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Navigating cultural differences: 5 cultural factors to watch out for when doing business globally

Culture has a significant impact on how people do business. Even though we share common human nature, our perspective and relationship with the world around us are mainly defined by culture. Culture colors our behavior, our communication, and even our thought processes. Lack of cultural intelligence in business can cause miscommunication between head office and branches, alienate employees who work across the globe, and offend clients. Want to avoid cultural faux pas? Here are five cultural factors to watch out for when doing business globally! 

As today’s business environment is becoming global, more and more companies are expanding internationally. With internationalization comes geographical dispersion: we do not only interact with colleagues and clients who work in the same building or at least in the same country and come from the same culture, but we increasingly work with people from all parts of the world.

Cultural awareness is crucial for any business. Whatever sector you are operating in, cultural differences will affect your company. Not understanding your customer’s culture can have a disastrous impact, as experienced by both small and big companies.

When doing business abroad, there are five factors you have to take into account:

1. Leadership and status

A leader is someone who can inspire, motivate, and guide to a common goal. However, the answer to what makes a good leader is not straightforward and varies across countries. What is considered a strength in one culture may be seen as a drawback in another culture. As Prof. Geert Hofstede suggests in his article “Cultural constraints in management theories,” there is evidence that different cultural groups prefer different ways of being led. Depending on the culture, the role of the leader, its importance, and its impact may differ. In some cultures, a democratic approach may be the preferred method, and in other cultures, one might need to take strong actions to be seen as a leader.

Status exists in all societies but differs radically. In different cultures, people perceive status differently, receive status differently, and react to status differently. For example, rank and hierarchy are crucially important in some Asian and Latin American cultures. Leaders take a dominant, clear-cut role, and the employees address them in a certain way. It is common for the employees not to challenge what the leader says. In contrast, hierarchies and ranks are less important in western cultures. Communication between the leaders and their subordinates is less formal and more relaxed. These cultural differences hugely affect the leadership style and interactions within the team.

2. Communication style

A leader is someone who can inspire, motivate, and guide to a common goal. However, the answer to what makes a good leader is not straightforward and varies across countries. What is considered a strength in one culture may be seen as a drawback in another culture. As Prof. Geert Hofstede suggests in his article “Cultural constraints in management theories,” there is evidence that different cultural groups prefer different ways of being led. Depending on the culture, the role of the leader, its importance, and its impact may differ. In some cultures, a democratic approach may be the preferred method, and in other cultures, one might need to take strong actions to be seen as a leader.

Status exists in all societies but differs radically. In different cultures, people perceive status differently, receive status differently, and react to status differently. For example, rank and hierarchy are crucially important in some Asian and Latin American cultures. Leaders take a dominant, clear-cut role, and the employees address them in a certain way. It is common for the employees not to challenge what the leader says. In contrast, hierarchies and ranks are less important in western cultures. Communication between the leaders and their subordinates is less formal and more relaxed. These cultural differences hugely affect the leadership style and interactions within the team.

4. Manners & Taboos

Cultural differences are also found in gestures and intonation. Body language is another crucial factor in intercultural communication, and it is essential to know what your body should be doing when interacting with people from different cultures. What may be considered a sign of respect or friendliness in one culture, might be inappropriate in another. For instance, Dutch people are non-tactile and display limited body language. Koreans are also non-tactile, and touching another person may be seen as an insult. In Spain, on the contrary, shoulder patting and general physical closeness are common.

5. Motivating factors

A massive component of a leader’s task is to motivate others. However, many motivational drivers are culture-bound, and certain motivational techniques that are acceptable in one culture may not be successful in another. In some cultures, financial compensation, for example, might be the best reward, whereas in other cultures, personal growth and responsibility are rated much higher. Of course, the leaders of an international team don’t have to approach everything differently but remembering that cultural differences affect individual needs can help managers create favorable conditions.

To sum it up

It is difficult to deny that cultural literacy is the key to success for any business. As companies internationalize, we increasingly work with colleagues and clients from all over the world – whether in the office or virtually via e-mail, phone, or videoconference. It doesn’t matter what sector you are operating in and where you work – in Cologne or Chicago, Paris or Beijing – today’s success in business is affected by the ability to navigate the differences in the cultures and by the distinctions in the ways people from different cultures think, act, react to the inputs and conduct business. By learning about other societies, we will not only avoid cultural faux pas but secure good relationships with colleagues and clients.

To help the companies navigate the cultural differences, we created a brand-new tool called Culture Center. It is divided into five sections, which we consider to be especially important for international business and where cultural gaps are most common: leadership and status; communication style; meetings and negotiations; motivating factors; manners and taboos. Culture Center covers twenty countries and contains exclusive content developed by a cross-cultural expert. If you want to know more, ask us about Evolve or Solo demo.