Cultural contrasts in business (part 1)

Cultural contrasts in business

Part 1

Introduction

About ten years ago I spent some time reading various books about cultural differences in business. I cannot now remember the titles and authors. I made a lot of notes. The document that I created that summarized the books has been sitting in my files ever since then and I have never done anything with it. I’ve now decided to present it here on my blog. Feel free to use it in any way that you choose, possibly as a student handout for discussion and comment, possibly just for your own consideration.

I’ll post these notes in two installments, with the second to follow next month.

Yes, I am aware of all the problems of generalizing about cultural differences:

  • I am aware that international business culture is becoming more uniform, and that many individuals do not conform to these stereotypes.
  • I am aware that when you take someone out of their country and put them into a team in another country, they often adapt quickly and lose their ‘national’ characteristics, at least to some extent, and at least for younger people.
  • I am aware that company culture may be as important as national culture.
  • I am aware that descriptions of national characteristics are really just subjective impressions with no firm evidence (Hofstede and Trompenaars notwithstanding).
  • I am aware that the descriptions that follow in this document divide the world into three groups, and ignore differences within the groups.

If you personally are against cross-cultural comparisons and believe that everyone should be treated as an individual, then that is perfectly reasonable. At least the summary below will give you something to argue against. I would just add that people who are interested in intercultural differences never try to pretend it is the whole story: of course individual/family/gender/age/team/company/profession differences also play a part in describing and explaining differences between people. It’s just that for that part that does relate to national culture, no matter how big or small, at least there can be an attempt at describing the differences. And a division into three groups as here, rather than country by country, gives a first approximation that can be used for later refinement. The big argument in favour of cross-cultural comparisons is that:

  • It makes you realize that your way is not the only way.
  • It gives an initial orientation for what to expect when working internationally, and this alone is helpful. As you get to know the culture the broad stereotypes will disappear and you will see individual differences and form your own views.

General business culture

 

America/N. Europe

Latin America/S. and E. Europe/Middle East

Japan/China/E. Asia

Self-image Unique individuals, independent and equal. Part of a family or religious group. Members of a large group: family, company, nation.
Measure of success Individual achievement, high salary, recognition for being creative. Status, honor, social recognition, reputation. Group success.
Cultural values America: action, success, openness, directness, equality, competition, independence, risk-taking.Europe: less materialistic, less risk-taking, more traditional. Family security, family harmony, relationships, authority, status. Group harmony, relationships, cooperation, honesty, loyalty, age/seniority, family security.
Corporate values Competition, innovation, quality, informality. Trust in individuals. Group harmony, long-term relationships, reputation of company, quality.
Motivation to do business Profit. People live to work. Security for family and prestige for head of family. People work to live. Market share and long-term opportunities for company.
Business relationships Friendly and informal, but a continuing personal relationship with individuals is not important. Much business is done over the phone. Personal relationships are very important. A long time is needed to build trust before business can begin. Preference for doing business face-to-face. Based on mutual respect. Relationships with individuals are important, but business is done on a group basis. Often there is an older authority figure who seldom appears but has ultimate power. In Japan, socializing after work is seen as an important part of the relationship.
Business style America: hard sell, with slogans, clichés, exaggeration, tough talk and wisecracks.Europe: reason and soft sell. Time needed to study other individuals. Reserved. Like lots of opportunity to ask questions.
Nature of decisions Decisions are like contracts and people are under an obligation to stick to them. If the situation changes, the decision might also have to change. If the situation changes, the decision might also have to change.

Discussions and Meetings

 

