2011

TURKEY: THE NEW FRONTIER

Benjamin Kankipati 695295X 9/20/2011

Executive summary
The republic of turkey, a nation with a population of 78 million, stands as an important link for international businesses seeking a breakthrough into the major Islamic Middle Eastern countries. This report will examine the influences of the Byzantine and Ottoman Empire on the duel ethos of Turkeys European and Middle-Eastern culture. This, compiled with the current political atmosphere of the nation, creates a perfect foundation for the examination of the cultural, political and character based dynamics involved in the negotiation and progression of international business deals. This report will show that when approaching and doing business with turkey it is fundamental to: Remember that though turkey may use the same European business mode (like the business table), there is still a Middle-Eastern culture that influences their practices causing a perspective connection between business deals and family. That is, they will want to get to know you before signing on the dotted line. o Additionally, much research will be conducted on both your business ethics and personal life, in terms of actions that might be considered taboo or against religion (though secular, 98 % of the population is still Muslim and have the same value system) to gauge if you are a good person to deal with. Be patient and ready to work with not only your business partner but also the family. As most business are family owned, business agreements made overseas may be overridden by family members in Turkey, so be cautious and wait till something is signed before breaking open the champagne, the hand shake is only the start of serious negotiations. Show respect to the elders in both business and family. Home ethics. When invited to the family home to better know you: o Avoid negative, contentious or taboo subjects. The dinner table is NOT for business. o Look for shoes being placed on the side of the front door as a sign to remove your shoes, or at least ask if you should, and always wear clean socks. o Try everything, but if not willing use tact and say that you will try some other food that may be on the table, having more is considered a complement to the hostess. Be trustable and stable. Turkish business men look for risk free business deals as much as possible, and a person who is inconsistent with their actions cannot be trusted with their money, no matter how good they are at pulling through in the end.

In general Turkey is a great opportunity, but like all business opportunities only the judicious and aware reap the rewards of the market. Being tactful and respectful to elders and people in general, without emanating a superiority complex is the key to being brought into the fold and succeeding in Turkey.

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Table of Contents
Executive summary ........................................................................................................................................... 1 Turkish History .................................................................................................................................................. 3 The Byzantine Empire .................................................................................................................................. 3 The Ottoman Turks ..................................................................................................................................... 4 Republic of Turkey ........................................................................................................................................ 5 Turkeys business practices ............................................................................................................................... 5 Cultural Forces ............................................................................................................................................... 6 Political Forces ............................................................................................................................................... 7 Character Forces ............................................................................................................................................ 8 Power Distance Index (PDI) .................................................................................................................. 8 Individualism verses Collectivism Index (IDV) ................................................................................... 8 Masculinity Index (MAS) ......................................................................................................................... 8 Uncertainty Avoidance Index (UAI)...................................................................................................... 9 Bibliography ......................................................................................................................................................10

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Turkey, a symbol of secularism in the midst of an Islamic world, has developed into a strategic staging point for international businesses seeking entrance into the major Islamic Middle Eastern countries. It has progressed tremendously through a vast history of imperial conquests into a nation which, though wrought by an identity problem, has a great potential for business development and foreign direct investment. If theres one thing I keep hearing over and over when it comes to

the European startup scene, its that investors who are not seriously looking at the Turkish market may be missing out on some of the continents biggest digital companies in the next 10 years. (Sina Afra, 2011)
Therefore it is vital to establish an understanding of the dynamics encapsulating the country, beginning with its history, cultural basis, political and economic status so as to properly determine the viability of success in this new market.

Turkish History
The Turkish land can trace its history back to the Hittite empire around 1200 BC, and has long been known as a major center of civilization. It has since been through successive periods of societies such as the Trojans, Ionians, Lydians, and Persians, however its present identity and name is more closely related to the arrival of the Byzantine and Ottoman Empire.

The Byzantine Empire

The Byzantine Empire can more correctly be described as the continuation of the Roman Empire whose capital was moved from Rome to Constantinople, modern day Istanbul, by Emperor Constantine in 326 AD. Its establishment brought a strong influence of Christian art, music, architecture, and its designation as the political center of the Empire also brought a high level of education and European culture to the region. No greater example of this is needed than that of the Imperial Library of Constantinople, constructed after the Great Library of Alexandria.

