Scientists have determined the main success factor of global companies

11:34, July 15, 2020

Recommendations and cases are presented in a special issue of the European Business Review

The success of global companies is determined not so much by well-established business strategies as by delicate cross-cultural management that takes into account the mental characteristics of consumers (stakeholders) in any of the countries where the companies are present. In addition, the success is defined by knowledge management based on the active involvement of stakeholders in business decision-making processes. Ignoring cultural nuances and their influences leads to disastrous consequences for business. This is the basic notion underlying the special issue of the European Business Review, dedicated to the problems of international business.

The special issue is the result of 2.5 years of research in individual countries and industries, consists of nine articles and was prepared by an editorial team of scientists from Russia, Great Britain, Italy and Cyprus under the leadership of Prof. Zhanna Belyaeva, Academic Head of the School of Management and Interdisciplinary Studies of GSEM UrFU.

«People from different cultures react in their own way to the same phenomenon. Peter Drucker, one of the most widely known thinkers on management, said, "culture eats strategy at breakfast". And many large companies have been badly burned by this point. For example, the corporate culture of the American company Google prescribes to indicate positive achievements in group discussions. In France, this rule was perceived with bewilderment: it is not customary to praise oneself, it is customary to criticize. In the Netherlands, it is generally considered the norm to be straightforward. But in Asian countries, for example, in China, on the contrary, self-criticism is unacceptable. In Russia and Germany, straightforwardness is also perceived as something indecent. Such nuances must be considered when entering local markets» emphasizes Prof. Zhanna Belyaeva.

Prof. Zhanna Belyaeva defines the history of Ikea's entry into the Chinese market as a prominent example of an unsuccessful start. Ikea chose an inconvenient store location for Chinese consumers without making a preliminary analysis and relying on corporate standards. Moreover, it turned out that the size of Ikea furniture does not fit the modest size of Chinese apartments. Correction of errors cost the company wasted time and additional costs.

«An example of a successful entry is the Russian company Dodo Pizza. Selling pizza in China is not easy: there are peculiar taste preferences, a specific payment system. But Dodo Pizza previously studied the Chinese market and entered it with customized products and solutions. This attention to the originality of the markets has largely determined the global success of the company: today it is a big chain consisting of more than 600 pizzerias in 13 countries. In the banking sector, the British bank HSBC has the same policy, - continues Prof. Zhanna Belyaeva.  Companies that implement an effective cross-cultural knowledge management system can achieve significant improvements in their operations in terms of cost savings, improving the efficiency and the ability to manage global relationships. Traditionally operating companies achieve only moderate levels of growth».

Trust is a key factor in the relationship between entrepreneurs and stakeholders which forms the corresponding reputation of companies. Therefore, based on the value of trust, many global companies “grow” future branch managers from among local residents. A study carried out in 30 countries showed that in countries with low GDP and per capita income, consumers especially value the behaviour of representatives of foreign cultures and foreign companies, adapted to local cultural identity. In such countries the sharing economy is developing most dynamically, represented by companies such as Uber (car sharing) and Airbnb (rental housing). The researchers explain this phenomenon by the fact that in more developed and prosperous countries, it is more difficult to fit the economy of trust and mutual assistance into traditional and conservative state institutions.

At the same time, thanks to modern information technologies, the incorrect activity of companies even in remote corners of the Earth leads to damage the business and public reputation and subsequent losses.

The special issue of the European Business Review emphasizes that research on intercultural management is seriously separated from the realities of the modern global economy, with its emphasis on knowledge sharing, organizational learning and developing partnerships. Companies can collect and share all information related to cultural factors, influencing the business, social and legal aspects of their practice through the cross-cultural knowledge management system.

Therefore, a special subtopic of the special issue is the role of universities in the formation of cross-cultural and transdisciplinary thinking, receptive both to the assimilation of universal global values ​​and to work with local cultural specifics. Thus, students of GSEM UrFU together with dozens of peers from Europe, Asia, Latin America analyze the cases of partner companies of their universities.

«This activity includes such global companies as Coca-Cola, Unilever, Google and other similar business structures. Students from different countries and cultures not only prepare joint professional analytical, financial or marketing solutions, but also learn to interact with each other in a multicultural environment, thus preparing themselves for an international career», comments Prof. Zhanna Belyaeva.

The editors of the European Business Review special issue point out that the organizational nature of cross-cultural stakeholder knowledge management is quite new, the existing literature does not fully describe this phenomenon and the positive or negative experience of companies.

«To fill this considerable gap in research on the relationship between the organization and its stakeholders, further research is clearly needed on evolving business models in different macroeconomic, institutional, sectoral and cross-cultural contexts», state the editors.