Global Business Cultural Analysis of India

Abstract

In the last several years, India has begun to experience high levels of economic growth. With the significant advancement in economic development, India boasts the potential to become one of the most influential countries in the world. In response to this, India has made attempts to increase its economic and political cooperation with the global community. Moreover, it attracts businesses from all over the whole world. However, the success of any international business depends on an understanding of the local culture, local people, their traditions, and the business environment. However, these factors have proven to be the greatest barriers to entering the Indian market. Therefore, the current research aims to analyze the main elements of Indian business culture, compare and contrast US and Indian culture and business, and seek out reasons for why India attracts businesses. The research results show that there are obstacles for US businesses in entering the Indian market. However, awareness of cultural dimensions will eliminate many of these issues.

 

Introduction

Country Background

India is the seventh-largest country by area in the world covering more than one billion square kilometers of land. In 2014, the country’s population is 1.27 billion people. There are 16 official languages in the country, not to mention the innumerable number of dialects. The country is divided into 28 states representing different traditions, customs, and cultures. India gave rise to four of the world’s major religions: Buddhism, Hinduism, Jainism, and Sikhism.

For many years, India is been viewed as the destination for international businesses that want to cut costs through outsourcing. While the country has many English speaking and highly educated professionals, they can be hired for considerably lower salaries compared to their counterparts in the West. However, this view has been rapidly changing and the country is starting to become recognized for its largest potential market in the world. India’s middle class is rapidly growing, creating the need for commodities that were lacking in the country in the past including consumer goods and services as well as legal and financial services (Budhwar, 2001).

The country has begun to experience high economic growth since it opened itself to the global market after introducing reforms in the public sector, industrial policy, the financial market, trade, and the management of the exchange rate. Nowadays, India is a BRIC member due to its rapid advancements in economic development and the country has the potential to become one of the most influential countries in the world. India has made attempts to increase its economic and political cooperation with the global community in order to achieve this. India attracts international companies due to its vast market opportunities. However, the businesses that want to expand their market to India should study the cultural norms of the country. While is difficult to generalize an ideal business approach in India, there are some universal factors that may be applied when working in the country. India is the country where building personal relationships take priority over business matters. It means that the relationship phase of the business cycle is of vital importance.

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Over the last decade, the Indian economy has been growing as a result of industries such as apparel, jewelry, Information Technology, and chemical production, among others. These industries have helped facilitate India’s rising global market competitiveness. The newest industries have led to revolutionizing prices of high demand and technologically advanced goods. Several other factors have contributed to the country’s attractive foreign investment environment including macroeconomic indicators, an emerging middle class, high disposable incomes, rapid urbanization, as well as skilled and low-cost labor. Moreover, India is currently the biggest buying economy in Asia. India’s commitment to manufacturing goods at low cost has enabled items such as medical equipment, computers, and automobiles to be sold at competitive prices on the global market. India’s comparative advantage is associated not only with its skilled labor but also with the low cost of advanced technology (Budhwar, 2001).

The majority of businesses in India are concentrated in cities such as Mumbai, Delhi, Bangalore, and Hyderabad. The domestic market successfully performs in the agricultural, industrial, and service sectors. Although India represents huge market opportunities, it also presents barriers and risks to entry. India has long been known for its social issues such as the high level of poverty, sex discrimination, dialect barriers, and high pollution (Cappelli et al., 2010). Moreover, the country has political problems including border conflicts with Pakistan and clashes between political parties. However, the country is supported by economic powers like Japan and the USA, which has enhanced the economic growth, stability and ensured secure political relationships with other countries.

Although the government has sought to make the country appealing for foreign investment, many sectors are still closed due to high string entry barriers. Companies that approach the Indian market with the right approach, are accepted by the country, run their businesses successful, and see a future full of greater opportunities.

Doing Business in India

The country attracts businesses due to its vast territory, great potential, substantial workforce, and cost-effective geographical base for the development of factories, organizations, and offices. But India is known for its unique manner of conducting business.

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The Indian market often becomes a daunting place for many businesses. In many cases, business success depends on an understanding of the local culture, local people, their traditions, and the business environment. In addition, religion, language, etiquette, and behavior should also be taken into consideration. However, the main factor that influences business success is a general understanding of the culture.

