Business in India from a Danish perspective
-Cultural differences to be aware of.
Tobias Wisby Tobiassen
284702
Introduction
When considering the best way to enter a new market a company should ideally pay attention to
a wide range of factors, this thesis will outline the vastness of cultural, societal and structural
differences a Danish company should be aware of when considering making an entry on the
Indian national market.
Problem statement
The focus of this thesis is centered on which differences a company with a Danish approach to
business culture and experience in operating in the Danish national market should be especially
aware of when considering, planning and starting business operations in the Indian national
market, be it with the intention of production, sales or research and development. As no
distinction is made some aspects may be of greater importance than others to specific operations,
however the intention of the thesis is that of outline a broad consideration of the various
differences between India and Denmark which are likely to influence a Danish company new to
the Indian market.
The purpose of bringing these differences to attention is to prepare a company in the given
situation for a likely scenario. Moreover I intend to explore how various cultural differences could
be successfully handled, ignored or otherwise dealt with in the manner least likely to cause
cultural friction.
Examples from real life situations, as presented by various sources, will illustrate successful ways
of handling situations as well as the, at times costly, consequences of not paying attention to
cultural and infrastructural differences.
While Denmark and India have very different historical backgrounds I have elected not to pay
special attention hereto, despite the potential risk of a colonialist discussion, with India as a
former colony and Denmark as a former colonizer.
Since the role of the Danish nation as former colonizer does not affect the mindset of daily life in
Denmark, the colonial impulse does not affect the way in which Danes behave internationally.
Furthermore, the former Danish colony in India was purchased from the locals rather than taken
at gun point, and it is my impression that the former colony harbors no ill will towards Danes.
While post colonialism by some is argued to be of great significance in India, it is insignificant to
the average Danish mindset, as Danish colonial power ended completely in 1917 with the sale of
St. Croix, St. John and St. Thomas, however Danish presence in India ended as early as 1845.
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Business in India from a Danish perspective
-Cultural differences to be aware of.
Tobias Wisby Tobiassen
284702
Theory
Hofstede
A series of cultural dimensions were developed in the 1970s by the Dutch psychologist Geert
Hofstede, intended to define national cultures. Initially four dimensions taking into account
various aspects of human life were developed, as work continued on these, a fifth began to take
form. In collaboration with students at a Chinese university Hofstede’s fifth and final dimension
was established, producing Hofstede’s five dimensions.
The five dimensions developed by Geert Hofstede





PDI – Power Distance Index1
IDV – Individualism vs. Collectivism
MAS – Masculinity Index
UAI – Uncertainty Avoidance Index
LTO – Long Term Orientation
PDI – Power Distance Index
The distribution of power within a society is addressed by the power distance index. PDI is an
evaluation of the allocation of power within a society, as seen by the least powerful amongst the
citizenry of the society.
The focus hereof is whether the distribution is considered just and fair by the least powerful, the
higher the value on the PDI the greater the extent of acceptance amongst the low status
individuals of the society. Additionally PDI addresses the extent to which the more powerless
individuals expect inequality in the distribution of power within various social structures,
companies and institutions as well as within the family.
A level of endorsement of the power distribution from not just the leaders of a society, but its
followers as well, may thus be read from the values on the PDI. Several notable differences may
be observed between small and large power distance societies, examples include2:
Hierarchies within companies established for convenience as opposed to reflecting the inherit
inequality between lower status people and higher status ones.
Narrow salary ranges from top to bottom contrasting wide salary gaps of high PDI culture
companies.
Political spectrum with weak left and right wings and strong center, common in low PDI value
cultures whereas high value cultures, provided a political spectrum is allowed to manifest, will
have strong wings and a weak center.
1
2
http://www.geert-hofstede.com/
Hofstede extracts, boxes on PP 37 and 43
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The change of political system within a low PDI society is achieved through evolution, a change of
the rules, whereas high PDI societies employ revolution where the people at the top are the ones
changed.
IDV – Individualism vs. Collectivism
The degree to which individuals in a given society base their identity upon membership of various
in-groups is expressed through the IDV index. A culture where individuals consider themselves
part of a ‘we’ no matter the situation may thus be allocated as a collectivist culture. In contrast a
culture where individuals as a constant consider themselves as ‘I’ would be considered an
individualist culture.
Including the idea of ‘self’ some notable differences between collectivist and individualist cultures
include3:
Hiring and promotion in a collectivist culture may be based exclusively on group membership
whereas it is the intention that it be entirely based on skills and rule sets in an individualist
culture.
The constant maintenance of harmony and avoidance of confrontation is dictated by a collectivist
culture whereas the vocalization of personal opinions speaks of the individual’s level of honesty in
an individualist culture.
MAS – Masculinity Index
Predominant values of a society determine the value on the MAS index. Values traditionally
considered more male equate higher values on the MAS index; values more traditionally female
equate lower ones.
The care for others, an emphasis on the importance of people and warm relationships, and an
ideal of a welfare society, are all female values. They are opposed by material accomplishment
and financial growth, a focus on the importance of things and money, and an ideal of a
performance society, that is the male value counterparts4.
3
4
Hofstede extracts, boxes on PP 67 and 73
Hofstede extracts, boxes on PP 96 and 103
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Tobias Wisby Tobiassen
284702
UAI – Uncertainty Avoidance Index
The extent to which a society has rules and regulations to deal with situations, both social and
legal, determines its level of uncertainty avoidance, UA, on the index5.
Extensive laws and regulations within a society are indicative of attempts at the removal of
uncertainty and ambiguity, such a society has strong UA.
Comfort with ambiguous situations as well as with unfamiliar risks is promoted by societies with
weak UA, in their citizens. Acceptance of familiar risks and a fear of unfamiliar risks and ambiguity
are traits most common among citizens of a society with a strong avoidance of uncertainty.
Difference is a cause of curiosity among people with weak UA whereas it is considered dangerous
by strong UA individuals.
There are few and generalized rules and laws within a weak UA society and a common consensus
that if a rule cannot be abided by it should be altered to accommodate reality, or removed
completely. Laws and rules are numerous and specific within a society with a strong UA, and if a
rule is unable to be adhered to, the citizenry feel like sinners for breaking it.
