Chapter 04 - Differences in Culture

Differences in Culture

Learning objectives

Know what is meant by the culture of

a society.

Identify the sources that lead to

differences in social culture.

Identify the business and economic

implications of differences in culture.

Understand how differences in social

culture influence values in the work
place.

This chapter explores the role of culture in

international business: how differences in
culture across and within countries can affect
the practice of business.
The discussion then addresses the major
questions of the chapter: What is culture? How
does it play itself out in social structures,
religious and ethical systems, language, and
education? The need for cross-cultural literacy
and an appreciation of the impact of culture on
competitive advantage are all addressed.
The opening case explores the influence of
Saudi Arabias culture on business and the
implications of the culture for companies
operating within or with the country. The
closing case explores the changes at Matsushita.
The companys new CEO eliminated many
traditional Japanese practices including lifetime
employment in an effort to increase the firms
competitiveness.

Develop an appreciation for the

economic and business implications of
cultural change.

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Chapter 04 - Differences in Culture

OUTLINE OF CHAPTER 4: DIFFERENCES IN CULTURE

Opening Case: Culture and Business in Saudi Arabia
Introduction
What Is Culture?
Values and Norms
Culture, Society, and the Nation-State
The Determinants of Culture
Social Structure
Individuals and Groups
Social Stratification
Country Focus: Breaking Indias Caste System
Religious and Ethical Systems
Christianity
Islam
Hinduism
Buddhism
Confucianism
Country Focus: Islamic Capitalism in Turkey
Management Focus: DMG-Shanghai
Language
Spoken Language
Unspoken Language
Education
Culture and the Workplace
Cultural Change
Implications for Managers
Cross-Cultural Literacy
Culture and Competitive Advantage
Chapter Summary
Critical Thinking and Discussion Questions
Closing Case: Matsushita (Panasonic) and Japans Changing Culture

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CLASSROOM DISCUSSION POINT

Ask students about what they might expect in the way of cultural differences if they were to go to
Saudi Arabia. What might they expect if they were to go to France, Brazil, or South Korea?
Next, ask students what they think students from Saudi Arabia, France, South Korea, or Brazil
might expect from American culture. As students respond, jot their ideas on the board and try to
develop categories similar to the elements of culture discussed in the text.
Then, discuss why these elements of culture exist, and why they differ between countries.
Finally, ask students to consider what they mean for international companies.
If there are foreign students in the class, draw on their special expertise by asking what
differences they experienced when they first came to the United States.

OPENING CASE: Culture and Business in Saudi Arabia

Summary
The opening case explores Saudi Arabias culture and its influence on how business is conducted
in the country. Saudi Arabias culture reflects the strong traditions of both Islam and Bedouin
beliefs. Prayer times are strictly observed, women have little freedom, and Western expatriates
are frequently the targets of terrorist attacks. In addition, the concept of time is viewed quite
differently and values including loyalty and status are important as are strong interpersonal
relationships. Companies doing business with the country must be aware of these cultural
differences and adapt accordingly. Discussion of the case can revolve around the following
questions:
1. Reflect on the long standing cultural traditions in Saudi Arabia and how they shape the
countrys business environment. How should Westerners approach a business meeting in Saudi
Arabia? How might your response change if you are a Western woman?
2. Saudi Arabia has a long held aversion to manual labor and indeed any behavior that might be
considered menial or servile. Discuss the implications of this value system. How does it impact
companies doing business in the country? How is this basic cultural tradition beginning to
change? What are the long term implications of this?

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3. Consider the restrictions put on Saudi Arabian women. How do these restrictions change the
way products are marketed toward women?
Another Perspective: To explore business opportunities in Saudi Arabia in more detail, consider
{http://www.doingbusiness.org/data/exploreeconomies/saudi-arabia} and
{http://www.saudiarabiaexpoonline.com/en}.

