BI0013

International Business
Culture

ACCOUNTING PROGRAM
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Introduction
• What is Culture?
• “Sum total” of all learned activities, a way of life‐‐ refers to the
learned norms based on values, attitudes, and beliefs of a group
of people living in a geographic area, in a society or a nation
• Why an international business manager should study the
culture of a country?
• Culture is an integral part of a nation’s business and operating
environment
• Companies need to decide how and when to make cultural
adjustments
• Fostering cultural diversity can offer global competitive
advantage
Cultural Awareness
• We need a GLOBAL MINDSET to succeed‐‐managers that
educate themselves about other cultures have a greater
chance of success. Problem areas that can hinder
managersʼ cultural awareness…
• Subconscious reactions to circumstances (self‐
reference criterion)
• The assumption that all societal subgroups are
similar
• Cultural collision can occur when a company implements
practices that are counters a country’s cultural norms
Understanding Culture
National cultures are dynamic, they evolve over
time, change occurs by choice or by imposition.
Three features are:
• The Nation or Nation‐State as point of reference
(identity, symbolism, common history)
• Language as both a diffuser and stabilizer of
culture (expression, sharing, bond)
• Religion as a cultural stabilizer (beliefs, ethics,
spiritualism)
How Cultures Form and
Change
• Cultural value systems are established early in
life but may change through
• choice or imposition
• cultural imperialism
• contact with other cultures
• cultural diffusion
• creolization
 Language:
Cultural Diffuser and Stabilizer
Distribution Of The Worldʼs Major Languages
 Language:
Cultural Diffuser and Stabilizer
Major Language Groups: Population and Output
Religion: Cultural Stabilizer
• Religion impacts almost every business function
• It influences our consumption and expenditure
• Centuries of profound religious influence
continue to play a major role in shaping cultural
values and behavior
• many strong values are the result of a dominant
religion
Religion: Cultural Stabilizer
Distribution Of The Worldʼs Major Religions
Behavioral Practices
Affecting Business
• Social Stratification
• Work Motivation
• Relationship Preferences
• Risk‐taking Behavior
• Information and Task Processing
• Communications
Social Stratification
• Social ranking is determined by
• an individual’s achievements and qualifications
• an individual’s affiliation with, or membership in, certain groups
• Group affiliations can be
• Ascribed group memberships
• based on gender, family, age, caste, and ethnic, racial, or
national origin
• Acquired group memberships
• based on religion, political affiliation, professional
association
• Two other factors affecting social stratification are: education and
social connections
Work Motivation
• The motivation to work differs across cultures
• Studies show
• the desire for material wealth is a prime motivation to work
• promotes economic development
• people are more eager to work when the rewards for success are
high
• masculinity‐femininity index
• high masculinity score prefers “to live to work” than “to
work to live”
Work Motivation
• Hierarchy of needs theory
• Individuals will fill lower‐level needs before moving
to higher level needs
• The ranking of needs differs among cultures
Work Motivation
The Hierarchy of Needs and Need‐Hierarchy Comparisons
Relationship Preferences
• Relationship preferences differ by culture
• Power distance
• high power distance implies little superior‐
subordinate interaction
• autocratic or paternalistic management style
• low power distance implies consultative style
• Individualism versus collectivism
• high individualism – welcome challenges
• high collectivism – prefer safe work environment
Communications
• Cross border communications do not always
translate as intended
• Spoken and written language
• Silent language
• Color
• Distance
• Time and punctuality
• Body language
• Prestige
Communications
Body Language Is Not A Universal Language
Hofstede’s Five Cultural
Values
• Individualism/collective index (IDV): Refers to preference of behavior
that promotes one’s self interest. Higher score (e.g., USA) means high
on individualism.
• Power distance index (PDI): Measures the tolerance of social
inequality, i.e., inequality between superiors and subordinates within
a social system. Higher score (e.g., Arab countries) means more
hierarchical.
• Uncertainty avoidance index (UAI): Refers to the intolerance of
ambiguity and uncertainty among members of a society. Higher score
(e.g., Greece) means less tolerance for uncertainty.
• Masculinity/feminity (MAS): Refers to one’s desire for achievement
and entrepreneurial tendencies. Higher score (e.g., Latin culture)
means more assertiveness and masculinity.
• Future orientation: Refers to the future or long‐term orientation of
the society