Cultural differences and the impact on business relationships

By | April 19, 2014

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a)   How do cultural differences impact on business relationships?

 

1.          Introduction

 

Business relationship could be understood as the legal relationship between contracting-parties evidenced by (1) an offer, (2) acceptance of the offer, and a (3) valid (legal and valuable) consideration (Sweet & Schneier 2008). In the following we will discuss how the cultural differences could have influences over the construction and maintenance of the business relationship.

 

2.          How culture affects the business relationships

 

2.1     Cultural differences in term of custom differences

 

Custom does play an important role in our daily life or even business life, for example, in some societies hugging is an appropriate business greeting and in other societies a handshake is the custom (Dlabay, Scott & Scott 2011, p. 17). As a result, we can see that custom differences exhibits that people would also have differences in term of do business while having the business relationship.

 

 

2.2     Cultural differences in term of communication habits

 

According to Shihui Han (2011, p. 112) language is one of the most tangible markers of culture and one of the greatest dividers by which cultures remain distinct from the rest. Language as we know form along with a long history in different cultures, some languages have a history of more than several thousand years, they contains the cultural elements, perhaps more than other evident of national cultures. For example, different greetings imply different cultures, in UK because of the frequent seen rainy and humid weather people there prefer to start the talks with topics related to the weather, and in China people always begin the conversations with topics related to eating such as “have you eaten”, here we do not want to get involved into the discussion about whether these greetings are meaningful or not, but at least these differences in greetings prove the fact that language based cultural differences would affect the communication between people from different language backgrounds. And logically, if greeting does not start well, we anticipate that the business relationship could be affected because people can’t communicate from the very beginning smoothly.

 

2.3     Cultural differences and business profitability

 

Within a normal business partnership, not only the higher management needs to communicate with each other from time to time, but also the executive level employees need to keep a close cooperative relationship with the counterparts, for example, technicians from two companies may need to work together to fix an technical issue, if these two groups of staffs from two companies may have conflicts over how the jobs are assigned and what time the work should be started because of their different cultural background. And the work incompatibility caused by the cultural background would absolutely affect the business profitability.

 

3.          Impacts on business

 

And as known to us that business relationship could be affected by a number of variable elements, such as the history of past cooperation, competition in the industry, common business partnerships and direct negotiation behaviors and etc. And within the routine direct contact in term of holding meetings and negotiation summits, it would be of great importance to take into consideration of the cultural differences if the two parties are from different cultures. Two major impacts could be identified: direct economic loss if the partner is loss or indirect impacts when the partners are not happy to work with the company in term of unwillingness to reach a deal or other types of resistance.

 

4.          Summary

 

Hence we can see that culture differences exhibits that people would also have differences in term of do business while having the business relationship with partners from difference culture systems.

 

 

Reference

Dlabay, L., Scott, J. & Scott, J. C. 2011, International Business. Mason: South-Western Cengage Learning. p. 17

Han, S. 2011, Culture and Neural Frames of Cognition and Communication. New York: Springer-Verlag. p. 112

Sweet, J. & Schneier, M. M. 2008. Legal Aspects of Architecture, Engineering and the Construction Process. Mason: South Western Cengage Learning.