MBA 713 - Chapter 04

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MBA 713 - Chapter 04

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  • Firms and businesspeople venturing beyond their familiar domestic markets soon recognize that foreign business customs, values, and definitions of ethical behavior differ vastly from their own. Indeed, virtually all facets of an international firm’s business may be affected by cultural variations. This chapter highlights some of the cultural differences among countries and explains how understanding those differences is essential for international businesspeople.
  • This chapter’s learning objectives include the following:Discussing the primary characteristics of culture. Describing the various elements of culture and providing examples of how they influence international business. Identifying the means by which members of a culture communicate with each other. Discussing how religious and other values affect the domestic environments in which international businesses operate.
  • Additional learning objectives include:Describing the major cultural clusters and their usefulness for international managers.Explaining Hofstede’s primary findings about differences in cultural values.Explaining how cultural conflicts may arise in international business.
  • Culture is the collection of values, beliefs, behaviors, customs, and attitudes that distinguish one society from another. A society’s culture determines the rules that govern how firms operate within the society.
  • Several characteristics of culture are worth noting for their relevance to international business:Culture reflects learned behavior that is transmitted from one member of a society to another, and the elements of culture are interrelated. Furthermore, because culture is learned, it is adaptive; that is, the culture changes in response to external forces that affect the society. Finally, culture is shared. Individuals who share a culture are members of a society; those who do not are outsiders.
  • This section provided an overview of the Characteristics of Culture. The next section will examine the Elements of Culture.
  • A society’s culture determines how its members communicate and interact with each other. The basic elements of culture are social structure, language, communication, religion, and values and attitudes. The interaction of these elements affects the local environment in which international businesses operate. They also affect the ability of countries to respond to changing circumstances.
  • Basic to every society is its social structure—theoverall framework that determines the roles of individuals within the society, the stratification of the society, and individuals’ mobility within the society.
  • All human societies involve individuals living in family units and working with each other in groups. However, societies differ in the way they define the family and the relative importance they place on the individual’s role within groups. The view of family ties and responsibility in the United States focuses on the nuclear family. In other cultures, the extended family is more important—including uncles, brothers, cousins, and in-laws as family members who are owed obligations of support and assistance. Other societies define family even more broadly; for example, focusing on clans, each one comprised of individuals of the same tribe who share a common ancestor. Cultures also differ in the importance of the individual relative to the group. Culture in the United States, for example, promotes individualism. Conversely, in group-focused societies such as Japan, children are taught that their role is to serve the group.
  • Societies differ in their degree of social stratification; that is, how people are classified on the basis of birth, occupation, educational achievements, or other attributes. In addition, the importance of these categoriesvaries by society. Multinational corporations (MNCs) operating in highly stratified societies often must adjust their hiring and promotion procedures to take into account class or clan differences among supervisors and workers. Hiring members of one group to do jobs traditionally performed by members of another group may lower productivity and morale on the job. In less stratified societies, firms are freer to seek out the most qualified employees, regardless of whether they went to the right school or belong to all the best clubs. Social mobility allows individuals to move from one stratum of society to another. Such mobility tends to be higher in less stratified societies. Social mobility (or the lack of it) often affects individuals’ attitudes about such factors as labor relations, human capital formation, risk taking, entrepreneurship, and education.
  • Language is a primary delineator of cultural groups because it is an important means by which a society’s members communicate with each other. Language organizes the way members of a society think about the world. In addition, language provides important clues about a society’s cultural values and aids in the acculturation of that society. The presence of more than one language group is an important signal about the diversity of a country’s population. It also signals differences in income, cultural values, and educational achievement. Generally, countries dominated by one language group tend to have a homogeneous society. Countries with multiple language groups tend to be heterogeneous, with language providing an important means of identifying cultural differences within the country.