LECTURE OUTLINE
This lecture outline follows the Power Point Presentation (PPT) provided along with this
instructors manual. The PPT slides include additional notes that can be viewed by clicking on
view, then on notes. The following provides a brief overview of each Power Point slide
along with teaching tips, and additional perspectives.
Slide 4-3 Cultural Differences and International Business
Business success requires cross-cultural literacy. Managers need an understanding of the
culture, or cultures, that prevail in the countries where they do business.
Slide 4-4 What is Culture?
Culture is a system of values and norms that are shared among a group of people and that when
taken together constitute a design for living.
Values are abstract ideas about what a society believes to be good, right, and desirable. Norms
are social rules and guidelines that prescribe the appropriate behavior in particular situations.
The cost of doing business in a country is influenced by culture different cultures are more or
less supportive of the capitalist approach to production. Culture is dynamic.
Slide 4-5 Values and Norms
Values and norms are the basic components of culture. Norms can be further divided into
folkways and mores.
Values include attitudes towards concepts like freedom, honesty, loyalty, justice, responsibility,
and personal relations including marriage. Norms shape the actions of people towards one
another. Norms can be divided into folkways and mores.
Slide 4-6 Culture, Society and Nation State
While it is possible for a nation-state to have a uniform culture, this is not always the case.
Within a nation-state multiple cultures can exist, and cultures can also cut across national borders.

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Slides 4-7-4-8 The Determinants of Culture

Culture is an evolutionary product of a number of factors.
Political philosophy, economic philosophy, education, dominant language, social structure, and
dominant religion are all determinants of culture.
Slide 4-9 Social Structure
The social structure of a country can be described along two major dimensions: individualism
vs. group, and degree of stratification into classes or castes.
Slides 4-10-4-12 Individuals and Groups
A focus on the individual and individual achievement is common in many Western societies. An
emphasis on individual achievement has positive and negative implications.
On the positive side, the dynamism of the United States economy owes much to people like Sam
Walton, Steve Jobs, and Bill Gates - people who took chances, tried new things, succeeded, and
encouraged others to do likewise. On the other hand, individualism can lead to a lack of
company loyalty and failure to gain company-specific knowledge, competition between
individuals in a company rather than team building, and a limitation of people's ability to develop
a strong network of contacts within a firm.
In sharp contrast to the Western emphasis on the individual, in many Asian societies the group is
the primary unit of social organization.
While this emphasis on the group may discourage job switching between firms, encourage
lifetime employment systems, and lead to cooperation in solving business problems, it tends to
suppress individual creativity and initiative.
Slides 4-13-4-15 Social Stratification
All societies have some sort of stratification, where individuals in higher strata or castes are
likely to have a better education, standard of living, and work opportunities.
Social structure is linked to the ease with which an individual can move between strata.
Additionally, the social structure created by the strata levels and the social significances of each
strata level can have implications for the way business is conducted.
The significance of the social strata can have important implications for the management and
organization of businesses.

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In cultures where there is a great deal of consciousness over the class of others, the way
individuals from different classes work together (i.e. management and labor) may be very
prescribed and strained in some cultures, or have almost no significance in others.
Slides 4-16-4-18 Religious and Ethical Systems
Religion can be defined as a system of shared beliefs and rituals that are concerned with the
realm of the sacred.
Ethical systems refer to a set of moral principles, or values, that are used to guide and shape
behavior. The ethical practices of individuals within a culture are often closely intertwined with
their religion.
Another Perspective: The International Business Ethics Institute {http://www.business-ethics.org}
promotes ethical business practices around the world. The site contains a number of articles that
can be used to expand a discussion of business ethics in foreign markets, and a top ten
mistakes list for companies doing business in other countries.
Slide 4-19 Christianity
Christianity, the largest religion, is common throughout Europe, the Americas, and other
countries settled by Europeans and has three major branches: Protestant, Roman Catholic, and
Eastern Orthodox.
The "Protestant work ethic" a focus on hard work, wealth creation, and frugality - is considered
the driving force of capitalism. In the workplace this work ethic translates into a significant
emphasis on quality and productivity.
Slide 4-20 Islam
Islam has the same underlying roots of Christianity (Christ is viewed as a prophet), and suggests
many of the same underlying societal mores. Islam, however, extends this to more of an allembracing way of life that governs one's being. Islam also prescribes many more rules by which
people should act and live.
In Islam people do not own property, but only act as stewards for God and thus must take care of
that with which they have been entrusted. They must use property in a righteous, socially
beneficial, and prudent manner; not exploit others for their own benefit; and they have
obligations to help the disadvantaged. Thus, while Islam is supportive of business, the way
business is practiced is strictly prescribed. For instance, no interest may be paid on business loans.
Slide 4-21 Hinduism
Hinduism, practiced primarily on the Indian sub-continent, focuses on the importance of
achieving spiritual growth and development, which may require material and physical self-denial.

