Chapter Four

Managing intercultural diversity

4.1 Norms and Values

Norms

 Is unwritten rule followed by a group of people.

 It is a way of behaving which has become accepted practice within a
group, or society.

Norms can be defined as attitudes and behaviors common to members of a

particular group, or what they believe is “normal”. For example, most cultures
require that people wear clothes. Some even have laws to enforce this dictum: in
many western countries, a naked person in public will be arrested with a charge of
“indecent exposure”.

We have norms about how we speak. How you address your grandmother is
probably different to how you talk with your spouse, and this is also different to
how you speak to your boss, or our children. Your choice of words, your tone, and

your body language are all norm-based. Nearly everything in human

society is governed by norms of some kind . This is why it feels so
strange to go to a very different culture, where their norms are so different to what
we are used to – but it is normal to them.

As groups, organizations have their own norms. When you move from
one job to another, whether between companies, or even within the same
organization, part of learning your new role does not just understand the tasks you
must perform, but also the unwritten rules – the norms – associated with that task.

Values –
Basically, our values are what are important to us. All of us
constantly exhibit our values every day. How you think about the car you
drive and the environment determines whether you purchase a hybrid car or an

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SUV. The way we dress tells a lot about your values; do you have an untucked t-
shirt and messy hair, or do you wear a button-down collar, blazer, and use a comb?
If you are sarcastic in your comments you might value humor in your social
relationships, but a person who is always polite may place a higher priority on
respect.

Values concentrate on different areas: some may be general life values, but we
also have family values, cultural values, and work values. And as people have
values, so do organizations. Today, nearly everybody who has worked for a
company is familiar with the concept of company values.

A company’s values usually first appear at orientation, and you will

probably be reminded of them at various times during your
employment. Perhaps you hold them dearly; you can recite them, and believe
you apply them on a daily basis. You may feel that values unite the organization
into a common way of thinking. These are the espoused values of the company:
the values the company says it has.

But what does the company actually do? How does it really treat its employees, its
customers, the environment? These are the values-in-action, or the values the
company puts into practice.

Imagine an innovative engineering company where one of its values is

“Teamwork”. The manager of a research team claims that as the manager, he is
responsible for all of his team’s new ideas, and even files the patents for them in
his own name. He is then given awards for the high number of patents he has
filed. The company is rewarding individual effort, which contradicts its value of
teamwork. Employees may start to hide their work from the manager, to keep the
patent in their own name. Over time, this can become a norm in the organization.
People sometimes join companies because their personal values match the
company’s values. However, employees become disillusioned when the company’s
espoused values do not match its values-in-action. In a person, this kind of
behavior is called hypocrisy, and nobody likes a hypocrite.

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World Views

A worldview is a theory of the world, used for living in the world.

A world view is a mental model of reality — a framework of ideas
& attitudes about the world, ourselves, and life, a comprehensive
system of beliefs— with answers for a wide range of questions:

What are humans, why we are here, and what is our purpose in life? What are
your goals for life? When you make decisions about using time — it's the stuff life
is made of — what are your values and priorities? What can we know, and
how; and with how much certainty? Does reality include only matter/energy, or is
there more?

4.2 Cultural Diversity and Reactivity

CULTURAL DIVERSITY
Diverse workforce (diversity) refers to the co-existence of people from various socio-cultural
backgrounds within the company. Diversity includes cultural factors such as race, gender, age, colour,
physical ability, ethnicity, etc. (Kundu and Turan, 1999). Diversity includes all groups of people at all
levels in the company. Diversity requires a type of organizational culture in which each employee can
pursue his or her career aspirations without being inhibited by gender, race, nationality, religion, or other
factors that are irrelevant to performance (Bryan, 1999). Managing diversity means enabling diverse
workforce to perform its full potential in an equitable work environment where no one group has an
advantage or disadvantage (Torres and Bruxelles, 1992).

