What is Culture? How Cultural Differences Impact International Business

Interested in expanding your business internationally and learning more about culture? Pick up a copy of my latest book, Business Beyond Borders: Take Your Company Global.

As I mentioned in my post Bridging the Cultural Divide, culture has visible and invisible layers, just like an iceberg. The visible aspects of culture include the way people dress, their behavior (verbal and non-verbal language), food, buildings, customs and traditions.

The less visible aspects of culture include values, beliefs, norms, perceptions, and philosophies, and these intangible aspects of culture are the most important because they influence our perceptions and the way we think and act. Moreover, because we have a natural tendency to revert to our cultural roots, how we behave and make decisions, are all affected by cultural values, even if we are not aware of it. For instance, it was my Australian cultural background that made me conclude that leaving a sick friend to sleep was a kind thing to do, while my friend’s Egyptian cultural background led him to see the same behaviour as uncaring. At the time, neither of us was aware of how significantly culture fed into this episode.

The huge impact that culture has on how we think and act means that it’s very important to understand other cultures if we want to do business in culturally diverse settings. In this blog, I want to touch on some of the key topics and themes that you should be aware of as you start working overseas. I’ll also make some suggestions about things that you can do to prepare for cross-cultural interactions.

Challenge Stereotypes

Challenging the stereotypes that you have about other cultures is a good place to start. Stereotypes are oversimplified ideas about certain groups of people which can affect our own attitudes and expectations as we communicate with people from that group. Stereotypes can be positive or negative and by stereotyping, we infer that a person has a whole range of characteristics and abilities that we assume all members of that group have. 

For example, common stereotypes about Americans include that they are generous, hardworking and optimistic, but also that they are loud, arrogant and obsessed with guns. Or, when doing business in Europe we might expect our Italian counterparts to be late for a meeting whereas a Swiss would always be punctual and well organised. However it would be inappropriate to assume that no Italian would ever be on time and no Swiss would ever be late. Using stereotypes is a way in which we simplify our social world, as they reduce the amount of thinking we have to do when we meet a new person or encounter a new culture. A stereotype gives the illusion of a predictable pattern we can learn, providing a kind of boilerplate for how to react to any given cross cultural situation. The problem is that while they can help us get a very general idea about a culture, stereotypes are general, not accurate and individual people often don’t conform to stereotypes. That’s why cross-cultural stereotypes need to be treated carefully – they can have a negative impact on our thinking and our capacity to perceive things with discernment. 

When you are doing business internationally, get ready to challenge the initial stereotypes that you have about the people in your new target market.

Different lens

Our starting point to unpacking and understanding different cultures is that a lot of what we call culture is perspective. Each of us has different perspectives on the world that are shaped by the circumstances we grew up in; our education and the norms that our family and society taught us. Geert Hofstede, a famous Dutch sociologist calls culture “the software of the mind”. It’s how we’re programmed.

The idea that culture is closely tied to perspective can be hard to get your head around if you always lived in one culture, because it feels like the way you see the world is the “right” way. Here is the thing, though. Someone who has also grown up in one culture (that’s entirely different to your culture) can also have a single view on the world that they feel is the “right” one. And they’ll be just as certain about that as you are.

Tip: Understand that people see the world through different lenses…. and factor that in to how you act or react to circumstances, rather than basing what you think, say and do on your own cultural stereotypes.

Pay attention to hierarchy and status

In what are known as “high power distance” societies, which include countries like China and Japan, status and hierarchy matter. Respect for and deference to superiors is very important, in all areas of life. For example, Richard Lewis, author of When Cultures Collide: Leading Across Cultures says of Malaysia (which has a power distance score of 100/100):

“Status is inherited, not earned, and is confirmed by demonstrating leadership and a caring attitude. Malays feel comfortable in a hierarchical structure in which they have a definite role”.

