The Effect of Cross-Cultural Management On The Performance of Multinational Companies in Nigeria
The Effect of Cross-Cultural Management On The Performance of Multinational Companies in Nigeria
The Effect of Cross-Cultural Management On The Performance of Multinational Companies in Nigeria
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ABSTRACT
Effective cross-cultural management can become a critical source for increasing business competitiveness, which in
firm can lead to success in international business. Multinational companies have played an important role in
international business. This paper is designed to examine the impact of national culture on the performance and
growth of multinational corporations. The population of this study is the staff of manufacturing companies in Nigeria.
The sample is the Unilever Nigeria Plc, Agbara. The sample size for this study is 400 employees. Questionnaire was
used to elicit data from respondents. Data collected was analyzed and the hypothesis was tested with chi-square. It
was noted that culture has a significant influence not only on individual, but also on the performance of the ethnic
multinational corporation in Nigeria. However, cross-cultural managers should endeavor to understand the tools used
in handling cultural differences in multinational corporations.
Keywords: Cross-Cultural management, National culture, culture, multinational companies, Cross cultural managers
iSTEAMS Proceedings Reference Format
Bako, Y.A., Ogunremi, G.D. & Bako, Z.F. (2019): The Effect of Cross- Cultural Management On the Performance of Multinational Companies in Nigeria.
Proceedings of the 16th iSTEAMS Multidisciplinary Research Nexus Conference, The Federal Polytechnic, Ilaro, Ogun State, Nigeria, 9 th – 11th June, 2019. Pp
133-144. www.isteams.net - DOI Affix - https://doi.org/ 10.22624/AIMS/iSTEAMS-2019/V16N2P17
1. INTRODUCTION
Increasing globalization requires more interaction among people from diverse cultures and back grounds than ever
before. People no longer live and work in an insular market place, they are now part of a worldwide economy with
competition coming from nearly every continent. For this reason, organizations need diversity to become more
creative and open to change. Therefore maximizing and capitalizing on work place diversity has become an important
issue for management today (Akpoviroro & Owotutu, 2018). Many firms proactively pursue inter-nationalization as a
strategic move.
However, even though expanding internationally can be attractive and lucrative, operating and managing an
international business has become more complex in today’s business world due to several factors, which include
differences in economic, cultural, legal and political environments. Internationalizing firms are routinely exposed to
different types of risks, among others are:- cross-cultural risks, country or political risks, currency risks and commercial
risks (Romani, Barmeyer, Primecz & Pilhofer, 2018). Hence, business that are situate abroad are vulnerable to more
risk than undertaking domestics business.
133
Among all international business risks, cross-cultural discrepancies are inevitable in particular because human
resources are required at all operational levels and across all business units. Therefore, there is a need to manage
effectively the cross-cultural aspects of human resources for the advancement and success of multinational
companies. According to Gancel, Rodgers and Raynaud (2002); the failure of cross-cultural awareness – managers
that are not aware of the very existence of the cultural dimensions of management; insufficient understanding –
manage know about the existence of culture, but they do not understand this issues and this underestimate the unpait
that culture can have on business and do not deal with it; and insufficient willingness – managers knowingly decided
not to deal with culture; and insufficient level of abilities and skills – managers may be aware of and may even try to
manage the culture but fail due to a lack of intercultural competence. Many scholars finally conclude that effective
cross-cultural management can become an critical source for increasing business competitiveness, which in fun can
lead to success in international business which multinational companies have played an important role in international
business. As defined by Romani et al (2018), a multinational enterprises is a large company with substantial resources
that performs various of subsidiaries and affiliates located in multiple companies. The main reason for the expansion
of multinational companies is to create global competitiveness by reducing production costs and exploiting market
opportunities offered by trade liberalization and economic integration The growing role of multinational firms has
increased the volume of international trading and has stimulated business to become more competitive an the global
market. Besides the emergence multinational corporations has also increases the degree of global interdependence.
These employees all possess diverse attitude with respect to the same management practices.
It is a known fact that organizations do to not exist in a vacuum but in a specific culture or socio-culture environment.
That reveals that each environment has a different culture which require different managerial prowess, strategies,
organizational structure, planning and control (Romani, Mahadevan & Primecz, 2018).
Every culture has a set of beliefs that influence nearly all aspects of human behaviours and help institute order to a
society and individual. This will influence and shape managers and employees ways of behaviour, thoughts,
recognition, perception, expectation and understanding of various circumstance, and events related to work and other.
It is worthy of note to beacquainted with the fact that international managers who manage multinational corporations
today faces an external environment that is fast changing, complex, uncertain and vigorously competitive.
Internationalization of a company’s operation can result in developing a competitive advantage but only under a
certain environments.
