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This document discusses the key elements of culture, including values, norms, social structure, religion, language, and education. It defines culture as a system of shared values and norms that provide a design for living. Key aspects of social structure examined are individualism vs collectivism and social stratification. The document emphasizes that understanding cultural differences is important for international business success and that culture influences competitive advantage and ethics.
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- 2. 3-2 Introduction Cross-cultural literacy - an understanding of how cultural differences across and within nations can affect the way in which business is practiced important to success in international business There may be a relationship between culture and doing business in a country or region Culture is not static, its dynamic
- 3. 3-3 What is Culture? Question: What is culture? Answer: Culture is a system of values (abstract ideas about what a group believes to be good, right, and desirable) and norms (the social rules and guidelines that prescribe appropriate behavior in particular situations) that are shared among a group of people and that when taken together constitute a design for living
- 4. 3-4 Values and Norms Values – Basic convictions (firmly held belief) that people have regarding what is right and wrong, important and unimportant. Norms - the social rules that govern the actions of people toward one another and can be studied as Folkways (traditional culture) - the routine conventions of everyday life
- 5. 3-5 Culture, Society, and the Nation-State Society - a group of people who share a common set of values and norms There is not a strict one-to-one correspondence between a society and a nation-state nation- states are political creations that can contain a single culture or several cultures some cultures embrace several nations
- 6. 3-6 The Determinants of Culture Figure 3.1: The Determinants of Culture
- 7. 3-7 The Determinants of Culture Customs- Common or established practices. Manners- Behaviors regarded at appropriate in a particular society.
- 8. 3-8 Social Structure A society's social structure is its basic social organization Two dimensions to consider: the degree to which the basic unit of social organization is the individual, as opposed to the group the degree to which a society is forms into classes or castes
- 9. 3-9 Individuals and Groups Group - an association of two or more individuals 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 groups are common in many Asian societies many Western countries emphasize the individual
- 10. 3-10 Individuals and Groups In societies where the individual is emphasized individual achievement and entrepreneurship are promoted but, this can encourage job switching, competition between individuals in a company rather than team building, and a lack of loyalty to the firm In societies where the group is emphasized cooperation and team work are encouraged and life time employment is common but, individual initiative and creativity may be suppressed
- 11. 3-11 Social Stratification All societies are stratified on a hierarchical basis into social categories, or social strata usually defined by characteristics such as family background, occupation, and income Societies differ in terms of the degree of mobility between social strata the significance attached to social strata in a business context
- 12. 3-12 Social Stratification Social mobility- the extent to which individuals can move out of the strata into which they are born The most rigid system is the caste system - a closed system of stratification in which social position is determined by the family into which a person is born, and change in that position are unlikely A less rigid system is the class system - a form of open social stratification in which the position a person has by birth can be changed through achievement or luck
- 13. 3-13 Religious and Ethical Systems Religion - a system of shared beliefs and rituals that are concerned with the realm of the sacred Religions with the greatest following are Christianity Islam Hinduism Buddhism
- 14. 3-14 Language Countries differ in terms of language or means of communication There are two forms language spoken unspoken Language is one of the defining characteristics of culture
- 15. 3-15 Spoken Language Countries with more than one spoken language often have more than one culture Chinese is the mother tongue of the largest number of people in the world English is the most widely spoken language in the world, and is becoming the language of international business However, knowledge of the local language is beneficial, and in some cases, critical for business success
- 16. 3-16 Unspoken Language Unspoken language - nonverbal cues examples include facial expressions and hand gestures can be important for communication Many nonverbal cues are culturally bound and because they may be interpreted differently, can result in misunderstandings
- 17. 3-17 Education Formal education is the medium through which individuals learn many of the language, conceptual, and mathematical skills that are indispensable in a modern society The knowledge base, training, and educational opportunities available to a country's citizens can also give it a competitive advantage in the market and make it a more or less attractive place for expanding business
- 18. 3-18 Education The general education level of a country is a good indicator of the types of products that might sell in that location or the type of promotional materials that might be successful
- 19. 3-19 Cultural Change Culture evolves over time, although changes in value systems can be slow and painful for a society cultural change is particularly common as countries become economically stronger
- 20. 3-20 Implications for Managers Differences in culture imply that 1. there is a need for managers to develop cross-cultural literacy 2. there is a connection between culture and national competitive advantage 3. there is a connection between culture and ethics in decision making
- 21. 3-21 Cross-Cultural Literacy Individuals and firms must develop cross- cultural literacy firms that are ill informed about the practices of another culture are unlikely to succeed in that culture Individuals must also beware of ethnocentric behavior (a belief in the superiority of one's own culture)
