Dick Locke, President, Global Procurement Group, San Francisco, CA 94114, 415/695-1673, firstname.lastname@example.org
Abstract. Cultural differences can cause problems in international procurement. The main reason they cause problems is usually not a difference in manners, because people expect these. The main reason is usually that one or the other party acts differently than expected in situations where neither party expected a difference. If cultures can be analyzed by describing them according to a few key characteristics, more behaviors can be expected, understood properly, and dealt with smoothly. This presentation will explain some of those key characteristics.
The importance of cultural understanding. Culture differences are an unusual issue, in that experienced international buyers see culture as a bigger problem than inexperienced buyers do. Cultural misunderstandings can prevent potentially beneficial business arrangements from being completed.
The three dimensions of culture. Training programs in cultural differences often consist mainly of manners-related topics. They stress issues such as how to pass out business cards in a Japanese meeting, or whether it is considered good form to discuss business at lunch. However, manners and other immediately visible behavior make up only the tip of the cultural iceberg. There are two other important and hidden issues that people should understand when learning about another culture.
The first hidden issue is behavioral. In a purchasing context, it involves the way people inside a culture communicate and make decisions when they are not in a cross-cultural situation. For example, decision-making style can be broadly classed as top-down or collegial. In a top-down country, decisions are made by a small group (or by one person) at the top of an organizational structure. In a collegial country, decisions are made after detailed discussion involving multiple layers of the company and after reaching a consensus. Assuming a top-down decision style on a party from a collegial country can easily result in trying to force a decision that the collegial party is not prepared to make. To continue with the iceberg metaphor, the hidden behavior issues make up the bulk of the iceberg and the part that sinks ships. (1)
The second hidden issue is not behavioral, but is an issue of values. These are the key beliefs that people in a country have and that cause them to behave in a certain way in certain situations. Some of the values are a preference for egalitarianism versus hierarchy, a like or dislike for individualism, and a concern or lack of concern for being on time. To continue the iceberg metaphor, values are represented by a glacier. Glaciers (values) make icebergs (behavior). The glacier is an apt metaphor because values change very slowly and may be so far from the behavioral iceberg that the connection is not immediately obvious. Good cultural understanding requires knowing all three aspects: The iceberg above the water, the iceberg below the water, and the glacier that forms the iceberg.
Three degrees of seriousness. It's unfortunate that cultural differences are often seen as a problem. I believe that cultural understanding changes cultural differences from a problem to a benefit. If a person understands the other's way of thinking or acting, it causes the person to rethink his or her own cultural assumptions and become more flexible and creative by recognizing previously culturally imposed limits.
However, in reality, cultural differences do cause problems. I classify the problems into three levels. The least serious problems result from differences that are expected. These are differences such as eating with forks versus chopsticks, passing out business cards at the start of a meeting versus the end of a meeting, or bowing versus shaking hands. The most cursory preparation will give a list of differences to expect. These tend to be manners issues, and while good manners are always better than bad manners, the system is somewhat forgiving for buyers. Deals rarely founder on poor use of chopsticks or incorrect business card etiquette.
The next, more serious, degree of seriousness results from differences that appear when a person is going into a situation where he or she might expect a difference, but doesn't know exactly what behavior to expect. Promptness is an example. Most people realize that different countries have different attitudes toward the importance of schedules, but a person may not know what a particular country's attitude is. Therefore, at the first meetings in a country the visitor may not know whether the meeting is likely to begin on time, but knows that he or she is in a situation where there is likely to be a cultural difference. If the host acts differently than a host in the visitor's country, it is unlikely to cause a serious issue.
The third level is the most troublesome. It involves behavior that is different in a situation where no one expected a difference. The behavior just appears strange and inexplicable. One personal example is telephones being answered in a conference room. This used to bother me until I learned that it is an indicator of one of just a few cultural characteristics that can be used to classify a culture, and that some cultures are more likely than others to display it. Once I understood that, I had reduced the telephone issue to a lower degree of seriousness. It became a potentially expected difference.
The key characteristics. I remember a statement in my own cross-cultural training: "Start with the assumption that they are different." I didn't find that advice very useful. It's too broad, too open-ended and opens an infinite number of possibilities. I preferred a list of a few ways that they are different.
Fortunately, in a purchasing situation, there are just a few key ways that cultures differ. The most important are:
The first three terms are based on an analysis one of the early pioneers in the field of cross-cultural business behavior, Geert Hofstede. The other four are my terms, based on experience and observation.
Hofstede's values. Geert Hofstede is a Dutch researcher who studied IBM's employees around the world. He came up with four key value differences, one of which isn't as important (or clear) as the others. The three most important differences are:
Power distance. Power distance is approximately a measure of the amount of inequality in a society. The actual definition is the degree to which differences in power are seen as legitimate and beneficial by those lower on the power scale. A high power distance country is likely to have wider differences than a low power distance country. Latin American countries tend to have high power distance, and Northern European countries tend to have low power distance. Asian countries run the gamut from high (Malaysia) to medium (Japan). High power distance countries will tend to have a single decision-maker. Lower power distance countries will tend to have collegial decision-making.