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Since Hindus are valued by their spiritual rather than material achievements, there is not the
same work ethic or focus on entrepreneurship found in some other religions. Likewise,
promotion and adding new responsibilities may not be the goal of an employee,
Slide 4-22 Buddhism
Buddhists also stress spiritual growth and the afterlife, rather than achievement while in this
world. Buddhism, practiced mainly in Southeast Asia, does not support the caste system,
however, so individuals do have some mobility not found in Hinduism, and can work with
individuals from different classes.
Slide 4-23 Confucianism
Confucianism, practiced mainly in China, teaches the importance of attaining personal salvation
through right action. Unlike religions, Confucianism is not concerned with the supernatural and
has little to say about the concept of a supreme being or an afterlife. The needs for high moral
and ethical conduct and loyalty to others are central in Confucianism.
Three key teachings of Confucianism - loyalty, reciprocal obligations, and honesty - may all lead
to a lowering of the cost of doing business in Confucian societies.
Slides 4-24-4-25 Language
Language refers to the spoken and unspoken means of communication, and is one of the defining
characteristics of culture.
While English is clearly the language of international business, knowing at least some of the
local language can greatly help when working in another country.
In some situations knowing even a bit of the local language can be critical for business success.
Such knowledge may be understood as a sign that the businessperson is willing to learn from the
local firm
Unspoken language refers to nonverbal communication such as facial expressions, personal
space, and hand gestures. Managers who fail to understand the nonverbal cues of another culture
may experience a breakdown in communication.
Slide 4-26 Education
Formal education is the medium through which individuals learn many of the language,
conceptual, and mathematical skills that are indispensable in a modern society.
Education is part of the social structure of a country, and is instrumental in shaping many cultural
values and norms. The knowledge base, training, and educational opportunities available to a
country's citizens can contribute to a competitive advantage in the marketplace.

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Slides 4-27-4-31 Culture in the Workplace

Geert Hofstede conducted what is probably the most famous study about the connection between
culture and values in the workplace. Hofstede made a study of IBM employees worldwide, and
identified four dimensions to describe cultures: power distance, individualism vs. collectivism,
uncertainty avoidance, and masculinity vs. femininity.
Power distance focuses on how a society deals with the fact that people are unequal in physical
and intellectual capabilities. Individualism versus collectivism focuses on the relationship
between the individual and his or her fellows. Uncertainty avoidance measures the extent to
which different cultures socialize their members into accepting ambiguous situations and
tolerating ambiguity. Masculinity versus femininity looks at the relationship between gender
and work roles.
Hofstede later expanded his study to include a fifth dimension called Confucian dynamism
which captures attitudes toward time, persistence, ordering by status, protection of face, respect
for tradition, and reciprocation of gifts and favors.
Slide 4-32 Cultural Change
Culture is not a constant, but evolves over time. As countries become economically stronger,
cultural change is particularly common.
Slide 4-33-4-34 Implications for Managers
Managers need to be aware that societies differ because their cultures vary, and cultures vary
because of profound differences in social structure, religion, language, education, economic
philosophy, and political philosophy.
Individuals and firms must develop cross-cultural literacy. International businesses that are ill
informed about the practices of another culture are unlikely to succeed in that culture. One way
to develop cross-cultural literacy is to regularly rotate and transfer people internationally.
Managers need to be aware of ethnocentric behavior, or a belief in the superiority of their own
culture.
Another Perspective: To give students an opportunity to experience cultural differences create
a mock business meeting. Executive Planet maintains a web site,
{http://www.executiveplanet.com/index.php?title=Main_Page}, with guidelines for doing
business in different countries. The site allows visitors to explore relevant issues in a variety of
cultures.

