Development of a team in an international company with a multicultural workforce by using diversity management

Academic Paper, 2018
21 Pages, Grade: 1,3


Talbe of Contens

List of Figures

List of Abbreviations

1 Introduction

2 Term Explanation
2.1 Culture
2.2 Corporate Culture
2.3 Multiculturalism
2.4 Interculturalism
2.5 International Entreprises

3 Multiculturalism in international enterprises
3.1 Opportunities of multiculturalsm
3.2 Risks of multiculturalsm
3.3 Success factors of multiculturalism

4 Team development
4.1 The goal of team development
4.2 The five stages of team development
4.2.1 Forming phase
4.2.2 Storming phase
4.2.3 Norming phase
4.2.4 Performing phase
4.2.5 Adjourning phase
4.3 Various indicators of the effectivity
4.4 Various indicators of ineffectiveness

5 Conclusion


List of Figures

Fig. 1: Effectiveness of mono- and multicultural teams

Fig. 2: Opportunities and Benefits of Managing Diversity

Fig. 3: The way of Team Development with Diversity Management

Fig. 4: Stages of Group Development

List of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

1 Introduction

Cross border activities of multinational companies face the problem of culture. The environment of international companies include several societies which may include very different cultures. Therefore, there is a very high probability that different cultures will clash during the activities of multinational (Sacra, 1997). Due to the growth of multinational companies and the globalization of markets, it is necessary to constantly attract managers and employees that are suitable and able to adapt to the multicultural environment. Numerous statistics indicate that demographic diversity in the workplace is a worldwide trend. In the United States, for example, the current labour force is older, more gender balanced and contains more ethnic minorities than in past years. These workplace changes are projected to continue to the point where women will slightly outnumber men and where there will be equal numbers of white and non-white employees in the year 2050 (Shore, 2012).

The term "diversity" has been part of organizational and management literature for over twenty years. Indeed, the area is characterised by ambiguities, contradictions and uncertainties. This is why we are now more and more aware of its increasing importance in the private sector. In the context of this paper the effects of cultural diversity will be discussed along with the question, whether multiculturalism in international companies is the basis for better opportunities in competition to meet the challenges on a global scale. Another question that shall be answered is, to what extent cultural diversity management can lead to competitive economic advantages. For this purpose, the fundamental terms are interpreted first in the second chapter. The following chapter will address opportunities, risks and success factors, considering multiculturalism in international companies. In the last chapter, the stages of team development are illustrated using the "Tuckman Group Development Model".

2 Term Explanation

2.1 Culture

The current definitions of the term culture today are as numerous as they are different. In the past few centuries, several meanings of "culture" and word combinations of various kinds of research can be identified. Anthropology, psychology, sociology and also the management theory have often tried to express the phenomenon of culture in words. Difficulties arise from the different perspectives from which the individual sciences consider culture (Hofstede, 2009, pp. 9–10).

Cultural research findings began in the 19th century. In 1871 Edward Burnett Tylor, the founder of cultural anthropology, attempted to define the culture term for the first time:

Culture or civilization, taken in its wide ethnographic sense, is that complex whole, which includes knowledge, belief, art, moral, law, custom, and any other capabilities and habits acquired by man as a member of society. “ (Tylor, 1871, p. 1)

The this first attempt of putting culture into words proves how complex the concept of culture is.

Cultural research in its economic orientation beacme popular in the 1960s, when business-oriented authors realized that organizations and companies also have different cultures, which significantly influenced entrepreneurial success. During this time, Geert Hofstede conducted an empirical study with more than 110,000 IBM employees. Using a factor analysis, Hofstede developed the model of cultural dimensions that show the differences of national cultures (Hofstede, 2006, pp. 28–31).

Hofstede defines culture as follows:

„Culture is the collective programming of the mind distinguishing the members of one group or category of people from another.“ (Slavik, 2004, p. 26)

Regardless of the multitude of interpretations of the concept of culture, however, we must not adhere to these strict definitions. Culture is rather a dynamic process in which individuals of different cultural affiliations constantly adapt themselves. Characteristically, the term culture differs on the basis of various categories as follows (Moran et al., 2014, pp. 11–15):

1. Subjective Self and Space Consciousness
2. Communication and language
3. Clothing and appearance
4. Food and eating habits
5. Time and ideas of time
6. Relationships
7. Norms and values
8. Beliefs and opinions
9. Mental processes and learning
10. Work attitude and habits

2.2 Corporate Culture

In colloquial terms, corporate culture is referred to as "the way we manage our business". In an enterprise, it describes the work-life character of an organization. For expample, it is characterized by the working atmosphere, the leadership behavior, but also by performance criteria and organizational structures. A typical function of corporate culture is to establish identity. The purpose of this is that each individual of the enterprise identifies itself as a member of a particular group or a performance unit (Herget and Strobl, pp. 4–16).

