CHAPTER 2
The Cultural Environments
Facing Business
The Cultural Environments Facing Business
Chapter Objectives
• To understand methods for learning about cultural environments
• To analyze the major causes of cultural difference and change
• To discuss behavioral factors influencing countries’ business practices
• To understand cultural guidelines for companies that operate internationally
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The Cultural Environments Facing Business
Culture
• Learned norms based on values, attitudes, and beliefs of a group of people.
• Because people simultaneously belong to different groups that have different
cultures - for example, based on their nationality, ethnicity, religion,gender, work,
age and income level - culture is elusive to study.
Cultural Diversity
• A means of gaining global competitive advantage by bringing together people of
diverse backgrounds and experience
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The Cultural Environments Facing Business
Culture
Cultural Collision
• Occurs in international business when:
• A company implements practices that are less effective
• Employees encounter distress because of difficulty in accepting or adjusting to
foreign behaviors
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The Cultural Environments Facing Business
Cultural Factors Affecting International Business Operations
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The Cultural Environments Facing Business
Focus
• Cultural Awareness
• Cultural differences, rigidities and changes
• Behavioral factors that affect the conduct of business internationally
• Why businesses and individuals adjust- or don’t adjust - to another culture
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The Cultural Environments Facing Business
Focus
• Building cultural awareness of national cultures is not an easy task, and no
foolproof methods exists for doing so. Further, culture cannot easily be isolated from
such factors as economic and political conditions.
For example: an opinion survey of a country’s citizens that measures, say,
attitude toward buying a new product may reflect response to temporary economic
conditions rather than basic values and beliefs that will have lasting effects on the
product’s acceptance.
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The Cultural Environments Facing Business
Focus
• Almost everyone agrees that national culture differ, but they disagree on
what the differences are.
• Some people seem to have an innate ability to say and do the right thing at
the right time and others offen unintentionally. Nevertheless, there is general
agreement that business people can improve their awareness and sensitivity and the
training about the cultures will enhance the likelihood of succeeding in those
cultures.
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The Cultural Environments Facing Business
Cultural Awareness
Problem areas that can hinder managers’ cultural awareness…
• Subconscious reactions to circumstances
• The assumption that all societal subgroups are similar
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The Cultural Environments Facing Business
The Idea of a “Nation” – Delineating Cultures
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
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The Cultural Environments Facing Business
The Nation as a Cultural Mediator
The nation is a useful definition of society because:
• A national culture must be flexible enough to accommodate the diversity of various
subcultures, ethnic groups, races, and classes
• Yet every nation boasts certain human, demographic, and behavioral characteristics
that constitute its national identity
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The Cultural Environments Facing Business
Country-By-Country Analysis
Managers find this difficult to implement because:
• Subcultures exist within nations
• Similarities link groups from different countries
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The Cultural Environments Facing Business
Country-By-Country Analysis
• Culture is transmitted in various ways- from parent to child, teacher to pupil, social
leader to follower and one peer to another. The parent to child route is especially
important in the transmission of religious and political affiliations.
• Developmental psychologists believe that by age 10, most children have their basic
value system firmly in place, after which they do not make changes easily.
• However individual and societal values and customs evolve over time.
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How Cultures Form and Change
Change by Choice
• Reaction to social and economic situations
Change by Imposition (Cultural Imperialism)
• Imposed introduction into a culture of certain elements from an alien culture
• occurs when countries introduce their legal systems into their colonies by prohibiting
established practices and defining them as criminal.
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How Cultures Form and Change
• The introduction of some, but not all, elements of an outside culture often is called
creolization (the process by which elements of different cultures are blended
together to create a new culture) , indigenization( the act of making something
more native) , or cultural diffusion (the spreading out and merging of pieces from
different cultures).
• Contact with other cultures
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The Cultural Environments Facing Business
Language as Both a Diffuser and Stabilizer of Culture
• A common language within a country is a unifying force.
• When people from different areas speak the same languange, culture spreads more
easily.
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The Cultural Environments Facing Business
Religion As A Cultural Stabilizer
• 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.
