Running head: GLOBALIZATION AND OUTSOURCING: UNDERSTANDING LATIN AMERICAN CULTURE

GLOBALIZATION AND OUTSOURCING: UNDERSTANDING LATIN AMERICAN CULTURE

A Review of the Literature

Luisa Valls
The University of Texas at Dallas

Author Note
This paper was prepared for International Business 3310, Section 008, taught by
Professor Carraher.

GLOBALIZATION AND OUTSOURCING: UNDERSTANDING LATIN AMERICAN CULTURE

Abstract
Purpose The purpose of this paper is to analyze the Latin American culture as compared to the
U.S. and its effects on international business specifically related to globalization and
outsourcing.
Design/methodology/approach A range of academic journals and articles in globalization,
outsourcing, and Latin American culture were analyzed to determine certain cultural differences
and their effects on business.
Findings Better understanding of cultural differences among the United States and Latin
America is required for successful negotiations.
Practical implications
Originality/value
Keywords Globalization, Outsourcing, Cross-cultural dimensions, Latin America, Stereotypes
Paper type Research paper
Introduction
The exchange of goods and services, information, technology, knowledge, and culture
among countries is bringing the world closer. This global integration grows each day as
companies strive to lower material and labor costs in developing countries in an effort to boost
profits significantly. Globalization provides all countries with an opportunity for growth and
helps to promote efficiency through competitive advantage. Globalization is also responsible for
dispersing a variety of cultures throughout the world making it imperative to understand the
aspects of different cultures and how they relate to the business environment. The negotiation
process in a global environment generally deals not only with cross-borders, but also crosscultures.

GLOBALIZATION AND OUTSOURCING: UNDERSTANDING LATIN AMERICAN CULTURE

The role of Latin America as an IT and business processing outsourcing (BPO) services
destination has been growing in recent years. Organizations employees in the United States are
now dealing with a diverse global business population, including Latin Americans, and are often
faced with cultural differences that hinder international negotiation success. For this reason, this
paper attempts to provide a small insight into the Latin American culture. Although extensive
research has been done regarding cross-cultural differences, some of the work of Geert Hofstede
was used to identify cultural differences between Latin America and the United States. Other
factors, such as ethics, time, spatial orientation, and cultural context that affect international
negotiations are explained. Identifying and understanding different aspects of the Latin American
culture is not only important to avoid stereotyping, but also a crucial step in making successful
negotiations possible.
Understanding the Concept of Globalization
The concept of globalization has been of much talk and debate over the years. This
concept is hard to define, and as a result, most people describe it rather than define it. According
to Elena Granell, a Professor and Coordinator of the Chair of Human Development in
Organization at the Instituto de Estudios Superiores de Administracin (IESA) in Caracas,
Venezuela, globalization does not mean that developed countries can force rules and models on
less developed countries. Instead, it is a way for all involved to assimilate differences and build
from those differences to find ways to achieve mutual goals (Granell, 2000). Globalization
cannot be avoided. It is incessantly moving forward, having politic, economic, and social
repercussions (Garza-Carranza, Guzman-Soria, & Hernadez-Soto, 2009). In the past, the world
economy was made up of national economies (Pollin, 2007). However, the world economy has
undergone a series of metamorphoses through the modernization of technology. Technological

GLOBALIZATION AND OUTSOURCING: UNDERSTANDING LATIN AMERICAN CULTURE

developments have substantially reduced the cost of transportation and communication, making
economic globalization possible (Pollin, 2007). The world economy has been transformed into a
highly integrated global factory (Castillo Fernandez and Sotelo Valencia, 2013).
International competitiveness has become stronger and more prevalent with globalization.
Outsourcing has increased in recent decades worldwide as organizations strive to produce goods
and services overseas as a means to reduce costs and maximize profits. The constant threat from
foreign competition requires countries to make dramatic changes in strategy, technology,
working systems, and management styles (Granell, 2000) and creates pressure for corporations
to deliver their products and services more efficiently (Durvasula & Lysonski, 2009).
Some countries perceive globalization as a threat. Jobs in the United States are at risk
since workers in less developed countries are willing to accept lower wages for similar work.
This apprehension was addressed by U.S Senator for New York Charles Schumer and former
U.S. Assistant Secretary of the Treasury for Economic Policy, Paul Craig Roberts in January of
2004 saying that Any worker whose job does not require face-to-face interaction is now in
jeopardy of being replaced by lower-paid equally skilled workers thousands of miles away.
American jobs are being lost not to competition from foreign companies, but to
multinational corporations, often with American roots, that are cutting costs by shifting
operations to low-wage countries (Schumer & Roberts, 2004).

