BBC1200 Module 6

Sociocultural Factors in International

Business

This chapter will:

• Define the term “sociocultural” as a combination of societal, political, and cultural norms and
responses and discuss its influence in international business.

• Discuss how attitudes and beliefs influence human behavior, especially attitudes toward time,
achievement, work, change, and occupational status.

• Present the influence of aesthetics and material culture within different societies.

• Examine how communication, both verbal and nonverbal, may serve as a barrier to international
business operations.

• Investigate the importance of social status and the family within different cultures and their effect on
the business environment.

• Identify the role of multinational corporations as agents of change in the international community.

SOCIOCULTURAL FACTORS AND INTERNATIONAL BUSINESS

Multinational corporations operate in different host countries around the world and have to deal with a
wide variety of political, economic, geographical, technological, and business situations. Moreover, each
host country has its own society and culture, which are different in many important ways from almost
every other society and culture, although there are some commonalities. Although society and culture
do not appear to be a part of business situations, they are actually key elements in shaping how business
is conducted, from what goods are produced, and how and through what means they are sold, to the
establishment of industrial and management patterns and the determination of the success or failure of
a local subsidiary or affiliate.

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Society and culture influence every aspect of an MNC’s overseas business, and a successful MNC
operation, whether it involves marketing, finance, operations, information systems, or human resources,
has to be acutely aware of the predominant attitudes, feelings, and opinions in the local environment.

The various aspects of culture are interrelated; culture influences individual and group behavior and
determines how things are done. Features of culture include religion, education, caste structure, politics,
language differences, and production.

SOCIETY, CULTURE, AND SOCIOCULTURAL FORCES

There are many definitions of culture. In general, culture can be defined as the entire set of social norms
and responses that dominates the behavior of a population, which makes each social environment
different. Culture is the conglomeration of beliefs, rules, techniques, institutions, and artifacts that
characterize human population. It consists of the learned patterns of behavior common to members of a
given society—the unique lifestyle of a particular group of people.

Society refers to a political and social entity that is defined geographically. To understand society and
culture we must relate one to the other, hence the term “sociocultural.” To be successful in their
relationships with people in other countries, international managers must study and understand the
various aspects of culture.

ELEMENTS OF CULTURE
The number of human variables and different types of business functions preclude an exhaustive
discussion of culture here. Instead, we have broken down the broad area of culture into some major
topics to facilitate study.

ATTITUDES AND BELIEFS

In every society there are norms of behavior based on the attitudes, values, and beliefs that constitute a
part of its culture. The attitudes and beliefs of a culture, which vary from country to country, influence
nearly all aspects of human behavior, providing guidelines and organization to a society and its
individuals. Identifying the attitudes and beliefs of a society, and how or whether they differ from one’s
own culture, will help the businessperson more easily understand people’s behavior.

ATTITUDES TOWARD TIME

Everywhere in the world people use time to communicate with one another. In international business,
attitudes toward time are displayed in behavior regarding punctuality, responses to business
communications, responses to deadlines, and the amounts of time that are spent waiting in an outer
office for an appointment. For example, while Americans are known to be punctual, few other cultures
give the same importance to being on time as Americans. In terms of business communications,
Japanese companies may not respond immediately to an offer from a foreign company. What a foreign
company may see as rejection of an offer or disinterest may simply be the lengthy time the Japanese
company takes to review the details of a deal.

ATTITUDES TOWARD WORK AND LEISURE

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Most people in industrial societies work many more hours than is necessary to satisfy their basic needs
for food, clothing, and shelter. Their attitudes toward work and achievement are indicative of their view
toward wealth and material gain. These attitudes affect the types, qualities, and numbers of individuals
who pursue entrepreneurial and management careers as well as the way workers respond to material
incentives.

