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Home Blog What Is Cultural Intelligence and Why Does It Matter in International Business?

What Is Cultural Intelligence and Why Does It Matter in International Business?

July 5, 2024

Contributing Author: Alley Bardon

8 mins read

Working in international business inherently means working with people from a wide range of distinct cultures and backgrounds. Having a keen sense of cultural intelligence is an absolute must if you wish to be successful as an international business leader. Unfortunately, all it takes is one bad interaction to sour a relationship with a potential client or partner—but being able to relate to and understand people from diverse cultures can drive your success. 

With a better understanding of what cultural intelligence entails, why it matters, and how you can develop your own cultural intelligence, you can empower yourself to become a more open-minded and empathetic business leader. 

What Is Cultural Intelligence?

Cultural intelligence refers to a person's ability to understand and relate to people from diverse cultures. In the business world, this may also go a step further to include a person's ability to work with people from other cultures with a shared sense of respect and sensitivity. 

Relevance and Impact on International Business

In an increasingly global economy and business world, professionals need to possess cultural intelligence if they want to remain relevant. These days, cultural intelligence isn't just something "nice" to have; it's an absolute must in a growing number of workplaces.

 Importance of Cultural Intelligence in International Business

Simply put, cultural intelligence matters in the international business world because this industry involves a great deal of interaction with people from diverse cultures. And because different cultures have different norms and unique characteristics, business professionals need to be aware of what might be expected (as well as what should be avoided). 

Cultural Factors Impacting International Business

Numerous cultural factors can influence international business relations—ranging from culture and etiquette to languages, customs, and even customer preferences. The most impactful business leaders in a globalized economy, then, are those who can confidently identify these cultural dimensions and understand their impact in an international business context. 

Identifying Cultural Dimensions

Specifically, there are a few cultural dimensions that business leaders should be aware of as they relate to international business. These include: 

  • Communication styles – In certain cultures, it may be considered rude to engage in a business conversation via text or email. Instead, a phone call or direct meeting may be the preferred method of communication. 
  • Work values – Some cultures value a greater sense of work/life balance and may find it rude to receive an email or business call outside of "traditional" working hours. 
  • Attitudes toward authority/hierarchy – Different cultures may also have varying feelings and attitudes about authority figures or people at certain levels of management. 

By being able to identify cultural dimensions in an international business setting ahead of time, leaders can prepare for differences in belief systems and act accordingly. 

Effect of Cultural Differences in International Settings

Cultural differences can impact the way international business is executed in a variety of ways. For example, cultural beliefs may affect a person's expectations when it comes to negotiations. In some cultures, negotiating may be considered offensive, whereas it is a part of everyday business in other cultures. 

Cultural differences can also impact  basic business etiquette matters, such as whether to shake a person's hand, how to address a person, or even how decisions are made.

Strategies for Developing Cultural Intelligence

Business leaders (and aspiring business leaders) have an obligation to develop their own cultural intelligence in the workplace. This should include taking the time to enhance cultural knowledge, along with focusing on cultural mindfulness and awareness. 

Approaches for Enhancing Cultural Knowledge

There are many ways business leaders can improve their overall knowledge of other cultures, which can then be applied to everyday interactions. Taking the time to complete cross-cultural training is an excellent first step. In some cases, it may also make sense to learn at least some basic words and phrases in other languages. 

Cultural immersion experiences (integrating oneself with another culture for a specific period of time) can also be extremely helpful in learning about the ins and outs of a culture by experiencing it firsthand. 

Techniques for Developing Cultural Mindfulness

Another central aspect of developing cultural intelligence is shifting into a mindset of cultural mindfulness. For business leaders, this means proactively considering how your actions may be interpreted by people from different cultures and backgrounds—then adjusting as needed.

Embracing a mindset of cultural mindfulness everywhere you go can be a fantastic way to strengthen your open-mindedness, while seeing the world from different perspectives.

Tips for Developing Cultural Skills

In addition to the above techniques and best practices, aspiring international business leaders can develop their cultural skills by: 

  • Regularly assessing their cultural intelligence and competence 
  • Practicing active listening 
  • Accounting for cultural differences in scheduling and communication 
  • Proactively learning about other cultures around the world 
  • Understanding and reflecting on their own cultural identity

Strategies for Cultural Adaptation and Adjustment

When interacting with someone from a different cultural background than your own (or preparing for an international business trip), adapting and adjusting is a must. You can achieve a greater sense of adaptation by always maintaining an open mind, as well as asking questions and using your observation skills in a new environment. 

