PART TWOCOMPARATIVE ENVIRONMENTAL FRAMEWORKS

International Business

Chapter Two

The Cultural Environments Facing Business

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Chapter Objectives

• To understand the major causes of cultural differences and change

• To grasp behavioral factors influencing countries’ business practices

• To become familiar with cultural guidelines for companies that operate internationally

• To learn to discuss the problems and methods of learning about cultural environments

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Culture Defined

Culture: the specific learned norms of a society that reflect attitudes, values, and beliefs

Major problems of cultural collision are likely to occur if:

-a firm implements practices that do not reflect local customs and values and/or

-employees are unable to accept or adjust to foreign customs.

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Fig. 2.1: Cultural Influenceson International Business

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Cultural Dynamics

• Cultures consist of societies, i.e., relatively homogeneous groups of people, who share attitudes, values, beliefs, and customs.

• Cultures are dynamic; they evolve over time.

• Cultural value systems are set early in life, but may change because of:

-choice or imposition

-contact with other cultures.

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The Nation as a Point of Reference

• The basic similarity amongst people within countries is both a cause and an effect of national boundaries.

• National identity is perpetuated through the rites and symbols of a country and a common perception of history.

Subcultures may link groups from different nationsmore closely than certain groups within nations.

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Cultural Formation and Change

• Societal values and customs constantly evolve in response to changing realities.

• Cultural imperialism is brought about by the imposition of one culture upon that of another.

• Certain elements introduced from outside a culture may be known as creolization, indigenization, or cultural diffusion.

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Language as a Cultural Stabilizer

• Isolation from other groups, especially because of language, tends to stabilize cultures.

• Some countries see language as being so important that they regulate the inclusion of foreign words and/or mandate the use of the country’s official language for business purposes.

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Map 2.2: Major Languagesof the World

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Fig. 2.2: Importance of Major Language Groups: Two Views

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Religion as a Cultural Stabilizer

• Religion is a major source of both cultural imperatives and cultural taboos.

• Major religions include:

-Buddhism

-Christianity

-Hinduism

-Islam

-Judaism

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Map 2.3: Major Religionsof the World

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Social Stratification Systems

• Ascribed group memberships are defined at birth; they may include gender, family, age, caste, and ethnic or national origin.

• Acquired group memberships are based on one’s choice of affiliation, such as political party, religion, and social and professional organizations.

Social stratification affects both business strategy and operational practices.

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Factors Affecting Work Ethics

• The desire for material wealth vs. the desire for leisure (Protestant Ethic)

• The expectation of success and reward• Assertiveness (Hofstede’s masculinity vs.

femininity index)• Needs satisfaction (Maslow’s Hierarchy)

Motivated employees are normally more productive, and higher productivity leads to lower costs.

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Fig. 2.4: The Hierarchy of Needs and Need-Hierarchy Comparisons

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Factors Affecting Relationship Preferences

• Power distance, i.e., the psychological and social distance between superiors and subordinates

• Individualism vs. collectivism– Individualism represents a desire for personal

freedom, time, and challenge.– Collectivism represents a dependence on the

organization as well as a need for a safe environment.

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Factors Affecting Risk-taking Behavior

• Uncertainty avoidance, i.e., one’s tolerance

of risk

• Trust, i.e., one’s belief in the reliability and honesty of another

• Future orientation, i.e., the need for immediate vs. delayed gratification

• Fatalism, i.e., the belief that life is pre-destined, that events are “the will of God”

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Factors Affecting Information and Task Processing

• Selective perception of cues• Communication context

-low-context cultures [explicit]-high-context cultures [implicit]

• Information processing-monochronic [work sequentially]-polychronic [multi-task]

Whereas idealistic cultures are principle driven, pragmatic cultures are detail driven.

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Factors Affecting the Communication Process

• Spoken language• Written language• Silent language

-color associations-conversational distance-perception of time-kinesics [body language and gestures]

Problems in communication may arise, even when nations share the same basic language (e.g., British, Canadian, and American English).

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Managerial Issues Associated with Cultural Differences

• Accommodation of foreigners

• Cultural distance [degree of similarity]

• Culture shock and reverse culture shock

• Managerial orientations– polycentric– ethnocentric– geocentric

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Map 2.4: A Synthesis of Country Clusters

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Factors Affecting Strategies for Instituting Cultural Change

• Value systems• Cost/benefits of change• Resistance to change• Participation in decision-making• Reward sharing• Role of opinion leaders• Timing• Opportunities to learn from abroad

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Implications/Conclusions

• Culture is dynamic and evolves over time. Economic development and globalization are two engines of cultural change.

• In addition to being part of a national culture, people are simultaneously part of other cultures, such as social and professional associations and business and government organizations. [continued]

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• Host cultures do not always expect firms and individuals to conform to their norms; in some instances they may choose to accommodate differences in traditions.

• International firms should make a concerted effort to identify ideas and behaviors in host countries and foreign cultures that can be usefully applied across the whole of their organizations.

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Determinants of Culture

Culture:Norms and

Value Systems

Education

Economic Philosophy

PoliticalPhilosophy

Religion

Language SocialStructure

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World’s Religions

10%

43%

18%

20%

5%4%

Christian

Islam

Hindu

Buddhist

Confucian

Other/Nonreligious

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Spoken Language

20%

6%5% 4% 3%

62%

Other

Chinese

English

Hindi

Russian

Spanish