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- 1. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-1 International Business Environments and Operations Part Two Comparative Environmental Frameworks
- 2. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-2 Chapter Two The Cultural Environments Facing Business
- 3. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-3 Chapter Objectives • To understand methods for learning about cultural environments • To analyze the major causes of cultural difference and change • To discuss behavioral factors influencing countries’ business practices • To understand cultural guidelines for companies that operate internationally
- 4. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-4 Culture Learned norms based on values, attitudes, and beliefs of a group of people
- 5. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-5 Cultural Diversity A means of gaining global competitive advantage by bringing together people of diverse backgrounds and experience
- 6. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-6 Cultural Collision • Occurs in international business when: A company implements practices that are less effective Employees encounter distress because of difficulty in accepting or adjusting to foreign behaviors
- 7. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-7 Cultural Factors Affecting International Business Operations
- 8. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-8 Cultural Awareness • Problem areas that can hinder managers’ cultural awareness… Subconscious reactions to circumstances The assumption that all societal subgroups are similar
- 9. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-9 The Idea of a “Nation” – Delineating Cultures The nation is a useful definition of society because: • Similarity among people is a cause and an effect of national boundaries • Laws apply primarily along national lines
- 10. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-10 The Nation as a Cultural Mediator • A national culture must be flexible enough to accommodate the diversity of various subcultures, ethnic groups, races, and classes • Yet every nation boasts certain human, demographic, and behavioral characteristics that constitute its national identity
- 11. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-11 Country-By-Country Analysis • Managers find this difficult to implement because: Subcultures exist within nations Similarities link groups from different countries
- 12. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-12 How Cultures Form and Change • Change by Choice Reaction to social and economic situations • Change by Imposition Imposed introduction into a culture of certain elements from an alien culture
- 13. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-13 Language as Both a Diffuser and Stabilizer of Culture A common language within a country is a unifying force
- 14. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-14 Major Language Groups: Population and Output
- 15. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-15 Religion As A Cultural Stabilizer Centuries of profound religious influence continue to play a major role in shaping cultural values and behavior
- 16. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-16 Behavioral Practices Affecting Business • Issues in Social Stratification Social ranking is determined by: • Factors pertaining to you as an individual • Factors pertaining to your affiliation with certain groups
- 17. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-17 Group Affiliations Can Be: • Ascribed or Acquired Include those based on gender, family, age, caste, ethnic, racial, or national origin • A reflection of class and status Include those based on religion, political affiliation, and professional and other associations
- 18. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-18 Social Stratification and Employment Practices • Performance Orientation • Open and Closed Societies • Gender-Based Groups • Age-Based Groups • Family-Based Groups
- 19. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-19 Work Motivation • Materialism and Motivation • Expectation of Success and Reward • Performance and Achievement: The Masculinity- Femininity Index • Hierarchies of Needs
- 20. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-20 Hierarchy of Needs
- 21. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-21 Relationship Preferences • Power Distance • Individualism Versus Collectivism
- 22. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-22 Risk-Taking Behavior • Uncertainty Avoidance • Trust • Future Orientation • Fatalism
- 23. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-23 Information and Task Processing • Perception of Cues • Obtaining Information: Low Context versus High Context Cultures • Information Processing • Monochronic Versus Polychronic Cultures • Idealism Versus Pragmatism
- 24. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-24 Communication • Spoken and Written Language • Silent Language • Distance • Time and Punctuality • Body Language • Prestige
- 25. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-25 Body Language Is Not A Universal Language
- 26. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-26 Degree of Cultural Differences Cultural Distance When a company moves within a cluster of culturally similar countries, it should expect to encounter fewer cultural differences and to face fewer cultural adjustments. Cultural Friction A business interaction may be viewed negatively because of possible changes in power relationships and the sovereignty that sets countries apart.
- 27. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-27 Company and Management Orientations • Polycentrism belief that business units in different countries should act like local companies • Ethnocentrism conviction that one’s own culture is superior to that of other countries • Geocentrism requires companies to balance knowledge of their own organizational cultures with both home and host country needs, capabilities, and constraints
- 28. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-28 Strategies for Instituting Change • Value Systems • Cost-Benefit Analysis of change • Resistance to too much change • Participation • Reward Sharing • Opinion Leadership • Timing • Learning Abroad
- 29. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-29 Future: What will happen to national cultures? • Scenario 1. New hybrid cultures will develop and personal horizons will broaden • Scenario 2. Outward expressions of national culture will continue to become homogeneous while distinct values will remain stable • Scenario 3. Nationalism will continue to reinforce cultural identity • Scenario 4. Existing national borders will shift to accommodate ethnic differences
- 30. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 2-30 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.
Editor's Notes
- Culture can be based on nationality, ethnicity, gender, religion, work organization, profession, age, political party membership, income level…etc. International business activities incorporate people from all different groups and backgrounds, thus, every business function is subject to cultural difference.
- By bringing together people of diverse backgrounds and experience, companies often gain a deeper knowledge about products and services and ways in which to produce and deliver them. Chapter 1 identified two means of gaining useful knowledge from overseas activities: (1) Learning from foreign operating experiences and (2) tapping into foreign intellectual competencies.
