Chapter Four Managing intercultural diversity 4.

1 Norms and Values Norms Norms can be defined as attitudes and behaviors common to members of a particular group, or what they believe is normal. For example, most cultures require that people wear clothes. Some even have laws to enforce this dictum: in many western countries, a naked person in public will be arrested with a charge of indecent exposure. We have norms about how we speak. How you address your grandmother is probably different to how you talk with your spouse, and this is also different to how you speak to your boss, or our children. Your choice of words, your tone, and your body language are all norm-based. Nearly everything in human society is governed by norms of some kind. This is why it feels so strange to go to a very different culture, where their norms are so different to what we are used to but it is normal to them. As groups, organizations have their own norms. When you move from one job to another, whether between companies, or even within the same organization, part of learning your new role does not just understand the tasks you must perform, but also the unwritten rules the norms associated with that task. Values Basically, our values are what is important to us. All of us constantly exhibit our values every day. How you think about the car you drive and the environment determines whether you purchase a hybrid car or an SUV. The way we dress tells a lot about your values; do you have an untucked t-shirt and messy hair, or do you wear a button-down collar, blazer, and use a comb? If you are sarcastic in your comments you might value humor in your social relationships, but a person who is always polite may place a higher priority on respect. Values concentrate on different areas: some may be general life values, but we also have family values, cultural values, and work values. And as people have values, so do organizations. Today, nearly everybody who has worked for a company is familiar with the concept of company values. A companys values usually first appear at orientation, and you will probably be reminded of them at various times during your employment. Perhaps you hold them dearly; you can recite them, and believe you apply them on a daily basis. You may feel that values unite the organization into a common way of thinking. These are the espoused values of the company: the values the company says it has.

