Research Knowledge

How does culture affect international business?

Posted on Wednesday 29 May 2019

In an ever-increasing globalised world, cultural sensitivity is essential. As more companies grow and the global market place becomes more accessible for small businesses, multinational and cross-cultural teams are becoming more common. This means that now more than ever, businesses who are looking to expand internationally need to be aware of the culture of their new market in order to succeed.

Culture is the beliefs, ideas, and social behaviour of a particular person or group within society. But how does culture affect international business? In a business context, culture relates to what behaviour is accepted as common practice professionally in a specific location, compared to another. What may be acceptable business practice in one country may be very different to the approach that is used by businesses overseas. Therefore, recognising how culture can affect international business is something that should be understood in order to avoid misunderstandings and miscommunication between colleagues and clients. Understanding culture also ensures that the business is presenting itself to its new market in the best way it can.

Attitude

Businesses need to be aware that different cultures have different attitudes towards business practices.

Scandinavian countries such as Sweden emphasise social equality and therefore they tend to have a relatively flat organisational hierarchy. This relates to their informal approach to communication, and cooperation is normally at the heart of their organisations. In Japan, their traditional values of relative status and respect for seniority are reflected in their organisations as reflected in their clear organisational structure. This means that senior management command respect at all times and expect a level of formality from junior members of their teams.

These different cultural attitudes towards management can therefore make it difficult to define roles in multinational teams. Therefore, it is important for businesses to be aware of their target market’s cultural approach towards organisational structure, and clearly identify their organisations approach so that all team members can act accordingly.

Etiquette

Workplace etiquette is something else that businesses need to be aware of if they are working internationally.

The formality of address is another key thing to consider within international businesses when communicating with colleagues and clients form different cultures. Are they comfortable with being approached on a first-name basis or do they prefer titles and surnames? Asian countries such as China seem to prefer the latter, where as Americans usually use first names. Things such as formality of address may not seem that important, but if you get off on the wrong foot with a potential foreign client then that could ruin your chances of ever working with them in the future. Therefore, it is important for businesses to know that their level of formality will differ depending on the culture of the person they’re communicating with.

Workplace etiquette in some cultures also means they have a different approach towards workplace confrontation, rules and regulations, and working hours. While some may consider working long hours a sign of commitment and achievement, others may consider these extra hours a demonstration of a lack of efficiency or the lack prioritisation of essential family or personal time.

Communication

Communication plays an important role in international business, and sometimes effective communication can be the difference between succeeding or failing in a new market. Effective communication is particularly important for international businesses as there is risk of your messages getting ‘lost in translation’. There are several things that need to be considered when looking at how effective your business’ communication is at an international level.

The first thing that should be considered when looking into communication is any language barriers that may hinder the communication between you and your new market. However, this goes deeper than just the language that is used to communicate, it’s how the messages are conveyed that’s important. Language barriers not only relate to people speaking different languages, but also to the different tone used within those languages. For example, in countries like the US or Germany, it is common for people to speak loudly and be more assertive when sharing ideas amongst colleagues. However, in countries like Japan people typically speak more softly and have a more passive tone when making suggestions to colleagues.

Another thing to consider are the basic customs, mannerisms and gestures that are commonly accepted in that culture. Behaviour that might be commonplace in one culture could be unusual or potentially offensive to a client or colleague overseas. Professor Jean Vanhoegaerden gives the example of a business handshake being the norm in European and US cultures, but in some Middle Eastern cultures handshakes are seen differently.

Businesses who are looking to operate internationally need to be aware of language barriers, tone and body language. Cross-cultural communication can be a challenge, but approaching cultural differences with sensitivity, openness, and curiosity can help businesses succeed internationally.

Don’t get lost in translation

Don’t let an international deal fall apart due to cultural misunderstandings: businesses should do plenty of research and be open to new cultural experiences and expectations when doing business across borders. Businesses aren’t alone in this process, translation and localisation servicescan help businesses communicate internationally ensuring they have the best chance at succeeding in new markets.

Language Insight

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