In global trade, the buyer or seller with the best understanding of an emerging business market's culture often negotiates the best deal.

Culture is acquired knowledge that people use to interpret experiences and generate social behavior. This knowledge forms values, creates attitudes and influences how people act.

Cultural behavior is shaped by the norms and values of a given society, which, in turn, are determined by that culture’s basic, implicit assumptions.

Culture is:

• learned not inherited
• shared among group members
• adaptive based on the human capacity to change
• trans-generationally passed from one generation to the next
• patterned since a change in one component affects another.

Professor Geert Hofstede® has developed a set of cultural factors that help explain why people from different countries sometimes behave differently.

Power Distance

Some cultures are more accepting of an unequal distribution of power. Societies with a comparatively low power distance like the U.S. and Canada prefer flatter, decentralized organizational structures and therefore a smaller proportion of supervisors. Other societies, like those in Asia and Latin America, are more comfortable with a high power distance. Taller, centralized organizational structures with a large proportion of supervisory employees are common in countries like Brazil, India and the Philippines.

Uncertainty Avoidance

Certain cultures feel threatened by ambiguous situations. To mitigate uncertainty, societies enforce strict laws and rules. Cultures with a high need for security feature managers who take less risks, have more written rules and experience lower labour turnover. Colombia, Germany, Japan and Spain are examples of risk-averse cultures.

Cultures with a low need for security include Britain and Denmark. In such countries, managers take more risks, have fewer written rules, offer less structural activities and experience higher labour turnover.

Individualism

Individualism is the tendency of people to look after themselves and their immediate family only. In contrast, collectivism means that group members look after each other in exchange for loyalty.

In general, wealthy countries like America and Canada show more individual initiatives and bestow promotions based on market value. Poorer countries like China (in per capita terms) focus more on collective efforts with promotion based on seniority.

Masculinity

Masculinity is merely a label for a cultural characteristic in which the dominant values in a high-masculine society are success, money and material possessions.

According to this cultural dimension, Japan is a high-masculine country in which there is:

• Greater importance on earnings
• Recognition, advancement and challenge
• High job stress
• Emphasis on economic growth over environment conservation
• More control since managers believe employees dislike work
• Favour towards large-scale enterprise
• Encouragement for independent decision-making.

Norway is low-masculine nation since the dominant values in that society are caring for others and quality of life.

In Norway there is:

• Greater importance on cooperation
• A friendly atmosphere
• Employment security
• Group decision-making
• Less stressful workplace
• Employee freedoms bestowed by managers
• Favour towards small-scale enterprise
• More conservation of the environment.

Cultural Handshakes

Geert Hofstede® has developed theoretical models by country that can help with international trade negotiations.

Here’s a practical example. Deal-makers from Western countries typically work toward a target of mutual understanding and agreement then shake hands when that agreement is reached. That’s a signal that negotiations are over and work on the international deal can start.

If the deal is with a company from a Middle Eastern country, however, shaking hands is a cultural signal that serious negotiations are just starting. Westerners must also be aware that shaking hands with a Middle Eastern businesswoman is not allowed.

To be successful in international trade, even large multinationals like Wal-Mart and Starbucks must respect the distinct cultural characteristics of other nations.

References

This article presents independent insights based on research from www.geert-hofstede.com and International Management, Culture, Strategy and Behavior (6th edition, Hodgetts-Luthans-DOH).