Handshakes Across the World

The power of networking in today’s global marketplace.

by Les Roka

Troy Oldham believes the words of Frigyes Karinthy, the Hungarian author whose 1929 short story “Chains” was the first to suggest that everyone is, at most, six steps or degrees away from any other person on the planet.

One of Oldham’s colleagues at Utah State University’s Jon M. Huntsman School of Business — Oldham is executive director of marketing and branding for the school — was having a difficult time lining up a briefing in Beijing for a group of traveling students.

“I told her I didn’t know anyone in Beijing specifically, but that I would reach out to a couple of my networks from graduate school and prior employment,” says Oldham, a former Microsoft executive who worked in Australia and was instrumental in launching the global nineMSN Internet portal. “Within less than 24 hours, I was connected to a Microsoft executive in Beijing who agreed to host a two-hour briefing at Microsoft offices in China. The visit turned out to be a highlight of the trip. My network started with a friend in Utah, then to Australia, then to China and finally Beijing.”

The glue of networking

Networking skills are essential for successfully breaking into an international market, explains Franz Kolb, regional director for international trade and diplomacy in the state’s Governor’s Office of Economic Development. And, while social media tools such as LinkedIn, Facebook and Plaxo are good places to start finding a local trusted business partner overseas, Kolb says direct personal contact such as “breaking bread” or shaking hands remains the essential pretext to firming up a business relationship.

“The biggest problem I find is that people don’t follow up appropriately on those initial contacts they did with e-mail, texting or connecting to social media,” he explains. Kolb says trade shows still remain one of the most effective channels for building international networks.

A cold call from a business prospect might not go anywhere in Europe, for example, and certainly won’t lead to an introductory appointment, he says. “However, a trade show is a good venue to establish what could become a fruitful long-term, if not lifetime, relationship,” adds Kolb, who annually attends a massive information technology expo in Hanover, Germany. He uses the show, which attracts more than 800,000 IT business professionals, to sustain his international network of contacts.

Kolb says booking appointments with vendors and exhibitors at trade shows can help identify local networking mentors who have the right access and knowledge of a geographically specific market, and can help navigate the potential pitfalls in an unfamiliar market. Oldham agrees, explaining that cultural customs, laws and business practices, as well as being accepted and trusted by the local business community, are issues that every new venture must face in an emerging market. “While this comes at a cost, and there are risks of selecting the wrong partner, the right partner or advisor can help avoid costly mistakes and delays in entering the market,” he says.

The ‘lingua franca’ of international experience

Kolb, who regularly conducts networking seminars for professional business groups and chambers of commerce throughout the state, says international experience has become the “lingua franca in today’s business world.” Just 10 years ago, only 48 percent of C-suite business executives and 54 percent of CEOs had senior business assignments overseas as part of their experience. Today, more than seven out of 10 C-suite executives and 75 percent of Fortune 100 CEOs have substantial international experience, according to Mark Smith, research institute president of Healthy Companies International, a business-consulting firm based in Arlington, Va.

“American companies previously seemed to give lip service to the need for international experience,” Smith explains. “Executives tended to be parochial in their perspective and often sought to impose an American way of thinking no matter where they served.”

Smith says that American CEOs are becoming increasingly diverse and global, especially as more executives take on assignments in Asian locations in addition to those traditionally based in Europe or the Middle East.

Awareness of cultural differences

When it comes to business deals potentially worth millions if not tens of millions of dollars, the networking process also must include a sensitively familiar awareness of the cultural customs associated with doing business. “In Japan, business cards carry significant symbolic value and must be received and treated with respect,” Kolb explains. “Otherwise, it can thwart an otherwise promising opportunity.”

Likewise, with negotiations in Western countries, the objective is to work toward a target of mutual understanding, and the shaking of hands once agreement has been reached signals the actual start of the business partnership. However, in Middle Eastern countries, the handshake is a cultural sign that serious negotiations have only just begun.

Perhaps the most influential research to guide business executives and help reduce the frustration, anxiety and concerns of navigating cultural differences in the international business environment comes from Geert Hofstede. The Dutch researcher conducted extensive surveys with IBM managers in the 1970s and published his original set of five main cultural dimensions in 1980, which now have been further tested and include data from more than 70 countries around the world. In 2008, The Wall Street Journal named Hofstede as one of the world’s 20 most influential business thinkers.

In fact, Hofstede’s cultural dimensions are now the basis of several digital applications including CultureGPS, which is continuously updated for iPhone use. The dimensions measure such things as social equality, individualism, gender differences in terms of authoritative and power roles, tolerance for a diversity of ideas and beliefs, and a long-term orientation perhaps best described as a traditional Confucian-style respect for thrift and perseverance.

For example, the United States ranks highest in terms of individualism and lowest in terms of a Confucian-style long-term orientation. Other nations that score individualism as their strongest dimensions are Australia, United Kingdom, Netherlands, Canada and Italy.

On the other hand, China has one of the world’s lowest scores on individualism, ranking lower than any other Asian country on that dimension. However, Hofstede explains that loyalty is a highly valued attribute in which group members are encouraged to take responsibility for the welfare of fellow members in a specific group.

Meanwhile, China scores highest on long-term orientation, which suggests that business executives prefer a muted, indirect communication style, dealing with conflicts subtly and discreetly, incorporating strategies of independence to reflect differences in status, and emphasizing harmony and empathy in interacting with others.

Globalization cannot change cultural values

It would be incredibly naïve to think that the world operates under a single economic, psychological or sociocultural rationale, Kolb says. “Globalization cannot change these values,” he explains, “and, in international business, people with different cultural values communicate through a shared set of business practices.” In other words, business objectives — for example, in Asia, where market share is seen as more important than profits — reflect the values held in a specific nation, not the business practices themselves, so therefore the values and objectives will not change.

For Oldham, the most important habits to develop in international networking target integrity and business execution. “I don’t advocate building networks just so you can get what you want,” he says. “People in your network recognize that you genuinely care about them as a person and not just a ‘contact.’ If you have developed that level of trust in your relationships, it makes getting to know the right people a lot easier.”