UNIT I.

INTRODUCTION AND OVERVIEW

MODULE 3 DIFFERENCES IN CULTURE

LEARNING OUTCOMES 
This module aims to accomplish the following desirable objectives for you to:
Knowing other cultures gives a person a competitive advantage in doing business across
national boundaries.
Develop a sense of cultural heterogeneity

INTRODUCTION:

                           In recent decades internationalization has forced more and more

companies to expand their business operations across national boundaries. The trend has
led firms to face different and unknown cultures. In international business, business success
is strongly contingent, among other factors, on how business executives manage a new and
unknown culture (Kazi, 2009, 3). When the question of culture comes to international
business context, the national culture is usually preferred by most academics, students and
businesspeople. Neither two individuals nor two national cultures are alike. Therefore,
intercultural difference is a common issue in cultural discourse. 
                   What is this culture? According to Hofstede, culture is the collective
programming of the mind that distinguishes the members of one group or category of
people from others (Hofstede and Hofstede, 2005, 4). However, human beings are not
programmed the same way as the computers are, they have reflective ability and may
deviate based on contingency. More so, culture has a strong impact on the way a person
acts in certain situations. Consequently, the paper considers “culture as something which is
comprised of norms and values and governs human behavior to a particular direction, which
is learned, does not change easily, which is characteristic of a particular group and which is
transmitted over time from one generation to the other (Kazi, 2009, 97).” Culture is always a
group property as personality is to an individual.   
 
 

 
                       Culture contains different elements (Figure 1)
           As a result, each national culture has its own artifacts, norms, values, rituals,
ceremonies, heroes and stories which form culture. These elements differ from one culture
to another, creating intercultural differences. In the context of international business,
intercultural difference exposes with time, believes in destiny, importance put forward to
rationality, emphasis given in participative decision-making over authoritarian one,
preferences for a person over an organization, the value of an individual versus group,
stand towards fairness, consideration given on merit versus nepotism or ascription in
recruitment, prioritizing religion in daily life and gender treatment.
            In international business, it may be very difficult for a businessperson to learn each
and every counterpart’s culture and deal with them according to their expectation. However,
the following recommendations may be instrumental in minimizing cultural differences in
international business encounters:
Cultural awareness.If there is a chance, it would be always helpful acquiring upcoming
counterparts’- or the trading partners’ cultural information. As cultural information inventory
increases, cultural awareness in multicultural- or cross-cultural encounters also increases.
This may help businesspeople to understand cultural differences quickly and thereby act
appropriately. In addition, cultural knowledge helps to do international business with
confidence and provide customer service more efficiently. Furthermore, in the 21 centuryst

globalized world where multicultural groups and international business are two crucial pillars
for survival of an economy. Knowing other cultures gives a person a competitive advantage
in doing business across national boundaries.
Accept that cultural differences are as common as individual differences. Usually, people
from different cultures act differently. Those differences may be sometimes difficult to
accept or recognize. However, in international business context, mutual understanding of
each other’s culture is a must for business success. In addition, if you are a seller, it is more
likely that you have to be more active in accepting, recognizing and bridging the gap
between those differences. Strong curiosity and effort to know and study a culture may
develop an ability to cope easily with cultural differences in international business.
Develop a sense of cultural heterogeneity. Cultural heterogeneity means belief in cultural
pluralism. The basic building block of cultural heterogeneity is that we are not all the same;
groups within society differ (Adler, 2002, 117). A national culture may differ based on
regional disposition, ethnic groupings, religious membership and linguistic affiliation.
Globally, national cultures have been grouped by Hofstede in power distance; individualism
versus collectivism; masculinity versus femininity and uncertainty avoidance dimensions
(Hofstede and Hofstede, 2005). Organizational culture typologies according to Basi are
paternalistic, bureaucratic and synergistic (Basi, 1998). A sense of cultural heterogeneity
may be instrumental to maximizing pros and minimizing cons in cross-cultural business
encounters.
Be flexible but retain your own identity. It does not always work like, “when in Rome do
as the Romans do”. Preserving self-identity is an important issue in the globalized world.
“See everything; overlook a lot; correct a little (Pope John XXIII quoted in Hoyle & Newman,
2008, 59);” be flexible and do not lose your self-identity. Flexibility is one of the most crucial
qualities in international encounters. In order to develop a flexible personality, one has to
view things from multiple directions rather than developing a tunnel vision. Interest-,
understanding-, outlook-, mindset- and expectation collision is a common issue in
multicultural business perspective – one has to go along with these flexibly.
Believe in win-win game. “Good business should contain something for both parties (John
Harvey-Jones, British business leader quoted in Ibid 70).” Win-loss game ends up with
retaliation by the loser/s. Therefore, businesspeople should stick to a win-win game in
international business negotiation. Bargaining takes place in a negotiation process, a
mindset containing a sense of give and take leads to a win-win game. Be empathic and try
to understand your counterpart’s expectations as well. It is essential to consider other
cultural aspects in negotiation, for example, identifying the decision maker, understanding
the concept of time, knowing when the deals are done and whether there is the need for
after deal reminders before its implementation or not just to name a few.
Task-and purpose related focus. Once cultural diversity has been acknowledged,
businesspeople should superordinate the task and purpose of the business and subordinate
their cultural differences. Avoidance of ethnocentrism may be instrumental for subordinating
cultural differences. Ethnocentric attitude puts itself at the center of judging others around it.
Apart from ethnocentrism, prejudice may also harm task- and purpose orientation in
international operation because prejudice reflects a negative or neglecting attitude against
other groups. In the absence of ethnocentrism and prejudice result in a level playing field ,
where everyone may work equally for the task- and purpose of the business.
Create cultural synergy: Eastern cultures differ from Western cultures. Despite their
differences, they do business successfully. The concept of cultural synergy is a unique
organizational approach that considers cultural diversity as a resource. Each culture has
some uniqueness and in a multicultural perspective those uniqueness may yield new
solutions to existing problems. Therefore, steps may be undertaken to use the best parts of
other cultures for solving business problems.
The globe is not anymore divided into two separate blocks; socialist led by the former USSR
and capitalist led by the USA. Human mobility has never been as intense as it is now. The
World Wide Web and the social media of different types have brought human beings closer
to each other than ever before. The nations have virtually lost their national boundaries in
the economic front – countries and companies do business almost unhindered. Cultural
expertise would determine someone’s business success in such a world order.
 
