CULTURAL CHALLENGES IN INTERNATIONAL BUSINESS

Culture is an important element embedded in society in a firm manner. By nature, culture

is known to be extremely complex and dynamic and is known to have a significant impact on

every single element, party, and authority of society. Culture is also known to be making a major

contribution to the success of business organizations. The performance of business activities at

the international level can contribute to providing new opportunities for business that can be

exploited to initiate growth and earn more amount of profit. However, it is important to note that

it is not an easy task and is affected by several challenges and risks that must be dealt with by the

business to be successful in the international market. One such challenge is the barriers of

culture.

Definition of Culture

In business, culture refers to an organization’s values, beliefs, goals, practices, behaviors,

and communication patterns that impact its business operations, decisions, and relationships.

Culture is essential in international business because it influences how multinational and cross-

cultural teams interact and collaborate. It dictates the business world’s values, etiquettes,

thinking patterns, decision-making, practices, and processes.

Three ways in which culture can cause challenges:

 Personal Challenges – the emotional challenges faced by individuals.

 Cognitive Challenges – the mental challenges faced by people.

 Pragmatic Challenges - the practical challenges faced by business.

1. Personal Challenges

When working in a multicultural environment or with another culture, the personal

challenges can be many.

When we come across cultural differences and are unable to recognize and deal with

them, our responses are emotional.

Anxiety and stress are common reactions for people new to working in a foreign

culture. When people find themselves confronted with difference, they feel

challenged and therefore build mental walls to help them cope.

For example, decision making may be impaired or people may withdraw from others,

creating even more distance between themselves and a solution.

Symptoms may also be physical, with people experiencing headaches, migraines,

exhaustion and burnout.

 The ‘Culture Shock’ experienced by many expatriates who move abroad is a very

good example of how cultural differences affect professionals on a personal level.

 It is a psychological disorientation that most people experience when they move

for an extended period of time into a culture markedly different from their own.

2. Cognitive Challenges

Working with people from different cultures can present considerable cognitive

challenges.

Cognitive challenges relate to how we think, process information and essentially how

we view the world.

Two simple examples of this are the concepts of time and relationships.

 Some cultures place a high value on time, others don’t. If you come from a culture

in which ‘time is money’ and you find yourself working with a culture in which it

isn’t, your cultural norms can result in you making bad decisions.

 Time conscious professionals can see lateness in other cultures as unprofessional

or even disrespectful. They don’t appreciate that in the culture they are working

with, punctuality is a much more nuanced concept.

 In reverse, those cultures that are a lot more flexible with their approach to time

can see the time-conscious professionals as rigid and materialistic, which ties in

with the value given to relationships.

 In some cultures, it's relationships before business whereas in others, business

 first. Usually, those cultures that are time conscious are less relationship

orientated.

3. Pragmatic Challenges

Doing business with people from different cultures can also affect the more

practical aspects of work.

All of us have specific ideas as to what is the good or bad way to conduct a job

interview, give a presentation or handle a customer complaint. Many of these do

not necessarily translate into other cultures, which can cause challenges.

 For example, the simple act of eye contact can cause several practical challenges.

What happens when you have a culture that sees eye contact as a sign of confidence

and engagement interact with one that sees eye contact as rude? If the two parties are

unaware of this there can be several consequences such as a lack of trust, poor

communication, a failed job interview or a confusing meeting.

 Management is another good example of where we see differing cultural expectations

cause challenges in the workplace. What happens when you have a manager who is

used to a more hands-off leadership style, whereby they leave their team to their job,

come into a country where the management style is much more authoritative and

directive? They can come across as weak and unqualified. And if it is was the other
 way around, the manager would be seen as a controlling leader who doesn’t trust their

team to do anything.

Various Elements of Culture

Language

Language is the “mirror” or expression of culture because it plays a vital role in

communication and provides insights into ones culture.

Linguistic proficiency is a great asset in international business because it facilitates cross-

cultural understanding.

At present the world has nearly 7,000 active languages, including over 2,000 in Africa

and Asia.

Language is a function of the environment. The concept and meaning of a word are not

universal, even though the word can be translated into another language.

 The Japanese word “muzukashii”, for example, can be variously translated as “difficult,”

“delicate,” or “I don’t want to discuss it,” but in business negotiations it usually means

“out of the question.”

Communication

Effective communication is essential to the success of any business venture, but it is particularly
critical when there is a real risk of your message getting “lost in translation.”

 Low-context cultures rely on elaborate verbal explanations, putting much emphasis on

spoken words.

They tend to be in northern Europe and North America, which place central

importance on the efficient delivery of verbal messages; speech should express

one’s ideas and thoughts as clearly, logically, and convincingly as possible.

Communication is direct and explicit, meaning is straightforward, i.e. no “beating

around the bush,” and agreements are concluded with specific, legal contracts.

 High-context culture emphasizes nonverbal messages and use communication as a means

to promote smooth, harmonious relationships.

Prefer an indirect, polite, “face-saving” style that emphasizes a mutual sense of

care and respect for others; careful not to embarrass or offend others.

