No Trust

articles Business

Ilya Adler

I recently attended a two-day seminar about the strategies Mexican companies should follow in order to compete successfully in a globalized economy. Economic globalization is creating new and stiffer competition for Mexican firms, as the country’s borders open more and more to imports and direct investment. On the other hand, globalization has given Mexican companies a chance to reach other markets. The success of companies now depends on their ability to compete in and reach new markets.

Failing at Fraternity

At the seminar, one theme particularly caught my attention: Why do Mexican companies not have a stronger presence in other Latin American regions, given the apparent cultural similarities between Latin American countries?

Before the seminar, I would have responded that Mexican companies already have an important presence in other regions in Latin America, especially in the telecommunications industry. I also would have said that Mexican businesses concentrate their efforts on North American markets. We know that 85% of all Mexican exports go to the United States, so it must be where export business is most likely to succeed, I would have said.

However, other seminar participants pointed to cultural differences between Latin American nations. Many of my Mexican friends who do business in Latin America say that just being a fellow Latino isn’t enough to gain the trust of potential customers. Perhaps because Mexicans expect cultures from other Latin American countries to be so similar to their own, we are often shocked to discover the contrary.

Of course, while cultural differences do exist, I believe that the real issue is that all Latin American cultures tend to be low on trust. Outside of your family and friends, everyone else is distrusted until they prove themselves to be trustworthy. That includes people from your own country, city and even neighborhood. In this sense, the effort needed to become personal and interested in the person with whom you are trying to do business is the same for an American, a Canadian or a Mexican.

Rash Generalization

A more painful reason that Mexican firms tend to favor trade with their northern neighbors is that Latin Americans often view products and companies from other Latin American countries as “inferior” to those from Europe, Canada, the United States, or Japan. This is slowly changing, as regional companies begin to show above-average quality and service. But the bias is strongly rooted, and I expect this attitude to persist for a long time.

Finally, Latin American countries have historically seen each other as “competitors.” For many Latin American nations, their “worst enemies” are their closest neighbors. Perhaps this is remnant of the Spanish conquest, where the strategy of divide and conquer was so successful. This phenomenon has also led to strong national sentiments and a strong sense of regional competition.

How we come to trust another person or company is a complex process that combines early lessons in life, experience, history and cultural differences. For example, Mexicans tend to trust people they know well, but on the other hand, when trust has to be placed in companies, then personal relations with a company’s employees may not matter as much as the company’s nationality.

These factors contribute to a sub-conscious bias that Latin Americans often show toward each other. They might like each other personally, but when it comes to doing business, they feel safer with North American or European companies.

Published or Updated on: January 1, 2002 by Ilya Adler © 2008
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