How Culture Affects Business Decision Making

However, studies on culture and its effect on the business environment became crucial when international companies did not perform as well as they expected in certain countries across the world. Research shows that individualism and collectivism are the two main cultures that contribute to the rejection of some Western business values and the collaboration of people from diverse societies. This paper uses American culture to represent Westernized, individualized cultures and Saudi Arabia to illustrate a collectivist, restrictive society, and show how the latter adapts policies from the west, how people from the two societies interact or avoid one another for corporate harmony, how culture affects business decision making, and the role of religion in shaping beliefs. Individualism vs. Collectivism It is possible that the biggest cause of discord between Western cultures and those in parts of the world that encourage collectivism like Asia and Africa is that the West emphasizes competition and freedom of choice.

In an Islam dominated country that follows Sharia law, business is supposed to be conducted without focusing on individual profits, and free trade is encouraged by rules that prohibit price fixing and monopolies (Cavusgil, Knight, & Riesenberger, 2016). Also, in some Asian states, corporations protect their employees by ensuring that they can secure lifetime employment. Hirt (2012) notes that when culture gives people varying expectations in the workplace, then the human resource that is required to transfer technology from one country to another will be almost impossible since there are two groups working towards varying goals. Unwavering dedication to culture and religion A study that tested this difference between America and Saudi Arabia showed that Saudi Arabia is sensitive towards consumers, community affairs, and the environment but it does not have a clear grasp on the CSR concept as it is promoted in America and Europe (Robertson et al.

The country only permits corporate strategies that will not go against its general culture, supporting Hirt’s (2012) findings which showed that cultural closeness between nations does not always result in frictionless human resource transfers in the business setting. The rules that applied to the Kingdom on dressing, segregation, restrictions on women, and schooling were not enforced within the camps, which reduced the effort that the expatriates had to exert to live within Saudi Arabian limits. Al-Adaileh & Al-Atawi (2011) note that when a company does not implement a culture that inspires employee collaboration, it would be difficult to implement strategies and respond positively to change. Saudi Arabia’s system limits cultural collaboration with strict rules that resist change. When Culture is More Important Than a Human Right If the expatriates stayed in the camps designed for them, they did not have to wait outside closed restaurants and stores when it was time for prayers (Jackson & Manderscheid, 2015).

The seclusion made it difficult for Western and Saudi Arabian cultures to interact with the expatriates taking part in Jackson & Manderscheid’s (2015) study. (2007), Kim et al. (2013) conclude, that the belief that consumers across the world have similar needs is misleading since culture affects how people respond to corporate strategies, change, and adapt to new environments. Culture and Business Decision-Making When Tse et al. (1988) conducted a study that tried to explain the impact of culture on managerial decision-making, they noted that in the marketing sector, business executives were influenced by their culture in many ways. They concluded that even though people may change because of exposure to contrasting cultures, the core values they learned from childhood persist in the workplace, and that individuals from culturally strict nations like the People’s Republic of China have higher levels of tenacity compared to Westerners.

For example, the brewing firm Heineken, had to produce a non-alcoholic malt drink called Fayrouz that would be accepted in Muslim countries since the Qur’an forbids drinking alcohol (Cavusgil et al. However, through such activities, international organizations have had access to Saudi Arabia, its culture, and its people, and the companies are still trying to ensure locals conform to Westernized life. Conclusion The challenges that multinational companies have faced over the years have not reduced because the information available on overcoming cultural differences is not sufficient enough to improve decision-making. In Saudi Arabia, the parties involved even avoid cultural interactions instead of trying to develop mutual understanding and appreciating diversity in behavior within the business environment. As such, the differences in culture, values, customs, and beliefs are visible because many people are working against one another instead of offering support.