How does culture influence international business

How does culture influence international business

As a result of the globalization, the increasingly close interaction between firms which are from different cultures has been booming. Therefore, culture, which is manifest in behavioral norms, hidden assumptions, and human nature, each occurring at a different level of depth, has profound influences on international business. (Kilmann, Sfixton, Serpa 1986) Under this circumstance, in order to negotiate and deal with foreign partners more efficiently, and to enter new markets successfully as well, we should explore the exotic cultures and in what manners those magical cultures will affect the way we trade

Generally speaking, culture is consisted of language, religion, social institutions, political systems and philosophy, economic systems, education, and symbols. (Johnson, Turner 2010: 307) So, when talking about the influences of culture on international business, these aspects should be taken into account, especially the impacts from language, history, religion, and social institution, which can reflect the habits, attitudes, beliefs of the society. With the analysis of these three aspects, the great impacts of culture on international trade will be clear.

To begin with, language is one of the most significant factors that have impacts on international business, since language is the crucial medium for business partners to communicate with each other and understand their ideas. During the frequent global trade and commerce, the exchange of language is necessary, which has great effect on international trades. There are some taboo words and idioms in every language, which are likely to cause problems. For instance, some specific numbers are treated differently in different areas. The number “3” enjoys both praise and abuse alike. In Monaco, people like this number very much because they believe it will bring them prosperity. The Hong Kong people like this number, too, because in Cantonese, “3” is homophonic with “promotion”. But the Europeans generally consider it ominous. “4” is commonly disliked by people in Japan, Hong Kong and China, because it means death. So, code-switching is very vital in international business, especially in terms of the interaction with partners and customers and advertisement. Let’s take Microsoft Word as an example. At first glance, Word is simply a software package rather than an advertisement. However, the languages available in the programme are part of Microsoft marketing discourse, and also make statements about how the brand wants to be perceived. As part of its localization strategy, Word offers a great variety of Englishes, from Australia to Zimbabwean. One such variety offered is an ‘Irish-English’ language option and dictionary. Microsoft dose provide a comprehensive language option in Irish, but a dictionary of Irish-English, prepared with a genuine understanding of the everyday mixed-up sociolinguistic context of that variety, should include these and other examples. (Kelly-Holmes 2008: 185) Here Microsoft is a typical good model of code-mixing, which not only provide convenience for customers, but expand it consumer base as well as attain international reputation.

Then, as a significant role in global trade, religious factor can’t be ignored, especially for those states ruled by religious authority, since religion lays down a set of fundamental principles and values which govern the behaviour and life of its adherents. (Johnson, Turner 2010: 308) Religious beliefs can influence trading behavior in mainly two ways. First, sharing the same religious belief often implies sharing similar values. A common religion may therefore enhance trust between trading partners and reduce transaction costs, increasing the trade volume between traders of the same religion should be higher than trade between different religions. Second, each religion has its own ethical standpoint towards the activity of trading. (Helble 2007) The impacts of religion on can be indicated in individuals’ material life and their attitudes toward purchasing and using merchandise and services. Sometimes religious traditions even prohibit the use of certain goods and services altogether, like Islam forbids the eating of pork and Hindus do not consume beef. Therefore, when Macdonald entered Muslim countries, it has changed its menu to get used to their specific religious practices. The hamburgers (and all food items for that matter) must be Halal, and in fact, they do not call the burgers ‘hamburgers’ as such, instead they call them beef burgers so as to make it clear that there is no ham in them. (The Travel Almanac n.d) So taboos and preferences have to be explored before entering a religious society and trade with partners who are religious believers.

Thirdly, history is a mirror of a society, which can indicate the establishment and development about economic and political form of a country. Whereas in developing economics foreign brands have status value, when countries develop, people tend to focus more on their historical national preferences. For instance, in the early 1990s anything Western sold in Russia, but since 1996 international companies such Coca-Cola and Nestlé have been localizing their messages in Russia. As Russians have become more nationalistic, producers have tried to make their products more relevant. (Mooij nd: 17) So historical characteristics should be considered during international business to make sure that your products and ways of negotiating are suitable to the countries of destination in terms of their habits, tastes, and values. Japanese businessmen may prefer keep on saying ‘yes, yes’. However, their ‘yes’ doesn’t mean their acceptance to the term is offered, but rather their understanding of what is said. They keep on saying yes only for rite’s sake. Still worth mentioning there is that the Japanese have more trust in personal rapport than in business contracts. This presents a sharp contrast to the Americans. So when doing business with the Japanese, you should take time and pains to establish true personal rapport and friendships. Don’t count too much on contracts; they are pieces of waste paper in the eyes of the Japanese once both sides are at odds. (Huang 2010: 2) From this example, it indicates that doing business with foreign countries has changed the traditional thinking patterns, and some successful companies have been adapted to particular coping styles according to different cultures. History is the best treasure, which explains the economic development of societies that have played a significant part in global trade, can help businessmen to learn the information of the habits and life styles of both partners and customers from destination countries.

