Enhancing cultural awareness crucial for international business success

Ferhan Alesi and Mehmet Öğütçü

In today’s world, the rate of return, supply chain, regulatory requirements, compliance, tax incentives, infrastructure, enabling environment and shareholder value are all crucial factors in business decisions and executing deals between contracted parties.

But business leaders must also know that cultural awareness is equally important – not only because they have to deal increasingly with globalization, but also because their interlocutors, managers, customers and labour resources are growing more and more diverse.

Every culture has rules that its members take for granted. Few of us are aware of our own biases because cultural conditioning begins at an early age. And while some of a culture’s knowledge, rules, beliefs, values, phobias and anxieties is taught, most has been absorbed subconsciously.

Each culture has a different set of values, business ethics, language, behavior, etiquette and expression. Not knowing the differences in the country in which one is doing business can lead to communication barriers that impede the effectiveness of the message. In some cultures, personal bonds and informal agreements are far more binding than any formal contract. In others, the meticulous wording of legal documents is viewed as paramount.

Some look for meaning and understanding in what is not said – in body language, in silences and pauses, and in relationships and empathy. Others place emphasis on sending and receiving accurate messages directly, and by being precise with spoken or written words.

For example, German and Dutch directness could offend people from more socially “indirect” cultures. Silence carries significance in all cultures, and this might be interpreted in different ways during multicultural business meetings. Understanding a culture can help businesses anticipate potential challenges or barriers in the adoption of new policies or processes before efforts break down.

Understanding a company’s culture is also important. A company’s structure and design can be viewed as its body, its culture as its soul.

The culture is often specific. Everything else (products, strategies, marketing, even innovations) can be replicated, but the only truly unique identifiers are the values and norms of the organization – its culture, or personality.

Talented people want to do business with the best organizations, because those organizations align with their own values and expectations. These talented people, partners and clients see your culture as a strong indication of how you do business, and never rely solely on your products or services. Typically, companies with a strong culture tend to produce superior results as compared to those with weaker cultures.

It is also important to understand that both ageing populations and the new generation entering the workplace are creating new opportunities and challenges for employers. For this reason, understanding the different characteristics of the generations is fundamental. Millennials, for example, have a specific outlook, necessitating a change in corporate cultural priorities in today’s workplaces.

Boomers are typically loyal and will allow flexibility in the workplace, as opposed to millennials, where a career means much more than a stable place to work for 25 years as employees look at company values, meaning, community and culture.

All in all, let us bear in mind that ignoring or neglecting culture in business can lead to serious problems and communication breakdowns. Ineffective cross-cultural communication can offend, confuse or send out a misleading message, which could lead not only to broken relations with investors or employees, but also to the loss of partnerships and revenues. Cultural awareness, on the other hand, can help solve conflicts, whether past, present or future.