Chapter 4

DIFFERENCES
IN CULTURE
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 Learning Objectives

The learning objectives for this chapter are to:

1. Explain what is meant by the culture of a society.
2. Identify the forces that lead to differences in social
culture.
3. Identify the business and economic implications of
differences in culture.
4. Recognize how differences in social culture
influence values in business.
5. Demonstrate an appreciation for the economic and
business implications of cultural change.
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 Introduction

Cross-cultural literacy - an understanding of

how cultural differences across and within
nations can affect the way in which business
is practiced
There may be a relationship between culture
and the costs of doing business in a country
or region
Culture is not static
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 What is Culture?

Question: What is culture?

Answer:
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

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 Values and Norms

Values - provide the context within which a

society’s norms are established and justified
Norms - the social rules that govern the actions
of people toward one another
◦ 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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 Culture, Society, and the Nation-State

Society - a group of people who share a common

set of values and norms

◦ Nation- states are political creations that can contain a

single culture or several cultures

◦ Some cultures embrace several nations

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 Determinants of Culture

The values and norms of a culture evolve based on:

◦ Prevailing political and economic philosophies

◦ A society’s social structure

◦ The dominant religion, language, and education

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Determinants of Culture
(continued from Slide 4-8)

The Determinants of Culture

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 Social Structure

A society's social structure is its basic social organization

Two dimensions to 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

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 Individuals and Groups

Group - an association of two or more individuals 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

◦ Groups are common in many Asian societies

◦ Many Western countries emphasize the individual

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 Individuals and Groups
(continued from Slide 4-11)

In societies where the individual is dominant:

◦ Individual achievement and entrepreneurship are promoted

◦ Encourages job switching, competition between individuals rather

than team building, and a lack of loyalty to the firm

In societies where the group is dominant:

◦ Cooperation and team work are encouraged and life time
employment is common

◦ Individual initiative and creativity may be suppressed

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 Social Stratification

All societies are stratified on a hierarchical basis

into social categories, or social strata
◦ Usually defined by characteristics such as family
background, occupation, and income
Societies differ in terms of:

◦ The degree of mobility between social strata

◦ The significance attached to social strata in a business

context

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 Social Stratification
(continued from Slide 4-13)

Four basic principles of social stratification:

1. It is a trait of society, not a reflection of individual
differences
2. It carries over one generation to the next generation

3. It is generally universal, but variable

4. It involves not just inequality but also beliefs

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 Social Stratification
(continued from Slide 4-14)

Social mobility- the extent to which individuals can

move out of the strata into which they are born

◦ Caste system - social position is determined by the family into

which a person is born, and change in that position is unlikely

◦ Class system - the position a person has by birth can be

changed through achievement or luck

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 Social Stratification
(continued from Slide 4-15)

Question: What is the significance of social stratification for

business?

Answer:
In cultures where class consciousness (where people tend to
perceive themselves in terms of their class background) is
high, the way individuals from different classes work
together may be prescribed
◦ Antagonism between labor and management can raise the costs of doing
business
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 Religious and Ethical Systems
Religion - a system of shared beliefs and rituals that are
concerned with the realm of the sacred
Religions with the greatest following are:

◦ Christianity (2.25 billion adherents)

◦ Islam (1.65 billion adherents)

◦ Hinduism (1.07 million adherents)

◦ Buddhism (500 million adherents)

◦ Confucianism shapes culture in many parts of Asia

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Religious and Ethical Systems
(continued from Slide 4-17)

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Religious and Ethical Systems
(continued from Slide 4-18)

Ethical systems - a set of moral principles, or

values, that are used to guide and shape behavior

◦ The ethical practices of individuals within a culture are

often closely intertwined with their religion

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 Christianity
Christianity is the most widely practiced religion

Question: What are the economic implications of

Christianity?
Answer:
In 1904, Max Weber suggested that it was the
Protestant work ethic (focus on hard work, wealth
creation, and frugality) that was the driving force of
capitalism

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 Islam
Islam is an all-embracing way of life that governs one's being
◦ One true omnipotent God

Question: What is Islamic fundamentalism?

Answer:
In the Western media, Islamic fundamentalism is associated
with militants, terrorists, and violent upheavals

•Fundamentalists have gained political power in many Muslim

countries, and have tried to make Islamic law the law of the land
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 Islam
(continued from Slide 4-21)

Question: What are the economic implications of Islam?

