THE IMPACT OF CULTURAL INTELLIGENCE (CQ) ON GLOBAL BUSINESS

Ana Mihaela Istrate

Abstract
In nowadays business environment it is absolutely mandatory that we put the concept of culture in
direct contact with the idea of leadership, because tomorrow’s leaders have to be masters not only in what
intelligence or emotional intelligence mean, but they also need to be equipped with cultural intelligence.
Cultural intelligence (CQ – cultural quotient), which is a recent concept in modern sociology, offers
the ability to successfully operate across geographical and cultural boundaries, enhancing the set of skills
needed in an efficient business world. Together with the IQ (intelligence quotient) and EQ (emotional quotient),
CQ enables its possessors with the ability to bridge the gap between culturally different organizational
structures.

Keywords: cultural intelligence, Iceberg model of culture, Onion model of culture, cultural
globalization

JEL Classification: D83

1. Introduction

The concept of CQ (cultural quotient) or cultural intelligence is related not necessarily with
the ability of understanding the differneces between cultures, but more with the problematics of
adaptation to different cultural settings. So, the concept appeared from the need of solving the
problems that international business people had to cope with, when relocating to distant spaces.
Cultural intelligence, or CQ (cultural quotient) is a core element in building interpersonal
relationships, but also a very important tool that enhances skills such as creativity and innovation. In
other words, a key aspect in international business.
Made up of four different components: CQ CQ drive, CQ motivation, CQ strategy and CQ
action, cultural intelligence can be built and strengthened through different communication channels:
oral, written, verbal or nonverbal, through what specialists call experiential learning, or “learning
through reflection on doing”. (Patrick, 2011: 1003)

2. Definition of Culture

The starting point of any study related to cultural intelligence should be the proper definition
of culture. In this respect, from the wide range of materials available in the specialized literature, we
have considered three of the most important definitions, whose authors, mainly anthropologists and
sociologists, played an important role in shaping mentalities, raising awareness about the importance
of the term, and helping develop a better understanding of the importance of cultural differences in the
business environment.
Edward Hall is the author of the famous Iceberg model of culture, which will be explained in
the next pages, Geert Hofstede is the Dutch sociologist who realized the importance of cultural
dimensions in the business world, while Edgar Schein is the American management professor who
realized that culture is like an onion with three layers, thus creating the Onion model of culture.
 “Culture can be likened to a giant, extraordinary complex, subtle computer. Its programs
guide the actions and responses of human beings in every walk of life. (…) The essence
of effective cross-cultural communication has more to do with releasing the right
responses than with sending the right messages”. (Hall & Hall, 1990: 4)
 “Culture is the collective programming of the mind which distinguishes the members
of one group or category of people from another” (Hofstede, 1994: 5)

Lecturer of Intercultural Management at the Romanian-American University, Bucharest,
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  ”A better way to think about culture is to realize that it exists at several levels, and that
we must understand and manage the deeper levels. (Schein, 2010: 21)
From the above given definitions of culture, we realize that culture is a way of doing things,
sometimes as we are programmed, sometimes as the context dictates to us, some other times as the
environment or the people around us suggest us to do. But it is mainly related to ideas, beliefs,
customs and traditions.
Culture is more than a concept, it is a mode in which we are able to solve problems, as Fons
Trompenaars suggests, but culture is visible at all levels: at family level, school level, group of
individuals level, adult level, business level, corporate culture level, etc. “It is even found at the level
of the whole industry because of the shared occupational backgrounds of the people industry wide”.
(Schein, 2009: 19)
It is extremely difficult to make a list of all subcultures or how they impact society. They are
sociological phenomena, changing in time according to the overall changes of mentality in a society,
behaving as milestones or starting points.
There are different possibilities of presenting subcultures, but for the present study we will base
our list on Nunez, Nunez and Popma’s study. Thus, we can talk about:
 Geographical subcultures: continental subcultures (European, Asian, North American,
South American subcultures); country subculture (Japanese, Romanian, French, etc.);
regional subcultures (Scandinavian, Bavarian, Moldavian, Transylvanian, etc.)
 Religious subcultures: Catholic, Orthodox, Jewish, Islamic, etc.
 Urban vs. rural subculture
 Gender
 Age: elderly, middle aged, generation Y, X, millennials, etc.
 Professional subculture: doctors, professors, economists, IT specialists, military, police
forces, etc.
 Social status: middle class vs. rich people, for example.
 Corporate subculture: IBM vs. Oracle subculture, Vodafone vs. Orange subculture, ASE
vs. RAU, etc.

