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Clash of cultures or fusion of cultures?: Implications for international business
Journal of International Management 12 (2006) 218 – 221
Discussion
Clash of cultures or fusion of cultures?: Implications for international business Jagdish N. Sheth⁎ 1626 Mason Mill Road NE, Emory University, Atlanta, GA, 30329-4133, United States Received 31 December 2004; accepted 4 February 2006 Available online 24 May 2006
1. Introduction Globalization in the 21st century is fundamentally different in its antecedents and outcomes when compared to the first wave of globalization that occurred in the 1800s. The latter was predominantly driven by the Industrial Revolution and a shift from the agriculture age to the industrial age, as Europeans expanded into other countries and geographies in search of land (raw materials) and labor resources. Unfortunately for the resource rich areas, this process of resource capturing was carried out through such invasive and destructive methods as colonialism and slavery. Another disruptive, but unintentional, consequence of 1800s globalization was that it created a disruptive cultural discontinuity between the traditional ways of day-to-day (food, shelter and clothing) living and what we call modern or contemporary ways of living. For example, instead of being home producers of foods, beverages and medicine, the modern family became buyers of commercially produced, packaged and branded versions of those products. All through the last century, and especially after World War II, the gap between traditional cultures and what Triandis (2006) calls the jet set culture has continued to widen, both within and between culturally defined nations and geographies. This often results in culture clashes that are still evident today as the world becomes more and more a global village (Huntington, 1993). 2. New era of globalization This new era of globalization is, however, due to a lack of economic growth among all advanced countries. In my most recent book, Tectonic Shift (Sheth and Sisodia, 2006), I argue that the rapid aging of affluent countries and consequent lack of economic growth has necessitated an economic integration between affluent but aging economies and emerging but young economies. This ⁎ Tel.: +1 404 727 7603; fax: +1 404 325 0091. 1075-4253/$ - see front matter © 2006 Elsevier Inc. All rights reserved. doi:10.1016/j.intman.2006.02.009
J.N. Sheth / Journal of International Management 12 (2006) 218–221
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integration has been manifested in trade agreements such as NAFTA and regional trade blocs such as ASEAN and the European Union. Indeed, as documented by Wilson and Purushothaman (2003), the export driven growth economies of countries such as Brazil, Russia, and especially India and China (BRIC) will rival and even eclipse the current developed economies. In my opinion, the rise of China and India as new economic superpowers will create a totally different type of globalization and have a totally different impact on the world's cultures. This globalization will be less about European or Western cultures encroaching and changing traditional cultures and more about Western cultures embracing the cultural beliefs and values of India and China, and Asia in general. For example, today, the fastest growing religion in the U.S. is Buddhism. Because the jet set culture is more likely to embrace the traditional cultures and values of the East, this will create a cultural fusion between the West and East. The popularity of Christian Yoga in the U.S. is an example of this fusion of cultures. Indeed, in the U.S., it is the white majority that has consistently legitimized new ethnic cultures by adopting their cultural mores and turning them into mainstream behavior. Examples include the disproportionate consumption of pizza and pasta by descendants of northern Europeans as compared to Italian Americans. And more recently, with the rise of the Hispanic population in the U.S., we have witnessed what appears to be a permanent shift from ketchup to salsa and from potato chips to tortilla chips. Many studies have shown that, in the U.S., African–Americans are usually at the root of trends in music and fashion, and their behavior is legitimized by adoption of the white majority. 3. Three mega trends in world cultures I strongly believe that the rise of China and India as the next economic superpowers will result in three mega trends in world cultures that will change the way we think about the impact of globalization on international business. The first mega trend, as I mentioned earlier, is the reverse culture influence on modern Western cultures from emerging economies, especially those with an ancient cultural heritage. Because Western cultures are pro innovation and pro change, they will accept and assimilate the old culture values and behaviors. In my opinion, cultural artifacts of India and China (and especially India) such as music, mythology, arts and fiction will have a major influence on most Western cultures. Indeed, it is already happening as Indian artists and writers are winning major Western awards in literature and science, and Bollywood has begun to invade Hollywood. If this seems far-fetched, note