National Differences Learning Objectives

LO 4-1 Explain what is meant by the culture of a society.

LO 4-2 Identify the forces that lead to differences in social
culture.
LO 4-3 Identify the business and economic implications of
differences in culture.

Source: © Ashok Saxena/Alamy Stock Photo

LO 4-4 Recognize how differences in social culture influence
values in business.
LO 4-5 Demonstrate an appreciation for the economic and
business implications of cultural change.
Chapter 4: Differences in Culture

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Opening Case:
Introduction
World Expo 2020 in Dubai, UAE
 Cross-cultural literacy - an understanding of how
 United Arab Emirates established in 1971
cultural differences across and within nations can
 In top ten of countries with largest oil reserves in the world affect the way in which business is practiced
 Open-market economy includes seven emirates  There may be a relationship between culture and the
 Dubai rated as one of best places to live in the Middle East costs of doing business in a country or region
 Theme of World Expo 2020 “connecting minds, creating the  Culture is not static – it can and does evolve
future”
 Multinational enterprises can be engines of cultural
 Expo will last six months where countries are expected to
show what they can do: “nation branding” change

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Did You Know? What is Culture? 1 of 4

Scholars have not been able to agree on a simple
Did you know arriving definition
late is expected in some  Culture is a system of values and norms that are shared
cultures? among a group of people and that when taken together
constitute a design for living
 Society is a group of people sharing a common set of
Click to play video values and norms

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Basic Marketing – Chapter 6

Handout 6-1
 What is Culture? 2 of 4 Planning on Doing Business Internationally?
Values and Norms If a company is planning to start exporting a product, there are two
basic questions that need to be asked. Is the product ready to be
 Values - provide the context within which a society’s norms exported? And, is the company ready to export the product?
are established and justified Culturally, the product is either ready for a global market or not (and,
if not, the company can modify it if the market is important enough).
 Norms - the social rules that govern the actions of people Company readiness is much more culturally sensitive. Having the
toward one another appropriate cultural knowledge and skills are important. If you have
 Folkways - the routine conventions of everyday life the basic information about a company, you can use globalEDGETM’s
diagnostic tool called CORE (Company Readiness to Export) to assess
 Mores - norms that are seen as central to the functioning of a
society and to its social life
both product and company readiness to be exported. Try it out; how
much better do you think Microsoft, which is everywhere in the
world, will score compared with Questcor Pharmaceuticals
(questcor.com), which was ranked number one on Forbes’ list of
“America’s Best Small Companies” in 2013?
Sources: globalEDGE’s CORE diagnostic tool, http://globalEDGE.msu.edu;Badenhausen, K.,
“America’s Best Small Companies,” Forbes, October 9, 2013.

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What is Culture? 3 of 4 What is Culture? 4 of 4

Culture, Society, and the Nation-State The Determinants of Culture
 Society reflects people who are bound together by a  The values and norms of a culture evolve based on:
common culture  Prevailing political and economic philosophies
 Nation-states are political creations that can contain a single  A society’s social structure
culture or several cultures
 The dominant religion, language, and education
 Some cultures embrace several nations
 Also possible to talk about culture at different levels within
societies

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Figure 4.1 The Determinants of Culture Social Structure 1 of 7

 A society's social structure is its basic social
organization
 Two dimensions to consider
 The degree to which the basic unit of social organization is the
individual, as opposed to the group
 The degree to which a society is stratified into classes or castes

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Basic Marketing – Chapter 6

Handout 6-2
 Social Structure 2 of 7 Social Structure 3 of 7
Individuals and Groups  The Individual
 Group - an association of two or more individuals who  Emphasized in Western countries
have a shared sense of identity and who interact with each  Individual achievement and entrepreneurship are
other in structured ways on the basis of a common set of promoted
expectations about each other’s behavior  Fosters managerial mobility
 Encourages job switching, competition between
individuals rather than team building, and a lack of
loyalty to the firm
 The Group
 Emphasized in non-Westernized countries (Japan)
 Cooperation and team work are encouraged and life time
employment is common
 Individual initiative and creativity may be suppressed
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Social Structure 4 of 7 Social Structure 5 of 7

