Chapter 4: Differences in Culture

Chapter 4: Differences in Culture
National Differences Source: © Ashok Saxena/Alamy Stock Photo Listening to changing customer demands and monitoring your environment allow you and the firm to identify potential growth opportunities. Chapter 4: Differences in Culture

Learning Objectives LO 4-1 Explain what is meant by the culture of a society. LO 4-2 Identify the forces that lead to differences in social culture. LO 4-3 Identify the business and economic implications of differences in culture. LO 4-4 Recognize how differences in social culture influence values in business. LO 4-5 Demonstrate an appreciation for the economic and business implications of cultural change.

Introduction Cross-cultural literacy - an understanding of how cultural differences across and within nations can affect the way in which business is practiced There may be a relationship between culture and the costs of doing business in a country or region Culture is not static – it can and does evolve Multinational enterprises can be engines of cultural change Cross cultural literacy is important to success in international business. The actions of MNEs can contribute to cultural change.

What is Culture? 1 of 4 Scholars have not been able to agree on a simple definition Culture is a system of values and norms that are shared among a group of people and that when taken together constitute a design for living Society is a group of people sharing a common set of values and norms LO 4-1 Explain what is meant by the culture of a society. Values refer to abstract ideas about what a group believes to be good, right, and desirable. Norms are the social rules and guidelines that prescribe appropriate behavior in particular situations.

What is Culture? 2 of 4 Values and Norms
Values - provide the context within which a society’s norms are established and justified Norms - the social rules that govern the actions of people toward one another Folkways - the routine conventions of everyday life Mores - norms that are seen as central to the functioning of a society and to its social life A good example of folkways concerns attitudes toward time in different countries. People are keenly aware of the passage of time in the United States and northern European cultures such as Germany, Netherlands, and the Scandinavian countries. Businesspeople are very conscious about scheduling their time and are quickly irritated when their time is wasted because a business associate is late for a meeting or if they are kept waiting. Mores include such factors as indictments against theft, adultery, incest, and cannibalism. In many societies, certain mores have been enacted into law.

What is Culture? 3 of 4 Culture, Society, and the Nation-State
Society reflects people who are bound together by a common culture Nation-states are political creations that can contain a single culture or several cultures Some cultures embrace several nations Also possible to talk about culture at different levels within societies To complicate things further, it is also possible to talk about culture at different levels. It is reasonable to talk about “American society” and “American culture,” but there are several societies within America, each with its own culture. For example, in the United States of America, which is one country, one can talk about African American culture, Cajun culture, Chinese American culture, Hispanic culture, Indian culture, Irish American culture, and Southern culture.

What is Culture? 4 of 4 The Determinants of Culture
The values and norms of a culture evolve based on: Prevailing political and economic philosophies A society’s social structure The dominant religion, language, and education LO 4-2 Identify the forces that lead to differences in social culture.

Figure 4.1 The Determinants of Culture
/Mythology Resources/Geography

Social Structure 1 of 7 A society's social structure is its basic social organization Two dimensions to consider The degree to which the basic unit of social organization is the individual, as opposed to the group The degree to which a society is stratified into classes or castes

Social Structure 3 of 7 The Individual The Group
Emphasized in Western countries Individual achievement and entrepreneurship are promoted Fosters managerial mobility Encourages job switching, competition between individuals rather than team building, and a lack of loyalty to the firm The Group Emphasized in non-Westernized countries (Japan) Cooperation and team work are encouraged and life time employment is common Individual initiative and creativity may be suppressed In a now-classic study of Japanese society, Nakane noted how this expresses itself in everyday life. Nakane goes on to observe that the primacy of the group to which an individual belongs often evolves into a deeply emotional attachment in which identification with the group becomes all-important in one’s life. One central value of Japanese culture is the importance attached to group membership