that, in Britain, fish and chips have been displaced by Indian curry as the most popular meal. The key consequence of this reverse culture flow is that it will take place with no clash of cultures and civilizations. Indeed, it will result in a fusion of cultures and not a clash of cultures. A second mega trend in world culture is that it will be Asia centric and not European or American centric, largely because of the rising economic and political power of China, India, South Korea and to some extent Japan and the ASEAN. Just as the 19th century was the European century and the 20th century was the American century, the 21st century will be the Asian century. New discoveries, inventions and designs for food, fashion, homes and offices are destined to come from the Asian countries. Eastern practices and traditions such as Feng Shui and Diwali will be welcomed and accepted in Western businesses and homes. This is already the case in Silicon Valley in California, for example. The third mega trend in world cultures is increased diversity within cultures and geographies. In my view, every major city or country will have significant multi-cultural diversity, whether it is
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J.N. Sheth / Journal of International Management 12 (2006) 218–221
New York, London, Mumbai, Shanghai or Dubai. It's easy to see how this is taking place by visiting shopping mall food courts and corporate cafeterias around the world. 4. Implications for international business So what does all this mean for international business and especially for international marketing? Here are some implications and prescriptions. First, it will become increasingly necessary to avoid what James A. Lee (1996) calls the self reference criterion (SRC). In other words, one's own upbringing, values and viewpoints give an individual what I like to call cultural myopia. This has an effect on a company's management and can result in underutilization of a company's human capital as well as overlooked market opportunities. For example, until recently, the perception has been that China and India, which have low per capita incomes and a large number of people living in poverty, were inconsequential consumer markets. But China is now the largest market for cell phones, the second largest market for appliances and the third largest market for automobiles. Similarly, India is likely to be second largest in cell phones and is the largest consumer of milk and milk-based products. A second implication for international business is what is referred to in Buddhism and Jainism as “Anekanta”, a philosophical viewpoint that considers that multiple perspectives of a single observation or phenomenon can be true. This is often illustrated by the fable of five blind men touching different parts of an elephant and coming to different conclusions as to what the elephant is like (e.g., the trunk is like a tree, the tail is like a rope). All of them are correct from their limited viewpoint. But by not having the benefit of the Gestalt (the whole can not be described as merely the sum of its parts), they are unable to grasp that they are actually touching an elephant. In my view, the principles of Anekanta and Gestalt will be increasingly important because of the necessity of understanding and respecting diverse business practices, what Edward Hall (1959) often referred to as the “silent language” of doing business overseas. Third, as national markets become more diverse, with increasing mobility of products, people, capital and culture, it will be essential to discover and identify global segments and global niche markets. Although these segments and markets may not be profitable in any single national market, they become economically viable when aggregated globally. Within culturally heterogeneous markets, this will require the development of business processes that create and deliver an infinite variety of choices but with virtually the same economy of scale achieved in a standardized, mass-produced product or practice. This mass customization process will become another business necessity for serving markets and employees. Toyota Motors has taken this concept a step further by developing such lean operations sub-processes as TQM, mass customization, cycle time and supply chain management to adjust for diversity within and between cultures. A fourth implication for international business is the opportunity to serve what C.K. Prahalad (2004) refers to as the “bottom of the pyramid”. In other words, rather than fighting for market share, it will be desirable and even necessary to grow the total market by innovating affordable products and services, and making them accessible so they are affordable for even subsistence-level consumers. For example, today nearly 50% of the world population has never made a single telephone call, let alone have access to a cell phone. Similarly, half of the world's population has no electricity or running water. It is my estimate that all the advances of technology and innovation since the Industrial Revolution have benefited less than 20% of the world's population. Conveniences that we take for granted still continue to be beyond the affordability and accessibility of 86% of the market (Mahajan and Banga, 2006).