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The connection between culture and competitive advantage is important because it suggests
which countries are likely to produce the most viable competitors, and it has implications for the
choice of countries in which to locate production facilities and do business.

CRITICAL THINKING AND DISCUSSION QUESTIONS

QUESTION 1: Outline why the culture of a country influences the costs of doing business in that
country. Illustrate your answer with examples.
ANSWER 1: This question has be explored throughout the chapter, and since there can be
numerous reasons and examples of how culture influences the costs of doing business, there is no
single acceptable response to the question. Several are highlighted below, but there could be
numerous others. When there are simply different norms between how individuals from different
countries interact, the costs of doing business rise as people grapple with unfamiliar ways of
doing business. For example, while in the US people get down to business first, and then get to
know each other socially later, in many South American countries it is important develop a good
social relationship before trying to discuss business issues. Different class structures and social
mobility also raise the costs of doing business, for if there are inhibitions against working with
people from different classes, then the efficiency with which information can flow may be
limited and the cost of running a business increased. A country's religion can also affect the costs
of business, as religious values can affect attitudes towards work, entrepreneurship, honesty,
fairness, and social responsibility. In Hindu societies where the pursuit of material well-being
can be viewed as making spiritual well being less likely, worker productivity may be lower than
in nations with other religious beliefs. Finally, a country's education system can have important
implications for the costs of business. In countries where workers receive excellent training and
are highly literate, the need for specific worker training programs are decreased and the hiring of
additional employees is facilitated.
QUESTION 2: Do you think that business practices in an Islamic country are likely to differ
from business practices in the United States? If so how?
ANSWER 2: The cultural differences between a Muslim country and the US will cause business
practices to differ dramatically. The public role women can take, appropriate etiquette (including
simple things like not passing objects with the left hand), holidays, and wining and dining all
differ from patterns in the US. But beyond these, the underlying ideal and understanding of the
role of business differs. Since Muslims are stewards of property for God, rather than owners,
they are more likely to use their resources carefully and may be less likely to give up or sell
something to a person who may not practice the same stewardship. The importance of fairness to
all parties in all relations means that over-aggressiveness and self-interest may not be well
received, and breaking an agreement, even if technically/legally permissible, may be viewed as

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inappropriate and the sign of a huge character flaw. Finally, the prohibitions on interest
payments in some Muslim countries means that the wording of the terms of an agreement must
be careful so that "fair profits" are not construed as being "interest payments."
QUESTION 3: What are the implications for international business of differences in the
dominant or ethical system of a country?
ANSWER 3: Differences in the dominant religion of a country affect relationships, attitudes
toward business, and overall economic development. First, differences in religion require intercultural sensitivity. This sensitivity requires things like simply knowing the religious holidays,
accepting that some unexpected things may happen "because of Allah's will," or understanding
how interpersonal relationships may be different between "believers" and "non-believers."
(Hence non-believers may be treated differently.) Second, religious beliefs can significantly
affect a countrys attitude toward business, work, and entrepreneurship. In one country
successfully beating a competitor may be considered a great achievement while in another it may
be thought of as showing a lack of compassion, or disruptive to the society and persons involved,
both attitudes that may be derived from underlying religious beliefs. Likewise, hard work may
be either rewarded positively or viewed as something of secondary importance to spiritual peace
and harmony. Third, different dominant religions may affect the overall competitiveness and
potential for economic growth of a nation, and hence attractiveness of a country for international
business.
Basic, unarticulated assumptions about what has value, what is right and wrong, and what
constitutes good are embedded in our religions. Should rules or laws apply to all people all the
time (in the US, the answer here is probably yes); or should they change depending on the
circumstances of the particular situation (in Asia, the answer would be, of course)? Religion
plays a basic, influential role in our most fundamental values and the norms that arise from them.
So if an international business venture faces a different dominant religion in its foreign market,
managers there will have to make special efforts to understand what is really underlying practice
differences.
QUESTION 4: Choose two countries that appear to be culturally diverse. Compare the culture of
those countries and then indicate how cultural differences influence (a) the costs of doing
business in each country, (b) the likely future economic development of that country, and (c)
business practices.
ANSWER 4: Responses to this question will obviously vary based on the countries chosen by
students, and their knowledge of the countries. Hopefully, students can present some
information on the dimensions of culture including values, norms, social structure, religion,
language, and education of the countries and also describe the key differences and similarities of
the countries along these dimensions. Relating the differences between the countries along these
dimensions to differences in the costs of doing business, the potential for economic development,
and business practices would fully answer the question. (While it may be more difficult for
students to come up with really