Opportunities in cultural diversity

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Cultural differences can have both positive and negative impacts on organizations.
However, undoubtedly, these differences would not be considered as hazards but
rather opportunities and benefits if they can be managed well (Day, 2007). The
opportunities and benefits include, but not only include, innovation,
competitiveness and knowledge transfer; increased attraction to minority
customers (Baum et al, 2007); better talent recruitment and retention; and labor
cost reduction. Successfully managing cultural diversity can also help companies
to diversify supply base by developing business partnership with minority-owned
vendors to drive quality up and cut cost down (Ruggless, 2003), and help
companies to enhance corporate images in neighbor communities as well
(Fernandez, 2006). Take the Hispanics for instance. Since it is estimated that
Hispanics will soon exceed African American as the nation’s major minority group
(Fullerton & Toossi, 2001), managers should concentrate on hiring and educating
Hispanics to use their input and ideas, which will help the companies to develop
marketing and product strategies to target this increasing demographic in the
United States. The benefits of targeting this growing Hispanic culture within the
U.S. can aid the companies to increase market share and profitability (Elmuti,
2001).

Generally, among the benefits of cultural diversity, four are frequently mentioned
in the literatures as the main reasons why companies in the hospitality industry

endeavor to be diverse. The benefits include valuable innovation,

effective knowledge transfer, increasing competitiveness and
building image.

Valuable Innovation

First of all, diversity often stimulates new business innovations (Johansson, 2007).
Employees with multicultural backgrounds and experience can bring in the
industry more improved innovation by providing new ideas from their different
viewpoints. If employers can understand and appreciate their different kinds of
values and different ways of viewing the world, the companies can greatly take
advantage of the benefits that differences bring in. Many surveys reveal that if a
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team or a general workforce includes individuals with different cultures
backgrounds, more effective resolutions can be presented for the business
problems. When compared to homogeneous employee groups, diversified
employee groups show outstanding performance in the long run and efficiently
take responsibility to their duties. This difference is partially caused by the
increased creativity and novelty in multicultural teams that come from the diverse
perspectives, views and experiences of their team members (Seymen, 2006).

Effective Knowledge Transfer

Cultural diversity can be helpful in knowledge transfer because, when employee

from different country come to the organization; they come with different
knowledge and share that knowledge as well as skill with others. Currently,
developing countries focused on knowledge and technology transfer from
developed country when they hire workers from advanced nations. Although
human beings come in different colors, shapes and forms, they do not seek to be
different from others. Rather, people prefer to be with their own kind (Denton,
1997). Most people agree with that when two strangers come together, it is much
easier for them to break ice if the two have some common backgrounds or
experience. In the workplaces, obviously, it is much easier to communicate and
transfer information and knowledge if some of the employees speak the same
language, have the same cultural background, and think or behave in similar ways.
Efficiency increases simply because that misunderstanding can be greatly reduced
by eliminating communication barriers from cultural differences. For example, it
would be more efficient for a training manager with Hispanic cultural background
to give training courses to employees with Hispanic origin. This easier knowledge
transfer greatly enhances the working efficiency and productivity.

Increasing Competitiveness

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Effectively managing cultural diversity increases companies’ competitiveness. The
hospitality industry is an extremely competitive one. To survive in the competition,
companies in this industry will have to control labor costs and increase customer
count. In order to achieve these goals, companies must learn how to motivate
employees, decrease turnover, and attract more customers. Successful diversity
management will definitely do help (Belfry & Schmidt, 1989).

In today’s dynamic markets, companies have to serve various customer groups

with different characteristics. Hence, cultural diversity in the workforce can help
companies to develop their capability of understanding customers’ needs and
keeping long-term business relations with them.

Building Images

Cultural diversity can help to enhance corporation images. The hospitality industry
has been somewhat passive about building a positive industry image for the public
(Fernandez, 2006). It should take some actions to build an image that this industry
is willing to recruit more valuable minority employees from diverse cultures. This
kind of message can attract more young people to take hospitality as a possible
career option. In addition, diverse cultural workforce can make a company look
and feel more like the neighbor communities that it serves. This kind of images can
help the companies in the hospitality industry to be better recognized and
accepted by diverse communities.

Challenges of Cultural Diversity

Aside from the benefits, hospitality industry still faces challenges of cultural
diversity (Baum el al, 2007).

Communication Challenges

Different languages and various cultural backgrounds increase the difficulty of

communication between employees in the workplaces. Language is always viewed
as a crucial one among all the cultural features that make up cultural identity

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(Ganen, 1999). The second factor that causes communication gap is the cultural
background differences. Rather than coming naturally, communication
competence is a learned process like some other skills, which therefore increases
the difficulty employees with different backgrounds to understand each other
quickly and correctly. In addition, an intercultural communication may encounter
more specific problems than a communication with one culture does. With different
knowledge or experience, people in an intercultural communication have more
difficulty to interpret others’ behavior, which increases their uncertainty of how
other persons will respond to the communication (Baum et al, 2007). Employees of
a company with diversity environment are therefore often poorly prepared to
manage the high uncertainty experienced in intercultural communication.