One of the greatest barriers to entering the Indian market is the cultural differences that every investor will inevitably experience. India is an ancient culture, and these customs that have developed over the course of centuries continue to influence its business culture and etiquette today. In most cases, business structures reflect the fact that Indian society is a hierarchical nature. Understanding of complex patterns of business communication, the influence of a hierarchical mindset, and a variety of other elements help to improve the chances of doing business successfully in the country.

Doing Business in the USA

The USA was founded as a nation of immigrants. The country’s cultural diversity unites people of various races and ethnic origins. The USA has a complex tax system that has a substantial influence on business decisions and business operations, creating difficulties for the companies that operate in the country. Therefore, businesses allocate huge resources to focus on tax matters. An essential aspect of American culture is the widespread belief that every person can be successful by working hard. This idea is closely related to a strong work ethic and a merit-based system of work. The US business culture is characterized by an emphasis on achievement. Individual performance and professionalism are highly valued. In addition, Americans are known for their informality. For example, they generally do not use titles and often insist on being called by their first names even in business settings.

Business Research Paper Problem Statement

Since 1991, India has become the object of studies than aim to uncover previously undiscussed topics and establish comparisons between India and other countries. The USA is among the most economically prosperous countries in the world, while India is the second-most populous one (Thakur, 1996, p. 591). In recent years, the USA has been the largest and most important trading partner of India. During the past decades, countries have had numerous business relations. Many American entrepreneurs see India as an attractive place for conducting successful business. Both countries manage their relations through negotiations. However, differences in cultures, nature of business communication and other factors create some obstacles for US businesses in India. It is important to explore the way these countries build their business relations through negotiations that reflect their cultures. Therefore, the current research will focus on the key features of the Indian culture, business culture in particular.

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Research Aims and Objectives

The research aim is to analyze the main elements of Indian business culture, compare and contrast US and Indian culture and business, and seek out why India reasons for attracts businesses. The main objectives of the paper are as follows:

  • to investigate the cultural dimensions of India as a BRIC member;
  • to analyze the peculiarities of Indian business culture;
  • to state the main features of the US business culture;
  • to uncover the key differences between the US and India business cultures;
  • to discuss the implications for US businesses that want to work in the Indian market.

Research Questions

The research questions are as follows:

  1. What are the major elements and dimensions of culture in India?
  2. How are the cultural elements and dimensions integrated by locals conducting business in India?
  3. What are the differences between US and Indian culture and business?
  4. What are the implications for US businesses that wish to conduct business in India?

Research Limitations

The main limitation of the current research is that it is limited to the cultural comparisons of only two countries: the US and India. Another limitation is the use of observation and comparative analysis. The use of interviews and questionnaires might lead to better and more accurate results. In addition, the research is limited to the analysis of business culture.

Research Outline

This paper is divided into the following chapters:

Chapter 1: Introduction. It provides the background of India, highlights the main peculiarities of conducting business in India and the USA, state research aims and objectives, and defines research questions.

Chapter 2: Literature Review. This chapter analyzes research carried out by other scholars related to the research topic.

Chapter 3: Methodology. This covers the principal approaches to research methodology, represents the process of data gathering and data analysis.

Chapter 4: Results and Discussion. This chapter discusses and analyzes research results.

Chapter 5: Conclusion. This offers conclusions made in the process of research.

Literature Review

Place of Culture in a Business Environment

In the modern business environment, the business has become more diverse. As a result, cultural interaction is unavoidable. Culture encompasses learned and shared behaviors of a person, as well as values and material objects. Moreover, it includes activities with which people express those values and behaviors (Brett, 2000). Culture is a key element that shapes societies and nations (Varner & Beamer, 2010). The researchers stated that culture tends to impact human thinking, behavior, and communication, often leading to misunderstandings. Such pitfalls can be eliminated with the help of sufficient knowledge and awareness of the unfamiliar culture. Global diversity makes it difficult to understand every culture a person encounters. However, if a person wants to conduct business in a particular foreign country, it is vital to learn the main principles of culture, code of conduct, business culture, and communication. (Neuliep, 2006).

Culture shapes society and develops from life experiences and their interpretations. It helps to make assumptions about the common ideal, establish behavior rules and set up priorities (Varner & Beamer, 2010, p.9). Culture is pervasive and is able to influence people, their lives and their methods of communication. However, people from different countries differ in the way they communicate and form relationships (Neuliep, 2006, p.15).