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good examples relative to business practices, the costs and prospects for economic development
should be quite feasible.)
Another Perspective: The US CIA website is a good place for introductory-level information
(economic, demographic, climate, background) on countries. The site is available at
{http://www.cia.gov/cia/publications/factbook}.
QUESTION 5: Reread the Country Focus on Islamic Capitalism in Turkey. Then answer the
following questions:
a) Can you see anything in the value of Islam that is hostile to business?
b) What does the experience of the region around Kayseri teach us about the relationship
between Islam and business?
c) What are the implications of Islamic values towards business for the participation of a country
like Turkey in the global economy?
ANSWER 5:
a) Many students will probably focus on the comment by the sugar factory manager that if you
are not a good Muslim, dont pray five times a day and dont have a wife who wears a headscarf,
it can be difficult to do business here when they respond to this question. Some may perceive
this comment to be a gentle warning that only Muslims will be successful in Turkey. Others
however, will probably perceive this comment as a reminder that companies coming into the
region need to respect the local way of doing things.
b) The area around Kayseri that has been growing rapidly is strongly influenced by Islam. In
addition to incorporating gestures like prayer rooms, some companies are also adhering to the
Islamic value of equal opportunities in business, and are now changing their strategies to create
new opportunities for other companies.
c) Some students might focus on the lack of competitiveness that is sometimes associated with
Islam. Others might note though, that at least for Turkey, this doe not seem to be an issue. Many
students will probably conclude that in this day and age of globalization and interdependency,
Muslims, like other distinct groups, must find a comfortable balance between their beliefs and
what is occurring around them.
QUESTION 6: Reread the Management Focus on DMG-Shanghai. Then, answer the following
questions
a) Why do you that it is so important to cultivate guanxi and guanxiwang in China?
b) What does the experience of DMG tell us about the way things work in China? What would
likely happen to a business that obeyed all of the rules and regulations, rather than trying to find a
way around them as Dan Mintz apparently does?
c) What are the ethical issues that might arise when drawing upon guanxiwang to get things done
in China? What does this suggest about the limits of using guanxiwang for a Western business
committed to high ethical standards?

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ANSWER 6:
a) Guanxi literally means relationships, although in business settings in can better be understood
as connections. The concept of guanxi is deeply rooted in Chinese culture and Confucianism.
The Chinese will often cultivate a guanxiwang, or relationship network, for help. In China,
there is a tacit acknowledgement that if you have the right guanxi, legal rules can be broken or
bent. Mintz made connections with two Chinese men who had access to high ranking
government officials. Through these men, Mintz was able to secure permission to film
commercials in locations that are normally closed to outsiders.
b) Personal power and relationships or connections (guanxi), rather than the rule of law, have
always been the key to getting things done in China. Most students will probably agree that
companies that play by the rules in China will probably find it difficult to compete.
c) Guanxiwang refers to the relationship network that many Chinese companies rely on.
Because reciprocal obligations are central to the process, some students may suggest that
companies could get into trouble if they are asked to return a favor to a network partner that
involves unethical actions. Other students may note that in China, it is not what you know that
is important, it is who you know. These students may point out that since success depends on
others, firms doing business in China are not in complete control of their own destinya
situation that could result in ethical standards being comprised.

