Doing Business in India: Beware the Similarities
Rajesh Kumar is Associate Professor of International Business at the Aarhus School of Business in Aarhus, Denmark. He is also the Director of the school's Indian Centre. Professor Kumar has recently co-authored Doing Business in India.
Professor, Kumar, you focus on the cross-cultural aspects of doing business in India but you go far beyond the typical do's and don'ts.
Yes, I'm trying to make business people more aware of the cultural challenges in doing business in India. This is important because on the one hand, there is a very superficial similarity between India and the West, but they can mask underlying differences and if people are not careful, they may find themselves in trouble.
I never really quite liked the do's and don'ts. I don't deny the importance of some of them but they usually provide very superficial information. What I'm looking to do is to understand the mindset of the people; to really understand where they are coming from and what they are thinking. I think that the types of conflicts that arise from these misunderstandings run very deep and unless you truly understand this, you can't adequately deal with certain fundamental issues.
You have written that there is a lag between the quick changes in a country's economy and the much slower moving cultural shifts brought about by this economic transformation.
That's correct and I think that is true not only about India, but applies to all countries. For example, I when I lived in the United States in the 1980s, there was a lot of talk about Japan. Certainly, I think Japan did absorb a lot from the West but I also think that their core cultural values did not really change. This is one illustration of what I'm describing and think the same thing is now happening in India. Clearly, there are a lot of interactions taking place between Indians and Western nations and obviously there are some changes occurring in Indian culture, but the deeper underlying values, even as they change, may change slowly and will likely end up creating a hybrid culture. For example, there are many American or Canadian companies outsourcing to India, but if you analyze these relationships, many run into cross-cultural difficulties. Communications break down, people assume that the other party thinks in the same way, so they have entered into contracts on that particular basis and obviously that is not the case. The interpretation on the other side is different but because people have not gone into it in a deeper way, they have not realized the extent of the differences and are really surprised when things go sour. I think companies are still slow to recognize the importance of cultural dimensions.
You describe the Indian cultural context as a mix of Eastern and Western cultures, but that the core cultural values are heavily influenced by Hinduism.
Yes, but we must also not forget the importance of British rule in India. Through British rule came the English language, the institutions, the legal system, the administrative structures. This certainly had an impact on how Indians react and perceive different stimuli. I would also say that as a reaction to this, Indian nationalism is very high throughout the country. And this is one difference, amongst others, between India and China. India was colonized and China was not. Now things have changed very much in India since 1991, but the point is that you've got to be careful to not trample on nationalistic sentiments when doing business there.
Asian cultures typical are more collectivistic than Western cultures, yet you argue that there is a co-existence in India of a collectivism and individualism.
I would argue that historically, Indian cultural tradition has had a very strong individualist streak. In Indian philosophy, there is a desire to escape the curse of being born in this world. This is really dependant on your own individual actions so as you can see, within this philosophy itself, there is a lot of emphasis on the individual. If you take a look at Indian scriptures, there is a very strong individualistic streak which I don't think you will find in Confusionism, for example. Then of course, with the evolution of the society, you had the emergence of the caste system and elements of hierarchy came into play. Then the British arrived only to further encrust a hierarchical system within the society. So there are many influences over time that have created this strong individualistic streak in Indians. Yet, at the same time, Indians are very family-oriented and very loyal to those who are close to them. This extends to the work environment where business dealings beyond the familiar in-group may be difficult. On the whole, Indians are more Western than Eastern in their thinking in this regard, but their behaviour is very context-sensitive.
You also describe Indian society as having an idealistic bent of mind. What do you mean by that?
What I mean by that is a tendency to think in very grandiose terms. Thinking in terms of trying to achieve the most perfect possible solution -almost like trying to solve a mathematical puzzle. There is often only one solution and you are trying to attain that degree of perfection. One can juxtapose that with a more Western approach, say with Canadians or Americans, where you have ideas and goals and you tend to try and relate them to a concrete imperative reality, and you seek to find a balance.
I'm a Canadian businessman and I've already established a relationship with an Indian counterpart with whom I want to do business. We are now at the stage of hammering out a deal between us; negotiate an agreement between us. Given our different cultural core values, how might these differences manifest themselves during our negotiations?
