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Toolkit for Quick’n’Dirty Country/Culture Research

October 20, 2012

Whenever you are planning to take your startup or a mature company to a new market, planning to export your products there or seeking to open a new office to plug into local talent pool, you always know it will somehow be different than back home. Some of this is quite intuitive, like guessing that the farther you go physically, culturally or linguistically, the larger the change in environment. An enormous amount of differences are more nuanced.

The smart thing to do, of course would be to turn to relevant locals and expats, anthropologists and culture researchers. Maybe even hire a dedicated consultants who have been there and done what you’ve about to. Yet, there is always some of the analysis you need to do yourself, either because you can’t afford the time or resources to get external help, or you just need to prepare before turning to them. As cultural differences are highly contextual, not all of them really matter for your case, but you need to do some thinking on what are the few things that really do, the least.

Years ago I ran a project to figure out where should Skype build our next engineering centre to support the needed hiring pace. We looked at 12 countries in mostly Central-Eastern Europe, drilled deeper on a final shortlist of four and settled on Prague, which has sine been a great part of the Skype product engineering family since and still growing. Despite of the successful outcome, it wouldn’t have hurt to have had a bit more structured understanding beforehand on how to compare all our options.

Hence the very compressed reference list below, of books, frameworks, country data sites and other notes. Meant not to excite any culture theory experts, but rather to provide a very quick’n’dirty toolkit for business people who need to think through an upcoming international move.

Researching countries

  • Despite the apparent globalisation trends, country and regional differences are nowhere near dying out.
  • CAGE Distance Framework (Ghemawat.com – also provides online tools to compare real country data):
    • Cultural – languages, ethnicities, religions, values, norms
    • Administrative/political – colonial ties, trading blocs, currencies, political hostility
    • Geographic – not just distance, also borders, time zones, climates
      • Canadian PM: “we have too much geography!”
    • Economic – rich-poor differences, natural/financial/human resources, infrastructure, knowledge
  • Can be applied from various viewpoints
    • Positive: aspects making a particular target market attractive
    • Negative: understanding the liability of foreignness moving into particular country
    • Comparative: putting several foreign competitors or markets side-by-side
    • Quantitative: assigning numeric values to CAGE and using them to discount/adjust your other research on a market (e.g multiplying market size data with distance-driven coefficients)
  • Can be applied on country- and industry level
    • to avoid overgeneralisation, keep bilateral(country-pairs), rather than multi- or unilateral
      • e.g, “what are the differences when you go from Finland to Egypt”, rather than “what is Egypt’s culture like?” or “how is North Africa different from Scandinavia”
    • on industry level, get as granular as possible
      • e.g, “champagne” rather than “drinks” or even “food and agriculture” industry
  • Economists borrow Newton’s law of universal gravitation to predict international trade
    • 1% increase of the size of an economy leads to 0.7-0.8% increase in trade volumes
    • 1% increase of distance between capitals of two countries decreases trade between them by about 1%
  • Sample effect of similarities versus differences in bilateral trade (Ghemawat & Mallick, 2003)
    • Common language +42% (change in trade)
    • Common regional trading block: +47%
    • Colony/colonizer: +188%
    • Common currency: +114%
    • Common land border: +125%
  • Pro-tip: mini-genre of books by newspaper foreign correspondents reflecting on countries of their posting. Skilled writers, informative, yet engaging enough for good airplane reading.
  • Book: Reinventing the Bazaar: A Natural History of Markets
  • Cross-country data show that autocracies are subject to wider fluctuations in economic growth than democracies (Quinn & Woolley, 2001)
  • Analysis of all countries 1950-90 (Book: Democracy and Development: Political Institutions and Well-Being in the World, 1950-1990 (Cambridge Studies in the Theory of Democracy))
    • per-capita income <$1700: democracy survives on average for 8 years
    • $1700..$3500: average 18 years
    • $10,000+: zero chance of reverting to autocracy, once attains democracy
    • Democracy accumulates like a form of capital.
  • Country research bookmarks collection:

Analyzing culture

UPDATES:

  • My friend Tarmo added another recommended book on this list: Seeing Culture Everywhere, from Genocide to Consumer Habits by  Joana Breidenbach and Pál Nyíri:
    • Seeing Culture Everywhere challenges the misguided and dangerous global obsession with cultural difference and directly critiques the popular notion that world affairs are determined by essential civilizations with immutable and conflicting cultures. The book offers an alternative view of a world in which cultural mixing, not isolation, is the norm, but where several historical trends have come together at the beginning of the twenty-first century to produce the current wave of “culture think.” Brimming with concrete examples that move from genocide in Rwanda to schools in Berlin, from the Chrysler boardroom to the war in Iraq, it contemplates how ethnic identity can be mobilized in the service of all kinds of goals – violent or nonviolent, laudable or despicable – and the unintended effects such mobilization invariably produces.

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The above reference list is compiled mostly based on assigned readings and group project preparation research for STRAMGT 279 class taught by Professor John Roberts at Stanford Graduate School of Business. Articles used include Cultural Foundations of Global Business (Steers, Nardon, Nardon 2006) and How to Learn About a Country (McMillan 2006).

For more posts on the Stanford GSB Sloan life – click here to search by tag “sloan”.

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