CHAPTER 2:

CULTURE ENVIRONMENT
 Learning Objectives
2-1 Explain why culture, especially national culture,
is important in IB, but tricky to assess
2-2 Grasp the major causes of national cultural
formation and change
2-3 Discuss major behavioral factors influencing
countries’ business practices
2-4 Recognize the complexities of cross-cultural
communications
2-5 Analyze guidelines for cultural adjustment
 Culture
Objective 2-1
• What is Culture?
• Bicultural and/or Multicultural
• Relevant Groups/Dissimilar Groups
 Culture

• Culture is sometimes an elusive topic to study.

Why?
• Because people belong to different groups
based on nationality, ethnicity, religion,
gender, work organization, profession, age,
political party membership, and income level,
and each group comprises a culture.
 Prof. Geert Hosftede

“Culture is more often a source of conflict than of

synergy. Cultural differences are a nuisance at best and
often a disaster”
 Culture
•The shared values, attitudes, and beliefs of a
group of individuals constitutes a culture.
•Bicultural or multicultural: meaning that
they have internalized more than one
national culture because of having dual or
multiple citizenships, parents or spouses
from another country, or lived abroad at an
impressionable age.
 Culture
• Groups can hold more similar attitudes with like-
groups abroad than with dissimilar groups in their
own countries.
• For instance, urban people in Country A may have
more in common with urban people in Country B
than with rural people in their own country.
• As a consequence, when comparing nations
culturally, one must be careful to examine relevant
groups—differentiating between, say, the typical
attitudes of rural and urban dwellers, or between
managers and production workers.
 Culture
• By values, we mean abstract ideas about what
a group believes to be good, right, and
desirable. Put differently, values are shared
assumptions about how things ought to be.
• By norms, we mean the social rules and
guidelines that prescribe appropriate behavior
in particular situations.
 Culture
• Values include a society’s attitudes toward
such concepts as individual freedom,
democracy, truth, justice, honesty, loyalty,
social obligations, collective responsibility, the
role of women, love, sex, marriage, and so on.
• Norms are the social rules that govern
people’s actions toward one another. Norms
can be subdivided further into two major
categories: folkways and mores.
 Folkways vs Mores
• Folkways are the routine conventions of
everyday life. Generally, folkways are actions
of little moral significance. Rather, they are
social conventions concerning things such as
the appropriate dress code in a particular
situation, good social manners, eating with
the correct utensils, neighborly behavior, and
the like.
• Folkways include rituals and symbolic
behavior.
 Religious and Ethical Systems

• Religion may 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.
• Most of the world’s ethical systems are the
product of religions
LANGUAGE
3,000 languages and as many as 10,000 dialects worldwide
Language can be a competitive weapon
Language serves at the window to the culture of a society
Verbal or non-verbal is a very important skill for Business people
 Language

• Only 8 percent of the world’s people speak

English as their native (first) language,
• But the countries and territories where English
is the most spoken native language account
for 33 percent of global economic output,
which helps to explain the prevalence of
English as a second language when conducting
international business.
4 Main religious: Christianity, Islam, Hinduism, Buddhism
 Cultural Factors and the IB Environment
Objective 2-1
FIGURE 2.1 Cultural Factors Affecting IB Operations
 Activity
Opening case

