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Importance of Intercultural Skills for European SMEs

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Intercultural skills are important in the economic and business world, more so when an SME is dealing with international and foreign markets. In this case, an SME's management should be able to understand the cultural differences in different European countries to ensure that they maximized profits by identifying with the culture of the country. To emphasize the importance of intercultural skills, Johnson, Lenartowicz and Apud (2006, p. 526) noted that businesses failed overseas because of the “ inability of managers to understand the local culture of a subsidiary and interact effectively with their counterparts overseas, rather than a lack of ability in the technical aspects of their job. ” Since all SMEs would like to expand in overseas markets across Europe, the management guiding the ventures should understand the local culture of subsidiaries to interact effectively with customers and their counterparts responsible for the daily operations.

Traditionally, firms operate domestically, which in essence means that they tailored their goods and service for the domestic market by aligning their products with the culture of their country of origin. However, globalization means that a business should venture into overseas markets in order for the business to make more profits and expand in growth.

Nevertheless, most firms ventured into foreign markets using the same policy for goods meant for their unique domestic market. According to Adler and Gundersen (2008, p. 10), “ When firms exported products, they often did so without altering them for foreign consumption. ” However, this is changing in the global market and firms are increasingly adapting their products to the culture of the overseas markets in order for them to have a competitive edge in the market.

Heller (2003, p. 490) calls this process hybridity, “ Which is a mark of being able to navigate across the different realms of the corporate market. ” Conversely, the aim of SMEs is to expand their domestic markets first, and then seek to expand into foreign markets. However, the goods and services SMEs produced for their domestic markets have to be different due to the differences in cultures.

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