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Culture is the collection of values, beliefs, behavior, customs, and attitudes that distinguish one society from another.
A societys culture determines the rules that govern how firms operate in the society.
Firms and businesspeople venturing beyond their familiar domestic markets soon recognize that foreign business
customs, values, and definitions of ethical behavior differ vastly from their own. Firms that rely on their familiar home
culture to compete in a new market can jeopardize their international success. Indeed, virtually all facets of an
international firms businessincluding contract negotiations, production operations, marketing decisions, and
human resource management policiesmay be affected by cultural variations.
Characteristics of Culture:
Learned behavior
Interrelated elements
Culture reflects learned behavior that is transmitted from one member of a society to another. Some elements of
culture are transmitted intergenerationally, as when parents teach their children table manners. Other elements are
transmitted intragenerationally, as when seniors educate incoming freshmen about a schools traditions.
The elements of culture are interrelated. For example, Japans group-oriented, hierarchical society stresses harmony
and loyalty, which has historically translated into lifetime employment and minimal job switching.
Because culture is learned behavior, it is adaptive; that is, the culture changes in response to external forces that affect
the society.
Culture is shared by members of the society and defines the membership of the society. Individuals who share a culture
are members of a society; those who do not are outside the boundaries of the society.
Elements of Culture

Social Structure
Individuals, families, and groups
Social stratification
Social mobility

All human societies involve individuals living in family units and working with each other in groups. Societies differ,
however, in the way they define family and in the relative importance they place on the individuals role within groups.
The U.S. view of family ties and responsibilities focuses on the nuclear family (father, mother, and offspring). In other
cultures, the extended family is far more important. These differing social attitudes are reflected in the importance of
the family to business. In the United States, firms discourage nepotism, and the competence of a man who married
the bosss daughter is routinely questioned by co-workers. In Arab-owned firms, however, family ties are crucial, and
hiring relatives is a common, accepted practice. Cultures also differ in the importance of the individual relative to the

Societies differ in their degree of social stratification. All societies categorize people to some extent on the basis of
their birth, occupation, educational achievements, or other attributes. However, the importance of these categories
in defining how individuals interact with each other within and between these groups varies by society.
Social mobility is the ability of individuals to move from one stratum of society to another. Social mobility tends to be
higher in less stratified societies. Social mobility (or the lack thereof) often affects individuals attitudes and behaviors
toward such factors as labor relations, human capital formation, risk taking, and entrepreneurship.
Nonverbal Communication

Art and rhetorical forms

Speech rate, pitch, inflection, volume
Color symbolism
Synchronization of speech and movement
Taste, symbolism of food, oral gratification
Sound signals
Time symbolism
Timing and pauses Silence

Gift Giving and Hospitality

Gift-giving and hospitality are important means of communication in many business cultures. Japanese business
etiquette requires solicitous hospitality. Elaborate meals and after-hours entertainment serve to build personal bonds
and group harmony among the participants. These personal bonds are strengthened by the exchange of gifts, that
vary according to the occasion and the status of the giver and the recipient. However, business gifts are opened in
private so as not to cause the giver to lose face should the gift be too expensive or too cheap relative to the gift offered
in return. The business culture of Arab countries also includes gift-giving and elaborate and gracious hospitality as a
means of assessing these qualities. Unlike in Japan, however, business gifts are opened in public so that all may be
aware of the givers generosity.
Norms of hospitality even affect the way bad news is delivered in various cultures. In the United States, bad news is
typically delivered as soon as it is known. In Korea, it is delivered at days end so it will not ruin the recipients whole
day. Further, in order not to disrupt personal relationships, the bad news is often only hinted at. In Japan, maintaining
harmony among participants in a project is emphasized, so bad news often is communicated informally from a junior
member of one negotiating team to a junior member of the other team. Even better, a third party may be used to
deliver the message to preserve harmony within the group
Imposes constraints on roles of individuals in society
Affects the types of products consumers may purchase
Varies from country to country
Religions impose constraints on the roles of individuals in society. For example, the caste system of Hinduism
traditionally has restricted the jobs individuals may perform, thereby affecting the labor market and foreclosing
business opportunities. Countries dominated by strict adherents to Islam, such as Saudi Arabia and Iran, limit job
opportunities for women, in the belief that their contact with adult males should be restricted to relatives.
Religion also affects the types of products consumers may purchase as well as seasonal patterns of consumption. In
most Christian countries, for example, the Christmas season represents an important time for gift-giving, yet very little
business is done on Christmas Day itself. While consumption booms during the Christmas holidays, production
plummets as employees take time off to visit friends and family.
The impact of religion on international businesses varies from country to country, depending on the countrys legal
system, its homogeneity of religious beliefs, and its toleration of other religious viewpoints. Consider Saudi Arabia,
home of the holy city of Mecca, to which all Muslims are supposed to make a pilgrimage sometime in their lives. The
teachings of the Koran form the basis of the countrys theocratic legal system, and 99 percent of the Saudi population
is Muslim. Strong political pressure exists within the country to preserve its religious traditions. For example, work
stops five times a day when the faithful are called to pray to Allah.

