INTERNATIONAL BUSINESS
Session 3
Culture
Language
Religion
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
The way in which a group of people solves problems and
reconciles dilemmas.
A code of attitudes, norms and values,
Social Structure
our way of thinking.
Communication


Values/ Attitudes/
Beliefs
and how
Determines how we see ourselves
we see the world.
Is not right or wrong; it is not inherited, but learned.
Artifacts
and Products
explicit
Norms
and Values
implicit
Basic
Assumptions
Cross-Cultural Proficiency is Paramount
in Managerial Tasks
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Developing products and services
Communicating and interacting with foreign business
partners
Screening and selecting foreign distributors and other
partners
Negotiating and structuring international business
ventures
Interacting with current and potential customers from
abroad
Preparing for overseas trade fairs and exhibitions
Preparing advertising and promotional materials
What are your top 10 values?
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Age/seniority
Authority
Belongingness
Collectiveness
Competition
Compromise
Cooperation
Devotion
Directness
Efficiency
Equality
Independence
Family harmony
Family security


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Freedom
Go-between
Group consensus
Group harmony
Independence
Indirectness
Individualism
Hospitality
Openness
Parental guidance
Patience
Quality
Self-reliance
Time
Priorities of Cultural Values
Table 4-1
Priorities of Cultural Values: United States, Japan,
and Arab Countries
United States
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Freedom
Independence
Self-reliance
Equality
Individualism
Competition
Efficiency
Time
Directness
Openness
Japan
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Belonging
Group harmony
Collectiveness
Age/seniority
Group consensus
Cooperation
Quality
Patience
Indirectness
Go-between
Arab Countries
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Family security
Family harmony
Parental guidance
Age
Authority
Compromise
Devotion
Patience
Indirectness
Hospitality
Note: “1” represents the most important cultural value, “10” the least.
Adapted from Table 4-1: Priorities of Cultural Values: United States, Japan, and Arab Countries
Mini-Quiz on Culture
1.
2.
3.
4.
5.
At what time should you arrive for a 10:00 meeting: in
USA? China? Spain?
If given a gift, should you open it: in Saudi Arabia?
China?
Should you give bad news in the morning: in USA? Korea?
Is it a bad sign if you didn’t really speak about business in
your first meeting: in UK? Japan?
Should you send a young executive to a meeting: in USA?
Japan?
How to Categorize and Understand
Cultures
Key Researchers:



Hofstede, Geert
Hall, Edward
Trumpenaars, Fons
Develop Frameworks for Understanding Cultures
Which definition do you agree with more?
A company is….
1.
2.
a system designed to perform functions and tasks in an
efficient way. People are hired to perform these functions
with the help of machines and other equipment. They are
paid for the tasks they perform.
a group of people working together. They have social
relations with other people and with the organization. The
functioning is dependent on these relations.
A company is…..
… a system
… a group
Mini-Case
Six months after the ABC mining company had signed a longterm contract with a foreign buyer to buy bauxite in 20
annual installments, the world price of bauxite collapsed.
Instead of paying $4 a ton below world market prices, the
buyer now faced paying $3 above.
The buyer faxed ABC to say it wished to renegotiate. The final
words of the fax stated: “You cannot expect us as your new
partner to carry alone the now ruinous expense of these
contract terms.”
Options

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
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A contract is a contract. We had a deal. We won.
A contract symbolizes the underlying relationship. Where
circumstances transform the mutual spirit, the terms must be
renegotiated to preserve the relationship.
A contract symbolizes the underlying relationship. But such
rigid terms are too brittle for turbulent environments. We
need to be flexible.
A contract is a contract. Had the price risen we wouldn’t
have complained. We would, however, consider a second
contract who’s terms would help offset their losses.
Hofstede’s Five Dimensions
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Social Orientation
Power Orientation
Uncertainty Orientation
Goal Orientation
Time Orientation
Social Orientation
Individualism
Collectivism
Relative importance of the
interests of the individual versus
interests of the group
Power Orientation
Power Respect
Power Tolerance
Appropriateness of
power/authority within
organizations
Uncertainty Orientation
Uncertainty Acceptance
Uncertainty Avoidance
An emotional response
to uncertainty and change
Goal Orientation
Aggressive Goal Behavior
(masculine)
Passive Goal Behavior
(feminine)
What motivates people
to achieve different goals
Time Orientation
Long-term Outlook
Short-term Outlook
The extent to which
members of a culture
adopt a long-term or a short-term
outlook on work and life
Other Cultural Orientations
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Inner-directed vs. Outer-directed
High context vs. Low context
Neutral vs. Emotional
Achievement vs. Ascription


Achievement culture: people are accorded status based on how
well they perform their jobs
Ascription culture: status is attributed based on who or what the
person is
Synthesis of Country Clusters
Adapted from Figure 4–8: A Synthesis of Country Clusters
Czech Republic
Bulgaria
Germany
Russia
Italy
Spain
France
Switzerland
Sweden
Finland
United Kingdom
United States
Australia
Japan
China
India
Arab World
Turkey
West Africa
Mexico
Brazil
Power Distance Index
PDI
100
90
80
70
60
50
40
30
20
10
0
Czech Republic
Bulgaria
Germany
Russia
Italy
Spain
France
Switzerland
Sweden
Finland
United Kingdom
United States
Australia
Japan
China
India
Arab World
Turkey
West Africa
Mexico
Brazil
Individualism
IDV
100
90
80
70
60
50
40
30
20
10
0
Czech Republic
Bulgaria
Germany
Russia
Italy
Spain
France
Switzerland
Sweden
Finland
United Kingdom
United States
Australia
Japan
China
India
Arab World
Turkey
West Africa
Mexico
Brazil
Masculinity
MAS
100
90
80
70
60
50
40
30
20
10
0
Czech Republic
Bulgaria
Germany
Russia
Italy
Spain
France
Switzerland
Sweden
Finland
United Kingdom
United States
Australia
Japan
China
India
Arab World
Turkey
West Africa
Mexico
Brazil
Uncertainty Avoidance Index
UAI
100
90
80
70
60
50
40
30
20
10
0
Hofstede Results Comparison
Czech Republic
Bulgaria
Poland
Hungary
Austria
Germany
100
90
80
70
60
50
40
30
20
10
0
PDI
IDV
MAS
UAI
Hofstede’s Dimensions