Chapter Two
The Cultural Environments
Facing Business
2004 Prentice Hall, Inc
2-1
International Business 10e Daniels/Radebaugh/Sullivan
International Business
Chapter Objectives
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Understand cultural environments
Explain major causes of cultural
difference and change
Examine behavioral factors
influencing countries business
practices
Examine cultural guidelines for
companies that operate
internationally
2-2
Introduction

Culture represents the specified learned norms of a
society, based on attitudes, values, and beliefs.

Major problems of cultural collision may occur
because:
A firm implements practices that do not reflect local
customs and values;
Its employees are unable to accept or adjust to
foreign behaviour.
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Major Cultural Issues

Problems arise in international business
when:
• Employees have subconscious reactions
• Employees assume all societal groups are
similar
• A company implements practices of work less
well than intended
• Employees encounter distress because of an
inability to accept or adjust to foreign cultural
behaviors
• Companies/employees are insensitive to
foreign consumer preferences
2-3
Cultural Awareness

Firms must develop awareness about those cultures in
which they operate.

The amount of effort needed to do this depends on the
similarities between or among countries, and the type of
business operations undertaken .
Identification and Dynamics of Cultures

The Nation as a Point of Reference
Cultural Formation and Dynamics
Cultural values may change through:
- Change by Choice: takes place as a reaction to social and
economic changes that present new alternatives.
- Change by Imposition (Cultural imperialism):
occurs when countries introduce their legal systems into their
colonies by prohibiting established practices and defining them
as criminal.
- The introduction of some, but not all, elements of an outside
culture often is called creolization, indigenization, or
cultural diffusion.
- Contact with other cultures
Cultural Factors at Play

Cultural awareness
• Apparel
• Religion
• Language


Identification and dynamics of
cultures
Behavior practices affecting
business
• Timeliness
• Ethics

Strategies for dealing with
cultural differences
• Education
• Research
2-4
Identification of Cultures
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Cultures are derived with people with
shared attitudes, values, and beliefs
People also belong to national, ethnic,
professional, and organizational cultures
Points of reference:
•
•
•
•

National
Geographic
Language
Religion
International business often changes
cultures
2-5
World Output by Language Group
LANGUAGE
English
Mandarin
Spanish
German
French
Arabic
Hindi
Other
% OF WORLD OUTPUT
33%
10%
7%
7%
5%
3%
2%
33%
2-6
Major Religions of the World
RELIGION
Christian
Muslim
Hindu
Chinese folk
Buddhist
Sikh
Judaic
NUMBER OF ADHERENTS
(in millions)
2,000,000
1,188,000
811,000
384,000
360,000
23
14
2-7
Behavioral Practices Affecting Business

Social Stratification Systems
• Individuals status with the culture

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Managerial groups may be highly valued
Employees may be valued less
• Ascribed (qualified) group memberships

Gender, family, age, class, and ethnic, racial
or national origin
• Acquired (obtain) group memberships

Religion, political affiliations, and professional
and other associations
2-8
United States “Values”
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COMPETENCE!
Intolerance for discrimination based upon:
•
•
•
•
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Gender
Race
Age
Religion
Although equality is not applied perfectly, in
many other cultures, this competence is of
secondary importance
Since our values may seem radical to foreigners
it is of extreme importance that international
businesses spend the resources to determine
what foreign cultures they can ethically and
effectively conduct business in
2-9
Characteristic-Based Groups

Gender-based groups
• China
• India
• Afghanistan
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Age-based groups (United States)
Family-based groups
Occupation (United Kingdom)
2-10
Motivation
Cultural difference in:
• Work ethic
• Greediness
• Leisure
- Protestant work ethic
• Expectation of success and reward
Perceived likelihood of success and reward is an
important factor, which motivates a person’s
behaviour toward working.
In general, People have little enthusiasm:
- For efforts that seem too easy or too difficult;
- Where the probability of success or failure seems
almost certain.
2-11
The highest degrees of enthusiasm occur when the
uncertainty (success is uncertain) is high.
In general, people will usually work harder at any task
when the reward for success is high compared with that
of failure.
In cultures where the probability of economic failure is
almost certain and the perceived rewards of success are
low, there is a tendency to view work as necessary but
unsatisfying.
The greatest enthusiasm for work exists where high
uncertainty of success is combined with the likelihood of
a very positive reward for success and little or none for
failure.
• Need Hierarchy
Relationship Preferences