The paradigm of business culture has been attracting the attention of researchers since the time of globalization growth. Hofstede (1991) is one of the leading figures in intercultural research, in particular, the influence of culture on workplace values. Trompenaars & Turner (1997) carried out research to investigate the model of national cultural differences. Their research reinforces Hofstede’s claims. The researchers suggest that cultures are different and something that might work in one culture, it will not necessarily work in another.

It was found that cultural factors are the most essential ones as they are reasonable for business success. According to Czinkota and Ronkainen (2003), it is easy also to offend people from other cultures because of mere unawareness of local culture. Even a hand gesture and body language that is perfectly appropriate in one culture may be utterly offensive in another. To avoid misunderstandings in communication and business, it is necessary to gain a deep understanding of the foreign country’s culture.

Salacuse (2005) notes that culture influences the way people think, communicate, and behave. It even affects negotiation and transactions. The national culture shapes the negotiator’s personality, his/her expectations, and views. Indeed, cultural values focus on essential and cultural norms that define appropriate and inappropriate behavior (Brett, 2000, p.101).

Business culture is closely related to “service outcomes, service quality, adoption of innovations, worker morale, staff turnover, and organizational effectiveness” (Glisson, 2007, p. 24). Thus, culture is a vital element of the modern business environment. Awareness of cultural dimensions and elements leads to a successful business. Culture tailors business environment, communication, and management.

Indian Culture and Business

Indian culture has been influenced by numerous factors, including ancient Hindu philosophy and centuries under British colonization. Rapid economic growth and offshore outsourcing in the country have resulted in great economic and social changes. According to Budhwar (2001), Indian workers are reluctant to accept responsibilities and in many cases are unable to manage uncertain situations (Capelli et al., 2010). As a rule, the corporate culture of India is perceived an old-fashioned due to a large number of family-run businesses. Despite the strong influence of India’s culture on its business environment, local managers are beginning to adapt to modern business cultures and learn global changes in business practices. Nonetheless, Chatterjee and Pearson (2000) found that traditional values still dominate the local business culture.

The business culture of India entails various norms and standards. Various cultural criteria extend to Indian business culture. Basic knowledge of Indian cultural practices and the key elements of business etiquette is necessary for engaging in a business venture in the country. It will not only show respect for India with its ancient traditions but also create more favorable conditions for conducting business. Cultural beliefs make it difficult for Indians to say ‘no,’ causing a stumbling block in closing contracts and negotiations (Chatterjee & Pearson, 2000).

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In addition, numerous bureaucratic hurdles tend to delay paperwork. Therefore, business transactions require immense patience. Inadequate chain management and a lack of infrastructure can also be a source of frustration for foreign investors.

The US Culture and Business

Like in India, the US business environment is casual and professional. However, business culture and dress code are different. In many instances, it is common for Americans to wear casual clothes to work and to even eat at the desk. The office environment often informal and the hierarchy structure between employees and their supervisors is less rigid, with all of them treated with mutual respect irrespective of their views and beliefs.

In the USA, the business culture presupposes many meetings that do not necessarily deal with important decisions. This may include planning, discussing, organizing, or reviewing project stages. Americans are time conscious and believe in time management principles. Office staff generally finish work on time as there is less of a tendency to work late hours or on weekends, in contrast to some Asian cultures. It was found that American managers are highly analytical while making decisions, seldom rely on intuition, and base their assumptions on normative ethics.

Kracher, Chatterjee, & Lundquist (2002) carried out a comparative analysis of a business culture in India and the USA. They found that cognitive moral development is strongly influenced by education, culture, and ethical decision making. It was found that both American and Indian culture substantially influence the business environment, dictating the rules and norms accepted in the local society. Therefore, the business environment should be viewed together with the culture of the investigated country.

Methodology

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Theoretical Underpinnings

The research subject will be undertaken on the basis of available literature on cultural peculiarities of conducting business in India. The research strategy and research approach will help in finding answers to research questions. The study methodology will combine the scientific approach and the methods of data collection.

The qualitative approach enables the research to gain a deep understanding of people’s personal experiences, and focus on the interpretations of behavior. Qualitative methods of research provide an opportunity to experience issues from the participants’ point of view. Reports received from qualitative research are often presented in a narrative form and are easy to understand and to analyze. In addition, a qualitative approach is useful when it is necessary to investigate changes that have happened over time.

