This chapter discusses the importance of culture in international business decisions. It defines culture as the way of life of people, including their attitudes, values, beliefs, arts, sciences, modes of perception, and habits of thought and activity. The major constituents of culture discussed are value systems, norms, aesthetics, customs and traditions, language, and religion. Managers operating internationally must understand these cultural factors and how they vary across countries to make informed business decisions.

1. 1
International Business
Ranjani Srinivasan
Chapter 7: International Cultural
Environment

2. Chapter 7
INTERNATIONAL
CULTURAL ENVIRONMENT
Chapter 7: International Cultural
Environment

3. Learning Objectives

To understand the significance of culture in
international business decisions

To elucidate the concept of culture and its
constituents

To explain comparisons of cross-cultural
behaviour

To discuss cultural orientation in international
business

To appreciate emic versus etic dilemma and its
operationalization
Chapter 7: International Cultural
Environment

4. Significance of Culture
A
firm
operating
internationally
comes
across a wide range of diverse cultural
environments, which significantly influence
international business decisions.
Managers
operating internationally need to appreciate
the differences among cultural behaviours of
their
business
partners
and
consumers
across various countries.
Chapter 7: International Cultural
Environment

5. Self Reference Criterion (SRC)
An unconscious reference to one’s own cultural
values, experiences, and knowledge as a basis
for decision-making. SRC significantly influences
ability of international managers to objectively
evaluate
environmental
factors
and
make
business decision.
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International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

6. Approach to Eliminate SRC
Step 1:Define the business problem or goal in
home-country traits, habits, or norms.
Step 2:Define the business problem or goal in
foreign
country cultural traits, habits, or
norms. Make no value judgments.
Step 3:Isolate the SRC influence in the problem
and examine it carefully to see how it
complicates the problem.
Step 4:Redefine the problem without the SRC
influence and solve for the optimum business
goal situation.
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International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

7. The Concept of Culture
Culture is the way of life of people, including
their attitudes, values, beliefs, arts, sciences,
modes of perception, and habits of thought and
activity. Cultiral differences across the countries
significantly influence business decisions.
Copyright @ Oxford University Press
International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

8. Constituents of Culture
A variety of learned traits that influence human
behaviour can contribute to the culture of a social
group, the major constituents, include:
• value system
• norms
• aesthetics
• customs and traditions
• language
• religion
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International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

9. Characteristics of culture






Learned
Shared
Trans-generational
Symbolic
Patterned
Adaptive
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International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

10. Value System
Shared assumptions of a group about how
things ought to be or abstract ideas about
what
a group believes to be good,
desirable, or right.
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International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

11. Value system


Value systems vary among managers
across different countries :
Eg. US managers : high achievement
orientation vs Japanese managers
how have a growth and size
orientation vs Indian Managers who
have moralistic orientation.
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International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

12. Norms
Guidelines
or
social
rules
that
prescribe appropriate behaviour in a
given situation.
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International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

13. Norms





For eg. In Japan, aggressive selling is not perceived
in the positive spirit.
Eg. Indian use hands or different types of spoons
for eating. Chinese and Japanese use chopsticks.
Europeans and American use forks and knives to cut
the food before eating.
Lessons: International managers need to know what
is acceptable , unacceptable in foreign culture. They
also need to know cultural tolerance to business
customs that may be grouped as :
Cultural Imperatives; Cultural Exclusives; Cultural
Adiaphora

14. 







Culture Imperatives
It refers to norms that must be followed / avoided in a foreign
country.
For Eg. Too much eye contact in Japan is considered to
completely offensive.
On the other hand in the Gulf , strong eye contact necessary
with an Arab, to establish trustworthiness.
Cultural Exclusives:
Social patterns which are considered appropriate for locals and
in which foreigners are expected not to participate.
Eg. Foreigners should stay away from discussions on local
country politics, social customs and practices.
Cultural Adiaphora : social customs in which a foreigner may
participate, so that the Intl. manager may decide whether to
participate or avoid. Eg. Bowing in Japanese culture is not
expected of foreigners, but such display may be appreciated .

15. Aesthetics
Ideas and perceptions that a cultural
group upholds in terms of beauty and
good taste.
music,
It includes areas related to
dance,
painting,
drama,
architecture, etc.
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International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

16. Aesthetics






Eg. Colours have different aesthetic value in
different cultures:
Africa : bright colours are favourites
Japan : pastel colours preferred as they express
harmony.
China : red is lucky colour but associated with
witchcraft in Africa.
America : blues and greys are perfect for official
environments. But blue is evil in Africa
Death colours : Black signifies death in America,
Europe; In India, Japan & other Asian countries it is
white, For Latin Americans Purple means death;
Dark red is the mourning colour in the Ivory Coast.

