Culture and Business
Read this chapter for an overview of how cultural understanding applies to business negotiations. For example, you will learn how a message is communicated in high- and low-context cultures. In high-context cultures, body language is as important and sometimes more important than actual words spoken. In low-context cultures, people tend to be explicit and direct in their communications. Verbal language and body language can impact our chances of understanding and being understood in a positive or negative way.
What Are the Key Methods Used to Describe Cultures?
Learning Objectives
- Know several methods to describe cultures.
- Define and apply Hofstede's and Hall's categories for cultural identification.
- Identify and discuss additional determinants of culture.
The
study of cross-cultural analysis incorporates the fields of
anthropology, sociology, psychology, and communication. The combination
of cross-cultural analysis and business is a new and evolving field;
it's not a static understanding but changes as the world changes. Within
cross-cultural analysis, two names dominate our understanding of
culture - Geert Hofstede and Edward T. Hall. Although new ideas are
continually presented, Hofstede remains the leading thinker on how we
see cultures.
This
section will review both the thinkers and the main components of how
they define culture and the impact on communications and business. At
first glance, it may seem irrelevant to daily business management to
learn about these approaches. In reality, despite the evolution of
cultures, these methods provide a comprehensive and enduring
understanding of the key factors that shape a culture, which in turn
impact every aspect of doing business globally. Additionally, these
methods enable us to compare and contrast cultures more objectively. By
understanding the key researchers, you'll be able to formulate your own
analysis of the different cultures and the impact on international
business.
Hofstede and Values
Geert
Hofstede, sometimes called the father of modern cross-cultural science
and thinking, is a social psychologist who focused on a comparison of
nations using a statistical analysis of two unique databases. The first
and largest database composed of answers that matched employee samples
from forty different countries to the same survey questions focused on
attitudes and beliefs. The second consisted of answers to some of the
same questions by Hofstede's executive students who came from fifteen
countries and from a variety of companies and industries. He developed a
framework for understanding the systematic differences between nations
in these two databases. This framework focused on value dimensions.
Values, in this case, are broad preferences for one state of affairs
over others, and they are mostly unconscious.
Most
of us understand that values are our own culture's or society's ideas
about what is good, bad, acceptable, or unacceptable. Hofstede developed
a framework for understanding how these values underlie organizational
behavior. Through his database research, he identified five key value
dimensions that analyze and interpret the behaviors, values, and
attitudes of a national culture:
- Power distance
- Individualism
- Masculinity
- Uncertainty avoidance (UA)
- Long-term orientation
Power
distance refers to how openly a society or culture accepts or does not
accept differences between people, as in hierarchies in the workplace,
in politics, and so on. For example, high power distance cultures openly
accept that a boss is "higher" and as such deserves a more formal
respect and authority. Examples of these cultures include Japan, Mexico,
and the Philippines. In Japan or Mexico, the senior person is almost a
father figure and is automatically given respect and usually loyalty
without questions.
In
Southern Europe, Latin America, and much of Asia, power is an integral
part of the social equation. People tend to accept relationships of
servitude. An individual's status, age, and seniority command respect -
they're what make it all right for the lower-ranked person to take
orders. Subordinates expect to be told what to do and won't take
initiative or speak their minds unless a manager explicitly asks for
their opinion.
At
the other end of the spectrum are low power distance cultures, in which
superiors and subordinates are more likely to see each other as equal
in power. Countries found at this end of the spectrum include Austria
and Denmark. To be sure, not all cultures view power in the same ways.
In Sweden, Norway, and Israel, for example, respect for equality is a
warranty of freedom. Subordinates and managers alike often have carte
blanche to speak their minds.
Interestingly
enough, research indicates that the United States tilts toward low
power distance but is more in the middle of the scale than Germany and
the United Kingdom.
Let's
look at the culture of the United States in relation to these five
dimensions. The United States actually ranks somewhat lower in power
distance - under forty as noted in Figure 3.1 "The United States' Five
Value Dimensions". The United States has a culture of promoting
participation at the office while maintaining control in the hands of
the manager. People in this type of culture tend to be relatively
laid-back about status and social standing - but there's a firm
understanding of who has the power. What's surprising for many people is
that countries such as the United Kingdom and Australia actually rank
lower on the power distance spectrum than the United States.
