II Country Factors

Collectivism vs. Individualism

CollectivismA political system that stresses the

primacy of collective goals over individual goals.

Advocated by Plato in the “Republic.”

In modern times, the Socialists advocate Collectivism.

Trace intellectual roots to Karl Marx. Argued that the pay of workers does not reflect the

full value of their labor. Advocated state ownership of production,

distribution, and exchange (businesses), thereby ensuring that workers were fully compensated for their labor.

Two Approaches for SocialismCommunists: Socialism is achieved through

violent revolution.Social Democrats: Socialism is achieved through

democratic means.

Socialism

Individualism Opposite of Collectivism. Individual should have freedom in political

and economic pursuits. Advocated by Aristotle: Private property is

more highly productive than communal property and will thus stimulate progress.

Revived during the 16th century in England and the Netherlands. Hume (1711-1776) Adam Smith (1723-1790) John Stuart Mill (1806-1873)

Embodied in the U.S. Declaration of Independence

Democracy and Totalitarianism

Democracy: Government by the people, exercised either directly or through elected representatives.

Totalitarianism: Government in which one person or political party exercises absolute control over all spheres of human life and opposing political parties are prohibited.

4 major forms of Totalitarianism Communism

Collectivism is achieved through total dictatorship. Theocratic

Political power is influenced by religious principles. Tribal

A political party representing the interests of a particular tribe monopolizes power.

Right-wingGenerally permits individual economic freedom, but

restricts political freedom to prevent the rise of communism.

Economic Systems Market Economy:

All productive activities are privately owned.

Command Economy:

Goods and services produced, their quantity, and prices

are determined by the government.

Mixed Economy:

Parts of the economy are left to private ownership and

free market mechanisms while other sectors are state-

owned and have government planning.

State-Directed Economy:

The state plays a significant role through its “industrial

policy” and setting national goals.

Legal Systems: Rules, or laws, that regulate behavior and the processes by which laws are enforced and grievances redressed.

Property Rights: the legal rights over the use of a resource and the income derived from it.

Property rights can be violated by two ways Private Action: Theft, piracy, blackmail and the

like by private individuals and groups.Public Action and Corruption: Violation of

property rights by public officials, such as politicians and government officials, by extorting income or resources from property holders.

What is Culture? A system of values and norms shared among a

group of people and, when taken together, constitute a design for living.

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.

Determinants of Culture

Culture:Norms and

Value Systems

Education

Economic Philosophy

PoliticalPhilosophy

Religion

Language SocialStructure

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

Religion

Shared 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.

World’s Religions

4% 5%

20%

18%

43%

10%

Christian

I slam

Hindu

Buddhist

Conf ucian

Other/Nonreligious

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.

Buddhism Little emphasis on entrepreneurial behavior.

Confucianism Loyalty, reciprocal obligations, and honesty in dealings.

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?

Spoken Language

20%

6%5% 4% 3%

62%

Other

Chinese

English

Hindi

Russian

Spanish

Nonspoken Language

Nonverbal cues:

eyebrows

fingers/thumbs

hand gestures

feet

personal space

body gestures

Hofstede Study (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).

Work Related Values for Selected Countries

Power Distance

Uncertainty Avoidance

Individualism Masculinity

Argentina 49 86 46 56

Brazil 69 76 38 49

France 68 86 71 43

India 77 40 48 56

Japan 54 92 46 95

Mexico 81 82 30 69

Netherlands 38 53 80 14

U.S.A. 40 46 91 62

Hofstede later added the fifth dimension: long-term orientation.

A culture with a long-term orientation is based on stability, persistence, order & thrift.The success of Japanese companies in 1970s to early 19

90s: Focus on long-term investment, commitment to their workers, and building of relationships with their customers.

A culture with a short-term orientation will expect immediate returns and will focus on satisfaction of immediate needs and wants.U.S. & U.K. companies are often criticized for their foc

us on short-term goals (maintain share prices).

Trompenaars’ dimensions of culture framework

It comprises three groupings of cultural factors:Relationships with peopleTimeRelating to natural (the natural environment)

Relationships with people can be considered in five subdivisions:Universalism vs. particularism Individualism vs. communitarianism (collectivism)Affective vs. neutral culturesSpecific vs. diffuse relationshipsAchieving vs. ascribing status

Organizational culture

Each organization will have its own distinctive culture or way of working.

The intangible nature of culture makes cultural change difficult to manage.

The culture of an organization is made up of the distinctive values, attitudes, beliefs and norms which influence the way in which it conducts its business.

Peters and Waterman (1982) found that organizational culture was related to performance

Determinants of Organizational Culture

National culture

Industry culture

Size of the organization

Organization history

Management and leadership style

Nature of the employees