Why are these elements important? Edward T. Hall suggests that they can help us learn the
internal culture of other people and this is particularly true in our global society where working in
multicultural teams, or with co-workers belonging to a different subculture from ours, is an absolutely
normal fact. If we want to be efficient and proficient at the same time, we have to master the skills of
cultural intelligence.

3. The Iceberg Model of Culture

In 1976, the American anthropologist Edward T. Hall, in his book Beyond Culture, developed the
iceberg analogy of culture, which gives us a better understanding of what culture is, or more
specifically of the fact that culture means more than what we see.
In his theory he compares culture with an iceberg, whose visible part, which is above the sea
level, is smaller and less important than the invisible part, which is under the sea level, and which he
calls the invisible culture.
Above the sea level he includes elements such as: language, dressing code, folklore, rituals,
customs and traditions, etc., in other words all the elements that we see at a first glimpse, when we get
in contact with a new culture, while under the sea level we have the important aspects, such as beliefs,
values, unconscious feelings, biases, etc., as can be seen in the image below. (Figure 1)
 Fig. 1 The Iceberg Model of Culture

We cannot say that the invisible aspects are more important that the visible ones, on the
contrary, they are equally important. However, an understanding of their role in shaping regional
culture can help as gain a set of skills so that we can cope easier with cultural differences.

4. The Onion Model of Culture

Edgar Schein, in the 1980s, developed the organizational culture model, also known as the
onion model of culture.

Figure 2. Onion Model of Culture

As can be seen in the picture above, this cultural model has three layers:

1. Artifacts and symbols which represent the external layer, that we face when we get in contact
for the first time with a new culture. For example, when we travel to London, we immediately
see that cars or trains travel on the “other” side, which is the opposite from the one we are
accustomed to. Foreigners arriving in India will be immediately shocked at the style of
dressing, in the street. The same is similar when coping with a company culture that is
completely different from the one you were used to: companies have artifacts such as: logos,
company style, dressing style, etc. “The most important point to be made about this level of
culture is that it is both easy to observe and very difficult to decipher”. (Schein, 2010: 24)
 2. Espoused values and beliefs represent the second layer of the model. As Nunez, Nunez and
Popma suggest in their book, they are “written and unwritten standards of correct, desired
behavior. (…) Norms and values are not as visible as artifacts. It takes some time to notice, let
alone learn them. But with the necessary effort and observation they can be learned”. (Nunez,
Nunez, Popma, 2017: 14)
3. The most important layer of the onion is made up of the basic underlying assumptions,
which in our culture are assimilated to the so called 7 years from home. Schein enumerates in
this category the “unconscious, taken for granted beliefs, perceptions, thoughts and feelings
(ultimate source of values and actions)”. (Schein, 2009: 21)