Figure 3.1 The United States' Five Value Dimensions
Individualism,
noted as IDV in Figure 3.1 "The United States' Five Value Dimensions",
is just what it sounds like. It refers to people's tendency to take care
of themselves and their immediate circle of family and friends, perhaps
at the expense of the overall society. In individualistic cultures,
what counts most is self-realization. Initiating alone, sweating alone,
achieving alone - not necessarily collective efforts - are what win
applause. In individualistic cultures, competition is the fuel of
success.
The
United States and Northern European societies are often labeled as
individualistic. In the United States, individualism is valued and
promoted - from its political structure (individual rights and
democracy) to entrepreneurial zeal (capitalism). Other examples of
high-individualism cultures include Australia and the United Kingdom.
On
the other hand, in collectivist societies, group goals take precedence
over individuals' goals. Basically, individual members render loyalty to
the group, and the group takes care of its individual members. Rather
than giving priority to "me," the "us" identity predominates. Of
paramount importance is pursuing the common goals, beliefs, and values
of the group as a whole - so much so, in some cases, that it's nearly
impossible for outsiders to enter the group. Cultures that prize
collectivism and the group over the individual include Singapore, Korea,
Mexico, and Arab nations. The protections offered by traditional
Japanese companies come to mind as a distinctively group-oriented value.
The
next dimension is masculinity, which may sound like an odd way to
define a culture. When we talk about masculine or feminine cultures,
we're not talking about diversity issues. It's about how a society views
traits that are considered masculine or feminine.
This
value dimension refers to how a culture ranks on traditionally
perceived "masculine" values: assertiveness, materialism, and less
concern for others. In masculine-oriented cultures, gender roles are
usually crisply defined. Men tend to be more focused on performance,
ambition, and material success. They cut tough and independent personas,
while women cultivate modesty and quality of life. Cultures in Japan
and Latin American are examples of masculine-oriented cultures.
In
contrast, feminine cultures are thought to emphasize "feminine" values:
concern for all, an emphasis on the quality of life, and an emphasis on
relationships. In feminine-oriented cultures, both genders swap roles,
with the focus on quality of life, service, and independence. The
Scandinavian cultures rank as feminine cultures, as do cultures in
Switzerland and New Zealand. The United States is actually more
moderate, and its score is ranked in the middle between masculine and
feminine classifications. For all these factors, it's important to
remember that cultures don't necessarily fall neatly into one camp or
the other.
The
next dimension is uncertainty avoidance (UA). This refers to how much
uncertainty a society or culture is willing to accept. It can also be
considered an indication of the risk propensity of people from a
specific culture.
People
who have high uncertainty avoidance generally prefer to steer clear of
conflict and competition. They tend to appreciate very clear
instructions. At the office, sharply defined rules and rituals are used
to get tasks completed. Stability and what is known are preferred to
instability and the unknown. Company cultures in these countries may
show a preference for low-risk decisions, and employees in these
companies are less willing to exhibit aggressiveness. Japan and France
are often considered clear examples of such societies.
In
countries with low uncertainty avoidance, people are more willing to
take on risks, companies may appear less formal and structured, and
"thinking outside the box" is valued. Examples of these cultures are
Denmark, Singapore, Australia, and to a slightly lesser extent, the
United States. Members of these cultures usually require less formal
rules to interact.
The
fifth dimension is long-term orientation, which refers to whether a
culture has a long-term or short-term orientation. This dimension was
added by Hofstede after the original four you just read about. It
resulted in the effort to understand the difference in thinking between
the East and the West. Certain values are associated with each
orientation. The long-term orientation values persistence, perseverance,
thriftiness, and having a sense of shame. These are evident in
traditional Eastern cultures. Based on these values, it's easy to see
why a Japanese CEO is likely to apologize or take the blame for a faulty
product or process.
The
short-term orientation values tradition only to the extent of
fulfilling social obligations or providing gifts or favors. These
cultures are more likely to be focused on the immediate or short-term
impact of an issue. Not surprisingly, the United Kingdom and the United
States rank low on the long-term orientation.
Long-
and short-term orientation and the other value dimensions in the
business arena are all evolving as many people earn business degrees and
gain experience outside their home cultures and countries, thereby
diluting the significance of a single cultural perspective. As a result,
in practice, these five dimensions do not occur as single values but
are really woven together and interdependent, creating very complex
cultural interactions. Even though these five values are constantly
shifting and not static, they help us begin to understand how and why
people from different cultures may think and act as they do. Hofstede's
study demonstrates that there are national and regional cultural
groupings that affect the behavior of societies and organizations and
that these are persistent over time.