Professor Alan Blinder of Princetons economics department in his article Fear of

Outsourcing classifies the worlds goods and services as: tradable or non-tradable. He says
that transportation and communications technologies decide which goods or services can
definitely be traded worldwide and which cannot (as cited in Pollin, 2007). Many jobs that

GLOBALIZATION AND OUTSOURCING: UNDERSTANDING LATIN AMERICAN CULTURE

require face-to-face contact, high levels of personal trust, or other location-specific attributes
cannot be outsourced (Pollin, 2007).
Developing countries often perceive globalization as an opportunity for economic
growth as their workers benefit from the jobs created by outsourcing countries (Pollin, 2007).
Countries like Brazil, Mexico, Argentina, the Dominican Republic, and Jamaica have benefited
greatly from companies that embrace offshore outsourcing of soybean production, material
handling, call-center operations, and information services (Cobb,2009).
Terminology
Many individuals often confuse certain terminology used in the field of global business.
For understanding purposes, the differences among outsourcing, offshore outsourcing, offshoring, and subcontracting will be clarified.
Outsourcing is delegating a specific project or a responsibility either for a product or
service to an outside third-party entity, a specialized firm, or even an overseas production
development unit (Bae, Yoo, & Sarkis, 2010). In other words, outsourcing occurs when
organizations obtain products or services, previously performed internally, from an outside
company (Dolgui & Proth, 2013). It is important to note that organizations can attain
outsourcing services from both economically advanced and developing countries (Bae, Yoo, &
Sarkis, 2010). Offshore outsourcing takes place when the provider of a product or service
(vendor) is located in a different country from that of the costumer (buyer) (Dolgui & Proth,
2013). Organizations often pursue offshore outsourcing to take advantage of labor arbitrage
(Durvasula & Lynoski, 2009). Companies that move their entire operations to a country outside
their home country are said to be off-shoring. The last concept, sub-contracting, occurs when

GLOBALIZATION AND OUTSOURCING: UNDERSTANDING LATIN AMERICAN CULTURE

companies transfer part of their work to a company that specializes in that specific field (Dolgui
& Proth, 2013).
Nearshoring is also another common term used in the field of global business. Similar to
off-shoring, Nearshoring occurs when a business relocates its operations to a different country.
However, the term nearshoring refers to a company moving its operations to a neighboring
country in order to take advantage of cultural and geographic similarities (Andone & Pavaloaia,
2010).
Therefore, an effective way of differentiating these terms is by knowing the geographical
location of the parties involved (Andone & Pavaloaia, 2010).
Outsourcing
Outsourcing has become an important element of the modern global economy. Various
forms of outsourcing have existed since the beginning of capitalism (Castillo Fernandez and
Sotelo Valencia, 2013). Initially, companies began using the outsourcing model in the form of
sub-contracting or piecework labor (Castillo-Fernandez & Sotelo- Valencia, 2013). In recent
years, this practice has expanded considerably and has become more complex. Outsourcing has
turned stable jobs into more temporary, unstable positions in developed countries (CastilloFernandez & Sotelo- Valencia, 2013). The most common forms of outsourcing are information
technology outsourcing (ITO) and business process outsourcing (BPO) (Andone & Pavaloaia,
2010).
Outsourcing IT applications is at its peak and it is considered to be at the top of a series
of outsourcing activities. IT outsourcing uses service providers to fabricate, support, and
restructure a companys IT system (Ray, Ramaswami 5). These services include applications,

GLOBALIZATION AND OUTSOURCING: UNDERSTANDING LATIN AMERICAN CULTURE

data, and IT infrastructure management, help desk, data recovery, and IT security (Andone &
Pavaloaia, 2010).
Business Processing Outsourcing (BPO) derived from Application Service Providers
(ASP) to expand services on business processes. BPO services include internal business
functions, information technology enabled services, and customer-related services (Andone &
Pavaloaia, 2010).
India, China, and Latin America are some of the preferred offshore destinations for U.S
companies (Castillo-Fernandez & Sotelo- Valencia, 2013). The importance of Latin America as
an offshore destination for IT and business process outsourcing services is growing considering
its proximity to the United States, foreign language expertise, telecommunications
infrastructure, and tax incentives (KPMG, 2009). Latin America and Africa have now become
the third-largest offshore outsourcing destinations after Asia and Europe (Castillo-Fernandez &
Sotelo-Valencia, 2013).

