What are the main differences between doing business in developed and developing countries?

The international business scholar in me would probably say that it is the lack of an institutional environment that differentiates developing from developed countries. While that is certainly one characteristic, my personal experience has also provided me with a more positive angle on developing nations. They have learned to live with resource scarcity and are usually a lot less set in their ways, which makes them - sometimes - more creative, flexible, and adaptive.

Stability is a key to economic development and growth. Most of the underdeveloped and developing countries suffer from one or more than one kind of instability. They get trapped in a never-ending series of unfortunate events (such as violence, conflict, war, political unrest, etc.). Enforcing laws and regulations becomes a challenge. These events create a repellent and unattractive environment for business and investment.

A tape be it red, white or black, is a hindrance to developmental democracy, as economy of commerce needs to be kept in mind. Political interference on almost every aspect Executive decision making often leads to delay and frustration. In developing countries, as I understand from my little knowledge, rule of commerce tends to dominate rule of law. That causes problem of sustainable and stable democratic business environment.

The developed countries aim for the next 25 years while innovating in business. The developing countries by virtue of their history and socio-politico structures can only envisage the next 5-10 years only. This highly impacts the direction of funding, which in turn impacts the governance decisions, business choices, consumer preferences, and ability to innovate. The exact reason why India pays pennies to its Ph.D. scholars, cannot find its Metas, fails its Nano, and invests in inventory-driven businesses where the leakage is enough to satiate stakeholders.

In the developed countries the companies does the business on the laid down company business policies and keeping loyalty to the company not the chairman but in developing countries the business is being done by chairman and the loyalty of the officials are towards the chairman not the company. This this loyalty from company to the person who is holding the chair creates unethical practices. This also one reason of inhibition for FDI inflow.

I find that developed countries are not neccessarily more homogeneous. For example, Singapore is one of the wealthiest countries in the world, and also among the most diverse with its mix of Chinese, Indian, and Malay influences. Developed economies aren't neccessarily more individualistic either. Japan and South Korea, two of Asia's wealthiest nations are both highly collectivist. These differences are more about culture than economic development. A collectivist country won't suddenly become individualistic simply because it reaches a certain level of development.

Cultural diversity can mean many things : linguistic (think of a country like India - where each state has its own unique language and culture), religious and also identitarian. You need to get a good grasp of how people think of : a. time/ commitments? b. contracts and their validity c. Expectations in terms of work and work ethic - do people value family time/ friends more than working till late at night. Getting a grasp of these things is key. Having a local mentor/ friend/coach can greatly help.

In wealthy nations, busine­sses often work with many differe­nt people. This helps to include­ everyone and make­ better ideas. Still, it can be­ tough to lead a team with many backgrounds and to understand what all custome­rs want. Doing business in growing nations could offer chances to le­arn from deep-rooted customs and ne­w ways people act, building plans that work with many groups. But, we must not forge­t about potential issues due to cultural diffe­rences and the importance­ of being respectful. De­aling with these differe­nces the right way is vital for growing the busine­ss and forming strong ties with the community.

Agree! I think two key reasons contributed to this. One is that the developed world havely invest in education, universities, R&D, and innovation. Second is that the entrepreneurship mindset is more common and greatly encouraged and supported in developed countries than in developing countries.

Developing countries, especially in their urban areas, often have a greater level of technological advancement and superior infrastructure than their developed counterparts. For example, the mass transit system in Shanghai is generally cleaner, faster, and more modern than anything in the United States. The same is true for bridges, roads, and airports in China's major cities. Meanwhile, the ten countries with fastest internet speeds in 2023 include emerging markets like Romania (4th place) and Thailand (7th place), and Chile (8th place). Much of this is simply because of the fact that, when a country is developing, it's able to build new infrastructure. Developed nations often built out their infrastructure many decades ago already.

I've worked in contexts where emails dont get answered for weeks, but when you write to someone on Whatsapp or other messaging platforms, they will answer immediately. Figure out what the communication culture is. What tech do people prefer to use? Do they like to email or do phone calls or message. Learning this early on can save you a lot of head and heart aches.

Industry in developed countries benefits from strong technological and industrial development, and provides improved communications, more efficient transportation systems and good infrastructure. This provides easier operations, effective supply chain, driving higher productivity. In developing countries, although infrastructure and technological development may be less developed, this provides opportunities for companies to support and benefit from the development of these important sectors. This can lead to networking and collaboration and robust employment generation. However, lack of well-designed infrastructure can pose limitations in terms of efficiency and market penetration.

Less of red tape and adherence to processes make the developed countries fare better in this area. Regulatory burden is a disincentive for the startups and MSMEs in any country. A country which fares well in reducing red tape and process simplification earns multiple growth opportunities both domestically and globally.

Doing business in emerging markets is far more effective if you have local connections. Because of this, foreigners are often at an innate disadvantage since they're less likely to have any helpful contacts in the local business community or government.

Companies in developed countries adhere to strict regulations and high ethical standards, ensuring transparency and credibility, although navigating complex regulations can be difficult to less stringent regulations in developing countries provide flexibility but can create ethical dilemmas, emphasising the need for responsible business practices.

In developed countries, firms compete fiercely in crowded markets, which leads to innovation but puts pressure on prices. Low market conditions in developing countries encourage cooperation, emphasizing the need for trust and effective partnerships for business growth.

I think people in "developing countries" can produce work that is of equal (or sometimes even better quality). It depends on the industry you are in. I have worked in creative industries where sometimes, the "developing" countries had more and better talent. I have learnt that creating a learning culture is key - and opportunities for mentoring, regardless of where one is. If this culture exists and talent is rewarded, then there is growth!

Nepotism and favoritism as well as inequality and poverty are some of the key hindrances for learning and growth in developing countries. The Elite has access to higher-quality education and then to higher-level positions. They control resources and opportunities, which tremendously limits untaping the potential of the vast majority of the population (the poor). The cycle goes on and never stops. Corruption can kill any talent and destroy hope.

Doing business in developing and developed countries presents distinct challenges and opportunities. Developed nations typically offer stable economies, advanced infrastructure, and a well-educated workforce. In contrast, developing countries may have lower labor costs but often face political instability and infrastructure limitations. Market maturity, regulatory environments, and consumer behavior vary significantly. Adaptation to these factors is crucial for successful global business operations.

Commitment to sustainable infrastructure development that pays attention to land use equity, in-country job creation, supporting educational institutions, transparent rule of law and related administrative procedures.