There are as many scientific definitions of the term corporate culture as for the term of culture. Edgar H. Schein describes corporate culture as a whole cultural system. He infers in his "Model of Organizational Culture" the emergence of an organizational culture as the interplay of three different cultural strata. In his view, the elements of a culture can be subdivided, depending on their visibility, into the three levels artefacts and behaviors, espoused values and assumptions (Schein, 2010, pp. 23–33).

2.3 Multiculturalism

Multiculturalism refers to the social structures of an organization or enterprise. In the sense of multiculturalism, it is assumed, that it does not come to the fusion of different cultures but that they exist side by side. The more multicultural a company is, the more it will appreciate, use and support cultural diversity (Cox, 1991, pp. 34–36). Multiculturalism takes up the problems of coexistence in different cultures within a society. The concept of multiculturalism seeks for opportunities of tolerance, understanding, acceptance and conflict avoidance or conflict therapy (Welsch, 1995).

2.4 Interculturalism

Interculturality is the collision of two or more cultures that are influencing each other, despite of cultural differences. While international management is a matter concerning "hard facts" of transnational management activities, intercultural management sees cultural dependence on social groups and individuals. The essential parts of their social environment this perceived, interpreted, understood and acted in this manner of (Welsch, 1995).

2.5 International Entreprises

In the conceptual explanation of international enterprise, too, the contents and demarcation criteria have been numerous as well as varied in literature. The terminology used by most authors synonymously varies from international to transnational to global and multinational. Different concepts determine the degree of internationality based on the quantitative and qualitative criteria, for example number of foreign branches, share of foreign sales revenue, foreign market share, proportion of foreign employees in the total staff, orientation of the company policy or organizational or qualification structure (Dülfer and Jöstingmeier, 2011, pp. 5–7). Adler states that a company is considered international, if its foreign activities are essential to achieving and securing the company's goals and if the company's success is permanently influenced. In addition to spatial distance, the factor of multiculturalism is encountered, which has a positive or negative effect on the enterprise’s success. In simple terms, a company can be described as international if it is economically active in at least two states (Adler and Gundersen, 2008, pp. 13–18).

3 Multiculturalism in international enterprises

Through the globalization of the markets, enterprises are exposed to both, multiculturalism and interculturalism. Therefore, we have become aware of their increasing importance in the private sector. Empirical research shows that multicultural teams are not always successful. They are either much better or much worse performers (Lehman and van den Bergh, 2004, pp. 27–29).

Abbildung in dieser Leseprobe nicht enthalten

Fig. 1: Effectiveness of mono- and multicultural teams (Lehman and van den Bergh)

The term diversity has been part of organizational and management literature for more than twenty years. Defining the field of diversity is, however, still not easy. Indeed, the area is characterized by ambiguities, contradictions and unclarities (Bendl et al., 2017, p. 65). Academic research offers at least two reasons, why diversity should not be defined to refer only to people who are in a gender or ethnic minority group in a particular social system. Firstly, it has been noted that the diversity of workers includes group identifications beyond gender and ethnicity, secondly, theory and research on gender and ethnic effects by definition apply to members of the gender or ethnic majority groups as well as to those of minority groups (Cox, 1994, pp. 51–52). The benefits of diversity management in companies are seen in the fact that, if diversity strategy is used correctly with organizational efficiency and effectiveness, it brings considerable competitive advantages (Aretz and Hansen, 2002, p. 88). The impact of cultural diversity will therefore be further explored here, considering various aspects of how cultural diversity management can lead to economic competitive advantages.

3.1 Opportunities of multiculturalsm

The following will describe the effects of multiculturalism in the international enterprise will be described by showing different aspects of how cultural diversity management can lead to competitive opportunities:

I Staff Recruitment

Companies will increasingly face challenges in the future due to globalization and demographic changes. But through intensive expansion, companies can win the best employees from different cultures and countries worldwide.

II Costs

Companies in which multiculturalism already exists reduce the cost of integration measures. Furthermore, a study in the USA states that the turnover figures have increased due to diversity management. This generates cost advantages over competitive companies (Cox and Blake, 1991, p. 46).

III Tolerance

Multicultural teams use a working language for their activities, which on the one hand is detrimental as to mutual understanding but on the other hand gives the advantage of focussing on the essentials. Being different not only leads to more tolerance among the team members, but even among colleagues of the same nationality. Consequently, more space is left for tolerance and employees will feel more free to state their opinion. This leads to higher job satisfaction and increases the creativity of the team so that better solutions are developed in decision-making and problem-solving processes. (Lehman and van den Bergh, 2004, p. 28).

