International Business
Dr. Md. Rakibul Hoque
University of Dhaka
The Cultural
Environments
Facing Business
Learning Objectives
Explain culture and forces shaping
individual culture
Forces Shaping Individual Culture
Understanding Cultural differences
Role of Education In Culture?
National Culture vs Organizational Culture
Cultural Factors Affecting IB Operations
Cultural Differences Mean For Managers?
Cultural Awareness and Cultural
Assessment
Cross-Cultural Literacy and Cultural Shock
The Adaptation Stages
Culture, Society and the Nation-State 2-3
Learning Objectives
How Cultures Form and Change
Influences on Cultural Formation and
Change
Major Behavioral Practices Affecting
Business
Problems in Communicating Across
Cultures
Guidelines for Cultural Adjustment
Strategies for Instituting Change
2-4
Culture
Culture refers to the shared values,
attitudes, and beliefs of a group of
individuals.
Culture is the collective programming of the
mind which distinguishes the members of
one human group from another (Hofstede).
Often, people simultaneously belong to
different groups representing different
cultures and/or subcultures.
Every business function is subject to cultural
influences. 2-5
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
3-6
Culture
Culture refers to the learned norms based
on values, attitudes, and beliefs of a group
of people
Culture is an integral part of a nation ’ s
operating environment
◼ every business function is subject to potential
cultural differences
Every society has its own daily routine and
rules, codes of social relations, language,
and the show of emotions and even
concept of luck. 2-7
Culture
A shared system of
meanings,
beliefs,
values
behaviours
through which experience is
interpreted and carried out
2-8
Culture
Culture can be based on nationality,
ethnicity, gender, religion, work
organization, profession, age, political
party membership, income level, and so
on.
International business activities incorporate
people from all different groups and
backgrounds, thus, every business function
is subject to cultural differences.
2-9
Culture
Every business function is subject to
cultural influences.
Fostering cultural diversity can allow a
company to gain a global competitive
advantage by bringing together people of
diverse backgrounds and experience
Companies need to decide when to make
cultural adjustments
2-10
Culture
Cultural diversity means bringing
together people of different backgrounds,
perspectives, and experience.
But, cultural collision can occur when a
company implements practices that are
less effective or when employees
encounter distress because of difficulty in
accepting or adjusting to foreign behaviors
2-11
Forces Shaping Individual
Culture
Urbanization Nationalism Colonisation
Education
Migration
Industrialization
Personal
Minority
Experience Culture Social
background
Values
World-views
Cross-
Ethnic
cultural Beliefs
background
Adjustments Behaviours
Profession
Religion
Gender Language
2-12
Understanding Cultural
Differences
Eating habits
Asia - chop sticks
Europe - knife and fork
Clean right hand in some countries
Common plate
Pork not eaten by Muslims for religious
reasons
Christians keep horses, dogs and cats
as pets
Fish is neutral
2-13
Understanding Cultural
Differences
Religion
Religion – an important place in many
societies
Knowledge of religion of host nation
very important
Respect religious beliefs
2-14
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. Christianity
2. Islam
3. Hinduism
4. Buddhism
Confucianism is also important in influencing
behavior and culture in many parts of Asia
Ethical systems are a set of moral principles,
or values, that are used to guide and shape
behavior 3-15
How Do Religious
And Ethical Systems Differ?
World Religions
3-16
What Is Christianity?
Christianity
◼ the world’s largest religion
◼ found throughout Europe, the Americas, and
other countries settled by Europeans
◼ the Protestant work ethic (Max Weber,
1804)
hard work, wealth creation, and frugality is the
driving force of capitalism
3-17
What Is Islam?
Islam
◼ the world’s second largest religion
◼ extends the underlying roots of Christianity to an all-
embracing way of life that governs one's being
◼ Islamic fundamentalism is associated in the Western
media with militants, terrorists, and violent upheavals, but
in fact Islam teaches peace, justice, and tolerance
◼ fundamentalists, who demand rigid commitment to
religious beliefs and rituals, have gained political power in
many Muslim countries, and blame the West for many
social problems
◼ people do not own property, but only act as stewards for
God
people must take care of that which they have been
entrusted with
◼ supportive of business, but3-18
the way business is practiced
is prescribed
What Is Hinduism?
