International business expansion and cultural impacts yielding success or failure: The impact of culture on the global economy

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International business expansion and cultural impacts yielding success or failure: The impact of culture on the global economy Doctoral Dissertation Proposal Business problem Hodge (2001) states: “Securing a global competitive advantage is the greatest challenge facing... business today.” After all, Scott (2004) tells us going “beyond the borders” is the next logical step for organisations once they’re established. In fact, among US franchises along, while only 3,365 had international units in 1971, by 1990 the number increased more than 10 fold to 39,000 franchised units (Scott 2004). Macnaghten and Jacobs (1997) emphasise the need to understand the manner in which the public of a target country identifies with and can support a product line or organisation in order to assure sustaintability, stating that if this is not properly studied, the likelihood of business success in expansion into a foreign country is highly unlikely. Not only is an understanding of how the target country identifies with the product, but it is critical to understand the culture of the target country during all negotiations and business interactions in order to assure success. For example, Ostermiller (2004) cites the incident of a businessman arriving in casual attire inclusive of sandals to dine with Chinese representatives of an organisation. The deal was quickly quashed as straw sandals, like the ones worn by the casual businessman, represent funerals within the Chinese culture and representatives were highly offended at the implication and lack of regard for their heritage (Ostermiller 2004). Frase (2007) states many international deals are often lost due to the misinterpretation of a single word. Thus, the statement made by Shattuck (2006) that suggests a proper business and cultural foundation is critical in order for businesses to succeed in their plans for expansion or start-up in a new country is accurate and presents a growing problem in business today. There is a widespread, yet inaccurate belief that if one is successful in their own country, expanding into another is a natural step that should, theoretically, proceed without any problems. This is clearly not the case in the real world. Research phenomenon Kanter and Corn (1994) tell us which most business negotiations are fraught with tension, when acquisitions of international firms are involved in order to expand business in a target market; yet most frequently their success or failure is based on cultural values. Hodge (2001) believes that, while “hard” factors, including currency fluctuation, economic condition and political stability are critical to assess in a potential country of planned business expansion, it is the “soft” factor, cultural differences and cultural awareness that can make or break your business. For example, how are female managers viewed by the country planned for business entry? Cordana, Scherer and Owen (2002) determined that gender was the ultimate explanation for three times the variance than culture specific issues within a country; however, the attitudes towards gender are part of a country’s culture where resistance to female managers by male counterparts would be a source of friction. This was also highlighted in research on cross-cultural attitudes of organisations in India, Korea and the United States which found that significant cultural implications are responsible for concepts of power and strength within the business environment (Christie, Kwon, Stoeberl & Baumhart, 2003). Research has also highlighted the role various industries present as cultural industries, such as fashion or design which have serious implications related to cultural awareness of target countries in order to assure success in business expansion (Banks, Lovatt, O’Connor & Raffo 2000). For example, Brooks Brothers made the decision in 1991 to expand from New York City to Italy, citing Italians as fashion conscious and ready for their type of classic clothing (Palmieri 1991). Palmieri (1991) also noted that Brooks Brother’s already had a strong demand for their product in Italy prior to the expansion. Even within the computer technology industry, knowledge of how international websites are viewed and interpreted with respect to business must be designed with attention to cultural awareness and conform to cultural differences. For example, Zhang and Galletta (2006) note that Mexicans studied were seen as more patient during longer waiting periods for web pages to load when compared with Americans. Similar issues were highlighted in research conducted by Russo and Boor (1993) on the need for culturally aware user interfaces for international companies. For example, Russo and Boor (1993) sited the importance of word choice, local formats, use of images, colour choice and even process flow as needing to be appropriate for