Qualitative research helped to meet the research aims and objectives as it was the way of representing research data. It gave an opportunity to investigate the cultural dimensions of India, analyze Indian business culture, and define the difference between the American and Indian business cultures. Secondary data analysis was conducted to analyze and discuss studies carried out by other researchers. Thus, this study analyzes the elements and dimensions of Indian culture, business culture in particular. Also, cultures and businesses of Indian and American societies are compared.

Observation

Observation is the most common method to get information about things that happen around us. It is also used to investigate and analyze various processes as it helps in gaining a deeper understanding of the research topic. Observation is a qualitative method of research that aims at collecting and analyzing information obtained by observing others in different environments. This type of research is usually used to develop a marketing plan and enables efficient results. Observational research presupposes direct observation of people, natural settings, environments, or phenomena. The key benefit of observation is its flexibility. Observation as a research method has several disadvantages including cultural barriers, potential risks, and language barriers.

Observational research based on interactions and exchanges between the researcher and research participants. It relies on the premise that communication, culture, and ethics may be observed, recorded, and analyzed. Observation-based research is strongly dependent on the researcher’s critical reflection. Observation can take different forms including informal and unstructured approaches, structured and standardized procedures to get either quantitative or qualitative data. Observational research allows getting the best results as it can be modified.

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One of the main advantages of this method is that the participants are not aware of the fact that they are being observed. Therefore, they behave naturally in their regular environment. In some cases, observational techniques are the only possible way to conduct research. The current study uses observation to find and analyze the cultural elements of India’s business environment. In other words, numerous business people, businesses, and business conversations were observed to find barriers to conducting business in India and the main cultural dimensions a potential investor or business partner should know before starting a business in the country.

Comparative Analysis

The main aim of comparative analysis is to find similarities and differences between the two mediums. Comparative research is used to separate general patterns and isolate regularities. Hence, comparative analysis as a method of research is the act of comparing two or more things to better understand their features. The extent of difference shows how it is necessary to treat different cases.

The comparison is treated as a fundamental tool for analysis as it increases the power of description and plays a key role in forming concepts by investigating similarities and differences among cases. Comparative research gives a researcher a lens into the mechanisms used to understand and manipulate the investigated phenomena. Furthermore, comparative analysis enables the researcher to recognize these phenomena and effectively analyze them. In addition, it helps find institutions that shape people’s behavior and decisions.

Comparative research encourages a mutual relationship between the development and testing of a theory, which usually begins with a rough idea of variables, cases, and concepts relevant to the research and helps to discover areas for improvement. But as it relates to cultures, a major problem in comparative research is the possibility of defining categories differently in the cultures being compared. Two key factors of comparative research are space and time. The spatial factor presupposes cross-national comparisons, comparisons within countries, cultures, governments, areas, etc. Time factors include comparison at different time frames. The study uses a comparative analysis to determine the difference between culture and business environment in the USA and India.

Findings and Discussion

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SWOT Analysis of India’s Business Environment

Strengths

There are numerous strengths associated with the Indian business environment. For one, it is impossible to exhaust the Indian system's strengths. Other strengths of the Indian business environment are the huge pool of workforce, a stable economy, an abundance of cultivable land, and the diversified nature of the economy. The country is home to diverse professionals including engineers, managers, scientists, doctors, and professors. India has gained a geographical advantage from the current world market shift towards the Asian continent. The flourishing of democracy has led to the creation of a big market. In addition, the country boasts high economic growth, a skilled and low-cost labor force, an English speaking population, and an extensive system of higher education system.

Weakness

Despite the numerous strengths, the business environment of India also possesses major weaknesses. The key weaknesses include the high rate of unemployment, low productivity, and the fact that almost of quarter of the population is below the poverty line. In addition, poor infrastructural facilities, inequality in socioeconomic conditions, low mechanization level, bureaucracy, illiteracy, and unequal distribution of wealth are also negative sides of the Indian business environment. Some other weaknesses include the absence of quality awareness, fear of risk-taking, insufficient knowledge related to teamwork, absence of entrepreneurship, a lack of patriotism, low leadership skills, and transparency. On the other hand, the corruption, fear of instability, egocentric political leadership, a high level of competitiveness and diversity imbalance are also the threats of the Indian business environment.

