Comparative Studies of Business Culture Between China and Western Countries

1. Comparative Studies of Business Culture Between China and Western Countries

2. Preface What do you want to get from the course?

3. What can you get from it? Objective: Through the introduction of cultural differences from business perspective, this course aims to help students to understand different cultural signals, challenges and opportunities in business. As a result, the students will be capable of analyzing business cultures in different countries and areas, so to avoid improper behaviors in business environment. Main Contents: This course consists of 2 major parts: understanding basic cultural differences and cultural types; cross-cultural communication. This course will be conducted in the following aspects: basic cultural types, the impact of culture, the globalization of business, non-verbal communication, cross-cultural meeting, cross-cultural negotiations, corporate culture, cross-cultural marketing and cross-cultural consultants, etc.

4. Learning approach: case study, group discussion, group work, and multi-media methods, etc. Learning result: a course paper (2,000 words) a group presentation (15min.)

5. Understanding Cultural Differences in Globalization • A world in globalization • a world market – economic and cultural penetration • technical possibility • political change after 1990

6. Defining Culture • “Culture is the way of life of a group of people” (Foster, 1962) • “Culture is that complete whole which includes knowledge, beliefs, art, law, morals, customs and any capabilities and habits acquired as a member of a society” (Tylor, 1977) • “the collective programming of the mind which distinguishes the members of one human group from another …. The interactive aggregate of common characteristics that influences a groups response to it’s environment” (Hofstede, 1980)

7. A more formal definition: Culture is a set of learned core values, beliefs, standards, knowledge, morals, laws, and behaviors shared by individuals and societies that determines how an individual acts, feels, and views oneself and others. (from Mitchell, C. (2000) The Short course in International Trade Series: International Business Culture, Shanghai: Shanghai Foreign Language Education press)

8. Functions of culture • Enables us to communicate with others through a language that we have learned and that we share in common • Makes it possible to anticipate how others in our society are likely to respond to our actions • Gives us standards for distinguishing what is right or wrong, beautiful and ugly, reasonable and unreasonable etc. • The knowledge and skill necessary for meeting sustenance needs • Enables us to identify with other people

9. National Culture 3 aspects • It is shared by all or almost all members of some social group • Older members try to pass it on to younger members • It shapes behaviour and structures ones perception of the world “National culture explained more of the differences in employees than did professional role, age, gender or race” (Hofstede, 1980)

10. Does culture matter? A case study of Euro Disney

11. Japan vs. U.S. France vs. U.S. • The company, it seems, failed to do its cultural homework on everything from French business negotiating styles to employee flexibility and dress habits to consumer spending patterns and eating preferences.

12. Mistakes of the company • Sense and sensibility land of farmers or land of Mickey? negotiate with whom? French way or American way? • The devil is in the details sit-down breakfasts or continental? graze or set lunchtime? family friendly or wine?

13. Hospitality headaches souvenirs? month-long vacation or one night’s stay? • Culture caution: It should be noted that for all of Disney’s faults the French government was more than happy to have them set up shop. The government also bears some responsibility for not making Disney’s transition smoother. The French have claimed for centuries that Americans have no culture but nowadays, it seems, they believe Americans have too much and need to export some.

14. Language Religion Conflicting Attitudes Manners and Customs Education Humor Social Organizations The Arts Cultural Components

15. Do cultures evolve?

16. Religion and Islamic Banking A society based on social justice, equity, and moderation • A religious philosophy (the Koran) actually dictates the terms of business relationship • Profit-sharing principles so as not to break the Islamic prohibition on riba, or usury • Risks should be shared between the financier and the entrepreneur. • Predetermined interest or predetermined profit-sharing ratio?

17. Conflicting attitudes • Young or old? • Culture caution: This example illustrates how a lack of understanding on both sides can cause confusion. The Chinese must also understand that Western culture is based in meritocracy and that young executives in the West are given far more responsibility.