Answer:
Under Islam, people do not own property, but only act as
stewards for God and thus must take care of that which
they have been entrusted with
•Islam is supportive of business, but the way business is practiced is
prescribed
•Businesses that are perceived to be making a profit through the
exploitation of others, by deception, or by breaking contractual obligations
are unwelcome
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 Hinduism
Hinduism - focuses on the importance of achieving
spiritual growth and development, which may require
material and physical self-denial

Question: What are the economic implications of

Hinduism?
Answer:
Hindus are valued by their spiritual achievements

•Promotion and adding new responsibilities may not be the goal of

an employee, or may be infeasible due to the employee's caste
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 Buddhism

Buddhists - stress spiritual growth and the afterlife, rather than

achievement while in this world
Question: What are the economic implications of Buddhism?
Answer:
Buddhism does not support the caste system, so individuals do
have some mobility and can work with individuals from
different classes
◦ Entrepreneurial activity is acceptable

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 Confucianism

Confucianism - attain personal salvation through right action

Question: What are the economic implications of

Confucianism?
Answer:
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

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 Language

Countries differ in terms of language or means of

communication
There are two forms language:
◦ Spoken
◦ Unspoken

Language is one of the defining characteristics of culture

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 Spoken Language

Countries with more than one spoken language often

have more than one culture

◦ Chinese is the mother tongue of the largest number of people in

the world
◦ English is the most widely spoken language in the world, and is
becoming the language of international business

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 Unspoken Language

Unspoken language - nonverbal cues

◦ Examples include facial expressions and hand gestures
◦ Can be important for communication

Many nonverbal cues are culturally bound and

because they may be interpreted differently, can
result in misunderstandings

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 Education

Formal education is the medium through which individuals learn many of

the language, conceptual, and mathematical skills that are indispensable
in a modern society

The knowledge base, training, and educational opportunities available to

a country's citizens can also give it a competitive advantage in the market
and make it a more or less attractive place for expanding business

The general education level of a country is a good indicator of the types

of products that might sell in that location or the type of promotional
materials that might be successful

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 Culture and Business

Question: How does a society's culture impact on the

values found in the workplace?
Answer:
Geert Hofstede isolated four dimensions that summarized
different cultures
1. Power distance
2. Individualism versus collectivism
3. Uncertainty avoidance
4. Masculinity versus femininity

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 Culture and Business
(continued from Slide 4-30)

1. Power distance - how a society deals with the fact that people are
unequal in physical and intellectual capabilities
2. Individualism versus collectivism - the relationship between the
individual and his or her fellows
3. Uncertainty avoidance - the extent to which different cultures
socialize their members into accepting ambiguous situations and
tolerating ambiguity
4. Masculinity versus femininity - the relationship between gender
and work roles
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 Culture and Business
(continued from Slide 4-31)

Hofstede added Confucian dynamism - captures attitudes towards

time, persistence, ordering by status, protection of face, respect for
tradition, and reciprocation of gifts and favors
A sixth dimension called indulgence versus restraint may be added
where indulgence refers to a society that allows relatively free
gratification of basic and natural human drives related to having fun,
and restraint refers to a society that suppresses gratification of
needs and regulates it by means of strict social norms

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Culture and the Workplace

Work Related Values for 15 Select Countries

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 Cultural Change

Culture evolves over time, although changes in

value systems can be slow and painful for a society

◦ Social turmoil is an inevitable outcome of cultural change

◦ Cultural change is particularly common as countries

become economically stronger

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 Managerial Implications

Differences in culture imply that:

1. There is a need for managers to develop cross-cultural literacy

2. There is a connection between culture and national

competitive advantage

3. There is a connection between culture and ethics in decision

making

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 Cross-Cultural Literacy
Individuals and firms must develop cross-cultural literacy

◦ Firms that are ill-informed about the practices of another

culture are unlikely to succeed in that culture

Individuals must also beware of ethnocentric behavior

◦ Belief in the superiority of one's own culture

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 Culture and Competitive Advantage

The connection between culture and competitive advantage is important

because:
◦ It suggests which countries are likely to produce the most viable competitors
◦ It has implications for the choice of countries in which to locate production facilities
and do business

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 Summary

In this chapter we have:

◦ Explained what is meant by the culture of a society.

◦ Identified the forces that lead to differences in social culture.
◦ Identified the business and economic implications of
differences in culture.
◦ Recognized how differences in social culture influence values
in business.
◦ Demonstrated an appreciation for the economic and business
implications of cultural change.

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