A Guide to Navigating Cultural Differences in Business

International transactions have become an increasingly powerful component of the business world, with tens of thousands of deals taking place every year. For example, cross-border merger and acquisition deals alone totaled around 8,500 in 2024.¹

What Is International Business?

Many international businesses operate facilities and create products and services for their own home markets but sell those products or services in other countries.² Other international businesses may import or export products, outsource business functions, create franchises, or enter into a business venture with an organization in another country.³ All of these transactions that cross national borders are international business.

Depending on your role and industry, you may conduct business or attend professional events across various states, countries, or continents. In such cases, it is in both your and your organization’s best interest to proactively understand and respect the cultural differences that may arise when working with international colleagues or partners. Preparing ahead of time can help you navigate cross-cultural interactions more effectively, avoiding potential misunderstandings, miscommunications, or unintended offenses.

What Are Cultural Differences?

Culture is a broad term with many aspects, but a common definition is the customary beliefs, social forms, and material traits of a racial, religious, or social group.⁴ Your family, religion, political beliefs, education, work, hobbies, where you live, and the media you consume can influence your culture.

How Culture Blends With Business 

Since business is such a large part of our lives, our culture naturally bleeds into our work. From the mundane, like always bringing your own lunch, to the more impactful, like whether you approve a new supplier’s working conditions, your culture affects much of your working self. The blend of cultures you experience and offer can determine what companies you’re willing to do business with, how you approach employee relations, and what path you take in your career.

The Importance of Understanding Cultural Differences in Business

Appreciating and respecting cultural differences in international business is essential to your professional and organizational success. It enables you to improve your communication and relationships with coworkers, external partners, and customers. It also helps minimize misunderstandings and build trust with people with diverse backgrounds and experiences.

Impact of Cultural Differences on Business Operations

Cultural differences impact multiple aspects of business operations, beginning with management. Leadership and communication styles, as well as organizational structures, differ from one culture to the next. Some organizations, and cultures, are very hierarchical and centralized. Others may be more entrepreneurial, sometimes to the point of feeling like they operate haphazardly, with no clear rules. Business leaders who know how to adapt to their environment are more likely to earn employees' respect, loyalty, and engagement.

This same principle applies to marketing. A consumer's culture affects their purchasing decisions and behavior. As a result, businesses must adjust their marketing strategies to find success with both their own domestic customers and with multi- or cross-cultural customers. A classic example was when U.S. General Motors took its “Nova” automobile to Latin America. While the origin of the car’s name was the Latin “novus,” meaning new, the car sold slowly south of the U.S. border, as no one had focused on the fact that “no va” in Spanish means “doesn’t go,” which is not a good moniker for a car.⁵

Cultural differences also have significant implications in customer service. Businesses have to consider how customers from various cultures will respond to different service strategies. For example, some customers might appreciate direct, straightforward service experiences, while others are accustomed to a more subtle approach.

Cultural Dimensions Theory 

According to Dutch management researcher Geert Hofstede, there are six dimensions to understanding the differences in culture across countries.⁶

1. Power-Distance Index: How much or how little do lesser members of a society accept their inequality, or their distribution of power. A society with high power distance will create and enforce strict hierarchies with a top-down effect, whereas low power distance groups will solicit and incorporate feedback from all levels, bridging the gap between authority figures and those “below” them⁶
2. Collectivism vs. Individualism: How individuals are viewed when part of a group. Individualist societies focus on achievement, personal rights, and the “I.” Collectivist societies emphasize relationships, loyalty, and “we”⁶
3. Uncertainty Avoidance Index: A culture’s tolerance for and reaction to change. Strict rules and regulations in high uncertainty avoidance indexes help to eliminate ambiguity and risk-taking. Low uncertainty avoidance cultures accept and feel comfortable in low-structure and changeable environments⁶
4. Femininity vs. Masculinity: How a society views gender roles and which traits are “important” for each gender. Masculinity favors strength, assertiveness, and competition; a feminine society values nurturing, cooperation, and quality of life⁶
5. Short-Term vs. Long-Term Orientation: i.e., short-term success vs. long-term success. Does your society prioritize answering material, social, and emotional needs now or later?⁶
6. Restraint vs. Indulgence: The extent and tendency of a society to fulfill its desires. High indulgence encourages you to splurge, live in the moment, and gratify yourself frequently. Conversely, high restraint means to save and focus on practical needs⁶

These dimensions can help you assess a new country’s or a new culture’s readiness to accept your out-of-box message. And they can help guide you to adjust or create new messaging to make your products or services more interesting and acceptable in the new place.

Examples of Cultural Differences in Business

Distinctions in communication, etiquette, and negotiation strategies are among the most significant examples of cultural differences in business. These differences can be a disadvantage or a benefit, and you need to be aware of them.