  • Linguistic ties often create important competitive advantages because the ability to communicate is so important in conducting business transactions. English has emerged as the predominant common language, or lingua franca of international business. However, failure by native English speakers to learn a second language puts them and their firms at a decided disadvantage when negotiating or operating on foreign turf.Of course, some linguistic differences may be overcome through translation. The process, however, requires more than merely substituting words of one language for those of another. Translators must be sensitive to subtleties in the connotations of words and focus on translating ideas, not just the words themselves.Even the use of yes and no differs across cultures. In contract negotiations, Japanese businesspeople often use yes to mean, “Yes, I understand what is being said” rather than, “Yes, I agree with you.” Misunderstandings can be compounded because directly uttering no in some cultures is considered impolite or inhospitable. In such cultures, negotiators who find a proposal unacceptable will suggest that it “presents many difficulties” or requires “further study.”
  • This section explored the following Elements of Culture: social structure; individuals, families, and groups; social stratification; and functions and cultural aspects of language. The next section will cover Communication.
  • Communicating across cultural boundaries is an important skill for international managers. Although communication can often go awry between people who share a culture, the chances of miscommunication increase substantially when the people are from different cultures. In such cases, the senders encode messages using their cultural filters, and the receivers decode the same messages using their filters. The result of using different cultural filters can be a misunderstanding that is expensive to resolve.
  • Members of a society communicate with each other using more than words. In fact, some researchers believe that 80 to 90 percent of all information is transmitted among members of a culture by means other than language. This nonverbal communication includes facial expressions, hand gestures, intonation, eye contact, and body language. Although most members of a society share an understanding of common nonverbal forms of communication, outsiders may find that society’s nonverbal communication difficult to comprehend.Because of cultural differences, nonverbal forms of communication often can lead to misunderstandings. For instance, the meanings of certain hand gestures can differ dramatically from culture to culture. Needless to say, international businesspeople should avoid gesturing in a foreign culture, unless they are sure of how those gestures will be interpreted in that culture. 
  • Gift-giving and hospitality are important means of communication in many business cultures. Japanese business etiquette requires solicitous hospitality, such as elaborate meals and after-hours entertainment to build personal bonds and group harmony among the participants. These personal bonds are strengthened by the exchange of gifts; however, business gifts are opened in private. That way, the giver will not lose face should the gift be too expensive or too cheap relative to the gift offered in return. The business culture of Arab countries also includes gift-giving and elaborate hospitality, as a means of assessing proposed business partners. Unlike in Japan, however, business gifts are opened in public so that all may be aware of the giver’s generosity. Hospitality customs also differ. American executives often seek the most conspicuous table in a fancy restaurant as a means of communicating their status and clout. In China, business banquets are an important mechanism for developing the personal relationships so important in that business culture. However, such events, are normally located in a private dining room at an expensive restaurant.  
  • This section explored nonverbal communication, gift-giving, and hospitality, as they apply to international Business Communication. The next section will explore The Effects of Religious and Other Values on Domestic Environments for International Business.
  • Religion is an important aspect of most societies. It affects the ways in which members of a society relate to each other and to outsiders.
  • Religion shapes the attitudes its adherents have toward work, consumption, individual responsibility, and planning for the future. The Protestant ethic stresses hard work, frugality, and achievement as ways of glorifying God. Hinduism emphasizes spiritual accomplishment, rather than economic success. Islam is supportive of capitalism, but it places more emphasis on the individual’s obligation to society. Religion affects the business environment in other important ways. Often religions impose constraints on the roles of individuals in society. For example, the caste system of Hinduism restricts the jobs that individuals may perform, thereby affecting the labor market and business opportunities. Religion may also affect the way products are advertised and sold. The precept that “sex sells” may hold true in Western society, but it would not be accepted in societies that are predominately Muslim. Religion also affects the types of products consumers may purchase, as well as seasonal patterns of consumption. In Christian countries, the Christmas season represents an important time for gift-giving. While consumption booms during this season, production falls as employees take time off to visit friends and family.
  • The impact of religion on international businesses varies from country to country, depending on the country’s legal system, its homogeneity of religious beliefs, and its toleration of other religious viewpoints. In some countries, strong political pressure exists to preserve religious traditions. In such situations, it would be impossible to overstate the importance of understanding how politics and religion affect exporting, producing, marketing, or financing goods. In many other countries, religion is important, yet it does not permeate every facet of life. Ironically, countries characterized by religious diversity may offer even greater challenges. Firms that operate in the cosmopolitan cities of London and New York must accommodate the diverse religious needs of their employees and customers by taking into account differences in religious holidays, dietary restrictions, and Sabbath days. Firms that fail to adjust to these needs may suffer from absenteeism, low morale, and lost sales. 
