Topic 4: International Cultural Environment
Dr. John R.M. Philemon
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Introduction
A
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firm operating internationally comes
across a wide range of diverse cultural
environments
,
which
significantly
influence international business decisions.
Managers
operating
across
national
borders need to appreciate the differences
among the cultural behaviours of their
business partners and consumers across
various countries.
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INTRODUCTION
⚫ One of the equally
difficult environment
variables faced by international businesses
is culture. Adler (2002) argues that
cross-cultural business activities typically
tend towards either highly effective
outcomes or highly ineffective outcomes
⚫ Managing these sorts of relationships can
involve a search for cultural Synergy
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Culture and International
Business
⚫ Culture is very important to the practice
of international business.
⚫ Impacts the way strategic moves are
presented.
⚫ Influences decisions.
⚫ The lens through which motivation occurs.
⚫ Management, decision making, and
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negotiations are all influenced through
culture.
⚫ Culture influences nearly all business
functions from accounting to finance to
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production
to service.
Culture and International
Business
⚫ Culture is a key ingredient in the “liability
of foreign-ness” .
⚫ Culture is what makes international
business practice difficult or easy,
depending on how similar or different
cultures are.
⚫ Culture is both divisive and unifying.
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Culture Does Not Explain
Everything
⚫ Culture is very important to our understanding of
international business. HOWEVER ,it does not explain
everything that is different from one place to another.
⚫ Corporate strategy, structure, rivalry, governmental
policy, and economics
⚫ Culture is not a residual variable; it is useful to know
that it is not a primary variable either. It is one of
many.
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Culture
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Culture is the way of life of people including
their attitudes, values , beliefs , arts ,
sciences , modes of perception and habits
of thoughts and activity.
Culture is the collective programming of the
mind , which distinguishes the members of
one group or category from those of
another(Hofsteede, 1984).
"a pattern of basic assumptions - invented,
discovered, or developed by a given group as it
learns to cope with its problems of external
adaptation and internal integration - that has
worked well enough to be considered valid and,
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to be taught to new members as the*
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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Cross-Cultural Proficiency
is Paramount in Managerial Tasks
Example
1. Developing products and services
2. Communicating and interacting with foreign business
partners
3. Negotiating and structuring international business
ventures
4. Interacting with current and potential customers
5. Preparing advertising and promotional materials
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CHARACTERISTICS OF
CULTURE
⚫ LEARNED
⚫ SHARED
⚫ TRANS-GENERATIONAL
⚫ SYMBOLIC
⚫ PATTERNED
⚫ ADAPTIVE
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CONSTITUENTS OF CULTURE
1.
VALUE SYSTEM –Shared assumptions of a group regarding what is good or bad,
right or wrong, and important or unimportant.
2.
NORMS-guidelines or social rules that prescribe appropriate behaviour in a
given situation. E.g. Aggressive selling is not perceived positively in Japan.
(read about : Cultural Imperatives, Culture Exclusives, Culture Adiaphora)
3.
AESTHETICS –ideas and perceptions that a cultural group upholds in terms of
beauty and good taste. It includes areas related to music, dance, painting , drama ,
architecture etc.
4.
CUSTOMS –established patterns of behaviour within a sociaety AND
TRADITIONS – elements of culture passed on from generation to
generation
5.
LANGUAGE –systematic means of communicating ideas or feelings by the use of
conventionalized signs , gestures , marks or especially articulate vocal sounds.
6.
RELIGION –Religion contains key values and norms that are reflected in
adherents’ way of life. People try to adopt business practices that will satisfy
religious tenets without sacrificing modern practices in business. Explanation,
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standard
, moral values of good behaviour
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Comparisons of cross –cultural
behaviour
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National Culture
A study of IBM employees in 50 countries. Studying values (“the broad tendencies to prefer certain states over others”
1.
2.
3.
4.
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Individualism versus collectivism refers
to whether a person primarily functions
as an individual or within a group.
Power distance describes how a society
deals with inequalities in power that exist
among people.
Uncertainty avoidance refers to the
extent to which people can tolerate risk
and uncertainty in their lives.
Masculinity versus femininity refers to a
society’s orientation based on traditional
male and female values.
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Individualistic vs. Collective
Societies
⚫ Individualistic societies: ties among people
are relatively loose; each person tends to focus
on his or her own self-interest; competition for
resources is the norm; those who compete best
are rewarded financially.
⚫ Examples- Australia, Canada, the UK, and the U.S.
tend to be strongly individualistic societies.
⚫ Collectivist societies: ties among individuals
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are more important than individualism;
business is conducted in the context of a group
where everyone’s views are strongly
considered; group is all-important, as life is
fundamentally a cooperative experience;
conformity and compromise help maintain
group harmony.
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⚫ Examples-China, Panama, and South Korea tend to
High vs. Low Power Distance
⚫ High power distance societies have substantial
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gaps between the powerful and the weak; are
relatively indifferent to inequalities and allow them
to grow.
⚫ Examples- Guatemala, Malaysia, the Philippines
and several Middle East countries
⚫ Low-power distance societies have minimal gaps
between the powerful and weak.
⚫ Examples- Denmark and Sweden, governments
instituted tax and social welfare systems that
ensure their nationals are relatively equal in
terms of income and power.
⚫ Social stratification affects power distance- in Japan
almost everybody belongs to the middle class,
while in India the upper stratum controls
decision-making and buying power.
⚫ In high-distance firms, autocratic management
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styles2021
focus
power at the top and grant little
autonomy to lower-level employees.
High vs. Low Uncertainty
Avoidance Societies
⚫ High uncertainty avoidance societies create
institutions that minimize risk and ensure financial
security; companies emphasize stable careers and
produce many rules to regulate worker actions and
minimize ambiguity; decisions are made slowly.
