Fourth Edition

InternationalBusiness

CHAPTER 3

Differences in Culture

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Chapter Focus

We need to learn:Business success in different countries requires cross cultural literacy. People are ain’t what you see..

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Chapter Focus

We need to learn:Business success in different countries requires cross cultural literacy. People are ain’t what you see. Values are different.

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Chapter Focus

We need to learn:Business success in different countries requires cross cultural literacy. People are ain’t what you see. Can we follow the adage “when in Rome do as the Romans do”

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Chapter Focus

We need to learn:Business success in different countries requires cross cultural literacy. People are ain’t what you see. Can we follow the adage “when in Rome do as the Romans do”Some Cultural attributes cause cost of doing business to increase. What are they in the US?

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Chapter Focus

We need to learn:Business success in different countries requires cross cultural literacy. People are ain’t what you see. Can we follow the adage “when in Rome do as the Romans do”Some Cultural attributes cause cost of doing business to increase. What are they in the US? Cultures change.

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What is Culture?

A system of norms and values sharedamong a group ofpeople and, whentaken together,constitute a designfor living.

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Norms

Norms:Social rules and guidelines that prescribe appropriate behavior in particular situations. They stem from:

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Norms

Norms:Social rules and guidelines that prescribe appropriate behavior in particular situations. They stem fromFolkways: Routine conventions of everyday life.

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Norms

Norms:Social rules and guidelines that prescribe appropriate behavior in particular situations. They stem fromFolkways: Routine conventions of everyday life. Violations of folkways does not constitute villainy or a character flaw.

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Norms

Norms:Social rules and guidelines that prescribe appropriate behavior in particular situations. They stem fromFolkways: Routine conventions of everyday life.Mores (Essential accepted traditional customs that often become a part of the legal code): They are central to functioning of a society and its social life.

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Values

Values are:The bedrocks of culture.

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Values

Values are:The bedrocks of culture.Have emotional significance to individuals and the society

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Values

Values are:The bedrocks of culture.Have emotional significance to individuals and the society

These are abstract ideas about what a group believes to be good, right, and desirable.

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Determinants of Culture

Culture:Norms and

Value Systems

Economic Philosophy

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Determinants of Culture

Culture:Norms and

Value Systems

Economic Philosophy

PoliticalPhilosophy

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Determinants of Culture

Culture:Norms and

Value Systems

Economic Philosophy

PoliticalPhilosophy

SocialStructure

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Determinants of Culture

Culture:Norms and

Value Systems

Economic Philosophy

PoliticalPhilosophy

Religion

SocialStructure

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Determinants of Culture

Culture:Norms and

Value Systems

Economic Philosophy

PoliticalPhilosophy

Religion

Language SocialStructure

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Determinants of Culture

Culture:Norms and

Value Systems

Education

Economic Philosophy

PoliticalPhilosophy

Religion

Language SocialStructure

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Social StructureWestern Structure

Is based on:

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Social Structure Individualism

andWestern Structure

Is based on:

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Social Structure

Entrepreneurship

Individualism and

Western Structure

Is based on:

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Social Structure Hard toBuild

Teams

Entrepreneurship

Individualism and

Western Structure

Is based on:

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Social Structure

MobileManagers

Hard toBuild

Teams

Entrepreneurship

Individualism and

Western Structure

Is based on:

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Social Structure

MobileManagers

Hard toBuild

Teams

Lackof

Loyalty

Entrepreneurship

Individualism and

Western Structure

Is based on:

