13.3 Cross-Cultural Literacy

Companies conducting business internationally fail to recognize the importance of cultural literacy. To them, all businesses across the globe are the same because they share the same goal – making a profit. They tend to ignore the fact that business practices that are acceptable in one country may not be acceptable in another country. They underestimate the impact of these different practices on their company’s profitability. A little effort into learning the new market’s cultural values and business etiquette can help organizations present themselves in the best way. To better understand differences in cultures, organizations can refer to cultural dimensions theory, which was developed by a Dutch social psychologist, Geert Hofstede.

Cultural Dimensions Theory

Geert Hofstede divides cultural differences across countries into six dimensions: power-distance index, collectivism vs. individualism, uncertainty avoidance index, femininity vs. masculinity, short-term vs. long-term orientation, and restraint vs. indulgence. Hofstede’s cultural dimensions are used in multiple areas, including business dealings and communication.

• Power Distance Index – explains to what extent members of society tolerate power and inequality. A high-power index describes a culture where inequality and power differences are accepted and there is high respect for authority. A low power index, on the other hand, indicates that a culture believes in power distribution and participatory decision-making. (Nickerson, 2023)
• Collectivism vs. Individualism – describes whether a social basic unit is “individual” or “group.” In a society where the basic social unit is an individual, the emphasis is made on individual rights and achievements. However, a society based on collectivism places importance on the well-being of a group and values loyalty and relationships. (Pitt Law Online Blog, 2023)
• Uncertainty Avoidance Index – shows how uncertainties and unusual situations are dealt with by the members of the society. A high certainty avoidance index indicates a low tolerance for risk and uncertainty. These societies implement strict rules and regulations to reduce uncertainty and risk. A low certainty avoidance index indicates that the tolerance for risk and uncertainty is high. Individuals in these societies embrace changes and uncertainties and feel comfortable with unstructured situations.
• Femininity vs. Masculinity – this index refers to gender roles and the extent to which a society values masculine and feminine roles. The high feminine index shows traditional feminine roles are more valued and will most likely have better maternity benefits and childcare services. Meanwhile, the low femininity index indicates female representation in leadership roles.
• Short-term vs. Long-term Orientation – describes the extent to which a society plans for the future. A long-term-oriented society values sustainable growth, savings, and long-term achievements over short-term success. Short-term-oriented society focuses more on the present than the future, emphasizing quick results and short-term success.
• Restraint vs. Indulgence – refers to the extent to which a society tends to fulfill its desires. Indulgence indicates that a society enjoys life and is more likely to spend money on luxury. Restraint indicates that members of society are more likely to limit themselves to absolute necessities and spend money on more practical needs.

Issues To Address in Cultural Literacy

Differences in Communication

Language and verbal communication in international business can be challenging to overcome; however, hiring a translator or interpreter can resolve the issue.

What is more important in communication is the non-verbal language, which is harder to determine. For example, business professionals in the Netherlands prefer to communicate only the essentials, while Italians like to build relationships and have friendly communication. Some nations like direct eye contact during business meetings, while others find direct eye contact intimidating. Other examples of non-verbal communication include physical distance, such as bowing or speaking closely (Pitt Law Online Blog, 2023).

Business Etiquette

Before meeting with their business counterparts from another country, it is recommended that organizations do some research about basic business etiquette and be as prepared as possible. For example, when meeting with business professionals from the U.S. or Canada, a firm handshake, good eye contact and keeping a proper distance are in order. On the other hand, if the meeting is with business leaders from Russia or Brazil, for example, be prepared for at least three kisses on the cheeks. Being considerate of workdays and holidays is also important when scheduling business meetings. Different countries have different work weeks. For example, most traditionally Christian countries have Saturdays and Sundays as non-working days. Still, in Judaism, the sabbath falls on Fridays and Saturdays, so the “weekend” days in Israel are different.

Negotiation

As the most delicate part of business, negotiation is an art and requires strong social skills, even when dealing with people from the same culture. Adding cultural differences can make it even more difficult. However, studying other cultures, especially applying Hofstede’s Cultural Dimensions Theory, can be very handy when preparing for negotiation with other countries’ business parties.

Managing Culturally Diverse Teams

With the globalization of production and services and companies operating around the world, having to manage culturally diverse teams is inevitable.

Diversity is great for bringing different perspectives and creative ideas to the project and can help solve the problem faster and better; however, managing diverse teams can also be challenging. (Taras et al., 2021). Acknowledging differences, making an effort to listen to and understand team members, showing respect and empathy, providing clear expectations right from the beginning and being transparent in explaining those expectations are some of the strategies managers use to address challenges associated with diverse teams (Marzullo, 2022; Brett, Behfar & Kern, 2006).

Organizations with managers and workers who have high cross-cultural literacy are more agile. These organizations can quickly and easily adapt to different processes, capture new opportunities, and respond to changes across diverse markets.

References

Brett, J.M., Behfar, K.J. & Kern, M. (2006). Managing multicultural teams. Harvard Business Review. https://hbr.org/2006/11/managing-multicultural-teams

Marzullo, D. (2022, June 16). How to respect cultural differences when managing a global team. Trinet. https://www.trinet.com/insights/how-to-respect-cultural-differences-when-managing-a-global-team

Nickerson, C. (2023, October 24). Hofstede’s cultural dimensions theory & examples. Simply Psychology. https://www.simplypsychology.org/hofstedes-cultural-dimensions-theory.html

Pitt Law Online Blog (2023, August 22). Cultural differences in international business. University of Pittsburgh School of Law. https://online.law.pitt.edu/blog/cultural-differences-in-international-business

Taras, V., Baack, D., Caprar, D., Jiménez, A. & Froese, F. (2021, June 9). Research: How cultural differences can impact global teams. Harvard Business Review. https://hbr.org/2021/06/research-how-cultural-differences-can-impact-global-teams