Chapter 2 Culture in Business

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Chapter 2

C H A P T E R T W O

Culture in

Business 2Learning Objectives

Describe culture, and explain the

significance of both national cultureandsubcultures.

Identify the components of culture,

and describe their impact on business

activities around the world.

Describe cultural change, and

explain how companies and culture

affect one another.

Explain how thephysicalenvironmentand technology

influence culture.

Describe the two mainframeworks

used to classify cultures and explain

their practical use.

This chapter explains the significance of culture tointernational business. Culture is one of the most

challenging elements that managers face in

international business. Managers must have

cultural literacydetailed knowledge about a

culture that enables people to live and work within

it. The main components of culture are aesthetics,

values and attitudes, manners and customs, social

structure, religion, personal communication,

education, and physical and material environments.

A cultures aesthetics is important to formulating

strategies, as are peoples values because they

influence attitudes toward time, work,achievement, and cultural change. Knowledge of

manners and customs is necessary for avoiding

offensive behavior. Knowing the basics of other

religions helps managers understand behavior. The

ability to speak the language and understand

unspoken language allows managers to understand

a people. A cultures educational aspects are

important to a company, as is its material culture.

Several tools developed to help analyze and

classify cultures include the Hofstede framework

and the Kluckhohn-Strodtbeck framework.

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Many PowerPoint Slides, including both the original text art and newly created images, have been

developed and are available for you to coordinate with Chapter 2 materials presentation.

ANNOTATED OUTLINE

1. INTRODUCTION

This chapter describes culture in the context of international business. Social institutions,religion, language, and other elements of culture affect international business. Each nations

culture can affect business practices and international competitiveness.

2. WHAT IS CULTURE?

Culture is the set of values, beliefs, rules, and institutions held by a specific group of people. The

main components of culture include: aesthetics, values and attitudes, manners and customs,

social structure, religion, personal communication, education, and physical and material

environments.

Accommodating Culture: Avoiding Ethnocentricity

1. Managers must strive to overcome ethnocentricitythe belief that ones ownethnic group or culture is superior to that of others. Ethnocentricity causes people

to view other cultures in terms of their own, causing them to overlook important

human and environmental differences among cultures.

2. International business projects can be undermined by ethnocentricity when a

firms employees are insensitive to cultural nuances. Many international projects

failed because companies changed something fundamental to a culture and

resisted by a local government, labor, or the general public.

Understanding Culture: Developing Cultural Literacy

1. Managers working directly in international business should develop cultural

literacydetailed knowledge about a culture that enables a person to function

effectively within it. Cultural literacy improves the ability to manage employees,

market products, and conduct negotiations in other countries.2. Because culture dictates that many products incorporate local tastes and

preferences, cultural literacy brings a company closer to customer needs and

desires and improves competitiveness.

NOTES Educational Materials to Use

A. National Culture and Subcultures

We tend to invoke the concept of the nation-state when speaking of culture, referring toBritish and Indonesian cultures as if all Britons and all Indonesians were culturallyidentical. The concept of national culture is a generalizationBritish culture includes

English, Scottish, and Welsh.

1. National Culture

a. Nation states support and promote the concept of a national culture by

building museums and monuments to preserve the legacies of important

events and people.

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important to business as they affect the work ethic and desire for materialpossessions. Some cultures value leisure and others value hard work. They also

can be the reason why a culture resists certain products (e.g., Because Muslims

believe drugs, alcohol, and some music and literature undermine their values,

Islamic-law nations exact severe penalties for the possession of drugs and

alcohol).

Attitudes are positive or negative evaluations, feelings, and tendencies that

individuals harbor toward objects or concepts. Attitudes are learned from role

models, including parents, teachers, and religious leaders. They differ from one

country to another because they are formed within a cultural context. Whereas

values are rigid over time, attitudes are more flexible.

1. Attitudes Toward Time

a. Latin American and Mediterranean cultures are casual about time

whereas in Japan and the United States people arrive promptly for

meetings, keep tight schedules, and work long hours.

b. Americans strive toward workplace efficiency but may leave work early

if their work is done because they value individual results. Meanwhile,

the Japanese look busy even when business is slow to demonstrate

dedicationan attitude grounded in cohesion, loyalty, and harmony.

2. Attitudes Toward Work

a. Whereas some cultures display a strong work ethic, others stress a more

balanced pace in work and leisure (e.g., People in southern France say,

We work to live, while people in the U.S. live to work. For the French,

work is a means to an end, not an end in itself.

b. Many European nations are trying to foster an entrepreneurial spirit to

achieve the job growth realized in the United States.


3. Attitudes Toward Cultural Change

A cultural trait is anything that represents a cultures way of life including

gestures, material objects, traditions, and concepts (e.g., bowing to show respect

in Japan [a gesture]).

a. Cultural diffusion is the process whereby cultural traits spread from one

culture to another. Advances in telecommunications are increasing the

cultural diffusion process. As new traits are absorbed into a culture,

cultural change occurs; globalization and technological advances are

increasing the pace of cultural diffusion and cultural change.

b. Cultural imperialism is the replacement of one cultures traditions, folkheroes, and artifacts with substitutes from another. (e.g., During the Miss

World Pageant in India, groups criticized Western sponsors for spreading

consumerism and portraying women as sex objects). Companies must

consider how their activities affect traditional ways.

c. Culture can force companies to adjust business policies and practices.

