Impact of Cultures in Business

Why is Culture Important in Understanding Strategic Management and Business Development?

Any of us who is travelling is constantly living different situations that can be considered strange, anomalous or weird to us. Culture impacts in our daily life as in our business. Indeed, every culture has its own values, habits, attitudes, believes. We usually simplified(y) and link a culture to one single nation, but we should always consider that this is not really correct because in any nation there are also differences such as various territorial origins with different histories and socio-economic situations (i.e. Western and Eastern Germany; Northern and Southern Italy, etc.), different ethnicities, religions, minorities, languages, etc.

Culture is relevant in Management and Business Development because it embraces a large number of spheres which can influence our perceptions and decision-making approach. In particular there is a variety of business-areas where culture can strongly influence and impact on the strategic approach and the expected results of a company:

- Marketing

- Management of international teams

- Business negotiations

- Leadership

- Language and communication skills

- Establish business trust and long term relations.

Analysing the Marketing and looking at these two videos, for instance,  (https://www.youtube.com/watch?v=smusX8AirYY & https://www.youtube.com/watch?v=PIojNGI9KGE) we can easily understand how two companies, both working in the bakery and pasticcerie sector, are focusing their television-advertisement on different cultural-values. Indeed, the Finish Company Oululainen (https://www.oululainen.fi/) which has developed the first video focuses its attention on the tenacity and independence of the child from his father concluding the video with the written sentence “Kova kuin elämä” - Hard as life. The video of the Italian Company Mulino Bianco (https://www.mulinobianco.it/home) is instead focused on the value of the family and its unity. Mulino Bianco video, indeed, at the end of the images says “Flauti, fatti per stare insieme” – Flauti, made to be together. This example notices the relevance of culture in any marketing strategy.

What is culture?

Culture is a complex concept which defines the individual and collective, intellectual and social, material and spiritual evolution of people. The concept of Culture had a relevant historical progression, in particular from the second half of XVIII Century, thank to various scholars such as J.G. Von Herder, E.B. Tylor and later on to F. Boas.

According to Richard D. Lewis, one of the main scholars who has studied the role and impact of Culture in Business, the concept of Culture is composed by different levels and each level correspond to specific individual and collective characteristics. Lewis Model defines as most relevant characteristic of our Culture the National level, while the personal level as the least influencing one (see the picture below).

Levels of Culture (Lewis Model view)

Lewis explains also that Culture is linked to a single nation due to the specific collective way we perceive and create it. Thus, analysing the pictures below, we can compare the perception of culture of Germans and Japanese. In the first case - considering the German cultural perspective - each individual entering in the society undergoes a “process of acculturation” which later is transferred to other younger individuals. In the second case - considering the Japanese cultural perspective – Culture is evaluated as collective and united concept which all people are carrying on day by day, year by year. In Japan, the culture itself includes different collective concepts such as art, language, science, law, philosophy, etc. Thus, comparing the two perspectives we can underline that German culture is founded on the concept of individuals, while Japanese culture is based on the community and its harmony.

Evolution of Culture – German perspective (Lewis Model view)

Evolution of Culture – Japanese perspective (Lewis Model view)

According to the Lewis Model, there are four specific main spheres where people can easily have a cross-culture misunderstanding: 1) VALUES - Core beliefs; Attitudes and world view; 2) COMMUNICATION PATTERNS - Speech styles; Listening habits; 3) Concept of TIME; 4) Concept of SPACE. Looking at the pictures below, indeed, we can see how people perceive differently the meaning of space.

Meaning of Space – People waiting a bus in Finland

Meaning of Space – People waiting to enter in a Temple in India

Meaning of Space – People waiting to enter in a Bank in Bulgaria

The Lewis Model of Cross-Cultural Communication

Richard D. Lewis has distinguished the different cultures in three main groups: Linear-Active; Multi-Active; Reactive. Focusing mainly on the national level, Lewis Model defines the Anglo-Saxon cultures as Linear-active (i.e. Germans, English, American, etc.), so people who are frank, direct, job-oriented and capable to follow their activities in a well-organized and linear way. Multi-Active are all the people belonging to Latin cultures (i.e. Spanish, Italians, Brazilians, etc.) who are mainly people-oriented, very communicative, creative and capable to follow various activities at ones. The third category is called Reactive and includes mainly Asian cultures (i.e. Japanese, Chinese, etc.) which are polite, indirect, patient and react to partner’s actions. The three categories represent a model which simplified the reality, but each individual - despite his/her nationality - according to a detailed test which Lewis has created can belong more or less to one of these categories. Here below there is the picture of the triangle of Lewis Model and the list of the main features which define the classification of the three categories of Lewis.

Lewis Model – Linear-Active; Multi-Active; Reactive.

Main features of the three categories of Lewis Model