The Role of Culture in Business Transaction: Implications for Success in Trans-Geographical Settings

The past two decades have seen an extraordinary increase in communications and interactions to levels that humankind has never experienced before. The prevalence of technology and improved ease of access to information, increased travel, tourism and recreational activities imply that people, even those in developing economies, are more aware of other cultures and their respective activities. Globalization has meant an increase in exchanges, flows of information, and capital across the globe. Regardless of whether one is a proponent of globalization or not, it is unlikely that this ‘interconnectedness’ will diminish in the decades to come. In the business arena, more and more companies will need to face the challenges of dealing with trans-geographical and transcultural interactions. Understanding how business transactions can be made more effective becomes an important competitive advantage. Building on established research on culture at the individual level, this book assesses the impact of the exposure of people and businesses to different cultures, in order to provide practical and pragmatic insights to avoid conflict and enhance such trans-geographical and transcultural business exchanges.

This PhD examines how culture also impacts management, leadership and power relationships, concluding that leadership styles are context dependent, as is the way in which power is exerted in a given situation. Naturally, because we are concerned with cultural business exchanges, we look at the two parties involved: the sender (generally the initiator of the exchange) and the recipient (receives and interprets the message). It is because of this ‘interpretation’ that potential conflict or misunderstandings may occur. However, understanding cultural differences should be based on rigorous models and not on anecdotal information. A review of existing literature highlights specific cultural aspects that may affect companies and their managers. For example, some studies focus on leadership and power as the areas that are more likely to cause conflict. Furthermore, the qualities that make a good leader in a particular culture may not necessarily be ideal in another situation. Extracting from this body of knowledge, this book presents what are called ‘cultural conflict indicators’. These are issues that are considered to be critical to understand how potential conflicts could arise in cultural exchanges, and more importantly how to avoid them. Given the number of issues involved, three case studies are used to assess the recurring cultural challenges. This helped identify nine cultural conflict indicators which were integrated into an assessment framework which is termed the Cultural Conflict Framework or ‘CC Framework’. This is applied in a fourth case study. The book introduces the notion of ‘cultural competency’ at both the individual and company level, suggesting this is the capacity to deal successfully with transcultural issues in trans-geographical business situations by encouraging specific aptitudes over and above an organisation’s type and structure. Pragmatically, it recognises that identifying cultural conflicts relies on an individual’s assessment of the potential for conflict in any given business exchange, therefore one cannot underplay individual biases and the specific cultural background when undertaking such assessments. Finally, it recommends that wanting to do business trans-geographically is not enough; this must be accompanied with appropriate financial, personnel, data, planning, human and other resources which will make the business a success. Within this, the role of individuals with appropriate cultural awareness and tools to deal with this will be essential.

Yvonne Mandri-Bossart is a Swiss national living in Singapore since 2012, that spent her youth in Mexico. She has lived in seven countries and in three continents. She holds a Master’s Degree in Business Administration from Oxford Brookes University, England and a degree in Commerce from the Marketing and Business School Zurich (MBSZ) in Switzerland.