Return to Home Page 1997 Cultural Cues to Conducting Business in Venezuela by Paul Herbig Abstract of To be successful in doing business internationally, it is important to understand and appreciate cultural differences. This study will analyze various characteristics of the Venezuelan culture as well as some obstacles that foreign companies face when doing business in Venezuela. Introduction: Venezuelans For the most part, a Venezuelan’s concerns are family, personal friends, hobbies, political party, and possibly athletics. But transcending all these is the concern for oneself. So it is important when dealing with a Venezuelan to relate everything to him or her in personalized terms. Due to the economic instability, there is a boom or bust attitude. Those in the high class have been able to survive the crisis because they had enough capital before the crisis and invested their money wisely. On the other hand, those that were in the middle and low classes did not have any capital to invest and their income was overtaken by the high inflation. Many desire to make it rich by speculation, manipulation, or gambling. As a result, business people are not as interested in stable growth as U.S. business persons. Related to this is the Venezuelan tendency to let chance guide their destiny. Most are convinced that outside forces govern their lives. They are willing to accept the inevitable. Venezuelans are much like Europeans as far as good manners and dignity goes. They are more formal and more elaborate. They shake hands on meeting and departing. In Venezuela, the work one does is directly related to the social class one is in. One is born “high” or “low.” Moreover, the Venezuelan society is highly stratified. Venezuelans are warm, friendly and hospitable. They like to talk, and want to know about a visitor’s family and interests. When analyzing the culture of Venezuela, it is very important to look at factors such as the economy, politics, the society, and religion that have a great impact on the culture of this country. In Venezuela, the overall business climate is dampened by recent banking and fiscal crises. The investment climate has been depressed due to a range of unfavorable factors. Recent memory of 1992-1993 political instability, debt service concerns, the reintroduction of exchange controls and skepticism over the government’s ability to manage the economy together translate into falling international investor confidence. Current economic difficulties have added urgency to opening the hydrocarbons, mining and metals sectors to foreign investment through strategic partnerships, and raising revenues by privatizing state companies. Dramatic developments in this area could result in a significant new surge in foreign investment in Venezuela in the medium-term. The number of major U.S. and other foreign multinational companies watching the progress in these areas is growing. In the long run, the Venezuelan market is expected to fall back into line with regional trends towards robust growth. The country’s natural resource wealth, low energy costs, and relatively skilled workforce provide fundamental strengths. Short-term difficulties in the Venezuelan business world are kept in perspective by the fact that not one of the hundreds of U.S. investor firms with operations in Venezuela has withdrawn from the market since the economy faltered in 1992.1 Venezuela has endured a series of political challenges since 1989 which have contributed to worsening political risk assessments by international banking institutions. Major rioting in Caracas in 1989 was put down with military support. Two attempted military coups were successfully fended off by President Carlos Andres Perez in 1992; but in 1993, he was constitutionally removed from office on grounds of misuse of government funds. The interim government of Ramon J. Velasquez upheld the country’s traditions and held democratic elections in December 1993, resulting in the presidency of Rafael Caldera. The Caldera administration inherited a difficult economic situation, intensified by the collapse of the banking system and government measures to respond to the crisis. Frequent changes in economic planning and in key economic decision-making posts have also contributed to a contraction of the economy. The June 1994 decree declaring temporary price and exchange rate controls has adversely affected international business perceptions of the Venezuelan investment climate. However, the Caldera government has had success in restoring political stability, and in particular, in resolving problems within the armed forces and reestablishing military unity and discipline. Venezuelan government officials, and the country as a whole, have a generally pro-United States attitude, and both countries have long shared a cordial bilateral relationship. The Venezuelan government has eliminated legal barriers to foreign investment in most sectors. It has also attempted to move toward a more export-oriented and diversified economy. At this time, disincentives to invest in Venezuela stem principally from government economic policies, including its management at the macroeconomic level and the imposition of price controls.2 The economic crisis in Venezuela has led to social instability. As stated by the president of the Venezuelan Institute for Social and Political Studies, Andres Serbin, “The middle class is disappearing, now you have a clear polarization between the people who have and the people who don’t have.”3 Social insecurity has been intensified with the suspension of some constitutional warrants, including detaining people without charge, entering homes without warrants, and seizing property without compensation.4 In Caracas, fear has become a virtual psychosis, fueled by the media, which covers the crimes in detail, especially those resulting in 20 to 50 deaths per weekend. When it was limited to the poor neighborhoods, crime did not worry the