The cultural environment and the business culture

3-2

What is Culture?
A system of values and norms shared among a group of people and, when taken together, constitute a design for living.

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3-3

What is culture?
Culture

is everything that people have, think or do as members of their society

shared by two or more people transmitted by a learning process ___________________________

CULTURE CONSISTS OF:

Material objects Ideas, values and attitudes Normative or expected patterns of behaviour
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3-4

Cultural universals

Economic system Marriage and family system Educational system Social control system Supernatural belief system
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3-5

Culture is Dynamic

Cultural Change
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3-6

Norms and Values

Norms:

Values:

Social rules and guidelines that prescribe appropriate behaviour in particular situations. Folkways:
Routine conventions of everyday life.

Mores:
Central to functioning of society and its social life.

Abstract ideas about what a group believes to be good, right, and desirable. The bedrock of culture. Have emotional significance.
Freedom.

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3-7

Culture, Society and the NationState

NationStates are political creations Not a strict one-to-one correspondence

McGraw-Hill/Irwin

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3-8

Determinants of Culture
Economic Philosophy Education Culture: Norms and Value Systems Political Philosophy

Language

Social Structure

Religion
McGraw-Hill/Irwin

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3-9

Social Structure
Individual
Western
Entrepreneurship

Hard to Build Teams Mobile Managers Lack of Loyalty

Group two or more individuals with a shared sense of identity

Group Eastern Identity

McGraw-Hill/Irwin

Nonmobile Managers

Lack of Entrepreneurship

Lifetime Employment
9

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3-10

Social Stratification
Typically defined by family background, occupation, and income.

Caste: Virtually no mobility

Class: some social mobility

Class Consciousness: May play a role in a firms operations

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3-11

Religion
Shared

beliefs and rituals concerned with the realm of the sacred. Ethical Systems:

Moral principles or values used to guide and shape behavior.

Shapes

attitudes toward work and entrepreneurship and can affect the cost of doing business.
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3-12

Worlds Religions

Christian
43% 20% 18%

Islam Hindu Buddhist Confucian Other/Nonreligious

4%

5%

10%

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3-13

Worlds religions
Existed since Hinduism Buddism Confusianism Christianity Islam 2000 B.C. 600 B.C 500 B.C. C 600 A.C.

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3-14

Religion and Economic Implications

Christianity

Protestant Work Ethic and The Spirit of Capitalism. Favors market-based systems. No payment or receipt of interest. Asceticism may have an impact. Caste system plays a role. Little emphasis on entrepreneurial behavior.
Loyalty, reciprocal obligations, and honesty in dealings.

Islam

Hinduism

Buddhism

Confucianism

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3-15

Language
Allows

people to communicate. Structures the way the world is perceived. Directs attention to certain features of the world rather than others. Helps define culture. Creates separatist tendencies?
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3-16

Spoken Language
5% 4% 3% 62% 20% Other Chinese English Hindi Russian Spanish

6%

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3-17

Language dimensions
The

McGraw-Hill/Irwin

spoken language The written language The official language Linguistic pluralism Language hierarchy International language Mass media language The non-spoken language/ bodylanguage FEB 690

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3-18

Nonspoken Language
Nonverbal

cues:

eyebrows fingers/thumbs hand gestures feet personal space body gestures

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3-19

Education
Formal education supplements family role in teaching values and norms For intl business, it is a determinant of national competitive advantage Medium to learn language, conceptual, and math skills

Cultural norms such as respect, obedience, honesty

Value of personal achievement and competition Focus on facts of social and political nature of society Obligations of citizenship
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3-20

Legal systems

Civil/Code law

Continental Europe. Codification

Anglo-Saxon. Court decisions (precedents/prejudikat) Middle East & South Asia. 13th century frozen Islamic moral Communist countries. Political courts

Common law

Islamic law (Sharia)

Political law

McGraw-Hill/Irwin

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20

The cultural environment and the business culture

3-22

What is Culture?
A system of values and norms shared among a group of people and, when taken together, constitute a design for living.