LTO – Long Term Orientation
Whether the societal norm is an orientation towards the future or towards the past and the
present is the focus of the LTO time index. Parsimony and persistence are values typically
associated with long term time orientation, the orientation towards the future. Satisfying social
responsibilities, deference to tradition and the protection of one’s ‘face’ and by effect, the face of
one’s in-group, are all values related to short term time orientation, which is indicative of a
primary orientation towards the past and the present6.
5
6
Hofstede extracts, boxes on PP 125 and 134
http://www.geert-hofstede.com/
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Business in India from a Danish perspective
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Tobias Wisby Tobiassen
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Richard R. Gesteland
With many years of experience working as an expatriate with and within cultures different to his
own, the need for appropriate training and preparation of expatriates and foreign negotiators
became apparent to Richard R. Gesteland. He opted for early retirement, and started a new
company, with the purpose of such training.7
Five fundamental variables, defining the ways in which people conduct business, which one
should be aware of when negotiating across cultures have been defined by Richard R. Gesteland,
and presented at a lecture at the University of Aarhus.





Deal-Focus vs. Relationship Focus
Direct vs. Indirect Communication
Informal vs. Formal Business Behavior
Monochronic vs. Polychronic Time
Reserved vs. Expressive Communication
Deal-focus vs. relationship-focus
Where a deal-focused society is one that is mostly preoccupied with the end result a relationship
focused one will often be more concerned with the journey to the end result than the actual
result when doing business8.
Direct contact, where one company contacts another directly, is a common and mostly effective
way of initializing a business transaction in a deal-focused society. However, in a relationshipfocused society the companies would both be expecting potential business partners to be
introduced by a trusted third party.
The frequency of face to face meetings in deal-focused cultures is much lower than in
relationship-focused cultures.
Direct vs. indirect communication
The language employed by relationship-focused individuals is often indirect, high-context
language, as opposed to the deal-focused people’s primary utilization of direct, low-context
language. In the majority of relationship-focused cultures direct language is considered offensive
and therefore carries an inherit risk of insulting whomever addressed by it9.
The fear of loss of ‘face’ or causing loss of ‘face’ is a great one within relationship-focused
cultures. Maintaining harmony is thus a big concern for relationship-focused people as
disharmony potentially leads to loss of ‘face’ on either or both parts of a negotiation. As
7
Lecture by Richard R. Gesteland
Gesteland, PP 31-39
9
Gesteland, PP 65-73
8
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relationship-focused individuals rely on relationships to deal with issues, where deal-focused
people would employ the legal system and contracts, there is a very strong urge to avoid the loss
of ‘face’ and disharmony, which both potentially disrupt relationships beyond repair.
This protection of relationships and avoidance of loss of ‘face’ coupled with high-context
communication causes relationship-focused negotiators to be unable to say ‘no’ when faced with
a question. As saying ‘no’ would inevitably cause either personal loss of ‘face’, loss of ‘face’ for the
company or even the loss of ‘face’ on the part of the other negotiator who posed the question.
To relationship-focused individuals the entire relationship is the business relationship and vice
versa, following this relationship-focused negotiators consider business contracts continually
renegotiable as the relationship develops.
Informal vs. formal business behavior
-Interchangeably also defined by Richard R. Gesteland as Hierarchical and egalitarian business
behavior10.
Relative status is very important in hierarchical business cultures. The relative status of an
individual is based on a number of factors relative to those of the individual with which
interaction is taking place, gender, rank, credentials, and age. The all pervasive caste system is an
additional factor in this equation in India. Comparatively no such equation is necessary in
egalitarian cultures as there are only very small differences in the status of different individuals11.
Showing persons of higher status appropriate respect is an important issue in hierarchical cultures
unlike egalitarian ones where the minimal status difference confers a much smaller degree of
required deference display.
Formality in both language and interaction is expected in hierarchical cultures as informality may
be seen as rude. No expectation of formality is present in egalitarian cultures and informality is
not regarded as rude.
Great emphasis is placed on preservation of ‘face’ and on the proper display of respect within
hierarchical cultures. The preservation of ‘face’ is predominately unobserved by members of
egalitarian cultures, increasing the difficulty with which egalitarians interact successfully with
hierarchical counterparts as the preservation of ‘face’ is not paid enough attention to as well as
the proper levels of display of respect.
In hierarchical cultures a top-down business culture, where the boss makes the decisions and the
employees abide thereby, is predominant. Contrasting the approach employed by egalitarian
cultures where less authoritarian bosses make management decisions in collaboration with the
employees in a more collegial approach.
10
In the book it is hierchical and egalitarian business behavior, whereas both descriptions were used in the lecture.
See Appendix
11
Gesteland, PP 41-64
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High levels of micro-management are expected in some hierarchical cultures and especially in
traditional Indian organizations, unlike egalitarian cultures, where the employees are subjected to
little supervision, which is especially true for the Nordic12 cultures.
Monochronic vs. polychronic time
Meetings have predefined agendas which are generally adhered to, commence according to the
time schedule as planned and interruptions are a rarity as interruptions are considered rude,
these are common aspects of monochronic time behavior in regard to meetings13.
In contrast, an agenda is a rarity at meetings set in a polychronic culture, and when present is
unlikely to be abided by. The meeting may start on time, but without the presence of everyone
concerned, during the meeting these may show up late without excusing themselves and lastly
the meeting may be interrupted frequently by matters considered to be more pressing, and thus
more important, at the given time.
Where punctuality is of great importance and since meetings start on time, and are preferably
carried out entirely without interruptions, as is the case with cultures with monochronic time, the
potential for disagreement with members of a polychronic culture is imminent as these abide by a
different set of rules regarding time.
A meeting with a powerful individual in a polychronic society may be interrupted several times
throughout the meeting and much time spent considering the issues causing the disturbance.
However these interruptions may not be entirely caused by the polychronic nature of the host
culture. They may also be a demonstration of power. Provided the culture is also hierarchical the
interruptions may be a way of illustrating the power of the individual by demonstrating the
amount of interdependencies on the individual14.
Finally polychronic time orientation may also lead to late deliveries and missed deadlines
sometimes to great aggravation for the monochronic customers expecting the product.
12
Denmark, Norway and Sweden. Gesteland, PP 15-16
Gesteland, PP 19-30
14
Pointed out by Richard R. Gesteland during the lecture
13
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Reserved vs. expressive communication
Several different aspects of nonverbal communication are considered under the heading of
reserved versus expressive communication as cultures vary and may be expressive in certain
aspects and to a lesser extent so in others. Three key variables and one fundamental cultural
difference have been identified by Richard R. Gesteland15 16.