Hinduism
◼ practiced primarily on the Indian sub-continent
◼ focuses on the importance of achieving
spiritual growth and development, which may
require material and physical self-denial
◼ Hindus are valued by their spiritual rather than
material achievements
◼ promotion and adding new responsibilities may
not be important, or may be infeasible due to
the employee's caste
3-19
What Is Buddhism?
Buddhism
◼ has about 350 millions followers
◼ stresses spiritual growth and the afterlife,
rather than achievement while in this world
◼ does not emphasize wealth creation
◼ entrepreneurial behavior is not stressed
◼ does not support the caste system, individuals
do have some mobility and can work with
individuals from different classes
3-20
What Is Confucianism?
Confucianism
◼ ideology practiced mainly in China
◼ teaches the importance of attaining personal
salvation through right action
◼ high morals, ethical conduct, and loyalty to
others are stressed
◼ three key teachings of Confucianism - loyalty,
reciprocal obligations, and honesty - may all
lead to a lowering of the cost of doing business
in Confucian societies
3-21
Understanding Cultural
Differences
Family and Gender
Elders are highly respected in some
cultures
Understand family ties
Different gender beliefs and views
2-22
Understanding Cultural
Differences
Dress Code
Depends on culture, customs,
traditions and climate
Adapt to local customs
2-23
Understanding Cultural
Differences
Time
People have different concept of time
Need to understand
“You have the clock, we have the
time”
2-24
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
3-25
National Culture
Geert Hofstede has defined “culture” as
“the collective programming of the mind
that distinguishes the members of one
group or category of people from others”.
In 1980 he published his book “Culture’s
Consequences: International Differences in
Work-Related Values”.
2-26
National Culture vs
Organizational Culture
National Culture
National Culture is about the value
differences between groups of nations
and/or regions.
Organisational Culture
Organisational Culture is about differences
in practices between organisations and/or
parts within the same organisation (sub-
cultures).
2-27
National Culture
Professor Geert Hofstede conducted perhaps the
most comprehensive study of how values in the
workplace are influenced by culture. He analysed a
large database of employee values scores collected
by IBM, between 1967 and 1973, covering more
than 70 countries, from which he first used the 40
largest only and afterwards extended the analysis to
50 countries and 3 regions.
Geert Hofstede, assisted by others, came up with
six basic issues that society needs to come to term
with in order to organize itself. These are called
dimensions of culture. Each of them has been
expressed on a scale that runs roughly from 02-28to
100.
[Link]
hofstede-gert-jan-hofstede/6d-model-of-
national-culture/
2-29
National Culture
Individualism versus Collectivism (IDV)
The high side of this dimension, called
individualism, can be defined as a preference for a
loosely-knit social framework in which individuals
are expected to take care of only themselves and
their immediate families.
Its opposite, collectivism, represents a preference
for a tightly-knit framework in society in which
individuals can expect their relatives or members of
a particular in-group to look after them in exchange
for unquestioning loyalty. A society's position on
this dimension is reflected in whether people’s self-
image is defined in terms of “I” or “we.” 2-30
National Culture
Power Distance Index (PDI)
This dimension expresses the degree to which the
less powerful members of a society accept and
expect that power is distributed unequally. The
fundamental issue here is how a society handles
inequalities among people.
People in societies exhibiting a large degree of Power
Distance accept a hierarchical order in which
everybody has a place and which needs no further
justification. In societies with low Power Distance,
people strive to equalise the distribution of power
and demand justification for inequalities of power.
2-31
National Culture
Masculinity versus Femininity (MAS)
The Masculinity side of this dimension represents a
preference in society for achievement, heroism,
assertiveness and material rewards for success.
Society at large is more competitive. In a masculine
society, men are supposed to be tough.
Its opposite, femininity, stands for a preference for
cooperation, modesty, caring for the weak and
quality of life. Society at large is more consensus-
oriented. In the business context Masculinity versus
Femininity is sometimes also related to as "tough
versus tender" cultures.
2-32
National Culture
Uncertainty Avoidance Index (UAI)
The Uncertainty Avoidance dimension expresses the
degree to which the members of a society feel
uncomfortable with uncertainty and ambiguity. The
fundamental issue here is how a society deals with the
fact that the future can never be known: should we try
to control the future or just let it happen?
Countries exhibiting strong UAI maintain rigid codes of
belief and behaviour and are intolerant of unorthodox
behaviour and ideas. Weak UAI societies maintain a
more relaxed attitude in which practice counts more
than principles.