- 22. 3-22 Culture and Competitive Advantage The connection between culture and competitive advantage is important because the connection suggests which countries are likely to produce the most viable competitors the connection has implications for the choice of countries in which to locate production facilities and do business
Editor's Notes
- Chapter 3: Differences in Culture
- Have you ever visited another country? If you have, think for a minute about some of the differences you may have seen. Perhaps people dressed differently or ate different types of foods. How did people get around? By car, by train, by motor bike? Was there a particular religion that influenced how society worked? What language was spoken? Did you notice any forms of unspoken language? Your answers to these questions will give you some insight to the country’s culture. We’ll be exploring cultural differences and their effect on business in this chapter. Even if you haven’t traveled to a foreign country, you can still see cultural differences within the U.S. Think about the concept of time for example. How do people on the East Coast view time? You might have answered that East Coasters often see time as a valuable commodity that shouldn’t be wasted. Now, compare that perspective to how someone from the South might view time. Many Southerners still prefer a slower paced way of life. How might these differences affect the way you would do business in each region? Just like you might adapt for differences at home, when doing business in foreign countries, you’ll need to adapt as well. We say that companies must have cross-cultural literacy, or an understanding of how cultural differences across and within nations can affect the way in which business is practiced. It’s also important to consider how culture might affect the cost of doing business in a particular location. For example, some people argue that the Japanese traditions including lifetime employment and long-term decision-making lowered the costs of doing business in the country during the 1960s, 70s and 80s.
- So, what is culture? The fundamental building blocks of culture are values, or abstract ideas about what a group believes is good, right, and desirable, and norms, or the social rules and guidelines that prescribe appropriate behavior in particular situations. You may not think, now that people in so many countries wear blue jeans, drink Coke and Starbucks coffee, eat Big Macs, and listen to MTV, that cultural differences are still important. But you’d be wrong! Long-standing cultural differences still influence how business is being done. Think for a moment about the opening case, and, how MacDonald’s had to adapt its traditional menu to meet the needs of India where the cow is revered. Also, keep in mind that culture is dynamic, it is always changing. Just think for a moment of how cell phones have changed our culture and those of many others as an example. We call a group of people who share a common set of values and norms a society, and though we talk about the French culture, and the Japanese culture, and so on, culture is not necessarily divided by national boundaries. Some countries like Switzerland even have multiple distinct cultures. Similarly, some cultures transcend national boundaries. For example, you might think of how the values promoted by Islam influence many countries.
- Let’s look at the elements of culture a little more closely. As we said, values are a fundamental building block of culture. They provide the context within which a society’s norms are established and justified. Values can include things like a society’s attitudes toward individual freedom, loyalty, collective responsibility, marriage, and so on. Values also reflect the political and economic systems of a society. So, for example, the free market system in the U.S. shows that individual freedom is valued. The social rules that govern people’s actions toward one another are called norms. You can think of norms as being either folkways or mores. Folkways are the routine conventions of everyday life like dress codes, social manners, and neighborly behavior. Usually, violations of folkways are not a serious matter, but can have a negative effect on business. For example, earlier we mentioned the need to adapt to how people view the concept of time. If we consider time from an international perspective, we can think, in general terms, of people from countries like those in Northern Europe or the U.S., placing a value on time. People from these countries often think of it as a commodity that can be wasted or saved. In contrast, people from Arab or Latin cultures have a much looser concept of time, and don’t worry if they’re late for appointments, or things take longer than originally expected. So, imagine a meeting between a manager from Germany and a manager from Saudi Arabia. If the manager from Germany is kept waiting by the Saudi manager, the German manager might feel slighted, yet the Saudi manager would have no idea why. However, if the managers were aware of the different perspectives of time, the German manager might be more tolerant of the Saudi manager, and the Saudi manager might make a bigger effort to be on time to the meeting! Rituals are also folkways. So, take the process of exchanging business cards for example. The way a Japanese business manager presents his card will provide information on his rank. The deeper the bow when the card is presented, the greater the respect the manager is showing you. When you receive the card, you can show your respect by examining the card carefully, and bowing in return, and presenting your own card. Contrast this to how cards are exchanged in the U.S.! Mores are the norms that are central to the functioning of a society and to its social life. Mores may actually become laws. So, we have laws against theft and incest. As you’ve probably guessed, mores are much more significant than folkways, and violating them usually brings serious retribution. Keep in mind though, that what might be acceptable in one country, may be forbidden in another! So, while drinking alcohol is acceptable in Denmark, in Saudi Arabia it’s not.
