International Business
by
Daniels and Radebaugh
Chapter 2
Cultural Environments
Facing Business
© 2001 Prentice Hall
2-1
Objectives
To relate the problems and methods of learning about cultural
environments
To explain the major causes of cultural difference and change
To examine behavioral factors influencing countries’ business
practices
To examine cultural guidelines for companies that operate
internationally
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Introduction
Culture
• The specific learned norms based on attitudes, values, and
beliefs that exist in every nation
• An integral part of external environments
Problems of cultural collision occur when
• Company practices work less well than intended
• Employees’ are unable to accept or adjust to foreign
environment
Every business function subject to cultural problems
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Cultural Influences on International Business
EXTERNAL INFLUENCES
PHYSICAL AND
SOCIETAL FACTORS
• Political policies and
legal practices
• Cultural factors
• Economic forces
• Geographical influences
COMPETITIVE
ENVIRONMENT
OPERATIONS
OBJECTIVES
• Cultural awareness
• Identification and
dynamics of cultures
• Behavioral practices
affecting business
• Strategies for dealing
with cultural differences
© 2001 Prentice Hall
STRATEGY
MEANS
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Cultural Awareness
Problems that hinder cultural awareness
• Subconscious reactions to circumstances
• Assumption that all societal subgroups are similar
Cultural awareness can be improved
• Research descriptions of specific cultures
• Observe behavior or respected foreign nationals
• Study foreign market directly
Company’s need for cultural knowledge increases as it
• Moves from one to multiple foreign functions
• Increases the number of countries in which it operates
• Moves from similar to dissimilar foreign environments
• Converts from external to internal handling of international
operations
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Identification and Dynamics of Cultures
The nation as a point of reference
• Each nation has certain human, demographic, and behavioral
Characteristics that give it a national identity
– people share values, language, and race
• Laws governing business apply along national lines
• Problems using a country-by-country approach
– individual differences within a country
– similarities link groups from different countries
Cultural formation and dynamics
• Value systems set early in life, but may change
• Values may change due to choice or imposition
– cultural imperialism
• IB increases change in cultures and governments
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Identification and Dynamics of Cultures (cont.)
Language as a cultural stabilizer
• Culture spreads rapidly when people from different areas speak
the same language
• Stronger adherence to a culture if it does not share its language
with other peoples
• English, French, and Spanish are widespread
– most of IB conducted in English
Religion as a cultural stabilizer
• Religion has a strong influence on values
• Specific beliefs may affect business
– not all nations that practice the same religion have the same
constraints on business
– where rival religions vie for political control, resulting strife
may disrupt business
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Behavioral Practices Affecting Business
Social stratification systems
• Every culture values some people more than others, thereby
dictating social class or status
• Ascribed group membership based on:
– gender, family, age, and caste
– ethnic, racial, or national origin
• Acquired group membership based on
– religion, political affiliation, and professional and other
associations
• Characteristics that affect status differently from country to
country include
– Competence—competition versus cooperation
– gender-based groups
– age-based groups
– family-based groups
– occupation
© 2001 Prentice Hall
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Behavioral Practices Affecting Business (cont.)
Motivation—countries differ in how much people are motivated to work
and why
• Materialism and leisure
– countries differ in emphasis on materialism
– Protestant ethic—work a means to salvation
– most people consider economic achievement to be
commendable, regardless of culture
• Expectation of success and reward— people are more eager to
work if:
– rewards for success are high
» same tasks performed in different countries may have
different rewards for success and consequences of
failure
– there is some uncertainty of success
» same task performed in different countries may have
different probabilities of success
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Behavioral Practices Affecting Business (cont.)
Masculinity index—degree of admiration for success, sympathy for
unfortunate, preference for being better than others
• High masculinity cultures
– roles differentiated by gender
– men should dominate
• Low masculinity culture
– need for smooth social relationships
– employee and social welfare has higher priority than growth
and efficiency
Need hierarchy—lower-order needs must be fulfilled prior to higher-order
needs
• Workers in poor countries motivated by lower-order needs
• People from different countries may rank needs differently
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Relationship Preferences
Power distance—describes relationship between superiors and
subordinates
• High—people prefer little consultation
– autocratic or paternalistic management
• Low—consultative styles preferred
– easier to implement worker participation
Individualism versus collectivism
• Individualism—low dependence on organization and desire for
personal time, freedom, and challenge
– self-actualization a prime motivator
• Collectivism—dependence on organization
– value secure physical and social environments
• Influences how employees interact with their colleagues
• Influences marketing strategies
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Risk-Taking Behavior
Uncertainty avoidance
• High—prefer set rules and lifetime employment
– supervisors need to be precise when issuing directives
– customers less willing to try new products
Trust
• Leads to lower cost of doing business
Fatalism—belief in inevitability of events rather than self-determination
• High fatalism—people plan less for contingencies
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Information and Task Processing
Perception of cues
• Cues perceived selectively
• Each culture is able to perceive some subjects more precisely
than other cultures perceive them
Obtaining information
• Low-context culture—focuses on firsthand information that bears
directly on issues to be decided
• High-context culture—focuses on information peripheral to the
issue to be decided
Information processing
• All cultures have ordering and classifying systems
– Monochronic—preference for sequential work
– Polychronic—comfortable working on several tasks
simultaneously
• Idealism versus pragmatism
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Strategies for Dealing with Cultural Differences
Making little or no adjustment
• Host cultures do not always expect foreigners to adjust to them
• Less adjustment necessary when moving to a country with a
similar culture
Communications
Spoken and written language
• Difficult to directly translate one language into another
Silent language
• Color associations, sense of appropriate distance, time and status
cues, and body language (kinesics)
Culture Shock
Frustration from having to learn to cope with new cultural cues and
expectations
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Stages of Culture Shock
High
Acceptance of New Culture
Understanding
Elation
Frustration
Low
1
2
3
4 5 6
Months Living in New Culture
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Company and Management Orientations
Polycentrism
• Overly cautious response to cultural variety
– imitation of local practices
• Decentralized structure
– home office may lose control over local operations
Ethnocentrism
• Belief that home-country practices and objectives should prevail
• Ignores important local factors
• Believes that change is not difficult
Geocentrism
• Between polycentrism and ethnocentrism
• Based on informed knowledge of home- and host-country needs,
capabilities, and constraints
• Preferred approach to IB
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Strategies for Instituting Change
Value system
• The more a change upsets important values, the more resistance
it will engender
Cost benefit of change
• Company must consider the expected cost-benefit relationship of
any adjustments it makes abroad
Resistance to too much change
• Resistance to change may be lower if the number of changes is
not great
• Make fewer demands at one time and phase in other policies
more slowly
Participation
• Discussing proposed change with stakeholders in advance may
reduce resistance
• Participation must not violate prevailing value system
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Strategies for Instituting Change (cont.)
Reward sharing
• Employees are more apt to support change when they expect
personal or group rewards
Opinion leaders
• Should be convinced first about benefits of change
• Can help speed up the acceptance of change
Timing
• Change should be timed to occur when resistance is likely to be
low
• Must attend to attitudes and needs of culture
Learning abroad
• International companies should learn things abroad that they can
apply at home
© 2001 Prentice Hall
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