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CULTURAL ENVIRONTMENT
AND BUSINESS

By: Prof. Dr. Djoko Suryo

I. INTRODUCTION

One of the important non economic factors which

affect the performance of the business
organization is the Social-Cultural Environment.
The impact of these social and cultural factors with
their basic local values and traditions as well as
the global interaction on the formation on the
business opportunities can be identified in several
part of the Asian Countries, such as Japan, Korea,
China, and Indonesia.
The relationship between Culture, Economic
Institution and non-Economic Institution are
believed to be very closed.

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One of the prominent social theories on the

relation between culture and modern economic
system was the theory of the origin of the
Modern/ Western Capitalism forwarded by Max
Weber.
In his work on The Protestant Ethic and the
Spirit of Capitalism, Weber argued that the rise
of modern capitalism was supplied by the
worldly asceticism of Puritanism, as focused
through the concept of the calling.
According to him, that the Calvinist (Protestant)
ethic introduced an activism into the believers
approach to worldly affairs, a drive to mastery in
a quest for the virtue in the eyes of God.

Robert Bellah, in effort to apply Max Webers

sociology of religion theory, examined the origin of
the Japanese capitalism / Modern Japanese
entrepreneurship as showed in his work on
Tokugawa Religion, The Cultural roots of the
Modern Japan (published in 1957).
Bellah argued that one of the essential cultural roots
of the modern Japan in the Tokugawa period was
the values and ethic of Bushido, the Way of the
Warrior (the bushi or samurai embodied to the
central Japanese values or the national ethic).
Bushido means the determined will to die. It was a
kind of the religious dimension of Tokugawa period
and the economic ethic of the merchant class.

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Robert F. Dernberger, in his article Capitalism

and the East Asian Miracle, attempt to call the
genus of East Asian capitalist countries as
Confucian capitalism.
According to Robert F. Dernberger, each of
these economies had a cultural heritage related
to Confucian values such as a greeter sense of
community or group identity and
interdependence, a much more active role of the
government in initiating and directing activities in
the economy.

S. Gordon Redding, in his work The Spirit of

Chinese Capitalism (1990), argued that the
East Asian value system, the Spirit of Chinese
Capitalism, can be held to be significant in
explaining the success of what may be called
petty capitalism ( that is, family enterprise).
In similar effort, Cliffort Geertz examined the
cultural roots of the Indonesia entrepreneurship
in the Muslim merchants or traders groups and
aristocratic groups as shown in his work on The
Princes and the Peddlers and the History of
Town.

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II. DEFINITION AND CONCEPT OF CULTURE &

VALUES

Culture is a system of knowledge and ideas (cultural

knowledge), which consciously or unconsciously
belongs to a unit of society and is acquired in
accumulative manner, that functions as the directive
and guidance for attitude and behavior of the society
that bears this system (Goodenough, 1971,
Spradley, 1972, and Geertz, 1973).
Culture consist in patterned ways of thinking, feeling
and reacting, acquired and transmitted mainly by
symbols, constituting the distinctive achievements
of human groups, including their embodiments in
artifacts; the essential core of culture consist of
traditional ideas and especially their attached values
(Kluckhohn, 1951: 85.5).

Culture as transmitted and created contents

and patterns of values, ideas, and other
symbolic meaningful systems as factors in
shaping of human behavior and artifacts
produced through behavior (Kroeber and
Parson, 583).
Culture as the collective programming of the
mind which distinguishes the members of
human group from another (Geert Hofstede,
1980, 25).

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Values is a conception explicit or implicit,

distinctive of an individual or characteristic of a
group, of the desirable which influences the
selection from available modes, means and end
of actions (Kluckhohn, 1951a: 395).
Values are distinguished into values as the
desired and values as desirable.

III. CULTURAL VALUES ORIENTATION

Five categories of cultural values orientation of a
society according to Kluckhohn and Strodtbeck
(1961):
Human nature orientation (orientation toward
relationship between human and life (evil-mixedgood).
Man-nature orientation (orientation toward the
relationship between man and environment
(subjugation-harmony-mastery).
The orientation in time (orientation toward pastpresent-future).
The orientation toward activity (orientation between
human and works).
Relational orientation (orientation toward human and
others relationship).

