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Chap 4

Investments (National Cheng Kung University)

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Chapter 4 Differences in Culture 31) The system of values and norms that are shared among a group of people and that when
taken together constitute a design for living best defines
TRUE/FALSE A) society.
1) In today's world of global communications, rapid transportation, and global markets, B) value systems.
cultural differences have ceased to exist. FALSE C) principles.
2) Norms are abstract ideas about what a group believes to be good, right, and desirable. D) culture.
FALSE 32) Social rules and guidelines that prescribe appropriate behavior in particular situations
3) Folkways include rituals and symbolic behavior. TRUE are best described as
4) Upon meeting a foreign business executive, a Japanese executive will hold his business A) norms.
card in both hands and bow while presenting the card to the foreigner. This is an example of B) values.
ritual behavior. TRUE C) culture.
5) The term social strata refers to the extent to which individuals can move out of the strata D) society.
into which they were born. FALSE 33) People who share a common set of values and norms form a
6) Education plays an important role, from an international business perspective, as a A) culture.
determinant of national competitive advantage. TRUE B) society.
7) Both Hindus and Buddhists stress the afterlife and spiritual achievement rather than C) country.
involvement in this world. TRUE D) caste.
8) Islam is a polytheistic religion, like Christianity and Judaism. FALSE 34) Even if a ________ can be characterized as having a single homogeneous culture, often
9) A caste system is a closed system of stratification in which social position is determined that national culture is a mosaic of subcultures.
by the family into which the person is born. TRUE A) culture.
10) A class system is a rigid form of social stratification in which the position a person has B) country.
by birth cannot be changed through his or her own achievements or luck. FALSE C) society.
11) An antagonistic relationship between management and labor classes may result in lower D) norm.
costs of production. FALSE 35) ________ are the routine conventions of everyday life.
12) Max Weber believed that Protestantism encouraged capitalism's development by A) Folkways
emphasizing the importance of wealth creation and frugality. TRUE B) Mores
13) Individualism has led to a high degree of managerial mobility between companies C) Rites
resulting in managers who have good general skills but lack company-specific experience. D) Beliefs
TRUE 36) When Jana visits her mother, she takes great pains to watch her language and use good
14) In countries where the value of group identification is considered to be primary, manners because that is what her mother expects of her. This demonstrates the concept of
managers and workers are discouraged from moving from company to company. TRUE A) folkways.
15) The mudarabah contract is the most widely used Islamic banking method, because it is B) mores.
the easiest to implement. FALSE C) rites.
16) Max Weber believed that devout Hindus would be less likely to engage in D) beliefs.
entrepreneurial activity than devout Protestants. TRUE 37) The term ________ also means culture.
17) Guanxi is an important mechanism for building long-term business relationships and A) folkway
getting business done in China. TRUE B) society
18) Hofstede's study found that in masculine cultures, sex roles were less sharply C) country
distinguished, and little differentiation was made between men and women in the same job. D) norm
FALSE 38) ________ are social conventions concerning things such as the appropriate dress code in
19) Hofstede's research has been criticized because it was culturally bound. TRUE a particular situation, good social manners, eating with the correct utensils, neighborly
20) Hofstede's concept of power distance focused on the extent to which different cultures behavior, and the like.
socialized their members into tolerating uncertainty. FALSE A) Values
21) According to Hofstede, the concept of Confucian dynamism captures attitudes toward B) Beliefs
time, persistence, protection of face, and respect for tradition. TRUE C) Mores
22) The convergence hypothesis states that there is a slow but steady merging occurring D) Folkways
across different cultures toward some universally accepted values and norms. TRUE 39) An act as simple as shaking hands when meeting new people is an example of
23) International businesses that are ill-informed about the practices of another culture are A) values.
likely to fail. TRUE B) symbolic behavior.
24) The value systems and norms of a country are unrelated to the costs of doing business in C) mores.
that country. FALSE D) social stratification.
25) Because of its individualistic mind-set, Japanese culture is more supportive of 40) A Japanese executive's ritual of presenting a business card to a foreign business
entrepreneurial activities than American culture. FALSE executive is an example of
A) mores.
MULTIPLE CHOICES B) a values.
26) Culture is C) an attitudes.
A) static. D) a folkways.
B) not static. 41) Mores are
C) unchanging. A) the norms that are seen as central to the functioning of a society and its social life.
D) abstract. B) the routine conventions of everyday life.
27) The term ________ refers to a group of people sharing a common set of values and C) abstract ideas about what a group believes to be right, good, and desirable.
norms. D) the social rules and guidelines that prescribe appropriate behavior in particular situations.
A) mores 42) Brad has been in trouble his whole life. He stole from the local hardware store when he
B) society was 12, and as an adult he didn't feel the need to be faithful to his wife. Brad is guilty of
C) culture violating
D) folkway A) mores. B) folkways.
28) Cross-cultural literacy refers to C) ethics. D) values.
A) an individual's self-concept derived from perceived membership in a relevant social 43) ________ are typically defined on the basis of characteristics such as family
group. background, occupation, and income.
B) the phenomenon of merging and converging cultures. A) Social strata
C) abstract ideas about what a group believes to be good, right, and desirable. B) Norms
D) an understanding of how cultural differences can affect business. C) Social structure
