© 2013 Cengage Learning. All rights reserved.

CHAPTER 3

GLOBAL2 PENG

© D

avid

Lom

ax/R

ober

t H

ardi

ng/G

low

imag

es.c

om

1

© 2013 Cengage Learning. All rights reserved.

CHAPTER 3 LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1. Define culture and articulate its two main manifestations.2. Articulate three ways to understand cultural differences. 3. Explain why understanding cultural differences is crucial for

global business. 4. Explain why ethics is important. 5. Identify ways to combat corruption. 6. Identify norms associated with strategic responses when

firms deal with ethical challenges. 7. Explain how you can acquire cross-cultural literacy.

2

© 2013 Cengage Learning. All rights reserved.

ETHNOCENTRISM

Ethnocentrism:A self-centered mentality held by a group of people who perceive their own culture, ethics, and norms as natural, rational, and

morally right

3

© 2013 Cengage Learning. All rights reserved.

CULTURE

“the collective programming of the mind which distinguishes the members of one group or

category of people from another.”

Geert Hofstede

4

© 2013 Cengage Learning. All rights reserved.

TWO COMPONENTS OF CULTURE

5

Culture

Language Religion

Lingua franca – a global business language. (ENGLISH)

RELIGIONReligion is another major manifestation of cultureKnowledge about religions is crucial even for nonreligious managers

Largest religions:Christianity - 1.7 billionIslam - 1 billionHinduism - 750 millionBuddhism - 350 million

CULTURAL DIFFERENCES:THE CONTEXT APPROACH

ContextThe underlying background upon which social interaction takes place

Low-context culturesCommunication is usually taken at face value withoutmuch reliance on unspoken context

High-context culturesCommunication relies a lot on the underlying unspokencontext, which is as important as the words used

© 2013 Cengage Learning. All rights reserved.

CONTEXT APPROACH

10

CLUSTER APPROACH

Groups countries that share similar cultures into a cluster.

11

DIMENSION APPROACH:5 Dimensions1. Power distanceExtent to which less powerful members within a

country expect and accept that power is distributed unequally

2. Individualism/Collectivism IndividualismIdea that an individual’s identity is fundamentally

his or her own CollectivismIdea that an individual’s identity is fundamentally

tied to the identity of his or her collective group

DIMENSION APPROACH3. Masculinity/FemininityDimension of sex role differentiation

4. Uncertainty avoidanceExtent to which members in a culture accept or

avoid ambiguous situations and uncertainty

5. Long-term orientationHow much emphasis is placed on perseverance

and savings for future betterment

DIMENSION APPROACH

Focuses on multiple

dimensions of cultural

differences both within and

across cultures.

Sources: G. Hofstede, “Cultural constraints in management theories,” Academy of Management Executive 7, no. 1 (1993): 81–94 and G. Hosftede, Cultures and Organizations: Software of the Mind (New York: McGraw-Hill, 1997) 25, 26, 53, 84, 113, 166. For newest update, see http://www.geerthofstede.com.

14

© 2013 Cengage Learning. All rights reserved.

CULTURAL DIFFERENCES AND GLOBAL BUSINESS

15

EthicsEthicsThe principles, standards, and norms of conduct that govern Individual and firm behavior

Code of conductA set of guidelines for making ethical decision

Ethical relativismFollows the cliché, “When in Rome, do as the Romans.”

• There is overlap between what is ethical and legal. But in some cases, what is legal may be unethical.

MANAGING ETHICS OVERSEAS

Three Core Principles

Respect for human dignity and basic rights

Respect for local traditions

Respect for institutional context

© 2013 Cengage Learning. All rights reserved.

Sources: T. Donaldson, “Values in tension: Ethics away from home,” Harvard Business Review (September-October 1996): 4–11 and J. Weiss, Business Ethics, 4th ed. (Cincinnati: South-Western Thomson, 2006).

17

CORRUPTION

The abuse of public power for private

benefits usually in the form of bribery, in cash

or in kind.

© 2013 Cengage Learning. All rights reserved. 18

COMBATING CORRUPTION

Foreign Corrupt Practices Act (FCPA)A US law enacted in 1977 that bans bribery of foreign officials

© 2013 Cengage Learning. All rights reserved. 19

STRATEGIC RESPONSES TO ETHICAL CHALLENGES

NORMS: prevailing practices of relevant players

© 2013 Cengage Learning. All rights reserved. 20

CULTURAL INTELLIGENCE

Managers should enhance their cultural intelligence – an individual’s ability to understand and adjust to new cultures.

Managers should be aware of the prevailing norms and their transitions globally.

© 2013 Cengage Learning. All rights reserved. 21

CULTURAL INTELLIGENCE

© 2013 Cengage Learning. All rights reserved. 22