Cross-Cultural Business

Globalization and advancements in technology have made cross-cultural business more common and increasingly important. No matter which country or industry you work in, chances are good that you’ll have coworkers, partners, vendors, suppliers, or customers from different countries and different cultures. 

In cross-cultural business environments, people are exposed to various cultural norms – including business etiquette, verbal and non-verbal communication, languages and unfamiliar business practices. Cultural differences can make it more challenging to communicate and understand each other, making people feel uncomfortable. If organizations and employees are aware of cultural nuances and learn how to work in cross-cultural settings, cultural diversity is a huge asset. It benefits organizations and employees and has societal benefits as well. 

Why Cross-Cultural Business is Important  

Benefits for the organization 

People from different cultures often have different skills, experiences and perspectives. These differences challenge team members to be more open-minded about problems and how to solve them. So, intercultural business environments tend to promote higher levels of creativity and innovation. This is great for businesses because increased innovation leads to increased revenue. 

In fact, one Boston Consulting Group study found that companies with diverse management teams have 19% higher revenues due to innovation. Another study by McKinsey showed that companies with diverse executive boards saw far higher earnings than those who did not encourage diversity in the workplace. 

Additionally, with international business on the rise, more and more companies are trying to move into new markets. Cross-cultural organizations have an easier time making this global move because cultural diversity is already part of their company DNA. When companies embrace cultural diversity and teach cultural awareness, their employees are better prepared to work across countries on an individual and group level. 

Furthermore, organizations that champion culturally inclusive management practices often have higher employee retention levels. Many studies have shown that employees prioritize company culture – including diversity and inclusion. According to a Glassdoor poll, about 67% of job seekers said that diversity is an important factor when choosing job offers. Another survey by Yello found that 70% of employees would consider leaving their job if the company didn’t demonstrate a commitment to diversity. 

The same is true of consumers. According to a recent study, if two brands offer the same product, 34% of consumers consider each brand’s commitment to diversity and inclusion when making their final purchasing decision. Also, about 64% of consumers are more likely to make a purchase after seeing a diverse brand advertisement. In addition to yielding benefits in business communication, having a message and company culture that consumers believe in drives brand loyalty and ultimately increases revenue. 

Benefits for employees 

Cross-cultural interactions help to develop some important interpersonal skills. Working with people from other cultures develops empathy, acceptance and tolerance. It empowers people to be more open-minded to others' ideas, talents and experiences. Engaging across national and cultural boundaries also improves communication skills because people from different cultures sometimes require us to explain things differently, be more explicit and understand different languages or accents. Learning to communicate well in cross-cultural settings enables better communication with people from our own culture and the same language.  

Another great benefit of cross-cultural business is increased opportunities for more people. Globalization and access to technology have helped break down cultural barriers and facilitated diversity in the workplace. 

Cross-cultural business is a win-win for businesses and employees and has a great impact on society. However, when people don’t know how to navigate cultural differences, they may hit more roadblocks than opportunities. One of the most significant barriers that people face is cross-cultural communication. 

Why Cross-cultural Communications are Important 

Cross-cultural communication is invaluable in business. It is required for successful business negotiations, building relationships with global business partners and collaboration within and outside your team. Cross-cultural communication is not just about verbal communication either. It helps to be able to read body language and eye contact and communicate using other non-verbal cues. These nuances are unique to cultures and are very important to effective communication. 

6 Tips for Improving Cross-Cultural Business Communication

1. Develop Cultural Awareness – Understanding the differences between one’s own culture and the culture of others is called cultural awareness. Developing this understanding and striving to understand more is an essential step in cross-cultural communication. You can gain this awareness by asking questions, talking to people with different cultural backgrounds, visiting cultural museums or institutions, reading books, or taking classes.
2. Learn a New Language – Learning a new language can be hugely beneficial for cross-cultural communication in business. Oftentimes, learning a new language helps us connect with others and gives us insight into the culture.
3. Choose Face-to-Face Communication – A lot of communication happens in our mannerisms and body language. As much as possible, try to communicate with people in person or on video. This helps to develop relationships and reduces miscommunication, a common problem in international business. 
4. Open Your Mind – When you're part of a large global enterprise, you have colleagues from other cultures with a wide spectrum of perspectives, experiences and skills, which often differ from those that may be common in your own culture. When you have an open mind, you’re more willing to hear new perspectives and try new ideas, both of which foster innovation.
5. Be Flexible – This is where we really embrace and practice trying new ideas. When we stay flexible, we are more open to improvement and opportunities – both of which are critical for professional and personal development. Try stepping out of your comfort zone and doing something a new way. 
6. Maintain Proper Etiquette – When meeting with a new client or business associate, having proper etiquette is important. For example, if you’re meeting someone from China, it would be helpful to know that a proper greeting is a nod or a bow. If you’re meeting someone from India, it would be helpful to know that using your left hand to offer a drink, exchange money or give a business card is considered poor manners. Each culture has different rules of etiquette and formalities. Using poor etiquette communicates a lack of knowledge or care and could make the difference between a business win and a business fail. When in doubt, do your research and read the room.  

Cross-cultural communication is a necessary capability as our world becomes increasingly globalized and interconnected. Especially in business, being able to communicate across cultures is crucial to success. At Thunderbird, our curriculum teaches cross-cultural business skills to prepare leaders for a global career that can take them anywhere. We also offer a continuing education course dedicated to cross-cultural communication.