29) ________ include such factors as indictments against theft, adultery, incest, and D) Groups
cannibalism. 44) A major difference between Buddhism and Hinduism is that unlike Hinduism, Buddhism
A) Norms A) does not support the caste system.
B) Folkways B) emphasizes wealth creation.
C) Mores C) promotes blind loyalty to employers.
D) Values D) supports extreme ascetic behavior.
30) ________ is/are best defined as shared assumptions about how things ought to be. 45) A ________ is an association of two or more individuals who have a shared sense of
A) Norms identity and who interact with each other in structured ways on the basis of a common set of
B) Values expectations about each other's behavior.
C) Society A) society B) collective
D) Culture C) social strata D) group
46) A society's social structure refers to its
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A) system of values and norms. A) The nature of a language has no effect on the way we perceive the world.
B) basic social organization. B) The language of a society does not direct the attention of its members to certain features
C) religious practices. of the world rather than others.
D) educational infrastructure. C) Countries with more than one language often only have one culture.
47) The social organization of Western society tends to emphasize on D) Most people prefer to converse in their own language rather than English.
A) a group orientation. 62) A condition where people tend to perceive themselves in terms of their class background
B) collectivist values. and this shapes their relationships with members of other classes is known as
C) individual achievement. A) class stratification.
D) work groups. B) social mobility.
48) Which of the following refers to the extent to which individuals can move out of the C) class mobility.
strata into which they are born? D) class consciousness.
A) caste stratification 63) An upper-middle-class manager tends to have hostile relationships with the working-
B) class system class employees in the firm because of his tendency to perceive himself as superior to them
C) social mobility based on his class background. In this example, the manager exhibits
D) individual potential A) class consciousness.
49) Hindus believe B) cultural awareness.
A) that there is but the one true omnipotent God. C) social mobility.
B) in reincarnation, or rebirth into a different body, after death. D) group orientation.
C) in the importance of individual religious freedom. 64) There are three values central to the Confucian system of ethics that have very
D) that a material quest is more important than a spiritual quest. important economic implications. Which of the following is one of these values?
50) Which of the following is a closed system of stratification in which social position is A) filial piety
determined by the family into which a person is born, and change in that position is usually B) rule-based law
not possible during an individual's lifetime? C) humaneness
A) caste system D) honesty in dealings with others
B) class system 65) Which of the following sociologists made a connection between Protestant ethics and
C) social system "the spirit of capitalism"?
D) cultural system A) Karl Marx
51) A ________ is a less rigid form of social stratification in which social mobility is B) Max Weber
possible. C) Amartya Sen
A) caste system D) Adam Smith
B) normative system 66) According to Islam, those who hold property are regarded as
C) religious system A) trustees.
D) class system B) owners.
52) Which of the following statements is true about a class system? C) tenants.
A) A class system is a more rigid form of social stratification, compared to a caste system. D) speculators.
B) A class system is a closed form of stratification. 67) The emphasis on individualism in the United States results in which of the following
C) Social mobility within a class system varies from society to society. advantages?
D) In a class system, social position is determined at birth and cannot be changed during an A) Managers tend to develop good general skills as well as company-specific experience.
individual's lifetime. B) Teams are built within an organization to perform collective tasks.
53) According to ________, suffering originates in people's desires for pleasure. C) Executives are exposed to different ways of doing business.
A) Hinduism D) It is easy to achieve cooperation—both within a company and between companies.
B) Protestantism
68) Which of the following observations is correct?
C) Buddhism
D) Judaism A) The economic principles established in the Koran are against free enterprise.
54) A caste system differs from a class system because B) The economic principles of Islam prohibit the payment or receipt of interest.
A) a caste system is an open system of stratification, while a class system is a closed system C) The Koran speaks disapprovingly of earning legitimate profit through trade and
of stratification. commerce.
B) it is not possible for an individual to change his or her caste, while a class system D) Protection of the right to private property is not acceptable within Islam.
allows people to change their class through individual achievement. 69) Under the mudarabah banking system, when an Islamic bank lends money to a business
C) the social mobility in caste systems varies from society to society, while in a class system A) it charges that business interest on the loan.
there is no social mobility. B) the business needs to pay back the loan with an additional markup.
D) a caste system is a less rigid form of social stratification, while a class system is a C) it has to donate the interest received on the loan to a charitable trust.
comparatively more rigid form of social stratification. D) it takes a share in the profits that are derived from the investment.
55) Ethical systems are 70) Which of the following statements is true about the murabaha contract?
A) a set of moral principles, or values, that are used to guide and shape behavior. A) Under the murabaha contract, when an Islamic bank lends money to a business it takes a
B) shared beliefs and rituals that are concerned with the realm of the sacred. share in the profits that are derived from the investment.
C) routine conventions of everyday life. B) Under the murabaha contract, money deposited in a savings account is treated as an
D) social rules that govern people's actions toward each other. equity investment in whatever activity the bank uses the capital for.