Managers can use situational management, walking an employee

through an assignment and monitoring the results. Other changes need to

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suit local culture (e.g., In Vietnam, companies modify employee

evaluation systems because criticism must be delivered privately.)

d. Is a global culture emerging? Rapid cultural diffusion and increased

human interaction across borders cause cultures to converge. Although

cultural convergence is taking place in some market segments for some

products (e.g., pop music), any broader global culture is very far off. Yet,values and attitudes are under greater pressure as globalization continues.


C. Manners and CustomsWhen doing business in another culture, it is important to understand manners and

customs to avoid embarrassing mistakes. In-depth knowledge improves the ability to

negotiate, market products effectively, and manage international operations.

1. MannersManners are appropriate ways of behaving, speaking, and dressing in a culture

(e.g., Conducting business during meals is common practice in the United States,

but in Mexico, it is poor manners.)

2. Customs

Customs are habits or ways of behaving in specific circumstances that are passed

down through generations; customs define appropriate habits or behaviors in

specific situations (e.g., Sharing food gifts during the Islamic holy month of

Ramadan is a custom).a. Folk customs are behaviors, dating back several generations practiced

within a homogeneous group of people (e.g., Wearing of turbans by

Muslims in southern Asia and belly dancing in Turkey).

b. A popular custom is a behavior shared by one or more groups (e.g., Thewidespread acceptance in many Asian countries of the Western burgers

n fries and fish n chips among young people).

c. Although giving token gifts to business and government associates is

customary, the proper type of gift varies (e.g., A knife should not be

offered in Russia, France, or Germany where it signals the severing of a

relationship).

d. Large gifts to business associates raise suspicion. Cultures differ in their

legal and ethical rules against giving or accepting bribes. The U.S.

Foreign Corrupt Practices Act, which prohibits companies from giving

large gifts to win business favors, applies to U.S. firms operating at home

and abroad. In many cultures, bribery is woven into the social fabric

(e.g., In Germany, bribery may qualify for tax deductions).


D. Social Structure

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Social structure embodies fundamental organization, including groups and institutions,

social positions and relationships, and resource distribution. It affects decisions,

production site-selection, advertising methods, and the costs of doing business. Three

important elements of social structure that differ across cultures are social group

associations,social status, andsocial mobility.

1. Social Group AssociationsA social group is a collection of two or more people who identify and interact

with one another. Social groups contribute to identity and self-image. Two

groups that affect business activity are family and gender.

a. Family

i. A nuclear family consists of immediate relatives, including

parents, brothers, and sisters. It prevails in Australia, Canada,

USA, and in Europe.

ii. An extended family includes grandparents, aunts and uncles,cousins, and relatives through marriage. It is a more important

social group in Asia, the Middle East, North Africa, and Latin

America. Extended families can present interesting situations for

businesspeople unfamiliar with the concept (e.g., In some

cultures, owners and managers obtain supplies from companies

where family members work.)

b. Gender

i. Genderrefers to socially learned behaviors and attitudes such as

styles of dress and activity preferences. Sociologists regard

gender as a categorypeople who share some status.

ii. Although many countries have gender equality in the workplace,

others have not (e.g., Countries under Islamic law segregate

women and men in schools, universities, and social activities,

and may restrict women to certain professions).

iii. In Japan, men traditionally hold nearly all positions

responsibility, but the role of women in business community is

expanding.

2. Social Status

a. Social Stratification is the process of ranking people into social layers

or classes according to family heritage, income, and occupation.

b. Royalty, government officials, and top business leaders occupy the

highest social layer. Scientists, medical doctors, and others with a

university education occupy the middle rung. Below are those with

vocational training or a secondary-school education, who dominate the

manual and clerical occupations.

c. Rankings can change over time (e.g., Because Confucianism stresses a

life of learning, Chinese culture frowns on businesspeople, but in modern

China, businesspeople are considered role models).3. Social Mobility

a. Social Mobility is the ease with which individuals can move up or down

a cultures social ladder. For much of the worlds population today,one of two systems regulates social mobility: a caste system or a class

system.b. A caste system is a system of social stratification in which people are

born into a social ranking, with no opportunity for social mobility (e.g.,

India has a caste culture with little social interaction between castes). The

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3. Hinduisma. Hinduism was formed around 4,000 years ago in present-day India,

where over 90 percent of its nearly 690 million adherents live.

b. Some consider it to be a way of life rather than a religion. Integral to the

Hindu faith is the caste system. Hindus believe in reincarnationthe

rebirth of the human soul at the time of death. Hindus do not eat or

willfully harm any living creature because it may be a reincarnated

human soul.

c. Because Hindus consider cows sacred animals they do not eat beef (e.g.,

firms like McDonalds work to respect Hindu beliefs by replacing beef

with lamb).

4. Buddhism

a. Buddhism was founded about 2,600 years ago in India by a Hindu princenamed Siddhartha Gautama. Buddhism has approximately 311 millionfollowers, mostly in Asian nations such as China, Tibet, Korea, Japan,

Vietnam, and Thailand.

b. Buddhism promotes a life centered on spiritual rather than worldly

matters. Buddhists seek nirvana (escape from reincarnation) throughcharity, modesty, compassion for others, restraint from violence, and

general self-control.


5. Confucianism

a. Confucianism was founded in China nearly 2,500 years ago. Its founder

was an exiled politician and philosopher named Confucius. China ishome to most of Confucianisms 150 million followers.

b. Confucian thought is ingrained in the cultures of Japan, South Korea, and

nations with large numbers of ethnic Chinese, including Singapore.

c. South Korean business practice reflects Confucian thought in its rigid

organizational structure and reverence for authority (e.g., Efforts to apply

Korean-style management in overseas subsidiaries have caused disputes

and even physical confrontations).

d. For centuries, as people despised merchants because earning moneyviolated Confucian beliefs, many Chinese moved to Indonesia, Malaysia,

Singapore, and Thailand to launch successful businesses.

