Differences

in Culture
 LEARNING OBJECTIVES

o Explain what is meant by the culture of a society.

o Identify the forces that lead to differences in social
culture.
o Identify the business and economic implications of
differences in culture.
o Recognize how differences in social culture
influence values in the workplace.
o Demonstrate an appreciation for the economic and
business implications of cultural change.
 How Do Cultural Differences
Affect International Business?
Understanding and adapting to the local cultural
is important international companies
o cross-cultural literacy - an understanding of
how cultural differences across and within
nations can affect the way in which business
is practiced
A relationship may exist between culture and the
costs of doing business in a country or region
o MNEs can be agents of cultural change

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 What Is Culture?
Culture - a system of values and norms that are
shared among a group of people and that when
taken together constitute a design for living
where
o values are abstract ideas about what a group believes
to be good, right, and desirable
o norms are the social rules and guidelines that prescribe
appropriate behavior in particular situations
Society - a group of people who share a common
set of values and norms

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 How Are Culture, Society,
& The Nation-State Related?
The relationship between a society and a
nation state is not strictly one-to-one
Nation-states are political creations
o can contain one or more cultures
A culture can embrace several nations
o the values and norms of a culture evolve
over time

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What Determines Culture?
Determinants of Culture

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 What Is A Social Structure?
Social structure - a society’s basic social organization
A group is an association of two or more people who have a
shared sense of identity and who interact with each other in
structured ways on the basis of a common set of
expectations about each other’s behavior
• Individuals are involved in families, work groups, social
groups, recreational groups, etc.
o US citizens: individual goal setting → job switching →
New Learning → creativity→ performance enhancement.
o Japanese → Strong value system → Family help in the
business → Workers retentions → Dependency of family
and friends network → Dependency lack of dynamism
and entrepreneurship
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 What Is Social Stratification?
All societies are stratified on a hierarchical basis
into social categories, or social strata
1. Social mobility - the extent to which individuals can move
out of the strata into which they are born
• caste system
• class system: Britain's was more rigid compared to other western
societies based on professions.
o They were divided in Upper class, Upper middle and lower middle,
and lower class.
o Rural Vs. Urban societies: China with limited social mobility
3. The significance attached to social strata in business
contacts
• class consciousness
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 How Do Religious And
Ethical Systems Differ?
Religion - shared beliefs and rituals that are
concerned with the realm of the sacred
1. Christianity
2. Islam
3. Hinduism
4. Buddhism
5. Confucianism influences behavior and culture
Ethical systems - a set of moral principles, or
values, that are used to guide and shape
behavior

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 Christianity
• Protestants Ethics – Hard work, wealth
creation (for glory of God), no worldly
pleasures.
• Weber believed that protestants laid
foundations of modern Capitalism.
• meaningful consumption, consequently,
accumulation of wealth and reinvestment of
profits.
• Individual freedom in prayers to focus on
businesses.
 Islam
• Belief in One God like Christianity and
Judaism.
• Submission to will of Allah in all respects,
family, institutions, business and greater good.
• Socialism is linked to Islam
• Islamic and fundamentalism in western
countries.
• Islam, terrorism and western media.
• Western cultural identity and Muslim identity.
 Islam and Economic
principles
• Cultural differences in Islamic countries such
as Saudi, Pakistan, Iran.
• Social justice
• Normal profit
• Islamic banking – no interest rate;
✔ Mudarabah is an Islamic contract in which one party supplies the money and the
other provides management expertise to undertake a specific trade. The party
supplying the capital is called owner of the capital. The other party is referred to
as an agent who actually runs the business.
✔ Murabaha is a commonly known Working Capital Finance widely used in Islamic
Banks. Murabaha refers to sale where the seller discloses the cost of commodity
and the amount of profit charged. Thus it is not a loan given on interest rather it
is a sale of commodity at profit.(Bank Alfalah)
 Islamic countries and
International Business
• No storage of goods

• Charity for greater good

• Muslims vs Globalisation Vs
International Business
 HINDUISM
• Worlds oldest started in Indus Valley
• Dharma Vs Karma
✔ Dharma: Principles of living
✔ Karma: Rewards or consequences of actions
• Weber: Hinduism does not encourage
entrepreneurial activities for wealth creation. But
modern India is best in Entrepreneurship and
businesses.
• Good moral Deeds to be used as criteria to
judge individuals rather than wealth.
• India Vs Caste System and Mahatma Gandhi
How Do Religious And
Ethical Systems Differ?
World Religions

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 What Is The Role
Of Language In Culture?
Language - the spoken and unspoken (nonverbal
communication such as facial expressions, personal
space, and hand gestures) means of
communication
Chinese is the mother tongue of the largest number of
people
English is the most widely spoken language in the world
and is also becoming the language of international
business
but, knowledge of the local language is still beneficial, and
in some cases, critical for business success
failing to understand the nonverbal cues of another
culture can lead to communication failure

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 What Is The Role
Of Education In Culture?
Formal education is the medium through which
individuals learn many of the language, conceptual,
and mathematical skills that are indispensable in a
modern society
• important in determining a nation’s competitive advantage
o Japan’s postwar success can be linked to its excellent
education system
• general education levels can be a good index for the kinds
of products that might sell in a country
o ex. impact of literacy rates

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 How Does Culture
Impact The Workplace?
Hofstede’s dimensions of culture:
1. Power distance - how a society deals with the fact
that people are unequal in physical and
intellectual capabilities
2. Uncertainty avoidance - the relationship between
the individual and his fellows
3. Individualism versus collectivism - the extent to
which different cultures socialize their members
into accepting ambiguous situations and tolerating
ambiguity
4. Masculinity versus femininity -the relationship
between gender and work roles
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 How Does Culture
Impact The Workplace?
Work-Related Values for 20 Countries

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 How Does Culture
Impact The Workplace?
Hofstede later expanded added a fifth
dimension called Confucian dynamism or
long-term orientation
captures attitudes toward time, persistence,
ordering by status, protection of face, respect
for tradition, and reciprocation of gifts and
favors
Japan, Hong Kong, and Thailand scored high on
this dimension
the U.S. and Canada scored low

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 Does Culture Change?
Culture evolves over time
changes in value systems can be slow and
painful for a society
Social turmoil - an inevitable outcome of
cultural change
as countries become economically stronger,
cultural change is particularly common
economic progress encourages a shift from
collectivism to individualism
globalization also brings cultural change

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 What Do Cultural Differences
Mean For Managers?
1. It is important to develop cross-cultural literacy
companies that are ill informed about the practices
of another culture are unlikely to succeed in that
culture
2. There is a connection between culture and
national competitive advantage
suggests which countries are likely to produce the
most viable competitors
has implications for the choice of countries in which
to locate production facilities and do business

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