CLOSING CASE: Matsushita (Panasonic) and Japans Changing Culture

The closing case explores the changes at Japans Matsushita after new CEO Kunio Nakamura
began to eliminate many traditional practices at the company. Until 2000, Matsushita, like many
other Japanese companies followed traditional Japanese practices including providing lifetime
employment and benefits to its employees. However, the company was forced to abandon these
practices in order to survive the economic slump that began in the 1990s and the growing
realization that many of Japans younger workers were not willing to make the same commitment
to a single company as their parents were. Changes were implemented slowly and a new focus
on individuality, initiative-taking and risk-taking was emphasized. Today, the company is once
again on firmer ground. A discussion of the case can revolve around the following questions:
QUESTION 1: What were the triggers of cultural change in Japan during the 1990s? how is
cultural change starting to affect traditional values in Japan?
ANSWER 1: A shift in traditional values began to emerge in Japan as the generation born after
1964 started to come of age. This generation resisted many of the values shared by their parents
and instead embraced many Western traditions. Many watched as troubled

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companies reneged on lifetime employment commitments made during the post-ward period and
decided that instead of being tied to a single company they wanted the freedom to move around
in the same way that their Western counterparts could. Most students will probably recognize
that in this new cultural era values that set employees apart in the Western world such as
individual effort will become more important in Japanese business, and that these new values
will eventually make their way into other parts if Japanese life as well.
QUESTION 2: How might Japans changing culture influence the way Japanese businesses
operate in the future? What are the potential implications of such changes for the Japanese
economy?
ANSWER 2: The generation born after 1964 is changing the way businesses operate in Japan.
This generation, which resisted the lifetime employment concept of their parents, has pushed for
more freedom to move from company to company. Many students will probably suggest that this
generation will make individual effort and initiative more important for success in Japan.
Students may conclude that these values may promote more risk taking by Japanese companies
and in doing so influence the highs and lows of Japans economy in a more direct way.
QUESTION 3: How did traditional Japanese culture benefit Matsushita during the 1950s-1980s?
Did traditional values become more of a liability during the 1990s and early 2000s? How so?
ANSWER 3: Japans traditional culture helped Matsushita become a major economic power
during the post-war years and through the 1980s. Matsushita agreed to take care of its employees
for life providing benefits such as subsidized housing and retirement bonuses n exchange for
loyalty and hard work. However, the prolonged economic slump that began in the 1990s made
these commitments difficult to keep. Matsushita was saddled with high expenses and no real
way to cut them. Some students may liken the situation to the more recent challenges of GM to
maintain the commitments it had made to its older workers.
QUESTION 4: What is Matsushita trying to achieve with the human resource changes it has
announced? What are the impediments to successfully implementing these changes? What are
the implications for Matsushita if (a) the changes are made quickly or (b) it takes years or even
decades to fully implement the changes?

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ANSWER 4: In 2000, Matsushita began to make changes to its employment policies offering
workers choices between traditional lifetime employment options with lower salaries to higher
salaries with no long-tem commitments. These changes should give the company more
flexibility to reduce its staff as needed as well as cut costs during leaner times. Matsushita is
implementing the changes in a gradual manner recognizing that especially among older workers
the new alternatives as not popular. Many students will probably agree that the faster Matsushita
moves towards a more Western approach to staffing the more flexibility it will have, but should
also recognize that it is important to maintain the values and traditions that are important to
Matsushitas corporate culture.
QUESTION 5: What does the Matsushita case teach you about the relationship between societal
culture and business success?
ANSWER 5: Most students will probably agree that societal culture and business culture are
strongly intertwined. A societys culture has a direct impact in a companys culture. The values
and traditions that are important in societal culture will typically be important in corporate
culture as well. As societal culture changes over time, so should company culture. However,
changes in the business environment can also prompt changes in corporate culture which can
then begin to influence societal culture as well.
Another Perspective: To learn more about Matsushita (now Panasonic), go to the companys web
site {http://www.panasonic.com//}.