Social Stratification Social Stratification continued
 All societies are stratified on a hierarchical basis into social  Four basic principles of social stratification
categories, or social strata 1. It is a trait of society, not a reflection of individual differences
2. It carries over a generation to the next generation
 Usually defined by characteristics such as family background,
3. It is generally universal, but variable
occupation, and income
4. It involves not just inequality but also beliefs
 Societies differ in terms of
 The degree of mobility between social strata
 The significance attached to social strata in a business context

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Social Structure 6 of 7 Social Structure 7 of 7

Social Stratification continued Social Stratification continued
 Social mobility - the extent to which individuals can move  Significance
out of the strata into which they are born  In cultures where class consciousness (where people tend to
 Caste system - social position is determined by the family into perceive themselves in terms of their class background) is high,
which a person is born, and change in that position is unlikely the way individuals from different classes work together may be
 Class system - the position a person has by birth can be changed prescribed
through achievement or luck  Evident in British society
 Social mobility in class system varies from society to society  Antagonism between labor and management can raise the
 Class system in U.S. less pronounced than in Britain costs of doing business

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Basic Marketing – Chapter 6

Handout 6-3
 Religious and Ethical Systems 1 of 8 Map 4.1 World Religions
 Religion - a system of shared beliefs and rituals that
are concerned with the realm of the sacred
 Ethical system – a set of moral principles, or values,
that are used to guide and shape behavior
 Religions with the greatest following
 Christianity (2.20 billion adherents)
 Islam (1.60 billion adherents)
 Hinduism (1.10 million adherents)
 Buddhism (535 million adherents)
 Confucianism shapes culture in many parts of Asia

Source: “Map 14,” Allen, John L., Student Atlas of World Politics, 10th ed. McGraw-Hill Education.

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Religious and Ethical Systems 2 of 8 Religious and Ethical Systems 3 of 8

Christianity Islam
 Most widely practiced religion  Adherents of Islam are referred to as Muslims
 In 1904, Max Weber suggested that it was the Protestant  One true omnipotent God
work ethic (focus on hard work, wealth creation, and  In the Western media, Islamic fundamentalism is
frugality) that was the driving force of capitalism associated with militants, terrorists, and violent upheavals
 Protestantism gave individuals more freedom to develop  Fundamentalists have gained political power in many
their own relationship with God which may have paved Muslim countries, and have tried to make Islamic law the
way to economic freedom law of the land

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Religious and Ethical Systems 4 of 8 Islamic Banks

Islam continued
 Economic Implications of Islam
 Koran establishes explicit economic principles many of which are
Islamic banks
pro-free enterprise
 Under Islam, people do not own property, but only act as stewards function differently
for God and thus must take care of that which they have been than conventional
entrusted with banks in the world,
• Islam is supportive of business, but the way business is practiced is as the Islamic
prescribed banks cannot pay
• Businesses that are perceived to be making a profit through the
or charge interest.
exploitation of others, by deception, or by breaking contractual
obligations are unwelcome Source: © Ali Al Saadi/AFP/Getty Images

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Basic Marketing – Chapter 6

Handout 6-4
 Religious and Ethical Systems 5 of 8 Religious and Ethical Systems 6 of 8
Islam continued Hinduism
 Economic Implications of Islam continued  World’s oldest religion
• Prohibits payment or receipt of interest  Moral force in society requires the acceptance of certain
• Mudarabah
responsibilities called dharma
• Similar to profit sharing
• Murabaha
 Believe in reincarnation and karma
• Most widely used  Individuals should be judged by their spiritual
• Includes a price markup achievements
 Promotion and adding new responsibilities may not be the
goal of an employee, or may be infeasible due to the
employee's caste

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Religious and Ethical Systems 7 of 8 Religious and Ethical Systems 8 of 8

Buddhism Confucianism
 Suffering originates in people’s desire for pleasure  Until 1949, official ethical system of China
 Stress spiritual growth and the afterlife, rather than  Not a religion
achievement while in this world  High moral and ethical conduct and loyalty to others
 The Noble Eight Path  Attain personal salvation through right action
 Buddhism does not support the caste system, so  Three key teachings of Confucianism - loyalty, reciprocal
individuals do have some mobility and can work with obligations, and honesty - may all lead to a lowering of the
individuals from different classes cost of doing business in Confucian societies
 Entrepreneurial activity is acceptable

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Language 1 of 3 Can You Speak the Most Important Languages?

