1. Chapter 9 -Sociocultural Forces
International Business
by Ball, McCulloch, Frantz,
Geringer, and Minor

2. Chapter Objectives
Understand the significance of culture for international business
Understand the sociocultural components of culture
Appreciate the significance of religion to businesspeople
Comprehend the cultural aspects of technology
Discuss the impact of the “brain drain” and the “reverse brain drain”
Appreciate the importance of the ability to speak the local language
Discuss Hofstede’s four cultural value dimensions

3. What is Culture? Culture
The sum total of beliefs, rules, techniques, institutions, and artifacts that characterize human populations.
Consists of learned patterns of behavior common to the members of a given society.
The unique lifestyle of a particular group of people.

4. What is Culture? Most anthropologists agree
Culture is learned, not innate.
The various aspects of culture are interrelated.
Culture is shared.
Culture defines the boundaries of different groups.

5. What is Culture? Learning to live with other cultures
First, realize that there are many different cultures.
Then, learn the characteristics of those cultures.
Spend a lifetime in a country.
Undergo an extensive, highly sophisticated training program that covers the main characteristics of a culture.

6. Culture Affects All Business Functions
Marketing
The wide variation in attitudes and values prevents many firms from using the same marketing mix in all markets.
A successful example is Proctor & Gamble’s “Joy” dishwashing soap in Japan.

7. Culture Affects All Business Functions
Human Resource Management
The national culture is also a key factor in the evaluation of managers.
In the U.S., results are generally the criteria for the selection and promotion of executives.
In Great Britain, the school they attended and their family background were important criteria in the selection and promotion of executives.

8. Culture Affects All Business Functions
Production
Personnel problems can result from differences in attitudes toward authority.
An American manager’s participative leadership style in a Latin American company.
Attitudes toward change also influence the acceptance of new production methods.

9. Culture Affects All Business Functions
Finance
Treasurers also experience sociocultural forces.
A local bank may place far more importance to who the borrower is rather on the strength of the balance sheet.

10. Sociocultural Components
Components of Culture
Aesthetics
Attitudes and beliefs
Religion
Material Culture
Education

11. Sociocultural Components
Components of Culture (cont’d)
Language
Societal organization
Legal characteristics
Political structures

12. Sociocultural Components
Aesthetics
Art
Of particular interest to international businesspeople are the formal aspects of art, color, and form.
Important because of the symbolic meanings they convey.

13. Sociocultural Components
Aesthetics
Music and Folklore
Musical commercials are generally popular worldwide.
However, the marketer must know what kind of music each market prefers, because tastes vary.

14. Sociocultural Components
Attitudes and Beliefs
Attitude toward Time
This cultural characteristic probably presents more adaptation problems for Americans overseas than does any other.
Time is important in the U.S., but not very important in Latin American or Middle Eastern countries.
American managers preoccupy themselves with monthly profit compared to Asian and Middle Eastern managers.

15. Sociocultural Components
Attitudes and Beliefs
Attitude toward Achievement and Work
“American live to work, Germans and Mexicans work to live.”
Demonstration effect
Result of having seen others with desirable goods.

16. Sociocultural Components
Attitudes and Beliefs
Attitudes toward Change
The American firm is accustomed to the rapid acceptance by Americans of something new.
Europeans are fond of reminding Americans that they are a young nation lacking traditions.
The more consistent a new idea is with a society’s attitudes and experiences, the more quickly it will be adopted.

17. Religion
Responsible for many of the attitudes and beliefs affecting human behavior.
Work Ethic
Protestant work ethic
Europeans and Americans generally view work as a moral virtue and look unfavorably on the idle.
Confucian work ethic
In Asian countries, this is the same as Protestant ethic.

18. Religion Primary Asian Religions Hinduism Buddhism
A conglomeration of religions, without a single founder or a central authority.
Practiced by more than 80 percent of India’s population.
Caste system is basis of the social division of labor.
Buddhism
This religion began in India as a reform movement of Hinduism.

19. Religion Primary Asian Religions Jainism, and Sikhism (India)
This religion was founded by Mahavira, a contemporary of Buddha.
Confucianism and Taoism (China)
Confucius taught that each person bears within himself or herself the principle of unselfish love for others.
Taoism is a mystical philosophy founded by Lao-tzu, a contemporary of Confucius.

20. Religion Primary Asian Religions Feng Shui Shintoism (Japan)
Belief is based on the concept that if human-made objects are placed in harmony with nature, they can bring good fortune.
Shintoism (Japan)
Shinto legends define the founding of the Japanese empire as a cosmic act, and the emperor was believed to have divine status.

21. Religion Islam About 1.1 billion followers
This youngest faith is the second largest after Christianity (2 billion adherents).
Founder of Islam is Muhammad
Muhammad was not only the prophet of God but also the head of state.
In Muslim nations, there is no separation of church and state.

22. Religion
Islam
A major division of Islam was created by a dispute over the succession to the caliphate.
This resulted in two major divisions, the Sunnis and the Shiites.

23. Material Culture Refers to all human-made objects Technology
Concerned with how people make things and who makes what and why.
Technology
The mix of the usable knowledge that the society applies and directs toward the attainment of cultural and economic objectives.
Exists in some form in every cultural organization.

24. Material Culture
Why is technological superiority important to international companies?
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.

25. Material Culture Technological superiority (cont’d)
Enables a company with only a minority equity position to control a joint venture.
Can change the international division of labor.
Is causing major firms to form competitive alliances.
Each partner shares technology and the high costs of R&D.
This is known as “strategic technology leveraging.”

26. Material Culture High GNP—High Level of Technology
Generally, a nation with a higher GNP per capita
Utilizes a higher level of technology than does one whose per capita income is smaller.