INTEGRATING iGLOBES
There are several iGLOBE video clips that can be integrated with the material presented in this
chapter. In particular, you might consider the following:

Title: Internet Restrictions Highlight Political, Cultural Divides

Run Time: 8:07
Special Note: This iGLOBE can be used in conjunction with an earlier iGLOBE: Google in
China (April 2006)

Abstract: This video explores the situation leading up to Googles recent decision to change its
policy in China to allow Internet users unfiltered access to information, and the tensions the
situation has created between the governments of China and the United States.

Key Concepts: ethics, globalization, political economy, global strategy, foreign direct
investment, political risk

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Notes: When Google entered the Chinese market in 2006, it agreed to follow certain filtering
requirements mandated by the Chinese government. At the time, Google was strongly criticized
by many who felt the company was compromising its ideals in its quest for greater profits.
Recently, after a series of attacks on the Google e-mail accounts of several prominent Chinese
human rights activists, Google decided to lift the filters and giver Chinese Internet users access to
all information available. Googles decision set off a series of verbal attacks from Chinas
official media, and the situation quickly reached diplomatic levels, prompting U.S. Secretary of
State Hillary Clinton to take a stand on the refusal of China and other countries like Tunisia,
Vietnam, and Iran to grant their citizens free access to the information provided via the Internet.
Clinton suggested that the limits imposed by China constitute a violation of human rights, and
requested that the Chinese government investigate the attacks on the e-mail accounts. China
responded with claims that the United States is trying to force its own values on the Chinese
people, arguing that Clinton is engaging in information imperialism. According to Michael
Posner, assistant secretary of state for democracy, human rights, and labor, the situation revolves
around two key issues. The first involves free and open access to the Internet, while the second
involves ensuring that individuals using the Internet have their privacy protected. David
Lampton of Johns Hopkins University believes that the restrictions imposed by the Chinese
government are simply an effort by the government to maintain social stability within the country.
In his view, the Chinese government is seeking to control access to information as a means of
controlling its citizens, however, he also notes that Chinas citizens, and especially its growing
middle class who are seeking to improve their lot, are resisting the restrictions. Lampton points
out that without free access to the Internet, Chinas ability to succeed in the global economy will
be limited.
At the moment, it remains unclear what Google will do next. Many Chinese citizens have
indicated that they back the companys decision to stop filtering information. Some have
actually left notes and other signs of support at Googles Chinese headquarters. Some analysts
believe that Google will find additional support for its actions from those individuals who felt
that the decision made by Google in 2006 compromised its dont be evil motto. Posner points
out that because China plays such a big role in todays global economy, it is essential that the
United States have ongoing discussions with the Chinese on issues that could contribute to a
stable society in which human rights are respected, commercial relationships are encouraged and
facilitated, and where information is exchanged freely.

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Discussion Questions:
1. Googles decision to no longer filter information in China has become a lightening rod for
human rights activists and politicians. What is Googles responsibility to the Chinese people?
Do you agree with the companys recent decision to make all information available to its users in
China? Is Google being ethical in its decision making?
2. In your opinion, can China truly become a world player in trade if it fails to maintain an open
and democratic society? Is the free flow of information a part of such a society? Why or why not?
3. What should Google do next? Can the company remain in China if it fails to meet the
demands of the Chinese government? What might happen if Google decides to pull out? Does
Google have a responsibility to the Chinese people to continue to offer its services in the country?
4. Michael Posner, assistant secretary for democracy, human rights and labor, has suggested that
other U.S. companies have a responsibility to demand that China allow for a free exchange of
information. Do you agree? Why or why not?

INTEGRATING VIDEOS
There are also several longer video clips that can be integrated with the material presented in this
chapter. In particular, you might consider the following from International Business DVD Volume 6:

Title: Twitter and Haiti

Learning Objectives
The purpose of this video is to help you:
Understand how social media platforms are increasing the pace of globalization.
Examine how new methods of communication are replacing more traditional ones.
Recognize the marketing implications of how people communicate via social media.
Explore how social media platforms may be changing social activism.

