How Does Culture Affect International Business?

Culture influences many aspects of international business through differences in communication, transactions, negotiation and behavior. Characteristics of cultures, such as style of communication (direct or indirect), negotiation strategies and perception of business partners as friends or merely partners influence the compatibility or incompatibility of businesses with others in the international business arena.

Differences in culture sometimes impede business transactions and the processes of negotiating and deal-making. When striving to reach an end goal through negotiations, business leaders from different cultures approach the negotiation process differently. In some countries, such as Spain, the United States and other European nations, business leaders seek a fast closure to meet business objectives. In other parts of the world, such as Asia, business executives engage in a lengthy preliminary stage of negotiations to solidify a partnership before carrying out complete negotiations.

Cultural differences also influence negotiation strategies and potentially outcomes. Some negotiators espouse win-win outlooks on negotiations, while others assume one business wins and the other loses. Degrees of formality also vary among business leaders and influence proper business etiquette. In the United States, for instance, business leaders refer to others by first names to indicate camaraderie. In Japan, however, business leaders frown upon using first names during business meetings, as doing so indicates disrespect.