Globalization and Culture in the context of Intercultural Management

Term Paper 2010 19 Pages

Economics - International Economic Relations


Table of Contents

1. Globalization
1.1 Definition
1.2 Globalization in the past and nowadays
1.3 Globalization and the future
1.4 Conclusion about the Chances and Risks of Globalization

2. Culture
2.1 Definition
2.2 Cultural diversity
2.2.1 Different cultural models The 5- Dimensions of Hofstede The 7-Dimensions of Trompenaars Cultural Categories by Richard D. Lewis
2.3 Culture and its role
2.4 Cultural values and social responsibilities

3. Globalization and Culture

1. Globalization

1.1 Definition

The term globalization is very broad and therefore it is necessary to define it.

First of all it is important to know what the word global itself means, “involving the entire earth” or "neither national nor continental but planetary" (http://dictionary.reference.com).

But in order to be able to imagine how profound globalization is, it is by far not enough just to say that our whole planet is involved. It is essential to look at all the different aspects of affairs all around the world.

In order to do that, a business definition shall help to understand the economic view; globalization is “the creation of international strategies by organizations for overseas expansion and operation on a worldwide level. The process of globalization has been precipitated by a number of factors, including rapid technology developments that make global communications possible, political developments such as the fall of communism, and transportation developments that make traveling faster and more frequent. These produce greater development opportunities for companies with the opening up of additional markets, allow greater customer harmonization as a result of the increase in shared cultural values, and provide a superior competitive position with lower operating costs in other countries and access to new raw materials, resources, and investment opportunities.” (http://dictionary.bnet.com)

But as already mentioned that is only the business point of view, to look at globalization in the whole, a lot of different aspects have to be considered. It also involves fields like medicine, engineering, education, law, religion and politics as well as arts and music. Technology plays a big role in this context, it does not only help to utilize resources all over the world, no it does also helps to operate economically with scarce resources. Apart from this, technological advances have given us the opportunity to travel and communicate worldwide; most important here is the internet which has made it possible to perform even faster. This implicates an increased connectivity, but also an increased competition.

Another important aspect is the cultural one; every culture has its own fundamental values, especially in law and politics. With all the different cross-border activities there also is a shift in moral values between the different cultures.

Sometimes western civilizations are even accused of exporting their forms of government, their ideals and lifestyles along with their goods. Frequently this westernization encounters resistance, for example in Islamic countries where state and church are not separated.

Having considered a lot of different aspects to show the broad sense of globalization it becomes explicit that there is no precise definition that experts agree on.

However there is one further point of view which looks at globalization differently: “The Era of Globalization is fast becoming the preferred term for describing the current times. Just as the Depression, the Cold War Era, the Space Age, and the Roaring 20's are used to describe particular periods of history; globalization describes the political, economic, and cultural atmosphere of today.” (http://usforeignpolicy.about.com)

1.2 Globalization in the past and nowadays

Looking at globalization and its definition, we have to be aware of the fact that this is not a recent phenomenon. Trade has already been spreading all over the world in early modern period, for example goods like spices and china have been imported from Asia to Europe, from Africa came valuable ivory. Consequences of trade have been exploitation of the newly discovered continents. As a result of this the tradesmen became richer and more powerful. They started to intervene in international politics and therefore helped to pave the way for colonialism in the following centuries.

In the 17th and 18th century the mercantilism establishes itself as the sole economic theory which then leads to a restraint of the sprawling world economy. In the 19th century the mercantilism has been replaced by the liberalism. After the Napoleonic Wars the first blossom of international trade started, first big accomplishments have been achieved in the second half of the 19th century. However the upswing of the world trade has been interrupted by the First World War as well as the Great Depression, which started with the collapse of the stock market in New York in the year 1929. A further setback came with the beginning of the Second World War after which the boom of the global trade eventually got started caused by the western industrial countries. This shows that “no matter what size, almost all firms around the world are affected to some extent bay globalism. They are affected through economic interdependence - as well illustrated by the domino effect on profits and financial markets around the world resulting from financial problems in Asia and Russia in 1997-1998 - and by global competition.” (Deresky, Helen, International Management, 2000, p. 6)

Then after a basically steady development of the world economy and the international trade, today we are facing a second world depression which is the consequence of the recession of an ordinary economic cycle (see Ill. 1) but has been reinforced by the crisis in the financial sector.

