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International

Business 9e
By Charles W.L. Hill
McGraw-Hill/Irwin

Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 4

Differences
in Culture

How Do Cultural Differences
Affect International
Business?

Understanding and adapting to the local cultural
is important international companies
 cross-cultural literacy - an understanding of how
cultural differences across and within nations can
affect the way in which business is practiced
cross-cultural literacy is important for business
success

 A relationship may exist between culture and the
costs of doing business in a country or region
 MNEs can be agents of cultural change
 McDonald’s
4-3

right. and desirable  norms are the social rules and guidelines that prescribe appropriate behavior in particular situations  Society .a group of people who share a common set of values and norms 4-4 .What Is Culture?  Culture .a system of values and norms that are shared among a group of people and that when taken together constitute a design for living where  values are abstract ideas about what a group believes to be good.

the routine conventions of everyday life mores .What Are Values And Norms?  Values provide the context within which a society’s norms are established and justified and form the bedrock of a culture  Norms include folkways .norms that are seen as central to the functioning of a society and to its social life 4-5 .

And The Nation-State Related?  The relationship between a society and a nation state is not strictly one-to-one  Nation-states are political creations can contain one or more cultures  A culture can embrace several nations 4-6 . Society.How Are Culture.

What Determines Culture?  The values and norms of a culture evolve over time  Determinants include religion political and economic philosophies education language social structure 4-7 .

What Determines Culture? Determinants of Culture 4-8 .

as opposed to the group the degree to which a society is stratified into classes or castes 4-9 .What Is A Social Structure?  Social structure .a society’s basic social organization  Consider the degree to which the basic unit of social organization is the individual.

 Societies place different values on groups 4-10 . social groups. recreational groups. work groups.How Are Individuals And Groups Different?  A group is an association of two or more people who have a shared sense of identity and who interact with each other in structured ways on the basis of a common set of expectations about each other’s behavior individuals are involved in families. etc.

there is a focus on the individual  individual achievement is common  dynamism of the U. creates a lack of company loyalty and failure to gain company specific knowledge  competition between individuals in a company instead of than team building  less ability to develop a strong network of contacts within a firm 4-11 .S.How Are Individuals And Groups Different?  In Western societies. economy  high level of entrepreneurship  But.

How Are Individuals And Groups 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. might also suppress individual creativity and initiative 4-12 .

or social strata  individuals are born into a particular stratum  Must consider 1.What Is Social Stratification?  All societies are stratified on a hierarchical basis into social categories. mobility between strata 2. the significance placed on social strata in business contexts 4-13 .

the extent to which individuals can move out of the strata into which they are born  caste system .closed system of stratification in which social position is determined by the family into which a person is born  change is usually not possible during an individual's lifetime  class system .form of open social stratification  position a person has by birth can be changed through achievement or luck 4-14 .What Is Social Stratification? 1. Social mobility .

The significance attached to social strata in business contacts  class consciousness .a condition where people tend to perceive themselves in terms of their class background.What Is Social Stratification? 2. and this shapes their relationships with others  an antagonistic relationship between management and labor raises the cost of production in countries with significant class differences 4-15 .

2.How Do Religious And Ethical Systems Differ?  Religion . 4. 5. 3.a system of shared beliefs and rituals that are concerned with the realm of the sacred  Four religions dominate society 1. Christianity Islam Hinduism Buddhism Confucianism is also important in influencing behavior and culture in many parts of Asia 4-16 .

How Do Religious And Ethical Systems Differ? World Religions 4-17 .

a set of moral principles. that are used to guide and shape behavior  Religion and ethics are often closely intertwined  ex.How Do Religious And Ethical Systems Differ?  Ethical systems . or values. Christian or Islamic ethics 4-18 .

the Americas. and other countries settled by Europeans the Protestant work ethic (Max Weber. 1804) hard work. and frugality is the driving force of capitalism 4-19 . wealth creation.What Is Christianity?  Christianity the world’s largest religion found throughout Europe.

justice. terrorists. and tolerance  fundamentalists have gained political power and blame the West for many social problems  people do not own property.What Is Islam?  Islam  the world’s second largest religion dating to AD 610  there is only one true omnipotent God  an all-embracing way of life that governs one's being  associated in the Western media with militants. in fact teaches peace. but the way business is practiced is prescribed 4-20 . and violent upheavals but. but only act as stewards for God  supportive of business.

