Global Business Cultural Analysis: Ecuador

Introduction

Today, a trend has emerged whereby a lot of emphasis is on global business cultural analysis in efforts to put various dimensions of culture in the context of specific countries. One of the approaches used in this undertaking is Hofstede’s analysis. In this analysis, major dimensions and elements of culture are identified. On the basis of this analysis, it is possible to determine how different dimensions can be integrated by locals. Similarly, such analysis provides foreign investors with a unique opportunity to understand the elements and dimensions and compare them with those of their home countries.

In the present paper, the thesis focuses on identifying the major elements and dimensions of culture in Ecuador, how locals integrate them into their business environment, and they can best be understood against the business culture of the United States. In the analysis of the Ecuadorian business culture, this paper discusses four core areas; namely Ecuador’s early history, the political culture and commitment to democracy, the country’s business environment, and Ecuador’s future business opportunities.

The objective is not only to identify the major elements and dimensions of culture in Ecuador but also to determine how these elements and dimensions have been integrated by locals conducting business in Ecuador. It is also within the scope of this paper to provide a comparison between the dimensions discussed with the US business culture. On this basis, implications for US businesses wishing to conduct business in Ecuador are highlighted.

Ecuador’s early history and movement to claim independence as a republic

Ecuador is one of South America’s smallest nations. However, what this nation lacks in size makes up in diversity (Kirk, 2008). One of the main defining features of Ecuador is the absence of political cohesion, which continues to plague its quest for sustainable development and stability (Kirk, 2008). The diversity takes both cultural and geographical dimensions. The diverse geographical features are represented by the coastal plains of the Pacific Ocean, the Galapagos Island, the snow-capped Andes Mountains, and the Amazon forest. Moreover, the country has striking human contrasts, which differentiate between the poor and the rich, country and city, illiterate and learned, peasant and lord, as well as desperate street urchin and successful entrepreneur.

Ecuador, which obtained its name from the equator, which runs through the country, is bordered by Peru and Colombia in northwestern South America. Administratively, Ecuador is organized into twenty one provinces. Hutchins (2007) points out that since the Spanish conquest in 1530s, Ecuador has continued to numerous barriers to development leading to isolation. Competing and conflicting interests have traditionally been frequent largely because of diversity in social and economic systems that have continually been evolving. Moreover, Ecuador’s development was greatly influenced by its status as the only Andean country that was not endowed with abundant precious mineral resources. However, things changed dramatically with the discovery of oil in the Amazon during the mid-twentieth century.

In the country’s highlands, agriculture and textiles have remained the dominant pillars of the economy (Szaszdi, 1964). Production focused primarily on cotton textiles, wool, sheep, wheat, potatoes, corn, pigs, and cattle. A high degree of social stratification also existed, whereby a minority class of white landowners operated expansive estates where majority underclass members, largely comprising of indigenous people, worked. An analysis of Ecuador’s historical background is critical because it strongly conditions the events that have been taking place in recent years.

There is limited recorded historical evidence of the so-called pre-Inca cultures of Ecuador. The Incas started making conquests on many diverse Ecuadorian indigenous communities in the fifteenth century. The Inca Empire, at its peak, extended as far as to parts of Chile and Colombia. This theocratic rule adopted the strategy of collective ownership of land. Ecuador played a critical role in the survival of this empire. However, at one time, years of civil war and conflicts over inheritance greatly weakened the Incas. This state of weakness put the Incas in a position of vulnerability, which continued to exist till the arrival of the Spaniards in the Americas.

The Spaniards regarded themselves as superior to blacks, Indians, and all other people of color in Ecuador. Although Indians were primarily agriculturalists, they started being forced to work in textile workshops as the industry started experiencing a major boom. However, as the end of Spanish rule in 1822 drew closer, textile production started diminishing. However, the highland areas were the most affected regions. Coastal areas remained largely unaffected by the economic downturn.

After independence from Spain, Ecuador continued to experience a phenomenon where state and church were intricately intertwined. The Catholic Church continued to hold a monopoly on ideological issues. Moreover, it was in possession of vast resources for promoting the arts, education, and cultural activities. When the colonial era ended, it was evident that the coastal areas were prospering economically while the highland areas were going through relative economic stagnation. During the late colonial period, highland elite was given access to very few opportunities, thereby making it difficult for it to influence economic progress in any significant way.

