Introduction

Cross-cultural

literacy (an
understanding of how cultural
differences across and within nations
can affect the way in which business is
practiced) is important to success in
international business
There may be a relationship between
culture and the costs of doing business
in a country or region
Culture is not static, and the actions of
MNEs can contribute to cultural change

What is Culture?
Question: What is culture?
Culture

is a system of values (abstract ideas

about what a group believes to be good,
right, and desirable) and norms (the social
rules and guidelines that prescribe
appropriate behavior in particular situations)
that are shared among a group of people
and that when taken together constitute a
design for living
A society is a group of people who share a
common set of values and norms

Values and Norms

Values

provide the context within which a

societys norms are established and justified
Norms are the social rules that govern the
actions of people toward one another and
can be further subdivided into
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)

Culture, Society,
and the Nation-State
A

society can be defined as a group of

people that share a common set of values
and norms
There is not a strict one-to-one
correspondence between a society and a
nation-state
Nation- states are political creations that
can contain a single culture or several
cultures
Some cultures embrace several nations

Cultural Dimensions in
China
Greetings

are done in
order of agealways greet
the eldest member of a
group first
As status is recognized by
age, university degree and
profession, use of a
persons title is important.
Address someone as Dr. or
Professor whenever
possible. Do not call
someone by their first
name until they ask you to.

Cultural Dimensions in
China
Deploy

senior staff members to

communicate and make announcements to
general staff
Be prepared for answers like we will see,
or let us think about it which in the nonconfrontational Chinese society actually
mean no
Expect frequent rescheduling of meetings.
It is a good idea to set up appointments a
few weeks in advance and
reconfirm 1-2 days before the scheduled
meeting

Cultural Dimensions in
America
Time and Its Control:
For Americans, time is a critical factor that is
battled on a daily basis. Were in an
adversarial relationship to time. We talk
about saving or wasting time, managing
time and beating the clock. Americans
added the term multi-tasking to the English
language.
Comfort with Change
Americans are fundamentally optimistic and
place faith in the future. As a young culture
with few traditions tying us to ways of the
past, our identity and inspiration are
projected forward in time. Americans link
change to progress,

development, and growth. We like things

that are New and Improved!
Self-Sufficiency
Closely related to the American emphasis
on individual control over destiny is the
value of being self-sufficient. To succeed
without depending on others shows
supreme self-determination, self-reliance,
and self-confidence.
Status
In American culture we value the idea of
equality. The quotation All men are
created equal is arguably the bestknown phrase in any of Americas political
documents.

 Language

Americans are low context communicators,

so the words we speak are expected to
deliver everything thats important during
verbal interaction. We pay far less attention
to factors such as body language and the
context of what is being said. Americans
appreciate
communication
that
gets
straight to the point and tend to interrupt
when conversation isnt moving along.
Individualism:
. Individualism is the belief that each
individuals
interests
should
take
precedence over those of the social group.
Collectivist cultures, by comparison, assign
value based on the role a person plays
within a group.

CULTURAL
DIMENSIONS
IN INDIA
Respect

is based on
seniority and not
necessarily on proficiency,
skills or knowledge
Lay out clear
instructions and
procedures to employees
Expect low job turnover
Expect frequent
rescheduling of meetings
It is a good idea to
confirm a day before the
scheduled meeting

Cultural Dimensions in
India
Do

not expect decisions to be

made at meetings, as meetings
are merely forums for exchange
of information
Aim to build lasting relationships.
Put your university degree or any
accreditations on your business
card

Cultural Dimensions in
Germany

Power distance
This dimension deals with the fact that all
individuals in societies are not equal it
expresses the attitude of the culture
towards these inequalities amongst us .
Individualism
The fundamental issue addressed by this
dimension isthe degree of
interdependence a society maintains
among its members.It has to do with
whether peoples self-image is defined in
terms of I or We. In Individualist
societies people are supposed to look after
themselves and their direct family only.

Cultural Dimensions in
Germany
Masculinity

/ Femininity

Germany is considered a masculine society.

Performance is highly valued and early
required as the school system separates
children into different types of schools at the
age of ten. People rather live in order to
work and draw a lot of self-esteem from
their tasks. Managers are expected to be
decisive and assertive. Status is often
shown, especially by cars, watches and
technical devices.

Cultural Dimensions in
England
Please

and thank you are words that

should be used a lot. In the UK we consider it
rude if you do not use them. If you ask for
something, say please. If somebody gives
you something or helps you, say thank you
Smoking is prohibited by law in many public
placesrestaurants, cafes, bars, cinemas
etc. If you smoke in these places you will
have to pay a fine
Many people in Britain do not smoke or are
trying to give up smoking. Even if they
smoke, it is unusual for people to smoke
inside their own house.

Cultural Dimensions in
England

Most of our families do not smoke but they are happy

for students to smoke outside - in their garden, for
example.

British people love pets! If you go to a park it is likely

that you will see many people walking their dogs.
Dogs are generally domesticated and well behaved so
there is no need to be afraid.

