“Western Culture” as a Stereotype: Defining “The West”

Over the last few weeks, we’ve talked about stereotypes: how they can be harmful and ways in which you can use them wisely to aid cross-cultural understanding.

In fact, we use stereotypes a lot in this blog.

One of these stereotypes is the broad term, “Western culture,” which is associated with core values, norms, and beliefs.

But what, exactly, is it?

What is “Western Culture”?

What do you think of when you hear the term, “Western culture”?

You probably think of Europe, the United States, Australia, Canada – the latter three of which are highly influenced by Europe, due to their historical roots.

All of these countries mentioned (and others that fall under the umbrella of “Western culture”) hold a common set of values and norms.

However, as we’ve also highlighted in this blog, values and norms vary widely across the countries that fall under this umbrella.

In the U.K., queues are law; in Italy, it’s every man for himself.

German companies run like well-oiled machines; French companies are like royal courts.

Despite these cultural differences on a country-by-country basis, Western cultures share strong commonalities, due to their historical heritage under the Ancient Greek and Roman Empires, as well as the influence of Judeo-Christian religions.

Moreover, 18th-century Enlightenment in Europe brought forth a rationalist and secular-oriented ideology focused on social and scientific progress.

This drove such democratic values as the separation of church and state, human rights, capitalism, modern technology, and political pluralism.

Western Culture is a Stereotype 

Up until now, we never defined “Western culture” in this blog.

Yet, somehow, we all understood what it means.

This is due to the fact that “Western culture” is as much a stereotype as anything else. 

The behaviors of someone from “the West” are fixed in our mind, contrasted with how those from an Eastern culture might act or the ideology and values they might live by.

So, while we know there are differences between the values and behaviors of Australians, Europeans, Americans, etc. – and even further, between countries, regions, subcultures, and even individuals in each culture – we still recognize the broad commonalities that exist across all of “the West.” 

Use Your Discretion

If I board a plane and am seated between a Swiss person and an American, I would be more inclined to talk to the American.

This is not because I am opposed to the Swiss (I am Swiss); it’s because I want to be courteous.

Americans generally like small talk with strangers in public settings; Swiss generally don’t.

However, some Swiss might actually be prone to small talk, while some Americans will put their earbuds in immediately.

The point is, when it comes to stereotypes, applying them wisely means to use your discretion when approaching each individual.

Test the waters, apply your observational skills, and proceed accordingly.

Stereotypes blanket entire populaces, but they don’t take into account the individuality of people.

So, rather than presuming each person is attached to the stereotypical values, norms, and behaviors of their cultures, tuning in to the individual nature of a person’s preferences, priorities, and behaviors will allow you to avoid misusing stereotypes.

Using Stereotypes Wisely: German Planning vs. Russian Improvisation

Meet Ralf.

Ralf is a German manager and the head of business development. His company is expanding into Russia.

Vlad, the Russian project manager, calls him one morning from St. Petersburg, where he’s aiding the opening of the new office.

“Planning is underway,” Vlad confirms. “Everything will be completed by the deadline.”

Ralf asks some follow-up questions, pressing for further details to ensure things are, indeed, on track, but he finds that despite Vlad’s initial assurances, his responses are vague.

“At this point, only the rough planning is done,” Vlad admits, adding, “but everything is under control.”

Needless to say, after this phone call, Ralf does not feel confident that his ducks are in a row, while Vlad feels he was being interrogated.

Stereotype: Russians Don’t Like to Plan

When Ralf shares his concerns with his boss, he says: “Don’t worry, the office will be finished according to schedule. Russians aren’t good at planning. They say that if you plan too much, you can’t demonstrate your improvisational skills.”

Although Ralf’s boss employed a stereotype to placate his worries, there is truth in this stereotype.

According to scientific studies, Russians generally do not prioritize detailed planning as much as Germans or Austrians. They’d prefer to resolve issues as they occur instead of predicting and investing time in future issues.

