Differences in Culture International Business: An Asian Perspective Chapter 3 Differences in Culture Chapter 3: Differences in Culture

What Is Cross-Cultural Literacy? Cross-cultural literacy is an understanding of how cultural differences across and within nations can affect the way in which business is practiced A relationship may exist between culture and the costs of doing business in a country or region Copyright © 2011 McGraw-Hill/Irwin

What Is Culture? Culture is a system of values and norms that are shared among a group of people and that when taken together constitute a design for living where values are abstract ideas about what a group believes to be good, right, and desirable norms are the social rules and guidelines that prescribe appropriate behavior in particular situations Society refers to a group of people who share a common set of values and norms Copyright © 2011 McGraw-Hill/Irwin

What Are Values And Norms? Values provide the context within which a society’s norms are established and justified and form the bedrock of a culture Norms include folkways - the routine conventions of everyday life mores - norms that are seen as central to the functioning of a society and to its social life Copyright © 2011 McGraw-Hill/Irwin

How Are Culture, Society, And The Nation-State Related? The relationship between a society and a nation state is not strictly one-to-one Nation-states are political creations can contain one or more cultures A culture can embrace several nations Copyright © 2011 McGraw-Hill/Irwin

What Are The Determinants Of Culture? The values and norms of a culture evolve over time Determinants include religion political and economic philosophies education language social structure Copyright © 2011 McGraw-Hill/Irwin

What Is A Social Structure? Social structure refers to a society’s basic social organization Consider the degree to which the basic unit of social organization is the individual, as opposed to the group the degree to which a society is stratified into classes or castes Copyright © 2011 McGraw-Hill/Irwin

How Are Individuals And Groups Different? A group is an association of two or more people who have a shared sense of identity and who interact with each other in structured ways on the basis of a common set of expectations about each other’s behavior In Western societies, there is a focus on the individual individual achievement is common dynamism of the U.S. economy high level of entrepreneurship But, creates a lack of company loyalty and failure to gain company specific knowledge competition between individuals in a company instead of than team building less ability to develop a strong network of contacts within a firm Copyright © 2011 McGraw-Hill/Irwin

How Are Individuals And Groups Different? In many Asian societies, the group is the primary unit of social organization discourages job switching between firms encourages lifetime employment systems leads to cooperation in solving business problems But, might also suppress individual creativity and initiative Copyright © 2011 McGraw-Hill/Irwin

What Is Social Stratification? All societies are stratified on a hierarchical basis into social categories, or social strata Must consider The degree of social mobility - the extent to which individuals can move out of the strata into which they are born caste system - closed system of stratification in which social position is determined by the family into which a person is born change is usually not possible during an individual's lifetime class system - form of open social stratification position a person has by birth can be changed through achievement or luck The significance attached to social strata in business contacts Class consciousness is a condition where people tend to perceive themselves in terms of their class background, and this shapes their relationships with others Copyright © 2011 McGraw-Hill/Irwin

How Do Religious And Ethical Systems Differ? Religion is a system of shared beliefs and rituals that are concerned with the realm of the sacred Religion and ethics are often closely intertwined Four religions dominate society Christianity Islam Hinduism Buddhism Confucianism is also important in influencing behavior and culture in many parts of Asia Ethical systems are a set of moral principles, or values, that are used to guide and shape behavior Copyright © 2011 McGraw-Hill/Irwin

How Do Religious And Ethical Systems Differ? World Religions Copyright © 2011 McGraw-Hill/Irwin

What Is Christianity? Christianity the world’s largest religion found throughout Europe, the Americas, and other countries settled by Europeans the Protestant work ethic (Max Weber, 1804) hard work, wealth creation, and frugality is the driving force of capitalism Copyright © 2011 McGraw-Hill/Irwin

What Is Islam? Islam the world’s second largest religion extends the underlying roots of Christianity to an all-embracing way of life that governs one's being Islamic fundamentalism is associated in the Western media with militants, terrorists, and violent upheavals, but in fact Islam teaches peace, justice, and tolerance fundamentalists, who demand rigid commitment to religious beliefs and rituals, have gained political power in many Muslim countries, and blame the West for many social problems people do not own property, but only act as stewards for God people must take care of that which they have been entrusted with supportive of business, but the way business is practiced is prescribed Copyright © 2011 McGraw-Hill/Irwin

What Is Hinduism? Hinduism practiced primarily on the Indian sub-continent focuses on the importance of achieving spiritual growth and development, which may require material and physical self-denial Hindus are valued by their spiritual rather than material achievements promotion and adding new responsibilities may not be important, or may be infeasible due to the employee's caste Copyright © 2011 McGraw-Hill/Irwin

What Is Buddhism? Buddhism has about 350 millions followers stresses spiritual growth and the afterlife, rather than achievement while in this world does not emphasize wealth creation entrepreneurial behavior is not stressed does not support the caste system, individuals do have some mobility and can work with individuals from different classes Copyright © 2011 McGraw-Hill/Irwin

What Is Confucianism? Confucianism ideology practiced mainly in China teaches the importance of attaining personal salvation through right action high morals, ethical conduct, and loyalty to others are stressed three key teachings of Confucianism - loyalty, reciprocal obligations, and honesty - may all lead to a lowering of the cost of doing business in Confucian societies Copyright © 2011 McGraw-Hill/Irwin

