Cultural Diversity and Its Impact on MNCs

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The theme of cultural diversity and its impact on corporations has become a common subject not only in academics but also in research. Globalization has enabled corporations to work across the world hence increasing the effect of cultural diversities. As people of different cultures work together, they encounter challenges ranging from language difference to how they perceive things (Dörrenbächer & Geppert, 2017). Cultural diversity also has some benefits to organizations such as increased creativity and innovation which leads to high productivity. The purpose of this research is to identify ways through which MNCs can improve cultural diversities by minimizing its negative impacts and advancing the positive ones.

How to Improve Cultural Diversities in MNCs

Overcoming the stereotypes and increasing fairness

One of the main strategies of overcoming cultural diversities and its negative impact in multicultural organizations is through increased fairness. Gong (2008) noted that stereotypes can effortlessly create discrimination against marginal groups with cultural variances. The discrimination makes the minority individuals become embarrassed by their culture and lack the will to collaborate with others. Ethnocentrism is the conviction that one’s culture is better than that of other people (Myers, 2015). When ethnocentrism occurs in an organization, conflict arises as people want to prove their culture is better than that of their colleagues. With conflict occurs organization politics which slows productivity hence negatively affecting firm performance. When stereotype, ethnocentrism and discrimination get combined, the effects are very dire that they can make the workplace unbearable for some people. One of the effects is isolation of minorities making them feel unwanted and unfit in the organization. MNCs must recognize that stereotype, ethnocentrism and prejudice can occur hence they have to come up with strategies to overcome biases (Awang-Shuib et al., 2017). Improving fairness and providing equal employment opportunities for all individuals is important in MNCs. In hiring, HR is required to concentrate more on talent than the resume of the applicants. Employers must, therefore, know the aptitudes of minority staffs and develop opportunities for them to adapt and prosper in the organization. The first step, therefore, should be overcoming negative stereotypes and improving equality in pre-employment screening. The job description must be more balanced and new principles such as structured interviews and cultural sensitive test ought to be included in the selection process (Berta, 2006). The screening will help select candidates who are open to cultural differences and who can easily cooperate with people of different cultures.

Fair treatment is important in MNCs but it is not enough for solving the issues of cultural diversities. MNCs need to completely evaluate diversity by handling people as individuals and not viewing them as part of some kind of multi-racial montage (Day, 2007). In addition to fairness, organizations must treat everyone with respect and integrity. Managers as well and workers must treat each other with dignity, by respecting their views and taking a genuine interest in understanding their behaviour or actions. Conversations should have common grounds and should be on areas that do not offend cultural sensibilities. Respect occurs when one feels admired and deeply regarded which makes them feel worthy and it enables them to bring out their good qualities. Integrity, on the other hand, is being honest and having strong moral principles (Hoch, 2013). These two aspects can enable one to fit more in a diverse culture hence reducing the negative impact of cultural diversities.

Vangen & Winchester (2014) conducted a research whose findings collaborated with those of previous researchers whereby it was concluded that focusing on inconsistencies and their intrinsic tensions improves the understanding of collaboration in manners mainstream theories cannot. The author recognizes that cultural diversity causes specific management tensions making collaboration difficult. By the nature of tensions, they cannot be solved by favouring one. The author suggests that the solution is not looking for the correct answer, rather, embracing the philosophies of a culture paradox and accommodation in reducing cultural diversity tension. This view stresses on the critical role of administrative judgment (Ospina &Saz-Carranza, 2010) and also enables managers to make wise resolutions and collaborate effectively through cultural diversity.

Developing a strong organizational culture

Organization culture emerges as an organization grows and begin to experience success and failures, encounter challenges that necessitate immediate reaction and behavioural adjustments (Schneider et al., 2013). During the early years of an organization, founder’s attitude, assumptions and prior experiences plant the seed of organization culture that reflect values and patterns in that entity. The values that are promoted by leaders and founders have a substantial effect on values exhibited by organizations (Madu, 2011). In regard to MNCs, culture is defined by the activities of the local organization, especially on how management behaves. As new employees join the organization, they adapt to the organization culture which becomes a trend. A strong organizational culture is good because it influences the impact of culture on behavioural patterns. Organization culture is said to be strong when it is widely shared and accepted by the members of the MNC (Shahzad et al, 2012). Therefore, MNCs must create strong organizational cultures that can improve diversities among workers. Management of cultural diversities is the creation of a shared culture in which persons from varying countries can securely work together and where their cultural dissimilarities are not felt (Seymen, 2006). Organization culture in MNCs should be a mechanism of providing a sensation of unity at all levels to individuals from different nations and deliver corporate dependence. Creating a common culture will create a platform for understanding the diversified views of employees. Similarities among different members improve cohesion and unity which in turn leads to accomplishment of the organization goals. The idea of organizational culture holds attitudes, values and norms which reinforce business actions and help shape behaviour of organizations (Randlesome, 2002). Organization culture assimilates workers around common values enabling them to act in a suitable behaviour model. Although organization culture is formed temporarily in the process of being an organization member, it is long-lasting. Hence, it is important to create a strong culture because it will remain the organization for years. Organization culture, however, is managed by changing practices. For instance, Vo (2014) argued that it is possible for people to keep up with communal culture of the organization by choosing contenders suitable to the organization’s values and beliefs.

