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By William A. Naughton, Ph.D. Copyright © 2003

Most of us recognize the need to deal effectively with problems of differing business interests, goals and values when U.S. corporations expand relationships in Latin America. And Latin Americans recognize the need to understand differing North American "bottom-line" needs when they do business together. But differences in "how we do business" within the Americas are less well recognized, and such differences in styles and practices--whether we are involved in commercial, professional or diplomatic "business"--can create serious stains and conflict because those differences are often subtle and each side takes for granted that "its" way is the "right" way to do things.

Although styles and business practices are becoming more standardized as a result of increased inter-American collaboration, persisting differences reflect the wide diversity of cultural values and social and business customs found throughout the region. The extent to which you are prepared to deal with those differences will have a significant impact on the level of success you achieve in your relations.

Because of the diversity throughout the Americas, such preparation must focus on the specific country and even individuals with whom you are dealing. Applying styles and practices which are appropriate in one country or with one group of people may create problems when dealing with another. But generally--as is true with other inter-American values and customs--Latin Americans tend to share many business practices and customs, while the contrasts between Anglo-American and Latin American styles and practices create the greatest potential for misunderstanding and conflict.

Which styles, practices and customs create the most problems between North Americans and Latin Americans? Based on my own more than forty years of personal experience, I believe the following are among the most important:

Personal Rapport: The Single Most Important Ingredient in The Relationship

Latin Americans rely primarily on personal trust in business relationships, whereas North American businessmen tend to be more impersonal and base such relationships primarily on the quality of the product or service and trust in the firm or government. Latinos do not put much trust in impersonal institutions. They want to trust you on a personal level in the expectation that you will understand and protect their interests in the business relationship.

Trusting rapport is the single most important requirement for successful inter-American relations. And achieving it requires considerable time and effort. Initial impressions are particularly important among Latin Americans, so it's essential to understand proper social and business protocol before initiating contacts. And referrals from mutual friends or contacts are especially valuable. Successful North Americans know that such initial time and preparation are well spent and that later personal referrals often lead to expanded business relationships. And successful Latin Americans understand that the U.S. tendency to separate business from social relations and to bypass social pleasantries to"get down to business" do not reflect any personal disrespect for them. Many North Americans simply do not give the same importance to personal rapport in a business relationship in the United States. But if they want to succeed with Latin Americans, they need to develop close, personal ties.

Ethnocentrism: "My Way is The Best Way"

Most people grow up convinced that their way of doing things is the "natural" and "best" way. But North Americans tend to have a stronger need to apply their "American way" in dealing with other cultures. That often creates serious problems in working with Latin Americans, since such an attitude is seen as patronizing and insulting, and many North American Anglo-Saxon styles often do not work as well in Latin American cultures. They usually have to be adapted to fit in more with Latino values and customs. Four examples:

• The U.S. emphasis on teamwork often conflicts with Latin American "machismo" and "individualismo," which emphasize individual uniqueness.
• U.S. egalitarian preferences tend to clash with strong Latin American hierarchical and authoritarian traditions.
• U.S. reliance on pragmatic alternatives and compromises often conflict with Latin American idealism and the importance given to concepts of what is "right" and "just."
• U.S. optimism and problem-solving styles can clash with Latin American caution and lingering fatalistic tendencies.

Each side needs to understand the other's customs and styles and search for the right combination and adaptation that will produce the best results for the particular situation. North Americans who insist on applying their own styles and ways of doing things without modification are most likely to be surprised not only by the failures they experience but also by the negative impression their styles can make on their Latin American associates.

Living to Work Versus Working to Live

The North American image of being a workaholic--working long hours at a fast pace with little time for the family--is changing, but it will probably never change enough to satisfy the strongly contrasting Latin American view that life is to be lived more fully and enjoyably. Latin American values are focused much more heavily on family, personal relationships and simply enjoying life: an emphasis on being rather than doing. They are more relaxed and enjoy social gatherings, music, dancing, and the arts much more than do most North Americans. This does not mean they are not hard workers or as achievement oriented as North Americans. They are. But they have a broader definition of achievement and include in it the pleasure of personal relationships. That's why personal ties are such a core part of developing successful business relations. Both sides need to understand and respect their differing perspectives.