McGraw-Hill/Irwin

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22

3-23

What is culture?
Culture

is everything that people have, think or do as members of their society

shared by two or more people transmitted by a learning process ___________________________

CULTURE CONSISTS OF:

Material objects Ideas, values and attitudes Normative or expected patterns of behaviour
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McGraw-Hill/Irwin

23

3-24

Cultural universals

Economic system Marriage and family system Educational system Social control system Supernatural belief system
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McGraw-Hill/Irwin

24

3-25

Culture is Dynamic

Cultural Change
McGraw-Hill/Irwin

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25

3-26

Norms and Values

Norms:

Values:

Social rules and guidelines that prescribe appropriate behaviour in particular situations. Folkways:
Routine conventions of everyday life.

Mores:
Central to functioning of society and its social life.

Abstract ideas about what a group believes to be good, right, and desirable. The bedrock of culture. Have emotional significance.
Freedom.

McGraw-Hill/Irwin

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2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

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3-27

Culture, Society and the NationState

NationStates are political creations Not a strict one-to-one correspondence

McGraw-Hill/Irwin

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27

3-28

Determinants of Culture
Economic Philosophy Education Culture: Norms and Value Systems Political Philosophy

Language

Social Structure

Religion
McGraw-Hill/Irwin

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28

3-29

Social Structure
Individual
Western
Entrepreneurship

Hard to Build Teams Mobile Managers Lack of Loyalty

Group two or more individuals with a shared sense of identity

Group Eastern Identity

McGraw-Hill/Irwin

Nonmobile Managers

Lack of Entrepreneurship

Lifetime Employment
29

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2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

3-30

Social Stratification
Typically defined by family background, occupation, and income.

Caste: Virtually no mobility

Class: some social mobility

Class Consciousness: May play a role in a firms operations

McGraw-Hill/Irwin

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2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

30

3-31

Religion
Shared

beliefs and rituals concerned with the realm of the sacred. Ethical Systems:

Moral principles or values used to guide and shape behavior.

Shapes

attitudes toward work and entrepreneurship and can affect the cost of doing business.
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McGraw-Hill/Irwin

31

3-32

Worlds religions
Existed since Hinduism Buddism Confusianism Christianity Islam 2000 B.C. 600 B.C 500 B.C. C 600 A.C.

McGraw-Hill/Irwin

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3-33

Worlds Religions

Christian
43% 20% 18%

Islam Hindu Buddhist Confucian Other/Nonreligious

4%

5%

10%

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3-34

World religions
Map 3.1

McGraw-Hill/Irwin

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3-35

Religion and Economic Implications

Christianity

Protestant Work Ethic and The Spirit of Capitalism. Favors market-based systems. No payment or receipt of interest. Asceticism may have an impact. Caste system plays a role. Little emphasis on entrepreneurial behavior.
Loyalty, reciprocal obligations, and honesty in dealings.

Islam

Hinduism

Buddhism

Confucianism

McGraw-Hill/Irwin

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2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

35

3-36

Language
Allows

people to communicate. Structures the way the world is perceived. Directs attention to certain features of the world rather than others. Helps define culture. Creates separatist tendencies?
McGraw-Hill/Irwin

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3-37

Spoken Language
5% 4% 3% 62% 20% Other Chinese English Hindi Russian Spanish

6%

McGraw-Hill/Irwin

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3-38

Language dimensions
The

McGraw-Hill/Irwin

spoken language The written language The official language Linguistic pluralism Language hierarchy International language Mass media language The non-spoken language/ bodylanguage FEB 690

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38

3-39

Nonspoken Language
Nonverbal

cues:

eyebrows fingers/thumbs hand gestures feet personal space body gestures

McGraw-Hill/Irwin

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39

3-40

Education
Formal education supplements family role in teaching values and norms For intl business, it is a determinant of national competitive advantage Medium to learn language, conceptual, and math skills

Cultural norms such as respect, obedience, honesty

Value of personal achievement and competition Focus on facts of social and political nature of society Obligations of citizenship
McGraw-Hill/Irwin

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2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

40

3-41

Education

Education can be a source of competitive advantage

Example India Malaysia Singapore

McGraw-Hill/Irwin

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3-42

Percentage of GNP spent on education

Map 3.2

McGraw-Hill/Irwin

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3-43

Adult literacy rates

Map 3.3

McGraw-Hill/Irwin

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3-44

Legal systems

Civil/Code law

Continental Europe. Codification

Anglo-Saxon. Court decisions (precedents/prejudikat) Middle East & South Asia. 13th century frozen Islamic moral Influenced by political ideologies.

