International Cultural Environment 140129122348 Phpapp01

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International Business
Ranjani Srinivasan
Chapter 7: International Cultural

Environment
Chapter 7
INTERNATIONAL
CULTURAL ENVIRONMENT

Environment
Learning Objectives
 To understand the significance of culture in
international business decisions
 To elucidate the concept of culture and its
constituents
 To explain comparisons of cross-cultural
behaviour
 To discuss cultural orientation in international
business
 To appreciate emic versus etic dilemma and its
operationalization
Environment
Significance of Culture
A firm operating internationally comes
across a wide range of diverse cultural
environments, which significantly influence
international business decisions. Managers
operating internationally need to appreciate
the differences among cultural behaviours of
their business partners and consumers
across various countries.
Environment
Self Reference Criterion (SRC)
An unconscious reference to one’s own cultural
values, experiences, and knowledge as a basis
for decision-making. SRC significantly influences
ability of international managers to objectively
evaluate environmental factors and make
business decision.
Copyright @ Oxford University Press Chapter 7: International Cultural

International Business R. M. Joshi Environment
Approach to Eliminate SRC
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.

The Concept of Culture
Culture is the way of life of people, including
their attitudes, values, beliefs, arts, sciences,
modes of perception, and habits of thought and
activity. Cultiral differences across the countries
significantly influence business decisions.

Constituents of Culture
A variety of learned traits that influence human
behaviour can contribute to the culture of a social
group, the major constituents, include:
• value system
• norms
• aesthetics
• customs and traditions
• language
• religion
Characteristics of culture
 Learned
 Shared
 Trans-generational
 Symbolic
 Patterned
 Adaptive

Value System
Shared assumptions of a group about how
things ought to be or abstract ideas about
what a group believes to be good,
desirable, or right.

Value system
 Value systems vary among managers
across different countries :
 Eg. US managers : high achievement
orientation vs Japanese managers
how have a growth and size
orientation vs Indian Managers who
have moralistic orientation.

Norms
Guidelines or social rules that
prescribe appropriate behaviour in a
given situation.

Norms
 For eg. In Japan, aggressive selling is not perceived
in the positive spirit.
 Eg. Indian use hands or different types of spoons
for eating. Chinese and Japanese use chopsticks.
 Europeans and American use forks and knives to cut
the food before eating.
 Lessons: International managers need to know what
is acceptable , unacceptable in foreign culture. They
also need to know cultural tolerance to business
customs that may be grouped as :
 Cultural Imperatives; Cultural Exclusives; Cultural
Adiaphora
 Culture Imperatives
 It refers to norms that must be followed / avoided in a foreign
country.
 For Eg. Too much eye contact in Japan is considered to
completely offensive.
 On the other hand in the Gulf , strong eye contact necessary
with an Arab, to establish trustworthiness.
 Cultural Exclusives:
 Social patterns which are considered appropriate for locals and
in which foreigners are expected not to participate.
 Eg. Foreigners should stay away from discussions on local
country politics, social customs and practices.
 Cultural Adiaphora : social customs in which a foreigner may

participate, so that the Intl. manager may decide whether to
participate or avoid. Eg. Bowing in Japanese culture is not
expected of foreigners, but such display may be appreciated .
Aesthetics
Ideas and perceptions that a cultural

group upholds in terms of beauty and
good taste. It includes areas related to
music, dance, painting, drama,
architecture, etc.

Aesthetics
 Eg. Colours have different aesthetic value in
different cultures:
 Africa : bright colours are favourites
 Japan : pastel colours preferred as they express
harmony.
 China : red is lucky colour but associated with
witchcraft in Africa.
 America : blues and greys are perfect for official
environments. But blue is evil in Africa
 Death colours : Black signifies death in America,

Europe; In India, Japan & other Asian countries it is
white, For Latin Americans Purple means death;
Dark red is the mourning colour in the Ivory Coast.
Traditions and Customs
Traditions: The elements of culture
passed down from generation to
generation.
Customs: An established pattern of
behaviour within a society.

Traditions and Customs
 International managers need to know the customs and
traditions of the culture being dealt with:
 Eg. Food Habits eg. Chocolate flavors preferred are
different in different cultures : Eg. Americans and
Germans prefer blends, French- Dark, Dutch –White.
 Coffee brews: Nescafe manufactures200 different

varieties of coffee to suit local tastes.
 The concept of Indian vegetarianism is very complex for

foreigners to understand. Vessels used for cooking both
should be different. KFC offers vegetarian dishes in its
Indian outlets. Pizza Hut offers Jain Pizza in India alone.
 Lessons: companies need to modify products/services to

suit the local customs and traditions.
Manners and Customs...
 Manners in gift giving:
 A lot of preparation and sensitivity required while
giving gifts. What and when is important.
 China : occasion : New Year
Preferred Gifts: Modest gifts such as coffee table,
books, ties, pens.
 Japan: Oseibo( January 1)
Preferred Gifts : Brandy. Scotch, round fruits such
as melons
 Manners and Customs in the Way Products are used
should also be considered
 Example Orange juice:
 Breakfast item in US, Refreshment in France
 Moisturizers : After bath lotion in one, beauty
product in another. 19
Language
A systematic means of communicating ideas
or feelings by the use of conventionalized
signs, gestures, marks, or especially
articulate vocal sounds.

