HOW DOES CULTURE AFFECT INTERNATIONAL BUSINESS?
Clarke Ricks School of Business,
Liberty University
BUSI 690: Policy and Strategy in Global Competition
Dr. Hicks
April 30, 2022
HOW DOES CULTURE AFFECT INTERNATIONAL BUSINESS?
In a globalized economy, cultural sensitivity is essential. As more companies grow, and the
global marketplace becomes more accessible for small businesses, multinational and cross-
cultural teams are becoming more common. This means that it is crucial, now more than ever,
for businesses to understand the culture of their foreign market if they wish to succeed
internationally.
Culture is the ideas, customs, and social behavior of a particular person or society. But
how does culture affect international business?
In a business context, culture relates to what behavior is common and accepted
professionally in one location, compared to another. What may be acceptable business practice
in one country, may be very different from the approach that is used by businesses overseas.
Therefore, recognizing how culture can affect international business is something that should
be understood in order to avoid misunderstandings between colleagues and clients, and also to
make sure that businesses are presenting themselves to their new market in the best way they
can.
Communication plays an important role in international business
Communication
Communication plays an important role in international business, and sometimes effective
communication can be the difference between succeeding or failing in a new market. Effective
communication is particularly important for international businesses as there is a risk of your
messages getting ‘lost in translation’. There are several things that need to be considered when
looking at how effective your business’ communication is at an international level.
The first thing that should be considered when looking into communication is any
language barriers that may hinder the communication between you and your new market.
However, this goes deeper than just the language that is used to communicate, it’show the
messages are conveyed that’s important. Language barriers not only relate to people speaking
different languages, but also to the tone used in those languages. For example, in countries like
the US or Germany, it is common for people to speak loudly and be more assertive when
sharing ideas amongst colleagues. However, in countries like Japan people typically speak more
softly and have a more passive tone when making suggestions to colleagues.
Another thing to consider are the basic customs, mannerisms and gestures that are
commonly accepted in that culture. Behaviour that might be commonplace in one culture could
be unusual or potentially offensive to a client or colleague overseas. Professor Jean
Vanhoegaerden gives the example of a business handshake being the norm in European and US
cultures, but in some Middle Eastern cultures, handshakes are seen differently. For example in
some cultures, handshakes must involve the right hand only as the left hand is seen to be less
hygienic.
Businesses who are looking to operate internationally need to be aware of language
barriers, tone and body language. Cross-cultural communication can be a challenge, but
approaching cultural differences with sensitivity, openness, and curiosity can help businesses
succeed internationally.
Different cultures have different attitudes to organisational structure
Attitude
Businesses also need to be aware that different cultures have different attitudes towards
business.
Scandinavian countries such as Sweden emphasise social equality and therefore they tend
to have a relatively flat organisational hierarchy. This relates to their informal approach to
communication and cooperation normally at the heart of their organisations. In Japan, their
traditional values of relative status and respect for seniority are reflected in their organisations
and there is a very clear organisational structure. This means that senior management
command respect at all times and expect a level of formality from junior members of their
teams.
These different cultural attitudes towards management can, therefore, make it difficult to
define roles in multinational teams. Therefore, it is important for businesses to be aware of
their target market’s cultural approach towards the organisational structure.
Businesses need to be aware of workplace etiquette when working internationally
Etiquette
Workplace etiquette is something else that businesses need to be aware of if they are
working internationally.
The formality of address is another key thing to consider within international businesses
when communicating with colleagues and clients from different cultures. Are they comfortable
with being approached on a first-name basis or do they prefer titles and surnames? Asian
countries such as China seem to prefer the latter, whereas Americans usually use first names.
Things such as formality of address may not seem that important, but if you get off on the
wrong foot with a potential foreign client then that could ruin your chances of ever working
with them in the future. Therefore, it is important for businesses to know that their level of
formality will differ depending on the culture of the person they’re communicating with.
Workplace etiquette in some cultures also means they have a different approach towards
workplace confrontation, rules and regulations, and working hours. While some may consider
working long hours a sign of commitment and achievement, others may consider these extra
hours a demonstration of a lack of efficiency or the lack of prioritisation of family or personal
time.
