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International BusinessCompeting in the Global Marketplace

8e

By Charles W.L. Hill

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Chapter 3

Differences

in Culture

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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

practicedIt is important for foreign businesses to gain an

understanding of the prevailing culture of its

host country, and that success requires a

foreign firm to adapt to the culture

Beware ofethnocentric behavior, or a belief in

the superiority of ones own culture

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What Is Culture?

Culture is a system ofvalues and norms that are

shared among a group of people and that when

taken together constitute a design for living

values are abstract ideas about what a groupbelieves to be good, right, and desirable

norms are the social rules and guidelines that

prescribe appropriate behavior in particular

situationsSociety 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 societys norms are established and

justified and form the bedrock of a

culture

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

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How Are Culture, Society, andThe Nation-State Related?

The relationship between a society and a

nation state is not strictly one-to-one

A society is defined as a group of people that

share a common set of values and norms

people who are bound together by a common

culture

Nation-states are political creations

can contain one or more cultures

A culture can embrace several nations

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What determines Culture?

The values and norms of a culture evolveover time

Determinants of culture (Figure 3.1)

includereligion

political and economic philosophies

educationlanguage

social structure

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What Is a Social Structure?

Social structurerefers to a societys basic

social organization

Consider two dimensions:the degree to which the basic unit of social

organization is the individual, as opposed to

the group

the degree to which a society is stratified into

classes or castes

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Copyright 2011 McGraw-Hill/Irwin 3-9

How Are Individuals andGroups Different?

In Western societies, there is a focus on theindividual, benefits include

common individual achievement

dynamism of the U.S. economy

high level of entrepreneurship

But, individualism creates a lack of company loyaltyand failure to gain company specific knowledge

competition between individuals instead of teambuilding

less ability to develop a strong network of contactswithin a firm

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How Are Individuals andGroups 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

But, the primacy of the value of groupmight also suppress individual creativity

and initiative

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What Is Social Stratification?

Societies are stratified in two related ways1. The degree ofsocial mobility - the extent to which

individuals can move out of the strata into which theyare born

caste system - closed system of stratification in whichsocial position is determined by the family into which aperson is born

class system - open stratification; social position canbe changed through achievement or luck

2. The significance attached to social strata in businesscontexts Class consciousness is a condition where people tend to

perceive themselves in terms of their class background

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How Do Religious andEthical Systems Differ?

Religion is a system of shared beliefs and ritualsthat are concerned with the realm of the sacred;Ethical systems are a set of moral principles, orvalues, that are used to guide and shape behavior

Religion and ethics are often closely intertwinedFour religions dominate society

1. Christianity

2. Islam

3. Hinduism4. Buddhism

Confucianism is not a religion, but influencesbehavior and shapes culture in many parts of Asia

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World Religions

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What Is Christianity?

The largest religion in the world

20% of the worlds people identified as Christians

Found throughout Europe, the Americas, and

other countries settled by Europeans

The three main branches of Christianity:

Catholic, Orthodox, and Protestant the latter

has the most important economic implications

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?

The worlds second largest religion, with about 1billion adherents

The central principle of Islam is that there is but onetrue omnipotent of God; people do not own property,

but only act as stewards for GodTeaching peace, justice, and tolerance

supportive of business, but the way business ispracticed is prescribed

Islamic fundamentalists have gained political power inmany Muslim countries and blame the West for manysocial problems; they are associated in the Westernmedia with militants, terrorists, and violent upheavals

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Copyright 2011 McGraw-Hill/Irwin 3-16

What Is Hinduism?

Hinduismpracticed primarily on the Indian sub-continent

focuses on the importance of achieving spiritualgrowth and development and believes that a

moral force requires the acceptance of certainresponsibilities, called dharma

Hindus are valued by their spiritual rather thanmaterial achievements

Hindu cultures reverence for the cow

promotion and adding new responsibilities maynot be important, or may be infeasible due to theemployee'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 worlddoes not emphasize wealth creation

entrepreneurial behavior is not stressed

does not support the caste system, individualsdo have some mobility and can work with

individuals from different classes

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What Is Confucianism?

Confucianismideology practiced mainly in China, Korea, and

Japan

teaches the importance of attaining personalsalvation through right action

high morals, ethical conduct, and loyalty toothers are stressed

three key teachings of Confucianism - loyalty,reciprocal obligations, and honesty - may all leadto a lowering of the cost of doing business inConfucian societies

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What Is the Role ofLanguage in Culture?

Language includes both the spoken and unspoken(nonverbal communication such as facialexpressions, personal space, and hand gestures)means of communicationcountries with more than one language often have

more than one cultureEnglish is the worlds most widely spoken language

and is also becoming the language of IB

Chinese is the mother tongue of the largest number of

people, followed by English and Hindiknowledge of the local language is still beneficial

failing to understand the nonverbal cues of anotherculture can lead to communication failure

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What Is The Role ofEducation In Culture?

Formal education is the medium throughwhich individuals learn many of the language,conceptual, and mathematical skills that areindispensable in a modern society

important in determining a nations competitiveadvantage

Japans excellent education system is an

important factor underlying its economic successgeneral education levels can be a good index for

the kinds of products that might sell in a country

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How Does CultureImpact the Workplace?

Probably the most famous study of how culturerelates to value in the workplace was conductedby Geert Hofstede, who identified four dimensionsof culture

1. Power distance how a society deals with the factthat people are unequal in physical and intellectualcapabilities

2. Uncertainty avoidance the extent to whichdifferent cultures socialize their members into

accepting ambiguous situations and toleratingambiguity3. Individualism vs. collectivism4. Masculinity vs. femininity the relationship

between gender and work roles

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Work-Related Values for 20 Countries

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Was Geert Hofstede Right?Hofstede later added a fifth dimension called

Confucian dynamism , also long-term orientationcaptures attitudes toward time, persistence, ordering

by status, protection of face, respect for tradition,and reciprocation of gifts and favors

Hofstedes work has been criticized becausethe assumption of one-to-one relationship between

culture and the nation-state

study may have been culturally bound

used IBM as sole source of informationculture is not static it evolves

But, important to understand how cultures differ, andthe 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 ofcultural change

as countries become economically stronger,

cultural change is particularly commone.g., Japan has been moving toward greater

individualism

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What Do Cultural DifferencesMean For Managers?

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

of another culture are unlikely to succeed in that

culturemanagers must beware of ethnocentric behavior, or

a belief in the superiority of one's own culture

2. There is a connection between culture andnational competitive advantage suggests which countries are likely to produce the

most viable competitors

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

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Review Questions

1. Abstract ideas about what a group believesto be good, right, and desirable are called

___________.

2. The basic social organization of a society isits ___________.

3. 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 Questions

4. Which of the following is not characteristicof individualism?

a) individual achievement

b) low managerial mobility

c) low company loyalty

d) entrepreneurial behavior

5. Which religion promotes the notion that amoral force in society requires theacceptance of certain responsibilities calleddharma?

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Review Questions

6. The most widely spoken language in the

world is ___________.

7. _________ focuses on how society deals with

the fact that people are unequal in physicaland intellectual capabilities.

8. Which refers to nonverbal communication

such as facial expressions, personal space,and hand gestures?