Latin America as a Global Sourcing Location

Latin America refers to the sub region part of the American continent located south of the
United States, comprised of 20 countries where Spanish and Portuguese are the primary
languages. Globalization has not been an unfamiliar phenomenon for Latin America. Latin
America has been involved in international trade since its colonization more than four centuries
ago. In recent years, Latin America has grown into a nearshore attraction for information
technology and business processes due to its close propinquity and small time zone variation to
the U.S. Furthermore, Latin America and North America have favorable business environments.

GLOBALIZATION AND OUTSOURCING: UNDERSTANDING LATIN AMERICAN CULTURE

The modern telecommunication infrastructure, tax incentives, and ability to speak English as a
second language also give Latin America a competitive advantage (KMPG, 2009).
The 2014 A.T. Kearney Global Services Location Index (GSLI) states that Latin America
offers the second-deepest pool of qualified labor after Asia. Eight Latin American countries
are ranked in the top fifty locations suitable for offshoring business services: Mexico (4), Brazil
(8), Chile (13), Costa Rica (24), Panama (30), Argentina (38), Uruguay (42), and Colombia (43),
as showed on Figure 1 (Figure 2 in GSLI).
Mexicos low labor costs and highly-educated work force have given Mexico its place as
the leading destination in Latin America. Brazils capacity to supply software to domestic and
international markets, and its increasingly experienced industry capable of serving global
firms, makes them the second largest destination. Chile comes in third as it offers higher-end
research and development (R&D) and analytics services to American firms. Costa Ricas IT
labor force growth situates them as the fourth preferred location in Latin America for offshore
operations. For the first time this year, Colombia enters in the index ranked at 43.
According to the Kearney index, Latin America is gaining popularity as an offshore
destination because of its comparable business environment to developed countries (Brazil and
Chile), skilled labor force and worker availability (Costa Rica), and strong talent and low labor
costs (Mexico). As Latin America becomes a prime destination for offshore outsourcing, it is
imperative for business executives to understand the culture and how things are done in Latin
America.

GLOBALIZATION AND OUTSOURCING: UNDERSTANDING LATIN AMERICAN CULTURE

Figure 1

A.T. Kearney. (2014). [Graph illustration GSLI, 2014]. A.T. Kearney Global Services Location
Index. Retrieved from:
http://www.atkearney.com/documents/10192/5082922/A+Wealth+of+Choices.pdf/61c80111-

41b2-4411-ad1e-db4a3d6d5f0d

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Historical Underpinnings of Latin American Culture

To better understand the Latin American culture of today, it is best to know where the
culture has its origins. In their research, Volkema and Chang (1998) provide a brief history of
Latin America. Latin American culture is deeply-rooted in Spanish and Portuguese values and
influences. These countries imposed socio-political systems throughout the region during
colonization including Spanish and Portuguese languages, the Catholic religion, and customs.
Throughout the fifteen and sixteen centuries, the absolute monarchies of Spain and
Portugal handicapped self-governance in Latin America. The majority of Latin American
countries gained formal independence by the mid 1800s. However, the newly formed Latin
American countries struggled to exist as republics as a result of the monarchic-form of
governance in which they had been submitted for years. This struggle translated into
dictatorships across Latin America, where substantial landowners employed considerable power
and control. During the industrial revolution, Latin America depended on Europe for
manufactured goods, capital, and technology. In the early twentieth century, many Latin
American countries flourished despite the lack of land reform or redistribution of wealth.
However, it all ended during the Great Depression.
In recent years, civilian rule and more democratic forms of government have begun to
emerge. Unfortunately, these new political institutions have had considerable external debt and
as a result large economic instability (Volkema & Chang, 1998).

