Banter Without Borders

Globalization's Tribulations: Old (Cultural) Habits Die Hard

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One of the consequences of the recent economic downturn is that more and more companies realize they can no longer continue to grow their businesses successfully on domestic turf alone. In writing of the Japanese pharmaceutical industry, a recent Financial Times* article states: “With diminishing prospects at home…companies have little option but to scour the globe for richer pickings.”  While I do find the notion of Japan manufacturing ‘fat-busting’ products for its rotund Western customers a bit tongue-in-(plump) cheek, it is nevertheless a compelling sign of this trend in action. Whether through shrinking populations, as in Japan’s case, or shrinking earnings figures and GDPs, companies from Bentonville to Bangalore are, more than ever, “[taking] the fight abroad.” For those of us in the global coaching and consulting industry, it signals cultural challenges and tough times ahead.

As businesses expand their operations through various means (M & A activity, joint ventures and the like), they must resist the temptation to fixate solely on the financial picture.  Although this seems obvious, the spate of recent articles on the lack of global mindset and proper attention to cultural context and human capital factors would have us believe otherwise.  In the Harvard Business Review*, Rosabeth Moss Kanter discusses successful mergers, and outlines the importance of attending to the cultural and emotional facets of a transaction in order to “create real value.” In her eyes, “a deal is never a bargain” when these all-important factors are shortchanged.

Similarly, the title of an editorial in last week’s Nikkei Weekly*, “What Good is Globalization without Global Perspectives?”, effectively describes the many frustrations of UK companies who have been operating in Japan, stymied in their attempts to reach across the cultural divide. It is a striking example of how, even when the aforementioned factors are taken into account, and even with thorough due diligence  – and who better for assiduous information gathering than the Japanese – putting globalization into practice is far easier said than done. Old cultural habits die hard.

From the unfolding Kraft and Cadbury drama, where the merging of two major US and UK business cultures is at stake, to the countless discussions as to whether the cultural differences of East and West Germany have been reconciled successfully since the fall of the Berlin Wall, signs of the difficulty in managing cultural interactions are nearly impossible to ignore. With the world’s economic future still uncertain, and companies ramping up their overseas efforts, we can at least be sure of plenty of intercultural activity on the horizon.

* http://www.ft.com/cms/s/0/72688fb8-c9ab-11de-a071-00144feabdc0.html  

* http://hbr.harvardbusiness.org/2009/10/mergers-that-stick/ar/1