Ralf’s boss responded with a stereotype, but his response alleviated Ralf’s stress and may have diffused misunderstanding and potential conflict in the company’s cross-cultural business relations.

One reason this stereotype could be considered wise is that it was explanatory; it allowed Ralf to better understand the rationale behind his Russian counterpart’s behaviors.

Stereotype: Germans Like Detailed Planning

Back in St. Petersburg, Vlad sensed Ralf’s lack of confidence in his management of the project. Being a bit annoyed, he, too, mentioned the exchange to his boss.

Vlad’s boss tells him: “Germans like to plan. Their plans are concrete and detailed, down to the letter. They anticipate potential issues and their variable responses to these issues in order to use time efficiently and reduce risk.”

This is another stereotype. It’s generally true that Germans view time as a resource that shouldn’t be wasted, hence they invest in detailed planning.

This, too, is backed by data making it, more or less, the norm.

This is one way in which stereotypes can aid mutual understanding, allay worries and unnecessary stress, and prevent cross-cultural conflict.

Stereotypes Exaggerate the Norm

Despite the sometimes-usefulness of stereotypes, it’s important to note that stereotypes aren’t all-encompassing and tend to exaggerate norms.

Not every German is a planner and not every Russian likes to improvise.

To illustrate this exaggeration, consider these graphs.

monkey_charts_CMYK-16

The top graph shows how Russians view their own penchant for planning. They acknowledge that improvisation is valued as much as planning, leaving the curve centered.

The next graph shows the Russian perspective on the German penchant for planning. Russians view Germans as planning fanatics, leading to most Germans falling under this stereotypical umbrella right of center.

In the end, the reality is more like the last chart. Germans are, on average, slightly more adept at planning than Russians, and the German company culture often produces and favors managers who work accordingly. However, this stereotype doesn’t apply so severely to all Germans, though the Russian perspective exaggerates that view.

Point being, take stereotypes with a grain of salt.

Their primary use in business management should be to provide generic odds and a general understanding of the values a culture prioritizes.

But don’t let stereotypes color your opinion about another individual in an ugly way, especially if their actions show you the opposite.

As Maya Angelou wisely wrote,

“When someone shows you who they are, believe them.”

Stereotypes: A “Solid Impression” or a Funhouse Mirror?

Imagine you’re trying to navigate yourself to a restaurant in a big city.

You open up Google Earth, plug in the address, and find the coordinates.

At first, you’re in satellite view. So many details – lines, colors, buildings, trees. With such an intricate bird’s-eye perspective, it’s hard to focus and find the way.

Gps Maps Google Map Navigation Location Navigator
Gps Maps Google Map Navigation Location Navigator

However, when you switch over to map view, everything is suddenly simplified and much clearer.

Analogies are the map views of a culture. They simplify a culture’s complexity, clearing the way to understanding by providing less – but more pertinent – information.

Analogies strip away the details you don’t need, leaving only those that you do.

While this is most certainly helpful in a lot of ways, you must be careful with simplified views.

A simplified map can leave out roadblocks, traffic jams, or other valuable information that might have altered your chosen route or decision-making.

This can especially happen when we use stereotypes as our simplified cultural maps.

A “Solid Impression”

The word “stereotype” is rooted in the Greek words for firm/solid (“stereos”) and impression (“typos”).

Literally translated, stereotype means “solid impression.”

In the late 18th century, the term was used by Firmin Didot in printing to describe printing plates that duplicate typography.

Rather than using the original plate, the stereotype (duplicate printing plate) was used for printing.

The meaning of the word changed in the early 20th century when American journalist, Walter Lippmann, used it analogously in relation to the characteristics of a group of people.

As a stereotype is a solid impression in the printing process, so it is in people’s minds in relation to groups or cultures.

Lippmann saw this, defining the word as,

“a distorted picture or image in a person’s mind, not based on personal experience, but derived culturally.”

Stereotypes are like a funhouse mirror: conditioning that distorts our image of “the other.”

