Tag: cross-cultural business

3 Mechanisms That Bias Our Decision-Making: REVIEW

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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.

When Being On-Time Means Everything: How Important is Punctuality to Culture?

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How does your culture value time?

Are they more often punctual or late?

Do people care?

Time is valued differently across cultures. In some places, like Switzerland or Germany, punctuality is important. Tardiness is unacceptable and often viewed as disrespectful.

In such cultures, daily schedules, goals, and decision-making processes are dictated by time.

Some cultures, on the other hand, don’t stress punctuality. They might be an hour late, a day late, a week late.  And that’s a-okay. Time is not ruled by a schedule, and neither is business.

This can lead to huge headaches in cross-cultural business. When one culture’s concept of time is not the same as your own, how do you deal?

We’ll discuss that over the next few weeks. For now, let’s take a look at why time is viewed differently across cultures.

Finding Cultural Equilibrium

Is our valuation of time deeply engrained in our values? Or is it simply a reaction to others’ tardiness?

A 2002 study on punctuality in culture, entitled, “A Cultural Trait as Equilibrium,” concludes that punctuality is largely reactionary:

“…punctuality may be simply an equilibrium response of individuals to what they expect others to do. The same society can get caught in a punctual equilibrium or a non-punctual equilibrium.”

In other words, individuals of a society may collectively habit-form according to punctuality or tardiness, based on what they expect from their peers. Then this habit becomes a cultural norm.

This study suggests that such habits “could be subject to evolutionary erosion or bolstering.” The researchers consider a society’s punctuality/tardiness norm is both a shared social trait and an individual reaction to our expectations of others, adjusting our behaviors to arrive at equilibrium.

This makes sense. After all, have you ever had a group of friends that were perpetually late and, in knowing that, you found yourself arriving for planned meetups later and later than the set time.

“Fashionably late” is a term for a reason. Who wants to be the first one to arrive, the longest to wait? How unfashionable.

The question is, what came first, the chicken or the egg? Did society’s general values about time inform the initial tardiness/punctuality that evolved and became a norm? Or did the values evolve as the norm became more, well, normal?

The Clocks Run On-Time…Literally

While cultural studies tend to delve into the intangible nature of cultural attitudes and values to explain behavior, some behaviors may result from very practical matters.

One interesting theory that developed from a 1980 study on punctuality pattern differences between the United States and Brazil is that Brazilian watches were simply not as reliable, which may have led to less stress on punctuality in Brazilian culture.

When researchers studied various watches in the United States and Brazil, they found evidence to support the theory that “public clocks and personal watches [are] less accurate in Brazil than in the United States.”

An interesting hypothesis, and not a conclusion you’d immediately jump to.

Are Swiss more punctual, because their clocks are notoriously accurate? Or are their clocks notoriously accurate, because they value punctuality?

Do German trains run on time, because their tickers do?

Over the next few weeks, we’ll discuss culture and its relation to time. How it impacts everyday life, communication, orientation, and business relations. Stay tuned.

How Business Communications & Negotiations Differ Across Cultures: Rule- Vs. Relationship-Based

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When you walk into a Western office, any Western office, you know that there are rules.

They are hardline rules, and they apply to everyone, across the board.

Western cultures (“Western” meaning the US and Europe) are rule-based cultures.

In countries where equality and justice for all are building blocks upon which society is built, this rigidity in rule-following makes perfect sense. Rules provide objective guidelines for companies, for government, for society as a whole.

Relationship-based cultures, on the other hand…

Relationship-Based Cultural Communication

Negotiation is the basis of relationship-based cultures. Even when it comes to “the rules.”

Managers in relationship-based cultures dictate these rules, and so the better the relationship you have with said managers, the better stacked you are at the negotiation table.

Anything and everything can be negotiated in such cultures.

This leaves a lot of room for ambiguity, something Westerners aren’t very comfortable with when it comes to the workplace.

Being as such, communicating within relationship-based cultures requires one to keep in mind a complex network of human relationships.

Rule-Based Cultural Communication

The company rules in a rule-based culture (like those in the West) are spelled out; they’re explicit. Unless a worker hopes to be fired, he follows the rules.

