Implications of Cultural Communication in Business

10 October 2016

A study of Swedish small enterprise “ImseVimse” and its international distributors and retailers Master in International Management Gotland University Supervisors: Fredrik Sjostrand Per Lind Authors: Maka Kvantaliani Olga Klimina Spring 2011 Visby In times of rapid economic development and internationalization of business, effective cross-cultural communication among managers remains a challenge. This thesis aims to research and analyze crosscultural communication in business context based on qualitative case study of a small Swedish company and its international business partners.

Previous research has focused on differences and similarities in people? s behaviour and ways of communication based on their cultural background. Through in-depth analysis and application of existing theories to the chosen case study company, the findings of this research demonstrated that although national culture does have an undeniable influence on people? s behaviour and their communication style, implications in communication between business partners of different cultural backgrounds often connected to an individual approach to cross-cultural communication.

A common misconception among the managers of small firms is that business communication is believed to be universal and not affected by cultural differences. However, it is evident that individuals brought up in different cultures think and behave inversely, even in business context. As authors of “Managing Cultural Differences,” Harris and Moran (2007) state “at the root of the issue, we are likely to find communication failures and cultural misunderstandings” (p. 4).

Unfortunately, some firms still do not place enough importance on the issue of effective cross-cultural communication for more efficient business operation (Park, Sun Dai and Harrison, 1996). In particular, small and medium firms that choose to go international for growth or/and expansion of business, often fall victims to cross-cultural communication barriers with international suppliers, retailers, customers, distributors and partners which, sequentially, leads to serious communication mishaps and conflicts and sometime may result in termination of business relations (Xu and Smith, 2005). . 1 Problem background and discussion Although extensive research has been done on the topic of cross-cultural communication in business, it is still a very practical subject matter amongst researches around the world. Cross-cultural communication can be analyzed through multiple fields of study – anthropology, psychology, communication, linguistics, and organizational behaviour (Munter, 1993:69). In our work, we want to 1|Page combine these multiple disciplines and apply them to business communication between intercultural partners. What is cross-cultural communication?

Browaeys and Price (2008) refer to Gudykunst (2004), stating that cross-cultural communication is a “sub-domain” of intercultural communication and has to do with “the comparison of the various ways people communicate across cultures” (p. 233). Lustig and Koester (1998) define it as “the presence of at least two individuals who are culturally different from each other on such important attributes as their value orientations, preferred communication codes, role expectations, and perceived rules of social relationship” (cited in Harris and Moran, 1999:48).

Communication ways among individuals are greatly affected by one? s background, culture, norms, values and perceptions of the world. Why would an academic be interested in research of implications of cross-cultural communication in business context? Often when we experience miscommunication and discomfort in our intercultural communication, we tend to question the actions of other counterpart and may perceive his/her behaviour as inadequate because we do not understand why the other person does or says something.

Hickson and Pugh (1995:12) suggest that we rarely notice that we have been “moulded by cultural socialization to be the kind of people we are… it is in “culture shock” that we experience what the culture of a society has created, when we are not among our own kind and things happen differently. ” By analyzing and studying diverse cultures, managers can be capable of understanding the reasons behind business partner? s actions and try to find ways to adjust communication to make it more efficient.

For one thing, differences in business communication styles in various cultures can be demonstrated through the approach Asians and Europeans take when communicating with others. For instance, compare these two statements: 1. Reason ? {We believe that economic situation of the country is not stable enough which creates doubt that we can get the political support we need}; [therefore, we want to delay contract signing until further development of events] ? main point 2. Main point ? [We decided to delay contract signing] {due to unstable economic situation of the country and lack of political support.

In addition, waiting for situation to improve will give 2|Page us opportunity for further evaluation of pros and cons of this project and for building stronger business relationship} ? reason In this particular case, we observe two communication styles, which can be explained by difference in learned way of providing information to others. Asian speakers have a tendency to use inductive communication approach when the reasons or situation background is provided before presenting the main point or suggested action, so called “reason-main comment” order as presented in statement 1 (Scollon, R & Scollon, 2001).

Whereas westerners/Europeans usually use deductive, direct approach in explaining the situation – the “main point-reason” order, illustrated in statement 2 (ibid). While the above-mentioned exhibits only one reason for potential miscommunication, in this paper we discuss many examples of cultural differences in communication styles, which might cause minor or major communications mishaps such as missing the main idea/focus of the speech, misinterpretation of one? s words, being offended by words or gests, etc. As Adler and Graham (1989), referring to Mishler? work (1965: 517), remark “The greater the cultural differences, the more likely barriers to communication and misunderstandings become. ” Basic knowledge and awareness of cultural differences (cultural sensitivity) are vital for effective and efficient business communication. 1. 2. Research question Effective communication is a fundamental function for all organizations, including SMEs. In this case study research of cross-cultural communication implications between a Swedish SME and its international partners we aim to discover whether cross-cultural communication is, in fact, a problem for a small SME.