Uncertainty avoidance. Uncertainty avoidance is the need to be sure of the future before proceeding. A high uncertainty avoidance country will want to be really sure, and they can show the uncertainty in several ways. One is by rigid insistence on contracts. Another is to want to know their partners on a personal basis before proceeding. Korea and Japan are high uncertainty avoidance countries; Britain, Malaysia and Singapore are low. High uncertainty avoidance countries are likely to have less flexible scheduling and a strong dislike of surprises over the course of a relationship.
Indivualism. Individualism is self-explanatory. The English-speaking countries of the US, Britain, Canada, and Australia have high individualism and Asian and Latin American countries are the lowest. Low individualism is another driver toward group decision making. Be cautious about even praising an individual in a country where they believe "the nail that sticks up gets hammered down."
Other differences. Hofstede described some very important values. However, he does not have all the key value differences. There are four more key issues.
Importance of a personal relationship. Fons Trompenaars is another Dutch researcher. He runs cross-cultural workshops in Europe, where he poses the following hypothetical situation: You are a passenger in a car driven by a close friend who is speeding. He hits and injures a pedestrian, and you are the only witness. Your friend's lawyer tells you that if you say in court that he wasn't speeding, your friend will be OK. Otherwise your friend will be in trouble.
Then Trompenaars asks two questions: What right does your friend have to expect you to lie to help him, and would you lie in court? Approximately 95% of Americans, Germans and British people state either that their friend had no right to ask, or that he had some right to ask but they would still not lie. Only 25% of Koreans share this attitude. Obviously, there is more importance to a "close friendship" in Korea.
The US values the importance of a personal relationship in business lower than almost any country in the world. In most other countries, people will want to get to know their business partners very well before committing to business. The personal relationship often gives the person confidence to proceed with minimal or no contracts required. Do not expect to do business on any significant level without meeting and developing a personal relationship with the other parties in a relationship-oriented country.
Need for harmony. In some countries, generally Asian and Latin American, people think it is rude to give bad news or to say "no" directly. They use circumlocution, body language, and facial expressions to convey bad news without saying it directly. Sometimes people in those countries are accused of lying or acting in bad faith because of this issue. However, even Americans do the same thing for the same reason in some circumstances. In order to keep harmony, an American is very likely to avoid telling the truth when asked "Do you like my new hairstyle?" Dealing in these countries requires developing the skill of asking difficult questions indirectly.
Buyer-seller rank. Some countries are more culturally attuned to pleasing buyers than other countries are. In some countries, particularly Japan, Korea, Thailand and India, the rank of the speaker and listener must be considered in phrasing a sentence. In Korea and Japan, the buyer in a transaction actually outranks the seller. The seller must speak upward to the buyer. In other countries, particularly Germany and Northern Europe, there is less of a cultural tendency to consider the buyer as particularly important. Buyers can take advantage of the trait in the former countries and need to be more restrained in the latter countries.
Importance of the clock. Different cultures have different attitudes toward time. Sociologists call cultures either "polychronic" or "monochronic." A person from a monochronic culture is likely to want to do one thing at a time and start and stop it according to a schedule. A polychronic person doesn't mind doing several things simultaneously and is unlikely to stop a conversation because of a conflicting appointment. Latin and South Asian cultures tend to be polychronic, and North Asian and North European cultures tend to be monochronic. Like most cultural characteristics, both ways have their good points. A monochronic culture is more likely to ship on time but the lead times are likely to be longer than those of a polychronic culture are.
The benefits of labeling. A lot of the unexpected behavior that people see in other cultures can be ascribed to one or more of this small set of differences. The telephone in the conference room that used to bother me, for example, is a sign of polychronic behavior. Classifying the behavior into known and understood patterns enables a person to be prepared to deal with it ahead of time. It also seem more professional to think "that person is acting polychronic" than to think "that person is at least strange and may be rude to be talking on the phone during a meeting."
Before you go. Before visiting another country (or before someone visits you) spend some time thinking about your culture and predicting how the other culture will be based on this handful of characteristics. The characteristics listed in this article can be applied at several levels, so you can also think of your own personal preferences and your company's culture. Then predict where the large differences will be and be prepared to work with them and through them. It will probably take patience and some change in your normal behavior.
You also need to learn the manners of the country. While they are not the most important issue, they are easy to discover or learn. Some of the books in the reference material will help. If all else fails, a simple tourist guidebook will help. Finally, if a personal relationship is important, expect to be judged as to your knowledge, flexibility, and general ease of doing business with. This not only applies to your cultural flexibility, but also to your general level of knowledge about your country and the supplier's country. You should take time to learn ahead of time about the things and developments that they are proud of in their country, and be prepared to discuss them. Again, some of the reading material will help.
Finally, keep an open mind and a spirit of adventure. People who are judgmental and want to rank one culture against another on some kind of "goodness" scale tend not to do well in international business. Approach any culture with an open mind and you will learn some new ways of thinking, acting, and looking at the world.