Chapter 3
The Cultural Environment of
International Business
PART ONE
International Business
Strategy, Management & the New Realities
by
Cavusgil, Knight and Riesenberger
Adapted by
Dr. Eman Ismail
Ph.D., PGCERT, FHEA UK
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Learning Objectives
By the end of this chapter, you should be able to:
3.1 Understand culture and cross-cultural risk
3.2 discuss the dimensions of culture
3.3 Appreciate the role of language and religion in culture
3.4 Appreciate culture’s effect on international business
3.5 Learn models and explanations of culture
3.6 Understand managerial implications of culture
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Opening Case: China’s Little emperorsLucky but Lonely in Life
- China has the biggest number of
internet users.
- China has banned Western social
media
sites—for
example,
Facebook and
YouTube—over
concerns that they facilitate access
to material critical of the Chinese
government.
- China’s government rule: One Child
only.
- Popular Chinese search engines
and social media sites – Copying
similar technologies is acceptable - Guanxi (guan-shee) refers to informal
personal relationships that emphasize
in China.
reciprocal obligations and the exchange of
- Chinese people flock into local
Social sites.
favors. In China, it strongly influences
- China is: Collectivist – High-context
business, organizational behavior, and
- Chinese values derived from
human relations in general.
Confucianism.
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Opening Case: China’s Little emperorsLucky but Lonely in Life
Questions
3-1. Why are the Chinese
such heavy users of the
Internet?
3-2.
What
are
the
characteristics
of
a
collectivistic society such as
China?
3-3. In what ways does social
media reflect cultural values in
China?
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Definitions of Culture
In-class activity: Try to formulate a definition of ‘Culture’ based on your
understanding.
• Culture refers to the values, beliefs, customs, arts, and other
products of human thought and work that characterize the
people of a given society.
• Incorporates both objective and subjective elements.
• Objective aspects of culture include tools, roads, television
programming, architecture, and other physical artifacts.
• Subjective aspects include norms, values, ideas, customs, and other
meaningful symbols.
• Hofstede, a well-known Dutch organizational anthropologist, views
culture as ‘collective mental programming’ of people, and the
‘software of the mind,’; How we think and reason.
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Cross-Cultural Risk
•
A situation or event where a cultural
miscommunication
puts
some
human value at stake
•
Arises when we enter environments
characterized
by
unfamiliar
languages and unique value
systems, beliefs, attitudes, and
behaviors
•
One of the four major risks in
international business
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What Culture Is not
Culture is:
• Not right or wrong. Culture is relative.
There is no cultural absolute. Different
nationalities simply perceive the world
differently.
• Not about individual behavior. Culture
is about groups. It refers to a collective
phenomenon of shared values and
meanings.
• Not inherited. Culture is derived from
the social environment. We are not
born with a shared set of values and
attitudes; we learn and acquire as the
grow up.
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Culture is Learned
• Socialization: The process of learning the rules and behavioral
patterns appropriate to one's given society, i.e. cultural learning.
e.g. “we don’t do things the other way round here!”
• Acculturation: The process of adjusting and adapting to a culture
other than one's own, commonly experienced by expatriate workers.
Adults are less flexible than children.
• Culture is like an iceberg – above the surface, certain characteristics
are visible; below the surface is a massive base of assumptions,
attitudes and values that strongly influence decision-making,
relationships, conflict, and other dimensions of business. – See next
slide.
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The Iceberg Model of Culture
Above the surface, certain characteristics
are visible.
Below, invisible to the observer, is a massive
base of assumptions, attitudes, and values.
These invisible characteristics strongly
influence decision making, relationships,
conflict,
and
other
dimensions
of
international business.
We are usually unaware of the nine-tenths of
our cultural makeup that exists below the
surface. In fact, we are often not aware of
our own culture unless we meet another one.
Exhibit 3.4 illustrates the iceberg concept of
culture, using three layers of awareness:
high culture, folk culture, and deep
culture.
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Dimensions of Culture
1.
2.
3.
4.
5.
6.
Values and attitudes
Manners and customs
Perception of time
Perception of space
Symbolic productions
Material productions
creative expression
7. Education
8. Social structure
and
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Dimensions of Culture:
1-Values and attitudes
12
Dimensions of Culture:
2-Manners and Customs
Manners and customs are ways of behaving and conducting
oneself in public and business situations.
Some countries are characterized by informal cultures; people
treat each other as equals and work together cooperatively.
In other countries, people tend to be more formal; status,
power, and respect are relatively more important.
Preferences for food, eating habits, and mealtimes are still
varied.
Customs that vary most worldwide relate to work hours and
holidays, drinking and toasting, appropriate behavior at social
gatherings, gift giving, and women in the workforce.
Gift giving is complex in much of the world. In Japan, it is
usually a mistake not to offer a gift in initial meetings. The
Middle East is characterized by generous gift giving.
International Business: Strategy, Management, and the
Burma: Kayan tribes like long necks
Women of the Kayan tribes in Burma are
well known for wearing neck rings, brass
coils that are placed around the neck,
appearing to lengthen it. The women
wearing these coils are known as "giraffe
women" to tourists. Girls first start to wear
rings when they are around 10. Over the
Newyears
Realities
13 one
the coil is replaced by a longer
and more turns are added.
