Cross Cultural Concerns in Today's Cross Border Transactions

Dear friends,

So much of the discussions at the Paris meeting of the Section of International Law and Practice of the ABA last week was about the buying into a foreign country's economy through a merger, acquisition, joint venture, working alliance or other form of structuring such a working arrangement. Much of the talk is about the chioce of law and how critical that choice is, or about the financing for the deal, or about the details in a long document that will clearly describe the working relationship that will exiswt among the parties to the cross border transaction.

The key words for me are "cross border" as immediataely I am made aware of the fact that two or more nations will be trying to work together to create a working opportunity that has the potential to offer a secure stream of income/profit for all parties as well as future work opportunities that can flow from the present one being created. The light in the midst of all of this talk and opportunity then is the application of the Best Practices for Managing Cross Cultural Concerns in Global Contracting. It is absolutelya fundamental to apply these Best Practices to better assure the present and ongoing success of the global contracting work.
Will you please write to me to share why this is so? I look forward to hearing from you.

Warm regards,

Jane

Jane E. Smith
LiSimba Consulting Services, Inc.
Building Relationships for International Business Success
www.lisimba.com
jsmith@lisimba.com

Best Practices in Managing Cross Cultural Concerns

Dear Friends,

I have just completed five days in Paris France, where I attended the Fall Meeting of the Section of International Law and Practice of the American Bar Association. I am a member of this Section and as always I learned so much about what is going on in our global legal world with up to date information on many parts of our global business world.

What was most interesting to me is that through all of the discussions on mergers and acquisitions, mediation and any other type of legal activity that is going on in our global legal world, there was little if any understanding that at the base of each cross boarder opportunity for work is the glaring need for effective management of cross cultural concerns among the varying national cultures represented through the parties to each "deal".

I am reminded of a statement by Mr. Jack Welch, the former CEO of GE, when asked about cross cultural concerns when creating a global "deal". Jack said in a July issue of Newsweek magazine in 2007 that in the heat of the deal, one forgets about such things as cross cultural concerns. That was clear in these meetings I just attended as the talk is all about the national and internatinal law that can be used when creating the deal. Nothing was said about the greatest risk of all that can and does undermine the benefit of the bargain for parties to the bargain, the cross cultural risk, which is at the heart of each cross boarder deal created. It is the cross cultural concerns that can and do then undermine over 80% of the cross boarder deals created globally. Jack's own commments came back to bite the deals that he created for GE. Many of his deals have failed financially as well as in terms of maximizing the present and future work opportunities existent in each signed global contract.

So as you read this blog entry, please look back at the earlier entries on this blog and apply the Five Best Practices for minimizing risk in managing Cross Cultural Concerns in global contracting.

I look forward to hearing from you readers and your comments.

Warm regards,

Jane

Jane E. Smith
LiSimba Consulting Services Inc.
Buildling Relationships for International Business Success
www.lisimba.com
jsmith@lisimba.com
Telephone: 612-802-1240

Inernational Litigation and Mediation-Cross Cultural Aspects

Dear friends,

Today we will carry on looking at Best Practice Number One and its application to international litigation and mediation. As I said in the earlier blog entry on this topic, each nation's culture is supported by its legal system. Following on this idea, each nation's culture is fundamentally supported by its core values as I have discusssed on this and other blogs before. It is the differing values held by a culture and those who live within that culture and thus by a nation that can create difficulties in understanding another nation and the people of the other nation's culture. Values are at the very core of every culture. The layers that are more visitble of that culture are the "practices", including the culture's rituals, heroes and symbols, which are the most visible. If the values of one national culture are almost 180 degrees different from those of another national culture, then the "practices" of the very differing cultures will also be 180 degrees different.

I suggest that in an early simplistic application of Best Practice Number One (THE ABA GUIDE TO INTERNATIONAL BUSINESS NEGOTIATIONS, A Comparison of Cross-Cultural Issues and Successful Approaches, 3rd Edition, Chapter 8, Jane E. Smith, "Minimizing Risk: Best Practices in Managing Cross Cultural Concerns in Global Contracting", p. 159-187, May 2009, Section of International Law and Practice, American Bar Association.), each participant in an international legal dispute apply Best Practice Number One first to themselves to better understand their own culture and its values and then apply the Best Practice to each national culture participating in the international litigation dispute. With the cultural values understandings that can come from such application of Best Practice Number One, there is increasing opportunity that the dispute may settle in manner that is least costly financially to all parties, with great opportunity to settle the dispute with bridges of mutual understanding and respect built.

For more information on this topic, please feel free to contact me personally. I will continue with this topic on this blog, discussing the opportunities that the Best Practices Method offers for meaningful resolution of international litigation and meditation, in regard to the cross cultural concerns that exist.

