International Management: Effect of Regional and National Culture on MNCs
Culture refers to the institutions, folklore, history, customs, beliefs and traditions shared by a group of people. People who belong to the same religion, nationality, language or ethnic group share a common culture (University of Kansas, 2013). Organizational culture refers to the customs, assumptions, beliefs, values, procedures and policies that govern the way an organization is run and managed (University of Kansas, 2013). MNCs operate in different countries, and therefore, encounter diverse, distant cultures in their international operations. Cross-cultural relations are inevitable and MNCs have to develop organizational cultures that can effectively manage such relationships, so as to establish good relations both within and without the organization (Rozkwitalska, 2013).
The Effect of the Parent Country's Culture
It has been found that the operations of MNCs' subsidiaries are largely influenced by the culture of the parent company (George, 2011). MNCs are known for diffusing cultural values across borders. Taking for instance, a MNC headquartered in Paris, France, but with subsidiaries in India, Germany and Australia; the organizational culture of the subsidiaries will heavily incorporate elements of the French culture. However, in as much as this may be so, the MNC still has a duty to engineer change in the systems of employment in the host countries, as well as to maintain its own competitive position (George, 2011). This it can only achieve by varying its practices to suit different cultures. The effect of national and regional culture on the international operations of MNCs, as enumerated in the subsequent sections of this text, arises from this particular aspect.
The Effect of National and Regional Cultures on MNCs
The cultural practices of people in host countries affect the organizational culture of MNCs in a variety of ways. I will dwell on four of these; the leadership...
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