In these kinds of cultures, people at the top of the hierarchy enjoy privileges which are not available to those lower down the hierarchy. For example, when I lived in the UAE, I had to visit my bank from time to time. When I did, it was normal for me to be escorted to the front of the queue, ahead of all the Arab and Filipino customers who’d been patiently waiting their turn. That was because I was female, white and a diplomat. Coming from a very egalitarian culture where you wait your turn in the queue no matter who you are, this made me uncomfortable. I also didn’t like it when I was talking to the back teller and an Emirati man in traditional dress elbowed me out of the way and began loudly voicing his request. To everyone else in the bank, this kind of thing appeared unremarkable, because as an Emirati man, he held a higher rank than I did, but I really minded it. That’s probably because in “low power distance” cultures like Holland, Australia and New Zealand, much less emphasis is placed on hierarchy and there is a general expectation that society will work democratically.

Within Australian companies for example, flat structures are common and there is an understanding that everyone is inherently equal. Where they exist, hierarchies are often established merely for convenience. Superiors are usually accessible and managers rely on individual employees and teams for their expertise. Both managers and employees share information frequently and expect to be consulted. Communication between different levels of an organisation is informal, direct and participative. People call each other by their first names. This is quite different to how things work in a Japanese or Emirati company where titles are important and communication is formal. In high power distance cultures, the person of higher status usually gets to speak first, set the agenda and have the final say. Conversely, in low-power distance countries anyone can speak up if they have a valid point to make and decisions are often made collectively.

One of the most important differences between high- and low-power distance cultures is whether or not a subordinate is allowed to directly confront their boss about an issue. This includes asking questions. In low-power distance countries, employees are expected to ask questions and to tell their superiors when something does not seem to be correct. In a high-power distance culture, employees do not ask questions, and they do not point out obvious errors that a superior has made. You can imagine the kinds of challenges that can crop up when people from low and high power distance societies begin working together without an awareness of these differences.

As you do business in a high-power distance culture, you may also find that you’re not necessarily talking with the final decision-maker and you may need to allow greater time for your contact to get the necessary approvals within the organization to move forward than you would at home. This is often frustrating for businesspeople from low power distance cultures, as they struggle to understand why business moves at what appears to be a glacial pace.

Conversely, if you are from a high-power distance culture, your counterpart may be in a position to make decisions quickly and independently, and your deal may move forward faster than you were expecting.

Rules vs relationships

Cultures can also be categorised as either relationship- based and rule-based. While rule- based cultures and relationship-based cultures both have rules,  the differences between them have significant implications for how business is done.

In a relationship-based culture, relationships are a key driver of behaviour and authority figures – parents, bosses, elder siblings or even departed ancestors do the regulating. Bad behavior is deterred by shame, loss of face, punishment, or ostracism. Because the authority figures are close at hand and form an integral part of the social environment, everyone knows what appropriate behaviour looks like and there is no need to spell it out explicitly.

Behavior in rule-based cultures on the other hand, is based on respect for rules. People respect and obey the rules for their own sake, not because someone in a position of authority made a rule.

The dichotomy between rules and relationship-based culture is particularly apparent if you are a Westerner doing business in the Gulf States. There, it is common to hear people talking about using wasta, which translates as “influence” or “connections”, to resolve a conflict or get things done. Using wasta usually means bypassing official channels or bending the rules to get a faster or more favourable result. In fact, if you don’t have wasta, getting anything done quickly in these countries can be a struggle, and it is the normal and preferred way of doing business in the Middle East. To rule-obsessed Westerners though, it reeks of nepotism, cutting corners and doing back-room deals, all of which are frowned on in Western culture. Australians, Americans and Brits feel irritated by the idea of someone getting a great outcome specifically because they did not play by the rules or do things “the official way”.

Or, consider how contracts work in a country like China. Whereas something as simple as hiring a car in Europe requires you to sign a five-page contract, dealing with every possible contingency, it is possible to begin a major commercial deal in China on handshake (although as a rule-obsessed Western lawyer, I personally don’t recommend it). Where there is a written contract in China, it may be more of a memorandum of understanding than a binding legal document. Because the terms are vague, there is room for adjustment as the situation evolves. As for compliance, the parties are more likely to rely on a relationship of trust than a legal system.