J.N. Sheth / Journal of International Management 12 (2006) 218–221
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Fifth, it will become increasingly necessary for global enterprises to organize around global centers of excellence. In other words, a corporation may have a technology center in one part of the world, a design center in another part of the world, and manufacturing or operations in yet another part of the world. In short, companies historically organized as vertically integrated organizations in one or more globally dispersed locations are likely to be reorganized into virtually integrated global organizations. This means less focus on traditional products and markets and more focus on competencies and processes across the value chain. Finally, I believe it will be to the advantage of global enterprises to recruit and promote talent on a global basis. In other words, it will be no longer necessary, and maybe even undesirable, to have a country-of-origin manager or executive in charge of that country. In fact, I have strongly advocated in many large global enterprises that the company is better off, for example, to have a Korean in charge of an Indian subsidiary, an Indian in charge of German operations and a German in charge of French or U.S. business. This is because a country of origin manager who has never managed any resource outside his or her country also suffers from cultural bias (the self-reference criterion), analogous to the five blind men and the elephant. Furthermore, he or she is likely to be loyal to the country first and the employer second, and therefore very likely to be recruited by local competition. On reflection, this is not very different from what we also experience internally in the U.S. where many West Coast managers refuse to relocate to the East Coast, and vice versa. As a result, rotation of high potential managers and executives around the world as a part of career advancement will become a common practice. As the globalization of cultures and markets continues, it is not enough for businesses to try to understand this change from an outside perspective when making production and marketing decisions. Global businesses will go further and develop a pan-cultural psyche that embeds this understanding in its processes and personnel in order to make the best strategic decisions for a worldwide market. Just like the world at large, a fusion of cultures is more desirable, and therefore more likely to occur, than a clash of cultures. References Hall, Edward T., 1959. The Silent Language. Doubleday, Garden City, NY. Huntington, Samuel P., 1993. The clash of civilizations. Foreign Affairs 72 (3), 22–28 (Summer). Lee, James A., 1996. Cultural analysis in overseas operations. Harvard Business Review 106–111 (March–April). Mahajan, Vijay, Banga, Kamini, 2006. The 86 Percent Solution. Wharton School Publishing, Philadelphia. Prahalad, C.K., 2004. The Fortune at the Bottom of the Pyramid. Wharton School Publishing, Philadelphia. Sheth, Jagdish N., Sisodia, Rajendra S., 2006. Tectonic Shift: Geo-Economic Realignment of Globalizing Markets. Sage India, New Delhi. Triandis, Harry C., 2006. Cultural aspects of globalization. Journal of International Management (Special Issue on Megatrends in World Cultures and Globalization). Wilson, Dominic, Purushothaman, Roop, 2003. Dreaming with BRICs: The Path to 2050. Goldman, Sachs and Co., New York.
Discussion
Clash of cultures or fusion of cultures?: Implications for international business Jagdish N. Sheth⁎ 1626 Mason Mill Road NE, Emory University, Atlanta, GA, 30329-4133, United States Received 31 December 2004; accepted 4 February 2006 Available online 24 May 2006
1. Introduction Globalization in the 21st century is fundamentally different in its antecedents and outcomes when compared to the first wave of globalization that occurred in the 1800s. The latter was predominantly driven by the Industrial Revolution and a shift from the agriculture age to the industrial age, as Europeans expanded into other countries and geographies in search of land (raw materials) and labor resources. Unfortunately for the resource rich areas, this process of resource capturing was carried out through such invasive and destructive methods as colonialism and slavery. Another disruptive, but unintentional, consequence of 1800s globalization was that it created a disruptive cultural discontinuity between the traditional ways of day-to-day (food, shelter and clothing) living and what we call modern or contemporary ways of living. For example, instead of being home producers of foods, beverages and medicine, the modern family became buyers of commercially produced, packaged and branded versions of those products. All through the last century, and especially after World War II, the gap between traditional cultures and what Triandis (2006) calls the jet set culture has continued to widen, both within and between culturally defined nations and geographies. This often results in culture clashes that are still evident today as the world becomes more and more a global village (Huntington, 1993). 2. New era of globalization This new era of globalization is, however, due to a lack of economic growth among all advanced countries. In my most recent book, Tectonic Shift (Sheth and Sisodia, 2006), I argue that the rapid aging of affluent countries and consequent lack of economic growth has necessitated an economic integration between affluent but aging economies and emerging but young economies. This ⁎ Tel.: +1 404 727 7603; fax: +1 404 325 0091. 1075-4253/$ - see front matter © 2006 Elsevier Inc. All rights reserved. doi:10.1016/j.intman.2006.02.009