Training Challenges

Diversity training aims at building up respect and increasing sensitivity for all of
the differences among employees and customers. In order to develop a diverse
workforce, it is essential to reduce cultural ethnocentrism and shortsightedness in
employees (Lim & Noriega, 2007). Multicultural training will play a key role to
increase the awareness of cultural diversity in employees and build up a culturally
enriched environment in a company (Baum et al, 2007). Training needs to be
conducted to employees to help them to understand the requirements and
benefits of the cultural diversity. They should also be given training to increase
their knowledge and skills of dealing with people having different cultural
backgrounds (Baum el al, 2007).

Discrimination Issues

As a visually oriented species, people tend to notice differences and seek to be

with their own kind. In the history of human beings, most of the bloody battles
have been between social or cultural groups. It seems that people are inclined to
choose enemies based on cultural differences. One of the reasons is that culture,

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once developed, refuses changes. It helps people to identify and strengthen their
sense of community.

4.4. The OECD Guidelines for Multinationals

OECD is the abbreviation for Organization of Economic and Cooperative

Development and the guidelines cover business ethics on: employment, human
rights, environment, information, disclosure, combating bribery, consumer
interests, science and technology, competition and taxation.

Organizations should take fully into account established policies in the countries in
which they operate, and consider the views of other stakeholders. In this regard,
enterprises should:

 Contribute to economic, social and environmental progress with a view to

achieving sustainable development.
 Respect the human rights of those affected by their activities consistent with
the host government’s international obligations and commitments.
 Encourage local capacity building through close co-operation with the local
community, including business interests, as well as developing the enterprise’s
activities in domestic and foreign markets, consistent with the need for sound
commercial practice.
 Encourage human capital formation, in particular by creating employment
opportunities and facilitating training opportunities for employees.
 Refrain from seeking or accepting exemptions not contemplated in the
statutory or regulatory framework related to environmental, health, safety,
labor, taxation, financial incentives, or other issues.
 Support and uphold good corporate governance principles and develop and
apply good corporate governance practices.
 Develop and apply effective self-regulatory practices and management
systems that foster a relationship of confidence and mutual trust between
enterprises and the societies in which they operate.

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 Promote employee awareness of, and compliance with, company policies
through appropriate dissemination of these policies, including through training
programs.
 Refrain from discriminatory or disciplinary action against employees who make
bona fide reports to management or, as appropriate, to the competent public
authorities, on practices that contravene the law, the Guidelines or the
enterprise’s policies.
 Encourage, where practicable, business partners, including suppliers and sub -
contractors, to apply principles of corporate conduct compatible with the
guidelines.
 Abstain from any improper involvement in local political activities.

4.5Ethical Obligations of Multinationals

A multinational corporation (MNC) or transnational corporation (TNC) is a

corporation or enterprise that manages production or delivers services in more
than one country. It can also be referred to as an international corporation. Their
aim is the global profit maximization.

Multinational companies are not free from moral obligations. There will always be
social expectations of multinationals either from individuals, the government or
consumers of a product or service. Multinationals need to behave morally and
corporate leadership can be the guide for how the corporation should act.

Laws are one way of making multinationals behave morally. Valequez (1992)
makes a good argument about multinationals ability to escape laws by moving
operations between countries. Some multinational companies seek out places just
for cheap labor and environmental laws (Gunther, 2005). Other companies find
cheap labor but adopt the highest standard or law in which it sells products. This
is in order to be able to sell the products universally (Gunther, 2005). For
example, a car maker might choose to adopt California’s car emission standard so
that they could sell their automobiles in all of the United States.

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When law might not hold the multinational to a high standard, social pressure can
have an impact. Consumers in the United States have demands and expectations
of how a company should behave. There have many times in the news when
clothing designers and other manufacturers are accused of having their product
manufactured at sweat shops in foreign countries. This can cause shareholders
and other stakeholders within a company to change working conditions for factory
workers. For example, Nike now more closely monitors its manufacturing partners’
operations in Asia (Gunther, 2005).