Language
The Four Roles of Language
Language aids in information gathering and
evaluation.
Language provides access to local society.
Language capability is increasingly

important in company communications.
Language provides more than the ability to

communicate because it extends beyond
mechanics to the interpretation of contexts
that may influence business operations.
21
Languages
Top Ten World Languages
Language Population (in millions)
1. Chinese, Mandarin 885

2. Spanish 332
3. English 322
4. Bengali 189
5. Hindi 182
6. Portuguese 170
7. Russian 170
8. Japanese 125
9. German, Standard 98
10. Chinese, Wu 77
Language … some lessons for
managers
 Even though English is considered lingua-franca for non
English speaking countries, it fails to provide non-verbal
cues … for example:
 Coca – Cola was named Ke-kou-ke-la in China which
translates in Mandarin to ‘Bite the wax tadpole’.
Subsequently Coke found a close phonetic equivalent
Ko-kou-ko-Le which translates to ‘Happiness in the
mouth’ after researching 40,000 Chinese characters.
 The Swedish vacuum cleaner Manufacturer Electrolux
introduced the same print ad which was successful in
Britain in the US Market with the tag line ‘ Nothing sucks
like an Electrolux’. Later they found this to be a disaster
in the US because ‘sucks’ in American means ‘really
Bad’. i.e. Electrolux is a ‘really bad vacuum cleaner’
Religion
Religious beliefs significantly influence people
behaviour and business decision making.
 Religion encompasses three distinct
elements:
•Explanation: God seen as a ‘first cause’ behind the creation of
the universe
•A standard organization: Consisting of places of worships and
rituals
•Moral rules of good behaviour : concerning principles of right
and wrong in human behaviour.
Dominant Religions
Christianity
Islam
Hinduism
Buddhism
Confucianism
25
Religion : lessons for managers
Considerable influences international business
decisions.
For. Eg. Location of commerical buildings and office
interiors need to be as per Fen shui in China and
Vastu Shastra in India, as it concerns free flow of
cosmic energy and keeps evil spirits away.
Advertisements and corporate communications

must keep religious sentiments in mind. For eg.
Islam does not permit shaving. So Shaving
equipment makers like Gillette need to be
sensitive while advertising their product in Islamic
countries.
Comparison of Cross Cultural
Behavior
An appreciation of cultural differences
facilitates international managers to
conceptualize and implement business
strategies in view of cultural sensitivities in
various countries.

Hofstede’s Cultural Classification
Power distance
The extent to which less powerful members
of an institution accept that power is
distributed unequally.

High Power Distance Countries
•High social inequalities tolerated with
differences in power and income distribution
•Organizational structures are hierarchical
based an inequality among superiors and
subordinates
•Decision making is centralized
•Juniors blindly follow the orders of their
superiors
For instance, Malaysia, Mexico, Arab

countries, India etc.
Low Power Distance Countries
 Superiors and subordinates consider each

other equal
 Organizations are relatively flatter
 Decision making is decentralized
For instance, Austria, Sweden, Great Britain,
the US etc.
Lessons: In view of the power distance, the international
manager has to asses the organizational dynamics, identify
the key decision makers and accordingly formulate their
business strategy for different countries.
Individualism vs. Collectivism
Individualism:
The tendency of people to look after themselves and their
immediate family.
 Strong work ethics
 Promotions based on merit
 Involvement of employees in the organization is
calculative.
 Ability to be independent of others is considered to be
the key criterion for success in individualistic
societies.
Countries with high individualism include, the US, Great
Britain, France, South Africa etc
Collectivism:
The tendency of people to belong to groups and to
look after each other in exchange for loyalty. In such
cultures, interest of groups have precedence over
individual interest .
For instance, Guatemala, Pakistan, Singapore,
Malaysia etc.
Lessons: 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, it
should have group acceptability unlike in the
individualistic societies.
Masculinity vs. femininity
In masculine societies, the dominant values emphasize
on work goals, such as earnings, advancement, success,
and material belongings. e.g. Japan, Switzerland, Great
Britain, the US etc.
In feminine societies the dominant values are
achievement of personal goals, such as quality of life,
caring for others, friendly atmosphere, getting along
with boss and others.
e.g. Sweden, Norway, Denmark, Thailand etc.
India falls in between.
Summarily, in masculine societies, people ’live to work’,

whereas in feminine societies people’ work to live’.
Uncertainty avoidance
The extent to which people feel threatened by
ambiguous situations.
In high uncertainty avoidance societies there is lack
of tolerance for ambiguity and the need for formal
rules. For instance, Greece, Portugal, Japan, France
are the most uncertainty avoidance countries.
Low uncertainty avoidance countries include

