As Global Business Expands, What Is Holding It Back?

9/3/2013

In fact, between 2009 and 2012, something surprising happened: The downturn in the global economy forced an uptick in international ventures for multinational businesses. So, counter intuitively, as the economy continued to stagnate, global ventures took off, including mergers and acquisitions, joint ventures and off-shoring. As a result, global market expansion has tripled in percentage points, which makes it a top priority for global enterprises. This is occurring primarily to achieve one or more of the following three business imperatives:

  • Top-line growth (growing revenue)
  • Market expansion (growing footprint),
  • Cost reduction (growing margins)

As Robert House and his colleagues noted in their GLOBE research study conducted across 62 countries, “As economic borders come down, cultural barriers could go up, thus presenting new challenges and opportunities in business.” (House, et al., 2004) These business requirements are forcing a more fluid enterprise-wide adaptation, requiring a more sophisticated level of cultural agility in today’s workforce.

For this reason, according to the Economist, “Cross-border collaboration is a critical skill, but research shows that cultural traditions are the thing that most often gets in the way.” (Economist Intelligence Unit, 2012 “Competing Across Borders”)

Companies need to surmount the challenges of doing business in different cultures and languages in order to take advantage of the cultural diversity of their workforce.

Lynne Tarter, Director of Solutions, TMC