Social Structure 4 of 7 Social Stratification
All societies are stratified on a hierarchical basis into social categories, or social strata Usually defined by characteristics such as family background, occupation, and income Societies differ in terms of The degree of mobility between social strata The significance attached to social strata in a business context LO 4-2 Identify the forces that lead to differences in social culture. Country Focus: Using IT to Break India’s Caste System Summary This feature explores India’s caste system and the implications of the system. While many urban middle class citizens are not affected in a significant way by the caste system, for India’s rural population, the influence of the system is readily apparent. The government is strongly encouraging private companies to hire more lower caste individuals. Suggested Discussion Questions 1. India’s castes system has been around for many years. Explain why its influence has diminished among educated urban middle class Indians. Discussion Points: The caste system in India was officially abolished in However, it seems that urban citizens have benefited the most from its abolishment. For many rural Indians, the system is still very much in effect. Educated, urban middle class Indians make up the majority of employees in India’s high tech economy. They may work for large multinationals like Infosys and Wipro. Many students will probably attribute the relative freedom of these individuals to the presence of these large companies, and their need to hire the best people regardless of caste. In rural areas though, the caste system still has significant influence in daily life. One female engineer working for Infosys notes for example that as a member of a lower caste, she was not able to enter the homes of higher caste individuals. Yet the same engineer, a beneficiary of an Infosys training programs, now works for Infosys in a “higher caste” position. 2. Why are many private companies in India resisting the hiring quotas suggested by the government? Why might it be necessary to hire lower caste individuals? Discussion Points: The Indian government has suggested that private companies make an effort to employ lower caste individuals. However, many companies are resisting the request using the argument that they want to hire qualified people who want to work hard, and not people who are available simply because of a quota system. Some companies however, recognize that there may be a place for lower caste individuals, especially has business grows. Infosys for example, offers special training to low caste members. Lecture Note: To extend this discussion, consider { and { Lecture Note: For more on India’s caste system, go to {

Social Structure 5 of 7 Social Stratification continued
Four basic principles of social stratification It is a trait of society, not a reflection of individual differences It carries over a generation to the next generation It is generally universal, but variable It involves not just inequality but also beliefs

Social Structure 6 of 7 Social Stratification continued
Social mobility - the extent to which individuals can move out of the strata into which they are born Caste system - social position is determined by the family into which a person is born, and change in that position is unlikely Class system - the position a person has by birth can be changed through achievement or luck Social mobility in class system varies from society to society Class system in U.S. less pronounced than in Britain Gardner- However, recent research suggests that economic/social mobility has declined in the U.S. in recent years, and the U.S. has higher levels of inequality and lower levels of economic mobility than many other countries (latter measured by intergenerational income elasticity). The most rigid system is the caste system. The class system is less rigid. Historically, British society was divided into three main classes: the upper class, which was made up of individuals whose families for generations had wealth, prestige, and occasionally power; the middle class, whose members were involved in professional, managerial, and clerical occupations; and the working class, whose members earned their living from manual occupations. The middle class was further subdivided into the upper-middle class, whose members were involved in important managerial occupations and the prestigious professions (e.g., lawyers, accountants, doctors), and the lower-middle class, whose members were involved in clerical work (e.g., bank tellers) and the less prestigious professions (e.g., schoolteachers).

Social Structure 7 of 7 The “Great Gatsby Curve”
LO 4-3 Identify the business and economic implications of differences in culture. Class consciousness shapes peoples’ relationships with others. Source: Miles Corak – see his web site

Social Structure 7 of 7 Social Stratification continued Significance
In cultures where class consciousness (where people tend to perceive themselves in terms of their class background) is high, the way individuals from different classes work together may be prescribed Evident in British society Antagonism between labor and management can raise the costs of doing business LO 4-3 Identify the business and economic implications of differences in culture. Class consciousness shapes peoples’ relationships with others.

Religious and Ethical Systems 1 of 8
Religion - a system of shared beliefs and rituals that are concerned with the realm of the sacred Ethical system – a set of moral principles, or values, that are used to guide and shape behavior Religions with the greatest following Christianity (2.20 billion adherents) Islam (1.60 billion adherents) Hinduism (1.10 million adherents) Buddhism (535 million adherents) Confucianism shapes culture in many parts of Asia LO 4-2 Identify the forces that lead to differences in social culture.

Map 4.1 World Religions Source: “Map 14,” Allen, John L., Student Atlas of World Politics, 10th ed. McGraw-Hill Education.

Christianity Most widely practiced religion In 1904, Max Weber suggested that it was the Protestant work ethic (focus on hard work, wealth creation, and frugality) that was the driving force of capitalism Protestantism gave individuals more freedom to develop their own relationship with God which may have paved way to economic freedom LO 4-3 Identify the business and economic implications of differences in culture. He argued that Protestant ethics emphasizes the importance of hard work and wealth creation (for the glory of God) and frugality (abstinence from worldly pleasures). According to Weber, this kind of value system was needed to facilitate the development of capitalism. Protestants worked hard and systematically to accumulate wealth.

