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Learning Outcomes
• To be able to define culture and identify its
ROLE OF CULTURE IN major dimensions.
INTERNATIONAL BUSINESS • To understand how culture affects
MANAGEMENT International Management.

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INTRODUCTION What is Culture?

• This lecture is an overview of culture and • “Culture is the accumulated total learned
shows its impact on the international values, norms, customs, attitudes,
management functions which are:- perceptions, art, law, and other capabilities
– Planning and habits acquired by people that are shared
– Organizing
– Staffing
by members of society”.
– Directing and • Source: Hoebel, International Marketing, 8th
– Controlling.
Edition, Terpstra,Vern., Sarathy, Ravi, Chapter
4, page 90.

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Other Definitions Conclusion on Definition

• “Culture is the shared meanings that
characterize a society and distinguish it from
other societies.”
• Culture determines what is acceptable and
not acceptable in society.
• Culture is a society’s “personality.”
• These definitions suggest that the concept of
culture is broad and complex.
• It encompasses virtually every part of a
person's life.
• It cannot be easily defined by a sentence.

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Characteristics of Culture
• 1. Culture is Learned
• Culture is not innate (inborn).
• Consumers are not born with a culture; they
learn it.
• How do consumers learn about culture?
• Enculturation – learning one’s own culture by
growing up with it.
• Acculturation is the process of learning a
foreign culture.
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4. Culture is Functional, Dynamic
• Culture serves a particular function or need of
a people.
• When the function it was serving changes so
also does culture.
• Culture evolves / changes to reflect changes in
the environment.
• The Swazi / E-Swatini people have a very
strong culture, that helped them to avoid
annexation by SA.
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• (c) Organizational Culture
• This level is organizational and may contain
subcultures of various functions.
• Functional culture is expressed through the
shared values, beliefs, meanings and
behaviours of the members of a function
within an organization (e.g. Marketing,
Accounting, Finance, Purchasing, Top
Management and Blue-Collar workers).
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• 2. Culture is shared
• To be considered as culture a practice must be
shared by a significant portion of society
rather than by specific individuals.
• 3. Culture is pervasive – invisible hand
• Impact of culture is widespread, natural and
automatic.
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The different layers of culture
• National Culture
• This level gives the overall framework of
cultural concepts and Legislation for business
activities.
• (b) Industry Culture
• Players within an industry know the rules of
the game.
• For example, shipping, the oil business,
electronics industry have similar
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characteristics or culture.
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Components or Elements of
Culture
• Since culture cannot be easily defined some
researchers have developed generalizations
that identify what constitutes cultures.
• These generalizations are commonly referred
to as components or elements of culture. The
elements include:-
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2. Educational Institutions
• Another fundamental source of cultural
development is educational institutions which
differ from society to society.
• Some societies such as Germany heavily
emphasize organized structured forms of
learning that stress logic while others
including Great Britain and America take a less
formal approach.
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4. Health
• The system of healthcare in a country affects
employee productivity, expectations, and
attitudes toward physical fitness and its role in
the workplace.
• These expectations will influence managerial
decisions regarding healthcare benefits,
insurance, physical facilities, sick days, and so
forth.
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1. The Family
– The most fundamental unit to the development of
culture is the family.
– The formation of family households varies across
cultures.
– For example in Western Societies the family
consists of parents and children – the nuclear
family.
– In many other cultures, especially Africa, the
family is extended to include grandparents and in
some cases other relatives such as aunts and
uncles. 14
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3. Religion
• Different societies develop different religions
which are the major causes of cultural
differences in many societies.
• In some countries, religious beliefs and
practices permeate everyday business
transactions and on-the-job behaviors.
• For instance, McDonald’s does not serve beef
or pork in India out of respect for Hindus and
Muslims.
• In Saudi Arabia, Islamic law prohibits the 16
charging of interest.
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5. Recreation
• Another element of culture is the way people
use their leisure time.
• Workers' attitudes toward recreation can
affect their work behavior and their
perception of the role of work in their lives.
• In some countries once workers are paid, they
do not come back to work until the money is
finished.
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6. Aesthetics
• Aesthetics relate to the appreciation of the
artistic nature / beuaty of something,
including its smell, taste or ambience.
• Also includes folklore, music, drama, colour, or
architecture.
• The artistic tastes of people and meanings
differ among societies all over the world.
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7. Language
• Language is the most obvious distinction
between cultures.
• Success in advertising, branding, personal
selling and marketing research are highly
dependent on using a language appropriately.
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9. Politics
• This aspect of culture refers to the system of
government in a society, whether democratic,
Communist, or dictatorial.
• These systems have implications on the
freedom to do business.
• It is the manager's job to understand the
political system and how it affects
organizational processes, to negotiate
positions within that system, and to manage
effectively the mutual concerns of the host
country and guest company.
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• For example, the meaning of colours normally
vary from culture to culture.
• For example, black is the colour for mourning
and white is happiness in the West and Africa;
the reverse is true in the Far East.
• Purple means death in Latin America.
• Green is unpopular in Malaysia because it is
associated with the jungle and illness is
believed to come from there.
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8. Material Culture - Economy
• Material Culture refers to the level of
economic development of a society.
• It is the result of the society's exposure to
technology.
• Material culture is visible in a society's
economic, social, financial and marketing
infrastructure.
• On the basis of material culture markets may
be classified into: High, Medium and Low
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income. 22
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AN EXAMPLE OF CULTURAL
INFLUENCE ON BUSINESS
BEHAVIOUR
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The Link between Food and