Singapore, Denmark, India, the US etc.
Trompenaars’ Cultural
Classification

Universalism vs. Particularism
 Universalism: The belief that ideas and practices
can be defined and applied everywhere without
modification
e.g. the US, Australia, Germany, Sweden etc.
 Particularism: The belief that unique

circumstances and relationships, rather than
abstract rules are more important considerations
that determine how ideas and practices should be
applied
e.g. Venezuela, the US, Indonesia, China etc.

Individualism vs.
Communitarianism
Individualism: people regarding themselves as individuals.
For instance the US, Czechoslovakia, Argentina, the CIS,

Mexico, and the UK .
Societies with high individualism make frequent references to ‘I’

and ‘me’. And achievement and responsibility are personal.
Communitarianism: people regarding themselves as part of a

group.
For instance, Singapore, Thailand, Japan, and Indonesia.
In collectivist societies ‘we’ is used more frequently than ‘I’ and

achievement is considered group achievement.
Neutral vs. Affective
Neutral Cultures: Cultures in which people tend to hold back
their emotions and try not to exhibit their feelings.
For instance, Japan, the UK, Singapore, Australia, etc.
Will consider anger, delight or intensity in the workplace as

‘unprofessional’
Affective Cultures: Cultures where emotions are expressed

openly.
For instance, Mexico, Netherlands, Switzerland, China, Brazil,

etc.
Will consider holding back of emotions by colleagues to signify

‘emotionally dead’ or a ‘mask of deceit’.
Specific vs. Diffused
The relative size of ‘Public space and Private space ‘ and
the degree to which individuals feed comfortable sharing it
with others differ considerably across societies .
Specific Cultures: Cultures in which individuals tend to have a
large public space which is readily shared, and a smaller private
space.
For instance, Australia, the UK, the USA and Switzerland.
Diffused Cultures: Culture in which public and private space are

more or less similar and public space is guarded more
carefully.
For instance, Venezuela, China and Spain
Achievement vs. Ascription
Achievement Cultures: Culture in which status is
accorded to high achievers and high performers.
For instance Austria, the USA, Switzerland, the UK,

Sweden and Mexico etc.
Ascription Cultures: Culture in which status is

accorded to those who ‘naturally’ evoke admiration
from others such as elderly, seniors, highly
qualified and skilled people.
For instance, Venezuela, Indonesia, China, the

CIS, and Singapore etc.
Other Cross-Cultural
Classifications

High Context vs. Low Context
High Context Cultures: Culture in which high
significance is given to implicit communications,
such as non-verbal and subtle situational cues.
For instance, China, Korea, Japan and Arab
countries.
Low Context Cultures: Cultures in which

communication is more explicit with heavy reliance
on words to convey the meanings.
For instance, Germany, Switzerland, Scandinavia,
North America and Britain.
Homophilous vs. Heterophilous
Homophilous Cultures: Cultures where
people share beliefs, speak the same
language, and practice the same religion.
For instance, Japan, Korea and Scandinavian
countries.
Heterophilous Cultures: Countries that
have a fair amount of differentiation in
languages, beliefs, and religions followed.
For instance, India and China.
Relationship vs. Deal-focused
Relationship-focused Cultures: Cultures in
which strong orientation towards building
relationships and developing mutual trust.
For instance, India, Japan, China, Singapore,
Saudi Arabia, United Arab Emirates, Egypt,
Brazil, Mexico, and Russia.
Deal-focused Cultures: Task-oriented
cultures with openness to hold direct business
talks with strangers.
For instance, Britain, USA, Germany,
Denmark, Australia, Canada, Finland etc.
Formal vs. informal cultures
Formal Cultures: Status differences are large and
valued and formality is used to show respect.
For instance, India, UAE, Egypt, Brazil, Russia,