Edward T. Hall
Edward T. Hall was a respected anthropologist who applied his field to the understanding of cultures and intercultural communications. Hall is best noted for three principal categories that analyze and interpret how communications and interactions between cultures differ: context, space, and time.
Context: High-Context versus Low-Context Cultures
High
and low context refers to how a message is communicated. In
high-context cultures, such as those found in Latin America, Asia, and
Africa, the physical context of the message carries a great deal of
importance. People tend to be more indirect and to expect the person
they are communicating with to decode the implicit part of their
message. While the person sending the message takes painstaking care in
crafting the message, the person receiving the message is expected to
read it within context. The message may lack the verbal directness you
would expect in a low-context culture. In high-context cultures, body
language is as important and sometimes more important than the actual
words spoken.
In
contrast, in low-context cultures such as the United States and most
Northern European countries, people tend to be explicit and direct in
their communications. Satisfying individual needs is important. You're
probably familiar with some well-known low-context mottos: "Say what you
mean" and "Don't beat around the bush". The guiding principle is to
minimize the margins of misunderstanding or doubt. Low-context
communication aspires to get straight to the point.
Communication
between people from high-context and low-context cultures can be
confusing. In business interactions, people from low-context cultures
tend to listen only to the words spoken; they tend not to be cognizant
of body language. As a result, people often miss important clues that
could tell them more about the specific issue.
Space
Space refers to the study of physical space and people. Hall called this the study of proxemics, which focuses on space and distance between people as they interact. Space refers to everything from how close people stand to one another to how people might mark their territory or boundaries in the workplace and in other settings. Stand too close to someone from the United States, which prefers a "safe" physical distance, and you are apt to make them uncomfortable. How close is too close depends on where you are from. Whether consciously or unconsciously, we all establish a comfort zone when interacting with others. Standing distances shrink and expand across cultures. Latins, Spaniards, and Filipinos (whose culture has been influenced by three centuries of Spanish colonization) stand rather close even in business encounters. In cultures that have a low need for territory, people not only tend to stand closer together but also are more willing to share their space - whether it be a workplace, an office, a seat on a train, or even ownership of a business project.
Attitudes toward Time: Polychronic versus Monochronic Cultures
Hall
identified that time is another important concept greatly influenced by
culture. In polychronic cultures - polychronic literally means "many
times" - people can do several things at the same time. In monochronic
cultures, or "one-time" cultures, people tend to do one task at a time.
This
isn't to suggest that people in polychronic cultures are better at
multitasking. Rather, people in monochronic cultures, such as Northern
Europe and North America, tend to schedule one event at a time. For
them, an appointment that starts at 8 a.m. is an appointment that starts
at 8 a.m. - or 8:05 at the latest. People are expected to arrive on
time, whether for a board meeting or a family picnic. Time is a means of
imposing order. Often the meeting has a firm end time as well, and even
if the agenda is not finished, it's not unusual to end the meeting and
finish the agenda at another scheduled meeting.
In
polychronic cultures, by contrast, time is nice, but people and
relationships matter more. Finishing a task may also matter more. If
you've ever been to Latin America, the Mediterranean, or the Middle
East, you know all about living with relaxed timetables. People might
attend to three things at once and think nothing of it. Or they may
cluster informally, rather than arrange themselves in a queue. In
polychronic cultures, it's not considered an insult to walk into a
meeting or a party well past the appointed hour.
In
polychronic cultures, people regard work as part of a larger
interaction with a community. If an agenda is not complete, people in
polychronic cultures are less likely to simply end the meeting and are
more likely to continue to finish the business at hand.
Those
who prefer monochronic order may find polychronic order frustrating and
hard to manage effectively. Those raised with a polychronic
sensibility, on the other hand, might resent the "tyranny of the clock"
and prefer to be focused on completing the tasks at hand.
What Else Determines a Culture?
The
methods presented in the previous sections note how we look at the
structures of cultures, values, and communications. They also provide a
framework for a comparative analysis between cultures, which is
particularly important for businesses trying to operate effectively in
multiple countries and cultural environments.