Culture
• Chinese eat dogs – Many people in Africa and
the West find it difficult to understand.
• Cows have religious significance to Hindus so
they cannot understand why we eat them.
• The French eat horsemeat and frogs which the
British do not approve.
• When a person in Botswana needs food he is
most likely to want to satisfy that need by
eating papa or phane.
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• When a person in Mauritius needs food he is
most likely to want to satisfy that need by a
rice and beans.
• When an American needs food he is most
likely to want to satisfy that need by a Burger,
chips and a soft drink.
• What we eat is to a greater extent a reflection
of our cultural upbringing.

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• Conclusion: If biological reasons alone were

the explanation of what people eat then diets
AN ADDITIONAL CONCEPT
around the world would be similar.
• Therefore international marketers must take ABOUT CULTURE
into account the local culture of the country in
which one wishes to market to.

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Self-Reference, Parochialism,
Ethnocentrism
• The Self-Reference Criterion is the
unconscious reference point of one’s own
How to Guard Against Self-
cultural values.
– It means people often understand and relate to Referencing
others only in terms of their own culture.
• Parochialism occurs when a person expects
those from another culture to automatically
fall into patterns of behavior common in
his/her own culture.
• Ethnocentrism describes the attitude of those 29

who operate from the assumption their ways

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Cultural Savvy, Cultural Sensitivity,

Cultural Empathy
• To guard against Self-Referencing,
Parochialism and Ethnocentrism one needs to
be Culturally Savvy or Cultural Sensitivity or
have Cultural Empathy.
• All three concepts above describe an
awareness of and an honest caring about
another individual’s culture .
• That is the willingness to put oneself in
another's shoes.
• Many blunders made in international 31 32

operations can be attributed to a lack of

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DIMENSIONS OF CULTURE IN Hofstede's Cultural Dimensions

BUSINESS Model
• Culture can be classified into major • Hofstede developed a typology / classification
dimensions according to differences among consisting of four dimensions by which all
societies. cultures can be classified:
• One of the most popular theories addressing – Power Distance
the impact of culture on the management – Uncertainty Avoidance
process is that developed by Geert Hofstede – Individualism / Collectivism and
of the Netherlands. – Masculinity/Femininity.
• He proposed a paradigm to study the impact
of National Culture on individual behaviour.
• He examined the values and beliefs of 116,000 33 34

IBM employees based in 50 nations

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Hofstede’s Cultural Dimensions A. Power Distance

Power Distance
The level of acceptance by a
society of the unequal
distribution of power in
institutions
Individualism /
Collectivism
The tendency of people to
look after themselves and
their immediate families only
and to neglect the needs of
society
Uncertainty Avoidance
The extent to which people in
a society feel threatened by
ambiguous situations
Masculinity-Femininity
The degree to which masculine
values such as assertiveness
materialism and lack of
concern for others) prevail.
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• Power distance is the extent to which a society
accepts unequal power distribution.
• In low power distance cultures superiors and
subordinates are more likely to view one
another as equals leading to more
cooperation.
– Thus leadership tends to be particpative and
decentralized.
• In high power distance cultures formal
authority and hierarchy are very much 36

respected.
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Further Characteristics of Low and

B. Uncertainty Avoidance
High Power Distance Dimension
• Uncertainty avoidance is the extent to which
people feel threatened by ambiguous
situations.
• Low Uncertainty Avoidance cultures are more
comfortable with ambiguity.
• In these cultures company activities are less
formal and structured managers take more
risks and employees have more job mobility.

