Building effective business relationship in Ethiopia: A cross-cultural perspective

effective business relationship
ICCM intern and author Ayneengda Alem Ayenew with Public Relations Manager Leah Wolfeld

The need of managing cultural diversity in a business setting 

In the modern economic climate, rapid pace of globalization, technological advancement, and intense competition drive companies to operate across geographical boarders in a dynamic and diverse environment. Cultural diversity, among other human factors, has become an important issue in managing the contemporary worldwide workplaces (Reddy, 2011). Therefore, it has become a necessity for managers to understand the depth of the cultural diversity and to be able to implement effective cross-cultural management strategies that would ensure a harmonious relationship in organizational framework to achieve their goals.

The potential benefits of managing cultural diversity include better decision making, greater creativity and innovation, greater success in international marketing activities and with local ethnic communities, a better distribution of economic opportunities, reduced cost, resource acquisition, and organizational flexibility (Cox, 1991; Cox & Blake, 1991). Additionally, the authors state that a multicultural workforce with its collective intelligence and knowledge can produce higher quality goods to meet customer needs more satisfactorily. A multicultural work environment can also contribute to internal team work by transforming the workplace into a place of learning; it also facilitates the practice of new ideas as well as behavioral testing and application of new rules and organizational processes giving the organization a competitive advantage in the industry.

Taking all the above issues into consideration, this article tries to give an insight about the social and economic dimensions of Ethiopian culture for (foreign) investors, managers, human resource officials of global companies, which are currently operating or willing to operate in Ethiopia so that they would be able to achieve their goals more successfully through proper management of cultural diversity.

Effective Business Relationship: An overview about Ethiopia

Ethiopia is the oldest independent country in Africa. It is located in the north-eastern part of the continent and is commonly known as the Horn of Africa. It is at the cross-roads between Africa, the Middle East and Asia. Ethiopia is a multi-ethnic country with many indigenous languages. According to the Lewis, Paul, Simons & Charles (2014), the number of individual languages listed for Ethiopia is 89. Of these, 87 are living and 2 are extinct. Though there is a slight difference in beliefs among people who belong to different ethnic groups, the people have much more values and beliefs in common as citizens of a nation. Amharic was the official language and the language of primary school instruction, but it has been replaced in many areas by local languages such as Oromifa and Tigrigna. English is the most widely spoken foreign language and is the medium of instruction in secondary schools and universities. Hence, fluency of the English language is an advantage for foreign investors seeking to operate their business in Ethiopia.

Effective Business Relationship: Direct investment in Ethiopia

The Ethiopian Investment Agency (2013) indicates that the inflow of foreign direct investment (FDI) has been increasing over the last twenty one years. Accordingly, out of the total investment projects licensed between 1992- 2012, FDI’s share is about 15.80 per cent. The agency also states that Ethiopia remains an untapped and unexploited market for investors. China, India, Sudan, Germany, Italy, Turkey, Saudi Arabia, Yemen, the United Kingdom, Israel, Canada and the United States are the major sources of FDI. It is quite clear that investors from these countries hire local and international (from their own countries and/or others countries) employees with different cultural backgrounds. Failure to properly manage this difference may result in economic and other loses. Hence, managers and other stakeholders need to pay attention to the management of cultural diversity so as to avoid cultural barriers and build effective business relationship in the country.

Effective Business Relationship: Communication styles

Ethiopians appreciate warm greetings, handshakes (it is automatic), positive body language (smile or showing a sign of happiness) and a show of respect. They offer the best they can afford and give priority to their guest. For instance, in most cases, Ethiopians will not take a seat before their guests. However, things like this should not be interpreted as anything other than a sign of respect. It is good to speak in calm, soft and audible voice. High voice is a sign of anger or disappointment. Pointing fingers at someone or speaking in a loud and angry manner is considered very rude (Foreign Affairs and International Trade Canada [FAITC], 2009; Biruhe & Thomas, 2012).

