Chapter 3: Understanding the Role of Culture

Chapter 3: Understanding the Role of Culture
Ninth Edition Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Chapter Learning Goals
To understand how culture affects all aspects of international management To be able to distinguish the major value dimensions which define cultural differences among societies or groups To understand the interaction between culture and the use of the Internet Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

4. To be able to develop a working cultural profile typical of many people within a certain society as an aid to anticipating attitudes toward work, negotiations, and so on 5. To gain some insight into different management styles around the world Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Opening Profile: Saudi Arabian Culture
Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Opening Profile:: Social Media Bring Changes to Saudi Arabian Culture
As of 2014, social media penetration in Saudi Arabia included: 88% on Facebook % on Twitter 78 % on Google 70 % of Saudis are under 30 and own smartphones Many use Twitter and YouTube out of boredom with the lack of entertainment Twitter represents an escape from the lack of social freedom Twitter represents an avenue of escape from the lack of social freedom and legal restrictions on freedom of assembly or association, especially for women. . As a wealthy country, Saudis enjoy wearing high-end fashions, even though women must wear their clothes under abayas. Saudis also have become accustomed to foreigners holding most lower-level jobs—so much so that it made the front page of the newspaper when a Saudi accepted a bellboy job. These examples illustrate how understanding the local culture and business environment can provide competitive advantage. Managers must alter their approaches according to the host-country environment. Unfortunately, many mangers underestimate the importance of culture—they lack cultural savvy. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Opening Profile: Saudi Arabian Culture
Social media used in all sectors of Saudi society Government officials Royalty Sheikhs Industry Saudi government, an absolute monarchy, reviews online activity to gather intelligence and monitor public opinion Social Media force for modernity in Saudi Arabia powerful interactions with cultural mores Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Culture and its Effects on Organizations
A set of shared values, understandings, assumptions, and goals that are learned from earlier generations, imposed by present members of a society, and passed on to succeeding generations Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Environmental Variables Affecting Management Functions
Culture is the shared values, understandings, assumptions and goals that are learned from earlier generations, imposed by present members of a society and passed on to succeeding generations. It often results in shared attitudes, codes of conduct, and expectations that subconsciously guide and control certain norms of behavior. As shown in this figure, national and socio-cultural variables provide the context for cultural variables, which in turn determine attitudes toward work, time, materialism, individualism, and change. Attitudes affect behavior and, thus, individual’s motivation and expectations regarding work and workplace relations. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Culture is the shared values, understandings, assumptions and goals that are learned from earlier generations, imposed by present members of a society and passed on to succeeding generations. It often results in shared attitudes, codes of conduct, and expectations that subconsciously guide and control certain norms of behavior. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

As shown in this figure, national and socio-cultural variables provide the context for cultural variables, which in turn determine attitudes toward work, time, materialism, individualism, and change. Attitudes affect behavior and, thus, individual’s motivation and expectations regarding work and workplace relations. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

Culture and its Effects on Organizations
An awareness of and an honest caring about another individual’s culture Cultural Sensitivity or Cultural Empathy? Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Organizational Culture
Exists within and interacts with societal culture Varies a great deal from one organization, company, institution, or group to another Represents those expectations, norms, and goals held in common by members of that group Examples: IBM vs. Apple Daimler Benz vs. Chrysler Organizational culture functions equivalently to societal culture, but varies a great deal from one organization to another—even within a single societal culture. Nonetheless, organizational culture is at least partially a function of and must respond to societal culture. Airline KLM responded to Dutch attitudes regarding families and norms regarding relationships by extending its travel benefits policy to any couple who formally registered as living together—regardless of whether the couple was heterosexual or homosexual, formally married or not. McDonald’s provides more extensive training to employees in Russia than to those in the US because Russians are less familiar with working within a capitalist system. Copyright ©2017 Pearson Education, Inc © 2010 Pearson Prentice Hall

