Conducting Business Across Cultures

In this lesson, you’re expected to learn about:
– cultural awareness and the impact of culture on international business
– the global manager’s dilemma
– cross-cultural negotiations

As today’s business world becomes ever-more global, executives and managers are expected to work harmoniously together with counterparts from a broad array of cultures and backgrounds.

When you put people together who come from starkly different backgrounds and cultures, the result can be interesting, but can also lead to misunderstanding and confusion.

Today more cultures work together in business than ever before. Never has it been more important to get business-etiquette savvy when working with foreign countries than now.

Characteristics of Culture

Culture provides people with identity. Harris summarized the characteristics of culture into ten categories:(1) sense of self and space
(2) communication and language
(3) dress and appearance
(4) food and feeding habits
(5) time consciousness
(6) relationships
(7) values and norms
(8) beliefs and attitudes
(9) mental process and learning
(10) work habits and practices

* Harris and Moran, 1991
Corporate Culture

Corporate culture
 affects how an organization copes with competition and change, whether in terms of technology, economics or people.Now management is more cognizant of its customs and traditions, rules and regulations, policies and procedures—such components of culture are being used to make work more enjoyable, to increase productivity, and to meet customer needs and competitive challenges.

Effects of Cultures

Persons of dissimilar backgrounds usually require more time than those of the same culture to become familiar with each other, to be willing to speak openly, to share sufficiently in common ideas, and to understand one another.

Therefore, education and training of global leaders must include formal learning in the various cultural dimensions. With the globalization of business, managers and leaders need to become more transnational and transcultural in their thinking, planning, and involvement with people.

Differences in customs, behavior, and values result in problems that can be managed only through effective cross-cultural communication and interaction. When people have misunderstandings or commit “errors” when working with people from different cultures, they are often unaware of any problem.

Cross-cultural mistakes result when we fail to recognize that persons of other cultural backgrounds have different goals, customs, thought patterns, and values than our own. Differences do not necessarily mean barriers; they can become bridges to understanding and enrichment of human lives.

Impact of Culture on International Business

A business cannot simply rely on its current method of conducting business when it decides to take its business to the international level. Every country has a set of different variables which can be new for an offshore company, e.g. rules and regulations, taxation, currency, different holiday periods etc.

The most important consideration in this regard is the difference in culture. In a study on international negotiations between organizations, Korobkin, R. (2000) maintains that successful negotiations not only require technical proficiency i.e. communication technique, but you also need to understand the context in which those negotiations are being done in order to secure profitable contracts.

Global Manager’s Dilemma

Global managers operating transnationally are commonly faced with the following situation: in one country something is a lawful or accepted practice, and elsewhere it is illegal.

Bribes, for example, may be a common way of doing business to ensure service in the host-country culture but illegal in the home-country culture.

Advances in mass media, transportation, and travel are breaking down the traditional barriers among groups of people and their differing cultures so that a homogenization process is underway. Global managers should be alert to serving this new community and markets with strategies that are transnational.

Regional Differences

Global planning not only requires an effective international management information system but input from a variety of locals at different levels of sophistication. Even when there are apparent similarities of people in geographic regions, cultural differences may require alteration of strategic market planning.

Even within a specific country, there are cultural differences between the north and the south or between the east and the west regions. Food habits, language, accent, work attitudes, and values are different. Culture affects decision making too.

High-and Low-Context Communications

Anthropologist Edward Hall makes a vital distinction between high- and low-context cultures and how this matter of context impacts communications.A high-context culture uses high-context communications—that is, information is either in the physical context or internalized in the person. Japan, Saudi Arabia, and Africa are examples of cultures engaged in high-context communications, as are the Chinese and Spanish languages.

However, a low-context culture employs low-context communications—most information is contained in explicit codes, such as words. North American cultures engage in low-context communications, and English is a low-context language.

* E. Hall, 1990

In the communication process, a low-context culture places the meaning in the exact verbal description of an event. Individuals in such a culture rely on the spoken word. The common statement that typifies this idea is, “Say what you mean.”