But what does the company actually do? How does it really treat its employees, its customers, the environment? These are the values-in-action, or the values the company puts into practice. Imagine an innovative engineering company where one of its values is Teamwork. The manager of a research team claims that as the manager, he is responsible for all of his teams new ideas, and even files the patents for them in his own name. He is then given awards for the high number of patents he has filed. The company is rewarding individual effort, which contradicts its value of teamwork. Employees may start to hide their work from the manager, to keep the patent in their own name. Over time, this can become a norm in the organization. People sometimes join companies because their personal values match the companys values. However, employees become disillusioned when the companys espoused values do not match its values-in-action. In a person, this kind of behavior is called hypocrisy, and nobody likes a hypocrite. World Views A worldview is a theory of the world, used for living in the world. A world view is a mental model of reality a framework of ideas & attitudes about the world, ourselves, and life, a comprehensive system of beliefs with answers for a wide range of questions: What are humans, why we are here, and what is our purpose in life? What are your goals for life? When you make decisions about using time it's the stuff life is made of what are your values and priorities? What can we know, and how; and with how much certainty? Does reality include only matter/energy, or is there more? 4.2 Cultural Diversity and Reactivity Opportunities in cultural diversity Cultural differences can have both positive and negative impacts on organizations. However, undoubtedly, these differences would not be considered as hazards but rather opportunities and benefits if they can be managed well (Day, 2007). The opportunities and benefits include, but not only include, innovation, competitiveness and knowledge transfer; increased attraction to minority customers (Baum et al, 2007); better talent recruitment and retention; and labor cost reduction. Successfully managing cultural diversity can also help companies to diversify supply base by developing business partnership with minority-owned vendors to drive quality up and cut cost down (Ruggless, 2003), and help companies to enhance corporate images in neighbor communities as well (Fernandez, 2006). Take the Hispanics for instance. Since it is estimated that Hispanics will soon exceed African American as the nations major minority group (Fullerton & Toossi, 2001), managers should concentrate on hiring and educating Hispanics to use their input and ideas, which will help the companies to develop marketing and product strategies to target this increasing demographic in the
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United States. The benefits of targeting this growing Hispanic culture within the U.S. can aid the companies to increase market share and profitability (Elmuti, 2001). Generally, among the benefits of cultural diversity, four are frequently mentioned in the literatures as the main reasons why companies in the hospitality industry endeavor to be diverse. The benefits include valuable innovation, effective knowledge transfer, increasing competitiveness and building image. Valuable Innovation First of all, diversity often stimulates new business innovations (Johansson, 2007). Employees with multicultural backgrounds and experience can bring in the industry more improved innovation by providing new ideas from their different viewpoints. If employers can understand and appreciate their different kinds of values and different ways of viewing the world, the companies can greatly take advantage of the benefits that differences bring in. Many surveys reveal that if a team or a general workforce includes individuals with different cultures backgrounds, more effective resolutions can be presented for the business problems. When compared to homogeneous employee groups, diversified employee groups show outstanding performance in the long run and efficiently take responsibility to their duties. This difference is partially caused by the increased creativity and novelty in multicultural teams that come from the diverse perspectives, views and experiences of their team members (Seymen, 2006). Effective Knowledge Transfer Cultural diversity can be helpful in knowledge transfer. Although human beings come in different colors, shapes and forms, they do not seek to be different from others. Rather, people prefer to be with their own kind (Denton, 1997). Most people agree with that when two strangers come together, it is much easier for them to break ice if the two have some common backgrounds or experience. In the workplaces, obviously, it is much easier to communicate and transfer information and knowledge if some of the employees speak the same language, have the same cultural background, and think or behave in similar ways. Efficiency increases simply because that misunderstanding can be greatly reduced by eliminating communication barriers from cultural differences. For example, it would be more efficient for a training manager with Hispanic cultural background to give training courses to employees with Hispanic origin. This easier knowledge transfer greatly enhances the working efficiency and productivity. Increasing Competitiveness Effectively managing cultural diversity increases companies competitiveness. The hospitality industry is an extremely competitive one. To survive in the competition, companies in this industry will have to control labor costs and increase customer count. In order to achieve these goals, companies must learn how to motivate employees, decrease turnover, and attract more customers. Successful diversity management will definitely do help (Belfry & Schmidt, 1989).
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In todays dynamic markets, companies have to serve various customer groups with different characteristics. Hence, cultural diversity in the workforce can help companies to develop their capability of understanding customers needs and keeping long-term business relations with them. Building Images Cultural diversity can help to enhance corporation images. The hospitality industry has been somewhat passive about building a positive industry image for the public (Fernandez, 2006). It should take some actions to build an image that this industry is willing to recruit more valuable minority employees from diverse cultures. This kind of message can attract more young people to take hospitality as a possible career option. In addition, diverse cultural workforce can make a company look and feel more like the neighbor communities that it serves. This kind of images can help the companies in the hospitality industry to be better recognized and accepted by diverse communities. Challenges of Cultural Diversity Aside from the benefits, hospitality industry still faces challenges of cultural diversity (Baum el al, 2007). Communication Challenges Different languages and various cultural backgrounds increase the difficulty of communication between employees in the workplaces. Language is always viewed as a crucial one among all the cultural features that make up cultural identity (Ganen, 1999). The second factor that causes communication gap is the cultural background differences. Rather than coming naturally, communication competence is a learned process like some other skills, which therefore increases the difficulty employees with different backgrounds to understand each other quickly and correctly. In addition, an intercultural communication may encounter more specific problems than a communication with one culture does. With different knowledge or experience, people in an intercultural communication have more difficulty to interpret others behavior, which increases their uncertainty of how other persons will respond to the communication (Baum et al, 2007). Employees of a company with diversity environment are therefore often poorly prepared to manage the high uncertainty experienced in intercultural communication. Training Challenges Diversity training aims at building up respect and increasing sensitivity for all of the differences among employees and customers. In order to develop a diverse workforce, it is essential to reduce cultural ethnocentrism and shortsightedness in employees (Lim & Noriega, 2007). Multicultural training will play a key role to increase the awareness of cultural diversity in employees and build up a culturally enriched environment in a company (Baum et al, 2007). Training needs to be conducted to employees to help them
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to understand the requirements and benefits of the cultural diversity. They should also be given training to increase their knowledge and skills of dealing with people having different cultural backgrounds (Baum el al, 2007). Discrimination Issues As a visually oriented species, people tend to notice differences and seek to be with their own kind. In the history of human beings, most of the bloody battles have been between social or cultural groups. It seems that people are inclined to choose enemies based on cultural differences. One of the reasons is that culture, once developed, refuses changes. It helps people to identify and strengthen their sense of community.

4.4. The OECD Guidelines for multinationals (See Attached Document) 4.5 Ethical Obligations of Multinationals A multinational corporation (MNC) or transnational corporation (TNC) is a corporation or enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation. Their aim is the global profit maximization. Multinational companies are not free from moral obligations. There will always be social expectations of multinationals either from individuals, the government or consumers of a product or service. Multinationals need to behave morally and corporate leadership can be the guide for how the corporation should act. Laws are one way of making multinationals behave morally. Valequez (1992) makes a good argument about multinationals ability to escape laws by moving operations between countries. Some multinational companies seek out places just for cheap labor and environmental laws (Gunther, 2005). Other companies find cheap labor but adopt the highest standard or law in which it sells products. This is in order to be able to sell the products universally (Gunther, 2005). For example, a car maker might choose to adopt Californias car emission standard so that they could sell their automobiles in all of the United States. When law might not hold the multinational to a high standard, social pressure can have an impact. Consumers in the United States have demands and expectations of how a company should behave. There have many times in the news when clothing designers and other manufacturers are accused of having their product manufactured at sweat shops in foreign countries. This can cause shareholders and other stakeholders within a company to change working conditions for factory workers. For example, Nike now more closely monitors its manufacturing partners operations in Asia (Gunther, 2005). The leadership in a company does have influence over how a company behaves. Valasquez (1992) states that bureaucracy of the company is not influenced by
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individuals and that a company has employees in positions and the company goes on regardless of who is in that position. Flemming (1992) states that the executives and bureaucrats that lead an organization do have an impact that can lead to social responsible policies and actions. Stockholders, the board of directors and executive level employees all apply their individual morality, through their actions, into the company. Some companies dont need laws to act morally. Some companies that open factories overseas for cheaper labor, keep health and safety polices from established factories (Gunther, 2005). Some companies might act morally for the public, media and government relations positive benefits. In todays world economy and with the fast spread of information companies have to behave and think globally. It is difficult to keep non-moral corporate decisions away from the public. Society holds multinationals to a level of ethics and responsibility that law might not be able to do. Multinationals are not free from morals. 4.6 Bribery and corruption Bribery may include the corruption of a public official as well as commercial bribery, which refers to the corruption of a private individual to gain a commercial or business advantage. The essential elements of official bribery are: Giving or receiving; A thing of value; To influence; An official act.