Islam Adherents of Islam are referred to as Muslims One true omnipotent God In the Western media, Islamic fundamentalism is associated with militants, terrorists, and violent upheavals Fundamentalists have gained political power in many Muslim countries, and have tried to make Islamic law the law of the land LO 4-2 Identify the forces that lead to differences in social culture. Other major principles of Islam include (1) honoring and respecting parents, (2) respecting the rights of others, (3) being generous but not a squanderer, (4) avoiding killing except for justifiable causes, (5) not committing adultery, (6) dealing justly and equitably with others, (7) being of pure heart and mind, (8) safeguarding the possessions of orphans, and (9) being humble and unpretentious.38 Obvious parallels exist with many of the central principles of both Judaism and Christianity.

Islam continued Economic Implications of Islam Koran establishes explicit economic principles many of which are pro-free enterprise Under Islam, people do not own property, but only act as stewards for God and thus must take care of that which they have been entrusted with (Gardner: Also true in Judeo-Christian scripture) Islam is supportive of business, but the way business is practiced is prescribed Businesses that are perceived to be making a profit through the exploitation of others, by deception, or by breaking contractual obligations are unwelcome LO 4-3 Identify the business and economic implications of differences in culture.

Islamic Banks Islamic banks function differently than conventional banks in the world, as the Islamic banks cannot pay or charge interest. Source: © Ali Al Saadi/AFP/Getty Images

Islam continued Economic Implications of Islam continued Prohibits payment or receipt of interest – Islamic banks Mudarabah Similar to profit sharing – instead of receiving predetermined rate of interest on bank deposits, the depositer receives a share of the profits earned from bank investments. Murabaha Most widely used – If I need machinery, the bank buys it for me now at the current market price, and turns it over to me. I repay the bank later by buying the equipment from the bank at a higher “price,” rather than paying “interest.” Under mudarabah, when an Islamic bank lends money to a business, rather than charging that business interest on the loan, it takes a share in the profits that are derived from the investment. Many believe that a mudarabah system is less efficient than a conventional Western banking system. In a murabaha contract, when a firm wishes to purchase something using a loan—let’s say a piece of equipment that costs $1,000—the firm tells the bank after having negotiated the price with the equipment manufacturer. The bank then buys the equipment for $1,000, and the borrower buys it back from the bank at some later date for, say, $1,100, a price that includes a $100 markup for the bank.

Hinduism World’s oldest religion Moral force in society requires the acceptance of certain responsibilities called dharma Believe in reincarnation and karma Individuals should be judged by their spiritual achievements Promotion and adding new responsibilities may not be the goal of an employee, or may be infeasible due to the employee's caste LO 4-2 Identify the forces that lead to differences in social culture. . Hinduism is practiced primarily on the Indian sub-continent. Note though that India today is a dynamic entrepreneurial society Hindus also believe in karma, the spiritual progression of each person’s soul

Buddhism Suffering originates in people’s desire for pleasure Stresses spiritual growth and the afterlife, rather than achievement while in this world Buddhism does not support the caste system, so individuals do have some mobility and can work with individuals from different classes Entrepreneurial activity is acceptable Siddhartha offered the Noble Eightfold Path as a route for transformation. This emphasizes right seeing, thinking, speech, action, living, effort, mindfulness, and meditation. Unlike Hinduism, Buddhism does not support the caste system.

Confucianism Until 1949, official ethical system of China Not a religion High moral and ethical conduct and loyalty to others Attain personal salvation through right action Three key teachings of Confucianism - loyalty, reciprocal obligations, and honesty - may all lead to a lowering of the cost of doing business in Confucian societies

Language 1 of 3 Countries differ in terms of language or means of communication There are two forms language: Spoken Unspoken Language is one of the defining characteristics of culture

Can You Speak the Most Important Languages?
Mastering your own native language is critically important to doing business in your own home country. Mastering the language of a foreign country (or subcultures) with which you want to do business is also an added value in any cross-cultural relationship. English leads the way in terms of business languages, but which languages are important after English? Spanish? No, not necessarily. The three languages that are important for business after English are Mandarin Chinese, French, and Arabic. Spanish is fifth, so it is clearly important, but not as useful as English, Mandarin, French, and Arabic because of the number of people who speak these languages. Do you agree with the rank order of these languages? Why or why not? Source: S. Kim, “Top 3 Useful Foreign Languages for Business Excludes Spanish,” ABC News, September 1,

Language 2 of 3 Spoken Language
Countries with more than one spoken language often have more than one culture Chinese is the mother tongue of the largest number of people in the world English is the most widely spoken language in the world, and is becoming the language of international business Knowledge of the local language is beneficial, and in some cases, critical for business success.