Poland, Japan, China,, Singapore, France, Belgium,
Britain, Germany, Denmark, Finland etc.
Informal Cultures: Status differences are not

valued and Informal behaviour is not considered
disrespectful. For instance, the USA, Canada, and
Australia etc.
Polychronic vs. Monochronic
Polychronic Cultures: Cultures in which time
schedules and deadlines are flexible and relationships
take precedence. For instance, India, Thailand,
Philippines, UAE, Egypt, Brazil, Russia etc.
Monochronic Cultures: Cultures with rigid time

schedules and deadlines with high emphasis on
punctuality. For instance, Japan, China, Singapore,
Britain, USA, Canada, Australia, Germany, Denmark
etc.
Expressive vs. Reserved Cultures
Expressive cultures: people are more

expressive with direct eye contact.
For instance, Russia, Poland, Romania,
USA, Australia, and Canada
Reserved cultures : people restrain their
facial expression and gesturing.
For instance, India, Japan, China,
Singapore, Britain, Germany, Denmark,
Finland etc.
Parochialism vs. Simplification
Parochialism: Belief that views the rest
of the world from one’s own cultural
perspective.
Simplification: Exhibiting same cultural
orientation towards different cultural
groups.
Copyright @ Oxford University Press
International Business R. M. Joshi
Environment
EPRG Approach
Ethnocentric orientation
The belief which considers one’s own culture as
superior to others. The belief that the business
strategy which has worked in the home country
would also be suitable in alien cultures.

Polycentric orientation
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 adapted in
different countries.

Regiocentric orientation
A firm treats the region as a uniform cultural
segment and adopts a similar business strategy
within the region but not across the region.

For example Mc Donald’s strategy is to not serve beef based
products in India, but serves beef based products in other
countries. Also in the Middle East, it does not serve pork and all
meat based preparations are made out of halal process only .

Geocentric orientation
The approach considers the whole world a single
market and attempts to formulate integrated business
strategies. A geocentric firm attempts to identify
cultural similarities across countries and formulates a
globally uniform business strategy.
Examples: the Harry Potter series of books and films,
cartoon characters and their serials, apparels like
Jeans, T-shirts etc…

Emic vs. Etic Dilemma
 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.
 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.
Operationalisation of Emic and Etic
Emphasis is often placed an identifying

and developing constructs that are
feasible across countries and cultures,
while conducting cross country research.


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1

Chapter 7: International Cultural

Chapter 7: International Cultural

values, experiences, and knowledge as a basis

for decision-making. SRC significantly influences

ability of international managers to objectively

evaluate environmental factors and make

Copyright @ Oxford University Press Chapter 7: International Cultural

Copyright @ Oxford University Press Chapter 7: International Cultural

their attitudes, values, beliefs, arts, sciences,

modes of perception, and habits of thought and

activity. Cultiral differences across the countries

significantly influence business decisions.

Copyright @ Oxford University Press Chapter 7: International Cultural

Copyright @ Oxford University Press Chapter 7: International Cultural

Shared assumptions of a group about how

things ought to be or abstract ideas about

what a group believes to be good,

Copyright @ Oxford University Press Chapter 7: International Cultural

Copyright @ Oxford University Press Chapter 7: International Cultural

Guidelines or social rules that

prescribe appropriate behaviour in a

Copyright @ Oxford University Press Chapter 7: International Cultural

 Cultural Adiaphora : social customs in which a foreigner may

Ideas and perceptions that a cultural

Copyright @ Oxford University Press Chapter 7: International Cultural

 Death colours : Black signifies death in America,

Traditions: The elements of culture

passed down from generation to

Customs: An established pattern of

behaviour within a society.

Copyright @ Oxford University Press Chapter 7: International Cultural

 Coffee brews: Nescafe manufactures200 different

 The concept of Indian vegetarianism is very complex for

 Lessons: companies need to modify products/services to

A systematic means of communicating ideas

or feelings by the use of conventionalized

signs, gestures, marks, or especially

articulate vocal sounds.

Language provides access to local society.

Language capability is increasingly

Language provides more than the ability to

Language Population (in millions)

1. Chinese, Mandarin 885

Advertisements and corporate communications

facilitates international managers to

conceptualize and implement business

strategies in view of cultural sensitivities in

Copyright @ Oxford University Press Chapter 7: International Cultural

The extent to which less powerful members

of an institution accept that power is

Copyright @ Oxford University Press Chapter 7: International Cultural

For instance, Malaysia, Mexico, Arab

 Superiors and subordinates consider each

India falls in between.

Summarily, in masculine societies, people ’live to work’,

Low uncertainty avoidance countries include

Copyright @ Oxford University Press Chapter 7: International Cultural

 Particularism: The belief that unique

Copyright @ Oxford University Press Chapter 7: International Cultural

For instance the US, Czechoslovakia, Argentina, the CIS,

Societies with high individualism make frequent references to ‘I’

Communitarianism: people regarding themselves as part of a

For instance, Singapore, Thailand, Japan, and Indonesia.