Yesterday’s class we took a look on
globalization and its increasing impact on cultural identity, in fact, I would
say, globalization has turned into a culture itself nobody can escape from since it is a reality we face today. That is why I wanted to give this post
the title above. The two aspects I would like to highlight from class are:
first, the role of Multinational Enterprises (MNEs) in globalization; and
second, the hybridization of culture.
MNEs
play a fundamental role on how globalization affects and alter cultural
identities and that influence can be either positive or negative
(unfortunately, being more criticized rather than praised). As a matter of
fact, MNEs acts as vehicles through which the culture from one country gets into
contact with cultural values from other countries. The example of
Coca-Colonization clearly evidences the tremendous impact that a brand can have
on the cultural values of a community. I think this is fundamental for us when
working in multinational company in order to understand and identify the firm’s
corporate culture and how workers and members of the organization adopt it as
part of their own cultural identity, to the extent that, when negotiating with
other person, we should not only know about its national culture, but also the
culture of the company they work for.
The spread of multinational corporations
throughout different cultures and nations has contributed to the second
relevant topic of the class: the hybridization of culture. As presented by the teacher, the traditional relation existing between nationality and culture is getting weaker and losing
ground in today’s globalized work. Nationality does not seem to be a criterion
to define cultural groups anymore. For
example, we can find cultural sub-groups within a same nation as the
micro-nations seen in class: Scotland and Québec. But also the cultural
clusters identified in some studies such as GLOBE Study (Latin America and
Latin Europe, for example). Furthermore, nowadays, we can find new individual
cultures which have emerged based on other common values different to
nationality as music, social classes, professions, religion and language. For
this reason, and as I previously argued, as part of a professional’s cultural
abilities, we need to understand and study those cultural sub-groups when
dealing with people in an intercultural scenario and not only studying about
the culture of their country. It can really make a difference and even be a
source of professional competitive advantage.
Research Question: Does
the BIG MAC Index really reflect differences in Purchasing Power Parity among
countries?
Since we approached the BIG MAC Index in class,
I wanted to take this post as an opportunity to share a recent short research I
made on the real usefulness of the index to find purchasing power differences
worldwide. Next, I present the main conclusion of the work but I attach the
file where the complete information is contained.
“The methodology of
the Big Mac Index shows Colombia to be quite close to PPP conditions with a
historical low deviation and a market exchange rate close to its theoretical
level. However, we may make two critiques of this Index: first, it cannot be
generalized to the overall level of prices of the economy since we are basing
the analysis on only one product. Second, the Big Mac Index does not completely
reflects Purchasing Power Parity, it justs shows the purchasing power of the
currencies in nominal terms, not real because it does not take into account the
income gap existing accross countries. In Colombia, a worker earning a minimum
wage (most of the Colombian workers) takes almost 3 hours to earn enough money
to buy a Big Mac, it is five times more than what they would take in the United
States. In conclusion, even though the Big Mac Index shows the colombian peso
is close to Purchasing Power Parity conditions with the dollar and that it is
overvalued; in reality, the colombian peso has much less purchasing power than
the dollar; in simple words, we could do much more with one dollar in U.S. than
what can be done with COP 1.911 (the PPP implied rate) in Colombia.”
Link to the file:
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