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Further Characteristics of Low and

High Uncertainty Avoidance
Dimension
• 2. In High Uncertainty Avoidance cultures
people become uncomfortable with ambiguity
and tend to have strict laws and closely
followed procedures.
• In businesses managers tend to make low-risk
decisions employees are not aggressive and
lifetime employment is common.

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Further Characteristics of
C. Individualism versus Collectivism Dimension Individualist and Collectivist
Dimension
• Individualism is the tendency for people to
look after themselves and their immediate
families only and to neglect the needs of
society.
– Individual initiative and achievement are valued.
– Countries scoring higher on individualism tend to
have higher GNPs and freer political systems.
• Collectivism entails strong belief in group
decisions.
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Further Characteristics of
D. Masculinity versus Femininity
Masculine/Feminine dimension
• Masculinity refers to the degree to which
traditionally masculine values (e.g.
assertiveness, materialism and lack of concern
for others) prevail.
• Femininity emphasizes the traditionally
feminine values of concern for others
relationships and quality of life.
• In more feminine cultures one tends to find
less work-family conflict, less job stress more
women in high-level jobs and a reduced need 43 44

for assertiveness.
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The Confucian Dynamism Further Characteristics of

Dimension Short/Long-Term Orientation
• Later research in 23 countries using a survey
developed by Bond and colleagues called the
Chinese Value Survey led Hofstede to develop
a fifth dimension — called the Confucian work
dynamism—which he labeled a long-
term/short-term dimension.
• He defined long-term orientation as “the
extent to which a culture makes its members
to accept delayed gratification of their Hofstede’s Fifth Dimension
material social and emotional needs.” 45 46

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Another Principle of Confucianism The African Culture: “Ubuntu”

• Confucian teaching says that unequal
relationships between people create stability
in society.
• The basic relationships are ruler-subject
father-son, older-younger, and husband-wife.
• The junior owes the senior respect and the
senior owes the junior protection and
consideration.
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• Africans have an underlying pan-African
character that results from a unique
geographical, historical, cultural and political
experience.
• Africans can be identified by certain common
characteristics in their daily lives: Ubuntu.
• One important characteristic of Ubuntu is
emphasis of a high degree of harmony of the
whole rather than its distinct parts.
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Criticism of Hofstede’s Model

• Thus similar to Confucianism Ubuntu too
emphasizes suppression of the self-interest for
the sake of the group's needs.
• This means that in many organizations in
Africa a reward system emphasizing group
achievement is often more effective than a
reward system emphasizing individual
achievement.
• All of the research was conducted in a single
firm—IBM.
• The company information cannot be about
entire national cultures.
• As such the result should be interpreted with
caution.

