Introduction to International Business Cultural Environment:

A firm operating internationally comes across a wide range of diverse cultural environments which significantly influence
international business decisions. Managers operating across national borders need to appreciate the differences among the
cultural behaviours of their business partners and consumers across various countries.
As a matter of basic principle, an international manager visiting overseas is expected to follow local customs and a seller
needs to adapt to the buyer’s requirements.
When international managers are faced with a set of business situations overseas, they are prone to misjudge or
erroneously react due to perceptual differences of cross-cultural nuances. Therefore, it becomes imperative for
international managers to have a thorough conceptual understanding of cross-culture issues and its implications on
international business decisions.
International managers need to develop cultural sensitivities in the countries of their operations and adapt their business
strategies accordingly. The failure of Euro Disneyland is a classic example of the failure to understand a foreign culture
and is often described as a ‘Cultural Chernobyl’.
Disney’s insensitivity to French culture in terms of product designs, consumer habits, and local norms made the company
enter into troubled waters in its French venture. For instance, alcoholic beverages are out of place in Disney’s US ‘family
restaurants’, whereas in most parts of Europe, alcoholic drinks form integral part of the meals.
Another example of cultural insensitivity was witnessed in May 2001 when a wave of anger erupted among vegetarian
and Hindu consumers across the world, especially in India, within hours of receiving the news of McDonald’s using beef
extract for cooking its fries.
The perception and behaviour of people varies widely across cultures (Exhibit 7.1). Culture represents the collective or
group behaviour of people that makes them different from others. The various constituents of culture such as value
system, norms, aesthetics, customs and traditions, language, and religion have also been elaborated along with their
implications in international business.

step 1:
Define the business problem or goal in home-country traits, habits, or norms.
Step 2:
Define the business problem or goal in foreign country cultural traits, habits, or norms. Make no value judgments.
Step 3:
Isolate the SRC influence in the problem and examine it carefully to see how it complicates the problem.
Step 4:
Redefine the problem without the SRC influence and solve for the optimum business goal situation?

Comparison of Cross-Cultural Behaviour:

Attempts have been made to carry out cross-country comparisons of cultural behaviour so as to develop better
understanding among cultures. An appreciation of cultural differences facilitates international managers to conceptualize
and implement business strategies in view of culture sensitivities in various countries.
The major types of cross- cultural classifications are discussed here:
(i) Hofstede’s Cultural Classification:
The most widely used tool to study cross-cultural behaviour is the Hofstede’s classification, which identified cross-
cultural differences based on a massive survey of 1, 16,000 respondents from 70 countries working in IBM subsidiaries.
Hofstede’s classification involves the following.
Power Distance:
The degree of inequality among people that is viewed equitable is known as ‘power distance’. It is the extent to which less
powerful members of an institution accept that power is distributed unequally. As indicated in Fig. 7.7, power distance in
Malaysia is the highest while it is the lowest in case of Austria.
Power distance in India is on the higher side. In the UK and Scandinavian and Dutch countries, managers expect their
decision-making to be challenged, while the French consider the authority to take decisions as their right. Germans feel
more comfortable in formal hierarchies while the Dutch have a relaxed approach to their authorities.
In countries with large power distance, hierarchical
organizational structures are based on inequality among
superiors and subordinates and juniors blindly follow the
orders of their superiors. Generally, high social
inequalities are tolerated in cultures with wide
differences in power and income distribution.
Small power distance is characterized by egalitarian
societies, in which superiors and subordinates consider
each other equal. Organizations are relatively flatter and
decision-making is decentralized.
Power distance greatly affects the international business
decision-making process. In view of the power distance,
an international manager has to assess the organizational
dynamics, identify the key decision makers, and
accordingly formulate their business strategy for
different countries.
Individualism vs. Collectivisms:
The tendency of people to look after themselves and only their immediate family is termed as ‘individualism’. Societies
with a high level of individualism tend to have strong work ethics, promotions based on merit, and involvement of
employees in the organizations primarily calculative.
Ability to be independent of others is considered to be the key criterion for success in individualistic societies.
Collectivism is referred to the tendency of people to belong to groups and to look after each other in exchange for loyalty.
The interests of group have precedence over individual interests.
As indicated in Fig. 7.8, the US, the UK, and France have highly individualistic societies while, Guatemala, Pakistan,
Singapore, and Malaysia show a high level of collectivism. International business strategy is greatly influenced by
individualism vs. collectivism in terms of decision-making and market communication.
For a product to be successful in collective societies, such as Guatemala, Ecuador, Panama, Venezuela, Malaysia, and
Japan, it should have group acceptability unlike in the individualistic societies of the US, Australia, UK, and Canada.