Watch Hult Professor Jean Vanhoegaerden discussing why culture is important in
international business:
                      https://youtu.be/qsS-TIt5D1ch
“There is an atmosphere of understanding and support at Hult. Everyone has this

respect and curiosity for all the cultural and personal differences between us.

This environment encourages everyone to strive for excellence.”

Tatiana Ufimtceva

Hult MBA Class of 2014

 
 
The Effects of Cultural Differences on Global Business
More businesses are entering the global market. It is vital for businesses to understand
that cultural differences can affect how they perform in the local markets they are
targeting. One of the first things to consider is communication because bridging the
language gap is extremely important in business talks.
Cross-cultural challenges
As you learn more about cultural differences, you will encounter several more concepts,
such as low-context and high-context cultures. In low-context cultures like the United
Kingdom, the United States and Canada, communication is explicit and clear while in a
high-context culture like Russia, communication is nuanced and implicit and there is
more shared content. However, the opposite happens when negative feedback is to be
given. Russia becomes direct, while low-context cultures tend to be indirect when
negative feedback is called for.
Building trust is another challenge for businesses. The concept may be relationship-
based or task-based. When doing business in China, for example, one of the ways to
build good relationships involves spending time together at the dining table (drinking
and eating). It is akin to building a strong network where gaining trust opens a path to
success as cultural differences are set aside. The Chinese call this type of relationship
‘guanxi.’ In the United States, however, people tend not to have drinks with potential
business partners often, unless necessary, so they can avoid embarrassing situations.
Another factor that affects trust building is the comfort of silence. In some countries, a
few seconds of silence make the conversation uncomfortable. This happens in countries
where the comfort of silence is low, such as in France, Italy and the United States. In
Asian countries like Korea, Indonesia and Japan, however, the comfort of silence is
high, which often results in Asians not being able to speak often during business
meetings with people from Western countries. Asians are not likely to feel
uncomfortable if the conversation stops for as long as 30 seconds.
Business executives should learn that cultural sensitivity is essential when engaging in
cross-cultural business. Never look at cultural differences as weaknesses. Instead,
respect cultural differences to gain success.
Gaining benefits from cultural differences
Accepting cultural differences provides you with a wide range of business expertise and
gives you novel business insights to overcome business-related problems. It’s your way
to cope with potential barriers regarding international business and culture.
It is vital for a global company to understand that there is a difference in the definition of
culture per se and culture in relation to the context of international business. Culture is
typically defined as a group of common and accepted standards shared by a specific
society. When you put it in international business context, what one society considers
as professional may be different for another foreign society.
You have to understand that cultural differences affect global business in three primary
areas – organizational hierarchy, etiquette, and communication. Understanding them
and recognizing their effects on your business will prevent you from creating
misunderstandings with foreign clients and colleagues.

1. Communication  - Effective communication is vital to business success, whether

you are a start-up or a big corporation. Although it is common to hear that
English is the language of business, do not ever assume that you will be able to
come across your foreign counterparts by using or speaking English.

              When you venture into the international business arena, one way of bridging
the cultural differences is through language. Understand the language your target
market speaks and know how you use it to convey your message. In India for example,
business professionals typically communicate in nuanced and indirect ways. This is
opposite to the Finns who tend to be direct and brief in their communication.
Aside from the verbal communication, it is essential to learn that non-verbal
communication is also extremely important when dealing with international businesses.

2. Interactions

Gestures that are commonplace in your own country, like kissing people you meet on
the cheek, making eye to eye contact and shaking hands firmly, may be taken as
offensive or unusual by your foreign clients or business partners. As many business
coaches will tell you, it is critical for you to remember the proper professional
interactions when dealing with different cultures. Doing research on accepted and
proper business etiquette is important. In some cases, you need to be extra observant
of body language and at times, it is better to ask than commit a cultural faux pas.