6. Judaism

a. Judaism was the first religion to believe in one God and is more than

3,000 years old. Judaism has roughly 18 million followers worldwide. In

Israel, Orthodox (or fully observant) Jews make up 12 percent of the

population and constitute an increasingly important economic segment.

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b. Several important observances are Rosh Hashanah (the Jewish New

Year), Yom Kippur (the Day of Atonement), Passover (the Exodus from

Egypt), and Hanukkah (a victory over the Syrians).

c. Employers must be aware of those Jewish holidays. Also, because the

Sabbath lasts from sundown on Friday to sundown on Saturday, work

schedules might need adjustment.d. Marketers must take into account foods that are banned among observant

Jews (e.g., Pork and shellfish are prohibited. Meat is stored and served

separately from milk). Meals prepared according to Jewish dietary

traditions are called kosher.

7. Shinto

a. Shinto means way of the gods, arose as the native religion of the

Japanese, and teaches sincere and ethical behavior, loyalty and respect

toward others, and enjoyment of life. Today Shinto claims about 3.5

million strict adherents in Japan.

b. Shinto beliefs are reflected in the workplace through lifetime

employment (although this is waning today) and the traditional trust

extended between firms and customers.c. Japanese competitiveness in world markets has benefited from loyal

workforces, low employee turnover, and good labormanagement

cooperation.


F. Personal Communication

Every culture has a communication system to convey thoughts, feelings, knowledge, and

information through speech, actions, and writing. Understanding a cultures spokenlanguage provides insight into why people think and behave in a certain way.

Understanding a cultures body language avoids unintended or embarrassing messages.

1. Spoken Language

a. Spoken Language is the part of a cultures communication system

embodied in its spoken and written vocabulary.

b. Linguistically different segments of a population are often culturally,

socially, and politically distinct (e.g., Malaysias population is comprised

of Malay [60 percent], Chinese [30 percent], and Indian [10 percent]).c. Software providers assist companies from English-speaking countries in

adapting their Web sites for global e-business. The company that

provides customers in Mexico City, Paris, or Tokyo with a quality

buying experience in his or her native language will have a competitiveedge.

d. Companies have made language blunders in their international business

dealings (e.g., When Chevrolet launched its Chevrolet Nova in Spanish-

speaking markets, it did not realize that No va means No go in

Spanish).

e. The use of machine translationsoftware that translates languagesis

booming along with the explosion in nonnative English speakers using

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H. Physical and Material Environments

The physical environment and material surroundings of a culture heavily influence its

development and pace of change.

1. Physical Environment

a. Topography refers to all the physical features that characterize the

surface of a geographic region. Cultures isolated by impassable

mountains or large bodies of water are less exposed to the cultural traits

of other peoples and thus change more slowly. Topography impacts

product needs (e.g., there is little market for Honda scooters in

mountainous regions because of their small engines).

b. Topography impacts personal communication (e.g., mountains and the

Gobi Desert consume two thirds of China; in the valleys of these

mountain ranges people speak their own languages although Mandarin is

the national language).

c. Climate refers to the weather conditions of a geographic region. Climateaffects where people settle and directs systems of distribution (e.g., In

Australia, hot and dry conditions combined with jungles pushed

settlement to coastal areas).

d. Climate plays a large role in lifestyle and work habits (e.g., Because of the

intense heat of the summer sun in the early afternoon hours in southern

Europe, northern Africa, and the Middle East, people take afternoon

breaks of 1 or 2 hours). Production schedules must be adjusted to allow

for hours during which machines stand idle.

e. Climate affects customs such as clothing and food (e.g., In the desert areas of

the Middle East and North Africa, people wear long robes as protection

from intense sun and blowing sand).

2. Material Culture

Material Culture includes the technology employed in a culture to manufacture

goods and provide services. Material culture can be used to measure a cultures

technological advancement.a. A firm enters a market under one of two conditions: (1) demand for its

products has developed, or (2) the market is capable of supporting its

production operations (e.g., Myanmar (Burma) does not fulfill eithercondition, and few companies enter).

b. Changes in material culture often cause changes in other aspects of

culture (e.g., Eastern Europe lags behind industrialized nations in

Internet access due to underdeveloped telecommunications systems. But

as their economies advance and people get on the Web other aspects of

popular culture are likely to change as well).

c. Uneven Material CultureMaterial culture displays uneven development

across geography, markets, and industries (e.g., Bangkok, Thailand,

houses 10 percent of the population but accounts for about 40 percent ofits economic output).


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4. CLASSIFYING CULTURESPeople living in different cultures respond differently in similar business situations. There are two

ways to classify cultures based on differences in characteristics such as values, attitudes, and

social structure: the Kluckhohn-Strodtbeck and Hofstede frameworks.

I. Kluckhohn-Strodtbeck Framework

The Kluckhohn-Strodtbeck Framework compares cultures along six dimensions,

asking the following questions:

Do people believe that their environment controls them, that they control the

environment, or that they are part of nature?

Do people focus on past events, on the present, or on the future implications of

their actions?

Are people easily controlled and not to be trusted, or can they be trusted to actfreely and responsibly?

Do people desire accomplishments in life, carefree lives, or spiritual and

contemplative lives?

Do people believe that individuals or groups are responsible for each persons

welfare? Do people prefer to conduct most activities in private or in public?

