Review Question_______ focuses on how society deals with thefact
that people are unequal in physical andintellectual
capabilities.
a) power distanceb) individualism versus collectivismc)
uncertainty avoidanced) masculinity versus femininity
Welcome to International Business, Eighth Edition, by Charles
W.L. Hill.
Chapter 3: Differences in Culture
If youve ever visited a foreign country, you probably noticed
some differences in how people dressed, the food they ate, or their
choice of transportation. Perhaps a particular religion influenced
how society worked, or a different language was spoken. All of
these things are part of cultureJust as youd adapt for differences
at home, when doing business in foreign countries, youll need to
adapt as well. We say that managers need cross-cultural literacy,
or an understanding of how cultural differences across and within
nations can affect the way in which business is practiced.Its also
important to consider how culture might affect the cost of doing
business in a particular location. For example, some people argue
that the Japanese traditions including lifetime employment and
long-term decision-making lowered the costs of doing business in
the country during the 1960s, 70s and 80s.
Culture is a system of values and norms that are shared among a
group of people and that when taken together constitute a design
for living--where values are abstract ideas about what a group
believes is good, right, and desirable, and norms are the social
rules and guidelines that prescribe appropriate behavior in
particular situations. You may not think, now that people in so
many countries wear blue jeans, drink Coke and Starbucks coffee,
eat Big Macs, and listen to MTV, that cultural differences are
still important. But youd be wrong! Long-standing cultural
differences still influence how business is being done. Also, keep
in mind that culture is dynamic, it is always changing. Just think
for a moment of how cell phones have changed our culture and those
of many others as an example.We call a group of people who share a
common set of values and norms a society, and though we talk about
the French culture, and the Japanese culture, and so on, culture is
not necessarily divided by national boundaries. Some countries like
Switzerland, even have multiple distinct cultures. Similarly, some
cultures transcend national boundaries. For example, you might
think of how the values promoted by Islam influence many
countries.
Values are a fundamental building block of culture. They provide
the context within which a societys norms are established and
justified. Values can include things like a societys attitudes
toward individual freedom, loyalty, collective responsibility,
marriage, and so on. Values also reflect the political and economic
systems of a society. So, for example, the free market system in
the U.S., shows that individual freedom is valued.The social rules
that govern peoples actions toward one another are called norms.
You can think of norms as being either folkways or mores. Folkways
are the routine conventions of everyday life like dress codes,
social manners, and neighborly behavior.Mores are the norms that
are central to the functioning of a society and to its social life.
Mores may actually become laws. So, for example, we have laws
against theft and incest. As youve probably guessed, mores are much
more significant than folkways, and violating them usually brings
serious retribution.
What is the relationship between culture and the nation-state?
Well, remember that a society is a group of people that share a
common set of values and norms. In other words, its a group bound
together by a common culture. Nation-states are political creations
and so they can contain more than one culture like India and
Switzerland do. Keep in mind also that a country can have different
societies, and that each society can have its own culture.
Likewise, a culture can embrace several nations. You might think of
the Hispanic culture, for example.
What determines culture? The values and norms of a culture
evolve over time and are a function of a number of factors at work
in a society including religion, political and economic
philosophies, education, language, and social structure. Lets talk
about each of these factors beginning with social structure.
Social structure refers to the basic social organization of a
society. There are two important elements to consider here: first,
the degree to which the basic unit of social organization is the
individual rather than the groupusually we think of the individual
being dominant in Western societies, and the group being more
important in other societies. Second, the degree to which the
society is stratified into classes or castes. You already know that
in the U.S. there is a relatively low degree of social
stratification and that its fairly easy to move between strata.
Compare this to the situation in India for example, where there is
a high degree of social stratification and much lower mobility
between strata.
It is important to study the role of groups and individuals in
order to really understand a culture.A group is just an association
of two or more people who share a sense of identity or who interact
with each other in structured ways based on a common set of
expectations. So, you might think of your family as being a group,
or perhaps you belong to a recreational or social group. In some
societies the group is considered more important, while in others,
individual achievements and attributes are more important. In many
Western societies, there is a strong focus on the individual and
individual achievements. Think about your favorite sports team for
a minute. You probably know its record, and many of its players,
and you can probably tell me a lot about a few stars. What does
this tell you about this particular group? How does this mindset
affect business? Well, it can be both beneficial and harmful. On
one hand, the focus on individual achievements leads to a high
degree of entrepreneurship which is beneficial because its linked
to the development of new products and processes. On the other
hand, the focus on the individual also leads to a lot of managerial
mobility, and so, there is a lack of loyalty and commitment to
individual firms, and there is competition between individuals
within a firm rather than team building for the sake of the
organization. Youve probably experienced some of these issues
yourself.
