Measuring and comparing business cultures

South Korea

Vs

Spain

Ivan Kuzevanov - Panagiotis Sarantidis – Jaime Carvajal

Treschov Alexey – Maria Safarovic

World Business Cultures

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Business culture in South Korea

The Republic of Korea (South Korea) is a constitutional democracy, has a population of roughly 51 million people, occupies a land of 99,720 square kilometers, and its currency is called Won ($USD=1073,43KRW, 3/3/2014). About 50% of the population practices religion (10,7 mil. Buddhists, 8,6 mil. Protestants and 5,1 mil. Catholics). The country of Korea was occupied by Japan since 1910 and it was split up after the Japanese loss in 1945, under the agreement that the north part would be administered by the Soviet Union, while the southern part by the U.S.A., and is divided to North and South Korea to this day.

Geert Hofstede’s Cultural Dimensions

Power distance At an intermediate score of 60, South Korea is a slightly hierarchical society. This means that people accept a hierarchical order in which everybody has a place and which needs no further justification. Hierarchy in an organization is seen as reflecting inherent inequalities, centralization is popular, subordinates expect to be told what to do and the ideal boss is a benevolent autocrat.

Individualism

South Korea, with a score of 18 is considered a collectivistic society. This is manifested in a close long-term commitment to the member 'group', be that a family, extended family, or extended relationships. Loyalty in a collectivist culture is paramount, and over-rides most other societal rules and regulations. The society fosters strong relationships where everyone takes responsibility for fellow members of their group. In collectivist societies offence leads to shame and loss of face, employer/employee relationships are perceived in moral terms (like a family link), hiring and promotion decisions take account of the employee’s in-group, management is the management of groups.

Masculinity South Korea scores 39 on this dimension and is thus considered a feminine society. In feminine countries the focus is on “working in order to live”, managers strive for consensus, people value equality, solidarity and quality in their working lives. Conflicts are resolved by compromise and negotiation. Incentives such as free time and flexibility are favored. Focus is on well-being, status is not shown. An effective manager is a supportive one, and decision making is achieved through involvement.

Uncertainty avoidance

At 85 South Korea is one of the most uncertainty avoiding countries in the world. Countries exhibiting high uncertainty avoidance maintain rigid codes of belief and behavior and are intolerant of unorthodox behavior and ideas. In these cultures there is an emotional need for rules (even if the rules never seem to work) time is money, people have an inner urge to be busy and work hard, precision and punctuality are the norm, innovation may be resisted, security is an important element in individual motivation.

Pragmatism At 100, South Korea scores as one of the most pragmatic, long-term oriented societies. Notion of the one and only almighty God is not familiar to South Koreans. People live their lives guided by virtues and practical good examples. In corporate South Korea, you see long term orientation in the, higher own capital rate, priority to steady growth of market share rather than to a quarterly profit, and so on. They all serve the durability of the companies. The idea behind it is that the companies are not here to make money every quarter for the share holders, but to serve the stake holders and society at large for many generations to come.

Indulgence With a low score of 29, South Korean society is shown to be one of restraint. Societies with a low score in this dimension have a tendency to cynicism and pessimism. Also, in contrast to indulgent societies, restrained societies do not put much emphasis on leisure time and control the gratification of their desires. People with this orientation have the perception that their actions are restrained by social norms and feel that indulging themselves is somewhat wrong.

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The Hofstede Analysis illustrates that pragmatism has the highest score. That is to be expected from an economy that has is seeing an increased GDP for 5 consecutive decades. One of the main reasons why the Korean economy is always growing is because Koreans have perfected the art of change and rebuilding. When faced with adversity, they evolve. If one of their policies does not work, they do not think twice to change it, and they have proven themselves to be very quick and adept about it. They are always planning ahead for a long time in the future.

Seven Dimensions of Culture

• Universalism v Particularism

South Korea is a particularistic country. Personal relationships have a very important role in the daily life of Koreans. People that are from the same place, region, studied in the same school, University, people who work together, highly value one another in Korea. The “spirit” of the law is more important than the “letter”, and laws are more like guidelines. Business loyalty is based on personal relationships, while personal trust is more important than a contract, which can be a subject to change, depending on the circumstances.

• Individualism v Collectivism

South Korean society is a collectivistic one. The person holds society in high regard, and aims to succeed through and in collaboration with it, not despite or against it. The responsibility of the individual is to act in ways that are required by the society, and are beneficial to it. By doing so, the individual needs are fulfilled. This means that Korea is one of those countries where high level of teamwork is achieved, and many achievements come from teamwork, while the team is rewarded as a whole – there is no favoritism. The individual grows up in groups and his personal life is usually invaded by it.

