BUSS6048

INTERNATIONAL BUSINESS

WEEK 2

NATIONAL DIFFERENCES IN POLITICAL, ECONOMIC,

LEGAL, AND CULTURE

UNIVERSITAS BINA NUSANTARA

SUBJECT MATTER EXPERT

Dr. Lianna Wijaya, A.Md., S.E., M.MSI
 Learning Outcome
Understand globalization and why the world’s cultures,
LO1
countries, and regions differ

01 Participants can understand the differences in politi-

cal, economic, legal, and cultural systems
02 Participants can explain the differences in political,
economic, legal, and cultural systems
Outline
2.1 National Differences in Political Systems

2.2 National Differences in Economic Systems

2.3 National Differences in Legal Systems

2.4 National Differences in Culture

2.1. National Differ-
ences in Political
Systems
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COLLECTIVISM AND INDIVIDUALISM

Collectivism refers to a Individualism refers to

political system that the philosophy that an
stresses the primacy of individual should have
collective goals over freedom in his or her
individual goals economic and political
pursuits
DEMOCRACY AND TOTALITARIANISM
Totalitarianism is a form
Democracy refers to of government in which
a political system in one person or political
which government is party exercises
by the people, exer- absolute control over all
cised either directly spheres of human life
or through elected and prohibits opposing
representatives. political parties.
The world is characterized by three major types of political
systems: authoritarianism, socialism, and democracy

Authoritarianism
Authoritarianism centralizes power in
the government.

Socialism
Socialism is based on a collectivist
ideology

Democracy
Democracy is characterized by two major
features: Private property rights and
Limited government.
2.2. National Differ-
ences in Economic
Systems
 MARKET ECONOMY
Main Characteristics:
• Market forces created by the interaction of supply and
demand to determine prices in a market economy
• Government intervention in the marketplace is limited
• Economic decisions are left to individuals and firms
• Market economies are closely associated with
capitalism, in which the means of production are
privately owned and operated.
 COMMAND ECONOMY
Main Characteristics:
• Command economy makes the state a dominant
force in the production and distribution of goods
and services
• Central planners make resource allocation
decisions, and the state owns major sectors of the
economy
 MIXED ECONOMY
A mixed economy exhibits the features of both a
market economy and a command economy. It
combines state intervention and market
mechanisms for organizing production and
distribution. Most industries are under private
ownership, and entrepreneurs freely establish, own,
and operate corporations. But the government also
controls certain functions, such as pension
programs, labor regulation, minimum wage levels,
and environmental regulation.
2.3. National Differ-
ences in Legal Sys-
tems
 LEGAL SYSTEMS
A legal system is a system for interpreting and
enforcing laws. Laws, regulations, and rules
establish norms for conduct.
A legal system includes institutions and procedures
that aimed to:
• Ensure order
• Resolve disputes in civil and commercial activities
• Tax economic output
• Provide protections for private property, including
intellectual property and other company assets
 COMMON LAW
The common law system evolved in England over
hundreds of years. It is now found in
most of Great Britain’s former colonies, including
the United States.
Common law is based on tradition, precedent,
and custom. Tradition refers to a country’s legal
history, precedent to cases that have come before
the courts in the past, and custom to the ways in
which laws are applied in specific situations.
 CIVIL LAW
Also known as code law, civil law is found in
France, Germany, Italy, Japan, Turkey, and Latin
America. Its origins go back to Roman law and the
Napoleonic Code. Civil law is based on an
all-inclusive system of laws that have been
codified; the laws are clearly written and
accessible. A civil law system is based on a
detailed set of laws organized into codes. When
law courts interpret civil law, they do so with regard
to these codes.
 THEOCRATIC LAW
A theocratic law system is one in which the law is based on
religious teachings. Islamic law is the most widely
practiced theocratic legal system in the modern world,
although usage of both Hindu and Jewish law persisted into
the twentieth century. Islamic law is primarily a moral rather
than a commercial law and is intended to govern all aspects
of life.
The foundation for Islamic law is the holy book of Islam, the
Koran, along with the Sunnah, or decisions and sayings of
the Prophet Muhammad, and the writings of Islamic
scholars who have derived rules by analogy from the
principles established in the Koran and the Sunnah.
Table 2.1. Differences Between Common Law and Civil Law
 Three Approaches for resolving
International Disputes

Conciliation Arbitration Ligitation

Conciliation is the least Arbitration is a Litigation is the most
adversarial method. process in which a adversarial approach
It is a formal process of neutral third party and occurs when one
negotiation with hears both sides of a party files a lawsuit
the objective to resolve case and decides in against another to
differences in a friendly favor of one party or achieve desired ends.
manner. the other based on an
objective assessment
of the facts.
2.4. National Differ-
ences in Culture
 CULTURE
The values, beliefs, customs, arts, and other
products of human thought and work that character-
ize the people of a given society.

Socialization Acculturation
The process of learning the rules and behavioral The process of adjusting and adapting to a
patterns appropriate for living in one’s own society culture other than one’s own
 How to Acquire Cross-Cultural Competence
GUIDELINE 1: Acquire factual knowledge about the other culture and try to speak the language
Successful managers acquire a base of knowledge about the values, attitudes, and lifestyles of the cultures that they encounter.

GUIDELINE 2: Avoid cultural bias

Problems arise when managers simply assume that foreigners think and behave just like the folks back home.
Such ethnocentric assumptions lead to poor business strategies in both planning and execution.

GUIDELINE 3: Develop cross-cultural skills

Cross-cultural proficiency is characterized by four key personality traits:
1. Tolerance for ambiguity
2. Perceptiveness
3. Valuing personal relationships
4. Flexibility and adaptability
References:

1. Hill, Charles W.L.; Hult, G. Tomas M. (2019). International Business: Competing in the Global Marketplace.
McGraw-Hill Education. New York. ISBN 978-1-259-92944-1. Chapter 2 and 4.
2. Cavusgil Tamer, S., Knight, G., & Reisenberger, J. (2019). International Business: the new realities. Global
Edition: 5th Edition. Essex, UK: Pearson. eBook ISBN 13: 978-1-292-30330-7. Chapter 3 dan 6.
3. Shenkar, O., Luo, Y., & Chi, T. (2022). International Business. 4th Edition. Routledge, New York. Chapter 7.
THANK YOU

UNIVERSITAS BINA NUSANTARA

SUBJECT MATTER EXPERT

Dr. Lianna Wijaya, A.Md., S.E., M.MSI