1. Case Example: Dimensions of Japanese Culture

By answering these questions, the framework can be applied to Japanese culture:

Japanese believe in a delicate balance between people and environment

that must be maintained.

Japanese culture emphasizes the future.

Japanese culture treats people as quite trustworthy.

Japanese are accomplishment-orientednot necessarily for themselves,

but for their employers and work units.

Japanese culture emphasizes individual responsibility to the group and

group responsibility to the individual.

The culture of Japan tends to be public.


J. Hofstede Framework

The Hofstede Frameworkgrew from a study of more than 110,000 people working in

IBM subsidiaries by Dutch psychologist Geert Hofstede. He developed four dimensions

for examining cultures.

1. Individualism versus CollectivismThis dimension identifies the extent to which a culture emphasizes the individual

versus the group.

a. Individualist cultures value hard work, entrepreneurial risk-taking, and

freedom to focus on personal goals.

b. Collectivist cultures feel a strong association to groups, including family

and work units. The goal is to maintain group harmony and work toward

collective rather than personal goals.

2. Power Distance

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We invite you to visit the Wild, Wild & Han homepage on the Prentice Hall Web site

for the best online business support available. This site provides professors with a

customized course Web site, including new communication tools, one-click

navigation of chapter content, and great resources such as Current Events, Internet

Exercises and more. For more information, contact your local sales representative.

Ideas to Enhance Your Lecture

1. It is often the case that students from a variety of cultures are enrolled in the international

business course. Invite international students and one student from the home country to give 10-

minute presentations on their countries cultures. Also, ask the international students to describe

those aspects of their host culture that they find most peculiar or to which they have had difficulty

adapting. If there are no international students in your class, you could contact campus

organizations (for example, the Chinese, Greek, or Latin American student associations) to find

potential speakers.

2. Invite a professor from your own or a nearby college who is from another country to give a guest

lecture on his or her culture. Other options for guest speakers are professors who are U.S. citizens

that have traveled and/or lived abroad for an extensive period of time.

3. Invite a current (or retired) manager with extensive international business experience to give a

guest lecture on how the firm for which they work (or worked) has dealt with cultural elements in

other markets.

4. If possible, invite official representatives of other countries to present an overview of their

cultures to the class. Possible organizations to contact include embassies of other nations or

agencies of the United Nations, World Bank, International Monetary Fund, and so on. Most

countries have cultural attaches in their embassies.

5. Invite members of several religious groups to form a panele.g., Jewish, Christian, Muslim,

Hindu members. Ask each panel member to give a brief overview of his/her religion. Students

can then ask each panel member specific questions about their religions beliefs, practices, etc.

Geography Exercises

1. Appendix B titled Country Facts in this manual consists of 70 countries, each containing the

following informationpopulation, main religion, main language(s), capital city, currency, main

rivers/mountains, main export products, form of government, and major trading partner. The table is only

a partial listing of all the countries in the world. Students could be asked to select a country not included

and to fill out a similar chart for that country. They could expand on the type of data supplied in the table

and determine, for example, the countrys climate, main agricultural products, main minerals, and othernatural resources.

2. Highlight the geography (and other) data supplied in Appendix B for two or three countries when

you give examples involving those countries. You could call on students to come up in front of class and

locate them on a world map or globe and share with fellow students any general information they might

know about each country. Students are often surprised by how little information they can convey about

other nations.

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3. Religions of the world. Using the maps on pp. 54 and 55, name the countries that correspond to

the major world religions. For example, France is Roman Catholic, Iraq is Muslim. This activity can be

done in small groups, assigning a religion to each group.

4. Employing Figures 2.4 and 2.5, ask individual students (or small groups) to select a country,locate it geographically, and explain the culture in terms of each of the dimensions listed in these two

figures of Hofstedes framework.

5. Give your students the following quiz. It can be used at the start of class as a short icebreaker

that gets students thinking about geography and culture in international business. Students could be called

on after raising their hand if they feel they know the answer. In this way, a few students will not dominate

the class by simply calling out the answers (Correct answers are in boldface type).

1. You are sent to Japan to represent your company in negotiations. You are introduced to

your Japanese counterpart, Yonemitsu Yasushi. How do you address him or her?

a. Yonemitsu

b. Yasushic. Mr. Yonemitsu

d. Mrs. Yasushi

e. Sensai Yonemitsu

2. Which one of the following countries has a work ethic most similar to that of Germany?

a. Mexico

b. United Kingdom

c. India

d. Russia

e. Vietnam

3. Arriving late for a business meeting is most unacceptable in:a. United Arab Emirates

b. Chile

c. Japan

d. Italy

e. Argentina

4. In the United States people typically point to their chest when referring to themselves

while in Japan they typically point to their:

a. chin

b. temple

c. stomach

d. nose

e. big toe

5. In exploring markets to expand sales of your Islamic credit card you might decide to rule

out:

a. Indonesia

b. Bahrain

c. Peru

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d. Malaysia

e. Turkey

Additional Projects

1. Select a country and describe its characteristics based on the eight components of culture(aesthetics, values and attitudes, manners and customs, and so on) covered in this chapter.

2. Select a company that is engaged in international business and describe and critique the steps the

company has taken in training its employees on the culture of a country it entered. What were the

challenges/difficulties the company faced? How did they overcome them?

3. Perform a cultural analysis on a selected country. Then propose a training program for employees

of an international company that are being relocated there. Students should focus on those cultural

elements in which the two countries are most different from one another.