• Neutral v Emotional

South Koreans do not display their emotions. It’s not that they don’t have them, but rather that are in control of them. They are taught that expressing one’s emotions is undesirable, and a leader who displays his emotions will see his command over the group diminished. On the contrary, well controlled conduct is admired and respected. While Koreans are trying to start building relationships from the first meeting, they tend to be detached and distant on later meetings, always keeping to the point.

• Specific v Diffuse

South Koreans are diffuse. All subjects are related to each other, and the whole is much more than the sum of its elements. This has a peculiar impact on personal relationships: new acquaintances are not easily accepted, but once they are, they become part of every aspect of a person’s life. They never say what they believe, and usually make use of evasive tactics in their negotiations.

• Achievement v Ascription

South Korean culture is perhaps one of the most ascriptive worldwide. The individual’s status derives from birth, age, gender, wealth or position. It’s not an accident that Korean companies have hierarchical structures, where the managers take it for granted that the employees below their own rank will blindly follow whatever orders will be issued, while many of Korea’s corporate giants are family owned.

• Sequential Time v Synchronous Time

South Koreans follow synchronous time practices. One of the main characteristics is multitasking, and even though they are as punctual as the British have a fame of being, for them schedules are also flexible. Time commitments are desirably upheld, but in no case absolute.

• Internal Direction v Outer Direction

South Korea is more outer direction oriented. They value teamwork, and always keep an attitude of softness, politeness and persistence, believing that patience will be rewarded. They do not try to control everything, and realize that change is a part of life. To get to their destination, they prefer to ride with the wave, rather than try and control it, or go against it.

Business culture in Spain

The Kingdom of Spain has a population of 46.5 million people, and is 194,992 sq. mi. The majority of citizens, 94%, are raised Roman Catholic, and family values are extremely important in Spain. The Spanish lifestyle is more relaxed than many other nations. For example, many businesses are closed between 1:30 p.m. and 4:30p.m. for a siesta, allowing families to get together for a meal. Geert Hofstede’s Cultural Dimensions

Power distance Spain’s score on this dimension (57) is a high score, which means that Spain has a hierarchical society. This means that people accept a hierarchical order in which everybody has a place and which needs no further justification. Hierarchy in an organization is seen as reflecting inherent inequalities, centralization is popular, subordinates expect to be told what to do and the ideal boss is a benevolent autocrat.

Individualism Spain, in comparison with the rest of the European countries (except for Portugal) is Collectivist (because of its score in this dimension: 51). However, compared with other areas of the world it is seen as clearly individualist. This has made Spaniards quite easy to relate with certain cultures -mainly non European- whereas other cultures can be perceived as aggressive and blunt. On the other hand, teamwork is considered as something totally natural, employees tend to work in this way with no need for strong motivation from Management.

Masculinity Spain scores 42 on this dimension and is a country where the key word is consensus. So polarization is not well considered or excessive competitiveness appreciated. Spanish children are educated in search of harmony, refusing to take sides or standing out. There is a concern for weak or needy people that generate a natural current of sympathy. Regarding management, managers like to consult their subordinates to know their opinions and, according to it, make their decisions. In politics, it is desirable to have participation of all the minorities, trying to avoid the dominant presence of just one winning party. It is the country opposite to ‘the winner takes it all’.

Uncertainty avoidance If there is a dimension that defines Spain very clearly, it is Uncertainty Avoidance, as is reflected in a high score of 86. Spain is considered the second noisiest country in the world. People like to have rules for everything, changes cause stress, but, at the same time, they are obliged to avoid rules and laws that, in fact, make life more complex. Confrontation is avoided as it causes great stress and scales up to the personal level very quickly. There is great concern for changing, ambiguous and undefined situations. Thus, for example, in a very recent survey 75% of Spanish young people wanted to work in civil service (i.e. a job for life, no concerns about the future) whereas in the USA only 17% of young people would like it.

Pragmatism Despite an intermediate score of 48, Spain is a normative country. Spanish people like to live in the moment, without a great concern about the future. In fact, Spain is the country that has given the meaning of ‘fiesta’ to the world. In Spain, people look for quick results without delays. Moreover, there is a need for clear structures and well defined rules prevailing against more pragmatic and relaxed approaches to life, particularly, in the long term time.

Indulgence With a low score of 44, Spain is not an indulgent society. Societies with a low score in this dimension have a tendency to cynicism and pessimism. Also, in contrast to indulgent societies, restrained societies do not put much emphasis on leisure time and control the gratification of their desires. People with this orientation have the perception that their actions are restrained by social norms and feel that indulging themselves is somewhat wrong.