Additionally,
there are other external factors that also constitute a culture -
manners, mind-sets, values, rituals, religious beliefs, laws, arts,
ideas, customs, beliefs, ceremonies, social institutions, myths and
legends, language, individual identity, and behaviors, to name a few.
While these factors are less structured and do not provide a comparative
framework, they are helpful in completing our understanding of what
impacts a culture. When we look at these additional factors, we are
seeking to understand how each culture views and incorporates each of
them. For example, are there specific ceremonies or customs that impact
the culture and for our purposes its business culture? For example, in
some Chinese businesses, feng shui - an ancient Chinese physical art and
science - is implemented in the hopes of enhancing the physical
business environment and success potential of the firm.
Of these additional factors, the single most important one is communication.
Communication
Verbal Language
Language
is one of the more conspicuous expressions of culture. As Hall showed,
understanding the context of how language is used is essential to
accurately interpret the meaning. Aside from the obvious differences,
vocabularies are actually often built on the cultural experiences of the
users. For example, in the opening case with Dunkin' Donuts, we saw how
the local culture complicated the company's ability to list its name in
Chinese characters.
Similarly,
it's interesting to note that Arabic speakers have only one word for
ice, telg, which applies to ice, snow, hail, and so on. In contrast,
Eskimo languages have different words for each type of snow - even
specific descriptive words to indicate the amounts of snow.
Another
example of how language impacts business is in written or e-mail
communications, where you don't have the benefit of seeing someone's
physical gestures or posture. For example, India is officially an
English-speaking country, though its citizens speak the Queen's English.
Yet many businesspeople experience miscommunications related to
misunderstandings in the language, ranging from the comical to the
frustrating. Take something as simple as multiplication and division.
Indians will commonly say "6 into 12" and arrive at 72, whereas their
American counterparts will divide to get an answer of 2. You'd certainly
want to be very clear if math were an essential part of your
communication, as it would be if you were creating a budget for a
project.
Another
example of nuances between Indian and American language communications
is the use of the word revert. The word means "to go back to a
previously existing condition". To Indians, though, the common and
accepted use of the word is much more simplistic and means "to get back
to someone".
To
see how language impacts communications, look at a situation in which
an American manager, in negotiating the terms of a project, began to get
frustrated by the e-mails that said that the Indian company was going
to "revert back". He took that to mean that they had not made any
progress on some issues, and that the Indians were going back to the
original terms. Actually, the Indians simply meant that they were going
to get back to him on the outstanding issues - again, a different
connotation for the word because of cultural differences.
The
all-encompassing "yes" is one of the hardest verbal cues to decipher.
What does it really mean? Well, it depends on where you are. In a
low-context country - the United States or Scandinavian countries, for
example - "yes" is what it is: yes. In a high-context culture - Japan or
the Philippines, for example - it can mean "yes," "maybe," "OK," or "I
understand you," - but it may not always signify agreement. The meaning
is in the physical context, not the verbal.
Language or words become a code, and you need to understand the word and the context.
Did You Know?
English Required in Japan
It's
commonly accepted around the world that English is the primary global
business language. In Japan, some companies have incorporated this
reality into daily business practice. By 2012, employees at Rakuten,
Japan's biggest online retailer by sales, will be "required to speak and
correspond with one another in English, and executives have been told
they will be fired if they aren't proficient in the language by then.
Rakuten, which has made recent acquisitions in the U.S. and Europe, says
the English-only policy is crucial to its goal of becoming a global
company. It says it needed a common language to communicate with its new
operations, and English, as the chief language of international
business, was the obvious choice. It expects the change, among other
things, to help it hire and retain talented non-Japanese
workers".
Rakuten is only one of many large and small Japanese companies pursuing English as part of its ongoing global strategy. English is key to the business culture and language at Sony, Nissan Motor, and Mitsubishi, to name a few Japanese businesses. English remains the leading global business language for most international companies seeking a standard common language with its employees, partners, and customers.
Body Language
How
you gesture, twitch, or scrunch up your face represents a veritable
legend to your emotions. Being able to suitably read - and broadcast -
body language can significantly increase your chances of understanding
and being understood. In many high-context cultures, it is essential to
understand body language in order to accurately interpret a situation,
comment, or gesture.
People
may not understand your words, but they will certainly interpret your
body language according to their accepted norms. Notice the word their.
