International Business

“International Culture”
 Culture and Management: Google in China
• Founded in 1998, Google operates in more than 50 countries and established
operations in China in 2006.
• Google agreed to censor certain types of search results, especially those that
criticize the Chinese Government, but complied as little as possible with
orders to block content.
• Google’s Chinese employees experienced difficulties adjusting to the firm’s
freewheeling style, and Google had to block its Chinese engineers from
accessing the firm’s software code to protect private property rights.
• Chinese Government officials hacked the Gmail accounts of Chinese
dissidents and human rights activists.
• A Chinese executive hired by Google to manage the firm’s government
relations criticized Google management for not working hard enough to
understand Chinese customs.
 Culture and Management: Google in China
• Eventually, Google senior management grew weary of China and decided to
stop complying with government censorship rules. In 2010, Google withdrew
from mainland China
• Google’s experience in China demonstrates the importance of culture in
international business.
• Guanxi refers to informal personal relationships that emphasize reciprocal
obligations and the exchange of favors. Skillful guanxi can open dialogue,
build trust and facilitate the exchange of favors that augment business
performance.
• In 2012, Google renewed efforts to enter China, acknowledging that it
cannot afford to miss out on the world’s biggest internet market.
• Top management has softened its position, and is seeking to introduce new
services in China, especially those not subject to censorship.
 The Challenge of Crossing Cultural Boundaries
• In cross-border business we step into different cultural environments
characterized by unfamiliar languages and unique value systems, beliefs
and behaviors.
• Cross-cultural risk: A situation or event where a cultural miscommunication
puts some human value at stake.
• Culture: The learned, shared and enduring orientation patterns in a society.
People demonstrate their culture through values, ideas, attitudes, behaviors
and symbols.
• Culture influences a range of interpersonal exchange as well as value-chain
operations such as product and service design, marketing and sales.
 The Meaning of Culture: Foundation Concepts
• Not right or wrong. Culture is relative.
• Not about individual behavior. Culture is about groups.
• Not inherited. Culture is derived from the social environment.

• Socialization: The process of learning the rules and behavioral patterns

appropriate to one’s given society.

• Acculturation: The process of adjusting and adapting to a culture other than

one’s own.

• Culture signals the differences between societies on the basis of language,

habits, customs and modes of thought.
 Why Culture Matters in International Business
• Cross-cultural proficiency is paramount in many managerial tasks, including:
• developing products and services
• communicating and interacting with foreign business partners
• screening and selecting foreign distributors and other partners
• negotiating and structuring international business ventures
• interacting with current and potential customers from abroad
• preparing for overseas trade fairs and exhibitions
• preparing advertising and promotional materials
 Key Dimensions of Culture
• Value is a measure of the worth or importance a person attaches to
something; our values are often reflected in the way we live.

• Attitude is the way a person expresses or applier their value or belief and is
expressed through behavior.

• In deal-oriented cultures, managers focus on the task at hand and want to

‘get down to business’. Examples: Australia, Northern Europe and North
America.

• In relationship-oriented cultures, managers value affiliations with people,

building rapport and getting to know the other party in business
interactions. Examples: China, Japan, Latin American countries.
• Manners and customs: Ways of behaving and conducting oneself in public
and business situations.

• Perceptions of time: Time dictates expectations about planning, scheduling,

profit streams and what constitutes lateness in arriving for work and meetings.

• Monochronic orientation: A rigid orientation to time, in which the individual

is focused on schedules, punctuality and time as a resource.
• Polychronic orientation: A flexible, non-linear orientation to time, in which
the individual takes a long-term perspective and is capable of attending to
multiple tasks simultaneously.
• Perceptions of space: Cultures also differ in their perceptions of physical
space; conversational distance is closer in Latin America than in Australia,
Northern Europe or the United States.
• Religion: A system of common beliefs or attitudes concerning a being or a
system of thought that people consider to be sacred, divine or the highest
truth; incorporates the associated moral codes, values, institutions,
traditions and rituals.
• Symbolic productions: A symbol can be letters, figures, colors or other
characters that communicate a meaning. National symbols include flags,
anthems, seals, monuments and historical myths.
 Language as a Key Dimension of Culture
• The ‘mirror’ or expression of culture; essential for communications; provides
insights into culture.

• Linguistic proficiency is a great asset in international business; facilitates

cross-cultural understanding.

• Language has both verbal and non-verbal characteristics

(facial expressions and gestures).