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IMPACT OF CULTURE ON THE

INTERNATIONAL MANAGEMENT
PROCESS

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A. THE IMPACT OF CULTURE ON

INTERNATIONAL PLANNING
• RECALLING THE CONCEPT: Planning is simply • International planning is affected by various
deciding in advance the objectives of a cultural concepts including the following two:
business and the strategies on how to achieve – Master-of-destiny versus the fatalistic viewpoint.
them. – The never-ending-quest-for-improvement
• It means being more proactive than reactive. viewpoint.
• Instead of just responding to a situation
planning allows an organization to create and
influence its environment to exert some
degree of control over its destiny.
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1. Master-of-Destiny Versus the
Fatalistic Viewpoint
• Societies holding this cultural viewpoint
believe that they can substantially influence
the future; that is, they can control their
destiny, and that through work they can make
things happen.
• Planning in such cultures is feasible because
individuals are willing to work to achieve
objectives.
• The master-of-destiny viewpoint is prominent
in America, Britain and Australia.
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2. The Never-Ending Quest-for-
Improvement Viewpoint
• In some cultures such as America managers
believe that change is normal and necessary
and that all aspects of an enterprise can be
improved.
• Organizations are therefore constantly
evaluated in the hope that improvements can
be made.
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B. THE IMPACT OF CULTURE ON
INTERNATIONAL ORGANIZING
• RECALLING THE CONCEPT: Organizing involves
designing an organizational structure that
enables an enterprise to attain its Plan.
• This includes determining what tasks need to
be done by whom, how tasks should be
grouped, who is responsible for what, and
how authority should be delegated.
• Organizing across countries is affected by the
cultural views held by the society.
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• In contrast cultures in the Middle East and
those of the Muslim faith believe in the
fatalistic viewpoint.
• Societies influenced by this viewpoint believe
that they cannot control their destiny; that is,
God has predetermined what they are to do
during their lives.
• International managers are likely to encounter
difficulty in obtaining a commitment to their
55 plans in fatalistic cultures. 56
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• In contrast in some other cultures managers
are evaluated not by changes made, but from
the maintenance of stability in the status quo.
• These managers interpret a suggestion for
improvement as a threat and an implication
that they have failed.
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• For example in the USA a corporation is
viewed as an entity that has important social
function that must be protected and
developed.
• As a result individuals develop strong feelings
of obligation to serve the company and the
enterprise takes priority over their personal
social obligations including family and friends.
• USA managers therefore assume that each
59 employee will give primary effort to carrying 60
out assigned tasks in the interests of the
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• In contrast individuals in South American
cultures consider personal relationships more
important than the enterprise.
• The organizing approach applied in the two
cultures would thus be different - for example
there is likely to be less delegation of
authority in South America.
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1. The concept of merit in
personnel selection
• In some cultures including that of the USA
managers select the best qualified people for
jobs.
• In contrast in South American cultures friends
and family are considered more important
than the company.
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2. Views on wealth
• In some cultures such as Australia wealth is
generally considered desirable and the
prospect of tangible gains serves as a
substantial motivator.
• However the practice in some cultures such as
Mexico and Malaysia is to work only until one
earns a desired amount of money and then
not return to work until the money has been
spent.
• Offering rewards in these cultures will thus
not obtain high commitment to organizational
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C. THE IMPACT OF CULTURE ON
INTERNATIONAL STAFFING
• RECALLING THE CONCEPT: Staffing means
recruiting, training and developing the people
necessary to accomplish tasks.
• The culture of a society has an impact on
international staffing policies.
• International staffing is affected by various
cultural concepts including the following two:
– The concept of merit in personnel selection.
– Views of people on wealth.
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• Therefore nepotism is a natural part of the
working world in Mexico, Venezuela.
• Individuals who are not members of the family
or friends may therefore be less motivated to
work hard and family members may not work
as hard since their jobs are guaranteed.
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D. THE IMPACT OF CULTURE ON
INTERNATIONAL DIRECTING
• RECALLING THE CONCEPT: Directing refers to
the function of leadership, and
communicating.
• Culture affects the Directing function in at
least two areas:
– Delegation of Authority; and
– International Communication.
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1. Delegation of Authority
• In some cultures such as the USA managers
believe that personnel in an organization need
the authority of making decisions to grow;
they thus practice decentralization.
• On the other hand managers in some cultures
such as France believe that only a few people
in the organization have the right to make
decisions; they accordingly centralize decision
making.
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(a) Frankness in Communication:
– Frankness in communication with people because
it is a valued practice in the USA, for example).
– A US An international manager would not be
respected by people in a culture in which face-
saving is valued (Japan for instance).
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E. IMPACT OF CULTURE ON
INTERNATIONAL CONTROLLING
• RECALLING THE CONCEPT: Controlling is the
act of monitoring - measuring individual and
organizational performance comparing them
to objectives and taking corrective action
when required.
• Establishing controlling mechanisms across
countries is affected by the importance placed
by a culture on objective analysis versus
judgment.
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2. International Communication
• International managers must be aware of
national differences which dictate the need
for differences in communication approaches
with regard to areas such as:-
– Frankness in communication and
– Pausing to think.
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(b) Pausing to Think:
– In the US an individual feels uneasy when the
person with whom he is communicating pauses to
think.
• Americans consider people who respond
directly as being trustworthy.
• On the other hand the Japanese distrust a
person who responds directly; they value a
person who pauses (becomes silent) to give
careful thought to a question before
responding. 70
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• A belief in making decisions based on
objective analysis (factual data) is widely held
by managers in numerous cultures including
the American culture.
• These managers always explain the rationale
for their decisions.
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SUMMARY – Key Concepts

