II Country Factors
Collectivism vs. Individualism
Collectivism
 A political system that stresses the
primacy of collective goals over
individual goals.
 Advocated by Plato in the “Republic.”
 In modern times, the Socialists advocate
Collectivism.
Socialism
 Trace intellectual roots to Karl Marx.
 Argued that the pay of workers does not reflect the
full value of their labor.
 Advocated state ownership of production,
distribution, and exchange (businesses), thereby
ensuring that workers were fully compensated for
their labor.
 Two Approaches for Socialism
 Communists: Socialism is achieved through
violent revolution.
 Social Democrats: Socialism is achieved through
democratic means.
Individualism
 Opposite of Collectivism.
 Individual should have freedom in political
and economic pursuits.
 Advocated by Aristotle: Private property is
more highly productive than communal
property and will thus stimulate progress.
 Revived during the 16th century in England
and the Netherlands.
 Hume (1711-1776)
 Adam Smith (1723-1790)
 John Stuart Mill (1806-1873)
 Embodied in the U.S. Declaration of
Independence
Democracy and Totalitarianism
 Democracy: Government by the people,
exercised either directly or through elected
representatives.
 Totalitarianism: Government in which one
person or political party exercises absolute
control over all spheres of human life and
opposing political parties are prohibited.
4 major forms of Totalitarianism
 Communism
Collectivism is achieved through total dictatorship.
 Theocratic
Political power is influenced by religious principles.
 Tribal
A political party representing the interests of a
particular tribe monopolizes power.
 Right-wing
Generally permits individual economic freedom, but
restricts political freedom to prevent the rise of
communism.
Economic Systems
 Market Economy:
 All productive activities are privately owned.
 Command Economy:
 Goods and services produced, their quantity, and prices
are determined by the government.
 Mixed Economy:
 Parts of the economy are left to private ownership and
free market mechanisms while other sectors are stateowned and have government planning.
 State-Directed Economy:
 The state plays a significant role through its “industrial
policy” and setting national goals.
 Legal Systems: Rules, or laws, that regulate
behavior and the processes by which laws are
enforced and grievances redressed.
Property Rights: the legal rights over the use of a
resource and the income derived from it.
Property rights can be violated by two ways
Private Action: Theft, piracy, blackmail and the like
by private individuals and groups.
Public Action and Corruption: Violation of
property rights by public officials, such as politicians
and government officials, by extorting income or
resources from property holders.
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:
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.
Determinants of Culture
Economic
Philosophy
Education
Language
Culture:
Norms and
Value
Systems
Religion
Political
Philosophy
Social
Structure
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
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
Avoidance
Individualism
Masculinity
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
 Hofstede later added the fifth dimension:
long-term orientation.
 A culture with a long-term orientation is based on
stability, persistence, order & thrift.
 The success of Japanese companies in 1970s to early
1990s: Focus on long-term investment, commitment to
their workers, and building of relationships with their
customers.
 A culture with a short-term orientation will expect
immediate returns and will focus on satisfaction of
immediate needs and wants.
 U.S. & U.K. companies are often criticized for their
focus on short-term goals (maintain share prices).
Trompenaars’ dimensions of culture framework
 It comprises three groupings of cultural factors:
 Relationships with people
 Time
 Relating to natural (the natural environment)
 Relationships with people can be considered in
five subdivisions:
 Universalism vs. particularism
 Individualism vs. communitarianism (collectivism)
 Affective vs. neutral cultures
 Specific vs. diffuse relationships
 Achieving vs. ascribing status
Organizational culture
 Each organization will have its own
distinctive culture or way of working.
 The intangible nature of culture makes
cultural change difficult to manage.
 The culture of an organization is made up
of the distinctive values, attitudes, beliefs
and norms which influence the way in
which it conducts its business.
 Peters and Waterman (1982) found that
organizational culture was related to
performance
Determinants of Organizational Culture
National culture
Industry culture
Size of the organization
Organization history
Management and leadership style
Nature of the employees