Academic journal article Journal of Organizational Culture, Communications and Conflict

Cross-Cultural Discontinuities within International Knowledge Work: Firm-Level Evidence from a German Software Developer in Thailand

Academic journal article Journal of Organizational Culture, Communications and Conflict

Cross-Cultural Discontinuities within International Knowledge Work: Firm-Level Evidence from a German Software Developer in Thailand

Article excerpt

INTRODUCTION

Increasing competitiveness in the global economy has compelled a substantial number of multinational companies to outsource and offshore their business activities to foreign countries, particularly within Asia (Ernst, 2006). This has frequently resulted in both challenges and opportunities, but the current shift in the types of activity offshored embodies new critical challenges. This is especially so for SMEs (small and medium enterprises) who may be lured by the business prospects that offshoring presents, but may lack the experience and resources to overcome these challenges, in particular, the day-to-day management of employees in a cross-cultural work environment. This paper adopts a case study approach to explore the cultural challenges SMEs face when offshoring and employing knowledge workers abroad.

According to Balasubramanian and Ashutosh (2005), a new, second wave of offshoring is underway, which is characterised by firms who are offshoring more than simple manufacturing, and are now relocating knowledge and innovation activities (Lewin, Massini & Peeters, 2009). Theoffshoring of knowledge activities and innovation requires a critical understanding of how to managelocally recruited knowledge workers who are performing these knowledge-based activities in the context of an international management environment. This paper argues via a German Thai case studythat cross-cultural discontinuities between expatriate management and their locally recruited staff represent a significant barrier to effective knowledge work. Such cross-cultural discontinuitie scan negate the potential benefits that attract SMEs to offshore their activities in the first place. The paper has two keyaims, firstly to identify the cultural discontinuities which exist within the German-Thai workplace, and secondly, to assess the potential impacts these cultural discontinuities have on work performance and quality.

LITERATURE REVIEW AND CONTEXT

Offshoring Business Activities

Offshoring has frequently been termed the most visible consequence of globalisation (e.g. Auer, Besse & Meda, 2006). Akey driver of this offshoring process has often been access to comparatively low cost labour; firms seek to relocate their business activities to countries where labour is cheaper. While this global division of labour is often suggested as the primary reason for offshoring (Farrell, 2005), other aspects also play a significant role in business decisions to locate internationally. These include the need to secure raw materials located overseas (e.g. Fifarek, Veloso & Davison, 2008), the desire to diversify and overcome the risks related to currency fluctuations (e.g. Vestring, Rouse & Reinert, 2005), and the requirements to access free trade areas and be closer to key markets (Kelly, 2001).

While the cost savings of operating aboard are generally well understood, there are a variety of invisible costs and challenges associated with offshoring, which are generally less acknowledged (String fellow, Teagarden & Nie, 2008). For example, cultural differences have been noted as one of the most significant barriers when operating overseas, particularly in terms of managing staff. These cultural issues are frequently nuanced towards particular cross-cultural interactions, and often require specific understanding or practical experience. Developing an awareness and understanding of these cultural issues and interactions is fundamentally important to firms operating in the domain of the creative knowledge industries. It is particularly important for SMEs that are unlikely to possess the experience or financial resources necessary to address the cultural issues affecting their work quality and performance.

Deciding whether to offshore and operate internationally can become a business dilemma. On the one hand it provides significant benefits, including considerable scope and flexibility to cut costs, address local issues, and differentiate from competitors who remain focused at home (Miroshnik, 2002). …

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