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Latin American Culture

Geert Hofstede is a Dutch social psychologist who is well known for his pioneering
research on cross-cultural groups. Hofstede refers to a group as a set of people who mutually
maintain contact and to a category of people as a set of people who dont have mutual contact
but share something in common: Guatemaltecos, Ecuatorianos, triathletes, students, etc. (Hidalgo
Campos, Manzur Mobarec, Olavarrieta Soto, & Farias Nazel, 2007).
Hofstede defines culture as the collective programming of the mind distinguishing the
members of one group or category of people from others (as cited in Hidalgo Campos, Manzur
Mobarec, Olavarrieta Soto, & Farias Nazel, 2007).
According to Hofstede, culture is communal. People living in the same social
environment share the same culture (as cited in Hidalgo Campos, Manzur Mobarec, Olavarrieta
Soto, & Farias Nazel, 2007). Hofstede points out certain aspects that spark cultural differences
among countries: geographical, political, and economical differences, wealth disparity, and
historical backgrounds (as cited in Hidalgo Campos, Manzur Mobarec, Olavarrieta Soto, &
Farias Nazel, 2007).
Hofstede research on IBM employees involved more than fifty countries around the
world. He based his research on the responses of 117,000 personnel from one multinational
corporation, IBM (Smith, Dugan, Trompenaars, 1996). According to Hofstede, four dimensions
of culture distinguish Latin America from the rest of the world: power distance, individualism,
uncertainty avoidance, and masculinity. His studies in Latin America included Argentina, Brazil,
Chile, Colombia, Costa Rica, Ecuador, Guatemala, Mxico, Panam, Per, El Salvador,
Uruguay, and Venezuela (Volkema & Chang, 1998).

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Power Distance
Power Distance describes how people of institutions and organizations in a specific
society expect and accept power inequality. This dimension concerns with the fact that
individuals do not perceive themselves as equals. Hofstede marks a distinction between
institutions and organizations. Family, school, and community form the basic elements of
society or Institutions while workplaces form organizations (as cited in Hidalgo Campos,
Manzur Mobarec, Olavarrieta Soto, & Farias Nazel, 2007).
In high power countries, it is easy to identify someone that has control over others and with
higher status (Hidalgo Campos, Manzur Mobarec, Olavarrieta Soto, & Farias Nazel, 2007).
Many Latin American countries rank high on power distance. The high power distance of Latin
America is consistent with the hierarchical and authoritarian structures of Catholicism and
Spanish-Portuguese rule (as cited in Volkema & Chang 1998). According to Hofstede,
Guatemala and Panama are the highest ranking countries for power distance in Latin America
both at a very high score of 95. People in high power distance societies like Guatemala and
Panama, accept a hierarchical order in which everybody has a place and which needs no further
justification. As shown in Figure 2, Costa Rica and Argentina are exceptions. Costa Rica scores
lower than the United States at 35 and Argentina scores slightly above the U.S. at 49, both
ranking low for this dimension in the Latin American region (Hofstede, 2001). Low power
distance societies strive to equalize the distribution of power.

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Figure 2: Hofstedes Power Distance

Source: (Hofstede, 2001)

Individualism
Individualism measures the degree to which members of a society depend on each other
and its social norms. Individualist societies value individual needs, personal contributions, and
their immediate family, while collectivist societies place more value on family, community, and
religion (Volkema & Chang, 1998). Therefore, collectivist societies have a higher degree of
interdependence than individualist societies (Garza-Carranza, Guzman-Soria, & Hernandez-Soto,
2009).
Most Latin American societies rank low for individualism. Figure 4 shows Guatemala
and the United States on opposite ends once again. At an incredibly low score of 6 for
individualism, Guatemala is the most collectivist culture in the entire world. On the opposite side

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of the spectrum, the United States score of 91, makes it one of the most individualist cultures
worldwide (Hofstede, 2001). Hofstedes analysis found individualism and power distance to be
closely related (Smith, Dugan, & Trompenaars, 1996).
Figure 4: Hofstedes Individualism

Source: (Hofstede, 2001)

Uncertainty Avoidance
One can define uncertainty as something that is doubtful or unknown. Uncertainty
Avoidance measures a societys ability to deal with the unknown (Drnevich, 2004). Hofstede
defines it as the degree to which societies favor structured situations over unstructured situations
(Hidalgo Campos, Manzur Mobarec, Olavarrieta Soto, & Farias Nazel, 2007). Societies that
struggle with the ambiguity of their futures rank high in uncertainty avoidance and tend to
establish rules, policies, and procedures to avoid uncertainty. This can be either written or

