Conducting Business in India Report

Culture of India is marked by diversity of languages, religions, races, cultural styles. There are three macro conditions that affect business operations in India. These factors can affect a business’s economic chances, especially in the conduct of daily business. These four kinds of thinking go a long way toward explaining historical behavior patterns in India. India embraces three major racial groups: the Indo-Aryans (72 percent), Dravidians (24 percent), and Mongoloids (3 percent) (Gesteland 65). Most businesses in India are privately owned, tightly managed, and strongly hierarchical (Gesteland 54).

Written Communication and Contract

Most Indians view written contracts as essential to a business relationship. They should be very detailed and adhered to scrupulously. Verbal agreements are not considered binding and never should be used to infer financial commitment. Memorandums of Understandings are common tools used to document initial interest, but are not usually formally binding. Memorandums of Understandings that are not formalized into a written contract can eventually be held to be a de facto written contract; some key factors can be money transfer or acquiring employees (Makar 29). It is not uncommon for an Indian business executive rather than a lawyer to negotiate and approve contracts with overseas companies. Senior business people can legally commit a firm without an attorney’s review. Indian business people have been tough negotiators since childhood and have had to bargain for every improvement in life. From the foregoing it should be clear that it is unwise to presume that Western management theories will work in India just as they do in, say, South America or Eastern Europe (Makar 34).

Management Models and Styles

In India two management models coexist. The private company is usually hierarchical, while the public company and government bureaucracy are usually concentric. The Indian private-sector business structure is usually a hierarchy manned by many layers of fairly toothless functionaries. Indian management thinking pushes power toward the top, just as in Indian families (Grihault 41). Individual managers usually have a fairly broad latitude in which to make decisions, but the real power in those decisions is limited. A businessman might liken Indian management authority to unfunded mandates. The public-sector management model is usually the Concentric Circles model, in which various satellite hierarchies relate to a core leadership, not in a vertical order, but surrounding a center of power. The roots of this double system lie in the tradition that most of India’s early clans were loosely associating republics which merged both management styles (Grihault 45).

Largely autonomous families or tribes related to a regional clan that, often as not, was not based on power but prestige (often symbolized in clan totems) (Grihault 72). Within each clan, families operated on the hierarchical system. Hence, when dealing with a private business a person will find it very clear who makes the decisions. Indian businesses can be intensely hierarchical, with a great deal of micromanaging done by a single authoritative person, beneath whom middle managers are little more than implementors.

Industrial Relations (roles and status, decision-making)

Employer-employee relationships often manifest remnants of the colonial system in which workers were considered part of a large family, treated with genuine regard, and given fairly autonomous responsibility. One result is an intense preoccupation with job security. Another is high-profiling the visible perks of position. A third is indifference to the quality of the actual work performed (Bartlett and Ghoshal 123). A fourth is the primacy of personal over company needs. When dealing with a government bureaucracy, on the other hand, a businessman will often find that the titular decision-maker is often but a spokesperson for a collective process in which it is hard to pin down exactly how or why a decision is made. One result is a great deal of ad-hoc decision-making by the contact person at the front desk whose signature on a piece of paper is all a person really need. The diffuse, ad-hoc character of Indian bureaucracy is one reason why India’s bribery system is so ineradicable (Bartlett and Ghoshal 123).

Cultural Values, Rules and Social Behavior

In India, as in much of Asia, face is a complex phenomenon rooted in anxiety over self-esteem. In general it can probably be said that highly pampered childhoods terminated with sharp obedience demands create a conflict between an idealized self-image and the harsh discomforts of the world. The result is an overwhelming fear of criticism and a correspondingly overwhelming reaction against criticism when it does occur. Face is mostly concerned with external dignity —how a person thinks he or she is seen in the eyes of others. Few things cause Indians loss of face more quickly than being unappreciated (or underappreciated) for what they perceive as their true worth (Grihault 92). Not being promoted when the time is due, not getting due recognition for good work, excessive criticism, and, above all, public rebuke—these are face-losers no manager should indulge in. Throughout Asia the concept of face is also associated with denial and false belittlement (Dana 86).

Denial is simply pretending that things are not so. A businessman will find it very difficult to get the true facts from anyone—especially if those facts are negative. This is a powerful response throughout all of Asia and is behind the phenomenon of advocates of “Asian values” ignoring that their societies do exactly the same things they despise in the West (Grihault 93). Indians rarely take responsibility for mistakes. Accountability is often weak. Errors and oversights are blamed on subordinates or simply passed over. Some Indians are not good at carry-through or meeting deadlines (Hofstede 81). Procrastination is common, especially in the public sector (Grihault 102). There are three areas where the above observations affect management employee relations. The most effective Indian managers compliment in front of others and criticize behind closed doors. “Public praise results in praiseworthy employees” (Grihault 96) may sound trite, but morale in India is demonstrably better when managers have praise for everyone, even though it may be only a particular person or team that is being acknowledged on a specific occasion (Grihault 96).

