Cultural differences continue to represent a relevant obstacle in the internal and external activity of exporting firms, but this can be overcome with the adequate development of this capacity.
Today's world is marked by disruption, in which the globalization process is combined with the consequences of a health pandemic with serious economic and social implications, and with other global dynamics related to the expansion of the Internet, the strengthening of economic nationalisms or the rise of Asian powers. All of this has given rise to a new global scenario, in which the risks in international business have increased.
Along with those of a financial, commercial or political nature, the risks derived from cultural differences, different communication and negotiation tactics, or how decisions are made in other places seem to have descended into the background, perhaps because they are less tangible results in business internationalization in a scenario that, at first glance, may seem increasingly homogeneous.
But the reality is that these divergences continue to clearly influence all the activities of international companies, both in their external aspects - especially in intercultural negotiations - and internally, in relation to the creation and maintenance of powerful international teams, and they generate difficulties due to the lack of adaptation to values, hierarchies, protocols or ways of thinking and acting that are different from ours.
Sufficient as an example are the existing differences in the way of communicating between “low context” cultures, such as those of Anglo-Saxon or northern European countries, in which the interlocutor clearly indicates what he or she means with verbal language and explicit corporal, and those of “high context”, where we could place many Asian, Arab or Latin American countries, whose non-verbal communication and attitudes or circumstances are usually more relevant than what is expressed orally.
Núria Bagés, director of NBagility Business Training, highlights in this sense that “adequate salespeople within the country are not necessarily appropriate in other cultural environments, not even if they speak the same language or are geographically close. “Good local technicians are not necessarily good international negotiators.”
Cultural intelligence as a lever for success
“When talking about success in international marketing and leadership, one of the most current and best-founded models to increase possibilities relevantly includes cultural intelligence (as a literal translation of Cultural Quotient or CQ)”, highlights Bagés.
This concept, introduced in 2003 by Cristopher Earley and Soon Ang, refers to the ability to relate to and work effectively in culturally diverse situations. This implies both a methodology and a dynamic mindset, in which we must first become aware of our own “cultural lenses” and be motivated to understand others, to subsequently capitalize on these strategic levers and continually improve them (see attached infographic). .
In general, Núria Bagés points out that there are four factors that should be developed if we want to be culturally intelligent: motivation, knowledge, action (behaviors) and strategy. It may seem like a complex term, but surely we all appreciate that culture is a value and that we can be very sensitive when something or someone does not conform to how we think things should be according to what we have learned.
The founder of NBagility Business Training also emphasizes that “research by experts such as Van Dyne demonstrates that CQ predicts an important variety of outcomes in cross-cultural contexts, such as cultural adaptation, expatriate performance, global leadership or success in international negotiation and in multinational team processes.
In this way, a leader of a team with members from China, Germany, India and Spain, for example, has the challenge of commenting or criticizing directly or indirectly according to each person's culture. “It is a difficult but indispensable task that can avoid discomfort, loss of confidence or friction in the team and that does not consist only of changing a word or two,” says Bagés.
A scene in transformation
The expansion of globalization during recent decades could lead one to think that cultural differences are disappearing as a certain universalization or homogenization advances in the functioning of the international business world, but Enrique Fanjul, director of Iberglobal, considers that this would be a serious error and that these factors continue to play a relevant role, so their misinterpretation can cause problems.
Fanjul believes, in any case, that “we should not underestimate these aspects, but nor should we exaggerate their influence in the current context.” Precisely, the coronavirus pandemic has profoundly disrupted the evolution of the world economy, with negative effects on international trade reflected in the growing lack of supplies, the increase in transportation costs and the closure of factories. Which in turn has produced a reinforcement of the previous trend towards a certain “deglobalization”, with the aim of securing supplies, reducing costs or strengthening strategic positions.
Although the director of Iberglobal does not believe that in the short term there will be important changes in terms of cultural patterns and intercultural negotiation, he does highlight the impact that the crisis and its restrictions on mobility have had on personal relationships, many of them now interrupted, and that are key "in building a framework of trust as a basic element for doing business, especially in certain cultures like ours."
