INTERNATIONAL BUSINESS Professor H. Michael Boyd, Ph.D.

INTERNATIONAL BUSINESS Professor H. Michael Boyd, Ph.D.

Chapter 3Differences in Culture H. Michael Boyd, Ph.D.

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 H. Michael Boyd, Ph.D.

Different Components of Culture • Values and Norms • Folkways and Mores

Values • Form the bedrock of a culture • Provide the context for establishing and justifying a society’s norms and attitudes toward: • individual freedom • democracy • truth and justice • honesty • loyalty • social obligations • role of women • love and sex • marriage H. Michael Boyd, Ph.D.

Norms • Social rules that govern people’s actions toward one and another • Folkways • routine conventions of everyday life • actions of little moral significance • dress code, eating habits, time orientation, rituals, etc. • violating folkways will not be considered evil or bad • Mores • norms seen as central to the functioning of a society • have much greater significance than folkways • violating mores can bring serious retribution • theft, adultery, incest, cannibalism H. Michael Boyd, Ph.D.

Characteristics of Culture • Learned behavior through: • observation • sharing and transferring • Accumulation of solutions to common problems by: • accident • learning • borrowing (Cultural Diffusion) • All elements are interrelated • Composed of explicit and implicit layers • Dynamic and evolutionary H. Michael Boyd, Ph.D.

Cultural Diffusion • Up to 90% of all cultures have their major origins from elsewhere • When two different cultures interact: • selective process • two-way process • borrowed items will be reinterpreted H. Michael Boyd, Ph.D.

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 • nation states are political creations • many cultures can co-exist within a nation state • similarity among people is both a cause and effect of national boundaries • Nations composed of several cultures with no super-ordinate and uniting values are likely to split apart • Nations break up and yield smaller units allowing national cultures to emerge and solidify H. Michael Boyd, Ph.D.

Determinants of Culture Fig: 3.1 H. Michael Boyd, Ph.D.

Social Structure A society’s basic social organization Two Dimensions • Degree to which basic social unit is the individual vs. the group • Degree to which society is stratified into classes or castes H. Michael Boyd, Ph.D.

Individualism • Often prevalent in Western societies • Not only reflected in the political and economic organizations • How people perceive themselves and relate to each other in social and business settings • Social status of an individual is not a function of where they work but their individual performance • Often expressed in a high degree of entrepreneurship and managerial mobility • Makes team building more difficult H. Michael Boyd, Ph.D.

The Group • Often prevalent outside Western societies • Social status of an individual is determined by the standing of the group to which they belong to as much by their individual performance • Often expressed in a high degree of group affiliation and the lack of managerial mobility H. Michael Boyd, Ph.D.

Social Stratification • All societies are stratified on a hierarchical basis into social categories (social strata) • Typically defined on the basis of: • family background • occupation • Income • Culture differ from each other with regard to the: • degree of social mobility between social strata • significance attached to social strata in business H. Michael Boyd, Ph.D.

Social Mobility The extent to which individuals can move out of the social strata into which they are born • Two Major Types • Caste System • Class System H. Michael Boyd, Ph.D.

Caste System • Most rigid form of stratification • Closed system in which social position is determined by the person’s family • Change is usually not possible for entire life • Caste position carries with is a specific occupation H. Michael Boyd, Ph.D.

Class System • Less rigid form of social stratification • Open system where social mobility is possible • both upward or downward • Person’s social position by birth can be changed through their achievements or luck • Degree of social mobility varies by society H. Michael Boyd, Ph.D.

Class Consciousness When people tend to perceive themselves in terms of their class background which shapes their relationships with members of other classes • Where class consciousness is high, the way individuals from different classes work together may be very prescribed and strained H. Michael Boyd, Ph.D.

Religion System of shared beliefs and rituals concerned with the realm of the sacred • Shapes attitudes toward work and entrepreneurship • Relationship between religion, ethics and society is subtle and complex • Hazardous to make sweeping generalizations! H. Michael Boyd, Ph.D.

Ethical Systems Set of moral principles or values used to guide and shape behavior • Can affect the cost of doing business in a country H. Michael Boyd, Ph.D.

World Religions Map 3.1 H. Michael Boyd, Ph.D.