media or the wealthy. But for more than two years the violence has spread over residential areas, and no one is safe anymore. The middle and upper classes increasingly feel harassed, an impression magnified by the topography of Caracas: the city and its nicer neighborhoods were built in a valley, with the surrounding hills covered by the slums of the poor. Since February, 1989, when 400 people were killed during a military crackdown on hunger riots, fear has been steadily spreading among the wealthy. Currently, 78 percent of families are living below the poverty line, and 40 percent are living in extreme poverty. If the government does not improve the economic situation soon, a serious revolt could be triggered resulting in total disaster.5 The Roman Catholic cultural tradition not only pervades in the Venezuelan history, but in the ways of life and thinking of Venezuelans. The Spanish and Portuguese explorers and conquerors brought the missionaries with them to convert and “civilize” the pagan inhabitants. At first, the clergy protected the Indians and helped through their missions to educate the indigenous populations. Their agricultural and trading centers became the great cities. With the passage of time and increase in wealth, the Church became part of the establishment. As a major land owner itself, the Church has not only supported the oligarchy, but opposed population control, divorce, and social change. The growth of the militant theology and activities caused Pope John-Paul in his visits to the country, to protest social inequities, and yet warn the clergy of the need to concentrate on their spiritual mission. In any event, no modern manager operating in Venezuela can afford to ignore the Church as a cultural force. Cooperation and collaboration for social improvement in Venezuela can be significantly advanced when business cooperates with institutions for human development.6 Foreign Influences in the Venezuelan Culture The Spanish heritage and language dominates the Venezuelan culture. Other European influences such as Italian, Portuguese, German, and African, are also evident in this country. However, the dominant influence on the culture of Venezuela was that of the Spanish conquerors. The Native Indians of the country, lacking any political or cultural unit of their own, were assimilated by the immigrant groups and had only a slight influence on the national culture. The distinct Venezuelan contribution to folk legend is the llanero, or South American cowboy. The national dance, the joropo, and such popular instruments as the maracas or shakers, the harp, and the cuatro, a small guitar are associated with the llanero. Venezuela, which was regarded as one of the less profitable colonies of Spain, lacks the splendors of Spanish architecture that are found in other South American countries. Nevertheless, in the second half of the 20th century, the combination of the wealth produced from oil discoveries and strong ties with the United States has helped foster the development of modern architecture. Caracas is now considered one of the most modern cities in the world.7 Cultural Characteristics In Venezuela, the culture is very similar to the rest of Latin America. Cultural characteristics are evident in the business world. The way people behave when doing business is completely related to cultural values. Management emphasizes the total person. Leaders are respected as multidimensional social beings who are family leader, business leader, and intellectual. Appearance and clothing are very important for Venezuelan businesspersons. Venezuelans are formal and reserved. They are very careful to preserve a dignified composure in a business setting. Relaxed manners, unabashed drinking and hearty laughter are reserved for family and a circle of close friends. Although the uniqueness of the individual is valued and provides inner dignity, it is not necessarily evident through actions or achievements. For instance, Venezuelans are comfortable talking about their inner qualities like soul or spirit and may look at North Americans as insensitive because they avoid such subjects. In conversations, Venezuelans tend to maximize differences between persons due to gender, status, or age in contrast to North Americans who often minimize them. Reality for Venezuelans is not just objective but interpersonal, so they may reply in a way that makes the receiver happy although it may not be the fact.8 The Individual’s Position in Venezuelan Society Venezuela has a highly stratified society in which all powers are concentrated in the hands of the superior. The subordinate usually learns not to question the decision of the superior. Therefore, people behave submissively especially in the presence of the boss. Venezuela ranks among the highest countries in power distance.9 [Power distance is the extend to which a society accepts that power in institutions and organizations is distributed unequally.] Employees manage their work according to what the manager wants. Managers are seeing as showing relatively little consideration but like to see themselves as benevolent decision-makers. Coercive and referent power is stressed over reward, expert, and legitimate power in Venezuela.10 Moreover, according to Hofstede, Venezuela has one of the lowest individualism index values. This individualism is defined as a loosely knit social framework in a society in which people are supposed to take care of themselves and of their immediate family only. This low individualism is shown by the moral involvement of individuals with the companies they work for.11 Male-Female Relationships In Venezuela people greet one another with a warm, somewhat gentle but friendly handshake. Men who know each other well may pat the right shoulder of the other person as well. Good male friends will embrace, the abrazo. Men and women who are good friends may kiss, and good women friends will hug lightly and kiss cheeks. Closeness