When IMA was founded more than 100 years ago, the majority of its members were business professionals within the United States, often within a few hours’ drive of each other. While trade happened internationally, there were few interactions that consisted of bringing people together from more than one culture or country. Today, however, many business professionals in the U.S. and elsewhere have found that it’s common to work with team members, customers, and suppliers from a multitude of countries. These interactions can be grounds for cultural misunderstanding and communication challenges.
To ensure more successful interactions, first it’s important to understand what culture is. Culture is defined by Merriam-Webster as the “customary beliefs, social forms, and material traits of a racial, religious, or social group.” Merriam-Webster includes a secondary definition: “the characteristic features of everyday existence…shared by people in a place and time.” Culture is most influenced by beliefs systems, the anthropological history of races, and geography.
Cultural anthropologists use geography to define key archetypes that help to define the cultural norms shared across regions. One of those archetypes, the Anglophone archetype, is based on areas where English is the primary language and where common-law legal systems are the norm, such as Australia, Canada, New Zealand, the United Kingdom, the U.S., and some areas in the Caribbean.
While there are many defining characteristics of these archetypes, we’ll look at three specific continuums that are relevant to how archetypal cultures do business. Note these continuums are a range and that individual countries—and the people living within them—differ from others in their archetype but often share common traits than they do with countries from other archetypes. Individual countries and even regions within countries may be different on certain issues, and you should ask before making assumptions on the specific local cultural norms.
INDIVIDUALISTIC-COLLECTIVIST CONTINUUM
In my experience, one of the most important continuums for navigating business relationships is the range from an individualistic culture to a collectivist culture. The extremes on this continuum are the Anglophone archetype, considered to be most individualistic, and the East Asian archetype, considered to be most collectivist. Individualistic cultures tend to derive systems and norms around the ideas of individual freedoms and liberties, while collectivist cultures tend to value and safeguard family, community, and society as a whole. That isn’t to say that all Americans, for example, are only out for themselves without regard to their family, and all Japanese individuals care only about their family or community without regard for their own individual circumstances.
The key takeaway for persons conducting business between these two cultures is that they should consider how they may negotiate business arrangements. For a person from the East Asian archetype, an approach may be to highlight how such business arrangements could impact the individual on the other side of the table or his or her business. Conversely, an Anglophone may want to highlight the societal benefits of the deal or the benefit to family units of employees of the company once the deal is in full force.
TRANSACTIONAL-RELATIONSHIP CONTINUUM
The second most important continuum is the transactional-relationship continuum, which defines how cultures view business dealings. Business dealings for three archetypes (Anglophone, Nordic, and Germanic) tend to be focused on an individual transaction (transactional) in nature, with other archetypes being more based on the whole of the relationship spanning many transactions over time. While individual countries may be more transactional than their archetype—for example, Singapore is generally more transactional than other South Asian and East Asian cultures—they’re largely closer to the relationship orientation than to the transactional end of the continuum.
Business professionals on both sides of this continuum should understand the expectations of those on the other side. For transactional cultures, you should identify the key metrics for success in a transaction and communicate how success on these metrics may lead to future business dealings. For relationship cultures, it may be helpful to discuss expanding the relationship by ensuring a focus on quality, efficiency, cost, or other important measures to the company you’re trying to do business with. This will ensure you understand expectations and stand a good chance of winning future business, which will build the desired relationship.
LEADERSHIP CONTINUUM
The leadership continuum is a range from a more hierarchical leadership to egalitarian leadership. The two most egalitarian archetypes are the Nordic archetype followed closely by the Germanic archetype. Both groups tend to believe that all people are equal to speak their opinion in a meeting and that all viewpoints should be considered. On the other end, the Arabic Middle East and North African archetype tends to prize leadership based on position and authority.
Both styles of leadership have their unique advantages and disadvantages. For instance, a hierarchical leadership style is advantageous for making quick decisions where lower levels of management desire direction and action. Egalitarian leadership is ideal for engaging diverse opinions and for gaining buy-in across multiple levels of an organization.
The Ringi methodology, a hybrid approach developed in Japan, is one notable exception on this continuum. It prizes both the ability to get behind the decisions made by top levels of leadership while also gaining buy-in from all levels of a decision-making structure. The Ringi approach builds consensus among each layer of management starting from the bottom level and working upward, allowing many ideas to be explored by the time a formal decision is made. This is probably the slowest but most inclusive methodology.
For a business professional trying to do business in a different culture, it’s important to understand who the ultimate decision maker is and who may need to be influenced along the way. This is especially important if more people than just those at a meeting have the ability to sway opinion. It’s also important to understand the impact on time to decide.
Through understanding these three cultural differences, you’ll begin to get an idea of how to effectively conduct business across cultural lines. There are many resources on this topic, and research for a particular country or culture is strongly encouraged before starting your first negotiation. In understanding these and other cultural dynamics, you’ll be a more successful businessperson by avoiding cultural missteps.
June 2020