Lippmann warned of the dangers of such bias. In Public Opinion (1922), he wrote,

“The only feeling that anyone can have about an event he does not experience is the feeling aroused by his mental image of that event.”

In this way, our feelings about an event (or a people) are not based in truth if we have no experience with said event/people.

They’re based on a stereotype.

Stereotypes condition us to deflect valid and true claims that do not align with our own, grounded in often negative attitudes and perceptions of “the other” – attitudes that are regularly driven by social and political motivations.

How Are Stereotypes Different Than Analogies

Although stereotypes and analogies work in a similar fashion in that they simplify the mechanics and behaviors that drive a culture’s people, the aim of creating analogies is to enable one to work effectively in a cross-cultural environment.

The aim of stereotypes, on the other hand, is often to contrast characteristics of other cultures that conflict with one’s own, essentially blanketing them over an entire group.

Stereotypes can often be intolerant, toxic, discriminatory, prejudicial, and downright dangerous.

Swiss are punctual; Indians are late.

Italians are jovial; Brits have a stiff upper lip.

Russians love vodka; the French love wine.

Americans are superficial; the Japanese are polite.

While stereotypical characteristics may not always be negative or evil, applying them to an entire people can result in prejudice of said people and individuals, which is of course ineffective to cross-cultural leadership and understanding.

Next week, we’ll talk about taking a wise approach to stereotypes.

The Rice Field Analogy: Negotiation Tactics Across Cultures

Cultures have codes.

The past few weeks, we’ve discussed how to tap into these codes by using analogies constructively.

So can they be used to tap into negotiating with other cultures.

Innate Analogous Terms in Negotiation

Negotiation is a game.

In each culture, this game has different rules.

Strategy in negotiation requires understanding the game you’re playing.

Language used in negotiation is, of itself, analogous.

Negotiation is sometimes likened to going to war. Rules are minimal. Often, sports jargon is used, such as “fair play,” which is:

“in sport, the fact of playing according to the rules and not having an unfair advantage.”

Negotiations are something to be “won.”

These analogous terms used in negotiations naturally extend to cultures.

Framing a foreign culture’s negotiation tactics in the form of an analogy will help drive the correct strategy to “win.”

Cultural Analogies in Negotiation

In negotiation, Russians are “playing poker”; Germans are “playing chess.”

These are pretty straight forward analogies, easily understood by Westerners.

But what about the Chinese?

Chinese negotiations can be an enigma to foreigners.

You might feel mutual confidence, trust, and cooperation one day and, the very next, feel tricked into accepting something you hadn’t discussed.

The “pattern” is not like poker; it’s not like chess.

It’s variable and inconsistent.

To understand this seemingly random give-and-take, a friend provided me a succinct analogy: Chinese negotiations are like working in a rice field.

Rice is, without a doubt, an important part of Chinese culture.

It provides the people sustenance every single day from childhood to old age.

Cultivating this crop necessitates much more cooperation within a village than do crops in Europe or the U.S.

The rice field terraces in the countryside are flooded with a common irrigation system. The water irrigates one field to the next, and this requires that the entire village collectively working together.

Focusing on your land, alone, won’t work.

Instead, you must both hold your own and cooperate with others in equal parts.

This is what negotiating in China requires.

blog rice2

View it as working together on these rice terraces: you must hold your own while using the same irrigation system as that which feeds your business partner’s field. And your business partner is doing the same.

In order to be successful, you must support and cooperate with your business partner while playing defensively and cleverly, seeking your own advantage and ensuring that your partner doesn’t exploit his.

When negotiating with Chinese partners, you aren’t playing poker, neither are you playing chess.

You’re working in a rice field together, both supporting and competing.

Chrysler & the PT Cruiser: A Cross-Cultural Case Study

A French office is like a royal court; a German office is a well-oiled machine.

As we’ve discussed over the past few weeks, analogies are simple mental models that can aid cross-cultural understanding.

While behavioral changes are inevitable when working a new culture, it can be impractical to completely alter your cultural identity. Analogies provide a rough blueprint so you can play by the rules.