In contrast, many Asian societies focus on the group as the
primary form of social organization. So, rather than looking at the
individual achievements of a Japanese manager, you might look at
the standing of the group that he belongs to. In fact, rather than
identifying themselves by the job they do, for example marketing
manager, Japanese business men often identify themselves as
belonging to a particular company, so they might say they belong to
Sony or Toyota. Youve probably heard of the lifetime employment
system that is often associated with Japanese companies that
reflects this commitment. From a business perspective, this means
that there is a strong incentive to work together for the common
good, rather than focus on individual achievements. Many experts
believe that this cooperative atmosphere has been central to
Japanese success. Is the group emphasis always better? Not
necessarily! Just like in societies that emphasize the individual,
there are drawbacks from emphasizing the group. One drawback in
Japan for example, is a lack of incentive for individual creativity
and initiative, and consequently entrepreneurial activity.
Now, lets talk about the social organization of a culture.All
societies are stratified to some extent - what differs is how much
mobility there is between social strata, and what the social strata
means for business.Suppose you dont like your lot in life. Can you
move? We use the term social mobility to refer to the extent to
which individuals can move out of the strata into which they are
born. How easy it is to move depends on the society. The most rigid
type of society is the caste system where a persons social position
is determined by their family, and change is virtually impossible.
So, if youre born into a family of shoemakers, you can more or less
count of being a shoemaker yourself! India is probably the best
modern example of how a caste system works. There are four main
castes, and even though it was officially abolished in 1949, its
influence still remains today, particularly in rural areas. You can
learn more about Indias caste system in the Country Focus in your
text.The class system that exists in countries like the U.S. is a
much less rigid system of stratification. Youre probably already
aware of stories of immigrants coming to the U.S. with only the
clothes on their backs, and managing to work their way up to the
top of the social hierarchy. In a class system, mobility is
possible either through luck or personal achievements. Why is
social stratification important to managers? The social
stratification of a society is significant if it affects the
operation of business organizations How people perceive themselves
in terms of their class background influences their relationships
with others. So, in countries with high levels of class
consciousness, antagonistic relationships may exist between
classes. Think of Britain for example. The countrys well defined
classes have led to many disputes between labor and management over
the years. Today, Britain is moving toward a less class conscious
society, but China is moving in the opposite direction! In China,
because of the sharp contrast in education, health care, and so on,
between the rural population and urban dwellers that existed during
the Communist regime, a new class structure is beginning to emerge.
Peasants looking for jobs are moving into cities where a new set of
classes is emerging based on occupation. Religion is another
important determinant of culture, especially in countries where a
single religion is dominant. We define religion as the systems of
shared beliefs and rituals that are concerned with the realm of the
sacred. Religions with the greatest following today are
Christianity, Islam, Hinduism, and Buddhism. You might also include
Confucianism with these. While not strictly a religion,
Confucianism influences behavior and shapes culture in many parts
of Asia. Closely related to religion are ethical systems, or sets
of moral principles or values that guide and shape behavior. So,
you might think of Christian ethics or Islamic ethics. Why is it
important for companies to understand the different religions? An
individuals religion helps shape his attitude toward work and
entrepreneurship.
Here you can see the different religions in the world, and where
theyre practiced.
About 20 percent of the worlds population is Christian. Its the
worlds largest religion. Most followers live in Europe, the
Americas, or other countries settled by the Europeans. Christians
are divided into Roman Catholics, those who belong to the Orthodox
church, and Protestants.You may have heard of the famous German
sociologist Max Weber who made the connection between Protestant
ethics and capitalism in 1904. Weber believed that the Protestant
ethics of hard work and value creation were instrumental to the
development of capitalism.
With its 1 billion followers, Islam is the second largest
religion in the world. Its adherents are called Muslims, and are
found in more than 35 countries, particularly in the Middle East.
Islam is an all-embracing way of lifeprayers take place 5 times a
day, women dress in a certain manner, and pork and alcohol are
forbidden. The attacks on the World Trade Center have increased
public knowledge of Islamic fundamentalism. Many people believe
that Islamic fundamentalists are violent terrorists. However, Islam
teaches peace, justice, and tolerance. The violence that we often
associate with Islamic fundamentalism actually involves only a
small minority of all fundamentalists. Most Muslims live
peacefully, and are deeply committed to their religious beliefs and
principles. Many have turned to symbols to signify their commitment
to their faith. So, for example, you see women covered head to toe
in public. How does Islam affect business? The Koran, which is the
sacred book for Islam like the Bible is for Christianity, supports
free enterprises and legitimate profits, and the right to protect
private property, but advocates using profits in a righteous
socially- beneficial manner. So, for example, paying or receiving
interest is not allowed. You can learn more about how Islam and
capitalism co-exist in the Country Focus on Turkey in your
text.
