1. Culture, Institutions, and Global Business

2. “Culture” Something difficult to understand
From ancient times, travelers have noticed that when you go from one place to the next, things you take for granted at home aren’t true any more

3. Central to life in America is the desire to be a free individual who gets what he or she wants
“I know my rights”
In Japan, people took for granted they would do what their group (their company, their family, their school) wanted
“The nail that sticks up gets hammered down”

4. What is culture?
“The collective programming of the mind which distinguishes one human group from another”
- Geert Hofstede
Systems of ideas that constitute a “design for living”
- Zvi Namenwirth & Robert Weber
Reading has several definitions. And there are good reasons for being aware of several definitions, because there is no agreed on definition of culture.
A 19th century anthropologist defined culture as “that complex whole which includes knowledge, belief, art, morals, law, custom, and other capabilities acquired by man as a member of society.”
Wow! Everything!

5. Why do cultures differ? Cultures are an ‘evolutionary product’
For thousands of years, human groups evolved with a good deal of isolation
They’ve struggled with different problems
People can do European-style farming individually
Rice farming calls for great cooperation
There are probably many, many other reasons for differences among cultures

6. Components of Culture: One standard (incomplete!) approach
Values – basic attitudes about what is important
Norms – social rules
A Society – a group of people who share common values & norms & ways of doing things
that is, a common culture
Values – core ideas – freedom in US;
group harmony in Japan
Norms – social rules that govern action – In the U.S. – smart people go to college, and by graduating they show that they’re smart that companies select them for good jobs.
Mores – we’ve gotten so individualistic and there are so many cultures in San Jose that it’s hard to define a more.
In Japan – big companies practice lifetime employment for their elite workers.
In the US, a more is that whoever gets the most votes in an election gets to run the next government. There are countries – the number is declining, but it’s still high – where the person who gets the most votes may not get to rule.
Folkways – Our attitude towards time. I’ll let you be a minute late. I’m struggling to prevent you from being more than that. Couldn’t do that in Peru, Italy.

7. Values – assumptions about how things ought to be
Values may form the bedrock of a culture
They provide a context within which a society’s norms are established and justified
They include attitudes toward
Individual freedom
Democracy
Truth
Justice
Honesty
Loyalty
Social obligations
Values are also reflected in the political and economic systems
Can anybody name a dog who is famous in the US or some other culture?
Rin-Tin-Tin, Old Yeller, Lassie – live out in the country with a small group of people, they solve individuals’ individual problems.
Scoo-Bee-Doo – a joker.
Can anyone think of a dog who is famous in some other culture?
Who is the most famous dog in Japan, and why is she famous? Ha-chi-ko

8. Norms
Norms are the social rules that govern people’s actions toward one another
Folkways – little moral significance
Americans expect you to come on time to appointments
In Italy, people weren’t usually on time
Mores
Norms seen as central to functioning of society
Marriage
Honesty
A folkway – Italian concept of time

9. Values – assumptions about how things ought to be
Values may form the bedrock of a culture
They provide a context within which a society’s norms are established and justified
They include attitudes toward
Individual freedom
Democracy
Truth
Justice
Honesty
Loyalty
Social obligations
Values are also reflected in the political and economic systems
Can anybody name a dog who is famous in the US or some other culture?
Rin-Tin-Tin, Old Yeller, Lassie – live out in the country with a small group of people, they solve individuals’ individual problems.
Scoo-Bee-Doo – a joker.
Can anyone think of a dog who is famous in some other culture?
Who is the most famous dog in Japan, and why is she famous? Ha-chi-ko

10. Norms
Norms are the social rules that govern people’s actions toward one another
Folkways – little moral significance
Americans expect you to come on time to appointments
In Italy, people weren’t usually on time
Mores
Norms seen as central to functioning of society
Marriage
Honesty

11. Examples of Mores – Norms felt as central to society
U.S. – The winner in an election gets to rule
African nations – an individual is loyal first to his/her tribe
Scandinavia – differences in wealth must not be too great
Japan – elite organizations try to give the people they hire a position for life
Stop and discuss difference between values, norms

12. Culture vs. ‘a culture’
If “culture” means the “collective programming that distinguishes a human group”…
the phrase, “a culture” refers to a group that shares the same programming
So you’ll hear me – and you’ll hear businesspeople – talking about the difficulties of dealing with culture – collective programming.
Then you’ll hear me talking about ‘Japanese culture’ – the collective programming of Japanese.
Then you’ll hear me talking about ‘the differences between one culture and the next,’ I mean the differences between one programmed group and the next.