  • Culture also affects and reflects the secular values and attitudes of the members of a society. Cultural values often stem from deep-seated beliefs about the individual’s position in relation to his or her deity, the family, and the social hierarchy. Cultural attitudes toward such factors as time, age, education, and status reflect these values in a given culture.Attitudes about time differ dramatically across cultures. In Anglo-Saxon cultures, “time is money,” so it is not to be wasted. In Latin American cultures, few participants would think it was unusual if a meeting began 45 minutes after the appointed time. Important cultural differences exist in attitudes toward age. Many U.S. firms devote much time and energy to identifying young “fast-trackers” and providing them with important assignments. In Asian and Arab cultures, however, age is respected and a manager’s stature is correlated with age.  A country’s formal system of public and private education is an important transmitter and reflection of the cultural values of its society. The United States prides itself on providing widespread access to higher education. In contrast, the United Kingdom, has historically provided an elite education to a relatively small number of students. The means by which status is achieved also vary across cultures. In some societies, status is inherited as a result of the wealth or rank of one’s ancestors, or conferred by the status of the group to which a person belongs. In others, status is earned through personal accomplishments or professional achievements.
  • This section explored The Effects of Religious and Other Values on Domestic Environments of International Business. The next section will cover Cultural Clusters and International Management.
  • The various elements of national culture affect the behavior and expectations of managers and employees in the workplace. International businesspeople face the challenge of managing and motivating employees with different cultural backgrounds.
  • One useful way of characterizing differences in cultures is the low-context–high-context approach developed by Edward and Mildred Hall. In a low-context culture, the words used by a speaker convey the message to the listener; hence, the specific terms of a transaction are important. The United States and Germanic countries are good examples of low-context culturesIn a high-context culture, the context in which a conversation occurs is just as important as the words that are actually spoken. Furthermore, high-context cultures consider interpersonal relationships when deciding whether to enter into a business arrangement. Japan and Arab countries exemplify high-context cultures.  
  • The cultural cluster approach is another technique for classifying and making sense of national cultures. Researchers have analyzed such factors as job satisfaction, work roles, and interpersonal work relations in an attempt to identify clusters of countries that share similar cultural values that can affect business practices. Their findings suggest that similarities exist among many cultures, thereby reducing some of the need to customize business practices to meet the demands of local cultures. Many international businesses instinctively utilize the cultural cluster approach in formulating their internationalization strategies. Furthermore, closeness of culture may affect the method that a firm uses to enter a foreign market.
  • This section explored Cultural Clusters and International Management. The discussion focused on Hall’s cultural context approach and the cultural cluster approach. The next section will review Hofstede’s Findings on Differences in Cultural Values.
  • The most influential studies analyzing cultural differences and synthesizing cultural similarities were performed by Geert Hofstede, a Dutch researcher who studied 116,000 people working for IBM in dozens of different countries. Although Hofstede’s work has been criticized for methodological weaknesses and his own cultural biases, it remains the largest, most comprehensive work of its kind.
  • Hofstede identified five important dimensions along which people seem to differ across cultures: i.e., social, power, uncertainty, goal, and time orientations. These dimensions reflect tendencies within cultures, not absolutes. Within any given culture, there are likely to be people at every point on each dimension.
  • Social orientation is a person’s beliefs about the relative importance of the individual and the groups to which that person belongs. The two extremes of social orientation are individualism and collectivism. Individualism is the cultural belief that the person comes first. Key values of individualistic people include a high degree of self-respect and independence. They tend to put their career interests first and weigh decisions from their own point of view. Hofstede asserted that people in the United States, Australia, Canada, New Zealand, and the United Kingdom tend to be relatively individualistic.Collectivism is the belief that the group comes first. Collectivistic societies are usually characterized by well-defined social networks, such as extended families, tribes, or coworkers. People are expected to put the good of the group ahead of their own personal welfare, interests, or success. According to Hofstede, people from Mexico, Greece, Hong Kong, Singapore, Colombia, and Pakistan tend to be relatively collectivistic in their values.
