02 Mai 2018
What is the business value of having intercultural competence?
To which degree do you agree with these statements?
- All over the world, wherever you go, people are basically the same.
- Globalization means that there is now only one business culture.
- When in Rome, do as the Romans do.
- I don´t think about cultural differences – I treat everyone I meet as an individual.
- Cultural stereotypes are a dangerous thing.
- Business is business all over the world – cultural awareness is not that important.
How you answer these questions reflects the value you place in intercultural competence in business and this will be the subject of this Blog. The personal benefits of having intercultural competence was the subject of my previous post.
Let us start with a working definition. Cultural competence in business requires that organizations adopt a set of rules, attitudes and behaviors that will enable the staff to work effectively cross-culturally.
It should be obvious that organizations are most interested in adopting intercultural skills for the direct benefits they bring—in particular, the economic ones. Some of these are:
- Keeping teams functioning efficiently
- Enhancing public reputation
- Bringing new clients
- Building trust with clients
- Helping in communication with overseas partners
- Facilitating work with diverse colleagues
- Increasing productivity
- Increasing sales
On the other hand, a lack of these intercultural skills can create:
- Miscommunication and conflict within teams
- Damage to the global reputation
- Loss of clients
- Cultural insensitivity to clients/partners overseas
- Project mistakes
- Law suits
Culture-Based Negotiation Styles
JThe more interculturally savvy we are, the more hesitant we may be about making generalizations that apply universally – not only to groups that are different to ours, but even those we belong to and are more familiar with. Even so, we are forced to make generalizations to be able to communicate at all.
These cultural generalizations are helpful as long as we are aware that they are only guides that apply within many contextual factors including time, setting, situation, stakes, the history between the parties, nature of the issue, individual preferences, interpersonal dynamics and mood.
Factors to be weighted in negotiations within different cultures:
How do these factors translate specifically in an international business negotiation process? These are some possible scenarios:
- Goal – Asians value long-term relationships, whereas western negotiators´ main objective is to get the contract signed.
- Protocol – Asians value etiquette and respectful manners. The British and Germans, for example, are more formal and follow a proper protocol.
- Time – How we deal with this factor can be summarized in the saying: “Western cultures have the watches and the others have the time.”
- Risk propensity – Even among Asians there are differences: Japanese are less risk adverse than Thais who are willing to be more flexible with rules and accept change.
- Groups versus individuals – In decision making, a more collective culture places emphasis on group priorities. An individual-oriented culture is more independent and assertive. Again, Thai culture is group-oriented, but hierarchical; decisions are made by the top managers. Japanese negotiators rely on consensus.
- Nature of agreements – Asians and other cultures respect contracts, but personal commitment has more value. Germans are detail-oriented and prefer specific provisions.
For one negotiator, time is money; for another one, the slower the negotiations, the better and more trust is gained by both parties.
So, should we aim first at obtaining a contract or developing a relationship?. To play safe, it is obviously better to start with a formal approach. If the situations allows it, then we can assume an informal style.
Should we go top down or bottom up? Americans initially prefer to show everything that is possible to achieve by both parties provided that the conditions are right, The Japanese, among others, prefer to start working on small gains first.
Is intercultural competence only for “business softies”?
A friend of mine who was a well-travelled and somewhat successful international trader told me that the whole emphasis on intercultural competence was totally overrated. He believed that “if both parties wanted a deal, they would have it no matter what.” He seemed to forget the countless hours and money he spent on avoidable litigation with some of his business partners because he had not cared to spend much time developing relationships built on trust and cultural understanding.
I asked him innocently if he was for a “Win/Win or Win/Lose” approach. He responded bluntly: I am for “Win/Whatever.” In other words, as long as he did the winning, he was not interested in knowing what happened to the other party. So much for wanting to develop intercultural competence and long-lasting Win/Win business partnerships!
It is extremely difficult to measure the business losses incurred due to a lack of intercultural skills. Pragmatically put and leaving ethical considerations aside, it can at least serve as an insurance policy against possible business losses.
Regardless of whether our professed attitudes towards cultural differences really match our actual behavior, we can all benefit by improving our cross-cultural effectiveness in business and our own personal lives.
What other business benefits do you see in having intercultural competence?