Cultural Impact On International Business

Corporations today have to deal with the reality of cultural diversity not just on the international business scene but also within their organizations. As such, if they are to truly make use of the increasing opportunities and benefits that the global economy is providing, they have to make sure that their employees have sufficient intercultural competence.

Current research however, does not indicate that many companies have been successful in this respect. In fact, there are too many businesses that still have the attitude that because they do not understand the way something is being done, that method or philosophy has to be inferior, whether these are old traditions or business practices.

Similarly studies have also shown that people who are sent on international assignments often face serious problems in achieving a good working and social relationship with people from the foreign country. This creates problems on the individual front, the family front and starts taking a toll on the productivity of the individual as well as the business. At times, these cultural differences prove to be the biggest obstacle in achieving the expected success for any international joint venture.

These studies confirm that the main reason for the managers to fail and the assignments not to succeed as expected has very little to do with the person’s technical or managerial competence. It has got to do more with the dynamics of two, at times vastly varying, cultures trying to work together as one. To handle these dynamics one requires a special understanding of the differences between the two cultures, how to develop relations by appreciating these differences and to develop an accepting attitude on both fronts so that the necessary goals can be accomplished.

It is therefore very important to understand that culture impacts international business far more than domestic business. Most of the principles of conducting business remain the same for both domestic and international business but there are certain added complexities that one has to be aware of and be trained to handle, most important of which is intercultural communication.

One has to understand that by intercultural communication we do not mean merely learning the local language. Most businesses see this as the only solution afflicting all their international trade and insist that their employees attain language competency for the particular region they will be working in. Though knowing the local language will go a long way in making things easier for employees working elsewhere or while hosting foreign businesspeople, this is not the complete solution.

Intercultural communication is a broader topic than merely learning to speak the local language. Speaking is not communicating and in order to truly communicate one also has to be sensitive to what others are experiencing. This would mean going beyond just the language – it would mean studying how social and business relationships are built, what makes people more comfortable and how to avoid words or situations that do not and enabling others to see through your attitude and deeds that you seek their co-operation. This does not mean compromising your business values, it means respecting the values of others so that they respect yours and so that together, you can work productively for the success of your organization.