In fact, the rules laid out by Western managers are communicated directly, and they are often compiled in various written resources.

Most American companies have thousands of pages of rules, included in such documents as the company’s mission statement and vision, their HR handbooks, compliance handbooks, job descriptions and responsibilities, expense regulations, strategies, etc.

Written regulations, above all else, are spelled out for you. Personal preferences and favored relationships don’t apply (at least, they shouldn’t in theory).

This allows managers to communicate within a set of rules. They, therefore, often communicate directly, unambiguously, and concisely.

Negotiation

Considering each culture’s values and the way these values impact communication, negotiating tactics are extremely different across these two cultural types.

When negotiating in rule-based cultures, one often uses a direct approach, as the rules are objective, and disputes can subsequently be resolved using said rules.

In relationship-based cultures, where rules are not black and white, courtesy and saving face is the most important part of a negotiation.

A Western manager must go into a negotiation with the business partner of a relationship-based culture focused on building and maintaining a relationship, rather than with a strategic focus on “the rules.”

Americans and other Western cultures see business as business and not personal. There are rules, so negotiations can get tough, without partners walking away from the table with a broken personal relationship.

But with a relationship-based business partner, you can’t negotiate tough and then expect your partner to amiably join you in a round of golf.

This may be the norm in America, but not in China nor in Japan.

Instead, business and personal are intertwined, so the relationship must be cared for above all else.

Next week, we’ll talk about bridging this understanding.

How Does Maslow’s Hierarchy of Needs Stack Up Across Cultures

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Management trainings often cut out the cross-cultural nature of leadership expectations, hierarchies, and values and norms.

So, when you’re put into a cross-cultural leadership position, you’re a fish out of water, and you don’t have much to guide you.

Maslow’s “Hierarchy of Needs”

In Maslow’s theory, human motivation is pretty straight forward.

His “hierarchy of needs” is taught across many business administration curriculums and has been since its inception in the early ’40s.

It was in 1943 that researcher Abraham Maslow identified basic human needs and categorized them in a pyramid.

hierarchy of needs
FireflySixtySeven [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)%5D

At the bottom are the most basic physiological needs:

When a person’s most basic human needs are satisfied, their more complex emotional and psychological needs rise to the top:

  • Love/belonging
  • Esteem
  • Self-fulfillment/actualization

Think about these needs. Do you feel them in this order and manner?

What A Man Can Be

Maslow once wrote:

“What a man can be, he must be.”

This explains the pyramid in a nutshell: if we can achieve something greater than simply meeting our physiological needs, we will seek it out.

The hierarchy of needs may seem instinctive to the Western mind, so much so that Western managers apply this basic model to motivate their teams and incentivize success.

Self-fulfillment would then be the highest motivation, manifesting itself in power and personal career development.

However, as it turns out, this hierarchy of needs hasn’t stood the cross-cultural test.

Security, Social Needs, & Quality of Life

Let’s take a look at Greece and Japan.

Self-actualization in these countries is undercut by security needs.

According to research done within IBM World Trade Corporation:

“At the country level, higher mean stress turned out to be associated with stronger rule orientation and greater employment stability…When [the mean level of anxiety] is higher, people feel more stressed, but at the same time they try to cope with their anxiety by searching for security.”

Both Japan and Greece had high Uncertainty Avoidance Indexes, which indicate higher stress and anxiety levels.

This is why life-long job security supersedes climbing the corporate ladder or seeking out challenging work in these countries and may be another reason Japanese companies keep on workers even though they may be subpar or their positions could be made redundant.

On the other hand, Norway, Sweden, and Denmark place a lot of emphasis on quality of life, thus building a career takes a back burner to social needs.

Hofstede Disagrees

As Geert Hofstede duly notes:

“My interpretation is that this tells us more about Maslow than about the other countries’ managers. Maslow categorized and ordered his human needs according to the U.S. middle-class culture pattern in which he was embedded himself – he could not have done otherwise.”

This can be said about many studies that unintentionally (or intentionally) discount cross-cultural differences.

Cross-cultural values and norms are not much considered when identifying “human needs.”

Instead, every human is painted with one brush; the brush of whichever culture is doing the research.