56) Religion may be defined as C) The murabaha contract is widely used among the world's Islamic banks because it
A) routine conventions of everyday life. is the easiest to implement.
B) social rules that govern people's actions toward each other. D) The murabaha contract is a more efficient system than the Western banking system since
C) shared beliefs and rituals that are concerned with the realm of the sacred. it encourages both long-term savings and long-term investment.
D) a set of moral principles, or values, that are used to guide and shape behavior. 71) In countries where the value of ________ identification is considered to be primary,
57) Hinduism and Buddhism both stress the importance of managers and workers are discouraged from moving from company to company.
A) the caste system. A) individual
B) the afterlife. B) group
C) Confucian ethics. C) cultural
D) life on earth. D) primary
58) Max Weber theorized that there was a relationship between Protestantism and the 72) The ________ dimension of Hofstede's study explores how a society deals with the fact
emergence of modern capitalism because that people are unequal in physical and intellectual capabilities.
A) Protestant ethics emphasize the importance of hard work and wealth creation and A) power distance
frugality. B) individualism versus collectivism
B) Protestantism promotes the hierarchical domination of religious and social life. C) uncertainty avoidance
C) Protestantism states that spiritual growth is more important than material wealth. D) masculinity versus femininity
D) Protestantism promotes blind loyalty to employers. 73) Martin worried a lot about his job, which he chose specifically because it was very
59) The concept of mobility between castes within an individual's lifetime structured with clear rules and regulations. He carefully planned his career to maximize job
A) is an opportunity to adopt positions of responsibility and influence in society. security and retirement benefits. Martin would rate high on which of Hofstede's four
B) makes no sense to traditional Hindus. dimensions?
C) shows a figurative "reincarnation" of a person. A) power distance
D) is a sign of spiritual progression to traditional Hindus. B) individualism versus collectivism
60) Max Weber was a German sociologist who, in 1904, made the connection between C) uncertainty avoidance
________ and "the spirit of capitalism." D) masculinity versus femininity
A) Protestant ethics B) ethnocentrism
C) cross-cultural literacy D) collectivism
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74) The individualism versus collectivism dimension of Hofstede's study explored
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A) the extent to which different cultures socialized their members into accepting ambiguous 86) For international businesses, the connection between culture and competitive advantage
situations and tolerating uncertainty.
B) the relationship between gender and work roles.
C) how a society deals with the fact that people are unequal in physical and intellectual
capabilities.
D) the relationship between the individual and his or her fellows.
75) Hofstede's uncertainty avoidance dimension considered
A) the extent to which different cultures socialized their members into accepting
ambiguous situations and tolerating uncertainty.
B) the relationship between gender and work roles.
C) how a society deals with the fact that people are unequal in physical and intellectual
capabilities.
D) the relationship between the individual and his or her fellows.
76) The ________ is a research project spanning more than 100 countries that explores
people's values and norms, how they change over time, and what impact they have in
society and business.
A) World Values Survey
B) Global Leadership and Organization Behavior Effectiveness Instrument
C) Indulgence Versus Restraints Survey
D) Chinese Value Survey
77) According to Geert Hofstede's study, which of the following cultural dimensions would
be characterized by a greater readiness to take risks and less emotional resistance to change? C) improved technology
A) high power distance cultures
B) low uncertainty avoidance
C) high collectivism
D) low power distance cultures
78) The ________ instrument is designed to address the notion that a leader's
effectiveness is contextual. It is embedded in the societal and organizational norms, values, B) individualism is a more important trait in a global society.
and beliefs of the people being led.
A) GLOBE
B) WVS
C) IND
D) CVS
79) The ________ refers to the extent to which a culture programs its citizens to accept
delayed gratification of their material, social, and emotional needs.
A) long-term versus short-term orientation dimension
B) indulgence versus restraint dimension
C) uncertainty avoidance
D) power distance dimension
80) ________ refers to a society that allows relatively free gratification of basic and natural
human drives related to enjoying life and having fun.
A) Persistence
B) Indulgence
C) Reciprocation
D) Restraint
81) Hofstede's ________ dimension measured the extent to which different cultures
socialized their members into accepting and tolerating ambiguity.
A) power distance
B) long-term versus short-term orientation
C) uncertainty avoidance
D) indulgence versus restraint
82) Hofstede's results, as might be expected, showed that nations such as ________ scored that may contain a single culture or several cultures. While it is possible to talk about
low on long-term orientation.
A) the United States and Canada
B) Denmark and Sweden
C) Japan and Thailand
D) Great Britain and Mexico
83) Hofstede's masculinity versus femininity dimension looked at the relationship between
gender and work roles and found that in
A) feminine cultures, sex roles were sharply differentiated, and traditional "feminine values"
determined cultural ideals.
B) feminine cultures, sex roles were less sharply distinguished; however, there was a great
deal of differentiation between men and women in the same job.
C) masculine cultures, sex roles were less sharply distinguished, and little differentiation
was made between men and women in the same job.
D) masculine cultures, sex roles were sharply differentiated, and traditional
"masculine values" determined cultural ideals.
84) Hofstede's dimension of Confucian work dynamism
A) captures attitudes toward time, persistence, ordering by status, protection of face,