- Now, let’s talk about culture and its relationship with society and the nation-state. As we said earlier, a society is a group of people that share a common set of values and norms. In other words, it’s a group bound together by a common culture. Remember though, that nation-states are political creations and so they can contain more than one culture like India and Switzerland do. Keep in mind also that a country can have different societies, and that each society can have its own culture. We mentioned earlier the differences within the U.S.
- Let’s talk about each of these factors beginning with social structure. Keep in mind that while social structure and religion influence values and norms, value and norms influence religion and social structure.
- The basic social organization of a society is its social structure. There are two important elements to consider here. First, is the degree to which the basic unit of social organization is the individual rather than the group. In general terms, we think of the individual being dominant in Western societies, and the group being more important in other societies. The second element to consider is the degree to which the society is stratified into classes or castes. You already know that in the U.S. there is a relatively low degree of social stratification and that it’s fairly easy to move between strata. Compare this to the situation in India for example, where there is a high degree of social stratification and very low mobility between strata.
- Let’s talk a bit more about the importance of individuals and groups to understanding culture. A group is just an association of two or more people who share a sense of identity or who interact with each other in structured ways based on a common set of expectations. So, you might think of your family as being a group, or perhaps you belong to a recreational or social group. In some societies the group is considered more important, while in others, individual achievements and attributes are more important.
- Think about your favorite sports team for a minute. You probably know its record, and many of players, and you can probably tell me a lot about a few stars. What does this tell you about this particular group? In many Western societies, there is a strong focus on the individual and individual achievements. How does this affect business? Well, it can be both beneficial and harmful. On one hand, the focus on individual achievements leads to a high degree of entrepreneurship which is beneficial because it’s linked to the development of new products and processes. On the other hand, the focus on the individual also leads to a lot of managerial mobility, and so, there is a lack of loyalty and commitment to individual firms, and there is competition between individuals within a firm rather than team building for the sake of the organization. You’ve probably experienced some of these issues yourself. Think about your favorite sports team for a minute. You probably know its record, and many of players, and you can probably tell me a lot about a few stars. What does this tell you about this particular group? In many Western societies, there is a strong focus on the individual and individual achievements. How does this affect business? Well, it can be both beneficial and harmful. On one hand, the focus on individual achievements leads to a high degree of entrepreneurship which is beneficial because it’s linked to the development of new products and processes. On the other hand, the focus on the individual also leads to a lot of managerial mobility, and so, there is a lack of loyalty and commitment to individual firms, and there is competition between individuals within a firm rather than team building for the sake of the organization. You’ve probably experienced some of these issues yourself. In contrast, many Asian societies focus on the group as the primary form of social organization. So, rather than looking at the individual achievements of a Japanese manager, you might look at the standing of the group that he belongs to. In fact, rather than identifying themselves by the job they do, for example marketing manager, Japanese business men often identify themselves as belonging to a particular company, so they might say they belong to Sony or Toyota. You’ve probably heard of the lifetime employment system that is often associated with Japanese companies that reflects this commitment. From a business perspective, this means that there is a strong incentive to work together for the common good, rather than focus on individual achievements. Many experts believe that this cooperative atmosphere has been central to Japanese success. So, is the group emphasis always better? Not necessarily! Just like societies that emphasize the individual, there are drawbacks from emphasizing the group. One drawback in Japan for example, is a lack of incentive for individual creativity and initiative, and consequently entrepreneurial activity.