18. Basic Cultural Types Geert Hofsted and other researchers’ study

19. Hofstede’s five dimensions of culture • Individualism IDV • Power distance index PDI • Masculinity MAS • Uncertainty avoidance index UAI • Long-term orientation LTO (Guidham 1999)

20. Individualism versus Collectivism • Individualism (IDV) focuses on the degree the society reinforces individual or collective achievement and interpersonal relationships. • A High Individualism ranking indicates that individuality and individual rights are paramount within the society. Individuals in these societies may tend to form a larger number of looser relationships. • A Low Individualism ranking typifies societies of a more collectivist nature with close ties between individuals. These cultures reinforce extended families and collectives where everyone takes responsibility for fellow members of their group.

21. Sino-American Comparison • USA A society with a individualistic attitude and relatively loose bonds with others • CHINA A society with strong relationships where everyone takes responsibility for fellow members of their group Source: ITIM 2003

22. Power Distance • Power Distance Index (PDI) focuses on the degree of equality, or inequality, between people in the country's society. • A High Power Distance ranking indicates that inequalities of power and wealth have been allowed to grow within the society. These societies are more likely to follow a caste system that does not allow significant upward mobility of its citizens. • A Low Power Distance ranking indicates the society de-emphasizes the differences between citizen's power and wealth. In these societies equality and opportunity for everyone is stressed.

23. Sino-American Comparison • USA a greater equality between societal levels, including government, organizations, and even within families. • CHINA A high level of inequality of power and wealth within the society. This condition is not necessarily forced upon the population, but rather accepted by the society as their cultural heritage. Source: ITIM 2003

24. Masculinity versus Femininity • Masculinity (MAS) focuses on the degree the society reinforces, or does not reinforce, the traditional masculine work role model of male achievement, control, and power. • A High Masculinity ranking indicates the country experiences a high degree of gender differentiation. In these cultures, males dominate a significant portion of the society and power structure, with females being controlled by male domination. • A Low Masculinity ranking indicates the country has a low level of differentiation and discrimination between genders. In these cultures, females are treated equally to males in all aspects of the society.

25. Societies with supposedly “masculine” values appreciate aggressiveness and assertiveness while respecting the goal of material acquisition. The more “feminine” cultures value interpersonal relationships, put quality of life before material acquisition and actively express concern for the less fortunate. • A government that promotes a comprehensive social welfare system represents a highly feminine society that demonstrates concern for the downtrodden. As governments move away from higher taxes and welfare systems it could be said that they are exhibiting a more masculine approach to social responsibilities.

26. Sino-American Comparison • USA the country experiences a higher degree of gender differentiation of roles. The male dominates a significant portion of the society and power structure. This situation generates a female population that becomes more assertive and competitive, with women shifting toward the male role model and away from their female role. • CHINA

27. Uncertainty Avoidance • UAI focuses on the level of tolerance for uncertainty and ambiguity within the society - i.e. unstructured situations. • A High Uncertainty Avoidance ranking indicates the country has a low tolerance for uncertainty and ambiguity. This creates a rule-oriented society that institutes laws, rules, regulations, and controls in order to reduce the amount of uncertainty. • A Low Uncertainty Avoidance ranking indicates the country has less concern about ambiguity and uncertainty and has more tolerance for a variety of opinions. This is reflected in a society that is less rule-oriented, more readily accepts change, and takes more and greater risks.

28. Sino-American Comparison • CHINA & USA a society that has fewer rules and does not attempt to control all outcomes and results. It also has a greater level of tolerance for a variety of ideas, thoughts, and beliefs. • JAPAN a trade-off of individual freedom and mobility in exchange for a guarantee of lifetime employment

29. Long Term Orientation • LTO focuses on the degree the society embraces, or does not embrace, long-term devotion to traditional, forward thinking values. • High Long-Term Orientation ranking indicates the country prescribes to the values of long-term commitments and respect for tradition. This is thought to support a strong work ethic where long-term rewards are expected as a result of today's hard work. However, business may take longer to develop in this society, particularly for an "outsider". • A Low Long-Term Orientation ranking indicates the country does not reinforce the concept of long-term, traditional orientation. In this culture, change can occur more rapidly as long-term traditions and commitments do not become impediments to change.