IV Innovation and creativity

In a business environment created by multiculturalism, investigations are considered from different perspectives. This approach brings great creativity that, in turn, brings innovation. The potential of each individual is completely unlocked. Taylor H. Cox and Stacy Blake conducted an experiment on homogeneous and heterogeneous groups as part of a study by Charlene Nemeth. In a series of experiments, participants were asked to form as many words as possible from a sequence of 10 letters. This experiment showed that heterogeneous groups were much more creative (Cox and Blake, 1991, p. 50).

V Marketing and Sales

Just like the labour markets, the consumer markets are characterized by cultural diversity. Multicultural employees can help create an understanding of communication for customers of different countries of origin. As a result, there is an increasing awareness that can be successfully managed to meet the wishes and needs of these customers. These factors lead to both, higher market penetration as well as higher customer satisfaction (Lehman and van den Bergh, 2004, p. 28).

The chances in the workforce lead to an increased potential of different abilities of the employees and thus to a large synergy potential, which is difficult to copy due to the individuality of each employee. The system is less standardized and flexible, and thus can respond more effectively to ever-changing environmental conditions.

3.2 Risks of multiculturalsm

In what follows, the effects of multiculturalism in international companies will be described in regard to how cultural diversity management can lead to risks in competition:

I Communication

The problems of communication can be both verbal and nonverbal. The verbal communication difficulties occur when not all team members master the working language at the same language level. In discussion panels, in which decisions are made, native speakers dominate and control the meeting and the results. Thus, the advantage highlighted above as the factor of perspective diversity drops away. Emotions can be difficult to express, which can lead to misunderstandings and loss of confidence. The nonverbal communication difficulties can occur, when different communication behaviors of different cultures collide. For example, eye contact during the conversation is perceived as unpleasant and obtrusive in China, although in Germany it is a sign of interest (Lehman and van den Bergh, 2004, pp. 28–29).

II Education

In different countries, education is offered in different quality depending on the economic strength of each country. This means that an employee who has completed their educational path in Germany may have a better education level than someone from the Philippines. This could affect the quality of projects in the team or the speed of work (Cox and Blake, 1991, pp. 45–46).

III Mistrust

Different goals and expectations can make it very difficult to align all employees towards a common goal. Misunderstandings arising from communication difficulties and the possible impairment of quality of work, which is highlighted by educational status, could lead to mutual distrust (Lehman and van den Bergh, 2004, p. 28).

IV Costs

Cultural diversity brings an increasing complexity, which also becomes noticeable in managerial tasks. They require appropriate integration- and coordination efforts which are associated with costs. Furthermore, different standards must be observed in different countries. In order to be able to comply with these standards, an increased need for control is necessary, which subsequently influences the costs (Cox and Blake, 1991, p. 46).

V Distribution

This disadvantage is present when teams from different locations or countries have been put together. Although the distribution is considerably shortened today by digitization, in some countries the communication infrastructure is still not well developed. This can lead to information loss which in turn delays the speed of decision making (Lehman and van den Bergh, 2004, p. 31; Osterwalder, 2005, pp. 14–20).

3.3 Success factors of multiculturalism

Whether a company with multiculturally composed employees will benefit from the opportunities and risks or suffer damage from them depends primarily on the way the team deals with the prevailing multiculturalism. The most successful companies are those that manage to make effective use of opportunities and risks and avoid conflicts right from the start. Teams with a high degree of heterogeneity achieve the best results. The precondition for the development of cultural synergies is the ethnically conditioned attitude of all team members. To ensure this, tolerance, sensitivity, respect and curiosity towards people from other cultures are the core characteristics that members of multicultural teams must have. It must be ensured from the outset that ethnocentric people who view other cultures with prejudice and rejection have no place. Care must also be taken to ensure that the composition of the teams do not create an imbalance through educational level or position status. Highlighting the common features of the team members promotes understanding and facilitates mutual trust. The distribution of tasks is also a key success factor, since the central strength of multicultural teams is their flexibility and creativity. In contrast, the weakness lies in the coordination of processes. International teamwork is often associated with intensive travel and therefore the infrastructure is a prerequisite for the effectiveness of multicultural teams (Lehman and van den Bergh, 2004, pp. 29–31).

Abbildung in dieser Leseprobe nicht enthalten

Fig. 2: Opportunities and Benefits of Managing Diversity (Ivanova and Hauke, 2003)


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Development of a team in an international company with a multicultural workforce by using diversity management
Johannes Gutenberg University Mainz  (Wirtschaftswissenschaften)
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Alperen Akçay (Author), 2018, Development of a team in an international company with a multicultural workforce by using diversity management, Munich, GRIN Verlag,


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