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International Business. Chapter Two The Cultural Environments Facing Business. Understanding Culture. What is Culture?: “Sum total” of all learned activities, a way of life that includes values, attitudes, beliefs, lifestyles etc….
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International Business Chapter Two The Cultural Environments Facing Business
Understanding Culture • What is Culture?: “Sum total” of all learned activities, a way of life that includes values, attitudes, beliefs, lifestyles etc…. • Cultures consist of societies, i.e., relatively homogeneous groups of people, who share attitudes, values, beliefs, and customs. • Why an international business manager should study the culture of a country?
Understanding Culture • National cultures are dynamic, they evolve over time change may occur by choice or by imposition • The Nation or Nation-State as point of reference (identity, symbolism, common history) • Language as both a diffuser and stabilizer of culture (expression, sharing, bond) • Religion as a cultural stabilizer (beliefs, ethics, spiritualism)
Behavioral Practices Affecting Business • Issues in Social Stratification • Work Motivation • Relationship Preferences • Risk-taking Behavior • Information and Task Processing • Communications
Social Stratification Systems • Individual’s status in a culture • Open vs. closed societies • Ascribed and acquired group membership: gender, age, or family-based groups
Work Motivation • Work vs. leisure-how it affects productivity • Role of materialism, how it motivates people • Achievement orientation • Expectation of success and reward • Hierarchy of Needs
Relationship Preferences • Power distance, i.e., the psychological and social distance between superiors and subordinates • Individualism vs. collectivism • Individualism represents a desire for personal freedom, time, and challenge. • Collectivism represents a dependence on the organization as well as a need for a safe environment. • Role of extended families/clans
Risk-taking Behavior • Uncertainty avoidance, i.e., one’s tolerance of risk • Trust, i.e., one’s belief in the reliability and honesty of another • Future orientation, i.e., the need for immediate vs. delayed gratification • Fatalism, i.e., the belief that life is pre-destined, that events are “the will of God”
Information and Task Processing • Perception of Cues • Obtaining information: Low-Context cultures [explicit, e.g., USA] vs. High-Context cultures [implicit, e.g., Saudi Arabia] • Information processing: • Monochronic [work sequentially] vs. Polychronic [multi-task] • Idealism vs. Pragmatism
Communications • Spoken and Written Language • Silent Language of time, distance/space, and friendship • Verbal vs. Nonverbal Language (kinesics: body language and gestures) • We need to be sensitive to linguistic differences
Dealing With Cultures • Host society acceptance (i.e., accommodation of foreigners in a culture) • A few terms: Cultural Distance, Cultural Diffusion, Cultural Imperialism, Culture Shock and Reverse Culture Shock • Managerial Orientations: Polycentrism, Ethnocentrism, Geocentrism
Strategies for Instituting Change • Value systems • Cost-benefit analysis of change • Resistance to change • Participation in decision-making • Reward sharing • Role of opinion leaders • Timing • Opportunities to learn from abroad
Hofstede’s Cultural Value • Individualism/collective index (IDV): Refers to preference of behavior that promotes one’s self interest. Higher score (e.g., USA) means high on individualism. • Power distance index (PDI): Measures the tolerance of social inequality, i.e., inequality between superiors and subordinates within a social system. Higher score (e.g., Arab countries) means more hierarchical. • Uncertainty avoidance index (UAI): Refers to the intolerance of ambiguity and uncertainty among members of a society. Higher score (e.g., Greece) means less tolerance for uncertainty. • Masculinity/feminity (MAS): Refers to one’s desire for achievement and entrepreneurial tendencies. Higher score (e.g., Latin culture) means more assertiveness and masculinity. • Future orientation: Refers to the future or long-term orientation of the society
Chapter 2: Discussion Questions • Define culture? Why an international business manager should study the culture of a country? • Explain how the dynamic interplay of nation, language and religion shapes the culture of a country. • Explain the six behavioral practices that affect the business in a country. • Explain the three managerial orientations and their implications in international business. • What are the five cultural values of Hofstede? Explain.