Opportunities

The country has extensive opportunities for the entry of private firms in various business sectors. There is an increase in Foreign Direct Investment (FDI) in many sectors and the huge domestic market. The areas of infrastructure and biotechnology are promising opportunities. Huge deposits of natural gas in the country, diverse wildlife, vast forest area, and agricultural resources create great potential for the Indian economy. In addition, the country provides a large unexploited market for products and services, extended opportunities for development, intellectual property, and research.

Threats

The main threats to India include the slowdown of the global economy, crude oil price volatility across the world, high rate of fiscal deficit, growing import bills, and the explosion of the local population. Other threats include the rising cost of the labor force, the competition that comes from other countries, overpopulation, and religious instability.

FDI in India

The government of India aims at attracting and promoting FDI to increase domestic capital, accelerate the growth of the Indian economy, technology, and skills. FDI is transparent and easily comprehensible. From April 2000 through May 2014, the country had received cumulative FDI inflows of $331 billion US (Department of Industrial Policy and Promotion). The total FDI equity inflow during the same period was $222 billion US. The highest FDI equity inflows in 2014 were received by the services sector ($2.2 billion US). In second place was the construction sector ($1.2 billion), and telecommunications ($1.3 billion).

The USA offers Indian business numerous investment benefits including large consumer markets, abundant natural resources, and access to innovation. India’s investments in the largest FDI recipient in the world bring new jobs in the USA, new skills, and strong manufacturing.

In recent years, rapid economic growth and policy liberalization has made India a favorable and attractive destination for international investments. The USA takes the leading position of investments in India improving the partnership between the two world’s largest democracies (Varner & Beamer, 2010).

Hofstede Analysis

There is a strong correlation between the attitudes of business managers and culture. There are numerous factors that influence people’s ethical attitudes, with culture being one of the most common ones. A comparison between the US and Indian cultures was carried out on the basis of Hofstede’s typology. Hofstede’s cultural dimensions include individualism, the index of power distance, masculinity, uncertainty avoidance, and long term orientation. The research shows that individualism and the power distance index are the most strongly related to ethical attitudes (Hofstede, 1991). However, these indexes are different in India and the USA. It means that there are some potential obstacles in the ethical practices of cross-border businesses.

The analysis of literature sources has shown that there are potential obstacles for the USA partners and investors who want to conduct business in India. These obstacles are associated with cultural differences and potential facilitators.

Power Distance Index

This dimension refers to “the extent to which the less powerful members of institutions and organizations accept that power is distributed unequally” (Hofstede & Bond, 1984, p. 419). It means that less powerful and influential employees tolerate unequal power distribution. As a result, the representatives of high power cultures are the basis of society, while the members of lower distance cultures believe that only legitimate, representative power should exist.

In India, employees are told what to do and their high power distance culture does not allow them to question authority. However, the low power distance culture of the USA empowers employees to be treated fairly. The interaction of people from different systems may result in conflict (Chatterjee, & Pearson, 2000).

Individualism vs Collectivism

The dimension of individualism vs collectivism affects communication. This dimension addresses the issue related to all world societies. Individualistic cultures put an emphasis on the individual’s achievements and rights. At the same time, collectivist cultures value the group achievements and the rights of the group over that of the individual. Therefore, people in individualistic cultures belong to many in-groups including religion, work, and family, while members of collectivist cultures belong to a limited in-group number.

India is a collectivistic culture that boasts strong family values. A downward flow of communications is related to the strict obedience to senior members of an organization, family, business, and others. Trust is the key to any negotiations and decisions are made only at the highest level. In the USA, where the culture is individualistic, the situation is different as employees are allowed to make decisions and challenge their supervisors.

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Masculinity vs Femininity

Masculinity vs Femininity dimension refers to the distribution of genders in cultures. Masculinity characterizes cultures that value competitiveness, assertiveness, and material success, while femininity characterizes cultures that prefer collaboration and harmony. Understanding cultural values enables successful communication and proper orientation toward gender roles.

India has a masculinity cultural dimension where social gender roles are clearly defined by their local culture. Work is in the center of people’s life. Meanwhile, in the USA, the masculinity index is at the same level.

Uncertainty Avoidance

This cultural dimension deals with social discomfort and the arrangement of things to minimize unforeseen consequences. Cultures that are characterized by a high level of uncertainty avoidance feel a strong desire for consensus. Rules and rituals are vital for different situations. Therefore, interactions with people from culture high uncertainty avoidance may be polite and realistic.