Masculinity vs. Femininity:

In masculine societies, the dominant values
emphasize on work goals, such as earnings,
advancement, success, and material belongings. On
the other hand, the dominant values in a feminine
society are achievement of personal goals, such as
quality of life, caring for others, friendly atmosphere,
getting along with boss and others.
Summarily, in masculine societies, people ‘live to
work’ while in feminine societies, people ‘work to
live’.
As indicated in Fig. 7.9, Scandinavian countries such
as Sweden, Norway, and Denmark are highly

feminine while, Japan is highly masculine. India falls in

between, indicating a balanced emphasis on personal and
work goals. In feminine societies, such as Sweden,
Norway, the Netherlands, and Denmark, the gender
equality is much greater as compared to the same in
masculine societies such as Japan, Austria, Venezuela, Italy,
and the US.
Uncertainty Avoidance:
Uncertainty avoidance refers to the lack of tolerance
for ambiguity and the need for formal rules. It measures
the extent to which people feel threatened by
ambiguous situations. As indicated in Fig. 7.10,
Greece, Portugal, and Japan are the most
uncertainty avoidance societies, while
Singapore, Denmark, and India are the least
uncertainty avoidance societies.
In high uncertainty avoidance societies, lifetime
employment is more common, whereas in low
uncertainty avoidance societies, job mobility is more
common.

(ii) Trompenaars’ Cultural Classification:

The Dutch researcher, Fons Trompenaars, conducted research over a ten-year period, administering questionnaires to over
15,000 managers from 28 countries and published the findings in 1994.
Each of the cultural dimensions of Trompenaars’ research is defined on the basis of the usable responses received from at
least 500 managers in each country. The abbreviated terms for 23 countries, included in his report, are shown in Table 7.2.

Trompenaars’s five cultural dimensions address the way in

which people deal with each other. This helps in explaining the
cultural differences and offers practical ways in which MNCs
can do business in various countries.
Universalism vs. Particularism:
Universalism is the belief that ideas and practices can be
defined and applied everywhere without modification. On the
contrary, particularism is the belief that unique circumstances
and relationships, rather than abstract rules, are more important
considerations that determine how ideas and practices should be
applied.
In cultures with high universalism (Fig. 7.11), such as the US,
Austria, Germany, Sweden, UK, etc., the focus is more on
formal rules than on relationships, whereas in particularist
cultures, such as Venezuela, CIS, Indonesia, China, Hong
Kong, Thailand, etc. the focus is more on relationships than on
rules.
In high universalism cultures, business contracts are very
closely adhered to and ‘a deal is a deal’ whereas in high particularism cultures, legal contracts may readily be modified,
honoring the changing circumstances based on the reality of the situation.

Individualism vs. Communitarianism:

Trompenaars’ communitarianism seems to be an analog of
Hofstede’s collectivism. Individualism refers to people
regarding themselves as individuals whereas
communitarianism refers to people regarding themselves
as part of a group.
Societies with high individualism make more frequent use
of T and ‘me’, decisions are typically made on the spot by a representative during business negotiations, and achievement
and responsibility are also personal.
On the contrary, in collectivist societies, ‘we’ is used more frequently than T, business decisions are typically referred
back to the organization, achievement is considered to be a group achievement, and managers believe in joint
responsibility.
The US, Czechoslovakia, Argentina, the CIS, Mexico, and the UK rank high on individualism (Fig. 7.12) whereas
Singapore, Thailand, Japan, and Indonesia rank high on communitarianism.
 Neutral vs. Affective:
All human beings have emotions but this dimension
deals with the different contexts and ways in which
emotions are expressed by various cultures. In affective
cultures, emotions are expressed openly and are more
‘natural’ whereas in neutral cultures, people tend to
hold in check their emotions and try not to explicitly
exhibit their feelings.
Neutral cultures often consider anger, delight, or
intensity in the workplace as ‘unprofessional’, whereas affective cultures regard holding back of emotions by colleagues
to signify ’emotionally dead’ or a ‘mask of deceit’.
In affective cultures, people often smile, laugh, talk loudly, and exhibit a great deal of enthusiasm in greeting each other.
Managers from neutral cultures such as Japan, UK, Singapore, and Australia (Fig. 7.13) need to be open to the emotional
behaviour displayed in affective cultures, such as Mexico, the Netherlands, Switzerland, China, Brazil, etc.

