International

Business
Environments & Operations
Daniels ● Radebaugh ● Sullivan

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 Chapter 2
The Cultural
Environments Facing
Business

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 Learning Objectives
 Explain why culture, especially national
culture, is important in IB, but tricky to
assess
 Grasp the major causes of cultural
difference and change
 Discuss behavioral factors influencing
countries’ business practices
 Recognize the complexities of cross-
cultural communications
 Analyze guidelines for cultural adjustment
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 Introduction
Learning Objective 2-1:
 Explain why culture, especially national
culture, is important in IB, but tricky to
assess

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 Introduction
 Culture refers to the learned norms based
on values, attitudes, and beliefs of a group
of people
 Culture is an integral part of a nation’s
operating environment
 every business function is subject to potential
cultural differences

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 Introduction
Cultural Factors Affecting International Business Operations

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 Introduction
 Companies need to decide when to make
cultural adjustments
 Fostering cultural diversity can allow a
company to gain a global competitive
advantage by bringing together people of
diverse backgrounds and experience

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 Introduction
 But, cultural collision can occur when a
company implements practices that are
less effective or when employees
encounter distress because of difficulty in
accepting or adjusting to foreign behaviors

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 Cultural Awareness
 Problem areas that can hinder managers’
cultural awareness…
 Subconscious reactions to circumstances
 The assumption that all societal subgroups are
similar
 Managers that educate themselves about
other cultures have a greater chance of
succeeding abroad

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Culture and the Nation-State
 The nation is a useful definition of society
because similarity among people is a
cause and an effect of national boundaries
 laws apply primarily along national lines
 language and values are shared within borders
 rites and symbols are shared along national
lines

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Culture and the Nation-State
 Country-by-country analysis can be
difficult because
 subcultures exist within nations
 similarities link groups from different countries
 Managers also need to focus on relevant
groups

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How Cultures Form and Change
Learning Objective 2-2:
Grasp the major causes of cultural
difference and change

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How Cultures Form and Change
 Cultural value systems are established
early in life but may change through
 choice or imposition
 cultural imperialism

 contact with other cultures

 cultural diffusion

 creolization

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 CREOLIZATION (example)
 https://youtu.be/2UlYCRfwhPQ

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 Language:
Cultural Diffuser and Stabilizer
 A common language within a country is a
unifying force
 A shared language between nations
facilitates international business
 Native English speaking countries account for a
third of the world’s production
 English is the international language of
business

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 Language:
Cultural Diffuser and Stabilizer
Distribution Of The World’s Major Languages

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 Language:
Cultural Diffuser and Stabilizer
Major Language Groups: Population and Output

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 Religion: Cultural Stabilizer
 Religion impacts almost every business
function
 Centuries of profound religious influence
continue to play a major role in shaping
cultural values and behavior
 many strong values are the result of a
dominant religion

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Religion: Cultural Stabilizer
Distribution Of The World’s Major Religions

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 Behavioral Practices
Affecting Business
Learning Objective 2-3:
Discuss behavioral factors influencing
countries’ business practices

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 Social Stratification
 Social ranking is determined by
 an individual’s achievements and
qualifications
 an individual’s affiliation with, or
membership in, certain groups

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 Social Stratification
 Group affiliations can be
 Ascribed group memberships
 based on gender, family, age, caste, and

ethnic, racial, or national origin

 Acquired group memberships
 based on religion, political affiliation,

professional association
 Two other factors that are important
 education and social connections

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 Work Motivation
 The motivation to work differs across
cultures
 Studies show
 the desire for material wealth is a prime
motivation to work
 promotes economic development

 people are more eager to work when the

rewards for success are high
 masculinity-femininity index
 high masculinity score prefers “to live to
work” than “to work to live”

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 Work Motivation
 Hierarchy of needs theory
 Individuals will fill lower-level needs before
moving to higher level needs
 The ranking of needs differs among
cultures

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 Relationship Preferences
 Relationship preferences differ by culture
 Power distance
 high power distance implies little superior-
subordinate interaction
 autocratic or paternalistic management style

 low power distance implies consultative style

 Individualism versus collectivism
 high individualism – welcome challenges
 high collectivism – prefer safe work
environment
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 Risk Taking Behavior
 Risk taking behavior differs across cultures
 Uncertainty avoidance
 handling uncertainty

 Trust
 degree of trust among people

 Future orientation
 delaying gratification

 Fatalism
 attitudes of self-determination

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 Information and
Task Processing
 Cultures handle information in different
ways
 Perception of cues
 Obtaining information
 low context versus high context cultures

 Information processing (whole vs parts)

 Monochronic versus polychronic cultures
 Idealism versus pragmatism

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 To which group does the flower
at the bottom belong to?

http://ohyecloudy.com/lifelog/archives/771/
Hofstede Cultural Values
Cultural Differences at Work
 Status Difference
 Status Within an organization
 Do NOT question authority
 Top-down decision making
 Status across organizations
 Large companies & their subcontractors
 Government & provide sector
 Change in Status dimension
 Social Status to Economic status
 Dealing with
Cultural Differences
Learning Objective 2-4:
Recognize the complexities of cross-cultural
communications

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 Communications
 Cross border communications do not
always translate as intended
 Spoken and written language
 Silent language
 Color
 Distance
 Time and punctuality
 Body language
 Prestige

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 Communications
Body Language Is Not A Universal Language

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UGANDAN ENGLISH

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 Dealing with
Cultural Differences
Learning Objective 2-5:
Analyze guidelines for cultural adjustment

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 Dealing with
Cultural Differences
 Do managers have to alter their
customary practices to succeed in
countries with different cultures?
 Must consider
 Host society acceptance
 Degree of cultural differences
 cultural distance

 Ability to adjust
 culture shock and reverse culture shock

 Company and management orientation

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 Dealing with
Cultural Differences
 Three company and management
orientations
 Polycentrism
 business units abroad should act like local

companies
 Ethnocentism
 home culture is superior to local culture

 overlook national differences

 Geocentrism
 integrate home and host practices

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