J.N. Sheth / Journal of International Management 12 (2006) 218–221
219
integration has been manifested in trade agreements such as NAFTA and regional trade blocs such as ASEAN and the European Union. Indeed, as documented by Wilson and Purushothaman (2003), the export driven growth economies of countries such as Brazil, Russia, and especially India and China (BRIC) will rival and even eclipse the current developed economies. In my opinion, the rise of China and India as new economic superpowers will create a totally different type of globalization and have a totally different impact on the world's cultures. This globalization will be less about European or Western cultures encroaching and changing traditional cultures and more about Western cultures embracing the cultural beliefs and values of India and China, and Asia in general. For example, today, the fastest growing religion in the U.S. is Buddhism. Because the jet set culture is more likely to embrace the traditional cultures and values of the East, this will create a cultural fusion between the West and East. The popularity of Christian Yoga in the U.S. is an example of this fusion of cultures. Indeed, in the U.S., it is the white majority that has consistently legitimized new ethnic cultures by adopting their cultural mores and turning them into mainstream behavior. Examples include the disproportionate consumption of pizza and pasta by descendants of northern Europeans as compared to Italian Americans. And more recently, with the rise of the Hispanic population in the U.S., we have witnessed what appears to be a permanent shift from ketchup to salsa and from potato chips to tortilla chips. Many studies have shown that, in the U.S., African–Americans are usually at the root of trends in music and fashion, and their behavior is legitimized by adoption of the white majority. 3. Three mega trends in world cultures I strongly believe that the rise of China and India as the next economic superpowers will result in three mega trends in world cultures that will change the way we think about the impact of globalization on international business. The first mega trend, as I mentioned earlier, is the reverse culture influence on modern Western cultures from emerging economies, especially those with an ancient cultural heritage. Because Western cultures are pro innovation and pro change, they will accept and assimilate the old culture values and behaviors. In my opinion, cultural artifacts of India and China (and especially India) such as music, mythology, arts and fiction will have a major influence on most Western cultures. Indeed, it is already happening as Indian artists and writers are winning major Western awards in literature and science, and Bollywood has begun to invade Hollywood. If this seems far-fetched, note that, in Britain, fish and chips have been displaced by Indian curry as the most popular meal. The key consequence of this reverse culture flow is that it will take place with no clash of cultures and civilizations. Indeed, it will result in a fusion of cultures and not a clash of cultures. A second mega trend in world culture is that it will be Asia centric and not European or American centric, largely because of the rising economic and political power of China, India, South Korea and to some extent Japan and the ASEAN. Just as the 19th century was the European century and the 20th century was the American century, the 21st century will be the Asian century. New discoveries, inventions and designs for food, fashion, homes and offices are destined to come from the Asian countries. Eastern practices and traditions such as Feng Shui and Diwali will be welcomed and accepted in Western businesses and homes. This is already the case in Silicon Valley in California, for example. The third mega trend in world cultures is increased diversity within cultures and geographies. In my view, every major city or country will have significant multi-cultural diversity, whether it is
220
J.N. Sheth / Journal of International Management 12 (2006) 218–221
New York, London, Mumbai, Shanghai or Dubai. It's easy to see how this is taking place by visiting shopping mall food courts and corporate cafeterias around the world. 4. Implications for international business So what does all this mean for international business and especially for international marketing? Here are some implications and prescriptions. First, it will become increasingly necessary to avoid what James A. Lee (1996) calls the self reference criterion (SRC). In other words, one's own upbringing, values and viewpoints give an individual what I like to call cultural myopia. This has an effect on a company's management and can result in underutilization of a company's human capital as well as overlooked market opportunities. For example, until recently, the perception has been that China and India, which have low per capita incomes and a large number of people living in poverty, were inconsequential consumer markets. But China is now the largest market for cell phones, the second largest market for appliances and the third largest market for automobiles. Similarly, India is likely to be second largest in cell phones and is the largest consumer of milk and milk-based products. A second implication for international business is what is referred to in Buddhism and Jainism as “Anekanta”, a philosophical viewpoint that considers that multiple perspectives of a single observation or phenomenon can be true. This is often illustrated by the fable of five blind men touching different parts of an elephant and coming to different conclusions as to what the elephant is like (e.g., the trunk is like a tree, the tail is like a rope). All of them are