⚫ Examples -- Belgium, France, and Japan
⚫ Low uncertainty avoidance societies socialize their
members to accept and become accustomed to
uncertainty; managers are entrepreneurial and
comfortable with taking risks; decisions are made
quickly; people accept each day as it comes and take
their jobs in stride.
⚫ Examples -- India, Ireland, Jamaica, and the U.S.
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Masculine vs. Feminine Cultures
⚫ Masculine cultures value competitiveness, assertiveness,
⚫
⚫
⚫
⚫
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ambition, and the accumulation of wealth; both men and
women are assertive, focused on career and earning money,
and may care little for others.
Examples- Australia, Japan. The U.S. is a moderately
masculine society; as are Hispanic cultures that display a
zest for action, daring, and competitiveness.
In business, the masculinity dimension manifests as
self-confidence, proactiveness and leadership.
Feminine
cultures
emphasize
nurturing
roles,
interdependence among people, and caring for less
fortunate people- for both men and women.
Examples-Scandinavian countries- welfare systems are
highly developed, and education is subsidized.
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2- Trompenaars cultural
classification
1.
2.
3.
4.
5.
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Universalism versus particularism
Neutral versus affective relationships
Specific versus diffuse relationships
Individualism versus collectivism/communitariasm
Achievement versus ascription
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Universalism versus particularism
Universalism is the belief that ideas and practices
can be applied everywhere without modification.
Universalistic: Germany, U.K.
Particularism is the belief that circumstances dictate
how ideas and practices should be applied.
Particularistic: China, Hong-Kong, Venezuela
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Neutral and affective
⚫ A neutral culture is one where emotions are held
in check (repressed)
⚫ Neutral: Japan, U.K.
⚫ An affective country is one in which emotions are
openly and naturally expressed
⚫ Affective: Mexico, Netherlands, Switzerland
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Specific and diffuse
⚫ Public versus private spaces
⚫ In specific cultures people tend to have a larger public area
and small private area. They prefer to keep private life
separate.
⚫ Highly mobile; Separate work and private life
⚫ Direct, open
⚫ “To the point” – may appear abrasive
⚫ In diffuse cultures the private space is usually larger while
the public area is smaller and more guarded. People come
across as cool initially the private space is more accessible.
⚫ Low mobility; Work and private life closely linked
⚫ Indirect, close and introvert
⚫ Flexibility is very important
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Achievement vs. Ascription
⚫ Achievement: people are accorded status based on how
well they perform their functions.
⚫ Achievement: U.K., Argentina
⚫ An ascription culture in one in which status is
attributed based on who or what a person is.
⚫ Ascription: China
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Individualism vs
Collectivism/Communitarianism
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Other cross cultural
classifications
1.
2.
3.
4.
5.
6.
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High context vs Low context cultures
Homophilous vs Heterophilous cultures
Relationship- focused and Deal-focussed
culture
Formal vs Informal cultures
Polychronic (fluid time) vs Monochronic
(rigid time) cultures
Expressive vs Reserved cultures
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Cultural orientation in
international business
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Orientation of international business
managers affects the ability of a company
to adapt any foreign business environment
. The major types of cultural orientations
include:
A. Parochialism(viewing the world from one’s
own cultural perspectives) vs.
Simplifications (exhibiting the same
cultural orientation towards different
cultural groups , overlooking cultural
differences)
B. EPRG(Ethnocentric , polycentric,
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regiocentric, and geocentric)
EPRG FRAMEWORK
Ethnocentric Orientation: the belief that
considers one’s own culture as superior to others .
Firms are guided by a domestic market
extension concept.
2. Polycentric
Orientation:
recognizes
cultural differences in the host countries
and is therefore market –oriented. Firms
are guided by a multi-domestic market
concept.
3. Regiocentric Orientation: the firm treats
the region as a uniform cultural segment
. Firms view world regions as distinct
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markets.
1.
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Are Cultures Converging?
⚫ Critics charge that globalization is harmful
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to local cultures, their artistic expressions
and sensibilities, and their replacement by
a homogeneous, often ‘Americanized’,
culture.
⚫ Others argue that increased global
communications is positive because it
permits the flow of cultural ideas, beliefs,
and values.
⚫ The homogenization (or the ‘banalization’)
of culture is demonstrated by the growing
tendency of people in much of the world
to consume the same Big Macs and
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Coca-Colas,
watch the same movies, listen *
Managerial Guidelines for
Cross-Cultural Success
Guideline 1: Acquire factual and interpretive
knowledge about the other culture; and try to speak
their language.
Guideline 2: Avoid cultural bias.
⚫ Self-reference criterion: The tendency to view other
cultures through the lens of one's own cultureunderstanding this is the first step.
⚫ Critical incident analysis -a method for analyzing
awkward situations in cross cultural interactions by
developing empathy for other points of view.
Guideline 3: Develop cross-cultural skills, such as
perceptiveness, interpersonal skills, adaptability
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The Search for Cultural
Synergies
1.
2.
3.
4.
5.
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Cultural dominance: A business that imposes its own
national or business culture on its foreign subsidiaries.
More powerful companies tend to use this approach
Cultural accommodation: A business tries to blend into
their host country culture at all costs
Cultural avoidance : Both the business and hosts
pretend as if there were no cultural differences. Weak base
on which to build long-term business relationships across
cultures
Cultural compromise: A business and partners meet
each other half way, sometimes literally, conducting
business in a third country
Another method: Look for ways in which the two
cultures can reinforce each other or compromise in
specific ways that benefit both sides
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⚫ END
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