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  1. 1. Chapter Five Sociocultural Forces McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
  2. 2. Learning Objectives <ul><li>Explain the significance of culture for international business </li></ul><ul><li>Identify the sociocultural components of culture </li></ul><ul><li>Discuss the significance of religion to businesspeople </li></ul><ul><li>Explain the cultural aspects of technology </li></ul><ul><li>Discuss the pervasiveness of the Information Technology Era </li></ul>
  3. 3. Learning Objectives <ul><li>Explain the importance of the ability to speak the local language </li></ul><ul><li>Discuss the importance of unspoken language in international business </li></ul><ul><li>Discuss the two classes of relationships within a society </li></ul><ul><li>Discuss Hofstede’s cultural value dimensions </li></ul>
  4. 4. Rules of Thumb for Business Conduct Across Cultures <ul><li>Be prepared </li></ul><ul><li>Slow down </li></ul><ul><li>Establish trust </li></ul><ul><li>Understand the importance of language </li></ul><ul><li>Respect the culture </li></ul><ul><li>Understand the components of culture </li></ul>
  5. 5. What is Culture? <ul><li>Culture is the sum total of beliefs, rules, techniques, institutions, and artifacts that characterize human populations </li></ul><ul><ul><li>Culture is learned </li></ul></ul><ul><ul><li>Its aspects are interrelated </li></ul></ul><ul><ul><li>Culture is shared (as opposed to individual traits) </li></ul></ul><ul><ul><li>It defines the boundaries of different groups </li></ul></ul>LO1
  6. 6. Ethnocentricity <ul><li>Ethnocentrism is the belief in the superiority of one’s own ethnic group </li></ul><ul><li>To overcome ethnocentricity </li></ul><ul><ul><li>Realize that there are many different cultures </li></ul></ul><ul><ul><li>Spend time in another country </li></ul></ul><ul><ul><li>Undergo training on culture and language </li></ul></ul>LO1
  7. 7. Culture Affects All Business Functions <ul><li>Marketing </li></ul><ul><ul><li>Variation in attitudes and values affects marketing mix </li></ul></ul><ul><li>Human Resource Management </li></ul><ul><ul><li>Evaluation of managers </li></ul></ul><ul><ul><li>Attitudes toward authority </li></ul></ul><ul><li>Production </li></ul><ul><ul><li>Attitude towards change </li></ul></ul>LO1
  8. 8. Sociocultural Components <ul><li>Culture is reflected in </li></ul><ul><ul><li>aesthetics </li></ul></ul><ul><ul><li>attitudes and beliefs </li></ul></ul><ul><ul><li>religion </li></ul></ul><ul><ul><li>materialism </li></ul></ul><ul><ul><li>language </li></ul></ul><ul><ul><li>societal organization </li></ul></ul><ul><ul><li>legal characteristics </li></ul></ul><ul><ul><li>political structures </li></ul></ul>LO2
  9. 9. Aesthetics <ul><li>Aesthetics refers to culture’s sense of beauty and good taste </li></ul><ul><ul><li>Art conveys meaning </li></ul></ul><ul><ul><ul><li>Colors, symbols, numbers--Nike air </li></ul></ul></ul><ul><ul><ul><li>Architectural style differences </li></ul></ul></ul><ul><ul><ul><li>Feng shui </li></ul></ul></ul><ul><li>Music and Folklore </li></ul><ul><ul><li>Musical tastes vary </li></ul></ul><ul><ul><li>Folklore discloses way of life </li></ul></ul><ul><ul><ul><li>Cowboys in Chile or Argentina </li></ul></ul></ul><ul><ul><ul><li>Mexican singing cricket </li></ul></ul></ul>LO2
  10. 10. Attitudes and Beliefs <ul><li>Attitudes Toward Time </li></ul><ul><ul><li>Vary across cultures </li></ul></ul><ul><ul><li>Difficult area for some Americans </li></ul></ul><ul><ul><li>Directness and drive may be perceived to be rudeness </li></ul></ul><ul><ul><li>Deadlines </li></ul></ul><ul><ul><ul><li>Liability abroad </li></ul></ul></ul>LO2
  11. 11. Attitudes Toward Achievement and Work <ul><li>Germans put leisure first and work second </li></ul><ul><li>The demonstration effect </li></ul><ul><ul><li>Result of having seen others with desirable goods </li></ul></ul><ul><li>Job Prestige </li></ul><ul><ul><li>The distinction between blue-collar workers and office employees </li></ul></ul><ul><ul><li>Professional order of hierarchy </li></ul></ul>LO2
  12. 12. Religion <ul><li>Religion is responsible for many of the attitudes and beliefs affecting human behavior </li></ul><ul><li>Work Ethic </li></ul><ul><ul><li>Protestant work ethic </li></ul></ul><ul><ul><ul><li>Duty to glorify God by hard work and the practice of thrift </li></ul></ul></ul><ul><ul><li>Confucian work ethic </li></ul></ul><ul><ul><ul><li>Drive toward hard work and thrift; similar to Protestant work ethic </li></ul></ul></ul>LO2
