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Ch.3: Differences in culture (Culture is not constant,it evolves over time)

Culture

Values

abstract ideas about

what a group believesto be good, right and

desirable

values can affect

attitudes towardpolitical and economic

system

Values provide the

context to establish asocietys norms

norms

the social rules andguidelines

FOLKWAYS

Violations of folkways

are not a serious matter

Routine conventions of

everyday life like dresscodes, social manners,

and neighborly

behavior

2. MORES

In many societies,

MORES may be enacted

to become LAWS

Much greater

significant than

folkways

central to the

functioning of a society

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Determinants of Culture

Determinants of Culture

Political PhilosophyDemocracy or Totalitarian political system

Economic Philosophy Market, command ,mixed economic system

Social Structure

individual and group

Social Stratification

CASTE SYSTEM

CLASS SYSTEM

Religion

CHRISTIANITY

HINDUISM

ISLAM

CONFUCIANISM

BUDDHISM

Language

SPOKEN LANGUAGE

Language blunder

Most widely spoken language

1.English 2. French 3. Spanish 4. ChineseUNPOKEN LANGUAGE

Education More education

attract foreign direct investment (FDI)

Generate nationals competitive advantage

More skilled workers => More productivity => Economic growth

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Hofetede Framework study cultural differences along five dimensions

Hofetede

Framework

1. Power distance

HIGHinequality in power and wealth &High distance between supervisors and

subordinates

LOW greater equality

2. Individualism vs Collectivism

individualism

Hard work, foster innovation

Ties between people are loose

Individual achievement and freedom

Collectivism

collective goal

feel strong association to

group

Ties between people are tight

3. Uncertainty

avoidance

HIGHvalue job security, retirement benefits and strong need for rules and regulations

LOWGreat readiness to take risk and changecreate Innovation& entrepreneurship

4. Masculinity versusFemininity

MasculinitySex roles are sharp, differentiated & Masculinevalues

FemininityLittle differentiation between men and womenin a same job & Relaxed lifestyles

5. Long-term orientation

(Confucian Dynamism)

HIGH Strong LONG-TERM business relationship

LOWFocus on present

only

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Criticism on Hoftsteds Research

1. Assumes there is a one-to-one correspondence between culture and nation-state

2. Research team was composed of Europeans and American only

3. Informants worked only within single industry (computer), and one company (IBM company)

4. Now beginning to outdated because cultures have changed

Cultural Change

1. As countries get richer, a shift occur away from traditional value linked to religion, family and national pride toward secular rational values2. Advances in transportation and communication technologies are merging the culture and Multinational enterprise (MNEs) can contribute to cultural change

Cultural Change

1. Economic

Advancement2. Globalization

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Implication for International Business (Difference in culture imply that)

-should be DEVELOPED

Ethnocentricity

Implication for

International Business

Need for mangers to develop cross-cultural literacy

Cross-Cultural Literacy an understanding of how culturaldifferences across and within nations can

affect the way in which business is practiced

Ethnocentricity

SHOULD AVOID

Belief that ones own culture is superior to

that of others

Connection between CULTURE

and national COMPETITIVE ADVANTAGE

Individualist lack of cooperation so cost of doing business increase

Collectivist Cooperation increase so cost of doing business decrease

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-Belief that ones own culture is superior to thatof others

-Often result in disregard or contempt for the culture of other countries

-Should be AVOIDED

2. Connection between CULTURE and national COMPETITIVE ADVANTAGE

-The value system and norms of a country influence cost of doing business in that country

Individualist =>lack of cooperation =>cost of doing business increase

Collectivist =>Cooperation increase =>cost of doing business decrease

-TWO important effect

1. Suggests which countries are likely to produce the most viable competitors

2. Importance for choice of countries in which to locate production facilities and doing business

3. Connection between CULTURE and ETHICS in decision making