17. Traditions and Customs
Traditions:
passed
The
down
elements
from
of
culture
generation
to
generation.
Customs:
An
established
pattern
behaviour within a society.
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International Business
R. M. Joshi
Chapter 7: International Cultural
Environment
of

18. Traditions and Customs





International managers need to know the customs and
traditions of the culture being dealt with:
Eg. Food Habits eg. Chocolate flavors preferred are
different in different cultures : Eg. Americans and
Germans prefer blends, French- Dark, Dutch –White.
Coffee brews: Nescafe manufactures200 different
varieties of coffee to suit local tastes.
The concept of Indian vegetarianism is very complex for
foreigners to understand. Vessels used for cooking both
should be different. KFC offers vegetarian dishes in its
Indian outlets. Pizza Hut offers Jain Pizza in India alone.
Lessons: companies need to modify products/services to
suit the local customs and traditions.

19. Manners and Customs...








Manners in gift giving:
A lot of preparation and sensitivity required while
giving gifts. What and when is important.
China : occasion : New Year
Preferred Gifts: Modest gifts such as coffee table,
books, ties, pens.
Japan: Oseibo( January 1)
Preferred Gifts : Brandy. Scotch, round fruits such
as melons
Manners and Customs in the Way Products are used
should also be considered
Example Orange juice:
Breakfast item in US, Refreshment in France
Moisturizers : After bath lotion in one, beauty
19
product in another.

20. Language
A systematic means of communicating ideas
or feelings by the use of conventionalized
signs, gestures, marks, or especially
articulate vocal sounds.

21. Language
The Four Roles of Language
Language aids in information gathering and
evaluation.
Language provides access to local society.
Language capability is increasingly
important in company communications.
Language provides more than the ability to
communicate because it extends beyond
mechanics to the interpretation of contexts
that may influence business operations.
21

22. Languages
Top Ten World Languages
Language
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Chinese, Mandarin
Spanish
English
Bengali
Hindi
Portuguese
Russian
Japanese
German, Standard
Chinese, Wu
Population (in millions)
885
332
322
189
182
170
170
125
98
77

23. Language … some lessons for
managers



Even though English is considered lingua-franca for non
English speaking countries, it fails to provide non-verbal
cues … for example:
Coca – Cola was named Ke-kou-ke-la in China which
translates in Mandarin to ‘Bite the wax tadpole’.
Subsequently Coke found a close phonetic equivalent
Ko-kou-ko-Le which translates to ‘Happiness in the
mouth’ after researching 40,000 Chinese characters.
The Swedish vacuum cleaner Manufacturer Electrolux
introduced the same print ad which was successful in
Britain in the US Market with the tag line ‘ Nothing sucks
like an Electrolux’. Later they found this to be a disaster
in the US because ‘sucks’ in American means ‘really
Bad’. i.e. Electrolux is a ‘really bad vacuum cleaner’

24. Religion
Religious beliefs significantly influence people
behaviour and business decision making.
Religion
elements:

encompasses
three
distinct
•Explanation: God seen as a ‘first cause’ behind the creation of
the universe
•A standard organization: Consisting of places of worships and
rituals
•Moral rules of good behaviour : concerning principles of right
and wrong in human behaviour.

25. Dominant Religions
Christianity
Islam
Hinduism
Buddhism
Confucianism
25

26. Religion : lessons for managers
Considerable influences international business
decisions.
For. Eg. Location of commerical buildings and office
interiors need to be as per Fen shui in China and
Vastu Shastra in India, as it concerns free flow of
cosmic energy and keeps evil spirits away.
Advertisements and corporate communications
must keep religious sentiments in mind. For eg.
Islam does not permit shaving. So Shaving
equipment makers like Gillette need to be
sensitive while advertising their product in Islamic
countries.

27. Comparison of Cross Cultural
Behavior
An
appreciation
facilitates
of
cultural
international
conceptualize
and
differences
managers
implement
to
business
strategies in view of cultural sensitivities in
various countries.
Copyright @ Oxford University Press
International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

28. Hofstede’s Cultural Classification
Power distance
The extent to which less powerful members
of
an
institution
accept
that
power is
distributed unequally.
Copyright @ Oxford University Press
International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

29. High Power Distance Countries
•High social inequalities tolerated with
differences in power and income distribution
•Organizational structures are hierarchical
based an inequality among superiors and
subordinates
•Decision making is centralized
•Juniors blindly follow the orders of their
superiors
For
instance,
Malaysia,
countries, India etc.
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International Business
R. M. Joshi
Mexico,
Arab
Chapter 7: International Cultural
Environment

30. Low Power Distance Countries

Superiors and subordinates consider each
other equal

Organizations are relatively flatter

Decision making is decentralized
For instance, Austria, Sweden, Great Britain,
the US etc.
Lessons: In view of the power distance, the international
manager has to asses the organizational dynamics, identify
the key decision makers and accordingly formulate their
business strategy for different countries.

