Cultural Differences in Business: Impact on Communication & Management

Understanding Cultural Differences in International Business

Uncertainty Avoidance Index (UAI)

The Uncertainty Avoidance Index (UAI) measures the tolerance of uncertainty and ambiguity among members of a society.

• High UAI Cultures: These cultures demonstrate a high intolerance of ambiguity, experience anxiety and stress, and accord a high level of authority to rules as a means of avoiding risk.
• Low UAI Cultures: These cultures are associated with a low level of anxiety and stress, a tolerance of deviance and dissent, and a willingness to take risks.

Differences in Authority and Decision Making

• In high-Power Distance Index (PDI) countries, subordinates are not likely to contradict bosses, but in low-PDI countries, they often do.

Differences in Management Objectives and Aspirations

Three typical decision-making patterns exist:

• Top-level management decisions
• Decentralized decisions
• Committee or group decisions

Other differences include:

• Security, especially of lifetime employment
• Affiliation and social acceptance by neighbors and fellow workers
• Power and achievement orientation sought by managers
• Importance of personal/family life over work and profit

Differences in Communication Styles

According to Edward T. Hall, the symbolic meanings of time, space, things, friendships, and agreements vary across cultures.

• "In some cultures, messages are explicit; the words carry most of the information. In other cultures... less information is contained in the verbal part of the message since more is in the context."
• Communication in a high-context culture depends heavily on the contextual (who says it, when it is said, how it is said) or nonverbal aspects of communication.
• Communication in a low-context culture depends more on explicit, verbally expressed communications.
• Hall places eleven cultures along a high-context/low-context continuum.

Differences in Formality and Tempo

• Level of formality in addressing business clients by their first name
• Level of formality in addressing your boss by their first name
• Tempo or speed in getting "down to business"
• Perception of time varies in many cultures.

Differences in Negotiation Emphasis

Differences exist with respect to the product, its price and terms, services associated with the product, and finally, friendship between vendors and customers.

P-Time Versus M-Time

• M-time (monochronic time): Typifies most North Americans, Swiss, Germans, and Scandinavians. Most low-context cultures operate on M-time, concentrating on one thing at a time.
• P-time (polychronic time): More dominant in high-context cultures. P-time is characterized by multitasking and by "a great involvement with people."