India is characterized as having a medium to a low preference for uncertainty avoidance. Imperfection is widely accepted and there is a high level of tolerance for the unexpected. Indians feel comfortable while carrying out the established tasks and routines. In India, people tend to show a high tolerance for making mistakes and value risk-taking. That is why it is a favorable destination for successful business relationships. Uncertainty avoidance of the USA is a bit higher than India, but it is also relatively low. This means that in the aspect of uncertainty avoidance both countries have distinct similarities.

Orientation

Hofstede divides orientation into long-term and short-term perspectives. The cultural dimension includes values such as hierarchy observation, perseverance, thrift, and a sense of shame (Hofstede, 1991). Members of cultures with a long-term orientation believe that truth is strongly dependent on situation, time, and context. They represent the ability to adapt to changing conditions saving and investing thriftiness to achieve results.

India is such a culture with a long-term orientation. The concept of karma is a dominant one in all philosophical and religious thoughts. The country has a general tolerance for religious views. A representative of a culture with a long-term orientation usually forgives a lack of punctuality and plan changes related to the change of reality. They feel comfortable discovering the fated path.

US culture, on the other hand, is categorized as having a short-term orientation. In that respect, cultures with a short-term orientation possess normative thinking, respect their traditions, and aim at achieving quick results.

Thus, Hofstede’s cultural dimensions provide a proper framework that helps to understand cultural similarities and differences between people from different cultures, in our case between the USA and India.

Obstacles to Entering Indian Market

The research results showed differences related to power distance and individualism between the US and Indian business culture. The USA boasts a high level of individualism. Strongly considered ethical practices tend to include personal accountability at all company levels. The hierarchical nature of Indian business practices shows a strong focus on senior management and little empowerment of low-level employees (Christie et al., 2003).

Ardichvili et al. (2012) carried out a comparison of ethical business cultures of India, Brazil, Russia, China, and the USA. The scientists revealed significant differences related to business cultures among BRIC member countries. According to LeFebvre (2011), there is a substantial correlation between business culture and the ethical beliefs of managers. It was found that many factors affect business attitude, with culture being one of the main ones. Cultural difference is one of the main potential obstacles related to business ethics in the USA and India. India is a hierarchical country that dates back to ancient times (Kumar, 2005). The legacy of the hierarchy is the basis of the business environment where all power is given to the bosses, while employees are not empowered. This means that all supervisors’ order is followed even if their decisions are questionable.

Employees in India do not discuss sensitive matters with their management, making it difficult for foreign businesses to develop ethical standards. This strict hierarchy culture is not found in US businesses. Contrary to Indian companies, US organizations empower their employees and even state it as an organizational goal. American employees often call their managers by the first name and are treated as a team member rather than as a subordinate. Moreover, in many cases they can communicate directly with senior managers, omitting the process of going through the command chain (Schuster, & Copeland, 2006).

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The hierarchical system of Indian society extends to the family and the head of the family takes almost all decisions related to the household (Kumar, 2005). Indian loyalty may be related to the family, but not to the work. There are a lot of family-run and family-owned businesses. More than 75% of Indian citizens work at family-owned businesses. In the USA, the situation is very different. Americans tend to pursue their personal interests and decisions without caring as much about the decisions of others. Family and work are two different aspects of people’s lives and they are encouraged to find a work-life balance.

Another distinction between Indian and American cultures is the context they use. India is a country with a high-context culture in which communication often leaves something unexplained and unsaid due to the cultural context. The USA is a low-context country in which communication makes everything commonly understood. In the sphere of ethical behavior in business, Americans tend to rely on unambiguous language in professional conduct codes, while Indians usually rely on relationships (Jakubowski et al., 2002). This distinction impacts the process of ethical decision making. Indian managers find it much more difficult to make ethical decisions than their American counterparts. Therefore, business managers in the USA take an analytical approach that results in a direct and easy process. Business managers in India tend to take an intuitive approach to the process of ethical decision making and rely on the context of a certain situation, which often leads to a conflict between personal and professional lives and there are substantial difficulties in resolving it (Christie et al., 2003).

