Cultural Context of International Business

Culture is generally defined as a system of learned behavior within which the individual lives and works.Culture has to be lived, it can't be learned.

Elements of Culture include- language, religion, traditions, customs, values, social structure, education etc.

With each passing day, the world appears to become a smaller place. An increasingly intertwined global economy means that business transactions taking place in one nation could easily have an impact on the rest of the world.

Being able to operate in a multi cultural environment it is important to know and be aware of the cultural differences and peculiarities. It is obviously not enough to categorize Italians as people spending most of their time in the sun while eating pizza and drinking wine. There is more that has to be learned to become successful in a foreign market. A major challenge for managers is to overwhelm their myopic view. It takes time to develop an open attitude and a cultural sensitivity which enables managers to look carefully to the foreign market and point out the customers needs there and not transferring the domestic market needs.

In IB one has to deal with cultural diversity.There are two prominent approaches on this-

a)Globalization is a fact of life and business is business around the world.

b)Companies must tailor business to different cultures.

One has to choose the approach based on the target customer and the competition.

One of the distinguishing characteristics of culture is context orientation.  In high context cultures, the context of a communication is at least as important as what is actually being said.  In low context cultures, most information is contained explicitly in the words.  Unless one is aware of the difference, actions could easily be misunderstood.(Re:Czinkota)

When workers from high-context and low-context cultures have to work together often problems occur by the exchange of information. These problems can be categorized as differences in “direction”, “quantity” and “quality”. At differences in direction employees from high-context cultures like China and France adapt to their good friends, families and also to close colleagues (in-group members). They communicate with them intensively (quantity difference) and exchange specific/detailed information about many different topics.The result is that every in-group member is constantly up-to-date with the facts around the business.

In comparison to high-context cultures low-context cultures like USA and Germany orientate on many people of their daily life because they don’t differentiate as much as high-context cultures between in- and out-groups. So their direction of communication is orientated on personal personal characters and referred to situations (direction difference). They mostly communicate within their out-groups in a broad and diffuse way (quantity difference). Within communication they exchange information just to the necessary extent so that work can be done and they don’t discuss or exchange information constantly in their work environment and colleagues (quality difference).

In China communication tends to be very efficient because of their information-flow at work and in privacy. They discuss everything in advance and consider meetings as an official “ceremony” where the already commonly agreed decision will be announced. This is important in the way of “giving and keeping face”. The Americans and Germans in contrast inform the participating attendants in a meeting about the hard and necessary facts. The decission-making process takes place within the meeting. To French it is similar with their Asian counterparts. They are also well informed before they meet each other. Much explicit and detailed discussions would probably seen as an insult because everything is already clear.

High-context means that “most of the information is either in the physical context or initialized in the person, while very little is in the coded, explicit, transmitted part of the message.” (Hall, 1976, p 79). In comparison to the meaning of low-context communication is “the mass of information is vested in the explicit code” (p 70).

The following graph ranks major cultures according to their contextual orientation:

Interesting TitBits

Choose gifts with care.  While liquor makes a suitable gift in Japan, it is banned in Saudi Arabia.  Fine compasses - the direction for prayer - are welcome.  Avoid leather objects or snake images in India, and gifts that come in sets of four or nine in Japan.  The mainland Chinese don't like to receive anything that comes from Taiwan.