Emerging markets such as in Asia and South America continue to attract Canadian businesses and investment. A new study led by A.J. Corner from the University of Ottawa’s Telfer School of Management identifies three context-specific competencies required for leaders and employees to succeed in multinational companies operating in these markets.
In recent decades, emerging markets have become appealing to many companies seeking to expand internationally and to employ culturally diverse talent. Canada has been at the forefront of this internationalization trend.
This gives Canada an edge. “There are opportunities for Canadian organizations to deploy and develop the right skills in emerging markets and to recruit and integrate employees with experience in those countries,” says A.J. Corner, Telfer School of Management assistant professor of organizational behaviour and human resource management.
The context of emerging markets
The federal government’s State of Trade 2021 reports that the number of Canadian multinationals increased by almost 30% between 2010 and 2018. Many of these businesses are investing in emerging economies. For example, half of the top 10 countries with Canadian mining assets are in Central and South America, including Chile, Panama and Brazil.
In a study published in International Business ReviewCorner and co-authors have observed several contextual factors that create specific demands for human capital in multinationals operating in emerging markets:
- Emerging markets are often shaped by rapid but volatile economic growth and political developments.
- Their formal institutional structures, such as the legal system and regulatory frameworks, can be fragile, pushing individuals to rely on informal networks and rules.
- Social embeddedness and in-group relationships are particularly important.
- People who live in emerging markets are typically more accustomed to hierarchical structures than those from developed countries, with a lesser focus on gender and social equality.
- People in emerging markets are generally deeply integrated in the local environment and respectful of norms and traditions.
Recruiting, developing and leading talent for these multinational companies can be complex. A Canadian employee or supervisor working in a multinational company in Santiago, Chile will encounter unfamiliar values, opinions and approaches to work. The researchers suggest that multinational leaders need to develop three competencies: recognizing perspectives, managing relationships and navigating uncertainty.
Given the unique characteristics of emerging markets, Canadian managers first need to recognize their differences from developed markets. But it’s not enough to simply understand these cross-cultural differences.
“You should demonstrate cultural sensitivity, develop the ability to appreciate others’ viewpoints and find a shared understanding between two cultures. Such a strategy can help to reduce the negative impact of cultural distance,” says Corner.
The emphasis on informal rules, local norms and social ties makes relationship-building an essential workplace skill in emerging markets. Through professional relationships, leaders can gain access to valuable information and connections. Otherwise, one’s actions can lead to misunderstanding and conflict.
For instance, a Canadian manager used to following a formal system for social interactions may not understand why clients, partners and colleagues in Brazil rely on a social influence strategy called jeitinho (finding a way to get things done, even if by bending the rules) to close a business deal.
Due to unstable economic growth and change, uncertainty is likely to be higher in emerging markets. Those working in this environment must cope with fast-paced, unpredictable circumstances. Thus, adaptability is a great asset for leaders of multinationals managing talent.
Recommendations for professionals and leaders
In today’s globalized business environment, the three competencies identified in the study can benefit professionals who interact with colleagues, partners, suppliers and customers from emerging markets.
“People who work on developing a global mindset will generally find it easier and more enjoyable to work overseas and in the diverse, international teams that characterize the modern workplace,” says Corner.
Corner has these recommendations for those working in multinationals abroad:
- Strive to improve your cross-cultural skills and develop a more global mindset.
- Focus on being accepting and non-judgmental of different cultures and perspectives, even in stressful or unfamiliar situations.
- Seek opportunities to gain global experience in emerging countries, such as study abroad programs, internships and client visits.
- Reflect on your existing competencies and development needs before, during and after international experiences.
Corner also has these recommendations for leaders of multinationals:
- Consider unique cultural perspectives in your decision-making and interactions. Otherwise, your actions may be ineffective.
- Design recruitment and selection policies and procedures that reflect the contextual demands of emerging markets, such as using context-specific competencies as key performance indicators.
- Select managers with experience in other emerging markets, as they are more likely to have developed the needed competencies.
- Tailor training programs towards understanding target markets and developing competencies specific to their culture.
- Leverage the competencies and experience gained in emerging markets when employees return to Canada. (It is worth noting that according to the 2020 Annual Report to Parliament on Immigration 26% of Canada’s workforce are immigrants.) This can increase retention of valuable human resources and institutional knowledge.
Read the study
Corner, A.J., Liu, L.A. and Bird, A.W. 2021. “Intercultural Competencies for Emerging Markets: A Contextualized Approach.” International Business Review.
A. J. Corner's research interests are centered on workplace interpersonal relationships, particularly with regard to their underlying social exchange processes. Learn more about his work.