CULTURE AND INTERNATIONAL BUSINESS (USE CULTURE TO TAKE YOUR STARTUP GLOBAL)
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TypePrint
- CategoryNon-Academic
- Sub CategoryNon Fiction
- StreamBusiness/Economics-Non Fiction
As established corporate businesses & young startups cross their domestic geographical boundary, they start facing the biggest challenge of adaptation to cultural reality in the country of entry both in terms of consumer culture and employee culture. For a long time it was believed that teaching cross cultural difference reality would automatically make corporate managers adapt to consumer and employee reality on the country. Foreign Cross - Culture difference has been taught through Geert Hofstede model but the on ground reality led to the need to bridge the gap between academic research and actual challenges of localization on the ground. The new insight among corporate and academic researchers is that we might possess best of knowledge of cultural differences but we can struggle to as we attempt to put this knowledge into localization reality. We have written this book because we believe that there is serious gap in what has been written about cross cultural management and what corporates in foreign markets struggle on the ground with regards to cultural localization. There are other aspects of culture in global business, which not a threat but opportunity in nature. Understanding the cultural insights of consumers and employees in target foreign country can help us develop innovative disruptive products for that country which is adapted from domestic market. Secondly employee cultural adaptation adds to productivity in a big way. Thirdly creating cultural diversity in foreign country for a company, is now been associated with disruptive innovations as ideas rub off with each other to generate a complete insurgent product & people which leads to exponential growth in exports / international business. iv There two key reasons for choosing this subject for this book – one being the insights collected from “Cross- Cultural Localization” initiatives by Indian MNCs in foreign markets and second being existing research about impact of “CrossCultural Localization” by American MNCs on Business performance in foreign markets. Firstly, let us look at first hand insights about impact of Cross- Cultural Localization on business performance, for Indian MNCs in foreign markets. Marico suffered heavy losses in first year of acquisition in Egypt, by implementing Domestic “Cross- Cultural” Employee Culture of “Egalitarianism & Freedom” in a highly “Hierarchical & Dictatorial” Egyptian Employee Culture, till Marico made amends by adapting itself to local CrossCultural reality, leading to a turnaround of business in second /subsequent years. Similarly, Dabur failed miserably with losses in first few years in Middle East, imposing domestic Indian Consumer Culture to Arab consumers through domestic product line, till the “Cross- Culture Consumer localization” in fourth year, by bringing localized consumer need driven products, like Dabur Miswak toothpaste, Dabur Hammam Zaith, and Dabur Henna, doubling the business in that year, followed by 45%+ CAGR in subsequent years. In fact, today Indian MNCs like Dabur, Marico and to some extent Emami dominate the personal care consumer space in Middle East Africa region purely on basis of Cultural adapted localization of products and people strategy. At the same time Indian MNCs like Wipro, Himalya and Godrej have negative CAGR i.e poor business performance reportedly due to lack of Cross- Cultural Localization in Middle East. Further, it has to be pointed out that such insights suffer from absence of documented case studies & documented academic research. Hence this reported v impact of “Cross-Cultural Localization” by Indian MNC on their business performance in foreign markets, needs to be tested, measured and then documented as a template for future Indian global startups and existing Indian MNCs. Secondly, one of the best experts in field of Cross-Cultural Training and authors of the book “Managing across Cultures”, Solomon & Schell, write with specific American MNC examples, that despite having best of Technological, Marketing and Finance competency, a MNC cannot realize its full business potential if it does not understand, appreciate, and then adapt to crosscultural differences in the foreign market. Andy Molinsky in his latest book, Global Dexterity – how to adapt across cultures, has also emphasized that he would have not researched or written this book had he not found a gap in existing research on Cross- Cultural Localization impact on business performance. These two academic premises, hence also need to be urgently tested in context of Indian MNC in foreign markets, so as to provide a template to new Indian MNC start-ups, who are quickly expanding in foreign markets. The recent global research, namely “Culture & Bottomline” by Solomon & Schell, “Global Dexterity” by Andy Molinsky, has brought “Cross-Cultural Localization” agenda to forefront giving it equal or even higher importance than Tech, Marketing, and Finance in International Business, and with a view that without Cross-Cultural Localization, business would fail in foreign markets. To explain this further the “Cross- Culture Localization” measurement, as suggested by these two eminent researchers, has to be by two variables i.e firstly “Cross- Cultural Score – Consumer” and secondly. “Cross - Culture Score- Employee” in foreign market vs domestic markets. The premise is that these two variables can vi be measured and then co-related with business performance, through a process of primary and secondary research. The other issue is that most of academic and corporate research material on Cross- Cultural Localization is only available for American MNCs and not for Indian MNCs in foreign market, which is the prime reason of inducting this research topic and presenting a thesis on same to provide a template for future Indian startups going to foreign markets and also for corporate academic partnership to further establish it for a series of countries instead of limited scope of this thesis. The Corporates are willing to further fund research on this subject since the scope of this thesis is limited to one domestic market (India) and one foreign market (Saudi Arabia) due to lack of resources. To sum, there is a research gap - in terms of absence of primary research on Culture Score for Indian MNC stepping from domestic to foreign market, and establishing the correlation of “Cross- Cultural Localization” with business performance. In the words of Andy Molinsky (Harvard Business Review 2023), the key variables to be measured in this case has to be “Cross Cultural Score”, “Cross Cultural Adaptation Score” and the “Business performance Index of MNCs”. These three variables hence need to be measured & co-related for future reference of Indian MNCs & Indian Startups going global. Such a study should then follow with ideal “Cross-Cultural Localization” models for each level of “Cross Cultural Difference” measured, forming an Localization tool for International Business managers from India. The above executive summary summarizes the entire research in a nutshell, with Current Research, The Research Gaps identified, the Derived objectives, Null Hypothesis, Range of Significance of measurement, Research Design, vii Finding, Conclusion and Recommendation. The research gap leads to identification of objectives i.e. measurement of Culture scores and Culture adaptation scores through using Primary research dashboard of Culture Wizard Model © and then co-relate them with Business Performance sourced from AC Nielson global reports. The Cultural Difference Score are found to be significant at 2.2-2.7 & P value less than 0.05 rejecting the null hypothesis. The Cultural adaptation score is found to have positive co-relation of 0.82-0.88 with business performance concluding that cultural adaptation done by Indian MNCs directly impacts business performance. The recommendation is a Cross-Cultural Adaptation model for each level of Cultural Difference with both Employee and Consumer adaptation recommendations so that business success is ensured.
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