International business, trust and putting the horse before the cart

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Transporting goods to market. Phan Thiet, Vietnam.

By Grant Hall.  Founder of League Cultural Diplomacy

I wrote in an earlier blog about the importance of having strong relationships from the very start when entering foreign markets.  I’ve also quoted the academics Asherman, Bing and Laroche, who correctly point out in their Building Trust across Cultural Boundaries work that:

In many other parts of the world… building relationships is a pre-requisite for professional interactions[1]

But why do some cultures put such an emphasis on relationships in business?

Trust.

Strong relationships build trust.

There are also historical reasons – for many years most developing countries did not have adequate legal protections for businesses, so relationships became the principal means of insurance against being ripped-off.

After devouring a mountain of relevant research, University of Colorado Professor R. Wayne Boss concluded in an oft-cited article that:

Under conditions of high trust, problem solving tends to be creative and productive.  Under conditions of low trust, problem solving tends to be degenerative and ineffective[2]

London Business School Professor Nirmalya Kumar, writing for the Harvard Business Review explains how trust:

… creates a reservoir of goodwill that helps preserve the relationship when, as will inevitably happen, one party engages in an act that its partner considers destructive[3]

Yet despite the theoretical knowledge about the crucial nature of trust in many emerging markets, few businesses adequately invest in developing relationships at an early stage.  It’s common for businesses to open their sales office or store first and then work on building relationships later – putting the cart before the horse.

Of course, what you need to do is put the horse before the cart and build your relationships first.

Corporate cultural diplomacy (CCD) is a powerful tool your business can use to build trust in foreign markets.  One way CCD establishes trust is through finding mutual interests between stakeholders and using that as a basis for building strong corporate relationships. I will expand on this and provide further examples in future posts.

Today, I’m signing off with a video by Cirque du Soleil about trust that is also a good example of the power of artistic expression to convey ideas or images more effectively than words alone can.

Endnotes and sources are listed on the next page.

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