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September 14, 2013

Finance in a global world

How approaches to financial matters differ according to worldview
Finance in a global world

Applying international financial best practice may not produce the results you expected, since the people to whom you are addressing your requests do not hold the same worldview.

The ‘global’ financial world as we know it today was built around an Innocence-Guilt way of thinking. On paper bookkeeping may be about recording financial transactions, but in practice it is clearly about Honor and Power in two thirds of the world.

Legal codes in primarily Innocence-Guilt countries tend to be extensive and extremely detailed, reflecting the cultural importance placed on knowing exactly what is right and what is wrong, particularly in matters involving banking and taxes. Every detail of a company’s finances should be documented to ensure financial transparency, and should the law appear insufficient to cover the continually evolving world of finance, it will be updated to ensure that a new standard is created.

This approach to handling money, however, does not necessarily apply in Honor-Shame or Power-Fear environments, where people approach finance very differently.

Bookkeeping is not necessarily about the Recording of Financial Transactions

Innocence-Guilt companies tend to see bookkeeping very differently from Honor-Shame and Power-Fear oriented companies. For Honor-Shame or Power-Fear oriented businesses the purpose of book-keeping is ultimately to communicate the finances of the business to the world in a way that either adds honor, or enhances the power base of the organization.

From the point of view of such a business, bookkeeping is meant to add to the honor of the family who owns the business, to add to the honor of the name of the business, to enhance the power or prestige of that business in a certain market, or to add to the power base of the family or person that owns that business. Therefore, applying international financial best practices, as such, may not produce the results you expect, since the people to whom you are addressing your requests do not hold the same worldview.

This is also reflected in IPOs. In Africa, some parts of Asia, and Latin America, IPOs can take up to three times longer to put together than they would in more Innocence-Guilt oriented countries. This is because of the interest created by mandated releasing of the books to the public in a way that doesn't necessarily put the company in its best light. Since bookkeeping generally would not necessarily serve the purpose of legal compliance for a company from a more Honor-Shame or Power-Fear oriented culture, then much more time needs to be invested to get the company to a place where an IPO is actually possible.

How Financial Firms Should Manage Honor-Shame and Power-Fear Oriented Companies

When financial firms deal with Honor-Shame or Power-Fear oriented companies, there needs to be a more relational approach to getting the information that the team needs. This is because there are more than just legal compliance issues to manage; the relational capital must be in place and the request should be appropriately put across.

It is unlikely that you would get the data you require by simply stating that it is a legal obligation to comply with your request. For example, in an Honor-Shame oriented culture the request needs to be phrased in a way that will not threaten the honor of the person you are requesting it from, due to the sensitive nature of financial information and the fact that maintaining the honor of the individual and the company is seen as more important than strict adherence to the written law.


If you’re interested in finding out more about managing finance in Honor/Shame or Power/Fear oriented cultures, please get in touch.

KnowledgeWorkx develops the ability to accurately diagnose the human terrain through Inter-Cultural Intelligence, The Three Colors of Worldview and the 12 Dimensions of Culture. To begin your culture learning journey, Contact us or get our mini-ebook: Inter-Cultural Intelligence: from surviving to thriving in the global space.

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Last modified on Thursday, 15 December 2016 01:44

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