Key Words

Globalization
Global economy
Technological change
Cultural change
Levels of economic development

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Synopsis
When the earthquake hit Haiti last year, many people, both within the country and outside,
immediately got on Twitter and Facebook to get information about what was happening, and to
communicate with each other. This crisis was one of the first of its kind in that rather than using
more traditional forms of communication like the telephone or television, large numbers of
people turned to new forms of technology like Twitter and Facebook. Even news reporters were
scanning postings to learn more about the crisis. This may reflect a global trend in which social
media platforms are replacing long established means of communication.
After the earthquake, many people posted messages to family members indicating that they had
survived and providing information about other friends and families. Some people also provided
details about what had occurred and what they had seen. Some postings included information
about problems that would probably occur as a result of the earthquake such as shortages of
medical supplies and water. People outside Haiti were able to learn from these accounts of the
extent of the devastation, and get a feel for what was ahead for the Haitian people and the
country as a whole.
Twitter and Facebook were also the first choice for many social activists and global health
organizations involved with the crisis. Social activists were able to leverage the power of the
social media platforms to reach out to people for help. Wyclef Jean, a popular Haitian musician,
asked his 1.3 million Twitter followers to donate money to help for example. Interestingly, the
efforts of activists like Jean were made easier because of the availability of social media
platforms and cell phones. People could respond to their requests simply by sending a text
message indicating their willingness to donate money. Global organizations like the Red Cross
were also able to use social media platforms to raise awareness of the needs of the Haitian people
and to organize contributions.

Discussion Questions
1. Discuss how new technologies emerged as a preferred form of communication after the
earthquake in Haiti. What conclusions might a company targeting consumers in a developing
country like Haiti draw from this phenomenon?

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2. What challenges do social network platforms like Twitter and Facebook face in developing
countries? Why might first mover advantages be important in these markets?
3. Reflect on the differences in how people use social networking platforms based on their
geographic location. How can companies capitalize on the growing use of social media networks
in developing countries and emerging markets?
4. Discuss how social media platforms are changing the way social activists raise awareness and
gain support for their causes. How can companies that support social causes leverage these same
opportunities?

INCORPORATING globalEDGE EXERCISES

Use the globalEDGE site {http://globalEDGE.msu.edu/} to complete the following exercises:

Exercise 1
You are preparing for a business trip to Chile where you will need to interact extensively with
local professionals. Therefore, you should consider collecting information regarding local culture
and business habits prior to your departure. A colleague from Latin America recommends you
visit the Centre for Intercultural Learning and read through the country insights provided for
Chile. Prepare a short description of the most striking cultural characteristics that may effect
business interactions in this country.

Exercise 2
Typically, cultural factors drive the differences in business etiquette encountered during
international business travel. In fact, Middle Eastern cultures exhibit significant differences in
business etiquette when compared to Western cultures. Prior to leaving for your first business trip
to the region, a colleague informed you that a guide to business etiquette around the world may
help you. Using the globalEDGE website, find five tips regarding business etiquette in the
Middle Eastern country of your choice.

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Answers to Exercise Questions

Exercise 1
The data can be accessed by searching for the term Centre for Intercultural Learning at
http://globaledge.msu.edu/ResourceDesk/. The Centre for Intercultural Learning is the only
source in this search. Go to the Country Insights link on the left side of this resources webpage.
This resource is found under the globalEDGE category Reference: Culture. Be sure to click on
the Resource Desk link to search this area of the globalEDGE website.
Search Phrase: Centre for Intercultural Learning
Resource Name: Centre for Intercultural Learning (Foreign Affairs and International Trade
Canada)
Website: http://www.dfait-maeci.gc.ca/cfsi-icse/cil-cai/
globalEDGE Category: Reference: Culture

Exercise 2
The data can be accessed by searching for the term Business Etiquette Around the World at
http://globaledge.msu.edu/ResourceDesk/. The Guide to Business Etiquette in the Middle East is
a source found near the bottom of this resources website. You can also select the region of the
Middle East from the map located at the top of the website. This resource is found under the
globalEDGE category Reference: Culture. Be sure to click on the Resource Desk link to search
this area of the globalEDGE website.
Search Phrase: Business Etiquette Around the World
Resource Name: Business Etiquette Around the World
Website: http://www.cyborlink.com/
globalEDGE Category: Reference: Culture

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