Therefore in this thesis the following questions will be investigated: A) What are the biggest cross-cultural communication implications caused by cultural differences, in business communication context, between the Swedish company ImseVimse and its international business partners? B) What kind of frictions, conflicts and misunderstandings based on cultural differences did the company face or/and is facing currently with its business partners. C) How do communication mishaps get resolved in ImseVimse (techniques, procedures)? 3|Page

Due to the fact that our analysis are based on single case SME, this work is the study of cross-cultural implications and the findings reflect the viewpoint of Swedish firm ImseVimse that became international and is still in the process of expanding its operations in other countries. Nevertheless, the theoretical framework of cross cultural-communication analysis and the nature of business operations can also be a decent example to other firms experience implications of crosscultural communication or firms that contemplate the expansion beyond national borders. 1. 3.

Aim The aim of this thesis is to analyze a single Swedish company that has gone through internationalization process and now has business operations in other countries. We intent to determine the most imperative cross-cultural communications implications caused by cultural differences, in business communication context, to identify the existing problems which have led to some kind of friction, a conflict, misunderstanding or termination of relations with international partner and finally, to determine any possible solutions for enhancement of cross-cultural business communication.

Knowledge of the key elements and successful incorporation of thesis findings could be a great tool for the companies that seek to initiate or continue business operations beyond national borders. We are certain that this topic of research is relevant and applicable to SMEs business with international processes. In the constantly increasing cross-border business operations, the knowledge and application of operational intercultural business communication between partners is crucial for the survival of business. The nature of the job of international managers demands them to become roficient communicators and to adopt broader cultural perspectives. 1. 4. Method There is an abundance of empirical theory and research on cross-cultural communication, which was applied as basic framework in this thesis. However, while using the existing research for analyzing cross-cultural communication in focus, this thesis is a contribution to an academic research through qualitative method of data collection. Interview method was used to collect the primary data and the secondary data was collected through literature reviews.

Thereupon, the empirical data was derived from Swedish firm ImseVimse, which has business relationship and experience of dealing with a number of international suppliers, distributors and retailers. 4|Page This chapter aims to describe the methodology – strategy, method and research design followed by evaluation of opportunities and limitations of chosen method. Finally, we discuss the issues of generalization, validity and reliability of this research. 2. 1. Research strategy Background information regarding cross-cultural communication barriers in business context was obtained from scientific and peer reviewed articles.

Extensive amount of information provided a broad knowledge of the topic. Further reading led to deeper understanding of the topic and familiarity with the ideas, major concepts and basic vocabulary in the chosen research area. Thereafter, the research question was formulated. Centred on our topic of interest and the field of research, an ensuing methodology was developed. 2. 2. Data Collection Sources are generally categorized as being primary or secondary. According to Boslaugh (2007), primary data is collected with specific aim, by the researcher, for further analysis.

Thus, if the data was collected by someone else for some other purpose, it is secondary data. In this thesis, we used both primary and secondary data, analyzed the results and, consequently, drew a number of inferences. In addition, there is synthesizing and integration of our own ideas into the finished product. 2. 3. Research methods There are two dominant business research methods – quantitative and qualitative. Quantitative research differs from qualitative research in several ways. On the word of Bryman and Bell (2007) in wide-ranging terms, quantitative method is more about collection of numerical data.

Conversely, qualitative researchers are interested in answering questions “why,” observing situations and understanding the reasons and are not keen to merely accept the results based on numerical interpretations (Ghauri, Granhaug and Kristianslund, 1995). 5|Page Choice of the best research method depends on the field of study and type of the research being carried out. For the purpose of this study of cross-cultural communication in business and management field, according to Bryman and Bell (2007), qualitative approach is the most applicable one.

Through qualitative method, we were able to gather data and information about cross-cultural business communication based on real life experiences and situations, which would be nearly impossible to conclude from quantitative method. 2. 4. Selected data collection method – interview Interview is one of the qualitative methods of collection of primary data and can be executed using different approaches. It can be ? Structured – exactly same questions for all interviewees, prepared in advance with no room for deviation ?