Culture & “The Bubble”: Closing the Gap of Personal Space

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A tennis ball.

A volleyball.

A beach ball.

An ocean.

Whatever size our bubble is, we each walk around inside our own yardstick of personal space.

Last week, we talked about how culture and the climate, along with the level of intimacy in relationships, can all affect the degree of our bubble.

This week, we’ll talk about how to close that gap – or at least become more comfortable with it – when living in a foreign culture.

The American Bubble

Americans value personal space. 

International student guides to the US even highlight this preference:

“If you try to get too close to an American during your conversation, he or she will feel that you are ‘in their face’ and will try to back away. Try to be aware of this, so if the person to whom you are speaking backs away a little, don’t try to close the gap.”

More advice given to international students to the US includes:

  • Shake hands upon meeting
  • Avoid all other physical contact while speaking with casual acquaintances (no arm over the shoulder, arm touching, hand holding, etc.)

Americans clearly have a preference for physical distance and no body contact…at least when it comes to strangers and casual acquaintances.

So, how do American managers deal with more touchy-feely cultures abroad?

Insert Desk Here

Latin America is a physically close culture, as was illustrated in the study discussed in last week’s post.

Imagine an American manager entering into this tennis ball-sized bubble culture.

When speaking with an employee, said employee stands too close for comfort, forcing the manager to step backwards to regain his bubble. But in doing so, the employee steps closer again, because he is uncomfortable with the wide gap.

While savvy American managers who work in Latin America want to adapt cross-culturally, those who can’t bear the physical closeness often use a small trick to avoid it with their colleagues and employees.

Instead of taking a step back, they close the gap with an object – like a table or desk – thereby creating the gap for them. This way, the employee is at a comfortable distance, while not feeling uncomfortable, himself, with the object-made gap.

Sometimes, closing the gap is not easy (see: the Japanese woman who forced herself to adapt to the Spanish greeting of kisses); other times, it’s as easy as a desk.

Cultural Must-Adapts: When Is It Mandatory to Adapt to Cultural Norms?

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Do you remember our four groupings of social norms – folkways, mores, taboos, and laws?

If not, then here’s our handy chart to recall how each of these norms applies to culture:

norms

As you can imagine, failing to queue up in Britain would not be looked upon as severely as, say, going topless at a beach in America. And this is due to the severity of the norm groupings to which each of these actions belong.

Folkways<Mores<Taboos<Laws

How strict is each cultural norm group?

Folkways are the softest social norms. While you have a choice whether or not to adapt to folkways, failing to adapt won’t lead to ostracism; it will simply lead some in your new cultural environment to consider you a bit rude.

One example: wearing formal attire in a business environment is a European folkway. A suit and tie in Europe is the uniform of choice for men.

So, when an American male manager walks into a business meeting with his European counterparts wearing a casual polo shirt and wrinkled slacks, while this casual attire is, of course, not forbidden, it may result in a negative perception of said businessman as a cross-cultural business leader.

This is one example of a folkway that you can choose to adapt or not, but in making that choice, consider how it’s perceived.

Mores define right versus wrong within a culture, so there is more pressure to adapt to this type of social norm.

For instance, if a female manager travels to a conservative country, and she comes from one where feminine business attire is much more liberal, she may feel pressured – or even be asked – to alter her attire, as it may be considered inappropriate or revealing, based on the culture’s mores.

This is the difference between “right vs rude” and “right vs wrong”. Again, you can choose to adapt or not, but in the process, you may be considered “rude” or “wrong” by the cultural standards of your new colleagues.

Mandatory Adaptions

When it comes to the last two social norm groups – taboos and laws -, you must adapt.

Remember, taboos define what’s forbidden, while laws define what’s illegal. If these norms don’t align with your own, and you believe there’ll be some “wiggle-room”, simply because you’re a foreigner, then you’re very much mistaken.

“Sorry, I didn’t know; I’m foreign,” might work when breaking a queue, but it certainly won’t work when breaking a law.

You must accept that other cultures have values that you must observe if you choose to live there. And if you can’t accept these deeply entrenched values and norms, then stand by your principles and don’t move there.

Because one thing is certain in building cross-cultural relationships: you should not expect an entire culture to bend to your will.