This kind of fluidity makes rules-based people uneasy, but for a Chinese person it makes sense. In a Confucian culture, doing business is primarily about developing personal relationships – not just doing a transaction. These can be based on family or clan connections, or on relationships of mutual obligation, guanxi, which also translates as “connection”. Business plans develop along with the relationship rather than through formal documents, and while businesspeople draw up contracts to please their Western counterparts, stories abound about the Chinese side wanting to alter the terms the day after the document is signed. While this is shocking for the Westerner who says to himself “I can’t believe they want to start moving the deckchairs already”, the Chinese thinking is “Why enslave oneself to a piece of paper, when the world constantly changes?”

The group or the individual?

Individualism versus collectivism is the degree of interdependence among the members of a society. In individualistic societies the ties between individuals are loose: everyone is expected to look after himself or herself and his or her immediate family. In collective societies people are integrated into strong, cohesive in-groups from birth onward. Through a person’s lifetime, the group protects them in exchange for unquestioning loyalty. Here’s an example of how these differences can play out in an international business context.

Imagine that Paul is an American who visiting his company’s Japanese partner in Tokyo for the first time. He has been talking with his counterpart, Taro, at least once a week for the last six months. Paul thinks that Taro has done a great job supporting the company’s Japanese clients, and he wants to make sure Taro gets the recognition he deserves.

At the beginning of the visit, Paul meets with the partner’s key staff including Taro. He wants to show his appreciation and build some goodwill, so he praises Taro’s dedication and skills in front of his peers. The mood in the room suddenly shifts and Taro seems visibly embarrassed. Everyone else looks uncomfortable too. What just happened?

As an American, Paul comes from a business culture where individual achievement is highly prized. What he doesn’t realise is that the majority of business cultures around the world place a higher value on group membership and dynamics and that Japan is one of the most collectivist societies in the world. By singling out a group member, Paul made Taro lose face in front of his team and the team shared his embarrassment. This is true even though Paul was recognising Taro for positive reasons. The Japanese expression for this is: “The nail that sticks up gets hammered down.”

Much of the world’s population lives and works in cultures that are more collectivist than individualistic. As a Westerner working internationally, how can you adjust to work effectively with collectivist mindsets?

For starters, the next time you find yourself in conversation with a key contact from Asia, the Middle East, Latin America, or Africa, be conscious of how much time you spend talking about individuals versus the group. While it makes sense to inquire after your contact’s health, it is also smart to ask how their team is doing. If you are meeting with someone from a culture that co-mingles work and private life, inquire about the health and well-being of their family as well. As you move forward in conversation, keep in mind the impact of potential decisions on other group members both in your organization and your counterpart’s.

Communication styles

In Anglo-Saxon cultures – the United States, United Kingdom, Canada, Australia and New Zealand, we trained, usually subconsciously to communicate as literally and explicitly as possible. Good communication is all about getting your message across clearly and succinctly and accountability for accurate transmission rests with the speaker. We are often told “if someone didn’t understand what you meant to say, it’s because you didn’t communicate clearly”.

As a result, people from these societies tend to speak directly without mincing words. We prize the “nothing to read between the lines” approach for its clarity, but not everyone sees it that way. People from the Middle East for example, find Ango-Saxon communication grating, specifically because it is so direct. I once had a Moroccan friend who felt this way, even after many years of living in Canada. He told me on more than one occasion “You Anglo-Saxons are so blunt”, and he didn’t mean it as a compliment. At the time, I found it hard to see his point, because to me, the way I communicated felt to the point, but not necessarily blunt and definitely not rude.

This difference of perspective stems from the fact that Morocco is a “high context” communication culture, where interpersonal relationships are extremely important and the harmony and well-being of the group is preferred over individual achievement, whereas Australia is a “low-context”. In low context cultures, communication is more explicit and direct because individuals are not expected to have knowledge of each other’s histories or background, and communication is not necessarily shaped by long-standing relationships between speakers. In high context Middle Eastern and Asian cultures, messages are often conveyed implicitly, requiring the listener to read between the lines. Good communication is subtle, layered and often relies on lots of sub-text. Responsibility for transmission of a message is shared between the sender and the receiver.


