Cultural Differences and Ethics of International Trading Case Study

International trading simply refers to the way of exchanging goods, capital and services across the world. In other words, this is the trade between countries on a global context.

One outstanding benefit of this type of trade is that, it plays the important role of increasing the gross domestic product (C G D) of the countries involved.

It is also important for the purpose of globalization to continue to ensure enough supply of goods and other services among nations. International trade creates jobs and also generates more improved and new goods from other nations, thus promoting trading affairs among countries (Hill and Jain, 2007).

Despite all these outstanding benefits, international trading is associated with many cultural differences as well as ethics that would tend to impact the nature of the trading affair, either positively or negatively.

As it would be observed, it is wise for the countries taking part in any form of international trade to have a sound understanding and knowledge of the cultural differences and ethics existing between them and their partners in trade.

Understanding the culture of others in business is always important in that, it is likely to attract maximum respect, thus helping people interact well with each other in all aspects. This informed approach plays a key role in promoting and enhancing peace and harmony among the players.

Differences of ethics and cultural settings in international business will also tend to have a direct impact on the partners involved, in terms of profitability or performance.

In this regard, improving levels of cultural understanding is likely to make participants be more globally sensitive thus establishing strong international competencies. This paper examines various cultural differences and ethics of international trading with some concern on how these would tend to impact trading affairs.

In order to be able to understand better the requirements of this paper, there is a need to first of all have informed knowledge on what is meant by the terms culture and ethics in the case of international business or trade.

Culture simply refers to a specific way of life normally followed by a country or community, as it is defined by aspects of religion, social, political, and economical. Cultural differences in this case would refer to the way different communities in their countries live and belief in terms of these aspects.

On the other hand, ethics of international trade refers to the moral conduct that governs and sustains the rules of trading.

Basically, the key to business success on global levels relies on constructive and acceptable ethical standards as established by the international community and regulating bodies on global business (Cass, 2011).

International business should adhere to ethical trade practices that are certain to promote macroeconomic potential between the participating countries. More importantly, ethical trading practices should be effective in eliminating poverty levels and promoting sustainable growth in business.

In this regard, the significance of constructive ethics in international business cannot be overestimated. However, the variation of ethical beliefs and standards across the world has been a substantial factor of the many ethical differences observed in today’s global business.

Therefore, having a sound knowledge of the individuality of ethics as they are formulated by different countries taking part in the international business is substantial in successful trading on the global levels.

Overview of Cultural Differences in international Trading

The practices of international trading are often influenced by a number of cultural factors (Markusen, 1995). As seen in the above paragraphs, culture would encompass aspects such as language, religion, shared values, sensitivities, and social conventions.

In most cases, these cultural factors or aspects would tend to vary according to geographical locations of the participating countries, among other aspects, thus resulting to significant cultural differences across various setting of human interaction.

If left uncontrolled, these cultural differences are likely to trigger serious repercussions socioeconomically, on international trade. Therefore a sound familiarity with cultural norms and values ranging from business ways, religious and history to diet and dress customs can bring forth good international relationships.

Cultural differences do matter a lot in the global business environment, for they influence the buying and selling decision of the participants (Braithwaite & Drahos, 2000). In this regard, having a deeper understanding of one’s foreign trade partners is crucial in helping them discover new market opportunities.

Some of the possible ways through which international trading partners are likely to differ with each other based on cultural aspects include, but are not limited to

• the way members of the society tend to think about schedules and time;
• shared and acquired behavior patterns such as acceptance of power;
• social organizations;
• the way people deal with gender roles;
• concept on private and public space;
• how comfortable people of one community or country are likely to be when dealing with strangers.

Following is a summary of the common cultural differences that are likely to be realized in practical international experiences, particularly in international business.

Cultural differences in shared values

It is inherent for humans to associate well with fellow humans who possess similar cultural values, and this habit has transcended into the international business community. These shared values could be defined by religion, race, and social conventions among other key aspects.

A good example here is a scenario whereby a particular country or community exercises limited trading affairs or activities with another community whose members are defined by different values in the aspects highlighted above.

These social and cultural restrictions could result to unwanted barriers in the global trading environments, thus making international business a preserve of only a few communities that happen to share same cultural values.

Cultural differences in communication

A successful trade relationship is based on good communication and the nature of the applied forms of communication. If anything, miscommunication due to cultural customs in expression terms has been costly with the global business.

According to Koester and Lustig (2012), different countries differ in language and the way the people speak or talk matters a lot in trading.

In some cultures, people speak loudly, being direct to the point and would sometimes interrupt the conversation among them , while in others people speak indirectly or softly according others enough time to communicate.

Some countries value written communication more compared to others who prefer the way of verbal communication. It is also important to observe the nature of some languages such as French and German, where written communication is needed.

As it would be observed, French is known to emphasize the use of communication which is grammatically correct, while just precise business communication is expected in Germany.

Aspects such as humor and modesty, as they are applied in expression, also play a significant role in explaining the ideas of cultural differences as they are portrayed through communication contexts. Humor, for instance, is commonly applied in office communication in some countries, unlike in others.