 Countries differ in terms of language or means of Mastering your own native language is critically important to doing
business in your own home country. Mastering the language of a
communication
foreign country (or subcultures) with which you want to do business
 There are two forms language: is also an added value in any cross-cultural relationship. English
leads the way in terms of business languages, but which languages
 Spoken
are important after English? Spanish? No, not necessarily. The three
 Unspoken languages that are important for business after English are Mandarin
 Language is one of the defining characteristics of Chinese, French, and Arabic. Spanish is fifth, so it is clearly
important, but not as useful as English, Mandarin, French, and Arabic
culture because of the number of people who speak these languages. Do
you agree with the rank order of these languages? Why or why
not?
Source: S. Kim, “Top 3 Useful Foreign Languages for Business Excludes Spanish,” ABC News, September 1,
2011. http://abcnews.go.com/blogs.

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Basic Marketing – Chapter 6

Handout 6-5
 Language 2 of 3 Language 3 of 3
Spoken Language Unspoken Language
 Countries with more than one spoken language often have  Unspoken language - nonverbal cues
more than one culture  Examples include facial expressions and hand gestures
 Chinese is the mother tongue of the largest number of people in  Can be important for communication
the world
 Personal space
 English is the most widely spoken language in the world, and is
becoming the language of international business  Many nonverbal cues are culturally bound and because
they may be interpreted differently, can result in
misunderstandings

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Education Culture and Business 1 of 3

 Formal education is the medium through which Geert Hofstede isolated five dimensions that
individuals learn many of the language, conceptual, and summarized different cultures
technical skills that are indispensable in a modern society 1. Power distance
 The knowledge base, training, and educational 2. Individualism versus collectivism
opportunities available to a country's citizens can also 3. Uncertainty avoidance
give it a competitive advantage in the market and make it 4. Masculinity versus femininity
a more or less attractive place for expanding business 5. Long-term versus short-term orientation
 Porter points to an excellent education system as an important  A move to add a sixth dimension: indulgence versus
factor in explaining the country’s postwar economic success restraint
 The general education level of a country is a good
indicator of the types of products that might sell in that
location or the type of promotional materials that might
be successful
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Culture and Business 2 of 3 Culture and Business 3 of 3

Hofstede’s work has been criticized  Hofstede’s work represents a starting point for
 Assumes a one-to-one relationship between culture and managers trying to understand cultural differences
nation-state  Global Leadership and Organizational Behavior
 Research may be culturally bound Effectiveness instrument
 Informants only worked within a single industry –
 World Values Survey
computers – and within one company – IBM.
 Certain social classes excluded from research

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Basic Marketing – Chapter 6

Handout 6-6
 Cultural Change Focus on Managerial Implications 1 of 3
Culture evolves over time, although changes in value CROSS-CULTURAL LITERACY AND COMPETITIVE
systems can be slow and painful for a society ADVANTAGE
 Social turmoil is an inevitable outcome of cultural change There is a need for managers to develop cross-cultural
 Cultural change is particularly common as countries literacy
become economically stronger 1. There is a connection between culture and national
 As countries get richer, there is a shift from “traditional competitive advantage
values” to “secular rational” values and from “survival 2. There is a connection between culture and ethics in
values” to “well-being values” decision making

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Focus on Managerial Implications 2 of 3 Focus on Managerial Implications 3 of 3

Cross-Cultural Literacy Culture and Competitive Advantage
 Firms that are ill-informed about the practices of another  Connection between culture and competitive advantage
culture are unlikely to succeed in that culture  It suggests which countries are likely to produce the most viable
 Individuals must also beware of ethnocentric behavior competitors

 Belief in the superiority of one's own culture  It has implications for the choice of countries in which to locate
production facilities and do business

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Summary
In this chapter we have
 Explained what is meant by the culture of a society.
 Identified the forces that lead to differences in social
culture.
 Identified the business and economic implications of
differences in culture.
 Recognized how differences in social culture influence
values in business.
 Demonstrated an appreciation for the economic and
business implications of cultural change.

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Basic Marketing – Chapter 6

Handout 6-7