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International Business. Session 3. Culture. Language. Religion. The way in which a group of people solves problems and reconciles dilemmas. A code of attitudes, norms and values, our way of thinking. Determines how we see ourselves and how we see the world.
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International Business Session 3
Culture Language Religion • The way in which a group of people solves problems and reconciles dilemmas. • A code of attitudes, norms and values, our way of thinking. • Determines how we see ourselves and how we see the world. • Is not right or wrong; it is not inherited, but learned. Social Structure Communication Values/ Attitudes/ Beliefs
Artifacts and Products Norms and Values Basic Assumptions explicit implicit
Cross-Cultural Proficiency is Paramount in Managerial Tasks • Developing products and services • Communicating and interacting with foreign business partners • Screening and selecting foreign distributors and other partners • Negotiating and structuring international business ventures • Interacting with current and potential customers from abroad • Preparing for overseas trade fairs and exhibitions • Preparing advertising and promotional materials
What are your top 10 values? • Age/seniority • Authority • Belongingness • Collectiveness • Competition • Compromise • Cooperation • Devotion • Directness • Efficiency • Equality • Independence • Family harmony • Family security • Freedom • Go-between • Group consensus • Group harmony • Independence • Indirectness • Individualism • Hospitality • Openness • Parental guidance • Patience • Quality • Self-reliance • Time
Priorities of Cultural Values Table 4-1 Priorities of Cultural Values: United States, Japan, and Arab Countries United States Japan Arab Countries • Freedom • Independence • Self-reliance • Equality • Individualism • Competition • Efficiency • Time • Directness • Openness • Belonging • Group harmony • Collectiveness • Age/seniority • Group consensus • Cooperation • Quality • Patience • Indirectness • Go-between • Family security • Family harmony • Parental guidance • Age • Authority • Compromise • Devotion • Patience • Indirectness • Hospitality Note: “1” represents the most important cultural value, “10” the least. Adapted from Table 4-1: Priorities of Cultural Values: United States, Japan, and Arab Countries
Mini-Quiz on Culture • At what time should you arrive for a 10:00 meeting: in USA? China? Spain? • If given a gift, should you open it: in Saudi Arabia? China? • Should you give bad news in the morning: in USA? Korea? • Is it a bad sign if you didn’t really speak about business in your first meeting: in UK? Japan? • Should you send a young executive to a meeting: in USA? Japan?
How to Categorize and Understand Cultures Key Researchers: • Hofstede, Geert • Hall, Edward • Trumpenaars, Fons Develop Frameworks for Understanding Cultures
Which definition do you agree with more? A company is…. • a system designed to perform functions and tasks in an efficient way. People are hired to perform these functions with the help of machines and other equipment. They are paid for the tasks they perform. • a group of people working together. They have social relations with other people and with the organization. The functioning is dependent on these relations.
A company is….. … a group … a system
Mini-Case Six months after the ABC mining company had signed a long-term contract with a foreign buyer to buy bauxite in 20 annual installments, the world price of bauxite collapsed. Instead of paying $4 a ton below world market prices, the buyer now faced paying $3 above. The buyer faxed ABC to say it wished to renegotiate. The final words of the fax stated: “You cannot expect us as your new partner to carry alone the now ruinous expense of these contract terms.”
Options • A contract is a contract. We had a deal. We won. • A contract symbolizes the underlying relationship. Where circumstances transform the mutual spirit, the terms must be renegotiated to preserve the relationship. • A contract symbolizes the underlying relationship. But such rigid terms are too brittle for turbulent environments. We need to be flexible. • A contract is a contract. Had the price risen we wouldn’t have complained. We would, however, consider a second contract who’s terms would help offset their losses.
Hofstede’s Five Dimensions • Social Orientation • Power Orientation • Uncertainty Orientation • Goal Orientation • Time Orientation
Social Orientation Individualism Collectivism Relative importance of the interests of the individual versus interests of the group
Power Orientation Power Respect Power Tolerance Appropriateness of power/authority within organizations
Uncertainty Orientation Uncertainty Acceptance Uncertainty Avoidance An emotional response to uncertainty and change
Goal Orientation Aggressive Goal Behavior Passive Goal Behavior (masculine) (feminine) What motivates people to achieve different goals
Time Orientation Long-term Outlook Short-term Outlook The extent to which members of a culture adopt a long-term or a short-term outlook on work and life
Other Cultural Orientations • Inner-directed vs. Outer-directed • High context vs. Low context • Neutral vs. Emotional • Achievement vs. Ascription • Achievement culture: people are accorded status based on how well they perform their jobs • Ascription culture: status is attributed based on who or what the person is
Synthesis of Country Clusters Adapted from Figure 4–8: A Synthesis of Country Clusters