- An international firm doing business in another country must determine which of that nation’s business practices differ from its own and then decide what adjustments, if any, are necessary if it is to operate efficiently.
- Businesspeople can learn to improve awareness and sensitivity and, by educating themselves, enhance the likelihood of succeeding abroad. Gathering some basic research on another culture can be instructive. In addition, managers must assess the information they gather to determine if it perpetuates unwarranted stereotypes, covers only limited facets of a country and its culture, or relies on outdated data. They should also observe the behavior of those people who have garnered the kind of respect and confidence they themselves will need.
- Within its borders, a nation’s people largely share such essential attributes as values, language, and race. There is a feeling of “we” that casts foreigners as “they.” National identity is perpetuated through rites and symbols—flags, parades, rallies—and the preservation of national sites, documents, monuments, and museums promotes a common perception of history.
- When international businesspeople compare nations, they must be careful to examine relevant groups—differentiating, for example, between the typical attitudes of rural dwellers and those of urban dwellers, or those of young people versus old people. Certain cultural attributes can link groups of different countries, sometimes even more closely than with groups of a given nation.
- As a rule, contact among countries brings change—a process known as cultural diffusion. When this change results in mixing cultural elements, the process is known as creolization.
- When people from different areas speak the same language, culture spreads more easily. That fact helps explain why there’s greater cultural homogeneity among all English-speaking countries or among all Spanish-speaking countries than between English-speaking countries and Spanish-speaking countries. Among nations that share a same language, commerce is easier because translating everything (which can be both time consuming and expensive) isn’t necessary. Thus when people study second languages, they usually choose the ones that are most useful in interacting with other countries, especially in the realm of commerce.
- Many of these religions—Buddhism, Christianity, Hinduism, Islam, and Judaism—influence specific beliefs that may affect business, such as inhibiting the sale of certain products or the performance of work at certain times. McDonald’s, for example, serves neither beef nor pork in India so as not to offend either its Hindu or Muslim populations, and El Al, the Israeli national airline, does not fly on Saturday, the Jewish Sabbath. In places where rival religions or factions are vying for political control, the resulting strife can cause so much upheaval that business activity suffers, whether from property damage, broken supply chains, or breaches in connections with customers.
- Social stratification also affects employment practices. Performance Orientation: companies tend to base a person’s eligibility for employment and promotion primarily on competence, thereby fostering work environments driven more by competition than by cooperation. Open and Closed Societies: The more egalitarian, or “open,” a society, the less the importance of ascribed group membership in determining rewards. In other cases, ascribed group memberships deny large numbers of people equal access to the preparation needed to qualify for jobs. In much of sub-Saharan Africa, for instance, the literacy rate for women is much lower than that for men. Gender-Based Groups: Countries differ in tradition and attitude toward gender equality. In many parts of the world, however, barriers to gender-based employment practices are coming down, due to changes in both attitudes and work requirements. In the United States, one noticeable change in attitudes has been reflected in the number of people of one gender employed in occupations previously dominated by the other, such as the increase in male nurses. Further, there’s been a decrease in production jobs requiring brawn and an increase in jobs for people with specialized education. Age-Based Groups: Country differences in attitudes concerning age can affect business operations. For example, the Japanese hold strongly to the assumption that there’s a significant correlation between age and wisdom. That’s why the seniority system, although now declining in importance, plays a key role in promotion and compensation decisions in Japan—much more so than in Western countries. Family-Based Groups: In some cultures—say, much of Latin America—the most important group membership is the family. An individual’s position in society at large depends heavily on the family’s social status or “respectability” rather than on individual achievement. Because family ties are so strong, there may also be a tendency to cooperate more closely within the family unit than in other relationships.
- Max Weber observed when developing a theory, the Protestant ethic, which reflects the belief that work is a pathway to salvation and that material success does not impede salvation. We do tend to adhere to the underlying values of Weber’s concept: namely, that self-discipline, hard work, honesty, and a belief in a just world foster work motivation and, thus, economic growth. Two factors that motivate attitudes toward work are the perceived likelihood of success and the reward from success versus failure. Generally, people have little enthusiasm for efforts when the likelihood of success seems too easy or too difficult. Why? Because the probability of success on the one hand or failure on the other seems almost certain. Performed in different countries, the same tasks come with different probabilities of success, different rewards for success, and different consequences for failure. We find the greatest enthusiasm for work when high uncertainty of outcome is combined with the likelihood of a positive reward for success and little or no reward for failure. Differences among countries in attitudes toward work and achievement can be measured using the masculinity-femininity index. The degree to which individuals are assertive, confrontational, and aggressive in their relationships with others varies across borders. Such attitudinal differences help explain why an international company may encounter managers abroad who behave differently from what it expects or prefers. The hierarchy-of-needs theory, can be helpful in differentiating among the reward preferences of employees in different countries. In very poor countries, for example, a company can motivate workers simply by providing enough compensation to satisfy their needs for food and shelter. Elsewhere, workers are motivated by other needs. Needs are broken down into physiological needs, security needs, affiliation needs, esteem needs, and self-actualization needs. The way in which these needs are ranked differs among countries.