Language 3 of 3 Unspoken Language Unspoken language - nonverbal cues
Examples include facial expressions and hand gestures Can be important for communication Personal space Many nonverbal cues are culturally bound and because they may be interpreted differently, can result in misunderstandings

Education Formal education is the medium through which individuals learn many of the language, conceptual, and technical skills that are indispensable in a modern society The knowledge base, training, and educational opportunities available to a country's citizens can also give it a competitive advantage in the market and make it a more or less attractive place for expanding business Porter points to an excellent education system as an important factor in explaining the country’s postwar economic success The general education level of a country is a good indicator of the types of products that might sell in that location or the type of promotional materials that might be successful LO 4-2 Identify the forces that lead to differences in social culture.

Culture and Business 1 of 3
Geert Hofstede isolated five dimensions that summarized different cultures Power distance Individualism versus collectivism Uncertainty avoidance Masculinity versus femininity Long-term versus short-term orientation A move to add a sixth dimension: indulgence versus restraint LO 4-4 Recognize how differences in social culture influence values in business. Hofstede’s power distance dimension focused on how a society deals with the fact that people are unequal in physical and intellectual capabilities The individualism versus collectivism dimension focused on the relationship between the individual and his or her fellows Hofstede’s uncertainty avoidance dimension measured the extent to which different cultures socialized their members into accepting ambiguous situations and tolerating uncertainty. Hofstede’s masculinity versus femininity dimension looked at the relationship between gender and work roles The long-term versus short-term orientation dimension refers to the extent to which a culture programs its citizens to accept delayed gratification of their material, social, and emotional needs. Indulgence refers to a society that allows relatively free gratification of basic and natural human drives related to enjoying life and having fun. Restraint refers to a society that suppresses gratification of needs and regulates it by means of strict social norms.

Hofstede’s work has been criticized Assumes a one-to-one relationship between culture and nation-state Research may be culturally bound Informants only worked within a single industry – computers – and within one company – IBM. Certain social classes excluded from research

Hofstede’s work represents a starting point for managers trying to understand cultural differences Global Leadership and Organizational Behavior Effectiveness instrument World Values Survey The Global Leadership and Organizational Behavior Effectiveness (GLOBE) instrument is designed to address the notion that a leader’s effectiveness is contextual The World Values Survey (WVS) is a research project spanning more than 100 countries that explores people’s values and norms, how they change over time, and what impact they have in society and business

Cultural Change Culture evolves over time, although changes in value systems can be slow and painful for a society Social turmoil is an inevitable outcome of cultural change Cultural change is particularly common as countries become economically stronger As countries get richer, there is a shift from “traditional values” to “secular rational” values and from “survival values” to “well-being values” LO 4-5 Demonstrate an appreciation for the economic and business implications of cultural change. For another illustration of cultural change, consider Japan. Some academics argue that a major cultural shift has been occurring in Japan, with a move toward greater individualism.74 The model Japanese office worker, or “salaryman,” is characterized as being loyal to his boss and the organization to the point of giving up evenings, weekends, and vacations to serve the organization, which is the collective the employee is a member of. However, a new generation of office workers may not fit this model.

Focus on Managerial Implications 1 of 3
CROSS-CULTURAL LITERACY AND COMPETITIVE ADVANTAGE There is a need for managers to develop cross-cultural literacy There is a connection between culture and national competitive advantage There is a connection between culture and ethics in decision making

Cross-Cultural Literacy Firms that are ill-informed about the practices of another culture are unlikely to succeed in that culture Individuals must also beware of ethnocentric behavior Belief in the superiority of one's own culture

Culture and Competitive Advantage Connection between culture and competitive advantage It suggests which countries are likely to produce the most viable competitors It has implications for the choice of countries in which to locate production facilities and do business Internet Extra: To learn more about international business etiquette, go to { Choose a country, then find three fun facts about your country. Compare these to those in other countries. What are some areas where cultural misunderstandings could occur? How does Hofstede assess your country? Based on what you’ve read, do you agree?

Summary In this chapter we have
Explained what is meant by the culture of a society. Identified the forces that lead to differences in social culture. Identified the business and economic implications of differences in culture. Recognized how differences in social culture influence values in business. Demonstrated an appreciation for the economic and business implications of cultural change.

Chapter 4: Differences in Culture

Similar presentations

Presentation on theme: "Chapter 4: Differences in Culture"— Presentation transcript:

Similar presentations

About project

Feedback

Log in

Auth with social network:

Chapter 4: Differences in Culture

Similar presentations

Presentation on theme: "Chapter 4: Differences in Culture"— Presentation transcript:

Similar presentations

About project

Feedback