Differences in Culture To change customs is a difficult thing. —LEBANESE PROVERB

Introduction Culture is an integral part of the businesses operating environment. Successful international managers need cross- cultural literacy - 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 Thus learning about cultural environment is very important to the practice of international business. Culture influences nearly all business functions from accounting to finance to production to service. Structure, strategies that adapt to one culture may cause failure in other. Miroshnik (2002) suggested that different cultural environment requires different managerial behaviors.

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 -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 Value is the bedrock of culture. Values are often reflected in the political and economic system of the society. Values regarding rights, freedom may change depending on the nation. For instance, someone in North Korea is going to have far different values regarding freedom, justice, individual achievement as opposed to someone from the U.S.

Cultural Orientations International businesses adopt an attitude towards foreign cultures Polycentrism: control is decentralized so regional managers can conduct business in a local manner. Ethnocentrism: belief that ones own culture is superior and ignores important factors. Geocentrism: a hybrid of polycentrism and ethnocentrism, the middle ground. Ethnocentric Approach may lead to cultural myopia

Cross Cultural Blunders When PepsiCo advertised Pepsi in China with the ad “ Come Alive with Pepsi” they had no idea that it would be translated into Chinese as “Pepsi Brings your Ancestors Back from the Dead”. American Motors tried to market its new car, the Matador, based on the image of courage and strength. However, in Puerto Rico the name means "killer" and was not popular on the hazardous roads in the country.

Cultural Awareness Cultural awareness involves continually developing one’s awareness of one’s own and others' cultures to assist in the performance of professional duties. Cultural awareness can be improved Research descriptions of specific cultures Observe behavior Study foreign market directly Learning about traditional beliefs Meanings Of Words, phrases, gestures, customs, Significant Days Or Holidays or activities and rituals.

Determinants of Culture People belong to national, ethnic, professional, and organizational cultures. Points of reference: National Geographic Language Religion International business often changes cultures Values and norms are not fully formed. They evolve and change in response to a number of factors; such as, political and economic systems, social structure of society, language, religion and education. 2-5

Culture -society - nation state Each nation has certain human, demographic, and behavioral Characteristics that give it a national identity. There is not a strict one-to-one relationship between a society and a nation state Nation-states are political creations that can contain one or more cultures Similarly, a culture can embrace several nations Thus , National boundaries act as proxy for culture. People share values, language, and race Laws governing business apply along national lines.

What Determines Culture? Determinants of Culture

What Is A Social Structure? Social structure - 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(social stratification) Country Focus: Breaking India’s Caste System explores the caste system in India that still influences society today particularly in the rural parts of the country.

How Are Individuals And Groups Different? 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

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 In a social setting, Asian employees often say they work for Sony, while a Western employee may say he/she is an electrical engineer. In Asia, the worth of an individual is more linked to the success of the group rather than individual achievement.

What Is Social Stratification? All societies are stratified on a hierarchical basis into social categories, or social strata Social mobility - the extent to which individuals can move out of the strata into which they are born caste system class system The significance attached to social strata in business contacts class consciousness A caste system is a rigid form of stratification in which social position is determined by the family in which a person is born and this cannot be changed in an individual’s lifetime. class consciousness - a condition where people tend to perceive themselves in terms of their class background, and this shapes their relationships with others Class consciousness is very limited in American or Japanese societies. On the other hand, in British culture class consciousness is high and it affects business relationships as well. High class consciousness meant greater hostility between the upper middle class managers and the working class employees.

Social Structure Social Stratification Individuals status with the culture Managerial groups may be highly valued Employees may be valued less Ascribed group memberships Gender, family, age, caste, and ethnic, racial or national origin Acquired group memberships Religion, political affiliations, and professional and other associations Ascribed group memberships are determined at birth Acquired group memberships are based on one’s choice of affiliation

How Do Religious And Ethical Systems Differ? Religion - a system of shared beliefs and rituals that are concerned with the realm of the sacred Four religions dominate society Christianity Islam Hinduism Buddhism Confucianism is also important in influencing behavior and culture in many parts of Asia Ethical systems - a set of moral principles, or values, that are used to guide and shape behavior Religion and ethics are often closely intertwined ex. Christian or Islamic ethics LO2: Identify the forces that lead to differences in social culture. Country Focus: Islamic Capitalism in Turkey examines the business environment in Turkey. Turkey, a Muslim state, wants to join the European Union, a move many critics believe would not work. The Opening Case: Culture and Business in Saudi Arabia explores the implications of religion on the country’s business culture.

