Free Online Course in International BusinessCulture DefinedCulture is defined as the integrated system of learned behavior patterns that are distinguishing characteristics of the members of any given society, including everything that a group thinks, says, does and makes – its customs, religion, language, material artifacts and shared systems of attitudes and feelings. Understanding culture involves understanding people, which is, as we all know, an extremely difficult task. Today, because of technology, the internet, the media, travel, and the opening of once-closed societies, culture attitudes have shifted somewhat, becoming more dynamic and less geographically sensitive.Geert Hofstede, a Danish psychologist, interviewed thousands of IBM employees during his employment and subsequently developed a cultural model which he claims summarizes the different cultures. Hofstede’s model contains five dimensions, with each dimension given a value between 1 and 120: 1. individualism versus collectivism – looks at the relationship between individuals and others in their society. 2. power distance – quantifies how well individuals accept the different levels of power that may be evident among them. 3. uncertainty avoidance – looks at how well individuals accept uncertainty and risk. 4. masculinity versus femininity – ranks the extent to which a society embraces masculine values (assertiveness, status, financial rewards) versus feminine values (quality of life). Societies with a stronger masculine culture tend to emphasize the differences in the role of the sexes. 5. long-term versus short-term orientation – added to help distinguish the difference in thinking between the East and the West. Models like Hofstede’s provide international managers with a tool to differentiate, compare, and understand cultures and the individuals they will be dealing with abroad. Two important points every international business person must remember: 1. Understanding culture does not mean judging or ranking cultures or individuals. One’s own culture is not the standard against which others are to be judged. Avoid being ethnocentric. 2. Applying too many generalizations is dangerous. A manager must understand culture as a framework in which to deal with individual business partners. There is a saying in international business, “Business is based on relationships.” Developing strong relationships with individuals is often the best way to make business ventures successful. Culture AppliedCulture is most often viewed as the language or religion of a country, but there is obviously more to culture than these two components as Hofstede’s model shows. A successful international business manager must know what cultural matters may affect developing relationships and the impact they have financially on a business venture.LanguageFinancial issues are very much affected by language. Negotiations between a buyer and seller include price, delivery dates, shipping methods, and methods of payment. If either party is not completely fluent in the other party’s language, misunderstandings may arise which could lead to late payment or no payment at all. This situation may also arise between individuals who speak the “same” language as well. Consider the differences in word connotations and spelling between the English spoken in the US, UK, Australia, South Africa, and New Zealand. English isn’t the same English everywhere.Another language issue that may affect payment, as Hofstede indicates, is the meaning of words. Consider the classic example of the Spanish word “mañana.” Literally translated, it means “tomorrow”; however in business it more appropriately means “not today.” So, if you are asking your customer in Latin America when payment will be ready to wire transfer and the answer is “mañana,” you very likely will not know when payment will actually be made. It could be the next day, but such is not a guarantee since the word has very broad usage. Another issue has to do with the Asian issue of saving face. Rarely will a business associate say “no” directly since this is considered too bold, direct, and rude. The issue, of course, is how then does an American business person know if payment will be made or if the shipment will be ready on time if the Asian company does not give a direct answer. Knowing and understanding the nuances of a culture will help in interpreting the meaning of statements and therefore knowing when and how business will be conducted.
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