• 2-1. Assume you are a manager in a multinational

company that needs to send a team of three to five
people to Saudi Arabia for about two weeks to
investigate the feasibility of selling your products
there. What advice should you give them to help
assure that cultural problems do not impede their
success in this task?
• 2-2. Assume your company is from North America or
Europe and considering the establishment of an office
in Saudi Arabia. What additional operating costs might
it have to assume because of the Saudi culture?
 Using Cultural Reference Points
Objective 2-1
• Cultural reference points
– Culture can be useful reference point
– However, culture reference points may not always
be accurate, due to:
• Not everyone therein shares the same values and
attitudes,
• Subcultures exist within nations,
• Some people have internalized more than one
culture, or
• Cultural similarities link groups from different
countries.
 Cultural Collision
Objective 2-1
• What is cultural collision?
• Deal-focus culture (DF)
• Relationship-focus culture (RF)
 Cultural Collision
Objective 2-1
• IB involves people from different national cultures,
which affects every business function—managing a
workforce, marketing and transporting output,
purchasing supplies, dealing with regulators, and
securing funds.
• Sometimes issues can happen because cultures may
have different values. When contact among divergent
cultures creates problems, the situation is known as
cultural collision. Cultural collision may cause:
– Ineffective business practices.
– Personal distress.
 Cultural Collision
Opening case
• Deal-focus (DF) culture vs Relationship-focus
(RF) culture
•An example of cultural collision: deal-focus (DF)
culture, where people are primarily task-
oriented; whereas relationship-focus (RF)
culture is based more on getting to know
potential business partners, and traditionally
move slower.
 Cultural Collision
Opening case
• Deal-focus (DF) culture vs Relationship-focus
(RF) culture
•DF people typically view RF people as time-
wasters, whereas RF people view DF people as
offensively blunt.
•The Saudis had less compulsion to wrap things
up, regarded small talk at a café as a means to
identify acceptable business partners, and put
dealings with friends ahead of business
dealings.
 Cultural Awareness Research
Objective 2-1
• Almost everyone agrees that national cultures
differ, but they disagree on what the
differences are.
• Shortcomings in cultural research
• Dangers in cultural awareness research
– Comparing countries by what people say
– Variations within countries
– Outdated research
 Influences on Cultural Change
Objective 2-2
• Sources of Change
– Choice:
– Imposition
 Influences on Cultural Change
Objective 2-2
• Sources of Change
- Change by choice may occur as a reaction to
social and economic situations that present
people with new alternatives. Imposition
- Change by imposition - sometimes called cultural
imperialism - involves imposing certain elements
from an alien culture, such as a forced change in
laws by an occupying country that, over time,
becomes part of the subject culture
 Behavioral Practices Affecting Business: Work
Motivation
Objective 2-3
• Work motivation
– Levels of materialism
– Trade off between productivity and leisure time
– Success and reward
– Masculinity-femininity index
 Behavioral Practices Affecting Business: Relationship
Preferences

Objective 2-3
• Relationship preferences
– Power Distance
– Individualism vs. Collectivism
 Behavioral Practices Affecting Business: Risk Taking
Behaviors

Objective 2-3
• Risk taking behaviors
– Uncertainty avoidance
– Trust
– Future orientation
– Fatalism
 Challenges Communicating Across Cultures
Objective 2-4
• Translation of written and spoken language
• Silent language
– Colors
– Distance
– Time
– Body language
– Prestige
 Guidelines for Cultural Adjustment
Objective 2-5
• Degrees of adjustment
– Host society acceptance
– Degree of cultural differences
– Ability to adjust
– Company and Management orientations
Power distance
“The extent to which the less
powerful members of institutions
and organizations within a country
expect and accept that power is
distributed unequally”
 Low power distance
• Minimize the inequalities among people
• Interdependence between less and
more powerful people
• Flat hierarchy pyramid
• Power decentralization
• Narrow salary range
• Subordinated expect to be consulted
• The ideal boss is a resourceful democrat
• Privileges and status are disapproved
High power distance
• Inequalities among people are both
expected and desired
• Less powerful people should be
depended on the more powerful
• Slope hierarchy pyramid
• Power centralization
• Wide salary range
• Subordinated expect to be told what to
do
• The ideal boss is a benevolent autocrat or
good father
• Privileges and status are both expected
and popular
 Viet Nam
High Malaysia
Orientation towards authority Arab Countries
Mexico
India
France
Italy
Japan
Spain
Argentina
US
Germany
UK
Denmark
Low Israel
Austria
Example
• A company from Austria (low power distance) is considering entering the
Vietnam (high power distance) market.