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Social Structure

Group is defined astwo or more individuals

with a shared sense of identity

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Social Structure

Group is

Group is defined astwo or more individuals

with a shared sense of identity

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Social Structure

Group

An Eastern

Approach to

Group is defined astwo or more individuals

with a shared sense of identity

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Social Structure

Identity. It leads to

Group is

An EasternApproach to

Group is defined astwo or more individuals

with a shared sense of identity

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Social Structure

Identity. It leads to

Group

Eastern

NonmobileManagers

Group is defined astwo or more individuals

with a shared sense of identity

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Social Structure

LifetimeEmployment

Identity

Group

Eastern

NonmobileManagers

Group is defined astwo or more individuals

with a shared sense of identity

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Social Structure

MobileManagers

Hard toBuild

Teams

Lackof

Loyalty

Entrepreneurship

Individual

Western

And therefore, lack ofEntrepreneurship

LifetimeEmployment

Identity

Group

Eastern

NonmobileManagers

Grouptwo or more individuals

with a shared sense of identity

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Social Stratification

Typically is defined by family background, occupation, and income.

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Social Stratification

Caste: Virtually no mobility

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Class Consciousness:May play a role ina firm’s operations

Social Stratification

Class: some social

mobility

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ReligionShared beliefs and rituals concerned with the realm of the sacred.Ethical Systems:

Moral principles or values used to guide and shape behavior.

Shapes attitudes toward work and entrepreneurship and can affect the cost of doing business.

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World’s Religions

4% 5%

20%

18%43%

10%

ChristianI slamHinduBuddhistConf ucianOther/ Nonreligious

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Religion and Economic ImplicationsChristianity

“”Protestant Work Ethic” and “The Spirit of Capitalism””.

Islam Favors market-based systems. “The Spirit of Capitalism””.No payment or receipt of interest.

Hinduism Asceticism may have an impact.Caste system plays a role.

BuddhismLittle emphasis on entrepreneurial behavior.

ConfucianismLoyalty, reciprocal obligations, and honesty in dealings.

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LanguageAllows people to communicate.

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LanguageAllows people to communicate.Structures the way the world is perceived.

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LanguageAllows people to communicate.Structures the way the world is perceived.Directs attention to certain features of the world rather than others.

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LanguageAllows people to communicate.Structures the way the world is perceived.Directs attention to certain features of the world rather than others.Helps define culture.

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LanguageAllows people to communicate.Structures the way the world is perceived.Directs attention to certain features of the world rather than others.Helps define culture.Creates separatist tendencies?

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Spoken Language

20%

6%5% 4% 3%

62%

OtherChineseEnglishHindiRussianSpanish

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Nonspoken Language

Nonverbal cues:eyebrowsfingers/thumbshand gesturesfeetpersonal spacebody gestures

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EducationFormal education

supplements family rolein teaching values

and norms

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EducationFormal education

supplements family rolein teaching values

and norms

Cultural norms such asrespect, obedience, honesty

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EducationFormal education

supplements family rolein teaching values

and norms

Cultural norms such asrespect, obedience, honesty

Value of personalachievement and

competition

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EducationFormal education

supplements family rolein teaching values

and norms

Obligations ofcitizenship

Cultural norms such asrespect, obedience, honesty

Value of personalachievement and

competition

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EducationFormal education

supplements family rolein teaching values

and norms

Focus on facts of socialand political nature

of society

Obligations ofcitizenship

Cultural norms such asrespect, obedience, honesty

Value of personalachievement and

competition

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EducationFormal education

supplements family rolein teaching values

and norms

Focus on facts of socialand political nature

of society

Obligations ofcitizenship

Cultural norms such asrespect, obedience, honesty

Medium to learnlanguage, conceptual,

and math skills

Value of personalachievement and

competition

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EducationFormal education

supplements family rolein teaching values

and norms

Focus on facts of socialand political nature

of society

Obligations ofcitizenship

Cultural norms such asrespect, obedience, honesty

For int’l business, it is adeterminant of nationalcompetitive advantage

Medium to learnlanguage, conceptual,

and math skills

Value of personalachievement and

competition

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HofstedeStudy (IBM) is a general way to look at differences between cultures.

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HofstedeStudy (IBM) is a general way to look at differences between cultures.4 dimensions:

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HofstedeStudy (IBM) is a general way to look at differences between cultures.4 dimensions:

Power distance: How does the society deals with both physical and intellectual diversity of citizens.