[pic] The Hofstede Analysis illustrates that uncertainty avoidance is ranked the highest for Spain, while the other dimensions are ranked moderately. This is a result of Spain’s feelings and concerns regarding rules, regulations, and career security. One interesting thing to note is their low masculinity score. While women are still behind men in business equality, they are extremely important in society. As women continue to make progress in the workforce, look for this score to drop even lower.

Seven Dimensions of Culture

• Universalism v Particularism

Spain is much closer to particularism than to universalism. They give greater attention to the obligations of relationships and unique situations. Would you give evidence against a friend who had been speeding and caused a traffic accident? A contract is the basis for an agreement, rather than being fixed for all time – because people and circumstances may change after you have signed it which means you reinterpret its conditions.

• Individualism v Collectivism

Once again, Spain, in comparison with the rest of the European countries is Collectivist. Collectivism puts the emphasis on shared benefits and judges individuals by what they put in. Should the team take responsibility for a mistake made by one member? Keeping face in relation to the group becomes of great importance, and loss of face must be avoided at all costs. However, compared with other areas of the world it is seen as clearly individualist. This has made Spaniards quite easy to relate with certain cultures -mainly non European- whereas other cultures can be perceived as aggressive and blunt. On the other hand, teamwork is considered as something totally natural, employees tend to work in this way with no need for strong motivation from Management.

• Neutral v Emotional

Spanish culture is an emotional one. Emotional business dealings - involving anger, joy and passion - are acceptable at the other end of the scale. If you are upset at work, you display your feelings.

• Specific v Diffuse

Of course, Spaniards are diffuse. Diffuse behavior overlaps the two sets of issues, and takes time to weave them together. You spend as much time on the relationship as on the business. You overlap the personal and the functional, and spend time outside working hours with your work colleagues and business contacts.

• Achievement v Ascription

Spanish culture is an ascriptive one. People believe that you should be valued for who you are. Power, title, and position matter in these cultures, and these roles define behavior.

• Sequential Time v Synchronous Time

As a Synchronous Time culture, Spaniards see the past, present, and future as interwoven periods. They often work on several projects at once, and view plans and commitments as flexible.

• Internal Direction v Outer Direction

Spanish culture is closer to be Outer Direction than to Internal Direction. Spaniards believe that nature, or their environment, controls them; they must work with their environment to achieve goals. At work or in relationships, they focus their actions on others, and they avoid conflict where possible. People often need reassurance that they're doing a good job.

Recommendations for both parties:

When we analyze a concrete country, we found always similarities and difference with our own country, than it is normal, the world is big and lots of people live there; however, the real job is to analyze a concrete country on the basis that another country different than yours is planning to have business with the analyzed country.

The recommendations to each country should take into account bought countries, for example we cannot recommend a Japanese to have physical contact with another person for the good of the business, this is why, the important think here is to find the point in which bought people from a different countries can meet and feel comfortable with each other.

We also found that among Asian Countries, South Korea seems to be the most flexible and open country to make business with a western country.

Both countries score highly on high power distance. While this might at first thought not seem to cause any problems, it is recommended to clarify in advance which positions in the company your business partners are and which roles they fulfill. That way, both Korean and Spanish business partners can avoid conflicts. Likewise, both cultures prefer working in groups as they are collectivistic. In order to avoid communication problems and in line with what was stated above about hierarchy awareness, it is useful to assign clear roles to all members in the group. Since uncertainty is to be avoided in both cultures, emphasis is to be put in sticking with agreements for both partners. Spaniards show more emotions when talking; this might lead to communication problems when interacting with Koreans, who keep a straight face. Awareness is the key to success here. While Koreans pay more attention to results when working on a project, Spaniards focus on the process itself. This might cause problems when deciding on a strategy, but may also play in your favor if tasks are assigned accordingly.

Recommendations on dealing with Koreans:

1. Give respect where respect is due. This is a crucial part of the hierarchical Korea. Respect should go to the ones at higher ranking and the elderly. It would be best to do some research on the people you are about to meet beforehand.

2. First meetings are not for business. The Koreans are people who rely heavily on personal relations, so the first meeting is going to be more about starting to build a relationship. There is not going to be much discussion about business during that meeting. A few words in Korean spoken by a non-Korean are always welcome and a fine gesture.

3. Koreans do not show emotions. Remember that the Korean culture is one where the exhibit of emotions automatically means that the authority of the person who exhibited them will be diminished. So, even in the dealings with foreigners, they do not show what they think.

