Fourth Edition

InternationalBusiness

CHAPTER 3

Differences in Culture

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Chapter Focus

What is culture/Focus on differences in:

Social structure.Religion.Language.Influence of education.

Discuss cultural change.

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What is Culture?

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

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Norms and Values

Norms:Social rules and guidelines that prescribe appropriate behavior in particular situations.Folkways:

Routine conventions of everyday life.

Mores:Central to functioning of society and its social life.

Values:Abstract ideas about what a group believes to be good, right, and desirable.The bedrock of culture.Have emotional significance.

Freedom.

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Culture, Society and the Nation-State

Nation-States are political

creations

Not a strictone-to-one

correspondence

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Determinants of Culture

Culture:Norms and

Value Systems

Education

Economic Philosophy

PoliticalPhilosophy

Religion

Language SocialStructure

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Social Structure

MobileManagers

Hard toBuild

Teams

Lackof

Loyalty

Entrepreneurship

Individual

Western

Lack ofEntrepreneurship

LifetimeEmployment

Identity

Group

Eastern

NonmobileManagers

Grouptwo or more individuals

with a shared sense of identity

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

Social StratificationTypically defined by family background,

occupation, and income.

Class: some social

mobilityCaste: Virtually no 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%

Christian

I slam

Hindu

Buddhist

Conf ucian

Other/ Nonreligious

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Religion and Economic Implications

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

Islam Favors market-based systems.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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Language

Allows 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%

Other

Chinese

English

Hindi

Russian

Spanish

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Nonspoken Language

Nonverbal cues:eyebrowsfingers/thumbshand gesturesfeetpersonal spacebody gestures

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Education

Formal education supplements family role

in teaching valuesand 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.4 dimensions:

Power distance.Individualism versus collectivism.Uncertainty avoidance.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 Ethics

Do 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.The belief that context matters when deciding what is right and what is wrong.