Embed Size (px)
Citation preview
EMBA 7162008
Chapters 3&4Country & CulturalDifferences, Ethics
Global Business Today, 5/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Outline
• Differences in Culture – Determinants of culture– Hofstede’s Cultural Dimensions– Implications for business managers
• Ethics in Global Business– Ethical Issues– Corruption Perceptions Index (Transparency
International)
Culture & Ethics
"Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster."
-Dr. Geert HofstedeMaastricht University
“Ethics is the new competitive environment" -Peter Robinson
CEO Mountain Equipment Co-op
“It takes 20 years to build a reputation and five minutes to ruin it.”
– Warren Buffet
Global Business Today, 5/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
The Determinants of Culture
(http://unesdoc.unesco.org/images/0012/001271/127160m.pdf)
Cultural Diversity
• “Culture takes diverse forms across time and space. This diversity is embodied in the uniqueness and plurality of the identities of the groups and societies making up humankind. As a source of exchange, innovation and creativity, cultural diversity is as necessary for humankind as biodiversity is for nature.”
• “In our increasingly diverse societies, it is essential to ensure harmonious interaction among people and groups with plural, varied and dynamic cultural identities as well as their willingness to live together.”
• “Cultural diversity widens the range of options open to everyone; it is one of the roots of development, understood not simply in terms of economic growth, but also as a means to achieve a more satisfactory intellectual, emotional, moral and spiritual existence.”
(http://unesdoc.unesco.org/images/0012/001271/127160m.pdf)
Cultural Differences in Business
“For those who work in international business, it is sometimes amazing how different people in other cultures behave. We tend to have a human instinct that 'deep inside' all people are the same - but they are not. Therefore, if we go into another country & make decisions based on how we operate in our own home country - the chances are we'll make some very bad decisions.”
Geert Hofstede
Cultural Differences in Business
• “When negotiating in Western countries, especially the US, the objective is to work toward a target of mutual understanding and agreement and 'shake-hands' when that agreement is reached - a cultural signal of the end of negotiations and the start of 'working together'.”
• “In Middle Eastern countries much negotiation takes place leading into the 'agreement', signified by shaking hands. However, the deal is not complete in the Middle Eastern culture. In fact, it is a cultural sign that 'serious' negotiations are just beginning.”
(http://www.geert-hofstede.com/)
Culturally Sensitive Iconography
In which country is this gesture not OK?
(http://www.iimaonline.org/presentations/20050510_globalmarketslocal.ppt;http://www.everythingesl.net/inservices/body_language.php)
Other Interpretations?
Hofstede Cultural Dimensions
(http://www.geert-hofstede.com/hofstede_united_states.shtml)
Hofstede Cultural Dimensions
(http://www.geert-hofstede.com/hofstede_united_states.shtml)
• Only 7 countries in the Hofstede research have Individualism (IDV) as their highest Dimension: USA (91), Australia (90), United Kingdom (89), Netherlands (80), Canada (80), and Italy (76).
• The US’s high Individualism (IDV) ranking “indicates a society with a more individualistic attitude and relatively loose bonds with others. The populace is more self-reliant and looks out for themselves and their close family members.”
• The lowest US dimension is Long Term Orientation (LTO) at 29, compared to the world average of 45.
• The low LTO ranking indicates “the societies' belief in meeting its obligations and tends to reflect an appreciation for cultural traditions.”
Hofstede Cultural Dimensions
(http://www.geert-hofstede.com/hofstede_thailand.shtml)
Hofstede Cultural Dimensions
• The two highest Hofstede rankings for Thailand are equal at 64 - PDI and UAI.”
• The high Power Distance (PDI) is “indicative of a high level of inequality of power & wealth within the society.”
• The ranking of Uncertainty Avoidance (UAI) indicates the society’s low level of tolerance for uncertainty.
• Thailand's lowest Dimension is Individualism (IDV) at 20 indicating “the society is Collectivist as compared to Individualist. This is manifest in a close long-term commitment to the member 'group', a family, extended family, or extended relationships.”