- From country to country, likely employee preferences differ in terms of interacting with bosses, subordinates, and peers. Power distance refers to the general relationship between superiors and subordinates. Where power distance is high, people prefer little consultation between superiors and subordinates. Employees usually prefer one of two management styles: autocratic (ruling with unlimited authority) or paternalistic (regulating conduct by supplying needs). Where power distance is low, they prefer “consultative” styles. Individualism is characterized by a preference for fulfilling leisure time and improving skills outside the organization. It also implies a low preference for receiving compensation in the form of benefits and a high preference for personal decision making and on-the-job challenges. Collectivism, in contrast, encourages dependence on the organization and a preference for thorough training, satisfactory workplace conditions, and good benefits.
- Uncertainty Avoidance: In countries where uncertainty avoidance is high, most employees prefer following set rules even if breaking them may be in the company’s best interest. In the same countries, fewer consumers are prepared to risk being early adopters of products. Trust: Where trust is high, the cost of doing business tends to be lower because managers don’t spend much time fussing over every possible contingency and monitoring every action for compliance with certain business principles. Future Orientation: Cultures differ in their perceptions of the risks from delaying gratification by investing for the future. Fatalism: If people believe strongly in self-determination, they may be willing to work hard to achieve goals and take responsibility for performance. But if they’re fatalistic—if they believe every event in life is inevitable—they’re less likely to accept the basic cause-and-effect relationship between work and reward.
- Low-context cultures: Cultures in which people generally regard as relevant only firsthand information that bears directly on the subject at hand. Businesspeople spend little time on small talk and tend to get to the point. In high-context cultures (for example, most countries in southern Europe), people tend to regard seemingly peripheral information as pertinent and to infer meanings from things said either indirectly or casually. Monochronic: People prefer to work sequentially, such as finishing transactions with one customer before dealing with another. Conversely, polychronic southern Europeans are more comfortable when working simultaneously on a variety of tasks, such as dealing immediately with multiple customers who need service. Idealism: preferring to establish overall principles before tackling smaller details Pragmatism: focusing more on details than on abstract principles These different approaches to information processing can affect business in a number of ways. In a culture of pragmatists (as in the United States), for example, labor negotiations tend to focus on well-defined issues—say, hourly pay increases for a specific bargaining unit. In an idealist culture like that of Argentina, labor disputes tend to blur the focus on specific demands as workers tend to rely first on mass action—such as general strikes or political activities—to publicize basic principles.
- We constantly exchange messages through a host of nonverbal cues that form what has been called a silent language. How people perceive and interpret physical cues or “body language” varies between cultures. Colors and sounds are also interesting aspects of a culture’s “silent language.” In most Western countries, for instance, black is associated with death. In parts of Asia, white has the same connotation. Another aspect of silent language is the appropriate distance people maintain during conversations. In the United States, for example, the customary distance for a business discussion is 5 to 8 feet; for personal business, it’s 18 inches to 3 feet. Perceptions of time and punctuality also affect unspoken cues that may create confusion internationally. U.S. businesspeople usually arrive early for business appointments, a few minutes late for dinner at someone’s home, and a bit later still for large social gatherings. In another country, the concept of punctuality in any or all of these situations may be different. Prestige: Another factor in silent language relates to a person’s organizational position. A U.S. businessperson who places great faith in objects as cues to prestige may underestimate the status of foreign counterparts who don’t value large, plush offices on high floors. A foreigner may underestimate U.S. counterparts who perform their own services, such as opening their own doors, fetching their own coffee, and answering unscreened phone calls.
- Regarding cultural distance, even within clusters, there may still be significant cultural differences that could affect business dealings. Moreover, managers may assume that closely clustered countries are more alike than they really are, and if they become too confident about the fit between their own and another nation, they may well overlook important subtleties. Women’s roles and behavior, for example, differ substantially from one Arab country to another even though Arab countries overall are similar culturally. There are cultural practices all over the world that many outsiders consider downright wrong, ranging from polygamy and child marriage to concubinage, slavery, and burning of widows. Both companies and individuals must decide if they’re ready to carry on business in places that countenance such practices. Workers who go abroad often encounter something called culture shock—the frustration that results from having to absorb a vast array of new cultural cues and expectations.
- Polycentrism may be an overly cautious response to cultural variety. How so? A firm whose outlook is too rigidly polycentric may shy away from certain countries or avoid transferring home country practices or resources that will actually work well abroad. Ethnocentrist management overlooks national differences and • Ignores important factors because they’ve become accustomed to certain cause-and-effect relationships in the home country. • Believes home-country objectives should prevail. • Thinks change is easy.
- When companies expand abroad, they introduce some degree of change into the foreign markets in which they operate. Thus they need to bear in mind that people don’t normally accept change very readily, either in the home- or host-country market. The methods that companies choose for managing such changes are important for ensuring success.