Power Distance Index

100
81
80
60
40
20 11
0
Austria Viet Nam
Communication tips for the Austrian manager:
1) Give clear and explicit directions to those working with him
2) Deadlines should be highlighted and stressed
3) Do not expect subordinates to take initiative
4) Be more authoritarian in his management style
5) Show respect and deference to those higher up the ladder
Uncertainty avoidance –
“The extent to which members of a
society feel threaten by uncertain
or unknown situations”
 Weak uncertainty avoidance
• Uncertainty: normal feature of life and
each day is accepted as it comes
• Low stress – subjective feeling of well-
being
• Aggression and emotions must not be
shown
• Comfortable in ambiguous situations
and with unfamiliar risk
• There should not be more rules than
necessary
• Precision and punctuality have to be
learned
• Tolerance to innovation
• Motivation by achievement
Strong uncertainty avoidance
• Uncertainty : continuous threat that
must be fought
• High stress – subjective feeling of
anxiety
• Aggression and emotions may be
shown at proper times
• Fear of ambiguous situations and of
unfamiliar risk
• Emotional need for rules, even if they
never work
• Precision and punctuality come
naturally
• Resistance to innovation
• Motivation by security
 VietNam
High
Greece
Japan
France
Korea
Desire for stability

Arab Countries
Germany
Australia
Canada
US
UK
India
Low Denmark
Singapore
Example
▪ A company from France (high uncertainty avoidance) is considering investing in
Denmark (low uncertainty avoidance)
100

Uncertainty Avoidance Index

86
80
60
40 23
20
0
France Denmark

Communication tips for the French manager:

1) Try to be more flexible or open in his approach to new ideas than he may be used to

2) Be prepared to push through agreed plans quickly as they would be expected to be

realized as soon as possible

3) Allow employees the autonomy and space to execute their tasks on their own; only
guidelines and resources will be expected of him
Individualism
“The tendency of people to look
after themselves and their
immediate family and neglect the
needs of society”
 Low individualism
• Individuals learn to think in terms of
“we”
• Diplomas provide entry to higher
status groups
• Relationship employer- employee is
perceived in moral terms, like a family
• Hiring and promotion decisions take
employees’ ingroup into account
• Management is management of
groups
• Relationship prevails over task
High individualism
• Individuals learn to think in terms of
“I”
• Diplomas increase economic worth
and/or self- respect
• Relationship employer-employee is a
contract based on mutual advantage
• Hiring and promotion are supposed
to be based on skills and rules only
• Management is management of
individuals
• Task prevails over relationship
High
Australia
US
UK
Canada
France
Germany
Spain
Japan
Mexico
Italy
Korea
Low Singapore
Example
▪ A company from UK (high individualism) is considering investing in Mexico
(low individualism)
100 96

Individualism Index
80

60

40
23
20

0
UK Mexico
Communication tips for the UK manager:
1) Note that individuals have a strong sense of responsibility for their family

2) Remember that praise should be directed to a team rather than individuals

3) Understand that rewards depend upon seniority and experience

4) Be aware that the decision making process will be rather slow, as many members
across the hierarchy need to be consulted
Masculinity
“The tendency within a society to
emphasize traditional gender
roles”
 Low masculinity
• Dominant values: caring for others
and preservation
• People and warm relationships are
important
• Sympathy for the weak
• In family, both fathers and mothers
deal with facts and feelings
• Stress on equality, solidarity , and
quality of work life
• Managers use intuition and strive
for consensus
• Resolution of conflicts by
compromise and negotiation
High masculinity
• Dominant values: material success
and progress
• Money and things are important
• Sympathy for the strong
• In family, fathers deal with facts and
mothers with feelings
• Stress on equity, competition among
colleagues and performance
• Managers are expected to be
decisive and assertive
• Resolution of conflicts by fighting
them out
 Activity 1
Ask students to outline the reasons why the
various elements of culture might increase the
cost of doing business in a country. Please
illustrate your ideas with concrete examples of
both cultural elements and specific countries.

46
Activity 2
Assumed that your corporation intend to open your business in
America and Japan, from your own research about their culture,
point out the culture differences and specialties. Give some
recommendations for your boss?