5. Cultural Intelligence (CQ)

Professor Guido Gianasso, from the Nanyang Technological University in Singapore speaks
about the new megatrends, which can help us become global citizens, particularly at business level.
He suggests that we, as a society, are at the crossroads of a couple of important issues: rapid
urbanization, changing demographics, new technologies and accelerated innovation, and last but not
least, hyper globalization.
That is why we need to develop new skills, in order to improve our personal portfolio. In this
context, only the intelligence quotient (IQ), which is the total score designed to assess human
intelligence, is no longer enough. New skills, such as emotional quotient (EQ) or cultural intelligence
(CQ) become key aspects.
Emotionally intelligent individuals can master their emotions, even the negative aspects, such
as frustration or sorrow. The American anthropologist Daniel Goleman who coined the term, speaks
about five different components of EQ:
1. Self-awareness
2. Motivation
3. Empathy
4. Self-regulation
5. Social skills
Cultural intelligence represents the “capability to function effectively across a variety of cultural
contexts, such as ethnic, generational and organizational culture”. (Livermore, 2011: 7)
The scope is not only to understand cultures that are totally different from our own, but to be able
to solve problems, to adapt, overcome a culture shock and ultimately master a new culture, both for
personal or business reasons. This happens because more and more people travel abroad for studies
(annually it is estimated that more than a million students study abroad) and aim to find a job in a
different country.
According to specialists, cultural intelligence is made up of four capabilities:
1. CQ drive (motivation) which refers to one’s trust and preoccupation with working and
functioning in a culturally different environment;
2. CQ knowledge (cognition) which deals with one’s seek and understanding of how different
or alike are cultures. This item is vital, as it develops in the individual a set of skills that will
allow him/ her to function in a different culture;
3. CQ strategy (meta-cognition) makes us aware of the processes we need to follow in order to
effectively experience culturally diverse environments;
4. CQ action (behavior) gives clear clues on how we need to adapt our behavior in order to
tackle cultural challenges. It requires flexibility and immediate reaction in difficult situations.
All these four elements make up the cultural intelligence quotient, which can be assessed through
different tests.
As Livermore suggests, CQ is not a fixed skill, but continuously progressing and improving, at
the same time. “It can be helpful however, to think about them as four steps towards enhanced overall
cultural intelligence”. (Livermore, 2011: 171)
One of the most important way in which we can improve cultural intelligence is by learning about
the cultural values of any society. These values are “a society’s ideas about what is good, right, fair
and, just” (Livermore, 2011: 88). However, we have to be very careful not to confuse these values
with the cultural stereotypes, which are more abstract, rigid and unresponsive to reality.

6. Conclusion

Out of curiosity, triggered by the need to improve personal income or family revenues, or
simply as a result of a need to change business environment, business people are sometimes tempted
to make a drastic change, and settle in a new cultural environment, without even guessing the entire
cultural shock that they are going to experience.
Culture shock theory was develped in 1954, by the Canadian anthropologist Kalervo Oberg,
but improved since the present times. It appears in the shape of a U-curve, with four stages:
honeymoon, negotioation, adjustment and adaptation, suggestive names which clearly explain the
different phases until the final adaptation of the individual to a new environment. (Oberg, 2009)
If an individual is fully equipped with the cultural intelligence competences, he/ she will be
able to reach the fourth phase faster, or even skip the difficult negative stages. People will relate more
effectively with neighbours, peers or co-workers and will have “a repertoire of strategies and
behaviors to orient themselves when they encounter unfamiliar behaviors and perspectives”.
(Livermore, 2011: 10)

References

Hall, Edward T., Hall, Mildred. 1990 . Understanding Cultural Differences, Intercultural Press, Inc.
Livermore, David. 2011. The Cultural Intelligence Difference, American Management Association
Nunez, Carlos, Nunez Mahdi, Raua, Popma, Laura. 2017. Intercutlural Sensitivity. from Denial to
intercultural competence. Koninklijke van Gorcum, The Netherlands
Oberg, Kalervo. 29 Sept 2009. “Culture Shock and the problem of Adjustment to the new cultural
environments”. World Wide Classroom Consortium for International Education & Multicultural
studies.
Patrick, Felicia. 2011. Handbook of Reasearch on Imporving Learning and Motivation, IGI Global
Schein, Edgar. 2009. The Corporate Culture Survival Guide. Jossey- Bass
Schein, Edgar. 2010. Organizational Culture and Leadership. Jossey- Bass