When Relationships Go Bad

Editor’s note: “International Business Corner” is a weekly column written by Joan Keston that provides information for people involved in or considering international operations. Keston is an international business consultant. Over the next several months she will be writing about important issues that international businesses face as they compete in the 21st century global business environment.

This article is the fourth in a 5 part series addressing business relationships in the global business environment. It talks about the negative aspects of doing business in relationship-based cultures.

RALEIGH, N.C. - In the US we talk about separating business from friendship and personal relationships. Business dealings are essentially controlled by business factors, terms and conditions. Personal relationships and considerations and their influence are considered separate and apart from a professional, third-party business deal. This is basic to our way of doing business and embodied in our world of professionalism. In general, business is insulated from personal relationships and survives their vagaries.

Relationship Spectrum

There are degrees of importance that are placed on relationships in different countries. The non-US industrialized world, although placing greater weight on relationships and their development than in the US, has developed more of a professional work environment and legal tradition than most developing countries. Contracts are a vital part of the business relationship, and business is conducted based on third-party professional contacts. The relationship is a style or courtesy, and reputation is very important in the business community, but it is not necessarily the basis of a business dealing.

In countries such as China and Brazil, the relationship is essential for the long-term success of your venture. The relationship takes on an importance and is needed to deal with the business environment or culture of the country. The contract may not embody or provide for certain difficulties or occurrences.

Failure

Because business is intertwined with relationships and business is often done between family and friends, if something goes wrong, or challenges and obstacles can’t be overcome, the friendship may fail and terminate. The opposite is also true. If a relationship fails for personal reasons, the business may be jeopardized. Personal is intertwined with business. This is very much the case in countries such as China and Brazil. In addition, businesses often fail to grow beyond a small business between family and friends into a large professional organization.

Conclusion

Doing business in cultures where relationships are essential is much more cumbersome, costly and time consuming than doing business based on contractual relationships. In order to be successful in the global business environment, you must understand the nature of the business culture where you are working, and adapt to that culture to some degree. Constructing the right kind of bridge to those cultures with the necessary employees or consultants to navigate the relationships is essential.

About the author: Joan Keston is the Managing Principal of Keston & Associates, Ltd., an international business consulting firm located in Raleigh, NC, and a Partner at Paladin and Associates, Inc. She has 25 twenty-five years of experience with mature as well as entrepreneurial companies, domestically and internationally, coupled with an executive managerial and legal background. Her firm facilitates international business transactions, and assists companies establish, grow and integrate their international operations. She can be reached at (919) 881-7764 and jkeston@kestonassociates.com.