chapter six Sociocultural Forces McGraw-Hill/Irwin International Business, 11/e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives Explain the significance of culture for international business Identify the sociocultural components of culture Discuss the significance of religion to businesspeople Explain the cultural aspects of technology Discuss the pervasiveness of the Information Technology Era

Learning Objectives Explain the importance of the ability to speak the local language Discuss the importance of unspoken language in international business Discuss the two classes of relationships within a society Discuss Hofstede’s four cultural value dimensions

Rules of Thumb for Cross Culture Business Be prepared Slow down Establish trust Understand the importance of language Respect the culture Understand the components of culture

What is Culture The sum total of beliefs, rules, techniques, institutions, and artifacts that characterize human populations Learned Interrelated Shared Defines the boundaries

Ethnocentricity Ethnocentricity Belief in the superiority of one’s own ethnic group

Living with Other Cultures Realize that there are many different cultures Learn the characteristics of those cultures Spend a lifetime in a country Do training program

Culture Affects All Business Functions Marketing Variation in attitudes and values requires firms to use different marketing mixes P&G Japanese Camay commercials Disneyland Paris Human Resource Management Evaluation of managers Production and Finance Attitudes toward authority Attitudes toward change

Sociocultural Components Culture is: Aesthetics Attitudes and beliefs Religion Material Culture Language Societal organization Legal characteristics Political structures

Aesthetics Culture’s sense of beauty and good taste Music and Folklore Art conveys meaning Colors, symbols, numbers--Nike air Architectural style differences feng shui Music and Folklore Musical tastes vary Folklore discloses way of life Cowboys in Chile or Argentina Mexican singing cricket

Attitudes and Beliefs Attitudes Toward Time Vary across cultures Difficult area for some Americans Directness and drive Perceived to be rudeness Deadlines Liability abroad

Attitudes Toward Achievement and Work Germans put leisure first and work second The demonstration effect Result of having seen others with desirable goods Job Prestige The distinction between blue-collar workers and office employees

Religion Responsible for many of the attitudes and beliefs affecting human behavior Work Ethic Protestant work ethic Duty to glorify God by hard work and the practice of thrift Confucian work ethic Drive toward hard work and thrift; similar to Protestant work ethic

Will this work?

Primary Asian Religions Hinduism Caste system entire society is divided into four groups (plus the outcasts) and each is assigned a certain class of work Buddhism Reform of Hinduism Jainism (Mahavira a contemporary of Buddha) Nonviolence a major principle Sikhism Bridge between Hinduism and Islam

Primary Asian Religions, cont’d. Confucianism Inseparable from Chinese culture Taoism Lao Tzu, contemporary of Confucius Shintoism Indigenous to Japan

Islam Five Pillars of Faith Youngest and second largest faith 1.3 billion followers Comparison: Christianity has 2 billion adherents Muhammad is Founder Prophet of God and head of state Holy Book Koran Five Pillars of Faith Confession of faith Five daily prayers Charity Ramadan fast Pilgrimage to Mecca Jihad – holy war Sunni-Shia Conflict Conflict gives rise to violent clashes

Religious Population of the World Insert Figure 6.1

Animism Spirit worship, incl. magic, witchcraft Everything in nature has its own spirit or divinity

Material Culture Material Culture All human-made objects concerned with how people make things (technology) and who makes what and why (economics)

Technology Technology Mix of usable knowledge that society applies and directs toward attainment of cultural and economic objectives

Importance of Technology Enables a firm to be competitive in world markets. Can be sold or be embodied in the company’s products Can give a firm confidence to enter a foreign market Enables the firm to obtain better than usual conditions for a foreign market investment Enables a company with only a minority equity position to control a joint venture Can change the international division of labor Causes major firms to form competitive alliances

Material Culture - Technology Cultural Aspects of Technology Includes skills in marketing, finance, and management People not always ready to adapt to changes technology brings Technological Dualism The side-by-side presence of technologically advanced and technologically primitive production systems Appropriate Technology The technology (advanced, intermediate, or primitive) that most closely fits the society using it Boomerang Effect Situation in which technology sold to companies in another nation is used to produce goods to compete with those of the seller of the technology.

Information Technology Information Technology Era As early as 2000 the Internet economy had reached $850 billion exceeded the size of the life insurance and real estate industries

Spoken Language Most apparent cultural distinction Spoken languages demarcate cultures Switzerland: four separate cultures Many languages can exist in a single country, but one usually serves as communication vehicle Lingua franca or link language English primary language of business

Language Translation Back Translation The ability to speak the language well does not eliminate the need for translator Back Translation To avoid translation problems Japanese hotel: “You are invited to take advantage of the chambermaid.” Bangkok dry cleaner: “Drop your trousers here for best results.”

Language Issues Technical words do not exist in all languages Usually use English Many cultures avoid saying anything disagreeable

Unspoken Language Nonverbal communication Gestures vary tremendously from one region to another Closed doors convey different meanings Office size has difference meanings in various cultures Conversational distance small in East Gift giving has specific etiquette in each culture Gift or bribe? Questionable Payments

2003 Corruption Index Scores and Ranking

Societal Organization Kinship Extended Family includes blood and marriage relatives Member’s responsibility Although the extended family is large, each member’s feeling of responsibility to it is strong Associations Social units based on age, gender, or common interest, not on kinship

Societal Organization Associations Age is important market segment criterion Gender As nations industrialize, more women enter the job market and assume greater importance in the economy Free association people joined together by a common bond: political, occupational, religious or recreational

Understanding National Cultures Hofstede’s Dimensions of Culture Individualism versus Collectivism Large versus Small Power Distance Strong versus Weak Uncertainty Avoidance Masculinity versus Femininity

Scores for Hofstede’s Value Dimensions

Individualism versus Collectivism Collectivistic cultures people belong to groups that are supposed to look after them in exchange for loyalty Individualistic cultures People look after only themselves and the immediate family

Large versus Small Power Distance the extent to which members of a society accept the unequal distribution of power among individuals In large-power-distance societies employees believe their supervisors are right; employees do not take any initiative in making non-routine decisions

Strong versus Weak Uncertainty Avoidance Degree to which members of a society feel threatened by ambiguity and are rule-oriented Employees in high uncertainty-avoidance cultures tend to stay with their organizations Japan, Greece, and Portugal Those from low uncertainty-avoidance nations are more mobile United States, Singapore, and Denmark

Plot of Nations: Power distance and Uncertainty Avoidance

Plot of Nations: Individualism and Power Distance

Masculinity versus Femininity the degree to which the dominant values in a society emphasize assertiveness, acquisition of money and status Masculinity achievement of visible and symbolic organizational rewards Femininity emphasize relationships, concern for others, and the overall quality of life