• On the other hand in several other cultures • The Figure below provides a broad overview
managers often rely on judgment rather than of how some of the aspects of culture impact
on objective analysis. the management process.
• When they are asked to explain the rationale • Some have been discussed and others are
for their decisions they interpret the question new.
as a lack of respect or confidence in their
judgment.
• The international manager has to address this
problem when establishing controls.
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Some Cultural Concepts and Their
Influences on Management
Cultural Concept
• Master-of-destiny
• Fatalism
• Quest for improvement
• Maintaining status quo
• Enterprise is important
• Relationships are important
• Selection based on merit
• Selection based on
relationships
• Accumulation of wealth
Some Cultural Concepts and Their
Influences on Management
Managerial Influences
Cultural Concept Managerial Influences
With the right rewards there is likely to be high employee commitment to
plans. • "Just enough" There may be a lower commitment to the organization's goals and
There is likely to be low commitment to plans; strong formal controls may objectives; strong controls may be needed; greater use of expatriates may
be required; greater use of expatriates may be needed. be needed.
Planning and implementing change may be feasible.
• Sharing in decision making Participative decision-making and leadership styles may work best and
Planning and implementing change may not be feasible and strong substantial authority may have to be delegated to subordinates.
motivational incentives and control mechanisms may be required. • Few people make decisions Authoritative decision-making and leadership styles may work best.
Managers may be able to delegate a high degree of authority to
subordinates. • Decisions based on data Looser control mechanisms can be applied.
Managers may be able to delegate only a low degree of authority to
• Decisions based on emotions Stronger control mechanisms may have to be applied; greater use of
subordinates and strong control mechanisms may be required; greater use
expatriates may be required.
of expatriates may be required.
• High -context cultures Business transactions and negotiations may have to be slow paced.
Employees may be highly motivated to work.
Employees in outer circle may be less motivated to work and so may family • Low-context cultures Business transactions and negotiations may have to be fast paced.
members and members of the inner circle; strong work incentives and • Large power distance Authoritative decision-making and leadership styles may work best.
controls may be needed; greater use of expatriates may be required.
A higher commitment to the organization's goals and objectives may be • Small power distance Participative/consultative decision-making and leadership styles may
obtained. 75 work best. 76

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Some Cultural Concepts and Their

CONCLUSIONS
Influences on Management
Cultural Concept Managerial Influences • It is clear, then, that a lot of what goes on at
• Collectivism Heavy reliance on informal controls; team approach highly
work can be explained by differences in
• Individualism
applicable.
Heavy reliance on formal controls; team approach not very
people's cultural systems, as described by
applicable. Hofstede, based on his research.
• Strong uncertainty Mechanistic organization may work best.
avoidance
• Weak uncertainty Organic organizational structures may work best.
• Awareness of such differences and how they
avoidance influence work behavior can be very useful to
• Masculinity Equal employment opportunity programs may be resisted by males.
• Femininity Equal employment opportunity programs may be resisted relatively
you as a future international manager.
• Confucianism
less by males.
Organizations may rely more on informal than on formal controls; • These cultural dimensions have an impact on
individuals prefer authoritative decision making and leadership.
international management in many ways (as
77 will be demonstrated more thoroughly 78

throughout the course).

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Sum Up
• International managers often face conflicts in
the workplace as a result of differences in
these four basic values of time, change,
materialism, and individualism.
• It is important for international managers to
anticipate can adjust for more constructive
outcomes for the company.
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CONCLUSIONS
• It is clear, then, that a lot of what goes on at
work can be explained by differences in
people's cultural systems, as described by
Hofstede, based on his research.
• Awareness of such differences and how they
influence work behavior can be very useful to
you as a future international manager.
• These cultural dimensions have an impact on
international management in many ways (as
will be demonstrated throughout the course). 80
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