The central tenets of Hinduism, which is practiced by about 750
million people who mainly live in India, are spiritual growth and
development. Hinduism is the oldest religion in the world, and goes
back about 4,000 years. Many Hindus believe that the way to achieve
nirvana is through material and physical self-denial. As you might
recall from the Opening Case on McDonalds in India, Hinduism
creates interesting challenges for companies. Because the religion
emphasizes spiritual rather than individual achievement, the drive
for entrepreneurial behavior that is so common among Protestants
for example, is not present. So, a devout Hindu may not see
promotion or additional responsibilities as being desirable.
Buddhisms 350 million followers are located mainly in Central
and Southeast Asia, China, Korea, and Japan. Buddhism stresses
spiritual achievement and the afterlife over involvement in this
world. As with Hinduism, theres a lack of emphasis on
entrepreneurial behavior. However, because Buddhism doesnt support
the caste system, and mobility between classes is an option, there
may be some entrepreneurial drive.
Confucianism, which is practiced mainly in China, is not really
a religion, but more of an influential ideology. Confucianism
teaches the importance of attaining personal salvation through
right action. Moral and ethical conduct is important, as is
loyalty. What do the principles of Confucianism mean for business?
Well, because of the key principles of the ideologyloyalty,
reciprocal obligations, and honestythe cost of doing business can
be lower. You might think of the concept of guanxi that is so
important to business in China. You can learn more about the
importance of guanxi in the Management Focus on DMG in your
text.Similarly, if people behave in a moral, honest way, expensive
contracts to protect companies are not necessary. Many people
believe that Japan owes its success in the auto industry to the
strong relationships that exist between the auto companies and
their suppliers.
Now, lets move on to look at how language defines culture.
Language is how we communicate with each other both in the spoken
form and in the unspoken form, and its also how we perceive the
world. Think for a minute about snow. You might say oh, look, its
snowing and your friend would know exactly what you mean. But the
Inuit or Eskimo people would have no idea what you meant. Why not?
Because the Inuit have 24 different ways of describing what you
probably think of as only snow!Some countries have more than one
language and distinct culture. Canada for example, has both an
English speaking and a French speaking areaboth with their own
cultures. Belgium is divided into Flemish and French speakers, and
four different languages are spoken in Switzerland! Do you know
which language is the most widely spoken language in the world? If
you answered English, youre right! But keep in mind that Chinese is
the mother tongue of the largest number of people! You may be
wondering if its important, given that English is so widely spoken
in the business world, to learn a foreign language. The answer is
yes! Its very important. Also remember, that just because people
may speak English, it may not be the English youre familiar with.
For example, if a British colleague tells you hes chuffed to the
mint balls should you be concerned or happy? The answer is happy!
What about unspoken language why is it important? Well, think for a
moment about how you stand when youre talking with another person.
You probably stand about an arms length away. But in Latin America
people tend to stand much closer together. Now picture yourself at
a business meeting with someone from Brazil. He might try to stand
at his customary distance causing you take a step backward because
hes invaded your personal space. You may be annoyed at him for
standing so close to you, and he may interpret your response as
aloofness. You meeting is already off to a bad start!Similarly,
consider the circle you might make with your thumb and forefinger.
In the United States, youve signaled a positive response, but if
you make the same gesture in Greece, youve just insulted someone!
Because facial expressions, hand gestures, and other types of
unspoken language can mean different things in different cultures,
its important to do your homework before meeting with someone from
another culture.
Another element of culture is education. You already know that
formal education is important to gain the skills you need to be
productive in modern society, but did you know that a countrys
education system can be an important determinant of competitive
advantage? Michael Porter has pointed out that Japans success story
began with its well-educated workforce. Today, India is an
attractive destination for investment because of its well-educated
workforce. A countrys education system can also be an indicator of
what products might sell well, and what types of promotional
materials should be used. For example, in a country where literacy
rates are low, written promotions wont work well.How does a
societys culture affect workplace values? One of the most extensive
studies exploring this was done from 1967 to 1973 by an IBM
psychologist called Geert Hofstede. Hofstede identified four
dimensions of culture: power distance, uncertainty avoidance,
individualism versus collectivism, and masculinity versus
femininity. Lets look at each more closely.Power distance focused
on how a society deals with the fact that people are unequal in
physical and intellectual capabilities. A culture would rank high
on this dimension if it allowed these inequalities to grow over
time into inequalities in wealth and power, while cultures that
ranked low on power distance played down the
inequalities.Individualism versus collectivism focused on the
relationship between the individual and her fellows. You already
know that in individualistic societies, individual achievement and
freedom are valued, and that in collectivist societies the ties
between individuals are stronger.Uncertainty avoidance measured the
extent to which different cultures socialized their members into
accepting ambiguous situations and tolerating uncertainty. So, in a
culture that ranked high on uncertainty avoidance, people placed a
premium on job security, retirement benefits, and so on, while in a
low uncertainty culture, people were more willing to take risks,
and were less resistant to change.Masculinity versus femininity
looked at the relationship between gender and work roles. In
cultures that were identified as masculine, there was a sharp
distinction between sex roles, and traditional masculine values
influenced cultural ideals, while in a more feminine culture, there
was little differentiation between men and women in the same
job.