4. Students will view a film entitled The Cup,a 1999 movie, critically acclaimed at the Cannes Film

Festival (available on video cassette at Blockbuster Video). Based on a true story, the film shows howtechnology has invaded a Buddhist monastery in a remote area of India. The young monks want to watch

the World Cup soccer match even though they have no television. The film should provide a very

interesting, thought-provoking class discussion about religion and cultural change.

5. Food is an important aspect of culture. Ask students to bring food items from different countries

and cultures to class for tasting. Encourage them to bring something exotic. Many communities have

Asian grocery stores or large specialty stores that specialize in foods from around the world.

Alternatively, students might prepare ethnic recipes themselves.

6. A German female executive would find it difficult to undertake business negotiations in Saudi

Arabia. Ask students to research the cultures of Germany and Saudi Arabia and explain why they agree

or disagree with this statement. Their task is to critically evaluate this statement and support it or refute itwith data and facts that buttress their stance.

7. Unification of European nations into the European Union will begin the homogenization of their

cultures. Research cultures in Europe and explain why you agree or disagree with this statement. Locate

articles on the progress of the European Union in the business press. Your task is to critically evaluate this

statement and support it or refute it with data and facts that buttress your stance.

8. Ask students to respond to the following scenario:

Jean-Louis Dubois, a manager for Air France, was transferred to Riyadh, Saudi Arabia, to open a

new office for the company. Although Jean-Louis had been on other extended overseas

assignments in Mexico City and New York, he was not well prepared for working in the Arab

world. At the end of his first several weeks, Jean-Louis came home in a state of near-total

frustration. As he sat at the dinner table that night he told his wife how exasperating it was to

work with local employees who he claimed seemed to take no responsibility for anything.

Whenever plans were being made or performance targets set they would simply say inshallah

(translated as if God wills it). Coming from a culture that sees no problem as unsolvable, Jean-

Louis could not understand how the local employees could be so passive. If I hear one more

inshallah, he told his wife, I will go crazy.

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Question: What would you tell Jean-Louis to help him understand the culture of Saudi Arabia?

Possible Response: This scenario can best be understood by first appreciating the very different

views in French culture and Saudi culture concerning locus of control. In France it is believed

that people are ultimately responsible for their own destinies. If something goes wrong, it is

believed that an individual can do something (to change certain behaviors) to bring about desiredoutcomes. In Saudi Arabia (indeed throughout the Arab world), people believe that all things are

subject to the direct will of Allah. All plans for the future (including business plans) are viewed

with a sense of inevitability and will be realized only if God wills it. This is not to say that people

in the Arab world would not work hard to help bring about the desired results. Rather, they

believe that despite their efforts, the desired ends will not happen unless God allows it. Perhaps

Jean-Louis would have been less frustrated if he had not just given a knee-jerk response and

accused people of absolving themselves of all responsibility.

Answers to Questions for Review

1. What isculture? Explain howethnocentricity distorts ones view of other cultures.

Culture is the set of values, beliefs, rules, and institutions held by a specific group of people.

Ethnocentricity is the belief that one's own ethnic group or culture is superior to that of others.

Ethnocentricity distorts peoples views of other cultures because it views other cultures in terms

of their own culture. In doing so, it causes one to overlook important human and environmental

differences among cultures.

2. What is cultural literacy? What factors are forcing businesspeople to understand more aboutother cultures?

Cultural literacy is detailed knowledge about a culture that enables people to live and workwithin it. Globalization is one force creating the need for cultural literacy because it is knitting

business activities in various countries more closely together than ever before. Cultural literacy

improves the ability of managers to manage employees, market products, and conduct

negotiations in other countries. Cultural literacy helps managers to modify products and

management techniques to suit local markets.

3. How do nation-states and subcultures affect a nations cultural image?

We are conditioned to think of culture in terms of national culture. Nation-states promote the

concept of national culture by building museums and monuments to preserve the legacies of

important events and people in their histories. This reaffirms the importance of national culture to

citizens and organizations. Nation-states also intervene in business to help preserve their nationalcultures.

A subculture is a group of people who share a unique way of life within a larger, dominant

culture. Although we often overlook important subcultures in forming our impressions of other

national cultures, they are extremely important to conducting business abroad.

4. What is meant by a cultures aesthetics? Give several examples from several different cultures.

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Aesthetics are what a culture considers to be good taste in the arts, the imagery evoked by

certain expressions, and the symbolism of certain colors. An example of aesthetics with respect to

good taste in music is the playing of polka music in many central European nations including the

Czech Republic, Poland, Slovakia, and others. An example with respect to the arts in the Czech

Republic is the production of fine glassware through the art of glass blowing. An example of

good taste with respect to dance is the ritualistic dancing of the native Australian Aborigines.

5. How do values and attitudes differ? Explain how cultures differ in their attitudes toward time,work, and cultural change.

Values are ideas, beliefs, and customs to which people are emotionally attached. Attitudes are

positive or negative evaluations, feelings, and tendencies that individuals harbor toward objects

or concepts. People hold as values only those ideas, beliefs, and customs extremely important to

them. Conversely, people harbor attitudes toward things that are important and unimportant to

them.

Attitudes toward time in certain cultures are more relaxed while attitudes toward time in others

are more rigid. For example, Latin American and Mediterranean cultures tend to be relaxedtoward the use of time whereas Northern Europe and the United States tend to keep far tighter

schedules.

Attitudes toward work also vary across cultures. Some cultures see work strictly as a means to an

end whereas others see work as an end in itself. Attitudes toward work influence peoples

attitudes toward time. For example, in France where people tend to take a relaxed attitude toward

work, attitudes toward time are quite flexible. The opposite is true in Japan.