However, in the high-context culture, much of the meaning is not from the words but is internalized in the person. Meaning comes from the environment and is looked for in the relationships between the ideas expressed in the communication process. High-context cultures tend to be more human-oriented than low-context cultures.

During negotiations or when working with Japanese or Latin Americans, they are looking for meaning and understanding in what is not said—in the nonverbal communication or body language, in the silences and pauses, in relationships and empathy.

North Americans place emphasis on sending and receiving accurate messages directly, usually by being articulate with words. Specifically, Japanese communicate by not stating things directly, while Americans usually do just the opposite and “spell it all out.”

Cultural Awareness

The following seven skills can be applied to understand people, whether they are local, regional or international:1. Communicate respect.
2. Be nonjudgmental.
3. Personalize knowledge and perceptions.
4. Display empathy.
5. Practice role flexibility.
6. Demonstrate reciprocal concern.
7. Tolerate ambiguity.

These skills are associated with effective managing and transferring of knowledge in a different culture. The degree to which managers possess these skills marks their potential effectiveness in working in a multicultural environment.

[Optional] Cultural Awareness in the Workplace

Cross-Cultural Negotiations

Negotiating across cultures is far more complex than negotiating within a culture because foreign negotiators have to deal with differing negotiating styles and cultural variables simultaneously. In other words, the negotiating styles that work at home generally do not work in other cultures.

As a result, cross-cultural business negotiators have one of the most complicated roles to play in organizations. They are often thrust into a foreign society consisting of what appears to be “hostile” strangers. They are put in the position of negotiating profitable business relationships with these people or suffering the negative consequences of failure. And quite often they find themselves at a loss as to why their best efforts and intentions have failed them.

How to Avoid Failure in International Negotiations

Negotiators in a foreign country often fail because the local counterparts have taken more time to learn how to overcome the obstacles normally associated with international/cross-cultural negotiations. Failure may occur because of time and/or cost constraints.

For example, a negotiator may be given a much shorter period of time to obtain better contract terms than was originally agreed to in a country where negotiations typically take a long time.

A negotiator may think, “What works in the home country is good enough for the rest of the world,” but this is far from the truth. In fact, strategies that fail to take into account cultural factors are usually naive or misconceived. Typically, the obstacles to overcome include:

– Learning the local language
– Learning the local culture
– Arriving well-prepared for the negotiations

How Much Must One Know about the Foreign Culture?

Realistically, it is nearly impossible to learn everything about another culture, although one might come close if one lives in the culture for several years. The reason for this is that each culture has developed, over time, multifaceted structures that are much too complex for any foreigner to understand totally.

Therefore, foreign negotiators need not have total awareness of the foreign culture; they do not need to know as much about the foreign culture as the locals, whose frames of reference were shaped by that culture. However, they will need to know enough about the culture and about the locals’ negotiating styles to avoid being uncomfortable during (and after) negotiations. Besides knowing enough to not fail, they also need to know enough to win.

Thus, it is necessary to develop a cross-cultural negotiating process. The process includes both strategy and tactics. Strategy refers to a long-term plan, and tactics refers to the actual means used to implement the strategy.
Strategic and Tactical Planning for International Negotiations

Strategic planning for international negotiations involves several stages:
(1) preparation for face-to-face negotiations
(2) determining settlement range
(3) determining where the negotiations should take place
(4) deciding whether to use an individual or a group of individuals in the negotiations
(5) learning about the country’s views on agreements/contracts.Tactical planning for international negotiations involves determining how to obtain leverage, use delay tactics, and deal with emotions.

Ethical Constraints

Business ethics and corporate social responsibility place constraints on negotiators. For example, a negotiator’s ethical concerns for honesty and fair dealings, regardless of the power status of negotiating parties, will affect the outcome.There is no global standard or view of what is ethical or unethical behavior in business transactions—what is viewed as unethical behavior in one culture may be viewed as ethical in another culture and vice versa.

For instance, if a negotiator on one side “pays off” an influential decision maker on the other side to obtain a favorable decision, it would be an unethical business practice in some cultures (and illegal in the United States), but it would be quite acceptable in other cultures.

Jim Rohn Sứ mệnh khởi nghiệp