Queuing..The British are well know for their love of

queues! It is considered very rude to jump a queue. If
there is a queue for something, please wait your turn.

Hofstedes Cultural
Dimensions in Dubai

The Determinants of
Culture

The Determinants of Culture

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

Individuals and Groups

A

group is 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 others behavior
Groups are common in many Asian
societies
Many Western countries emphasize
the individual

Individuals and Groups

In

societies where the individual is

emphasized
individual achievement and
entrepreneurship are promoted
but, this can encourage job switching,
competition between individuals in a
company rather than team building, and a
lack of loyalty to the firm
In societies with a strong identification with
the group
cooperation and team work are encouraged
and life time employment is common
but, individual initiative and creativity may
be suppressed

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

Social Stratification
Social

mobility refers to the extent to which

individuals can move out of the strata into
which they are born
The most rigid system is the caste system
(a closed system of stratification in which
social position is determined by the family
into which a person is born, and change in
that position are unlikely)
A less rigid system is the class system (a
form of open social stratification in which the
position a person has by birth can be
changed through achievement or luck)

Religious and Ethical

Systems

Religion

is a system of shared beliefs and

rituals that are concerned with the realm of
the sacred
Religions with the greatest following are
Christianity (1.7 billion adherents)
Islam (1 billion adherents)
Hinduism (750 million adherents)
Buddhism (350 million adherents)
Confucianism also influences behavior and
shapes culture in many parts of Asia

Religious and Ethical

Systems

Dominant Religions

Religious and Ethical

Systems

Ethical

systems are 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

Christianity
Christianity

is the most widely practiced

religion and is common throughout Europe,
the Americas, and other countries settled by
Europeans
Question: What are the economic
implications of Christianity?

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

Islam

Adherents of Islam, called Muslims, believe that there

is one true omnipotent God
Islam is an all-embracing way of life that governs one's
being
Question: What is Islamic fundamentalism?
In the West, Islamic fundamentalism is associated in
the media with militants, terrorists, and violent
upheavals, however, the vast majority of Muslims point
out that Islam teaches peace, justice, and tolerance
Perhaps in response to the influence of Western ideas,
some Muslims feel threatened, and are promoting a
commitment to traditional beliefs and practices
Fundamentalists have gained political power in many
Muslim countries, and have tried to make Islamic law
the law of the land

Islam
Question: What are the economic
implications of Islam?
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
While Islam is supportive of business, 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

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 selfdenial

Question: What are the economic

implications of Hinduism?
Hindus are valued by their spiritual rather
than material achievements
Promotion and adding new responsibilities
may not be the goal of an employee, or may
be infeasible due to the employee's caste

Buddhism
Buddhists,

found mainly in Central and

Southeast Asia, China, Korea, and Japan,
stress spiritual growth and the afterlife,
rather than achievement while in this world
Question: What are the economic
implications of Buddhism?

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 in
Buddhist societies

Confucianism
Confucianism,

practiced mainly in China,

teaches the importance of attaining personal
salvation through right action
The need for high moral and ethical conduct
and loyalty to others is central in
Confucianism
Question: What are the economic
implications of Confucianism?
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

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

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
However, knowledge of the local
language is beneficial, and in some
cases, critical for business success

Unspoken Language
Unspoken

language refers to
nonverbal cues
Unspoken language such as 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

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

Culture and the Workplace

Question: How does a society's culture
impact on the values found in the
workplace?

1.
2.
3.
4.

The most famous study undertaken to

answer this question was done by Geert
Hofstede who isolated four dimensions that
he believed summarized different cultures
Power distance
Individualism versus collectivism
Uncertainty avoidance
Masculinity versus femininity

Culture and the Workplace

1.

2.

3.

4.

Power distance is focused on how a society deals with

the fact that people are unequal in physical and
intellectual capabilities
Individualism versus collectivism is focused on the
relationship between the individual and his or her
fellows
Uncertainty avoidance measures the extent to which
different cultures socialize their members into
accepting ambiguous situations and tolerating
ambiguity
Masculinity versus femininity looks at the relationship
between gender and work roles
Hofstede later added a fifth dimension, Confucian
dynamism, to capture attitudes towards time,
persistence, ordering by status, protection of face,
respect for tradition, and reciprocation of gifts and
favors

Culture and the Workplace

Hofstedes Four Dimensions

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
As countries become economically
stronger, cultural change is
particularly common

Implications for Managers

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
(discussed in the next chapter)

Cross-Cultural Literacy
Individuals

and firms must develop

cross-cultural literacy
International businesses that are ill
informed about the practices of
another culture are unlikely to succeed
in that culture
Individuals must also beware of
ethnocentric behavior (a belief in the
superiority of one's own culture)

Culture and Competitive Advantage

For

international companies, the

connection between culture and
competitive advantage is important
because
the connection suggests which
countries are likely to produce the
most viable competitors
the connection has implications for
the choice of countries in which to
locate production facilities and do
business