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The Byzantine Empire lasted for close to a thousand years, establishing ancient cities and trade routes through the region of Turkey. The diversity of land and environment also made it desirable for agriculture and farming, an industry that is still in existence today, yet unbeknown to them it was this very prosperity that would cause the fall of the Byzantine Empire in Turkey and South-Eastern Europe.

The Ottoman Turks

The 13th century AD saw the rise of a nomadic tribe who, sent east by the Mongols, set out to conquer and establish themselves as a nation. Led under the banner of Osman (Othman in Arabic) and Islam, the tribe grew into a formidable enemy to the Byzantine rule. Through Osman, seen

later as founder of the dynasty, his people become known as the Ottoman Turks. (History world)
Conquest, however, wasnt an easy prospect as the Byzantine Empire was still strong and their forbidding fortifications, quite literally, put a stone wall in front of the Ottomans. Thus began a long 100 year process of military development and cultural growth culminating in the establishment of Istanbul in 1453. It has exchanged one empire for

another, Byzantine for Ottoman. (History world)

The Ottoman Empire enabled substantial change in the region, especially with the introduction of Islam and Sharia Law. Yet, as if in the face of these sweeping The minbar (pulpit) near the apse. Photo Helen changes or maybe because of them, the ottomans Betts. assimilated much of the established architecture and economic practices of the nation, blending the two cultures in an effort to create a strong nation. Hagia Sophia remained a functioning

church...Sultan Mehmet ...was amazed at the beauty of the Hagia Sophia and immediately converted it into his imperial mosque...a model for many of the Ottoman mosques of Istanbul such as the Blue Mosque...( sacred-destinations)
Nevertheless, political volatility marred the Ottoman Empire and successions to the ruler-ship of the nation were frequently disputed by the military, religious and royal factions. ...to prevent ongoing

rivalries, all male relatives of a newly crowned sultan were put to death. Later...were merely imprisoned for life. (Burak Sansal)
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Out of this volatility grew the need for a new nation, and so it was after 500 years a new nation was born; the Republic of Turkey.

Republic of Turkey
The Republic of Turkey was established in 1923 by Mustafa Kemal Ataturk, an acclaimed visionary who set about gathering the remnants of the Ottoman Empire in an effort to bring Turkey into the 20st century and prepare it for the 21st. Supported by his military victories in WW1, Mustafa Ataturk decisively severed the comprehensive control of the Ottoman sultans over the political and spiritual realms of the nation, creating a new democratic government separated from the influences of religion and based on the European civil code. ...abolished the caliphate

and seriat (Islamic law), replacing it with a European civil code, closed religious schools, banned religious brotherhoods, discouraged women from wearing the veil, and made Sunday instead of Friday the weekly day of rest. (Carol Migdalovitz, 2010)
These sweeping changes set a precedent for Turkeys emergence into the western markets and though this was challenged from time to time by Islamic parties, balance was always returned almost like clockwork. The results of these changes are clearly evident with 87% (95.3% men and 79.6% women) of the nation literate, the acceptance of a diverse nation and an abundance of economic growth with a GDP of $614.6 Billion US dollars at current prices and an annual growth rate of 4% per year, Turkey has grown to be the worlds 17th largest economy boasting place at the G20 tables and hopes of becoming an EU member.

Turkeys business practices

Despite mankinds innate wish to be free and break down all barriers, it is the reality of these boundaries that determine who a person is. Boundaries created through culture, religion and belief systems passed down through parents make the basis of how people live and determine their actions. Thus far this report has discussed the history and current politics of the nation of Turkey, bringing to light the effects of past influences in a journey through the chronicles of Islamic, Christian and pagan stimuli coupled with the insatiable need of a nation to be accepted. These arent foreign influences or desires, having impacted every modern culture and civilization at some 5|Page

point in time, yet its effects are different in every region. Therefore, when approaching a negotiating table and following through with a project it is important to understand the cultural, political and economic forces that are in motion, to enable a successful outcome.

