No doubt, cultural intelligence is a critical success factor in business. Drawing on workshops, projects and empirical research from transaction success stories and failures, we have identified six principles which are fundamental to capitalize on national culture differences in venture deals, namely: time orientations, spatial differentiation, risk avoidance, gender roles, power distance and nonverbal communication.
1. Time orientations are expressed in two ways across the world; monochromic and polychromic. Monochromic approaches to time are linear, sequential and involve focusing on one thing at a time. Leaders in such cultures tend to rely on specific, detailed and explicit communication; they handle one agenda item at a time and view lateness as lack of respect. These approaches are most common in the European-influenced cultures of the United States, Germany, Switzerland, and Scandinavia but also Japan.
Polychromic orientations to time involve simultaneous occurrences of many topics and the involvement of many people. The time it takes to complete an interaction is elastic. Leaders in such cultures tend to be comfortable with a high flow of information, expect to read each other’s thoughts and minds; and start and end meetings at flexible times. This orientation is most common in Mediterranean and Latin cultures including France, Italy, Greece, Mexico and Brazil, as well as some Eastern and African countries.
2. Spatial differentiation has to do with territory, divisions between private and public, comfortable personal distance, physical touch and contact, and expectations about where and how the business transaction will take place.
In Northern European countries, personal space is much larger than in Southern European countries. For a German or a Swedish person, the French people, Italians and the Greeks get too close. Asian, Canadian and U.S. cultures tend to discourage touching outside of intimate situations.
3. Risk avoidance differs from geographies; countries that show the most discomfort with ambiguity and uncertainty include China, Middle East, Europe and traditional African nations, where high value is placed on conformity and safety, and reliance on formal rules and rituals. Trust tends to be vested only in close family and friends. It may be difficult for outsiders to establish relationships of confidence and trust with members of these national cultures.
In contrast the United States, Scandinavia, and Singapore have a higher tolerance for uncertainty. Members of these national cultures tend to value risk-taking, problem-solving, flat organizational structures, and tolerance for ambiguity. It may be easier for outsiders to establish trusting relationships with business partners in these cultural contexts.
4. Gender roles refer to the degree to which a culture values assertiveness and social support. The terms also refer to the degree to which socially prescribed roles operate for men and women.Countries and regions such as Japan, Africa and Latin America foster the values of assertiveness, task-orientation and achievement. In these cultures, the gender roles are more rigid.
In countries and regions rated feminine such as Scandinavia, Thailand, and Portugal, the values of cooperation, encouragement, and relationship solidarity with those less fortunate prevail.
5. Power distance describes the degree of deference and acceptance of unequal power between people. Cultures where there is a comfort with high power distance are those where some people are considered superior to others because of their social status, gender, race, age, education, personal achievements, family background or other factors. Thus they are comfortable with hierarchical structures and clear authority figures, e.g. Arab countries, Guatemala, Malaysia, the Philippines, Mexico, Indonesia, and India.
Cultures with low power distance tend to assume equality among people, and focus more on earned status than ascribed status. Here democratic structures, flat organizational hierarchies and shared authority are well accepted, e.g. Denmark, Israel, New Zealand, Ireland, Sweden, Finland, Switzerland, and Germany.
6. Nonverbal communications also diverge in cultures. Japanese have been observed to use the most silence. Americans always appear with their lawyers. Looking directly into the face of a business counterpart is common in Brazil.
Beside a German leader might experience a hug as inappropriately intimate. These nonverbal communication notions should be not underestimated, especially by defining the zone of cultural appropriateness and breaking through the invisible boundaries of global business.
Navigate national cultures in global business transactions is crucial. However to reap the substantial benefits, you need to associate it with the insights of the related corporate culture and the personal background of the stakeholders.