Powell (2011) noted that organizations benefit when they endorse involvement of workforces from all groups in the organization culture. The concentration of including these employees is on the nature or quality of work relationships between workers from different cultures. Powell advises organizations not to forget the need for inclusion in promoting diversity in order to obtain full advantages of having a well-coordinated dissimilar labour force. The author continues to state that individuals have a tendency of being more attracted to and get more relaxed in social settings in which they interrelate with people like themselves. Therefore, unless probable glitches associated with diversity are handled, its benefits cannot be fully realized. These benefits include increased creativity and innovation which contribute positively to an organization’s productivity.

Cross-Cultural Training

Cultural diversity and the ability to manage diverse cultures has been beneficial to many organizations and individuals. Thomas (2016) gave examples of four highly successful individuals with multicultural backgrounds. The first was Carlos Ghosn who was born in Brazil, educated in France and now a superstar CEO in Japan and who is known in turning around the fortunes of Nissan. The second individual is Ralph Baer born in Germany, grew up in the United States and who is now the Father of Video Games and who received the National Medal of Technology in 2004. Third is Arianna Huffington who was born in Greece, moved to UK at the age of 16 and who is one of the most prominent women in media, the president and editor in chief of The Huffington Post Media. Lastly is Muhtar Kent born in New York City and attended high school in Turkey then earned his undergraduate in UK and is chairman and former CEO of Coca-Cola Company. The four individuals have succeeded in multiculturalism and have gained experience that has enabled them to perceive and process information differently thus having multicultural minds or cultural intelligence. Thomas (2016) argues that it is only through learning, tolerance and understanding that the four individuals gained the multicultural minds hence overcoming the negative impact of cultural diversity and emerging winners for their careers as well as the organizations they work for.

Management and employees in all MNCs should undergo cross-cultural training. Taking a culture inventory of the company’s demographics is the first step in improving culture diversity effects. Getting to know how many different nationalities, cultures and ethnic groups are represented enables HR to come up with an effective training program (Mor et al., 2013). The results should be published online for the employees to know and the posts on how the workforce is making progress should be regularly updated. Communication is integral in an organization because it not only passes information but makes employees feel valued (Berkenkotter & Huckin, 2016). The HR should also craft a statement of intent on diversity and cultural positivity. The statement should have support and must be cosigned by top management to it make more enforceable. The declaration has a clear target and gap regarding where the company wants to be and should also detail on how to get there. This declaration is similar to the goals of the organization which define the company’s purpose and assist in achieving the objectives.  The cross-cultural training also requires use of mentors who help leaders and junior staff relate to and understand people of other cultures (Lenartowicz et al., 2014). The mentorship relationship should be continuous as learning is an ongoing process. Some individuals may not be comfortable with mentoring and may require motivation to make them interested in the program. Cross-cultural training helps reduce the potential cultural faux hence maximizing positive outcomes of intercultural interactions. The training involves exploration of different verbal and non-verbal communication styles since they are one of the leading causes of misunderstandings across people of different cultures. The misunderstandings are the beginning of cultural diversities negative impact since they create a reduction in productivity and effectiveness owing to absence of knowledge or recognition of cultural differences (Matsumoto & Hwang, 2013). Difficulties in communication also ascend from observable linguistic variances in cultural values which are frequently involuntarily implanted in individual’s behaviour. Training enables people to be aware of not only their colleague's cultural values but also their and how they are perceived by others. The insight gained from cross-cultural training helps build intercultural competence among staff essentially for the good performance of the organization. 

Eriksson and Hagg (2016) studied how to manage cultural differences across workforces by concentrating on India and Sweden where they found that knowledge of cultural variances will add to a better understanding of how these variances can be coped. The study looked to answer the question of how Swedish multinational organization operating in India can lessen the cultural gap within its cross-cultural labour force. In responding to the issue at hand, the authors studied four aspects of culture namely time, relationships, hierarchy and gender equality. The study concluded by recommending that Swedish managers should develop some awareness of different cultural values and fathom how to prioritize one cultural norm over the other so that they can lessen the cultural gap. Managers are also required to obtain extensive understanding of cultural diversity to sufficiently select the cultural norm to employ. Moreover, the study found that culturally diverse workforce encourages competitive advantage if managed properly since individuals from diverse cultures contribute with different views, talents and concerns. In learning individual and other people’s cultures, the authors found that time and circumstance must be well thought-out to permit formal and informal discussions between personnel. MNCs should have physical meetings in harmless settings for the workers to feel contented and to easily work together as a workgroup.

Averweg & Addison (2015) used a three-phase Delphi study to manage the challenges of managing cultural diversity and determine how companies in South Africa can overcome the problems. The authors found that having project or team leaders who are mindful of cultural diversity concerns was a step in improving the impact of cultural diversity. The two authors also concluded that increased emphasis on goals, objectives, boundaries and tasks helps in creating cultural differences awareness hence solving them. Lastly, the authors advised MNCs to conduct thorough checking to ensure all requirements, instructions and methods are completely understood by all employees and management teams.


            Cultural diversity will continue to exist as long as there is globalization. The diversity has both positive and negative impacts which can be increased and decreased through use of effective strategies. The desirable impact of cultural diversity is increased productivity and innovation arising from output from people of different cultures who in many instances have different views and opinions hence increasing creativity. When culturally diverse groups collaborate well, an organization gains competitive advantage. This study, therefore, has discussed how MNCs can minimize the negative effect of cultural diversity to gain from its benefits. The strategies include overcoming stereotypes and increasing cultural awareness, developing strong organizational culture and conducting effective cross-cultural training. MNCs which implement these strategies are seen to improve the impact of cultural diversity which increases productivity of the organization.




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January 19, 2024

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