Culture is a key component in business and has an impact on the strategic direction of business. Culture influences management decisions and all business functions from accounting to production. International managers doing business in a foreign country need to have some knowledge of the rules and behaviors that are considered acceptable in social and professional relationships. The culture and traditions of each country make people behave differently and if international managers do not know how to adapt to business culture differences, they can cause rejection in the other party and even jeopardize the success of the negotiations. Two kind of business culture can be distinguished:
- Low context cultures: in which the partners clearly say what they mean: the language is direct and clear and there is no ambiguity – as North Americans say: Tell it like it is.
- High context cultures: in which attitudes and circumstances are more important than what is actually said.
Examples of low-context cultures are Western countries like the US, Australia, and the Netherlands, while the best example of high context cultures are Asian countries like Japan or China. See also cross-culture business; Business Culture Guides by Countries.