Cultural Intelligence: Why It Matters

“Companies don’t go global, people do.”

The point of this statement by renowned Organizational & Cross-Cultural Psychologist, Andy Molinsky, is simple. Companies can export technology, operating procedures and even their corporate cultures to new countries, but the human factor will determine the success or failure of overseas ventures.


When entering a new market, organizations have much to do before the first brick is laid or the first employee is hired. Lawyers and consultants are needed for registration and investment privileges. Relationships must be forged with government officials. Office space or manufacturing locations must be secured. Good local intermediaries are essential, but in these initial stages, the company’s own personnel make a lasting impact. Positive first impressions are driven by Cultural Intelligence.

Dr. Sandra Upton of the Cultural Intelligence Center describes Cultural Intelligence (CQ) as “…the capability to function effectively in multicultural situations.” CQ requires competence in three interactive components: Cultural Mindfulness, Cross-cultural Skills and Cultural Knowledge.

To succeed, CQ must permeate all aspects of setting-up and operating organizations’ overseas ventures, especially in deciding who will run them. Culturally intelligent chief executives are more conscious of the adaptability of the leadership personnel they bring with them and those they hire, in-country. The input of local leaders is crucial in building and running organizations. Some may speak English well and easily adapt to their foreign corporate cultures, but that may be an indication that they are uncomfortable with other locals.

Why Does Culture Matter?

Culture is a factor often overlooked by organizations that are expanding globally or even regionally. Gaps in values, communication styles, thought patterns, expectations and motivations between an organization and those of the local management and staff present substantial obstacles. The values espoused in performance review tools such as Key Performance Indicators (KPI), could be very foreign and uncomfortable to local management and staff, as well. Comprehensive policies with specific measures should be adopted to protect companies’ significant investments from difficulties posed by cultural gaps.

Figure. Communication across cultural contexts.


Companies can turn cultural diversity from obstacles to advantages, starting at the top. Corporate cultures should become more culturally intelligent. Policies toward overseas ventures should consider the local cultures as valid and allow the leadership in each country to find ways to integrate local values into the workplace.

Overseas assignees and their spouses should be chosen, in part, for their CQ. They should also receive at least one day of cross-cultural training for their new location. CQ should also be considered when hiring senior local leaders. Ideally, all leaders are chosen for their CQ along with their technical and linguistic qualifications.  Realistically, most companies need to develop their leaders’ intercultural attitudes, skills and/or knowledge, through cross-cultural and intercultural training and coaching. These minor expenditures are a proven component in protecting companies’ overseas investments.

Successful global businesses have found that by developing cultural intelligence within their organizations, their investments pose less risk and produce greater returns.


To request more information on MPG cultural services, please address your request to John Knipfing, Cultural Intelligence Consultant at

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