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IBIF 2013-14
International Business & Culture
What Is Cross-Cultural Literacy?
Cross-cultural literacy is an
understanding of how cultural differences
across and within nations can affect the way
in which business is practiced
A relationship may exist between culture
and the costs of doing business in a country
or region
Copyright © 2011 McGraw-Hill/Irwin
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What Is Culture?
Culture is a system of values and norms that are
shared among a group of people and that when
taken together constitute a design for living
where
values are abstract ideas about what a group believes
to be good, right, and desirable
norms are the social rules and guidelines that prescribe
appropriate behavior in particular situations
Society refers to a group of people who share a
common set of values and norms
 http://www.huffingtonpost.com/2012/10/31/international-businesscustoms_n_2049869.html#slide=1705592 (see pictures at foot of web
page).
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What Are Values And Norms?
Values provide the context within which a
society’s norms are established and justified
and form the bedrock of a culture
Norms include
folkways - the routine conventions of everyday
life
mores - norms that are seen as central to the
functioning of a society and to its social life
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How Are Culture, Society,
And The Nation-State Related?
The relationship between a society and a
nation state is not strictly one-to-one
Nation-states are political creations
can contain one or more cultures
A culture can embrace several nations
Copyright © 2011 McGraw-Hill/Irwin
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What Are The
Determinants Of Culture?
The values and norms of a culture evolve
over time
Determinants include
religion
political and economic philosophies
education
language
social structure
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What Is A Social Structure?
Social structure refers to a society’s basic social
organization
Consider
the degree to which the basic unit of social organization
is the individual, as opposed to the group
the degree to which a society is stratified into classes or
castes
http://www.google.co.uk/imgres?imgurl=http://swilliams24.files.wordpress.com/2009/12/castesystem.jpg&imgrefurl=http://swilliams24.wordpress.com/cultural-analysis-ancient-india%25E2%2580%2599s-creation-myths-andcaste-system-influence/&h=362&w=508&sz=36&tbnid=p9YuZM0oVrmXM:&tbnh=83&tbnw=116&prev=/search%3Fq%3Dindia%2Bcaste%2Bsystem%26tbm%3Disch%26tbo%3Du&zoom=1&q=ind
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How Are Individuals
And Groups Different?
 A group is an association of two or more people who have
a shared sense of identity and who interact with each other
in structured ways on the basis of a common set of
expectations about each other’s behavior
 In Western societies, there is a focus on the individual
 individual achievement is common
 dynamism of the U.S. economy
 high level of entrepreneurship
 But, creates a lack of company loyalty and failure to gain
company specific knowledge
 competition between individuals in a company instead of than
team building
 less ability to develop a strong network of contacts within a firm
Copyright © 2011 McGraw-Hill/Irwin
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How Are Individuals
And Groups Different?
In many Asian societies, the group is the
primary unit of social organization
discourages job switching between firms
encourages lifetime employment systems
leads to cooperation in solving business
problems
But, might also suppress individual
creativity and initiative
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What Is Social Stratification?
 All societies are stratified on a hierarchical basis into
social categories, or social strata
 Must consider
1. The degree of social mobility - the extent to which individuals
can move out of the strata into which they are born
 caste system - closed system of stratification in which social
position is determined by the family into which a person is born
 change is usually not possible during an individual's lifetime
 class system - form of open social stratification
 position a person has by birth can be changed through achievement or
luck
2. The significance attached to social strata in business contacts
 Class consciousness is a condition where people tend to perceive
themselves in terms of their class background, and this shapes their
relationships with others
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How Do Religious
And Ethical Systems Differ?



Religion is a system of shared beliefs and rituals that are
concerned with the realm of the sacred
Religion and ethics are often closely intertwined
Four religions dominate society
1.
2.
3.
4.