respect for tradition, and reciprocation of gifts and favors.
B) focuses on how a society deals with the fact that people are unequal in physical and
intellectual capabilities.
C) explores the relationship between the individual and his or her fellows.
D) looks at the relationship between gender and the ability to accept ambiguous situations.
85) Which of the following is an example of ethnocentrism?
A) A manager in India looks down upon his subordinates because they are from a lower
caste, compared to him.
B) An upper-middle-class woman talks rudely to a salesperson, because she looks down
upon individuals belonging to the working class.
C) An American manager criticizes the cultural practices of Saudi Arabia, when he is
sent there on business, because it differs from his own cultural norms.
D) A French business owner, who plans to expand his market to China, conducts a detailed
cultural study of China to customize his marketing campaign.
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is important because
A) a weak connection is likely to encourage isolationism.
B) a weak connection is likely to encourage competition.
C) a strong connection is likely to produce the most viable competitors.
D) a strong connection is likely to hamper innovation.
87) What is ethnocentrism?
A) a belief in the superiority of one's business or organization over another
B) a belief in the superiority of another group or culture over one's own group or culture
C) a belief in the superiority of one's own ethnic group or culture
D) a belief in the superiority of one's self over another person
88) Class-based conflict between workers and management in class-conscious societies can
lead to
A) increased costs of doing business.
B) decreased costs of doing business.
C) companies going out of business.
D) workers looking for new jobs in other businesses.
89) Several studies have shown that economic advancement and ________ are important
factors in societal change.
A) individualism
B) collectivism
D) globalization
90) One reason for Japan's shift in values away from collectivism and toward individualism
may be that
A) richer societies exhibit less need for social and material support structures built on
collectives.
C) richer societies exhibit more need for social and material support structures built on
collectives.
D) increased urbanization and improvements in the quality and availability of education are
both a function of economic progress.
91) The connection between ________ and ________ has important implications for the
choice of countries in which to locate production facilities and do business.
A) culture; competitive advantage
B) moral principles; values
C) class system; society
D) values; norms
92) Compare and contrast folkways and mores.
Answer: Folkways are the routine conventions of everyday life. Generally, folkways are
actions of little moral significance. Folkways include rituals and symbolic behavior. In
contrast, mores are norms that are seen as central to the functioning of a society and to its
social life. Mores have much greater significance than folkways. Accordingly, violating
mores can bring serious retribution.
93) Discuss the relationship between society and the nation-state.
Answer: A society is a group of people who share a common set of values and norms, that
is, people who are bound together by a common culture. There is not a strict one-to-one
correspondence between a society and a nation-state. Nation-states are political creations
cultures at different levels, for example, an "American society," and "American culture," it
is important to recognize there are several societies within America, each with its own
culture. The relationship between culture and country is often ambiguous. Even if a country
can be characterized as having a single homogenous culture, often that national culture is a
mosaic of subcultures.
94) What are the determinants of culture?
Answer: The values and norms of a culture do not emerge fully formed. They are the
evolutionary product of political philosophy, economic philosophy, education, language,
social structure, and religion. The chain of causation runs both ways. While factors such as
social structure and religion clearly influence the values and norms of a society, the values
and norms of a society can influence social structure and religion.
95) Explain the concept of social stratification.
Answer: All societies are stratified on a hierarchical basis into social categories or social
strata. Social strata are typically defined on the basis of characteristics such as family
background, occupation, and income. Individuals born into the top of a social hierarchy tend
to have better life chances than individuals born into a stratum toward the bottom of the
hierarchy. While all societies are stratified to some degree they differ from each other with
regard to the degree of mobility between social strata and with regard to the significance
attached to social strata in business contexts.
96) Why is the role of education in a culture important to international companies?
Answer: A key aspect of education in a culture is its role as a determinant of national
competitive advantage. The availability of a pool of skilled and educated workers seems to
be a major determinant of the likely economic success of a country. Porter, for example, has
argued that Japan's excellent education system is an important factor explaining the
country's postwar economic success. In addition, a good education system is an important
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factor guiding the location choices of international businesses. The general education level
of a country is also a good index of the kind of products that might sell in a country and of
the type of promotional material that should be used.
97) What is the connection between religion and ethical systems? Do they have any
implications for business?
questions they asked of IBM employees—and their analysis of the answers—may have been
shaped by their own cultural biases and concerns. Third, Hofstede's informants worked not
only within a single industry, the computer industry, but also within one company. At the
time, IBM was renowned for its own strong corporate culture and employee selection
procedures, making it possible that the employees' values were different in important
respects from the values of the cultures from which those employees came.