What Is The Role Of Language In Culture? Language - the spoken and unspoken (nonverbal communication such as facial expressions, personal space, and hand gestures ) means of communication One of the defining characteristics of culture countries with more than one language often have more than one culture English is the most widely spoken language in the world Chinese is the mother tongue of the largest number of people English is also becoming the language of international business knowledge of the local language is still beneficial, and in some cases, critical for business success failing to understand the nonverbal cues of another culture can lead to communication failure Copyright © 2011 McGraw-Hill/Irwin

Case discussion Hitler clothing shop in Israel Swastika – Nazi symbol? http://www.bbc.co.uk/news/world-asia-india-19433343 (Aug. 31) http://www.bbc.co.uk/news/world-asia-india-19481400 (Sep. 4) Swastika – Nazi symbol? Copyright © 2011 McGraw-Hill/Irwin

What Is The Role Of Education In Culture? Formal education is the medium through which individuals learn many of the language, conceptual, and mathematical skills that are indispensable in a modern society important in determining a nation’s competitive advantage general education levels can be a good index for the kinds of products that might sell in a country Copyright © 2011 McGraw-Hill/Irwin

How Does Culture Impact The Workplace? Management processes and practices must be adapted to culturally-determined work-related values Geert Hofstede identified four dimensions of culture Power distance - how a society deals with the fact that people are unequal in physical and intellectual capabilities Uncertainty avoidance - the relationship between the individual and his fellows Individualism versus collectivism - the extent to which different cultures socialize their members into accepting ambiguous situations and tolerating ambiguity Masculinity versus femininity -the relationship between gender and work roles Copyright © 2011 McGraw-Hill/Irwin

National cultural dimension: PDI Power distance - expresses the degree to which the less powerful members of a society accept and expect that power is distributed unequally. Low power distance 100 High power distance Denmark (18) Israel (13) Sweden (31) India (77) China (80) Indonesia (78) Panama (95) Copyright © 2011 McGraw-Hill/Irwin

National cultural dimension: UAI Uncertainty avoidance -  the degree to which the members of a society feel uncomfortable with uncertainty and ambiguity.  Low uncertainty avoidance 100 High uncertainty avoidance Denmark (23) Sweden (29) Argentina (86) France (86) Japan (92) Korea (85) Copyright © 2011 McGraw-Hill/Irwin

National cultural dimension: IDV Individualism versus collectivism- a preference for a loosely-knit social framework versus a preference for a tightly-knit framework in society   Collectivism 100 Individualism Indonesia (14) Panama (11) Korea (18) China (20) Turkey (37) Australia (90) Canada (80) Great Britain (89) United States (91) Copyright © 2011 McGraw-Hill/Irwin

National cultural dimension: MAS Masculinity versus femininity - a preference in society for achievement, heroism, assertiveness and material reward for success. versus a preference for cooperation, modesty, caring for the weak and quality of life. Femininity (concensus-oriented) 100 High masculinity (competitive) Sweden (5) Netherlands (14) Denmark (16) Japan (95) China (66) Mexico (69) Copyright © 2011 McGraw-Hill/Irwin

National cultural dimension: LTO Long-term (Confucian dynamism) versus short-term orientation-  dealing with society’s search for virtue. Short-term +100 Long-term United States (29) Sweden (20) Great Britain (25) China (118) Hong Kong (96) South Korea (75) Japan (80) Copyright © 2011 McGraw-Hill/Irwin

Copyright © 2011 McGraw-Hill/Irwin

How Does Culture Impact The Workplace? Work-Related Values for 22 Countries http://geert-hofstede.com/countries.html In this Table, you can see work-related values for twenty countries. Korea 50 85 18 39 China 80 30 20 66 Copyright © 2011 McGraw-Hill/Irwin

Was Hofstede Right? Hofstede later expanded added a fifth dimension called Confucian dynamism captures attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors Hofstede’s work has been criticized because made the assumption there is a one-to-one relationship between culture and the nation-state study may have been culturally bound used IBM as sole source of information culture is not static – it evolves But, it is a starting point for understanding how cultures differ, and the implications of those differences for managers Copyright © 2011 McGraw-Hill/Irwin

Does Culture Change? Culture evolves over time changes in value systems can be slow and painful for a society Social turmoil - an inevitable outcome of cultural change as countries become economically stronger, cultural change is particularly common Copyright © 2011 McGraw-Hill/Irwin

What Do Cultural Differences Mean For Managers? It is important to develop cross-cultural literacy companies that are ill informed about the practices of another culture are unlikely to succeed in that culture managers must beware of ethnocentric behavior, or a belief in the superiority of one's own culture There is a connection between culture and national competitive advantage suggests which countries are likely to produce the most viable competitors has implications for the choice of countries in which to locate production facilities and do business Copyright © 2011 McGraw-Hill/Irwin

What Do Cultural Differences Mean For Managers? Case discussion: McDonald’s in India Read case of McDonald’s in India (p. 104) http://www.youtube.com/watch?v=5syC7anMLbM&feature=BFa&list=PLA5FB3E6D14E99128 Copyright © 2011 McGraw-Hill/Irwin