The distance which people are comfortable being within with one another varies greatly across
cultures; this has been dubbed interpersonal distance by Richard R. Gesteland. Where people
from the Middle East, Latin America and Southern Europe prefer less interpersonal distance, the
preferred distance increases in North America, Eastern and Central Europe, South Asia, Australia
and New Zealand, to the cultures with the greatest distance preference being the Northern
European and East Asian ones.
The degree of eye contact intensity with which people are comfortable is another such variable,
ranging from the desire for intense eye contact in the Middle East, Southern Europe and Latin
America, to the more moderate levels of eye contact in Northern Europe, North America and
Eastern and Central Europe, to the indirect eye contact of East and Southeast Asia at the other
end of the spectrum.
Where high levels of physical contact are appropriate in the Middle East, France, Southern Europe
and Latin America, a more moderate degree is common in Eastern and Central Europe as well as
in North America. Northern Europe has low levels of physical contact, and East and Southeast Asia
have very low levels of physical contact as part of their nonverbal communication.
Lastly gestures are remarked upon by Richard R. Gesteland as several gestures by some may,
inaccurately so, be perceived as intercultural and internationally consistent. Examples of
ambiguous gestures include the use of the left hand, the display of the soles of one’s shoes, the
peace sign, and pointing or beckoning with the index finger.
15
16
Gesteland, PP 72-73
Addressed by Richard R. Gesteland in the lecture
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Homi K. Bhabha
A new framework is required to consider people, be that nationalities or otherwise, as there is no
longer a given concept of ‘the people’ and the wants and needs of ‘the people’ can no longer, if
indeed they ever could, be considered in the binary way they used to be. ‘The people’ would be
more accurately considered as an ever changing process of articulated and negotiated politics,
self contradicting and even antagonistic at times it is argued by Homi K. Bhabha.
The third space was invented by Homi K. Bhabha originally as a way of dealing with situations
where two fundamentally different cultures meet and are required to work together; specifically
Homi K. Bhabha worked with post-colonialism in modern day India. To create a new common
ground, as a hybrid of the two cultures which are required to work with one another is the
purpose of the third space.
The third space as a hybridism is something entirely new, although something that the two
cultural entities behind it can agree upon. It is based on neither and they are both anterior to this
new entity rather than either being the original upon which it is built.
Specifically Homi K. Bhabha developed this idea of the third space as a way for colonizers and
colonized to deal with living in today’s post-colonial world. Ideally for the two parties to produce a
new third space where neither is infringing on the territories of the other, attempted subjected to
the cultural framework of the other and where otherization is no longer an issue within the
society.
As I have opted not to address the issue of Indian history, colonialism and post-colonialism, no
further mention will be made hereof, however it is a vital part of the reason for Homi K. Bhabha’s
development of his theory and thus bears mention when explaining his original intention of third
space.
Since the invention of the third space it has seen various other applications, of specific interest to
this thesis is the application of the third space within the fields of business management and
negotiation. Several advocate this application of the third space, one of the more internationally
outspoken advocates of this application, is the Danish professor at the Copenhagen Business
School, Anne-Marie Søderberg.
The use of the third space advocated within this paper will be with a focus on the creation of a
common ground within negotiations, job interviews and managerial situations, so as to promote
an open atmosphere, facilitating an evolution of the views both parties have of each other.
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Essentialism / Non-essentialism
A pattern emerges as the theory of Geert Hofstede and Richard R. Gesteland is studied, and it
becomes evident that both individuals base their theory on stereotypes.
However upon meeting Richard R. Gesteland in person or by reading books by him one would
discover that he is in fact more concerned with the daily functionality of his theorization, than
whether it belongs to one or other school of cultural theorization, thus the encouragement of his
readers and students to employ third space and develop commonalities to improve business as
well as social relationships17 18.
In the theory by Geert Hofstede and Richard R. Gesteland, large generalizations are being made
about national culture, and how this affects the behavior of the population. This form of cultural
observance is known as essentialism and is the original cultural theorizing method.
As a reaction to this generalized and potentially detrimental theorization a new school of cultural
theorizing emerged; the non-essentialist school of cultural theory. Arguing that the cultural
theories of the essentialists were far from accurate at the level of the individual and thus not in
any way accurate enough to be of any use in cultural meetings consisting of smaller groups, such
as intercultural business negotiations.
The non-essentialists focus on the individual and small cultures, rather than national identities
and large cultures, and encouraging constant vigilance in the interpersonal relationship. As
cultural meetings progress, so should the relationship with and the image of the other individual.
Rather than having preconceived notions about people and sticking with them, non-essentialism
advocates a constant development in the notions of others.
Religion
Religion in India is a remarkable subject as despite the country’s lack of a state religion the society
is largely based on Hinduism, the religion to which about 80%19 of the population belongs.
Islam
While approximately 13.5%20 of the Indian population belongs to Islamic communities, no great
attention will be paid these as the influence hereof in regard to intercultural business is of little
consequence as these are largely affected by the Hindu society with which they are surrounded.
Many Muslims of India are Hindu converts attempting to escape an impoverished life with fewer
rights, as is common for those of lower caste. Due to the cultural influence of the Hindu
17
Gesteland, grey box, PP 16
Final remarks of the lecture by Richard R. Gesteland. See Appendix
19
Census of India, 2001 numbers.
20
Census of India, 2001 numbers.
18
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community the Islamic ones exists within however, even within Islamic communities a concept of
caste is prevalent21.
Thus while originally an aspect of religious life of Hindus, caste has evolved and become a societal
structure, this means that people attempting to escape their caste by converting to a different
religion were in effect locked in their original caste as the castes of their old religion were
retained as they transferred to a different one.
Hinduism
The name Hinduism was originally coined by the British to describe the values and beliefs of
people neither Muslim nor Christian22.
The religion being named from without rather than from within and being based on exclusive
inclusion, the inclusion of anyone exclusive of the two religions identified by the British, could
indeed be considered quite appropriate as no single correct way of practicing Hinduism can be
identified.
A major contributing factor to the indefinability of Hinduism is a preference for adoption of other
religious beliefs rather than refutation of these, as Hinduism stipulates that there is only one
world but many ways of looking at it, other viewpoints are considered as accurate as the Hindu
one and a mere matter of perspective. This emphasis on acculturation has lead to a very tolerant
nature of Hinduism and the practitioners hereof23.
