Cross-cultural Differences in Business

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Introduction

The world of business bridges together professionals from different ethnic, regional, and national areas. As the world turns into a global village, businesses are expanding into different countries. A borderless business requires that individuals participating in international business learn to work with businesspeople from other cultures. Cultural differences involve differences in mentality, perceptions, language, and language. One way to work with individuals from different countries and build a positive work relationship includes learning and being aware of the cultural practices in the new environment. One can also pursue higher education to understand the international marketplace scale and the cultural and sensitive factors that influence a business’s success globally. China, the United States, and Sweden are examples of leading industrialized countries, each with its own distinct culture. Over the decades, businesses from these countries have expanded into the global market, and with it, they have had to understand various cross-cultural differences among them. Understanding the cross-cultural differences enables companies and businesspersons effectively navigate global cultural businesses in a manner that guarantees lasting success and growth.

Cultural Differences in International Business

Globalization is the driving force of this era’s global businesses. Industrialized countries have the highest rates of globalization, and their populations have developed global-minded economic, social, and political world views. Companies and businesspersons looking into expanding into the global market have had to develop a mindful cross-cultural approach to business. This approach enables them to expand into new markets in a conscious and considerate manner that abides by existing customs and cultures. A cross-cultural approach to business ensures that a new business can attract and maintain new clients.

Cultural differences are normal and prevalent in the global market. Businesspersons and companies require sensitivity and knowledge to navigate these differences with finesses. An approach that businesses can use to navigate cultural differences is research. Researching cultures of interest is an integral step in understanding and bridging cultural differences (Shi & Wang, 2011). Cultural research should focus on etiquette, communication styles, and organizational hierarchy. Communication is key to the success of any company. Cultural differences pose the risk of messages getting lost in translation. Businesses that want to expand into the global market need to ensure they have effective means of communication. Effective communication involves mastering ways to convey messages in different cultures. For instance, in European countries such as Finland, people value brevity and directness, while in southern Asian countries such as India, people value nuanced and indirect messages. Other aspects of communication that businesses need to master include language and non-verbal communication skills. English is commonly used in most countries, and it gives companies a professional boost when expanding into the global market. For instance, companies that intend to expand into the African business market can use the English language as it is widely spoken in most countries in that region. Understanding the non-verbal communication cues of different cultures is also essential as it can help professionals be more sensitive to body language and acceptable gestures.

Workplace etiquette involves concepts of time and attitudes. Different regions worldwide have different ideas of what it means to be on time. Understanding a culture’s perspective of time ensures the businesspersons do not inconvenience their counterparts or cause misunderstandings. In the American culture, being on time means that people attend their meeting a few minutes ahead of the appointed time. In Mexican culture, arriving on time means arriving precisely at the scheduled time or a few minutes later. Understanding these differences ensures that business professionals adhere to the expected concept of time. Workplace attitudes involve concepts of working hours, approaches to confrontation, and rules and regulations. For instance, working longer than the required working hours in east Asia is viewed as a sign of commitment and hard work. In Europe, working long hours is seen as not being efficient and deprioritizing one’s time. Confrontations and disagreements in the workplace are expected; however, different cultures have different approaches to solving this challenge. In some cultures, people are expected to avoid direct confrontation, while in other cultures, people are expected to voice their opinions positively and respectfully. The rules and regulations set in a company are also influenced by culture. Therefore, depending on the region, company rules and regulations vary.

Businesspersons should also research organizational hierarchy as different cultures have different attitudes towards various management roles. Attitudes around organizational hierarchy demonstrate a culture’s level of social equality and societal values. In East Asian countries, traditional values of social hierarchy and respect for seniority influence how junior workers interact with senior workers. For instance, individuals in junior and middle-level positions cannot openly question a senior’s decisions or express a difference in opinion during meetings. Individuals in senior positions also expect high respect and formality from their juniors. There is great emphasis on societal equality in Western cultures, making these regions’ hierarchal systems relatively flat. As such, senior staff members’ decisions are subject to influence from other individuals, and there is a greater emphasis on cooperation between junior members and senior members.