Specific vs. Diffuse:

The degree of involvement, i.e., how comfortable
individuals are in dealing with other people, varies across
cultures. Individuals have various levels to their
personality— from a more public or outer layer to a more
private or inner level. The relative size of people’s public
and private ‘spaces’ and the degree to which individuals
feel comfortable sharing it with others differ considerably
among cultures.
In specific cultures, individuals tend to have a large public space and a smaller private space. They readily share public
space whereas the personal life is kept separate, closely guarded, and shared only with close friends and associates.
On the contrary, in diffuse cultures, public and private spaces are more or less similar and public space is guarded more
carefully because entry into public space gives more accessibility to individuals’ private space.
Work and private lives are separate in specific cultures whereas these are closely linked in diffuse cultures. Countries like
Australia, the UK, the US, and Switzerland (Fig. 7.14) are characterized by a small, intimate private layer that is well
separated from more public outer layers. On the other hand, in Venezuela, China, and Spain, personality structures have
large private areas separated from a relatively small public layer.
Doing business in cultures more diffused compared to one’s own is considered highly time consuming. ‘Work’ is set apart
from the rest of life in specific cultures whereas everything is connected to everything else in diffused cultures. Therefore,
it is important to invest time and resources and build relationships for operating in countries with diffused cultures.

Achievement vs. Ascription:

Cultures differ in the way status and power in a
society is determined. Such social status and power
may be attributed either to a person’s own efforts and
achievements or as a birth-right. In achievement
cultures, people are evaluated and accorded social
status based on how well they perform their allocated
functions.
In ascription cultures status is accorded to individuals who ‘naturally’ evoke admiration from others, such as the elderly,
seniors in the organization, and highly qualified and skilled people. Status in ascription cultures is generally independent
of a task or specific functions and society tends to show respect to such distinguished people who are not easily compared
with others.
Austria the US, Switzerland, the UK, Sweden, and Mexico (Fig. 7.15) possess high achievement cultures whereas
Venezuela, Indonesia, China, the CIS, and Singapore have ascription cultures. Managers from ascription cultures doing
business with achievement cultures need to emphasize upon facts and figures, data analysis and sound technical strength.
On the other hand, managers from achievement cultures doing business with ascription cultures need to be careful to show
due respect to the elderly, seniors, and formal position holders.
 (iii) Other Cross-cultural Classifications:
Other forms of cross-cultural classifications, such as those
based on cultural context, homogeneity, focus on
relationship versus focus on business deal, formality, time,
and communications also provide a useful insight into
international business decisions.
High-context vs. Low-context Cultures:
The context of a culture has crucial implications in
communicating and interpreting verbal and non-verbal messages. Interpretation of verbal and non-verbal cues is different
in different cultures. In high-context cultures, implicit communications such as non-verbal and subtle situational cues are
extremely important.
On the other hand, in low-context cultures, communication is more explicit and relies heavily on words to convey the
meaning.
In high-context cultures the relationship is long lasting, while in low context cultures the relationship is shorter in
duration. Verbal commitments are given high sanctity in high-context cultures, while commitments in low-context
cultures are written. Fig. 7.16 indicates cultural context for
select cultures.

