A key consideration for international businesses when establishing operations outside their home countries is the impact of the prevailing political, economic, and legal systems on the benefits, risks, and costs of doing business.
In the era of globalisation, investment decisions by international businesses outside their home states are informed by factors such as deregulation, interplay of market forces, the efficient allocation of resources, non-intrusion by governments with business operations, equitable and fair tax systems, the profit incentive through privatisation of resources, transparent legal systems, protection of intellectual property rights etc.
With these conditions being guaranteed as an anchor for business efficiency, an important consideration for an international business is the understanding of “cross-cultural literacy” in business, which is a necessary tool kit to ensure the success of the international business outside its home state.
Culture as an imperative for business success
As has been affirmed by scholars on international business, an understanding of the culture of a country where an international business seeks to operate is a guarantee for its success.
It is, therefore, imperative for the international business to adapt to the culture of its host state.
In Ghana, it may not be out of place in conformity with local culture for a business to scale down its operations substantially on a particular day because the majority of the staff may be attending the funeral of a dead colleague, which may have been fixed on a weekday, as is often the case.
What is culture?
There are many definitions of culture, as there are scholars devoted to its study.
Quite an early definition of culture has been stated by Edward Tylor as “that complex whole which includes knowledge, belief, art, morals, law, custom and other capabilities acquired by man as a member of society.”
Another important restatement of culture is provided by the Dutch psychologist Geert Hofstede as the “collective programming of the mind which distinguishes the members of one human group from another.
Culture in this sense includes systems of values; and values are among the building blocks of culture.”
Profs Charles Hill and Thomas Hult, acclaimed scholars of management and international business, state their view of culture “as a system of values and norms that are shared among a group of people and that when taken together constitute a design for living.”
Cultural differences across countries
As culture is not homogenous and varies from country to country, it is important to segment the varieties across many countries for an assessment of their impact on business success.
For example, a Japanese worker is traditionally considered to be overly patronising regarding his commitments to his workplace. Thus, he may be willing to spend extra time, including his weekends and out-of-hours time in doing extra work for the business where he is employed.
In America, the business culture emphasises the delivery of time-bound assignments as a way of showing the importance of the duty to be performed.
American business culture is also deeply rooted in keeping to time schedules for business appointments and considers delays to starting meetings as offensive.
American business culture also subscribes to making business decisions quite hurriedly rather than through prolonged, drawn-out negotiation sessions.
This may be offensive in other cultures, particularly Middle Eastern cultures and may be considered as overly demanding and also as a way of piling pressure to wrap up business deals.
Some peculiar business culture in Ghana
An observation of the Ghanaian business terrain reveals that, although Ghana is gaining increased importance in business activities, business efficacy is yet to reach the level of the advanced countries.
Among the factors which do not make for a conducive business environment are the postponement or cancellation of business appointments at short notice, no reply to emails and enquiries for information, long waiting times for the start of meetings, lack of commitment to the implementation of decisions arrived at business meetings, etc.
While these practices could be offensive in certain cultures, in Ghana, the longevity of their occurrences has come to be accepted as normal and part of the prevailing business culture.
Some other peculiar practices which may occur in business operations in Ghana and elsewhere may be the lack of long-term commitment of employees’ future to their workplaces.
In this situation, employees may not consider their fortunes as tied to the fortunes of the business where they are employed and may be “journey men,” being on the lookout for alternative employment avenues and also open to being poached by other competitors of the business.
In societies which are bound by deep bonds of collectivism among different strata of society, it could be difficult for disciplinary measures to be enforced at the workplace against errant workers, particularly those in the lower rungs.
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In such situations, employees could band together in support of an errant worker who has infringed the workplace regulations and is due to have the prescribed sanctions applied against him.
Often, the threat of collective action by employees in stopping work in support of the errant worker disables management from applying the requisite sanction against the employee.
Cultural influences on business
It has been established that the cultural practices prevalent in the respective countries of operation of an international business affect the value systems at each operational base of the business.
Consequently, the management of the business will have to tailor its business processes and practices in direct response to the prevailing values at each unit of operation.
Geert Hofstede (1928-2020), a Dutch psychologist, was commissioned by IBM to study the relationship between culture and workplace values. His findings were categorised as follows: power distance, individualism versus collectivism, uncertainty avoidance, masculinity versus femininity, long-term versus short-term orientation.
readiness to take risks.
Conclusion
It must be emphasised that Hofstede’s categorisations, though apposite in guiding an international business in navigating the cultural nuances and dilemmas in its bid to expand its operations outside its home base, the success of an international business outside its home base is not wholly dependent on its successful adaptation of the cultural values of its host state.
As the bounds of globalisation increase in the current world economic setting, it is imperative for countries which are desirous of expanding the reach of international businesses into their domains to focus more attention on such things as reform of legal systems, protection of intellectual property rights, deregulation, ensuring functional market economies, etc.
Source: Graphic Business