and casual touching among males will be seen in Venezuela just as in most Latin countries. Men should be very careful about public physical contact with women. In Venezuela, “machismo” or maleness is still common. Although more women are going out to work, men still comprise the majority of the working force. Machismo is an attitude that men have towards women. The macho is aggressive and sometimes insensitive, and machismo represents power. Translated to the daily, business life, Venezuelan men must demonstrate forcefulness, self-confidence, visible courage, and leadership with a flourish. The machismo concept is implanted early in childhood and is impressed in both sexes. Yet, the female still controls the home, the children and husband.12 The Relationship Between the Old and the Young The relationship between the old and the young is somehow related to history and religion. With the dominant religion being Roman Catholic, marriage follows the customary religious traditions and families are large by U.S. standards. Children usually stay at home until they get married. Family responsibilities come before all other responsibilities. Once people are old enough to work and be independent, the process reverses and the children start taking care of their parents. When older people retire, their children will support them and provide them all their needs. Nursing homes are not common in Venezuela because older people in most cases live with their children. Considerable respect for the elderly exists due to their perceived wisdom. Children are taught to respect the elder at a very early age. Attitudes Toward Work Attitudes toward work are culturally diverse. In Venezuela people are hard working and make many sacrifices to survive. Although minimum wage is not enough for a person to meet his or her basic needs, people have to find ways to overcome the adversities produced by low incomes. For instance, people tend to live with their families and friends to share expenses. Also, due to the difficult economic situation middle class people have fallen to the low class and have had to forgo some of the comforts they used to enjoy. Most jobs available only pay minimum wage and the rest of the jobs do not pay enough taking into consideration the high inflation rates. Venezuela is considered to have a high uncertainty avoidance index. [Uncertainty avoidance is the extend to which a society feels threatened by uncertain or ambiguous situations.] According to Hofstede, in these type of countries the uncertainty inherent in life is felt as a continuous threat that must be fought, there is higher anxiety and stress, there is inner urge to work hard, there are strong superegos, aggressive behavior of self and others is accepted, there is more showing of emotions, there is strong nationalism, concern with security in life, achievement is defined in terms of security, search for ultimate, absolute truths and values, ordinary citizens are incompetent versus the authorities.13 As in other Latin American countries, business meetings may become social events and no compulsion is felt to be brief and businesslike. The patron system prevalent in much of Latin America contrasts with American patterns of motivation by maintaining an intricate set of social relations between the individual and the patron. Patrons may be like godfathers to members of their estates and may extend, as a matter of obligation, personal services and considerations which would be unusual for American managers14. This system still holds in today’s business environment in Venezuela. People recur to their family or close friends as a kind of sponsor or supporter to help provide them with a job or help them find one. Due to the lack of equal employment opportunity laws in Venezuela, it is very common for companies to hire friends or relatives of its employees without interviewing other prospects. Attitudes Toward Time The Venezuelan culture is polychronic. In Venezuela people usually do many things at once, they are highly distractible and subject to interruptions, consider time commitments more casually, people are more committed to people, they borrow and lend things often, and tend to build lifetime relationships. Although time is a concern, Venezuelans do not allow schedules to interfere with experiences involving the family or friends. The culture is more people than task-oriented. The manana attitude (putting off until tomorrow what does not get done today) has been a source of frustration for time sensitive U.S. executives when conducting business with people from that culture. In addition, businesses often close for two hours in the middle of the day for a long meal and a rest or “siesta”, but people often work well into the evening. The importance of time in this culture is also related to religious belief. Since Venezuela is considered to have a high-context culture with long-lasting and significant relationships between individuals, and where insiders and outsiders are distinguished, it is important to invest a considerable amount of time in creating business relationships.15 Attitudes Toward Authority Venezuela has a hierarchical society, and there are signs of respect in both tone of the voice and manner that denote grades of inferiority and superiority. It is present in the rich who believe that the poor are poor and that the rich are rich because God ordained it that way. The caudillo, owner-manager, is master in his own domain. He has power and authority, and believes that the poor want a strongman who can give orders. Nonetheless, the caudillo will jump when someone stronger pulls his string. The patron is the man of power or wealth who sustains loyalty from those of lesser status. He can be the employer, the politico, the landowner and in other cases the money lender or merchant. Since decisions are difficult, they have to be made by the one in authority. Authoritarianism does not allow for