CHAPTER 3 : Culture Environment

Learning Objectives:
• Understand how culture impacts international business
• Concept and elements of culture
• Cross-culture comparisons
• Bribery and ethics in international business
• Social responsibility of MNCs
• Cross cultural training in preparing for international assignment
• Understand the principles of business negotiations abroad
• Business practices in host country
There are more than 160 definitions of culture

“Communicable knowledge, learned behavior passed on from

generation to generation”

“ An Integrated system of learned behavior patterns that are

distinguishing characteristic of the members of a given
society

“ The collective programming of the mind which distinguishes

the members of one group or category from those of another
Element of Culture
A. Language
• Spoken Language
• Written Language
• Official Language
• Body Language
• International Language
B. Religion
• Beliefs and Norms
• Sacred Objects
• Philosophical Systems
• Prayer/ Rituals
• Leading Religious of the World
C. Values and Attitudes
Toward
• Time (Monochronic (V.S) Polychronic)
• Achievement
• Work
• Change
• Risk Taking
D. Education
• Literacy Level
• Formal Education
• Vocational Training
• Human Resource Planning
• Primary / Secondary / High education
E. Social Organization
• Social Institutions
• Authority Structure
• Interest Groups
• Status Systems
• Social Mobility
F. Technology and Material Culture
• Science
• Invention
• Energy Systems
• Communications
• Tools and Objects
• Urbanization
G. Politics
• Nationalism
• National Interests
• Power
• Ideologies
• Political Risks
• Sovereignty

H. Law
• Common Law
• Code Law
• Foreign law
• Home / Host Country Law
• Regulation / Antitrust Policy
• International Law
Cross-Culture Comparisons

A. Edward Hall’s High-Context (V.S) Low-Context Cultures

B. Hofstede’s Classification Scheme

• Individualism (V.S) Collectivism
• Power Distance
• Uncertainty Avoidance
• Masculinity
• Long-Termism

C. Deal-Oriented (V.S) Relationship – Oriented Cultures

• Deal – Oriented Cultures
• Relationship – Oriented Cultures
Cultural Factors
• Never touch the head of a Thai or pass an object over it.
The head is considered sacred in Thailand
• Avoid using triangular shapes in Hong Kong, Korea and
Taiwan. It is considered a negative shape.
• The number 7 is considered bad luck in Kenya, good luck in
Czech Republic and has magical connotation in Benin, Africa
• The number 10 is bad luck in Korea
• The number 4 is means Death in Japan
• Red represents witchcraft and death in many African countries
 Cultural Difference between Japanese and American Individual
lifestyles

American Japanese Cultural

A Culture of self-expression A Culture of Self restrain Background

Clear expression of Joy Ambiguous of joy

Reticence
and sorrow and sorrow

Unequivocal expression Equivocal expression Modesty

of “Yes/No”. of “Yes/No”.
Strong self-assertion Weak self-assertion Reserve
Strong Personality Weak Personality Punctiliousness
Excellent Negotiating skill Poor Negotiating skill Politeness
Priority of self-interest Priority of harmony
with others Obligation
 Cultural Difference between Japanese and American
Social Life
American Society
Dignity of Individuals
Dignity of individuals
Individuals work ethic
Great individuals freedom
Respect for rules
A open and transparent
society
Multi-cultural society
A society excelling in creativity
and versatility
Individual decisions over consensus
A society which pursue that ideal
Japanese Society
“In the same boat” concept
Human relation oriented
Dependence on the group
Lack of individuals freedom
Low regard for rules
A close society, lacking in
transparency
Mono-cultural society
An orderly and uniform
society
Dependence on consensus
A society which pursue harmony
with reality
 Cultural Differences between Japanese and American
Business
American Business Japanese Business

Game concept: Business is a game in

pursuit of profits under the rules of laws
and contracts
Efficiency-oriented and approximate
accuracy simplicity, clarity, and quickness
Quantity-oriented
Short-term performance evaluation
Easy layoffs, dismissals of employees, and
selling of businesses
Mutual trust-oriented business:
business is based on trusting
relationship among people rather than the
rules of game
Highly precision-oriented and
perfectionism-high dependency on human
awareness
Quality-oriented
Mid-to-long term evaluations
Job security