correct from their limited viewpoint. But by not having the benefit of the Gestalt (the whole can not be described as merely the sum of its parts), they are unable to grasp that they are actually touching an elephant. In my view, the principles of Anekanta and Gestalt will be increasingly important because of the necessity of understanding and respecting diverse business practices, what Edward Hall (1959) often referred to as the “silent language” of doing business overseas. Third, as national markets become more diverse, with increasing mobility of products, people, capital and culture, it will be essential to discover and identify global segments and global niche markets. Although these segments and markets may not be profitable in any single national market, they become economically viable when aggregated globally. Within culturally heterogeneous markets, this will require the development of business processes that create and deliver an infinite variety of choices but with virtually the same economy of scale achieved in a standardized, mass-produced product or practice. This mass customization process will become another business necessity for serving markets and employees. Toyota Motors has taken this concept a step further by developing such lean operations sub-processes as TQM, mass customization, cycle time and supply chain management to adjust for diversity within and between cultures. A fourth implication for international business is the opportunity to serve what C.K. Prahalad (2004) refers to as the “bottom of the pyramid”. In other words, rather than fighting for market share, it will be desirable and even necessary to grow the total market by innovating affordable products and services, and making them accessible so they are affordable for even subsistence-level consumers. For example, today nearly 50% of the world population has never made a single telephone call, let alone have access to a cell phone. Similarly, half of the world's population has no electricity or running water. It is my estimate that all the advances of technology and innovation since the Industrial Revolution have benefited less than 20% of the world's population. Conveniences that we take for granted still continue to be beyond the affordability and accessibility of 86% of the market (Mahajan and Banga, 2006).
J.N. Sheth / Journal of International Management 12 (2006) 218–221
221
Fifth, it will become increasingly necessary for global enterprises to organize around global centers of excellence. In other words, a corporation may have a technology center in one part of the world, a design center in another part of the world, and manufacturing or operations in yet another part of the world. In short, companies historically organized as vertically integrated organizations in one or more globally dispersed locations are likely to be reorganized into virtually integrated global organizations. This means less focus on traditional products and markets and more focus on competencies and processes across the value chain. Finally, I believe it will be to the advantage of global enterprises to recruit and promote talent on a global basis. In other words, it will be no longer necessary, and maybe even undesirable, to have a country-of-origin manager or executive in charge of that country. In fact, I have strongly advocated in many large global enterprises that the company is better off, for example, to have a Korean in charge of an Indian subsidiary, an Indian in charge of German operations and a German in charge of French or U.S. business. This is because a country of origin manager who has never managed any resource outside his or her country also suffers from cultural bias (the self-reference criterion), analogous to the five blind men and the elephant. Furthermore, he or she is likely to be loyal to the country first and the employer second, and therefore very likely to be recruited by local competition. On reflection, this is not very different from what we also experience internally in the U.S. where many West Coast managers refuse to relocate to the East Coast, and vice versa. As a result, rotation of high potential managers and executives around the world as a part of career advancement will become a common practice. As the globalization of cultures and markets continues, it is not enough for businesses to try to understand this change from an outside perspective when making production and marketing decisions. Global businesses will go further and develop a pan-cultural psyche that embeds this understanding in its processes and personnel in order to make the best strategic decisions for a worldwide market. Just like the world at large, a fusion of cultures is more desirable, and therefore more likely to occur, than a clash of cultures. References Hall, Edward T., 1959. The Silent Language. Doubleday, Garden City, NY. Huntington, Samuel P., 1993. The clash of civilizations. Foreign Affairs 72 (3), 22–28 (Summer). Lee, James A., 1996. Cultural analysis in overseas operations. Harvard Business Review 106–111 (March–April). Mahajan, Vijay, Banga, Kamini, 2006. The 86 Percent Solution. Wharton School Publishing, Philadelphia. Prahalad, C.K., 2004. The Fortune at the Bottom of the Pyramid. Wharton School Publishing, Philadelphia. Sheth, Jagdish N., Sisodia, Rajendra S., 2006. Tectonic Shift: Geo-Economic Realignment of Globalizing Markets. Sage India, New Delhi. Triandis, Harry C., 2006. Cultural aspects of globalization. Journal of International Management (Special Issue on Megatrends in World Cultures and Globalization). Wilson, Dominic, Purushothaman, Roop, 2003. Dreaming with BRICs: The Path to 2050. Goldman, Sachs and Co., New York.