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IV. MORAL UNIVERSAL AS CULTURAL REALITIES

AND BUSINESS

People Ought to Respect the Others with

Whom They Seek to Reach.
Agreement as Willing and Interested Persons.
People Ought to Keep Their Promises.
People Ought to Make Their Communications
Honest and Not Deceptive.
People Ought to Honor Their Reciprocal
Obligations.

V. MORAL PRINCIPLES THAT MAKE MORALITY

CRIDIBLE

Five General Principles are as follows:

Individuals Ought to Choose as Spouses and Sexual
Partners those Persons outside Their Natural Families
with whom it is Fitting for Them to Mary have Sexual
Relations.
Parents Ought to Care for, protect, and educate Their
Children.
People Should Not Exercise Physical Violence to the
Injury of Others Except as means to Defend Themselves
against, and to disarm, Those Who Threaten or Exercise
Physical Violence against them.
Social Goods and Burden Ought to Be Allocated in
Keeping with Publicly Recognized Rules and Procedures
the accord to People What is their Due.
People Should Not Steal.

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VI. CHARACTERISTIC OF ASIAN CULTURAL

TRAITS AND GROUPS BEHAVIOUR AND
BUSINESS

The religious and civic traditions of Confucianism,

Buddhism, Hinduism and Islam in Asian Societies
have transmitted a legacy of behavior, attitudes and
beliefs which have deep and constantly evolving
impact on Asian Entrepreneurial culture.

Culture affects government policies, social norms,

consumption patterns, business transactions,
management practices and labour relations.
Cultural traits vary according to ethnic, religious and

national groups.
However, it is possible to identify certain enduring

characteristics of Asian social organization and

group behavior which are present across the region.

Group Reference : Group versus

Individual Identity.
Group belonging is asserted before
individual instinct;
Compliance with group norms is expected;
Individualistic behavior is condemned;
Individual transaction are based on intragroup affiliation leading to networking.

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Extended Family and Nepotism

Family support is considered the norm;
Organization are seen as extension of the
family support structure and hence as
providers of social welfare;
It is considered proper behavior to give
preference to family members in business
dealing.

VII. THE CASE OF KOREA, JAPAN AND

CHINESE OVERSEAS
1. Korean Confucian Ethical Codes.
The essence of Confucian Ethical Codes could
be in four items:

2.

Politeness,
Harmony,
Loyalty, and
Educational-based social status system.

Confucian Ethical Codes define the five

cardinal human relations:

Between the king and his subject;

Between father and son;
Between husband and wife;
Between young and old; and
Between friends.

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3.

Based on the concept of the Confucian

ethical codes, employees attitudes and
behaviors toward the their seniors and
superiors are defined as the following five
items:
Treating seniors as elders;
Respecting seniors;
Compliance with seniors opinions;
Obedience to superiors directions;
Accepting superiors informal directions.

The Korean CHAEBOL : The Korean Modern

Business Players

The term chaebol means financial clique, it

is used to describe a large business group,
originally created by a talented entrepreneur and
still largely family controlled, and spread over
many diversified area.
The chaebol are the offspring of Koreas forced
industrialization.

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The Ten Largest Korean Chaebol

(Group: Business sectors)

SAMSUNG:
Electronic, aerospace, chemicals,
semiconductors, food, textile, service
HYUNDAI:
Motor vehicles, electronics, oil, heavy
industries, engineering, machinery, construction materials.
LUCKY: Electronics, chemicals, oil.
GOLDSTAR: insurance, telecommunication, engineering,
instruments.
DAEWOO: Motor vehicles, machinery, electronics,
distribution, shipbuilding, construction, finance.
SUNKYONG: Energy, chemicals, distribution, shipping.
SSANGYONG: Motor vehicles, cement, oil.
HANJIN: Airline, shipping, machinery, construction.
KIA :
Motor vehicles, machinery, steel.
LOTTE:
Distribution, food and beverage, chemicals.
HANWHA: Energy, petrochemicals, distribution.

Japaneses Bushido Ethical Codes:

1.
2.

