Doing Business in India: Learn the culture code

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In my experience, one of the biggest challenges faced by American companies in setting up and navigating business in India, is successfully negotiating cultural differences. Among management professionals the catchphrase is understanding the “culture code of India” – because while India’s robust economy is inviting, there are particular social norms that can often serve as severe roadblocks.

In the following article Hofstede’s six points of cultural dimensions functions as a foundation for my interpretations on how to do business in India. It serves as a starting point in understanding how to navigate culture and business in India.

Gerard Hendrik Hofstede – a Dutch Organizational Psychologist has defined culture as “the collective programming of the mind which distinguishes the members of one group or category of people from another.” In the 1960’s & 70’s he conducted a large scale study within IBM across all of its more than 50 international locations. Based on this study & insights derived from it, he developed a ‘Cultural Dimensions Theory’ which consists of six culture dimensions that provide a framework for understanding how cultures and values can be analyzed.

Here are the six culture dimensions with my perspectives and experience, using which companies can start the process of understanding how to navigate business with India-

1. Power Distance Index: This indicates the degree to which members of the community accept and expect power inequalities. a larger PDI indicates a willingness to accept a hierarchical order without much justification. From a historical and cultural context, Indian society is a culture of hierarchies and interpersonal relationships that provide the framework for day to day functioning. For any corporation seeking to do business in India, it is essential to understand and respect the place of hierarchies both implicit as well as explicit ones and and how it impacts team organization. To a large extent clearly structures and hierarchies in fact help facilitate team dynamics.

2. Individualism versus Collectivism: India is predominantly a collectivist society; Interpersonal relationships and social-familial structures form the heart of Indian culture –  readily evidenced by the existence of small and large family run businesses (Reliance, TATA, Dabur etc). There also exists at the same time a strong spiritual individualistic trait rooted in Hindu philosophy i.e. an individual is ultimately responsible for their actions and consequences.  Understanding this intermediate ground is a core part of engaging with and navigating business relationships in India.

3. Masculinity versus Femininity: The former places emphasis on traits such as achievement, heroism, assertiveness and material rewards versus the latter which places emphasis on cooperation, modesty, caring, common consensus and quality of life. Indian culture tends to have an aggressive masculine approach, but in specific instances of managing relationships (especially those in which one is seeking to be command respect) more feminine traits such as politeness, prudence, patience and humility are valued.

4. Uncertainty Avoidance Index: This indicates the extent to which a society is comfortable with uncertainty, ambiguity and not knowing what the future holds. “Countries with strong UAI have rigid codes of belief and are intolerant of unorthodox behaviour and ideas. Weak UAI societies have a more relaxed attitude in which practice counts more than principles.” India traditionally is a tolerant culture where uncertainty and ambiguity are considered to be a part of life. Reliance on clear cut rules of engagement is minimal and most interaction is more practice based versus rule based. This is one of the most enduring traits of Indian society which it makes so resilient and vibrant; It is also one of the most difficult  characteristics since there is always room to maneuver and change at any point time. Being prepared for change and the unexpected is a must for doing business there.

5. Long Term Pragmatic Orientation (LTO) versus Short Term Normative Orientation (STO) i.e. Pragmatism: Normative societies tend to focus on time honoured traditions and norms whereas pragmatic societies have a focus on dealing with the challenges of the future. India because of it’s multi religious and pluralistic culture is a more tolerant and pragmatic society where change, resilience, adjustment along the way and the ‘jugaad‘ characterise work and relationships. It is possible in India to embark on setting up a business or pursue a project without knowing what the a clear cut process for it is.

6. Indulgence versus Restraint: This dimension is defined as the extent to which people control their desires and impulses. India is a culture of restraint i.e. individuals are governed by social norms of what is ‘good’ versus ‘bad’ and there is a tendency to view indulgence as ‘wrong’ or not appropriate. In navigating this environment restraint and avoidance of undue indulgence can be a tool to gain respect and establish business.

India is a country of contradictions and dichotomies. It is also a fast growing and emerging economy which according to Ernst and Young is going to be one amongst the top three economies of the world by 2020. Understanding India, its culture and building an emerging market strategy around it has to be one of the core priorities for businesses and corporations seeking to build value and long term sustainable growth. The factors I have discussed today provide a starting point for this strategy.

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