This chapter will present cultural competence and its significance, this will be followed by detailed overview to Cultural Intelligence Quotient (CQ).
The global business environment is becoming highly complex due to the dominance of culture. Culture dictates, people’s behavior, choices, communication, management, and leadership etc., therefore, the significance of culture cannot be underestimated. Culture influences the attitude of people in a positive as well as in a negative manner. Culture across the globe is not unified, as it differs to great extent across the globe and can as well be widely different in the same country. Therefore, it is nearly impossible for anyone to have all the knowledge about each and every culture in this world. However, in the realm of international business environments, it is imperative for business leaders to be
aware of cultural differences across different countries in order to function effectively. In order to be aware of the cultural differences, business leaders require competency to recognize how culture differs across different countries.
However, not all individuals are born with inherent qualities that enable them to work with people from diverse cultural backgrounds. In order to deal with people from different cultures, business leaders require high-levels of cultural competence, this will facilitate them to be successful in the international business environment. “Cultural competence is cultural literacy which is the ability to read the signs and symbols of our own culture as well as those arising from other cultural traditions” (Wilenius 2006:45). Likewise, cultural competence can be termed as the capability to deeply understand diverse cultures in order to behave appropriately in particular cultural contexts without prejudice.
Cultural competence provides a wide range of advantages for business leaders, for instance, it energizes leadership behavior to understand how cultures differ in their values, and how such differences impact behavior (Crowne 2008).
Furthermore, cultural capabilities enable leaders to identify and understand the sub-cultures, cultural heterogeneity, management style and in so doing adopt the correct leadership style across different countries. Culture competence becomes important in understanding different aspects of business, management and in particular leadership. For instance, leadership is essentially a social phenomenon and by understanding the culture to which the followers belong, leaders can understand the underlying assumptions, beliefs, and values of their followers, and thereby develop greater awareness about the followers (Singh & Krishnan 2007:219). The manner in which leadership is perceived and exhibited, differs greatly across different countries. However, through the correct cultural competence, one can acquire a greater amount of knowledge and gain skills to employ the appropriate leadership style.
Likewise, cultural competence enables business leaders to differentiate the difference that exists in terms of management style, organizational culture, and business culture and between their own culture and that of the host culture.
Cultural competence strengthens business leaders interest in establishing a relationship with stakeholders of society, networking, negotiation, managing people, distributors, suppliers etc., in the international business environment.
Moreover, business leaders also need capabilities to appreciate and treat people from other cultures equally. Therefore, business leaders require cultural competence that will allow them to differentiate cultural differences that exist between different nations of the world.
In the area of business studies, cultural competence is a vast area of study and is dominated by various traditional theories and models with a wide range of perspectives. There are several theories and models on cultural competences including: Global Mindset Inventory (Javidan & L..Walker 2013), Intercultural Development Inventory (Hammer, Bennet & Wisemen 2003), Socio-cultural Adaptation Scale (Ward & Kennedy 1999), Intercultural adjustment potential scale (Matsumoto et al. 2007), Intercultural Sensitivity Inventory (Bhawuk &
Brislin 1992) etc. Likewise, many more cultural competency theories exist and are being developed. When looking at all these existing theories, it raises a question why so many theories have been developed in recent years. However, when looking at the global business environment, it is understandable such theories are essential, as in recent decades, businesses are becoming increasingly global and new kinds of industries also have evolved. Furthermore, companies are also moving their manufacturing and outsourcing to emerging economies often these have not been included in academic research. Likewise, in the recent year’s business have become more complex and the world has undergone tremendous change, where businesses are becoming increasingly culturally inter-related across different countries and also new forms of industries are rapidly growing. In addition, manufacturing and outsourcing of services from the western countries has moved to emerging or developing countries. Therefore, it is evident that such theories on cultural competence are gaining momentum in recent years. However, it is questionable whether all the theories that exist are applicable in all different cultural contexts. The theories and models formulated and based on one cultural assumption, may not be applicable in all the cultures, as the models may be based on their own cultural ideologies.
The cultural capability model that is considered as a good model in one context, may be considered as a bad model in another context. Though no good or bad models exist, it is still important to understand the effectiveness of a particular model in a specific context. Investigating the effectiveness of a theory or a model in a specific culture, is crucial in understanding the underlying assumptions of that theory in that particular culture. The effectiveness of a theory can be determined in using the theory on individuals within a particular culture.
Therefore, it is imperative to investigate the theory in a certain context. Though there are several cultural capabilities or competence theories in existence, as discussed above, this study has chosen the CQ theory to investigate how it facilitates Finnish business leaders in the context of the Indian business environment. In continuation to the above discussion on cultural competence, the following section will give a detailed overview to Cultural Intelligence Quotient (CQ) theory.