Whilst “Eastern” religions, such as Islam, Hinduism and Buddhism continue to have a large impact on cross-national trade and relations it would appear that the impact of Christianity with respect to its social and economic significance is deteriorating. Organizations that operate internationally have to be increasingly aware of the political context in order to simultaneously operate successfully in what are often conflicting, political environments. In order to be successful in such conditions, there needs to be degree of sensitivity by all staff toward political issues. When discussing the political context four concepts are used to outline the implications, these being; the nation-state, nationalism, business-government relationships and geopolitics.
A nation-state is able to exert political control over a discrete territory, resulting in it being able to define geographical boundaries, establish citizenship requirements, control the movement of goods and people across its borders, settles internal disputes and protects the nation from outsiders. Nationalism is a state of mind of the individual and describes the individual’s loyalty to the nation-state, providing a basis for social and economic cohesion.
This can range from a rather mild sense of “belonging” to absolute commitment and loyalty. An example of the later extreme would be a person’s willingness to go to war to defend their country. Managers in change of those organisations that operate internationally ignore nationalism at their peril. Such a case would be when an organisation tries to expand into a country with a different culture. It would not be untypical for individuals to be against such a move, as the chances are, they would perceive such a move as a threat to their national culture.
Business-government relationships vary a great deal from one country to another. The nature of the interaction between businesses and governments paves the way in which the economic goals of the state are co-ordinated with organisational goals. An example where the two interact well would be Japan, who has enjoyed a great deal of economic success since the 1950’s. Many people would point towards the healthy relationship enjoyed between its government and businesses as being the main tool in achieving this. The state-business relationship is becoming more and more integral as the internationalisation of business continues, as it can be very detrimental to both parties if they have conflicting objectives.
So far, when looking into the political issues that may well arise when organisations are faced with cultural difficulties the assumption has been that of a simple two-country model. However, this is not always the case as often, seemingly inocent organisations, get caught in the middle of an international dispute. In the on-going conflict between Israel and its Arab neighbours many organisations have suffrered as a result of Arab countries boycotting firms which continue to enjoy a relationship With Israel or Israeli organisations.
For many an international investment decision, the need to assess the potential political uncertainty of a country is essential, and the problems of not doing so can far outweigh the potential benefit of undertaking a decision. Due to the fact that attitudes differ from one society to another, regarding the behaviour of individuals and institutions, then it should come as no suprose that these varying societies have different laws to regulate behaviour. A problem that is often encountered, by organisations, when trading with a nation that carries a different culture, is a lack of understanding of the key differences in legal systems.
Whilst we can safely say that the laws of one nation will differ from the laws of another, there are, however, likely to be some similarities. Just because there are similarities between the two does not mean that legal matters can be ignored. Some organisations may be unaware of trading laws which prohibit them from trading with certain countries, or the fact a high amount of tax may have to be payed when importing goods from a particular country. On a greater scale, an organisation may find it to be illegal to buy-out another organisation, as the nation of the “target company” may well believe it has a detrimental effect on the amount of competition that exists within that particular market industry, and rule against it due to illegal monopolistic practices.
Other matters which may arrise due to laws could be issues on hiring and firing, strike action and employee benefits such as pensions and share-rights issues. Education can maybe have the biggest effect on organisations wishing to expand into a country. All nations have different infrastructures in which they educate their people and not all nations educate to the same level, infact some nations, such as India, do very little to educate its people and pass the role of educating onto organisations.