13. “A society” or “a culture”
Definition: a group that shares the same values and norms (that is, shares same “collective programming”)
We often assume that a society corresponds to a nation
We talk of ‘American society,’ ‘Russian society’
But there is no strict one-to-one correspondence
Nation State:
Is a political creation
May contain a single culture or several cultures
Canada
India
Multi-tribal African nations

14. Societies contain subcultures
ethnic cultures
business or professional cultures
Often (usually?) a company will be known for a particular culture
At Ford and Toyota, manufacturing is most important
At General Motors, marketing is most important
youth cultures
How do youth cultures vary in the South Bay?

16. Social Structure
‘Social structure’ is a society’s basic systems of social organization
Two dimensions are particularly important:
The extent to which society is group or individually oriented (‘collectivist’ vs. ‘individualist’)
Degree of stratification into castes or classes
‘stratification’ = the separation of the members of a society into hierarchical social categories (‘strata’) based on family background, occupation, or income
Group-oriented = Collectivism (Japan, China)
Stratification – India, England
not the same as gap between rich and poor, though correlated with it.
Peru, Mexico – tends to be a stratification between people associated with the old cultures from the rural areas and European-dominated elites.
In England (traditionally) and also in Peru, if you make money you still have to build connections in the elite if you want to be elite.
Changing with globalization?
Is globalization creating its own castes?
Are technology geeks a new global caste?

17. How is social structure changing with globalization?
Are technology geeks a new upper class?

18. Religious and Ethical Systems
Religion: a system of shared beliefs and rituals that are concerned with the realm of the sacred (i.e., things regarded with special respect)
Ethical systems: a set of moral principles, or values, that are used to guide and shape behavior
Most of the world’s ethical systems are the product of religions
Among the thousands of religions in the world today, four dominate in terms of numbers of adherents:
Christianity with 1.7 billion adherents
Islam with 1 billion adherents
Hinduism with 750 million adherents
Buddhism with 350 million adherents
Religions are hugely important, but they’re very hard to summarize.
Just know that there are these different big religions.
When you’re ready to study them, I can recommend some good books.

20. Language Spoken Unspoken Language structures our perception of world
English tries to be precise
Japanese
doesn’t discourage vagueness
allows more direct expression of emotion
Unspoken
Body language
Personal space
One obvious way in which countries differ is language. By language, we mean both the spoken and the unspoken means of communication.
In English, if we feel are overwhelmed with the beauty of something, we’ll say, “That’s beautiful” – it’s a statement about something.
In Japanese, we could say ‘Utsukushiku wa nee…”

21. Be alert for unexpected meanings of ‘silent language’
Colors
Black symbolizes death in U.S.
White indicates death in parts of Asia
Purple indicates death in (some situations in) Latin America
Gestures
Sideways head movement that means ‘yes’ in Greece and parts of India looks like negative ‘no’ head shake in U.S.

23. Culture in the Workplace
Geert Hofstede’s four dimensions of culture
Power distance – the extent to which people are comfortable with inequalities of power and wealth
Uncertainty avoidance - the extent to which people accept ambiguous situations and tolerate uncertainty
Individualism versus collectivism - this dimension focuses on the relationship between the individual and his/her fellows within a culture
Masculinity versus femininity - this dimension looks at the relationship between gender and work roles
Probably the most famous study of how culture relates to values in the workplace was undertaken by Geert Hofstede. As part of his job as a psychologist working for IBM, Hofstede collected data on employee attitudes and values for more than 100,000 individuals from 1967 to These data enabled him to compare dimensions of culture across 40 countries. Hofstede isolated four dimensions that he claimed summarized different cultures—power distance, uncertainty avoidance, individualism versus collectivism, and masculinity versus femininity.
He later added long-term orientation vs. short-term orientation. But this has not been tested as well as the others.
Learn and try to be able to use the first three of these

24. Work-Related Values for 20 Selected Countries
Table 3.1 – Work-Related Values for 20 Selected Countries, p. 113

25. Problems with Hofstede’s ‘dimensions’
Assumes one-to-one relationship between culture and the nation state
Research may have been ‘culturally bound’
Survey was of IBM employees, conducted by Europeans and Americans
Survey respondents were from a single industry (computer) and one company (IBM)
Other scholars have proposed many other dimensions of culture
but none have been shown more significant than the first three Hofstede developed