Another approach that businesses can adopt to navigate cultural differences is keeping an open cultural mindset. Proper perspective is key to the success of any business. A proper mindset enables businesses to be open, sensitive, and flexible to the customs of their potential new clients. This approach to business fosters better communication and increases the chances of success. For instance, companies should remain open to adopting new languages. A study by Shopify plus found that communicating to new clients in a language they are familiar with increases customer satisfaction and, consequently, sales. Other cultural differences that companies should be open to are adopting local methods of brokering deals, adopting the expected attitude when approaching and negotiating with potential business partners, and adopting the company’s culture and beliefs to the region’s cultures and beliefs (Andersson & Mets, 2020). For instance, patience is a valued cultural aspect in Asia. Business negotiations in this region tend to take longer than in westernized countries as there is a need for several approvals. Western-based businesses moving into this region need to be more patient during business negotiations. It will be appreciated by the locals and result in long-term success.

Companies also need to adapt to how different cultures carry out their greetings. Gestures of greetings vary from one culture to the other. In some countries, the norm involves shaking hands, while in other cultures, one is expected to either bow or place arms in front of one’s chest. Businesses should adopt the most appropriate greeting gesture based on the region’s culture to avoid embarrassing and offending incidences. Companies should also adopt the titles used in addressing their new counterparts. For instance, countries in Europe use titles and first names while countries in east Asia use last names, and countries in Southeast Asia use first names and titles.

Lastly, businesses need to understand the basic needs of the customer. Customer needs are often rooted in cultural beliefs. Understanding the basic needs of customers shows that companies are aware of the customer’s cultural habits and are willing to adapt accordingly. For instance, when Mcdonald’s first got into the Chinese market, they realized that most locals preferred to eat chicken over beef. This preference is due to the cultural beliefs of this region. Mcdonald’s adapted to this cultural preference and introduced the spicy chicken burger to meet the needs of this market. By understanding and adapting to the region’s customer habits, the franchise achieved overwhelming success and popularity with the locals (Yu & Zhang, 2009). KFC also understood and adopted the cultural preferences of the people in China. KFC replaced its coleslaw with familiar localized alternatives that appealed more to their new clients (Yu & Zhang, 2009. To date, these companies enjoy business success in the region. Unlike these two companies, businesses that do not understand the needs of their customers often fail. For instance, Subway could not succeed in the Chinese market as they did not factor in cultural aspects, such as the people in this region preferring rice and pasta to bread. Also, Chinese people do not like touching their food, and the concept of building a sandwich was confusing. Home Depot failed to succeed in the Chinese market due to its do-it-yourself (DIY) nature. Most people relate DIY projects to poverty in China, making this business concept invalid in such a region (Zheng, 2017).

Cultural Overview of China

China is the world’s most populous country, with slightly more than 1.4 billion people. 91% of the population are Han Chinese, with other ethnic minorities making up the rest of the population. For millennia, China was a monarchy; however, this system of governance fell in 1912 when the Republic of China replaced the Qing dynasty. The Chinese Communist Party established the current people’s republic of China in 1949. China is the second-largest world economy with a GDP of 14. 72 trillion dollars.

Confucius’s values are at the core of Chinese culture and traditions. Confucius’s values help create a harmonious society through moderate communication processes. These values dictate family and interpersonal relationships, moral cultivation, harmony and face, and respect for age and hierarchy (Fu & Kamenou, 2011). The guiding principles of Confucianism include the ethically important relations of master and follower, father and son, elder brother and younger brother, husband, and wife, and senior friend and junior friend (Peterson, 2007). These categories are used to show people the different social positions they have, encouraging respect. Juniors are expected to obey and respect their seniors, while the seniors are tasked with mentoring and protecting their juniors.

Figure 1: Confucius relationship principles

Another guiding principle in Confucianism is working hard and modestly to acquire knowledge and skills that increase the value of one’s life. The Chinese golden rule is also a Confucianism guiding principle, and it encourages people to be virtuous by treating others as they would treat themselves. Lastly, individual families are reminded that they are part of a larger family which is the society and are required to act in a manner that retains the dignity, respect, and prestige of society.