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Illustration 1: Economic cycle (http://www.newlearner.com)

1.3 Globalization and the future

Not only should globalization be understood as a chance for a new world order [not meaning “The New World Order”( http://www.newworldorderinfo.com) mentioned in the Obama Deception], no an order in which the majority of the people on this planet have equal chances, but also for a new way of cultural exchange and wealth for the broad masses.

In an interview with the futurologist Professor Radermacher he explains three different possibilities for the future. “First of all a collapse of the ecological systems, secondly a “Brazilianization” to the disadvantage of living standard for the outweighing part of the people, also in the rich world, among others as a result of the adaption of costs to the scarcity of resources […] and thirdly an attractive, with sustainability compatible balanced development, if we will succeed to entrench a convenient international order including required mechanisms of cross-financing.”(Peter Mühlbauer, 18.09.2008, Telepolis) He prefers the third model which is called the “worldwide eco-social market economy” and explains in the following what would have to change in order to achieve it. “Contracts for a consequent protection of the environment worldwide would be necessary on the one hand. Those are economically about the internalization of external effects so that prices, for example in international transport, are saying the “truth”. Such a consensus among the states of the world probably requires in the sense of a giving and taking substantial methods of cross-financing of the rich world for the developing countries. That concerns among others securing a decent education for all people on this globe, just like it is already stipulated in the United Nations Millennium Declaration until the year 2015.”(Peter Mühlbauer, 18.09.2008, Telepolis)

Finally it is obvious that Globalization, if begun at the right end, could be a big chance to really make a change in the world. But in order to achieve a better standard of living for everyone, especially in the developing countries, it will be the task of future managers to use their intercultural knowledge and competences to help to establish these “methods of cross-financing” and to turn away from profit-oriented managing.

1.4 Conclusion about the Chances and Risks of Globalization

At first sight it seems like globalization is the big chance for our world economy, due to the fact that all kinds of MNEs are producing in low-wage countries, the people there have work and private capital is flowing into the country which then can be used to invest in new technology. The proponents also argue that another outcome is the dissemination of knowledge which can be seen as human capital in those developing countries. Thus this change in the world can be seen as first step in the direction of a world with equal chances. For example there have been significant reductions in poverty in countries which have adapted to the world economy such as China, Vietnam and India.

But as it is in life, to every positive view on a subject, there is always a critical one. In this case the opponents expect that the poverty will grow steadily and only a small segment of the population will profit from the changes. On top of that the dependence on corporations in those developing countries will increase even more and at the end these people will be the exploited ones. To sum up the chances and risks of globalization the following table will give an overview about the most important ones.

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(Siemens AG, Globalisierung aus Sicht der Wirtschaft, 2002, p.83)

All in all the most effective way to deal with changes that come with the international integration of markets for goods, services and capital is to be honest and open about them. With this approach the World Bank is expecting that until 2030 the developing countries will have increased their share in world trade so much that they will almost reach the level of the high income countries (see Ill. 3).

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Illustration 3: World Trade in the Future (http://siteresources.worldbank.org)

2. Culture

2.1 Definition

First of all it is important to know where the word culture has its roots; the origins are to be found in the Latin word “cultura” which is often associated with worship or cult. Geert Hofestede once defined the notion culture as “the collective programming of the mind which distinguishes the members of one human group from another. […] Culture is to a human collectivity what personality is to an individual.”(Hofstede, Culture’s Consequences, 1984, p. 21) To understand what is meant by “programming of the mind” we have to understand that Hofstede sets out from the point that human behavior is predictable since everybody implements “mental programming”(Hofstede, Culture’s Consequences, 1984, p. 14) up to a certain degree. He describes three levels of “mental programming” (see Ill.4).



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Stralsund University of Applied Sciences – Wirtschaftswissenschaften
globalization culture intercultural management



Title: Globalization and Culture in the context of Intercultural Management