Key aspects of Hinduism
As Identified by Rajesh Kumar there are six aspects of Hindu life that are widely held as the key
aspects24, these are as follows.
Ultimate reality
The ultimate reality, Brahman, as opposed to the illusionary one, maya, occupied in everyday life,
is the creator and protector of all things, and the life energy hereof, atman, flows through
everything, animate as well as inanimate. Atman may also be likened to what is known as a soul,
however in Hindu doctrine atman is a part of Brahman and has a desire to become reunited
herewith. The practical implication hereof is that Hindus should strive to unite their inner self with
21
Islamic Caste (Indian society). Encyclopædia Britannica.
Kumar. PP 56.
23
Kumar. PP 56.
24
Kumar. PP 57-59.
22
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the Brahman in an attempt to transcend the phenomenal world and ultimately become one with
the Brahman and achieve Moksha25.
This constant striving for perfection, as associated with achieving Moksha, permeates the entire
Indian society and is a factor in many aspects of Indian life. Where there is room for
improvement, perfection will often be the ultimate goal, this includes business negotiations,
family life26, production methods and products.
The law of Karma
All actions are evaluated according to Karma, where good deeds are rewarded and amoral actions
are penalized. A persons Karma determines the social setting in which the individual will be
reincarnated, more bad deeds than good thus leads to reincarnation in a social setting less
desirable than the previous, possibly as a decline in social status. Not heeding the law of Karma,
and behaving poorly throughout several lives can lead to individuals getting stuck in the
Samsara27, the cycle of reincarnation.
Whereas scales tipping towards the good deeds leads to reincarnation in a better social setting
than was previously the case and may eventually lead to Moksha, the escape from Samsara, and
thus the escape from further judgment under the law of Karma.
It is argued that this doctrine of Karma leads to fatalism and pessimism amongst Hindus; however
the opposite argument is also presented as all actions subject to judgment under Karma are
voluntary and performed by the individual itself. Hindus, despite belonging to groups and a
collectivist culture, thus consider themselves individually responsible for their own salvation28.
It is conceivable that the Hindu, and indeed the Indian, relaxed attitude towards corruption and
those causing it may in part be caused by the fact of this individual responsibility for
reincarnation, should a person get it wrong they may well strive to be better people if not in this
life, then the next.
The ideal of Ahimsa
Ahimsa is the principle of ‘non violence’ discouraging the infliction of harm upon any living being.
While not originally associated with vegetarianism some mutual influence between the two has
been evident through the course of Hindu history29.
One of the most prominent examples of Ahimsa is the committed application hereof by Gandhi30,
former Indian leader, to pressure the British to leave India.
25
Similar to the more famous Buddhist ’Nirvana’.
More about this under ”The four stages of life”
27
Kumar. PP 76.
28
Renou. PP20
29
Kumar. PP 58.
26
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The four stages of life
While a wide range of scholars are quoted by Kumar as having characterized the Hindu
philosophical thought as “other worldly in orientation”31 it is argued by him that while aspects of
Hinduism are indeed thus oriented it is not the only dominant orientation of Hindu thought. As
fulfillment in the four stages of life is important too, these take place in the tangible world. Four
different stages of life were thought of by Indian philosophers, the stage of the student, the
married person, the stage of withdrawal from illusionary world, the world of the ‘maya’, and
finally the stage of renouncing the world.
In the stage of the married person, as well as the other stages, specific responsibilities were
identified which must be met, specifically within the stage of the married person material and
economic wealth were of importance so as to provide for the family being raised.
The idea of Dharma
‘Dharma’ relates morally appropriate conduct in given situations and social settings. Many
different Dharmas are in existence and each governs various areas of life. Examples include ‘how
women should act’ and ‘how elders should behave towards people younger than themselves’. In
some situations several different Dharmas may be relevant and it is then up to the individual to
consider the place in the matrix hereof currently occupied, and act accordingly. While choices are
made that appear individualist, they may be based on a choice between numerous Dharmas
coupled with the individuals social situation in relation to several other not only individuals, but
groups as well.
Dharmas exist for the different castes as well, while Brahmins should be vegetarians, spiritual and
abstain from alcohol, other castes must be brave and strong, but are permitted to eat meat and
drink alcohol.
Thus under the Dharma of raising a family dictating that the family must be provided for, one
might feel obligated to take part in underhand business such as corruption in order to provide for
the family, as such whichever Dharma is perceived to be more important at a given time is the
one adhered to.
The hierarchical principle
Even though hierarchical order is by no means unique to India it is a fundamental aspect of
specifically Indian society. The hierarchy of India among other things by means of the caste
system, which will be addressed exclusively later, is a reflection of the hierarchy of Hinduism32
with every being animate as well as inanimate arranged hierarchically in relation to one another
30
Mohandas Karamchand Gandhi, also known as Mahatma (Great soul) Gandhi, and Bapu (Father)
Kumar. PP 58. Reference nr. 23, Chapter 4.
32
Renou. Pp18.
31
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some being inferior and others superior. At the very top of the hierarchical order of being are the
Brahmins. Brahmins are at the very top of the hierarchy as the highest state of reincarnation,
closest among the atman in maya to the Brahman. It could be said that Brahmins are ahead in the
race for perfection, having almost achieved Moksha and thus left the Samsara.
Hierarchy
As previously ascertained an all encompassing religious hierarchy permeates the entire Indian
culture. However hierarchy is important in all aspects of life in India, not limited to the religious.
Titles and positions are of great importance in all areas such as public offices, the military but also
in the private sector. Families are no strangers to distinction either, one’s place in the family
hierarchy is of great importance and rights and obligations to the family are determined hereby.
Therefore great awareness should be paid to the hierarchical system, especially by companies
producing certain luxury commodities which could be construed as status symbols. If an individual
in the higher end of the hierarchy owns a specific commodity this commodity becomes in effect
unobtainable to anyone at a lower level in the hierarchy and undesirable to anyone higher up.
This is especially true within the family hierarchies.
Caste
Originally the Indian caste system functioned in much the same manner as the trade guilds of
Europe33. The focus of which was to maintain and pass on skills within a trade by grouping those
of the same occupation and heritage together.
To begin with the caste system consisted of a mere four castes and a class considered outside and
socially below the caste system, the Chandals, tasked with the removal of the dead and
considered to be impure and untouchable34.
