Global Business Cultural Analysis: Sweden

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Introduction

Sweden is found in the Scandinavian Peninsula in Northern Europe and is the third largest country compared to other European Union countries. The majority of the country’s population is made up of ethnic Swedes, but there are also migrants who are referred to as new Swedes. The country boasts of a largely stable society occasioned by its unique Swedish culture that has stood the test of time and other difficulties such as the world war (Gannon, 2004, pp. 149)

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Sweden as a country is self reliant as a result of its rich natural resources endowment and developing industrial sector coupled with an enviable steady economic growth that has been witnessed over the years. The Swedish engage in economic activities such as mining, agriculture, forestry, tourism and manufacturing among others (Boraas, 2003, pp. 35-39) Sweden is governed under a constitutional monarchy with the Prime Minister as the leader of government business and the cabinet. Elected members of parliament also form part of the government (Gannon, 2004, pp. 151)

Sweden and its people is known for its commitment to its traditional cultural values and has for a long time operated under a generous state welfare program with low tax rates being offered to both individuals and firms but this situation has experienced some changes due to the evident effects of globalization. In a bid for the country to remain economically viable and competitive in the global arena, some of these changes have been accommodated by the people as they continue to embrace a model that portrays both capitalist and socialist characteristics. On the other hand high taxation as well as huge social benefits expected as payment to employees by foreign investors has often discouraged foreign investment (Putzi & Curry, 2001, pp. 735)

Dimensions of Culture

Culture has different dimensions which can be categorized as either values, religion, ethics, attitudes, customs, communication, social organizations and structures among others.

Communication: This refers to the mode through which information is communicated from one party to another. Information may be communicated verbally or nonverbally. Verbal communication involves conveying information through spoken word or in some cases written word while non verbal communication refers to the conveyance of information through facial expressions or body language for example nodding and waving. It is important to be conversant with the language of the people one intends to do or is already doing business with to avoid incidence of misunderstanding or misinterpretation.

Values and Attitudes: Values refers to those beliefs that are imparted on individuals by the society regarding what is considered to be right or wrong. Attitudes on the other hand refer to peoples’ perceptions and feelings about other people or things. These vary depending on where people come from and their culture.

Social Structures: This refers to the way a society is organized in terms of groups, status of the members of the society, societal institutions and the roles the societal culture imparts upon the different structures.

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Societal/cultural Ethics: This is the acceptable code of conduct and morals that a culture holds for its members. In the business environment they affect the decision making process but are generally similar to those acceptable even in the normal day to day activities.

Education: Refers to the process through which skills and knowledge, whether formal or informal, are transmitted to members of the society.

Religion: This refers to the relationship that is found between a human being and the supernatural or divine power in which he believes in. People with similar religious affiliations tend to have similar ways of doing things and as a kind of culture emerges from such. Religion is a very important factor to consider especially when dealing with people from different places and nations. There are nations for example which are majorly guided by religious beliefs and as such familiarity with the religion is very important so as to understand what is acceptable and what is not. For example in Muslim nations that are guided by the Sharia Law, dealing in products such as alcohol is not permitted, interest earning is also not allowed. Religious beliefs vary depending on whether one is a Christian, Muslim, Hindu, Buddhist or Judaist.

Customs: Customs refer to those habitual activities that are generally practiced and accepted by members of a society. They are regarded with importance and as such they are passed down from one generation to another through a formal or informal learning or socialization process.

Culture and Business

Culture refers to those beliefs, customs, values and forms of behavior that are shared by members of given groups and societies in order to deal with the expectations of the world and people who share the same cultural lifestyle. In most cases it is passed down from one generation to another through communication and learning. Culture is in most cases group oriented and not individualistic. Culture found on a national level is referred to as nationalistic culture meaning that it is common to the majority of the people living in that country (Hofstede, Pedersen & Hofstede, 2002, p.17)

Culture is a very important aspect when doing business especially with people from different countries as it may act either as hindrance or motivator to the business interaction. It is therefore imperative that all parties to the business are aware of each others culture in order to have an idea of what they are expected and not expected to do in the course of doing business so as to enhance the performance of a business.