Warm regards,

Jane

Jane E. Smith, Esq.
LiSimba Consutling Services, Inc.
Building Relationships for International Business Success
3305 Eagle Bluff Road
Minneapolis, Minnesota 55364
USA
www.lisimba.com
Telephone: 612-802-1240
Facsimile: 952-472-2681

Cross Cultural Aspects of International Litigation and Arbitration

Dear friends,

I am inspired by the Spring 2010 issue of International Law News, Section of International Law, American Bar Association, Volume 39, No.2, to write this series on the Cross Cultural Aspects of International Litigation and Arbitration. The final line on the front page of this issue says, "This issue revolves around these practical examples of clashing legal cultures."

I suggest that there is no need to understand the various legal cultures in our world as "clashing". The word "clashing" sets up a battlefield outlook on the differences in the legal cultures in our world. Perhaps a more workable way to "see" or to understand the various legal cultures in our world is to apply the Best Practices method that when followed creates a mutually repectful approach of working together as differing legal cultures in any venue. The Best Practices method thus allows for building bridges of understanding and a collaborative approach for situations where the legal systems of various countries and thus the underlying national cultures meet to resolve disputes that have arisen.

Today I will begin to apply Best Practice Number One to the varying legal cultures in our world, a fundamental beginning toward our goal of resolving disputes in a mutually respectful manner leading to building bridges of ongoing workable understandings among varying legal cultures.

A national legal system whether based upon civil or common law, essentially supports the nation's culture, especially the nation's cultural values. Cultural values are best understood when one understands the core of a culture is its values. Those cultural core values inform the culture's rituals, who its heroes are, the cultural meaning of its valued symbols. When one is working in a foreign legal system, foreign to one's own national culture and legal training, it is fundamental to being successful in representing one's client in the foreign legal culture, to understand what the foreign culture's core values are and how they give meaning to the daily and highly valued cultural rituals, culturally valued heroes, and the symbolic meaning of cultural words, behaviors, pictures and things. (Hofstede, Geert; Hofstede, Gert Jan, CULTURES AND ORGANIZATIONS, Software of the Mind, McGraw-Hill, 2005).

A brief example can be seen in a scenario where a person from a national culture where the individual is highly valued is sent to work in a nation where the group is valued over the individual. Perspectives based upon differing values, from the outset are quite different. When a dispute arises from the work setting, the most sound approach is to have informed the person sent to the foreign work setting of his/her own cultural values and then informed him.her of those of the people living in the nation where he/she will work. With such cultural understandings learned before entering the foreign work setting, disputes can be approached and worked through in a more time saving, relatinship building and thus cost effective manner. The greatest benefit that can flow from such cultural understandings is building the bridges of mutual understanding and respect that can then bolster all present and future work settings in the foreign location.

I will follow tomorrow with a more detailed application of Best Practice Number One. The Best Practices to which I am referring can be found in the ABA GUIDE TO INTERNATIONAL BUSINESS NEGOTIATIONS, A Comparison of Cross Cultural Issues and Successful Approaches, Third Edition, Section of International Law and Practice, American Bar Association, May 2009. Please see Chapter 8 for a fuller understanding of what I have written on Best Practices for global work settings.

Until tomorrow, warm regards,

Jane

Jane E. Smith, Esq.
LiSimba Consulting Services, Inc.
Building Relationships for International Business Success
www.lisimba.com
jsmith@lisimba.com

Cross Cultural Aspects of Corporate Social Responsibility

Dear friends,

After a break for writing, work and travel I am back addressing this topic. The simplest approach to the cross cultural aspects of corporate social responsibility is seen through the fact that trust is established in each culture in its own, culturally appropriate manner. Establishing trust in the USA, which is usually the cultural backdrop of the many books written on the establishemnt of trust, is totally focused on the USA values and practices. Establishing trust in Mexico has to be done in a manner that honors the values and practices within Mexico, and the same is true for each nation in our global working world.

With the concept of establishing and maintaining culturally appropriate trust, a corporation's approach to corporate social responsibility in each nation where it is doing business, must also be planned, established and maintained in a culturally appropriate manner. Corporate social responsibility is an aspect of trust. Trust in any nation functions on many levels. One of the levels of trust, as Steven R. Covey demonstrates in his book THE SPEED OF TRUST, is "Social Trust, The Principle of Contribution". (page 272) This is a very tangible expression of the fact that trust within each nation where a corporation is doing business, must function within the society of that nation's culture. "Business cannot succeed in societies that fail.", as Jorma Ollila, then Chairman and CEO of Nokia is quoted as saying in Covey's book. (page 282) So when a corporation is planning its corporate social responsibility approach and implementation, as well as its maintenance of that policy, the coporation must understand its own national and thus corpoate culture and then the national culture of each nation which will benefit from its corporate social responsibility policy.