Currently two to three thousand castes and another twenty-five thousand sub castes are
estimated to exist, all of them arisen from subdivision of the original four castes listed from top to
bottom; the Brahmins, the caste of priests, the Ksatriya warrior caste, the Vaishya merchants and
finally the Shudra worker caste35.
To this day an Indian group of people are considered below the castes and untouchable, the
group Gandhi called the Harijan, children of god, but which now calls itself Dalits, meaning the
oppressed36.
33
Weber. PP 399.
Keay. PP 145.
35
Kumar. PP 39.
36
Gesteland. PP 147.
34
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Caste rigidity
The caste system in its original form is supposed to not have been as rigid as has been the case
since the British colonization of India. It is argued by some that the British treatment of Indians,
comparing caste to the class system to which they were used in Britain caused much of the
rigidity which has been present in the caste system ever since37. As such it is believed that there
was some room for movement within the caste hierarchy prior to the British rule of India, as is
once again slowly becoming the case with the increase of wealth and power of the middleclass in
India.
While caste mobility is practically possible, and does occur, it is theoretically impossible since the
mobility of castes goes against the rules of the Hindu hierarchy, where one is born into a certain
social setting and can then either improve on this or cause deterioration hereof in the next life
based on the action of the present one. Thus caste mobility or attempts at it could be considered
an indirect expression of lack of acceptance of the social level one has been reincarnated at.
In practice caste mobility is a slow process, and may take several generations, where members of
a caste adopt practices common to higher castes in an attempt to emulate or assimilate to these.
As a response to this one might think that a family might change their name, adopt the practices
of a higher caste and move to a different area of the country, effectively changing caste at one fell
swoop. This however is inconceivable within an Indian setting as not only would it be a severe
transgression of Hinduism, it would also be nigh impossible to build new relationships in a new
place due to the collectivist nature of the society which causes distrust of people not members of
a common in-group. As such a move would require a third person to introduce the family into the
new in-groups to which they would need to belong for the move to be successful. Furthermore
the family would have to sever all ties to the rest of the family, where westerners live in nuclear
families Indians belong to much more extended versions and depend on these. In conclusion the
idea of such a move could only be thought of by a westerner as it would be next to impossible to
achieve and even then would come at such a high cost to the family that it is unimaginable.
The ban of untouchability and caste discrimination
The Indian constitution of 1950 specifically banned untouchability and any discrimination based
on caste or lack thereof. However, despite the 1950 ban, further legislation was passed in 1989,
The Prevention of Atrocities Act38 as a response to the continued violence against dalits. The act
specified the illegality of parading people nude around town, polluting their water, taking away
their land, forcing them to ingest feces, interfering with their voting rights, and putting their
homes to the torch39.
37
Kumar. PP 40.
Ministry of Tribal Affairs, Government of India.
39
National Geographic
38
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Hierarchical business aspects of caste
Caste can become an issue within companies as individuals of lower caste may be placed in a
position of power over others of higher caste, while this can be accommodated by the parties
involved a degree of discomfort is likely to be present on the side of the hierarchically higher
placed individual taking orders from someone placed lower in the outside society.
This becomes increasingly difficult for a company to take into account when considering
promotion as even in the most rigid period of the caste system’s existence, while order of
hierarchy existed, the order depended to some extent on the people questioned. That is, different
castes had different orders of the hierarchy.
In larger cities however, caste is largely unimportant in regard to trade, and almost exclusively
draws attention in a positive sense, expressed through the increased trust shared by individuals of
the same caste in-groups. Thus a company located in a larger city would have fewer caste and
hierarchy related issues to deal with than one situated in a more rural area.
Corruption
“Corruption in not unique to India, it is a global phenomena”
– former prime minister Mrs. Indira Gandhi 40
While it is indeed the case that corruption is a global phenomenon it is described as a problem in
several Indian scriptures, ranging from the Vedas to both of India’s great mythological epics, the
Mahabharata and the Ramayana, suggesting that it has been a problem in the Indian society for
over two thousand years41.
In international context
According to the Corruption Perception index, an index produced by the global watchdog
Transparency International ranking countries by their level of corruption in the public sector as
perceived by members of the society, India ranks on an 84th place from the top42 with a score of
3.4. The score on which the ranking system is based ranges from ten to zero, with ten as the
highest possible level of transparency of public spending and zero as an expression of no
transparency.
40
As quoted in Kumar. PP 78.
Ramayana (Indian Epic). Encyclopædia Britannica.
42
On the 2009 index.
41
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Religious influence on attitude
Hindu teachings place great emphasis on tolerance and the practice of non-violence, since
corruption is by no means a violent crime it is one easily forgiven by the majority of Indians. In a
culture where it is forgiven in the hope that the criminal will improve their ways and become a
better person it is easy for corruption to thrive and Hindu reincarnation further promotes this
continuous cycle of forgiveness and corruption as there will always be another life to in which to
seek forgiveness and mend one’s ways.
“as we trace the social roots of corruption in our country, we can identify that this eternal
message of tolerance, the sense of forgiveness, the hope held for sinners to come on the right
path, probably have also led to the tolerance of a sin like corruption”
- Mr. N. Vittal, former Chief Vigilance Commisioner of India.43
Responsible for overseeing India’s anti corruption activities.
As previously stated each person is individually responsible for their own reincarnation and
corruption is by no means supported by Karmic law, so while corruption may be flourishing in
India it is not endorsed by the religion. Though, to a westerner, it might appear as though if the
highly situational Dharmas at times support or encourage corruption, focusing on the goal rather
than the means, these would be misinterpretations hereof.
The argument that a misinterpretation of the Brahmanas, Hindu religious texts detailing the
rituals and ceremonies associated with the Vedas, the Hindu texts about the metaphysic and
spiritual aspects of Hindu life, has in part lead to the levels of corruption seen in India today is
presented by Rajesh Kumar44. When separated from the Vedas, the spiritual scriptures of
Hinduism together with which they belong, the Brahmanas appear to promote a worship based
on pomposity, social acknowledgement and even worship by proxy with offerings to priests.
Studying the Brahmanas without the Vedas it can easily be interpreted that the purpose of life is
to enjoy the pleasures of the senses and the body and to amass material wealth.
It is easily conceivable that with this in mind a new culture has developed within the Hindu
society, promoted by greedy priests and the likes, discarding the Vedas and following only the
material path of the Brahmanas, all the while maintaining a façade of being as pure and devout as
the underlying Vedic Hindu philosophy requires.