Thus, there are three potential obstacles related to the common ethical practices of the US and Indian businesses: the level of the hierarchy, the level of cultural context, and the distinction between collectivism and individualism. It was found that countries have different business ethics because of their vastly different cultures. Therefore, it is essential for business partners and investors from the USA to have a good understanding of all cultural aspects and peculiarities of business ethics of India and in order to make their businesses thrive in such a mixed environment.

Conclusion

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The US and Indian Business Culture

In the modern world, businesses often seek to extend beyond the domestic market. Many business partners who come from different countries and cultures experience issues of miscommunications and misunderstandings. The paper explored the cultural elements and dimensions of India and provided a comparison of the US and Indian business cultures.

People who live in the same culture share similar cultural values. They acquire the basic norms and aspects of culture during the first years of their lives. Then, these values are enforced throughout their whole life and are continuously incorporated into the national environment. Cultural values provide to its members' norms, rules, and expectations. They indicate what actions are good and bad, normal and abnormal, rational and irrational. Therefore, cultural values play a key role in determining people’s behavior, style of communication, international relationship.

India is one of the countries that attract foreign investors and businesses. The country has become a leader in the modern business world. It continues to step in the direction of its developments, but it nonetheless still struggles with unresolved issues. Many companies that do business in India face numerous misunderstandings related to the local cultures and customs. This usually leads to miscommunication. However, understanding Indian culture and business values can help a foreign business flourish. Modern India is working on foundation building that will help the country experience business success in the global market for many coming decades.

This study shows the key features of Indian business culture, the integration of cultural elements and dimensions by those who conduct business in the country and analyzes the difference between the US and Indian culture and business. An investigation of cultural differences makes it possible to bridge the gap and facilitate successful cross-border business. Investigation of business culture and business environment brings benefits to both the USA and India as it enables to build a stronger ethical business foundation.

Facilitators of Successful Business Transactions

When speaking about the facilitators of successful business transactions between the USA and India, it is worth mentioning their common roots and experiences based on the colonization of the British Empire. People from both countries are aware of the government systems, the rule of law, and bureaucracies (Schuster & Copeland, 2006). These facts create a good basis for successful business communication between these cultures. Strong prevalence of a code of conduct can also facilitate a better understanding of ethical practices defined by each country. Kaptein (2004) claimed that a written code of conduct is not necessarily followed by all companies, but it represents ethics that lie in the business practice.

Similarities of business cultures were detected between the USA and India in the area of responsibility for company protection. Hence, both business cultures expect their employees to not use company assets for personal gain. Negotiation, communication, business or a private one, is a form of social interaction. Therefore, it is closely related to and dependent on culture. The way people express their ideas, contact with others, think, and perceive information is influenced by their cultural background. Awareness of cultural background is key to a successful partnership and negotiations. In addition, it helps in understanding the meaning of all hidden messages and to adjust the behavior to the context and situation.

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The US vs Indian Business Culture

The Indian business culture is an extension of the common culture as it is unique and changes in accordance with the addressee and the context of address. Despite the fact that there are numerous languages spoken in the country, Hindi is the only officially recognized language in India. However, in the country’s business culture, English is the language of choice.

Indians tend to watch the clock only when the workday is coming to an end, but not necessarily when it is beginning. Hence, they are not known for their punctuality and being late by ten minutes is commonly accepted. However, this does not relate to all people as many of them follow a different strategy. Auspicious time tends to dictate activities in the country. Vernacular languages spoken in India are less polite than English. People in India differentiate between young and old, while in the USA people prefer to use first names. In Western culture, it is usual for people to give casual hugs, put an arm around the shoulder, etc. However, in India, a handshake is the only acceptance greeting. It is not easy to set up industrial ventures in the country due to the increased amount of power given to the political parties. It is necessary to provide them with financial donations. Trust is the key to any relationship building. The best way of earning business is to ear the customer’s trust.

According to the Indian business culture, decisions are taken at the highest level. A person cannot get a favorable decision unless there is an established trust of the client. The absence of a high positioned holder at a meeting is an indication that negotiations are only at the early stage. Empirical data and statistics cannot impact business decisions. High-pressure tactics usually implemented in the USA are unacceptable in India. Indian business culture requires formal attire.

