International Business

8e

By Charles W.L. Hill

Chapter 3

Differences
in Culture
 culture
If you’ve 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 culture

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 culture
Just as you’d adapt for differences at home,
when doing business in foreign countries,
you’ll 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.

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 Culture
The ideas, customs, and social behaviour of
a particular people or society.
The customary beliefs, social forms, and
material traits of a racial, religious, or social
group
also : the characteristic features of everyday
existence (such as diversions or a way of
life) shared by people in a place or time.

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 Organization Culture
 The set of shared attitudes, values, goals,
and practices that characterizes an
institution or organization.
The set of values, conventions, or social
practices associated with a particular field,
activity, or societal characteristic

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 What Is Cross-Cultural Literacy?
Cross-cultural literacy is 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 region
 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.

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 What Is Culture?
 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 to
be good, right, and desirable (Beliefs of a person or social
group in which they have an emotional investment
(either for or against something))
 norms are the social rules and guidelines that prescribe
appropriate behavior in particular situations
 (A standard, model or pattern regarded as typical, "the
current middle-class norm of two children per family")

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 What Is Culture?
 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 May 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.
 Society refers to a group of people who share a common set
of values and norms
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 What Are Values And Norms?
 Values provide the context within which a
society’s norms are established and justified and
form the bedrock of a culture.
 Values are a fundamental building block of culture.
 Values can include things like a society’s 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.

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 What Are Values And Norms?
The social rules that govern people’s actions
toward one another are called norms.

Norms include
folkways - the routine conventions of everyday
life
mores - norms that are seen as central to the
functioning of a society and to its social life.
(sociology) the conventions that embody the
fundamental values of a group

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 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 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.
 A culture can embrace several nations
 You might think of the Hispanic culture, for example.

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 What Are The
Determinants Of 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.
 Determinants include
 religion
 political and economic philosophies
 education
 language
 social structure
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 What Is A Social Structure?
 Social structure refers to a society’s basic social
organization
 There are two important elements to consider here
1-the degree to which the basic unit of social organization
is the individual, as opposed to the group
 Individual being dominant in Western societies, and the group
being more important in other societies.
2-the degree to which a society is stratified into classes or
castes.
in the U.S. there is a relatively low degree of social stratification
and that it’s 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.

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 How Are Individuals
And Groups Different?
 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
 In Western societies, there is a focus on the individual
 individual achievement is common
 dynamism of the U.S. economy
 high level of entrepreneurship
 But, creates a lack of company loyalty and failure to gain
company specific knowledge
 competition between individuals in a company instead of than
team building
 less ability to develop a strong network of contacts within a firm

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 How Are Individuals
And Groups Different?
 In many Asian societies, the group is the primary unit of
social organization
 discourages job switching between firms
 encourages lifetime employment systems
 leads to cooperation in solving business problems
 there is a strong incentive to work together for the common good
 this cooperative atmosphere has been central to Japanese success.
 Japanese business men often identify themselves as belonging to a
particular company, so they might say they belong to Sony or
Toyota.
 But, might also suppress individual creativity and initiative
 lack of incentive for individual creativity and initiative, and
consequently entrepreneurial activity.

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 What Is Social Stratification?
 (Stratification: The act or process or arranging persons
into classes or social strata)
 All societies are stratified on a hierarchical basis into
social categories, or social strata
 Must consider
1. The degree of social mobility - the extent to which individuals
can move out of the strata into which they are born
 caste system - closed system of stratification in which social
position is determined by the family into which a person is born
 change is usually not possible during an individual's lifetime
 class system - form of open social stratification
 position a person has by birth can be changed through achievement or
luck
2. The significance attached to social strata in business contacts
 Class consciousness is a condition where people tend to perceive
themselves in terms of their class background, and this shapes their
relationships with others
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 How Do Religious
And Ethical Systems Differ?
 Religion is a system of shared beliefs and rituals that are concerned
with the realm of the sacred
 Religion and ethics are often closely intertwined
 Four religions dominate society
1. Christianity
2. Islam
3. Hinduism
4. Buddhism
 Confucianism is also important in influencing behavior and culture
in many parts of Asia.
 (The teachings of Confucius emphasizing love for humanity; high
value given to learning and to devotion to family (including
ancestors); peace; justice; influenced the traditional culture of
China)
 Ethical systems are a set of moral principles, or values, that are
used to guide and shape behavior
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 How Do Religious
And Ethical Systems Differ?
World Religions