Answer: Ethical systems are a set of moral principles, or values, that are used to guide and
shape behavior. Most of the world's ethical systems are the product of religions. Therefore,
there are Christian ethics and Islamic ethics. There are four dominant religions in the world:
Christianity, Islam, Hinduism, and Buddhism. The relationship among religion, ethics, and
society is subtle and complex. Some scholars have argued that the most important business
implications of religion center on the extent to which different religions shape attitudes
toward work and entrepreneurship and the degree to which the religious ethics affect the
costs of doing business in a country. The authors point out that it is hazardous to make
sweeping generalizations about the nature of the relationship between religion and ethical
systems and business practice. The proposed relationships may exist, but their impact may
be small compared to the impact of economic policy.
98) Consider the importance of unspoken language. Why is it important to be familiar with
the unspoken language of another culture?
Answer: Unspoken language refers to nonverbal communication. We all communicate with
each other by a host of nonverbal cues. The raising of eyebrows, for example, is a sign of
recognition in most cultures, while a smile is a sign of joy. Many nonverbal cues, however,
are culturally bound. A failure to understand the nonverbal cues of another culture can lead
to a failure to communicate. For example, making a circle with the thumb and forefinger is a
friendly gesture in the United States, but it is a vulgar gesture in Greece and Turkey.
Personal space is another part of unspoken language.
99) Discuss why the stratification of a society is important to business.
Answer: The stratification of a society is significant if it affects the operation of business
organizations. In a country like Great Britain, for example, the relative lack of class mobility
and the differences between classes has resulted in hostility between middle-class managers
and their working-class employees. An antagonistic relationship between management and
labor classes, and the resulting lack of cooperation and high level of industrial disruption,
tends to raise the costs of production in countries characterized by significant class
divisions. In turn, this can make it more difficult for companies based in such countries to
establish a competitive advantage in the global economy.
104) What are the implications of cultural differences for international businesses?
Answer: International business is different from national business because countries and
societies are different. Societies differ because their cultures vary. Three important
implications for international business flow from these differences. The first is the need to
develop cross-cultural literacy. There is a need not only to appreciate that cultural
differences exist but also to appreciate what such differences mean for international
business. A second implication centers on the connection between culture and national
competitive advantage. A third implication looks at the connection between culture and
ethics in decision making.
105) Discuss the relationship between culture and national competitive advantage?
Answer: The value systems and norms of a country influence the costs of doing business in
that country. The costs of doing business in a country influence the ability of firms to
establish a competitive advantage in the global marketplace. It can be argued that the class-
based conflict between workers and management in class-conscious societies, when it leads
to industrial disruption, raises the costs of doing business in that society. Some sociologists
have argued that the ascetic "self-denial" lifestyle ethics of Hinduism (devoting life to a
spiritual rather than material quest) may not be as supportive of capitalism as the ethics
embedded in Protestantism and Confucianism. Japan's emphasis on group affiliation,
loyalty, reciprocal obligations, honesty, and education all boost the competitiveness of
Japanese companies. But as important as culture is to people, companies, and society, it is
probably less important than economic, political, and legal systems in explaining differential
economic growth between nations.