Confucius’s value system directs social life and extends into business. Emphasis on the differences between social positions dictates that younger people should have more respect for older persons, and they should accept the hierarchal system. This expectation is based on the cultural belief that older people are wiser and more experienced. Older people hold higher positions in an organization’s hierarchal system; therefore, their juniors should show respect and obedience (Jacobs, Guopei, & Herbig, 1995). Overall, the insistence on observing different social positions dictates that junior members listen to middle-level managers, who then listen to higher-level managers. The Confucius system insists on the well-being of the collective instead of the well-being of an individual. As collective honor and accomplishments are held in higher regard than individual accomplishments, individuals in companies are required to work in a group and consider the group’s needs over the needs of the individual.

Emphasis on giving face is an important part of Chinese culture. In a company setup, individuals are expected to work in a manner that brings pride to the entire organization. Individuals that act in a way that is regarded as dishonorable are seen as losing face, an attribute that results in dishonor. Lastly, the Chinese culture insists on the relationship ties between people. Relationships are used to determine the level of trust built, and they are in businesses. Businesspersons with a good relationship are more likely to enjoy success due to their trust in each other. In contrast, businesspersons with a mediocre relationship are more likely to experience failure as there is little to no trust between them. Therefore, the success of a business is determined by the level of trust and relationship individuals share.

When meeting new clients and business partners, one is expected to give a gentle handshake while avoiding eye contact. One is also expected to address people using their titles and family names and exchange business cards while using both hands holding the sides of the card. Business card etiquette is crucial in China as this culture relies more on non-verbal communication. The Chinese communication style is indirect, and it is customary to begin negotiations with Smalltalk. Structurally, the Chinese language is dependent on context; therefore, people use code words and phrases to either agree or disagree with something said. Also, Chinese people rely on body posture, facial expressions, and tone of voice to communicate. Therefore, individuals are expected to learn and understand these body signals. The business dress code in China is modest and conservative, with men and women being expected to wear dark business suits. Lastly, Chinese people value punctuality, and it is expected that people arrive on time. In case of delays, one is expected to provide prior notice and offer an apology.

Cultural Overview of Sweden

Sweden is a social-democratic society in the Northern part of Europe. Sweden first emerged as a kingdom through the Vikings in the 9th century, and it became a state in 1523. Sweden has a total population of slightly over 10 million people, with most of its population being Swedish. The country’s economy is ranked 23rd globally, with a GDP of 537.6 billion dollars.

Like most European countries, the Swedish culture strongly advocates for qualities such as equality. While this culture emphasizes collective well-being, people are taught that they are equal hence the lack of a strict hierarchal system and a higher tolerance for uncertainty. The emphasis on collective well-being creates a robust collaborative thinking society in which the collective gains are held in higher esteem than the gains of an individual. While this culture encourages group gains, its insistence on equality provides an environment where people communicate more freely as they are all equal. In a business setup, Individuals working for an organization are encouraged to pursue collective gain while maintaining a flexible hierarchal system that enables free and open communication between managers and subordinates. Insistence on equality also supports the growth of feminism. The equality of sexes in business is important as it helps companies create and maintain a diverse and innovative workforce that promotes the company’s development (Birkinshaw, 2002). For instance, women are better at soft skills than men. When placed in leadership positions, women can better handle workplace conflicts in a manner that satisfies all parties. As Swedish people prefer to avoid confrontations, having women in leadership positions enables businesses to adhere to the region’s culture while efficiently solving conflicts.

The Swedish culture promotes a supportive managerial style and encourages coaching and empowerment. These qualities promote the growth of the company and the individual as people in senior positions are encouraged to mentor and coach their juniors. The emphasis on empowering people also promotes individual and collective responsibility. Empowered individuals decide by themselves the tasks and goals they want to accomplish, further encouraging responsibility. Empowerment also encourages decision-making, which enables all individuals in an organization to make choices that best benefit the well-being of the collective. Coaching involves giving guidance. Managers are expected to guide their subordinates in accomplishing their tasks. Coaching is crucial to the growth of any business as it promotes teamwork and ensures the development of the individual. Overall, the Swedish culture emphasizes respect, equality, commitment, and self-control, attributes that promote the growth and well-being of the collective and the individual.

