A Study on Importance of Cross-Cultural Training in Effective Management of MNCs

Abstract

Recent research has extensively examined expatriates and cross-cultural training (CCT), sparking discussions about CCT\'s objectives, efficacy, methods, and procedural aspects. However, comprehensive reviews integrating all CCT-related research are scarce. These reviews delve into the reasons behind expatriates\' varying degrees of success and failure, considering factors influencing their outcomes. Additionally, the review proposes strategies to enhance CCT effectiveness and identifies areas warranting further research.

Introduction

I. INTRODUCTION

Increasing merger and acquisition activity across global manufacturing and mining sectors is a direct result of the rise of globalization, which is allowing Indian firms, particularly those in the information technology sector, to enter foreign markets. These initiatives highlight the global ambitions of Indian companies, but they also bring difficulties, such as the need for skilled managers who can understand and work within different cultural contexts and connect the dots between parent and branch offices. Also, Indian businesses need to figure out how to manage cultural diversity and provide cross-cultural training for their staff as they work with people from all walks of life and speak all kinds of languages. Employees engaging with foreign expatriates or working in outsourced industries with culturally diverse clientele will benefit greatly from this training, not just Indian expats.

Topics covered in the report include the following: the origins of cross-cultural differences, their effects on business practices, the competencies that expatriates must possess, the evolution of cross-cultural training, the elements that should be considered when creating successful training programs, various training methods, and international examples. The report aims to provide a comprehensive overview of this important aspect of global business management.

II. OBJECTIVE

MNCs recognize the importance of strategic global HR management for success in the global market. They often send senior executives abroad to standardize processes globally and oversee foreign subsidiaries, handling tasks like technology transfer and cultural transmission. Cross-cultural training (CCT) is crucial for expatriates' success but is sometimes overlooked by corporate leaders. The goal of CCT is to help individuals adapt to new cultures and excel in their roles, aiding in familiarization and proficiency. Researchers emphasize the need for an integrated CCT approach to manage international careers effectively and address cross-border differences, gaining a competitive advantage in the global marketplace.

III. LITERATURE REVIEW

Ibraiz Tarique and Paula Caligiuri (2009), This research investigates the impact of absorptive capacity theory on cross-cultural training, focusing on whether prior cultural knowledge influences a trainee's ability to absorb new cultural learning and enhance overall knowledge and cross-cultural adjustment. The study proposed that dividing training components and spacing sessions over time during in-country cross-cultural training would lead to increased cultural knowledge and improved cross-cultural adjustment. Results from an experiment supported this hypothesis, showing that distributed in-country cross-cultural training increased cultural knowledge. Although there was no statistically significant difference between the two groups, the training group demonstrated significantly higher improvements in cross-cultural adjustment scores between the pre- and post-training evaluations. Expats and foreign managers aren't the only ones who could gain from these findings, methodologies, and conclusions. Expats and international managers may benefit from in-country cross-cultural training just as much as they would from pre-departure training, according to the study's authors.

Parissa Haghirian (2010), Globalization has indeed brought the world closer together, facilitating easier connections, communication, and business interactions across borders. However, despite this interconnectedness, cultural disparities persist, posing challenges to the effective communication and transfer of knowledge on a global scale.

This book delves into the realm of cross-cultural management within multinational enterprises (MNEs), specifically examining how cultural variations influence knowledge transfer among different units within these organizations. insights into how MNE management processes can be enhanced. According to the study's findings, cultural variations could not have much of an effect on the sharing of information. Examining the relative merits of intracultural and intercultural knowledge transmission, the book draws on an extensive empirical study including 267 enterprises in Japan and Germany. It also reveals what characteristics help or hurt cross-border knowledge transmission and offerings, which have a major impact on how this information is received, absorbed, and used at the local level.

Bennet et al (2000), Organizations are increasingly prioritizing the development of skills necessary for global competitiveness, often achieved through deploying personnel across borders. This article focuses on cross-cultural training programs designed to enhance the success and effectiveness of these international assignees. It delves into the rationale for such training, its objectives, program components, and the limitations associated with these efforts. Additionally, it briefly touches on supplementary workforce development initiatives for all corporate staff, considerations for selecting consultants, and concludes with an outlook on future trends in this domain. The insights presented here are informed by both research literature and our consulting experiences.

By showcasing the differing acceptance of knowledge in Europe and Asia and highlighting the key factors influencing efficient knowledge transfer, the book underscores the importance of focusing on individual employees' capabilities and beliefs rather than solely relying on technological upgrades for improved cross-cultural management within MNEs.

Harrison, J. Kline (1994), When it comes to expatriate adjustment and performance in MNCs, cross-cultural training (CCT) has been shown to have a substantial favorable effect, according to both theory and practice. Despite this data, CCT has not been widely used in business settings. This is mostly because upper management views it as ineffectual or superfluous. There is also a dearth of a thorough framework for developing and executing CCT initiatives in the current literature on the topic. The purpose of this article is to address this knowledge vacuum by providing a workable framework for CCT program structure, chronology, and content. Additionally, it lays forth broad principles for coordinating these initiatives with the larger international business plans and personnel objectives. Managers and their families serving as expatriate workers may improve their cross-cultural competence, awareness, and ability to work successfully in culturally varied settings by following this methodical procedure. Moreover, MNCs stand to benefit significantly by maximizing the potential of their human resources through the strategic implementation of CCT programs tailored to their specific organizational objectives and global strategies.

