Mixing business with friendship
According to him, an important feature of the region’s entrepreneurs is their preference for exercising political influence instead of competing in the market. Entrepreneurs and executives from important industrial sectors lose, in meetings with ministers and authorities, valuable time that could be better spent, if they dedicated themselves to seeking an effective increase in the productivity of their companies.
is often achieved by unethical means, and according to Montaner it is common for businessmen to corrupt public officials to obtain customs exemptions or loans at subsidized interest rates or even market reserves. Montaner points out that corruption is not exclusive to Latin America, but stresses that the frequency with which it occurs in this region and especially impunity are highly worrying,
This political influence
as the respective societies do not seem to realize how much these facts end up burdening the goods and services that they themselves acquire and consume. When, however, problems or failures occur in their companies, the first culprit to be pointed out by entrepreneurs is always the government. This, in fact, is in line with what Fairbanks & Lindsay (2000, p.111-9) define as one of the most important characteristics of the
Latin American business community: they are always on the defensive, never admitting their own flaws or those of their companies. If there were problems, losses or failures, the first culprit is the government. But if not, then the fault for the failures lies with the supplier, or the workers’ unions, or the distributors, or even the customer, if not nature; but never from the company itself and its shareholders or executives.
- is common in Latin America. The contract is sometimes not as important as the word pledged. While in the United States there is a cult of lawyers, with
- everything focused on contracts, in Latin America there is a cult of “personality”, that is, everything depends on who you are negotiating with.
- Thus, in Latin America, the contract does not have the same meaning as in the United States.
In fact, in general, for Latin Americans, personal relationships are extremely important. Hickson & Pugh (1995, p.83-4) emphasize that the main characteristic of the behavior of Latinos, which affects the way companies in the region are managed, is the extensive networks of personal relationships. Unlike North Americans, Latin Americans have a negative view of individual competition, but they attach enormous of which they are a part.
Importance to the social groups
There is a common phrase that says that Americans do business and then, if possible, friends; while Latin Americans first check whether they are friends and then go on business. If there is a striking cultural trait for Latin Americans, it is the ever-present need for superior leadership to make important decisions. Perhaps for this reason, almost all countries in the region have presidential regimes and parliamentarism,
- which is the regime of developed countries, with the exception of the United States, has not succeeded in the region.
- The search for an answer to everything through a caudillean leader is something that has permeated the history of
- practically all the countries of this continent. This is probably why management decisions are often made by a single person in a central and decisive manner.
The small importance given to innovation is also a cultural phenomenon. Until the beginning of the 16th century, some of the peoples that inhabited Latin America, especially the Aztecs, Mayans and Incas, had scientific and technological knowledge many times superior to those that existed at the same time. in Europe or China. In some areas, such as astronomy, botany,
pharmacology and metallurgy, the Spanish assimilated the knowledge acquired in the region and disseminated it throughout Europe. Five hundred years later, the situation has completely reversed: very little of what is most advanced in the world today in terms of innovations and technologies has been designed or emerged on our continent. Latin America is no longer an important because,
Provider of scientific and technological knowledge
despite representing about 9% of the world population, the region as a whole corresponds to only 1.6% of the total invested globally in science and technology. According to the Organization for Economic Cooperation and Development (OECD), in 2001, the world invested around 587 billion dollars in this area. Of the total of this investment, only 9.4 billion were spent by Latin American countries. The abundance of natural resources in
- Latin America has been pointed out as an important explanation for the low concern with innovation that prevails in the region. Fairbanks & Lindsay (2000, p.25-40) claim that
- local businesspeople tend to assume that the advantages in natural resources, abundant raw materials and cheap labor will provide them
- with leadership positions in the export markets and, thus, leave to create conditions for innovation.
Adopting this philosophy, they are constantly overtaken by countries in Asia or Africa, which manage to lower or even lower the cost of their labor, or enter the international market by selling a natural resource at an even lower price than has been practiced by they. In addition, Fairbanks & Lindsay (2000) point out another important reason for the lack of innovations: it is a question of poor cooperation between companies.
According to them, there is no culture of cooperation between companies in the region. Unlike countries like Italy, where the existence of clusters, also called industrial clusters, promotes cooperation and encourages companies to unite to, for example, jointly seek external markets, launch a new brand or invest jointly in Research & Development (R&D),