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
An essential attribute of being a good manager and a leader is being a good communicator. But what makes a good communicator also varies in different parts of the world. The relationship between culture and communication is tightly interlinked. People learn to communicate through the impact of culture. Children learn to communicate by watching how others in their culture communicate, not only in language but also in meaning.
For example, Japanese communication style is very different from German or British style. In contrast to Germany or the UK, Japan is a high-context communication country. In high-context cultures, people tend to communicate more implicitly and rely less on verbal communication but more on nonverbal expressions, body language, environment, and the relationship between the communicators. Most of the message is carried “between the lines” and in cues. These contextual differences impact the way Japanese businesspeople are negotiating and making decisions. For instance, a “yes” can also mean no, and to understand whether “yes” is yes or actually no, a context is needed. The weight of understanding the message is placed on the receiver, not the sender.
In low-context communication countries, e.g., Germany, importance is placed on speech clarity and word choice. Everything that needs to be understood is in words. Ambiguity and evasiveness are not common. Thus, the sender is the one responsible for how a message is understood, not the receiver.
3. Meeting and negotiations
Researchers suggest that culture has an impact on negotiations outcome. The effect may not be direct, but it can be seen during the negotiation process.
Let’s take the disagreement. A little direct disagreement during negotiations sounds healthy to many. But different cultures have different thoughts on confrontation, disagreement, and their effectiveness. Just think about L’Oréal. L’Oréal believes that its success is primarily the result of its culture of confrontation and open disagreement. Whereas in China, people avoid confrontation and turn to ambiguity. In this case, it is important to acknowledge cultural differences and consider adjusting business etiquette.
Sometimes negotiation and persuasion approaches are deeply rooted in folk beliefs and religion, and this, too, should be taken into consideration when developing a negotiation strategy. The ways how people persuade others and the types of arguments they find convincing are strongly connected to their culture.
Time orientation is another factor to consider when meeting with international clients and colleagues. It differs significantly throughout the cultures and can affect the outcome of negotiations. For example, in Japan, punctuality is not only a priority but also a matter of respect. By comparison, Italians have a different sense of time, and coming to a meeting up to 45 minutes late is not considered disrespectful.
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.