Organizational culture functions equivalently to societal culture, but varies a great deal from one organization to another—even within a single societal culture. Nonetheless, organizational culture is at least partially a function of and must respond to societal culture. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

Airline KLM responded to Dutch attitudes regarding families and norms regarding relationships by extending its travel benefits policy to any couple who formally registered as living together—regardless of whether the couple was heterosexual or homosexual, formally married or not. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

McDonald’s provides more extensive training to employees in Russia than to those in the US because Russians are less familiar with working within a capitalist system. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

The Effect of Culture on Organizational Process
U.S. Culture Alternative Function Affected Individual influences future Life is preordained Planning, scheduling The environment is changeable People adjust to the environment Morale, productivity Hard work leads to success Wisdom and luck are also needed Motivation, rewards Employment can be ended Employment is for a lifetime Promotions, recruitment The extent to which culture affects organizational processes is a subject of debate. Some say that convergence is leading management styles to become more similar to one another due to issues such as industrialization and worldwide coordination. This slide is a condensed version of the information in Exhibit 3-2, and suggests ways that differences between US and other cultures might influence organizational functions. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

The Effect of Culture on Organizational Process
The extent to which culture affects organizational processes is a subject of debate. Some say that convergence is leading management styles to become more similar to one another due to issues such as industrialization and worldwide coordination. This slide is a condensed version of the information in Exhibit 3-2, and suggests ways that differences between US and other cultures might influence organizational functions. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

Culture’s Effects on Management
Convergence—the phenomenon of the shifting of individual management styles to become similar to one another Self-Reference Criterion—the subconscious reference point of ones own cultural values. Many people in the world understand and relate to others only in terms of their own cultures Parochialism—occurs, for example, when a Frenchman expects those from or in another country to automatically fall into patterns of behavior common in France Ethnocentrism—describes the attitude of those who operate from the assumption that their ways of doing things are best—no matter where or under what conditions they are applied The self-reference criterion is the unconscious reference point of one’s own cultural values. It means people often understand and relate to others only in terms of their own culture. An example of the need to overcome the self-reference criterion is when Japanese workers must put courtesy aside and interrupt conversations with Americans when there are problems. Parochialism occurs when a person expects those from another culture to automatically fall into patterns of behavior common in his/her own culture. Ethnocentrism describes the attitude of those who operate from the assumption their ways of doing things are best under all conditions. P & G demonstrated ethnocentrism when they ran a popular European ad for Camay soap in Japan. The ad depicted a man walking in on his wife in the bath. The commercial backfired in Japan because the Japanese viewed the man’s behavior as bad manners. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Influences on National Culture
Subcultures Stereotyping Many countries comprise diverse subcultures whose constituents conform only in varying degrees to the national character. Example: Canada A cultural profile that tends to develop some tentative expectations—some cultural context—as a backdrop to managing in a specific international setting Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Cultural Subsystems that Influence People and Their Behavior
Kinship Education System Economic System Political System Health System Recreation Religion Kinship is the system adopted by a given society to guide family relationships. In the US, this system consists primarily of the nuclear family. In some other countries the system consists of the extended family. In the latter case, family loyalty may be given primary consideration in corporate activities. The formal and informal education received by workers influences the expectations placed on those workers and managers’ choices about recruitment, staffing, training, and leadership. The economic system influences sourcing, distribution, incentives, and reparation of capital. The government imposes varying constraints on organizations and their freedom to do business. Religion commonly underlies moral and economic norms. In some countries, religious beliefs and practices permeate everyday business transactions and on-the-job behaviors. For instance, McDonald’s does not serve beef or pork in India out of respect for Hindus and Muslims. In Saudi Arabia, Islamic law prohibits the charging of interest. Various associations arise from the formal and informal groups that make up a society. A country’s system of health affects employee productivity, expectations, and attitudes toward physical fitness, which in turn affect decisions about health care benefits, insurance, physical facilities, and sick days. Workers’ attitudes about recreation can affect their work behavior and their perception of the role of work in their lives. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Under the Lens: Religion and the Workplace
Since the basis of a religion is shared beliefs, values, and institutions, it is closely aligned with societal culture Religion and culture are inextricably linked Religion underlies moral and economic norms and influences everyday business transactions and on-the-job behaviors Foreign managers must be sensitive to the local religious context and the expectations and workplace norms Failure to do so will minimize or negated the goals of the firm in that location Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Cultural Value Dimensions
Values Are a society’s ideas about what is good or bad, right or wrong Determine how individuals will probably respond in any given circumstances Help managers anticipate likely cultural effects Allow for contingency management Can vary across subcultures Values determine how individuals probably will act in given circumstances. They are communicated via the eight subsystems just described and are passed down through generations. Contingency management requires managers to adapt to the local environment and people and to adjust their management styles accordingly. Value dimensions and resulting cultural profiles provide only an approximation of national character. There may be variations in national culture—i.e., subcultures may exist as well. For example, American tend to think of the Chinese as culturally homogenous, but distinct ethnic groups within China have their own customs and dialects. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

