International Business

Chapter 3

Differences in Culture

4-3

How Do Cultural Differences Affect International Business?

Understanding and adapting to the local cultural is important international companies cross-cultural literacy - an understanding of how

cultural differences across and within nations can affect the way in which business is practiced

A relationship may exist between culture and the costs of doing business in a country or regionMNEs can be agents of cultural change

4-4

What Is Culture? Culture - a system of values and norms that are

shared among a group of people and that when taken together constitute a design for living

wherevalues are abstract ideas about what a group believes

to be good, right, and desirablenorms are the social rules and guidelines that

prescribe appropriate behavior in particular situations

Society - a group of people who share a common set of values and norms

4-5

How Are Culture, Society, And The Nation-State Related?The relationship between a society and a

nation state is not strictly one-to-one Nation-states are political creations

can contain one or more cultures

A culture can embrace several nationsthe values and norms of a culture evolve over

time

4-6

What Determines Culture?Determinants of Culture

4-7

What Is A Social Structure? Social structure - a society’s basic social

organization A group is an association of two or more people

who have a shared sense of identity and who interact with each other in structured ways on the basis of a common set of expectations about each other’s behavior individuals are involved in families, work groups,

social groups, recreational groups, etc.

4-8

What Is Social Stratification? All societies are stratified on a hierarchical

basis into social categories, or social strata1. Social mobility - the extent to which individuals can

move out of the strata into which they are born caste system class system

2. The significance attached to social strata in business contacts

class consciousness

4-9

How Do Religious AndEthical Systems Differ?

Religion - shared beliefs and rituals that are concerned with the realm of the sacred

1. Christianity

2. Islam

3. Hinduism

4. Buddhism

5. Confucianism influences behavior and culture

Ethical systems - a set of moral principles, or values, that are used to guide and shape behavior

4-10

What Is The Role Of Language In Culture?

Language - the spoken and unspoken (nonverbal communication such as facial expressions, personal space, and hand gestures) means of communication Chinese is the mother tongue of the largest number of

peopleEnglish is the most widely spoken language in the

world and is also becoming the language of international business

but, knowledge of the local language is still beneficial, and in some cases, critical for business success

failing to understand the nonverbal cues of another culture can lead to communication failure

4-11

What Is The Role Of Education In Culture?

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

advantageJapan’s postwar success can be linked to its

excellent education systemgeneral education levels can be a good index for the

kinds of products that might sell in a countryex. impact of literacy rates

4-12

How Does Culture Impact The Workplace?

Hofstede’s dimensions of culture:1. Power distance - how a society deals with the

fact that people are unequal in physical and intellectual capabilities

2. Uncertainty avoidance - the relationship between the individual and his fellows

3. Individualism versus collectivism - 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

4-13

How Does Culture Impact The Workplace?

Work-Related Values for 20 Countries

4-14

How Does Culture Impact The Workplace?

Hofstede later expanded added a fifth dimension called Confucian dynamism or long-term orientationcaptures attitudes toward time, persistence,

ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favorsJapan, Hong Kong, and Thailand scored high on

this dimensionthe U.S. and Canada scored low

4-15

Does Culture Change?Culture evolves over time

changes in value systems can be slow and painful for a society

Social turmoil - an inevitable outcome of cultural changeas countries become economically stronger,

cultural change is particularly commoneconomic progress encourages a shift from

collectivism to individualismglobalization also brings cultural change

4-16

What Do Cultural Differences Mean For Managers?

1. It is important to develop cross-cultural literacy companies that are ill informed about the practices

of another culture are unlikely to succeed in that culture

2. There is a connection between culture and national competitive advantage

suggests which countries are likely to produce the most viable competitors

has implications for the choice of countries in which to locate production facilities and do business