The Cultural Environment: Diversity and globalization

THE INTERNATIONAL BUSINESS ENVIRONMENT

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WHAT IS CULTURE?• ‘learned, shared…set of symbols whose meanings provide a

set of orientations for members of a society’ (Terpstra and David, 1991)

• Includes: - values and beliefs, - all forms of communication - norms of behaviour - customs - art, music, literature, sport

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HOW IS CULTURE RELEVANT TO BUSINESS?• National culture – a society’s shared language, religion,

history and identity• National culture exerts a strong influence – we acquire basic

values in childhood• Diversity of national cultures is a key factor for businesses

to understand in the international environment.• Ethnocentrism vs polycentrism: relating to the world in terms

of your own culture vs being open to other people’s cultures

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LANGUAGES• Low-context culture - clear, direct communication, characteristic

of the US

• High-context culture - importance of relationships and indirect communication, characteristic of Asian cultures

• Sources of linguistic diversity: indigenous cultures, colonialism, immigration

• Is English the global language?

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Language Percentage of global

web content English 68.4 Japanese 5.9 German 5.8 Chinese 3.9 French 3.0 Spanish 2.4 Russian 1.9 Italian 1.6 Portuguese 1.4 Korean 1.3 Other 4.6

Source: Global Reach(2004) ‘Global Internet Statistics (by Language)’ at

http://glreach.com/globstats/

Web content by language

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Year: 1900 1970 1990

2000

Christians

558.1 (34.5%)

1,236 (33.5%)

1,747 (33.2%)

1,999 (33.0%)

Muslims 199.9 (12.3%)

553.5 (15.0%)

962.3 (18.3%)

1,188 (19.6%)

Hindus 203.0 (12.5%)

462.5 (12.5%)

685.9 (13.0%)

811.3 (13.4%)

Buddhists 127.0 (7.8%)

233.4 (6.3%)

323.1 (6.1%)

359.9 (5.9%)

Jews 12.3 (0.8%)

14.7 (0.4%)

13.1 (0.3%)

14.4 (0.2%)

Non-religious 3.0 (0.2%)

532.0 (14.4%)

707.1 (13.4%)

768.1 (12.7%)

Note: Numbers in millions, followed by percentage of the world’s population (in brackets). Source: Barrett, D., Kurian, G., and Johnson, T. (eds), (2001) World Christian Encyclopedia, 2nd edition (New York: Oxford University Press)

Growth of major world religions

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IMPACT OF RELIGION ON BUSINESS LIFE

• Religious laws which impact on business contracts and employment laws

• Role of women

• Food and drink restrictions

• Requirements for prayer and religious observance

• Restrictions on media, e.g. output deemed to conflict with predominant religion

• Restrictions on trading hours

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MULTI-CULTURAL SOCIETIES

• Assimilation – Immigrants adopt the culture and language of their new society (example: France)

• Melting pot – Society evolves its own identity and culture, based on a mixture of the different cultures which formed it (examples: ‘settler’ societies of the US and Australia)

• Cultural pluralism – Immigrants and indigenous peoples form subcultures which remain distinct - becoming more common (examples: UK and possibly US at present)

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Hofstede

Theory based on cultural dimensions of national culture:

• Power distance• Uncertainty avoidance• Individualism v collectivism• Masculinity v femininity• Long-term v short-term

orientation

Trompenaars

Theory based on five relationship orientations:

• Universalism v particularism

• Individualism v collectivism

• Neutral v emotional

• Specific v diffuse

• Achievement v ascription

CULTURE THEORIES

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ORGANIZATIONAL OR CORPORATE CULTURE• Dominant values, such as high product quality and customer

orientation

• Norms of behaviour among staff and between the organization and other firms

• Preference for formal or informal means of communication

• Degree of empowerment of employees

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CULTURE CHANGE• Affects individuals, organizations and whole societies• Factors leading to change:

- Industrialization – transition from agricultural to industrial society

- Capitalist development – the ‘Protestant’ work ethic (based on individualism); but Asian societies, where a ‘Confucian’ ethic exists, have pursued different path

- Material well-being and prosperity

- Changes in the nature of work

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CULTURAL GLOBALIZATION: MYTH OR REALITY?

• Theorists such as Ohmae have predicted the fading away of cultural differences as consumer markets become globalized.

• However, in markets for consumer products and entertainment, successful global companies find that local diversity calls for different strategies.

• Although most web content is in English, multilingual websites reach more consumers.

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English35.8%

Chinese14.1% Japanese

9.6%

Spanish9.0%

Italian3.3%

Dutch1.8%

Other5.2%

Russ ian2.5%

Portuguese3.5%

French3.8%

Korean4.1%

German7.3%

Source: Global Reach 2004

Online language populations – percentages of those accessing the internet in major languages

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CONCLUDING SUMMARY AND QUESTIONS• Culture refers to a society’s values, norms, language

and shared history, which impact on differing markets for consumer products and ways in which businesses operate.

• Most states are multi-cultural.• Individuals, organizations and societies undergo cultural

changes over time. Are there ‘core’ values which may remain constant despite economic changes?

• The Internet has facilitated a more connected-up world, but not as yet cultural globalization.

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