Cultural Differences Between Multinational and Single-Country Companies

A company’s culture tends to be defined by its values, assumptions and beliefs. When a company operates in a single country, the attitudes and behaviors of its employees, customers and suppliers tend to be less diverse than those found in multinational companies. Some cultures place more emphasis on universal commitments, such as honesty, while others put a higher value on relationships. The potential for misunderstanding can be high in multinational companies. This can be mitigated with training, awareness campaigns and leadership commitment to embracing diversity.

Certain aspects of cultural differences are easily observable, such as rituals, language, music and food. Values and beliefs may not be as obvious. For example, in many Asian cultures, people spend a great deal of time examining business cards. It’s considered disrespectful not to do so. A multinational company must train its employees to take care when visiting these countries. A single-country company must only focus on the customs of its own country.

Objective indicators of cultural differences become more difficult to ascertain when behavior isn’t observable. Just because the majority of citizens in one country feel a particular way doesn’t mean the entire population reflects that opinion. For example, in the United States, many citizens oppose gun control. In a multinational company, U.S. residents may have to explain a differing viewpoint to co-workers from other cultures, who may make assumptions. If the company operates only in the United States, more visibility to the debate makes it unnecessary to explain divergent opinions.

Both multinational and single-country companies must deal with trust issues. Trust between residents in different countries tends to diminish as their language and religion differences, geographic distance and history of conflict increases. The effect of cultural differences in a multinational company can be vast, increasing with each country represented. Single-country companies may have to deal with regional differences, but the magnitude is typically not as great.

Differences in culture can be reflected in business decisions. Improving cultural awareness and enabling workers to build positive working relationships generally results in tangible business benefits. Avoiding conflict minimizing distractions and focusing on business activities always makes good business sense. Typically, leaders can choose a single management style when working in a single country, such as the United States. For example, in the U.S, using a participative leadership style can improve profitability because it results in higher employee engagement and productivity. On the other hand, choosing to apply this style in countries that view power differently can result in disaster.