How to cross the cultural divide in global business

What will you bring back from your next business trip overseas? A freshly inked contract or an embarrassing anecdote? Differences in international business culture can be hard to navigate and worlds do occasionally collide with unfortunate consequences. So whether you’re heading overseas for a business meeting or planning on working abroad long-term, here’s what to know about cross-cultural communication and international business etiquette. 

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There’s a framework for making cultural comparisons 

Because it’s so easy to descend into generalisations and stereotyping when comparing cultures, we need a more objective framework for comparing any two countries. The Hofstede model largely fulfils that purpose, and is used by many of the world’s largest corporations to help with cross-cultural training. 

The Hofstede model scores countries (out of 100) according to six dimensions:

Power Distance Index (PDI). The degree to which less powerful members in a society accept unequal power distribution. The higher the score, the greater the acceptance of power imbalance. 

Countries which score low on the power dimension, such as Ireland (28), Sweden (31) and the United Kingdom (35) typically minimise rigid hierarchies both in the workplace and in society. In high scoring countries such as China (80), Russia (93) and the Philippines (94), on the other hand, questioning a higher-ranking person or entire structure is less common. 

Individualism versus collectivism (IDV). Is the culture characterised by an “I” or “We” mentality?

Not surprisingly, the United States (91), Australia (90) and United Kingdom (89) all prize an individual approach. Notable cultures with a more collective mentality include China (20), Mexico (30) and the United Arab Emirates (36). 

Masculinity vs Femininity (MAS). Does the society lean towards achievement, assertiveness and material rewards (M) or cooperation, consensus and quality of life (F)? 

The scale spans cultures such as Sweden (5) at one extreme, where quality of life and recreation consistently trump professional achievement, to Japan (95) at the other, where work and professional status seem to outrank all else. 

Uncertainty Avoidance Index (UAI). To what extent do members of a society feel uncomfortable with uncertainty and ambiguity? High scoring countries tend not to tolerate unorthodox behaviour. The opposite is true for lower scoring countries. 

You’ll certainly get a sense that there is a “correct way of doing things” in Russia (95), Japan (92), and even France (86), whereas you might find yourself wondering if anyone knows the rules in Sweden (29), China (30) or Ireland (35). 

Long term vs short term orientation (LTO). This analyses the links between a society and its past and future. Low scoring countries value time-honoured traditions and absolute truth. High scoring countries can be more pragmatic and take longer to make decisions. 

How does this translate to a business context? Those countries which score lower, such as Australia (21), the UAE (22) and USA (26) tend to focus on quick results, whereas the process can be more convoluted in China (87), Japan (88) and Germany (83). 

Indulgence vs Restraint (IVR). Does a society encourage easy gratification of needs, or regulate it by tradition and even taboo?

Mexico (97) puts the rest to shame when it comes to the pursuit of immediate pleasure. At the other extreme, China (24), Russia (20) and India (26) show almost zen-like restraint. 

The above framework is designed to illustrate the shared characteristics and key points of divergence between countries. To see a more nuanced picture, however, it’s important to consider the context and the individual. 

Source: Hofstede Insights, 2010

Common areas for confusion in global business

Prepare for the following before you move abroad or travel overseas on business and you’re less likely to come unstuck or return empty handed. 

Speed of business

North American and Western European business culture tends to favour fast, unambiguous decision making. A six-figure deal can happen over a single lunch. The actual procurement cycle and legal arrangements may take longer, but both parties know they have a signed agreement. Companies doing business in Asia, on the other hand, should know that it’s customary for negotiations to go through several rounds, often without any clear sign of commitment. 

The start and finish points for a business may also be a source of confusion. If you’re doing business in Germany, for example, expect to start on time and get straight down to the task in hand. Other cultures are more flexible with punctuality, and meetings may appear to lack a specific focus once they do start. That said, Zoom conferencing and calendar sharing have arguably closed the global gap on timekeeping. 

Communication styles

Before beginning your pitch, establish whether you’re in a low or high context communication setting. Countries that steer towards low context (such as the Nordics) will communicate directly and clearly. To the untrained ear, that may seem abrupt or rude. 

Cultures that use high context communication, on the other hand, place considerable emphasis on implicit meaning and non-verbal gestures, or on the understood range of meanings a sentence can cover. In the UK, for example, “that sounds great” can mean that your idea or invitation has been received enthusiastically or politely rejected. 

Decision making

The inability to reach an agreement is not just frustrating. In some cultures, you may be putting a counterpart in an embarrassing situation by pressuring them for a decision. Particularly in Asian business settings, hierarchical structures tend to dominate over the egalitarian ones found in North America or Western Europe. That means that unless you’ve correctly identified the real decision-maker within an organisation, you may be running around in circles. 

Finding the correct form of address

Should you call someone by their last or first name? The custom may be different overseas. Then again, can you‌ pronounce their name correctly? You’ll make a much better first impression if you’ve made the effort to check beforehand, and shouldn’t assume you’ll be forgiven for putting your own spin on a name. 

If you’re communicating in a language other than English, there’s a whole new world of subtlety to address. There are four different ways to say ‘You’ in German, for example, but as many as 15 in Japan - depending on how many people you’re addressing at once, and their status relative to you. 

Giving feedback

When service quality levels or deadlines are missed, how should international teams articulate the problem? Bear in mind that the concept of “saving face” is engrained in Chinese culture, as it is in several other Asian societies. By contrast, American corporate culture can be brutal, with little mercy shown when it comes to giving feedback. Admittedly, it depends on the sector and office culture. When feedback crosses borders, however, it’s important to understand what explicit and implicit messages have been shared, who is held responsible, and what further action is required. 

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This information is correct as of March 2023. This information is not to be relied on in making a decision with regard to an investment. We strongly recommend that you obtain independent financial advice before making any form of investment or significant financial transaction. This article is purely for general information purposes. Photo credit: GettyImages