31. Individualism vs. Collectivism
Individualism:
The tendency of people to look after themselves and their
immediate family.

Strong work ethics

Promotions based on merit

Involvement of employees
in the organization is
calculative.

Ability to be independent of others is considered to be
the
key
criterion
for
success
in
individualistic
societies.
Countries with high individualism include, the US, Great
Britain, France, South Africa etc

32. Collectivism:
The tendency of people to belong to groups and to
look after each other in exchange for loyalty. In such
cultures, interest of groups have precedence over
individual interest .
For
instance,
Guatemala,
Pakistan,
Singapore,
Malaysia etc.
Lessons: International Business strategy is greatly
influenced by individualism vs. collectivism in terms of
decision making and market communication. For a
product to be successful. In collective societies, it
should
have
group
individualistic societies.
acceptability
unlike
in
the

33. Masculinity vs. femininity
In masculine societies, the dominant values emphasize
on work goals, such as earnings, advancement, success,
and material belongings. e.g. Japan, Switzerland, Great
Britain, the US etc.
In feminine societies the dominant values are
achievement of personal goals, such as quality of life,
caring for others, friendly atmosphere, getting along
with boss and others.
e.g. Sweden, Norway, Denmark, Thailand etc.
India falls in between.
Summarily, in masculine societies, people ’live to work’,
whereas in feminine societies people’ work to live’.

34. Uncertainty avoidance
The extent to which people feel threatened by
ambiguous situations.
In high uncertainty avoidance societies there is lack
of tolerance for ambiguity and the need for formal
rules. For instance, Greece, Portugal, Japan, France
are the most uncertainty avoidance countries.
Low
uncertainty
avoidance
countries
Singapore, Denmark, India, the US etc.
include

35. Trompenaars’ Cultural
Classification
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International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

36. Universalism vs. Particularism

Universalism: The belief that ideas and practices
can be defined and applied everywhere without
modification
e.g. the US, Australia, Germany, Sweden etc.

Particularism:
The
belief
that
unique
circumstances and relationships, rather than
abstract rules are more important considerations
that determine how ideas and practices should be
applied
e.g. Venezuela, the US, Indonesia, China etc.
Copyright @ Oxford University Press
International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

37. Individualism vs.
Communitarianism
Individualism: people regarding themselves as individuals.
For instance
the US, Czechoslovakia, Argentina, the CIS,
Mexico, and the UK .
Societies with high individualism make frequent references to ‘I’
and ‘me’. And achievement and responsibility are personal.
Communitarianism: people regarding themselves as part of a
group.
For instance, Singapore, Thailand, Japan, and Indonesia.
In collectivist societies ‘we’ is used more frequently than ‘I’ and
achievement is considered group achievement.

38. Neutral vs. Affective
Neutral Cultures: Cultures in which people tend to hold back
their emotions and try not to exhibit their feelings.
For instance, Japan, the UK, Singapore, Australia, etc.
Will consider anger, delight or intensity in the workplace as
‘unprofessional’
Affective Cultures: Cultures where emotions are expressed
openly.
For instance, Mexico, Netherlands, Switzerland, China, Brazil,
etc.
Will consider holding back of emotions by colleagues to signify
‘emotionally dead’ or a ‘mask of deceit’.

39. Specific vs. Diffused
The relative size of ‘Public space and Private space ‘ and
the degree to which individuals feed comfortable sharing it
with others differ considerably across societies .
Specific Cultures: Cultures in which individuals tend to have a
large public space which is readily shared, and a smaller private
space.
For instance, Australia, the UK, the USA and Switzerland.
Diffused Cultures: Culture in which public and private space are
more or less similar
and public space is guarded more
carefully.
For instance, Venezuela, China and Spain

40. Achievement vs. Ascription
Achievement Cultures: Culture in which status is
accorded to high achievers and high performers.
For instance Austria, the USA, Switzerland, the UK,
Sweden and Mexico etc.
Ascription Cultures: Culture in which status is
accorded to those who ‘naturally’ evoke admiration
from others such as elderly, seniors, highly
qualified and skilled people.
For instance,
Venezuela, Indonesia, China, the
CIS, and Singapore etc.
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International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

41. Other Cross-Cultural
Classifications
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International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

