The Importance of Effective Cross Cultural Communication in International Business

Cultural sensitivity is a necessity for communication in a globalized market.

The scope of business operations has changed drastically over the past several decades. Run a successful, growing business has become nearly impossible without having to engage in the international market. Globalization has connected us all in ways we never could have imagined. However, this globalization has also brought challenges regarding intercultural communication and understanding.

Definition

"Intercultural communication" refers to communication between parties hailing from different cultural backgrounds. In particular, intercultural communication occurs when the communicating parties come from cultures with different communication practices, expectations and norms. In the business world, cross-cultural or intercultural communication occurs when business associates from different cultures must participate in business exchanges, negotiations or partnerships.

Hoftstede's Cultural Dimensions

International communication scholar Geert Hofstede identified five realms, or dimensions, in which these differences manifest themselves, including power distance, time orientation, masculinity, uncertainty avoidance and individualism. Different cultures value different components of these dimensions to varying extents, and as such, communication can become complicated. For example, Chinese culture, on the individualism scale, ranks low; the Chinese tend to put more emphasis on the collective good. American culture, on the other hand, ranks high on the individualism scale, putting a large emphasis on individual success and prosperity. These cultural perspectives affect the way we convey messages, as well as the importance we place on different aspects of business. These differences play a critical role in mutual understanding if we are to effectively tailor our business-related communications for success.

Impact on Profitability

In a globalized market, businesses have access to a much wider array of raw materials, supplies, human resources and potential consumer bases. As such, many companies find it appealing to expand their horizons into other countries. However, companies must often implement intercultural communication in order to accomplish this kind of expansion. Failure to take into account cultural differences can create costly mistakes. Take Wal-Mart's abysmal failure in Germany, for example. In an effort to expand its global presence, the store sank $1 billion into a German venture, giving the task of the expansion to an American who did not even speak German. As a result, the Americanized company culture did not mix well with German mores, and practices such as greeters and grocery baggers repelled German consumers. The company eventually left Germany, largely due to the country's failure to take into account cultural differences in business practices and communication.

Potential Impact on Politics

As globalization continues to expand, companies continually create economies that become inextricably linked. This practice has greatly increased reliance on soft, or rhetorical, power. Take, for example the United States and China: The economic relationship between companies native to these two superpowers has strengthened astronomically since the 1980s. While some political analysts have expressed concern over hegemonic posturing and its ability to spur violent confrontation, economic interests have done much to stabilize relations between the two countries, leading to more soft power posturing than any possible military engagement. Effective intercultural business communication and the economic bonds that have resulted clearly affect political maneuvers in the globalized world.

Future Implications

The increasing instance of companies from different countries engaging in business relationships, has created worry about the potential for international monopolies. The majority of major international mergers take place with companies from already-established world superpowers. Unfortunately, this type of merger creates a large disadvantage for still developing countries. Smaller companies attempting to establish stability in a still-volatile market will find themselves unable to compete with the lower prices established by such monopolies and oligopolies. This phenomenon re-entrenches the cycle of poverty in developing nations. Localized companies can't compete and, as a result, go out of business, which increases unemployment and poverty. As such, continued intercultural business communication will likely result in an increased emphasis on intercultural political communication to determine the best methods for preventing exploitation and ruin of developing nations.

References

• "The Atlantic Times;" This Is Not America. Why Wal-Mart left Germany; Harald Schultz; 2006
• Third World Network: Mahathir Concerned Over Emerging World Monopolies; Chakravarthi Raghavan; 2000
• Geert Hofstede: Cultural Dimensions
• DiploFoundation: Intercultural Communication
• Wisconsin Business Alumni: Why Good Communication Is Good Business