Leading with Cultural Understanding: Maneuvering International Business Relations
Business relationships are careful balancing acts in which both parties seek to benefit, making negotiation between the two—even when done domestically and in English—oftentimes difficult. In our increasingly interconnected world, with more companies doing business overseas, these relationships become even more complex because the parties bring different languages as well as different cultural perspectives and expectations to the table.
As companies expand overseas, they must be ready to conduct business in new settings. Cited in The Economist, management expert David Livermore claims that almost 90 percent of top executives from a broad range of countries around the world name “cross-cultural leadership” their greatest management challenge for this century. When managers are not prepared to acknowledge cultural differences and adapt their communication styles to better connect with international partners, the results lead not only to failed opportunities but also to great expense and inefficiency:
“Different studies have found that 16-40% of all managers sent on foreign assignments end them early. The cost to employers of each early return has been estimated at between $250,000 and $1.25m, when moving expenses, downtime and other factors are taken into account. In almost every case, the reason things do not work out is cultural problems rather than job skills.”1
For this reason, among others, numerous American business schools are addressing the topic of cultural competency and working to teach business professionals how to maneuver these new types of relationships.
Professor Jeanne Brett teaches about conflict management in one of the executive education programs at Northwestern University’s Kellogg School of Management.
These short programs, which are offered for individual business professionals as well as entire organizations, are geared toward different aspects of business development. Brett explains: “In all the exuberance associated with negotiating new business relationships between China and the West, too little attention has been paid to managing conflict in those relationships, and conflict is inevitable.” Watch the video above to hear her share one example of how cross-cultural communication works at its best.
Of course, learning a language other than English also plays a enormous role in cultural competency, particularly in grasping the nuances of conversations. It is important to be able to understand the context of business dealings and, as a matter of respect, to have conversations in the preferred language of the other party whenever possible.
Thinking of enrolling in a course to boost your business skills or enrolling in a university program that thoroughly integrates language and cultural skills? Check out our page on Language Programs to learn about some options, including CIBERs—U.S. institutions dedicated to the international aspects of business, finance, management communications systems, and other professional fields.