The Power of Context in International Business

November 9, 2023

Identifying cultural taboos is rarely a challenge for companies operating domestically. Contrastingly, understanding and adapting your strategy to the expectations of individual cultures is fundamental to success in international business. Did you know, for instance, that in India you are expected to politely refuse the first offer of a drink or snack? In Germany, it is inappropriate to eat pizza or fries without using utensils. And in China, if you don't eat everything on your plate, your host or hostess could become offended that you did not like what you were served. These might seem like small issues, but they can compound and become a huge problem when you are creating a business deal in another country.

These cultural issues are considered part of the “context” of a country. Context refers to the individualized culture and other circumstances that require unique approaches for success in new places. As an MBA online student in an increasingly global business environment, it’s important to grasp the role cultural context plays in international business dealings. Here are three things to consider regarding the power of context when conducting international business:

1. Cultural Awareness Can Make or Break a Deal

You may be the world's greatest negotiator, but without basic cultural awareness, you may never get past an introduction overseas. And with business booming in countries like China, Brazil, and Australia, it is good business logic to appreciate the power of context in international business. Learning to navigate differences in body language, mealtime etiquette, and personal space issues is as important as learning the art of the deal.

The reality is that, in our current global economy, you may only have one chance to make the right first impression with an international client. And while you may not understand the significance of eating with your right hand instead of your left, or shaking someone's hand to begin a negotiation, it could be the difference between making and breaking an important deal.

2. Understanding the Context Spectrum is Key

It is also essential to understand where cultures fall on the low-to-high spectrum of context. High context cultures (like Asia and the Middle East) emphasize trust and relationship building as key to the process of doing business. Face-to-face interaction and abiding by cultural norms are musts in high context cultures, so those looking to do business in these cultures must undertake a great deal of preparation and study. Further, patience is important, as you have to earn trust before moving forward with any deals in high context countries. Contrastingly, low context cultures, like that of the U.S., highlight efficiency and straightforwardness, with less regard for anything other than the present business situation at hand.

An article in the Harvard Business Review on why context matters notes, “With half the world’s output and two-thirds of the world’s growth coming out of countries that are still “emerging,” it is important to recognize the centrality of context. The context in these countries is complex and different from what we are familiar with in the industrialized west. It is bound to emerge at an even slower pace. We should factor-in how business decisions connect with non-business factors, such as politics, history, and the human condition.”

3. Sensitivity to Time is Important

Another important aspect of cultural context is the varying sensitivity to time. Some cultures are fairly rigid about being on time – from a meeting to a proposal’s deadline– while others are more flexible. Though not a definitive rule, you may often find that high context cultures are also slower to make decisions because of their focus on relationship and trust building. Low context cultures may often be quicker to make decisions thanks to their emphasis on efficiency.

Time sensitivity, therefore, comes into play when some cultures take their time when making deals, whereas others are comfortable moving quickly. Where an American might push to close a business deal swiftly, a Japanese company would likely take it slow and cultivate a relationship before making any decisions. According to Ivey Business Journal, an American’s move to speed up a deal could be viewed by a Japanese company as an effort to hide something. Moving quickly, in this case, could kill the deal.

Sensitivity to time is one contextual factor that should not be ignored when expanding internationally. Companies should make an effort to understand the time sensitivity of their potential partners and adjust their strategies accordingly.

Obstacles or Opportunities?

As the U.S. economy becomes increasingly dependent on successful global relationships, it is important that business professionals be willing and prepared to travel overseas and leverage their cultural awareness to increase the company's bottom line. As cultural faux pas are increasingly identified as the greatest obstacles to successful overseas ventures, it is time to view these challenges as opportunities - instead of obstacles - in order to grow.

At Washington State University, the world is your boardroom. Our online MBA degree program has a unique international focus built into the coursework to prepare you for an evolving global business landscape. The program even offers an international business concentration, that provides an in depth education on the theories controlling the global business environment. Visit WSU online today.

Sources:

http://theglobalview.blogs.realtor.org/2016/04/01/recognizing-high-and-low-context-cultures/

https://hbr.org/2013/12/an-unexpected-lesson-from-mandela-why-context-matters