How Do Religious And Ethical Systems Differ? World Religions

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 The close ties between Japanese auto companies and their suppliers, called keiretsus, have been an important ingredient in the Japanese success in the auto industry. They have facilitated loyalty, reciprocal obligations, and honesty. In countries where these relationships are more adversarial and not bound by these same values, the costs of doing business are probably higher. Management Focus: DMG-Shanghai underscores the importance of guanxi in getting business done in China.

Language Language – A systematic means of communicating Spoken language Unspoken language When people from different areas speak the same language, culture spreads more easily. A common language within countries is a unifying force. Among nations that share a same language, commerce is easier. translaton

Language Countries with more than one language often have more than one culture The most widely spoken language in the world, but Chinese is the mother tongue of the largest number of people English is also becoming the language of international business, but knowledge of the local language is beneficial, and in some cases, critical for business success Countries with more than one language tend to have more than 1 culture. For instance, Canada has both English and French cultures in their country, often at odds with each other. Chinese is the mother tongue of the largest number of people, followed by English and Hindi.

Unspoken/Silent Language Perception of time and punctuality: Be tolerant of differing perceptions of time Body language and gestures: Pragmatics – the cultural interpretations of words, gestures etc. Conversational Distance: Proxemics – or the distance between people during conversation. Proxemics refers to personal distance in a business setting. In the United States the approximate distance in a business discussion is expected to be 5-8 feet. In Latin America it is 3-5 feet.

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 Japan’s postwar success can be linked to its excellent education system general education levels can be a good index for the kinds of products that might sell in a country ex. impact of literacy rates Education can lead to a nation’s competitive advantage because they have a pool of skilled and educated workers. Cultural Norms are also taught indirectly at schools. For instance, respect for others, obedience to authority, honesty, neatness, being on time and so on. The Japanese education system focused on Mathematics and Science in primary and secondary education system. This allowed Japan to have a large pool of trained engineers. Education levels also affect the kind of products that are offered for sale. For example, if a country has an illiteracy rate of 70%, then it will make little sense to sell books in such a country. In such countries using pictorial ads to do promotions makes more sense.

Culture & workplace Different countries have different work related values. Management process and practices, motivation factors, information processing processes all of these usually varies across culture. Hofstede’s Theory of Culture He conducted the research during 1967-1973 as an IBM Psychologist and included 100,000 employees of IBM in 40 countries. The purpose of the research was to identify difference of employees’ values and attitudes. The theory helped to compare and contrast between the nations. This is the benchmark for other cultural theories.

Individualism vs. Collectivism Uncertainty Avoidance Four Dimensions Individualism vs. Collectivism Power Distance Uncertainty Avoidance Masculinity Vs. Femininity

Power Distance Describes how a society deals with inequalities in power that exist among people.

Individualism – Collectivism Refers to whether a person primarily functions as an individual or within a group.

Uncertainty Avoidance Refers to the extent to which people can tolerate risk and uncertainty in their lives.

Masculinity versus Femininity This dimension looks at the relationship between gender and work roles.

The Fifth Dimension Hofstede added a fifth dimension -- Long-Term vs. Short-Term orientation This dimension describes the degree to which people and organizations defer gratification to achieve long-term success. Long-term orientation tends to take the long view to planning and living, focusing on years and decades. Examples- traditional Asian cultures-China, Japan, and Singapore, which partly base these values on the teachings of the Chinese philosopher Confucius. Short-term orientation - the U.S. and most other Western countries.

How Does Culture Impact The Workplace? Work-Related Values for 20 Countries Hofsteade’s dimension was criticized because IBM was the sole source of information and because culture is not static

Cultural Change Culture evolves over time, although changes in value systems can be slow and painful for a society Social turmoil is an inevitable outcome of cultural change As countries become economically stronger, cultural change is particularly common Economically stronger countries may shift towards an Individualistic approach. As people become more educated they shift away from tradition and towards a more secular and rational way of doing things.

Implications For Managers Societies differ because their cultures vary Cultures vary because of profound differences in social structure, religion, language, education, economic philosophy, and political philosophy There are three important implications that flow from these differences: 1. There is a need to develop cross-cultural literacy 2. There is a connection between culture and national competitive advantage International Businesses that are ill informed about the culture of another country and more likely to fail.