This document discusses how cultural differences impact international business. It defines culture and explains how values, norms, social structures, religions, languages, education and work-related cultural dimensions like power distance and individualism can vary significantly between societies and affect business practices. Managers need cross-cultural literacy to understand these differences and how a country's culture may determine its competitive advantages and the costs of doing business there. Cultural differences are important considerations for international companies.

1. International Business
9e
By Charles W.L. Hill
McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Chapter 4
Differences
in Culture

3. 4-3
How Do Cultural Differences
Affect International Business?
 Understanding and adapting to the local cultural
is important international companies
cross-cultural literacy - an understanding of how
cultural differences across and within nations can
affect the way in which business is practiced
 A relationship may exist between culture and the
costs of doing business in a country or region
MNEs can be agents of cultural change

4. 4-4
What Is Culture?
 Culture - a system of values and norms that are
shared among a group of people and that when
taken together constitute a design for living
where
values are abstract ideas about what a group believes
to be good, right, and desirable
norms are the social rules and guidelines that
prescribe appropriate behavior in particular situations
 Society - a group of people who share a
common set of values and norms

5. 4-5
How Are Culture, Society,
And The Nation-State Related?
The relationship between a society and a
nation state is not strictly one-to-one
Nation-states are political creations
can contain one or more cultures
A culture can embrace several nations
the values and norms of a culture evolve over
time

6. 4-6
What Determines Culture?
Determinants of Culture

7. 4-7
What Is A Social Structure?
 Social structure - a society’s basic social
organization
 A group is an association of two or more people
who have a shared sense of identity and who
interact with each other in structured ways on
the basis of a common set of expectations about
each other’s behavior
individuals are involved in families, work groups,
social groups, recreational groups, etc.

8. 4-8
What Is Social Stratification?
 All societies are stratified on a hierarchical
basis into social categories, or social strata
1. Social mobility - the extent to which individuals can
move out of the strata into which they are born
 caste system
 class system
2. The significance attached to social strata in business
contacts
 class consciousness

9. 4-9
How Do Religious And
Ethical Systems Differ?
 Religion - shared beliefs and rituals that are
concerned with the realm of the sacred
1. Christianity
2. Islam
3. Hinduism
4. Buddhism
5. Confucianism influences behavior and culture
 Ethical systems - a set of moral principles, or
values, that are used to guide and shape
behavior

10. 4-10
How Do Religious And
Ethical Systems Differ?
World Religions

11. 4-11
What Is The Role
Of Language In Culture?
 Language - the spoken and unspoken
(nonverbal communication such as facial
expressions, personal space, and hand
gestures) means of communication
Chinese is the mother tongue of the largest number of
people
English is the most widely spoken language in the
world and is also becoming the language of
international business
but, knowledge of the local language is still beneficial,
and in some cases, critical for business success
failing to understand the nonverbal cues of another
culture can lead to communication failure

12. 4-12
What Is The Role
Of Education In Culture?
 Formal education is the medium through which
individuals learn many of the language,
conceptual, and mathematical skills that are
indispensable in a modern society
important in determining a nation’s competitive
advantage
Japan’s postwar success can be linked to its
excellent education system
general education levels can be a good index for the
kinds of products that might sell in a country
ex. impact of literacy rates

13. 4-13
How Does Culture
Impact The Workplace?
 Hofstede’s dimensions of culture:
1. Power distance - how a society deals with the
fact that people are unequal in physical and
intellectual capabilities
2. Individualism versus collectivism - the
relationship between the individual and his
fellows
3. Uncertainty avoidance - the extent to which
different cultures socialize their members into
accepting ambiguous situations and tolerating
ambiguity
4. Masculinity versus femininity -the relationship
between gender and work roles

14. 4-14
How Does Culture
Impact The Workplace?
Work-Related Values for 20 Countries

15. 4-15
How Does Culture
Impact The Workplace?
Hofstede later expanded added a fifth
dimension called Confucian dynamism or
long-term orientation
captures attitudes toward time, persistence,
ordering by status, protection of face, respect
for tradition, and reciprocation of gifts and
favors
Japan, Hong Kong, and Thailand scored high on
this dimension
the U.S. and Canada scored low

16. 4-16
Does Culture Change?
Culture evolves over time
changes in value systems can be slow and
painful for a society
Social turmoil - an inevitable outcome of
cultural change
as countries become economically stronger,
cultural change is particularly common
economic progress encourages a shift from
collectivism to individualism
globalization also brings cultural change

17. 4-17
What Do Cultural Differences
Mean For Managers?
1. It is important to develop cross-cultural literacy
 companies that are ill informed about the practices
of another culture are unlikely to succeed in that
culture
2. There is a connection between culture and
national competitive advantage
 suggests which countries are likely to produce the
most viable competitors
 has implications for the choice of countries in which
to locate production facilities and do business