27. Material Culture High GNP—High Level of Technology
Analysts must be aware of technology dualism.
The side-by-side presence of technologically advanced and technologically primitive production systems.

28. Material Culture Appropriate Technology
The technology (advanced, intermediate, or primitive) that most closely fits the society using it.
Rather than choosing between labor-intensive and capital-intensive processes
Many experts in economic development are recommending appropriate technology.

29. Material Culture Boomerang Effect
When technology sold to companies in another nation is used to produce goods to compete with those of the seller of the technology.
Firms sometimes fear to sell their technology abroad because of the Boomerang effect.

30. Material Culture The Information Technology Era
By the year 2000 the Internet economy
Already reached $850 billion.
Exceeded the size of the automobile and truck and life insurance industries.

31. Education
Brain Drain
The emigration of highly educated professionals to another country.
Resulted from developing nations overinvesting in higher education in relation to the demand for students.

32. Education Brain Drain Facts
U.S. permits temporary admission of scientists and engineers from Canada and Mexico under NAFTA’s temporary entry provisions.
Roughly 75 to 80 percent of foreign students remain in the U.S. after receiving doctorates in science.
Women represented 21.3 percent of the scientists and engineers who were admitted in 1993.

33. Education Brain Drain Facts (cont’d)
As an indication of their professional positions, the median family income of Indians in the U.S. is $53,000
Five times more Japanese research scientists work in the U.S. than Americans work in Japan.
A U.S. State Department report stated
The value of expert labor power migrating to the U.S. in one year was equal to $1.8 billion.

34. Education Reverse Brain Drain
The return of highly educated professionals to their home countries.
Preoccupying American educators and businesspeople.
Korea and Taiwan are luring home Korean and Taiwanese engineers and scientists.

35. Language Spoken Language
Language is the key to culture, and without it, people find themselves locked out of all but a culture’s perimeter.

36. Language Languages Delineate Cultures Foreign Language
Spoken languages demarcate cultures just as physical barriers do.
Foreign Language
When many spoken languages exist in a single country, one foreign language usually serves as the principal vehicle for communication across cultures.
Lingua franca

37. Language English, the Link Language of Business
English as a business lingua franca has spread rapidly in Europe that in 1996
Over half the European Union’s adults could speak English.

38. Language Must Speak the Local Language Translations
Even though more and more businesspeople are speaking English, when they buy
Local manager insist on doing business in their own language.
Translations
The ability to speak the language well does not eliminate the need for translators.

39. Language Back Translations Technical Words
To avoid translation errors, the experienced marketer will prefer two translations.
Technical Words
Translators have difficulty with technical terms that do not exist in a language and with common words that have a special meaning for a certain industry.

40. Language No Unpleasantness Unspoken Language
The reluctance in many areas to say anything disagreeable to the listener.
Unspoken Language
Nonverbal communication, such as gestures and body language.
Although gestures are a common form of cross-cultural communication, the language of gestures varies from one region to another.

41. Language Closed Doors Office Size Conversational Distance
Difference in meaning by Americans and Germans.
Office Size
Difference in office size of American, Japan, and French managers.
Conversational Distance
Difference among cultures.

42. Language The Language of Gift Giving Acceptable Gifts Gifts or Bribes?
Questionable Payments

43. Societal Organization
Kinship
Extended family
Includes blood relatives and relatives by marriage.
This is a source of employees and business connections.
Member’s responsibility
Although the extended family is large, each member’s feeling of responsibility to it is strong.

44. Societal Organization
Associations
Social units based on age, gender, or common interest, not on kinship.
Age
Manufacturers of consumer goods are well aware of the importance of segmenting a market by age groups.
This segmentation often cuts across cultures.

45. Societal Organization
Associations
Gender
As nations industrialize, more women enter the job market and thus assume greater importance in the economy.
Free association
Composed of people joined together by a common bond.
This bond can be political, occupational, recreational, or religious.

46. Understanding National Culture
Hofstede’s Dimensions of Culture
Individualism versus Collectivism
Large versus Small Power Distance
Strong versus Weak Uncertainty Avoidance
Masculinity versus Femininity
Long term orientation (recently added)

47. Individualism versus Collectivism
People are only supposed to look after themselves and their immediate family.
Organizations emphasize individual decision making.
Collectivism
People belong to groups that are supposed to look after them in exchange for loyalty.
Organizations are likely to rely on group decision making.

48. Large versus Small Power Distance
Large Power Distance
Employees believe their supervisors are right even when they are wrong.
Employees do not take any initiative in making nonroutine decisions.
Small Power Distance
A participative management style of leadership is likely to be productive for this types of organization.

49. Strong versus Weak Uncertainty Avoidance
Strong Uncertainty Avoidance
Employees tend to stay with their organizations for a long time.
High resistance to organizational change is expected among these employees.
Weak Uncertainty Avoidance
Employees tend to change jobs more frequently.

50. Masculinity versus Femininity
The degree to which dominant values in a society emphasize assertiveness, acquisition of money and status, and achievement.
Femininity
The degree to which dominant values in a society emphasize people relationships, concern for others, and the overall quality of life.

51. Plots of Dimensions Latin American Countries Anglo Nations
Scored relatively high on power distance and uncertainty avoidance.
Characterized by formal controls and multiple layers of management.
Anglo Nations
Scored relatively low on power distance and uncertainty avoidance.
Characterized by less formal controls and fewer layers of management.

52. Plots of Dimensions Latin American Countries Anglo Nations
Scored relatively high on power distance and low on individualism.
Employees tend to expect their organizations to look after them and defend their interests.
Anglo Nations
Scored relatively low on power distance and high on individualism.
These people prefer to do things for themselves.