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Chapter 4: The Cultural Environment of International Business

Culture and Cross-Cultural Risk

Culture- Set of values, norms, beliefs, rules held by a specific group of people
Cross-cultural risk- A situation or event in which a cultural misunderstanding puts
some human value at stake -> Arises in environments characterized by unfamiliar
languages and unique value systems, beliefs and behaviors
o Cross-cultural misunderstandings can ruin business deals, hurt sales, or harm
the corporate image
Culture gets in the way of straight-forward communication
Culture affects simple rituals of daily life -> do you shake hands? What far do you
stand apart?
Ethnocentricity- Belief that ones own ethic group or culture is superior to that of
Cultural literacy- detailed knowledge of a culture that enables a person to function
happily and effectively within it
Key Concepts of Culture
All cultures are very similar and very different
Some cultures are more complex than others, some are more individualistic
Culture captures how the members of society live- how they feed, clothe, shelter
themselves -> how they behave toward each other -> their beliefs and values and
the way they perceive the meaning of life
What Culture is not
Not right or wrong -> it is relative. There is no cultural absolute -> people of different
nationalities simply perceive the world differently
o Ex. Islamic cultures, a wife cant divorce her husband
Not about individual behavior it is about groups and not individuals because some
individuals behave differently
o Ex. In most countries, men wear their hair short, but a few have long hair
Not inherited -> derives from social environment, we are not born with a shared set
of values and beliefs; we acquire them as we grow
Socialization and Acculturation
Socialization- the process of learning the rules and behavioral patterns appropriate
to ones society
Acculturation- The process of adjusting and adapting to a culture other than ones
owns; commonly experienced by refugee workers
The Many Dimensions of Culture
Most of us are not completely aware of how culture affects our behavior until we
come into contact with people from other cultures
Culture is like an iceberg- over the surface, certain characteristics are visible, below
the surface is a massive base of assumptions, attitudes, and values that strongly
influence decision-making, relationships, and other dimensions of business
Culture is linked with particular groups based on various factors including:
Geography- Different levels -> the world, the nation, the region, cities
Ethnicity African, Indian, Latino heritage tend to perceive reality differently

Gender- Men and women often experience the world difference

Age- Seniors, baby boomers, teenagers, and children perceive their worlds differently
Language- Language both reflects, and is reflects by cultural differences
Occupation- Perspectives differ among workers, professionals, artists -> take
accountants vs lawyers -> lawyers always doubt stuff

Larger cultures contain sub-cultures who share a unique way of life within the larger
Need to be aware of the sub-culture since its influences behavior
Components of Culture
Aesthetics - as all that a culture considers to be in good taste in the arts, the
imagery evoked by certain expressions, and the symbolism of colors
Manners- are generally acceptable ways of behaving, speaking, and dressing.
Customs- are habits and behaviors in specific circumstances and situations
Values - are Ideas, beliefs, and customs to which people are emotionally attached
Attitudes - are Positive or negative evaluations, feelings, and tendencies people hold
toward objects or concepts
Social Structure- consists of groupings such as family; stratification or the layers that
exist in the structure; and mobility which is the ease with which people can move
between the social strata.
Religion- the major religions of the world are: Christian, Muslim, Hindu, Buddhism,
Confucianism, and Judaism.
Personal Communication Language. Be aware of not only a nations core language
but also of the many dialects when translating brands, advertising or documents
Education- Cultures pass on traditions, customs, and values through schooling,
parenting, group memberships, etc.
Physical environment - Topography and climate can affect culture
Canadian Culture
Very accepting and multicultural
Hockey is considering a big sport, but not football -> football is a massive sports in
the States
-Leading interpretations of national culture
1) E.T Halls Context Typology
o High and Low Context Cultures
o Low- context culture A culture that relies on elaborate verbal explanations,
putting much emphasis on spoken words
Get down to business first
Expertise and performance are valued
Agreements emphasize specific contracts
German, Swiss
o High- context culture- A culture that emphasizes nonverbal messages and
views communication as a means to promote smooth, harmonious relationships
Establish social trust first
Person relations and goodwill are valued

Agreements emphasize trust

Chinese, Korean
2) Hofstedes Framework
o Individualism versus collectivism
Refers to whether a person functions primarily as an individual or as part
of a group
In individualistic societies -> ties among people are loose and each
person tends to focus on their own self interest
Competition for resources is the norm and those who compete best are
rewarded financially
Collectivist- business is conducted in the context of a group in which
others views are strongly considered
o Power distance
Describes how a society deals with inequalities in power that exist among
Low power distance gap between the powerful and weak are minimal
o Uncertainty Avoidance
Refers to the extent to which people can tolerate risk and uncertainty in
their lives
High uncertainty avoidance have institutions that minimize risk and
ensure financial security
Low uncertainty -> socialize their members to accept and become
accustomed to uncertainty
o Masculinity versus Femininity
Masculine cultures tend to value competitiveness, assertiveness,
ambition, and accumulation of wealth
Femininity cultures emphasize nurturing roles, interdependence among
people and caring for less fortunate
o Long term versus short-term Orientation
People with the long term orientation tend to take the long view to
planning and living -> focus on years

Cultures are different SO WHAT? Why & how does it affects us?
Reflected in language- so affects communication and understanding
Reflected in perceptions of business deal making vs relationship building
Reflected in perceptions of time if you ask for a contractor in Canada you will pin
down a person and ask for an exact time. In other places, they are just like oh I am
having a beer now, we will see about tomorrow I guess?
Reflected in expected behavior
Reflected in attitudes and values
How to give in with cultures? -> Developing a Global Mindset
Acquire factual and interpretive knowledge
Cultural adaptability means that a person must be knowledgeable of an unfamiliar
culture, then alter his or her behavior accordingly.
Bridging the gap means employing creativity when Western ideas are applied in
Eastern cultures, and vice versa.
Building global mentality involves developing openness and flexibility toward all
things unfamiliar, understanding global business principles, and improving abilities to
implement strategies.

Flexibility is key because the more behavioral the issue, the greater will be local
cultures influence on that issue.
Avoid cultural bias and stereotypes
**When you have a business you cant just hire someone that learns the culture,
its better to have people that know the business