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Dimensions of Culture:
3-Perceptions of Time
•
Time has a strong influence on business. It affects people’s
expectations about planning, scheduling, profit flows, and
promptness in arriving for work and meetings.
•
Japanese managers tend to prepare strategic plans for long
periods, such as a decade. The planning horizon for Western
companies is much shorter, typically a few years.
•
Monochronic orientation to time—a rigid orientation in which
people are focused on schedules, punctuality, and time as a
resource. They view time as linear, like a river flowing into the
future, carrying workers from one activity to the next.
•
Some cultures have a polychronic perspective on time. In such
societies, instead of performing single tasks serially, people are
inclined to do many things at once.
In this way, members of polychronic cultures are easily distracted.
They can change plans often and easily, and long delays are
sometimes needed before taking action. Punctuality per se is
relatively unimportant, and managers consider time commitments
flexible. They do not strictly follow the clock and schedules. They
put more value on relationships and spending time with people.
15
Dimensions of Culture:
4-Perception of Space
Cultures also differ in their perceptions of physical space. We have our own sense of personal
space and feel uncomfortable if others violate it.
In Japan, it is common for employee workspaces to be crowded together in the same room, desks
pushed against each other. One large office space might contain desks for fifty employees. U.S.
firms partition individual workspaces and provide private offices for more important employees.
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Dimensions of Culture:
5-Symbolic Production
• A symbol can be letters, figures,
colors, or other characters that
communicate a meaning.
• Businesses have many types of
symbols, in the form of
trademarks, logos, and brands.
Think how easy it is to identify
popular company logos such as
Nike’s swoosh, Apple’s apple,
and Cadbury’s unique lettering.
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Dimensions of Culture:
6-Material Productions and Creative Expressions
•
Material productions are artifacts, objects, and technological systems that
people construct to function within their environments.
•
The most important technology-based material productions are the
infrastructures that supply energy, transportation, and communications.
•
Others include social infrastructure (systems that provide housing,
education, and health care), financial infrastructure (systems for managing
means of exchange in banks and other financial institutions), and marketing
infrastructure (systems that support marketing-related activities such as ad
agencies).
•
Creative expressions of culture include arts, folklore, music, dance, theater,
and high cuisine.
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Dimensions of Culture:
7-Education
•
Cultural values, ideas, beliefs, traditions, and
attitudes are passed from one generation to
the next through education.
•
Available talent and skill base of a region or
country influences where corporations will
locate international ventures such as
factories or call centers. Better-educated
locations tend to attract higher paying and
higher skilled positions such as outsourced
call centers and accounting functions.
•
Literacy, the ability to read, is an important
indicator of education level and varies
substantially around the world. Exhibit 3.5
shows literacy rates in selected countries.
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Dimensions of Culture:
8-Social Structure
•
•
Social structure refers to the pattern of social arrangements and organized
relationships that characterize a society. It refers to how a society is
organized in terms of individuals, families, groups, and socioeconomic
strata.
Understanding the social structure of international employees, clients, and
suppliers is vital for avoiding cultural misunderstandings and optimizing
business transactions.
A- Individuals
B- Family
C- Reference Groups
D- Social stratification
E- Social Mobility
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ROLE OF LANGUAGES & RELIGION IN CULTURE
1- Verbal Language
•
The “mirror” or expression of culture; essential for communications; provides insights into
culture.
• Linguistic proficiency is a great asset in international business. WHY?
• Language has both verbal and nonverbal (unspoken, facial expressions and gestures).
• The world has nearly 7,000 active languages, including more than 2,000 in each of Africa and
Asia. Most of these languages have only a few thousand speakers.
• National languages, dialects, and translation tend to complicate verbal communication. It is
sometimes difficult to find words to convey the same meaning in a different language.
• Advertising themes often lose their original meaning in translation or give the wrong impression.
Discuss
• Exhibit 3.7 shows how the popular slogans of some languages translate into unintended
phrases in other languages.
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ROLE OF LANGUAGES & RELIGION IN CULTURE
1- Verbal Language
Cultural Metaphor
A distinctive tradition or institution strongly associated with a society
A guide to deciphering attitudes, values, and behaviors
Examples -- American football: systematic planning, strategy, leadership,
against rivals
The Swedish stuga (a sum cottage): the love of nature and desire for individualism
The Spanish bullfight: the importance of ritual, style, courage, and pride
o
o
o
Stereotypes
o
o
Generalizations that may or may not be factual, often overlooking real, deeper
differences.
Example -- People from the United States are said to be: Argumentative and aggressive,
compared to Japanese who tend to be reserved and humble.
Idiom
o
o
An expression whose symbolic meaning differs from its literal meaning; symbolizes
cultural values.
Examples -- U.S.: “Necessity is the mother of invention.” =>
Resourcefulness Turkey: “Steel that works, does not rust.” => Hard work
Thailand: “If you follow older people, dogs won’t bite you.” => Wisdom
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ROLE OF LANGUAGES & RELIGION IN CULTURE
1- Non-verbal Communication
•
•
•
Nonverbal communication is
unspoken and includes facial
expressions and gestures.