  • Power orientation refers to the beliefs that people in a culture hold about the appropriateness of power and authority differences in hierarchies, such as business organizations.Some cultures are characterized by power respect. They tend to accept the authority of a leader or manager based on that person’s position in an organization’s hierarchy. These same people also tend to respect that person’s right to power. In Hofstede’s opinion, people in France, Spain, Mexico, Japan, Brazil, Indonesia, and Singapore tend to be relatively power respecting.In contrast, people in cultures characterized by power tolerance attach much less significance to a person’s formal position in a hierarchy. Such people are willing to follow a leader, if they believe that person is right or if their self-interests will be served by doing so. Hofstede suggested that people in the United States, Israel, Austria, Denmark, Ireland, Norway, Germany, and New Zealand tend to be more power tolerant.
  • Uncertainty orientation is the feeling people have regarding uncertain and ambiguous situations. People in cultures characterized by uncertainty avoidance dislike ambiguity and will avoid it whenever possible. These people tend to prefer a structured and routine, even bureaucratic, way of doing things. Hofstede found that many people in Israel, Austria, Japan, Italy, Colombia, France, Peru, and Germany tend to avoid uncertainty whenever possible. People in cultures characterized by uncertainty acceptance are stimulated by change and thrive on new opportunities. Ambiguity is seen as a context within which an individual can grow and develop. Hofstede suggested that people from the United States, Denmark, Sweden, Canada, Singapore, Hong Kong, and Australia are more likely to accept uncertainty.
  • Hofstede’s fourth dimension, goal orientation is the manner in which people are motivated to work toward different kinds of goals. One extreme on the goal orientation continuum is aggressive goal behavior. People who exhibit aggressive goal behavior tend to place a high premium on material possessions, money, and assertiveness. According to Hofstede’s research, many people in Japan tend to exhibit relatively aggressive goal behavior, whereas many people in Germany, Mexico, Italy, and the United States exhibit moderately aggressive goal behavior.  At the other extreme, people who adopt passive goal behavior place a higher value on social relationships, quality of life, and concern for others. In Hofstede’s opinion, people from the Netherlands, Norway, Sweden, Denmark, and Finland tend to exhibit relatively passive goal behavior.
  • Hofstede’s fifth dimension, time orientation is the extent to which members of a culture adopt a long-term versus a short-term outlook on work, life, and other aspects of society. Some cultures, such as those of Japan, Hong Kong, Taiwan, and South Korea, have a long-term, future orientation. Members of those cultures value hard work, dedication, perseverance, and thrift. Other cultures, including those of Pakistan and West Africa, tend to focus on the past and present, emphasizing respect for traditions and fulfillment of social obligations. Hofstede’s work suggests that the people who live in the United States and Germany tend to have an intermediate time orientation.
  • This section explored Hofstede’s Findings on Differences in Cultural Values. The discussion focused on the five dimensions of national culture. The next section will cover International Management and Cultural Differences.
  • Some experts believe the world’s cultures are growing more similar as a result of improvements in communication and transportation. They also assert that multinational corporations facilitate this cultural convergence in two ways:Through advertisements that define appropriate lifestyles, attitudes, and goals.By bringing new management techniques, technologies, and cultural values into the international marketplace.Nevertheless, cultural differences do exist in global markets.
  • When dealing with a new culture, many international businesspeople make the mistake of relying on the self-reference criterion, the unconscious use of one’s own culture to help assess new surroundings. International businesspeople traveling abroad must remember that they are the foreigners and behave according to the rules of the culture at hand. There are numerous ways to obtain knowledge about other cultures to achieve cross-cultural literacy. The best and most common way, not surprisingly, is through personal experience that results from conducting business abroad or from non-business travel.Cross-cultural literacy is the first step in acculturation, the process by which people not only understand a foreign culture but also modify and adapt their behavior to fit into that culture. To complicate matters, many countries have more than one culture, although the level of such cultural diversity varies by country. Successful international businesspeople must recognize the attributes of the primary national culture, as well as any important subcultures, in culturally heterogeneous societies.
