PART TWO

COMPARATIVE ENVIRONMENTAL FRAMEWORKS

International Business

Chapter Two
The Cultural Environments
Facing Business
Chapter Objectives

• To understand the major causes of

cultural differences and change
• To grasp behavioral factors influencing
countries’ business practices
• To become familiar with cultural guidelines
for companies that operate internationally
• To learn to discuss the problems and
methods of learning about cultural
environments
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Culture Defined
Culture: the specific learned norms of a
society that reflect attitudes, values, and
beliefs
Major problems of cultural collision are likely to
occur if:
-a firm implements practices that do not
reflect local customs and values and/or
-employees are unable to accept or adjust
to foreign customs.

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Fig. 2.1: Cultural Influences
on International Business

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Cultural Dynamics

• Cultures consist of societies, i.e., relatively

homogeneous groups of people, who share
attitudes, values, beliefs, and customs.
• Cultures are dynamic; they evolve over time.
• Cultural value systems are set early in life,
but may change because of:
-choice or imposition
-contact with other cultures.
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The Nation as a Point of Reference

• The basic similarity amongst people within

countries is both a cause and an effect of
national boundaries.
• National identity is perpetuated through
the rites and symbols of a country and a
common perception of history.
Subcultures may link groups from different nations
more closely than certain groups within nations.
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Cultural Formation and Change

• Societal values and customs constantly

evolve in response to changing realities.
• Cultural imperialism is brought about by
the imposition of one culture upon that
of another.
• Certain elements introduced from outside
a culture may be known as creolization,
indigenization, or cultural diffusion.

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Language as a Cultural Stabilizer

• Isolation from other groups, especially

because of language, tends to stabilize
cultures.
• Some countries see language as being so
important that they regulate the inclusion
of foreign words and/or mandate the use
of the country’s official language for
business purposes.
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Map 2.2: Major Languages
of the World

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Fig. 2.2: Importance of Major
Language Groups: Two Views

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Religion as a Cultural Stabilizer

• Religion is a major source of both cultural

imperatives and cultural taboos.
• Major religions include:
-Buddhism
-Christianity
-Hinduism
-Islam
-Judaism

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Map 2.3: Major Religions
of the World

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Social Stratification Systems

• Ascribed group memberships are defined

at birth; they may include gender, family,
age, caste, and ethnic or national origin.
• Acquired group memberships are based
on one’s choice of affiliation, such as
political party, religion, and social and
professional organizations.
Social stratification affects both business strategy
and operational practices.

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Factors Affecting Work Ethics

• The desire for material wealth vs. the

desire for leisure (Protestant Ethic)
• The expectation of success and reward
• Assertiveness (Hofstede’s masculinity vs.
femininity index)
• Needs satisfaction (Maslow’s Hierarchy)
Motivated employees are normally more productive,
and higher productivity leads to lower costs.

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Fig. 2.4: The Hierarchy of Needs
and Need-Hierarchy Comparisons

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Factors Affecting Relationship
Preferences

• Power distance, i.e., the psychological and

social distance between superiors and
subordinates
• Individualism vs. collectivism
– Individualism represents a desire for personal
freedom, time, and challenge.
– Collectivism represents a dependence on the
organization as well as a need for a safe
environment.
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Factors Affecting Risk-taking
Behavior
• Uncertainty avoidance, i.e., one’s tolerance
of risk
• Trust, i.e., one’s belief in the reliability and
honesty of another
• Future orientation, i.e., the need for
immediate vs. delayed
gratification/satisfaction
• Fatalism, i.e., the belief that life is pre-
destined, that events are “the will of God”
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Factors Affecting Information and
Task Processing
• Selective perception of cues
• Communication context
-low-context cultures [explicit]
-high-context cultures [implicit]
• Information processing
-monochronic [work sequentially]
-polychronic [multi-task]
Whereas idealistic cultures are principle driven,
pragmatic cultures are detail driven.
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Factors Affecting the
Communication Process
• Spoken language
• Written language
• Silent language
-color associations
-conversational distance
-perception of time
-kinesics [body language and gestures]
Problems in communication may arise, even
when nations share the same basic language
(e.g., British, Canadian, and American English).
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Managerial Issues Associated with
Cultural Differences

• Accommodation of foreigners
• Cultural distance [degree of similarity]
• Culture shock and reverse culture shock
• Managerial orientations
– polycentric
– ethnocentric
– geocentric

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Map 2.4: A Synthesis of
Country Clusters

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Factors Affecting Strategies for
Instituting Cultural Change
• Value systems
• Cost/benefits of change
• Resistance to change
• Participation in decision-making
• Reward sharing
• Role of opinion leaders
• Timing
• Opportunities to learn from abroad
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Implications/Conclusions

• Culture is dynamic and evolves over time.

Economic development and globalization
are two engines of cultural change.
• In addition to being part of a national
culture, people are simultaneously part
of other cultures, such as social and
professional associations and business
and government organizations. [continued]

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• Host cultures do not always expect firms
and individuals to conform to their norms;
in some instances they may choose to
accommodate differences in traditions.
• International firms should make a
concerted effort to identify ideas and
behaviors in host countries and foreign
cultures that can be usefully applied
across the whole of their organizations.
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