Competition by Effective Management of Cultural Diversity

Abstract

Many of the multinational construction firms working in developing countries and in the Middle East in particular have been facing serious problems managing and carrying out their assignments. Many project managers have returned home from their Middle East assignments with strange stories about sociocultural mishaps that had resulted from misinterpretations, frustrations, and conflicts. For example, project managers experience a cultural shock when appointments are not met, a delay of two hours is not unusual, workers stop work twice a day for prayers (religion has influence in all aspects of life) and intertribal conflicts lead to intergroup conflicts on the work site. These problems have most often resulted not only in wastage of valuable resources but also in delay in completion of the projects. The decade of the 1970s was a booming period for the construction business in the Middle Eastern oil-rich countries, and it created a lucrative market for multinational construction firms, including firms based in Sweden. This was due to the huge oil revenues, the massive and ambitious investment programs in infrastructure, and the lack of local qualified constructors. However, decline in oil revenues turned the propitious into tough competition. As a result of price competition, shortage of a local labor force, and the high cost of Swedish labor, in some countries the construction firms hired labor from Thailand and Pakistan that was several times cheaper than that from Sweden. Furthermore, the consulting engineers came from different countries such as Japan and Britain. Such cultural differences appeared as an important issue in all aspects of project management - from the tendering and negotiation phase to construction operations. The question was, then, how to manage such culturally diversified groups effectively.