Religion and Economic Implications Christianity • “Protestant Work Ethic & the Spirit of Capitalism” Islam • favors legitimate profit and market-based systems • important to keep one’s word or contractual obligations • no payment or receipt of interest (mudarabah, murabaha) Hinduism • ascetic, non-material principles inhibit entrepreneurship • caste system plays a role Buddhism • little emphasis on entrepreneurial behavior Confucianism • loyalty, reciprocal obligations, and honesty in dealings H. Michael Boyd, Ph.D.

Education • Can be a source of national competitive advantage • provides a pool of skilled and educated workers • Key determinant for location of FDI • Impacts the kind of products/services that are consumed and the related promotional programs • Education can be a source of social classes H. Michael Boyd, Ph.D.

Adult Literacy Rates Map 3.3 H. Michael Boyd, Ph.D.

Language Enables people to communicate with each other and structures the way we perceive the world Spoken • verbal cues • language structures our perception of world Unspoken • body language • personal space

Spoken Mother Language H. Michael Boyd, Ph.D.

Non-Spoken Language • 70% of all communication • Nonverbal cues: • eyebrows • fingers/thumbs • hand gestures • feet • personal space • body gestures H. Michael Boyd, Ph.D.

Culture and the Workplace • Study on the relationship between culture and the workplace by Geert Hofstede 1967-73 • 40 countries • 100,000 individuals

Hofstede’s Cultural Dimensions Four Dimensions of Culture • Power Distance • Individualism versus Collectivism • Uncertainty Avoidance • Masculinity versus Femininity H. Michael Boyd, Ph.D.

Power Distance • Dimension focused on how a society dealt with the fact that people are unequal in physical and intellectual capabilities • High Power Cultures • societies that let inequalities (power and wealth) grow over time • Low Power Cultures • societies that tried to play down such inequalities H. Michael Boyd, Ph.D.

Individualism versus Collectivism • Dimension focused on the relationship between the individual and his/her fellows within a culture • Individualistic Societies • loose ties between individuals • individual achievement & freedom highly valued • Collectivist Societies • tight ties between individuals • tend to be more relationship oriented H. Michael Boyd, Ph.D.

Uncertainty Avoidance • Dimension measured the extent to which different cultures socialized their members into accepting ambiguous situations and tolerating uncertainty • High Uncertainty Cultures • job security, career patterns, retirement benefits are very important • need for rules and regulations and clear instructions and tight control from superior are important • Low Uncertainty Cultures • readiness to take risks and less resistance to change H. Michael Boyd, Ph.D.

Masculinity versus Femininity • Dimension focused on the relationship between gender and work roles • Masculine Cultures • sex roles were sharply differentiated and traditional ‘masculine values” were cultural ideals • Feminine Cultures • sex roles were less sharply distinguished and little differentiation was made between gender in the same job H. Michael Boyd, Ph.D.

Work-Related Values for 20 Countries H. Michael Boyd, Ph.D.

Problems with Hofstede’s Findings • Assumes one-to-one relationship between culture and the nation-state • His research may have been culturally bound • Survey respondents were from a single industry (computer) and a single company (IBM) • Findings are becoming dated (1967-1973) • Revised his initial research and included a fifth dimension “Confucian dynamism” • attitudes towards time, persistence, “face”, tradition H. Michael Boyd, Ph.D.

Cultural Change • Culture is not a constant; it evolves over time • American values toward the role of women • American college students values about work and careers • Japan moves toward greater individualism in the workplace and is impacted by aging society • Effects of economic advancement and globalization • Economic progress is accompanied by a shift in values away from: • collectivism towards individualism • “traditional values” towards “secular rational values” • “survival values” towards “self-expression” and “well-being” values

Changing Values H. Michael Boyd, Ph.D.

Managerial Implications • Culture and competitive advantage • Which nations might be competitors • Which nations might be a resource (HR, R &D) • Which nations might be a market (early adopters) • Which nation might be a production site • Culture and business ethics • Many ethical principles are universal, others are culturally bound • Cross cultural literacy • Observe and study foreign cultures H. Michael Boyd, Ph.D.

INTERNATIONAL BUSINESS Professor H. Michael Boyd, Ph.D.