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traditional rules (as cited in Hidalgo Campos, Manzur Mobarec, Olavarrieta Soto, & Farias
Nazel, 2007).
Most Latin American countries rank high on uncertainty avoidance compared to the
United States and it can be attributed to their dependency on Spain and Portugal during
colonization (Volkema & Chang, 1998). Guatemala ranks at a high 99 while the United States
ranks at 46.
Chart 4: Hofstedes Uncertainty Avoidance

Uncertainty Avoidance
Singapore
United Kingdom
India
China
United States
Germany
Ecuador
Brazil
Venezuela
Colombia
Mexico
France
Spain
Argentina
Chile
Costa Rica
Panama
Peru
Japan
El Salvador
Uruguay
Guatemala

Uncertainty Avoidance

20

40

60

80

100

120

Source: (Hofstede, 2001)

Masculinity
According to Volkema and Chang (1998) masculine cultures are driven mainly by
competition, justice, assertiveness, and performance, while feminine cultures are more concerned
with nurturance, compassion, and quality of life (Volkema,& Chang 1998). Gender

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differentiation roles tend to be higher in masculine cultures. The United States ranks high for
masculinity at 62. The majority of Latin America except for Mexico, Venezuela, Colombia, and
Ecuador, ranks below the United States (Hofstede, 2001).
Chart 5: Hofstedes Masculinity

Masculinity
Costa Rica
Chile
Guatemala
Uruguay
El Salvador
Spain
Peru
France
Panama
Singapore
Brazil
India
Argentina
United States
Ecuador
Colombia
United Kingdom
Germany
China
Mexico
Venezuela
Japan

Masculinity

20

40

60

80

100

Source: (Hofstede, 2001)

Ethics
Ethics refers to standardized principles, rules, and values about what is good and bad
behavior that govern a group of people.
Hofstedes cultural dimensions theory serves as the foundation for understanding the
consequences of culture on ethical behavior (as cited inVolkema, 2004).

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It is argued that the degree of power distance influences from whom individuals are
taking ethical cues and whether formal codes of ethics or informal norms are more likely to
affect behavior (Volkema, 2004). Cues being taken from an authority figure and formal codes
having a greater impact on behavior, suggest large power distance. In high power distance
cultures, high-level public officials and underclass members are more susceptible to unethical
behavior such as bribery and extortion (Volkema, 2004). This cultural dimension is the most
affiliated to the perception of corruption (as cited in Husted, 2002).
It is argued that individualist countries are less likely to consider both formal codes of
ethics and informal norms than collectivist countries. Individualists see their actions as
irreproachable (Volkema, 2004).
A survey of experts (Cohen et al.s 1996) suggests that the relationship that exists
between individualism-collectivism and ethical perception and behavior may be situation
specific (as cited in Volkema, 2004). In their study, the experts estimated a good relationship
between individualism and unrealistically low offers and a negative relationship between
individualism and favoring a clients son (as cited in Volkema 2014 71). Collectivist cultures
often provide special preference to family members and close friends over strangers. As a result,
collectivists consider lying acceptable if it benefits their inner circle (as cited in Volkema,
2004). In Brazil, this saying demonstrates it clearly, Para os amigos, tudo; para os inimigos, a
lei (Anything for friends; for enemies, the law) (Husted, 2002).
It is argued that cultures high on uncertainty avoidance do not perceive ethical problems
as they perceive the negative consequences of their questionable actions; they tend to follow
rules and regulations, avoid risk, and do not easily accept anomalies in individuals or ideas (as