The cultural context influences international business

decisions in several ways. International market promotion
and advertising has to be subtle in high-context cultures,
while it should focus on explicit display of information,
facts, and figures in low-context cultures. Marketing firms
rotate sales teams more frequently in low-context cultures.
However, in high-context cultures, where building
relationships with the clients is extremely important, the
sales force tend to have longer duration of operation in
assigned territories. Market research in high-context
countries has to focus on subtle and non-verbal expressions
of respondents, while in low-context countries; the focus is
more on factual information.
Homophilous vs. Heterophilous Cultures:
On the basis of homogeneity, culture may be divided into the following sub-sets:
Homophilous Cultures:
Cultures where people share the same beliefs, speak the same language, and practice the same religion are referred to as
homophilous. Japan, Korea, and Scandinavian countries generally have homophilous cultures. Diffusion of new products
takes much less time in homophilous cultures, in which relatively uniform marketing-mix decisions can be adopted.
Heterophilous Cultures:
In countries with heterophilous cultures, there is a fair amount of differentiation in language, beliefs, and religions
followed. India and China are countries with heterophilous cultures, wherein the variations in culture within states and
provinces, are significant. Business communications need to be adapted from region to region.
Relationship-focused vs. deal-focused cultures:
Relationship-focused cultures lay heavy emphasis on human relationship whereas deal-focused cultures are task oriented.
When managers from deal-focused cultures do business with relationship-focused cultures, conflicts often arise as
relationship- focused people find deal-focused people aggressive, offensive, and even blunt, whereas deal-focused
managers find relationship-focused people vague, slack, and enigmatic.
The fundamental differences between relationship-focused and deal- focused cultures determine one’s success in
international business.
In China, guanxi, which means ‘relationships’, ‘connections’, or ‘networks’, is crucial to success. Establishing a guanxi
makes a person feel obligated to help the other. Essence of guanxi lies in a strong emotional relationship that is often
overlooked by outsiders. Building trust, understanding, and personal relationship is vital to developing economic
relationship not only in China but also in other Asian countries.
Guanxi can be established by having some commonalities, called long, like being in the same industry, company, school
or university, or coming from the same region. Sometimes, guanxi is also established through exchanging gifts or personal
favours.
In Egypt, wastah, an intermediary or personal contact, in Russia, blat, and in many Latin American countries, palanca, are
used to express similar connotations. Although, it takes considerable time, patience, and commitment to establish personal
relationships, such social contacts often help one in the time of need in relationship-focused cultures.
Relationship-focused cultures:
In relationship-focused cultures, people have strong orientation towards building relationships and developing mutual
trust. Relationship-focused cultures include India, Bangladesh, Indonesia, Malaysia, Japan, China, Vietnam, Thailand, the
Philippines, South Korea, Singapore, Saudi Arabia, United Arab Emirates, Egypt, Brazil, Mexico, and Russia.
The key features of relationship-focused cultures include:
i. Reluctance to approach strangers for business; use of intermediaries, use of trade shows and exhibitions to meet
prospects
ii. High emphasis on building relationship and establishing rapport
iii. Indirect, polite, and high-context communication
iv. Face-to-face negotiations and meetings
v. Importance given to ‘saving face’, dignity, and respect
vi. Lawyers kept in the background during negotiations
vii. Verbal deals emphasized over written contracts
Therefore, it is important to establish personal rapport in relationship-focused cultures, which are hesitant to conduct
business with strangers. Business managers get things done in relationship-focused cultures through intricate networks of
personal contacts.
Managers from relationship-focused cultures prefer to deal with acquaintances, friends, and family members with greater
trust. Thus, it is important to have a thorough understanding of prospective business partners in relationship-focused
cultures before entering into business deals with strangers, especially foreigners.
Deal-focused culture:
Managers from deal-focused cultures, such as the US and the Nordic countries, are open to discuss business prospects
with strangers. Making appointments is easy and quick in deal-focused cultures whereas in relationship- focused cultures
one has to establish indirect contacts through acquaintances or a third-party introduction.
Trade missions and embassies are often considered in high esteem and are effective for getting initial contacts. Countries,
such as France, Belgium, Italy, Spain, and Hungary form part of moderately deal-focused cultures whereas Britain, the