Following this norm appears to have become more prevalent in the larger cities of India following
the liberalization of the economy, and motivates Rajesh Kumar to write:
“Wealth and its overt display has now become an expression of available power and
influence. The gratification of the senses is considered of paramount importance.”
-Rajesh Kumar45
43
As quoted in Kumar. PP 79.
Kumar. PP 79.
45
Kumar. PP 80.
44
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The interest of the public
Corruption is viewed in a much more subjective way in India than in the Scandinavian countries
and to a large extent is not considered wrong provided the desired results are achieved.
Examples exist of people publicly penalized for corruption, being backed by the population of
India despite their blatant abuse of the system because they brought about desired change and
results. One such example is the story of a former Minister of Telecommunications of the
Government of India46. When his house was searched by the criminal investigators an immense
amount of liquid currency was found, with notes stuffed into mattresses, pillowcases, plastic bags
and steel trunks. The Minister was prosecuted, publicly humiliated and fired from his political
position. He then proceeded to form a new political party, achieve massive voter support and
returned to office by the end of the following election. His reelection lends evidence to the fact
that Indians consider results more important than corruption, by the fact that despite his obvious
corruption the Minister had managed to procure vast improvements in the telecommunications
area as well as bringing about other, to the public, beneficial changes.
Times are changing
While Transparency International claims $5 billion are paid in bribes a year by Indian truck drivers
and local interest groups calculate with a margin of circa 33% for corruption47 times are changing
in India.
Business leaders, virtuous government officials and average citizens work together towards
improvement, their strongest weapon being transparency. New legislation known as the right-toinformation law has been passed, requiring of both central and state governments that they share
information about contracts, hiring and expending with any citizen desiring this information.
Moreover Indian software is being used employed by officials in two hundred districts to monitor
every expense in an attempt to minimize ‘leakage’, as Indians call it, from a government program
guaranteeing every rural household up to one hundred days of work a year, the majority of which
goes into public works. This information is made available in real-time to anyone wanting to it via
a website.
46
47
Kumar. PP 79.
TTWI -BW
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Infrastructural challenges
Across the globe, business people, researchers and even expatriate Indians identify infrastructure
as the single biggest issue restraining India’s continued economic growth, it is estimated by
Jagdish N. Bhagwati, expatriate professor at Columbia University, that with proper infrastructure
the growth of India would be 11% of its GNP48 rather than the current 9% per year.
The current economic growth of India rests on an unstable foundation of worn down
infrastructure, with an immense lack of modern highways, bridges, international airports, reliable
power supply and clean water access.
While it is argued by some that India’s current infrastructure matches that of China ten years ago,
this represents a major issue. Despite India’s hierarchical power structure the prevalent
collectivism and constant desire for perfection, in every aspect of life, means that while the
Chinese are able to decide on Infrastructural change with just a handful of people, and have
construction start by the end of the week, the Indians are likely to discuss the issue over a decade
before anything becomes of it.
Looking at the political landscape of India one quickly realizes how this affects efficient running of
the country as it is a rarity for a political party to be in government for more than a single five year
electoral period.
Transportation
The transportation infrastructure of India is falling apart, literally crumbling under the pressure of
economic growth, and losses due to the poor quality of transportation run as high as $6billion a
year49. The losses during transportation are incurred as goods are stuck in traffic, delayed by the
slow movement caused by a combination of worn down roads a lack of roads as well as the mixed
nature of traffic in India, with bullock carts, auto rickshaws and trucks to present a few examples.
The speed of travel on Indian roads is at about 30 Km/h bringing the goods to ports and airports
which in several cases are not equipped with cranes or similar devices for shifting goods from the
trucks to different transportation and must thus be shifted by hand. This process is slow and some
ports lack the space to hold goods as they await loading, let alone preserve the goods, at times
costing companies entire shipments lost due to weather and environment, while sitting on the
dock at a port50.
The Finish Nokia Corporation for instance experienced a loss of several thousand cell phones, in
October 2006, lost to downpour as there was no room in the storage facilities of the local airport
of Chennai to handle the crates which were consequently left outside.
48
Gross National Product
TTWI
50
TTWI
49
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The problem however does not exclusively affect export, as 40% of Indian produce is lost to poor
transportation, leading to inflated prices of common goods which could potentially be plentiful,
produce such as onions and lentils.
IT sector
Even though the technology sector is of great importance to the Indian economy it employs a
mere 1.6 million people, just close to one and a half permille of the population, and does not rely
on roads or bridges to function.
As about ten million, more than five times the entire IT sector, enter the Indian workforce every
year India needs more production to create the jobs to keep its people employed. But
manufacturing requires good infrastructure, in the forms of roads, airports and ports, as well as a
sensible rules governing export to avoid goods getting stuck in red tape.
Concern is expressed by N. R. Narayana Murthy, Chairman and co-founder of Infosys, one of
India’s largest IT companies and one of the world leaders within its field of operation, saying that
the longer infrastructure is delayed, the longer everything is delayed, and India risks this
opportunity for continued massive growth slipping away.
Continued infrastructural deficit is feared to cause the country to lapse back into stagnation with
a continuously widening gap between the rich elite of India and the 800 million poor people,
potentially leading to a severe destabilization of the entire country.
Politics
The political landscape of India, greatly affected by the power distance index value of the country,
is one of great divides between the political parties, which when coupled with the populist
behavior of voters leads to very erratic changes in policy, as parties are rarely in office for more
than a single five year period.
In elections popular policies provide the political agenda, focus is placed on the shortcomings of
the previous administration and silly antics such as free color TVs to poor families are common
instruments of political parties employed to sway voters.
Great attention must be paid all aspects of society when acting in Indian politics due to the levels
of populist behavior of the people. The state of Andhara Pradesh’s former chief minister N.
Chandrababu Naidu experienced firsthand how important broad attention can be, as he was not
reelected after having turned the state capitol into a modern city attracting wide international
attention from major companies, drawing many jobs and much foreign investment to the area. As
he ran for his third period in office it was argued by the opposition that he had done too little for
the rural areas of the state, something the challenger promised to remedy51.
51
TTWI
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Policies move slowly as all political parties want a hand in popular undertakings, whereas
unpopular policies, along with policies made unpopular by the opposition, often come at the cost
of the next election causing decision-making to be drawn out for as long as possible.