Many industrial psychologists have conducted research in this area to determine what motivates people
to work more than is necessary to provide for their basic needs. One explanation is the Protestant ethic,
which has its basis in the Reformation, when work was viewed as a means of salvation and people
preferred to transform productivity gains into additional output rather than additional leisure.
Europeans and Americans are typically considered to adhere to this work ethic because they generally
view work as a moral virtue and look unfavorably on the idle. In comparison, in places where work is
considered necessary only to obtain the essentials for survival, people may stop working once they
obtain the essentials.

These attitudes, however, can change. The demonstration effect of seeing others with higher incomes
and better standards of living has motivated workers in such cultures to put in longer hours to improve
their own financial status and material well-being. Additionally, attitudes toward work are shaped by the
perceived rewards and punishments of the amount of work. In cultures where both rewards for greater
amounts of work and punishments for lesser amounts of work are low, there is little incentive for people
to work harder than absolutely necessary. Moreover, when the outcome of a particular work cycle is
certain, there is little enthusiasm for the work itself. Where high uncertainty of success is combined with
some probability of a very positive reward for success, one finds the greatest enthusiasm for work.

ATTITUDES TOWARD ACHIEVEMENT

Cultural differences in the general attitude toward work are also accompanied by significant national
differences in achievement motivation. In some cultures, particularly those with highly stratified and
hierarchical societies, there is a tendency to avoid personal responsibility and to work according to
precise instructions, followed to the letter, that are received from supervisors. In many societies,

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especially where social security is low and jobs are prized, there is both a tendency to avoid taking risk
and little innovation in work or production processes.

Attitudes among workers and managers often influence the types of management that has to be utilized
to achieve corporate goals. In a culture that emphasizes risk taking, greater responsibility, and individual
decision making, a decentralized management system would be more appropriate. In a culture where
there is a tendency to put in only adequate amounts of work and where achievement is not a valued
personal attribute, the company will follow a more centralized management system, with only limited
delegation of decision-making authority.

ATTITUDES TOWARD CHANGE

The international manager must understand what aspects of a culture resist change, how those areas of
resistance differ among cultures, how the process of change takes place in different cultures, and how
long it will take to implement change. There are two conflicting forces within a culture regarding change.
People attempt to protect and preserve their culture with an elaborate set of sanctions and laws
invoked against those who deviate from their norms. Differences are perceived in light of the belief that
“my method is right; thus, the other method must be wrong.”

This contradictory force is one in which the public is aware that the cultural environment is continually
changing and that a culture must change in order to ensure its own continuity. In other words, to
balance these attitudes, the manager must remember that the closer a new idea can be related to a
traditional one when illustrating its relative advantage, the greater the acceptance of that new concept.
Usually cultures with centuries-old traditions that have remained closed to outside influences are more
resistant to change than other cultures. The level of education in a society and the exposure of its
people to knowledge and the experience of other cultures is an extremely important determinant of its
attitude toward change. The influence and nature of religious beliefs in a society also influence attitudes
toward change.

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ATTITUDES TOWARD JOBS

The type of job that is considered most desirable or prestigious varies greatly across different cultures.
Thus, while the medical and legal professions are considered extremely prestigious in the United States,
civil service is considered the most prestigious occupation in several developing countries. The
importance of a particular profession in a culture is an important determinant of the number and quality
of people who seek to join that profession. Thus, in a country where business is regarded as a
prestigious occupation, the MNC will be able to tap a large, well-qualified pool of local managers. On the
other hand, if business is not considered an important profession, much of the country’s talent will be
focused elsewhere.

DOES RELIGION AFFECT COMMERCE?

International business is affected by religious beliefs in many ways, because religion can provide the
spiritual foundation of a culture. Business can bring about modernization that disrupts religious
traditions, and international business can conflict with holy days and religious holidays. Cultural conflicts
in the area of religion can be quite serious. For example, a MNC would have problems with a subsidiary
where employees traditionally enjoy a month-long religious holiday.

Religion can also impose moral norms on culture. It may insist on limits, particularly the subordination of
impulse to moral conduct. Another example of business conflicting with religion is the development of a
promotional campaign for contraceptives in any of the predominantly Roman Catholic countries.