- Now, let’s move on to the second important element of social organization, how a society is stratified. Remember, all societies are stratified into different categories. So, for example, you might say that you belong to the middle class. Because you are born into the social category that you’re parents are in, your chances for success depend on them. People born toward the top of the social hierarchy tend to have better education, heath, standards of living, and so on.
- Suppose you don’t like your lot in life. Can you move? We use the term social mobility to refer to the extent to which individuals can move out of the strata into which they are born. How easy it is to move depends on the society. The most rigid type of society is the caste system where a person’s social position is determined by their family, and change is virtually impossible. So, if you’re born into a family of shoemakers, you can more or less count of being a shoemaker yourself! India is probably the best modern example of how a caste system works. There are four main castes, and even though it was officially abolished in 1949, its influence still remains today, particularly in rural areas. You can learn more about India’s caste system in the Country Focus in your text. The class system that exists in countries like the U.S. is a much less rigid system of stratification. You probably know stories of immigrants coming to the U.S. with only the clothes on their backs, and managing to work their way up to the top of the social hierarchy. In a class system, mobility is possible either through luck or personal achievements.
- Religion also plays a big role in culture, especially in countries where a single religion is dominant. We define religion as the systems of shared beliefs and rituals that are concerned with the realm of the sacred. The religions with the greatest following today are Christianity, Islam, Hinduism, and Buddhism. You might also include Confucianism with these. While not strictly a religion, Confucianism influences behavior and shapes culture in many parts of Asia.
- Now, let’s move on to look at how language defines culture. Language of course, is how we communicate with each other both in the spoken form and in the unspoken form, but it’s also how we perceive the world. Think for a minute about snow. You might say “oh, look, it’s snowing” and your friend would know exactly what you mean. But the Inuit or Eskimo people would have no idea what you meant. Why not? Because the Inuit have 24 different ways of describing what you probably think of as only snow!
- We mentioned earlier that some countries have more than one distinct culture. Does this mean they have more than one language, too? Very often, the answer is yes! You probably already know that Canada has both an English speaking and a French speaking area—both with their own cultures. Belgium is divided into Flemish and French speakers, and four different languages are spoken in Switzerland! Do you know which language is the most widely spoken language in the world? If you answered English, you’re right! But keep in mind that Chinese is the mother tongue of the largest number of people! Now you may be wondering if it’s important, given that English is so widely spoken in the business world, to learn a foreign language. The answer is yes! Remember, that just because people may speak English, it may not be the English you’re familiar with. One American executive with MobiTV recently wasn’t sure whether to be concerned or happy with his British client called to say she was “chuffed to the mint balls.” A late-night translation by his British colleagues revealed that she was happy. Furthermore, learning a foreign language signals to your host that you’re making an effort to meet his needs, just as he has made an effort to meet yours. And don’t forget that failing to learn the local language can result in costly blunders. For years, China has had a reputation for making poor English translations, in fact, the translations are commonly known as Chinglish. For example, instead of finding a sign for a handicapped restroom, signs might refer to toilets for deformed persons. Stay of the grass signs on park lawns are translated into show mercy for the slender grass! In 2007, China decided that in anticipation of holding the 2008 Summer Olympics, it was time to try to correct public signage. So, the country established teams of linguistic monitors to go around Beijing and look for signs that have poor translations. Many Westerners are now lamenting what they believe is a passing of a cultural tradition!
- Now, let’s talk about unspoken language. Think for a moment about how you stand when you’re talking with another person. You probably stand about an arm’s length away. But in Latin America people tend to stand much closer together. Now picture yourself at a business meeting with someone from Brazil. He might try to stand at his customary distance causing you take a step backward because he’s invaded your personal space. You may be annoyed at him for standing so close to you, and he may interpret your response as aloofness. Your meeting is already off to a bad start! It’s very important in international business to understand nonverbal cues. Think for a moment about the circle you might make with your thumb and forefinger. In the U.S., you’ve signaled a positive response, but if you make the same gesture in Greece, you’ve just insulted someone! So, because facial expressions, hand gestures, and other types of unspoken language can mean different things in different cultures, it’s important to do your homework before meeting with someone from another culture.