GLOBE Research Project Dimensions
Low: Sweden, Japan, Switzerland High: Greece, Austria, Germany Assertiveness Low: Russia, Argentina, Italy High: U.S., Hong Kong, Singapore Performance Orientation The GLOBE (Global Leadership and Organizational Behavior Effectiveness) dimensions are based on data gathered by 170 researchers over seven years. The data were collected from 18,000 managers in sixty-two countries. There are nine dimensions that distinguish cultures from one another and have implications for managers: assertiveness, future orientation, performance orientation, humane orientation, gender differentiation, uncertainty avoidance, power distance, institutional collectivism vs. individualism, and in-group collectivism. Only four are discussed in the text because the other five overlap with Hofstede’s dimensions. Assertiveness concerns how much people are expected to be tough, confrontational, and competitive versus modest and tender. Low assertiveness countries have sympathy for the weak and emphasize loyalty and solidarity. Performance orientation concerns the importance of performance improvement and excellence and refers to whether people are encouraged to strive for continued improvement. Low performance orientation countries place priority on things like tradition, loyalty, family, and background. They associate competition with defeat. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Low: Russia, Argentina, Italy High: Netherlands, Switzerland, Singapore Future Orientation Low: Germany, Spain, France High: Malaysia, Ireland, Philippines Humane Orientation Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

The GLOBE (Global Leadership and Organizational Behavior Effectiveness) dimensions are based on data gathered by 170 researchers over seven years. The data were collected from 18,000 managers in sixty-two countries. There are nine dimensions that distinguish cultures from one another and have implications for managers: assertiveness, future orientation, performance orientation, humane orientation, gender differentiation, uncertainty avoidance, power distance, institutional collectivism vs. individualism, and in-group collectivism. Only four are discussed in the text because the other five overlap with Hofstede’s dimensions. . Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

Assertiveness concerns how much people are expected to be tough, confrontational, and competitive versus modest and tender. Low assertiveness countries have sympathy for the weak and emphasize loyalty and solidarity. Performance orientation concerns the importance of performance improvement and excellence and refers to whether people are encouraged to strive for continued improvement. Low performance orientation countries place priority on things like tradition, loyalty, family, and background. They associate competition with defeat. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