A peoples’ culture affects the way business negotiations are handled, how organizations are managed and how the operations of the businesses take place. Culture also affects people’s attitudes towards certain businesses and the operations that are carried out to enable the success of the business. This does not however mean that business between different countries is impossible. Due to the globalization process such cultural barriers are being dealt with and shunned by the day. A peoples’ culture is portrayed in their language, religious and political ideologies and traditions among others.

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Swedish Culture

Swedes are traditionally known to be very practical and rational people and they tend to dissociate themselves with activities they consider impractical and not beneficial in the long run (Gannon, 2004, p. 155) This has been evidenced by their neutral nature when it comes to matters of war with the country having remained indifferent to war since 1814 when the country last engaged itself in war. This attitude saw them through both the First and Second World Wars. Sweden has remained a socially democratic state and this is clearly portrayed in the governing of the state and other state activities such as policy making.

Social Organization and Structure

The social organization in Sweden does not show a high degree of stratification as found in many countries. This is because of the culture of equality that has been in place for a long time. The fact that Sweden has been a social welfare for a long time has contributed to the situation. It is however important to note that despite this lack of or minimal differentiation, Sweden has been found to have a very small portion of its population holding top executive or managerial positions. This is despite the fact that the country has a very large work force compared to most countries of the world. (Hess, 2001, p. 152)

Religion

A majority of Swedes are affiliated to the Lutheran church but church attendance in the country is reported as being low since the country is largely secular. There are other religious affiliates in the country and this is mostly attributed to migration. This means that religion does not pose a major threat to those seeking to do business in the country as it is not a religious state governed under religious values.

Language and Communication

Most Swedes speak Swedish as their first language with English being their second. This is an important factor for people wishing to do business in the country as it is through a clear understanding of the languages that information can be rightly communicated and understood.

Culture in the United States

United States is a largely cosmopolitan country with a diverse number of people from different parts of the world. The culture in the country is thus diverse with globalization being the major cause of the diversity. The country does not have a clearly defined culture as can be found in other countries of the world because of the individualistic nature of the people where everyone is taught to be self reliant and hardworking since childhood. They are also taught to believe that anybody can grow up to be a high achiever if they set their mind to it (Shearer, 2008, p 20)

Right from when the nation was founded, the United States citizens were accorded liberty and freedom and they remain deeply rooted to this kind of thinking and are very proud of it with most of them being of the opinion that there can be no better place to live than America. This thought has been reinforced by the actions of people from other countries who move there to look for greener pastures believing to be the land of unlimited opportunities.

Shearer is also of the opinion that the United States culture embedded in its social, economic, ethnic, political, education and religious views is a source of strength and is based on compromise (2008, p. 20) The United States people profess different religions and therefore the country cannot be said to adhere to the values and beliefs of a specific religion. As far as doing business is concerned, the people are adherent to Law and they insist on making formal agreements in contracts which have to be checked and verified by legal agents before they can agree to formally endorse them. (Shearer, 2008, p. 20)

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In the United States people are driven to be better than the others and gaining power, success and the social status that comes with it is highly sought after. From when children are small they are allowed to choose what interests them and are encouraged to do so there by giving them the advantage of being able to develop themselves in their fields of interest, giving them an edge over children in other countries. The culture of innovation is also encouraged and this is portrayed even in the business world where different organizations and individuals seek to come up with new products, inventions and technologies of doing things in order to create efficiency and effectiveness.

People in the United States are also very business minded and are always seeking for new market and business opportunities making the country one of the leading in foreign investment whether directly or indirectly. The country’s citizens are also encouraged and expected to be independent as reliance on others is not taken to be a positive aspect. This is seen in areas where children and youths who are still in school are encouraged to get part time jobs so that they can make their own money. They are also expected to leave home as soon as they reach legal age. English is the official language in the United States and most contracts, business negotiations and other forms of communication are done in English.

From these views it is evident that the cultures in the two countries are generally different meaning that ways of doing business in the two countries also differs to some extent. Robinowitz and Carr (2001, p. 151) have categorized the ways in which doing business in the United States differs with the way of doing business in the United States into four areas. These are communication, making of decisions, structure of the corporations in the two countries and competition. In Sweden due to their culture of collectivism, vigorous competition is not always welcomed, on the contrary, the individualistic nature of the United States requires nothing short of such competition. This causes difficulty in cases where members from the two countries are engaged in similar work ventures.

