Introduction to International Business

1. Introduction to International Business David J. Boggs, Ph.D. Cultural Environment

2. International Business and Globalization • IB has grown rapidly and continues to grow rapidly • Activities are diverse and taken for many purposes • Different environment and activities than domestic-only competition • More difficult, complex, and risky than domestic business • In many industries it is no longer possible to be just a domestic competitor

3. Culture • Culture is the “set of values, beliefs, rules, and institutions held by a specific group of people” • It is learned and shared, its elements are interrelated, and it defines group boundaries • Subcultures exist within larger cultural contexts • One can acquire cultural literacy • Ethnocentricity is a belief that one’s own culture is universally superior to others

4. Elements of Culture • Aesthetics – sense of beauty and good taste • Art, color, symbols, music, folklore • Attitudes and beliefs • Time, directness, achievement, work, change • Manners (appropriate behavior) and customs (traditional behaviors)

5. Elements of Culture • Education • Literacy, science, math, trades, management • Legal and political system • Secular versus religious • Free or not free • Planned versus laissez-faire

6. Elements of Culture • Societal organization • Family structure, in-laws, extended family, divorce • Class mobility • Associations by age, gender, common interests, or otherwise

7. Elements of Culture • Language and communication • Verbal and non-verbal • Gestures and body language • Office size and closed versus open doors • Conversational distance • Touching • Protecting traditional languages

8. Elements of Culture • Religious beliefs • Christianity (Protestant, Catholic, Orthodox) • Hinduism and Sikhism in India • Sunni and Shia Islam • Judaism • Animism • Atheism • Confucianism, Taoism, Buddhism, and Shintoism in Asia

9. Less Obvious Elements of Culture Observed by Hofstede • Individualism versus collectivism • High/low power distance • High/low uncertainty avoidance • Desire for achievement/affiliation • Long/short time horizon

10. Kluckhohn-Strodtbeck Framework • Environment: control, controlled by, or part of • Time focus: past, present, or future • People: control/don’t trust or free/trust • Purpose focus: accomplishment, leisure, or spiritual • Individual or group responsibility • Public or private work and lives

11. Other Elements of Culture • Trust • Fatalism and locus of control • High context/low context • Idealism versus pragmatism • Monochronic versus Polychronic • Attitudes toward change

12. Culture Shock • When placed in a foreign culture people tend to experience culture shock, the frustration from having to learn to cope with new cultural cues and expectations

13. Understanding Elation Frustration Stages of Culture Shock High Acceptance of New Culture Low MonthsLivinginNewCulture

14. Cultural Clusters • Should cultures be defined by national borders?

15. Group Activity • Describe American culture • What elements of American culture might some foreigners find strange? • Describe one foreign culture • Describe ways that cultural differences can affect business activities in particular industries

16. Acquiring and Using Cultural Understanding • Cultural awareness can be improved • Company’s need for cultural knowledge increases as it • Moves from one to multiple foreign functions • Increases the number of countries in which it operates • Moves from similar to dissimilar foreign environments • Converts from external to internal handling of international operations

17. How does culture affect business? • Work ethic • Attitudes toward: • Time • Supervisors and superiors • Quality and reliability • Rewards and promotions

18. Attitudes and Hiring Practices • Ethnocentrism is the belief that all elements of one’s own culture are superior than the corresponding elements of others cultures • Polycentric staffing involves hiring locals to manage subsidiaries in each country and special attention to each culture • Geocentric staffing involves hiring without regard to cultural heritage or nationality

19. Need Hierarchy • Lower-order needs must be fulfilled prior to higher-order needs • Workers in poor countries motivated by lower-order needs • People from different countries or cultures may rank needs differently

20. Attitudes Toward Change • The more a change upsets important values, the more resistance it will engender; attend to attitudes and needs of culture • Consider the expected cost-benefit relationship of any adjustments • Resistance to change may be lower if the number of changes is not too great at any one time • Discussing proposed change with stakeholders in advance may reduce resistance

21. Attitudes Toward Change • Employees are more apt to support change when they see its benefits and they expect personal or group rewards • Change should be timed to occur when resistance is likely to be low • International companies should learn things abroad that they can apply at home