• There are nearly 7000 active languages, including over 2000 each in Africa
and Asia.
 Language as a Key Dimension of Culture (cont’d)
• National languages, dialects and translation have a tendency to complicate
straightforward communication.
• Even those from different countries who speak the same language may
experience communication problems because of unique colloquial words.
 Problems in Communicating across Cultures
Translation of Spoken and Written Language
• Cross border communications do not always translate as intended
• Following example highlight the problems:
“We are the old leader in making returns on stock portfolios”
Following were the exact sentences to assist English speaking guests:
Japan: “You are invited to take advantage of the chambermaid”
Norway: “Ladies are requested not to have children in the bar”

Use of IDIOMS:
• To beat around the bush
• Giving the cold shoulder
• Shooting from the hip
• Feather in your cap
Silent Language:
• Silent language includes color associations, distance, concept of time and
body language
Examples:
• Color: Yellow Cabs in US while Black in the UK
• Distance: Mexico vs US
• Concept of Time
• Body Language
 Interpretations of Culture
• Cultural Metaphor. A distinctive tradition or institution strongly associated with
a particular society.

• The Swedish stuga (a cottage or summer home) is a cultural metaphor for

Swedes’ love of nature and a desire for individualism through self-
development

• Stereotypes: Generalization about a group of people that may or may not be

factual, often overlooking real, deeper differences.
 Interpretations of Culture (cont’d)
Hall’s high- and low-context cultures
• Low-context cultures. A culture that relies on elaborate verbal
explanations, putting great emphasis on spoken words.
• Northern Europe and North America have a long tradition of rhetoric and
give central importance to delivery of verbal messages.

• High-context cultures. A culture that emphasizes non-verbal messages

and views communication as a means to promote smooth, harmonious
relationships.
• Japan and China prefer an indirect and polite face-saving style that
emphasizes a mutual sense of care and respect for others.
 Interpretations of Culture (cont’d)
Hofstede’s dimensions of cultural orientation
1. Individualism versus collectivism: Describes whether a person functions
primarily as an individual or within a group.
• Individualistic societies—ties between people are relatively loose; each
person tends to focus on his or her own self-interest.
• Collectivist societies—ties between individuals are more important than
individualism.
2. Power distance: Describes how a society deals with the inequalities in
power that exist between people.
• High power-distance societies—relatively indifferent to inequalities and
allow them to grow over time.
• Low power-distance societies—gaps between the powerful and weak are
minimal.
 Interpretations of Culture (cont’d)

3. Uncertainty avoidance: The extent to which people can tolerate risk

and uncertainty in their lives.
• High uncertainty avoidance societies—create institutions that minimize
risk and ensure financial security.
• Low uncertainty avoidance societies—socialise their members to accept
and become accustomed to uncertainty.

4. Masculinity versus femininity: Refers to a society’s orientation, based

on traditional male and female values.
• Masculine cultures—tend to value competitiveness, assertiveness,
ambition and the accumulation of wealth.
• Feminine cultures—emphasise nurturing roles, interdependence
between people and taking care of less fortunate people.
 Interpretations of Culture (cont’d)

5. Long-term vs. short-term orientation: Denotes the degree to which people

and organizations defer gratification to achieve long-term success.
• Long-term orientation—emphasizes the long view in planning and living,
focusing on years and decades; Asian cultures
• Short-term orientation—Australia, the United States, and most other
Western and South American countries
6. Indulgence versus restraint: Describes a society’s views on the
gratification of basic and natural human drives related to the enjoyment of life.
• Indulgence signifies a society that tends to allow free gratification of
basic and natural human drives that are related to enjoying life and
having fun.
• Restraint refers to a society that, through strict social norms, regulates
and suppresses the gratification of needs.
The Challenge of Crossing Cultural Boundaries (cont’d)
• Ethnocentric orientation: Using our own culture as the standard for judging
other cultures. Many of us are brought up in a single culture; we have a
tendency to view the world primarily from our own perspective. This intensifies
cross-cultural risk.
• Polycentric orientation: A host-country mindset where the manager develops
a greater affinity with the country in which he or she conducts business. A
manager does not make a judgment about another culture, but instead attempts
to gain an understanding of what makes the culture and society unique.
• Geocentric orientation: A global mindset where the manager is able
to understand a business or market without regard to country boundaries; a
cognitive orientation that combines openness to, and awareness of, diversity
across cultures. Managers with a geocentric orientation make deliberate effort
to develop skills for successful social behavior with members of other cultures.
Managerial Guidelines for Cross-Cultural Success
1. Acquire factual and interpretive knowledge about the other culture, and try
to speak their language.
2. Avoid cultural bias.
• Self-reference criterion. The tendency to view other cultures
through the lens of one’s own culture.
• Critical incident analysis (CIA). An analytical method for analysing
awkward situations in cross-cultural interactions by developing
empathy for other points of view.
 Managerial Guidelines for Cross-Cultural Success (cont’d)

• Cultural intelligence (CQ): A person’s capability to function effectively in

situations characterised by cultural diversity.

• Focuses on specific capabilities that are important for high-quality personal

relationships and effectiveness in culturally diverse settings and work groups
Thank You