The Swedes do not tolerate superlatives in communication and stretching the truth or pulling rank is rude. The Swedes use a relaxed and informal communication style; however, one is expected to speak and act in a manner that maintains harmony. One is expected to speak clearly, directly, and with low-context words. However, directness should not be confused with bluntness, as the culture in this society discourages any form of confrontation. Open display of emotions when communicating is equally discouraged, and one is expected to keep their hand gestures and body language at a minimum. The business dress code in this country is formal, with men and women being expected to dress in dark-colored business suits. The Swedish culture has a strict concept of time. People are expected to be punctual in both business meetings and social gatherings. If one is late, it is considered polite to give prior notification. When meeting new people, one is expected to give a brief, firm handshake on the first day. During subsequent meetings people are not required to have any form of physical contact. Lastly, due to the lax hierarchal system, people address each other with their first names regardless of their status.

Figure 2: Societal Cultural practices of countries in Northern Europe

Cultural Overview of the USA

The United States is a collection of previous colonies that gained independence from the British government in 1776. The USA has approximately 330 million people of different ethnicities and races. Currently, the US is the largest economy globally, with a GDP of more than 20 trillion dollars.

The American culture is rooted in meritocracy, efficiency, and equality. Unlike most countries, the American culture is less formal and hierarchal, enabling a relaxed environment where juniors have greater access to their supervisors, and their communication and dress codes are relaxed. The degree of informality and hierarchal systems are dependent on one’s field of business (Postolov et al., 2019). For instance, accounting, finance, and sales companies are a lot more formal than business in academia, technology, and media. Workplace norms and cultures are also dependent on regions, with individuals from the East coast adopting a work-hard mentality that sees them work for longer hours. In contrast, individuals from the west coast and the southern region of the country adopt a work to live approach that sees them pursue a work-life balance. Other qualities valued in the American culture include efficiency, direct communication, transparency, the “I can do it” mentality, and optimism.

When meeting new people or clients in American culture, individuals are expected to stand and give a brief, firm handshake while maintaining eye contact. This form of greeting is required regardless of one’s age, gender, or seniority level. When addressing supervisors, it is customary for juniors to use titles such as Ms., Mrs., or Mr. however it is common for all people to go by their first names. Americans also prefer putting on a happy face and using greeting phrases such as “how are you?” are said in an upbeat tone. Whether or not one is fine, the expected answer for this question if that one is well, and this answer is equally given in an upbeat tone. Americans tend to smile more than other cultures as they value people that look more friendly. While people should be approachable, the American culture encourages minimal contact. Therefore, most people prefer to have personal space, and it is expected that individuals should be careful not to stand too close to other people. Physical contact is therefore limited to handshakes.

Contrary to popular belief, Americans work longer hours and have fewer holidays than people from most industrialized countries. On average, people are expected to work 5 days a week for eight hours; however, people are expected to be more flexible. A 2016 study showed that the average American employee worked 20% more than their European counterparts and this figure translated to an extra workday (Bick, Brüggemann, & Fuchs-Schündeln, 2016). Americans have fewer off days, and they lack laws that cap the number of hours one is expected to work. After-hour business meetings are typical, and salaried employees are generally expected to work longer. While different regions in the US have varying off-days and working hours, different studies have shown that American worker is expected to work for long hours than employees from other developed nations.

Lastly, the preferred styled of communication in America is to-the-point and direct. While this communication style is blunt in most cultures being direct is encouraged in the US as straightforward people are seen as efficient and trustworthy. One should be cautious of giving direct criticism as it is confrontational and rude. Businesspersons that want to expand their businesses into America should ensure that they use a win-win communication style. One should also avoid talking about politics, religion, and income; instead, focus on neutral topics such as entertainment, leisure activities, and sports. The American concept of time encourages punctuality; therefore, people are expected to arrive at meetings a few minutes earlier than the set time.

Conclusion

Understanding cross-cultural differences enable companies and businesspersons effectively navigate global businesses in a manner that guarantees lasting success and growth. By learning the cultural norms of different cultures, companies can build lasting and trusting business relations based on mutual respect. As business practices and cultures vary from one region to another, learning and understanding these cultural differences enables companies and business professionals to best interact with their new counterparts and make successful business transactions. Understanding the cultural aspects of business ensures that companies and businesspersons can build trustworthy long-term relationships and respond appropriately to various challenges.

References

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