3. Etiquette in the workplace

When you are working for a multinational company, you are likely to encounter many
differences, which prompt you to learn international business etiquette.
Put high importance on the formality of address when dealing with foreign business
partners and colleagues. In some cultures, it is all right to address a person you’ve
recently met by their first name, while in other countries, they would rather that you
address them by their surname or their title. Canadians and Americans often use first
names, even when dealing with new acquaintances. But in many Asian countries, such
as Singapore, China and South Korea, you should always address a person formally by
adding Mr. or Ms. before thPunctuality is something that is relative. When you deal with
business partners, clients or colleagues from the United States, South Korea, Japan
and Russia, you are expected to be on time. In Germany, you are even expected to be
at least 10 minutes early for your appointment. In Greece, they expect foreigners to
arrive on time but just like in Russia, you may expect your counterpart to arrive slightly
late. Brazil is ambivalent. They could either be late by a few or several minutes unless
you indicate that they follow the English time, meaning they should arrive at the agreed
time.
In Malaysia, expect to wait up to an hour if your counterpart will be about five minutes
late. They are not required to give an explanation, either. In China, it is acceptable to be
at least 10 minutes late while in Mexico, it is quite normal for people to be late by 30
minutes for a business meeting. When doing business in Nigeria or Ghana, the
appointed hour for the meeting may be one hour late or within the day. In Morocco,
personal meetings could be delayed by an hour and in some cases, a day. When
scheduling meetings in India, understand that being punctual is not one of their ways.

4. Hierarchy in the organization

Cultural norms dictate how attitudes towards management and organizational hierarchy
are perceived. In some cultures, junior staff and people in middle management may or
may not be allowed to speak up during meetings. In some countries, it is difficult to
question decisions by senior officers or express opinions that are different from the rest.
Attitudes are dependent on social equality or the societal values of a country. In some
countries such as Japan and South Korea where respect for elders and people in
positions of authority is deeply ingrained in the members of society, the concept is
applied to the workplace as well. It helps in defining responsibilities and roles in the
company and those holding positions in senior management expect deference from
junior staff and a higher level of formality and respect.
However, the situation is different in Scandinavian countries. In Norway for example,
societal equality is emphasized so the organizational hierarchy tends to be flat. The
workplace environment calls for cooperation across all departments and informal
communication is prevalent.
Differences in negotiating styles
Negotiation is a principal component of international business. Culture influences the
way people behave, communicate and think. These characteristics are reflected in the
way they negotiate. It is crucial for businesses to understand cultural differences during
business transactions and find ways to hurdle the barriers these differences present.
Spanish speakers view negotiation as the means to have a contract, while in some
Asian countries, negotiations are taken as the way to build stronger and firmer business
relationships. The Japanese regard negotiation as a win-win process while the Spanish
look at it as a win-lose process.
The way one communicates during negotiations should be carefully considered. Israelis
and Americans are very direct, so you immediately know if the transaction is approved
or not. The Japanese, however, tend to be indirect. You have to read and carefully
interpret vague signs to know if they rejected or accepted your proposal.
Some cultures are very emotional like the Latin Americans. Most Asians, on the other
hand, have a tendency to suppress their emotions and keep things formal.
Even the way different cultures handle contracts vary. Americans like to have every
detail included in the contract because they want to anticipate possible eventualities and
circumstances. The deal equates to a contract, therefore everything that was discussed
and accepted during the negotiation should be specified in the contract. The Chinese,
on the other hand, prefer a contract to have the general principles only, because for
them, sealing a deal means forming a relationship with the business partner.
Remain competitive and successful in the global market
Cultural differences are sensitive issues and those who take the time to address these
differences will have a better chance of remaining competitive and successful in the
international business environment.
 
 SUMMARY
           The number of companies operating internationally is growing constantly. The
world is opening up for foreign firms and new destinations in the company´ business
are increasing. Because of high competition the companies operating abroad are faced
with a much larger task then before. When going international the challenges the
company must handle are new and unfamiliar. Obstacles the firm never faced before
are becoming crucial in everyday work. Culture is one of these obstacles and can affect
the entire co-operation. Culture can influence the business in different ways. Language
problems, pricing difficulties and culture collisions are not uncommon, especially in the
beginning. The company must be able to handle these difficulties in a way that is
satisfying also for the other part. Mistakes can be difficult to correct and disrespect for
the foreign culture can destroy the entire operation. There are some general advices
the company always must have in mind before and during a co-operation on the
international market. It is important, even before entering the foreign country, to inform
the personal about the manners and customs in that new culture. If the first impression
becomes negative, this can be hard to shake. Foreign cultures have different ways of
doing business, for example when it comes to planning ahead and keeping delivery
times. Culture can be both a positive and negative influence and many companies are
struggling in the new and foreign environment. The important thing to always have in
mind is that the foreign culture is not as we are used to at home and to be prepared
before starting the new foreign operation. Respecting and understanding the new
culture without forcing our own beliefs on people, are things that can be extremely
helpful to consider. By learning the host country’s language, can respect and trust more
easily be won, and competitive advantages can arise. 
 
 
 
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