In this Table, you can see work-related values for twenty
countries.
Hofstede later expanded his study to include a fifth dimension
he called Confucian dynamism to captures attitudes toward time,
persistence, ordering by status, protection of face, respect for
tradition, and reciprocation of gifts and favors. Its important to
note though, that while Hofstedes study gave us many important
insights to cultural differences, his study was flawed in that he
made the assumption that theres a one-to-one relationship between
culture and the nation-state, the research was culturally bound
since it was conducted only by Europeans and Americans, and the
study may have been biased since it took place within a single
company, IBM!
How does culture change?Culture is evolutionary, and change can
often be slow and painful. For example, the fall of Communism in
Eastern Europe ushered in a new era of individualism and a shift
away from the collectivist values that had been in place for many
years. Change is also present in Japan. While an emphasis on group
achievements and loyalty has contributed to much of the countrys
current success, Japans younger generation is showing signs that
these values may not be acceptable anymore. Instead, the younger
generation is acting more like Western managers who leave companies
in search of more money and rank, who avoid overtime, and who
prefer to spend their free time away from the office.Why do these
types of changes occur? Some studies show that economic progress is
associated with a shift away from collectivism and towards
individualismthis would explain whats happening in Japan, for
example. Other studies show that the effects of economic progress
on factors like education and infrastructure also contribute to
cultural change. So, as countries get richer, there is a shift away
from traditional values. Keep in mind though, that these changes
dont occur overnightit may take generations before they are really
a part of a new culture.
What are the implications of all of this for managers? Well, as
we said at the beginning, its vital for firms to develop cross
cultural literacy. To be successful, you have to be able to conform
and adapt to the value system and norms of the host country. One
way you can gain knowledge of the local culture is to hire local
citizens. Developing a cadre of cosmopolitan managers who have been
exposed to different cultures can also be helpful. Its important to
avoid being ethnocentric, or believe that your ethnic group or
culture is superior to that of others. Youve probably heard of the
Ugly American, or the American who believes he is better than
anyone else, and that his way of doing things is better than anyone
elses. French people have also been accused of sharing this trait.
Needless to say, it doesnt go down well in a business meeting!A
second reason for companies to be aware of cultural differences is
the link between culture and competitive advantage. The value
systems and norms of a country influence the costs the cost of
doing business, which of course then affects the competitive
advantage of firms.Remember our discussion of how a societys class
structure affects the relationship between management and labor for
example, or how Japans strong worker loyalty system, and lifetime
employment guarantees affect the success of Japanese companies.
Similarly, a more individualistic culture promotes entrepreneurial
activities as compared to a culture that emphasizes collective
behavior. These differences provide companies with insight as to
which countries are most likely to produce competitors, and which
countries will be the best for investing or selling. For example,
if youre comparing two countries with similar wage costs, youll
recognize that the country with the better education system, less
social stratification, and a group identification is probably the
better site for production facilities. Similarly, based on cultural
differences, we would expect strong competitors to emerge from
Pacific Rim nations, as compared to some other parts of the
world.
Now, lets see how well you understand the material in this
chapter. Ill ask you a few questions. See if you can get them
right. Ready?
Abstract ideas about what a group believes to be good, right,
and desirable are called
a) normsb) valuesc) folkwaysd) mores
The answer is b.
The basic social organization of a society is its
a) cultureb) social stratac) social structured) caste system
The answer is c.
The group is the primary unit of social organization in
a) Japanb) the United Statesc) Switzerlandd) Mexico
The answer is a.
Which of the following is not characteristic of
individualism?
a) individual achievementb) low managerial mobilityc) low
company loyaltyd) entrepreneurial behavior
The answer is b.
Which religion promotes the notion that a moral force in society
requires the acceptance of certain responsibilities called
dharma?
a) Islamb) Buddhismc) Hinduismd) Confucianism
The answer is c.
The most widely spoken language in the world is
a) Chineseb) Spanishc) Hindid) English
The answer is d.
_______ focuses on how society deals with the fact that people
are unequal in physical and intellectual capabilities.
a) power distanceb) individualism versus collectivismc)
uncertainty avoidanced) masculinity versus femininity
The answer is a.