For such guidance we at LiSimba would welcome the opporutnity to work with each member of a corporation's corpoate social responsibility planning team in order to maximize the benefits for the nations where the policy will be implemented and of course to maximize the beneifts flowing to the implenting multinational corporation.

Warm regards,

Jane

Jane E. Smith, Esq.
LiSimba Consutling Services, Inc.
Building Relationships for International Business Success
www.lisimba.com
jsmith@lisimba.com

Continuing Cross Cultural Implications of Corporate Social Responsibility

Dear friends,

Today after our brief look at the First Best Practice for minimizing all forms of risk when managing global contracting sites, we will move to a brief look at the Second Best Practice, which states that one should acquire a critical awareness of the impact of a cross cultural concern on the financial success of each global contracting opportunity. This Best Practice requires in detail a financial analysis of the various forms of risk that exist and their potential costs to the multinational corporation that is supporting the global contracting site. The Second Best Practice relies on Best Practice Number One, namely that there is a functioning awareness of the cultural values that the multinational corporation follows and also the cultural values that each participant in the global contracting opportunity follows. You then can use the knowledge gained from Best Practice Number One to inform you, the multinational corporation, or you as a member of the cross cultural global contracting site, each time a decision must be made regarding the global contracting site. You can make cross culturally informed decisions, and thus add to the financial success potential of each global contracting opportunity.

With financial success on a global contracting site, the sponsoring multinational corporation can then experience that it has made a contribution to the host nation through the financial success of the site. Following on the financial success, the corporate social responsibility policy of the sponsoring multinational corporation can then move to make a cross culturally appropriate contribution to the host nation, one which honors the host nation's culture and hopefully the cultures of those working on the global work site.

I will discuss the corporate social resonsibility aspect in more detail, as results from the financial success of each global contracting site, when I review Best Practice Number Four. This practice introduces the concept of culturally appropriate trust.

Warm regards,

Jane

Jane E. Smith, Esq.
LiSimba Consutling Services, Inc.
Buildling Relationships for International Business Success
http://www.lisimba.com/
jsmith@lisimba.com

Continuing Cross Cultural Implications of Corporate Social Responsibility

Dear freinds,

I open the blog today with a concrete example of the cross cultural implications of corporate social responsibility. This example is drawm from my work with corporations. There is a multinational corporation whose international headquarters are located from the corporation's beginnings, in the USA. Culturally, as understood through application of some of the lenses that are part of learning one's own culture, the USA is one of the nations in our world that values the individual and his/her individual accomplishments. The USA also values and functions in a manner that is farily comfortable with a short distance between the source of power and the individuals that the source of power is responsible for in the work setting. The USA is also considered to be masculine, although not as masculine in its cultural values as some other national cultures. This means that the USA cuture does value some of the feminine charactieristics, as understood in one of the lenses through which culture is understood.

The USA multinational corporation has chosen to open manufacturing operations in southern China, in response to an impetus by the Chinese government to bring manufacturing there. The Chinese culture values a collectivist outlook on individuals, meaning that the value of the individual is not as strong as the value of the group as a whole. This is quite a contrast to the USA value of individualism. The Chinese culture values a long distance between the source of power and those for whom the power source is responsible. Again this is in full contrast to the USA value regarding power distance. Finally, for this brief example, the Chinese culture highly values the masculine set of charactereistics, with very little if any value of the feminine characteristics in its culture. This measure is not totally opposite to the USA value here but is on a continuum, quite far from the more middle fo the road USA value of masculine characteristics with some feminine characteristics worked into the USA point of view.

If the USA corporation wishes to contribute in a meaningful way through its corporate social responsibility policy to the area where its southern Chinese operation is located, then the USA multinational must come to understand and to respect the Chinese values, as seen in its Chinese practices that will be part of the Chinese operation on a daily basis.

To the point, this example clarifies the importance of the First Best Practice for minimizing risk of all forms in managing successfully global contracting operations. Effective corporate social responsibility policy, effective for both the corporation and for the national culture where the corporation is working, should reflect a functional knowledge of the corporation's culture as well as that of the national culture where the corporation wishes to operate efficiently and effectively.

I look forward to hearing from you with your thoughts and or experiences on this blog topic.

Warm regards,

Jane

Jane E. Smtih, Esq.
LiSimba Consulting Services, Inc.
Building Relationships for International Business Success
www.lisimba.com
jsmith@lisimba.com