Values and Attitudes

Values are the principles and standards accepted by the members; attitudes encompass the actions, feelings, and
thoughts that result from those values.
Culture also affects and reflects the secular values and attitudes of the members of a society. Cultural values often
stem from deep-seated beliefs about the individuals position in relation to his or her deity, the family, and the social
hierarchy that we discussed earlier. Cultural attitudes toward such factors as time, age, education, and status reflect
these values and in turn shape the behavior of and opportunities available to international businesses operating in a
given culture.

Attitudes about time differ dramatically across cultures. In Anglo-Saxon cultures, the prevailing attitude is time is
money. In Latin American cultures, however, few participants would think it unusual if a meeting began 45 minutes
after the appointed time. In Arab cultures, meetings not only often start later than the stated time, but they also
may be interrupted by family and friends who wander in to exchange pleasantries.
Important cultural differences exist in attitudes toward age. Youthfulness is considered a virtue in the United States.
In Asian and Arab cultures, however, age is respected and a managers stature is correlated with age.
A countrys formal system of public and private education is an important transmitter and reflection of the cultural
values of its society.
The means by which status is achieved also vary across cultures. In some societies, status is inherited as a result of the
wealth or rank of ones ancestors. In others, it is earned by the individual through personal accomplishments or
professional achievements.
Halls-Low-Context High-Context Approach
An approach to understanding communication based on the relative emphasis on verbal and nonverbal cues to
transmit meaning
One useful way of characterizing differences in cultures is the low-context high-context approach developed by
Edward and Mildred Hall. In a low-context culture, the words used by the speaker explicitly convey the speakers
message to the listener. Anglo-Saxon countries, such as Canada, the United Kingdom, and the United States, and
Germanic countries are good examples of low-context cultures (see Figure 4.2 shown on the following slide). In a highcontext culture, the context in which a conversation occurs is just as important as the words that are actually spoken,
and cultural clues are important in understanding what is being communicated. Examples are Arab countries and

Business behaviors in high-context cultures often differ from those in low-context cultures. For example, German
advertising is typically fact oriented, while Japanese advertising is more emotion oriented. High-context cultures place
higher value on interpersonal relations in deciding whether to enter into a business arrangement. In such cultures,
preliminary meetings are often held to determine whether the parties can trust each other and work together
comfortably. Low-context cultures place more importance on the specific terms of a transaction. In low-context
cultures such as Canada, the United Kingdom, and the United States, lawyers are often present at negotiations to

ensure that their clients interests are protected. Conversely, in high-context cultures such as Saudi Arabia, Japan, and
Egypt, the presence of a lawyer, particularly at the initial meeting of the participants, would be viewed as a sign of
distrust. Because these cultures value long-term relationships, an assumption by a potential partner that one cannot
be trusted may be sufficient grounds to end the negotiations.

Hofstedes Five Dimensions

The most influential studies analyzing cultural differences and synthesizing cultural similarities are those performed
by Geert Hofstede, a Dutch researcher who studied 116,000 people working for IBM in dozens of different countries.
Although Hofstedes work has been criticized for methodological weaknesses and his own cultural biases, it remains
the largest and most comprehensive work of its kind. Hofstedes work identified five important dimensions along
which people seem to differ across cultures.
The following slides expand on each dimension.

The first dimension identified by Hofstede is social orientation. Social orientation is a persons beliefs about the relative
importance of the individual and the groups to which that person belongs. The two extremes of social orientation are
individualism and collectivism. Individualism is the cultural belief that the person comes first. Key values of
individualistic people include a high degree of self-respect and independence. These people often put their own career
interests before the good of their organizations, and they tend to assess decisions in terms of how those decisions
affect them as individuals. Hofstedes research suggested that people in the United States, the United Kingdom,
Australia, Canada, New Zealand, and the Netherlands tend to be relatively individualistic.
Collectivism, the opposite of individualism, is the belief that the group comes first. Societies that tend to be
collectivistic are usually characterized by well-defined social networks, including extended families, tribes, and coworkers. People are expected to put the good of the group ahead of their own personal welfare, interests, or success.
Individual behavior in such cultures is strongly influenced by the emotion of shame; when a group fails, its members
take the failure very personally and experience shame. In addition, group members try to fit into their group
harmoniously, with a minimum of conflict or tension. Hofstede found that people from Mexico, Greece, Hong Kong,
Taiwan, Peru, Singapore, Colombia, and Pakistan tend to be relatively collectivistic in their values.

