Jun 9 2011
In today’s world of globalization, where advances in transport and communication have created what many refer to as a "global village," understanding and appreciating cultural differences in business has become of vital importance to all organizations.
Companies are increasingly operating cross-border teams, and international trade is vital in today's business world. Rapid growth of emerging markets in Asia and South America means an increase for many in contact with business partners in areas that are possibly alien to them. Sensitivity and maintaining a good relationship is vital when managing a business deal – understanding differences between your own cultural and an unfamiliar partner’s can make or break a business deal. Insensitivity or misunderstanding can have a huge impact on your reputation.
Understanding and appreciating cultural differences is not just ensuring you avoid causing offence however. Attitudes towards business, the way they are run and views on management styles can vary greatly in different cultures. Geert Hofstede, a Dutch anthropologist specializing in assessing cultures, conducted a study of IBM employees in more than 70 countries in which he was able to identify several key sources of cultural difference. One of the most important was "power distance", or “the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally.” Hofstede also identified other factors that help analyze cultural-based behaviour, including whether a society is generally more comfortable with uncertainty, ambiguity and nuance; or if a society stresses group harmony and "saving face".
Another example provided by Geert Hofstede is in the differing cultures of the United States and the Middle East and the problems that can arise in business without a proper knowledge of a prospective business partner’s culture. When negotiating in Western countries such as the United States, once there is a mutual understanding between the two parties and a satisfactory conclusion has been reached the cultural sign of the end of negotiations would be to "shake hands." In Middle Eastern countries however, a hand shake is a cultutal sign that serious negotiations are just beginning.
Internally, effective communication is key to any organization’s success, and so an appreciation of different cultures is also of great importance in maintaining a professional and harmonious environment in the workplace. Organizations in the 21st century are a mix of people from different cultural backgrounds who have to understand each other, interact on a daily base and often work in more than one country. Seemingly innocuous things such as eye contact, hand gestures or work attire can cause possible offence or misunderstanding.
Above all, it is important to ensure that the increasing diversity of workplaces and the global nature of modern business is not seen as a hindrance, and is turned into the positive that it can and should be. Diversity brings a wider variety of viewpoints and can bring about solutions to problems that may not previously have been seen, as well as bringing individual talents and experiences to provide an increased adaptability.