Cultural thinking and art of business decision making

What’s that little voice in your head saying now? PHOTO | SHUTTERSTOCK

Achoki sits at the head of a fast-growing textile supplier based in Thika. From humble beginnings in 2014 and a slow start, his firm began to take off in 2016. Benefiting from the American law favouring imports from Africa, the Africa Growth and Opportunities Act (Agoa), he distributes clothing mainly to America and then other markets.

As the Thika textile trade declined, Achoki moved his manufacturing operations to Cameroon and expanded exports to the Euro zone. Achoki now desires to grow sales, distribution, and manufacturing to new countries with a particular eye towards Kazakhstan in Central Asia.

First, coming from a different cultural community than the largest ethnic group in Thika, he underwent his first exposure to different culture dynamics back in 2014 and how different societies react to stimuli.

Inasmuch, Achoki pondered how do manifestations of thinking impact business actions and decisions? How do a society’s values impact business decisions? How should business men and women assess cultural values in new regions so as to expand their businesses?

The best known researcher in the field of cultural thinking and values involves Dutch intellectual Dr Geert Hofstede. In 1973, he concluded a landmark study investigating national culture differences based on four dimensions.

Later researchers added two additional dimensions and the dozens of additional studies tweaked the researched angles of culture, including Robert House and team’s landmark GLOBE Framework.

First, a culture may view life and others individualistically or collectively. Global commentators often lump all of Africa into the collectivist category without fully appreciating our diversity and how our more collectivist tendencies differ from East Asian collectivism. But in East Africa, how Pokots prefer collectivism differs from Meru collectivism which certainly differs from Yoruba collectivism in Nigeria.

A society that prefers to take care of themselves primarily and their immediate family only and live within loosely-knit social frameworks refers to individualistic societies.

On the flip side of the coin, collectivism societies desire closely intertwined group thinking and group care for each other with unflinching loyalty to each other. So in Kenya, we prefer collectivist thinking nationally, but more individualistic in Nairobi.

While interesting for intellectual stimulation, how does such knowledge impact your business? If you want to expand manufacturing operations into a new country, like Achoki described above, then how would individualism vs. collectivism affect your business decisions?

Since Achoki expanded his manufacturing operations to Cameroon, then he would likely tailor his compensation schemes around collectivist principles for group-based reward incentives rather than individualistic as if the operations took place in Europe. Further, Cameroonians might prefer expanded healthcare insurance to cover extended family members rather than higher bonuses as a tradeoff because of their collectivist nature.

Second, a culture handles power distance differently. How acceptable do less fortunate citizens in a culture find it that power in society is distributed unequally? Does the society widely tolerate inequalities among people?

A culture with large power distance actually accepts hierarchical order where everyone has a place in society and that reality need not disturb the citizens to demand justification. On the other hand, if a society demands to equalise the distribution of power and clamors for justification for inequality, then the culture possess low power distance.

So if a company like Achoki’s strives to expand into Kazakhstan, then ascertaining that nation’s power distance proves vital. In Kazakhstan, could Achoki pay his Country Director 50 times the salary of the lowest-level employee?

If Kazakhs live apathetically about power distance, then he  could pay employees very differently. If, on the other hand, such a pay difference would arise in Norway, employees would likely not tolerate such differences and, therefore, companies must change their financial projections accordingly.

Further, if Achoki researches Kazakhstan and realises that the World Bank ranks the country’s Gini Coefficient as high, a quantitative picture of inequality, and the people in interviews do not tolerate power distance, then Achoki must remain concerned about possible political unrest. Therefore, Achoki may choose to invest elsewhere or reduce his existing holdings.

Third, a nation’s ability to deal with uncertainty should feature highly in business expansion decisions. Uncertainty avoidance often shocks Africans when they travel to the United States, Europe, or China.

Such societies strive to eliminate any uncertainty in their culture. Uncertainty avoidance expresses the extent to which members of the society handles the fact that the future can never be known. So, should the society take measures to try and control the future or just let it unfold as it happens.

Societies that tolerate uncertainty operate more relaxed attitudes about principles and laws. Cultures that desire to forecast the future end up developing rigid codes of belief and behaviour and do not tolerant uncommon ideas.

In Kenya, we tolerate uncertainty remarkably well. In the lead-up to our last General-Elections in 2022, business transactions decreased, but did not fall off completely. If such an uncertain election with uncertain possible outcomes took place in East Asia or Europe, GDP growth would likely have ground to a halt nearly a year before the elections over fear for what may occur.

Consumers would have stopped spending and started saving more in preparation. However, in Kenya, we robustly moved into the election season with relatively less fear than other societies might have done.

Inasmuch, investors looking at investment in Kenya should consider our tolerance for uncertainty and the strength it brings to our continued economic growth. Likewise, Kenyan firms growing outside our borders must investigate uncertainty avoidance in a culture as a gauge for how consumers may react in crises or whether rules in the new country might become too stringent to functionally accomplish business.

Fourth, a nation’s obsession with short-term or long-term orientation would impact how Achoki would compensate employees with long-term schemes or incentivise clients with short or long-term benefits.

Fifth, how much a society indulges itself on instant gratification might reflect on sales techniques and methods in a new country. Sixth and finally, the masculinity orientation of a culture determines how assertive citizens in the country portray themselves. Russia versus Ireland would yield stark contrasts. Masculinity orientation would determine how to manage employees in a new nation.

In summary, ask questions. Understand culture. Business does not revolve solely around financial projections and prospective demand.

Take steps to expand your business with vigorous planning of possible outcomes and long-term strategies to engage your new workforce and tantalise new clients. Assessing culture provides you with competitive advantages over your competitors.

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