SOURCE : Norihiko Shimizu, “Today’s Taboos may be

gone tomorrow,’ Tokyo Business, February 1995, p.51.
Cultural Differences between Japanese and American
Business

American Business Japanese Business

Top down management Heavy dependence on human resources bottom-
up management and teamwork

Low mutual dependence between employers High mutual dependence between employers and
and employees employees

Control of business by stockholders and the Joint management of business by Employees and
management Employees

Management by “force” Management by “motivation”

Heavy dependence on machinery and

technology, vs. Light dependence on human Heavy dependence on human resources
resources
Limited loyalty and incentive-oriented work
ethics Strong loyalty and fewer incentives
Excellent software-based technology
development Inadequate software development ability

SOURCE : Norihiko Shimizu, “Today’s Taboos may be gone

tomorrow,’ Tokyo Business, February 1995, p.51.
 Corruption Perception Index* (Selected Countries 1997&1996)
Country CPI 1997 CPI 1998 Country CPI 1997 CPI 1998
Denmark (1) 9.94 9.33 Italy (30) 5.03 3.42
Finland ((2) 9.48 9.05 S. Korea (34) 4.29 2.96
Norway (7) 8.92 8.87 Brazil (36) 3.56 2.96
Singapore (9) 8.66 8.8 China (41) 2.88 2.43
Switzerland (11) 8.61 8.76 India (45) 2.75 2.63
USA (16) 7.61 7.66 Mexico (47) 2.66 5.5
France (20) 6.66 6.96 Russia (49) 2.27 2.58
Czech Rep. (27) 5.2 5.37 Nigeria (52) 1.76 0.69

The ranking is based on 52 countries studied

 The maximum 10 would be corrupt free country

 Bribery

 Extortion

 Subornation

 Lubrication
 Three Ethical Principles

Principle Question
Utilitarian Ethics Does the action optimize the
“common good” or beneficial of all
constituencies?

Rights of parties Does the action respect the rights of

the individuals involved?

Justice of fairness Does the action respect the canons

of justice or fairness to all parties
involved?
Ethical and social responsibility issues in multinational
business decisions

Does the decision efficiently optimize the common good and

benefits of :

• The business firm (Stockholders, Profit, Growth, etc)

• Society (“The good of life”, Culture, Order, Justice, etc)
• The economy (Economic growth, Production and Distribution
of goods/services)
• The individual (Freedom, Health and Welfare, Opportunity,
Human dignity
Cross-Culture Training Methods (Ascending Order)
• Area Briefing
• Books
• Sensitivity Training
• Field Trips
• Experiential
• Field Experience
Impact of Globalization
• Globally competent employees
• Ability to work with diverse cultures
• Overcoming the self-reference criterion (SRC)
Cross- Cultural Negotiations

• Non-Task sounding
• Task-Related Information Exchange
• Persuasion
• Concessions and agreement
• Try to access 3 videos produced by Big world UW-W library

 Cross-cultural communicating
 Cross-cultural understanding
 Cross-cultural negotiating
 Selected Reference on Culture and Business Practices
Around the World
• Video series from Big world : Cross-cultural understanding*
Cross-cultural communicating*
Cross-cultural negotiating*
• Do’s and taboos around the world by Roger Axtell , Wiley**
• Culturgrams Vol. I & II, Brigham Young University Press, 1999**
• International Business Etiquette by Ann Marie Sabath, Career
Press  Latin America **
 Europe **
 Asia **
• World Trade Press
 Doing Business in Series*
• Cross-Cultural business behavior by R.R. Gesteland ,
Copenhagen Business School Press**
• Richard Hill : We Europeans. Europublications **
: Euromanagers and Matians. Europublications **
* Available at UW-W Library ** Available at GBRC (C2018)