Role of Intercultural Differences in Development of Business Strategies (As Exemplified by Russian-German Economic Relationships)

In the course of development, firms aim to internationalize in order to broaden their influence and enhance their opportunities. There are risks, however, in internationalization. This paper focuses on risks relating to cultural differences, which can affect a firm’s reputation when entering foreign markets. The specifics of markets can require perception of socio-cultural differences. A firm’s global image must be defined at headquarters, but the communication strategies should be defined by its local offices. Andreas Siegert explains the complexity of the process by which the culture of the country of origin affects worldview and behavioral patterns that can become problematical, or raise risks, in relations between representatives of the two different cultures. The general components of national culture—religion, ethical norms and traditions — evolve slowly within definite parameters. Misunderstandings between culture at headquarters and culture in the country where the branch is located can embrace legal awareness, interpretation of contracts, and perceptions of product quality. The paper uses for a case study Russo-German corporate relations. It reviews aspects of national character in both countries, patterns of negotiation, the perception of details of co-operation, and organizational etiquette. Russia is an important market for German firms, and therefore, consideration of cultural diversity will entail unique business-strategies. The paper uses examples of German employees, recruited only for their skills and experience, that is, neglecting their understanding of Russian norms and traditions, who can fail to communicate well. The paper advances the solution in the creation of an international team aimed to develop a cooperative climate that will transcend distinctive frameworks of existing cultural practices. There is abundant evidence that international teams perform well when identifying problems and seeking out innovative solutions. Note: Downloadable document is in Russian.