Cultural Differences in Business

by Dennis Hartman; Updated September 26, 2017
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One of the results of increased globalization in the world economy is the frequent interaction of different cultures in the business world. Wherever a business establishes itself, growth and expansion will likely lead to engagement with customers, colleagues and competitors from a different cultural background. Managing cultural differences in business is essential for those who want to participate internationally and succeed globally.

Sources

Businesses experience cultural differences for a number of reasons. When a company does business internationally, it is likely to bring its workers into contact with a new culture, either by adding an overseas office or bringing on workers with different cultural backgrounds to help with the expansion. Another situation involves contract labor, with specialists from another cultural background coming in, sometimes on a temporary basis, to support an existing workforce. General trends toward multiculturalism, including immigration and emerging economies, also increase the amount of cultural difference in business.

Communication

One of the key ways cultural difference reveals itself in business is through communication methods. Each culture has its own approach to communicating and collaborating to solve problems. High-context communication, which is a normal means of communicating in some cultures, relies on previous knowledge and a high level of context for the communication to make sense. On the other hand, low-context communication is common in other cultures and supplies a great deal of information that listeners are expected to interpret as meaningful to the main point of a statement. The meaning of phrases and gestures also varies from one culture to another, increasing the chance for misunderstanding. Finally, work ethics take different forms in each culture, resulting in patterns for work hours and daily routines that vary.

Training and Policies

Businesses that bring together workers from various cultural backgrounds benefit from training that teaches employees about diversity and the value of cultural differences in business. This training can take the form of reading material or group seminars that teach employees about the etiquette, language and taboos of a culture they're likely to come into contact with. Memos explaining cultural holidays that some workers observe create a sense of understanding and tolerance through shared celebration and new knowledge.

Impact

The impact of cultural differences in business is significant, whether it's positive or negative. Employers who fail to prepare their employees for dealing with cultural diversity risk miscommunication, reduced productivity and low morale, while those that manage cultural diversity well can expect better communication and increased efficiency due to multiple viewpoints and a mutual exchange of ideas that takes advantage of what each culture has to offer. A business that disregards cultural differences also puts itself at risk of violating antidiscrimination laws that make it illegal for employers to make hiring and compensation decisions on the basis of religion or ethnicity.

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