In certain countries, religion may require its followers to dress in a particular manner or maintain a
certain type of physical appearance, which may conflict with the MNC’s appearance and presentation
norms. Certain products manufactured by the MNC or some ingredients used in manufacturing may be
taboo in some religions. For example, beef and tallow are taboo in the Hindu religion and cannot be
used as ingredients in soap manufacturing in India. Similarly, pork products cannot be sold or used in
manufacture in Muslim countries because pork is religiously impure according to the tenets of Islam.

In many religions, the general philosophy of life is completely different from that in the Western world.
Within some Asian religions, for example, the notion exists that nothing is permanent and therefore the
world is an illusion. To followers of such beliefs, time is cyclical—from birth to death to reincarnation—
and the goal of salvation is to escape the cycle and move into a state of eternal bliss (nirvana). These
religious beliefs directly affect how and why people work, as in the Buddhist and Hindu religions, where

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people are supposed to eliminate all desires and therefore may have little motivation for achievement
and the acquisition of material goods.

AESTHETICS

Aesthetics pertains to the sense of beauty and good taste of a culture and includes myths, tales,
dramatization of legends, and more modern expressions of the arts: drama, music, painting, sculpture,
architecture, and so on. Like language, art serves as a means of communication. Color and form are of
particular interest to international business because in most cultures these elements are used as
symbols that convey specific meanings. Green is a popular color in many Muslim countries but is often
associated with disease in countries with dense, green jungles. In France, the Netherlands, and Sweden,
green is associated with cosmetics. Similarly, different colors represent death in different cultures. In the
United States and many European countries, black represents death, while in Japan and many other
Asian countries, white signifies death.

In many countries physical contact in public by persons of opposite sexes is not considered proper, and
exposure of the human body is treated as obscene. MNCs must be exceptionally careful in designing
their advertising programs, the packaging of their products, and the content of their verbal messages to
ensure that they do not offend the aesthetic sensibilities of the country they are operating in.

MATERIAL CULTURE

Material culture refers to the things people use and enjoy and includes all human-made objects. Its
study is concerned with technology and economics. Material cultures differ very significantly because of
tradition, climate, economic status, and a host of other factors. Material culture is an extremely
important issue to be considered by an MNC. Almost everything a society consumes, or, in other words,
whatever the MNC sells or hopes to sell, is determined by the material culture of the population. For
example, selling humidifiers in a tropical country would be a failure because they are not needed by the

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local people and are simply not a part of the material culture. Alternatively, selling American-style
barbecues would be a failure in parts of the world where outdoor cookery is not a part of popular
material culture.

Technology is an important factor that affects the material culture of a society. As more and more new
products and processes are made available by technology, and if they are sufficiently used by the
people, they ultimately become a part of the material culture. One example is the personal computer,
which has become an integral part of the material culture of most industrialized societies.

A country’s particular physical and geographic circumstances also play an important part in influencing
its material culture. Space limitations in Japan prevent the use of large domestic appliances, such as
large-capacity deep freezers or refrigerators, and preclude a real estate market featuring rambling
suburban homes, even though the economy may be prosperous enough to pay for these luxuries. Thus,
suburban homeowner living is not a part of the material culture of Japan, and this affects the type of
products the Japanese middle class will or will not buy. For example, sales of lawn mowers, backyard
pools, and home security systems are likely to be extremely low in Japan, while those of compact,
sophisticated appliances and luxuries that can be accommodated in small apartments are likely to be
very high.

LITERACY RATE

The literacy rate of a potential overseas market or facility is used by many areas of the international
business firm. The marketer uses it to determine the types and sophistication of advertising to employ.
The personnel manager uses it as a guide in estimating the types of people available for staffing the
operation. Literacy rate numbers, however, rarely provide any information about the quality of
education.