questioning. However, among younger generations there has been a change caused by profound social and economic changes which are altering the above customs and influences. World communications, international exchanges, and contemporary realities are transforming this culture.16 Competition and Cooperation In Venezuela, competition is intense due to the economic situation. Jobs are scarce and people are willing to do whatever it takes to succeed. Competition is also a primary method used by managers to motivate employees. However, a great deal of cooperation exists between people since the majority works with either friends or relatives. Competition is more common in lower level positions among lower and middle class people who are struggling economically. This competition is evident when looking at the number of people that are self-employed. Everyone wants to succeed and the lack of jobs available in the market makes people establish their own business to survive. Friends and relatives are usually more willing to cooperate among them and this cooperation has helped the development of some important businesses. Networking with businesspersons and especially government agents is the best way to find cooperation. The more cooperation received from the government and people with money, the more the chances one has to succeed in the business arena.17 The Business Environment Negotiating in Venezuela is a complex and long procedure, covering several stages. First, the parties involved must determine if they, as individuals or organizations, can do business together. Establishing a warm working relationship with one’s counterparts is essential to the process and facilitates the negotiation. Connections in Venezuela are very important and the government has a significant influence in private business matters. Negotiators are selected primarily on statues. Family connections, personal or political influence, end education are critical. Hence the importance of ubicacion, or your place in the society, becomes evident. Venezuelan negotiators tend to be high level, male, and well-connected. Whether Venezuelans are individualists or collectivists seem to depend on the social arena. In business, and with other men, Venezuelans tend to be competitive, set on pursuing individual goals and needs for their personal recognition. Often they feel they owe loyalty to their patron, but they seek to project a public image of significance and power. The Venezuelan culture is dominated by courtesy, dignity, tact, and diplomacy. Protocol is important and social competence is as critical as technical competence. For Venezuelans, relationship-based and personal/internal issues tend to predominate and affect the negotiations, and Venezuelans emphasize the social and personal aspects of their relationships with the people they encounter, including business people. Communicative context is formed by body language and emotional cues, not just the spoken words. Venezuelans communicate with hand movements, physical contact, and emotional expressions, making Venezuelans high-context communicators. Also, Venezuelans embrace closeness. People stand close to each other, sit close to each other, and often touch each other. Evaluations of trustworthiness are based initially on intuition and then later on one’s past records. Negotiations should take place within a generally trusting atmosphere. Trust must develop through a series of frequent and warm interpersonal transactions, either socially or business oriented. Decision making is highly centralized in government, companies, and within negotiating teams. Venezuelan leaders tend to make decisions without concern for consensus. Individuals with palancas (leverage) tend to be well positioned, expressive, and forceful with their opinions and decisions. The only way to be certain that a business agreement has been reached in Venezuela is with a written document.18 Social Customs Shaking Hands: This is the same as in Europe. If there are several people in the room, enter with a little bow and then go around to each person and shake hands. The abrazo (embrace) is a greeting used with individuals one knows well. Pleasantries: Nobody rushes into business. As a foreign business person one should take time and ask about the colleague’s family’s health, or the weather, or perhaps the local sports team. Thank-you Notes: Send thank you notes promptly after any courtesy. Flowers are often presented as a thank you. Time: Venezuelans are often late according to North American standards but expect North Americans to be on time. Offices often close after five thirty and dinner usually begins at eight. As a guest, never arrive exactly on time. Party Traditions: Traditionally, women congregated on one side of the room and men on the other, but that is changing. For large formal affair, invitations are written by hand. Flowers are often sent before a large affair. At a smaller party you should take them to your host or hostess. Privacy: There are closed doors, fences, and high walls around their home due to delinquency and violence. Knock, and wait to be invaded in. Do not drop in on neighbors. This is not a custom. Personal security is very important. Questions: Some North Americans get to know people by asking questions. However, in Venezuela, it is safer to talk about local issues of interest. Questions are often interpreted as prying. Class and Status: People may not be served on a first-come, first-served basis. Their place in society may determine the order of preference. Doing Business: The pace in Venezuela is traditionally slow, especially when negotiations are under way. Decisions are made at the top. Deals are never concluded over the telephone or by letter, but in person. Do not call anyone by his or her first name unless the person has invited you to do so. When in doubt, be formal. Dress conservatively and use business cards of good quality and in Spanish. Self Control: The