Communication with foreigners in business situations is a very sensitive issue for Ethiopians because working with foreigners, for most of them, is a recent phenomenon. In general, Ethiopians are humble and respectful (Biruhe & Thomas 2012). In a work context, it would be very important to address other persons with their title (“Ato” for man or “Weziro” for woman). Once good relationship is developed it is possible to drop the title but whether or not this would be appropriate or not needs to be assessed. Some elders really prefer to be addressed by their title (FAITC, 2009).

Business cards are presented and received with the right hand only or with both hands. Using left hand only is considered as a sign of disrespect (Central Intelligence Agency [CIA] world fact book, 2009, cited in Biruhe & Thomas, 2012). Moreover, Ethiopians, as a rule of communication, tend to be non-confrontational and offer what they believe is the expected response rather than say something that might embarrass another. Honour and dignity are crucial of Ethiopians. It is, therefore, important to treat Ethiopian business colleagues and employees with utmost professionalism and to avoid anything that would make them lose dignity and respect. Business owners, organization leaders, and human resource officials need to be sensitive to such communication issues that might have significant effect on the accomplishment of their mission.

Effective Business Relationship: Time orientation and protocol of business meetings

Time orientation and business meeting procedures are other issues that deserve attention in order to run a successful business in Ethiopia. According to FAITC (2009), attitudes regarding time can be quite variable and context specific. In general, there is respect and value in being punctual, although these are not necessarily the same values held by ’Westerners’. Particularly in the rural areas, punctuality is not taken as seriously. Arriving to a meeting several hours late is common. However, one does also need to appreciate the difficult circumstances that many people living in rural areas are under and there should be some understanding of their circumstances (such as lack of transportation).

It is also important to note that Ethiopia uses the Julian calendar which divides the year into 13 months. Of which, 12 have 30 days each. The remaining five or six days in a leap year constitute the short 13th month of “Pagume”. The calendar is seven years behind the Western or Gregorian calendar. The Ethiopian New Year starts on 11 September. That means for Ethiopians it is 1st September, the first day of the New Year. The day is divided into 12 hours of daylight and 12 hours of night. For example, a 10 AM meeting means 4 o’clock in the morning; or a dinner engagement at 7:30 PM is 1:30 o’clock in the evening. This condition usually creates confusion among foreigners and it is essential to double check the agreed time.

Business visitors should be aware of meeting protocol so that they do not cause unintentional offence. In general, meeting schedules are not rigidly kept to in Ethiopia (Biruhe & Thomas 2012). In most cases, meetings start with extended social pleasantries by offering tea or coffee and then business issues will follow. Meetings seldom have a scheduled ending time since it is considered more important to complete the meeting satisfactorily than be strictly tied to the clock. The meeting will end when everyone has had their say and the most senior Ethiopians decide that there is nothing left to be discussed. Because of this flexible time-keeping it is difficult to schedule a series of meetings for one day (Ministry of Finance and Economic Development [MOFED], 2010). In addition, Ethiopians are less assertive in business meetings compared to other kind of meetings. They express their idea when they believe that it is very important for both parties. Encouraging them to speak up, therefore, is important to get more information from them.

Effective Business Relationship: Decision making at workplace

Decision making at workplace in Ethiopia can be seen from two perspectives: government offices and private business. In both cases, top-down decision-making is considered the normal, expected practice. Specific business practices such as obedience to seniors, collective responsibility, and class consciousness are common. Maintaining the status quo,—especially when it comes to one’s position in the organization, is a preoccupation. Ideas are usually communicated by people with status and position in the organization. Lower level staff may have ideas but they would feel difficult in expressing them for fear that their ideas may be misinterpreted (seen as a threat) by people at higher levels in the organization (FAITC, 2009). In government circles, decisions are made with politics being the major factors of consideration. The public has limited say in the government’s affairs. Conversely, in the private business sector, as is the case in other countries, owners have the final say and decisions affecting profit and long-term benefits are theirs to make.