Christianity
Islam
Hinduism
Buddhism
Ethical systems are a set of moral principles, or values,
that are used to guide and shape behavior
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How Do Religious
And Ethical Systems Differ?
World Religions
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What Is The Role
Of Language In Culture?
 Language - the spoken and unspoken (nonverbal
communication such as facial expressions, personal space,
and hand gestures ) means of communication
 One of the defining characteristics of culture
 countries with more than one language often have more than one
culture
 English is the most widely spoken language in the world
 Chinese is the mother tongue of the largest number of people
 English is also becoming the language of international business
 knowledge of the local language is still beneficial, and in some
cases, critical for business success
 failing to understand the nonverbal cues of another culture can
lead to communication failure
Copyright © 2011 McGraw-Hill/Irwin
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What Is The Role
Of Education In Culture?
Formal education is the medium through
which individuals learn many of the
language, conceptual, and mathematical
skills that are indispensable in a modern
society
important in determining a nation’s
competitive advantage
general education levels can be a good index for
the kinds of products that might sell in a
country
Copyright © 2011 McGraw-Hill/Irwin
3-14
How Does Culture
Impact The Workplace?


1.
2.
3.
4.
Management processes and practices must be adapted to
culturally-determined work-related values
Geert Hofstede identified four dimensions of culture
Power distance - how a society deals with the fact that
people are unequal in physical and intellectual
capabilities
Individualism versus collectivism - the relationship
between the individual and his fellows
Uncertainty avoidance - the extent to which different
cultures socialize their members into accepting
ambiguous situations and tolerating ambiguity
Masculinity versus femininity -the relationship
between gender and work roles
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Hofstede’s site
http://geert-hofstede.com/national-culture.html
Videos
http://www.youtube.com/results?q=hofsede&hl=enGB&gbv=2&um=1&ie=UTF-8&sa=N&tab=w1&gl=GB
Copyright © 2011 McGraw-Hill/Irwin
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How Does Culture
Impact The Workplace?
Work-Related Values for 20 Countries
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Was Hofstede Right?
 Hofstede later expanded added a fifth dimension called
Confucian dynamism
 captures attitudes toward time, persistence, ordering by status,
protection of face, respect for tradition, and reciprocation of gifts
and favors
 Hofstede’s work has been criticized because
 made the assumption there is a one-to-one relationship between
culture and the nation-state
 study may have been culturally bound
 used IBM as sole source of information
 culture is not static – it evolves
 But, it is a starting point for understanding how cultures
differ, and the implications of those differences for
managers
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Does Culture Change?
Culture evolves over time
changes in value systems can be slow and
painful for a society
Social turmoil - an inevitable outcome of
cultural change
as countries become economically stronger,
cultural change is particularly common
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What Do Cultural Differences
Mean For Managers?
1. It is important to develop cross-cultural
literacy
 companies that are ill informed about the practices of
another culture are unlikely to succeed in that culture
 managers must beware of ethnocentric behavior, or a
belief in the superiority of one's own culture
2. There is a connection between culture and
national competitive advantage
 suggests which countries are likely to produce the
most viable competitors
 has implications for the choice of countries in which
to locate production facilities and do business
Copyright © 2011 McGraw-Hill/Irwin
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Geert Hofstede
Hofstede’s dimensions (1980)
Was one of the first researchers to
analyse the influence of national
culture on management practices
Case study of IBM
66 national subsidiaries
116, 000 questionnaires
http://www.youtube.com/watch?v=TNvaoVM-iqE
Hofstede’s 4 dimensions +1
Dimension
Description
Power Distance
The extent to which a society accepts the
unequal distribution of power in institutions
and organizations
Uncertainty Avoidance
Refers to a society’s discomfort with
uncertainty preferring predictability and
stability
Individualism Collectivism
Reflects the extent to which people prefer to
take care of themselves and their immediate
families, remaining emotionally independent
from groups, organizations and other
collectivities.
Masculinity / Femininity
Reveals the bias toward either ‘masculine’
values of assertiveness, competitiveness and
materialism, or toward ‘feminine’ values of
nurturing and the quality of relationships
Schneider and Barsoux, p. 87
Low / High Power Distance
Dimension
Power Distance
High Power distance
Low Power distance
Individualism / Collectivism
Dimension
What is rewarded?
Loyalty to the group
Individual initiative
Masculinity / Femininity
Masculinity / Femininity
Competition
Cooperation
Uncertainty Avoidance
Uncertainty Avoidance
Effects on Management and
Business
The Fifth Dimension: Long Term
Orientation
 Found in a study using a questionnaire designed by
Chinese Scholars
 Said to deal with virtue regardless of truth
 Values associated with LTO are thrift and perseverance;
values associated with Short term orientation are respect
for tradition, fulfilling social obligations, and protecting
one’s face.