Let me give you an example. I recently got a call from a British businessman and he was very puzzled with his negotiations with the Indians. He said one of the problems was that the Indians sent him a very one-sided contract, which he didn't appreciate. It was totally unacceptable to him. It was likely just a case of the Indians going for that perfect possible solution; very high expectations. That is one example; another would be the individualistic nature of Indian society might make them more argumentative than say, the Japanese or Chinese. The issue of saving face is less important to them than in other Asian cultures and likely similar to Western cultures. On the positive side, this is something that Westerners can relate to because it resembles their style of negotiating. The downside is that Indians can keep on arguing and arguing, and will draw out negotiations. As a Westerner, this can be very frustrating because for you, time is important. You're there to sign a contract or to solve a problem and then to move on. You don't want to be drawn into what might be an academic exercise.
What about contracts?
This is where there might be a similarity with other Asian countries. There will likely be a contract but they won't necessarily stick to it over time, and again, this is a source of real frustration with Western business people. Contractual obligations do not have the same sanctity in India as in Canada. The Indian business person has had to operate in an environment with infrastructure weaknesses, political instability, nationalistic tendencies, a very slow moving justice system and a thick bureaucracy. Their culture also leans towards flexibility and so when there is a contract in place (not always), they lean toward open-ended deals and frequent renegotiations. Even if you do have a contract, you may have to get it enforced at some point and the legal system in Indian is very slow.
Tell me about the question of fairness.
The question of fairness is very important and I think this is where the perception of previous exploitations really comes into play. The general assumption in India is that foreigners have exploited the country. If a foreign investor comes into the country, Indians will want to ensure that this particular company is really contributing more to the welfare of the country rather than appropriating profits and reinvesting them elsewhere. From the standpoint of the Indians, they should gain more or at least as much as the foreign company does from the venture. Obviously it's a subjective perception and there are no barometers by which you can assess this, but the point is that you've got to be sensitive to it. In other words, if you come to be seen as a company that is insensitive and unfair, then that can spell the demise of your particular project. Of course this makes negotiations very difficult. Some Westerners will say that you make a concession and the Indians will ask for more! (laughter)
Let's move on to strategies and coping skills for Westerners. Let's start with your recommendation to be firm but patient. Is it just a question of knowing how hard you can push and when to give a bit?
Typically, Westerners might get impatient. They don't get any response from the other party and they find that there is stalling going on. The advice I have is : don't give in that easily but don't be overly aggressive. You can state your position and see how things evolve. And things might not evolve as quickly as you might expect. But if you are too aggressive, then this will not go over well in a country where nationalistic sentiments are high.
And how should Westerners deal with the Indian "unrestrained imagination" that you describe in your book?
Well, you can either reject it outright or try to channel it in ways that might be mutually beneficial. You know, you can get into all kinds of arguments and all kinds of different issues, and in the process you might really miss the point. I suggest that you try to reframe the situation and get the Indian partners to shift their mental orientation. Of course, that is not easy, but this is where cross-cultural skills come into play. With these skills, you know what to do, how to do and when to do. I think that once you realize things are going in a very different way, it really depends on your skills to transform the situation. You cannot be arrogant, you cannot be too aggressive, you cannot oversell yourself. You need a more gentle and subtle approach in dealing with the Indians. There is a lovely quote from Silvio Napoli, a Western expatriate manager, that says; "To succeed in India, you have to be one half monk and one half warrior."
Do you think that the typical Indian business person spends this kind of time and energy thinking about the cultural values of North Americans?
On one level I think that in India, there is nothing but admiration for North Americans. Everyone wants to send their kids to study in Canadian or American universities, and there is much greater connection between India and North America than there is between India and Europe. This has much to do with both history and language. So at one level, there is an interest in North American culture, particularly popular culture. But from a business perspective, I'm still not sure to which degree Indian companies are cognizant of what kind of adaptation they have to do when operating in a North American environment. There are plenty of examples of Indian companies going to North America and really not doing very well. The Indian style of management is very different from the Western managerial style. I think they need to do more.
Professor Khumar, thank you very much.
You're very welcome.
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