In the Semsom episode of Escape from the Boardroom we meet Christine Sfeir, CEO of a Lebanese firm with three restaurant chains in Lebanon and the Middle East region: Dunkin Donuts, Green Falafel and Semsom. Christine is planning expansion of her business into the USA and starting to look at how her business model may need to change to succeed in this very different setting.
Christine has experience of living in North America and tends to downplay the differences, telling us at one point that “from my experience in Canada and the US there are more similarities than there are differences in the way people do business. A store in the US will be run, very very similar to a way a store will be run in Lebanon or Germany or any part of the world.” Is she right?
There is no doubt the business fundamentals remain the same. Wherever you do business, it is important to control costs and manage cash flow, achieve good profit margins, establish effective supply chains, ensure consistent and appropriate quality, market your product or service, and manage the people well.
However, the detail of how each of these works in practice can vary significantly from country to country. There are important differences in local cultures and in the social, legal, economic and political institutions that make up the business environment.
A quick way to consider key cultural differences between countries can be to look at some of the large cross-national studies that have been carried out. Two important sources are Geert Hofstede’s work on culture and the GLOBE survey.
For example looking at Hofstede’s characterisation of the differences between US and Lebanese cultural values in the figure below, we can see that the major differences are in Power Distance and Individualism.
In the Lebanon with high Power Distance (like most Arab societies), there is a greater emphasis on hierarchy, and acceptance by individuals of their place in the hierarchy. Deference to those with a higher position is important; as are the obligations of those with power to those for whom they have responsibility.
By contrast, in the USA, people expect hierarchy to be primarily a matter of efficiency and convenience not of status. Managers and employees expect to be consulted and that information should be shared informally and frequently.
The USA also has a very individualistic culture. Individual striving and performance are highly valued and people are expected to take responsibility primarily for their own welfare and that of their immediate family.
This is very much in contrast to the more group oriented culture in the Lebanon with much greater emphasis on social obligations (especially amongst extended family) and on the importance of politeness and avoiding any implied insult.
These differences can matter a great deal in terms of the kind of management style that will work best in each location. Typically, US firms have a strong transactional approach to employment with a focus on direct feedback and on measuring and rewarding individual performance rather than the more relational and hierarchical style common in the Lebanon.
Interestingly, while Arab countries tend to be high on Uncertainty Avoidance in comparison to the USA (valuing tradition and stability over change and innovation), this is not especially true of the Lebanon. This perhaps relates to what we hear in the programme about the need for a very flexible and adaptable orientation, to succeed as a business, in the unpredictable environment created by the history of conflict.
There are also important differences between the two cultures in attitudes to time. In Arab cultures time is seen as much more flexible than in the USA. In part, this relates to the importance of social civility. For example, business people who have arranged a meeting will expect to take time to engage in civil conversation and take some refreshments before mentioning business.
In contrast in the USA ‘getting down to business’ without delay is usual. For Christine Sfeir, an important consequence is the need to design US restaurant processes around the assumption that often customers in the USA will want to order and eat quickly and leave promptly, in contrast to the more relaxed approach in the Lebanon.
Of course these ways of characterising cultural difference are highly simplistic. They overemphasise national culture at the expense of other variation; for example differences in the Lebanon between Christian, Druze and Muslim groups and between rural and urban areas or northern and southern states in the USA. It is also impossible to adequately summarise the rich variation in national cultures with a few simple dimensions.
Nonetheless, this kind of data can be a useful starting point in getting to grips with the important ways in which culture can affect business and management around the world.
- For a look at some of the important non-cultural national differences which affect business and management, try our article on the challenges of managing in a global economy and our OpenLearn Unit on International management: An institutional perspective.
- Geert Hofstede, Gert Jan Hofstede, Michael Minkov, Cultures and Organizations: Software of the Mind. Revised and Expanded 3rd Edition. New York: McGraw-Hill USA, 2010