What is Culture?  Culture is the sum of the knowledge, values, beliefs and attitudes shared by a particular society and a group of people.  Culture includes: --Material culture --General life style --Belief system/religion --Aesthetics --Language/education --Time orientation --Space --Taste

Characteristics of Culture  Culture is omnipresent;  Culture is different;  Culture is dynamic;  Culture is never wrong or right. Cultural aware Cultural tolerant Cultural adaptive

Religion ShintoIslam Judaism Hinduism ConfucianismBuddhism Christianity

MannersandCustoms Behavior Speech Dress Folk Customs Popular Customs

Aesthetics Music Painting Dance Drama Architecture

Identification and Dynamics of Cultures The nation as a point of reference Each nation has certain human, demographic, and behavioral Characteristics that give it a national identity –people share values, language, and race Laws governing business apply along national lines Problems using a country-by-country approach –individual differences within a country –similarities link groups from different countries Cultural formation and dynamics Value systems set early in life, but may change Values may change due to choice or imposition –cultural imperialism IB increases change in cultures and governments

Identification and Dynamics of Cultures (cont.) Language as a cultural stabilizer Culture spreads rapidly when people from different areas speak the same language Stronger adherence to a culture if it does not share its language with other peoples English, French, and Spanish are widespread –most of IB conducted in English Religion as a cultural stabilizer Religion has a strong influence on values Specific beliefs may affect business –not all nations that practice the same religion have the same constraints on business –where rival religions vie for political control, resulting strife may disrupt business

Cultural Context Low-Context Culture: Communication depends on explicit, verbally expressed vehicles, such as contract, reports, and other written documents. So, people get down to business quickly. High-Context Culture: Communication depends on implicit and nonverbal aspects such as metaphor, hinting, and personal relationship. So, business processes are lengthy.

Contextual Background of Various Countries High Context Implicit Japanese Arabian Latin American Spanish Italian English (UK) French North American (US) Scandinavian German Swiss Low Context Explicit

Business Customs in Different Cultural Contexts

Hofstede’s Cultural Typology PDI- Power Distance Index This refers to the degree to which power differences are accepted and sanctioned by society. A high PDI describes a society that believes there should be a well - defined order in which everyone has a rightful place. Whereas the low PDI is associated with the prevalent belief that all people should have equal rights and the opportunity to change their position in the society.

IDV - Individualism This refers to the degree to which individual decision making and action are accepted and encouraged by society. A high IDV score depicts a society that emphasises the role of the individual. Conversely a low IDV emphasises a societal emphasis on the importance of the group model. Individualism vs. Collectivism

MAS - Masculinity This refers to the degree to which traditional male values are important to society. A high MAS would have clearly differentiated sex roles with men being dominant. In low MAS culture, the sex roles are more fluid and there is predominance of feminine values.

UAI - Uncertainty Avoidance Index This refers to the degree to which society is willing to accept and deal with uncertainty. A high UAI score suggests a culture that seeks certainty and security and wishes to avoid uncertainty. A low UAI score reflects the society is comfortable with a high degree of uncertainty and is open to the unknown.

Long-term Orientation This concerns a society’s search for virtue, rather than a search for truth. It assesses the sense of immediacy within a culture, whether gratification should be immediate or deferred. a. life time employment b. hard work c. loyalty d. extensive training e. generalised training f. promotion based on seniority

Cultural Awareness Problems that hinder cultural awareness Subconscious reactions to circumstances Assumption that all societal subgroups are similar Cultural awareness can be improved Research descriptions of specific cultures Observe behavior or respected foreign nationals Study foreign market directly Company’s need for cultural knowledge increases as it Moves from one to multiple foreign functions Increases the number of countries in which it operates Moves from similar to dissimilar foreign environments Converts from external to internal handling of international operations

Strategies for Instituting Change Value system The more a change upsets important values, the more resistance it will engender Cost benefit of change Company must consider the expected cost-benefit relationship of any adjustments it makes abroad Resistance to too much change Resistance to change may be lower if the number of changes is not great Make fewer demands at one time and phase in other policies more slowly Participation Discussing proposed change with stakeholders in advance may reduce resistance Participation must not violate prevailing value system

Strategies for Instituting Change (cont.) Reward sharing Employees are more apt to support change when they expect personal or group rewards Opinion leaders Should be convinced first about benefits of change Can help speed up the acceptance of change Timing Change should be timed to occur when resistance is likely to be low Must attend to attitudes and needs of culture Learning abroad International companies should learn things abroad that they can apply at home