Traditionally, conflict between Ecuadorians and Spaniards has been centered on many issues, one of them being the church. Other factors that have fuelled the conflict include the introduction of an absolute Spanish monarchy and a strong executive authority. Moreover, many Ecuadorians were opposed to the idea of Gran Colombia. Among other issues, the locals were opposed to the idea of outsiders holding almost all of the top administrative positions. Many Ecuadorians were concerned that many northerners would continue dominating the union simply because they had spearheaded the liberation process.

Eventually, the Union of Gran Colombia, which had brought together the three states of Venezuela, Ecuador, and Colombia, disintegrated with the withdrawal of Venezuela in January 1930. This was followed by the proclamation of the state of Ecuador in May 1830. The constitution that was enacted soon afterwards transferred power to a minority affluent class of landowners. This conservative tradition continues to exist even in the present-day Ecuador. In post-independence Ecuador, regional power remained under the control of those controlling the great estates. Civil wars were common as efforts were made to establish a central authority that superseded regional authority. Moreover, according to Friedrich Hassaurek, the US minister in charge of Ecuador during the 1860s, land and labor conditions in rural Ecuador had not changed much since independence (Becker, 1990).

During the early twentieth century, many changes started occurring in Venezuela. For example, the establishment of a liberal government led to the separation of Church and state. However, rural power structure remained unchanged. Nevertheless, waves of change continued being experienced in many fronts throughout the twentieth century. They include an increase in urbanization and industrialization, the emergence of the middle class, the growing power of the urban poor, and the emergence of urban elite that poses a threat to the traditional power structure that is based on agrarian practices. For example, in 1923, the Liberal Party spearheaded the campaign for the abolition of the country’s archaic institutions in the process of bringing about agrarian reform. The objective was to eliminate all the country’s inefficient estates.

Since the mid-1950s, the middle class has been playing an increasingly critical role in the country’s politics (Martin, 2011). The same case applies to industrialists, bankers, and manufacturers. At the same time, the United States has continued to demonstrate tremendous influence as one of Ecuador’s major trading partners, lenders, and investors. Nevertheless, politics remained largely elitist until the 1970s. This elitist flair in Ecuadorian politics ended with the emergence of the country’s oil boom in the early 1970s. The government of the day launched numerous ambitious public works projects, in most cases roads, schools, bridges, and electric plants. It also started spending more on the education sector.

The political culture, early commitment of democracy

Since the early twentieth century, Ecuador has made tremendous efforts to establish a political culture characterized by peace, stability, and development. However, one of the main aspects of this culture has entailed domination by the elite. Archaic institutions have also been standing in the way of agrarian reform. Soon after independence, Ecuador struggled with civil wars as different regions competed for influence in the sharing of national resources.

In this political culture, government often found themselves trapped between limited finances on the one hand and increasing demands for expenditure on the other. One of presidents who faced this pressure is Velasco Ibarra, who led the country between 1934 and 1972. Whenever he was faced with popular or congressional opposition, he would promptly assume dictatorial powers.

Prior to the 1970s, the Ecuadorian military had an active influence in politics, particularly since the beginning of the twentieth century. One of the periods when the military influenced political events came in 1925 through tax and banking restructuring. The second wave of influence came in 1963 when soldiers influenced politicians to centralize revenue collection, raise import duties, inaugurate modest land reform, and introduce tax on personal income with the aim of reducing the country’s deficit (Lucero, 2003).

The Constitution, political stability, and agricultural exports

Until 1982, Spain has been maintaining firm control of the colony. For centuries, Spain had adopted a political framework of a near-absolute monarchy characterized by strong executive authority. The institution of the legislature was new in Ecuador. Similarly, Ecuador was not used to the practice of using checks and balances entrenched constitutionally to promulgate laws. Nevertheless, on the eve of the country’s independence, a new division occurred. Some politicians supported royal absolutism while others supported the constitution that had been adopted in 1912. With time, limited monarchy and fresh ideas have rapidly been evolving into fully-fledged republicanism. In this republicanism, division of legislative, executive, and executive powers has been created. However, these reforms have been strongly opposed by those who are strongly grounded in the country’s tradition. In fact, the negative reaction of and opposition from the proponents of a monarchy has turned out to be a major destabilizing factor since the early nineteenth century not only in Ecuador but across Latin America.

