Culture

Crossing Cultures: Balancing the Global with the Local

Fall 2009

“If you think education is expensive, try ignorance.”

James Armstrong

Lecture Outline:• CULTURE DEFINED

• THE ELEMENTS OF CULTURE•SOURCES OF CULTURAL KNOWLEDGE•CULTURAL ANALYSIS•THE TRAINING CHALLENGE•MAKING CULTURE WORK FOR BUSINESS SUCCESS

Culture – Defined• Culture: an integrated system of learned behavior

patterns that are characteristic of the members of any given society.

– Includes: customs, language, material artifacts, shared system of attitudes & feelings

• Culture is learned, shared and transmitted from generation to generation

• Primarily passed on from parents to children, but also transmitted by social organizations, government, schools, & churches

Culture – Defined

• Acculturation – adjusting and adapting to a specific culture other than one’s own– Key to success in international business

• High-context cultures – context is at least important as what is being said (body language, tone, etc.)– Saudi Arabia, Japan

• Low-context cultures – most information is contained in the spoken words– U.S., Canada

Culture – Defined

• In most countries, intra-cultural differences based upon nationality, religion, race and geographic areas has resulted in distinct “subcultures”

• International Manager’s task is to identify cross-cultural and intra-cultural differences and isolate potential opportunities & problems– Hispanic subculture in the U.S. is growing– Huge challenge ahead in Mainland China with the

numerous ethnicities!

The Elements of Culture

Major cultural elements include:

• Language – verbal & non-verbal• Religion• Values & attitudes• Manners and customs• Material elements• Aesthetics• Education• Social institutions

Language - Verbal• Mastery of language is acquire prior to acculturation into another

culture– What languages are necessary to be successful in Hong Kong?

• Use of language in international business:– Information gathering & evaluation– Access to local society– Company communications – need for interpreter– Extends beyond communication mechanics to the interpretation of

contexts

• Managers must have more than simple word recognition– “tabling a proposal” has distinctly different meanings in U.S. & U.K.

Language - Nonverbal• Managers must analyze and become familiar with

“hidden languages” of foreign cultures:

– Time – relaxed or rigid? Hong Kong – transportation difficulties require more flexibility.

– Space – how much space do people want around them?

– Material possessions – what is the importance?

– Friendship patterns – establishing personal rapport is a requisite to conducting business in some countries

– Business agreements – lengthy negotiations or a simple hand shake?

– Body language – use of hands, etc. when talking. Be careful of using hand signals!

Religion

• Religion defines the ideals for life, which are reflected in values & attitudes of society

• Religion can impact entrepreneurship, consumption and social organizations

• Religious impacts can be direct or indirect– Strict Muslim countries– Secular countries– Freedom of religion

Religion - Christianity

• Largest world religion – more than 2 billion

• Catholicism, Protestantism

• Major holidays tied to religion– Pay attention to the calendar, i.e. Christmas gifts

aren’t always exchanged on the same day– Make sure local holidays are taken into account for

business scheduling purposes

Religion - Islam• More than 1.2 billion followers• Significant minority religion in many part of the world• Shariah law is followed• 5 daily prayer periods• Ramadan – month of fasting• Pilgrimage to Mecca• High degree of “fatalism” – “Allah’s will”• Role of women in business can be affected• Beef & poultry – animals must be killed in the halal

method & certified• Alcohol restrictions• Travel/work restrictions – Mecca & Medinah• Interest payments are illegal – considered “usury”

Religion - Hinduism• More than 860 million followers, mainly in India, Nepal,

Malaysia & Sri Lanka

• In addition to religion, is a “way of life” predicated on the “caste” or class to which you are born

• Caste system can affect business– Individual efforts are hampered – you cannot rise above your

caste– Workforce integration problems can occur– Drive for spiritualistic as opposed to materialistic achievement

can hamper business success

• Families are important in Hindu society, extended families are the norm– Affects purchasing power and consumption patterns

Religion - Buddhism

• More than 360 million followers, primarily in Asia

• Offspring of Hinduism, but no caste system

• Life is seen as filled with suffering, and the solution is to achieve “nirvana” – the spiritual state marked by absence of desire

• Emphasis is on spiritual achievement, not accumulation of worldly goods– As a manager, can you motivate a Buddhist in the same way as

you would followers of other religions?

Religion - Confucianism

• More than 150 million followers, primarily in Asia

• Characterized as a “code of conduct” more than a religion

• Teachings stress loyalty and relationships– Loyalty to central authority, placing the good of the group before

that of an individual– Westerners perceive the subordination of the individual to the

group as a violation of human rights!– Emphasis on relationships is evident in developing business ties

in Asia. It may takes years for a business transaction to take place

Values & Attitudes

• Values: shared beliefs or group norms that have been internalized by individuals

• Attitudes: evaluations of alternatives based upon these values

• Difference in cultural values can affect the way:– Planning is executed– Decisions are made– Strategy is implemented– Personnel are evaluated

Values & Attitudes

• Dealing in China – the international manager must realize that making deals is more about cooperation than competition.– The Chinese believe in building relationships

first, followed by business transactions– The relationship or “guanxi” is a set of favor

exchanges to establish trust

Manners & Customs

• Understanding manners & customs is important in negotiations

• Interpretations based only on one’s own frame of reference may lead to an incorrect conclusion– Americans interpret inactivity & silence as negative signs– Japanese expect that their silence will cause American partners

to lower prices– Middle Easterners may take many days to negotiate a very

simple deal, as they may want to discuss unrelated issues– Russians are aggressive in style, usually requiring last-minute

changes

Manners & Customs

Potential way negotiators may not be prepared:

• Insufficient understanding about different ways of thinking

• Insufficient attention to the necessity to “save face”• Insufficient knowledge/appreciate of host country’s

history, culture, government, image of foreigners• Insufficient recognition of the decision-making process

and the role of personal relationships• Insufficient allocation of time for negotiations

Manners – Gift Giving

• China – Chinese New Year– Recommended: coffee table books, pens,

ties, cash (give gifts using both hands)– Avoid: clocks, anything from Taiwan

• India – Hindu Diwali festival– Recommended: sweets, nuts, fruit, candle

holders– Avoid: leather objects, snake images

Manners – Gift Giving

• Japan - Oseibo– Recommended: scotch, brandy, “Americana”– Avoid: gifts that come in sets of 4 or 9

• Mexico – Christmas & New Year’s– Recommended: desk clocks, pens, lighters– Avoid: sterling silver items, logo gifts, food

baskets

Manners – Gift Giving

• Saudi Arabia – Eid Holidays– Recommended: fine compasses to determine

prayer direction, cashmere– Avoid: pork products, liquor

Customs• Fung Shui – can have a great impact on businesses

operating in Asia– Conrad Hotel in HK initially experienced low occupancy after opening– Fung shui consultant suggested moving a piece of sculpture from the

lobby to the outside, as one of the characters on the statue looked like it was trying to run out of the hotel

– Shangri-La employs full-time fung shui consultants

• Extensive research and use of focus groups are ways to avoid this type of problem

• Adjustment to cultural nuances also takes place through trial and error– U.S. retailer Office Depot learned to scale down the size of stores

Material Elements• Infrastructure is a good indicator of potential product

demand, and the extent of the “material culture” has an impact on business decisions

• Economic infrastructure - consists of transportation, energy and communication systems

• Social infrastructure – housing, health and educational systems

• Financial/marketing infrastructure – provides the facilitating agencies for international operations (banks, research firms)

Aesthetics• Cultures have guidelines for good taste,

expressed symbolism of colors, form, music

• What is or isn’t acceptable can vary greatly between cultures

• Sex is a selling point in many countries– In Japan, foreign models are used to convey the

message– Europeans are used to naked models, while they will

need to wear a bathing suit in U.S. ads

Aesthetics – Colors & Symbols

• Black is color of mourning in the U.S. and Europe

• White is the color of mourning in Japan and many parts of Asia– United Airline’s blunder when opening their HK office

• Green is associated with death in Singapore

• A British software company used an “owl” for a help icon, before it learned it was symbol of evil & insanity in some countries

Education• Both formal and informal education play a huge role in

passing on and sharing culture

• Educational levels can be assessed using literacy rates, enrollment in secondary education and higher education

• International firms need to understand the qualitative aspects of education– Japanese & S. Korean schools emphasize sciences – especially

engineering

• High illiteracy levels suggest use of visual aides in lieu of printed material

• International managers must overcome recruiting obstacles– Japanese workers value loyalty, tend to stay with one company for their

entire career. Makes it challenging for a foreign firm to recruit.

Social Institutions

• Social institutions (families) affect the ways people relate to each other– Western family is parents & children– Asian family often includes grandparents & other

relatives

• Affects consumption patterns and should be taken into account when conducting market research– Affect on Chinese hospitality & tourism consumption

patterns?

Social Institutions

• Social stratification – division of the population into classes (lower, middle, upper)– Europe & the U.S. have strong middle classes, while many

Asian countries have a big divide between upper and lower classes

– Impacts workforce availability

• Reference groups – provide the values & attitudes that influence behavior– Primary reference groups: family, coworkers, good friends– Secondary reference groups: professional associations, trade

organizations

Social Institutions• Social organization also determines roles of managers &

subordinates– In some cultures managers & subordinates are separated by

boundaries: social class, separate office facilities– Other cultures have equality

• Nissan U.S. – no reserved parking spaces, no private dining rooms, all employees wear the same uniform

• Western business has impersonal structure for channeling power & influence: law, contracts

• Chinese business relies on personal relationships to obtain clout– “Guanxi” – McDonalds in Beijing evicted 2 years into a 20-year

contract, because they didn’t work to maintain the relationship

Sources of Cultural Knowledge

• Objective/Factual knowledge – acquired from others through communication, research & education

• Experiential knowledge – acquired by being involved in a culture other than one’s own

• Interpretive knowledge – understanding and fully appreciating the nuances of different cultural traits & patters– Requires “getting your feet wet” over a sufficient length of time

Self-Reference Criterion• The unconscious reference to one’s own cultural

values– The root of most international business problems

(cultural bias)

• Way to reduce cultural bias:– Define the problem/goal in terms of cultural traits,

habits or norms– Isolate any self-reference criterion influence &

examine how it impacts the problem– Redefine the problem without the self-reference

criterion– Control “ethnocentrism” – the tendency to consider

one’s own culture as superior to others

Reference

Czinkota, M.R., Ronkainen, I.A., and Moffett, M.H. (2005). International Business (7th

ed.). Thomson-Southwestern.