Decision Making

Swedes tend to make decisions collectively while Americans are more of individual decision makers. This is due to the egalitarian nature of the Swedes which also affects their management style. There is little division between different levels of management as well as in the case of the division between the management and the lower level staff members. This plays into the advantage of the business and organization environment as little friction tends to occur between staff members. The United States on the other hand is a pseudo democratic nation and this also plays itself into the management and operations of organizations. There is the illusion of democracy but the eventual decisions come from few top executives. Management also takes place from the top flowing down to the lower level staff members with operational decisions also being made by top level executives (Lawrence & Spybey, 2000, p. 62)

Communication

Communication facilitates transformation among people whether in politics, business, and personal matters or when communicating to the public (Dewatripont & Tirole, 2004, p. 1). For communication to take place effectively, both parties must use modes that are favorable to both of them. Swedes are more direct in their communication and they do so in a cool controlled manner. In communicating business matters, Swedes avoid showing emotion as this is considered to be negative.

On the other hand, Americans have an even more direct communication culture with people expected to say directly what is on their mind and not beat around the bush and in effect waste time. They are also not insistent on face to face meeting and in most cases are comfortable in doing business over the phone unlike their Swedish counter parts that prefer the traditional face to face meetings when discussing business matters. Americans are also less hospitable compared to the Swedes as they are always preoccupied with the issue of time which to them is money and therefore wasting time means wasting money. Swedes are more hospitable and prefer getting to know their business counterparts on a personal level. This is not an issue as such to Americans as long as all the legal and other requirements are in place and check out.

Corporation Structures

The structures of corporations in America are very much defined. Different levels of management and their duties are more or less specific and there is little interference from each other. Decisions are mostly made by the top level managers and followed by the lower level managers and staff members. Communication is also on a top down kind of basis. They claim to be democratic but it is more of an illusion that a reality. Interactions between members of different levels of managers are limited. In formal meetings, interaction between staff members is less formal but whatever they discuss is taken seriously.

Their Swedish counterparts take business meetings very seriously and everything takes place in a formal manner until when it is deemed okay for them to relax and even so there is still a bit of formality. They address each other formally and avoid invading each others personal space. There organization structure is more horizontal as the differentiation between different levels of management is minimal. They believe in team effort and therefore consult a lot before making final decisions. Communication is two way, from top to bottom and from bottom to top. Lower level staff members are mostly accountable to different managers unlike in the Americans organization setting where people are accountable to specific managers who are mostly in the upper management levels.

The corporate structures found among the Swedes are so because they believe in equality among the people. This is portrayed even in their economic living standards where the Swedes share high living standards. The most prevalent form of social differentiation that exists among the Swedes is between themselves and the immigrants who have come to live in their country from elsewhere.

Employees in different sectors are well paid even those who engage in manual labor. In the United States economic differentiation is prevalent both in the business and social lives of people. The disparity between people from the upper class and the lower class is clearly visible and this translates into the division in the organizational structures with the workers in the top management getting higher pay than those in the lower levels.

Competition

Americans live in a very highly competitive society that promotes competition even at the individual level. Most Americans are taught from when they are little that in order to succeed they must remain competitive in all ways. The competition is found in almost all sectors of their lives from school to business institutions. Everyone strives to be at the top and therefore do whatever it takes to achieve this.

Swedes on the other hand are not that competitive. This stems from their lagom cultural background which teaches them to do everything in moderation. They thus refrain from going overboard in their personal and business interaction and are always content with having enough as opposed to having more than what they need. This also helps to promote the concept of equality. In an organization setting, you will find that most are content with the positions they hold and therefore do not seek to be increasingly competitive so as to rise higher in ranks. After all even if they do, the social and economic status that is usually attached to such positions in other countries is not visible in their social setting.

The United States is mostly a capitalistic nation while Sweden is more of a socialist state. With capitalism comes the need for increased competition unlike in a socialist setting. This means that in the United States, a minority owns the majority of the nation’s resources and in effect controls most of the economic decisions that come with such power. Most people seek to achieve this kind of power and therefore engage in activities that will take them to these levels and this is better achieved through competition.