Differences in Negotiating Styles

North American and Latin American negotiating strategies and styles also differ, and successful negotiations require substantial preparation on both sides to ensure successful win-win arrangements. As already indicated, Latin Americans emphasize enduring trusting business relationships built on personal friendship with reciprocal responsibilities and commitments. Detailed contracts are increasingly recognized as essential, but they are still seen as general guidelines with changes being made as conditions change and with any differences in implementation being resolved informally and amicably between trusting friends. Such a view often conflicts with the more legalistic U.S. approach to contracts which are usually written with great legal precision to be enforced by litigation, if necessary. Experienced North Americans know that successful negotiations begin with personal trust and emphasis on mutual interests and benefits.

Differing Legal Systems

Important differences between the North American Anglo-Saxon-based common law traditions and practicies and the Napoleanic-based civil law practices found in Latin American countries often create serious differences in legal interpretation and procedures. Both sides need expert legal counsel on local practices to avoid misunderstandings and conflicts regarding differing legal approaches and practices. Content of typical contracts also reflect local legal traditions. Efforts are underway within the Organization of American States to promote an "inter-American law" to standardize legal terminology, commercial documentation and general principles and agreement on inter-American law practices. But in the meantime, both sides need to have a clear understanding of the differences in legal norms and procedures they are dealing with to avoid possible later surprise and conflict.

The Issue of Corruption

Greed being what it is, corruption can unfortunately be found in varying degrees in every country of the Western Hemisphere--no exception. But governments of the hemisphere are taking steps against it. They agreed at the March 1996 Inter-American Convention Against Corruption to criminalize acts of corruption and to cooperate in anti-corruption efforts. And the 1977 U.S. Foreign Corrupt Practices Act made offering or accepting a bribe punishable by a jail term and as much as $2 million in fines for each violation-- even if the transaction does not violate the other country's laws. So there are clear and strong legal sanctions against engaging in corrupt practices.

But violations persist, and both sides must be prepared to deal with offers of or requests for bribery and other forms of corruption. Yet, one must always be very careful in defining "corruption," since customs and the line between what is legal and illegal can vary from country to country. Certain practices which may be acceptable in some Latin American countries could be seen as corrupt in others or in the United States, and some common U.S. practices might be considered at least unethical in certain Latino countries. But when obvious corruption is attempted, it must be resisted. Such behavior is a clear warning that you don't want to be doing business with those particular people, even when breaking the relationship can be economically costly.

The solution is to find ways to avoid or minimize situations which might lead to corrupt demands. One way is by maintaining transparency in all negotiations, but ultimately, the best solution is to have already developed a relationship of mutual respect and trust and openly discuss the impossibility of payments or favors to gain approval if the issue is ever raised. Corrupt practices represent one of the irreconcilable conflicts of interests and values that should prevent the relationship from being developed in the first place.

Differing Social and Business Protocol

Social and business protocols--from attire and nonverbal communication to entertaining and gift-giving--vary from country to country and even between regions and groups of people within particular countries. But following appropriate local protocol is seen as an important sign of respect for the people and their culture. Both sides need to do their homework before initial contact since first impressions can be lasting on both sides. And that homework must be based on advice from people experienced in the local culture. But do not be surprised if the people with whom you are dealing want to show their respect and knowledge by following your style of protocol. It is important to be flexible and ready to adapt as you find it appropriate. But perhaps most important is a sincere, open friendship and respect in your relations that will overcome any minor slips made in social or business protocol. Friends are always understanding.