Attitudes toward cultural change also vary from one culture to another. Some cultures readily

accept the cultural traits of other nations, whereas others are far more wary. However,

globalization and technological advancements are increasing the pace of cultural change for many

cultures around the world.

6. Describe the process of cultural diffusion. Why should international businesses be sensitive toaccusations of cultural imperialism?

A cultural trait is anything that represents a cultures way of life, including gestures, material

objects, traditions, and concepts. The process whereby cultural traits spread from one culture to

another is called cultural diffusion. This process is natural, yet gradual.

Cultures not open to the cultural traits of other nations typically fear that those traits will harm

their own values. Cultural imperialism is the replacement of one cultures traditions, folk heroes,

and artifacts with substitutes from another. Companies must be sensitive to charges of cultural

imperialism because they can result in laws designed to protect the local culture. Such laws canrender a market opportunity infeasible.

7. How do manners and customs differ? Give examples of each from several different cultures.

Manners are appropriate ways of behaving, speaking, and dressing in a culture. Customs are

habits or ways of behaving in specific circumstances that are passed down through generations in

a culture. The two differ from each other in that manners apply generally in a culture whereas

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customs apply to specific situations.

An example of good manners is behaving in a modest manner and dressing conservatively in

Japan. An example of a custom is the practice of arranging marriages on the behalf of children in

Indiajust as it was a widespread custom across Europe several or more generations ago.

Another custom is the playing of cricket in Britain and its former colonies including India andAustralia.

8. What are folk and popular customs? Describe how a folk custom can become a popular custom.

A folk custom is behavior often dating back several generations that is practiced within a

homogeneous group of people. Apopular custom is behavior shared by a heterogeneous group or

by several groups. Folk customs often become popular customs through the process of cultural

diffusion.

9. To what does social structure refer? How do social rank and mobility affect business activities?

Social structure is a cultures fundamental organization, including its groups and institutions, itssystem of social positions and their relationships, and the process by which its resources are

distributed. Social status (or rank) refers to the social layers or classes into which people are

classified. Social rank affects business in that the type of occupation a person has often

determines or heavily influences their social standing.

Social mobility is the ease with which individuals can move up or down a cultures social ladder.

Social mobility is severely restrained in a caste system but quite free in most class systems. Social

mobility can influence business activities in caste cultures because certain occupations can be off-

limits for certain groups of people. Also, in strict caste systems, someone from a lower class

generally cannot supervise a member from a higher class because personal conflict will likely

occur. Systems that do not allow a great deal of social mobility tend to be characterized by

greater labor-management conflict because workers often consider them unfair. Also, people canbe hesitant to work hard in systems that do not reward hard-working individuals with social

mobility. On the other hand, increased productivity and economic development often characterize

systems that do reward hard work with social mobility.

10. Identify the dominant religion in each of the following countries.a. India e. China

b. Ireland f. Brazil

c. Mexico g. Thailand

d. Russia

a) Hindu; b) Roman Catholic; c) Roman Catholic; d) Eastern Orthodox; e) Buddhist, Taoist, and

Confucian; f) Roman Catholic; g) Southern Buddhist.

11. What specific advantages do companies gain when they learn how to communicate in anotherculture?

The reason why people think and act the ways they do in a culture are important determinants of

how a company negotiates with locals, markets it products, and supervises employees.

Understanding a cultures language helps managers to fully understand a culture. In addition,

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understanding a cultures unspoken language helps managers avoid sending unintended or

embarrassing messages.

12. Why is the education of a countrys people important to both native and nonnative companiesoperating there? What is meant by brain drain and reverse brain drain?

Companies (both domestic and international) often rely on education statistics to determine

whether a culture represents a good market for their products or a good location for production or

assembly facilities. They also help companies determine how to promote products to potential

customers after the decision is made to enter a market. A highly educated workforce typically

attracts high-paying jobs in many high-tech industries.

Brain drain is the departure of highly educated people from one profession, geographic region, or

nation to another. When a profession, region, or nation lures back these highly educated

professionals it is called reverse brain drain.

13. How are a peoples culture and physical environment related? How does technology affect

culture?

Two aspects of the physical environment (topography and climate) influence a peoples culture.

Topography is all the physical features that characterize the surface of a geographic region.

Topography such as treacherous mountain ranges, large bodies of water, and deserts can increase

cultural dissimilarity and hinder cultural diffusion.

Climate is the weather conditions of a geographic region. Climate can influence a peoples work

patterns, such as when people in hot climates take breaks of one or two hours in the middle of the

day to rest and then return to work in the cooler hours of late afternoon. Climate also impacts the

type of clothing a culture prefers. People in cultures with hot, but humid and tropical climates

wear little clothing to stay as cool as possible. People in cultures with hot, but dry and sunny

climates often wear long, loose-fitting clothing to protect them from intense sunshine andblowing sand. Climate also affects the types of vegetation and animals living in a specific region

and therefore influences a peoples diet.

All the technology employed in a culture to manufacture goods and provide services is called

material culture. Changes in material culture often cause changes in other aspects of a peoples

culture. An increasingly sophisticated material culture dictates rising incomes and a greater

emphasis on material goods and, even, the development of a consumer culture. Material culture is

often uneven across a culture and can result in different regions developing at far different paces.

14. Describe the dimensions of the KluckhohnStrodtbeck and Hofstede frameworks. Contrast twocultures by applying one of these frameworks to them.

There are six dimensions to the Kluckhohn-Strodtbeck framework. According to the framework,

the essence of any culture can be captured by the following questions:

Do people believe that their environment controls them, that they control the

environment, or that they are part of nature?

Do people focus on past events, on the present, or on the future implications of

their actions?

