Cultural values and beliefs are often unspoken; they may even be taken for granted by those who live in a particular country. Cultural factors do not necessarily cause problems for managers when the cultures of two countries are similar. Difficulties can arise, however, when there is little overlap between the home culture of a manager and the culture of the country in which business is to be conducted. For example, most U.S. managers find the culture and traditions of England relatively familiar. The people of both countries speak the same language and share strong historical roots, and there is a history of strong commerce between the two countries. When U.S. managers begin operations in Japan or the Middle East, however, most of those commonalities disappear.

In Japanese, the word hai (pronounced “hi”) means “yes.” In conversation, however, this word is used much like people in the United States use “uh-huh”; it moves a conversation along or shows the person with whom you are talking that you are paying attention. So when does hai mean “yes” and when does it mean “uh-huh”? This turns out to be a relatively difficult question to answer. If a U.S. manager asks a Japanese manager if he agrees to some trade arrangement, the Japanese manager is likely to say, “Hai”—but this may mean “Yes, I agree,” “Yes, I understand,” or “Yes, I am listening.” Some U.S. managers become frustrated in negotiations with the Japanese because they believe that the Japanese continue to raise issues that have already been settled (because the Japanese managers said “Yes”). What many of these managers fail to recognize is that “yes” does not always mean “yes” in Japan.

Cultural differences between countries can have a direct impact on business practice. For example, the religion of Islam teaches that people should not make a living by exploiting the misfortune of others; as a result, charging interest payments is seen as immoral. This also means that in Saudi Arabia there are few businesses that provide auto-towing services to take stalled cars to a garage for repair (because that would be capitalizing on misfortune), and in the Sudan, banks cannot pay or charge interest. Given these cultural and religious constraints, those two businesses—automobile towing and banking—do not seem to hold great promise for international managers in those particular countries!

Some cultural differences between countries can be even subtler and yet have a major impact on business activities. For example, in the United States, most managers clearly agree about the value of time. Most U.S. managers schedule their activities tightly and then try to adhere to their schedules. Other cultures do not put such a premium on time. In the Middle East, managers do not like to set appointments, and they rarely keep appointments set too far into the future. U.S. managers interacting with managers from the Middle East might misinterpret the late arrival of a potential business partner as a negotiation ploy or an insult, when it is rather a simple reflection of different views of time and its value.²¹

Language itself can be an important factor. Beyond the obvious and clear barriers posed by people who speak different languages, subtle differences in meaning can also play a major role. For example, Imperial Oil of Canada markets gasoline under the brand name Esso. When the firm tried to sell its gasoline in Japan, it learned that esso means “stalled car” in Japanese. Likewise, when Chevrolet first introduced a U.S. model called the Nova in Latin America, General Motors executives could not understand why the car sold poorly. They eventually learned, though, that, in Spanish, no va means “It doesn’t go.” The color green is used extensively in Muslim countries, but it signifies death in some other countries. The color associated with femininity in the United States is pink, but in many other countries, yellow is the most feminine color.

Managers in international business also have to understand that there are differences in what motivates people in different cultures. Although it’s impossible to predict exactly how people from different cultures will react in the workplace, some insights have been developed from research on individual behaviors and attitudes across different cultures. This research, conducted by Geert Hofstede, identifies five important dimensions along which people seem to differ across cultures. These dimensions are illustrated in Figure 4.6.

Figure 4.6

Hofstede’s Five Dimensions of National Culture

The first dimension is social orientation. Social orientation is a person’s beliefs about the relative importance of the individual versus groups to which that person belongs. The two extremes of social orientation are individualism and collectivism. Individualism is the cultural belief that the person comes first. Research suggests that people in the United States, the United Kingdom, Australia, Canada, New Zealand, and the Netherlands tend to be relatively individualistic. Collectivism is the belief that the group comes first. Research has found that people from Mexico, Greece, Hong Kong, Taiwan, Peru, Singapore, Colombia, and Pakistan tend to be relatively collectivistic in their values. In countries with higher levels of individualism, many workers may prefer reward systems that link pay with the performance of individual employees. In a more collectivistic culture, such a reward system may in fact be counterproductive.

A second important dimension is power orientation, the beliefs that people in a culture hold about the appropriateness of power and authority differences in hierarchies such as business organizations. Some cultures are characterized by power respect. This means that people tend to accept the power and authority of their superiors simply on the basis of their position in the hierarchy and to respect their right to hold that power. Research has found that people in France, Spain, Mexico, Japan, Brazil, Indonesia, and Singapore are relatively power accepting. In contrast, people in cultures with a power tolerance orientation attach much less significance to a person’s position in the hierarchy. These individuals are more willing to question a decision or mandate from someone at a higher level or perhaps even refuse to accept it. Research suggests that people in the United States, Israel, Austria, Denmark, Ireland, Norway, Germany, and New Zealand tend to be more power tolerant.

The third basic dimension of individual differences is uncertainty orientation. Uncertainty orientation is the feeling individuals have regarding uncertain and ambiguous situations. People in cultures with uncertainty acceptance are stimulated by change and thrive on new opportunities. The research suggests that many people in the United States, Denmark, Sweden, Canada, Singapore, Hong Kong, and Australia are among those in this category. In contrast, people with uncertainty avoidance tendencies dislike and will avoid ambiguity whenever possible. The research found that many people in Israel, Austria, Japan, Italy, Columbia, France, Peru, and Germany tend to avoid uncertainty whenever possible.

The fourth dimension of cultural values is goal orientation. In this context, goal orientation is the manner in which people are motivated to work toward different kinds of goals. One extreme on the goal orientation continuum is aggressive goal behavior. People who exhibit aggressive goal behaviors tend to place a high premium on material possessions, money, and assertiveness. On the other hand, people who adopt passive goal behavior place a higher value on social relationships, quality of life, and concern for others. According to the research, many people in Japan tend to exhibit relatively aggressive goal behaviors, whereas many people in Germany, Mexico, Italy, and the United States reflect moderately aggressive goal behaviors. People from the Netherlands and the Scandinavian countries of Norway, Sweden, Denmark, and Finland all tend to exhibit relatively passive goal behaviors.

A fifth dimension is called time orientation. Time orientation is the extent to which members of a culture adopt a long-term versus a short-term outlook on work, life, and other elements of society. Some cultures, such as Japan, Hong Kong, Taiwan, and South Korea, have a longer-term orientation. One implication of this orientation is that people from these cultures are willing to accept that they may have to work hard for many years before achieving their goals. Other cultures, such as Pakistan and West Africa, are more likely to have a short-term orientation. As a result, people from these cultures may prefer jobs that provide more immediate rewards. Research suggests that people in the United States and Germany tend to have an intermediate time orientation.²²