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 What Is Christianity?
Christianity
the world’s largest religion
found throughout Europe, the Americas, and
other countries settled by Europeans
the Protestant work ethic (Max Weber, 1804)
hard work, wealth creation, and frugality is the
driving force of capitalism

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 What Is Islam?
 Islam
 the world’s second largest religion
 extends the underlying roots of Christianity to an all-embracing
way of life that governs one's being
 Islamic fundamentalism is associated in the Western media with
militants, terrorists, and violent upheavals, but in fact Islam
teaches peace, justice, and tolerance
 fundamentalists, who demand rigid commitment to religious
beliefs and rituals, have gained political power in many Muslim
countries, and blame the West for many social problems
 people do not own property, but only act as stewards for God
 people must take care of that which they have been entrusted with
 supportive of business, but the way business is practiced is
prescribed

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 What Is Hinduism?
Hinduism
practiced primarily on the Indian sub-continent
focuses on the importance of achieving spiritual
growth and development, which may require
material and physical self-denial
Hindus are valued by their spiritual rather than
material achievements
promotion and adding new responsibilities may
not be important, or may be infeasible due to
the employee's caste

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 What Is Buddhism?
Buddhism
has about 350 millions followers
stresses spiritual growth and the afterlife,
rather than achievement while in this world
does not emphasize wealth creation
entrepreneurial behavior is not stressed
does not support the caste system, individuals
do have some mobility and can work with
individuals from different classes

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 What Is Confucianism?
Confucianism
ideology practiced mainly in China
teaches the importance of attaining personal
salvation through right action
high morals, ethical conduct, and loyalty to
others are stressed
three key teachings of Confucianism - loyalty,
reciprocal obligations, and honesty - may all
lead to a lowering of the cost of doing business
in Confucian societies

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 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
 One of the defining characteristics of culture
 countries with more than one language often have more than one
culture
 English is the most widely spoken language in the world
 Chinese is the mother tongue of the largest number of people
 English is also becoming the language of international business
 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

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 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 advantage
general education levels can be a good index for
the kinds of products that might sell in a
country

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 How Does Culture
Impact The Workplace?
 Management processes and practices must be adapted to
culturally-determined work-related values
 Geert Hofstede identified four dimensions of culture
1. Power distance - how a society deals with the fact that
people are unequal in physical and intellectual
capabilities
2. Individualism versus collectivism - the relationship
between the individual and his fellows
3. Uncertainty avoidance - 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

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 How Does Culture
Impact The Workplace?
Work-Related Values for 20 Countries

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 Was Hofstede Right?
 Hofstede later expanded added a fifth dimension called
Confucian dynamism
 captures attitudes toward time, persistence, ordering by status,
protection of face, respect for tradition, and reciprocation of gifts
and favors
 Hofstede’s work has been criticized because
 made the assumption there is a one-to-one relationship between
culture and the nation-state
 study may have been culturally bound
 used IBM as sole source of information
 culture is not static – it evolves
 But, it is a starting point for understanding how cultures
differ, and the implications of those differences for
managers

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 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 change
as countries become economically stronger,
cultural change is particularly common

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 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
 managers must beware of ethnocentric behavior, or a
belief in the superiority of one's own 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

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 Review Question
Abstract ideas about what a group believes to
be good, right, and desirable are called

a) norms
b) values
c) folkways
d) mores

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 Review Question
The basic social organization of a society is its
a) culture
b) social strata
c) social structure
d) caste system

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 Review Question
The group is the primary unit of social
organization in
a) Japan
b) the United States
c) Switzerland
d) Mexico

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 Review Question
Which of the following is not characteristic of
individualism?

a) individual achievement
b) low managerial mobility
c) low company loyalty
d) entrepreneurial behavior

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 Review Question
Which religion promotes the notion that a
moral force in society requires the acceptance
of certain responsibilities called dharma?

a) Islam
b) Buddhism
c) Hinduism
d) Confucianism

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 Review Question
The most widely spoken language in the
world is

a) Chinese
b) Spanish
c) Hindi
d) English

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 Review Question
_______ focuses on how society deals with the
fact that people are unequal in physical and
intellectual capabilities.

a) power distance
b) individualism versus collectivism
c) uncertainty avoidance
d) masculinity versus femininity

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