Indians tend to trust only when convenient. This is more likely to occur in the internal relationships between the working partners, who may not have worked together until a businessman came along. It is relatively easy for a businessman as a foreigner to become accepted and trusted, assuming that he does not ask anyone to do something unscrupulous. In India, mistrust is easily acquired and almost impossible to eradicate. It never hurts to quietly ask colleagues what is the ‘pukka’, or proper thing to do, in a situation that is unfamiliar to a businessman (Makar 34). It is very helpful to socialize fairly often with an Indian counterpart and their families. To Indians trust is a personal bond that spills over into business life. Colleagues will go out of their way to entertain and take care of a family. Introducing a spouse and children to colleagues goes a long way toward cementing a relationship via the all-important Indian sense for the value of the family. Most Indian professionals perceive it an honor to conduct business with foreigners. However, be wary of some types who talk a good deal but never sign one—some people relish the prestige of appearing familiar with foreigners and love to “talk deal.” (Grihault 127).

Etiquette

It is fairly common for Indian executives to arrive at the office late in the morning and stay late at the end of the day. This often has to do with family obligations like getting the kids to school—Indians tend to put the happiness of their children above daily business details. Hence it is best to not schedule appointments earlier than 10:00 a.m. (Gesteland 98). It is better to use formal titles and surnames with senior government officials regardless of how long a person has known them. In private business, unless a businessman has been invited to say otherwise, always use a proper title such as “Dr.,” “Mr.,” “Mrs.,” or “Miss,” with the person’s surname. If a businessman does not know or cannot recall the surname, using “Sir” or “Madam” discreetly asks for it. “Doc” for “Dr.” is not done. A “Mrs.” is a high distinction in India, and a “Miss” will not object to being called one (Gesteland 99).

Indian business people greet with a handshake in office settings. Outside the office, the namaste is preferred (Gesteland 100). In casual situations such as a chance encounter with an acquaintance on the street, ‘the namaste’ hints at familiarity with Indian etiquette. In smaller towns and rural areas, ‘the namaste’ will mostly be used in lieu of a handshake (Makar 76). Business cards are exchanged at the first meeting, although not necessarily at the beginning of the meeting. The usual style is to hand the card with the right hand, although the Asian style of presenting it formally with both hands with the lettering facing the recipient also occurs. Using that method is a subtle way of communicating familiarity with other Asian countries. Leaving the card on the desk in front of a businessman during the meeting is a sign of respect—and also is a quick aid in case a person forgets the name (Makar 78).

Ethics and Time

In India, personal needs and family come first. Work is the necessity that produces the money that supports the family. Work has little socially redeeming value in and of itself. There is no “work ethic” as such, but there are definitely “work ethics”—the do’s and don’ts associated with one’s work (Bartlett and Ghoshal 28). Foreign managers often chafe at the amount of time spent on personal and family life in the office versus the time spent on work. One chronic complaint is “India time,” which often runs on a different schedule than “time-clock” time (Bartlett and Ghoshal 30).. More exalted are the returning nonresident Indians who went away to university and stayed there a generation or more, making reputations for Indian competence and work ethics that give the lie to the lazy image. A certain ‘distance” does not imply lack of interest in proposals. They simply do not commit themselves to anything or begin an extended discussion over the phone. One reason is the ever-present possibility of the connection going dead. In many cases, the phone seems to exist mainly to make appointments. Only after affairs are running rather smoothly does telephoning come into play as a daily communication tool.

Works Cited

1. Bartlett, C. and Ghoshal, S. Managing Across Borders: The Transnational Solution. 2^nd edition, London: Ramsden House, 1999.
2. Dana, L.P. Creating Entrepreneurs in India. Journal of Small Business Management, 38 (2000): 86-88.
3. Gesteland, R. Cross-Cultural Business and Behavior 2nd edn. Copenhagen Copenhagen Business School Press, 1999.
4. Grihault, N. India – Culture Smart!: a quick guide to customs and etiquette. Kuperard, 2006.
5. Hofstede, G. Cultures and Organizations, Software of the Mind: Intercultural Cooperation and its Importance for Survival. McGraw-Hill, 1996.
6. Makar, E.M. An American’S Guide To Doing Business In India. Adams Media, 2007.