The thing of value is not limited to cash or money. Such things as lavish gifts and entertainment, payment of travel and lodging expenses, payment of credit card bills, "loans," promises of future employment, interests in businesses, can be bribes if they were given or received with the intent to influence or be influenced. Proof of corrupt influence often involves demonstration that the person receiving the bribe favored the bribe-payer in some improper or unusual way, such as by providing preferential treatment, bending or breaking the rules, taking extraordinary steps to assist the bribe-payer, or allowing the bribe-payer to defraud the agency or company. It is not necessary, however, that the prosecution or claimant demonstrate that the bribe-taker acted improperly; a bribe might be paid to induce an official to perform an act that otherwise would be legal, or an act that the official might have performed without a bribe. Bribery schemes involving these circumstances, however, are difficult to prove and lack appeal for prosecution.
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The most common bribery and corruption schemes include: Bribery - Giving or receiving something of value to influence a transaction Illegal Gratuity - Giving or receiving something of value after a transaction is completed, in acknowledgment of some influence over the transaction Extortion - Demanding a sum of money (or goods) with a threat of harm (physical or business) if demands are not met Conflict of Interest - Employee has an economic or personal interest in a transaction Kickback - A vendor give part of an overbilling to a person who helped facilitate or allow the transaction. Corporate Espionage - Theft of trade secrets, theft of intellectual property, or copyright piracy Corruption has a more distortionary impact on the economy than taxation, because of the need to keep corruption secret. Efforts to avoid detection and punishment cause corruption to be more distortionary than taxation.

Corruption slows down investment and economic growth, the fact that bribery contracts are unlike regular contracts that are enforceable. Corruption raises the cost of doing business. Officials may introduce certain conditions to ensure that they get bribes, through delays and unnecessary requirements. Corruption discourages new ideas and innovations. Corruption leads to the decline in real per capita incomes, inflation, a widening budget and balance of payment deficits, and declining official production and exports: Corruption promotes inequality among firms Corruption leads to a reduction in the quality of products. Corruption diverts funds from investment and other production activities. Politically, corruption leads to a loss of faith on the part of the people and thus its legitimacy and power. Political equality and democratic values are undermined. Corruption strengthens bad governance, through the absence of the rule of Law, respect for human rights, no accountability, and transparency. Corruption has also led to massive neglect of the social sector, which has substantially decreased the quality of human resources in African states over the years. The provision of educational and health opportunities have been limited, this impacting negatively on the quality of life, labour, productivity, incomes, innovativeness, competitiveness, and poverty reduction in Africa States

Donors creditability has also been eroded. There have been instances in which donors have been critical as to the commitment of Africa State in handling corruption in their respective states. Corruption has also led to the weakness of structure and institutions crucial for better governance. Generally speaking, corruption is a species of governance failure and can only be mitigated when Africa states are committed to ensure Good Governance. Existing structures and institutions such as Anti-Corruption Commissions and Bureaus should be strengthened and the national Campaigns against corruption intensified in African Countries. Unless and until Africans are committed, corruption is the cancer that will eat up all the socio-economic and political achievements of the continent and Africa might not see the light of day. Forms of corruption The main forms of corruption are bribery, embezzlement, fraud and extortion. Even when these concepts are partly overlapping and at times interchangeable with other concepts, some of the basic characteristics of corruption can be identified through these concepts. Bribery is the payment (in money or kind) that is given or taken in a corrupt relationship. To pay or receive a bribe is corruption per se, and should be understood as the essence of corruption. A bribe is a fixed sum, a certain percentage of a contract, or any other favor in money of kind, usually paid to a state official who can make contracts on behalf of the state or otherwise distribute benefits to companies or individuals, businessmen and clients. Embezzlement is theft of public resources by public officials, which is another form of misappropriation of public funds. Embezzlement is when a state official steals from the public institution in which he his employed, and from resources he is supposed to administer on behalf of the state and the public. However, disloyal employees in private firms can also embezzle money and other resources from their employers. Fraud is an economic crime that involves some kind of trickery, swindle or deceit. It is a broader legal and popular term that covers more than bribery and embezzlement. Extortion is money and other resources extracted by the use of coercion, violence or the threats to use force. Favoritism is a mechanism of power abuse implying privatization and a highly biased distribution of state resources, no matter how these resources have been accumulated in the first place. Favoritism is the natural human proclivity to favor friends, family and anybody close and trusted.