Cultural Differences Related to International Business Essay
Abstract Culture is a predominant social aspect of society, which guides the way people think and act in their environment. Culture develops differently for all the various nations of the world, and in the context of international business, the challenge that arises for today’s managers is managing across these varied cultures effectively enough to render positive growth and productivity for the business organization. The influential factors such as individualism versus collectivism and masculinity versus femininity amongst others help categorize and identify cultural differences.
The manager of international business has to be well aware of these differences and show consideration and care in dealing with cultural disparities that may be incurred both inside the organization and in the organization’s external environment. Introduction Culture is a social phenomenon which helps define people’s interests, thoughts, ideas, models, and other behaviors they may exhibit in the social context. Culture goes as far as to directly influence how people communicate in different environments.
At the highest level of psychological sophistication culture directly influences people’s values and beliefs. Thus, all communities of the world, been influenced by extraneous factors of their environment, own their own unique cultures (Walter Lippmann). Thus, it is evident from the above description that culture is an aspect of one’s social existence which defines how they behave in different social and business context. Culture influences one’s knowledge, understanding, values and beliefs. How do Cultures Differ? Cultural differences are most pronounced in social settings where much is at stake.
In situations where individual’s personal life is involved such as marriage, death of a loved one, economic survival etc, individuals tend to exhibit there in-born cultural traits most evidently. Business relates to the individual’s economic survival. Thus, in business individuals tend to rely on their cultural influence in guiding their activities. Culture in the Context of Business In the business environment, an individual’s economic survival is on the line. Thus, cultural traits are very easily visible amongst the various participants of the business. Doing business in itself is ‘risky’ business.
As for an individual, to maintain economic stability they have to venture into the unknown economic world of supply and demand and put out their accumulated resources to use, so as to achieve positive gains. But, there is always the chance that one’s efforts may not prove as fruitful as expected. In such a situation of personal insecurity, individuals always tend to bank upon their learned cultural traits to carry them far, that’s because at a sub-conscious level individuals are more confident about their cultural traits as they have learned it well, and have had plentiful practice over the years, surviving in their respective societies.
For example, in Japanese businesses, decision making is left to the upper-management as a whole and they themselves decide upon business ventures collectively as a group. This business antic stems from the traditional Japanese culture of collectivism and hierarchical reverence for the social elite, which has been instilled into the Japanese society over its historic past. From the individual’s perspective, cultural differences tend to become more evident during the phase of interaction amongst the different business participants making the business run.
In this environment, the individuals that interact, hailing from different communities and societies across the globe, attach different meanings to the varied means of communication that are now utilized in business. Thus, there often arises the disparity in understanding of responses and situations. For example, it may often be mistaken by the American managers that a “yes” or a strong nod of the head by a Japanese manager to any discussion may be considered a positive agreement, while in actual what may be meant by the Japanese counterpart is that they completely understand what has been said.
On the holistic perspective, the simplified idea to understand here is that business in itself is the interaction of different participants who are indulged in pooling their available resources and making a collaborative effort to channel their energies in an attempt to suffice an existing economic demand for a product or service in the market. These participants may have the same objective of gaining positive returns through business but, by being influenced by their respective cultures, attach different meanings to communication methods used n the process of conducting business. Thus, owed to cultural difference, the Styles of business may differ across cultures. This belief is further strengthened by survey done by Hofstede in the 1980’s, in which he took a global sample of thousands of employees and run some significant cultural tests to decipher any common differences amongst them. His conclusion was such that up to fifty percent of the business-related behavior of employees can easily be attributed to their cultural differences (Calvert, Lin and Martin, 2005).
Culture and Communication Cultures are most evidently recognized through the process of communication. In the context of cultural influence, as explained by theorist Edward Hall, communication occurs at two unique levels, they are: High Context Communication In this form of communication the message is only worth delivering if the message carries with it plentiful of background information required by the recipient to make any sense of the message.
For example, in having to make an online request for a custom made product, complete details of the order needs to be provided by the customer, so as to secure a delivery. A good example of the prevalence of high-context cultures is in Japan and France. In these societies the employees coordinate with close communication, sharing intricate details of work that needs to be completed. Thus, this renders all in-group members to be very well-informed (Sugawara, 2009). Low-Context Communication In this form of communication not much background information is required to help decipher the message.
The recipient of the message by being influenced by the environment or prior knowledge can be expected to make complete sense of the message. For instance, when ordering another round of drinks in a bar, the customer may just tell the waiter “another round” and the waiter will understand the message completely. Out of all the nations of the world, the countries that rely mostly on low context communication are New Zealand, Canada, Australia, and the United States, also including majority European countries.
