Why Cultural Differences in Business Matter

Are you looking to enter the global marketplace? Do you have an understanding of cultural differences in business and how they can affect your efforts? In the wake of the COVID-19 pandemic, our world and the way we do business have undergone some significant changes. Now, more than ever, organizations need to harness the power of global markets, but it is also vital for them to understand the essential role that culture plays.

Cultural differences can affect consumer behavior, ultimately placing a brand’s opportunities at global success in the hands of their efforts to bridge cultural barriers between local and foreign markets. 

Cross-Cultural Challenges

As you learn more about cultural differences in business, 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. In contrast, 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 solid 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 don’t often socialize with potential business partners unless necessary to 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 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 speaking 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. 

Understanding Cultural Differences in Business

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.

A global company needs to understand that there is a difference in the definition of culture per se and culture in relation to international business. Culture is typically defined as a group of ordinary and accepted standards shared by a specific society. When you put it in a global business context, what one society considers professional may be different for another foreign society.

You must understand that cultural differences affect global business in three primary areas – organizational hierarchy, etiquette, and communication. By leveraging your knowledge from your MBA program, you can effectively address these differences and mitigate misunderstandings with foreign clients and colleagues, ultimately enhancing your business relationships and success in international markets.

By implementing lean processes effectively in your workplace, you can better observe your staff and see any inefficiencies in their communication styles. From there, you can create a step-by-step process that explains to your team how to effectively and productively speak to each other based on cultural differences. This will help you reach your desired output faster, whether that’s bridging cultural gaps or improving production tasks.

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, it’s never wise to assume that your global business partners will all understand English.

When you venture into the international business arena, one way of bridging 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 verbal communication, it is essential to learn that non-verbal communication is also critical when dealing with international businesses.

Interactions

Gestures that are commonplace in your own country, like kissing people you meet on the cheek, making 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, you must remember the proper professional interactions when dealing with different cultures. Researching accepted and proper business etiquette is essential. 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.

Workplace Etiquette

When you are working for a multinational company, you are likely to encounter many differences, which prompt you to learn international business etiquette.

Pay special attention to the formality of address when dealing with foreign business partners and multicultural teams. In some cultures, it is acceptable to address a person you’ve recently met by their first name, while in other countries, they would instead 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 their surname. If you are in doubt, use the formal way of address.

Punctuality 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 should follow the English time, meaning they should arrive at the agreed time.

In Malaysia, expect to wait up to an hour if your counterpart stated that they would be about five minutes late. They are not required to explain either. In China, it is acceptable to be at least 10 minutes late, while in Mexico, it is pretty 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.

Organizational Hierarchy

Cultural norms dictate how attitudes towards management and organizational hierarchy are perceived. In some cultures, junior staff and middle management may or may not be allowed to speak up during meetings. In some countries, it is challenging 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 define 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 Negotiation 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. Companies must 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 help build 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 Americas 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 see if they rejected or accepted your proposal.

Even the way different cultures handle contracts varies. Americans like to have every detail included in the contract because they want to anticipate possible eventualities and circumstances. The deal equates to an agreement. 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 Marketplace

Cultural differences are sensitive issues, and those who take the time to address these differences will have a better chance of remaining competitive and thriving in the international business environment.

Businesses preparing to enter the global market have to diligently learn how cultural differences can affect their business conduct in different markets. Their performance depends on understanding cultural diversity and that different markets have their own set of priorities, preferences, and expectations. Day Translations, Inc. can help you navigate the complexities of cultural differences through localization.

Our translators live in-country; thus, they have insider knowledge of specific cultures. They are also native speakers, assuring you that every nuance of the language is appropriately incorporated in the localization process. We share our comprehensive experience and long-term expertise in translation and localization to ensure that your business can genuinely respond to the needs of your target markets. For your translation and localization requirements, you can contact us or call us at 1-800-969-6853 anytime night or day. We are open 24 hours a day, every day of the year, to quickly respond to your linguistic needs.