Cultural Cluster Copyright ©2017 Pearson Education, Inc.
GLOBE research also indicates the existence of geographic clusters of countries that are culturally similar. This figures shows the 10 clusters that were found. The GLOBE research suggests companies may find it easier to expand into more similar cultures than into those that are dramatically different. Copyright ©2017 Pearson Education, Inc. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Hofstede’s Value Dimensions
Power Distance The level of acceptance by a society of the unequal distribution of power in institutions Uncertainty Avoidance The extent to which people in a society feel threatened by ambiguous situations Individualism The tendency of people to look after themselves and their immediate families only and to neglect the needs of society Collectivism The desire for tight social frameworks, emotional dependence on belonging to “the organization,” and a strong belief in group decisions Hofstede’s research, which was conducted prior to the GLOBE project, is based on 116,000 people in 50 countries. Nonetheless, all of the research was conducted in a single firm—IBM. As such, the result should be interpreted with caution. Power distance is a society’s acceptance of unequal power distribution. In high power distance cultures, formal authority and hierarchy are very respected. Thus leadership tends to be autocratic and centralized. In low power distance cultures superiors and subordinates are more likely to view one another as equals, leading to more cooperation. Uncertainty avoidance is the extent to which people feel threatened by ambiguous situations. High uncertainty avoidance cultures are very uncomfortable with ambiguity and tend to have strict laws and closely followed procedures. In businesses, managers tend to make low-risk decisions, employees are not aggressive, and lifetime employment is common. Low uncertainty avoidance cultures are more comfortable with ambiguity. In these cultures, company activities are less formal and structured, managers take more risks, and employees have more job mobility. Individualism is the tendency for people to look after themselves and their immediate families only and to neglect the needs of society. Democracy, individual initiative, and achievement are valued. Collectivism entails tight social frameworks, emotional dependence on the organization, and strong belief in group decisions. Countries scoring higher on individualism tend to have higher GNPs and freer political systems. Social loafing is more common in individual than in collective cultures. Masculinity refers to the degree to which traditionally masculine values (e.g., assertiveness, materialism, and lack of concern for others) prevail. Femininity emphasizes the traditionally feminine values of concern for others, relationships, and quality of life. In more feminine cultures one tends to find less work-family conflict, less job stress, more women in high-level jobs, and a reduced need for assertiveness. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Hofstede’s research, which was conducted prior to the GLOBE project, is based on 116,000 people in 50 countries. Nonetheless, all of the research was conducted in a single firm—IBM. As such, the result should be interpreted with caution. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

Power Distance MAL PHI MEX IND FRA ITA JPN SPA ARG US GER UK DEN ISR AUT Uncertainty Avoidance GRE JPN POR KOR ARA GER AUL CAN US UK IND DEN SIN High Orientation Toward Authority Low High Desire for Stability Low Copyright ©2017 Pearson Education, Inc.

Individualism AUL US UK CAN FRA GER SPA JPN MEX ITA KOR SIN Masculinity JPN MEX GER UK US ARA FRA KOR POR CHC DEN SWE Individualism Collectivism Assertive/Materialistic Relational Copyright ©2017 Pearson Education, Inc.

Trompenaar’s Dimensions
Obligation High Low US GER SWE UK ITA FRA JPN SPA SIN Emotional Orientation in Relationship JPN UK GER SWE USA FRA SPA ITA CHI Universalistic Particularistic Trompenaar’s research gathered data from 15,000 managers from 28 countries, representing 47 national cultures. Some of these are similar to other dimensions already discussed, and are not addressed here. Universalistic cultures apply rules and systems objectively, without consideration of individual circumstances. Particularistic cultures tend to put more emphasis on relationships and apply rules more subjectively. Affective cultures tend to express emotions openly, whereas neutral cultures do not. Neutral Affective Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Trompenaar’s Dimensions
Privacy in Relationship High Low UK US FRA GER ITA JPN SWE SPA CHI Source of Power and Status High Low US UK SWE GER FRA ITA SPA JPN CHI Specific Diffuse People in specific cultures compartmentalize their work and private lives, and they are more open and direct. In diffuse cultures work spills over into personal relationships and vice versa. In achievement-oriented cultures individual achievement is the source of status and influence. In ascription-oriented cultures status and influence come from class, age, gender, etc. Personal Society Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Critical Operational Value Differences
Time—differences in temporal values Change—control and pace of change Material Factors—physical goods and status symbols versus aesthetics and the spiritual realism Individualism—“me/I” versus “we” To Americans, time is money and schedules are strictly kept. In Latin America the word for tomorrow is used to mean “sometime in the future.” Many non-Western societies believe in destiny of the will of their God and, thus, tend to be passive and hostile toward change. For example, to a Chinese worker, the change to power machinery might suggest dissatisfaction with his father’s way of life. Americans tend to value physical goods and status symbols. Many non-Westerners value the aesthetic and spiritual realm instead. In the US, individual achievement takes precedent. There is a focus on “I.” In countries like China, there is more emphasis on conformity and cooperation. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

