Cultural Differences and Decision-Making in Business


Understanding the process of decision-making is significant to the business. The process itself is complicated since it is under the influence of diverse factors. In the context of business going global, a cultural aspect is gaining importance. Culture on the whole and language as a part of cultural background in particular influence the way people think, percept information, and, finally, make decisions (Anderson, 2015).

This issue is a popular research problem because awareness of cultural decision-making peculiarities can be helpful in overcoming the challenges of international business. For example, Dabic, Tipuric, and Podrug (2015) investigate cultural differences that have an impact on decision-making style. The purpose of their research is to determine the influence that national culture has on decision-making styles in such countries as Croatia, Slovenia, Bosnia and Herzegovina, and Hungary. One of the goals of researchers was to identify diversities and similarities observed in value orientation as well as approaches to decision-making that can be mistreated and thus have a negative effect on business cooperation.

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Methods

The researchers demonstrate a thoughtful approach to the study. Before conducting research, they analyze the basic definitions and dimensions of national culture as well as those of decision-making style through a literature review of earlier works dedicated to the problem of decision-making under the impact of culture. The methods used by the authors of research include comparative, cross-cultural analysis with the standardization procedure and variance analyses.

The latter was applied to identify the existing differences in culture that have an impact on decision-making styles and, as a result, complex decisions in business. The researchers expressed a hypothesis that complex decisions, in addition to a diversity of other factors, are significantly influenced by social and cultural values present in every individual. The choice of methods is suitable for the study due to the following reasons.

First of all, the literature review allowed an understanding of the research problem, and the analysis of earlier findings provided data for comparative, cross-cultural analyses, which resulted in the determination of culture and cultural values as factors that are significant to the decision-making process. Secondly, variance analysis, which a statistical instrument, added reliability and validity to the study due to the identification of statistically significant dependency for decision-making style and dimensions of national culture.

Results

One of the benefits of the study is a detailed analysis of theory and empirical-based approaches to national culture’s dimensions in the course of 50-year’s research. The authors present the indexes of projected positions for the countries involved in the study in such dimensions of national culture as power distance, uncertainty avoidance, individualism/collectivism, masculinity/femininity, and long-term/short-term orientation (Dabic, Tipuric, & Podrug, 2015).

Another aspect analyzed in the literature review that is a part of the study under analysis is the decision-making style, including basic definitions, typologies, and cultural differences. The researchers define five steps in decision-making such as problem recognition, information search, construction of alternatives, choice, and implementation (Dabic, Tipuric, & Podrug, 2015). Based on the literature review findings, the authors develop a model of variables that have an impact on decision-making style.

This visual contributes to a better understanding of decision-making because it demonstrates that decision-making is influenced by the organization and individual variables as well as by dimensions of national culture that depend on cultural values. In turn, decision-making style is considered to determine behavior in the process of making decisions (Dabic, Tipuric, & Podrug, 2015).

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The major findings of the study are as follows. As a result of the cross-cultural analysis, the authors conclude that there is a statistically significant dependency between vigilance and hyper-vigilance decision-making styles and national culture dimensions (Dabic, Tipuric, & Podrug, 2015). According to analysis results, this dependency is confirmed with a 5% probability and p-value = 0.013. At the same time, no statistically significant dependency was identified for national culture’s dimensions and liability avoidance as well as procrastination. Still, hyper-vigilant decision-making style and national culture’s dimensions revealed a statistical dependency with 10% probability (p-value = 0.095) (Dabic, Tipuric, & Podrug, 2015).

As for the countries involved in the study, the results on complex decision-making are that Hungary has the highest average rate of vigilance while Croatia has the lowest. The highest rates of liability avoidance were discovered for Slovenia and the lowest for Croatia. Hungary proved to have the highest average procrastination rate as well as the highest average hyper-vigilance (Dabic, Tipuric, & Podrug, 2015).

On the whole, research reveals that individuals in Croatia and Bosnia and Herzegovina generally have a more vigilant approach to the process of making decisions than those from Hungary and Slovenia. For this approach, it is characteristic to analyze and weigh all possible decisions and their consequences before making the final one. Also, individuals with a more vigilant approach tend to ground their decisions on reliable information and set clear, achievable goals.

The study findings have a practical application for business. For example, they can be included as a part of the educational program for business schools and other educational institutions, together with findings of other investigations dedicated to similar issues. Thus, the study by Yates and de Oliveira (2016) also reviews the impact of culture on decision-making and addresses variations. The researchers define individualism and collectivism as major factors influencing the process of making decisions in business and suggest that their study can be practically used for learning the peculiar features of challenges of intercultural collaboration.

Conclusions

The research findings contribute to the understanding of cultural issues as related to the process of decision-making. It means that national culture dimensions have an impact on decisions made by representatives of different cultures, and this impact differs from culture to culture. Thus, to be effective and successful in business, it worth to be aware of the cultural peculiarities of partners and considers them in negotiations.

This knowledge is particularly important in the context of business globalization when companies hire international employees and have to manage a multicultural workforce. One of the aspects that the study considers is complex decision-making, which is significantly influenced by cultural differences. It is explained by the fact that complex decisions are more frequently the result of social and cultural values present in a person as a representative of a certain culture.

Nevertheless, despite the evident theoretical and practical value, the study has some limitations. First of all, the data collection process is a limitation for most studies of this type because cross-cultural research is usually complicated due to the inability to gather enough relevant data and thus analyze the complexity of the research object. Moreover, a limitation of cross-cultural research is possible to bias due to language and context disparities. Still, the study answers the questions put by researchers. Further investigation in the context of culture influencing business can be conducted on the issue of cultural distance in foreign business entries.

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References

Anderson, J. R. (2015). Cognitive psychology and its implications (8th ed.). New York, NY: Worth Publishers

Dabic, M., Tipuric, D., & Podrug, N. (2015). Cultural differences affecting decision-making style: A comparative study between 4 countries. Journal of Business Economics and Management, 16(2), 275-289.

Yates, J., & de Oliveira, S. (2016). Culture and decision-making. Organizational Behavior and Human Decision Processes, 136, 106-118.

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