Since the Industrial Revolution in the 18th and 19th centuries, the world has slowly become a global village. Today, most businesses have expanded their operations internationally to serve a broader customer base. Internationalization of business provides several benefits to the organization, including increased revenues, disposal of surplus goods, reduced competition, better risk management, access to export financing, longer product lifespan, and benefits from currency exchange. However, internationalization presents some challenges due to differences in cultures, languages, and time zones (Moreira & da Silva, 2018). Organization XYZ, whose headquarters are in the Kingdom of Saudi Arabia (KSA), plans to expand its business to Denmark and Mexico. The organization deals with the production of mobile devices. Before the expansion, organization XYZ needs to understand the cultural dimensions of the people of Denmark and Mexico to ensure successful coordination of business. This paper will explore the similarities and differences in cultural dimensions between Denmark, the KSA, and Mexico, how the cultural dimensions of the three countries will impact leadership styles, leadership behaviors, and the decision-making process of leaders, what leadership behaviors based on the Globe research leaders should understand and why it is crucial for leaders to understand cultural differences before doing business in other countries. Cultural competence is essential for all organizations to promote an open, collaborative and productive work environment.
Hofstede’s Cultural Dimensions-Similarities and Difference
Greet Hofstede developed Hofstede’s Cultural Dimensions Theory in 1980 to help people understand cultural diversity across countries and identify how people from different cultures conduct business (Bissessar, 2018). Hofstede established six categories that characterize culture. The first category is power distance, which describes a culture’s attitude towards power inequality in an institution or an organization. According to Hofstede Insights (2022), people in Denmark have the least tolerance for inequalities in power distribution in the workplace. Denmark ranks first among the twenty-seven European Union countries in terms of organizations giving their employees the freedom to control their work situation. On the other hand, people in Saudi Arabia have the highest tolerance of unequal power distribution compared to Denmark and Mexico. The second category is individualism which measures the extent members of a society depend on each other. Denmark has the highest score in individualism, meaning that members of that society prefer taking care of only their loved ones and themselves (Hofstede’s Insights, 2022). Therefore, people working in Denmark do not need to build relationships first. On the hand, people in Mexico and Saudi Arabia prefer to live together as a community and take care of each other.
Masculinity is the third category, which describes what motivates people in a particular society. Achievement, competition, and success drive those who score high in masculinity, while the quality of life and caring for others drive those who score low in masculinity. Mexico and Saudi Arabia score high in masculinity, while Denmark scores low in masculinity (Hofstede’s Insights, 2022). The fourth category is uncertainty avoidance, which measures how a particular community feels threatened by unknown situations. Denmark scores low in uncertainty avoidance, which means the people in that society do not need a lot of predictability in their work. However, Mexico and Saudi Arabia score high in uncertainty avoidance. Long-term orientation describes how people in certain cultures link some of their past while tackling present and future challenges. Denmark, Mexico, and Saudi Arabia score low in long-term orientation, with Mexico scoring the lowest, meaning they prefer to maintain the links of their past while viewing change with suspicion (Hofstede Insights, 2022). The last category is indulgence, which is how individuals manage their impulses and desires. Mexico scores the highest, followed by Denmark, and the last is Saudi Arabia.
Cultural Dimensions and Leadership
The culture of a particular society has a significant impact on leaders’ leadership styles, leadership behaviors, and decision-making process, which is why cultural competence is a vital skill that leaders should possess (Whitfield, 2014). This section will discuss four cultural dimensions, power distance, individualism, and masculinity, which are impactful for organization XYZ as it expands its operations to Denmark and Mexico. Denmark scores low in power distance, which means that people in the country do not tolerate unequal power distribution. Therefore, the organization may want to change the leadership style and decision-making process they use in Saudi Arabia in Denmark and instead decentralize the power and engage employees in decision-making on issues concerning the organization (Guldbrandsen, 2019). The company can use the same structure they have in Mexico because they have almost the same power distance. The organization will use a different approach for Mexico and Denmark, considering the individualism dimension. In Denmark, they can start business immediately without first building relationships. The leader will also not have to constantly engage in conversations with employees and keeps small talk at a minimum. However, the situation should be different in Mexico. The leader should focus on building relationships and constantly communicating with the employees. The leader should also care for the employees’ well-being and strongly emphasize group relations (Guldbrandsen, 2019). Liking what one does motivates people in Denmark. Therefore leaders in Denmark should provide employees with a conducive work environment, such as flexible working hours, and involve their employees in the decision-making process to feel like they are part of the organization. However, in Mexico and Saudi Arabia, which score high in masculinity, the leaders should motivate people to strive to be the best such as awards for the best employees.
