Huffpost Business
The Blog

Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors

Elizabeth Filippouli Headshot

Cultural Understanding and Global Thinking in Business

Posted: Updated:
Print Article

Information technology has penetrated almost every aspect of our lives, "shrinking" our world into a global village. Economies and cultures have come closer. People are now aware of the cultures, traditions, lifestyle, living conditions prevailing in almost every corner of the world. Interestingly, this is going beyond awareness and into a state of integration that is a result of cross-pollinated views, ideologies, products and services. This evolution is termed as "globalization."

The consequences of every individual action have been amplified, making a substantial impact on the world outside. Incidents occurring in remote areas of the world affect other countries; local businesses face competition from foreign corporations, regional uprisings can inflate oil prices, share trade in Europe can be a cause of economic tremors in America. This reality has created a new ideological context that calls for international social responsibility and accountability that goes beyond individualism, beyond borders, highlighting the importance of global thinking. We need to extend the mode of concern for individual actions from local boundaries to a global level.

I will attempt to discuss the idea of global thinking and cultural understanding in the context of the business world. Multinational firms whose operations are borderless have to consider the cultural variability of different regions of the world and develop cultural understanding. Major cultural constraints encountered by businesses include local attitudes, taste preferences, language, religion, management style, gender discrimination, skills, personalities, education, etc. To be successful, they need to mold their business actions in accordance with the local cultural models, they need to establish a global mindset.

Let's consider an example of the food giant, McDonald's. The company enjoys a global presence; operating in more than 100 countries serving 70 million people every day. Their headquarters and senior management are U.S.-based but they entrust their local operations to local managers of the countries they operate in. Operations in more than 50 percent of their outlets are franchised. Furthermore, their menus are customized according to cultural habits and local taste preferences in every country. It is without a doubt that global thinking and cultural understanding are both powerful business tools which allow multinational firms to dominate the local markets and establish a global presence.

A new idea gaining momentum among global business leaders is looking at constraints as opportunities, capitalize on them. Achieving this is just three steps away; think global, think cultural and be a global and cultural thinker at the same time. Globally expanding businesses require a wide range of expertise and knowledge that operates under a variety of managers coming from different cultures. These brains come up with strategies and policies that can find applications acceptable "glocally" (globally and locally). In order to benefit from the ideas of global thinking and cultural understanding, firms need to develop three types of assets: intellectual, social, psychological.

Intellectual capital can be secured by building and managing global alliances, partnerships and value networks. Inevitably, conflicting demands of local stakeholders and corporate headquarters create tensions; this issue must be managed efficiently. Finally, a major concern that comes up is that of understanding the cultural similarities, differences and histories between host and guest. This issue can be addressed through intense study of cultures and by bridging gaps through employing management that commands the cultural fundamentals of host countries.

Building social capital is the third and most important step towards global thinking and cultural understanding. It calls for establishing trusting relationships with local stakeholders including local customers, suppliers and employees. Managers must have the skill to spark positive energy in people who come from different parts of the world -- and excite them. They must be able to connect those people, allow them the space to cross-fertilise ideas and achieve the highest degree of collaboration.
Psychological capitalization demands adaptability, self-confidence, resilience and optimism. Managers need to cope with cultural differences in positive ways, i.e. respect towards different cultures, willingness to learn and adapt to new cultures; they need to acknowledge the significance of cultural diversity, show readiness to embrace initiatives and opinions regardless of which culture they come from; and they need flexibility to move around in culturally prolific environments.

Local crises are of different nature: geostrategic, economic, cultural, political, historical, social. However, a common denominator is that we need to rethink they way we do business. If we want to succeed, we have to develop a new global mindset that will combine international talent management and development while building on interlinkages between diversity and innovation.