The leadership in a company does have influence over how a company behaves.
Valasquez (1992) states that bureaucracy of the company is not influenced by
individuals and that a company has employees in positions and the company goes
on regardless of who is in that position. Flemming (1992) states that the
executives and bureaucrats that lead an organization do have an impact leading to
social responsible policies and actions. Stockholders, the board of directors and
executive level employees all apply their individual morality, through their actions,
into the company.

Some companies don’t need laws to act morally. Some companies that open
factories overseas for cheaper labor keep health and safety polices from
established factories (Gunther, 2005). Some companies might act morally for the
public, media and government relations positive benefits.

In today’s world economy and with the fast spread of information companies have
to behave and think globally. It is difficult to keep non-moral corporate decisions
away from the public. Society holds multinationals to a level of ethics and
responsibility that law might not be able to do. Multinationals are not free from
morals.

4.6.Corruption

Corruption–No body is unaware of this word. Whether it is a public sector or private entities, education
institution, businessmen, politician, officials from government, corruption has become an inherent
characteristic of any field.

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It is difficult to define corruption by a single word, but some of the common definitions are;

- Corruption is the practice of unlawful or improper use of influence, power and other means.
- Corruptness is the lack of integrity or honesty (especially susceptibility to bribery), use of
position of trust for dishonest gain.
- Political corruption is the misuse of public office to provide gain.
Forms of corruption

The main forms of corruption are bribery, embezzlement, fraud and extortion. Even
when these concepts are partly overlapping and at times interchangeable with
other concepts, some of the basic characteristics of corruption can be identified
through these concepts.
1. Bribery:Bribery may include the corruption of a public official as well as
commercial bribery, which refers to the corruption of a private individual to gain
a commercial or business advantage.
The essential elements of official bribery are: Giving or receiving; a thing of
value; to influence; an official act.The thing of value is not limited to cash or
money. Such things as lavish gifts and entertainment, payment of travel and
lodging expenses, payment of credit card bills, "loans," promises of future
employment, interests in businesses, can be bribes if they were given or
received with the intent to influence or be influenced.
2. Embezzlement: is theft of public resources by public officials, which is
another form of misappropriation of public funds. Embezzlement is when a state
official steals from the public institution in which he his employed, and from
resources he is supposed to administer on behalf of the state and the public.
However, disloyal employees in private firms can also embezzle money and
other resources from their employers.
3. Fraud:is an economic crime that involves some kind of trickery, swindle or
deceit. It is a broader legal and popular term that covers more than bribery and
embezzlement.
4. Extortion: Are money and other resources extracted by the use of coercion,
violence or the threats to use force.

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5. Favoritism: is a mechanism of power abuse implying “privatization” and a
highly biased distribution of state resources, no matter how these resources
have been accumulated in the first place. Favoritism is the natural human
proclivity to favor friends, family and anybody close and trusted.

Consequences of Corruption

 Corruption slows down investment and economic growth, the fact that bribery
contracts are unlike regular contracts that are enforceable.
 Corruption raises the cost of doing business. Officials may introduce certain
conditions to ensure that they get bribes, through delays and unnecessary
requirements.
 Corruption discourages new ideas and innovations.
 Corruption leads to the decline in real per capita incomes, inflation, a widening
budget & balance of payment deficits, & declining official production and
exports:
 Corruption promotes inequality among firms
 Corruption leads to a reduction in the quality of products.
 Corruption diverts funds from investment and other production activities.
 Politically, corruption leads to a loss of faith on the part of the people and thus
its legitimacy and power. Political equality and democratic values are
undermined.
 Corruption strengthens bad governance, through the absence of the rule of
Law, respect for human rights, no accountability, and transparency.
 Corruption has also led to massive neglect of the social sector, which has
substantially decreased the quality of human resources in African states over
the years. The provision of educational and health opportunities have been
limited, this impacting negatively on the quality of life, labour, productivity,
incomes, innovativeness, competitiveness, and poverty reduction in Africa
States.
 Corruption has also led to the weakness of structure and institutions crucial for
better governance.

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Generally speaking, corruption is a species of governance failure and can only be
mitigated when Africa states are committed to ensure Good Governance. Existing
structures and institutions such as Anti-Corruption Commissions and Bureaus
should be strengthened and the national Campaigns against corruption intensified
in African Countries. Unless and until Africans are committed, corruption is the
cancer that will eat up all the socio-economic and political achievements of the
continent and Africa might not see the light of day.

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