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Power distance:
relationship between
superiors and subordinates
Individualism vs.
collectivism
• United States is clearly
different from Japan
• China is clearly different from
Mexico

Risk-taking behavior
•
•
•
•
Uncertainty avoidance
Trust
Future orientation
Fatalism
2-12
Power Distance
When power distance is high: the management style is
usually distant (autocratic or paternalistic).
When power distance is low: managers tend to interact
with and consult their subordinates.
Individualism vs. Collectivism
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Individualism: A person’s desire for personal
freedom, time and challenge.
Low dependence on the organization
Self-actualization.
Collectivism
Collectivism: A person’s dependence on
and allegiance to the organization.
Focus on physical and emotional needs.
Differences in Information and Task Processing
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1.
2.
We perceive, obtain, and process information
differently.
We also reach conclusions differently.
Perception of cues
Obtaining information
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3.
Low-context cultures (United States)
Information Processing
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Sequentially or simultaneously
Focused or broad
Handling principles or small issues first
2-13
Perception of Cues
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People perceive signals selectively.
People identify what things are through their senses.
Obtaining information
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Low-Context Cultures: Most people consider firsthand
information to be the only information relevant to the
decision to be made.
High-Context Cultures: Most people believe that minor
information is valuable to decision making and conclude
meanings from things said indirectly.
Information Processing
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Monochronic Cultures: People prefer to work
sequentially.
Polychronic Cultures: People prefer to work
simultaneously on all tasks faced.
Some cultures tend to focus first on the whole and then
on the parts. Others focus first on the parts and then on
the whole.
Idealism: When people determine principles before they
try to resolve small issues.
Pragmatism: People focus on more on details rather than
principles.
Communication Problems
 Spoken and Written Language
- Be sensitive to accurate translations
- Some words do not have a direct translation.
- Languages and the common meaning of words are
constantly changing.
- Words may mean different things in different contexts.
- Misusing words may change the meaning significantly.
- Rules for choosing translators.
Language Strategies
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Get references for translators
Ensure the translator is familiar with
technical vocabulary for the business
Do a back translation
Use simple words
Avoid slang
Repeat words and ask questions
Expect the extra time communication will
take
2-16
Language Groups
2-17
Silent Language
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Be tolerant of differing perceptions of
time
Understand the message sent by body
language
2-14
Accommodation to Foreigners
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Advantages of adjusting to the host country culture.
International companies have sometimes succeeded in
introducing new products, technologies,and operating
procedures to foreign cultures with little adjustment.
Introductions did not significantly contradict deepseated values.
The host society may be willing to accept foreign
customs as a trade-off for other advantages.
Cultural Distance and Similarity
When doing business in a similar culture, companies:
 Usually have to make fewer adjustments.
 May overlook subtle differences.
Culture Shock
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Some people get frustrated when entering a different
culture.
Even when differences are not significant, culture shock can
happen: the frustration that results when having to learn
and cope with a vast array of new cultural values and
expectations.
Reverse Culture Shock: when some people encounter
culture shock when they return to their home countries
because they have learned to accept what they have
encountered abroad.
Cultural Orientations

International businesses adopt an attitude towards foreign
cultures
Polycentrism: control is decentralized so regional
managers can conduct business in a local manner.
Disadvantages:
• A company that is too polycentric may avoid
transferring home-country practices or resources
that actually may work well abroad.
• To compete effectively with local companies, an
international company must perform certain
functions in a distinct way.
• Excessive polycentrism may lead to extensive
imitation of host-country practices, which may
lead to losing innovative superiority.
2-18
• Ethnocentrism: belief that one’s own culture is
superior and ignores important factors
• Geocentrism: a hybrid of polycentrism and
ethnocentrism, the middle ground

Companies MUST evaluate their practices
to ensure they account for national
cultural norms
Cultural Influences
2-15
Hierarchy Comparisons
2-19
Chapter Review




Understand cultural environments
Explain major causes of cultural
difference and change
Examine behavioral factors
influencing countries business
practices
Examine cultural guidelines for
companies that operate
internationally
2-20