100) Explain how the Koran views business.

Answer: The Koran establishes some explicit economic principles, many of which are pro-
free enterprise. The Koran supports free enterprise and earning a legitimate profit through
trade and commerce, as well as the protection of the right to private property. However,
Islam is critical of those who earn profit through the exploitation of others. Islam stresses
the importance of living up to contractual obligations, of keeping one's word, and of
abstaining from deception. One economic principle of Islam prohibits the payment or
receipt of interest, which is considered usury. This is not just a matter of theology; in several
Islamic states, it is also a matter of law.

101) Consider the influence of Confucian ethics on the economies of China, Japan, South
Korea, and Taiwan.

Answer: It has been suggested that the economic success of China, Japan, South Korea, and
Taiwan may be due, in part, to the influence of Confucian ethics on the culture in those
countries. Three values that are central to the Confucian system of ethics are of particular
note: loyalty, reciprocal obligations, and honesty in dealing with others. The concept of
reciprocal obligations is important. Confucian ethics stress that superiors are obliged to
reward the loyalty of their subordinates by bestowing blessings on them. The notion of
guanxi, or business relationships, which permeates business dealings in the region, revolves
around the three values. For example, it has been suggested that the close ties between the
automobile companies and their suppliers in Japan are facilitated by a combination of trust
and reciprocal obligations.

102) Describe the four dimensions of culture as identified by Geert Hofstede.

Answer: Geert Hofstede identified four dimensions that he claimed summarized the
differences between different cultures. According to Hofstede, the power distance dimension
focused on how a society deals with the fact that people are unequal in physical and
intellectual capabilities. The second dimension identified by Hofstede, individualism versus
collectivism, focused on the relationship between the individual and his or her fellows.
Hofstede's third dimension, uncertainty avoidance, measured the extent to which different
cultures socialize their members into accepting ambiguous situations and tolerating
uncertainty. Finally, Hofstede's fourth dimension, masculinity versus femininity, examined
the relationship between gender and work roles.

103) Discuss the limitations of Hofstede's research.

Answer: Hofstede's research has been criticized on a number of points. First, Hofstede
assumes there is a one-to-one correspondence between culture and the nation-state, but
many nation-states have more than one culture. Second, the research may have been
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