Chapter 3 Differences in Culture 3 - 3 McGraw-Hill/Irwin Global Business Today, 4/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. OPENING

Chapter 3

Differences in Culture

3 - 3

McGraw-Hill/IrwinGlobal Business Today, 4/e

© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

OPENING CASE: Guanxi—Ties That Bind

• McDonald’s in China. • Just two years after opening its first store in China,

McDonald’s was told that it would have to move, despite having a twenty-year lease. McDonald’s took the Beijing city government to court, but the court refused to enforce the lease. Observers noted that McDonald’s lacked the all-important guanxi that is critical for success in China.

• guanxi - network of relationships, nepotism…

• http://www.time.com/time/asia/magazine/article/0,13673,501031124-543845,00.html

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Differences in Culture

• Societies’ differ along cultural dimensions• What is culture?• How/why do social structure, religion, language influence

cultural differences?• What are differences between culture and values in the

workplace (corporate culture)?• Culture(both national and business customs) changes over

time. What are some reasons behind this?• Implications for business managers

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What is Culture?

• Culture: a society’s (group’s) system of shared, learned values and norms; these are the society’s (group’s) design for living- Values: abstract ideas about the good, the right,

the desirable - Norms: social rules and guidelines; guide

appropriate behavior for specific situations• Folkways: norms of little moral significance

- dress code; table manners; timeliness

• Mores: norms central to functioning of social life- bring serious retribution: thievery, adultery, alcohol

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What is Culture?

“the collective programming of the mind which distinguishes the members of one human group over another…

Culture, in this sense, includes systems of values; and values are among the building blocks of culture”

Geert Hofstede

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National Culture

Way to bound and measure culture for conduct of business

• culture is a key characteristic of society• can differ significantly across national borders

- also within national borders

• laws are established along national lines

• Culture is both a cause and an effect of economic and political factors that vary across national borders

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Social Structure and Culture

• Unit of social organization: individual or group?• Society may be stratified into classes or castes

- High-low stratification- High-low mobility between strata

• The individual: building block of many Western societies- Entrepreneurship- Social, geographical and inter-organizational mobility

• The group: - Two or more associated individuals with a shared

identity- Interact with each-other in specific ways on the basis of a

common set of expectations.

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Individual vs Group Societal Characteristics

• Individual- Managerial mobility

between companies- Economic dynamism,

innovation- Good general skills- Team work difficult,

non-collaborative• Exposure to different ways of

doing business- e.g., U.S. companies

• Group- Loyalty and commitment to

company- In-depth knowledge of

company- Specialist skills- Easy to build teams,

collaboration- Emotional identification with

group or company- e.g., Japanese companies

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Religion, Ethics and Culture

• Religion: system of shared beliefs about the sacred• Ethical systems: moral principles or values that shape

and guide behavior; often products of religion• Major religious groups and some economic

implications- Christianity protestant work ethic- Islam Islamic economic principles- Hinduism anti-materialistic, socially stratified- Buddhism anti-materialistic, social equality- Confucianism hierarchy, loyalty, honesty

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Language: Culture Bound

• Language, spoken- “private” does not exist as a word in many

languages- Eskimos: 24 words for snow- Words which describe moral concepts can be

unique to countries or areas- Spoken language precision important in low-

context cultures• Language, unspoken

- Context... more important than spoken word in high context cultures

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High/Low Context Cultures

High-Context Low-ContextCrucial to Communications: external environment, situation, non-verbal behaviorexplicit information, blunt communicative

styleRelationships: long lasting, deep personal mutual involvement short duration, heterogeneous populationsCommunication: economical, fast because of shared "code" explicit messages, low reliance on non-

verbalAuthority person: responsible for actions of subordinates, loyalty at apremium

diffused through bureaucratic system,personal responsibility tough to pin down

Agreements: spoken, flexible and changeable written, final and binding, litigious, more

lawyersInsiders vs outsiders: very distinguishable difficult to identify, foreigners can adjustCultural pattern change: slow faster

See E.T. Hall & M.R. Hall, Understanding cultural differences, 1990, Intercultural Press

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Education and Culture

• Education- Medium through which people are acculturated- Language, “myths,” values, norms taught- Teaches personal achievement and competition- Critical to national competitive advantage

• Education system may be a cultural outcome

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Culture and the workplace (Hofstede)

• Hofstede finds national culture dimensions meaningful to business

• Basis:- Work related values not universal- National values may persist over MNC efforts to create

corporate culture- Home country values often used to determine HQ policies- MNC may create morale problems with uniform moral

norms• Purpose: understanding of business situations across-cultures• MUST understand own culture AND other culture(s)

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Power Distance -- (Hofstede)

• Degree of social inequality considered normal by people

• Distance between individuals at different levels of a hierarchy

• Scale: from equal (small power distance) to extremely unequal (large power distance)

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Individualism Vs. Collectivism (Hofstede)

• Degree to which people in a country prefer to act as individuals rather than in groups

• Describes the relations between the individual and his/her fellows

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Uncertainty Avoidance (Hofstede)

• Degree of need to avoid uncertainty about the future

• Degree of preference for structured versus unstructured situations

- Structured situations: have tight rules may or may not be written down

• High uncertainty avoidance: people with more nervous energy (vs easy-going), rigid society, "what is different is dangerous."

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Masculinity Vs. Femininity (Hofstede)

• Division of roles and values in a society• Masculine values prevail:

- assertiveness, success, competition• Feminine values prevail:

- quality of life, maintenance of warm personal relationships, service, care for the weak, solidarity

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Confucian Dynamism (Hofstede)

• Attitudes towards- Time- Persistence- Status in society- “Face”- Respect for tradition- Gifts and favors

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Cultural Change Over Time

•Change is slow and often painful•Shifts away from “traditional values” towards “secular values”

•Changes with shift from “survival values” to “self-expression values”

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Managerial Implications

• Ethnocentrism vs Polycentrism • Must a company adapt to local

cultures or can corporate -- often home-country dominated -- culture prevail?

• Cross-cultural literacy essential

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• Do some cultures offer a national competitive advantage over others?

• “Cultual Borrowing”

Documents

Chapter 3 Differences in Culture 3 - 3 McGraw-Hill/Irwin Global Business Today, 4/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. OPENING