Context I. BACKGROUND & CULTURE II. RESOURCES

Link I. Background & Culture

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Culture People’s behavior determined by: Human Nature - Universal Personality - Individual Culture - Local – View of the world – Habits of action – Emotional response Hofstede “Cultural Dimensions” Theory Assess by measuring values through surveys

Care with National Culture Avoid stereotypes – Whatever the truth of national cultural tendencies, individual character and human nature important too. Avoid lazy thinking – Culture imperfectly understood, tempting to attribute everything not understood to cultural differences.

World Values Survey WVS conducts international surveys to discover attitudes and values at country level. Ex. Link to Example Questionaire Link

Factor Analysis Many questions will be answered in similar ways across questionaires. (i.e. people who answer “Mentioned” to V13 will answer “Mentioned” to V18, etc.) Statistical Theory: There are a small number of independent factors which determine systematic correlations in answers to multiple questions. (plants/chlorophyll). Use statistics to construct clusters of questions and related answers which can be predicted by these factors. Use theory to interpret the dimensions

Link Cultural Values have two dimensions 1. Traditional vs. Secular 2. Survival vs. Lifestyle

Atlas of Cultural Values: Country Averagesof Dimensions Link

Show that factors are associated with identifiable social outcomes. Link

Theory of National Culture Common Cultural Issues Inkeles & Levinson, 1954 Relationship to Authority Conception of Self – Relationship of Individual to Society – Conception of Masculinity and Femininity Modes of Conflict Resolution Used to form theoretical foundation of factors for internal IBM study of values of employees in many countries. Additional work develops additional dimensions.

Cultural Dimensions Theory Business researchers more likely to use Hofstede “Cultural Dimensions” which looks at 5 dimensions of national culture. 1. Power Distance (PDI)- Society’s comfort with inequality or preference for hierarchy. 2.Individualism versus Collectivism (IDV) Preference for Self-sufficiency vs. Group loyalties.

Cont. 3.Masculinity versus Femininity (MAS) Value of Assertiveness vs. Nurturing. 4.Uncertainty Avoidance (UAI) s ‘threatened by uncertainty and ambiguity and try to avoid these situations’ 5.Long-Term Orientation (LTO) Present vs. Future Link

Cultural Dimension of Asia Link

Culture and Business Implications for Human Resources Management. Implications for Marketing Implications for Accounting Potential for Competitive Advantages

Setting Job Targets Set unilaterally, Subject to Renegotiation Set by Consensus, Subject to Renegotiation Set unilaterally, No Renegotiation Set by Consensus, No Renegotiation Masculinity vs. Femininity High Power Distance vs. Low Power Distance US,UK Nordic France, Italy Link

Assessment & Management Direct Feedback perceived as rude, Talent management loyalty/paternalism based Frank, direct, immediate feedback Individual assessment, performance based Individualism Vs. Collective High Power Distance vs. Low Power Distance US,UK Latin America Link

Culture and Branding Successful Brands associations: In high PDI cultures, “Prestige,”; in high UA cultures, “Trustworthy,”; Individualistic cultures: brands associate with abstract concepts, individual products emphasized. Collectivist cultures: brands associate with concrete people, corporate identities emphasize. Link

Cultural Values and Accounting Systems Accounting Values PRO: Professionalism vs. Statutory Control: Judgement vs. Legal control. UNI: Uniformity vs. Flexibility CON: Conservatism vs. Optimism- Prudence SEC: Secrecy vs. Transparency. S.J. Gray, 1988, Towards a Theory of Cultural Influence on the Development of Accounting Systems Internationally PROUNICONSEC PDI-+?+ UAI-+++ IDV+--- MAS??-- Link

II. Resources A.Natural Resources B.Human Resources C.Infrastructure D.Technology

A. Natural Resources Income from resource extraction can technically lead to higher GDP per hour…..

Link to CIA Factbook

Oil Reserves Link to BP Statistical Review of World Energy 2012

Resource Curse Some scholars argue that countries “blessed” with large endowment of mineral resources suffer slow growth. – Creates social conflict over control of natural resources. – Leads to unaccountable government. Ex 1. Conflict Diamonds LinkLink

Ex. 2 Nauru (pop. 8000) Link Significant deposits of phosphates and small population made this one of the wealthiest societies in world in 1970’s. But phosphates ran out..Link – Country never developed internal sources of productivity unemployment rate 90% – National gov’t corrupt and wasteful, bankrupt and completely dependent on multinational aid

Is the resource curse true? Recent studies question these results, but findings suggest that positive productivity spillovers to non-resource industries are questionable. (Link Requires registration)Link

B. Human Capital Measures skill, education level of the work force. General (broad primary & secondary education & health) or specific skills (technical skills obtained at tertiary level).

By 2005, average in cohort was 12.2 yrs compared with 13.4 years in USA

Education Literacy Rates: WDI Years of Education Barro-Lee Dataset LinkLink Quality of Education: OECD Programme for International Student Assessment (PISA) Link Summary DataLink Summary Data

Aging Population Structure LinkLink Population by age, sex and urban/rural residence

Population Structure and Employment

The Classic Demographic Transition Model Stage 1Stage 2Stage 3Stage 4 Time Natural increase Birth rate Death rate Note: Natural increase is produced from the excess of births over deaths. Link

Stages of Demographic Transition 1.Low Population Growth. High Birth Rates, High Death Rates 2.Population Growth Explosion. Medical Advances slow mortality rates, high population growth. 3.Slowing Population Growth. Educational Advances slow birth rates. 4.Low Population Growth. Low Birth Rates, Low Death Rates

Japan World Population Prospects, the 2010 Revision Volume II – Demographic Profiles LinkLink

Fertility Rates Age-specific fertility rate: Number of Births to women of a specific age per women of that age. Total Fertility Rates: Sum of Age-specific fertility rates from Longer-term ratio of average number of children Replacement Ratio: – 2.1 Developed Economy, – 2.3 Developing Economy

C. Infrastructure

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D. Technology Capacity Capacity for scientific advance measurable along a number of dimensions. UNESCO Data Link

Technical Workforce Link