They show you how another system works by transposing that system onto a concept that’s relatable to you.

Analogies aren’t perfect, but they do enable you to better comply with behavior in another culture which will make you more effective as a colleague or manager.

Instead of making decisions from the bias of your own cultural anchor, by understanding the structure of the workplace, you better understand its mechanics and are able to intuit decisions that more appropriately align.

If you don’t have a zookeeper to come up with an analogy for you – like an expat or local who’s worked in a similar cross-cultural capacity – observe the nuances of the culture and create your own simple but clear analogy to use as a mental model.

Here’s one example of how author and professor, Clotaire Rapaille, did just that.

The Culture Code

Having been exposed to numerous cultures in childhood, it was natural for Rapaille to dedicate his life to researching the differences of cultures around the world.

In doing so, he became a personal advisor for CEOs of top global companies and is on retainer for many Fortune 100 companies.

By applying basic analogies in his book, The Culture Code, his concise observations of other cultures make cross-cultural understanding more efficient.

Chrysler Case Study

One case study Rapaille presented in The Culture Code involved the development of Chrysler’s PT Cruiser.

Data from focus groups helped Chrysler analyze and understand the “code” of American car consumers.

What did they find?

  • A car means family: For Americans, the family car is made important during primary socialization. Therefore, the nostalgia of childhood and family are aspects entering into this code.
  • A car means freedom: As with most things American, owning a car in one’s youth means owning freedom in more ways than one. It was found that 80 percent of Americans have their first sexual experience in the backseat of a car.
  • A car means identity: There is a strong correlation between a person’s car and their identity in the U.S. In some ways, you are what you drive.

Considering this data, it’s clear that there’s a powerful emotional relationship between Americans and their cars.

As production planning for the PT Cruiser went into effect, German car manufacturer Daimler-Benz (Mercedes) took over Chrysler.

The German culture’s relationship with their vehicles is much different.

The legal driving age in Germany is 18, so the correlation between youthful freedom (and the nostalgia of a first sexual experience in a car) isn’t as common.

Moreover, German cars are ubiquitous with quality engineering. The focus is on advanced technology rather than on the powerful emotional relationship a consumer might have with their car.

Due to these differences in culture, the PT Cruiser project was not as successful as it could have been.

While the retro and individualistic design of the Cruiser pushed the right buttons for the American consumer, the German executives ignored this, instead focusing on the vehicle’s modest quality engineering.

They assumed the PT Cruiser would be a marketing disaster and consigned its production to a small plant in Mexico.

Because of this decision, supply couldn’t keep up with demand, when the car became a big hit with Americans.

The company could have sold much more in the first year had Daimler-Benz better understood and catered to the culture of the American car market.

This is one example where exploiting a cultural analogy (one shaped by family, freedom, and identity) could have guided decision-making and led a company to greater commercial success.

Insightful Cross-Cultural Analogies: How Hofstede’s Power Distance & Uncertainty Avoidance Aid Understanding

Power distance. Uncertainty avoidance.

We’ve discussed these two dimensions at length in previous posts.

Not only are they stand-alone aspects that aid cross-cultural understanding, but social psychologist, Geert Hofstede, has applied these two dimensions to create cultural analogies that help simplify foreign workplace environments.

Power Distance and Uncertainty Avoidance Review

These two dimensions relate to workplace behaviors.

Power distance is the degree to which cultures accept and expect the unequal distribution of power amongst members of organizations and institutions.

For instance, those employees in cultures of high power distance will not directly confront a superior; those employees and superiors in cultures of low power distance rely on communication and the consultation of each other, which de-emphasizes the hierarchical nature of status.

Uncertainty avoidance is the measure of acceptance and expectation for unpredictability and chaos in society.

Those cultures with high levels of uncertainty avoidance have a low tolerance for unpredictability and ambiguity, resulting in rule-oriented, law-abiding societies.

Those cultures with low levels of uncertainty avoidance have a high tolerance for the same, resulting in societies willing to take more risks, tolerate a wider variety of opinions, and not follow rules so strictly.

