PART TWO
COMPARATIVE ENVIRONMENTAL FRAMEWORKS
International Business
Chapter Two
The Cultural Environments
Facing Business
Chapter Objectives
• To understand the major causes of
cultural differences and change
• To grasp behavioral factors influencing
countries’ business practices
• To become familiar with cultural guidelines
for companies that operate internationally
• To learn to discuss the problems and
methods of learning about cultural
environments
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Culture Defined
Culture: the specific learned norms of a
society that reflect attitudes, values, and
beliefs
Major problems of cultural collision are likely to
occur if:
-a firm implements practices that do not
reflect local customs and values and/or
-employees are unable to accept or adjust
to foreign customs.
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Fig. 2.1: Cultural Influences
on International Business
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Cultural Dynamics
• Cultures consist of societies, i.e., relatively
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homogeneous groups of people, who share
attitudes, values, beliefs, and customs.
Cultures are dynamic; they evolve over time.
Cultural value systems are set early in life,
but may change because of:
-choice or imposition
-contact with other cultures.
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The Nation as a Point of Reference
• The basic similarity amongst people within
countries is both a cause and an effect of
national boundaries.
• National identity is perpetuated through
the rites and symbols of a country and a
common perception of history.
Subcultures may link groups from different nations
more closely than certain groups within nations.
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Cultural Formation and Change
• Societal values and customs constantly
evolve in response to changing realities.
• Cultural imperialism is brought about by
the imposition of one culture upon that
of another.
• Certain elements introduced from outside
a culture may be known as creolization,
indigenization, or cultural diffusion.
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Language as a Cultural Stabilizer
• Isolation from other groups, especially
because of language, tends to stabilize
cultures.
• Some countries see language as being so
important that they regulate the inclusion
of foreign words and/or mandate the use
of the country’s official language for
business purposes.
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Map 2.2: Major Languages
of the World
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Fig. 2.2: Importance of Major
Language Groups: Two Views
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Religion as a Cultural Stabilizer
• Religion is a major source of both cultural
•
imperatives and cultural taboos.
Major religions include:
-Buddhism
-Christianity
-Hinduism
-Islam
-Judaism
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Map 2.3: Major Religions
of the World
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Social Stratification Systems
• Ascribed group memberships are defined
at birth; they may include gender, family,
age, caste, and ethnic or national origin.
• Acquired group memberships are based
on one’s choice of affiliation, such as
political party, religion, and social and
professional organizations.
Social stratification affects both business strategy
and operational practices.
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Factors Affecting Work Ethics
• The desire for material wealth vs. the
desire for leisure (Protestant Ethic)
• The expectation of success and reward
• Assertiveness (Hofstede’s masculinity vs.
femininity index)
• Needs satisfaction (Maslow’s Hierarchy)
Motivated employees are normally more productive,
and higher productivity leads to lower costs.
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Fig. 2.4: The Hierarchy of Needs
and Need-Hierarchy Comparisons
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Factors Affecting Relationship
Preferences
• Power distance, i.e., the psychological and
social distance between superiors and
subordinates
• Individualism vs. collectivism
– Individualism represents a desire for personal
freedom, time, and challenge.
– Collectivism represents a dependence on the
organization as well as a need for a safe
environment.
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Factors Affecting Risk-taking
Behavior
• Uncertainty avoidance, i.e., one’s tolerance
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of risk
Trust, i.e., one’s belief in the reliability and
honesty of another
Future orientation, i.e., the need for
immediate vs. delayed gratification
Fatalism, i.e., the belief that life is predestined, that events are “the will of God”
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Factors Affecting Information and
Task Processing
• Selective perception of cues
• Communication context
-low-context cultures [explicit]
-high-context cultures [implicit]
• Information processing
-monochronic [work sequentially]
-polychronic [multi-task]
Whereas idealistic cultures are principle driven,
pragmatic cultures are detail driven.
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Factors Affecting the
Communication Process
• Spoken language
• Written language
• Silent language
-color associations
-conversational distance
-perception of time
-kinesics [body language and gestures]
Problems in communication may arise, even
when nations share the same basic language
(e.g., British, Canadian, and American English).
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Managerial Issues Associated with
Cultural Differences
• Accommodation of foreigners
• Cultural distance [degree of similarity]
• Culture shock and reverse culture shock
• Managerial orientations
– polycentric
– ethnocentric
– geocentric
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Map 2.4: A Synthesis of
Country Clusters
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Factors Affecting Strategies for
Instituting Cultural Change
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Value systems
Cost/benefits of change
Resistance to change
Participation in decision-making
Reward sharing
Role of opinion leaders
Timing
Opportunities to learn from abroad
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Implications/Conclusions
• Culture is dynamic and evolves over time.
Economic development and globalization
are two engines of cultural change.
• In addition to being part of a national
culture, people are simultaneously part
of other cultures, such as social and
professional associations and business
and government organizations.
[continued]
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• Host cultures do not always expect firms
and individuals to conform to their norms;
in some instances they may choose to
accommodate differences in traditions.
• International firms should make a
concerted effort to identify ideas and
behaviors in host countries and foreign
cultures that can be usefully applied
across the whole of their organizations.
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