The strategic potential of cultural diversity

<a href="http://www.ie.edu/eng/sobreie/sobreie_expertos_detalle.asp?id_exp=342">Celia de Anca</a>. Director. Centre for Diversity. IE Business School

21 March 2007

The cultural understanding of our foreign business partners and integrating these differences into our management processes can lead to greater business success for companies working in abroad.

Understanding cultural differences

Studies indicate that 75% of foreign investments fail because of misunderstandings over cultural issues. Similarly, an important key to a successful business deal lies with being able to understand the cultural traditions of an international partner, client or supplier. The cultural element plays a particularly important role in Spain’s relations with Morocco. Even though Spain already is its second largest commercial partner, Morocco continues to offer enormous opportunities to Spanish companies seeking new sources of growth.

Recently, a small group of international experts led by the ONA Foundation of Morocco and the Fundación Instituto de Empresa de Madrid discussed certain practical tools for promoting a greater understanding of culture in commercial transactions, during the Second Meeting of the Hispano-Moroccan Corporate Diversity Think Tank.

This corporate diversity think tank was constituted in Casablanca in December 2005 to enhance the understanding of cultural diversity in the context of growing Hispano-Moroccan commercial relations. The members of this think tank are entrepreneurs, executives, journalists, politicians, academics (philosophers, anthropologists, economists and Arabists), as well as other outstanding personalities. It stresses the importance of gathering empirical data as a way to gain a better understanding of the Hispano-Moroccan corporate world. Accordingly, research was carried out last year on the perception and practice of cultural activities in Moroccan companies. The experts within this think tank then debated the results at the meeting in Madrid.

Pinpointing where the difficulties lie

The findings of this study shed light on issues as important as the role of tradition and modernity in Moroccan business practices and the use within this cultural context of different management models. The conclusions provide some helpful pointers for Spanish companies seeking to do business in the Moroccan market. They also highlight the gap existing between how cultural diversity is perceived and how it is practiced. Whereas most of the businessmen who took part in the survey are aware of the cultural aspects surrounding the different management models, as well as of the potential they offer, only a few seek specifically to incorporate the principles of cultural diversity into the daily management of their company.

These findings also raise questions about how to manage cultural differences and, most notably, how to teach this area of management studies. Unlike science or mathematics, for example, culture cannot be explained within standard perimeters; in other words, merely understanding it does not suffice for drawing up an action plan with small margins of error. Like other human sciences, culture is dynamic and in constant flux, which means that the reality it deals with is also dynamic and changing. Furthermore, observers become part of this shifting reality, which gives them the power of influence over what they perceive. Therefore, cross-cultural management is an example of reactive knowledge, which implies that different courses of action are required at different times. Also required in these cases is an ability to reflect and to identify certain cultural features that can be incorporated into management policy. The ability to reflect is a highly-regarded skill among international executives.

Using difference to our advantage

Cultural diversity calls for getting rid of existing preconceptions and learning to explore the appropriate ways to react to each situation. Also important is to determine how these attitudes can complement other possible behaviour patterns. E.T. Hall, one of the pioneers in cultural management studies, identified various behavioural reactions to time, and described them as what is known as single-task or multi-tasking. People with these characteristics perceive time in different ways, but complement each other in a broader action framework, thus enabling each to contribute to the general good of the organisation.

In short, it is not a question of doing away with archetypes--which beyond the scope of prejudice have their raison d´être--but rather of including them, with the understanding that different cultural conducts have a role to play at all levels of corporate life. Only in this way will diversity management provide a genuine master key of success for corporations operating in a global environment.

Spain’s relations with Moroccan business are growing closer, as shown by the 800 Spanish companies operating in Morocco, according to the figures released by the Hispano-Moroccan chamber of commerce. But Morocco still has a lot of potential to develop. Clearly, a better understanding of cultural issues will help strengthen and consolidate relations between the two neighbours on each side of the Straits of Gibraltar.

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