Informal – open, conversational interview with no particular structure or ? Semi-structured – open-ended questions prepared in advance, the interviewer “goes with the flow” (Patton 1990) Discussing the interviews in his “Qualitative methods” book, Gummesson (1988) referred to two methods of documenting it. First method is recording an interview in such way that preserves its original form and to ensure that interviewees? answers are logged in their own terms. For instance, an interviewer may choose to use tape recorder, video camera, notepad, etc.

Another way of documenting is writing down critical information like dates, amounts, times and some notes for further analyses (Gummesson, 1988). In given research, we chose to proceed with semi-structured interview method. As interpretive researches, we began interview with broad questions to get a feel of the company and its operation and then resorted to open-ended questions that we primed in advance. Our choice of documenting the interview was to use a tape-recorder as we were not certain how it would proceed. Having recorded he entire conversation offered the advantage of being able to review the dialogue at any given time. 6|Page 2. 5. Case study approach Case study approach was chosen based on the nature of the research problem. Yin (1989) explained case study as “an empirical inquiry that investigates a contemporary phenomenon within its real life context using sources of evidence” (p. 22). Likewise, Noor (2008) identified that in research where one needs to understand a specific issue or situation; case study can become particularly useful as it allows detecting cases rich in information.

Investigating barriers in cross-cultural business communication, concerned with questions how and why communication mishaps happen, we sought to work with real life company that dealt with international partners on daily basis. 2. 5. 1. Our role – academic researchers Fisher (2007) in his book “Researching and Writing a Dissertation: A Guidebook for Business Students” identified four roles that a researcher may take: judge, academic, spy and “fly on the wall” (pg. 69). In this chosen research, we have a role of visible, non-involved academic which comes with its advantages (opportunities) and disadvantages (limitations). . 5. 2. Opportunities First, case study provides holistic view of subject in question. It focuses on “the interrelationships between all the factors, such as people, groups, policies and technology” (Fisher 2007: 70). Second, as academic researchers we would not be seen as potential harm to the company, which can work to our advantage when it comes to providing us with information. Third, focusing on one company provides opportunity to study the matter extensively and in depth. 2. 5. 3. Limitations Nevertheless, case study approach has its limitations.

In the first place, lack of representativeness. There is a question of external validity when doing single case study. Will the research be applicable to other organizations? Another limitation is the fact of being studied may bring upon fear of misunderstandings or miscommunications and interviewee may choose to alter what is being discussed. Lastly, as academic researchers we might not have high priority in manager? s schedule for multiple interviews we have planned to conduct. 7|Page 2. 6.

Preunderstanding: generalizing from a single case study One may be questioning the possibility of drawing conclusions about implications of cross-cultural business communication based on a study of one small Swedish SME. Although not always applicable, as stated by Gummesson (1988), it is probable to generalize based on a single case study in the management field of research as long as the generalization is of a certain character. However, in this research, we are not able to assert the degree of commonality of described situations or exact interaction patterns.

Former being said, the author of Qualitative Methods in Research Management claims that the possibility of generalization based on a single case study company is “founded in the comprehensiveness of the measurements which makes it possible to reach a fundamental understanding of the structure rather than a superficial establishment of correlation or cause-effect relationships” (Gummesson, 1988:79). 2. 7. Validity and Reliability There is a close relation between generalization and concept of validity.

As it has been mentioned previously, the concepts of validity and reliability, although highly important for any research, are a concern for this particular study. Validity demonstrates the extent to which we were able to study and get the results we intended to achieve. Equally important, reliability, demonstrates how consistent the measurement of research is (Bryman and Bell, 2007:163). For instance, if another researcher conducts an interview with ImseVimse regarding the same topic, the results should be just about the same.

Some academics say that if research is not reliable, it is not valid (Bryman and Bell, 2007:168). Others remark that “accurate evidence is not so crucial for generation theory, the kind of evidence, as well as the number of cases, is also not so crucial. A single case can indicate a general conceptual theory or property; a few more case can confirm the indication” (Glaser and Strauss, 1967:30). Therefrom, we are assured that this case study can be an excellent source for a future comparative study that may represent different aspect of reality.

This way a researcher can pay attention to similarities and differences of extracted results. Nevertheless, the inferences of this research can be the subject to credibility verification as the majority of qualitative data was derived from interviews of company employees. Therefore, the answers could be limited by the subjectivity of respondents. 8|Page This chapter aims to discuss the previous research and to evaluate the utilization of existing theories about cultural dimensions and value orientations. Moreover, we discuss language, technology and individual factors and its effects on business communication.