• It has the lowest Masculinity (MAI) ranking among Asian countries, showing a society with less assertiveness & competitiveness.
(http://www.geert-hofstede.com/hofstede_thailand.shtml)
Hofstede Cultural Dimensions
(http://www.geert-hofstede.com/hofstede_hong_kong.shtml)
Hofstede Cultural Dimensions
• Hong Kong's Long-term Orientation (LTO) is the highest-ranking (96) factor, which is true for all Far East Asian cultures. This indicates a society’s perspective of time & an attitude of persevering; that is, overcoming obstacles with time, if not with will and strength.
• Its low Uncertainty Avoidance ranking “indicates a society that not only tolerates uncertainty and a freedom of opinions, but uses this strength, in the case of Hong Kong, to be a place where many varying cultures and ideas can come together.”
• Hong Kong's Individualism ranking indicates a “high level of emphasis on a Collectivist society as compared to one of Individualism.”
(http://www.geert-hofstede.com/hofstede_hong_kong.shtml)
Global Business Today, 5/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Ethnocentrism
• Tendency to view the world primarily from the perspective of one's own culture.
• A belief in the superiority of one’s own ethnic group or culture.
• Disregard for or contempt for the culture of other countries.
• US, France, Germany, Japan
Global Business Today, 5/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Polycentrism
• “Slovenian business people can be described as polycentric. On the one hand, they adapt to the foreign culture easily. For example they will use the foreign language even if their foreign counterpart understands the Slovenian language. Thus, many Slovenian managers are very successful in working for multinational companies in countries such as ex- Yugoslavia, Russia and Saudi-Arabia.”
Damjan, 2004
Global Business Today, 5/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Ethical Issues
• Arise most often in the context of: – Employment practices– Human rights– Environmental policy – An MNC’s perceived moral obligations to society –
corporate responsibility– Corruption
• What is ethical and “normal” in one environment may not be so in another
Corruption Perception Index
• The Corruption Perception Index (CPI), developed by Transparency International, is a composite index derived from multiple expert opinion surveys that poll perceptions of public sector corruption in 163 countries around the world. It scored countries on a scale from zero to 10, with zero indicating high levels of perceived corruption and 10 indicating low levels of perceived corruption.
(Transparency International - http://www.transparency.org/)
Transparency International
(http://www.transparency.org/policy_research/surveys_indices/cpi)
Ranking Corruption
(http://www.transparency.org/policy_research/surveys_indices/cpi)
Corruption Impact
• “Trends that have characterized the CPI results throughout its history continue this year: 40% of the countries that score below 3 - indicating that corruption is perceived as rampant - are desperately poor.”
• “Somalia and Myanmar share the lowest score of 1.4; their average annual per capita GDP is 600 and 1,800 US dollars respectively.”
• “Other deeply troubled states such as Afghanistan, Iraq and Sudan, where conflict, corruption and poverty intersect, remain at the very bottom of the index.”
• “The African Union has estimated the total annual cost of corruption to the continent at just under 150 billion US dollars, far outstripping global development assistance spending.”
(http://www.transparency.org/policy_research/surveys_indices/cpi/2007/statements)
Corruption Impact
• “Although Ferdinand Marcos is estimated to have embezzled between five and ten billion US dollars, after an 18 year legal battle the Philippines have managed to recover only 624 million, or roughly 12 percent of the total amount, according to the World Bank.”
• “Bribery on foreign shores is no longer an acceptable business strategy. And the perpetrators are increasingly feeling the heat.”
• “Governments of developed countries must also strictly enforce the OECD Anti-Bribery Convention, which criminalizes the bribery of foreign public officials. Lack of compliance with the convention continues to hinder corruption investigations and prosecutions.”
(http://www.transparency.org/policy_research/surveys_indices/cpi/2007/statements)
Thank You
Questions?
