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Culture, the most essential part of every human being, has been handed down for generations on from our predecessors. It differs from nation to nation, state to state, people to people. Human behaviour can be accounted for by the difference in their culture. As such, for the globalised economy of today, it is crucial to understand the concept of culture for conducting business. This report will attempt to define the concept of culture, major disparities in it and the effect of it on the conduct of business. 2. What is Culture? Culture defines the way humans act.

According to Geertz, (cited in Trompenaars F. & Hampden-Turner C. , 1997) culture is the means by which humans have evolved their knowledge of life and have sought guidance for their actions. As stated by Trompenaars & Hampden-Turner, culture can be divided into three distinct layers: the outer layer, the middle layer and the core. The outer layer consists of explicit products. It is the tangible items, such as food, buildings, houses, shrines, markets, and the intangible ones, like the language, preference, fashion, taste, of a culture (Trompenaars F. & Hampden-Turner C., 1997).

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The middle layer consists of customs and ethics that determine human action. Trompenaars & Hampden-Turner refer to this layer consisting of norms, which is the reciprocal sense of a group of people that enables them to decide between ‘right’ and ‘wrong’, and values, which relates to the principles shared by a group concerning what is ‘good’ and what is ‘bad’. The core is the origin of people’s culture that has defined the way humans act. Trompenaars ; Hampden-Turner defines it as the effect on human perspective due to the physical environment a person was brought up in.

These form the basic assumptions of life and may include why we exist and why we do what we do. 3. The Concept of Individualism and Collectivism In order to understand the effects of culture on the conduct of business we need to look at the cultural variations among different people. Cultural differences can be explained by looking at Hofstede’s (cited in Samovar and Koester, 1999) two dimensions of culture the individualist and the collectivist. 3. 1. Individualism

According to Samovar and Porter, in individualistic culture individual is the most important unit in any social setting, independence rather than dependence is stressed, individual achievement is rewarded. According to Hofstede’s finding, the United States, Australia, Great Britain, Canada and New Zealand incline to be individualism and Goleman states that, people in individualism cultures prioritize personal goals more than groups’ goals. 3. 2. Collectivism Collectivist cultures are somewhat opposite of individualistic cultures, they tend to be more close with others people around them.

According to Samovar and Porter, people in collectivist cultures greater emphasis on the views, goals and needs of others rather than oneself. They tend to rely on a group for decision-making and prefer to be a part of the same association. Example of some collectivistic cultures is Pakistan, Colombia, Taiwan, Venezuela and Peru. 4. Effect of culture on the business context With the business becoming globalized, the effect of culture on business has become widespread. Will see how the effects of collectivistic and individualistic culture on business. 4. 1.

Business contract The meaning of a contract may vary with variations in culture. According to Lustig and Koester (1999) individualistic cultures may find a contract legally binding if not completed as stated whereas in places like China, where they are more collectivistic in nature, a contract is regarded as binding only if the conditions of the contract remain same, it is more like a formality and outline 4. 2. Business deal The effects of culture can be clearly seen in business negotiation with individualistic cultures being more straight forward than there counterparts.

Lustig and Koester points out that individualistic culture have a tendency of getting down to business rather than socialize and form ties like the collectivistic cultures. In Africa, China and other collectivistic cultures friendship is valued more than business and a frustworthy relationship is formed. However, it has been seen that Germans, Scandavians and French, all individualistic cultures fend more to set out the deal and conclude the business first. 4. 3. Gender Expectation In most of Collectivism countries, even the men and women are the same, but the women are still considered below men.

Thus, it is rarely found that there are women who are leaders. But it seems that this condition is slowly vanished. Megawati Soekarno Putri, the President of Indonesia and Sadako Ogata from Japan is one of the proofs that this culture is slowly replaced (Lustig and Koester, 1999). On the other hand, gender is not a big issue in the individualism countries where women have the same position as men. In America, England, Australia women is common to be a leader. 5. Conclusion In conclusion, the effects on the business context is evident with differences in culture.

It is important therefore, to recognize these differences in culture it this globalised economy of todays in order to conduct business.

Bibliography Lustig M. W. and Koester J. , 1999, Intercultural Competence: Interpersonal Communication Across Cultures, 3rd edn, Addison Wesley Longman, Inc. , New York Samovar L. A. and Porter R. E. , 2001, Communication Between Cultures, 4th edn, Wadsworth, Australia Trompenaars F. and Hampden-Turner C. , 1997, Riding the Waves of Culture: Understanding Cultural Diversity in Business, Nicolas Bradley, London.

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