Culture!
Thursday, November 2
What is culture?

« Culture is the integrated sum total of
learned behavioral traits that are shared by
members of a society » (Hoebel).

What are some examples of learned
behavioral traits that are shared in society?
3 fundamentals:
Culture is a total pattern of behavior that is
consistent and compatible in its components.
It is not a collection of random behaviors…
 Culture is a learned behavior. It is not
biologically transmitted. It depends on
environment, not heredity.
 Culture is behavior that is shared by a group
of people, a society. It is the distinctive way of
life of a people.

Learned behavior can mean almost anything,
from the way we dress to the way we speak
to the food we choose to eat.
Whenever we brush our teeth, cross our legs,
send our parents' a birthday card,
kiss someone, listen to music, or go out for
recreation we are practicing learned
behaviors which are a part of our culture.
So what should be know about
Culture
Understanding the cultural environment will
help in analyzing the other macroenvironments (political, legal, economic…)
Two levels of cultural diversity

External cultural diversity
 Cultural determinants influencing purchasing and consumption
behaviors (Who buys? What? Where? How? Why?)
 Cultural determinants influencing negotiations (relationships with
suppliers, buyers, partners)
Explicit culture: languages, behavior, know-how, institutions (directly
observable)

Internal cultural diversity
 Observed within all MNCs
 Cultural differences that affect the way subsidiaries work together
Implicit culture: moral values, learning process, beliefs
A new term to add

A subsidiary, in business, is an entity which
is controlled by another entity. The
controlled entity is called a company or
Corporation.

The most common way that control of a
subsidiary is achieved is through the
ownership of shares in the subsidiary by the
company. These shares give the company
the necessary votes to determine the
composition of the board of the subsidiary
and so exercise control.
There are quite a few reasons why companies have
subsidiaries, but one of the most important one is.

Risk: Many businesses use subsidiaries to
manage risk. This is achieved usually by
setting up a subsidiary corporation to
undertake the higher risk venture. If that
venture subsequently become subject to
litigation or liability, legally the subsidiary
corporation would be liable and not the
parent (unless the parent made
guarantees, in which case the parent is
liable for the guarantees it made).
According to Hoebel…
There are 3 types of cultural norms in terms of
behavior:

10% of norms are technical:


30% of norms are formal:


explicit, logical and transferable; written norms of a
society (laws, technical manuals, rules, etc…)
explicit, moral and transmissible; traditions of a
culture; learned through education (manners,
courtesy…)
60% of norms are informal:

implicit, instinctive and imitated; facial expressions,
body language, cultural perspective on time and
space…)
How do we measure cultural distance?
Hofstede’s Cultural Index
- National character survey
- 116.000 IBM employees
- 43 countries and 20 languages
Five different poles make up the cultural index:
- Power distance
- Uncertainty avoidance
- Individualism
- Masculinity
- (Long term orientation)
Hofstede’s cultural index

Power distance (PDI): shows class or social
structure. It shows how well a society accepts an
uneven distribution of power in organizations and
institutions and focuses on the degree of equality, or
inequality, between people in the country’s society.

Uncertainty avoidance (UAI): shows how
threatened a society feels by uncertain or unstable
situations. It focuses on the level of tolerance for
uncertainty and ambiguity within the society.

Individualism (IDV): focuses on the degree that
society reinforces individual or collective achievement
and interpersonal relationships. It distinguishes
between societies where the group and being a
member is important (collectively) and societies
where the group is less important (individualism).
Hofstede’s cultural index

Masculinity (MAS): focuses on the degree the
society reinforces, or does not reinforce, the
traditional masculine work role model of male
achievement, control and power. Indicates the
degree of gender differentiation and the
importance of masculine values (assertiveness,
money, material goods…).

Long-term orientation (LTO): focuses on the
degree the society embraces, or does not
embrace, long-term devotion to traditional, forward
thinking values. Indicates whether the country
prescribes to the values of long-term commitments
and respect for tradition.
Examples of Hofstede’s Dimensions

Uncertainty Avoidance Index (UAI) deals with a society's
tolerance for uncertainty and ambiguity; it ultimately refers to
man's search for Truth.

It indicates to what extent a culture programs its members to
feel either uncomfortable or comfortable in unstructured
situations. Unstructured situations are novel, unknown,
surprising, different from usual. Uncertainty avoiding cultures
try to minimize the possibility of such situations by strict laws
and rules, safety and security measures, and on the
philosophical and religious level by a belief in absolute Truth;
'there can only be one Truth and we have it'.

People in uncertainty avoiding countries are also more
emotional, and motivated by inner nervous energy. The
opposite type, uncertainty accepting cultures, are more
tolerant of opinions different from what they are used to; they
try to have as few rules as possible, and on the philosophical
and religious level they allow many currents to flow side by
side. People within these cultures are not expected by their
environment to express emotions.
Intracultural differences




Few cultures are homogeneous in terms of
cultural traits and norms.
Intracultural differences based on nationality,
religion, race, language or geographic areas
have resulted in the emergence of distinct
subcultures.
It is important to distinguish relevant crosscultural and intracultural differences and
isolate potential opportunities and problems.
However, international business may act as a
change agent by introducing new products or
ideas or practices.
To summarize on culture…

Cultural distance is essential in international
business

Culture is complex and multi-dimensional

Acculturation (adjusting and adapting to a
specific culture other than one’s own) is one
of the keys to success in international
operations