US, Germany, Denmark, Australia, Canada, Finland, the Netherlands, and the Czech Republic have deal-focused cultures.
Key features of deal-focused cultures include:
i. Openness to talking business with strangers
ii. Directly approaching prospective clients
iii. Clarity of understanding given more importance than harmony
iv. Direct, frank, low-context communication
v. Communication via telephone, e-mail, and faxes
vi. Little or no concept of ‘saving face’
vii. Lawyers forming part of negotiations
viii. Reliance on written agreements and contracts
Formal vs. informal cultures:
When informal business managers from relatively egalitarian cultures interact with their formal counterparts from
hierarchical cultures, there is a fear that their informality may offend status-conscious people from formal societies.
Formal cultures:
Countries such as India, Bangladesh, Indonesia, Malaysia, Vietnam, Thailand, Philippines, Saudi Arabia, UAE, Egypt,
Greece, Brazil, Russia, Poland, Romania, Japan, China, South Korea, Singapore, France, Belgium, Italy, Spam Hungary,
Britain, Germany, Denmark, Finland, the Netherlands, and the Czech Republic are classified as possessing formal
cultures.
Informal cultures:
i. Formality is used to show respect.
ii. Status differences are large and valued.
iii. Counterparts are addressed by title or family name.
iv. Protocol rituals are numerous and elaborate.
Informal cultures:
The US, Canada, and Australia are among countries with an informal culture.
In informal cultures:
i. Informal behaviour is not considered disrespectful.
ii. Status differences are not valued.
iii. Counterparts are addressed by first name.
iv. Protocol rituals are few and simple.
Polychronic (fluid time) vs. monochronic (rigid time) cultures:
Based on adherence to time schedules, cultures may be classified as polychronic or monochronic.
Polychronic (fluid time) cultures:
In polychronic cultures, people have a relaxed approach to time schedules, punctuality, and meeting deadlines, which
makes managers from rigid time cultures often frustrated. The word ‘tip’ is derived from the phrase ‘to insure promptness’
in such cultures.
India, Bangladesh, Indonesia, Malaysia, Vietnam, Thailand, the Philippines, Saudi Arabia, UAE, Egypt, Greece, Brazil,
Russia, Poland, and Romania may be classified under fluid time (polychronic) cultures.
Key attributes of polychronic culture are that:
i. People and relationships are more important than punctuality and precise scheduling.
ii. Schedules and deadlines are flexible.
iii. Meetings are frequently interrupted.
In polychronic cultures, people often avert rigid deadlines. For instance, the Arabian term Insha’Allah frequently used in
Middle East means ‘god willing’, i.e., things will happen if the Almighty wishes so. Thus, it is the God and not the man
who is m- charge of what is going to happen.
In oriental countries, such as India and Singapore, business meetings usually start within five to ten minutes of the
schedule time whereas social functions, such as a dinner, a birthday, or a wedding party may begin even one to two hours
late.
Therefore, international managers from polychronic cultures scheduling business meetings in monochronic cultures need
to be extra punctual about time since any delay is considered to be rude. On the other hand, international managers from
monochronic cultures when interacting with their counterparts from polychronic cultures need to have patience.
Monochronic (rigid time) cultures:
France, Belgium, Italy, Spain, and Hungary form part of moderately monochronic cultures whereas Japan, China, South
Korea, Britain, the US, Canada, Australia, Germany, Denmark, Finland, and the Netherlands have rigid time
(monochronic) cultures.
Salient features of monochronic culture include:
i. Primacy of punctuality and schedules
ii. Rigid schedules and deadlines
iii. Seldom interrupted meetings
Expressive vs. reserved cultures:
Communication patterns in expressive cultures are radically different from their non- reserved counterparts. This is true
for all types of communications, such as non-verbal, para-verbal, and verbal. This can lead to major confusions and
problems in international business activities.
Expressive cultures:
Saudi Arabia, UAE, Egypt, Greece, Brazil, Mexico, France, Belgium, Italy, Spain, and Hungary possess expressive
cultures whereas Russia, Poland, Romania, the US, Australia, and Canada may be said to have variably expressive
cultures.
The key characteristics of expressive cultures are that:
i. People speak louder, interrupt frequently, and are uncomfortable with silence.
ii. Interpersonal space is half-an-arm’s length.
iii. There is considerable physical contact.
iv. There is direct eye contact.
v. There are lively facial expressions and gesturing.
Reserved cultures:
The cultures of India, Bangladesh, Indonesia, Malaysia, Vietnam, Thailand, the Philippines, Japan, China, South Korea,
Singapore, Britain, Germany’ Denmark, Finland, the Netherlands, and the Czech Republic may be said to be reserved.
In reserved cultures:
i. People speak softly, interrupt less, and are comfortable with silence.
ii. Interpersonal space is arm’s length.
iii. There is little physical contact.
iv. Eye contact is indirect.
v. Facial expressions and gesturing are restrained.