Another cause of delays in politics is the Hindu aspiration to perfection, Moksha, which motivates
parties to discuss tiny particularities of policies for long periods of time, disrupting not only the
implementation of the policies but also everything dependant on the implementation of the
policies.
The problems of the infrastructure however have within recent years gained the attention of the
political leadership and policies are implemented to promote improvement, an example of such
implementation is legislation passed in 2005 permitting officials to enter into partnerships with
private companies to improve infrastructure. These partnerships are then modeled so that the
companies bring to the table the majority of the funds required in return for a fixed number of
years of collecting tolls, or similar usage based fees, after which the facilities are turned over to
the authorities.
An example of this new type of agreement, and the first project to take advantage of the new
legislation, is the international airport of Bangalore where a group of private investors will be
collecting tolls for 60 years are its construction before turning it over to the state government of
Karnataka, which was responsible for a mere eighteen percent of the expenses related to the
construction.
The groundbreaking ceremony of this airport, first conceived in 1991, was held in January 2002,
and another one again in January 2004, with an additional year passing before actual work
commenced on the site, illustrating how important it is considered by political parties to
participate in popular projects.
A year before the airport was supposed to be completed some uncertainty was arising as to
whether it would be able to open on time, not because of the actual airport itself, where work
was progressing according to schedule, but because two different government agencies were
mutually responsible for the construction of access roads and work on these had yet to begin due
to political squabble over the proportions of the roads.
The airport ended up opening delayed less than two months, with its first commercial flight on
May 24, 2008.
India needs more such success stories of cooperation between the public, and private sectors, to
draw international attention and raise the amount of foreign direct investment, if it is to improve
its infrastructure since the current levels are not going to suffice to pay for the necessary
overhaul; comparatively India drew $8 billion of foreign direct investment where China attracted
$63 billion52.
52
2006 numbers
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Since the construction of the Bangalore international airport several other airports both national
and international have been and are being built to better handle the air traffic of India. The air
infrastructure of India is anticipated to be beyond the hurdles of the past sometime during this
year. But the improvements are long overdue; the international airport of Delhi, the Indira Gandhi
airport was handling 16.2 million passengers every year, despite being proportioned to handle
only 12.5 million.
Power & Water
When operating in India daily power failures are to be expected, even in the most developed
areas of the country such as the major cities of Delhi, Bangalore and Mumbai. As a consequence
hereof the smooth operation of a company in these areas requires the presence of a backup
generator on site to take over the energy production while waiting for the power to be restored.
Power failures sometimes lasting as long as an hour followed by several hours of brownouts
makes the generator invaluable for companies relying on power, in a country with temperatures
like India, that includes all companies, and not just ones where operation is based on machinery
or computers, as the climate of offices would be unbearable without air conditioning53.
This necessity of generators on site no matter the type of company is a major influence on the
cost efficiency of operations in India.
And while the industrial need for reliable power is obvious to any business that has operated in
India popular politics rather than necessary politics means goals such as ‘Electricity for all by
2012’54 are set rather than focusing on the reliability of the already established parts of the grid.
Another such political goal is ‘drinking water for everyone by 2015’ as clean water is already a
problem in the country and predicted to only become scarcer in the future as the groundwater
level has dropped more than 73 meters over ten years in northern India, where it is now almost
depleted, and is still dropping due to the continued population growth, combined with the
documented reduction of the glaciers providing the rivers of India with water from snowmelt the
future of water supply in India looks bleak.
As clean water is a requirement for a number of productions, and certainly for the people
involved regardless of the type of production, thorough consideration should go into placing them
elsewhere as India’s water supply in ten years might very likely look like the power grid does
today, requiring that the firms maintain pumping stations or water reservoirs of their own in
order to keep production flowing. This would add a considerable additional cost, much like the
generators currently do, and should therefore be part of the company’s considerations of locality.
While attempts have been made at subsidizing the power production to private companies, there
has been no great success in this area, while the interest was present among foreign investors and
attempts were made, the politics of India lead to a price limit on power being set so low that the
53
54
Gesteland, PP 21
IIARA
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operation of the Dabhol power plant, constructed by a collaboration between Enron, GE and
Bechtel, could not be conducted in a profitable way and the investors eventually, despite their
$2.8billion investment, backed out, the power plant is now run only fitfully by a local Indian
company.
Business in India
Conducting business successfully in India is dependent on several factors while some more
generalized and institutional ones have already been addressed some more specific guidelines in
regard to conduct and structure of face-to-face encounters will be presented in the following
sections.
Business negotiations
When negotiating in India an approach based on a mix between essentialism and nonessentialism, especially with a focus on third space, would be my recommendation. Since vital
information about other societies and cultures may be derived from the essentialist approach one
is able to prepare for both cultural differences as well as similarities. Generalized facts about
other societies can prove invaluable once in a negotiation with individuals of a different cultural
background. In regard to India there are certain things one should avoid saying and doing as well
as ways of doing things one should avoid, more on this under business communication in the
following section.
While I would argue in favor of the use of third space in business negotiations with Indians, there
is a unique aspect of Indian culture which needs to be accommodated in an attempt to reduce the
amount of corruption one becomes subjected to, a common but detrimental part of Indian
society.
When negotiating with people from another culture third space is a great way to keep both
parties on an equal footing where neither feels overshadowed by the other. Due to its common
use in India, English language is a fairly weak third space compared to other parts of the world,
obviously excluding countries where English is the native language.
A strong third space in India might be a hotel conference room, or a similar facility which is
headquarter or home office of neither party involved. However when dealing with Indians I would
recommend hiring a local Brahmin to help with negotiations, the Brahmin would not need to take
active part herein as the mere presence of a Brahmin at the negotiations suggests support of the
company. One might wonder as to the importance of Brahmin support of a company, but when
dealing with Indians the presence of a Brahmin confers two important messages, the first one is
of hierarchy, as the Indian society is very hierarchical being told what to do is very common and
the accepted norm in managerial methodology. Indians to a large extent actually prefer being
told what to do rather than being expected to know autonomously what to do. Secondly the
presence of the Brahmin reminds Indians of the law of Karma and that stealing or breaching a
contract are both offenses and will be punished. Since Indians strive to achieve perfection and to
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be reincarnated upwards in the hierarchy, eventually leading to Moksha, the reminder of Karma
reduces the risk of corruption in a religiously conscious way, much like the way in which the
conference of hierarchy does it in a societal hierarchical one.
