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2. Problems occurring in International Business

What are some basic cultural problems encountered in doing international business? To start off with, it is necessary to adopt the attitude that no point of view, especially one’s own, is the norm everywhere. The “cultural glasses” that were referred to earlier must be left on the table so that each situation can be approached without assumptions and expectations. International business people will be confronted with different kinds of thinking and behavior in all elements of work: communication, selling strategies, and marketing, to name a few. The clearer the view, the more effective results will be.

2.1 The importance of time

The first attitude that could become a problem to deal with is the concept of time in different cultures. Although time is universal, the way cultures manipulate it to fit their lifestyle (or vice versa) is very interesting to examine. Let’s take a look at some examples.

The American businessman is always in a hurry, rushing from one appointment to the next, constantly chasing the clock. Copeland and Griggs speak of an American clock that “runs” and a clock that “walks” in other countries. Time is a valuable good and is seen as a limited resource, therefore one has to try to save and not waste it - time is money. A relentless clock ticks in the American ear that is guaranteeing a constant awareness of how much time has already been spent. For this reason the typical American tries to work as productively as possible, strictly organizing all activities on a daily calendar and working by a structured agenda in each meeting. Punctuality considering meetings, job interviews or any kind of sales activity is therefore extremely important. The meaning of being “on time” is also to be underlined, because it can be a form of communication as well. Being early can leave the impression that the visitor is anxious or overly eager and has too much spare time. Being late or keeping someone waiting would be considered as lack of interest or disrespect. Wasting precious time with too much small talk in the beginning of a meeting is also something that an American would try to avoid. After a short period of introductions and exchange of small talk, the meeting will turn straight to the topic and purpose of the visit.

In Asia and the Middle East, the first step of a meeting is an extended social acquaintance. This period can take several hours or even days and consists of drinking tea or coffee together, while observing the business partner. The objective is often not even mentioned during this time. An American is likely to assess this as “doing nothing” or a “waste of time”, whereas an Arab would consider it as socializing and “doing something”. The lack of obvious progress towards the objective should not be misinterpreted, because often, important steps towards credibility and rapport are established during apparently meaningless conversations. Future business is often based on those foundations.

The Germans’ attitude is comparable to the Americans’. Germans are known to always be punctual and disciplined at work and in private life. One should arrive at a meeting 5 minutes before the scheduled time, because the most important decisions often take place then. Following a strict timetable, appointments are scheduled at specifically arranged times and meetings are structured through clear agendas. This strict concept of time is often also found in leisure time. Activities have a certain routine and usually take place regularly. This is especially true with after-work hours, holidays and vacations, which are observed with religious importance. To disturb a German who is on vacation for the sake of work that needs to be done is an absolute no-go.

When doing business abroad, working hours, opening hours and public holidays should be generally considered, because they can influence the information and workflow. Every country has its own national holidays – official and unofficial – for example, the 2^nd Christmas Day in Germany, the Friday after Thanksgiving in the USA, and the Chinese New Year.

2.2 Conduct and communication

Values and behaviors are deeply rooted in every culture and therefore have to be treated with great sensitivity. They are very important in certain groups. Americans are usually concerned with objective facts and pay less attention to sensitive issues, such as manners, gestures or greeting rituals. The focus is on the objective, which means that it’s not the way a goal is achieve but the fact that it is reached. “A good loser is a loser” is an expression, which clarifies the American attitude regarding their “goal-orientation”.

In Japan or in China, “actions are judged by the manner in which they are performed”. It is less important to finally accomplish the task, as long as the method used was worthy of merit. Grace and honor are keywords symbolizing the concept of “face-saving”, which is important in every aspect of life. Being in control of one’s emotions is something that is more particular to the Japanese than other Asians. This self-control, which the Japanese see as a virtue, is interpreted by Westerners as coldness or lack of interest, when the truth could be quite the opposite. Physical space and contact are also issues that may cause problems in international interactions. Americans hug or slap their business partners on their backs as a form of friendly greeting. In European and Middle Eastern societies, “kissing” the partner’s cheeks (sometimes more than once) is a common form of greeting, a gesture that would shock an American or Asian. Personal physical space also varies according to culture, as do sitting/standing according to hierarchy, which can have huge significance in one and absolutely no significance in another.

Many other problems that can be encountered fall into the category of communication and conduct. These points will be covered in more detail later in the book.

