Chapter 3a Differences in Culture

8/3/2019 Chapter 3a Differences in Culture

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Chapter 3

Differences

in Culture


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Introduction

Cross-cultural literacy (an understandingof how cultural differences across andwithin nations can affect the way in

which business is practiced) is importantto success in international business

There may be a relationship betweenculture and the costs of doing business

in a country or regionCulture is not static, and the actions of

MNEs can contribute to cultural change


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What is Culture?

Question: What is culture?

Culture is a system of values(abstract ideas

about what a group believes to be good, right,and desirable) and norms (the social rules andguidelines that prescribe appropriate behaviorin particular situations) that are shared among a

group of people and that when taken togetherconstitute a design for living

A society is a group of people who share acommon set of values and norms


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Values and Norms

Values provide the context within which asocietys norms are established and justified

Norms are the social rules that govern the

actions of people toward one another and canbe further subdivided into

folkways(the routine conventions ofeveryday life)

mores (norms that are seen as central to thefunctioning of a society and to its social life)


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Culture, Society,and the Nation-State

A society can be defined as a group of peoplethat share a common set of values and norms

There is not a strict one-to-one correspondence

between a society and a nation-stateNation- states are political creations that can

contain a single culture or several cultures

Some cultures embrace several nations


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The Determinants of Culture

The values and norms of a culture arethe evolutionary product of a number offactors at work in a society including

prevailing political and economicphilosophies

a societys social structure

the dominant religion, language, andeducation


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Classroom Performance System

Abstract ideas about what a societybelieves to be good right and desirable arecalled

a) Attitudes

b) Norms

c)Values

d) Mores


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Social Structure

A society's social structure is its basicsocial organization

Two dimensions to consider:

the degree to which the basic unit ofsocial organization is the individual, asopposed to the group

the degree to which a society is stratifiedinto classes or castes


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Individuals and Groups

A group is an association of two or moreindividuals who have a shared sense ofidentity and who interact with each otherin structured ways on the basis of acommon set of expectations about eachothers behavior

Groups are common in many Asiansocieties

Many Western countries emphasize theindividual


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Individuals and Groups

In societies where the individual is emphasizedindividual achievement and entrepreneurship

are promotedbut, this can encourage job switching,

competition between individuals in acompany rather than team building, and alack of loyalty to the firm

In societies with a strong identification with thegroup

cooperation and team work are encouragedand life time employment is common

but, individual initiative and creativity may besuppressed


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Social Stratification

All societies are stratified on ahierarchical basis into social categories,or social strata (usually defined by

characteristics such as familybackground, occupation, and income)

Societies differ in terms of

the degree of mobility between socialstrata

the significance attached to socialstrata in a business context


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Social mobility refers to the extent to whichindividuals can move out of the strata into whichthey are born

The most rigid system is the caste system (aclosed system of stratification in which socialposition is determined by the family into which aperson is born, and change in that position is

unlikely) A less rigid system is the class system (a form

of open social stratification in which the positiona person has by birth can be changed throughachievement or luck)


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Question: What is the significance of socialstratification for business?

In cultures where there is a great deal of classconsciousness(a condition where people tendto perceive themselves in terms of their classbackground, and this shapes their relationshipswith others), the way individuals from different

classes work together (i.e. management andlabor) may be prescribed

Antagonism between labor and managementcan raise the costs of doing business


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The extent to which an individual can moveout of the social strata into which they areborn is called

a) Social stratification

b) Class mobility

c)Social mobility

d) Caste system


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Religious and Ethical Systems

Religion is a system of shared beliefs andrituals that are concerned with the realm of thesacred

Religions with the greatest following areChristianity (1.7 billion adherents)

Islam (1 billion adherents)

Hinduism (750 million adherents)

Buddhism (350 million adherents)

Confucianism also influences behavior andshapes culture in many parts of Asia


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Dominant Religions


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Ethical systems are a set of moral principles, orvalues, that are used to guide and shapebehavior

The ethical practices of individuals within aculture are often closely intertwined with theirreligion


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Christianity

Christianity is the most widely practiced religionand is common throughout Europe, theAmericas, and other countries settled byEuropeans

Question: What are the economic implicationsof Christianity?

In 1904, Max Weber suggested that it was theProtestant work ethic (focus on hard work,wealth creation, and frugality) that was thedriving force of capitalism


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Islam

Adherents of Islam, called Muslims, believe that there isone true omnipotent God

Islam is an all-embracing way of life that governs one'sbeing

Question: What is Islamic fundamentalism? In the West, Islamic fundamentalism is associated in the

media with militants, terrorists, and violent upheavals,however, the vast majority of Muslims point out that Islamteaches peace, justice, and tolerance

Perhaps in response to the influence of Western ideas,some Muslims feel threatened, and are promoting acommitment to traditional beliefs and practices

Fundamentalists have gained political power in manyMuslim countries, and have tried to make Islamic law thelaw of the land


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Islam

Question: What are the economic implicationsof Islam?