Mor et al (2013), Establishing reliable working connections with people from different cultural backgrounds is essential for effective cross-cultural management (Black, Mendenhall, & Oddou, 1991). New executive-level study (Chua, Morris, & Mor, & 2012) shows that increased cultural metacognition is positively associated with developing emotional intimacy and inventive cooperation in cross-cultural settings. Despite these findings, there is still a lack of knowledge about the social cognitive mechanisms that enable highly culturally metacognitive persons to succeed. To fill this knowledge vacuum, we set out to investigate the metacognitive practices that lead to successful cross-cultural partnerships. One of the most important ways to improve cross-cultural cooperation and coordination is what we term "cultural perspective taking," which is thinking about how someone's cultural background affects their conduct in a certain scenario. We postulated that those whose dispositions are less conducive to cultural metacognition would benefit the most from interventions that promote cultural perspective taking. Our research, comprising five studies employing both quasi-field and experimental methods, supports these hypotheses. We found that cultural perspective taking indeed contributes to improved intercultural coordination and cooperation, especially benefiting individuals with lower dispositional cultural metacognition. Many fields stand to benefit greatly from these results, including intercultural negotiations, cross-cultural training, cultural intelligence, and expatriate management.

IV. RESEARCH METHODOLOGY

The review thoroughly explored existing research on cross-cultural expatriate training by examining relevant studies from scholarly journals and electronic databases such as ERIC, PsycINFO, PsycARTICLES, Digital Dissertations, ABI Inform, and Psychology and Behavior Sciences Collection. The researcher also checked reference lists of articles and related publications. They focused on search terms like 'cross-cultural training,' 'expatriates,' 'expatriate training,' 'multicultural training,' 'success of cross-cultural training,' 'failure of cross-cultural training,' and 'diversity training.' Only articles discussing expatriate and cross-cultural training post-1980 were included in the review.

V. DATA ANALYSIS AND INTERPRETATION

Table 1: Pearson correlation

(*) Significant at the 0.05 level.

Hypothesis: There is a positive correlation between Cross-cultural training and its effectiveness in management of MNCs.

The correlation coefficient of 0.481 indicates a moderate positive correlation between cross-cultural training and effectiveness in management for multinational corporations (MNCs). This means that as cross-cultural training increases, the effectiveness in management tends to increase as well. With a p-value of 0.000, which is less than the typical significance level of 0.05, the correlation is statistically significant. This suggests that it is unlikely to have occurred by chance, reinforcing the validity of the relationship between cross-cultural training and management effectiveness. Thus, the hypothesis that there is a positive correlation between cross-cultural training and its effectiveness in the management of MNCs is supported by the data.

VI. FINDINGS

International marketplaces play a crucial role in the prosperity of several sectors, including information technology, telecommunications, manufacturing, and mining. Professionals’ adept at negotiating multiple cultures are in high demand due to this dependency. This need is being driven home by the rising tide of M&A deals that span international borders. Cultural norms and modes of expression vary greatly from one civilization to another. Germany places a premium on individuality and direct dialogue, in contrast to China's collectivism.  The significance of thorough training in efficiently navigating many cultural settings is highlighted by the fact that cultural norm diversity creates obstacles to establishing successful commercial connections. The analysis revealed a significant and positive correlation (Pearson correlation coefficient = 0.481) between cross-cultural training and effectiveness in management within multinational corporations (MNCs). This indicates that as the level of cross-cultural training increases, there is a corresponding improvement in management effectiveness. Importantly, this relationship holds statistical significance with a p-value of 0.000, suggesting that the observed correlation is not merely due to chance. The study was conducted based on a substantial sample size of 100 for both cross-cultural training and management effectiveness, enhancing the reliability of the findings. These results underscore the importance of investing in cross-cultural training initiatives for employees within MNCs, as it can significantly enhance their ability to navigate diverse cultural contexts and ultimately improve management outcomes in global business environments.

Conclusion

The aim of this review was to gather journal articles discussing the successes and failures of expatriates in relation to cross-cultural training (CCT). It explored the definition of success and failure within the CCT context, examined measures of success in CCT training, and identified antecedents or moderators influencing success and failure evaluation. Additionally, the review highlighted several theoretical models proposed by researchers that lack empirical testing. Besides addressing these research questions, the review aimed to identify future research directions. It discovered that there was a lack of study on the topics of success and failure among expatriates, with the majority of studies concentrating on pre-departure training, adjustment, performance, and assessment. There was a lack of theoretical frameworks as well, which prompted academics to test current hypotheses with data. Furthermore, there was a lack of focus on the interplay between training efficacy, learning styles, training methodologies, and expatriate competency. The review noted a geographical bias in the literature, with studies primarily focusing on North American, Japanese, or Chinese organizations, while European or African contexts were underrepresented. Additionally, there was a lack of research on women expatriates despite their increasing presence in the global workforce. Despite decades of research on CCT and expatriation, the review highlighted the inconclusive nature of much of this research due to insufficient empirical evidence. It emphasized the need for better synthesis of literature and the exploration of new research avenues to enhance understanding of CCT\'s design, effectiveness, and implementation in improving expatriate performance.

References

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Copyright

Copyright © 2024 Shruti Gupta. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.