CHAPTER 3 : Culture Environment

1. CHAPTER 3 : Culture Environment Learning Objectives: • Understand how culture impacts international business • Concept and elements of culture • Cross-culture comparisons • Bribery and ethics in international business • Social responsibility of MNCs • Cross cultural training in preparing for international assignment • Understand the principles of business negotiations abroad • Business practices in host country

2. There are more than 160 definitions of culture “Communicable knowledge, learned behavior passed on from generation to generation” “ An Integrated system of learned behavior patterns that are distinguishing characteristic of the members of a given society “ The collective programming of the mind which distinguishes the members of one group or category from those of another

3. Element of Culture A. Language • Spoken Language • Written Language • Official Language • Body Language • International Language B. Religion • Beliefs and Norms • Sacred Objects • Philosophical Systems • Prayer/ Rituals • Leading Religious of the World

4. C. Values and Attitudes Toward • Time (Monochronic (V.S) Polychronic) • Achievement • Work • Change • Risk Taking D. Education • Literacy Level • Formal Education • Vocational Training • Human Resource Planning • Primary / Secondary / High education

5. E. Social Organization • Social Institutions • Authority Structure • Interest Groups • Status Systems • Social Mobility F. Technology and Material Culture • Science • Invention • Energy Systems • Communications • Tools and Objects • Urbanization

6. G. Politics • Nationalism • National Interests • Power • Ideologies • Political Risks • Sovereignty H. Law • Common Law • Code Law • Foreign law • Home / Host Country Law • Regulation / Antitrust Policy • International Law

7. Cross-Culture Comparisons A. Edward Hall’s High-Context (V.S) Low-Context Cultures B. Hofstede’s Classification Scheme • Individualism (V.S) Collectivism • Power Distance • Uncertainty Avoidance • Masculinity • Long-Termism C. Deal-Oriented (V.S) Relationship – Oriented Cultures • Deal – Oriented Cultures • Relationship – Oriented Cultures

8. Cultural Factors • Never touch the head of a Thai or pass an object over it. The head is considered sacred in Thailand • Avoid using triangular shapes in Hong Kong, Korea and Taiwan. It is considered a negative shape. • The number 7 is considered bad luck in Kenya, good luck in Czech Republic and has magical connotation in Benin, Africa • The number 10 is bad luck in Korea • The number 4 is means Death in Japan • Red represents witchcraft and death in many African countries

9. Cultural Difference between Japanese and American Individual lifestyles American A Culture of self-expression Japanese A Culture of Self restrain Cultural Background Clear expression of Joy and sorrow Ambiguous of joy and sorrow Reticence Unequivocal expression of “Yes/No”. Equivocal expression of “Yes/No”. Modesty Strong self-assertion Weak self-assertion Reserve Strong Personality Weak Personality Punctiliousness Excellent Negotiating skill Poor Negotiating skill Politeness Priority of harmony with others Priority of self-interest Obligation

10. Cultural Difference between Japanese and American Social Life American Society Japanese Society Dignity of Individuals “In the same boat” concept Dignity of individuals Human relation oriented Individuals work ethic Dependence on the group Great individuals freedom Lack of individuals freedom Respect for rules Low regard for rules A open and transparent A close society, lacking in society transparency Multi-cultural society Mono-cultural society A society excelling in creativity An orderly and uniform and versatility society Individual decisions over consensus Dependence on consensus A society which pursue harmony with reality A society which pursue that ideal

11. Cultural Differences between Japanese and American Business Japanese Business American Business Game concept: Business is a game in pursuit of profits under the rules of laws and contracts Mutual trust-oriented business: business is based on trusting relationship among people rather than the rules of game Highly precision-oriented and perfectionism-high dependency on human awareness Efficiency-oriented and approximate accuracy simplicity, clarity, and quickness Quantity-oriented Quality-oriented Short-term performance evaluation Mid-to-long term evaluations Easy layoffs, dismissals of employees, and selling of businesses Job security SOURCE : Norihiko Shimizu, “Today’s Taboos may be gone tomorrow,’ Tokyo Business, February 1995, p.51.

12. Cultural Differences between Japanese and American Business Japanese Business American Business Heavy dependence on human resources bottom-up management and teamwork Top down management Low mutual dependence between employers and employees High mutual dependence between employers and employees Control of business by stockholders and the management Joint management of business by Employees and Employees Management by “force” Management by “motivation” Heavy dependence on machinery and technology, vs. Light dependence on human resources Heavy dependence on human resources Limited loyalty and incentive-oriented work ethics Strong loyalty and fewer incentives Excellent software-based technology development Inadequate software development ability SOURCE : Norihiko Shimizu, “Today’s Taboos may be gone tomorrow,’ Tokyo Business, February 1995, p.51.

13. Corruption Perception Index* (Selected Countries 1997&1996) • The ranking is based on 52 countries studied • The maximum 10 would be corrupt free country • Bribery • Extortion • Subornation • Lubrication

14. Three Ethical Principles Principle Question Utilitarian Ethics Does the action optimize the “common good” or beneficial of all constituencies? Rights of parties Does the action respect the rights of the individuals involved? Justice of fairness Does the action respect the canons of justice or fairness to all parties involved?

15. Ethical and social responsibility issues in multinational business decisions Does the decision efficiently optimize the common good and benefits of : • The business firm (Stockholders, Profit, Growth, etc) • Society (“The good of life”, Culture, Order, Justice, etc) • The economy (Economic growth, Production and Distribution of goods/services) • The individual (Freedom, Health and Welfare, Opportunity, Human dignity

16. Cross-Culture Training Methods (Ascending Order) • Area Briefing • Books • Sensitivity Training • Field Trips • Experiential • Field Experience Impact of Globalization • Globally competent employees • Ability to work with diverse cultures • Overcoming the self-reference criterion (SRC)

17. Cross- Cultural Negotiations • Non-Task sounding • Task-Related Information Exchange • Persuasion • Concessions and agreement • Try to access 3 videos produced by Big world UW-W library • Cross-cultural communicating • Cross-cultural understanding • Cross-cultural negotiating

18. Selected Reference on Culture and Business Practices Around the World • Video series from Big world : Cross-cultural understanding* Cross-cultural communicating* Cross-cultural negotiating* • Do’s and taboos around the world by Roger Axtell , Wiley** • Culturgrams Vol. I & II, Brigham Young University Press, 1999** • International Business Etiquette by Ann Marie Sabath, Career Press • Latin America ** • Europe ** • Asia ** • World Trade Press • Doing Business in Series* • Cross-Cultural business behavior by R.R. Gesteland , Copenhagen Business School Press** • Richard Hill : We Europeans. Europublications ** : Euromanagers and Matians. Europublications ** ** Available at GBRC (C2018) * Available at UW-W Library