Under Islam, people do not own property, butonly act as stewards for God and thus must

take care of that which they have beenentrusted withWhile Islam is supportive of business, the way

business is practiced is prescribed Businesses that are perceived to be making a

profit through the exploitation of others, bydeception, or by breaking contractualobligations are unwelcome


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Hinduism

Hinduism, practiced primarily on the Indian sub-continent, focuses on the importance ofachieving spiritual growth and development,which may require material and physical self-

denial

Question: What are the economic implicationsof Hinduism?

Hindus are valued by their spiritual rather than

material achievements Promotion and adding new responsibilities may

not be the goal of an employee, or may beinfeasible due to the employee's caste


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Buddhism

Buddhists, found mainly in Central andSoutheast Asia, China, Korea, and Japan,stress spiritual growth and the afterlife, ratherthan achievement while in this world

Question: What are the economic implicationsof Buddhism?

Buddhism does not support the caste system,

so individuals do have some mobility and canwork with individuals from different classes

Entrepreneurial activity is acceptable inBuddhist societies


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Confucianism

Confucianism, practiced mainly in China,teaches the importance of attaining personalsalvation through right action

The need for high moral and ethical conduct

and loyalty to others is central in Confucianism

Question: What are the economic implicationsof Confucianism?

Three key teachings of Confucianism - loyalty,reciprocal obligations, and honesty - may alllead to a lowering of the cost of doing businessin Confucian societies


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The religion with the largest following in theworld is

a)Christianity

b) Islam

c) Hinduism

d) Buddhism


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Language

Countries differ in terms of language ormeans of communication

There are two forms language

spokenunspoken

Language is one of the definingcharacteristics of culture


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Spoken Language

Countries with more than one spokenlanguage often have more than oneculture

Chinese is the mother tongue of thelargest number of people in the worldEnglish is the most widely spoken

language in the world, and isbecoming the language of

international businessHowever, knowledge of the local

language is beneficial, and in somecases, critical for business success


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Unspoken Language

Unspoken language refers to nonverbalcues

Unspoken language such as facialexpressions and hand gestures can beimportant for communication

Many nonverbal cues are culturally

bound and because they may beinterpreted differently, can result in

misunderstandings


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Education

Formal education is the medium through whichindividuals learn many of the language,conceptual, and mathematical skills that areindispensable in a modern society

The knowledge base, training, and educationalopportunities available to a country's citizenscan also give it a competitive advantage in themarket and make it a more or less attractive

place for expanding business The general education level of a country is a

good indicator of the types of products thatmight sell in that location or the type ofpromotional materials that might be successful


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Culture and the Workplace

Question: How does a society's culture impacton the values found in the workplace?

The most famous study undertaken to answerthis question was done by Geert Hofstede whoisolated four dimensions that he believedsummarized different cultures

1. Power distance

2. Individualism versus collectivism3. Uncertainty avoidance

4. Masculinity versus femininity


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1. Power distance is focused on how asociety deals with the fact that peopleare unequal in physical and intellectualcapabilities

2. Individualism versus collectivism isfocused on the relationship between theindividual and his or her fellows

3. Uncertainty avoidance measures the

extent to which different culturessocialize their members into acceptingambiguous situations and toleratingambiguity


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4. Masculinity versus femininity looks atthe relationship between gender andwork roles

5. Hofstede later added a fifth dimension,Confucian dynamism, to captureattitudes towards time, persistence,ordering by status, protection of face,respect for tradition, and reciprocation

of gifts and favors


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Hofstedes Four Dimensions


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Which of Hofstedes dimensions measuresthe extent to which different culturessocialize their members into accepting

ambiguous situations and toleratinguncertainty?

a) Individualism versus collectivism

b)Uncertainty avoidancec) Masculinity versus femininity

d) Power distance


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Cultural Change

Culture evolves over time, althoughchanges in value systems can be slowand painful for a society

Social turmoil is an inevitable outcome ofcultural change

As countries become economically

stronger, cultural change is particularlycommon


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Implications for Managers

Differences in culture imply that

1. there is a need for managers to developcross-cultural literacy

2. there is a connection between cultureand national competitive advantage

3. there is a connection between culture

and ethics in decision making(discussed in the next chapter)


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Cross-Cultural Literacy

Individuals and firms must developcross-cultural literacy

International businesses that are ill

informed about the practices of anotherculture are unlikely to succeed in thatculture

Individuals must also beware of

ethnocentric behavior (a belief in thesuperiority of one's own culture)


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Culture and Competitive Advantage

For international companies, theconnection between culture andcompetitive advantage is important

becausethe connection suggests which

countries are likely to produce themost viable competitors

the connection has implications for thechoice of countries in which to locateproduction facilities and do business

Chapter 3a Differences in Culture

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