Cross-cultural communication in a global world
If your company exports its goods and services internationally or operates overseas, you probably have an inkling that the ability to communicate and work cross-culturally will have an impact on its international success. But why is that, exactly?
According to a fascinating report, "Competing across borders: how cultural and communication barriers affect business" which was published by the Economist Intelligence Unit (EIU) in 2012, cross-cultural communication has a vital role to play in international commercial success at this particular point in history.
In the wake of the Global Financial Crisis (GFC), with many developed economies in the throes of stagnation or downturn, companies from these markets began to turn towards the developing world in search of new customers and new talent. Meanwhile, companies from vibrant developing economies whose ambitions had outgrown their own homelands were also seeking opportunities to grow through international expansion. Those dynamics combined to create the thoroughly international world of business that we inhabit today, where it is becoming increasingly common for businesses and employees to communicate and collaborate with customers, colleagues, suppliers and partners in other countries.
The resulting need for harmonious and productive cross-border relationships that transcend cultural differences has placed new demands on companies and their workforces. The EIU survey found that the corporate world recognised that success in global markets was tied to cultural sensitivity and communication skills, but also indicated that many organisations had yet to adopt measures that would turn this realisation into practice. In particular, the survey also highlighted that:
Effective cross-border communication and collaboration are becoming critical to the financial success of companies with international aspirations. Almost two-thirds of respondents to the survey thought that better cross-border communication had been a critical factor in the improvement of their organisation’s performance over the preceding three years. However, a similar proportion also believed that their organisation encountered difficulties with cross-border collaboration or communication at least “sometimes”. About half of the executives surveyed also admitted that ineffective cross-cultural communication and collaboration had been costly and had obstructed major international transactions, inevitably resulting in financial loss. The overwhelming majority (almost 90%) agreed that if cross-border communication were to improve at their company, then profit, revenue and market share would all improve as well.
Most companies understand the cost of not improving the cross-cultural communication skills of their employees, yet many are not doing enough to address the challenge. Despite acknowledging the direct impact of effective cross-border communication on their fortunes, a significant proportion of companies, by their own admission were not taking sufficient remedial action to address the root causes of misunderstandings.
Misunderstandings rooted in cultural differences present the greatest obstacle to productive cross-border collaboration.
Respondents to the survey regarded “differences in cultural traditions” (51%) and “different workplace norms” (49%) as the greatest threats to the smooth functioning of cross-border relationships.
In summary, in the post-GFC world, companies seeking long-term success in an increasingly globalising market need to “go international” more than ever. The degree to which these companies that expand abroad succeed in foreign markets will be significantly influenced by their understanding of the culture of their target market and their ability to communicate with the people in it. Companies which do not accept the challenge of getting inside the minds of their foreign counterparts, clients and suppliers, and communicating effectively with them can expect to have a tough time in the global marketplace.
To read the full report, click here.
Dearin & Associates provides cross-cultural consulting services to companies operating in overseas markets, and to their counterparts from abroad. Our briefings are tailored to each participant, and we focus on private and professional etiquette, cultural differences, religious considerations, political subtleties, racial and sexual mores and the greater economic and regulatory context. Click here to find out more.