27. A few cultures have influenced global business enormously
Technological and economic successes of northern Europe and North America from the 18th Century made international business possible
Why? There are many theories, and no consensus
But while the free trade theory that you’ll read about is clearly important, it’s certainly more than that
Something very important happened in northern Europe between the 16th and 18th centuries
It clearly continues to affect global business today

29. Limitations of the concept of ‘culture’
Clearly, societies differ a lot, and ‘culture’ tells why
But how do we think about where cultures come from?
Why don’t cultures change more?
How do we predict when they will change?
How can people change them deliberately?
Because the concept of ‘culture’ is so massive and complicated (“collective programming of the mind”), it is difficult to use it to think about specific, perhaps small, changes.
A friend of mine is a follower of an effort in Africa called ‘The Hunger Project,’ which tries to help women create businesses to feed their families.
In most of these villages there are traditional ways of doing things that make this hard. If you ask, ‘why does the husband spend more money on tobacco than on educating the kids?’ It may be correct to say, ‘Those are the norms of this society.’ But you want to say more than that.

30. Thinking about‘institutions’ can be more flexible
Institutions are defined as the “rules of the game” in any human system
Analogous to rules in a sport
Most elements of culture can be thought of as “rules of the game” in the system of a society
Example: One of rule of the game in our class is that we speak English
It’s easier to think about ‘changing the rules’ than about ‘changing the culture’

31. Cultural Change/Institutional Change
Culture evolves over time
Since 1960s American values toward the role of women have changed
Japan has moved toward greater individualism in the workplace
Globalization will continue to impact cultures around the world
And global business, especially, is always changing cultures
LAST SLIDE

34. Material below this slide is not part of the course

35. Some Managerial Implications
Cross-cultural literacy
You need to understand differences between cultures
Culture and competitive advantage
Some cultures make business easier than others
Culture and business ethics
As we’ll see in a few weeks, cultural differences create big ethical issues

37. What is Culture?
“The collective programming of the mind which distinguishes one human group from another”
- Hofstede
Text has several definitions. And there are good reasons for being aware of several definitions, because there is no agreed on definition of culture.
A 19th century anthropologist defined culture as “that complex whole which includes knowledge, belief, art, morals, law, custom, and other capabilities acquired by man as a member of society.”
Wow! Everything!
“Culture” / values, norms vs. Institutions / rules of the game as different ways of capturing what’s going on in a society.
If you want to understand politics and economics and political/economic differences, think in terms of institutions/rules of the game. It’s an economist or political scientist’s way to analyze what’s happening. It tries to make things simple.
Culture / values, norms – a way used by some sociologists or anthropoligists. They want to acknowledge the full complexity of the human experience.

38. You’ll always be shocked by new cultures
But we want to learn how to think about them so we can work with diverse cultures
“cross-cultural literacy” – understanding how cultural differences can affect the way business is practiced

40. Religious and Ethical Systems
Map 3.1 The Map of World Religions, p. 97

41. Why did Europe start growing? 3 Theories to consider (of many)
It was Protestantism working out its core principles. Protestant breakaway from the Catholic church starting created ways of life that promoted ‘progress’ (Troeltsch)
More individualistic, decentralized view of religion
Taught everyone to read, write to understand Bible
Promoted universities and secular learning
This theory dominant before 1930

42. It was also the fear Protestantism created
It was also the fear Protestantism created. Some theology made believers fear going to hell so much they worked hard in the world while practicing asceticism (renunciation of worldly pleasures). (Weber)
They started accumulating worldly goods.
When people stopped believing so strongly in God, they kept an ascetic approach to life
Secular knowledge and riches accumulated
This theory dominant after 1930

43. It was the success of the rich in throwing people off the land
It was the success of the rich in throwing people off the land. Owners forced the poor to leave the land so they could use it more efficiently. The poor became available for exploitation in factories. (Grossman and others)
This is a radical theory, but one with real empirical support

44. Something big happened
Whatever the truth, something about north European and North American culture has driven powerful economic growth since the 18th Century.
It still plays a big role today
It’s often hard to understand how people in other countries can deal with the challenge of the West

45. A silly example
When I was growing up, Mother said, “Don’t take your shoes off in the house, that’s uncivilized.”
In Japan, it’s completely uncivilized to have your shoes on inside the house

46. A dramatic example The English language is designed to be precise But
Speaking English, you assume the world is real. You want to describe it precisely
If you see a beautiful flower, you say, ‘That’s beautiful’
But