Are people easily controlled and not to be trusted, or can they be trusted to act

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freely and responsibly?

Do people desire accomplishments in life, carefree lives, or spiritual and

contemplative lives?

Do people believe that individuals or groups are responsible for each persons

welfare?

Do people prefer to conduct most activities in private or in public?

TheHofstede frameworkanalyzes cultures by applying the following four dimensions:

Individualism versus collectivism: Identifies whether a culture holds individuals

or the group responsible for each members welfare.

Power distance: Describes the degree of inequality between a cultures people in

different occupations.

Uncertainty avoidance: Identifies a cultures willingness to accept uncertainty

about the future.

Quantity versus quality of life: Cultures focused on quantity of life emphasize

accomplishments such as power, wealth, and status. Cultures that stress quality of life

generally have more relaxed lifestyles and people are more concerned with cultivating

relationships and the general welfare of others.

An individualist culture is one in which each individual tends to be responsible for his or her own

well-being. People are given freedom to focus on personal goals but are held responsible for their

actions. A child is taught to be self-reliant and self-confident at a young age. Such cultures value

hard work and risk taking. Developing a cooperative spirit in the workplace may be difficult to

achieve and cooperative ventures may become somewhat more troublesome.

A collectivist culture is one in which the group shares responsibility for the well-being of each

member. People work toward collective rather than personal goals and are responsible to the

group for their actions. All, social, political, economic, and legal institutions reflect the groups

critical role. Managers in these cultures often seek the input of their colleagues and subordinates

before making decisions. Employee-manager trust tends to be high because workers know that

managers consider their welfare when making decisions. Each of the business-related factors

mentioned can work to increase or decrease competitiveness depending on the actual

circumstances involved.

Guide to Questions for Discussion

1. Two students are discussing the various reasons why they are not studying internationalbusiness. International business doesnt affect me, declares the first student. Im going to

stay here, not work in some foreign country. Yeah, me neither, agrees the second. Besides,

some cultures are real strange. The sooner other countries start doing business our way, thebetter. What counterarguments can you present to these students perceptions?

First of all, students should present a counter-argument to the statement that international

business does not affect them if they do not work in another country. Today, international

business reaches deep into nearly every domestic economy. It affects the food we eat and drink,

the movies we watch, the cars we drive, the computers we use, the clothing we wear, and so on.

Chapter 1 explained how every national business environment is affected by events occurring in

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other nations.

Students should also recognize the emphasis on the words foreign and strange. This betrays

an ethnocentric bias in which anyone or anything from other countries is considered foreign

and different ways of thinking or acting is considered strange. Success in international business

today requires people to cast aside this outdated way of thinking about other cultures.

2. In this exercise, two groups of four students each will debate the benefits and drawbacks ofindividualist versus collectivist cultures. After the first student from each side has spoken, thesecond student questions the opponents arguments, looking for holes and inconsistencies. Athird student attempts to reply to these counterarguments. Then a fourth student summarizes each

sides arguments. Finally, the class votes on which team presented the more compelling case.

First, students should question who developed these terms. If a northern European nation

conducted the study, its use as a reference point could bias the results. Also, the culture of Greece

is very different from many of those found in Northern and Western Europe, such as Germany.

They differ in their attitudes toward the use of time and the pace of work. This is at least

somewhat affected by the fact that Greece is extremely warm for nearly one-half the year.German culture places an emphasis on punctuality and hard work whereas Greek culture places

greater emphasis on enjoying as much free time as possible. These differences reflect different

underlying values in the two cultures. German culture tends to emphasize quantity of life

accomplishments whereas Greek culture focuses on quality of life measures. German culture is

also more open to risk-taking (small uncertainty avoidance) than Greece and is characterized by

greater individualism that tends to promote entrepreneurial drive. Students should recognize that

these results do not imply one culture is better than the other culture.

Chapter 2 details the main characteristics of individualist and collectivist cultures. Throughout the

debate, students should be sure to give concrete examples of specific countries to support their

general statements regarding each type of culture. The instructor may wish to point out

inaccuracies in students statements prior to the vote by their classmates.

Answers to In Practice Exercise

1. In this chapter and in Chapter 1 you learned how globalization is affecting peoples lives. In youropinion, what role is globalization playing in the disappearance of languages? Be specificregarding the forces or trends you believe threaten the worlds linguistic diversity.

Information and communication technologies are facilitating the process of globalization in many

ways. Through email and videoconferencing, companies are better able than ever before to keep

in touch with far-flung subsidiaries, suppliers, and customers. Much of the Internet activityworldwide is conducted in English. The language of business is English generally, which makes

other languages seem less important. The concept of a global village is both an economic

village and a true village that entails a certain degree of cultural homogenization. The need to

speak English in order to communicate globally is a force that threatens linguistic diversity.

2. Do you think a nation should try to preserve endangered languages as part of its culturalheritage? If so, give several examples of how it could do this. What do you think companies couldbe doing to help such languages survive? Be specific.

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A nation or group should definitely preserve endangered languages. One example is Yiddish, the

language of European Jews. Following the Holocaust and the development of modern Hebrew,

the Yiddish language became endangered. Now, to preserve the language and literature, there is a

revival of Yiddish theater. Yiddish language courses are taught at universities and community

colleges. The rich body of literature in Yiddish is being reread. Yiddish music is being played and

rerecorded. Companies can sponsor cultural events to encourage local languages and dialects to

be preserved. For example, oil companies drilling in Alaska can encourage the Klinket Indians to

have events that showcase their language and other cultural traits. A recent example of something

similar was the 2002 Winter Olympics in Salt Lake City that honored the Native Americans of

Utah, calling attention to their language and customs.