30. Sino-American Comparison • USA This low LTO ranking is indicative of the societies' belief in meeting its obligations and tends to reflect an appreciation for cultural traditions. Greater flexibility and the freedom to react quickly to new opportunities • CHINA a society's time perspective and an attitude of persevering; that is, overcoming obstacles with time, if not with will and strength.

32. Structure • Origin and application of Chinese and American business culture China: Confucianism Buddhism Taoism America: Protestant ethic Liberty & Democracy • Overcome conflicts

33. Origin and Application of Chinese Business Culture Confucianism --- “Doctrine of the mean” Neither conservative nor aggressive --- “Hierarchy & Order” Interest of collectivity is higher than that of individual (Fang 1999) Long-term Orientation, Collectivism, High Power Distance

34. Origin and Application of Chinese Business Culture • Buddhism “Samara” The eternal cycle of birth, suffering, death and rebirth Fang 1999 Long-term orientation

35. Origin and Application of Chinese Business Culture • Taoism “Yin & Yang Reversion of love & hatred, good & bad, fortune & misfortune Fang 1999 Long-term orientation

36. Characteristics of Chinese Culture Collectivism High Power Distance Long-term Orientation

37. Origin and Application of American Business Culture • Protestant Ethic Pilgrim Fathers If one works hard, he or she will succeed. Weber 1958

38. Origin and Application of American Business Culture • Liberty & Democracy John Locke (1632-1704) Two Treatises of Government We hold these truths to be self-evident, that all men are created equal … --- Declaration of Independence

39. Characteristics of American Culture Individualism Masculinity Short-term orientation

40. Overcome Conflicts • Communicate • Understand • Respect • Learn • Corporate

41. References Fang, T (1999) Chinese Business Negotiating Style, London: SAGE Publications Ltd. Guidham, M (1999) Communicating Across Cultures, New York: PALGRAVE History of USA http://www.usahistory.info/New-England/Pilgrims.html(accessed 15th November 2003) ITIM http://www.geert-hofstede.com/(accessed 15th November 2003) Max Weber, The Protestant Ethic and the Spirit of Capitalism, New York: Scribner's Press, 1958, Accessed via American Studies at University of Virginia http://www2.pfeiffer.edu/~lridener/DSS/Weber/PECAP.HTML

42. Trompenaars’s Alternative Dimensions

43. Hofstede • Study (IBM) is a general way to look at differences between cultures. • 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). • Missing countries • Estimates values • Ignores differences within clusters

44. Culture Map for Uncertainty Avoidance and Masculinity-Femininity

45. Culture Map for Power Distance and Uncertainty Orientation

46. Trompenaars’s Alternative Dimensions • Focus on values and relationships • Survey of • 15,000 managers • Over 10-year period • From 28 countries • Bipolar cultural dimensions

47. Outer-directed—Inner-directed • Sense of control over one’s destiny • Outer-directed will accommodate behavior to situation • Inner-directed willing to change and pursue own goals

48. Trompenaars’ Research • Trompenaars’ dimensions of culture: • Universalism v Particularism • Individualism v Collectivism • Neutral v Emotional / Affective • Specific v Diffuse • Achievement v Ascription • Attitudes to Time • Attitudes to the Environment

49. Universalism—Particularism • Extent of belief in defined set of rules • Universalism • Performance-based considerations • Particularism • Relationship- or situation-based considerations

50. Universalism • Universalistic cultures focus more on rules than relationships, have a preference for legal contracts, and believe there is only one truth. In universalistic cultures a deal is a deal. Trust is based on honoring your word or contract. Fairness is treating all people the same.