It is their perceptions that will count when you are trying to do
business with them, and it's important to understand that those
perceptions will be based on the teachings and experiences of their
culture - not yours.
Another
example of the "yes, I understand you" confusion in South Asia is the
infamous head wobble. Indians will roll their head from side to side to
signify an understanding or acknowledgement of a statement - but not
necessarily an acceptance. Some have even expressed that they mistakenly
thought the head wobble meant "no". If you didn't understand the
context, then you are likely to misinterpret the gesture and the
possible verbal cues as well.
Did You Know?
OK or Not OK?
Various
motions and postures can mean altogether divergent things in different
cultures. Hand gestures are a classic example. The American sign for OK
means "zero" in Tunisia and southern France, which far from signaling
approval, is considered a threat. The same gesture, by the way, delivers
an obscenity in Brazil, Germany, Greece, and Russia. If you want to
tell your British colleagues that victory on a new deal is close at hand
by making the V sign with your fingers, be sure your palm is facing
outward; otherwise you'll be telling them where to stick it, and it's
unlikely to win you any new friends.
Eye
contact is also an important bit of unspoken vocabulary. People in
Western cultures are taught to look into the eyes of their listeners.
Likewise, it's a way the listener reciprocates interest. In contrast, in
the East, looking into someone's eyes may come off as disrespectful,
since focusing directly on someone who is senior to you implies
disrespect. So when you're interacting with people from other cultures,
be careful not to assume that a lack of eye contact means anything
negative. There may be a cultural basis to their behavior.
Amusing Anecdote
Kiss, Shake, Hug, or Bow
Additionally,
touching is a tacit means of communication. In some cultures, shaking
hands when greeting someone is a must. Where folks are big on contact,
grown men might embrace each other in a giant bear hug, such as in
Mexico or Russia.
Japan,
by contrast, has traditionally favored bowing, thus ensuring a
hands-off approach. When men and women interact for business, this
interaction can be further complicated. If you're female interacting
with a male, a kiss on the cheek may work in Latin America, but in an
Arab country, you may not even get a handshake. It can be hard not to
take it personally, but you shouldn't. These interactions reflect
centuries-old traditional cultural norms that will take time to evolve.
Ethnocentrism
A
discussion of culture would not be complete without at least mentioning
the concept of ethnocentrism. Ethnocentrism is the view that a person's
own culture is central and other cultures are measured in relation to
it. It's akin to a person thinking that their culture is the "sun"
around which all other cultures revolve. In its worst form, it can
create a false sense of superiority of one culture over others.
Human
nature is such that we see the world through our own cultural shades.
Tucked in between the lines of our cultural laws is an unconscious bias
that inhibits us from viewing other cultures objectively. Our judgments
of people from other cultures will always be colored by the frame of
reference in which we have been raised.
The
challenge occurs when we feel that our cultural habits, values, and
perceptions are superior to other people's values. This can have a
dramatic impact on our business relations. Your best defense against
ethnocentric behavior is to make a point of seeing things from the
perspective of the other person. Use what you have learned in this
chapter to extend your understanding of the person's culture. As much as
possible, leave your own frame of reference at home. Sort out what
makes you and the other person different - and what makes you similar.
Key Takeaways
- There are two key methods used to describe and analyze cultures. The first was developed by Geert Hofstede and focuses on five key dimensions that interpret behaviors, values, and attitudes: power distance, individualism, masculinity, uncertainty avoidance, and long-term orientation. The second method was developed by Edward T. Hall and focuses on three main categories for how communications and interactions between cultures differ: high-context versus low-context communications, space, and attitudes toward time.
- In addition to the main analytical methods for comparing and contrasting cultures, there are a number of other determinants of culture. These determinants include manners, mind-sets, values, rituals, religious beliefs, laws, arts, ideas, customs, beliefs, ceremonies, social institutions, myths and legends, language, individual identity, and behaviors. Language includes both verbal and physical languages.
Exercises
(AACSB: Reflective Thinking, Analytical Skills)
- Define Hofstede's five value dimensions that analyze and interpret behaviors, values, and attitudes.
- Identify Hall's three key factors on how communications and interactions between cultures differ.
- What are the two components of communications?
- Describe two ways that verbal language may differ between countries.
- Describe two ways that body language may differ between cultures.
- What is ethnocentrism?