Cultural Intelligence: German Expatriates as Managers in Portugal

Introduction

Globalization and multiculturalism have become features of the contemporary world, despite disagreement over how to define them. Globalization defines a very complex development, which in economics refers to the numbers of international corporations and projects which have increased simultaneously with the amount of goods and services, capital, and work force exchanged internationally (Graf, 2004; Kivisto, 2002; Koch, 2012). It is a dynamic process which increases global economic interconnectedness, fosters interdependencies, and makes the world more complex and far-reaching (House et al., 2004; Isidor et al., 2011; Kivisto, 2002). Diffusion of information is accelerated by the expansion and inflation of communication technologies and has increased the importance of information and networks, making them powerful assets in today’s world (Ferreira, 2007; Isidor et al., 2011; Varner & Beamer, 2005; WTO, 2019). This results in the increasing loss of importance of national borders and the intensification of international competition (Koch, 2012; Sambharya et al., 2005; Trompenaars & Woolliams, 2004). Simultaneously with technological advances, the multiplication and intensifying of international relationships have fostered international trade to experience a steep growth over the past few decades (Wild et al., 2006). Koch (2012) states that over the past fifty years the world’s trade volume has increased twice as much as the global overall production of goods and services. According to the World Trade Organization (WTO, 2019), in 2018 merchandise trade totaled at 19.48 trillion US dollars with a growth rate of 3% per year, and commercial services at 5.77 trillion US dollars, with a growth rate of 8% per year. Over time, globalization has led to the world’s development into “the place of borders and boundaries in a world where capital, production, and peoples are in constant motion” (Dirlik, 2005, p. 49), and an integration of production chains creates “more and more products are ‘Made in the World’ rather than made in just one economy” (WTO, 2019).

More connections and increasing interdependencies have brought about fundamental changes in global economic and political systems, cultural identities, and reorganized global relations (Dirlik, 2005; Engelen & Tholen, 2014; Kivisto, 2002). International political and economic dependencies have grown and linked the world even tighter. Terms and concepts such as proximity and distance, and place and space have obtained new meanings, as “social relations are no longer necessarily linked to particular places” (Kivisto, 2002, p. 1; see Koch, 2012; Varner & Beamer, 2005). As the borders between nations have come down and multiculturalism has spread, cultural barriers have come up (House et al., 2004; Loth, 2006). In these contexts, the “dependence on a federation of alliances and partnerships with other organizations” (Sambharya et al., 2005, p. 158) has granted more importance to intercultural competencies.

The focus of this chapter is on the influence of cultural intelligence in an international business environment. Firstly, it is important to understand the challenges and opportunities of internationalization in the business context. Special attention is given to expatriation. Definitions of culture and its influence on expatriates’ adjustment effecting the success of international business are exposed. Challenges and potential advantages of selecting and training culturally literate managers for international projects are elaborated. In that context an illustrative questionnaire and three interviews were conducted to further understand the current practices of German organizations expatriating managers to Portugal. Complementary information, such as cultural characteristics and conflict potentials are provided. The objective of this chapter is to provide a more specific exemplification of culture’s importance in today’s business environment and demonstrate the benefits companies profit from when ensuring that their human resources are cross-culturally prepared.