Common law

Islamic law (Sharia)

Political law

McGraw-Hill/Irwin

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3-45

Legal systems

Four issues important to international business

Contract law Property rights Protection of intellectual property Product safety and liability
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3-46

A. Contract law

Dispute resolution is often complex

where to arbitrate and whose laws apply?

host country or home country

validity of contracts and decisions

Role of United Nations Convention on Contracts for the International Sale of Goods (CIGS)
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3-47

B. Property rights

A bundle of legal rights over the use to which a resource is put and over the use made of any income from that resource
Property rights can be violated through

private action public action and corruption

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3-48

C. Protection of intellectual property

Intellectual property refers to property that is the product of intellectual activity

Patent: inventors exclusive rights to manufacture, use, sale of an invention Copyright: same for authors, composers, artists, publishers Trademarks: unique designs and names, often officially registered

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3-49

D. Product safety and liability

Product safety laws set safety standards for products and manufacturing processes Product liability laws hold the firm and its officers responsible for product safety standards Criminal laws/ civil liability laws

McGraw-Hill/Irwin

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3-50

Legal systems

Rules - laws - that regulate behavior

processes through which laws are enforced & grievances are redressed

Businesses must observe

home country laws host country laws international Laws and Treaties
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3-51

Business culture
FEB 690 51

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3-52

Gert Hofstede (NL)

Study (IBM) is a general way to look at differences between cultures 4 dimensions: Power distance. Individualism versus collectivism. Uncertainty avoidance Masculinity versus femininity But: Assumption of one-to-one relationship between culture and nation state Research may be culturally bound Respondents worked within a single company Work is beginning to look dated (1967-1973
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3-53

Hofstede: Work Related Values for Selected Countries

Power Distance
49 69 68 77 54 81 38 40 Argentina Brazil France India Japan Mexico Netherlands U.S.A. 86 76 86 40 92 82 53 46 46 38 71 48 46 30 80 91 56 49 43 56 95 69 14 62

Uncertainty Individualism Masculinity Avoidance

Table 3.1
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3-54

Richard Gestland (DK)

Dealfocused cultures <> Relationfocused cultures Informal cultures <> Formal cultures

Rigid-time cultures <> Fluid-time cultures

Expressive cultures <> Reserved cultures Based on own experiences

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3-55

Trompenaar (NL)
Larger

base for national comparisons Not limited to one company

Other

findings

Relation to time Tone of voice Silence High/low context

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Swedish business culture

What is typical?

3-57

Psychic distance
How

close are two countries in business culture?

research in Uppsala
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Swedish
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A European structure of business culture

Based on a study by top-managers

Different management systems

United states<>Japan<>Europe

3-60

Global Business Dress code Etiquette

Punctuality Non-verbal greetings Forms of address Verbal greeting Exchange business cards Gifts Refreshments Wining and dining
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3-61

Business ethics
Corporate

social responsability Managerial behavior State interventions

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3-62

Corporate social responsibility

(related to business policy issues)
Two

perspectives: The efficiency perspective

The social responsibility perspective

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3-63

Ethics in international business

(=managerial behaviour)
A

teleological perspective (goaloriented doctrine ) deontological perspective (=theory of moral obligations)

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3-64

Possible ethic issues in international business Examples:

Group

orientation False information Dealing with competitors Gender equality Attitudes to unions and environment Corruption and bribes
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3-65

State interventions:
US

Foreign Corrupt Practice Act of 1977 OECD recommendations are expected Sweden/India: Bofors France: Elf
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3-66

Country Corruption Rankings 2000

10=Highly clean 0=Totally corrupt
10 8 6 4 2

Ranking
Canada Singapore U.K. Switzerland Australia U.S.A. France Japan Greece China Russia Indonesia Nigeria

Finland

Figure 2.1

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3-67

Be aware of your ethnocentric behavior !

(=

we are superior)

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