In other words the presence of a Brahmin at the negotiations will greatly reduce the risk of
corruption in more than one way. While steps are being taken in India to combat corruption the
country has a very long history of corruption, and it is not a problem which will disappear
overnight.
While Denmark is on a second place on the international transparency index, one should not
necessarily take the Indian eighty-fourth place at face value as corruption may be prevented by
acting culturally aware and knowing the etiquette of the society.
A U.S. company had a request for the Minister for Textiles of India but knew that a similar request
from a competitor had recently been turned down by the Minister and had become aware of the
location of the country on the transparency index. These two things lead the U.S. company
representative to believe that the company would have to bribe the Minister to receive a
favorable response to the request, the consultant who had set up the meeting between the
company representative and the Minister however told the representative to keep his wallet in
his pocket, and explained that the representative was to wear formal business wear, complete
with a shirt, a black suit and a tie, be respectful to the Minister and under no circumstances
loosen his tie or in any other way reduce the formality of dress. After five quarters of seemingly
aimless chatter, in the Minister’s office at 45 degrees Celsius on a very humid day, the Minister
informed with a smile that he would be ruling in favor of the company’s request55.
In the very hierarchical Indian society Ministers are held in great regard and shown much respect,
this is an example of how the company achieved what they were hoping for by adhering to the
social and cultural norms of the society, and thus displaying respect not only for the Minister, but
also for the Indian way of doing things.
Indians to a large extent base agreements and the quality of agreements on the relationships they
have with the individuals and the companies with which they do business, something very
common in relationship-focused cultures, the better the relationship the better the deal.
Following the common conduct of relationship-focused people Indians see any agreement as
renegotiable and in all likelihood will want to renegotiate the deal continuously throughout the
business relationship. This is also an expression of the Hindu religion with its dedication to
perfection. As stated Indians consider the agreement an expression of the relationship, and the
relationship should if all goes well become continuously stronger and better over the course of
time, encouraging the Indians to renegotiate, the point from a western perspective is to remain
willing to renegotiate and thus constantly try to improve the business deal for both parties
involved.
For instance if an Indian production facility is having problems meeting an order date with a given
amount of product units, suggesting a lower price at a later date for the same amount of product
55
Gesteland. PP 46-47.
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units may leave the Indian business more room to handle its other clients as well, while still
maintaining a good relationship with you.
Business communication
Business communication in India is greatly helped along by the amount of Indians with English as
their second language, however as a westerner one should be especially aware of the fact that
Indians prefer indirect address over direct, and that direct may be misunderstood as rude or
abusive.
Language issues
Indians are very context sensitive and employ a highly context dependant speech pattern to avoid
‘face’ issues, this can at times prove to be a challenge for westerners as they are much less
context sensitive and therefore should pay close attention when communicating with Indians.
A way of combating the barrier of context is through active listening, repeating they received
message and making sure that it corresponds with the message the other party was sending. That
is, active listening as a way of negotiating the received message until it matches what the sender
meant to say. This tool is particularly important to westerners trying to understand Indians.
Westerners need to be very aware of the message they are sending when addressing Indians as
well, since the western tradition for direct speech reduces the context sensitivity westerners risk
sending what is perceived as high context signals by accident when addressing Indians, even when
doing so by employing an indirect and polite approach.
Things to avoid saying and doing
Particularly ‘yes’ or ‘no’ questions are a cause of much strife between western and Indian
companies as an Indian faced with a ‘yes’ or ‘no’ question will always with no exception answer in
a variation of yes, many of these variations mean ‘no’, but with the low levels of context
sensitivity common in western societies the high context signals indicating the ‘no’ value of the
‘yes’ are not noticed and hence the cause of the problems between the cultures.
The obvious and easiest way of combating this issue is to avoid ‘yes’ or ‘no’ questions completely.
If the answer to such a question is desired, ask around the issue, and create a full picture of the
situation.
Thus the answer to the question ‘Will delivery be on time?’ could be obtained by asking open
ended questions about the production, for example if there have been any problems getting the
new software to run on the machines, how hiring is going, detailed open ended questions will
eventually lead to the answer desired, and in a way that respects the concerns for ‘face’ and the
high context reality which the business partner operates in.
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In India along with several other Asian countries the left hand is considered unclean. Therefore
the right hand is used for handshakes, which in India are light and gentle, unlike the
demonstration of honesty and manliness often associated with a strong, bone cracking handshake
in Denmark, and presenting gifts. Many Indians prefer the Namaste to a handshake. The Namaste
is a greeting where both hands are placed palms together, fingers tips pointing upwards, below
the chin, while making a slight nod with the head56.
In India one should always avoid showing the soles of one’s feet to anyone as a deliberate display
of the soles, or what in a high context society may be perceived as a deliberate display, is a very
rude way of illustrating superiority to a degree close to that of proprietorship. This applies to
touching someone with the foot as well, and should therefore also be avoided.
When entering a temple, private residence of a mosque in India one should remove one’s
footwear as a sign of respect.
Finally especially Danes should avoid attempts at humor since the Danish ‘black humor’ is
notoriously misplaced in a high-context society and certain to be misunderstood as a very blatant
attack on the individual subjected to it. This sort of humor might be correctly interpreted by an
Indian with experience with Danish culture and several visits to Denmark in their past, but even
then one should tread carefully.
Consequences
There are many and wide-ranging consequences of not acting culturally aware, from companies
building Indian national headquarters along the Old Mahabalipuram Road which has been
politically decided to be turned into a six-lane highway only to remain a single lane dirt road, lined
with the new corporate buildings of several international giants57, over the international razor
producer introducing to the Indian national market a two bladed razor, a success in the rest of the
world, without considering the demand for vast amounts of water with a certain degree of
pressure to clean58, to the international producer of denim clothes not considering the actual
buying power of the youth it targets in India59. However due to constraints of space the examples
given throughout the thesis will not be elaborated further upon.
56
Gesteland. PP 73.
SVMV
58
Kumar. PP 89.
59
Kumar. PP 85.
57
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Conclusion
Differences to be aware of as a Danish company when considering, strategizing and entering the
Indian national market have been presented, encompassing aspects related to production, sales
and research and development, thus preparing the company for likely scenarios. A wide range of
situations of cultural difference have been presented as well as these should, and should not, be
dealt with. Real life examples have been drawn upon to illustrate ways of successfully handling
situations and some of the consequences of lacking infrastructural and cultural awareness.
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