The Analogies

Arranging these two dimensions on the axes of a matrix, Hofstede produced a set of helpful analogies to better understand the work cultures of the United Kingdom, China, Germany, and France.

monkey_charts_CMYK-14

With its low uncertainty avoidance and low power distance, a typical English company is like a village market, in that it combines risk-taking with flat hierarchies, resulting in the classic entrepreneurial spirit.

Germany also shares the flat workplace hierarchies (low power distance) with the British; however, German culture has a high uncertainty avoidance, making typical German companies efficient and inflexible, more like a “well-oiled machine” or a clock. Rules are strictly followed, with decentralized decision-making and each equally important wheel working together.

The typical French company is described as a “royal court” or “pyramid of people.” The culture is one of high power distance, where everyone knows their place and decision-making is centralized. They also share high uncertainty avoidance with the Germans, meaning rules are strictly followed, resulting in a complex network of relationships across the levels of hierarchy. Power and authority are highly valued.

The best analogy for a Chinese company is that of a family with a head patriarch. Like France, China values high power distance and, like England, low uncertainty avoidance. This means that, despite having a typical hierarchical society that values company loyalty, risks and rule-bending are embraced, which has helped to position China as an economic superpower.

Although I can’t stress enough that analogies are never perfect and nothing is one-size-fits-all, they do allow managers to form mental models, aiding understanding in the workplace environments of foreign countries.

Analogies: Understanding Culture Through Powerful Mental Models

You are a manager in a foreign culture. You look at everything through your cultural lens.

Workplace behaviors are strange. Your colleagues’ habits seem irrational.

You feel like a visitor at the zoo, a spectator observing everyone.

In actuality, you are in their habitat; not the other way around. You are the odd one out, behaving according to your “strange” cultural norms and values in their culture.

You are the monkey in the zoo.

This is an example of an analogy: a powerful image that enables you to adapt your mental model to the reality of your environment or situation.

Last week, we talked about German manager, Marie, and her struggle working in a French office.

It was an analogy – the French office is like a royal court – that assisted her in adapting her frame of interpretation.

Why do analogies work?

Because they familiarize unfamiliar situations, helping us form new mental models to confront the unknown.

Analogies Reshape Mental Models

Schemes, representations, and images form the mental models used to perceive and understand the world around us.

These are largely based on past experience, education, and training.

The mental models we’ve developed provide shortcuts in decision-making, allowing us to make decisions quickly and efficiently without necessarily having all the details at our fingertips.

Because we don’t have all the details, mental models abstract reality; they are biased. They make the real world more simplistic than it actually is.

Despite significant experience or education to back our mental models, at some point, they are usually wrong in one way or another.

What’s worse is mental models are deeply rooted and slow – if not impossible – to change.

Analogies, however, make that change easier.

By “tricking” our brains into seeing something that previously seemed concrete (office behaviors, for instance) in a new light (viewing French companies like royal courts), we are able to draw different connections and conclusions than our previous mental model allowed, thus arriving at new decisions that more adequately address the reality of the environment.

Making the Unfamiliar Familiar

Unknown social constructs are reshaped by analogies into a picture you can comprehend.

The fresh perspective from this corrected mental model will allow you to make more rational decisions relative to the social constructs of the culture.

There are, however, limits to analogies. Like anything, they aren’t perfect.

But a good analogy that accurately represents a cultural dynamic that doesn’t align with your own is always an improvement on the mental model you’ve brought with you from abroad.

Trying to fit another’s culture into your own is like trying to fit a square peg into a round hole.

So, how do you create good analogies?

Next week, we’ll talk about how Geert Hofstede’s dimensions can help.

A New Frame of Interpretation: How Analogies Can Help Direct Cross-Cultural Behaviors

Meet Marie.

Marie is a German business consultant tasked with reorganizing a French company.

Excited with the prospect, Marie initially enjoyed her frequent trips to Paris and the directive with which she was tasked. But soon, she faced regular roadblocks that would make the fun project a chore.

