Culture’s Impact on Business Practices

Business Customs Data

• CountryWatch Data Base– People– Cultural Etiquette– Travel Guide

• globalEdge web site maintained by Michigan State University Ciber Center at http://globaledge.msu.edu– Click on culture– Click on Global Road Warrior for following info:

• Business Culture• The Businesswoman• Travel Essentials• Etc.

Business Customs Data (cont’d.)

• globalEdge web site maintained by Michigan State University Ciber Center at http://globaledge.msu.edu– Click on culture– Click on Executive Planet for following info:

• Let’s Make a Deal• Prosperous Entertaining• Appointment Alert• Gift Giving• First Name or Title• Public Behavior• Business Dress• Conversation

What is Adaptation?

Understanding of cultural differences and willingness to accommodate those can cause misunderstanding

1. Norms – Rules that dictate what is right or wrong, acceptable or unacceptable in a society

– Imperatives - Norms referring to what individuals must or must not do in a culture

• Guanxi (China), Ningen Kankei (Japanese, Compadre (Latin America) Personal relationships key to successful business dealings

• Germany, business relationships formal, address by title and last name

2. Adiaphoras – Customs that a foreign national may engage in but is not necessarily expected to do so– E.g. eating with

chopsticks, kissing a woman’s hand

3. Exclusives – Norms that refer to activities that are appropriate only for locals from which individuals from a foreign country are excluded

– Christian trying to act like a Muslim

Importance of Language

1. Explicit (words communicated)

2. Implicit (gestures, tones, unspoken, context)

What language do they speak in Australia? Or maybe you should rent Crocodile Dundee

• Footy?• Barbie? “Let’s go to the beach and have a barbie.”• Cuppa? “What you need is a good cuppa.”• Chips?• Concession?• Chemist?• The Bush?• Fine?• Long black?

Context - Categorization of Culture

• Low Context - – messages are explicit, verbally explicit– Gets down to business quickly

• High Context– Communication depends on context, non-

verbal cues, read between the lines– Person’s word is his bond

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Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Contextual Background of Various Countries

High Context Implicit

Japanese

Arabian

Latin American

Spanish

Italian

English (UK)

French

North American (US)

Scandinavian

German

SwissLow Context Explicit

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Irwin/McGraw-Hill

High and Low-Context Cultures

Factor High Context Low Context

Lawyers Less important Very important

A person’s word Is his bond “Get it in writing”

Space People breathe on each other

People maintain a bubble private space

Negotiations Lengthy Proceed quickly

Time Polychronic Everything must be dealt with in its own time

Monchronic “one thing at a time, Linear; time is money”

Importance of Time

• Monochronic – One thing at a time – Promptness– Don’t waste time

• Never underestimate the importance of punctuality in German business culture. Arriving merely two or three minutes late is a grave insult, especially if you are a subordinate.

Make your appointments well in advance. Give at least one or two weeks’ notice for an appointment made by telephone; allow at least a month for an appointment made by mail. If you don’t have much preparation time, it's sometimes possible to arrange for a brief, introductory meeting within a few days' notice.

Importance of Time

• Polychronic time– More emphasis on

building relationship than holding to a schedule

– Greater flexibility in defining being late

– “Wait and see what develops”

Italy Store Hours

7 a.m. – 1 p.m. And 4 p.m. – 8 p.m.

? – 1 p.m. And 5:30 – 8 p.m.

Business Ethics

• Bribery– Extortion (Payments forced by someone

in authority)– Subornation (Giving larger sums of money

to entice an official to commit an illegal act)

– Lubrication (Relatively small sums of cash, gift or service to a low-ranking official”

U.S. Foreign Corrupt Practices Act“When in doubt, Don’t.”

US FCPA 1977 “makes illegal for companies and their representatives to bribe government officials and other politicians or candidates to political office. The Act also prohibits payment to third parties when the company has good reason to assume that part of the payment is being used for bribery.”

Omnibus Trade and Competitiveness Act 1988

• OTCA Among other ways to make U.S. more competitive, small payments O.K. to encourage officials to complete routine government actions such as processing papers, stamping visas, and scheduling inspections.