Knowing Where You Stand in International Business

Whether through company restructuring or some other means, you may be faced reporting to directors based in other countries. This can cause many changes, but the cultural adjustment that is the most challenging can be that of “power distance.” In the United States, managers and their subordinates have a more equal relationship. In other countries, like India, for example, the bosses and subordinates in businesses are typically structured with greater hierarchy and formality.

Geert Hofstede, a Dutch cultural anthropologist who studied IBM employees based all over the world to better understand the role of cultural context in business, coined the term “Power Distance”. This represents the relative distance between the top and bottom of an organization. A few of the low-power distance cultures include the US, Australia and Scandinavia. A few of the high-power distance cultures include Japan, Philippines and Korea.

Here are a few ways that power distance may affect your dealings if you are someone doing business internationally.

Direct Confrontation

Whether or not a subordinate is allowed to directly confront a boss regarding an issue is one of the most important differences between high and low-power distance cultures. It also includes whether or not they can ask questions. Employees are expected to ask questions and to confront their superiors when something does not seem to be correct in low-power distance countries. In a high-power distance culture, however, employees do not ask questions. They’re not allowed to point out obvious errors that a superior has made.

Additional/Fewer Approvals May Be Necessary

You may not be necessarily talking with the person who can make the final decision in high-power distance cultures. To move forward, you may need to give more time for your contact to get the necessary approvals. If you are from a high-power distance culture, however, your counterpart may be in a position to make decisions quickly and independently. This allows the project to go ahead faster than you were expecting.


In cultures where there is a high-power structure, the employees will use a higher level of formality when addressing their boss. Both male and female will wait until the boss has entered a room before they enter. This is considered to be very respectful. When dealing with international companies, you should follow the same culture as the person you’re dealing with. Remember with high-power structures, the person of higher status gets to speak first, set the agenda, enter and leave the room first. In a low-power distance country, however, there is more of a “ladies before gentlemen” approach. It is usually the woman who enters first. Anyone can speak up at any time during a meeting as long as they have a valid point to make.

Many foreign companies base their business transactions as building a relationship. In order to properly build the relationship for good business with that company, it is necessary to respect their culture.


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