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cited in Volkema, 2004). This cultural dimension relates to the law itself more than any other
dimension (Husted, 2002). In high uncertainty avoidance cultures, especially in developing
countries, bribery and corruption can emerge as the rule or custom rather than an expected
behavior (as cited in Volkema, 2004).
It is argued that masculine cultures do not perceive ethical problems and are not
influenced by codes of ethics as feminine cultures (Volkema, 2004). High masculinity countries
tend to tolerate higher levels of corruption (Husted, 2002). Individuals in masculine cultures tend
to over promote themselves, aggressively pursue new customers, and engage in bribery and
corruption as means to achieve success (Volkema, 2004).
Doing Business in Latin America
In todays world, doing business goes beyond just operations. It is important to
understand and adapt to existing cultural differences among nations. Many cross-cultural
endeavors do not succeed because the negotiator fails to embrace and adjust to the other partys
culture (Drnevich, 2004).
Generally, negotiations at an international level involve long-term learning and growth. In
their research, Shapiro et al. (2007) identify four stages for the development of cultural
sensitivity in international negotiations:
1. Romantic Sojourner: knowledge of a new culture begins and a new way of doing
business. People fall completely in love and are crazy about the culture and its
people (Shapiro et al., 2007). Skills and knowledge to measure cultural depths are nonexistent; therefore, romantic sojourners rely on their native cultural categories.

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2. Foreign Worker: realistic and cognitive understanding of the new culture. They develop
environmental scanning abilities, a deeper immersion into the business culture and feel
like part of the culture (Shapiro et al., 2007). The previous stage ends and cultural shock
kicks in (as cited in Garza-Carranza, Guzman-Soria, & Hernandez-Soto, 2009).
3. Skilled Worker: deeper understanding of local culture and business associates. Skilled
workers become more diplomatic, tolerant of mistakes and misunderstandings, skilled
environmental scanners, and appreciative of host culture and native culture. They limit
business relationships to foster successful relationships. Borrowed frames progress into
shared frames of meaning (Shapiro et al., 2007).
4. Partner: high development of cultural sensitivity and negotiated business culture based on
relational trust. They build a balanced understanding of local culture, and business occurs
with a handshake (Shapiro et al., 2007).
Recognizing, understanding, and communicating cross-cultural differences can
provide the negotiator with a foundation for successful agreements. Culture impacts the
effectiveness of the negotiating process (Drnevich, 2004). As a consequence, researchers have
attempted to identify and measure differences among cultures throughout the years. It is
important to note that a country tends to establish good relationships with a country that shares
the same values, rituals, symbols, and practices (as cited in Hidalgo Campos, Manzur Mobarec,
Olavarrieta Soto, & Farias Nazel, 2007).
The four dimensions previously explained provide a slight insight into the Latin
American culture. However, there are other cultural characteristics that must be considered when
negotiating with Latinos: time, space, and cultural context (Volkema & Chang, 1998).
Time

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The perception of time in Latin America deviates from the perception of time in the
United States (Nonis, Teng, & Ford 2005). Some people even joke about the perception of
time in Latin America: What time is it when a Latino arrives? It is late oclock. And it is
definitely not unusual for some people in Latin America to be always late.
The concept of temporal orientation is disparate among cultures. Temporal orientation
refers to peoples perception about time (Volkema & Chang, 1998). Culture influences an
individuals temporal perception and behavior. Temporal behavior depends on temporal
perception: whether time is viewed as monochronic time (M-time) or polychromic time (P-time).
M-time cultures prefer to do one thing at a time. Time is viewed as linear and separable
(Nonis, Teng, & Ford 2005). People in M-time cultures consider their time valuable and perceive
it like a commodity (Volkema & Chang, 1998). Many companies in the US consider time as a
very important asset that must be saved and managed efficiently (Nonis, Teng, & Ford 2005).
M-time oriented individuals share certain characteristics: task-focused, punctual, follow plans
rigorously, rarely lend or borrow money, and generally involved in short-term relationships with
others (as cited in Nonis, Teng, & Ford 2005).
Polychromic time cultures prefer to do many things at one time. Most Latin Americans
function under polychromic time. Time is viewed as flexible, fluid, and relational (Volkema &
Chang 1998). P-time oriented individuals emphasize on completing human transactions
regardless of schedule times (Hall, 1976). P-time oriented individuals have reversed M-time
oriented characteristics: unpunctual, change plans, often lend or borrow money, and usually
build long-term relationships with others (as cited in Nonis, Teng, & Ford 2005). However, it is
important to highlight that even if a culture follows a specific time orientation, there are