4. Yes doesn’t mean yes. Koreans usually use the word “yes” in a different way that most Westerners do. For them, “yes” can have a large variety of meanings, from “I am listening very carefully”, or “I understand that you are making speech sounds but I’m not sure what you’re talking about”, to “I completely disagree, but I am too polite to say no”. You should be absolutely 100% sure to convey your meaning clearly.

5. “No” practically doesn’t exist in the vocabulary. They say that when a negotiator says yes, he means maybe. When he says maybe, he means no. And when he says no, he’s not a negotiator. This is especially true with Koreans. It is considered rude to straight forwardly express their disagreement. Instead, they will say things like “we will consider it”, or “that sounds interesting”. In the presence of such phrases, the non-Korean party should expect a negative answer in the future.

6. Contracts are subject to change, verbal agreements are not. For most Westerners, a contract is an unbreakable bond. For Koreans, who are not afraid to make changes when something doesn’t work, especially under changing circumstances, it is a given that they will seek to change the agreement. However, since Koreans place high value to personal relations, if something is agreed verbally by the parties in a spirit of mutual understanding and collaboration, the non-Korean party may rest easy, as he shall know that this verbal agreement shall remain.

7. Western business women will not get the respect they deserve. This is actually natural in a hierarchical society like Korean, were women are denied high management positions by default, on gender criteria. Remember, that Koreans respect the position, not the achievement.
8. Negotiations will probably be protracted. Koreans have their eyes on the distant future, and are planning for it constantly. They do not seek the immediate gain, but rather take the slow and steady pay-off approach. Thusly, they are not likely to jump into agreements.

9. Bring gifts. This is not considered a bribe in no way. Bringing presents is a sign of friendship in Korea, and it is highly appreciated, even expected. The polite thing to do is bring a gift, always wrapped up, and when presented with one, you should pretend to deny a couple of times, and never open it in the presence of your Korean partners. Good and expensive alcohol is highly appreciated.

Recommendations on dealing with Spaniards:

1. Spaniards are touchy people. They are very emotional, and for them the human they deal with is much more important than keeping to schedules, precision or efficiency. They do not have the sense of urgency. It will be good to show that you respect them as well as their culture.

2. Spaniards may dress unusually. They are much more likely to express their personality through their clothing, which may seem strange or extravagant to others. It’s best to not give much thought to it and just let it slide.

3. Spaniards like to speak. Like most Mediterranean people, they enjoy the sound of their own voice and for them it’s more important to give their opinion than to receive one. It’s better to let them handle the rhythm of the conversation; otherwise they are likely to get offended. Show them that you value their opinion, even if you disagree.

4. Spaniards “feel” situations rather than analyze. They usually operate on instinct, rather than reasonable thought and analysis. It’s best not to appear too hanged on the details, and you should expect emotional outbursts.

5. Spaniards like to eat and drink. They are certain to offer some food and drinks to their business partners, who should gratefully accept it. This is a very important part of relation building in the Spanish culture. Keep in mind that these meals are lengthy and slow.

6. Spaniards do not rush things. Nor do they appreciate being rushed, restricted, hindered or hedged in. Give them time to think the situation and let them take things at their own pace.

7. Spaniards have low legal consciousness. They tend to avoid certain laws or regulations if they find them to be irrational.

8. They put idealism over pragmatism. This is something to consider for foreigners, and they should invest time to be friends with their business partners.

9. Absolutely do not allow a Spaniard lose face. Just don’t.

10. Paying too much personal attention to Spanish ladies may not be a good idea. The men are unreasonably jealous!

Conclusions

One would expect that two countries like Spain and South Korea would have vast differences. In reality, the analysis shows that they share a lot of common values. There are differences of course, with the major ones being that Spaniards are emotional while Koreans are not, as well as Koreans being punctual while Spaniards not so much, but there are no differences that would prohibit the two countries from doing business together. Of course there should always be a translator, since Koreans, and Asians in general, do not have a good ear for English, or western languages in general, and perhaps the two parties should spend some time studying each other’s culture, since that will greatly help them do successful business together.

Sources:

• Worldbank.org: “Learning from the Korean miracle” speech by Jim Jong Kim, Dec. 2013 • http://www.kwintessential.co.uk/resources/global-etiquette/south-korea-country-profile.html • Course materials • http://geert-hofstede.com/ • Strategic consumer and brand insights from Asia and the world: http://ddresearch-international.com/?p=207 • PROCEEDINGS OF THE 7th INTERNATIONAL MANAGEMENT CONFERENCE • "New Management for the New Economy", November 7th-8th, 2013, BUCHAREST, ROMANIA • http://conferinta.management.ase.ro/archives/2013/pdf/11.pdf