). While approaches can be different, many companies find the
best practice to align personal and professional values is to integrate
corporate values, while at the same time allowing for local policies
based on cultural traditions to take place (Olaru and Guru, 2009, p.
114). This style has two advantages, global principles reinforce the
values the company seeks to promote in its corporate culture to instill
universal standards of business conduct. On the other hand, local
policies demonstrate respect for cultural differences among global
workforces, (Olaru and Guru, 2009, p. 114). In order to create a truly
stable corporate value system, there are many additional challenges
multi-national companies must face.
Challenges of Doing Business in Different Cultures
Companies operating in foreign countries find that
understanding and complying with variant laws, managing
employees far from headquarters, serving customers, and
relating to suppliers and partners in multiple jurisdictions can
introduce significant challenges to developing shared corporate

values and realizing a truly global culture, (Olaru and Guru,

2009, p. 113).
Three issues multinational companies face in doing business in
different cultures consist of: First, how to adopt a culture of ethical
handling in all countries of operation, second, how to get the global
workforce to understand, adopt, and be engaged in its corporate
values system, and third, how to weave the web of complex legal and
compliance obligations that may exist in all its locations (Olaru and
Guru, 2009, p. 113). While these are issues many globalized
corporations face, global executives report the greatest challenge for
global corporations to achieve is a shared corporate culture between
all business locations (Taylor, 2010). As companies multiply globally,
corporate culture often lags behind and headquarters often has the
responsibility to oversee cultural operations from afar (Taylor, 2010).
By instilling a strategy where headquarters must oversee cultural
values, a global company is creating barriers to grow and prosper in
different cultural settings. This is based on the assumption that a
corporation is more likely to create a headquarter-mindset.
Therefore, based on this barrier, it is advisable for organizations to
establish localized cultural value hubs which report to one
centralized hub to allow for better integration and alignment
between local value systems and the main corporate value system.
Conclusion
While globalization has created interconnectedness by bringing us
closer together and has diminished our differences, it too has
highlighted them. Companies operating across boarders today face
the inexorable challenge of creating corporate values that integrate a
localized approach. Additionally, within this framework, global
employees must be aware and participate in the established corporate
value systems in order for a company to be sustainable for long term
success in a highly competitive, globalized world. Lord Greens lecture
highlighted the importance in integrating the entire workforce to be
part of a long-term, socially focused value system. Today it is the role
and responsibility of businesses to create policies and processes based
on environmental, economic, and social sustainability of communities
in line with the values of the global citizen.

Appendix
Appendix 1: Three Factors that Influence Business [Values]

Source: (Ferrell, 2011, p. 40)

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