2-33
National Culture
Long Term Orientation versus Short Term
Orientation
Every society has to maintain some links with its own
past while dealing with the challenges of the present
and the future. Societies prioritize these two
existential goals differently.
Societies who score low on this dimension, for
example, prefer to maintain time-honoured traditions
and norms while viewing societal change with
suspicion. Those with a culture which scores high, on
the other hand, take a more pragmatic approach: they
encourage thrift and efforts in modern education as a
way to prepare for the future. 2-34
National Culture
Indulgence versus Restraint (IND)
Indulgence stands for a society that allows
relatively free gratification of basic and
natural human drives related to enjoying life
and having fun.
Restraint stands for a society that
suppresses gratification of needs and
regulates it by means of strict social norms.
[Link]
2-35
National Culture
2-36
National Culture
High power distance reflects strong acceptance
of authority and social hierarchy.
Very low individualism means Bangladesh
is collectivist, where family/community ties are
key.
Moderate masculinity suggests balanced
competitive and nurturing cultural traits.
Higher uncertainty avoidance shows preference
for rules and predictability.
Mid-range long-term orientation indicates
neither strong future-focused nor strictly traditional
orientation.
Low indulgence suggests restraint and limited 2-37
emphasis on leisure or gratification.
Was Hofstede Right?
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
3-38
The Future of National Cultures
Scenario 1:
◼ New hybrid cultures will develop and personal
horizons will broaden
Scenario 2:
◼ Outward expressions of national culture will
continue to become homogeneous while distinct
values will remain stable
Scenario 3:
◼ Nationalism will continue to reinforce cultural
identity
Scenario 4:
◼ Existing national borders will shift to
accommodate ethnic differences
Organisational Culture
Organisational Culture is defined as the
way in which members of an organisation
relate to each other, their work and the
outside world in comparison to other
organisations. It can enable or hinder an
organisation's strategy. The Hofstede
Multi-Focus Model on Organisational
Cultural is a strategic tool aimed at
helping organisations to become more
effective.
2-40
Organisational Culture
Means-oriented vs. Goal-oriented
The means-oriented versus goal-oriented
dimension is, among the six dimensions,
most closely connected with the
effectiveness of the organisation. In a
means oriented culture the key feature is
the way in which work has to be carried out;
people identify with the “how”. In a goal-
oriented culture employees are primarily out
to achieve specific internal goals or results,
even if these involve substantial risks; 2-41
people identify with the “what”.
Organisational Culture
Internally driven vs. Externally driven
In a very internally driven culture employees
perceive their task towards the outside world
as totally given, based on the idea that
business ethics and honesty matters most
and that they know best what is good for the
customer and the world at large. In a very
externally driven culture the only emphasis is
on meeting the customer’s requirements;
results are most important and a pragmatic
rather than an ethical attitude prevails. 2-42
Organisational Culture
Easygoing work discipline vs. Strict
work discipline
This dimension refers to the amount of
internal structuring, control and discipline. A
very easygoing culture reveals loose internal
structure, a lack of predictability, and little
control and discipline; there is a lot of
improvisation and surprises. A very strict
work discipline reveals the reverse. People
are very cost-conscious, punctual and
serious. 2-43
Organisational Culture
Local vs. Professional
In a local company, employees identify with
the boss and/or the unit in which one works.
In a professional organisation the identity of
an employee is determined by his profession
and/or the content of the job. In a very
local culture, employees are very short-term
directed, they are internally focused and
there is strong social control to be like
everybody else. In a very professional
culture it is the reverse. 2-44
Organisational Culture
Open system vs. Closed system
This dimension relates to the accessibility of
an organisation. In a very open culture
newcomers are made immediately
welcome, one is open both to insiders and
outsiders, and it is believed that almost
anyone would fit in the organisation. In a
very closed organisation it is the reverse.
2-45
Organisational Culture
Employee-oriented vs. Work-oriented
This aspect of the culture is most related to
the management philosophy per se. In very
employee-oriented organisations, members
of staff feel that personal problems are
taken into account and that the organisation
takes responsibility for the welfare of its
employees, even if this is at the expense of
the work. In very work-oriented
organisations, there is heavy pressure to
perform the task even if this is at the 2-46
expense of employees.