In the modern world, international managers face many challenges in business communication and in the workplace. Why is it challenging? Managers want to do business with their partners. They want to be able to communicate effectively, but sometimes it just does not work. Latter leads to multiple implications for business operation. What are the factors hampering effective cross-cultural communication? National culture undeniably has a great influence on business culture. In order to have a successful business relationship with the members of other cultures, one should have cultural sensitivity and pay attention to cultural dimensions.

Knowledge of characteristics that are typical to each cultural group can help international managers in cooperation with colleagues from other cultural backgrounds. However, due to cultural differences, an individual should also take into consideration the possibility of encountering communication barriers. In this case, to be able to carry on with business partnership, managers need not just learn to acknowledge the differences in communication ways and styles but also learn how to communicate with multicultural business partners.

In our examination we would like to focus on a few categories of factors hampering-cross cultural communication in general and especially in business context. In this chapter we discuss frameworks and cultural dimensions that we found to be the most applicable to cross-cultural communication in business: ? Hofstede? s cultural dimensions model ? Hall & Hall? s cultural value orientations ? Language: verbal and non-verbal The cultural dimensions that affect our values, beliefs, attitudes and behaviours are what ultimately set cultures apart.

People need to develop a deep understanding of these culture dimensions to be able to 9|Page develop cultural sensitivity and a relationship to communicate effectively in cross-cultural setting. (Tuleja, 2005) Moreover, we find that technological mishaps can cause major communication misunderstanding between business partners as well to which we also dedicate our attention. Finally, throughout our research we came across number of academic articles signifying the importance of individual factors in cross-cultural communication which are also discussed. 3. 1. Hofstede’s cultural dimensions Geert Hofstede? research on cultural dimensions is known worldwide and, although criticized by some, is frequently used in numerous cross-cultural studies. Hofstede studied national cultural differences and made cross-cultural comparisons. He conducted surveys among IBM employees worldwide, analyzed them and identified and validated the first four dimensions of national culture: power distance, masculinity/femininity, uncertainty avoidance and individual/group orientation. These dimensions describe tendencies within a cultural grouping not in absolute terms, but in relative terms (Hofstede, 1980).

Later, after a survey was being carried out by researchers with “Eastern minds” in 1985, Hofstede added fifth dimension to his cultural dimensions model – short term/long term orientation. (McSweeney, 2002) 3. 1. 1. Power distance Power distance displays how members of a culture expect and accept unequal distribution of power in society (Browayes and Price, 2008). In high power distance countries there is a hierarchy in organizations. Pugh and Hickson (1995) explain high power distance as acceptance of inequality, “a place for everyone and everyone in their place” (p. 21).

The status of superiors is important and should be respected by the subordinates who are usually told what to do, follow the rules and expect clear instructions, which are then accepted without a question. In high power distance countries most managers are autocrats who enjoy privileges of the power they hold (Browayes and Price, 2008). On the other hand, in low power distance countries it is believed that everyone should have same privileges. Employees? participation in decision-making process, individuality and one? s opinion is respected and democratic management style is practiced (Hofstede, 1980).

According to Xie, Rau, Tseng, Hui and Zha (2008), members of low power distance cultures engage in peaceful, cooperative communication strategies while interacting. They easily compromise and collaborate with other cultures. Xie with his colleagues conducted a survey in which they inferred that 10 | P a g e the power distance affects the efficiency of communication. People from high power distance countries due to fear and indecision have inferior communication effectiveness when compared to people from low power distance countries.

In 2006, Zhu and Bhat suggested that “cultures that exhibit less power distance and strong egalitarianism tend to apply more egalitarian and replaceable communication strategies since they tend to treat everyone as of equal status” (p. 6). See Appendix 1. 3. 1. 2. Individual versus group orientation This dimension describes the relationship between an individual and the group. In collectivist societies, decisions are made according to what is best for the group. In his article, LeBaron (2003) alleged that “in collectivist countries, individual expression may be less important than group will. In such setting non-verbal, indirect communication may be preferred since it gives room for interpretation, saves face and displays interdependence. Moreover, in collectivist societies, group loyalty is a key factor and high-context communication is favoured to preserve harmony (Nova, p. 17). On the word of Zhu et al. (2006) “in collectivistic cultures people tend to exhibit more self-disclosure and use interdependent communication strategies, since group members tend to share their feelings and thoughts with each other” (p. 323).