The Swedes are socialistic and one can manage to survive without having to put in their effort as the state provides for such people so that they can maintain a specific level in their standards of living (Stockholm, 2007, para. 1) The level of socialism at present is not as it used to be in the earlier years due to the influence of globalization and Swedes are adopting a more market oriented economy as evidenced by the overwhelming political decision the country’s citizens made in 2006 when they elected a leader who was lobbying for a market oriented economy as opposed to the socialist economy that has for years dominated the nation. (Stockholm, 2007, para. 3-5)

Socialism in this case refers to a kind of situation in which a country’s resources, both natural and artificial are majorly owned by the State as opposed to individuals or the private sector. This means that the state has control over the how and what is produced and how such products are distributed among its citizens. (Bowman, 2004, pp. 48-49)

Education and Family

Another area in which the two countries differ is the area of Family. United States citizens accord utmost important to members of the nuclear family. The Swedish hold all members of their family with the same kind of importance and this includes both the nuclear and extended family. Swedes consider their families to be of more importance compared to their businesses and professional careers. Both countries accord utmost importance to education and all children are required to go to school to acquire education up to the highest level possible. Swedes have a comprehensive education system which allows for the establishment of privately owned schools and allows foreign students to learn in their country. The same case also applies to the United States.

Having covered the culture of the Swedish and the Americans and how it plays into the business situation in the two countries, it is time to look at how it affects Americans doing business in Sweden.

Implications for US Businesses wishing to Conduct Business in Sweden

Culture generally affects individual behavior as it shapes how the individual reacts to certain situations, his/her attitudes, values, beliefs and ethics (Nelson & Campbell, 2008, p. 72) Sweden has a lot of potential as far as it being an investment destination is concerned. This attracts a lot of foreign investors to the country and Americans are among them. Americans doing business in Sweden face certain challenges because they have to contend with the Swedish culture which is in many ways different from theirs. Though with globalization some aspects have changed and others are now taken more lightly, there are still those that are strictly adhered to since culture does not change overnight especially in country that has for so long stuck to its cultural values.

In order for business people to succeed in such countries they need to be aware of certain issues so as to avoid conflicts and misunderstandings (Roebuck & McKenny, 2005, p. 127). These include knowing their place in the society. Swedes are generally very hospitable people and it shows in the way they treat people including strangers. They are very welcoming even to their homes and are accommodating to the mistakes outsiders do as they try to get integrated into their society. But it is important to note that such accommodation should not be taken for granted and outsiders should try to respect and adhere to their cultural aspects the best way they can since they hold the position of outsiders all the time. The same case applies to American business men wishing to conduct business in Sweden, they should admit that they are outsiders and will therefore at all times be expected to respect the Swedish ways (Carte & Fox, 2008, p. 21)

They should also be aware of the limits in terms of what they are expected and not expected to do, even if it seems ridiculous to them. In order to do this they should seek to find out why the Swedes do things the way the do them and by understanding where they are coming from, they can understand why things are the way they are (Carte & Fox, 2008, p. 46) it is also necessary to understand the form of a peoples’ culture. There are definitely certain aspects of culture that are similar between people of different countries but it should not be generally assumed that just because this is the case, they can be taken for granted. For example, both Swedes and Americans realize the importance of keeping time especially where business meetings are concerned, but at the same time it is important to note that Americans are in a sense stricter about the matter. They therefore hold meeting where people go directly to avoid wasting time while on the other hand Swedes generally tend to ever indulge especially when dealing with business matters leading to longer explanations and in the process they may loose track of time.

In order for Americans to conduct business smoothly in Sweden it is important for them as well as the Swedes to focus in observing ethical, corporate and legal ethics (LRN, 2008, p. 2) Most of them are global and if observed they prevent problems for the parties conducting business together. Business ethics refer to those common principles that act as a guide to people conducting different types of businesses. They involve a moral and ethical obligation upon the parties involved so as to facilitate the smooth running of business affairs and operations (Campbell, Parker & Jones, 2005, p. 71) Business ethics can also be referred to as corporate ethics since they are applicable in the corporate world. Business ethics determine how the business and members of the business world conduct themselves in a business setting.