viewing and use in the target country. Business conduct and processes vary from culture and country to culture and country. For example, Aguinis and Kragier (2006) noted that in Latin America, meetings do not usually start at the scheduled time; however, one’s level of annoyance at the cultural phenomenon can lead to a quick dissolution of the business expansion plans as evidenced by a lack of cultural awareness. Cultural awareness on issues such as this are critical, as pointed out by Very and Schweiger (2001) who tell us that poorly managed acquisition processes can significantly sour the business relationship and opportunities in the target country. Concluding, Meschi (1997) notes that “the extent to which the longevity of an international joint venture affects the intensity of its cultural differences.” In other words, attention to cultural differences leads to success or failure of business start-up or planned expansion into other countries. This is also supported by Baris Oney (cited in Looking for Opportunity? 2005), head of International Business Development Relations at Turkcell who tells us the most important facet in business expansion is finding a target country familiar with Western business standards plus a comprehensive understanding of the target region’s socio-political undercurrents. Unresolved issues The majority of existing research appears limited in a number of ways. Firstly the primary focus on whether culture affects international business expansion tends to focus on management attention to culture from a human resources vantage point. Secondly, little purely academic research exists on the role of cultural appropriateness for international business expansion as proposed for this dissertation; the majority of current literature is primarily limited to trade journals, newspaper articles and discourse provided on websites. As such, it is believed that the results of this dissertation would add to the limited research available on the role of cultural awareness and cultural appropriateness on the success or failure of international expansion or state up. Research questions and hypotheses Based on a review of industry through current academic literature and the lack of data specific to the role of cultural awareness in business expansion or start-up in a foreign country, the following research questions and hypothesis is presented.
  1. Are some industries better suited to international expansion or start up than others?
  2. What role does technology play in the success or failure of international business based on cultural acceptance?
  3. How important is cultural awareness in the plans for international business expansion?
  4. Are some countries more accepting of international business expansion into their territories than others?
  5. Is there an international culture and language unique to global business (Clear window into Chinese market 2006)?
Hypotheses:
  1. Cultural awareness is considered one of the most important aspects predicting the success of international business expansion or start-up.
Rational and description of approach A mixed methodology approach is proposed in order to provide a comprehensive research effort. Cross, David, Graham and Thralls (1996) tell us the specific methodologies chosen should connect not only the research but the results to real world practicality. Particularly in the world of business, research has turned to using triangulated results from both qualitative and quantitative methodologies performed within the research scope of a single study to provide stronger and more meaningful results (Sogunro 2002). More specifically, Sogunro (2002) states that research studies should be designed based on what is most likely to provide the most useful set of knowledge. Therefore, if a researcher uses a mixed quantitative and qualitative approach results can provide complimentary data as benefitted from each unique methodology viewed separately (Devers 1999). Combined research methodologies also allow for a more descriptive study that Schollhammer (1994) believes are increasing seen as the research methodology most often used in management and business in order to allow for a more focused approach to research questions. Schollhammer (1994) concluded the most valuable pieces of research for business and management are those that use multiple methodological approaches. Therefore, this project proposes the mixed methodology approach Participants will be comprised of business development managers working in Fortune 500 companies as well as within medium sized companies from both Great Britain and from the United States. Participants will be actively recruited to take part in an online questionnaire specifically developed for this study. Although no contact information will be collected on the questionnaire itself, the last question on the survey will ask if the participant is interested in taking part in an online chat-like/focus group. Those participants who elect that option by answering “yes” will