LECTURE 5

CULTURAL ISSUES
IN INTERNATIONAL BUSINESS

University of South Australia Australia’s University of Enterprise

 5.1 Know what is meant by the culture of a
society.

5.2 Identify forces that lead to differences in

culture.

Learning 5.3 Identify business and economic

objectives implications of differences in culture.

5.4 Understand how differences in culture

influence the conduct of business.

5.5 Develop an appreciation for the economic

and business implications of cultural change.
Values and norms
Values
Group’s ideas about what is good, right and desirable
Provides context within which norms established and
justified

Norms
Social rules and guidelines prescribe appropriate
behaviour in particular situations

(1) the routine conventions of everyday life, and

(2) other norms seen as central to the functioning of a
society and to its social life
continued
Routine
conventions
Social conventions concerning how to
behave in everyday life
e.g. dress, manners, greetings, time

Time is ‘money’
vs.
Time is ‘elastic’

continued
Rituals and symbols and
national culture
Rituals and symbols
Visible manifestations of a culture
Outward expression of deeper values

Culture, society and the nation-state

Society a group sharing common set of values and
norms
A group bound together by a common culture

continued
The determinants of culture
Figure 5.1 The determinants of culture
Social structure
The individual

Individual achievement common in many Western societies

Can lead to:

Economic dynamism

Lack of company loyalty

Limit ability to develop teams and networks

The group

Primary unit of social organisation in many Asian and Oceanic

societies

continued
 Social
stratification
Hierarchical basis into social categories, or strata

Social mobility ability to move out of their birth strata

Caste system

Closed where social position determined by birth

No mobility

Class system

Open social stratification

Mobility possible

continued
 Religious and
ethical systems
Religions with the greatest numbers of followers–
Christianity, Islam, Hinduism and Buddhism

Ethical systems

Sets of moral principles used to guide and shape behaviour

Ethical practices often based on religion

e.g. Confucianism not a religion, but influences behaviour

and shapes culture in many parts of Asia

continued
Religious and ethical systems
Map 5.1 Predominant world religions

continued
Source: ‘Map 14’, in J. L. Allen and C. J. Sutton, Student Atlas of World Politics, 10th ed. New York, NY: McGraw-Hill Companies, Inc., 2013.
Christianity and
Islam
Christianity world’s largest religion

Evolved from Judaism

Monotheistic

Jesus Christ & the Bible

Protestant work ethic

Islam world’s second largest religion

Roots in Judaism and Christianity

Monotheistic

Muhammed and the Koran

Business practices guided by Koran

continued
Hinduism and Buddhism
Hinduism practised mainly in India

Polytheistic

No single sacred text

Focus on spiritual growth and development

Supports Indian caste system problematic for human resources

Buddhism practised mostly in Asia

Evolved from Hinduism, e.g. belief in Karma

Follows teachings of Buddha and seeks enlightenment

No particular effects on business practice

continued
Confusianism
Confusianism

Based in teachings of Confucius, 5th century Chinese scholar

Practised in East Asia

An ideology, not a religion

Belief in personal salvation through right action

High ethical conduct

3 key teachings:

Loyalty, reciprocal obligations and honesty

Lowering cost of doing business in Confucian societies

e.g. Concept of guanxi–relationship networks supported by reciprocal obligations

continued
Superstitions
All cultures have superstitions
Might affect business practices

For example:
In China number 8 lucky
In West number 13 unlucky

continued
 Language
Spoken language

Chinese the most spoken language in the world.

English lingua franca of the world

Unspoken language

Non-verbal communication important

Facial expressions and hand gestures different interpretations in
different cultures

Misunderstandings common

This Photo by Unknown Author is licensed under CC BY-SA

Kinesic gestures often have different meanings

continued
Education
Formal education medium of understanding
society and development of skills

Provides country with competitive advantage

if education opportunities and quality high

continued
Culture and the workplace
National culture effects on the workplace–values & behaviour
Theory & framework of Edward & Mildred Hall and Geert Hofstede

Hall & Hall distinguish cultures on concept of context–cues

Low-context culture
Speaker’s message conveyed explicitly by spoken words
Most individualistic Western countries low-context

High-context culture
Discussion as important as actual words spoken
Most of Asia, the Middle East, Latin America and Africa
 Culture and the
workplace
Hofstede’s dimensions

Power distance

People unequal in physical & intellectual capabilities

Individualism versus collectivism

Relationship between groups of people

Uncertainty avoidance

Accepting ambiguous situations & tolerating ambiguity

Masculinity versus femininity

Relationship between gender and work roles

Long-term orientation

Attitude to the past & future

continued
Culture and the workplace
Table 5.2 Work-related values for selected countries

Sources: G. Hofstede, ‘The business of international business is culture’, International Business Review, 3(1) (1994); data for Singapore and New Zealand derived from
T.C. Garrett, D.H. Buisson and C.M. Yap, ‘National culture and R&D and marketing integration mechanisms in new product development: a cross-cultural study between
Singapore and New Zealand’, Industrial Marketing Management, 35 (2006), pp. 293–307; G. Hofstede, G.J. Hofstede and M. Minkov, Cultures and Organizations:
Software for the Mind, 3rd ed, New York, NY: McGraw-Hill Professional Publishing (2010).
continued
Cultural change
Culture evolves over time
Often with economic growth
Often slow and painful for a society

Economic progress and globalisation engines

of cultural change
Cross-cultural
literacy
Individuals’ understanding of cultures within
which they operate

Business success at stake

Connection between competitive advantage

& culture

Affects choice of country in which to

operate

Avoid ethnocentric behaviour

Belief in the superiority of one’s own culture

 Cultural Intelligence

Core versus Flex

Julia Middleton TED talk.

Questions & Comments?

University of South Australia

Australia’s University of Enterprise