- Another element of culture is education. You already know that formal education is important to gain the skills you need to be productive in modern society, but did you know that a country’s education system can be an important determinant of competitive advantage? Michael Porter has pointed out that Japan’s success story began with its well educated workforce. Today, India is an attractive destination for investment because of its well-educated workforce. A country’s education system can also be an indicator of what products might sell well, and what types of promotional materials should be used. So, in a country where literacy rates are low, written promotions won’t work well.
- Let’s take that thought and move on to cultural change. As we said, culture is evolutionary, and change can often be slow and painful. You are probably familiar with the cultural changes that took place in the U.S. in the 1960s and 1970s when women entered the workforce and demanded to be treated the same way as men. In 2008, Sarah Palin became a candidate for Vice President of the United States. While she didn’t succeed, she did break new ground for women. The states of the former Soviet Union and its Eastern European neighbors have also been in a state of change in recent years. The fall of Communism ushered in new era of individualism and a shift away from the collectivist values that had been in place for many years. Change is also present in Japan. As we’ve already discussed, an emphasis on group achievements and loyalty has contributed to much of the country’s current success. But Japan’s younger generation is showing signs that these values may not be acceptable anymore. Instead, the younger generation is acting more like Western managers who leave companies in search of more money and rank, who avoid overtime, and who prefer to spend their free time away from the office. Why do these types of changes occur? Some studies show that economic progress is associated with a shift away from collectivism and towards individualism—this would explain what’s happening in Japan, for example. Other studies show that the effects of economic progress on factors like education and infrastructure also contribute to cultural change. So, as countries get richer, there is a shift away from traditional values. In India, a better standard of living is encouraging many younger people to embrace Western products. Yum Brands is hoping to capitalize on this cultural shift. The company opened its first Taco Bell in India in 2010. Keep in mind though, that these cultural shifts don’t occur overnight—it may take generations before they are really a part of a new culture.
- So, what does all of this mean for managers? Well, as we said at the beginning, it’s vital for firms to develop cross cultural literacy. To be successful, you have to be able to conform and adapt to the value system and norms of the host country. One way you can gain knowledge of the local culture is to hire local citizens. Developing a cadre of cosmopolitan managers who have been exposed to different cultures can also be helpful.
- It’s important to avoid being ethnocentric, or believe that your ethnic group or culture is superior to that of others. You’ve probably heard of the Ugly American, or the American who believes he is better than anyone else, and that his way of doing things is better than anyone else’s. French people have also been accused of sharing this trait. Needless to say, it doesn’t go down well in a business meeting! When several firms from Silicon Valley opened offices in London in 2006, both the Americans and the English had to learn to adapt to new ways of doing business. Londoners who were accustomed to eating a three course meal at a restaurant found themselves following the Californian style of grabbing a sandwich around the conference table instead! The English also discarded their suits in favor of the more causal approach to dressing that is common in Silicon Valley. One executive from Amgen commented that, unlike the British tradition of eating just at mealtimes, his American colleagues were always eating! Keep in mind that the need for cross-cultural literacy is not limited to face-to-face meetings. Boeing and Bell Helicopter found this out the hard way when promotional materials for the jointly developed Osprey plane offended many Muslims.
- Another reason for companies to be aware of cultural differences is the link between culture and competitive advantage. The value systems and norms of a country influence the costs the cost of doing business, which of course then affects the competitive advantage of firms. Remember our discussion of how a society’s class structure affects the relationship between management and labor for example, or how Japan’s strong worker loyalty system, and lifetime employment guarantees affect the success of Japanese companies. Similarly, a more individualistic culture promotes entrepreneurial activities as compared to a culture that emphasizes collective behavior. These differences provide companies with insight as to which countries are most likely to produce competitors, and which countries will be the best for investing or selling. For example, if you’re comparing two countries with similar wage costs, you’ll recognize that the country with the better education system, less social stratification, and a group identification is probably the better site for production facilities. Similarly, based on cultural differences, we would expect strong competitors to emerge from Pacific Rim nations, as compared to some other parts of the world.