2.3 Work attitudes and motivation

Many years ago, people had to work in order to survive. These days, putting food on the table is only one of many reasons for people to work. In some cultures, the work one does defines the person. In the U.S., for example, “What do you do?” is a question that quickly follows initial exchange of names. Americans would find it hard to carry on a conversation without knowing what the other person does for a living. Being a land of immigrants who arrived with very little materialistic fortune, it is not hard to understand that the amount of money a person makes equals accomplishment and prestige in society. While other motivational factors do play a role in the work attitude of Americans, financial reward can be considered the foremost motivator for this culture.

In contrast, there are many cultures in the world that do not value the concept of hard work and its accompanying financial reward. For example, South American cultures value time with family and friends highly and would rather work less and sacrifice pay to socialize. They prefer being paid by the hour so that they can choose their working hours according to their needs.In Japan, where the company is as important as family, motivation is derived from pride of belonging to a certain company. Here, it is not so much the position one holds or the salary one receives, dedication and seniority are respected and the main motivators for a job to be done well.

Germans have a strong need for security. A strong driving motivator for them is the need to save money for lasting investments, such as a house, and a large nest egg for their retirement.

While Germans yearn for the good life as Americans do, they are not driven by the immigrant work ethic, nor do they have the competitive atmosphere that Americans live in. The social security that German workers enjoy gives them the luxury of job security, long vacations, less working hours. The work attitude of the Germans can be seen more clearly in the following graph that shows the constantly decreasing number of working hours from 1990 to 2010.

In Germany, it would be futile to motivate workers with higher pay as in the U.S., or demand longer hours for the sake of stronger ties to the company as in Japan. To learn and understand what work means to people of different cultures means knowing how and what motivates them.

2.4 Individualism vs. collectivism

Although individuals have preferences about whether they like to work alone or in groups, a stronger tendency for this preference can be seen according to cultures as well. The USA is a country in which individualism is very important, meaning independence from the organization and having the capability to develop one’s personal time with a certain amount of freedom. Self-actualization is an objective that strongly motivates employees, because they usually prefer to be challenged. Americans just want “to do their own thing”. It can also be described as “social Darwinism”, which signifies the “survival of the fittest”.

Japan, on the other hand, is a country in which collectivism is a common and widely spread philosophy. The Japanese are dependent on the organizations and group work. Japanese workers are seen as very loyal to their work groups and their company in general. A strong identification with the employer is encouraged with a special company anthem or a get-together after work. They want to achieve success as a group or, in other words, as an entity. Harmony and hard work are dominating factors at the workplace – “The nail that sticks out gets hammered back in place”.

The USA and Japan are two extreme opposite examples of individualism vs. collectivism. We see strong preferences one way or the other when we take a look at some other countries. The following chart illustrates the manifestation of individualism in certain countries in relationship to uncertainty avoidance. It is ranked from 0, which means that people prefer to work in groups and reaches up to 100, representing a strong tendency to individual working methods. The countries with the highest and lowest GDP in 2006 are shown in fig. 2.

2.5. Power Distance

Power Distance is a term describing the relationship between superiors and subordinates. The behavior of employees in how they interact with their bosses, subordinates and colleagues varies from country to country. Without basic information about the power distance in another country, expectations will not be met and will lead to tension in the office. In cultures in which values like individualism and self-fulfillment are important, the relationship between superiors and subordinates is more open, i.e. the power distance is small. The executive might give his subordinate the opportunity to take responsibility himself. Discussions or constructive criticism among them often is normal and even desired.

In countries with greater power distance, consultation among superiors and subordinates does not take place. Subordinates are used to execute the work in the way they are told to by their boss. This is the case in South America and most parts of Asia. In Japan, for example, consultations take place on a horizontal level, but rarely between different layers. Participation in decision-making is a direct result of knowledge and not of the degree of responsibility. There is also a large difference in the degree of power distance among the countries of southern and northern Europe. Scandinavians as well as Germans and Austrians are often encouraged to take part in the process of decision-making and usually prefer a consultation style.

The following dialog shows a typical scenario where neither party is aware of the power distance of the other. The American boss (small power distance) wants to force his Greek subordinate (large power distance) to make his own decision while the Greek is waiting for exact directions from his boss. The result is tension between the two; both are irritated with the other.

What do they say and what do they think?

US says: “How long will it take you?”

Greek thinks: “He’s the boss, why doesn’t he tell me?” but says: “I don’t know. How long should it take?”

US thinks: “He refuses to take responsibility.” but says: “You should be able to analyze the time.”

Greek thinks: “I asked him for an order, now I have to give him an answer.”