Cultural difference: India and Latin America – Uncertainty Avoidance

by Dave

In a previous post, I’d outlined a list of culturally similar values that exist across India and Latin America. One value where I’d like to highlight a difference is uncertainty avoidance, (though similarities do exist in certain areas).

Roll of the dice

High Uncertainty Avoidance: Situations giving rise to uncertainty like Roll of the Dice are to be controlled/regulated

The concept of uncertainty avoidance describes people’s attitude towards the ambiguity and unpredictability of life stemming from interactions with society, the natural and spiritual worlds. Laws and regulations, tools and technology and religion are ways used to address uncertainty in each of these corresponding areas.

Cultures and societies with high uncertainty avoidance place greater emphasis on laws, rules and procedures. Experts are usually deferred to in decision making. Conformity, structure and stability are valued. A fair degree of formality in interactions is expected. Open confrontation is a no-no.

Cultures and societies with low uncertainty avoidance place appreciate flexibility and have a greater tolerance for differences. Not every aspect of behavior needs to be legislated. There is less fear of the unknown and more appetite for risk.

In India, growing small to midsized businesses (esp those aggresively seeking overseas markets) are characterized by relatively “low uncertainy avoidance”. (while “high uncertainty avoidance” is typical of the governmental sphere). From what I have seen in LatAm esp. Brazil, Argentina and Uruguay, businesses are characterized by higher uncertainty avoidance. (Some uncertainty avoidance values from the Hofstede study of cultures;  for India – 40, USA – 46, Uruguay – 100, Argentina – 86,  Mexico, 82, Brazil – 76) Lower values indicate lower uncertainty avoidance – greater comfort with ambiguity.

Two specific examples from the business world where failure to understand this cultural difference, between India and LatAm, was a deal-breaker:

1) Earlier this year, I was attempting to broker a commodity purchase from a Brazilian seller and Indian-mgmt led Emirate-based buyer. The Brazilians sent a list of 8 to 10 procedures to be followed and the India-mgmt felt a few of those procedures were unnecessary (e.g could be replaced by electronic instead of paper verifications) and were wasting time. Moreover, the Indians added a couple of other procedures they expected the Brazilians to comply with. The Brazilians flatly refused. On each side, there was a failure to understand where the other side was coming from with regard to this “uncertainty avoidance” dimension. Each side thought the other was out of their mind for asking for a certain procedure to be complied with or bypassing a listed procedure. My attempts, weak in retrospect, at facilitating this understanding proved futile.

2) Acqusition/JV with Uruguayan pharma company which was stalled.

We were in talks with 2 companies – 1 for a JV, the other for a possible acquisition. For the acquisition candidate, lots of data was requested, typical due diligence stuff. Our pitch was we could track down potential Indian partners/buyers. After a couple of follow-up conversations following face-to-face meetings, things ground to a halt. One of the comments we heard through our intermediary was the company in question, was looking for a buyer’s mandate from our side to continue talks – something to show we were serious (I guess 3 people flying from India to Uruguay didn’t cut it). They did not wish to proceed on an ad-hoc basis. This demonstrated the Uruguayan’s higher uncertainty avoidance – they wanted something specific and detailed before proceeding with any negotiation.

Some lessons for Indian companies attempting to collaboration with LatAm partners, keeping “uncertainty avoidance” differences in mind:
1) Understand counterpart’s need for following procedures and processes, where appropriate – before attempting to modify them
2) More background research and planning than what you are used to
3) Present risk-mitigation strategies in proposed plans
4) Schedule more time to build relationships and seek consensus
5) Bring in expert opinions/prior track record where necessary to boost credibility

PS – This cultural value difference partly explains the greater reluctance of Brazilian companies to explore the Indian market.