Finally, social institutions are defined as a complex of positions, roles, norms, and values lodged in particular types of social structures and organizing relatively stable patterns of human resources with respect to fundamental problems in sustaining viable societal structures within a given environment by Turner (1997). It is also considered that the very nature of social institutions that produce values or standards of good and bad can also encourage justifications of sanctioned behaviors.( Parboteeah, Hoegl, Cullen 2003) Let’s take China as an example. China is a country with powerful social institutions, which affect Chinese business activities a lot. On the other hand, another important institution in China is the family and the mutual dependency of its members. Therefore, Chinese people’s behaviours and manners have influenced deeply by these aspects. In Chinese societies, such relationships are governed by what is termed guanxi, which is a bond between people, on the basis of which friends are expected to look after each other’s wellbeing. (Bargiela-Chiappini and Harris 1997: 42) The complexities of interpersonal relations bothered a large number of western businessmen, since most Chinese businessmen prefer to trade with friends or friends’ friends and relatives, who are thought to be more trustful due to the special guanxi between them. Therefore, as Lafayette De Mente states, a successful business relationship between Chinese companies begins with the establishment of a personal bond between the principal managers of the companies and is based particularly on the careful maintenance of these personal ties. (Bargiela-Chiappini and Harris 1997: 42) So, exploring the social institution of the destination countries is very useful for businessmen to trade in different societies efficiently.

After the discussion of key determinants of culture, a famous study of cultural dimensions, which can provide a more clear view of the impacts of culture on international business, will be highlighted. Dimensions of cultural differences are very necessary for organizations especially those who operate internationally to understand and cope with such differences that can manifest themselves in terms of different standards, values and expectations in the various countries in which they operate. (Johnson, Scholes, Whittington 2008: 190) Here I have to mention one of the most effective studies of cultural dimensions, Hofstede’s cultural dimensions, which are consisted of power distance, uncertainty avoidance, individualism and collectivism, masculinity-femininity, and short/long-term orientation.

To begin with, power distance discusses dependence relationships within countries and societies. The smaller the power distance is, the more dependency of subordinates on supervisors will be. Bargiela-Chiappini and Harris (1997) found that from Hofstede’s research it is indicates that in Chinese societies, such as Hong Kong and Singapore, people tend to demonstrate greater deference towards those in power than they do in Western societies. Malaysia is an example of a high power distance culture and a majority of the websites reflected this cultural aspect; for instance companies’ hierarchy information and authority figures were the main features in communication media such that pictures of important people in the company were displayed clearly so that they could be effectively addressed and appropriately shown respect. Similarly, the main feature of the web pages was a photograph and statement by the Chancellor to the students. (Ahmed, Mouratidis, Preston 2009) Thus, when designing a website for a high power distance culture, we needs to pay attention to a conspicuous organizational chart that clearly describes and highlight the level of hierarchy in order to make people know the fundamental structure and chain of charge of the company. Therefore, in the high power distance countries and societies the management should be apprehensible and hierarchical, while in the opposite phenomenon, power should be delegated to the lower levels and individuals should be rewarded according to their performance rather than their place or job title.

Secondly, uncertainty avoidance will be analysed, which is the extent to which individuals within a society are prepared to tolerate uncertainty in their lives. (Hofstede 1980: 153) In those cultures where uncertainty avoidance is high, the planning and assignments should be conducted in a more accurate and formal way so that staff can understand and pursue the assignments strictly, which is similar to the high power distance cultures. Hofstede (1991) suggested that in uncertainty societies there are many formal laws and informal rules controlling the rights and duties of employees and employers, while in countries with very weak uncertainty avoidance there rather seems to be an emotional horror of formsl rules. People in such societies pride themselves that many problems can be solved without formal rules. However, in the low uncertainty avoidance cultures, decisions making and planning can be in a more informal way, that individuals can be motivated to provide suggestions and make innovation. As Reimann, Lünemann, and Chase (2008) thought, the importance of uncertainty avoidance in conjunction with service quality can be found at the macro level of economies as well as at the micro level of consumer behavior. From a macroeconomic standpoint, as services become increasingly important to modern economies (Metters, Marucheck 2007), high uncertainty avoidance may hinder a service business actually being started and, thus, slow down the exploitation of new economic opportunities, especially in the service sector (Wennekers et al. 2003). On the level of consumer behavior, we agree with Wong (2004) that high uncertainty avoidance is likely to have a significant impact on repurchase intention because individuals with high uncertainty levels seek to minimize service defect potentials. Therefore, the uncertainty avoidance plays a very significant part in analyzing the purchase habits of targeting customers in order to meet their special needs.