Understand, too, that you are going to make some mistakes. While it's ideal to avoid offending anyone whenever possible, it is also important to realize that you might not be perfect. 

Role of Cultural Intelligence in Leadership

Cultural intelligence is essential for anyone working in international business. However, it is most crucial for business leaders for several reasons.

Importance of Cultural Intelligence for Leaders and Managers

First, consider that business leaders and managers are often among the first to interact with other professionals at the international level. In this sense, they become the first impression of a business or organization. When these leaders are not culturally intelligent, they run the risk of tarnishing the company's reputation and having a negative impact on international business relations. 

On the other hand, when business leaders do have a keen sense of cultural awareness and intelligence, they are more likely to form healthy working relationships with other international business leaders that can, in turn, foster company growth and success. 

Culturally Intelligent Leadership Can Foster DEI Initiatives

Of course, the potential for business leaders and managers to use their cultural intelligence for good doesn't end with external relationships. Oftentimes, these same leaders are those responsible for carrying out cultural sensitivity training and DEI initiatives within their respective workplaces. 

In this sense, then, culturally intelligent business leaders can help create more collaborative and culturally aware employees and teams. 

Overcoming Challenges in International Business

Working in international business isn't without its challenges. In fact, many common obstacles in international business end up being related to cultural differences. By understanding the roots of these differences and learning to overcome common cultural barriers, business leaders can optimize their business relationships across borders. 

One of the most common challenges regarding cultural differences in international business is that of language barriers. When one business leader and another business leader don't speak the same language, needless to say, it is difficult to communicate effectively. Even when using translators, there may be underlying nuances within the language that result in some ideas getting lost in translation. 

Likewise, differences in communication styles and etiquette can affect international business relationships. Even in an in-person meeting, body language may not be understood—or one party may make a well-meaning gesture that is interpreted offensively by the other side. 

Overcoming Cultural Barriers and Building Trust

Both in the workplace and at the international level, business leaders can work to overcome cultural barriers while building a greater sense of trust and shared understanding. This can be done in several ways, beginning with maintaining a sense of patience and curiosity when working with people from other cultures. Taking the time to actively research another person's culture (including norms and taboos) can go a long way here, as can taking individual personalities into consideration.

Leveraging Cultural Intelligence for Business Success

At the end of the day, cultural differences don't need to stifle international business. In fact, when leaders have a solid sense of cultural intelligence, these perceived differences can result in remarkable collaborations and innovations. 

Benefits of Cultural Intelligence for Businesses

When business leaders exercise cultural intelligence, the potential for new ideas and innovations is incredible. This is especially true when a business is able to partner or collaborate with a business on the other side of the world to bring new ideas to fruition. This could ultimately introduce a greater sense of competitiveness within the industry while expanding the market share internationally. 

How Culturally Intelligent Organizations Can Leverage Diversity

In many ways, businesses with culturally intelligent team members can use diversity to their advantage by fostering a greater sense of open communication and shared understanding. This can lead to all team members more openly and comfortably sharing their thoughts and ideas—which can then turn into projects and innovations that help the business grow and scale. 

Integrating Cultural Intelligence into Your Business

So, how can business leaders start incorporating this idea of cultural intelligence into their own businesses today? The key is to start by getting to know your team and their different backgrounds. From there, leaders and managers need to put forth the effort to research and understand these backgrounds, reflecting this understanding in practice through matters like holiday celebrations and scheduling considerations. 

Whenever possible, cultural sensitivity and awareness training should also be provided in the workplace. This can be an ideal way to get other team members to think about different cultures and prevent potential conflict. 

Advance Your Business Education with an Online MBA

As globalization continues to dominate the business world, future generations of business leaders are implored to focus on their cultural competence and awareness in order to do their jobs well. With a firm grasp of cultural intelligence in business, you can handle interactions with professionals from anywhere in the world with grace and confidence. 

Looking to build upon your business leadership skills even further? Lindenwood University Online is proud to provide a Master of Business Administration (MBA) program with a wide range of available specializations, including one in international business. Plus, this program is offered exclusively online, so you can continue growing your career while you pursue your degree. 

Reach out to learn more about our MBA program today, or feel free to get the ball rolling by completing your online application.  

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