But the point to be understood here is that high context communication actually prevails within a low context culture as well, for instance the in-home culture amongst family members is most appropriately categorized as high context even in the above mentioned low context societies (Hooker, 2009). It is evident through Edwards Hall’s efforts that the effect of context does help to explain many of the cultural disparities across nations. Thus, this explains a direct impact of miscommunication across businesses operating cross-borders in multiple markets (Beaman, 2008). Cultural Differences in Business
In the international business arena the development of an understanding of cultural differences across borders is vital for the business to operate smoothly. Cultural differences can lead to misunderstandings and confusion. These confusions may actually run the risk of getting propagated beyond controllable limits, which can lead to a dysfunctional organization which is operating across borders. Thus, for managers managing diverse teams or operating in groups of people who hail from varying cultures it is immensely important to identify differing cultural traits and then to educate the team members of such prevailing differences.
In the same context, understanding about language is incomplete without understanding the cultural implications o f language. In reference to organizational sustenance and success of global companies, competency in communication is vital. It encapsulates not just the understanding of languages and the development of linguistic abilities but also requires one to gain thorough understanding of the underlying cultural traits behind the languages which help really clarify the meaning of communication (Eggerstedt, 2008).
It must be noted that each country has its own unique culture, and for the country’s inhabitants this culture dictates particular standards of acting, thinking, being etc. Thus, it may be understood that these cultural traits end up influencing workplace ethics, and behavior. Thus, for managing an organization operating across such cultural diversity in the international arena, certain basic behavioral and attitudinal traits of individuals should be categorized and understood across cultures. Such observable factors, as explained by Geert Hofstede, are discussed as follows: Individualism Vs Collectivism
As the world has evolved through the ages, the different social communities have evolved differently. A usual generalization that one can pick up from available literature is that the western regions of the globe (US, Europe etc) has evolved more so towards an individualistic culture more rapidly, placing lower level of importance to group cohesiveness than individual growth. Whereas in the eastern regions, (China, India, Japan etc) greater importance is placed on collectivism, where groups are more dominant than individuals.
This distinction of collectivism or individualism is very important to understand, as it directly influences how people, belonging to one of these two cultural groups, behave and interact in the business environment. For instance, an American manager headed to Japan for a business engagement should take into consideration the fact that, being there he might feel completely responsible for all decision-making as an individual but the Japanese counterparts will always consider group cohesion for every type of decision making.
Thus, the American manager, should be educated about such cultural differences before he can be in a position to effectively interact with the Japanese counterparts Uncertainty Avoidance This deals with the level of comfort that members of a society enjoy in face with ambiguity and uncertainty about work. Cultures with high uncertainty avoidance basically need the work to be well defined, structured and completely outlined.
On the other hand, members of cultures rated lower on the level of uncertainty avoidance tend to be more flexible in their work environment, less emotional about work, but may require intrinsic level of motivation to work effectively. Masculinity Vs Femininity Masculinity oriented cultures tend to value competitiveness, capitalism and ambition more than other factors of motivation (e. g. Japanese culture). Femininity oriented cultures place more importance to compassion, good relationships and general quality of life. (e. g. Mexican culture).
Power Distance In many countries power distances are greatly respected and are considered well before the way interaction may take place between two individuals working in the business environment. Examples of such cultures are of African countries, Latin American countries, and Arab nations. These are the high power distance regions of the world. In other countries like United States of America, and many European countries, there are fewer adherences paid to power distances and more collaborative effort is concentrated upon in the workplace.
For example, a senior manager will refrain from mingling with his/her subordinates in the high power distance cultures, but in a low power distance culture no such distance may be present. Polychromic Vs Monochromic This is the difference between participants of different cultures being able to conduct multiple tasks at a time. The participants of monochromic culture tend to concentrate on one task at a time and for polychromic culture members they are comfortable with handling multiple relevant tasks at the same time.
Implicit Vs Explicit In cultures like that of Japan and China, people tend to communicate at an implicit level, where communication occurs at the basic common understanding of the subject matter. Emphasis is made upon etiquettes, common knowledge and mutual understanding. On the other hand, cultures like that of USA and Europe promote clear and simple sharing of ideas and Information, where complete message is transferred through the communication process, with little adherence to shyness or humility. Use of Non-Verbal Cues
Different cultures across the globe attach different meanings to non-verbal cues. For example, a Japanese subordinate’s avoidance of making eye contact may be considered as shyness by an American counterpart, while the intentions might really just be to exhibit respect on part of the Japanese subordinate. Similarly, many other non-verbal cues such as handshaking, facial expressions, hand movements, and overall physical distance may be considered in different perspectives in different cultures. Impact of Cultural Differences
Cultural differences influence business at both internal and external levels. Internal Influence At the internal organizational level, cultural differences need to be incorporated in to the organizational culture. Companies that operate across borders need to be vigilant of cultural differences in their organizational team composition. The team leaders need to be identified as facilitators and as promoters of group cohesion through celebrating the cultural differences and special care needs to be taken to counter discrimination against any specific cultural group.
