The most critical global developments for businesses include the increase in economic activity in emerging markets, the free flow of information across the globe, and increasingly global labor markets.
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The implications are clear: To grow and flourish in a global economy requires building strong business relationships across international boundaries. “Like it or not,” one expert points out, “knowledge of the world is no longer a luxury.” According to a McKinsey survey of executives around the world, the most important strategies for capturing growth include building a local presence, developing partnerships and joint ventures with local businesses, and recruiting talent from emerging markets. American companies must compete with companies around the world, whose leaders may be far more knowledgeable about U.S. culture than American leaders are about theirs.
For some years now, U.S.-based corporations have been acquiring businesses based abroad, establishing local branches in other countries, and assembling virtual teams to work across international boundaries. Even so, too many businesses are still unprepared to work with customers and coworkers from different cultures. The most common problems—misunderstandings and communication breakdowns—have a significant impact in terms of lowered productivity, lost sales, and unsuccessful product launches. “Effective cross- cultural skills are critical,” according to the Global Program Manager for a large telecommunications manufacturer. “We are a global organization. We have clients around the world requiring global support and many cross-cultural project teams. If we can improve the global effectiveness skills of our team leaders and members, this will have tremendous impact on our bottom line.”
What Can the Organization Do?
To build global competitiveness, U.S. companies need to recognize the special challenges of doing business globally and step up efforts to ensure employees acquire global awareness and cross- cultural communication skills. This means raising consciousness about the differences that create discomfort and confusion. This is critical, since the most
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common problems are caused by norms and behaviors that seem so natural to us that they are effectively out of our awareness.
To become more adept at communicating across cultures, people need to become comfortable with the nature of differences. Then they need skills that enable them to communicate and relate effectively.
The Five Cultural Dimensions that Make the Biggest Difference
People can gain insights into other cultures by understanding five key dimensions where cultural differences are likely to be the most profound and where knowledge can have the biggest effect in reducing culture shock.
Task and Relationships
One of the most noticeable differences between cultures has to do with how people approach the development of relationships. Some cultures can be characterized as more task/achievement oriented, while others are more relationship oriented. Westerners, and Americans in particular, tend to be more task/achievement oriented, with a shorter-term focus that creates a sense of urgency about getting things done and moving forward. In our view, “time is money,” a commodity that can be “saved” or “wasted.” In a typical American meeting, the task comes first. Socializing can come after the meeting. In contrast, relationship-oriented cultures will organize activities and priorities around the people involved, rather than around the clock. In a relationship-oriented culture, people are not driven by time. They would see themselves as flexible—the person, rather than the task, dictates the event. Social aspects come first, as a prerequisite to task achievement.
Even at the level of individual meetings and appointments, relationships can be affected by these different perspectives. For example, Americans take punctuality as a sign of respect for the other person’s time. Yet in a relationship culture, starting some time later than the formally stated hour is the norm, and arriving early or even “on time” might appear pushy, too impatient, or even inconsiderate. This difference in the “unwritten rules” can undermine the mutual trust and respect on which effective business relationships are founded.
Power Distance
This dimension has to do with the extent to which individuals in the society accept power inequality based on each person’s place in a hierarchy. This dimension influences degrees of autonomy and decision-making processes. Historically, American culture leans toward egalitarianism, favoring less distance between those at the top of a hierarchical structure and those at the bottom. Our traditions abound with stories of the ordinary employee speaking “truth to power.” In other cultures, deference to authority is expected, and it would be considered presumptuous and even shocking for
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