International

Business 9e
By Charles W.L. Hill
McGraw-Hill/Irwin

Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Concept 1

Differences
in Culture

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
cross-cultural literacy is important for business
success

A relationship may exist between culture and the

costs of doing business in a country or region
MNEs can be agents of cultural change
McDonalds
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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
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What Are Values And

Norms?
Values provide the context within which a
societys norms are established and
justified and form the bedrock of a culture
Norms include
folkways - the routine conventions of everyday
life
mores - norms that are seen as central to the
functioning of a society and to its social life

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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

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What Determines
Culture?
The values and norms of a culture evolve
over time
Determinants include
Aesthetic
religion
political and economic philosophies
education
language
social structure
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Aesthetic
https://en.wikipedia.org/wiki/Aesthetics
People and their way of praising and
admiring depending on their definition of
beauty. Working in a biased culture allows
mis-communication resulting from various
aesthetic senses.

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What Is A Social
Structure?
Social structure - a societys basic social
organization
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 stratified into
classes or castes

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How Are Individuals

And Groups Different?
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 others
behavior
individuals are involved in families, work
groups, social groups, recreational groups,
etc.

Societies place different values on groups

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What Is Social
Stratification?
All societies are stratified on a
hierarchical basis into social categories,
or social strata
individuals are born into a particular stratum

Must consider
1. mobility between strata
2. the significance placed on social strata in
business contexts

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What Is Social
Stratification?
2. The significance attached to social strata
in business contacts
class consciousness - a condition where people
tend to perceive themselves in terms of their
class background, and this shapes their
relationships with others
an antagonistic relationship between
management and labor raises the cost of
production in countries with significant class
differences

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How Do Religious And

Ethical Systems Differ?
Religion - a system of shared beliefs and
rituals that are concerned with the realm of the
sacred
Four religions dominate society
1.
2.
3.
4.
5.

Christianity
Islam
Hinduism
Buddhism
Confucianism is also important in influencing
behavior and culture in many parts of Asia
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How Do Religious And

Ethical Systems Differ?
Ethical systems - a set of moral
principles, or values, that are used to
guide and shape behavior
Religion and ethics are often closely
intertwined
ex. Christian or Islamic ethics

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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
countries with more than one language often
have more than one culture
Canada, Belgium, Spain

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What Is The Role

Of Language In Culture?
Language is one of the defining characteristics
of culture
Chinese is the mother tongue of the largest number of
people
English is the most widely spoken language in the
world
English 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

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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 nations competitive
advantage
Japans 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

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How Does Culture

Impact The Workplace?
Management processes and practices
must be adapted to culturally-determined
work-related values
Geert Hofstede studied culture using
data collected from 1967 to 1973 for
100,000 employees of IBM
Hofstede identified four dimensions that
summarized different cultures

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How Does Culture

Impact The Workplace?
Hofstedes dimensions of culture:
1. Power distance - how a society deals with the
fact that people are unequal in physical and
intellectual capabilities
2. Uncertainty avoidance - the relationship
between the individual and his fellows
3. Individualism versus collectivism - 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
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How Does Culture

Impact The Workplace?
Work-Related Values for 20 Countries

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Was Hofstede Right?

Hofstedes work has been criticized for several
reasons
made the assumption there is a one-to-one
relationship between culture and the nation-state
study may have been culturally bound
used IBM as sole source of information
culture is not static it evolves

But, it is a starting point for understanding how

cultures differ, and the implications of those
differences for managers
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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

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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

To avoid being ill-informed

consider hiring local citizens
transfer executives to foreign locations on a regular
basis

Managers must also guard against

ethnocentrism
a belief in the superiority of one's own culture
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What Do Cultural
Differences Mean For
Managers?

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

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