The Cultural Environment: Diversity and globalization THE INTERNATIONAL BUSINESS ENVIRONMENT...

The Cultural Environment: Diversity and globalization

THE INTERNATIONAL BUSINESS ENVIRONMENT

DR(PROF) M AMBASHANKAR 1

WHAT IS CULTURE?• ‘learned, shared…set of symbols whose meanings provide a

set of orientations for members of a society’ (Terpstra and David, 1991)

• Includes: - values and beliefs, - all forms of communication - norms of behaviour - customs - art, music, literature, sport


HOW IS CULTURE RELEVANT TO BUSINESS?• National culture – a society’s shared language, religion,

history and identity• National culture exerts a strong influence – we acquire basic

values in childhood• Diversity of national cultures is a key factor for businesses

to understand in the international environment.• Ethnocentrism vs polycentrism: relating to the world in terms

of your own culture vs being open to other people’s cultures


LANGUAGES• Low-context culture - clear, direct communication, characteristic

of the US

• High-context culture - importance of relationships and indirect communication, characteristic of Asian cultures

• Sources of linguistic diversity: indigenous cultures, colonialism, immigration

• Is English the global language?


Language Percentage of global

web content English 68.4 Japanese 5.9 German 5.8 Chinese 3.9 French 3.0 Spanish 2.4 Russian 1.9 Italian 1.6 Portuguese 1.4 Korean 1.3 Other 4.6

Source: Global Reach(2004) ‘Global Internet Statistics (by Language)’ at

http://glreach.com/globstats/

Web content by language

Dr(Prof) M Ambashankar 5

Year: 1900 1970 1990

2000

Christians

558.1 (34.5%)

1,236 (33.5%)

1,747 (33.2%)

1,999 (33.0%)

Muslims 199.9 (12.3%)

553.5 (15.0%)

962.3 (18.3%)

1,188 (19.6%)

Hindus 203.0 (12.5%)

462.5 (12.5%)

685.9 (13.0%)

811.3 (13.4%)

Buddhists 127.0 (7.8%)

233.4 (6.3%)

323.1 (6.1%)

359.9 (5.9%)

Jews 12.3 (0.8%)

14.7 (0.4%)

13.1 (0.3%)

14.4 (0.2%)

Non-religious 3.0 (0.2%)

532.0 (14.4%)

707.1 (13.4%)

768.1 (12.7%)

Note: Numbers in millions, followed by percentage of the world’s population (in brackets). Source: Barrett, D., Kurian, G., and Johnson, T. (eds), (2001) World Christian Encyclopedia, 2nd edition (New York: Oxford University Press)

Growth of major world religions

Dr(Prof) M Ambashankar 6

IMPACT OF RELIGION ON BUSINESS LIFE

• Religious laws which impact on business contracts and employment laws

• Role of women

• Food and drink restrictions

• Requirements for prayer and religious observance

• Restrictions on media, e.g. output deemed to conflict with predominant religion

• Restrictions on trading hours


MULTI-CULTURAL SOCIETIES

• Assimilation – Immigrants adopt the culture and language of their new society (example: France)

• Melting pot – Society evolves its own identity and culture, based on a mixture of the different cultures which formed it (examples: ‘settler’ societies of the US and Australia)

• Cultural pluralism – Immigrants and indigenous peoples form subcultures which remain distinct - becoming more common (examples: UK and possibly US at present)


Hofstede

Theory based on cultural dimensions of national culture:

• Power distance• Uncertainty avoidance• Individualism v collectivism• Masculinity v femininity• Long-term v short-term

orientation

Trompenaars

Theory based on five relationship orientations:

• Universalism v particularism

• Individualism v collectivism

• Neutral v emotional

• Specific v diffuse

• Achievement v ascription

CULTURE THEORIES


ORGANIZATIONAL OR CORPORATE CULTURE• Dominant values, such as high product quality and customer

orientation

• Norms of behaviour among staff and between the organization and other firms

• Preference for formal or informal means of communication

• Degree of empowerment of employees


CULTURE CHANGE• Affects individuals, organizations and whole societies• Factors leading to change:

- Industrialization – transition from agricultural to industrial society

- Capitalist development – the ‘Protestant’ work ethic (based on individualism); but Asian societies, where a ‘Confucian’ ethic exists, have pursued different path

- Material well-being and prosperity

- Changes in the nature of work


CULTURAL GLOBALIZATION: MYTH OR REALITY?

• Theorists such as Ohmae have predicted the fading away of cultural differences as consumer markets become globalized.

• However, in markets for consumer products and entertainment, successful global companies find that local diversity calls for different strategies.

• Although most web content is in English, multilingual websites reach more consumers.


English35.8%

Chinese14.1% Japanese

9.6%

Spanish9.0%

Italian3.3%

Dutch1.8%

Other5.2%

Russ ian2.5%

Portuguese3.5%

French3.8%

Korean4.1%

German7.3%

Source: Global Reach 2004

Online language populations – percentages of those accessing the internet in major languages


CONCLUDING SUMMARY AND QUESTIONS• Culture refers to a society’s values, norms, language

and shared history, which impact on differing markets for consumer products and ways in which businesses operate.

• Most states are multi-cultural.• Individuals, organizations and societies undergo cultural

changes over time. Are there ‘core’ values which may remain constant despite economic changes?

• The Internet has facilitated a more connected-up world, but not as yet cultural globalization.


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