Understanding Cultural Differences in Business

I always say that you cannot play football if you do not know the rules.  What is penalties, what is of side, direct and indirect kicks, the list is endless.  The players, the referee, the fans everybody who is involved in one way or another must know these rules, otherwise they will fall out of place.  In the same say, ensuring that communication across border is effective and that business transactions are successful it is important to understand cultural differences and promoting cultural sensitivity.  If you are observant, you will notice that each country has its own cultural standards of being, thinking and acting.  Their cultural differences strongly influence their business setups, values and naturally business communication.  What you may consider as perfectly acceptable and natural in your own country, can be considered as confusing or even offensive in business setups of other country.

I always say that there is no better arena for observing a culture in action than business.  Cultures tend to reveal themselves in situations where much is as stake, because it is here that their resources are most needed.  Business women and men who want to get involved in the international business arena should be aware of how other cultures differ across the following dimensions. Many of these dimensions are based on Geerte Hofstede's framework for assessing culture.

Power Distance

In African countries people recognize and respect differences in power.  According to Geert Hofstede’s Cultural Dimensions analysis the PDI (Power Distance Index) indicates that the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally.  The representation here is based on inequality (more versus less), but on the other hand defined from below, and not from above.

It is suggested that a society's level of inequality is endorsed by all parties concerned, i.e. the followers and the leaders. Power and inequality, of course, are extremely fundamental facts of any society and anybody who wants to start doing international business must be aware that “all societies are unequal, but some are more unequal than others”

In Kenya for example, which is considered as high power distance, bypassing a supervisor or any other superior would be considered insubordination.  When we look at the low power distance countries, such as America the lines between superiors and subordinates are often blurred. It is perfectly acceptable in America, for example, that supervisors can mingle with subordinates as equals within a social setting.

Explicit Versus Implicit

In some countries, such as Germany, Great Britain and Amercia, people tend to be explicit in communication. Ideas are fully spelled out, and when trying to understand a message, people will depend on what has been actually said or written. In other countries, such as Kenya and Japan, people tend to speak and communicate in an implicit and indirect manner. In this case, people depend on common understanding in knowledge and etiquette to extract the underlying message.

Monochronic Versus Polychronic

Monochronic cultures prefer to focus on one task at a time. They emphasize order and do not favor interruptions. For these people, time is a precious commodity. Schedules and timetables are greatly valued and are meant to be strictly followed.

Polychronic cultures, on the other hand, like to multi-task and are generally less stringent when it comes to establishing or following an agenda. In this setting, the concept of time is more fluid, and the pace of life is more relaxed.

Let me give you an example:  A German business man in Morocco is anxious to get the contract which was agreed on to be signed.  He has a tight schedule and does not want to waste time.  He has been waiting for what he considers ages to get an appointment with his Moroccoan business partner and is with time getting more and more frustrated.  Finally he does get an appointment, and to his dismay, the meeting does not start punctually, and when it does, there were frequent interruptions, with people popping in to get papers signed, hold short discussions, and to crown it all the telephone never stops ringing during the meeting.  You can imagine what the German business partner was going through...

Individualism Versus Collectivism

Cultures like Germany,  America and Great Britain for example are considered to be indudualist based.  Independence and self-determination is highly valued.  Whereas in the collective cultures such as Kenya, Italy and Japan, people are expected to identify themselves with and to work well in groups.  In exchange for their loyalty and compliance, people receive a sense of security, protection and shared responsibility.

Masculinity Versus Femininity

Cultures that value competitiveness, assertiveness, ambition and accumulation of wealth, for example Japan and Germany are considered to be masculine.  Italy, Spain and Kenya for example are considered to be feminine cultures as they place more emphasis on relationships, compassion, and the general quality of life.

Uncertainty Avoidance

According to Geert Hofstede, "uncertainty avoidance" is the extent to which the members of a culture feel threatened by uncertain and unknown situations".   Within their structured environment, these people tend to be more emotional and expressive. Cultures that are comfortable with uncertainty avoid rules and in general are less emotionally expressive and pragmatic.

We see for example that Germans employees will begin their careers in one company and traditionally will remain in the same company in some cases for the rest of their working lifes.  Whereas for the British employees it is very normal to frequently change jobs even consider move to the competitor and "poaching and being poached" particularly on the senior level staff is the rule of the game and is considered as very normal.