The Japanese KAISHA

The Japanese KEIRETSU

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Japanese KAISHA

The Javanese Firms as typically Japanese;

Devoted Employee and Patient Capital. The
devotion of Javanese employee to their kaisha
is the resulted of two factors:
1. The strong desire of the Japanese to identify
with a group rather than striving for individual
achievement;
2. As a member of a group, employee is
implicitly offered life-long employment in
exchange for life-long commitment and
loyalty. In return, it is expected that the
employees future is closely tied to the wellbeing of the firm as life-long employment not
only offers job security, but also reduces
lateral job mobility.

Japanese KEIRETSU

Most of the larger firm are connected with

affiliated companies with whom they form a
keiretsu system whereby companies maintains
long-standing business ties with each other that
are sometimes, but not always, cemented by
mutual ownership of some of each others share.
Japans industrial landscape is dominated by
six very large keiretsu, MITSUBISHI, MITSUI,
SUMITOMO, FUYO, DAIICHI-KANGYO AND
SANWA.

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The Overseas Chinese Conglomerate: The Third

Distinctive Type of Regional Local Asian Business
Players

Historical Origin:
The Chinese Diasporas began in South China
with different waves of emigration starting as
early as the seventh century and accelerating
during the nineteenth and twentieth centuries.
Most of them established large immigrant
communities throughout Southeast Asia.
Confident of their eventual return to the Chinese
mainland, these immigrants avoided investing in
illiquid assets, preferring to specialize in
commerce and service occupations.

Historical Origin:
Their trading networks grew and at certain
stages succeeded in providing an alternative,
parallel framework to colonial European
multinationals and trading companies.
The Communist Revolution in China triggered
another wave of the ethnic Chinese Diasporas,
with many established Chinese capitalist fleeing
to Hong Kong and Taiwan.
This group has been more inclined towards
industry and manufacturing and has gradually
linked up with existing Overseas Chinese
network.

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Major Overseas Chinese Group in Asia Pacific

Countries

INDONESIA

MALAYSIA

Hong Leong (Kwek LengJoo);

United Overseas Bank (Wee Cho Woo);
Overseas Chinese Bankning Corporation (Lee Seng Wee).

TAIWAN

Fortune Tobacco (lucio Tan);

J.G. Summit Holdings (John Gongkonwei);
SM Prime Holding (Heny Sy)

SINGAPORE

Chaeroen Pokphand (Dhanin Chearavanon);

Bangkok Bank (Chatri Sophonpanich)
Siam Motors (Khunying Phornthip).

PHIPIPPINES

Kuoak Group (Robert Kuok)

Hong Leong (Quek Leng Chan)
Genting Group (Lim Goh Tong)

THAILAND

Salim (Liem Sioe Liong )

Sinas Mas (Eka Tjipta Wijaya)
Astra (FounderW. Soerajaya)

Formosa Plastic (Yung Ching Wang);

President Enterprises (Kao Chin Yen)
Acer Group (Stan shih).

HONG KONG

Hutchinson Whampoa & Cheung Kong Hong Kong Electric (li Ka

Shing);
Sun Hung Kai (Kwok brothers)
New World (Cheng Yu Tung)

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VIII. INDONESIAN CULTURE AND ITS IMPACT

UPON BUSINESS

Culture
History: the Indonesia Republics History;
The Pattern of Authority;
Indonesian society in the industrial
perspective;
The diversity of the people: Pluralism /
Multiculturalism.

IX. SOME ASPECT OF CULTURE OF BUSINESS

IN INDONESIA

Cultural diversity
The Indonesian Way
Feeling and emotions
Relationship based on worth-wile projects
and mutual friendship, trust and benefit;
Respect;
Women in government and business
Islam

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Non

Javanese
Javanese cultural influences.
Traditional attitude: gotong royong, unggahungguh, sumonggodawuh,alon-alon asal
klakon, tuna satak bathi sanak, gemi nastiti
ngati-ati dsb. (Jv.).
Conflict with modern business practices
Peacefulness and harmony
Self centeredness
The unsaid

Friends
Face-

and losing it
Humor
Fate and curiosity
The works place
Paternalism and sharing
Village influences
Changing attitudes affected by rapid social
change.

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