  13. 13. Will This Work? LO2
  14. 14. Primary Asian Religions <ul><li>Hinduism </li></ul><ul><ul><li>Caste system </li></ul></ul><ul><ul><ul><li>Society is divided into four groups (plus the outcasts) </li></ul></ul></ul><ul><ul><ul><li>Each is assigned a certain class of work </li></ul></ul></ul><ul><li>Buddhism </li></ul><ul><ul><li>Reform of Hinduism </li></ul></ul><ul><li>Jainism (Mahavira a contemporary of Buddha) </li></ul><ul><ul><li>Nonviolence a major principle </li></ul></ul><ul><li>Sikhism </li></ul><ul><ul><li>Bridge between Hinduism and Islam </li></ul></ul>LO3
  15. 15. Primary Asian Religions <ul><li>Confucianism </li></ul><ul><ul><li>Inseparable from Chinese culture </li></ul></ul><ul><li>Taoism </li></ul><ul><ul><li>Lao Tzu, contemporary of Confucius </li></ul></ul><ul><li>Shintoism </li></ul><ul><ul><li>Indigenous to Japan </li></ul></ul>LO3
  16. 16. Islam <ul><li>Islam is the youngest and second largest faith </li></ul><ul><ul><li>1.3 billion followers </li></ul></ul><ul><ul><li>In comparison, Christianity has 2 billion adherents </li></ul></ul><ul><li>Muhammad is Founder </li></ul><ul><ul><li>Prophet of God and head of state </li></ul></ul><ul><li>Holy Book Koran </li></ul>LO3
  17. 17. Islam <ul><li>Five Pillars of Faith </li></ul><ul><ul><li>Confession of faith </li></ul></ul><ul><ul><li>Five daily prayers </li></ul></ul><ul><ul><li>Charity </li></ul></ul><ul><ul><li>Ramadan fast </li></ul></ul><ul><ul><li>Pilgrimage to Mecca </li></ul></ul><ul><li>Jihad – holy war </li></ul><ul><li>Sunni-Shia Conflict </li></ul><ul><ul><li>Conflict gives rise to violent clashes </li></ul></ul>LO3
  18. 18. Religions of the World Insert Figure 6.1 LO3
  19. 19. Animism <ul><li>Animism </li></ul><ul><ul><li>Spirit worship, including magic and witchcraft </li></ul></ul><ul><ul><li>Everything in nature has its own spirit or divinity </li></ul></ul>LO3
  20. 20. Material Culture <ul><li>Material culture refers to all human-made objects </li></ul><ul><li>Concerned with how people make things (technology) and </li></ul><ul><li>Who makes what and why (economics) </li></ul>LO3
  21. 21. Technology <ul><li>Technology is a mix of usable knowledge that society applies and directs toward attainment of cultural and economic objectives </li></ul>LO4
  22. 22. Importance of Technology <ul><li>Technology </li></ul><ul><ul><li>enables a firm to be competitive in world markets </li></ul></ul><ul><ul><li>can be sold or be embodied in the company’s products </li></ul></ul><ul><ul><li>can give a firm confidence to enter a foreign market </li></ul></ul><ul><ul><li>enables the firm to obtain better than usual conditions for a foreign market investment </li></ul></ul>LO4
  23. 23. Importance of Technology <ul><li>Technology </li></ul><ul><ul><li>enables a company with only a minority equity position to control a joint venture </li></ul></ul><ul><ul><li>can change the international division of labor </li></ul></ul><ul><ul><li>causes major firms to form competitive alliances </li></ul></ul>LO4
  24. 24. Material Culture - Technology <ul><li>Cultural aspects of technology </li></ul><ul><ul><li>Includes skills in marketing, finance, and management </li></ul></ul><ul><ul><li>People are not always ready to adapt to changes technology brings </li></ul></ul><ul><li>Technological dualism </li></ul><ul><ul><li>The side-by-side presence of technologically advanced and technologically primitive production systems </li></ul></ul>LO4
  25. 25. Material Culture - Technology <ul><li>Appropriate Technology </li></ul><ul><ul><li>The technology (advanced, intermediate, or primitive) that most closely fits the society using it </li></ul></ul><ul><li>Boomerang Effect </li></ul><ul><ul><li>Situation in which technology sold to companies in another nation is used to produce goods to compete with those of the seller of the technology </li></ul></ul>LO4
  26. 26. Information Technology <ul><li>Information Technology Era </li></ul><ul><ul><li>As early as 2000 the Internet economy </li></ul></ul><ul><ul><ul><li>had reached $850 billion </li></ul></ul></ul><ul><ul><ul><li>exceeded the size of the life insurance and real estate industries </li></ul></ul></ul>LO5
  27. 27. Spoken Language <ul><li>Spoken language is the most apparent cultural distinction between countries </li></ul><ul><li>Spoken languages demarcate cultures </li></ul><ul><ul><li>Switzerland has four separate cultures </li></ul></ul><ul><li>Many languages can exist in a single country, but one usually serves as communication vehicle </li></ul><ul><ul><li>Lingua franca or link language </li></ul></ul><ul><ul><li>English primary language of business </li></ul></ul>LO6