Debate on constitutional interpretation is one of the most dominant topics in Ecuador’s political scene. In many ways, power politics have been at the center of efforts to influence the way various provisions of the constitution are interpreted. At the same time, the military continues to have some degree of influence in the political affairs of the country. This political landscape has had a far-reaching on the legislative framework established to govern agricultural exports. For example, in recent years, controversy has arisen over the modification of the privatization bill, which ended up being replaced with a new Economic Transformation Law.

Nevertheless, the biggest constitutional crisis in recent times revolved around the constitutional foundation of Congress. A major problem has been on the interpretation of the constitution, which provides that every two years, the head of congress must be elected from the party that has the second highest number of seats. The constitution also provides that the post should rotate between this party and the political party with the largest number of seats. At one time two factions emerged, with each one electing its leader and claiming to be the legitimate Congress. These different groups of legislators met n different floors of the Congress, exposing Ecuador to international ridicule.

Soon after the election of President Rafael Correa in 2006, Ecuador demonstrated that with political will, it was possible for efforts aimed at economic reform to succeed. Upon election, President Correa embarked on a campaign of economic reform, with specific focus on the financial sector and government corruption. The president, an economist strongly believes in the importance of free trade with South American countries and the US and the reduction of barriers between countries with the aim of easing inflation. The president’s stated aim has been to improve the economy to uplift the living standards of the poor nation’s indigenous population.

In a country that is endowed with oil, one of the greatest challenges of the Correa administration has been to adopt global governance practices that promote efforts to save and protect indigenous people and their land from the harmful effects of carbon emissions (Martin, 2011). For example, at Yasuni National Park, many indigenous people have chosen to live in an environment where the social culture promotes harmony between man and nature. In this society, local people have rejected numerous efforts by oil prospectors that would lead to the exploitation of oil resources in the region (Martin, 2011). On his part, President Correa has been promoting the idea of co-responsibility to the world community. The aim of this idea as articulated by the president is to let the oil remain underground for the sake of protecting the indigenous people and their land (Martin, 2011).

In efforts to promote environmental conservation, Ecuador has had to address concerns relating to agricultural production. Different indigenous communities in the country have different economic, social, and political cultures (Hutchins, 2007). This makes it difficult for the government to adopt a unified approach to the transformation of the agricultural sector (Hutchins, 2007). Just like agricultural exports, tourism is largely viewed as a global commodity. In Ecuador, it is being promoted as a symbol of a new market framework characterized by globalization and the adoption of transformative policies that will continue affecting the Amazon rainforest and its indigenous inhabitants.

In efforts to promote agricultural exports in an environmentally friendly manner in Ecuador, one of the dimensions of culture that have become visible is power. This power has been constructed in such a way that it influences local communities as well as assisting building stable relationships with indigenous people. The objective is to create not just sustainable environment for the pursuit of agricultural exports but also a marketplace for ecotourism. However, many observers are concerned that export-oriented agricultural exploitation of the Amazon rainforest will have many implications, most important among them the redefinition of culture and its core values and elements.

Corrupt government, military and the forms of leadership

During the 1960s and early 1970s, Ecuador, like other Latin American nations, went through an era of great disillusionment, particularly for reformers who were hoping for progressive development, albeit in a gradual manner. This period was equally frustrating for radicals who were keen to spearhead more revolutionary change. Military takeovers became an increasingly common phenomenon since the mid-1960s in many Latin American countries, including Brazil, Uruguay, Chile, Argentina, Ecuador, and Peru. Civilian regimes in all these countries were unable to withstand military might.

Different factors led to the fall of all these civilian governments. The same is true for the military governments that succeeded them. In Ecuador and Peru, military coups were largely triggered by the belief within the ranks of the armed forces regarding the ineptness of civilian administrators. Military leaders were convinced that the goals of social-economic development could be achieved with greater effectiveness through strong-handed rule by the military. In Ecuador, the centrist military spearheaded the establishment of one of the best records of civil liberties and press freedom in South American in recent decades.

The takeover of government by the military marked a trend in which the values of multiparty politics, democracy, and civilian rules were waning. This trend led many scholars to argue that the destiny of South America lay with military authorities. This trend may be traced to the economic structure and political culture in the region, which encourages authoritarianism. This culture is as prevalent in Ecuador as in other countries of Latin America. Social organization is based on a corporatist basis, there is deep inequality in the distribution of income and in land tenure, social relationships are deeply hierarchical, and the political order over-bureaucratized. Other factors that promote military rule include foreign political interventionism, economic dependency, and a history of military involvement in the political process.

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