Cultural Creation in International Business:

The orientation of its international managers affect the ability of a company to adapt any foreign business environment.
The major types of cultural orientations include parochialism versus simplification and the EPRG (ethnocentric,
polycentric, regiocentric, and geocentric) approach.

Parochialism:
Parochialism is the belief that views the rest of the world from one’s own cultural perspectives. This creates problems in
international business situation. Such notion is found in all cultures of the world. The domestic business experiences of
international managers often interfere in alien cultures.
The tendency of one’s culture to persuade thinking and behaviour without one being aware of it is generally known as
‘cultural baggage’. Cultural baggage often becomes a liability when international managers encounter new cultures.
The sheer gravity of one’s memory of the domestic business experience pulls one down towards set thinking and set
procedures. Therefore, an international manager needs to train his/her mind to operate from a zero base for which he/she
virtually needs an eraser. One should go overseas for business with a clear mind and fill it with first-hand experience and
feelings.

Simplification:
Simplification is the process of exhibiting the same cultural orientation towards different cultural groups, for instance, a
manager’s behaving in the same manner while doing business with Swedish, Arabian, and Japanese managers,
overlooking cultural differences.
As overseas markets are unique, people are different and so are their cultural responses. Although the fundamentals of
human behaviour remain the same, the why people behave varies from country to country. Therefore, it is extremely
important for international business managers to understand the cultural differences between countries and prepare
themselves to meet business challenges.

EPRG Approaches for Cultural Orientation in International Business:

The behavioural attributes of international managers may be portrayed through the EPRG approach.

(i) Ethnocentric Orientation:

The belief that considers one’s own culture as superior to others is termed ethnocentric orientation. Many a times, a firm
or its managers are obsessed with the belief that the business strategy that has worked in the home country would also be
suitable in alien cultures. Thus, the ethnocentric approach ignores the cultural differences across countries.
These companies carry out either domestic business or export business as an extension of domestic business with
minimum effort to adapt the business strategy to the needs of a foreign country. Generally, such companies attempt to sell
their products in countries where either the demand is similar to that in the domestic market or where the indigenous
products are acceptable.
For instance, most Indian handicraft exporters who are primarily from the SME sector hardly appreciate the cultural
differences and do not realize the need to adapt a business strategy in different countries.
A number of Indian products sold abroad—garments like salwar-kurtas and sarees and food items such as dosa mix, idli
mix, vada mix, sambhar mix, gulab jamun mix, papad, Indian sweets, etc.—primarily target the ethnic Indian population.
Trade statistics also reveal that these products find major markets such as Dubai, Singapore, London, Canada, etc., which
have sizable ethnic Indian or South Asian population. This marketing strategy can be used in South Asian markets as well
where consumer tastes and preferences resemble to a large extent.

(ii) Polycentric Orientation:

Contrary to ethnocentric, the polycentric approach recognizes cultural differences in the host countries and, therefore, is
strongly market- oriented. It is based on the belief that substantial differences exist among various countries. Therefore, a
single business strategy cannot be effective across the world and customized business strategies need to be adopted.
The HSBC Bank, with its network in six continents, total assets worth US$1,000 million, and serving over 100 million
customers worldwide, advertises with the punch-line ‘the world’s local bank’. The bank focuses on the cultural
differences between countries.
HSBC’s classic advertisement campaign as shown in Fig. 7.17 reveals that body tattoos are considered to be trendy in the
East whereas colourful, glittery mehendi is a popular tradition in India.
On the other hand, Indian mehendi seems trendy to the Western world whereas body tattoos are considered traditional.
Similarly, contrary perceptions do prevail among cultures about the medicinal effects of traditional herbs and modem
allopathic drugs. Thus, HSBC emphasizes upon its adaptation of products offered and business strategies used across the
countries.
 Thus under the polycentric approach, each country
is considered unique in terms of business
environment, which is made up of political,
cultural, legal, and economic factors, consumer
behaviour, market structure, etc. Business decisions
in each country are made with the active
involvement of local experts. The decentralization
of business activities is the highest in polycentric
orientation.

