The key role of culture in business development
Print Edition
MANY people may assume that the political, economic and legal aspects in distant countries are the more important things to bear in mind when conducting business abroad. Awareness of culture provides a wealth of information as to the territory that embraces it. Each nation has its own culture and the importance people ascribe to this element also varies.
Coming to grips with those cultural differences enables firms to differentiate from one another, helping them understand how every county operates in their own unique way. The main engine for this expansion is the development of new technologies that facilitates trading between distant countries. The ability to comprehend cultures abroad will be of great value to firms seeking to establish a legal entity in a targeted nation.
Culture affecting business
Culture values and behaviors affect business from finance to production decisions on what products need to be sold. Many people may think when establishing business relationships abroad, the main issue is communication because of the different languages spoken, or how much importance religion plays in the lives of foreign partners. But the issues run much deeper. The most common and important ones according to business managers include the following:
1. Stratification issues
Members of any given society can be part of many groups that cover almost every aspect of our daily lives. Group affiliations that are determined by birth are the ascribed ones. This type of affiliation is based on gender, nation of origin and ethnicity among others. Conversely, we have acquired memberships to these groups incorporating aspects such as religion, political views and personal beliefs. Taking this into business practices social stratification affects directly the decisions within an organization.
Gender differentiation also plays an important aspect because in countries such as Latin America, the roles and salaries of both men and women are strongly differentiated. Finally, age-based groups tend to be a very common and strong source of stratification. Typically, senior citizens are regarded as having more experience and knowledge. Because of this they have access to multiple benefits when obtaining jobs, product and services. Accordingly, companies ascribe greater value toward aged workers in areas like aviation or directories.
It is crucial to be aware that without motivation things that we do usually turn out to be bad or not as successful as one may have expected. When workers are motivated they are more productive and this is translated into lower costs because of their efficient performance on assigned tasks. Moreover, aspects of staff motivation also differ from one culture to another.
2. Relationships
The way employees interact with their bosses vary from country to country. Power distance comes into play as defining the relationship between parts. Two types of managers from dissimilar cultures represent two very different types of relationships: autocratic and the paternalistic. The autocratic manager tries to avoid much contact with employees, whereas the paternalistic manager has a closer bond with workers.
Yet another aspect of relationships in an organization is the awareness of individualism vs collectivism as propounded by Prof Geert Hofstede in “Dimensions of Culture.” Hofstede proposes individualism that encourages dependence on the organization. Whereas collectivism encourages dependence on the organization and a preference for training and reward within the company.
3. Communication
Finally, one of the most important cultural problems when doing business is communication. Cross-border communication does not always translate as intended. The first aspect that comes into play is the written and spoken language. Translation from one language to another is not a straightforward process, in some cases words do not exist. Furthermore, one can make mistakes in translated words but have different interpretations in different languages. Jokes also can be misinterpreted from one language to another.
What companies can do
Business cultural influences and differences can become a major headache. Fortunately, there are ways to overcome these issues to facilitate a successful global business.
Firms should identify the key elements of a targeted culture, especially those related to business and companies. But, is that enough? Having identified the key elements, how does one know if one must adapt one’s practice or not? By how much? Obviously, this is not as simple as a yes or no. But there are variables that help us to understand and determine how different the two related cultures are and how much is required to adapt properly. This will not deliver the perfect answer but it serves as a benchmark in the global arena.
Editor’s note:
Australian Dahvida Falanitule, an established international business consultant, moved to Shanghai in December 1999. He has regularly provided English-language training lectures to Chinese students, and facilitated local white-collar professionals in international business skills training. He welcomes your feedback and any culture-related questions. You can reach him at dahvida@eicmediagroup.com.
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