Organisational Culture
Degree of acceptance of leadership
style
This dimension tells us to which degree the
leadership style of respondents’ direct boss
is being in line with respondents’
preferences. The fact that people,
depending on the project they are working
for, may have different bosses doesn’t play
a role at the level of culture. Culture
measures central tendencies.
2-47
Organisational Culture
Degree of identification with your
organisation
This dimension shows to which degree
respondents identify with the organisation in its
totality. People are able to simultaneously
identify with different aspects of a company.
Thus, it is possible that employees identify at
the same time strongly with the internal goals
of the company, with the client, with one’s own
group and/or with one’s direct boss and with
the whole organisation. It is also possible that
employees don’t feel strongly connected with 2-48
Cultural Factors
Affecting IB Operations
FIGURE Cultural Factors Affecting IB Operations
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
3-50 facilities and do
Cultural Awareness and
Cultural Assessment
Problem areas that can hinder managers’
cultural awareness.
◼ Subconscious reactions to circumstances
◼ The assumption that all societal subgroups are
similar
Managers that educate themselves about
other cultures have a greater chance of
succeeding abroad
2-51
Building Cultural Awareness
Understand your own culture
Understand and accept logic of other
cultural frameworks
Cultural differences as unique and creative
problem-solving opportunity
Cross-cultural literacy
2-52
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
3-53
Cultural Shock
Culture Shock: a stressful transitional
period when individuals move from a
familiar cultural environment to an
unfamiliar one.
Unfamiliar:
◼ Language
◼ Climate
◼ Currency
◼ Road signs
◼ Colleagues
Adaptation process
2-54
Cultural Shock
Considering Culture Shock …
[Link]
4A-WQ&feature=[Link]
• Have you ever experienced culture shock?
Share a story…
• What were you experiencing emotionally?
• What caused your anxious feelings?
• How did you handle the culture shock
situation?
• In retrospect, would you like to have
handled the situation differently?
• What does culture shock mean to YOU???
The Adaptation Stages
Honeymoon
Initial confrontation
Adjustment crisis
Recovery
2-56
The Adaptation Stages
SITUATIO APPROAC REACTIO
STAGE
N H N
First Exciteme
exciting nt;
Honeymo
contact Observe Curiosity;
on
with new Slight
culture concern
Confusion
First
Solve ;
Initial intensive
problems Mystified
confrontat feeling
in familiar about;
ion with new
ways Others
culture
behaviour
2-57
The Adaptation Stages
SITUATIO APPROAC
STAGE REACTION
N H
Frustratio
Experimenta
n;
Adjustmen Problems tion with
new Anger;
t crisis intensify
behaviours Confusion
about
New New
Sense of strategies culture is
understand
belonging to help
Recovery able;
to culture one Enjoying
emerges function many
effectively aspect of it
2-58
The Revised W-Shape
Adjustment Model
STAGES:
A. Honeymoon
“Everything is Beautiful”
B. Hostility
“Everything is Ugly”
Three types of reaction: Early Returnees, Time
Servers, or Participators
C. Humorous
“Everything is Quite Funny”
Rebounding stage
D. In-Sync
“Everything is OK”
“If you are
Humble
Respectful
Friendly
you will always be fine”
2-60
National Cultures As a
Point of Reference
Culture can be useful reference point
◼ National culture
◼ The nation as cultural mediator
Culture and the Nation-
State
The nation is a useful definition of society
because similarity among people is a
cause and an effect of national boundaries
◼ laws apply primarily along national lines
◼ language and values are shared within
borders
◼ rites and symbols are shared along
national lines
2-62
Culture and the Nation-
State
Country-by-country analysis can be
difficult because
◼ subcultures exist within nations
◼ similarities link groups from different
countries
Managers also need to focus on relevant
groups
2-63
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
3-64
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
3-65
How Cultures Form and Change
Cultural value systems are established
early in life but may change through
◼ choice or imposition
cultural imperialism
◼ contact with other cultures
cultural diffusion
creolization
2-66
Influences on Cultural Formation
and Change
Sources of Change
◼ Change by choice
◼ Change by imposition
Influences on Cultural
Formation and Change
Language as both diffuser and stabilizer of
culture
◼ Common language is a unifying force
◼ Multiple language groups
◼ Why English travels so well
◼ The evolvement of language