or may be infeasible due to the employee's caste 4-21 . which may require material and physical self-denial Hindus are valued by their spiritual rather than material achievements promotion and adding new responsibilities may not be important.What Is Hinduism?  Hinduism practiced primarily on the Indian sub-continent focuses on the importance of achieving spiritual growth and development.

individuals do have some mobility and can work with individuals from different classes 4-22 . rather than achievement while in this world does not emphasize wealth creation entrepreneurial behavior is not stressed does not support the caste system.What Is Buddhism?  Buddhism has about 350 millions followers stresses spiritual growth and the afterlife.

ethical conduct.What Is Confucianism?  Confucianism ideology practiced mainly in China teaches the importance of attaining personal salvation through right action high morals. and honesty . and loyalty to others are stressed three key teachings of Confucianism .may all lead to a lowering of the cost of doing business in Confucian societies 4-23 . reciprocal obligations.loyalty.

the spoken and unspoken (nonverbal communication such as facial expressions. Belgium. personal space. and hand gestures ) means of communication countries with more than one language often have more than one culture Canada. Spain 4-24 .What Is The Role Of Language In Culture?  Language .

critical for business success  failing to understand the nonverbal cues of another culture can lead to communication failure 4-25 . knowledge of the local language is still beneficial. and in some cases.What Is The Role Of Language In Culture?  Language is one of the defining characteristics of culture  Chinese is the mother tongue of the largest number of people  English is the most widely spoken language in the world  English is also becoming the language of international business  but.

What Is The Role Of Education In Culture?  Formal education is the medium through which individuals learn many of the language. impact of literacy rates 4-26 . and mathematical skills that are indispensable in a modern society  important in determining a nation’s competitive advantage Japan’s postwar success can be linked to its excellent education system  general education levels can be a good index for the kinds of products that might sell in a country ex. conceptual.

How Does Culture Impact The Workplace?  Management processes and practices must be adapted to culturally-determined work-related values  Geert Hofstede studied culture using data collected from 1967 to 1973 for 100.000 employees of IBM  Hofstede identified four dimensions that summarized different cultures 4-27 .

the extent to which different cultures socialize their members into accepting ambiguous situations and tolerating ambiguity 4. Uncertainty avoidance . Power distance .the relationship between the individual and his fellows 3.How Does Culture Impact The Workplace?  Hofstede’s dimensions of culture: 1.how a society deals with the fact that people are unequal in physical and intellectual capabilities 2. Masculinity versus femininity -the relationship between gender and work roles 4-28 . Individualism versus collectivism .

How Does Culture Impact The Workplace? Work-Related Values for 20 Countries 4-29 .

How Does Culture Impact The Workplace?  Hofstede later expanded added a fifth dimension called Confucian dynamism or long-term orientation captures attitudes toward time. protection of face. respect for tradition. and Canada scored low 4-30 . ordering by status. persistence. and reciprocation of gifts and favors Japan. Hong Kong.S. and Thailand scored high on this dimension the U.

it is a starting point for understanding how cultures differ. and the implications of those differences for managers 4-31 .Was Hofstede Right?  Hofstede’s work has been criticized for several reasons  made the assumption there is a one-to-one relationship between culture and the nation-state  study may have been culturally bound  used IBM as sole source of information  culture is not static – it evolves  But.

Does Culture Change?  Culture evolves over time changes in value systems can be slow and painful for a society  Social turmoil . cultural change is particularly common economic progress encourages a shift from collectivism to individualism globalization also brings cultural change 4-32 .an inevitable outcome of cultural change as countries become economically stronger.

What Do Cultural Differences Mean For Managers? 1. It is important to develop cross-cultural literacy  companies that are ill informed about the practices of another culture are unlikely to succeed in that culture  To avoid being ill-informed  consider hiring local citizens  transfer executives to foreign locations on a regular basis  Managers must also guard against ethnocentrism  a belief in the superiority of one's own culture 4-33 .

What Do Cultural Differences Mean For Managers? 2. There is a connection between culture and national competitive advantage  suggests which countries are likely to produce the most viable competitors  has implications for the choice of countries in which to locate production facilities and do business 4-34 .