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HofstedeStudy (IBM) is a general way to look at differences between cultures.4 dimensions:

Power distance: How does the society deals with both physical and intellectual diversity of citizens.

High power distance: those that allow inequalities to grow over time into inequality of wealth and power.

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HofstedeStudy (IBM) is a general way to look at differences between cultures.4 dimensions:

Power distance: How does the society deals with both physical and intellectual diversity of citizens.

High power distance: those that allow inequalities to grow over time into inequality of wealth and power.Low power distance: those that play down these inequalities

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HofstedeStudy (IBM) is a general way to look at differences between cultures.4 dimensions:

Power distance: Individualism versus collectivism.

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HofstedeStudy (IBM) is a general way to look at differences between cultures.4 dimensions:

Power distance: Individualism versus collectivism.Uncertainty avoidance: How much uncertainty and ambiguity is encouraged by the society.

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HofstedeStudy (IBM) is a general way to look at differences between cultures.4 dimensions:

Power distance: Individualism versus collectivism.Uncertainty avoidance: How much uncertainty and ambiguity is encouraged by the society.Masculinity versus femininity.

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HofstedeStudy (IBM) is a general way to look at differences between cultures.4 dimensions:

Power distance: Individualism versus collectivism.Uncertainty avoidance: How much uncertainty and ambiguity is encouraged by the society.Masculinity versus femininity.

But:Assumption of one-to-one relationship between culture and nation-state.

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HofstedeStudy (IBM) is a general way to look at differences between cultures.4 dimensions:

Power distance: Individualism versus collectivism.Uncertainty avoidance: How much uncertainty and ambiguity is encouraged by the society.Masculinity versus femininity.

But:Assumption of one-to-one relationship between culture and nation-state.

Research may be culturally bound.

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HofstedeStudy (IBM) is a general way to look at differences between cultures.4 dimensions:

Power distance: Individualism versus collectivism.Uncertainty avoidance: How much uncertainty and ambiguity is encouraged by the society.Masculinity versus femininity.

But:Assumption of one-to-one relationship between culture and nation-state.Research may be culturally bound.

Respondents worked within a single company.

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HofstedeStudy (IBM) is a general way to look at differences between cultures.4 dimensions:

Power distance: Individualism versus collectivism.Uncertainty avoidance: How much uncertainty and ambiguity is encouraged by the society.Masculinity versus femininity.

But:Assumption of one-to-one relationship between culture and nation-state.Research may be culturally bound.Respondents worked within a single company.

Work is beginning to look dated (1967-1973).

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Work Related Values for Selected Countries Power

Distance Uncertainty Avoidance

I ndividualism Masculinity

Argentina 49 86 46 56

Brazil 69 76 38 49

France 68 86 71 43

I ndia 77 40 48 56

J apan 54 92 46 95

Mexico 81 82 30 69

Netherlands 38 53 80 14

U.S.A. 40 46 91 62

Table 3.1

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Culture is Dynamic

Cultural Change

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Culture and Competitive Advantage

The connection suggests:Which countries are likely to be the most viable competitors.Which countries in which to locate production facilities and do business.

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Culture and EthicsDo the “right” thing.Thomas Donaldson’s Three Principles:

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Culture and EthicsDo the “right” thing.Thomas Donaldson’s Three Principles:

Respect for core human values (human rights), which determine the absolute moral threshold for all business activities.

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Culture and EthicsDo the “right” thing.Thomas Donaldson’s Three Principles:

Respect for core human values (human rights), which determine the absolute moral threshold for all business activities.

Respect for local tradition.

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Culture and EthicsDo the “right” thing.Thomas Donaldson’s Three Principles:

Respect for core human values (human rights), which determine the absolute moral threshold for all business activities.Respect for local tradition.

Context matters when deciding what is right and what is wrong.