India is known for its numerous festivals that are based on religious beliefs. The reasons for celebrating are different and overseas companies should anticipate and permit employees to ask for vacation time around these festival days. During the business meeting, Indians are not completely direct with their US counterparts. The conversation usually starts from small and unimportant topics and migrates to the main issue of discussion. Indian hierarchy is also expressed in communication and the more important members should be addressed to first. In addition, Indians are strongly stickled to policy and follow all of the steps needed for issue solutions because they do not want to have trouble with anyone on the hierarchy chain. At the same time, Americans are result-oriented and concentrate on the end result.

Business discussions are often made at home. In India, business cards are extremely important and are handed out for casual occasions. However, Indians often lack knowledge concerning documentation and have to be taught to maintain proper business records. In most cases, they are confident speaking in public.

Indians are not very imperative on time and deadlines. Schedules are often canceled only if some key people are absent (Capelli et al., 2010). There is a great difference in the work-life balance. In the USA, people do not usually bring workplace stress and pressures home. Work and life itself are separated. In India, the workplace is often treated as an opportunity to build their future and earn financial benefits. There is no balance between work and life as Indians work beyond the limits. As a result, they experience a lot of pressure. Work tends to be valued more than personal life.

Indians do not have a close or personal relationship between boss and subordinates. In Western culture, subordinated are treated with respect and are entrusted with important tasks. American supervisors typically accept blame for failures as they are ultimately responsible for management. Contrary to the US people, Indians do not easily accept change. Therefore, a lot of resistance occurs in cases when changes should be implemented (Jhunjhunwala, 2012).

India has a high-context culture. This means that the Indians are very polite and tend to tell others what they want to hear. However, they avoid saying the things that the listeners may find unpleasant (Gesteland, 2012). People usually rely on context when communicating and freely express their emotions. Low-context communication is common for the USA. For example, Americans express their thoughts in words and value directness. People are suspicious of business in the USA, the process of negotiation with business partners is viewed as a “give and take the scenario where both sides should put all their cards on the table at the beginning and waste no time beating around the bush” (Lewis, 1996, p.102). As a result, their communication style tends to be confrontational and aggressive whereas Indians use indirect language.

According to Hofstede’s cultural dimensions, India has an unequal distribution of power that is centralized and is based on the obedience of subordinates. By contrast, the USA has an equal distribution of power that presupposes a direct and informal process of communication. There is a large difference between the two countries that indicate a problem in the sphere of negotiation between Indians and Americans.

The collectivist and hierarchical nature of the Indian culture is in contrast to the individualistic and encompassing American culture. American companies apply their codes of conduct to all employees irrespective of their position, while in India the code of conduct is applied only to senior management. In the USA employees are required to report about the violation of the code by any of the colleagues. Anonymous reporting is a widely used mechanism that encourages such behavior without the fear of repercussions. Very few companies in India encourage their employees to make similar reports through anonymous reporting. In addition, India is more specific than the USA when discussing the conflict of interests and undue influence through gifts. The similar feature of the US and Indian cultures is the fact that both have a strong expectation to protect company interests rather than achieve personal gains at the expense of a company.

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The collectivism vs individualistic value index shows that Indians culture is group-driven. Members of such a culture act strictly according to the rules and norms. However, Americans tend to take care of their family and themselves, rather than their jobs. This difference in the attitude to work may pose threats to successful business relations as collectivist Indian people may require a frequent and stable relationship with their American partners and investors. Such relationships usually require time and effort from both sides. It may be difficult for American negotiators, who are members of an individualistic culture, to understand the value of such a relationship. As a result, the negotiator may fail to conduct a successful communication process.

The USA and India have similar results related to the masculinity vs femininity dimension. Both countries are masculine when they display power and success. The dimension of uncertainty avoidance shows that Indian culture shows a high tolerance for unexpected events. In addition, Indians do not require perfectionism. The US culture shows extreme acceptance of innovative ideas and enables people to be free in their expressions. Analysis of the final Hofstede’s cultural dimension has shown that people in India look for long-term results, while Americans make an emphasis on the immediate results.

Business Implications

The research results show that there are several essential implications for US companies that plan to conduct business in India. First, there is a strong commonality foundation in the practices of ethical business. The US companies that want to enter the Indian market can expect that their confidential information will be properly protected and their assets will be properly used. Mutual respect of business culture provides business with greater confidence in their dealing.

However, the US business should remember that their expectations for ethical practices are different from the employees in an Indian-based company. It is vital to follow the hierarchical nature of Indian businesses by taking into account that junior employees are not expected to call their supervisors out when it comes to unethical behavior.

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