  28. 28. Language and Translation <ul><li>Translation </li></ul><ul><ul><li>The ability to speak the language well does not eliminate the need for translator </li></ul></ul><ul><li>Use back translation to avoid translation problems </li></ul><ul><ul><li>Japanese hotel: “You are invited to take advantage of the chambermaid.” </li></ul></ul><ul><ul><li>Bangkok dry cleaner: “Drop your trousers here for best results.” </li></ul></ul>LO6
  29. 29. Language Issues <ul><li>Technical words do not exist in all languages </li></ul><ul><ul><li>Usually use English </li></ul></ul><ul><li>Many cultures avoid saying anything disagreeable </li></ul>LO6
  30. 30. Unspoken Language <ul><li>Nonverbal communication </li></ul><ul><ul><li>Gestures vary tremendously from one region to another </li></ul></ul><ul><ul><li>Closed doors convey different meanings </li></ul></ul><ul><ul><li>Office size has different meanings in various cultures </li></ul></ul><ul><ul><li>Conversational distance small in Middle East </li></ul></ul><ul><ul><li>Gift giving has specific etiquette in each culture </li></ul></ul><ul><ul><ul><li>Gift or bribe ? </li></ul></ul></ul><ul><ul><ul><li>Questionable Payments </li></ul></ul></ul>LO7
  31. 31. 2003 Corruption Index Scores and Ranking
  32. 32. Societal Organization <ul><li>Kinship </li></ul><ul><ul><li>Extended family </li></ul></ul><ul><ul><ul><li>includes blood and marriage relatives </li></ul></ul></ul><ul><ul><li>Member’s responsibility </li></ul></ul><ul><ul><ul><li>Although the extended family is large, each member’s feeling of responsibility to it is strong </li></ul></ul></ul><ul><li>Associations </li></ul><ul><ul><li>Social units based on age, gender, or common interest, not on kinship </li></ul></ul>LO8
  33. 33. Societal Organization <ul><li>Associations </li></ul><ul><ul><li>Age is an important market segment criterion </li></ul></ul><ul><ul><li>Gender </li></ul></ul><ul><ul><ul><li>As nations industrialize, more women enter the job market and assume greater importance in the economy </li></ul></ul></ul><ul><ul><li>Free association </li></ul></ul><ul><ul><ul><li>people joined together by a common bond: political, occupational, religious or recreational </li></ul></ul></ul>LO8
  34. 34. Understanding National Cultures <ul><li>Hofstede’s Dimensions of Culture </li></ul><ul><ul><li>Individualism versus Collectivism </li></ul></ul><ul><ul><li>Large versus Small Power Distance </li></ul></ul><ul><ul><li>Strong versus Weak Uncertainty Avoidance </li></ul></ul><ul><ul><li>Masculinity versus Femininity </li></ul></ul>LO9
  35. 35. Hofstede Value Dimension Scores LO9
  36. 36. Individualism versus Collectivism <ul><li>Collectivistic cultures </li></ul><ul><ul><li>People belong to groups that are supposed to look after them in exchange for loyalty </li></ul></ul><ul><li>Individualistic cultures </li></ul><ul><ul><li>People look after only themselves and the immediate family </li></ul></ul>LO9
  37. 37. Large versus Small Power Distance <ul><li>Power distance refers to the extent to which members of a society accept the unequal distribution of power among individuals </li></ul><ul><ul><li>In large-power-distance societies employees believe their supervisors are right; employees do not take any initiative in making non-routine decisions </li></ul></ul>LO9
  38. 38. Strong versus Weak Uncertainty Avoidance <ul><li>Uncertainty avoidance refers to the degree to which members of a society feel threatened by ambiguity and are rule-oriented </li></ul><ul><ul><li>Employees in high uncertainty-avoidance cultures tend to stay with their organizations </li></ul></ul><ul><ul><ul><li>Japan, Greece, and Portugal </li></ul></ul></ul><ul><ul><li>Those from low uncertainty-avoidance nations are more mobile </li></ul></ul><ul><ul><ul><li>United States, Singapore, and Denmark </li></ul></ul></ul>LO9
  39. 39. Power Distance and Uncertainty Avoidance LO9
  40. 40. Individualism and Power Distance LO9
  41. 41. Masculinity versus Femininity <ul><li>Masculinity versus femininity refers to the degree to which the dominant values in a society emphasize assertiveness, acquisition of money, and status </li></ul><ul><ul><li>Masculinity </li></ul></ul><ul><ul><ul><li>achievement of visible and symbolic organizational rewards </li></ul></ul></ul><ul><ul><li>Femininity </li></ul></ul><ul><ul><ul><li>emphasize relationships, concern for others, and the overall quality of life </li></ul></ul></ul>LO9