What are the economic and business implications of cultural change?
Three important implications for international business can be drawn from differences in social structure, religion, language, education, economic philosophy, and political philosophy.
- Cross-Cultural Literacy
Companies must embrace the differences that occur when working globally, making efforts to appreciate and make use of them. This can be done by hiring local citizens to inform, educate managers from the home country in the new culture and be aware of ethnocentric behaviour(=belief in superiority of one's own ethnic group).
- Cultural and competitive advantage
The value systems and norms of a country influence the cost of conducting business in that country. Social structure and religion can impact on how well cooperation between management and labor can vary, the general working culture, and how payment of interest is handled. Individualism fosters entrepreneurial activity and innovation, while collectivism motivates cooperation and hard work as an entity.
Although very important, cultural differences might still not be as influential as political, economic and legal differences when it comes to explaining economic growth.