Cultural Forces
The nation of Turkey is built on a split foundation, displaying a mix of European, Arab (though it would be wise not to mention) and Persian business etiquette. Consequently, the European practice of sitting down at a big conference table, with muffins, baklava or some other snack, and nutting out a business deal over the course of a few hours, which would then be sent over to the lawyers so that it can be drafted and signed at a later date, is still workable. However, a business deal of this sort would meet a stone wall and an excessive amount of wasted money very quickly, as the business system is also built on a trust/family basis. Thus if you are not automatically met by someone when entering a room, greet the most elderly or most senior person first, working your way around the table in an anti-clockwise way. This is a result of Arabian and Persian influences that sequestered most of their business dealings to family members (a fact that still plays a role in many middle eastern countries today, a clear example being Saudi Arabia, a country both governed and run by the royal family) or those under covenant, which is a type of contract that ties blood lines for a lifetime or in some cases forever, and can, if broken, result in either: No further business deals with anyone in the region or who have connections to that region Severe retribution; and/or Death

In consideration of all these factors, the best course of action in any business dealings would be to: Make connections with influential people who have strong ties in Turkish politics and have the ability to both weather coups and any factor of the deal that might be construed as unpleasant to the public or political factions Be open to investigation, the people you are dealing with will look into your personal and business lifestyle and will only make a connection if they believe you to be honorable or useable in both Be patient. Most business deals become serious after the hand shake, which is when the real business talks begin. Frustration over the time line or progress of the deal may lead a company coming into Turkey to back off and look for another business partner, however this can be a costly move as it may be rewarded with a cold shoulder from other business in the industry including the one being dealt with at the moment. Be open to negotiating, the Turks will start at extremes in order to gage your response. When conceding ensure you present this as a favor and a decision made out of respect and liking for your counterpart(s). Try and concede only once you have gained agreement on a reciprocal concession on a separate or related issue.

Finally a trait that may be experienced through the course of dealing with Turkish employees or partners is the use of the phrase God willing when trying to acquire a commitment in terms of 6|Page

timing and especially the eventual completion of key aspects in the proposal. This trait finds its sanction in the belief that God is in control of everything and if He is willing for an event to take place, it will. This belief stems from the Islamic religion which is predominant in the region, though not solely constricted to it as the term can also be found in the Christian world. It is a phrase used as a sign of respect to their god and will be used often despite the western frustration that might be felt due to the perspective that it is a way of avoiding the subject.

Political Forces
Turkeys political system moves through cycles of democracy, sharia Islamic based law and the final coup that brings the cycle back to a people/military appointed government. This cycle occurs approximately every ten years and is a factor that could cause major issues to any business venture caught in the cross fire. Those companies with especially strong ties to one faction of government might find themselves on shaky ground and subject to closure. Staying neutral may not suffice either, particularly during the operational phase of the endeavor, as the companys ability to perform and compete in the market can be severely disadvantaged through the lack of governmental support. The following conditions clearly exemplify this fact. 1. The majority of start-up companies are either a Limited liability company or a Joint stock company, both of which require a board of members that, despite the condition have a better chance of survival with a Turkish national. This can significantly reduce the level of control a company has over its operations. 2. Over 45% of the population is classified under unregistered employment as of Feb 2011, posing substantial taxation and work force gathering problems. ...there are two main

Shareholders may be Turkish or foreign nationals( Open A European Company),

groups that suffer from the unregistered economy: registered entrepreneurs and all taxpayers, be they individuals or institutions. (Hrriyet Daily News, 2011)

Despite these issues Turkey is still an ideal arena in which to build or expand a business, exhibiting exponential growth rates to those companies who: 1. Pick the right person a. Research demands research, and thus comes the importance of informed knowledge of those the company is dealing with and how they operate in Turkeys political/economic world b. Be polite, flexible, a person of few words and develop the ability to perceive vague comments as they can have great meaning. 2. Insurance a. Hedge against possible losses, it may be expensive now but if the company has to come out of the industry, it can do so without infinitely adverse effects. 3. Support political change a. A growing economy requires growing investment, and those investing have an audible voice 7|Page

Character Forces
Geert Hofstedes cultural dimensions theory is well known for its framework in assessing business culture in a nation. The theory allows for the breakdown of Turkish business practices into four cultural traits that will help any entrepreneur navigate the Turkish world of business. Power Distance Index (PDI) PDI is a measure of the distance placed between people of authority and their subordinates. In Australia this is quite low, however Turkey measures a level of 67 to 100. Consequently the respect given to business partners, especially those older or higher up the ladder is significant. This is evident through the practice of title prefixes and honorary suffixes. For example when addressing a male/female the common method would be to call them by their first name followed by 'bey' (for men, pronounced bay) and 'hanim' (for women, pronounced ha-num).