In fact, nonverbal messages
accompany
most
verbal
ones. These include facial
expressions,
body
movements, eye contact,
physical distance, posture,
and other nonverbal signals.
Nonverbal communications
frequently
can
lead
to
confusion
and
misunderstandings because
of cultural differences.
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ROLE OF LANGUAGES & RELIGION IN CULTURE
3- Religion
• A system of common beliefs or attitudes regarding a being or system of thought that
people consider sacred, divine, or the highest truth; and the associated moral values,
traditions, and rituals.
• Influences culture, and therefore business and consumer behavior.
• Example: Islam’s holy book, the Qur’an, prohibits drinking alcohol, gambling, usury,
and ‘immodest’ exposure.
Although there are thousands of
distinct faith groups worldwide,
four major religions dominate:
Christianity with roughly 2 billion
adherents, Islam with about 1.5
billion followers, and Hinduism
and Buddhism, each with
around 1 billion adherents.
Other belief systems include
Confucianism and Judaism.
launched
a mobile
thatRealities
shows Muslims the
International Business:Nokia
Strategy,
Management,
andphone
the New
direction towards Mecca, Islam’s holiest site.
25
Cultural effect on International Business
Cross-cultural proficiency is paramount in many managerial tasks,
including:
1.
2.
3.
4.
5.
6.
7.
8.
Managing employees
Communicating and interacting with foreign business partners
Negotiating and structuring international business ventures
Developing products and services. See example next slide
Preparing advertising and promotional materials
Preparing for international trade fairs and exhibitions
Screening and selecting foreign distributors and other partners
Interacting with current and potential customers from abroad
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Cultural effect on International Business
Example: Developing products and services.
Cultural
differences
necessitate
adapting
marketing activities to suit the specific needs of
target markets.
Johnson & Johnson developed different varieties
of its mouthwash, Listerine, for foreign markets.
For instance, it created alcohol-free Listerine Zero
for Muslim countries where spirits are forbidden.
For Asian markets, it launched Green Tea
Listerine.
In Europe, consumers want their mouthwash to
solve more complex problems than just bad
breath, so the firm developed an advanced gum
treatment rinse.
Activity/assignment
THINK OF OTHER
EXAMPLES WHERE
CULTURE HAD A
REMARKABLE EFFECT ON
ANY OF THE
MANAGERIAL TASKS
LISTED IN THE PREVIOUS
SLIDE.
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Models & Explanations of Culture
Model 1: Hall’s high- and Low-Context typology of Cultures
• By Edward T. Hall
People in low-context cultures rely heavily on
spoken words and detailed verbal explanations.
• In negotiations, for example, Americans typically
come to the point quickly.
• Low-context cultures tend to value expertise and
performance.
• Managers conduct negotiations as efficiently as
possible.
• These cultures use specific, legalistic contracts to
conclude agreements.
High-context cultures, such as China and Japan,
emphasize
nonverbal
messages
and
view
communication as a means to promote smooth,
harmonious relationships.
• The notion of high- and low-context cultures also
plays a role in communications between people
who speak the same language.
e.g. British managers sometimes complain that
presentations by their U.S. counterparts are too
detailed. Everything is spelled out, even when
28
Models & Explanations of Culture
Model 2: Hofstede’s Model
Dutch anthropologist
Geert
Hofstede
conducted one of the
early
studies
of
national cultural traits.
Hofstede
identified
six
independent
dimensions
of
national
culture,
described next.
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Models & Explanations of Culture
Model 2: Hofstede’s Model
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Models & Explanations of Culture
Typology by G. Hofstede
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Models & Explanations of Culture: Hofstede Typology of National Culture
POWER DISTANCE
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Models & Explanations of Culture: Hofstede Typology of National Culture
Comparison between China & USA using Hofstede’s
dimensions of National Culture
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Deal vs. Relationship Orientation
• In deal-oriented cultures, managers focus on the task at hand, are
impersonal, typically use contracts, and want to just “get down to
business.”
Examples: Australia, Northern Europe, and North America.
• In relationship-oriented cultures, managers
value affiliations with people, rapport, and
getting to know the other party in business
interactions.
• Relationships are more important than
individual deals.
• Trust is much valued in business agreements.
Examples: China, Japan, Latin American countries.
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Cultural Orientations
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How to acquire Cross-Cultural Competence?
•
•
•
Managers are more effective in cross-cultural encounters when they keep an open
mind, are inquisitive, and don’t jump to conclusions about others’ behaviors.
Even experienced managers undergo cultural training that emphasizes peoplewatching skills and human relations techniques.
Skills are more important than pure information because skills can be transferred
across countries, whereas information is often country-specific.
GUIDELINE 1: Acquire factual knowledge about the other
culture and try to speak the language.
GUIDELINE 2: Avoid cultural bias.
GUIDELINE 3: Develop cross-cultural skills
(Tolerance for ambiguity, Perceptiveness, Valuing personal relationships,
Flexibility and adaptability)
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THANK YOU
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