Venezuelan deals passively with stress. People will attend social events as a way to release stress. Type of Civilization: The Venezuelan is traditional; technically inferior, but morally superior. As most other cultures, the Venezuelan culture is egocentric, and Venezuelans feel superior to other Latin Americans. Racial Attitude: In Venezuela, social classes have subtle shades; whiter is better. Honesty and Trustworthiness: In Venezuela it is more important to be nice than objective. It is fine to bend truth or retain information if people’s feelings are preserved. Character: The Venezuelan is brave, but often overpowered. Time Orientation: The Venezuelan lives and enjoys the present, respects the past, and awaits a future to be determined by God’s will. Social Classes: Venezuelans are exclusive, but more cultured and civilized at top levels. Money is not only determinant status for high-class people. Religion: In Venezuela, religion is repository of higher moral values. Orientation to Nature: For the Venezuelan nature is a creation of God that man can ultimately neither influence nor control. National Intent: In Venezuela there is sovereignty, respect and recognition.19 Recommendations for Doing Business With Venezuelans Foreign business people should be aware of the cultural characteristics of Venezuelan business people. Due to past foreign ownership of companies in Venezuela, national business people are usually accustomed to dealing with foreigners. The fact that there are large groups of immigrants in the country makes it easier for Venezuelans to deal with other cultures. Even when doing business locally, people deal with foreigners that have been in the country for a long time but that come from different cultures. This constant interaction with different cultures has prepared the Venezuelan people to be more open and understanding of other cultures. For that reason it is not so hard for foreigners to adapt to Venezuelan people. However, other factors such as economy and politics, have affected the society very much and the behavior of the people has changed. In other words, people in the middle and lower working classes have been affected by the economic situation and their attitudes have been altered. Nevertheless, those dealing with foreign investors are at a higher level and their situation has not been affected as much, so their behavior has not changed. On the contrary, those people involved in international business are becoming more open to foreign cultures due to the opening of the markets and the many free trade agreements in which Venezuela is involved. Foreign business people should be aware mainly of the importance of family, friends, and social life for Venezuelans. They should always keep in mind that the family comes first, and that Venezuelans are not rushed into business. They should take the time to socialize and network as much as possible before negotiating. In Venezuela, it is more important who you know and not what you know. Getting to know people, making connections, especially with the government should be the first step when doing business in this country. Learn what people like as well as what they want, and invest a lot of time in building a close relationship before talking about business. In addition, foreign business people should be open minded and realize that the Venezuelan culture is modern and actualized. Do not think that because it is a South American country people are less prepared intellectually. Although infrastructure and technology may not be as advanced, the level of preparation of Venezuelan business people is very high. Most business people dealing with foreign investors have been educated in the United States and other parts of the world. Also, television, radio, movies, and telecommunications in general keep Venezuelans updated and informed about what happens around the globe. Conclusion The Venezuelan culture is complex, similar to other Latin American cultures, and highly influenced by European cultures. Venezuela is currently undergoing difficult economic times that are affecting the society as a whole. The need for privatization and foreign direct investment are opening the country to different cultures. Also, the economic hardship in the society and the disappearing middle class have affected some cultural values of the Venezuelan people. The need to work to survive and the integration of women in the labor force have changed the attitudes of Venezuelans. In addition, the development of trade agreements in Latin American and around the world is causing a change in the mentality of Venezuelans. The opening of the hydrocarbons sector is bringing foreign firms in and foreign investors and managers are becoming part of the Venezuelan business environment. Some policy changes have taken place to facilitate direct foreign investment, but it is important that cultural adaptation takes place for foreign firms to succeed in Venezuela. Venezuelans need to become more open to foreign business tactics and foreign cultural values as much as foreign business people coming into the country need to learn and understand the Venezuelan culture. Because of the cultural background and the European cultures that shaped the Venezuelan culture, it will not be hard for Venezuelans to adapt to foreign cultures entering Venezuela as a result of an open economic policy. For a foreign firm to be successful in Venezuela, understanding that Venezuelans have different social and cultural values will determine its success in that country. Statistics show that despite the economic difficulties that the country has faced, not one American firm has pulled out of Venezuela. This fact illustrates that foreign business people have been able to adapt to the Venezuelan culture. The major obstacles faced by foreign companies are related economic and politic policies that in turn affect the culture. 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