be automatically transferred online to a separate form for the participant to complete strictly on contact information and best time to arrange the online session, thus assuring no personal information will be maintained on the quantitative questionnaire portion of the study. Those who decline the invitation will automatically be logged off the system and their survey/questionnaire responses will automatically be uploaded into the database table constructed to hold feeds from the line research data. References Aguinis, H & Kraiger, K. 2006. Intervening in emerging markets: Back to the basics, or go home empty-handed. Society for Industrial and Organizational Psychology, Inc. [Online]. Retrieved from: http://70.60.24.9/tip/backissues/tipdec95/aguinis.aspx [Accessed 2 October 2008]. Banks, M, Lovatt, A, O’Connor, J & Raffo, C. 2000. Risk and trust in the cultural industries. Geoforum, 31(4), 453 – 464. Christie, PMJ, Kwon, IWG, Stoeberl, PA & Baumhart, R. 2003. A cross-cultural comparison of ethical attitudes of business managers: India, Korea and the United States. Journal of Business Ethics, 24, 263 – 287. Clear window into Chinese market. 2006. Automotive Industries. [Online]. Retrieved from: http://www.highbeam.com/doc/1P3:1083692591 [Accessed 8 October 2008]. Cordano, M, Scherer, RF & Owen, C. 2002. Attitudes toward women as managers: Sex versus culture. Women in Management Review, 17(10), 51 – 60. Cross, GA, David, CS, Graham, MB & Thralls, C. 1996.Thinking and rethinking business methodology. Business Communication Quarterly, 59(3), 105 - 115. Devers, KJ. 1999. How will we know “good” qualitative research when we see it? Beginning the dialogue in health services research. Health Services Research, 34(5), 1153 – 1188. Frase, M. 2007. How all employees a wider world: Even employees who don’t travel overseas need to know the culture and practices of the countries where you have commercial ties. HR Magazine. [Online]. Retrieved from: http://www.highbeam.com/doc/1G1:165167749 [Accessed 8 October 2008]. Galletta, D., Henry, RM, Mccoy, S & Polak, P. “Understanding the direct and interaction effects of web delay and related factors: A research program.” In Computer Interaction and Management Information Systems Foundations, eds. P Zhang & D Galletta. Human-Advances in Management Information Systems, 5, 26 – 69. Hodge, S. 2000. Global smarts: The art of communicating and deal making anywhere in the world. Hoboken, NJ: John Wiley & Sons, Inc. Kanter, RM & Corn, RI. 1994. Do cultural differences make a business difference? Contextual factors affecting cross-cultural relationship success. Journal of Management Development, 13(2), 5 – 23. Looking for an opportunity? Go East, young man: European and US companies are increasingly looking at Turkey s a partner and springboard to new markets further afield. Foreign Policy. [Online]. Retrieved from http://www.highbeam.com/doc/1G1:138534066 [Accessed 8 October 2008]. Macnaghten, P & Jacobs, M. 1997. Public identification with sustainable development investigating cultural barriers to participation. Global Environmental Change, 7(1), 5 – 24. Meschi, PX. 1997. Longevity and cultural differences of international joint ventures: Toward time-based cultural management. Human Relations, 50(2), 211 – 228. Ostermiller, P. 2004. Global gifting: A sampling of suitable gifts from local honey to yak hair hats. Utah Business. Retrieved from: http://www.highbeam.com/doc/1G1:125953711 [Accessed 8 October 2008]. Palmieri, JE. 1991. Brooks Bros. to sell line to Italian stores. Daily News Record. [Online]. Retrieved from http://www.highbeam.com/doc/1G1:10911747 [Accessed 8 October 2008]. Russo, P & Boor, S. How fluent is your interface? Designing for international users. Conference on Human Factors in Computing Systems. Proceedings of the INTERACT ’93 and CHI ’93 conference on human factors in computing systems. Amsterdam, Netherlands, 1993, pages 342 – 347. Schollhammer, H. 1994. Strategies and methodologies in international business and comparative management research. Management International Review, 34, 5 – 20. Scott, NR. 2004. For the stout-hearted and well-heeled, opportunities abound overseas. Franchising World. [Online]. Retrieved from: http://www.highbeam.com/doc/1G1:112686801 [Accessed 8 October 2008]. Shattuck, MC. 2006. How franchise companies can target growth markets. Franchising World. [Online]. Retrieved from: http://www.highbeam.com/doc/1G1:143481457 [Accessed 8 October 2008]. Sogunro, O. 2002. Selecting a quantitative or qualitative research methodology: An experience. Educational Research Quarterly, 26(1), 3- 10. Stephens, GK & Greer, CR. 1995. Doing business in Mexico: Understanding cultural differences. Organizational Dynamics, 24(1), 39 – 55. Very, P & Schweiger, DM. 2001. The acquisition process as a learning process: Evidence from a study of critical problems and solutions in domestic and cross-border deals. Journal of World Business, 36(1), 11 – 31.
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