For example, Arabs tend to talk around the point and expect the listener to be intuitive enough to discover the hidden message being communicated. They are more likely to use abstract ideas than concrete facts, particularly when bad news has to be delivered. If a Lebanese or Saudi needs to refuse a request, he or she will rarely say “no”, as being so direct makes them feel extremely uncomfortable. Instead, he or she will drop hints and use indirect language to let you know that what you are asking cannot be done. 

Saying “no” between the lines is also common throughout Asia, especially when speaking to a boss or a client. If you work with a supplier or team member from China, Japan, the Philippines or Korea, you’ll find that people have a variety of ways to say “no”. A question like “Can you complete this project by next week” may elicit a non-committal answer like “I’ll try my best” or “we’ll need to think about it”, or even a silence.

To a Westerner, this can feel like poor communication at best and evasiveness at worst. I’ve heard Western businesspeople ask “why can’t they just say what they mean?” when it comes to negotiating deals in the Middle East. People from high context cultures are also fond of talking about non-business topics in a business context. For example, the Finance Manager at our company is Indian and we meet every few weeks to review the finances. Even though our meeting is specifically finance-focussed and time limited, he always makes a point of talking about other things that are happening in his life – the rate of Covid infections in India, what is happening with his family or property investments, the charitable project he set up – one time he even took our team on a virtual tour of a local temple. These themes often take up 30% of the meeting. As an Australian who is used to sticking with the meeting agenda, this can feel like a diversion, but I have come to appreciate the fact that this is how my colleague is building a relationship with my team, from thousands of kilometers away. And it works.

These same patterns exist in other Asian cultures and as you can imagine, differences in communication styles can lead to serious misunderstanding when Westerners get talking to people from high context societies. Being aware of the differences in the way in which high and low context cultures communicate will go quite a way towards helping you read a particular social or business context and to keeping you out of trouble, even before the commercial conversation begins.

If you come from a low context culture, one of the ways you can improve communication with clients, suppliers and partners from high context cultures is to practice ‘listen between the lines’ rather than taking everything at face value. Try to hear what is being implied rather than focussing on the words themselves, and ask clarifying questions to tease out meaning.

On the other hand, if you come from a high context culture, try to be as clear and transparent with your interlocutors as possible. State your objectives and opinions simply and clearly and show your cards upfront. At the end of a meeting or call, recap all the key points and agreed action steps and repeat these in your follow up email. If you are ever unsure about what has been agreed or what you are expected to do, don’t read between the lines, let people know that you are unsure and clarify their expectations.

A word on email

The use of email is an area which can cause real problems in international business, because people have different expectations about how it is used. I want to highlight two issues: function and tone.

Westerners love email because it is fast, direct and it creates a written record of what happened, which we can use to hold others accountable – it compliments our rules-based thinking. We feel comfortable dashing off short, snappy messages to colleagues as a way of managing work and driving projects forward.

To people in relationship-based, high-context cultures, using email this way feels very perfunctory. In Middle Eastern cultures, for instance, people generally prefer to meet face-to-face (or on video or phone where an in-person meeting is not possible) to discuss work, because it is personal and helps to build a relationship – a key goal for them. Follow-up email is used sparingly, if at all. When I worked in Iraq, colleagues in various government ministries often didn’t reply to my emails, although they were amiable and easy enough to work with in person.

In countries like Indonesia, the Western mania for writing everything down can feel like distrust. That’s because where people agree a course of action in a meeting, they believe that the verbal commitment is sufficient and that black on white is only required where a person does not trust that someone will do what they have agreed to.

Tone is another are where problems crop up. Without context, emails, like text messages can be easily misinterpreted and problems can occur, even between cultures that are quite similar. I once heard an anecdote about two female colleagues, one British and the other Australian who had come to dislike each other, at least partly thanks to their email communications.