To Americans, time is money and schedules are strictly kept. In Latin America the word for tomorrow is used to mean “sometime in the future.” Many non-Western societies believe in destiny of the will of their God and, thus, tend to be passive and hostile toward change. For example, to a Chinese worker, the change to power machinery might suggest dissatisfaction with his father’s way of life. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

Americans tend to value physical goods and status symbols. Many non-Westerners value the aesthetic and spiritual realm instead. In the US, individual achievement takes precedent. There is a focus on “I.” In countries like China, there is more emphasis on conformity and cooperation. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

The Internet and Culture
Over 92 percent of Korean homes have high-speed Internet service Sweden requires all databases of personal information to be registered with the Data Inspection Board, their federal regulatory agency About 75 percent of the world’s Internet market lives outside the United States: websites must reflect local markets, customs, languages and currencies Technology is changing culture in many societies—especially in terms of associations, education, and the economy. That compares with an average of 70 percent for the European countries, 87 percent in the United States, and 47 percent for China. Seoul is the most techno- logically advanced city in the world. Culture also is changing how technology is used. The US collects a great deal of information from consumers. In Sweden and many other European countries, the use and sharing of consumer data is closely monitored by the government. The Swedish airline example illustrates the extent to which privacy is protected and suggests some degree of uncertainty avoidance. The fact that so much of the internet market lives outside the US indicates the need for e-commerce to take local approaches to markets, customs, languages, and currencies to be successful. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

To be able to develop a working cultural profile typical of many people within a certain society as an aid to anticipating attitudes toward work, negotiations, and so on Copyright ©2017Pearson Education, Inc.

Developing Cultural Profiles
Managers can gather considerable information on cultural variables from current research, personal observation, and discussion with people. Managers can develop cultural profiles of various countries. Managers can use these profiles to anticipate drastic differences that may be encountered in a given country. It is difficult to pull together descriptive cultural profiles in other countries unless one has lived there and been intricately involved with those people. Though profiles have their limitations, managers can use them to anticipate differences in the level of motivation, communication, ethics, loyalty, and individual and group productivity that may be encountered in a given culture. This Comparative Management in Focus section illustrates how to synthesize information from Hofstede and others to gain a sense of the character of a society. Much of Japanese culture and working relationships can be explained by the principle of wa. Wa is embedded in the value of indulgent love, which leads to mutual confidence, faith, and honor necessary for business relationships. As such, the workplace is characterized by a mix of authoritarianism and humanism—much like a family. Management systems stress rank and looking after employees. There is devotion to work, collective responsibility, and a high degree of employee productivity. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Comparative Management in Focus
Japan Germany “Wa”—peace and harmony A mix of authoritarian and humanism in the workplace Emphasis on participative management, consensus, and duty Open expression and conflict discouraged Preference for rules and order, privacy Dislike of inefficiency and tardiness Assertive, but not aggressive Organizations are centralized but still favor consensus decision making Though profiles have their limitations, managers can use them to anticipate differences in the level of motivation, communication, ethics, loyalty, and individual and group productivity that may be encountered in a given culture. This Comparative Management in Focus section illustrates how to synthesize information from Hofstede and others to gain a sense of the character of a society. Much of Japanese culture and working relationships can be explained by the principle of wa. Wa is embedded in the value of indulgent love, which leads to mutual confidence, faith, and honor necessary for business relationships. As such, the workplace is characterized by a mix of authoritarianism and humanism—much like a family. Management systems stress rank and looking after employees. There is devotion to work, collective responsibility, and a high degree of employee productivity. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Latin America Not homogenous, but common similarities “Being-oriented” compared with “doing- oriented” Work and private lives are more closely integrated Very important to maintain harmony and save face Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

