The cultural dimension in international business

If you’re an international negotiator, you will probably have already been faced with an uncomfortable situation during a professional meeting. Whether you are young or you already have twenty years of experience in business, you have probably already been baffled by the cultural idiosyncrasies of some of your business associates... And that is completely normal! Cultural codes are sometimes difficult to decipher and they can be interpreted very differently. Culture influences the way in which an agreement is reached. You can only ensure mutual interests if you understand your future partner/client. 

Indeed, the cultural context is extremely important in the case of international projects. Knowing the uses and customs of your business associates can help you to avoid mistakes and misunderstandings. 

1. Hofstede cultural comparison tool: a valuable aid for negotiators

Some of you may already have heard of the online cultural comparison tool hofstede insights. This tool allows us to obtain information about the cultural dimensions of a country. This website is the successor of the work of the Dutch psychologist Geert Hofstede, who was involved in research for over twenty-five years, using the employees of the IBM Group in 50 countries as a point of reference.

Based on his research into cultural uses in different fields, a list of four different criteria was compiled, each one ranked from 0 to 100.

1.1 Distance with respect to the hierarchy (power)

In a professional context, this relates to the importance granted to the hierarchy.

For example, Spain obtained a score of 57/100. Thus, Spain is considered a hierarchical society in which each individual occupies a certain place. Senior executives are considered inaccessible to other employees.

1.2 Individualism versus communitarianism

Individualism can be considered as the moment in which the “I” is deemed more important than the “we”. Personal interest takes priority over common interest.

Again, continuing with the example of Spain, which obtained a score of 51. Compared to other European countries, it is considered a country with a collectivist mentality in which teamwork is seen as natural.

In business terms, it is evident in the fact that the employer and the employee are connected by a contract and not a moral tie. (Compared to the case of India, for example, where an employee’s loyalty towards their boss is absolute).

1.3 Masculinity versus femininity

This criteria determines the driving force behind society. Being the best? (Masculinity) or liking what you do? (Femininity).

Spain obtained a score of 42. Excessive competition is not appreciated. Children are educated in search of harmony. There is also a concern for weak or needy people.

1.4 Uncertainty avoidance

This dimension has to do with the way that society deals with the unknown. 

In this case, Spain obtained a score of 86, demonstrating great concern to avoid ambiguous and unknown situations. In general, you can say that Spain prefers traditions over surprises.

In 2010, two additional criteria were added, thanks to a complementary investigation conducted by Michael Harris Bond, who is also specialised in social psychology, and Michael Minkov, a Bulgarian linguist (in collaboration with Geert Hofstede).

1.5 Long term orientation

This dimension measures how the traditions of a society have an impact on present and future decisions.

Spain obtained a score of 48. That means that Spain is a normative country. It also means that Spanish people like to live in the present, without thinking about the future.

Indulgence versus restraint

This measures the capacity of a society to satisfy the desires of its members while restraint is reflected in the rules established in society to canalise desires.

In this category, Spain obtained a score of 44. Therefore, its inhabitants have the impression that their actions are restricted by social rules that prevent them from living life to the full. 

These units of measurement may help you during the negotiation process, why don’t you take a look? Go to the Hofstede cultural comparison tool.

2. Main cultural differences to take into account during negotiations

2.1 Time

The concept of time influences the negotiation process. For Westerners, time is money and it should be used wisely to maximise profits. In Asia, time has a totally different connotation. It is endless and should not be a source of conflict for negotiators. Therefore, it is necessary to be patient with Chinese suppliers or clients who usually extend negotiations over several days or weeks, with the participation of different people every day or every two days.

2.2 Establishing commercial relationships

Due to this permanent impression of not having enough time, Westerners tend to seek to accelerate negotiations. Speed and efficiency are the key words related to all business meetings. The relevant rules must be put into place as soon as possible in order to commence with the project. In the eyes of Chinese business people, whose customs are often misunderstood by Westerners, acting with such haste shows a lack of respect.

Furthermore, the western culture of establishing rules and strict principles may bewilder Chinese business associates, who do not conceive business relationships in this manner. Indeed, Chinese business people are more concerned about maintaining harmony between all those present during negotiations. Negotiation is perceived as the beginning of a long relationship, in which changes may arise without adhering to strict rules.

This part of the negotiation is vital for it to proceed. It is therefore a good idea to contact a translation company when there is a significant linguistic and cultural difference. Transcription and contextualisation are delicate tasks, and the majority of the time it is a good idea to contact a professional. For further information, see the article published on this blog, Interculturality: an obstacle in international business.

2.3 Humour

It can serve to create closeness with the business associate and give an air of confidence to establish a harmonious negotiation process between the two parties. However, in the case of international business, the culture of each party comes into play and complicates understanding, which could even lead to a “boomerang effect” that would further complicate communication.

Your business associate may not get your joke and may take it as something derogatory or insulting in their own culture. That is why humour and jokes must be used with caution. Even between close European countries such as England and Spain care must be taken, the difference between Spanish irony and British sarcasm could lead to conflicts during negotiations.