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The Cultural Environments Facing Business
Behavioral Practices Affecting Business
Issues in Social Stratification
• Social ranking is determined by:
1. Factors pertaining to you as an individual
2. Factors pertaining to your affiliation with certain groups
3. Individuals status with the culture
Ex. Managerial groups may be highly valued
Employees may be valued less
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The Cultural Environments Facing Business
Group Affiliations Can Be:
Ascribed or Acquired
• Include those based on gender, family, age, caste, ethnic, racial, or national origin
A reflection of class and status
• Include those based on religion, political affiliation, and professional and other
associations
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The Cultural Environments Facing Business
Social Stratification and Employment Practices
Performance Orientation
• Some nations, such as the USA,base a person’s eligibility for jobs and promotions
primarily on competence, creating a work environment driven than by cooperation.
• But in some countries like Japan, seniority and humaneness will largely influence a
person’s eligibility for certain positions and compensations.
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The Cultural Environments Facing Business
Social Stratification and Employment Practices
Open and Closed Societies
• The MORE EGALITARIAN, or open, a society, the less difference ascribed group
membership makes for receiving rewards.
Gender-Based Group
• There are strong country-specific differences in attitudes toward males and females.
In China and India, there has been an extreme degree of male preferences.
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The Cultural Environments Facing Business
Social Stratification and Employment Practices
Occupation
• In every society, people perceived certain occupations as having greater economic
and social prestige than others.
• For example, Professional outrank street cleaners.
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The Cultural Environments Facing Business
Work Motivation
Employees who are motivated to work long and hard are normally more productive
than those who are not.
The following factors summarizes the major difference.
• Materialism and Motivation
• Expectation of Success and Reward
• Performance and Achievement: The Masculinity-Femininity Index
• Hierarchies of Needs
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Work Motivation
Materialism and Motivation
• The desire for material wealth is : a prime motivation to work and positive for
economic development
• National norms differ in preference for performance and growth versus quality of life
and the environment.
Expectation of Success and Reward
• Employees’ work attitude may change as they achieve economic gains.
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The Cultural Environments Facing Business
Work Motivation
Performance and Achievement: The Masculinity-Femininity Index
• Assertiveness - the average interest in career success varies substantially among
countries.
• Employee with a high masculinity score were those who admires the succesful
achiever, had a little sympathy for the unfortunate and preferred to be the best
rather than on par with others
Hierarchies of Needs
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Hierarchies of Needs
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The Cultural Environments Facing Business
Social Stratification and Employment Practices
Age-Based Groups
• Many cultures assume that age and wisdom are correlated.
• These culture usually have a seniority-based system of advancement.
Family-Based Groups
• In some societies, the family is the most important group membership.
• An individual acceptance in society largely depends on the family’s social status or
respectability rather than on the individual’s achievement.
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Relationship Preferences
Within social stratification systems, not everyone within a reference group is
necessarily equal.
Further, there may be strong or weak pressures for conformity within ones
group.
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Relationship Preferences
Power Distance
• This is a term describing the relationship between superiors and subordinates.
• Where power distance is high, people prefer little consultation between superiors
and subordinates - usually wanting and having an autocratic or paternalistic
management style.
• Where power distance is low, people prefer and usually have consultative styles.
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The Cultural Environments Facing Business
Relationship Preferences
Individualism vs Collectivism
• Attributes of INDIVIDUALISM are low dependence on the organization and a desire
for personal time, freedom and challenge.
• Attributes of COLLECTIVISM are dependence on the organization and a desire for
training, good physical conditions and benefits.
• In those countries with high individualism, self-actualization will be a prime
motivator because employees want challenges.
• Japan has a much more collectivist culture than USA
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The Cultural Environments Facing Business
Risk-Taking Behavior
Nationalities differ in how happy people are to accept things the way they are
and how they feel about controlling their desires.
• Uncertainty Avoidance
Studies show that in coutries with the highest scores on uncertainty avoidance,
employees prefer set rules that are not to be broken even if breaking them is
sometimes in the company’s best interest.
In countries with high uncertainty avoidance, few consumers are prepared to
take the social risk of trying new products.
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Risk-Taking Behavior
• Trust
Where trust is high, there tends to be a lower cost of doing business because
managers do not have to spend time foreseeing every possible contingency and then
monitoring every action for compliance in business relationships. They can spend time
investing and innovating.
• Future Orientation
Countries also differs in the extent to which individuals live for the present
rather than the future because they see risks in delaying gratification and investing for
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Risk-Taking Behavior
• Fatalism
If people believe strongly in self-determination, they may be willing to work
hard to achieve goals and take responsibility for performance.
But a belief in fatalism, that every event is inevitable, may present people from
accepting this basic cause-and-effect relationship.