Though profiles have their limitations, managers can use them to anticipate differences in the level of motivation, communication, ethics, loyalty, and individual and group productivity that may be encountered in a given culture. This Comparative Management in Focus section illustrates how to synthesize information from Hofstede and others to gain a sense of the character of a society. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

Much of Japanese culture and working relationships can be explained by the principle of wa. Wa is embedded in the value of indulgent love, which leads to mutual confidence, faith, and honor necessary for business relationships. As such, the workplace is characterized by a mix of authoritarianism and humanism—much like a family. Management systems stress rank and looking after employees. There is devotion to work, collective responsibility, and a high degree of employee productivity. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

Under the Lens: Doing Business in Brazil
Almost everyone has a combination of European, African, and indigenous ancestry Individual relationships are important Brazilians take time when negotiating Brazilian business is hierarchical, and meetings are required Avoid confrontations Dress well and conservatively Business cards are exchanged Having your business card printed in Portuguese on the opposite side is a good idea. Copyright ©2017 Pearson Education, Inc.

Developing Management Styles and Ways of Doing Business: Saudi Arabia
Paternalism, nepotism Tribalism Person-orientation, Theory Y management (treat workers with freedom and respect) Close friendships Islam permeates Saudi life—Allah is always present, controls everything, and is frequently referred to in conversation.83 Employees may spend more than two hours a day in prayer as part of the life pattern that intertwines work with religion, politics, and social life. Outsiders must realize that establishing a trusting relationship and respect for Arab social norms has to precede any attempts at business discussions. Honor, pride, and dignity are at the core of shame societies such as the Arabs. As such, shame and honor provide the basis for social control and motivation. Circumstances dictate what is right or wrong and what constitutes acceptable behavior. Conflict avoidance, positive reinforcement Honor, shame Copyright ©2017 Pearson Education, Inc.

Developing Management Styles and Ways of Doing Business: Chinese Family Business
Small, family businesses predominate “Guanxi” connections People are put ahead of business – human centered management style Globalization has resulted in more competitive management styles: the new generation manager is more individualistic, more independent and takes more risks The predominance of small businesses means that they are likely to become part of the value chain for most foreign firms. Guanxi refers to the network of relationships that the Chinese cultivate, and it entails the exchange of favors and gifts to provide an obligation to reciprocate favors. Leadership tends to be centralized and autocratic, but leaders feel a responsibility for their employees. As such, caring for people is put ahead of business concerns and efficiency. Because organizations tend to be centralized, most have only two primary hierarchical levels. The highest level includes the boss and a few family members. The second level includes all of the employees. Today, younger Chinese managers are integrating both Western and Chinese management styles to some extent. Copyright ©2017 Pearson Education, Inc. © 2010 Pearson Prentice Hall

The predominance of small businesses means that they are likely to become part of the value chain for most foreign firms. Guanxi refers to the network of relationships that the Chinese cultivate, and it entails the exchange of favors and gifts to provide an obligation to reciprocate favors. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

Leadership tends to be centralized and autocratic, but leaders feel a responsibility for their employees. As such, caring for people is put ahead of business concerns and efficiency. Because organizations tend to be centralized, most have only two primary hierarchical levels. The highest level includes the boss and a few family members. The second level includes all of the employees. Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

Summary of Key Points Each society has its own unique culture
Managers must develop cultural sensitivity Researchers such as Hofstede and Trompenaar have created studies which help describe cultural profiles; GLOBE study created a body of data on cultural dimensions Managers can use research results and personal observations to develop cultural profiles of countries Copyright ©2017 Pearson Education, Inc.

Copyright © 2017 Pearson Education, Inc.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2017 Pearson Education, Inc. 55

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