The second dimension Hofstede proposed is power orientation. Power orientation refers to the beliefs that people in
a culture hold about the appropriateness of power and authority differences in hierarchies such as business
organizations. Some cultures are characterized by power respect. This means that people in a culture tend to accept
the power and authority of their superiors simply on the basis of the superiors positions in the hierarchy. These same
people also tend to respect the superiors right to that power. People at all levels in a firm accept the decisions and
mandates of those above them because of the implicit belief that higher-level positions carry the right to make
decisions and issue mandates. Hofstede found people in France, Spain, Mexico, Japan, Brazil, Indonesia, and Singapore
to be relatively power respecting.
In contrast, people in cultures characterized by power tolerance attach much less significance to a persons position
in the hierarchy. These people are more willing to question a decision or mandate from someone at a higher level or
perhaps even refuse to accept it. They are willing to follow a leader when that leader is perceived to be right or when
it seems to be in their own self-interest to do so but not because of the leaders intangible right to issue orders.
Hofstedes work suggested that people in the United States, Israel, Austria, Denmark, Ireland, Norway, Germany, and
New Zealand tend to be more power tolerant.

The third basic dimension of individual differences Hofstede studied is uncertainty orientation. Uncertainty orientation
is the feeling people have regarding uncertain and ambiguous situations. People in cultures characterized by
uncertainty acceptance are stimulated by change and thrive on new opportunities. Ambiguity is seen as a context
within which an individual can grow, develop, and carve out new opportunities. In these cultures, certainty carries
with it a sense of monotony, routineness, and overbearing structure. Hofstede suggested that many people from the
United States, Denmark, Sweden, Canada, Singapore, Hong Kong, and Australia are uncertainty accepting.
In contrast, people in cultures characterized by uncertainty avoidance dislike ambiguity and will avoid it whenever
possible. Ambiguity and change are seen as undesirable. These people tend to prefer a structured and routine, even
bureaucratic, way of doing things. Hofstede found that many people in Israel, Austria, Japan, Italy, Colombia, France,
Peru, and Germany tend to avoid uncertainty whenever possible.

Hofstedes fourth dimension, goal orientation, is the manner in which people are motivated to work toward different
kinds of goals. One extreme on the goal orientation continuum is aggressive goal behavior. People who exhibit
aggressive goal behavior tend to place a high premium on material possessions, money, and assertiveness. At the
other extreme, people who adopt passive goal behavior place a higher value on social relationships, quality of life, and
concern for others.
According to Hofstede, cultures that value aggressive goal behavior also tend to define gender-based roles somewhat
rigidly, whereas cultures that emphasize passive goal behavior do not. In cultures characterized by extremely
aggressive goal behavior, men are expected to work and to focus their careers in traditionally male occupations;
women are generally expected not to work outside the home and to focus on their families. If they do work outside
the home, they are usually expected to pursue work in areas traditionally dominated by women. According to
Hofstedes research, many people in Japan tend to exhibit relatively aggressive goal behavior, whereas many people
in Germany, Mexico, Italy, and the United States exhibit moderately aggressive goal behavior. Men and women in
passive goal behavior cultures are more likely to both pursue diverse careers and to be well represented within any
given occupation. People from the Netherlands, Norway, Sweden, Denmark, and Finland tend to exhibit relatively
passive goal behavior.

Hofstedes fifth dimension, time orientation, is the extent to which members of a culture adopt a long-term versus a
short-term outlook on work, life, and other aspects of society. Some cultures, such as those of Japan, Hong Kong,
Taiwan, and South Korea, have a long-term, future orientation that values dedication, hard work, perseverance, and
thrift. Other cultures, including those of Pakistan and West Africa, tend to focus on the past and present, emphasizing
respect for traditions and fulfillment of social obligations. Hofstedes work suggests that the United States and
Germany tend to have an intermediate time orientation.

Understanding new Culture

When dealing with a new culture, many international businesspeople make the mistake of relying on the self-reference
criterion, the unconscious use of ones own culture to help assess new surroundings. A U.S. salesperson who calls on
a German customer in Frankfurt and asks about the customers family is acting politely according to U.S. culturethe
salespersons reference pointbut rudely according to German culture, thereby generating ill will and the potential
loss of a customer.
There are numerous ways to obtain knowledge about other cultures to achieve cross-cultural literacy. The best and
most common way, not surprisingly, is through personal experience that results from conducting business abroad
as part of either a business trip or a long-term assignmentor from nonbusiness travel. Many firms offer cross-cultural
training programs to their employees headed for foreign assignments. Information about specific cultures can also be
obtained from various published sources. Cross-cultural literacy is the first step in acculturation, the process by which
people not only understand a foreign culture but also modify and adapt their behavior to make it compatible with that
culture. Acculturation is of particular importance to home country managers who frequently interact with host country