(iii) Regiocentric Orientation:

In the regiocentric orientation, the firm treats the
region as a uniform cultural segment and adopts a similar business strategy within the region but not across the region.
Depending upon the convergence of the socio-cultural behaviour on the basis of geographical regions, a similar business
strategy is used McDonald’s strategy not to serve pork and sell all meat preparations made out of halal process only in the
Middle East or in countries dominated by Muslim consumers can be termed as regiocentric.

(iv) Geocentric Orientation:

The geocentric approach considers the whole world a single market and attempts to formulate integrated business
strategies. A geocentric form attempts to identify cultural similarities across countries and formulates a uniform business
strategy. Geocentric companies strive to analyse and manage the business strategy with an integrated global business
programme.
The Harry Potter series of books is a classic example of geocentric orientation (Exhibit 7.4), wherein the author J.K.
Rowling has brought out a series of fictions that appeal to global readers and has marketed it globally using a highly
integrated business strategy.

Essay # 6. Emic Vs. Etic Dilemma – Cultural Uniquness VS Pan-Culturalism:

The two approaches of emic and etic represent the two different streams of thought at the polar extremes of cross-country
business decision-making and research methodology. Emic
emphasizes cultural uniqueness while etic, pan-culturalism.
The Emic Approach:
The Emic School holds that attitudes, interests, and behaviour are
unique to a culture and best understood in their own terms. It
emphasizes studying the business research problem in each
country’s specific context and identifying and understanding its
unique facets.
Subsequently, cross-cultural differences and similarities are made in
qualitative terms. As the motive to buy differs substantially across
cultures, the multi-country research may call for an emic approach.
The Etic Approach:
The etic school emphasizes identifying and assessing universal
attitudinal and behavioural concepts and developing ‘pan-cultural’
measures. Thus, etic is basically concerned with measuring universal
behavioural and attitudinal traits. The assessment of such
phenomenon needs unbiased measures. For instance, there appears
to be convergence in preferences across cultures.
Operationalization of Emic and Etic:
An international firm focuses on identifying similarities across
national markets as it offers opportunities to transfer the products
and services and integration of business strategies across the borders. Therefore, an international firm generally prefers
etic strategy. While conducting cross-country research, emphasis is placed on identifying and developing constructs that
are feasible across countries and cultures.
An approach to resolve the emic versus etic dilemma was proposed by Berry, as shown in Fig. 7.18.
Under this approach, research is first conducted in one’s own cultural context X and then the construct or instrument
developed for cultural context is applied to another culture, i.e., of the host country; this is known as ‘imposed etic’ Using
an emic approach, the market behaviour is studied in the second culture from within.
Then, the results of the emic and the ‘imposed etic’ approach are examined and compared. No comparison is possible if
no commonality is identified between the two and the cultures are to be studied under the emic elements. In case some
commonality is identified based on common aspects/features, a ‘derived etic’ comparison between the cultures is possible.

One has to develop cultural sensitivities to be effective in international business. Developing basic understanding about
the nuances of a culture is fascinating and enables one to objectively evaluate and appreciate new cultures.
One should understand that culture is not inherited and variations do not suggest what is right or wrong and good or bad,
rather indicate mere cross-cultural differences.
In order to effectively manage cross-cultural differences in international business, one has to:
i. Develop a conceptual understanding of one’s own cultural biases and assumptions.
ii. Explore the reasons as to why the way of doing things in different cultures makes sense in view of their cultural
assumptions.
iii. Treat ways of doing things and cultural assumptions as starting points that need to be integrated in developing culture-
specific competitive solutions.
The conceptual understanding of the various constituents of culture, such as value systems, norms, aesthetics, customs and
traditions, language and religion, and their implications help in increasing appreciation of culture and in formulating an
effective business strategy.
Cross-cultural classifications facilitate international business managers to prepare challenges encountered in cross-cultural
business situations. The etic-emic dilemma and its operationalization provides a practical tool to cope with cross-cultural
divergence.