The French company she was to reorganize was hierarchical and centralized. Despite this, Marie had difficulty identifying the appropriate decision-makers, as a number of people claimed to be in charge though they didn’t actually hold any power in moving the project forward.

Their interference threw rocks into the cogs of this project, slowing it to a standstill, and the delay resulted in even less support from the French team.

At this point, she wasn’t even able to secure a meeting with management or access the information required to complete her mission.

Marie had two choices: a) abandon the project, or b) find someone who could assist in her cross-cultural understanding of the way a stereotypical French company functions.

The Working Parts of a French Company

Marie was lucky enough to find her Zookeeper at the wedding party of a friend.

Using an analogy, this Zookeeper – a French manager who’d worked for over a decade in Germany – managed to crystalize Marie’s understanding of the hierarchy in the French office and the politics with which it functioned.

The Zookeeper told her, first of all, to abandon her German ideas of how an office should function. Unlike in Germany, companies in France don’t function like well-oiled machines.

Instead, he said, they are more like royal courts, in which the CEO reigns supreme. He is the king, and surrounding him, are his noblemen, knights, servants, etc. – all of whom vie for his attention.

They do this by constructing their own fiefdoms.

As Marie was someone sent in from the outside to manage a project, she should navigate this world like an earl.

As quoted from I am the Monkey, the Zookeeper advised:

“Be humble in the right moment. Be bold in the right moment. Be courteous when required. Be rude when needed. Build your political relationship and network, until you have the ear and favor of the king or one of his important ministers.”

By abandoning her expectations that a French office should function like a German one, Marie would be able to get the job done effectively in this foreign culture.

A Culture’s Office Hierarchy is Often a Microcosm of the Country’s Structural Macrocosm

France, itself, has a thousand-year-old history of strong monarchies. Further, its current politics is centered around a strong presidential state; so much so that President François Mitterand was deemed the “last French King.”

French thinking and the stereotypical hierarchies of French companies have been influenced by this historical structure and the way in which it functions.

In understanding this, Marie was able to adapt her behavior to a new frame of interpretation.

The idea that “French companies are like royal courts” created a firmer, almost visceral blueprint for not only what was expected from her, but for the methods by which she could achieve her goal in this setting that differed greatly from her own back in Germany.

This is one example of how analogies can aid a manager’s understanding of a new cross-cultural environment. We’ll be talking more about creating analogies in the coming weeks.

3 Mechanisms That Bias Our Decision-Making: REVIEW

Why do we make the decisions that we do? How do we rationalize these decisions?

Research is constantly evaluating how and why business managers make the choices we make, which we’ve outlined over the last few weeks.

To sum up, the three main biases discussed:

  • Availability bias – involves making a decision not based on an outcome’s true frequency/probability, but rather on how frequent an event enters the forefront of one’s mind.
  • Representativeness bias – involves judging the likelihood of an event based on how closely it relates to another event – i.e., on a mental model that does not exist in reality.
  • Anchoring bias – involves reaching a decision from an initial set point, often grounded in your culturally-influenced values and norms.

However, these are only a few ways in which culture creeps in to bias our decision-making.

Even our confidence in our decision-making ability is often influenced by culture.

Confidence in the Veracity of Decision-Making Ability

Research shows that, compared to their U.S. counterparts, Mexican managers are exceedingly confident in the veracity of their decision-making.

In a study by Christine Uber Grosse, entitled, “Global Managers’ Perceptions of Cultural Competence,” one Mexican manager explained the differences between leaders in Mexico and America, saying:

“We in Mexico are more colloquial or informal and are not so inclined to statistics. The Americans are very ‘manual-oriented’ and organized and we are more relaxed and ingenious.”

So, while before committing to a decision, U.S. managers expect to hear a complete plan laid out, including costs, a schedule, and the target results, Mexican managers rely more heavily on their gut instinct.

Moreover, when Mexican managers commit and something fails, they are more likely to double-down on that commitment, throwing good money after bad (as U.S. managers might put it).

