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The Importance of Understanding Culture in International Business

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The Importance of Understanding Culture in International Business | Business Management in an International Context | |

The increasing number of interactions between independent countries, companies and people has highlighted the importance of an understanding of global cultures, both national and organisational. Culture plays a large role in the way individuals behave and interact with one another and therefore plays an important role in business interactions across cultures. Many definitions of culture are offered, but one more relevant to culture in international business is :
“Culture is the way in which a group of people solves problems and reconciles dilemmas.” (E.Schein 1985)

The first way in which countries can be broadly categorized is into either a high context or a low context culture. High context cultures place more emphasis on the importance of group identity. They have a high sensory involvement and participate more readily in bodily contact. Low context cultures prioritise individualistic properties. They use body language less frequently and are monochronic thus placing a high importance on timing and scheduling. Most Northern European countries and other western societies are low context cultures.

It has been suggested by the acclaimed social scientist, Norbert Elias (1978) that the development of society and the basis of its’ cultural contexts are closely associated with the prominent historical groups of the region leading to an establishment of national cultural values. Countries and even regions of a country often have very different historical backgrounds which lead to a vast plethora of different national cultural contexts. The authoritative work on formally distinguishing the differences between these cultures was carried out by Professor Geert Hofstede between 1967 and 1973. His work involved analysing values of IBM employees...

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