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This chapter explores the origins of informal institutions, defines culture and its two main manifestations, and discusses various approaches to understanding cultural differences. It also emphasizes the importance of ethics in global business and provides strategies for managing ethical challenges. The chapter concludes by highlighting the concept of cultural intelligence and how individuals can acquire it.
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CHAPTER 3 GLOBAL t PENG © 2010 Cengage Learning. All rights reserved.
Chapter 3 LEARNING OBJECTIVES After studying this chapter, you should be able to: • Explain where informal institutions comes from. • Define culture and articulate its two main manifestations. • Articulate three ways to understand cultural differences. • Explain why understanding cultural differences is crucial for global business. • Explain why ethics is important. • Identify ways to combat corruption. • Identify norms associated with strategic responses when firms deal with ethical challenges. • Explain how you can acquire cross-cultural literacy. © 2010 Cengage Learning. All rights reserved.
LO1: WHERE DO INFORMAL INSTITUTIONS COME FROM? Socially transmitted information, part of the heritage we call cultures, ethics and norms. Informal institutions © 2010 Cengage Learning. All rights reserved.
LO2: CULTURE “the collective programming of the mind which distinguishes the members of one group or category of people from another.” Geert Hofstede © 2010 Cengage Learning. All rights reserved.
LO2: TWO COMPONENTS OF CULTURE Culture Language Religion © 2010 Cengage Learning. All rights reserved.
LO3: THREE WAYS TO UNDERSTAND CULTURAL DIFFERENCES Context Approach: context is the background against which interaction takes place. © 2010 Cengage Learning. All rights reserved.
LO3: THREE WAYS TO UNDERSTAND CULTURAL DIFFERENCES Cluster Approach: groups countries that share similar cultures into a cluster. © 2010 Cengage Learning. All rights reserved.
LO3: THREE WAYS TO UNDERSTAND CULTURAL DIFFERENCES Dimension Approach: focuses on multiple dimensions of cultural differences both within and across cultures. © 2010 Cengage Learning. All rights reserved.
LO5: THE IMPORTANCE OF ETHICS Ethics – the principles, standards, and norms of conduct that govern individual and firm behavior. The value of an ethical reputation is magnified during a time of crisis. • Three views on firms’ ethical motivations: • Negative view • Positive view • Instrumental view © 2010 Cengage Learning. All rights reserved.
LO5: MANGAING ETHICS OVERSEAS Three Core Principles Respect for human dignity and basic rights Respect for local traditions Respect for institutional context © 2010 Cengage Learning. All rights reserved.
LO6: CORRUPTION The abuse of public power for private benefits usually in the form of bribery, in cash or in kind. © 2010 Cengage Learning. All rights reserved.
LO7: STRATEGIC RESPONSES TO ETHICAL CHALLENGES © 2010 Cengage Learning. All rights reserved.
DEBATE: Are cultures converging or diverging? Some argue for a convergence toward “modern” Western values such as individualism and consumerism. Divergence – others argue that Westernization in consumption does not indicate Westernization of values. vs. Or…Crossvergence © 2010 Cengage Learning. All rights reserved.
LO8: ACQUIRING CULTURAL INTELLIGENCE Three phases… Awareness Knowledge Skills © 2010 Cengage Learning. All rights reserved.
LO8: CULTURAL INTELLIGENCE © 2010 Cengage Learning. All rights reserved.