America/N. Europe

Latin America/S. and E. Europe/Middle East

Japan/China/E. Asia

Objectives of meeting Making a deal or decision. Formulating a plan of action. Establishing relationships and building rapport. Clarifying and issuing instructions. Information gathering. Decisions emerge over long time period.
Punctuality Punctuality important. It shows a desire to use time efficiently (particularly Switzerland and Germany). In Latin cultures people might take a more relaxed attitude to time, and being 5 or 10 minutes late is acceptable. Time very important to the Chinese, who apologize for taking up time and thank others for their time.
Seating Senior person sits at head of the table, others sit fairly randomly. If there are two ‘sides’ they sit face-to-face. Senior person in place of obvious importance, others often arranged by status/age. Two ‘sides’ may sit next to each other. Pre-arranged, with members often sitting in order of rank. Guests will be shown where to sit. Two ‘sides’ may sit so that you face a person of equal rank across the table.
Body language Direct eye contact shows sincerity and equality. Direct eye contact shows sincerity and trust. Direct eye contact rarely used – it is seen as intrusive. A smile shows lack of understanding.
Opening comments Americans, Germans and Scandinavians get down to business quickly. Considered rude to start talking business until some small talk has been exchanged. People’s opening comments are addressed to the senior person, who often speaks first. In Japan, there is a long ritual of thanking the visitors. People’s opening comments are addressed to the senior person, who often speaks last.
Communication style Americans: direct, factual, informal and at times confrontational. French: oratorical with abstract logical arguments. Germans: require full information and context. British: use humour and try to be reasonable. In Arab culture distractions during a meeting are normal. The host may be talking to several people about different topics at the same time. Preferred style is ‘monologue – pause – reflection – monologue’ rather than dialogue. Arguments are often indirect. Periods of silence show respect and allow time for consideration.
Flow of meeting Keep to the agenda. Treat agenda more flexibly, returning to previous items or digressing. In Arab cultures there is often no clear agenda. In Japan the meeting has clear phases: opening ritual, outline of agenda, less formal expression of views, non-confrontational replies, formal summary.
Disagreements Participants bring up disagreements quickly, openly and directly. Americans, Germans and Australians are particularly frank. English are indirect. French are rational and precise. Latins are direct, but the Portuguese and Chileans are considered more diplomatic. In Arab culture disagreement is often shown by silence. Public disagreement is very rare because criticism means the other person losing face. More subtle techniques are used, including questions that express doubt, remaining silent, or ‘Yes, but …’. Serious issues are addressed privately, outside the meeting. The Japanese in particular value harmony very highly. Koreans are more direct.
Decision-making Decisions are based on facts, and are often made instantly in the meeting. During the meeting positions can change. Decisions are made by key individuals, outside the meeting. Positions are relatively fixed in the meeting, but are subject to rapid change outside the meeting. No rush to make decisions. Decisions are made by group consensus over a longer time period. ‘Yes’ often means ‘I understand’ rather than ‘I agree’. There are no sudden changes of viewpoint in meetings.
Closing Plan of action, delegation of responsibility, review of tasks to be done. Reference to continuing relationship. Formal thanks. Reference to long-term relationship.

 

Negotiating

 

America/N. Europe

Latin America/S. and E. Europe/Middle East

Japan/China/E. Asia

Group composition Typically 2-3 people involved. Team members constant throughout process. Typically 4-6 people involved. Senior person involved at beginning, junior/technical staff take over later. Senior person comes back to close the deal. Typically 4-7 people involved. Team members may rotate.
Social setting Pragmatic view of negotiation – little consideration given to social aspects. Little understanding of nuances of protocol, status, connections and respect. Sit facing each other and maintain eye contact while talking. Negotiation is a social ceremony with important considerations of venue, hospitality, protocol, timescale and courtesy of discussion. Seating shows status of individuals. Maintain eye contact while talking. Negotiation is a social ceremony. Seating displays harmonious relationship – often a circular arrangement. The Japanese sit side by side and stare at a common point, giving sideways glances to their opposite numbers.
Relationship building Little time spent on building rapport – the deal comes before personal feeling, particularly in America. Little room for sentimentality. Personal relationships are very important for doing business, and a long time is spent on building trust. In S. America it is important to spend time establishing respect for national characteristics. Building rapport and group harmony is necessary before business can be discussed. Respect for the company is important. Long time frame is used to check sincerity of other side.
Exchange of information Logical, step-by-step approach. Early focus on price. Much use of written documentation. All elements of negotiation are constantly available for change. Price discussed towards end. Extensive asking for and checking of information. Focus on explaining, justifying and evaluating.
Persuasion techniques Saving and/or making money. Facts and figures. Loss of opportunity unless you act soon. Concessions are asked for and given in a rapid, linear process. Hospitality and personal relationship. In Middle East a go-between is often used to avoid face-to-face conflict. Long-term relationship more important than the individual deal. No-one must lose face, so open negotiating in a meeting is unacceptable.
Use of language In America language is open, direct and urgent. Confrontation is seen as being necessary for progress. No personal honor is at stake. The English like a calm, reasonable discussion where confrontation is avoided. Germans are very thorough. The French are logical and rational. Use of expressive and emotional language. Respect for dignity of others. Grand outlines rather than details. Latins like to have something to win, and their own concessions must not appear too much like concessions. In Middle East religious references (God’s will) may be made. In Japan, language is indirect, appreciative and cooperative. Respect for dignity of others is very important. No-one must lose face in the meeting.
First offer Within 5-10% of expected outcome. Within 10-20% of expected outcome. In Middle East, within 20-50%. Within 10-20% of expected outcome.
Further offers Add to package, sweeten the deal with more favorable payment terms etc. Further concessions on price. Few further concessions and little continued bargaining.
Decision making Top management team make decisions. Short time scale. In America there is high tolerance of risk. It is calculated, and is the personal responsibility of an individual. Feelings and intuition of senior individuals are important. Long time scale. In the Middle East never push for a decision or criticize anyone for the way business is conducted. Middle managers make a collective decision. Long process until consensus is achieved. Low tolerance of risk. Group responsibility.

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