Cultural dynamics in international business

More often than not, international businesses take into consideration such factors which are likely to impact their operations positively in countries where they wish to establish themselves outside their home states.

Overwhelmingly, such factors would be the impact of the prevailing political, economic and legal systems in the targeted host state on the benefits, risks and the cost of doing business.

Such factors informing the investment decisions by international businesses outside their home states especially in this era of globalisation would be economic deregulation, interplay of market forces, the efficient allocation of resources, non-intrusion by governments with business operations, equitable and fair tax systems, the profit incentive through privatisation of resources, transparent legal systems, protection of intellectual property rights, a tranquil labour environment etc.

With the certainty of these conditions enumerated above being guaranteed as an anchor for business efficiency, the ultimate consideration for an international business to navigate in its decision to establish itself outside its home state would be the understanding of the concept of “cross cultural literacy” in business which is a necessary tool kit to ensure the success of the international business outside its home state.

Culture as an imperative for business success

Scholars of international business and management have stated the imperative of the total understanding of the culture of a country where an international business seeks to operate as a guarantee for its success.

It is therefore imperative for the international business to adapt to the culture of its host state. In Ghana, an international business which intends to establish here should regard it as a matter of necessity to inform the traditional authourity within whose jurisdiction it intends to establish itself “to seek its blessings” as it were before formalising its operations in the jurisdiction of the traditional authourity.

It may also not be out of place in conformity with local culture for a business to scale down its operations substantially on a particular day because majority of the staff may be attending the funeral of a dead colleague which may have been fixed by his family on a weekday as is often the case.

What is culture?

Quite an early definition of culture has been stated by Edward Tylor as “that complex whole which includes knowledge, belief, art, morals, law, custom and other capabilities acquired by man as a member of society.”

Another important restatement of culture is provided by the Dutch psychologist Geert Hofstede as, the “collective programming of the mind which distinguishes the members of one human group from another. Culture in this sense includes systems of values; and values are among the building blocks of culture.” Profs Charles Hill and Thomas Hult, acclaimed scholars of management and international business, state their view of culture “as a system of values and norms that are shared among a group of people and that when taken together constitute a design for living.”

Cultural differences across countries

As culture is not homogenous and varies from country to country, it is important to segment the varieties across many countries for an assessment of their impact on business success. For example, a Japanese worker is traditionally considered to be overly patronising regarding his commitments to his work place. Thus, he may be willing to spend extra time including his weekends and out of hours time in doing extra work for the business where he is employed.

In America, the business culture emphasises the delivery of time bound assignments as a way of showing the importance of the duty to be performed. American business culture is also deeply rooted in keeping to time schedules for business appointments and consider delays to starting meetings as offensive. American business culture also subscribes to taking business decisions quite hurriedly rather than through prolonged and long drawn out negotiation sessions.

This may be offensive in other cultures particularly middle-eastern cultures and may be considered as overly demanding and also as a way of piling pressure to wrap up business deals.

In some Asian cultures, a negotiator who pulls his nose suddenly during a business session in response to a proposal is deemed to be lying since it is held in those cultures that a person might be lying when he suddenly pulls his nose at a business negotiation session. This is for the reason that it is believed that hot blood suddenly runs through the nose of a person who might be lying.

Some peculiar business culture in Ghana

An observation of the Ghanaian business terrain reveals that, although Ghana is gaining increased importance in business activities, business efficacy is yet to reach the level of the advanced countries.

Among the factors which do not make for a conducive business environment in Ghana are the postponement or cancellation of business appointments at short notice without prior information, no reply to emails and enquiries for information, long waiting times for start of meetings especially with high ranking political leaders, lack of commitment to implementation of decisions arrived at business meetings etc.

While these practices could be offensive in certain cultures, in Ghana, the longevity of their occurrences have come to be accepted as normal and part of the prevailing business culture.

Some other peculiar practices which may occur in business operations in Ghana and elsewhere may be the lack of long-term commitment of employees future to their workplaces. In this situation, employees may not consider their fortunes as tied to the fortunes of the business where they are employed and may be “journey men,” being on the lookout for alternative employment avenues and also open to being poached by other competitors of the business.

In societies which are bound by deep bonds of collectivism among different strata of the society, it could be difficult for disciplinary measures to be enforced at the workplace against errant workers particularly those in the lower rungs.

In such situations, employees could band together in support of an errant worker who has infringed the workplace regulations and is due to have the prescribed sanctions applied against him. Often, the threat of collective action by employees in stopping work in support of the errant worker disables management in applying the requisite sanction against the employee.

Cultural influences on business

It has been established that the cultural practices prevalent in the respective countries of operation of an international business affects the value systems at each operational base of the business.

Consequently, the management of the business will have to tailor its business processes and practices in direct response to the prevailing values at each unit of operations. Geert Hofstede (1928-2020) a Dutch psychologist was commissioned by IBM to study the relationship between culture and workplace values.

His findings were categorised as follows; power distance, individualism versus collectivism, uncertainty avoidance, masculinity versus feminity, long-term versus short term orientation.

Hofstede characterised societies with power distance relations as those societies with inequality in physical and intellectual capabilities. He claimed that such societies witnessed inequalities in power and wealth over time. He related individualism to prevalent cultures in societies where the interest of the individual is paramount as opposed to countries with collectivism with tightly knit bonds among individuals. He emphasised collectivism as prevalent in countries dominated by extended family relationships with each person bound by the interest of his fellow family member.

As such, collective interests were protected as a whole. Cultures which were characterised as uncertainty avoidance pertained in such societies where people regarded life as uncertain and hence always laid emphasis on protecting themselves against such uncertainties by emphasising on employment security, certainty of career progression, need for adherence to rules and regulations, less emotional resistance to change and a readiness to take risks.

Hofstede characterised cultures with long-term versus short-term orientation as where citizens accepted delayed gratification of material needs, persistence, positive attitude towards time, respect for tradition, ordering by status, reciprocation of gifts and favours etc.

Conclusion

It must be emphasised that Hofstede’s categorisations, though apposite in providing guidance for an international business in navigating the cultural nuances and dilemmas in its bid to expand its operations outside its home base, the success of an international business outside its home base is not wholly dependent on its successful adaptation of the cultural values of its host state.

As the bounds of globalisation increase in the current world economic setting, it is imperative for countries which are desirous in expanding the reach of international businesses into their domains to focus more attention on such things like reform of legal systems, protection of intellectual property rights, deregulation, ensuring functional market economies etc.

The writer is a lawyer with specialisation in international business law.

Email:   joseph.a@akyeampongandco.com