Navigating cultural differences in cross-border engagements

The beauty of the world lies in the diversity of its people, as the saying goes, yet values that resonate strongly in one society may be less important in another.

Effective business in a globalised world often requires an understanding of the values that are hallmarks of different cultural environments, which comes from developing cultural intelligence.

Defined by one academic as the ability to interpret a stranger’s behaviour the way the stranger’s compatriots would, cultural intelligence is the platform on which different parties understand each other’s values and build trust.

When executed well, cultural intelligence is a key factor in unlocking new markets and conducting trade. An established international footprint can be a key marker of success in business growth, and the names published on lists of firms to watch are usually eyeing off new and bigger overseas markets.

Baker Tilly’s recently released Global Dealmakers 2023 market outlook is a snapshot of the globalisation of business. In 2022, about US$1.4 trillion worth of cross-border merger and acquisition transactions were carried out across sectors as diverse as materials, finance and consumer staples.

But it is not just international financial growth at stake when discussing cultural intelligence. As societies change through immigration and become more diverse, cultural insight is increasingly necessary at a domestic level.

Knowing important cultural holidays and understanding whether to bow or shake hands in a greeting are useful parcels of knowledge, but may be scratching the surface when it comes to progressing a business deal, growing a new customer market or engaging with employees from a different cultural background.

Global recruitment consultancy Mercer has conducted research into the values that employees believe makes a fulfilling workplace, grouped by global regions.

The one consistent finding was the need for employees to feel their contributions were valued by their employer, and that an absence of understanding what valued means to an individual heightens the risk of an employee walking away or a deal falling through.

What strategies do yout organisations deploy to navigate these cultural differences and understand the values of the people they deal with?