A global presence will translate into competence only when a company underrates local markets differences, realizes
global economics of scales, and effectively transfers knowledge without significant understanding of the
organizational and socio– cultural environments. Multinational companies may not succeed in taking full advantage of
available resources and opportunities. The major challenge for MNC operating in different markets is therefore to
adapt to these different socio-economic and cultural context.
This research endeavor to attain the following objectives:
1. To examine the impact of national culture on the performance and growth of multinational corporations.
2. To ascertain the effect of employees diverse culture on management practice on a multinational cooperation.
3. To determine if multinational corporation consider the local social-cultural and economic factor before taking a
business decision.
4. To determine whether cross cultural management affect consumer buying behaviour in a multinational market.
In light of the stated objectives, the following hypothetical statements were synthesized:
H01: National culture is not a tool to evaluate performance and growth of Multinational Corporation.
H02: Diverse culture does not have any significant impact on management practice in a Multinational Corporation.
H03: Multinational Corporation does not consider local socio-cultural and economic factor before taking a business
decision.
H04: Cross-cultural management does not affect consumer buying behaviour in a Multinational market.
2. LITERATURE REVIEW
This frame work is associated with economic development, political /social history, and national cultures (norms,
values and beliefs which has a powerful influence on definitions, motivation, and perception). These have influenced
organizational citizenship behavior (OCB) and have had an important impact on organizational performance, team
performance and individual performance ratings. In the meantime, there are several antecedents that also affect
{OCB}, such as organizational contests, attitudes e.t.c
The growing importance of world business creates a demand for managers sophisticated in international management
and skilled at working with people from other countries. Cross-cultural management studies the behaviour of people in
organizations around the world and trans-people to work in organization with employee and client populations from
several countries (Beamer, 2008). Cross cultural management is a system designed to train people/dimension in the
global business about the variation of cultures, practices and performance of customer around the globe (Romani,
Mahadevan & Primecz, 2018). The debate regarding to the nature of culture and its implications has a long history.
And it had been part of a sociological, historical and anthropological debate about the relation between individual
action and society (Neal: 1998) defined culture as that complex which includes knowledge, belief, act, law, custom and
other capabilities acquired by man as a member of society”. Also, it is pertinent to the consideration of what Hofstede
(2003) defined culture as “the collective programming of mind that distinguishes the member of one human group from
another”.
If fusions or acquisition are created within one country which means among local companies, the cause of conflict is
difference of the content of organizational culture.Confrontation on the level of organization processes, systems, practices
and behaviour of employees that takes place here is relatively visible for the employees of the fusing companies. Less
visible or hidden is the conflict on the level of organization values and especially the main conditions through which the
external manifestation are determined. If fusions and acquisition are created among companies from different countries,
the employees are exposed to a double conflict; a conflict on the level of organization cultures and a conflict on the level of
national cultures. The agreement reach is that the differences in thinking, feeling and behaviour resulting from differences
of national cultures are deeper than the differences resulting from various organization cultures (Hall, 1995).The starting
point for managing intercultural standards is the realization of validity of one’s own culture patterns and the recognition of
cultural groundwork of the partner. Nový, Schroll (1996) recommend quite a simple procedure consisting of three
consequent steps leading to a successful cooperation in international environment:
Having specific knowledge of another culture can be thought of as a task relevant ability for some groups tasks. The
expression of alternate views by culturally different groups member can raise the quality decision making and problems
sowing by increasing the attention of the group to the decision making process (Romani, Mahadevan & Primecz, 2018).
3. METHODOLOGY
The study adopted a survey research design. The study population is individual respondent who live members of staff of
Unilever Nigeria Plc, Agbara Plant. The population of the study culture-cross various departments of the company which
include, resources, finance and account, sales and marketing, production, stores and warehouse, training and
development, security, information technology and canteen. Five MNC were selected from all the MNC in Ogun State of
which Unilever was used as the case study. Based on the information generated, a total number of four hundred (400)
were given as the staff strength of the organization which spread across all the various departure of the organization in the
following categories.
Hypothesis 1
H0: National culture is not a tool to evaluate performance and growth of multinational-corporation.
Chi-Square Test
SA A UD SD D Total
1 5 30 35 70 100 240
12.50 40.00 37.50 50.00 100.00
2 20 50 40 30 100 240
12.50 40.00 37.50 50.00 100.00
Total 25 80 75 100 200 480
Chi-Sq= 4.500 + 2.500 + 0.167 + 8.000 + 0.000 + 4.500 + 2.500 + 0.167 + 8.000 + 0.000 = 30.333
DF = 4, P-Value = 0.000
Decision
On the basis of the above calculation p value is < than 0.05, therefore, alternative hypothesis is accepted.
