Cultural Differences for SMBs in Different Markets

Monday, August 5, 2013
Posted by Joel Thompson

New entrants to the world of business often find themselves confounded by unexpected cultural differences in the commercial world.

As borders in trade continue to topple down and the digital landscape continues to expand, connecting countries and businesses far and wide, more and more people from myriad cultural backgrounds are finding ways to do business with one another. But not without the odd hiccup of business etiquette or social faux pas along the way.

When these people of vastly different cultural contexts come together and a transaction, or an exchange of knowledge, or some sort of contractual agreement takes place, cultural differences then tend to rise to the surface. Sometimes, they clash.

For those new entrants to the international markets - startup managers, small business leaders and entrepreneurs - it can be very easy to let earnestness and eagerness run away and make a deal go sour because the cultural differences involved have not adequately mediated.

Of course, knowing your market is crucial to the success of any venture but knowing the nuances and business rituals of your suppliers, clients, or partners is similarly important and arguably even harder to get to grips with.

The chances are that a new entrant to the startup and SMB world will be clued up enough to know that doing business with, say, a Brazilian is extremely different than doing business with a Norwegian. The fact is though, they may not know how the difference manifests itself.

Navigate the waters of cultural difference with skill and empathy, and the transaction will be a much smoother process.

Every business culture possesses their own quirks. Staying with the Brazilian example, reports that newcomers to the Brazilian markets are often taken aback by the ‘custo Brasil’ which is, quite simply, an ‘informal’ administrative fee/disguised extra cost which businesses have to adhere to if they want to make any head way there. It’s part of life; you just have to take it on the chin and move on.

Similarly, more extrovert cultures from Latin cultures are often confused by the apparent reserve of their Norwegian counterparts when conducting business with them. In reality, careful thought before speech and a propensity to minimise any emotional displays are highly prized social assets in all Scandinavian countries, not just Norway.

But without having first-hand experience of dealing with these differences and having accustomed yourself to them, it is almost impossible for small business managers to know of these quirks and nuances in advance.

The conscientious small business leader who wants to arm themselves with knowledge in advance of meetings in new territories can think about certain geopolitical, technological, historical and financial factors which can give them an insight into how that business culture might play out.

For example, in Argentina, because of a historically flux-riddled economy, short term business is more highly prized and business relationships are often more deeply interwoven with familial ones because that’s where the most security lies.

In the UK and the US cyber security systems are at their most thoroughly prepared for attacks. Commercial and consumer Providers like AVG flourish here. This is a signal that entrants into the British and American markets can expect due caution to be applied to any business arrangement, especially a technological one.

In Egypt, the country’s status as both a secular and a religious state impacts upon the economy with many observers describing ‘twin’ economies as a result. This cultural difference should be noted by businesses trying to make inroads here as companies may either be Islamic or non-Islamic in their orientation. This difference can be extremely decisive with regard to financial arrangements which include borrowing arrangements in the flow of cash, for example.

Working within a global commercial environment, startup managers and small business leaders need to adapt quickly to cultural differences, embrace them and find ways to navigate them with aplomb. If you don’t have any specific experience with the individual markets, then looking at geopolitical, technological, historical and financial characteristics will help prepare you instead.

Does your business have the passport for international success?