42. High Context vs. Low Context
High Context Cultures: Culture in which high
significance is given to implicit communications,
such as non-verbal and subtle situational cues.
For instance,
countries.
China,
Korea,
Japan
and
Arab
Low Context Cultures: Cultures in which
communication is more explicit with heavy reliance
on words to convey the meanings.
For instance, Germany, Switzerland, Scandinavia,
North America and Britain.
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International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

43. Homophilous vs. Heterophilous
Homophilous Cultures: Cultures where
people
share
beliefs,
speak
the
same
language, and practice the same religion.
For instance, Japan, Korea and Scandinavian
countries.
Heterophilous Cultures: Countries that
have a fair amount of differentiation in
languages, beliefs, and religions followed.
For instance, India and China.
Copyright @ Oxford University Press
International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

44. Relationship vs. Deal-focused
Relationship-focused Cultures: Cultures in
which strong orientation towards building
relationships and developing mutual trust.
For instance, India, Japan, China, Singapore,
Saudi Arabia, United Arab Emirates, Egypt,
Brazil, Mexico, and Russia.
Deal-focused
Cultures:
Task-oriented
cultures with openness to hold direct business
talks with strangers.
For
instance,
Britain,
USA,
Germany,
Denmark, Australia, Canada, Finland etc.
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International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

45. Formal vs. informal cultures
Formal Cultures: Status differences are large and
valued and formality is used to show respect.
For instance, India, UAE, Egypt, Brazil, Russia,
Poland, Japan, China,, Singapore, France, Belgium,
Britain, Germany, Denmark, Finland etc.
Informal Cultures:
Status differences are not
valued and Informal behaviour is not considered
disrespectful. For instance, the USA, Canada, and
Australia etc.
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International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

46. Polychronic vs. Monochronic
Polychronic
Cultures:
Cultures
in
which
time
schedules and deadlines are flexible and relationships
take precedence. For instance,
India, Thailand,
Philippines, UAE, Egypt, Brazil, Russia etc.
Monochronic Cultures: Cultures with rigid time
schedules and deadlines with high emphasis on
punctuality. For instance,
Japan, China, Singapore,
Britain, USA, Canada, Australia, Germany, Denmark
etc.
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International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

47. Expressive vs. Reserved Cultures
Expressive cultures: people are more
expressive with direct eye contact.
For instance,
Russia, Poland, Romania,
USA, Australia, and Canada
Reserved cultures : people restrain their
facial expression and gesturing.
For instance,
India, Japan, China,
Singapore, Britain, Germany, Denmark,
Finland etc.
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International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

48. Parochialism vs. Simplification
Parochialism: Belief that views the rest
of the world from one’s own cultural
perspective.
Simplification: Exhibiting same cultural
orientation
groups.
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International Business
R. M. Joshi
towards
different
cultural
Chapter 7: International Cultural
Environment

49. EPRG Approach
Ethnocentric orientation
The belief which considers one’s own culture as
superior to others. The belief that the business
strategy which has worked in the home country
would also be suitable in alien cultures.
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International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

50. Polycentric orientation
It is based on the belief that substantial
differences
exist
among
various
countries.
Therefore, a single business strategy cannot be
effective
across
the
world
and
customized
business strategies need to be adapted in
different countries.
Copyright @ Oxford University Press
International Business
R. M. Joshi
Chapter 7: International Cultural
Environment

51. Regiocentric orientation
A firm treats the region as a uniform cultural
segment and adopts a similar business strategy
within the region but not across the region.
For example Mc Donald’s strategy is to not serve beef based
products
in India, but serves beef based products in other
countries. Also in the Middle East, it does not serve pork and all
meat based preparations are made out of halal process only .

52. Geocentric orientation
The approach considers the whole world a single
market and attempts to formulate integrated business
strategies. A geocentric firm attempts to identify
cultural similarities across countries and formulates a
globally uniform business strategy.
Examples: the Harry Potter series of books and films,
cartoon characters and their serials,
Jeans, T-shirts etc…
apparels like

53. Emic vs. Etic Dilemma


The Emic school holds that attitudes, interests,
and behaviour are unique to a culture and best
understood in their own terms. It emphasizes
studying the business research problem in each
country’s specific context and identifying and
understanding its unique facets.
The Etic school emphasizes identifying and
assessing universal attitudinal and behavioural
concepts
and
developing
‘pan-cultural’
measures. Thus, etic is basically concerned with
measuring universal behavioural and attitudinal
traits.

54. Operationalisation of Emic and Etic
Emphasis is often placed an identifying
and
developing
constructs
that
are
feasible across countries and cultures,
while conducting cross country research.
Copyright @ Oxford University Press
International Business
R. M. Joshi
Chapter 7: International Cultural
Environment