Valentina Ivanic, Cultural Due Diligence Institute – Investments should be made in Serbia due to cultural characteristics of the labor force

Modern world business has been breaking barriers and pushing the envelope for a long time now. However, although interested parties are guided by the same goals and motives, cultural differences can cause misunderstandings.

Cultural dimensions are what Valentina Ivanic, the director of the Cultural Due Diligence Institute, deals with. She was initially interested in competitiveness. As she says, a company forever remains in the vicious circle of price competitiveness if its corporate culture is not based on innovations.

– Realizing that the cultural dimension of a country can explain more than 70% of its competitiveness was very important for my career in research and then in consulting – Ivanic begins her interview with eKapija.

She believes that the fact that the main question today is how to do something instead of why is a considerable problem.

– It has come to ours measuring the success of the transition through its speed, talking about Serbia's accession to the European Union as a goal, instead of something to be used to strengthen the competitiveness of the Serbian economy – our interviewee believes.

Her motive to start dealing with overcoming corporate cultural differences was the opportunity to help make Serbia be presented to foreigners as a country they should come to primarily thanks to the cultural characteristics of the labor force, such as the strong need to belong to one's company, as well as the strong need to favor interpersonal relations over achievements.

– All this is very important considering the fact that the world of labor is changing, primarily in the sense that experts are above all interested in their own carriers, not their companies, and that the leading industries in the future will be those that deal with the nature of human contact, due to the general aging of the populace and the growing sense of loneliness – Ivanic notes.

Due diligence of a company

She founded the Cultural Due Diligence Institute in 2017 in Novi Sad. The institute seeks to improve the competitiveness of companies, both those arriving to the Serbian market and those which export their goods and services from Serbia to other markets. Its role is to acquire knowledge of the cultures of the countries the investors in Serbia come from, as well as what management models each of these cultures brings along. As our interviewee emphasizes, investors coming to a country usually carry out due diligence, that is, a deep analysis of the operations of the company which is either being bought or invested in.

– There's legal, financial, technical and tax due diligence. The name “cultural due diligence” aims to emphasize that a deep analysis of a company's operations cannot be done without analyzing its corporate culture. The institute's activities are reflected in measuring the corporate cultures of companies and gaining a deep insight into them.

Foreign investors bring capital along with them, but also new technologies, practices and management methods. Initially, the investor learns about the cultural dimensions of Serbia and the amount of cultural distance between Serbia and the investor's country, pertaining to each of those dimensions.

– After that, they learn about the type of corporate culture they can expect in most institutions in Serbia. Finally, they learn about the ways of making the culture of the company they've bought, in which they've invested, functional. For example, if the management style of the country they come from is consultative, it's quite certain that such a style won't be functional in Serbia, so they are recommended an autocratic benevolent management style – Valentina Ivanic reveals.

She adds that business people are above all aware of the costs that can be caused by cultural differences. They first invest and then realize that the management methods they use in their countries do not produce results within the timeframe they expected and it the way they expected.

– The interest in corporate culture in Serbia is related to the arrival of foreign investors and it is mostly foreign investors that are interested in it. Local companies oriented to the local market are still less interested in this subject. The reason is that the founders don't want to outsource authority along with responsibility – our interviewee believes.

Which cultural model does Serbia belong to?

There are several cultural models, and the model our interviewee implements in her consulting practice is the model of Geert Hofstede.

– If we want to understand Serbia's culture through this model, we can say that Serbia is a country of high power distance, high uncertainty avoidance, feminine, collectivist and mildly long-term-oriented – she says.

She explains that, when it comes to high power distance, over a half of those who belong to the high power distance culture believe that it is alright for inequality to exist and that everyone should know where they belong in the society. When it comes to uncertainty, it is treated as a danger and the tendency is towards removing it. It is very often removed by adopting a large number of regulations, but also by expressing a strong need for agreement and harmony. Feminine values pertain to empathy, the quality of life and the quality of relations between people. Also, in collectivist cultures, the most important thing is to “save face” before the members of one's own group, as the collective is responsible for the individual.

– Serbia is a culture of mild long-term orientation, compared to the US culture, for example, which is a typical representative of a culture with a short-term-goal orientation – Ivanovic adds.

Aleksandra Kekic

Cultural due diligence institute Novi Sad

Cultural Due Diligence Institute

Valentina Ivanić

cultural dimensions

cultural distance

cultural differences

competitiveness

price competitiveness

transition

accession of Serbia to the European Union

overcoming corporate cultural differences

due diligence of a company

deep analysis of a company

improving competitiveness of companies

legal due diligence

financial due diligence

tecnical due diligence

tax due diligence

management methods

culture of a company

consultative management style

autocratic benevolent management style

cultural models

Geert Hofstede

high power distance

collectivist cultures