3. Select a language that you never knew existed. A good place to begin searching is Eurolang(www.eurolang.net), a European Union organization, and The Linguistic Society of America(www.lsadc.org). Find out all you can about the language by asking such questions as: Where isit spoken and what are its origins? Which languages are closely related to it? How many people

speak it and is it in danger of dying out? What is unique regarding its syntax, grammar, etc.?Write a brief report on your findings and present it to the class.

Students might select a language based on their own family heritage or from their region in the

United States. For example, a student from Louisiana might research Cajun French.

Guide to Projects

1. Select a recent business periodical or news source in print or onlinesay, the Far EasternEconomic Review (www.feer.com) or the Financial Times (www.ft.com) and find an article

discussing the role of culture in international business. Write a short summary detailing thecultural elements identified by the author, being sure to explain how they pertain to actual

business activities in the country being discussed.

Students should include in their summary a full account of the cultural elements that the articles

author identifies. It can be very interesting to have students analyze an article that describes the

cultural nuances of the students home country. This helps the student understand how their own

culture can be confusing to people from other cultures.

2. Select a company in your city or town that interests you and make an appointment to interviewthe owner or a manager. Your goal is to learn how international opportunities and competitionaffect the decisions of this owner/manager and his or her company. Be sure to ask for specific

examples. Write a short report of your interview and present a brief talk on your findings to theclass.

The students should be sure to ask questions related to how culture can make a business decision

either easier or more difficult, depending on the specific situation. Students should be certain that

the company has some international business dealings before scheduling an interview.

3. In your library or on the Internet, locate annual reports or similar information issued bycompanies like IKEA (www.ikea.com), Lands End (www.landsend.com), Nokia

(www.nokia.com), or Yahoo! (www.yahoo.com)most libraries have annual reports in either

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Clearly there are important and significant differences between the Asian nations. But some

values tend to be Pan-Asian. For instance, the concept of the extended family is strong across

Asiain contrast to the Western concept of the nuclear family. Also, respect for community

elders is strong throughout Asiaunlike the Western emphasis on youth and vitality (most

pronounced in the United States). Thus certain cultural elements can be discussed as Asian just

as we identify certain concepts and behaviors as Western. But the validity of generalizing aboutAsian values depends on the depth of the discussion. The deeper we explore Asian cultures, the

more differences we uncover.

4. Consider the following statement: Economic development and capitalism require a certain style

of doing business for the twenty-first century. The sooner Asian cultures adapt, the better. Doyou agree or disagree? Explain.

The statement is clearly biased toward Western management styles and is harsh in its tone. But

it is true (for better or worse) that companies around the world are striving to learn Western

business management principlesparticularly those practiced by U.S. companies. Companies are

trying to instill the unbending drive toward greater efficiency and are showing a greater appetite

for trying new management techniques. The shift toward Western management principles in Asiawas seen during the Asian economic crisis: Governments passed laws forcing greater

transparency among companies and banks, and many U.S. and other Western companies were

buying up bankrupt Asian companies and radically altering how they were run. But however

rapid the pace of change, Asian companies will always retain practices that make them unique.

Guide to A Question of Ethics

1. Some businesspeople and other experts argue that bribery helps cut through mounds of red tape.

Do you agree? By calling for reforms in nations that condone bribery, are international agencies

(strongly backed by U.S. interests) promoting a certain set of values and morals? Are theypracticing cultural imperialism?

Certainly, bribery can help a company get a deal done that may otherwise be delayed or would go

to a competitor. In this sense, it creates certain efficiencies for the company that does the bribing.

However, it corrupts the free market in that deals could go to companies that are not the most

efficient, but that pay the largest sums to officials. Agencies that are cracking down on bribery

around the world are often promoting a Western sense of fair play and proposing a certain set

of values and morals. However, these values and morals are not uniquely Western as evidenced

by a crackdown by many countries having a great deal of corruption. These agencies can be

considered to be practicing cultural imperialism in that they are replacing the local practice of

bribery with the fair play principle. But whether this is unethical is not so easy to answer.

2. When international firms enter the Indian market, they soon learn about the various ways in

which a rigid caste system can affect business activities. Should these companies adjust to localmanagement styles and human resource practices?

This question poses a real dilemma for international companies operating in India. Local

management practices can be very different from the companys practices in its home country.

The response by most companies is to implement the home country policies but to adapt them to

the local market. This is probably best accomplished by placing as head of the Indian operation

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an Indian-born employee that has worked for the company in the home country who understands

the corporate culture. This manager would know what policies can be or cannot be implemented

in the Indian subsidiary.

3. Companies often relocate factories from industrialized nations with high labor costs to low-wagecountries such as China, India, Mexico, and the nations of Central America. Is there a

reasonable response to charges that, in so doing, they frequently exploit child labor, forcewomen to work 75-hour weeks, and destroy family units?

Students should first of all recognize the bias in this statement. True, many companies are

relocating labor-intensive operations to low-wage countries. But many of these are involving

themselves in the local community to better peoples lives as opposed to exploiting workers at the

expense of education and family units. Why are they doing this? Because human rights groups

are active in every country and closely monitor the activities of multinational firms. If they are

abusing the rights of local workers, they will receive a great deal of bad publicity in the home

countryhurting their reputation and, perhaps, sales. Firms also do it because they recognize

how important an educated, healthy, and happy workforce is to productivity.

Chapter 2 Culture in Business

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Transcript of Chapter 2 Culture in Business