Countries with low literacy rates are less likely to provide the MNC with all the qualified personnel it
needs to staff its local operation and will necessitate the transfer of a large number of expatriate
managers. Literacy rates must be used with caution, however, because they often hide the fact that a
country with a low literacy rate but a very large population may have a large number of qualified
professionals, who as a percentage of the population may be very small but form a fairly large absolute
number by themselves. Literacy rates generally have a more direct bearing on the general level of
education and abilities of the workers at the lower levels, because much of the population that suffers
from illiteracy is at the lowest economic level in society.

EDUCATION MIX

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When considering education as an aspect of culture, an MNC not only should look at literacy rates and
levels of education but also should try to understand the education mix of a certain society; that is,
which areas are considered important for concentrated education? For example, a combination of
factors caused a proliferation of European business schools patterned on American models. First,
increased competition in the European Union resulted in a demand for better-trained managers.
Second, Europeans began establishing their own business schools after they were educated at American
business schools and returned home. Third, the establishment of American-type schools with faculty
from the United States was frequently accomplished with the assistance of American universities.

This trend toward specialized business education is slower in less-developed countries. Historically,
higher education in LDCs has focused on the humanities, law, and medicine; engineering has not been
popular, with the exception of architectural and civil engineering, because there were few job
opportunities in that field, and business careers have lacked prestige.

BRAIN DRAIN

Brain drain is a phenomenon experienced by many developing nations, especially China and India.
Because governments overinvested in higher education in relation to demand, developing nations have
seen rising unemployment among the educated. These unemployed professionals must immigrate to
industrialized nations to find appropriate work, which effectively represents a loss to the country that
has spent substantial amounts of scarce public resources to finance professional education.

COMMUNICATION AND LANGUAGE

Communication and language are closely related to culture because each culture reflects what the
society values in its language. Culture determines to a large extent the use of spoken language—specific
words, phrases, and intonations used to communicate people’s thoughts and needs. These verbal
patterns are reinforced by unspoken language—gestures, body positions, and symbolic aids.

Spoken language becomes a cultural barrier between different countries and regions. In one country,
verbal language can consist of many dialects and different colloquialisms and may be totally different
from the written language. There is no way to learn a language so that the nuances, double meanings,
and slang are immediately understood, unless one also learns other aspects of the culture.

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Languages delineate culture. In some European countries there is more than one language and, hence,
more than one culture. Belgium and Switzerland are two such examples, with French and Dutch spoken
in the former, and German, Italian, French, and Romansh officially spoken in the latter. Different cultures
exist within each country. One cannot conclude, however, that where only one language exists, there
will be only one culture. The people of both the United States and Great Britain speak English, but each
country has its own culture. An example of the problems facing an international firm that must respond
to the language aspects of a culture involves the sort of computer hardware marketed in Canada.

Canada’s heated debate about its official language may affect computer users. After several years of
study, a joint government-industry committee has come up with Canada’s first national standard for
computer keyboards with both English and accented French letters.

Although the Canadian government is officially bilingual, English remains the dominant language. Many
English speakers resent the government’s move to promote French, which is dominant only in Quebec.
Hence, selling keyboards with both English and accented French letters could prove to be an obstacle in
the English-speaking provinces of Canada.

Where many spoken languages exist in a single country, one language usually serves as the principal
vehicle for communication across cultures. This is true for many countries that were once colonies, such
as India, which uses English. Although they serve as national languages, these foreign substitutes are not
the first language of the populace and are therefore less effective than native tongues for reaching mass
markets or for day-to-day conversations between managers and workers. In many situations, managers
try to ease these communication difficulties by separating the workforce according to origin. The
preferred solution is to teach managers the language of their workers.

When communication involves translation from one language to another, the problems of ascertaining
meanings that arise in different cultures are multiplied many times. Translation is not just the matching
of words in one language with words of identical meanings in another language. It involves
interpretation of the cultural patterns and concepts of one country into the terms of those of another. It
is often difficult to translate directly from one language to another. Many international managers have
been unpleasantly surprised to learn that the nodding and yes responses of their Japanese counterparts
did not mean that the deal was closed or that they agreed, because the word for yes, hai, can also

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simply mean “it is understood” or “I hear you.” In fact, it is typical of the Japanese to avoid saying
anything disagreeable to a listener.