The necessary gender perspective
The progressive incorporation of women into all economic activities and, specifically, those related to international trade, is a fundamental element to explain the current performance of companies and economies. However, there is still a long way to go. In fact, as the World Bank highlighted in its report “Doing Business 2017”, “the elimination of all forms of discrimination against women on a global scale would increase per capita productivity by 40%”.
One of the most important recent steps in this direction was taken with the Buenos Aires Declaration of December 2017. 118 countries, including Spain, came together to demand greater integration of women in commerce and committed to promoting entrepreneurship. female, facilitate access to financing and participation in public procurement markets, include SMEs led by women in value chains and, ultimately, to fight for equal opportunities for women entrepreneurs.
To a large extent, it is the cultural aspects, based on stereotypes, taboos and prejudices, that constitute the main obstacles to achieving this development. Precisely for this reason, the gender perspective strengthens its role here in the necessary construction of cultural intelligence and in overcoming these challenges.
This concerns both the internal functioning of the companies and the external route, materialized mainly through intercultural negotiation. Broadly speaking, we can point out that there are different types of societies depending on the role that women occupy in them and this reality must be incorporated into the factors that characterize these negotiations (see attached infographic on the 10 factors of intercultural negotiation).
To questions about how women entrepreneurs are treated in the country of destination or what protocols exist, for example, we must also add the appropriate mechanisms within the company itself to support and reinforce the leadership role of women in negotiations to thus avoiding the multiple examples of disagreements that still occur.
On the other hand, and sponsored in part as a response to the crisis and the loss of “in-person presence”, there has also been an expansion in the use of social networks and new technologies in the daily work of companies, and this dynamic has generated also an increase in problems related to digital communication.
A report of Harvard Business Review of 2020 indicates that the 76% of the people interviewed who participate in virtual teams show difficulties in feeling connected with their teammates, as well as lower motivation and a greater workload, often related to time differences or lack of roles and clear rules.
Núria Bagés gives as an example the statements of Audrey Clegg, group talent director of Coca Cola, who pointed out that the pandemic has generated a new reality without an action plan in which it is essential to become more understanding of the needs of others. Facing new challenges with different perspectives increases the difficulty of effective communication and the lack of personal contact complicates the situation even more.
Cultural intelligence is revalued in this context of uncertainty and serves both leaders and members of multicultural groups in the new post-COVID-19 era, to be more aware of sensitivities and better detect failures to rebuild a new environment. more productive and successful. “We will continue working virtually for a while in the international sphere, but digital should not replace face-to-face communication in commercial or emotional effectiveness,” Bagés emphasizes.
Therefore, the development of cultural competencies can help sales teams to make better presentations of their products, to negotiate more effectively in other areas and open opportunities, to understand the values, styles and preferences of communication and decision-making. decisions in other countries, and to build strategies with shorter sales cycles both B2B and B2C.
With the right baggage
Although it is still early to assess the progress of Spanish firms in this line, it is true that at the moment there are few companies, usually large in size, that include comprehensive training in cultural intelligence and intercultural negotiation as a relevant part of their strategies.
However, business schools have already implemented subjects focused on cultural intelligence in their programs. This is, according to Núria Bagés, a good sign, since “its graduates will have to build effective international business relationships, work in high-performance global teams and do good business.” For all these reasons, its main recommendation, both for start-ups and SMEs as well as for larger companies, is "not to send personnel to other countries or to be part of multicultural teams, virtual or not, if they are not trained in CQ."
The benefits of cultural intelligence
- Better functioning of multicultural teams
- Development of a culturally differentiated strategy
- Greater efficiency in projects and more benefits
- Inclusive approaches that value differences
- Human resources solutions best adapted to circumstances
- Optimize your chances of international success
- Reduce risks through better analysis
- Promotes win-win outcomes
- Provides flexibility and adaptability to markets
- Improves international reputation
- Lays the foundations for adequate intercultural negotiation