The British woman would always begin her emails with a description of the weather in the UK and enquiries about her colleague’s health, and the Australian would invariably reply in with one sentence answers, completely bypassing all of the peripheral detail. What probably felt to her like efficiency and clarity came across as rudeness and coldness to her slightly more high context colleague on the other side of the world.

I recommend to my clients that they manage potential email problems by making email a secondary means of communication in their international business. My strong preference is that people communicate as much as they can via video (or phone at worst) and rely on email only to follow up and record outcomes, agreements and action points.

Approaches to time

Time is another area where cultures tend to differ markedly in their approach. The American sociologist Edward T. Hall – who developed the theory of high and low context culture – also concluded that two different orientations to time exist across the world: monochronic and polychronic. Monochronic approaches to time are linear, sequential and involve focussing on one thing at a time, whereas polychronic orientations to time involve simultaneous occurrences of many things and the involvement of many people. In a polychronic setting, the time it takes to complete an interaction is elastic and more important than any schedule. The Trompenaars’ model of national culture differences, also divides approaches to time, sequential and synchronous, which map roughly to Hall’s categories.

Western cultures tend to be monochronic / sequential whereas Middle Eastern and Latin American cultures are firmly polychronic / synchronous and Asian cultures are split between the two camps.

In monochronic or sequential cultures like Germany, Britain, Switzerland and the United States, people prefer to “stick to the plan”, to meet on time and for events to happen in the “correct” order. They place a high value on planning, punctuality, planning and staying on schedule because they believe that “time is money,” and don’t appreciate it when their timetable is thrown off.

By contrast, in polychronic or synchronous time cultures, meetings can start later and plans can be interrupted. People see the past, present, and future as interwoven periods. They often work on several projects at once, and view plans and commitments as flexible. I cannot tell you how many times I waited for meetings to start when I worked in Iraq, often with colleagues from the United States. While I was accustomed to laid back Middle Eastern scheduling and prepared to cool my heels for a while, my American colleagues- who hadn’t worked in the region before – found the delays maddening and this sometimes created a tense atmosphere in meetings … not a good way to begin.

As I mentioned above, there are a variety of approaches to time in Asia. Singaporeans value time and don’t like to waste it. The Japanese are more concerned not with how long something takes to happen, but with how time is divided up in the interests of properness, courtesy and tradition.

The Chinese, like most Asians, “walk around the pool” in order to make well- considered decisions, but they also have a keen sense of the value of time. This is apparent in their attitude toward taking up other people’s time, for which they frequently apologize. For example, at the end of a meeting in China, it is customary to thank the participants for contributing their valuable time.

Punctuality is also important in China —more so than in many other Asian countries. Indeed, when meetings are scheduled between two people, it is not unusual for a Chinese to arrive 15 to 30 minutes early “in order to finish the business before the time appointed for its discussion,” so as not to steal any of the other person’s time! It is also considered polite to announce, 10 or 15 minutes after a meeting has begun, that one will soon have to be going, so as to highlight a desire not to take too much of the other person’s time. The Chinese person will not go until the transaction has been completed, but the point has been made.

There is something of a double standard at work here: the Chinese penchant for humility demands that the other person’s time be seen as precious, but the Chinese also expect a liberal amount of time to be set aside for repeated consideration of the details of a transaction and to the careful nurturing of personal relationships surrounding the deal. Chinese people frequently complain that Americans doing business in China often have to catch their plane home “in the middle of the discussion.” Whereas the Americans believe that the facts have been adequately discussed, the Chinese feel that they have not yet attained that degree of closeness that is (for them) the bedrock of the deal and of other transactions in the future.

Because approaches to time can be such a source of friction across cultures, it is worth spending time contemplating your own approach to time and that of your counterpart as you do business overseas.

Have you ever dreamed of taking your business global?


Business Beyond Borders: Take Your Company Global is the latest book from international business strategist, Cynthia Dearin. It’s the culmination of decades of research, experience and ‘aha moments’ about the world of international business.


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