Hypothesis 2
Ho: Employee diverse culture does not have any significant impact on management practice in a multinational
corporation.
Chi-Square Test
SA A UD SD D Total
1 200 20 10 5 5 240
207.50 19.00 6.50 3.50 3.50
2 215 18 3 2 2 240
207.50 19.00 6.50 3.50 3.50
Chi-Square Test
SA A UD SD D Total
1 150 20 30 20 20 240
175.00 15.00 22.50 14.00 13.50
2 200 10 15 8 7 240
175.00 15.00 22.50 14.00 13.50
Decision
On the basis of the above calculation p value is less than 0.05, therefore, alternative hypothesis is accepted.
Hypothesis 4
Ho: Cross cultural management does not affect consumer buying behaviour in an multinational market.
Chi-Square Test
SA A UD SD D Total
1 150 20 20 25 25 240
165.00 22.50 17.50 17.50 17.50
2 180 25 15 10 10 240
165.00 22.50 17.50 17.50 17.50
Chi-Sq= 1.364 + 0.278 + 0.357 + 3.214 + 3.214 + 1.364 + 0.278 + 0.357 + 3.214 + 3.214 = 16.854
DF = 4, P-Value = 0.002
Decision
On the basis of the above calculation p value is less than 0.05, therefore, alternative hypothesis is accepted.
5. SUMMARY
Effort was made to the importance of cross cultural management impact on Multinational Corporation. It was
discovered that there is significant cultural influence on the performance of multinational corporation.It was discovered
that cross-cultural management is seen as a discipline of international management focusing on cultural encounters,
which aims to deriver tools to handle cultural differences seen as a source of conflict or miscommunication. It was
revealed that cross cultural management helps boost the image of Multinational Corporation thereby increasing the
relationship between the parent and host countries. The business organization sample i.e Unilever Nigeria Plc
identifies the importance of cross cultural management which help in boosting the relationship with host country.
The study also reveals ways of managing cultural differences in trying to overcome possible misunderstanding and to
create an environment favourable for all participating parties and variours ways adopted in managing cross cultural
differences.It also identify the consequences of ignoring cultural differences, studying various ways of overcoming
cultural difference thereby identifying the importance of cultural value for international managers. Finally, the research
finding also reveals that cross cultural management is an important tool for managing multinational corporation not
only because if increases sales performance but because it also educate managers of multinational corporation in
dealing with cultural differences.
6. CONCLUSION
Based on the data collected from the field survey and various literatures reviewed on the research topic, it is pertinent
to raise conclusion.Theunderstanding and correct interpretation of different culture and behaviour of consumers
ensures good relationship with multinational corporation.Cross-cultural management which is seen as a dyspeptic to
international managers aims to discover tools to handle cultural differences in which eventually engenders growth.
Also, culture has a significant influence not only on individual, but also on the performance of the ethnic multinational
corporation in Nigeria.
Any multinational corporation that want to excel should give more priority to cross cultural management as an effective
ingredient designed to train people oriented organization in the global business about the variation of culture, practice
and performance of consumer around the globe for easy interaction with consumer in a multinational content.
Similarly, understanding the importance of managing cultural differences to be key to building successful relationship
between the host and parent country of a multinational market. Management should not be limited to the performance
of economic but also pay attention to the influence of culture in the environment MNC operates in when taking
decision.
Consumer behaviour shapes the context of multinational managers works which in-turn influences managerial
role.Culture can be seen as a window of opportunities to accessing new market and enhance personal and
organizational growth.Good knowledge of foreign culture helps to create mutual understanding and cooperation
between the company and the host country which eventually leads to success of the company.Finally, this research
work hopes that with effective cross cultural management, interaction with consumers with diverse culture will be
positive and have great impact on the sales performance of multinational corporations.
7. RECOMMENDATION
Consequently, upon my finding and based the hypothesis tested, I therefore suggest the following recommendation
which I have keenly considered to be suitable ideal and resourceful for multinational managers in Unilever Nigeria Plc
and any other multinational corporations.Effort should be made to ensure and ascertain good and mutual relationship
between two diverse cultures. Also, cross-cultural managers should endeavor to understand the tools used in landing
cultural differences in multinational corporations.Multinational corporation managers should respect and understand
cultural differences between the host and the parent’s country.Effective cross cultural management process helps to
increase and advance the performance of multinational corporal.Management should not be limited to performance of
the economy and technical but also should devote their attention on the influence of culture in the environment
multinational from operation. Also multinational managers should acquaint themselves cultural factors that influence
organizational strategies and objectives.A due analysis of cross cultural management process will help to manage the
performance of multinational corporation.Managers of MNC should have good knowledge of foreign culture so as to
be able to ensure better cooperation between the cros-and the parent country.
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