According to research conducted by J. Frank Yates and Stephanie de Oliveira (“Culture and Decision-making“):

“A high degree of overconfidence has been found among Mexicans relative to Americans (Lechuga & Wiebe, 2011)…Overconfidence was widespread but differed in degree according to region.”

This overconfidence was attributed by the authors not so much to a manager’s judgment in confidence, but rather to differences in ability, as the latter varied substantially across countries.

Simplified Mental Models

Tying this all together with cross-cultural business, knowledge of the biases that influence decision-making – and another’s confidence in their decision-making – will help you navigate another culture’s rationale while also redirecting yours accordingly.

With various worldviews and cultural backgrounds, subjective realities exist, resulting in different mental decision models.

But one thing is universal: managers use their simplified and biased mental models to make their decisions.

Although likely different than your own, their simplified mental model is not irrational; it is based upon their subjective cultural perception and reality, just as yours is.

Oftentimes, no matter how illogical a decision may seem to you, the other is acting rationally within their own cultural framework, their baobab.

So, before concluding that a foreign manager’s decision makes no logical sense, familiarize yourself with the culture, its perception, and its reality.

You may then understand how a manager’s availability, representativeness, and anchoring biases – or any other culturally-influenced bias – enter into their decision-making.

3 Mechanisms That Bias Our Decision-Making: Anchoring Bias

An anchor prevents a boat from straying from a set point.

When making decisions, managers are starting from their anchor – their initial set point, which is grounded in culturally-influenced values and norms.

A manager will drift from this point until the chain pulls taut.

There, he will reach a final decision, but inevitably, because he is anchored to a set point, that decision is influenced by anchoring bias.

We’ve talked about availability bias and representative bias in the last two blog posts and how each influences decision-making.

This week, let’s take a deep look at anchoring.

Anchoring in North African Souk

Let’s say you’re from a Western culture and travel to Northern Africa as a tourist. There, you head into a souk, and a seller zeroes in on you.

Knowing that your cultural norms and values are anchored in paying top prices for quality goods, the seller asks for a much higher price for a carpet than he might ask of locals.

Assuming your ignorance of the local pricing market, he starts astronomically high when haggling. That way, he can negotiate down to the highest amount you’re willing to pay.

He knows your anchoring bias allows for it.

If you never discover how much locals are paying for the same carpet, you’ll be none the wiser. You might even walk away thinking you scored a real bargain, when in reality, you paid ten times the local rate.

But if you later discover the seller gouged you on the price, you’ll likely feel scammed, which can often strain future negotiations.

This is one way in which markets use anchoring bias to their advantage in cross-cultural business.

Anchoring in Vancouver Housing Market

Sometimes, exploiting anchoring biases can backfire for local communities.

Let’s travel from North Africa to Vancouver.

The ‘90s saw a peak in Hong Kongers and mainland Chinese immigrants migrating to Canada. A large number settled in the Vancouver area.

Hong Kong real estate is notoriously pricey, so when Hong Kongers anchored in Vancouver, they were willing to pay top dollar for property.

The local real estate market exploited this anchoring bias and charged higher rents.

The result was that, like Hong Kong, Vancouver real estate now has a reputation of being exceptionally expensive.

According to MoneySense,

“Data collected by David Ley shows how, over the last few decades, metro Vancouver has become similar to other Pacific Rim ‘gateway’ cities, such as Hong Kong, Singapore, London and Sydney. Each of these gateway cities have rising housing costs that are fueled by high immigration-driven population growth and foreign investors.”

So, when exploiting anchoring biases in cross-cultural business goes South for local communities, how do they re-anchor?

In 2018, the British Columbia New Democratic Party was voted in primarily due to their platform on housing costs. Their goal was to increase the housing supply, slow demand, and dissuade overseas buyers by taxing empty homes and raising the foreign-buyer tax from 15 to 20 percent.

In this way, Vancouver is attempting to re-anchor their housing market to align with their own cultural norms and values.