Same case applies to modesty. Some countries take modesty as an essential aspect of communication, while others don’t appreciate it all.

All these variations in communication and expression are certain ways which can raise cultural differences in the global business environment. However, many cultural differences in communications would also come as a result of hierarchies.

Cultural differences: Valuing Time

Cultural differences differ in concepts of time in terms of lateness. Some cultures are always time-conscious than others.

For example, Germans are always punctual to their appointment businesses but in many Asian and South of America nations, people do not abide to the appointments, but they rather treat them as a simple guideline.

Business meetings are observed to take long moments in some countries, unlike in other countries where they tend to be brief and straight to the point.

Whereby in a country such as the U.S. meetings are contained in short and brief moments, most business meetings in South American countries are characterized by a lot of deliberation, thus taking much time to be completed.

This, however, could raise a controversial scenario whenever people from the two settings happen to meet in a common business environment.

Gifts and Personal favors

The exchange of sensitive things such as gifts is very common in regions such as South America and Asia. This activity, however, is accompanied by strict rules in countries such as the U.S.

While the people from Asia see exchange of flowers and other favors as a normal way of life, Americans would view this as something which is likely to affect their impartial decision-making capacity (Peng, 2004).

Similar issues do happen with other countries allover the world on certain things in life, and this brings forth many cultural differences in the international trade thus making it exceedingly difficult for potential business partners to foster beneficial relationships.

Meritocracy, Decision Making and Seniority

As it is evident from some communities, the state of being senior is accorded much attention and concern; while on the other hand, the concept of meritocracy becomes a major aspect of concern in other countries.

Australia, Germany, and the United States are some of the countries that have adopted the concept of meritocracy.

However, in other countries such as France, both seniority and meritocracy are considered to be significant whenever it comes to making of important decisions on an individual within an organization, such whether or not they should be promoted.

These variations in meritocracy, seniority and decision making as exercised by different countries have triggered many controversies in the international business environment.

Other culture-related aspects that may contribute to cultural differences in international trading would include things such as power distance, individualism, personal and impersonal aspects, position of buyer or seller, importance of harmony, avoidance of uncertainty, and importance of face.

Ethics of International Trading

Just like the cultural differences, ethical differences vary from one country to another. Some countries would tend to have strict laws regarding work and trade. Without international trading ethics, it becomes impossible for the business to be regulated in the market.

Each country has its own ethical guideline for trade, and this explains the reason why some countries would come up with strict laws on foreign trade, while others would have significantly less stringent laws on the same.

In fact, this is a scenario which is likely to raise identifiable ethical disagreements in the international trading system (Buller, Kohls & Anderson, 1991). In most cases, these guidelines are constructed with the core aim of promoting market sustainability through unethical approaches such as bribing.

However, there are other established World Trade Organization regulations on international trade that would directly or indirectly establish economical specifications of countries involved in global trade.

In this regard, WTO ethical guidelines are likely to provide a trading environment that would be equal to all countries involved.

As Carroll (2009) observes, some of the common avenues through which ethical differences in international trading could be observed include, but are not limited to environment, human right grounds, business advertising, and standards.

Different countries will have different approaches for these topics, and would apply them differently in their ethical settings thus raising controversy and confusion on other countries.

For instance, a way or approach of putting across promotional advertisements that have been adopted by a certain country or community may not necessarily be considered ethical by another country or community, perhaps owing to identifiable morality reasons.

Obviously, cross-cultural business interactions can never be smooth due to the fact that, people from one particular country or community cannot come up with business guidelines that are ethically acceptable by all the other countries.

This, however, has increasingly become a serious challenge for the global business, and particularly for the many countries taking part in this diverse cross-cultural trading environment. These are vital issues that need to be addressed with the necessary approaches for a positive success in the international trading business.

For the buyers and traders in the global market to enjoy flourishing business experiences, they should appreciate the many cultural and ethical differences in the global market and try to adapt to them in the most appropriate ways possible.

References

Braithwaite, J., & Drahos, P. (2000). Global business regulation. Cambridge: Cambridge University Press.

Buller, P., Kohls, J., & Anderson, K. (1991). The challenge of global ethics. Journal of Business Ethics, 10(10),767-775.

Carroll, A. (2009). Ethical challenges for business in the new millennium. Business Ethics Quarterly, 10(1), 33-42.

Cass, D. (2011). The Constitutionalization of the World Trade Organization: legitimacy, democracy, and community in the international trading system. United Kingdom: Oxford University Press.

Hill, C., & Jain, A. (2007). International business: Competing in the global marketplace. Irwin New York, NY: McGraw-Hill.

Koester, J., & Lustig, M. (2012). Intercultural competence: Interpersonal communication across cultures. New Jersey: Pearson Prentice Hall.

Markusen, J. (1995). The boundaries of multinational enterprises and the theory of international trade. The Journal of Economic Perspectives, 9(2), 169-189.

Peng, M. (2004). Identifying the big question in international business research. Journal of International Business Studies, 35(2), 99-108.