Many international business consultants advise the manager in a foreign country to use two translations
by two different translators. The manager’s words are first translated by a non-native speaker; then a
native speaker translates the first translator’s words back into the original language. Unless translators
have a special knowledge of the industry, they often go to a dictionary for a literal translation that
frequently makes no sense or is erroneous.

Nonverbal language is another form of communication. Silent communication can take several forms,
such as body language, space, and language of things. Body talk is a universal form of language that may
have different meanings from country to country. Usually, it involves facial expressions, postures,
gestures, handshakes, eye contact, color or symbols, and time (punctuality). The language of space
includes such things as conversational distance between people, closed office doors, or office size. Each
of these has a different connotation and appropriateness in different cultures. The language of space
includes such things as conversational distance between people, closed office doors, or office size. Each
of these has a different connotation and appropriateness in different cultures. The language of things
includes money and possessions.

GIFT GIVING AND BRIBERY

Gift giving is a custom that has great value within a business environment. It is important not only to
remember to bring a gift, but also to make certain that the gift you have chosen is appropriate. In some
cultures, gift giving is not expected or encouraged, and the international businessperson must be
familiar with the appropriate behavior in each environment.

MANAGEMENT OF CULTURAL CHANGE

Managers must understand what aspects of a culture will resist change, how those aspects will differ
among cultures, how the process of change takes place in different cultures, and how long it will take to
implement changes. They must also consider that change may occur in different ways: Their
organization may act as an agent of change, influencing the foreign culture; it may be somewhat
changed itself; or it may both create change and be changed at the same time. In deciding how much
change an organization will assume and how an organization may attempt to influence its host
environment, a manager must consider the value system of the organization and its strategic mission,
goals, and objectives. In addition, the costs and benefits of change need to be outlined, because the
costs of change may far outweigh the benefits reaped from change.

If it is determined that some change is necessary in the foreign locale, the international manager should
remember that resistance to change is low if the amount of change is not too great. If too much change
is perceived by individuals within a certain culture at the outset, resistance will be stronger. In the same
vein, individuals will be more apt to allow and accept change if they are involved in the decision and
participate in the change process. Also, people are more likely to support change when they see
personal or reference group rewards.

To ease the problems associated with change, the international manager must find opinion leaders and
try to convince those who can influence others. The international firm should also time the
implementation of change wisely. Change should be planned for a time when there is the least

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likelihood of resistance. When considering timing, all elements should be considered to avoid conflict,
such as political disturbances or religious holidays. Moreover, the international manager needs to look
toward the home office for possible areas for change that will improve the potential for acceptance and
success within the foreign environment.

SUMMARY
When businesses crossed national borders, they face a diversity of societies and cultures quite different
from their own. “Society” refers to a political and social entity that is geographically defined and is
composed of people and their culture. “Culture” is a set of social norms and responses that conditions
the behavior of a population. The term “sociocultural” describes how society and culture relate to each
other.

In the study of culture, the major topics are attitudes, beliefs, religion, aesthetics, material culture,
education, language, and society organizations. Attitudes and beliefs influence human behavior by
providing a set of rules and guidelines including attitudes toward time, achievement and work, change,
and the importance of occupation. Religion provides the spiritual basis for a society by imposing moral
norms and appropriate behavior. Aesthetics include various forms of artistic expression. Material culture
refers to objects and possessions and focuses on technology, while nonmaterial culture covers a set of
intangibles. Communication and language can be silent, as well as spoken or written, and may be a
barrier to an international organization. Silent language includes body language, gestures, color, and
symbols.

Societal organizations may take a number of different forms and indicate the level of social stratification
within a society. Social groups may be either ascribed (determined by birth) or acquired.

Business customers may differ from one country to another and must be understood before an MNC
begins any negotiations or business dealings outside its own culture. Understanding the importance of
gifts and how they differ from bribes can be critical to international business relations.

END

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