International Business Fourth Edition

Differences in Culture CHAPTER 3 Differences in Culture

Chapter Focus What is culture/ Focus on differences in: Social structure. Religion. Language. Influence of education. Discuss cultural change.

What is Culture? A system of values and norms shared among a group of people and, when taken together, constitute a design for living.

Norms and Values Norms: Values: Social rules and guidelines that prescribe appropriate behavior in particular situations. Folkways: Routine conventions of everyday life. Mores: Central to functioning of society and its social life. Values: Abstract ideas about what a group believes to be good, right, and desirable. The bedrock of culture. Have emotional significance. Freedom.

Culture, Society and the Nation-State Nation-States are political creations Not a strict one-to-one correspondence

Determinants of Culture Norms and Value Systems Education Economic Philosophy Political Religion Language Social Structure

two or more individuals Social Structure Mobile Managers Hard to Build Teams Lack of Loyalty Entrepreneurship Individual Western Lack of Lifetime Employment Identity Group Eastern Nonmobile two or more individuals with a shared sense of identity

Social Stratification Class Consciousness: May play a role in a firm’s operations Typically defined by family background, occupation, and income. Class: some social mobility Caste: Virtually no mobility

Religion Shared beliefs and rituals concerned with the realm of the sacred. Ethical Systems: Moral principles or values used to guide and shape behavior. Shapes attitudes toward work and entrepreneurship and can affect the cost of doing business.

World’s Religions

Religion and Economic Implications Christianity “Protestant Work Ethic” and “The Spirit of Capitalism”. Islam Favors market-based systems. No payment or receipt of interest. Hinduism Asceticism may have an impact. Caste system plays a role. Buddhism Little emphasis on entrepreneurial behavior. Confucianism Loyalty, reciprocal obligations, and honesty in dealings.

Language Allows people to communicate. Structures the way the world is perceived. Directs attention to certain features of the world rather than others. Helps define culture. Creates separatist tendencies?

Spoken Language

Nonspoken Language Nonverbal cues: eyebrows fingers/thumbs hand gestures feet personal space body gestures

Education For int’l business, it is a Formal education supplements family role in teaching values and norms Focus on facts of social and political nature of society Obligations of citizenship Cultural norms such as respect, obedience, honesty For int’l business, it is a determinant of national competitive advantage Medium to learn language, conceptual, and math skills Value of personal achievement and competition

Hofstede Study (IBM) is a general way to look at differences between cultures. 4 dimensions: Power distance. Individualism versus collectivism. Uncertainty avoidance. Masculinity versus femininity. But: Assumption of one-to-one relationship between culture and nation-state. Research may be culturally bound. Respondents worked within a single company. Work is beginning to look dated (1967-1973).

Work Related Values for Selected Countries Table 3.1

Culture is Dynamic Cultural Change

Culture and Competitive Advantage The connection suggests: Which countries are likely to be the most viable competitors. Which countries in which to locate production facilities and do business.

Culture and Ethics Do the “right” thing. Thomas Donaldson’s Three Principles: Respect for core human values (human rights), which determine the absolute moral threshold for all business activities. Respect for local tradition. The belief that context matters when deciding what is right and what is wrong.