What is Culture? A system of values and norms shared among a group of people and, when taken together, constitute a design for living. Norms and Values Norms: Social rules and guidelines that prescribe appropriate behavior in particular situations. Folkways: Routine conventions of everyday life. Mores: Central to functioning of society and its social life. Values: Abstract ideas about what a group believes to be good, right, and desirable. The bedrock of culture. Have emotional significance. Freedom. Culture, Society and the Nation-State NationStates are political creations Not a strict one-to-one correspondence Determinants of Culture Economic Philosophy Education Language Culture: Norms and Value Systems Religion Political Philosophy Social Structure Social Structure Individual Western Mobile Managers Entrepreneurship Group two or more individuals with a shared sense of identity Group Eastern Identity Hard to Build Teams Nonmobile Managers Lack of Loyalty Lack of Entrepreneurship Lifetime Employment Social Stratification Typically defined by family background, occupation, and income. Caste: Virtually no mobility Class: some social mobility Class Consciousness: May play a role in a firm’s operations Religion Shared beliefs and rituals concerned with the realm of the sacred. Ethical Systems: Moral principles or values used to guide and shape behavior. Shapes attitudes toward work and entrepreneurship and can affect the cost of doing business. World’s Religions Christian Islam 20% 43% 18% 4% 5% 10% Hindu Buddhist Confucian Other/Nonreligious Religion and Economic Implications Christianity “Protestant Work Ethic” and “The Spirit of Capitalism”. Islam Favors market-based systems. No payment or receipt of interest. Hinduism Asceticism may have an impact. Caste system plays a role. Buddhism Little emphasis on entrepreneurial behavior. Confucianism Loyalty, reciprocal obligations, and honesty in dealings. Language Allows people to communicate. Structures the way the world is perceived. Directs attention to certain features of the world rather than others. Helps define culture. Creates separatist tendencies? Spoken Language 6% 5% 4% 3% Other 62% 20% Chinese English Hindi Russian Spanish Nonspoken Language Nonverbal cues: eyebrows fingers/thumbs hand gestures feet personal space body gestures Education Formal education supplements family role in teaching values and norms For int’l business, it is a determinant of national competitive advantage Medium to learn language, conceptual, and math skills Cultural norms such as respect, obedience, honesty Value of personal achievement and competition Focus on facts of social and political nature of society Obligations of citizenship Hofstede Study (IBM) is a general way to look at differences between cultures. 4 dimensions: Power distance. Individualism versus collectivism. Uncertainty avoidance. Masculinity versus femininity. But: Assumption of one-to-one relationship between culture and nation-state. Research may be culturally bound. Respondents worked within a single company. Work is beginning to look dated (1967-1973). Work Related Values for Selected Countries Power Distance Uncertainty Individualism Masculinity Avoidance Argentina 49 86 46 56 Brazil 69 76 38 49 France 68 86 71 43 India 77 40 48 56 Japan 54 92 46 95 Mexico 81 82 30 69 Netherlands 38 53 80 14 U.S.A. 40 46 91 62 Table 3.1 Culture is Dynamic Cultural Change Culture and Competitive Advantage The connection suggests: Which countries are likely to be the most viable competitors. Which countries in which to locate production facilities and do business. Culture and Ethics Do the “right” thing. Thomas Donaldson’s Three Principles: Respect for core human values (human rights), which determine the absolute moral threshold for all business activities. Respect for local tradition. The belief that context matters when deciding what is right and what is wrong.