GLOBE and Cultural Dimensions
GLOBE identified six leadership behaviors essential in diverse cultures. The leadership behaviors. However, leaders of organization XYZ should understand three of the six behaviors as they plan to expand their operations to Mexico and Denmark. The first is charismatic or value-based behavior, which is the ability of a leader to use their fundamental solid values to inspire their employees (Openstax, 2019). The leaders should lead by example. For example, being the best motivates people in Mexico. Therefore, the leader should be the best to inspire the rest to be the best. The second is team-oriented behavior, which is the leader’s ability to promote collaborative teamwork. Collaboration among teams is vital to ensure the smooth running of operations. Therefore a leader should know how to form a strong team in Denmark, where the society is individualistic. The final behavior the organization should understand is participative behavior, which entails involving employees in decision-making and implementation (Openstax, 2019). For example, people in Denmark have a low tolerance for power distribution inequality, and they prefer that the leaders involve them in the decision-making process. Although Mexico tolerates power distribution inequality, the involvement of employees is essential because it makes them feel like part of the organization, which increases their efficiency.
Understanding Cultural Dimensions
Businesses need to understand cultural differences before they venture into a new country to ensure they create a collaborative and productive work environment (Jenifer & Raman, 2017). Understanding the different cultures will also help them decide on the leadership style or approach they will apply in specific countries. For example, suppose organization XYZ does not know that people in Denmark have a low tolerance for power distribution inequalities. In that case, they may implement the same structure they have in Saudi Arabia, which has high tolerance, affecting the work environment. The organization will retain employees because the environment will be unconducive to that culture. The organization should also understand what motivates individuals in a certain region. For example, the organization cannot use the exact motivation mechanism it uses in Saudi Arabia in Denmark because what motivates people in Denmark in liking what they do and being the best motivates people in Saudi Arabia. Therefore, organizations need to understand the differences in cultures in different countries before expanding their operations to ensure a smooth flow of business after the expansion.
Conclusion
Most organizations are expanding their operations to different countries. Some of them succeed while others fail. Understanding the cultures of different countries before expanding the business is crucial to ensure that the organization provides a working environment in line with the cultures of specific countries. Organization XYZ plans to expand its operations to Denmark and Mexico. However, both countries have different cultures, which means that the organization cannot use the same approach for both offices. Cultural competence is essential because it promotes an open, collaborative and productive work environment.
References
Bissessar, C. (2018). An application of Hofstede’s cultural dimension among female educational leaders. Education Sciences, 8(2), 77.
Guldbrandsen, E. (2019). Management of cross-cultural teams. Roskilde University.
Hofstede Insights. (2022). Country Comparison. https://www.hofstede-insights.com/country-comparison/denmark,mexico,saudi-arabia/
Jenifer, D., & Raman, G. (2017). Cross-Cultural Competence an Essential Skill for Employees in Today’s MNC. Arcadia—International Journal for Literary Studies, 5, 167-172.
Moreira, A. C., & da Silva, P. M. F. (2018). Internationalization in Business-to-Business Markets: The Importance of New Product Development. Handbook of Research on Entrepreneurial Ecosystems and Social Dynamics in a Globalized World, 460-487.
Openstax. (2019). Principles of Management. Openstax.
Whitfield, D. (2014). Servant leadership with cultural dimensions in cross-cultural settings. In Servant leadership: Research and practice (pp. 48-70). IGI Global.
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