Where professional titles exist such as Doctor or Professor, always use them either on their own of before the first name. (Kwintessential Cross Cultural Solutions, Turkey, Naming Conventions) Elders are treated quit differently, but the action of showing respect should be
limited to when it is expected like if they hold out their hand to you or people are eyeing you, otherwise a firm handshake will do. Elders are always respected by kissing their right hand

then placing the forehead onto the hand. (Kwintessential Cross Cultural Solutions, Turkey, Naming Conventions). This characteristic also plays itself out in the consultation of elders in
society, whether that be parents or the imam (separation of church and state can only go so far with over 98% of the population Muslim), and many times these consultations may be unseen by the other party, making business deals seem a bit shady, however this may not be the case and patience must be exercised. Individualism verses Collectivism Index (IDV) The IDV for Turkey is 37, displaying an importance placed on societal benefits and group thinking. This trait can lend itself to the inconsistent behavior of prospective partners, especially when reflecting actions abroad to those made within Turkey, and must be considered when key parts on negotiated deal go amiss. Masculinity Index (MAS) MAS measures the level of care displayed for others, the difference between telling a person to get back on the bike and petting them. In Turkeys case a low MAS of 40 is observed which means as a people they generally lean more towards the feminine caring personality. This is evident in their tradition of being very hospitable, normally avoiding negative, contentious or taboo subjects when invited for dinner. The dinner table is NOT for business. Furthermore, when entering a Turkish home the removable of shoes may be required as a sign of respect and so as not to overly dirty the 8|Page

house. However this may not be required at all homes, so as a rule look for shoes being placed on the side of the front door as a sign to remove your shoes (or at least ask) and always wear clean socks. This caring personality does not, however, mean more equality between the sexes. Turkey has definite male and female roles, a subject that should not be mentioned when observer, especially those that seem unfair. Uncertainty Avoidance Index (UAI) The UAI for Turkey is set at 85, which specifies a high value placed on absolute truth, or low risk in business. This reinforces the level of research and relationship development that was touched upon in cultural forces. Furthermore, it hints at nations reliance on the consistency of life, imbedding itself in laws that keep it safe. do not deal well with uncertain situations and in order to

avoid those kinds of situation they incorporate strict laws (Hofstede 2003).
Overall Turkey is a great place to invest, but like all business opportunities only the prudent and aware reap the rewards of the market. Being tactful, mature and respectful to elders and people in general, without emanating a superiority complex is the key to being brought into the fold and succeeding in Turkey.

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Bibliography
Burak Sansal http://www.allaboutturkey.com/ottoman.htm Carol Migdalovitz, 2010, Turkey: Politics of Identity and Power http://www.fas.org/sgp/crs/mideast/R41368.pdf History world http://www.historyworld.net/wrldhis/PlainTextHistories.asp?historyid=ac94#ixzz1XnHAxgK5 Hofstede 2003 www.geert-hofstede.com Hrriyet Daily News, 2011, Top Turkish business group questions gray economy http://www.hurriyetdailynews.com/n.php?n=top-business-group-questions-the-8216grayeconomy8217-2011-02-10 Kwintessential Cross Cultural Solutions, Turkey, Naming Conventions http://www.kwintessential.co.uk/resources/global-etiquette/turkey-country-profile.html Open A European Company http://www.openaeuropeancompany.com/country-pages/turkey.html Sacred destinations http://www.sacred-destinations.com/turkey/istanbul-hagia-sophia Sina Afra, Why You Should Pay Attention To Turkey's Startup Scene Jul. 29, 2011 http://www.businessinsider.com/why-you-should-pay-attention-to-turkeys-startup-scene-2011-7

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