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individuals within the culture that will follow a different time orientation (Nonis,Teng,& Ford
2005).
Spatial Orientation
Dealing with a fusion of cultures in the United States, one can notice how each person,
depending on his or her culture, respects personal space. Growing up in a Latin American
country, where people tend to greet acquaintances with a cheek to cheek kiss and hugs, it can
be quite a cultural shock to greet others with a simply hello. The interpersonal space that exists
in Latin America is definitely much shorter than in the United States. Latin Americans
frequently engage in touching behavior as opposed to Americans who avoid touching each
other (Munter, 1993). According to Munter, individuals in the United States feel more
comfortable keeping a distance of zero to 18 inches for close family or friends; 18 inches to four
feet when interacting with friends; four to 12 feet when interacting with strangers; and more than
12 feet when in a public place (Munter,1993). Personal distance can be offensive for people in
Latin America.
Cultural Context
A relationship exists between cultural-context and time (Manrai & Manrai, 1995).
Cultural context is a way of life: how people think, feel, and act with others. It relates to how
much information communication holds within a culture (Volkema & Chang, 1998).
In his analysis of cultures, U.S. anthropologist Edward Hall, classifies cultures into highcontext and low-context (Munter, 1993). Low-context cultures usually operate under
monochronic time; therefore, the social context of interactions is of little significance, they get
right down to business (Manrai & Manrai 1995, and Munter, 1993). Work and social life are

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two very distinct concepts (Manrai & Manrai 1995). Low context cultures use explicit language
to communicate; in other words, low context cultures express themselves clearly because
meaning is specifically related to the words being used (Schuster & Copeland, 2008).
On the contrary, high-context cultures normally operate under polychromic time and
consider the social context of interactions to be of greater importance than their schedules, they
establish context or relationship first (Manrai & Manrai 1995, and Munter, 1993). Work and
social life are linked together and work is implemented as a method to accomplish quality of life
(Manrai & Manrai 1995). Latin Americans value good relationships. People not only take time to
greet one another warmly, but also show a genuine interest in people they are greeting (Osland,
De Franco, & Osland, 1999). High-context cultures use implicit language to communicate.
Words are understood, however, they dont clearly state one specific meaning. A word can have
several meanings. Understanding the meaning of the word depends upon the relationship of the
people involved in a conversation, the topic, and the context (Schuster & Copeland, 2008).
According to Dr. Orlando Kelm, Associate Director of Business Language Education at
the UT Center for International Business Education and Research in Austin, Texas, in highcontext cultures like Latin America, people take time to get to know each other in order to build
up strong relationships. However, in low-context cultures like the United States, people base
their behavior from the feedback received in words, numbers, and data( Kelm, 2011). He also
explains that if an individuals behavior is governed by the context of the situation, then the
individual is considered more of a high-context person. However, if the individuals tendency is
to follow rules, then the individual is more of a low-context person (Kelm, 2011).

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As previously demonstrated, different cultural characteristics can have a big impact on

the way countries conduct business and the negotiation process varies across cultures.
According to researcher Enrique Ogliastri, Latin American people feel more comfortable
doing business in a casual environment and among friends. They prefer to conduct business with
people they already have a personal relationship with (as cited in Garza-Carranza, GuzmanSoria, & Hernandez-Soto, 2009). This personal relationship is long lasting and not easily broken
(Osland, De Franco, & Osland, 1999). One aspect that US citizens find attractive in a Latin
American work environment is being treated as individuals rather than just a number (Osland,
De Franco, & Osland, 1999). Ogliastri also found that Latinos are generally impulsive and have
short term thinking. In order to get a contract, Latin Americans executives overcommit even
when they know they are not able to fulfill the terms (Garza-Carranza, Guzman-Soria, &
Hernandez-Soto, 2009).
Latino Stereotypes in the United States
Societies tend to have stereotypes for different cultures or races. Unfortunately, people
often generalize about an ethnic group with regard to the nationalities or countries that they
know. People in Texas might perceive Latin American culture through their interaction with one
of the thousands of Mexicans or Central Americans that live in this State. Stereotypical
representations of Latin American people in the United States are reflected in popular mass
media, websites, and blogs.
A recent study on the effects of U.S public attitudes toward worldwide immigration
found that several Latin American characteristics are the most unfavorable (As cited in
Menendez-Alarcon, 2014).