Effective Business Relationship and trust in business setting

Relationship dynamics are extremely important in Ethiopian business setting. This is evidenced by the fact that most small-scales businesses are established based on friendship, trust, and family ties rather than laws. In most cases, the relationship endures more than the business. So, it is very important to establish personal relationships with colleagues or clients so as to establish and run business smoothly and successfully in the country. The best way to establish a good relationship is to win their trust, show respect, listen to what they say, and try to understand things from their point of view. The stronger the friendship, the easier it is for them to develop trust. Moving straight into business related discussions without making proper introductions and small talk would be considered rude (Biruhe & Thomas 2012).

Effective Business Relationship: Implications

The above noted information on Ethiopian culture might have many implications for (foreign) investors, managers, human resource officials and others concerned to develop effective business relationship in the country. They seem simple issues but a failure to align organizational goals to these issues may turn everything around since they are shared values of the society. Hence, all the stakeholders need to be conscious about these issues and take appropriate actions to ensure the social conventions are being met. Some examples of these potentials measures can be:

  1. Business owners and managers need to be acquainted with the above specific cultural issues before and during operating the business so that they can make better decisions, ensure greater creativity and innovation, and avoid unnecessary conflicts and losses.
  2. Managers should be able to align the goals of their companies to those shared local values and global environment so that the companies can be strong competitors in the international market.
  3. Human resources managers should take the local and global cultural issues noted above into account in the process of human resources planning, recruitment and selection, and training and development so that the work environment can be a place of learning that allows the practice of new ideas for greater competitive advantage of the company.
  4. Due attention should be paid to cultural exchange programs between local and international employees so as to minimize or eliminate culture shock.
  5. At the higher level, governments should encourage cultural exchange programs between countries.


All in all, effective management of cultural diversity plays key role for the success of companies working across boarders and time zones. Aligning the goals of the companies to the local and international values is crucial for companies to compete in the international market. Additionally, managers of companies working or willing to work in Ethiopia need to understand the local context (more importantly the cultural dimensions) and act accordingly. In some aspects (e.g. communication style, decision making, time orientation, and business meetings) Ethiopian culture is quite different from the Western culture. Hence, all stakeholders should pay due attention for them and others to develop effective business relationships in Ethiopia and to achieve their goals more effectively and efficiently. 


Biruhe Eshete and Thomas Gebre (2012). Foreign Direct Investment (FDI) Development between the European Union (EU) and Least Developed Countries (LDCs) – Business Opportunities in Ethiopia. Unpublished Bachelor Thesis. Helsinki: Haaga-Helia University of Applied Sciences

Cox, T., & Blake, S. (1991). Managing cultural diversity: implications for organizational competitiveness. The Executive Academy of Management, 5(3), 45-56.

Cox, T. (1993). Cultural diversity in organizations: theory, research, and practice. San Francisco, California, USA: Berrett-Koehler.

Ethiopian Investment Agency. (2013). An Investment Guide to Ethiopia: Opportunities a Conditions. Retrieved from

Foreign Affairs and International Trade Canada. ( 2009). Centre for Intercultural Learning. Retrieved from

He, R., & Liu, J. (2010). Barriers of Cross Cultural Communication in Multinational Firms: A Case Study of Swedish Company and its Subsidiary in China. Accessible at http://hh.diva

Lewis, M. Paul, Gary F. Simons, and Charles D. Fennig (eds.). 2014. Ethnologue: Languages of the World, Seventeenth edition. Dallas, Texas: SIL International. Online version:

Ministry of Finance and Economic Development. (2010). Growth and Transformation Plan (GTP), 2010/11-2014/15. September 2010, Addis Ababa, Ethiopia.

Reddy, A. (2011). Cultural dimensions & impact on performance management. Zenith: International Journal of Multidisciplinary Research, 1(6), 300-311.

United Nations Conference on Trade and Development. (2010). The Least Developed Countries Report 2007: Towards a New International Development Architecture for LDCs. United Nations publication, New York and Gene

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