Punctuality: One of the Most Irritating Differences for Both Sides

The North American obsession with punctuality, tight schedules and deadlines often leaves little time for the very personal aspects of the relationship which Latin Americans most value. And time-conscious North Americans often feel insulted if they arrive "on time" for a meeting or social event, only to find themselves kept waiting--sometimes up to an hour--until their Latin American associates are ready. In turn, Latin Americans working in the United States learn very quickly the negative consequences of failing to adjust to local punctuality. Both sides need to understand and accommodate the customs of their counterparts. But be careful that your Latin American associates are not adjusting their own schedule to show respect for North American "punctuality" at the very time you are relaxing your punctuality to fit in with the more leisurely Latin American scheduling. There is clearly need for open discussion and agreement on which customs or combination of customs to follow, depending on the circumstances. Both customs have merit and are complementary: there are times when firm schedules are needed but also many times when schedules should be relaxed and more priority given to personal relationships.

Other Aspects of Time: Meeting Deadlines and Planning for the Future

Differences regarding other aspects of time can also create serious problems. Meeting strict deadlines, for example, is extremely important to most North Americans because their complex business operations often depend on synchronizing the availability of goods and services from multiple sources. One missed deadline can close down other production and prove very costly. Latin Americans are becoming much more attuned to meeting such scheduling, but some do not attach the same importance to meeting tight "American-style" deadlines even when they may agree in principle to do so. There is need to discuss such differences to safeguard against miscommunication--and missed deadlines.

And while North Americans tend to devote much attention to long-term planning, Latin Americans have tended more to focus on the present and past--perhaps in part because the uncertainty of unstable political and economic conditions made them reluctant to plan for a future over which they had little control. Fortunately, growing regional stability is providing a more reliable basis for future planning. But these differing attitudes toward strategic and operational planning can cause problems when the two cultures work together.

Contrasting Attitudes Toward Space

The North American preference to maintain at least a foot of separation from people they do not know well--considering anything less "too close for comfort"--is often seen by Latin Americans as being "too remote" and even unfriendly and untrustworthy. Latin Americans seem more comfortable standing less than a foot apart, seeing it as a sign of trust and friendship. North Americans wanting to create such a feeling need to adjust to the Latin American custom even if they initially feel uncomfortable doing it. Anthropologist Edward Hall had the best advice to newcomers of Latin American spatial customs: "Watch where people stand, and don't back up. You will feel funny doing it, but it's amazing how much difference it makes in people's attitudes toward you."

Differences in Roles of Women

Despite important advances made by women in most Latin American countries, their role in government, the professions and business generally remains far behind their North American counterpart. This is attributed in part to the continuing strong tradition of male dominance in Latin America. As a result, women are not commonly found in most senior executive positions in most governments or businesses--although you will also find many exceptions to this generalization.

This does not mean that foreign businesswomen cannot be successful in dealing with Latin Americans. They are usually respected for the professionalism and expertise they have. But they face many more problems than a male would in a similar situation: Some Latin American male counterparts may not take female business executives as seriously as they would a male executive, and personal rapport would have to be much more circumspect. And because of machismo, North American females also need to be on their guard in working with Latin American men and be prepared for the possibility of romantic signals from their male counterparts. As a result, a woman has to dress and behave in a conservative way to avoid communicating the wrong message to her male counterpart--not to mention to her counterpart's spouse.

Good will, openmindedness, trust and respect for diversity are essential for dealing successfully with such differences. But it also requires understanding both your foreign associates' styles and business practices and your own and an ability to see your practices as your associates see them and help them understand that you also respect their practices. Only through such understanding, engagement and dialogue can you collaborate effectively in making mutual adjustments that will produce the best results in your particular situation.

Much more detailed discussion of these and many other related topics can be found in two of Dr. Naughton's core studies: Working Successfully With Latin Americans and Negotiating Successfully With Latin Americans. For more information on those studies, click "Two Core Studies" below or contact Dr. William Naughton directly at WmNaughton@netscape.net: