The document discusses differences in culture and how it relates to business. It defines culture as shared values and norms among a group that constitute a design for living. Culture includes both visible and invisible components, with values and norms being deeper components. Different types of norms like folkways and mores are described. Culture is determined by factors like social structure, religion, language, and education. Hofstede's model of cultural dimensions is presented as a framework to analyze differences in individualism/collectivism, power distance, uncertainty avoidance, and masculinity/femininity across cultures. Culture influences business decisions and must be considered to avoid costly mistakes when conducting international business.

1. Differences in Culture CHAPTER 3

2. What is 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.” - Hofstede, Namenwirth and Weber “ Different countries, different customs.” - Peachy , The Man Who Would Be King.

3. The Cultural Iceberg Figure 3.2 Hodge, Sheila. Global Smarts, New York: Wiley & Sons, 2000, page 32

4. COMPONENTS OF CULTURE Values: abstract ideas/assumptions about what a group believes to be good, right, and desirable. Norms: social rules and guidelines that prescribe appropriate behavior in particular situations.

5. DIFFERENT TYPES of NORMS Folkways: Routine conventions of everyday life. Little moral significance General social conventions such as dress codes, manners, and attitude towards time. Mores: serious standards of behavior, usually tending to address appropriate behaviors in areas such as sex, religion, family, etc. norms central to the functioning of society and social life Greater significance than folkways Violation can bring serious retribution; negative mores are “taboos” e.g. Theft, adultery, incest and cannibalism

6. Culture, society and nation states Society is a group of people who share a common culture. No one-to-one correspondence between society and a nation state. Nation states are political creations (“imaginary lines drawn on the earth”) Many cultures can co-exist within one nation state.

7. Determinants of culture Social structure Economic philosophy Political philosophy Religion Language Education Fig. 3.1 p 93

8. Social Structure Two dimensions Extent to which society is group or individually oriented Degree of stratification into castes or classes Social mobility Significance to business

9. Social Structure: Individual vs. Group Orientation Individual societies tend to view individual attributes and achievements as being more important than group membership. Emphasis on individual performance can be both beneficial and harmful: Encourages entrepreneurship Can lead to high degree of managerial mobility Group societies see groups as the primary unit of social organization Group members Often form deep emotional attachments See group membership as all important Emphasis on the group can be both beneficial and harmful: Strong group identification creates pressure for mutual self-help and collective action Discourages managers and workers from moving from company to company Discourages entrepreneurship

10. Social Structure: Social Stratification Social stratification refers to the fact that all societies are stratified on a hierarchical basis of social categories. Strata are typically defined on the basis of characteristics such as family background, occupation, and income. Societies are all stratified to some degree but they differ in two related ways: Social mobility refers to the extent to which individuals can move out of the strata into which they are born Class consciousness refers to a condition where people tend to perceive themselves in terms of their class background and this shapes their interaction and relationship with others.

11. Religious and Ethical Systems Religion: a system of shared beliefs and rituals that are concerned with the realm of the sacred Ethical systems: a set of moral principles, or values, that are used to guide and shape behavior Most of the world’s ethical systems are the product of religions Christianity (1.7 billion) Economic implications: Protestant “work ethic” considered one of the foundations of capitalism; emphasis on individual religious freedom a possible force in development of concepts of individual economic and political freedom. Islam ( Inshallah- if God is willing) (1 billion) Economic implications: pro-free enterprise but it must be done in a righteous, socially beneficial and prudent way. Special case: the riba (interest) not permitted; employ other techniques of mudarabah (sharing ownership) or murabaha (the bank buys the product and sells it to the firm for a price having a mark-up).

12. Religious and Ethical Systems Hinduism (750 million ) Economic implications: focuses on importance of achieving spiritual growth and development (progression to nirvana), so sources of motivation may be different. Residual ideas of caste concept may remain in older employees. Buddhism (350 million) Economic implications: focuses on spiritual growth, following the Noble Eightfold Path, and the afterlife, so sources of motivation may be different. Confucianism (200 million) Economic implications: principles of loyalty, reciprocal obligations, and honesty may lead to reduction of business costs in Confucian societies.

13. World Religions Map 3.1 p 99

14. Other components of Culture Other influences Political philosophy: democracy vs. totalitarianism Economic philosophy: Market economy vs. Command economy

15. Language Spoken – Written Unspoken Language structures one’s perception of the world Hill, Charles. International Business, 5 th edition

16. Language In some cultures, the words convey most of the meaning of a message; in other cultures, language only partially convey the meaning. Good communication is critical to success in international business Cateora, Philip R. International Marketing. Homewood, Illinois: Richard Irwin, 1983, page 135. Meaning less direct; subject to more interpretation Meaning more direct; subject to less interpretation

17. SPOKEN LANGUAGE- Do you speak English? Australian English New chum Yankee shout Dinkum Sink the slipper British English Ring me up. Bonnet of the car Come down. Form “ Fancy a cuppa and a bit of a chin-wag?” American English Newly arrived immigrant Dutch treat Genuine, honest To kick someone when they are down Give me a call. Hood of the car Graduate. Grade level “ Would you like to have a cup of tea and talk a bit?

18. Language Problems Spoken and Written Spoken: If you are not sure that you understand or are being understood: Avoid slang Speak slowly Paraphrase Repeat Demonstrate Test understanding of other person

19. Language Problems Spoken and Written Written: Verify the quality of written messages, especially in contracts and advertising. Use qualified translators Test the meaning of written communications through: Back translations Parallel translations

20. Language Unspoken (“the silent language”)* Body language : gestures, eye contact Space : Physical distance required to maintain psychological distance public, social, personal spaces vary considerably among different cultures. *Concept pioneered by E.T. Hall

21. Language Unspoken Time : Time is one concept that is highly culturally bound. Different cultures view time differently. Time is: 1) actual time 2) Timing (“right moment”) 3) Tempo (rate or pace) e.g. -U.S.: “Time is money.” -Mexico: manana is “tomorrow, or sometime soon -Arabic speaking countries bukara is “tomorrow or some time in the future.” -Nigeria: “The clock did not invent man.” -France: “Before the time, it is not yet the time; after the time, it’s too late.” How a culture values time affects its business conduct. e.g. Punctuality in appointments, timeframes and deadlines for getting things done, delivery dates, etc.

22. Sequential vs. Synchronous Time Sequential time perspective views time as a giant cosmic clock ticking away. Synchronous views time as recurrent or cyclical time, good timing. SOURCE: Charles Hampden-Tirner and Fons Trompenaars, BUILDING CROSS-CULTURAL COMPETENCE. New Haven, Conn: Yale University Press, 2000. page 316

23. Education Education can be a source of competitive advantage if a country can offer skilled or training employees. e.g. India, Singapore, Malaysia Schools are a part of the social structure of any society. Norms and Values are reinforced in formal education.

24. Education Formal education plays a key role in a society Formal education: the medium through which individuals learn many of the language, conceptual, and mathematical skills that are indispensable in a modern society. Also supplements the family’s role in socializing the young into the values and norms of a society. Schools teach basic facts about the social and political nature of a society, as well as focusing on the fundamental obligations of citizenship. Cultural norms are also taught indirectly at school Examples include: respect for others, obedience to authority, honesty, neatness, being on time Part of the “hidden curriculum”

25. Adult Literacy Rates Hill, Charles. International Business, 5th edition

26. CULTURE and the WORKPLACE Study of the relationship between culture and the workplace: Geert Hofstede 1967-73 40 countries 100,000 individuals

27. HOFSTEDE’S: CULTURAL DIMENSION Four dimensions of culture Power distance Individualism versus collectivism Uncertainty avoidance Masculinity versus femininity

28. Power Distance Individualism vs. collectivism Cultures are ranked high or low on this dimensions based on that society’s ability to deal with inequalities, power, authority. Cultures are ranked on their orientation towards intersocietal relationships: Individualistic societies: loose ties, individual achievement and freedom Collectivist societies: tight ties, tend to be more relationship-oriented

29. Individual Behaviors Across Cultures Source: Adapted from R. W. Griffin,/M. Pustay, International Business, (figure 14.1, page 479) © 1996 Addison Wesley Longman. Reprinted by permission of Addison Wesley Longman. Figure 5.4 HIGH LOW HIGH LOW Social Orientation Relative importance of the interests of the individual vs. the interests of the group The interests of the individual take precedence Individualism The interests of the group take precedence Collectivism Power Orientation The appropriateness of power/authority within organi- zations Authority is inherent in one’s position within a hierarchy Power Respect Individuals assess authority in view of its perceived right- ness or their own personal interests Power Tolerance

30. Uncertainty Avoidance Masculinity vs. Femininity Cultures are ranked on extent that they accept ambiguous situations and tolerate uncertainty: risk issues. Cultures view relationship between gender and work role: goal orientation

31. Individual Behaviors Across Cultures (cont’d) Source: Adapted from R. W. Griffin,/M. Pustay, International Business, (figure 14.1, page 479) © 1996 Addison Wesley Longman. Reprinted by permission of Addison Wesley Longman. Figure 5.4 HIGH LOW HIGH LOW Goal Orientation What motivates people to achieve different goals Value material possessions, money, and assertiveness Masculine: Aggressive Goal Value social relevance, quality of life, and the welfare of others Feminine: Passive Goal Uncertainty Orientation An emotional response to uncertainty and change Positive response to change and new opportunities Uncertainty Acceptance Prefer structure and a consistent routine Uncertainty Avoidance

32. Work related values for twenty countries P 113

33. Problems with Hofstede’s Findings Assumes one-to-one relationship between culture and the nation-state. Research may have been culturally bound. Survey respondents were from a single industry (company) and a single company (IBM) Hofstede eventually added a fifth dimension: Confucian dynamism (short vs. long-term orientation).

34. CULTURE CHANGE Culture is not a constant; it evolves over time. Examples: role of women in U.S. rise of individualism in Japan e.g. Matsushita’s changing employment policies Effects of globalization: merging of cultures.

35. Changing values Fig: 3.2 SHIFT TOWARDS SECULAR/RATIONAL VALUES AND MOVE FROM SURVIVAL VALUES TO WELL-BEING VALUES. P 115

36. Managerial Implications Cross cultural literacy : understanding how the culture of a country affects the way business is practiced in this country. Cross cultural literacy is required to counter ethnocentrism (belief in superiority of one’s own culture). Relationship of Culture and Competitive Advantage : the values and norms of a country can influence the competitiveness of that country. Impacts attractiveness of a country Impacts potential costs of investment Culture is an important factor which influences the decisions made by multinational businesses to conduct international trade and foreign direct investment. Culture and business ethics

37. Cultural Issues affect Business Decisions Cultural issues can cost money, time, and resources Solutions may not always be complete; research and careful consideration are required to manage cultural issues. San Jose Mercury News : Monday, May 23, 2005 3A

38. Culture Affects How You Conduct Business M2 Reports In: How to prepare for a Business Trip