Religion as a cultural stabilizer
Language:
Cultural Diffuser and Stabilizer
A common language within a country is a
unifying force
A shared language between nations
facilitates international business
◼ Native English speaking countries account for a
third of the world’s production
◼ English is the international language of
business
2-69
Language:
Cultural Diffuser and Stabilizer
Distribution Of The World’s Major Languages
Copyright © 2015 Pearson Education, Inc. 2-70
Language:
Cultural Diffuser and Stabilizer
Major Language Groups: Population and Output
Copyright © 2015 Pearson Education, Inc. 2-71
Religion: Cultural Stabilizer
Religion impacts almost every business
function
Centuries of profound religious influence
continue to play a major role in shaping
cultural values and behavior
◼ many strong values are the result of a
dominant religion
2-72
Religion: Cultural Stabilizer
Distribution Of The World’s Major Religions
2-73
Major Behavioral Practices
Affecting Business
Social stratification
Individual qualifications and their limitations
◼ Ethnic and racial groups
◼ Gender-based groups
◼ Age-based groups
◼ Family-based groups
Social Stratification
Social ranking is determined by
◼ an individual’s achievements and
qualifications
◼ an individual’s affiliation with, or
membership in, certain groups
2-75
Social Stratification
Group affiliations can be
◼ Ascribed group memberships
based on gender, family, age, caste, and
ethnic, racial, or national origin
◼ Acquired group memberships
based on religion, political affiliation,
professional association
Two other factors that are important
◼ education and social connections
2-76
Major Behavioral Practices
Affecting Business
Work motivation
◼ Materialism and motivation
◼ Expectation of success and reward
◼ Performance and achievement
◼ Hierarchy of needs
Work Motivation
The motivation to work differs across
cultures
Studies show
◼ the desire for material wealth is a prime
motivation to work
promotes economic development
◼ people are more eager to work when the
rewards for success are high
◼ masculinity-femininity index
high masculinity score prefers “to live to
work” than “to work to live”
2-78
Work Motivation
Hierarchy of needs theory
◼ Individuals will fill lower-level needs before
moving to higher level needs
The ranking of needs differs among
cultures
2-79
Work Motivation
The Hierarchy of Needs and Need-Hierarchy Comparisons
2-80
Major Behavioral Practices
Affecting Business
Relationship preferences
◼ Power distance
◼ Individualism versus collectivism
Risk-taking behavior
◼ Uncertainty avoidance
◼ Trust
◼ Future orientation
◼ Fatalism
Major Behavioral Practices
Affecting Business
Information and task processing
◼ Perception of cues
◼ Low and high context cultures
◼ Information processing
◼ Monochromic and polychromic cultures
◼ Idealism vs. Pragmatic
Information and
Task Processing
Cultures handle information in different
ways
◼ Perception of cues
◼ Obtaining information
low context versus high context cultures
◼ Information processing
◼ Monochronic versus polychronic cultures
◼ Idealism versus pragmatism
2-83
Problems in Communicating
Across Cultures
Cross border communications do not
always translate as intended
Spoken and written language
Silent language
◼ Color
◼ Distance
◼ Time and punctuality
◼ Body language
◼ Prestige
2-84
Problems in Communicating
Across Cultures
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
3-85
failure
Problems in Communicating
Across Cultures
Body Language Is Not A Universal Language
2-86
Problems in Communicating
Across Cultures
Body Language
Gesture/body language have different
meanings
Smile will never be misunderstood
Polite handshake is accepted in most
cultures
2-87
Guidelines for Cultural
Adjustment
Host society acceptance
Degrees of cultural differences
◼ Cultural distance
◼ Hidden cultural attitudes
◼ Ability to adjust
Company and management orientations
◼ Polycentrism
◼ Ethnocentrism
◼ Geocentrism
Dealing with
Cultural Differences
Three company and management
orientations
◼ Polycentrism
business units abroad should act like local
companies
◼ Ethnocentism
home culture is superior to local culture
overlook national differences
◼ Geocentrism
integrate home and host practices
2-89
Guidelines for Cultural
Adjustment
Strategies for Instituting change
Value systems
Resistance to too much change
Participation
Reward sharing
Opinion leadership
Biculturals as mediators
Timing
Learning abroad
Strategies for Instituting Change
Value Systems
Cost-Benefit Analysis of change
Resistance to too much change
Participation
Reward Sharing
Opinion Leadership
Timing
Learning Abroad
2-91