All these factors need to be adhered to, so as to ensure organizational productivity fueled by motivated employees. External Influence On the global scale, organizations are in constant interaction with the other participants of the market. Albeit for competition or collaboration, companies need to be vigilant of other players in the market, and their style of business. Research upon cultural traits has revealed that business styles of companies are greatly influenced by culture in their country of origin.
Thus, it is important to understand cultural differences to participate effectively in the market. The Directly Affected Spheres of Business Communication The preferred means of communication vary in different cultures. This means that in some cultures more importance is given to direct communication then other cultures, depending upon the relevance and importance of the message to be conveyed. For example, some important news may need to be delivered personally in one culture, while in a more liberal culture, the news may even be forwarded through a third party, or even indirectly.
Negotiation Styles Americans are considered more aggressive in negotiations while Russians are considered more relaxed and stubborn, and similarly Japanese are considered too silent and cooperative in negotiations. These are generalized ideas about different cultures, when at the negotiation table, but they hold strong in their basic differences, and need to be well understood, so as to allow effective negotiations to be conducted. Business Meeting It is vital to plan properly for business meetings with multi-cultural articipants, as the cultural differences are most pronounced in close quarter communication in a meeting. The idea is to enable productive participation by the members of the meeting. This can be achieved through limiting the discriminating elements against different ethnicities of the participants. The meeting should be conducted in a supportive and open-minded environment. Decision Making Decision making is a very important aspect business operation and different cultures govern varied levels of norms in this regard.
For instance, in some cultures decision making is more decentralized than others. How to Identify Cultural Differences? In order to identify cultural differences effectively, business managers today need to understand that they have to be careful of cultural differences so as to keep the workforce motivated in a multi-cultural business environment. Accordingly they also need to be aware of cultural disparities that may exist when they interact with the surrounding business environment on behalf of their representative organization.
A few pointers for enabling effective discovery of cultural differences are as follows: •Be Observant, of cultural traits both internal and eternal to the organization •Be Patient, with minority ethnic groups so as to foster confidence and trust •Listen Affectively, to all perspectives of a discussion even if you may not understand completely what is being stated, research in cultural background may help in make sense •Do Your Homework, before all business and informal meetings so as to be well aware of styles of communication preferred along with knowledge of other specific etiquettes that may come in handy in fostering clear communication
How to Deal with Cultural differences? (Koning, 2009) •Avoid Language related misconceptions and misunderstandings. To understand this one has to realize that, just because someone can communicate with you in English does not mean that they are actually very comfortable with communication in the language. Thus, care must be taken not to misunderstand one’s extended efforts in communication. •Behaviors differ amongst people belonging to varied cultural backgrounds.
Thus, it is important to be considerate and tolerant of such cultural differences which induce different behaviors. Behaviors differ in the level of promptness, attendance of meetings, general etiquettes etc. •Understand the cultural differences that may prevail within the team. Members of a team can hail from diverse cultures and it is the responsibility of the team leadership to recognize these cultural variations and adapt accordingly. •Be a team player.
The general idea that has shown to work over the years in multi-cultural teams is participative and servant form of leadership. The management cannot afford to be too authoritative as they risk alienating the minority ethnic groups in their teams by doing so. •One should practice zero-level tolerance for discrimination. Thus, by allowing equity in participation, all cultures can be brought together under the umbrella of the organization and positive productivity maybe extracted from the human capital.
Conclusion Cultural differences do persist through the international business arena, and it is basically a fact which needs to be absorbed by today’s managers. The managers and leaders of global ventures need to become more sensitive to cross-cultural and cross-border variations in styles of business conduction. This will allow better productivity of the precious human capital being employed from all corners of the world, and consequently ensure improved profitability. References
Beaman K. V. (2008) The New Multi-Dimensional Talent Force: Multi-Cultural Differences Calvert C. , Lin S and Martin L. (2005) Doing International Business: From Cultural Perspective Eggerstedt M. D. L. L. (2008) Can Business be Affected by Cultural Differences Hooker J. (2009) Cultural Differences in Business Communication, Tepper School of Business, Carnegie Mellon University Koning L. (2009) Tips for Managing Culturally Diverse Teams Sugawara H. (2009) International Business Culture