  • This section has explored the following elements that pertain to International Management and Cultural Differences: the self-reference criterion, cross-cultural literacy, and acculturation. The presentation will close with a review of this chapter’s learning objectives.
  • This concludes the PowerPoint presentation on Chapter 4, “The Role of Culture.” During this presentation, we have accomplished the following learning objectives: Discussed the primary characteristics of culture. Described the various elements of culture and provided examples of how they influence international business. Identified the means by which members of a culture communicate with each other. Discussed how religious and other values affect the domestic environments in which international businesses operate.Described the major cultural clusters and their usefulness for international managers.Explained Hofstede’s primary findings about differences in cultural values.Explained how cultural conflicts may arise in international business.For more information about these topics, refer to Chapter 4 in International Business.
  • MBA 713 - Chapter 04

    1. 1. Chapter 4 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 1 The Role of Culture
    2. 2. Learning Objectives • Discuss primary characteristics of culture • Describe elements of culture and how they influence international business • Identify the ways that members of a culture communicate with each other • Discuss how religious and other values affect the domestic environments in which international businesses operate Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 2
    3. 3. Learning Objectives • Describe the major cultural clusters and their usefulness for international managers • Explain Hofstede’s primary findings about differences in cultural values • Explain how cultural conflicts may arise in international business Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 3
    4. 4. Characteristics of Culture Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 4
    5. 5. Primary Characteristics Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 5 Learned Interrelated SharedAdaptive
    6. 6. Summary of Discussion Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 6
    7. 7. Elements of Culture Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 7
    8. 8. Social Structure Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 8 The Roles of Individuals in Society Social Stratification and Mobility
    9. 9. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - Individuals, Families, and Groups 9 • Family Structure • Individualism • Group Service
    10. 10. Social Stratification Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 10 Types of Societies Higher Stratification Lower Stratification Social Mobility Lower Higher
    11. 11. Functions of Language Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 11 Delineates Cultural Groups Thought Patterns Cultural Values Acculturation Diversity
    12. 12. Cultural Aspects of Language Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 12 Competitive Advantage Lingua Franca Saying “Yes” or “No” Translation
    13. 13. Summary of Discussion Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 13
    14. 14. Communication Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 14
    15. 15. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 15 • Expressions • Gestures • Intonation • Eye Contact • Body Language Nonverbal Forms
    16. 16. Gifts and Hospitality Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 16 Etiquette Customs
    17. 17. Summary of Discussion Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 17
    18. 18. Effects of Religion and Values on International Businesses Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 18
    19. 19. Attitudes of Adherents Constraints on Social Roles Product Sales and Advertisements Seasonal Patterns of Consumption Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 19 Religion
    20. 20. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 20 Impact of Religion on International Business • Legal System • Homogeneity • Tolerance
    21. 21. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 21 Time StatusEducation Age Values and Attitudes
    22. 22. Summary of Discussion Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 22
    23. 23. Cultural Clusters and International Management Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 23
    24. 24. Hall’s Cultural Context Approach Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 24 High Context Low Context
    25. 25. Cultural Clusters Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 25 Similarities and Business Practices Internationalization Strategies Foreign Market Entry Methods
    26. 26. Summary of Discussion Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 26
    27. 27. Hofstede’s Findings on Differences in Cultural Values Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 27
    28. 28. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 28 The Five Dimensions Individual Collective Respect Accepting Aggressive Long-Term Tolerance Avoiding Passive Short-Term Power Orientation Uncertainty Orientation Social Orientation Goal Orientation Time Orientation
    29. 29. Social Orientation Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 29 •Collectivism •Individualism
    30. 30. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 30 Power Orientation •Respect •Tolerance
    31. 31. Uncertainty Orientation Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 31 •Acceptance •Avoidance
    32. 32. Goal Orientation Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 32 •Passive •Aggressive
    33. 33. Time Orientation Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 33 Short Term Long Term
    34. 34. Summary of Discussion Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 34
    35. 35. International Management and Cultural Differences Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 35
    36. 36. Understanding New Cultures Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 36 Self-Reference Criterion Cross-Cultural Literacy Acculturation
    37. 37. Summary of Discussion Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 37
    38. 38. Chapter 4 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 38 The Role of Culture
    39. 39. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 4 - 39 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

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