The effect on business in countries with a high degree of fatalism is that people
plan less for contingencies
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Information and Task Processing
“Beauty is altogether in the eye of the beholder”
People do perceive and reach conclusion differently. So do culture. Further,
once people have what they perceive as accurate information, they handle this
information in different ways.
• Perception of Cues
We perceive cues differently. We may identify what things are by means of any
of our senses and in various ways within each sense. The richness of descriptive
vocabulary can allow people to express subtle differences in color.
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Information and Task Processing
Obtaining Information: Low Context versus High Context Cultures
• Low context cultures - most people consider to be relevant only firsthand
information that bears directly on the decision they need to make. In business, they
spend little time on small talk and say things directly. (USA)
• High context cultures - information is valuable to deceision making and inter
meanings from things said indirectly. (Southern Europe)
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Information and Task Processing
Information Processing
Information processing is universal insofar as all cultures categorize, plan and
quantify.
All culture also have ordering and classifying systems.
• Monochronic Versus Polychronic Cultures
• Monochronic - people prefer to work sequentially
• Polychronic - more comfortable when working simultaneously
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Information and Task Processing
Idealism Versus Pragmatism
• Idealism - some culture will determine principles before they try to resolve small
issues
• Pragmatism - cultures will focus more on details rather than principles.
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Communication
Spoken and Written Language
• Translating ones languange into another can be difficult, making international
business communication difficult.
• Some words do not have direct translation.
• Languages and the common meaning of words are consistently evolving.
• Words mean different things in different contexts.
• Grammar is complex, and slight misuse of vocabulary or word placement may
change meanings substantially.
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Communication
Good international business managers use rules such as the following:
• Get references for the people who will do the translation for you
• Make sure your translator knows the technical vocabularyof your business
• Do a back translation for written work
• Use simple words whenever possible
• Avoid slang
• Clarrify communications in several ways
• Recognize the need for budget
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Communication
Silent Language
• We all exchange messages through a host of nonverbal cuses that form a silent
language.
• Color, for example, conjure up meanings that come from cultural experience.
Distance
• People’s sense of appropriate distance is learned and differs among society.
• In US, for example, the customary distance for a business discussion is 5-8 feet. For
personal business, 8 inches to 3 feet.
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Communication
Time and Punctuality
• In terms of context in the US, participants usually arrive early for business
appointment, a few minutes late for dinner at someone’s home.
• In Latin America, they may consider it discourteous if a latin american manager does
not keep to the appointed time.
Body Language
• Or KINESICS is the way in which people talk, touch, and move their bodies
• Some gestures are universal like YES
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Body Language Is Not A Universal Language
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Degree of Cultural Differences
Cultural Distance
When a company moves within a cluster of culturally similar countries, it should
expect to encounter fewer cultural differences and to face fewer cultural adjustments.
Cultural Friction
A business interaction may be viewed negatively because of possible changes in
power relationships and the sovereignty that sets countries apart.
Cultural Shock
The frustration that results when having to learn or cope with a vast array of
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The Cultural Environments Facing Business
Company and Management Orientations
Polycentrism
• belief that business units in different countries should act like local companies
Ethnocentrism
• conviction that one’s own culture is superior to that of other countries
• Ignore important factors
• Believes home country objectives should prevail
• Thinks change is easy
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Company and Management Orientations
Geocentrism
• requires companies to balance knowledge of their own organizational cultures with
both home and host country needs, capabilities, and constraints
• geocentric management often uses business practices that are hybrids of home and
foreign norms.
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Strategies for Instituting Change
Value Systems
• The more something counters our value system, the more difficulty we have
accepting it.
Cost-Benefit Analysis of change
• Some adjustments to foreign cultures are costly to undertake whereas others are
inexpensive.
Resistance to too much change
• resistance to change may be lower if the number of changes is not too great.
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Strategies for Instituting Change
Participation
• Employees are more willing to implement change when they take part in the
decision to change.
Reward Sharing
• Employees are more apt to support change when they expect personal or group
rewards.
Opinion Leadership
• Managers seeking to introduce change should first convince those who can influence
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The Cultural Environments Facing Business
Strategies for Instituting Change
Timing
• Companies should time change to occur when resistance is likely to be low.
Learning Abroad
• International companies should learn things abroad that they can apply at home.
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Future: What will happen to 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
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differences.