Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Global Business Today 7e

by Charles W.L. Hill

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Chapter 3

Differences

in Culture

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Introduction

Cross-cultural literacy - an understanding of how cultural differences across and within nations can affect the way in which business is practicedimportant to success in international business

There may be a relationship between culture and the costs of doing business in a country or region

Culture is not staticthe actions of MNEs can contribute to cultural change

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What is Culture?

Question: What is culture?

Culture is a system of values (abstract ideas about what a group believes to be good, right, and desirable) and norms (the social rules and guidelines that prescribe appropriate behavior in particular situations) that are shared among a group of people and that when taken together constitute a design for living

A society is a group of people who share a common set of values and norms

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What is Culture?

There is not a strict one-to-one correspondence between a society and a nation-statenation- states are political creations that can contain a

single culture or several culturessome cultures embrace several nations

Culture arises from prevailing political and economic philosophiesa society’s social structurethe dominant religion, language, and education

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Social Structure

Question: What is social structure?

A society's social structure is its basic social organization

Two dimensions to consider:the degree to which the basic unit of social organization

is the individual, as opposed to the groupthe degree to which a society is stratified into classes or

castes

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Social Structure

In societies where the individual is emphasizedindividual achievement and entrepreneurship are

promotedbut, this can encourage job switching, competition

between individuals in a company rather than team building, and a lack of loyalty to the firm

In societies where the group is emphasizedcooperation and team work are encouraged and life

time employment is commonbut, individual initiative and creativity may be

suppressed

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Social Structure

All societies are stratified on a hierarchical basis into social categories, or social strata

Social mobility refers to the extent to which individuals can move out of the strata into which they are bornthe most rigid system is the caste system a less rigid system is the class system

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Religious and Ethical Systems

Question: What is religion?

Religion is a system of shared beliefs and rituals that are concerned with the realm of the sacredChristianity - the most widely practiced religion Islam - an all-embracing way of life that governs one's

beingHinduism - focuses on the importance of achieving

spiritual growth and development Buddhism - stresses spiritual growth and the afterlife

rather than achievement while in this worldConfucianism - teaches the importance of attaining

personal salvation through right action

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Religious and Ethical Systems

Question: What is an ethical system?

Ethical systems - a set of moral principles, or values, that are used to guide and shape behaviorthe ethical practices of individuals within a culture are

often closely intertwined with their religion

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Language

Countries differ in terms of language or means of communication

There are two forms languagespokenunspoken

Language is one of the defining characteristics of culture

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Education

Formal education is the medium through which individuals learn many of the language, conceptual, and mathematical skills that are indispensable in a modern society

The knowledge base, training, and educational opportunities available to a country's citizens can also give it a competitive advantage in the market and make it a more or less attractive place for expanding business

The general education level of a country is a good indicator of the types of products that might sell in that location or the type of promotional materials that might be successful

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Culture and the Workplace

Question: How does a society's culture impact on the values found in the workplace?

Geert Hofstede isolated four dimensions that summarized different cultures

1. Power distance2. Individualism versus collectivism3. Uncertainty avoidance4. Masculinity versus femininity

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Culture and the Workplace

1. Power distance - how a society deals with the fact that people are unequal in physical and intellectual capabilities

2. Individualism versus collectivism - the relationship between the individual and his or her fellows

3. Uncertainty avoidance - the extent to which different cultures socialize their members into accepting ambiguous situations and tolerating ambiguity

4. Masculinity versus femininity - the relationship between gender and work roles

Hofstede later added a fifth dimension, Confucian dynamism - captures attitudes towards time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors

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Cultural Change

Culture evolves over time, although changes in value systems can be slow and painful for a societysocial turmoil is an inevitable outcome of cultural

changecultural change is particularly common as countries

become economically stronger

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Implications for Managers

Differences in culture imply that there is a need for managers to develop cross-cultural

literacy there is a connection between culture and national

competitive advantage there is a connection between culture and ethics in

decision making