In East Asian cultures, showing impatience, frustration, irritation, or anger

disrupts harmony and is considered rude and offensive.

In Japan, superiors are given favored seating as a show of respect, i.e., farthest

away from the entrance to the room.

Social structure

Social structure is the basic component of a social system. Relations, regulation, financial
 system, faith and group of all belong to the communal framework.

The notion of social stratification is that society is separated into different levels. The

different regions have the different social structures which urge business people to adopt

the corresponding business practices and strategies.

 In the Middle East, people think highly of relationships, such as family members, tribe

members, network members and close friends. Family and extended family are the

fundamental social unit throughout society and the dominant force in every relationship.

 The Middle Eastern area also has the strong hierarchy. Not only can the top-man make

the important decisions for everyone in the family or organization, but also his authority

cannot be challenged. The top man in the firm can control and manage everything.

 In America, people who come from different places with different background respect

each other and accept the diverse cultures and values. Hierarchy is not obvious in

America. People advocate individualism and emphasize individual freedom and personal

achievement. The American workers are not prone to accept the concept of administrative

privileges; the employees generally consider that the bosses are the same with me.

Therefore, in the United States, the relationships between employees and managers are

more equal and harmonious, which make employees achieve personal values.

Religion
Religion is something that influences all aspects of life up to the maximum extent. From

eating habits to clothing style and from internal feelings to once personality, religion

highly influences one’s lifestyle, personality and almost everything.

For example, Muslims female followers are easily recognized by their hijaab. Hijaab is

like scarf that is used to cover head, etc. in Muslims, exposing body, hair and other parts

is not allowed at all. Similarly Christians can be identified as most of them wear cross

sign lockets.

Christianity (including Roman Catholic, Protestant and Eastern Orthodox), Islam,

Hinduism, and Confucianism are the four dominant religions in world. Religion affects its

followers on work, consumption, attitude for life and individual responsibility.

For example, the Protestant ethic emphasizes individual hard work, frugality and

achievement as ways of glorifying God. The Protestant ethic insists people should

possess the virtues of having high savings rates, constant struggling for efficiency and

reinvestment of profits to improve future productivity, which helps to generate the

development of capitalism economy.

For international business, different religions have their own customs and rules according

to different countries. The business people should respect these religions. Due to religious

differences, these three cases commonly happen in the international business:

 female status
  staff’s religious needs

 misunderstanding on God.

 In Saudi Arabia as an example, 99 percent population of this country is Muslim. Saudi

religious tradition is that the female cannot be seen in public. Women should be covered

from head to foot and cannot go out in their own. Of course, they are not allowed to

work. Therefore, Female executives of Western firms have to face the great obstacle in

this place. People definitely do not work with women. The different religions have the

different view on the role of women.

Values/Attitudes

Values are people’s views about what is right and wrong and what is important in life.

Values relate to moral principles and individuals’ responsibilities and duties.

Attitudes relate to people’s actions, feelings and thoughts for work, life and society.

In the international business, the differences of values and attitudes can determine

whether the foreign companies are accepted by the local markets and influence

companies’ management methods. Therefore, values and attitudes impact international

business on such factors as ethics and national relationships.

Business ethics

 Nowadays, corporations increasingly enter into overseas markets, but suddenly

finding themselves confronted with diverse ethical issues. Moral values, which are

taken for granted in the home market, may cause some questions as soon as

corporations engage in the foreign markets.

 For example, attitudes toward race and gender in the Western countries may

significantly differ from those in the Middle Eastern countries.

 Similarly, in developed countries, the law strictly regulates employees’ working hours

and relevant wages, whilst in some developing countries; employees always work

beyond their working hours and do not get the relevant wages.

 Furthermore, the Europeans consider using child labor as completely unethical,

whilst child labor is a very common phenomenon in some Asian countries. As a

businessman, it is tough to judge the right and wrong of these different values and

attitudes. Businessman should adjust to the rapidly changing markets and insist on the

basic and essential business principles.

National Relationships

 The history between two nations may influence the international business. Due to

historical reasons such as wars, aggression and abruption, the domestic citizens
 boycott the products from that countries which they dislike.

 For example, Japan once invaded South Korea many years ago, which leads to

Korean boycott Japanese companies and products. Many old and traditional citizens

believe that buying Japanese products is unpatriotic. These values and attitude are

formed for a long time which seriously influences the sale and competitive

competencies.

 The relationships between two governments also may impact international business. If

two governments’ relationship becomes friendly and cooperative, the business

between two countries is more convenient and mutually advantageous. Citizens are

more willing to accept and trust these companies.

 If the governments become strained and confrontational, the development of business

will be limited. People are unwilling to buy their products.

 For example, a few years ago, China and France had some conflicts. France

intervened in the internal affairs of China, which made Chinese people so angry. They

boycotted Carrefour in China, which made Carrefour suffer the crisis. Therefore, the

external factors, such as history, politics may impact individuals’ values and attitudes

and then change the views on international business.