Business ethics involve respect, trustworthiness, carrying out ones obligations, maintaining a viable corporate social responsibility program, maintaining proper documentation as required, maintaining legal obligations, fair trade practices in businesses between different countries as well as cultural imperialism, that is taking into consideration the culture of the society in which one is doing business and integrating it into different aspects of the business (Tomlinson, 2001, p. 69). For example, Sweden as a country is committed to protecting the environment and therefore American business men can engage themselves in activities that promote environmental stability to show that they understand the importance the Swedes attach to the environment and thus they also want to help in its sustainability. This shows an act of good faith on their part.

What this means for businesses wanting to conduct business in Sweden is that they should be ready to adhere to the cultural requirements of Sweden as a nation and to those of its people. Since there are those cultures which are common, there should not arise such a big problem as these businesses seek to be integrated into the country’s business system. Businesses wishing to conduct business in Sweden should first of all invest in ways of acquiring knowledge about the different dimensions of culture in the region. After this they should invest in ways which will enable them to conduct their businesses without problems or without them going against the nation’s culture so as not to elicit resistance from Sweden’s stakeholders who include the government, the public and the private companies which are already in existence.

For example, they should seek to find out the best way to enter the Swedish market, ways in which to encourage fair competition and not engage in unfair competition practices, ways in which not to violate their basic business standards, the type of business structures that are acceptable in the country, ways in which they can contribute to the general economic growth and development in the country as well as the legal requirements they are supposed to adhere to. For example, how much tax they are required to pay and when they are supposed to file their returns, the required level of salaries for employees in different levels of the organizational structure, as well as other generally acceptable business practices.

Businesses can only thrive in an environment that is conducive for them and this means that they must act in a way that does not rub the citizens of the host county the wrong way. It is also important for stakeholders in Sweden to take into consideration the fact that business from the United States have been exposed to a different culture and therefore be ready to accommodate their mistakes and help them learn what is expected of them as the process cannot be fully one sided. Conducting business cross culturally usually requires a lot of compromise and understanding from both parties to the business. Conducting business across cultures gives all parties to the business agreement to learn more in terms of skill and expertise and the use of more advanced technology as well as to learn new ways of doing things.

Conclusion

Sweden offers a very viable business environment as it has a dynamic and diversified economy with various highly dynamic industries like the engineering, pharmaceutical and information technology. Over the years it has been able to attract different types of investors and those from the United States have not been left out. The United States and Sweden have managed to maintain a very good business relationship and has therefore invested in the country contributing up to thirty percent of the country’s foreign direct investment share. The reason that endears most United States citizens to establish businesses in Sweden is that the Swedish government allows foreigners full ownership of their businesses unlike in other countries where foreigners are only allowed to own a certain percentage of the business capital thus limiting their returns and the level of control they have over the businesses and also their decision making powers. This means that such businesses get to enjoy the full returns of their investments. Due to this fact, there has been a lot of cultural interaction. Though at times this poses difficulties for the business professionals of the two countries, this has not hindered their relationship and the need to continue investing in the country. Sweden has also become more accommodating to the United States culture as well as the culture of other countries and as a result of this the two countries have time and again managed to find common grounds as far as doing business is concerned.

Taking consideration of other peoples national culture is very important and is necessary if you hope to engage in either business or social activities with them. Most American business professional have accepted this fact and have taken time to familiarize themselves with the Swedish culture and it seems to be working in good faith due to the number of business ventures that have been established in Sweden by Americans and also the joint ventures between business men from the two countries.

Globalization has played a major role in the area of cultural assimilation among different culturally diverse countries and this has created a generally conducive environment for different countries and individuals from these to conduct business together. But the same form of globalization has been blamed for the erosion of culture in different nations. Globalization allows for the integration of other processes whether economic, business or social and not only the cultural aspects of people from different countries. It has translated and is still continuing to transform the world into a global market where all the players have a chance of benefiting from the opportunities that have been presented to them.

Sustainability of culture is important for any nation as it forms an identity for the nation’s citizens and through it they can be recognized as having originated from that nation. It should not however act as a hindrance to development because at the end of the day it is the same people who benefit from the development. Organization culture is mainly influenced by the culture of the people working in the organization since culture survives through people. Positive national or societal culture translates into a positive organization culture and in effect a positive business culture. A healthy relationship is therefore important between culture and business and it is up to the individuals of different countries to strike a balance between the two in order to achieve success without having to sacrifice either of the two aspects, that is business and culture.

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