1. Communication

A common difference between some cultures is language. Irish playwright George Bernard Shaw is commonly credited with saying that “England and America are two countries separated by the same language.” Wider language barriers can be difficult to overcome, but working with interpreters or translators can greatly alleviate the issue, even for people speaking the same language. Differences in dialect, tone, and meaning are challenging, so be sure to speak slowly and clearly at all times. The use of slang is a particular issue. While there are expressions that translate directly and across cultures, they can be a miss. A Korean or Japanese customer may pick up immediately on American baseball metaphors, as the sport is very popular there, but it’s far less known in Europe.

As you speak, read the room to see how people are reacting to you. Most people don’t like to hear someone belabor the point; in Northeast Asia and the Netherlands specifically, professionals would prefer you get to the point and communicate only the essentials.⁷ Italians, on the other hand, like to build relationships and have friendly communication.⁸

Remember that the types of cultural differences in business communication include verbal and non-verbal styles, and the latter are often harder to determine. For example, people with European backgrounds tend to initiate and hold a lot of eye contact, which other people can find intimidating and even menacing.⁹ Some people like to hug or even kiss in greeting, while others prefer to shake hands. Other examples of non-verbal communication include facial expressions, speaking closely, slouching, sitting, standing, and bowing.

2. Business Etiquette

Business etiquette varies across cultures, and leaders have their own approaches to managing meetings. In the United States, people may begin a meeting by introducing themselves, shaking hands, and exchanging pleasantries. In China, you will likely be expected to bring and offer a small gift to your business partners, and the most senior member should be given the head of the table.^8,10 Belgians usually start by greeting each other with three air kisses—one on the right, one on the left, then back to the right.⁸

Coordinating meetings across cultures can be challenging due to variations in workweeks, religious observances, and daily practices. For example, the Jewish Sabbath spans Friday evening through Saturday, Muslims often take short breaks to engage in daily prayers up to five times a day, and Christians traditionally celebrate Christmas on December 25. It’s important to ask your business partners if there are specific days or times that should be avoided when scheduling meetings. While the desire to do business is universal, there may be times and places that should be avoided.

Take time to research the customary business etiquette of a country or region to ensure you are well-prepared before you meet with your counterparts. While some cultural nuances may be unfamiliar, making an effort to understand key expectations can help you avoid major missteps. Learning a few basic phrases in your colleagues’ native language—such as “please,” “thank you,” “excuse me,” or “I’m sorry”—can ease communication.

3. Negotiation

Depending on your role, you may be part of business negotiations. This can be a delicate dance of competing priorities, considerations, agendas, egos, and stakeholders, which is made more difficult by cultural differences. However, you must navigate cross-border contracts and agreements and cultural divides to accomplish your goals.

The dominant cultural norm in the United States is to be direct and seek to resolve issues quickly. Others might find this aggressive and will instead want to talk it out.¹⁰ People in the UK may avoid confrontation and deflect with humor, while Australians like a more casual, conversational tone to make it through.¹²

Negotiation is an art, and that requires adaptation and improvement over time. Listen closely to how your business partners speak among themselves, and then try to incorporate elements of that into your communication with them.

Successes and Failures in Real-Life Businesses

Tesco, a popular grocery chain in the UK, attempted to expand into the US but found significant impediments. Specifically, the company failed to recognize the cultural differences in shopping practices between the two customer bases: in the UK, customers do small shopping trips almost every day, whereas in the US, they do large trips and buy in bulk. As a result of this fundamental misunderstanding, Tesco eventually closed all its U.S. stores.¹³

In contrast, Google is an example of a company that initially encountered some obstacles with cultural differences but eventually overcame them. Their focus on positive feedback was surprising for some workers from other cultures, but it has ultimately given them a strong company culture and friendly relationships between managers and subordinates.

Best Practices for Managing Cultural Differences in Business

To achieve and maintain success, an international business must develop a detailed strategy for handling cultural differences. This begins at the top, where leaders should promote appreciation and respect for all people regardless of their culture. If employees are regularly interacting with customers or coworkers of other cultures, language training or translation services are also beneficial.

In addition, cultural competence and awareness training is key, particularly in the areas of intercultural communication, cross-cultural etiquette, and cultural diversity. Many training organizations offer online courses, webinars, videos, and simulations allowing employees to explore questions and challenges related to culture.

Take Your Business International

Expanding your business internationally can be difficult but extremely rewarding. Aside from the cultural pitfalls that can occur, there are legal considerations as well. Different (and sometimes conflicting) laws, policies, business customs, and currencies can create roadblocks that even the most traveled business professionals can’t overcome—and they can be costly.

Pursuing higher education in international business law will teach you the processes of engaging with other countries, both in and out of the boardroom. Paired with the Online Master of Studies in Law core courses, the MSL in International Business Law specialization from the University of Pittsburgh prepares you to understand and manage U.S. and international business transactions. It will also teach you the skills to manage cross-border disputes via litigation, mediation, and arbitration.

Schedule an appointment with an admissions outreach advisor to learn more.