Thirdly, the individualism and collectivism are associated with who can get the priority, the individual or the group. In Hofstede’s opinion (1991), employed persons in an individualist culture are expected to act according to their own interest, and work should be organized in such a way that this self-interest and the employer’s interest coincide, while in a collectivist culture an employer will hire a person who belongs to an in-group, which may not always coincide with his or her individual interest. Hofstede discovered that people in Western societies traditionally demonstrate ‘a high degree of individualism, whereas in Chinese societies, people demonstrate a high level of collectivism. (Bargiela-Chiappini, Harris 1997: 39) In individualist societies, the relationship between employers and employees is primarily conceived as business traction, a calculative relationship between buyers and sellers on a ‘labor market’. On the contrary, in the collectivist mind only natural persons are worthy of trust, and via these persons their friends and colleagues, but not impersonal legal entities like a company. (Hofstede 1991: 64, 67) Therefore, when dealing with companies coming from individual societies, we should jump into the business and accomplish the deal efficiently, while, when doing business with companies coming from collectivism cultures, we’d better build friendship with our partners to enhance the trust.

Then, comes to masculinity and femininity, which relates to the approach to which people aim to reach their target. The masculinity societies are more ambitious, which pay great attention to achievements and obtaining properties, while feminine societies are more sensitive, which focus on life quality and public relations. Therefore these two kinds of societies are skilled in different types of industries. Industrially developed masculine cultures have a competitive advantage in manufacturing, especially in large production of big and heavy equipment and in bulk chemistry. Contrary to this, feminine cultures have a relative advantage in service industries like consulting and transport, customer-specified manufacturing, and high-yield agriculture and biochemistry, which are related to live matters. (Hofstede 1991: 95) Thus, masculine society gives us an impression of utilitarian and ambitious character, and feminine society provides us an impression of sensitive character. According to some related experiments, it shows that masculine web documents rely heavily on facts, particularly numerical facts. Whereas most masculine documents rely on factual and numerical rhetoric signifiers, feminine documents tend to rely on intuition and feeling signifiers with a higher degree of flexibility and non-specificity (Zahedi, Van Pelt, Srite), which suggests that impersonal data is essential when we deal with masculine societies, however, when trading with feminine societies, we should pay attention to humanization and flexibility.

Last but not least, long-term orientation focuses on distinguishing the difference in thinking styles between the Eastern and Western societies. In Yeung and Tung’s opinion, members of East-Asian cultures such as Korea, Japan, China mainland, and Hong Kong tend to understand social interactions under the circumstance of the long-term. Their personal, social and business relationships are maintained and reinforced through continuous and long-term associations. On the contrary, in the West, social transactions of all types are more often seen as isolated occurrences. The objective of any transaction is to achieve optimal ―give and take in that particular transaction. An emphasis is placed on immediate gains from the interaction (Ryu, Cook 2005). Long term oriented traders aim to develop lifetime relations. Not only a transaction’s calculated pay-off counts; the resulting relation is of value by itself. Given the choice, a long term oriented trader would not neglect a proposal from a known relation in order to make a one more attractive one time deal with a stranger. Short term oriented traders are not interested to develop long lasting relations. They want to make attractive deals as soon as possible. Their preferences in partner selection depend on other dimensions of culture, but they may be interested in doing business with high status partners to show off. (Hofstede, Jonker, Verwaart)

However, culture is not static, and it changes due to some traumatic events and the change of people’s everyday life. It is known that traumatic events have been part of our mutual experience for years. In recent years, we have experienced the devastating effects of the terrorist attack world widely. Globally, the world has lived through the 2004 Tsunami in Asia and many other disasters. The traumatic experiences of war and drought have brought dramatic changes to patterns of sociocultural and family organization. Given human beings’ dependence on culture, its loss, or deprivation can become traumatic (Devereux, 1980; De Vries, 1996; Eisenbruch, 1991). These huge events have resulted in the undermining of the social safety, employed guarantees, and a crazy wave of patriotism, which influenced people’s attitudes and life styles. As Chaney (2002) stated, the uncertainties about how everyday life is changing are related to developments in a culture of mass entertainment and therefore distinctive to modern era.

In conclusion, culture with its great power that can create an unconscious matrix of ideas and images (Seel 2008) do have impacts on international business in a lot of aspects, like languages, religions, history, and social institutions, since every business function-managing a workforce, marketing output, purchasing supplies, dealing with regulators, securing funds-is subject to potential cultural problems. (Daniels, Radebaugh, Sullivan 2006: 75) On the other hand, culture change has been happened unconsciously due to the improvement of human’s civilization and popular immigration, which spur business people to keep pace of the change of culture to learn the latest trend in destination countries or societies.