Other cultures, where job tasks prevail over personal relationships presumed to be individualistic in nature. In such countries an individual looks out for him/herself, decisions are made based on personal needs and the focus is on the individual achievement rather than a group (Hofstede, 1980). In individualist cultures, low-context communication may be preferable because it is “direct, expresses individual desires and initiatives, displays independence, and clarifies the meaning intended by the speaker” LeBaron (2003). See Appendix 2. 3. 1. 3.

Uncertainty avoidance Hofstede (1980) defined uncertainty avoidance as dimension that describes a society? s tolerance to deal with uncertainty and ambiguity. It describes how people feel in unstructured situations, the extent to which they feel threatened by uncertain or unknown situations. Based on Hofstede? s model, uncertainty avoiding cultures would try to minimize the possibility of unidentified situations by following strict laws and rules, safety and security measures (Hickson and Pugh, 1995). In such cultures, the uncertainty causes stress and nervousness. 11 | P a g e

The opposite type is uncertainty accepting cultures which take life events as they come, more tolerant to the ideas and opinions different from their own and treat uncertainty more casually. In such cultures, people usually have as few rules as possible and do not consider deviance to be a treat. Moreover, cultures that are weak in uncertainty avoidance are more ready to take risks, accept changes, and believe that hard work is not a virtue. (Duronto, Nishida and Nakayama, 2005) 3. 1. 4. Masculinity vs. Femininity This dimension indicates which values are common in societies – male or female.

Masculine cultures tend to be ambitious, assertive and competitive whereas feminine cultures consider quality of life and helping others to be very important. In feminine cultures dominant societal values are care and protection of others. Relationships are important and men and women usually share equal tasks. In masculine societies “dominant values in society are material success and progress; men should dominate in all settings; men should behave assertively, ambitious and tough; care for money and material objects are important” (Arrindell et. al, 2003).

In feminine cultures like Sweden, the quality of life matters, people “work to live” and “not live to work. ” According to Stets & Burke (2000) “In western culture, stereotypically, men are aggressive, competitive and instrumentally oriented while women are passive, cooperative and expressive”. (p. 3) Moreover they mentioned: “We now understand that femininity and masculinity are not innate but are based upon social and cultural conditions”. (p. 3) Transferred to work setting, masculinity could be evident though more assertive behaviour whereas feminine cultures tend to use more nurturing approach in business. 3. 1. 5.

Short term/long term orientation In this dimension, Hofstede (1997) discussed society? s “time horizon” where he compared people? s values on orientations and importance of time. In long term oriented cultures, people have values which are oriented towards the future, whereas in short term oriented societies, individuals are oriented towards the past and present. For instance, in long term oriented cultures employees wish a long relationship with the company, they consider that time is needed to achieve business results. The difference is that people from short term 12 | P a g e oriented cultures need quick results.

It is important for them to maintain personal stability and happiness in the present. 3. 2. Criticism of Hofstede’s model Despite its popularity, Hofstede? s model of national cultural dimensions has been a subject to certain criticism since the publication of Culture? s Consequences in 1980. It has been stated that culture is hard to measure, especially by survey methods; that only one company – IMB has been used in the research and that such complicated phenomenon as culture cannot de defined by only several dimensions (McSweeney, 2002). Hofstede replied to all the criticism and justified his research by stating hat within one organization the culture is the same, and any possible differences may be only explained by cultural differences. However, as he later admitted organizational and national cultures are interconnected and often there are more than one organizational cultured within an organization. Hofstede defines cultural differences based on national borders. However, some countries have more than one national culture within one border, i. e. Belgium; while others have changed their frontiers, i. e former Yugoslavia. Therefore, a question arises: how does one define national culture in such case?

The continuous criticism and Hofstede? s defense of his theory has been going on for years already, by both scholars and managers, and it is hard to predict whether any definite conclusion will ever be reached. Hofstede? s dimensions of culture are not the absolute truth and as any theory are to be used with consideration. It is would be not right to predict somebody? s behaviour based solely on those dimensions – in every particular case other aspects have to be taken into account: family background, personal character, specific situation, etc. Hofstede? s model can be used as one of the many guidelines of looking upon culture. . 3. Hall & Hall’s cultural value orientations Some of the ideas that proved to be relevant to international communication were those of Hall and Hall (1990) about time and communication. Academics examined the following cultural value orientations: ? Perception of time: time focus and time orientation ? Communication: high-context and low-context. 13 | P a g e These dimensions can serve as a framework to understanding some cultural differences managers may face in business context, for instance, when dealing with partners across borders or managing an international team.

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