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24

People in the United States are inclined to treat Latin America as one culture. However,
Hofstedes cross-cultural dimensions rank differently for each country in Latin America, as it
was previously discussed. Although many cultural similarities can be found within Latin
American countries, differences will always exist. Forming stereotypes for one continent based
on only a few known cultural characteristics without diversity considerations among countries,
will lead to racial prejudice (Menendez-Alarcon, 2014)..
In his article, Menendez Alarcon addresses some of the stereotypes on Latin America in
the United States, some of these stereotypes include:
1. People in the United States believe that Latin America has remained essentially
rural. The idea of the majority of people still living in huts made of wood or stone with thatched
roofs is erroneous. 72 percent of Latin American societies live in cities of more than one hundred
thousand residents. In fact, there are more cities in Latin America with more than five hundred
thousand people than in the United States (Menendez-Alarcon, 2014). Mexico City and Sao
Paulo have around 21 million inhabitants and are listed as the fourth and fifth most populated
cities in the world (http://www.miamiherald.com/news/nationworld/world/americas/article1974965.html).
2. Latin Americans are idle. US citizens picture Latin Americans as laid back and not
inclined to work hard. On the contrary, many Latinos think that US citizens live to work rather
than work to live. This may be related to the way that citizens in the United States measure their
lives according to their work and financial success unlike Latin Americans who perceive work as
a way of making a living. Although there are not conclusive statistics on this subject, there has
been extensive research that suggests that Latin Americans work the same or even more hours

GLOBALIZATION AND OUTSOURCING: UNDERSTANDING LATIN AMERICAN CULTURE

25

than Anglo Americans. One of the reasons would be the difference in wages as compared to cost
of living making Latin American work longer hours to maintain a desirable standard of living
(Menendez-Alarcon, 2014).
3. Latin Americans are perceived to be living in the past. The reason for this
perception is because Latin Americans still practice many rituals and myths from the preColumbian period. However, in Latin America, people's understanding of their ethnicity is linked
more to their own experiences and social status than their pre-Columbian past (MenendezAlarcon, 2014).
4. A small number of powerful families control the economy and politics: This is
true for any country with a capital system. If analyzed, this type of economies is controlled by a
small powerful minority. There is a significant gap between social classes in Latin America. The
gap also exists in the United States. However, the gap is more evident in the economic sphere
(Menendez-Alarcon, 2014).
5. The Catholic religion plays an important role in politics and everyday life. The United
States view Latin Americans as devoted Catholics and believe that Latinos are influenced
socially, spiritually, and politically by the power of the Catholic Church. While it is certain that
nearly half of all Catholics in the world live in Latin America, this does not mean that they are all
devout Catholics. In reality, many Catholics in Latin America mostly attend church to participate
in traditional ceremonies such as one of the seven catholic sacraments (baptism, first
communion, marriage, etc.). Additionally, research shows that only Mexico, Colombia, and
Paraguay have a proportion of Catholics greater than 80 percent. Religious affiliation in Latin
America is diverse. US citizens also believe that the Catholic religion in Latin America plays an

GLOBALIZATION AND OUTSOURCING: UNDERSTANDING LATIN AMERICAN CULTURE

26

important role in politics and everyday life. Although true, religious influences are as strong in
the United States as in Latin America. The use of religious symbols, especially in political
speeches, and weekly church attendance are more common in the United States than in Latin
America (Menendez-Alarcon, 2014).
In order to understand the Latin American culture, people in the United States should not
base their interpretation of a particular culture on standardized categories circulating on
television and other media (Menendez-Alarcon, 2014).
Conclusion
Since globalization is a way for all involved to assimilate differences and build from
those differences to find ways to achieve mutual goals, it is imperative to possess a good
understanding of people from different cultures. Latin America is growing as an offshore
destination as companies look to reduce costs and increase profits. Therefore, understanding its
culture is a critical factor for successful international negotiations. According to Hofstede, four
dimensions of culture differentiate Latin America from the rest of the world: power distance,
individualism, uncertainty avoidance, and masculinity. Although many cultural similarities exist
among Latin American countries, cultural differences are also present. These dimensions also
serve as the foundation for understanding the consequences of culture on ethical behavior. Time,
spatial orientation, and cultural context must be considered when dealing with Hispanics. When
companies entering a new cultural environment consider all these cultural aspects in advance,
they are providing their employees with valuable tools to successfully negotiate agreements.

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27

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