Differences in Culture Chapter 4 Differences in Culture Md. Afnan Hossain Lecturer, School of Business & Economics

What is Culture? The set of basic values, perceptions, wants and behaviors learned by a member of society from family and other institution. “A system of values and norms that are shared among a group of people and that when taken together constitute a design for living.” - Hofstede, Namenwirth, and Weber

Values and Norms Values are the abstract ideas about what a group believe to be good, right and desirable. Norms are the social rules and guidelines that prescribe appropriate behavior in particular situations and can be further subdivided into Folkways (the routine conventions of everyday life/ rituals and symbolic behavior): good social manner, appropriate dress code in a particular situation, eating with correct utensils, neighborly behavior, etc. Mores (norms that are seen as central to the functioning of a society and to its social life): they have much greater significance than folkways and violation can bring serious justice such as theft, cannibalism, etc. A society is a group of people who share a common set of values and norms. 3 3

What Determines Culture? 4 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 (layered) into classes or castes

Social Structure Class system: This is less rigid form of social stratification in which social mobility is possible. Class system is open stratification in which the position a person has by birth can be changed through his or her own achievements and/or luck. Example: British society has three different classes; upper class (wealth, prestige and power accumulated through generations), middle class (Upper middle class-Lawyers, accountants, doctors; Lower middle class- bank tellers, school teachers, etc.) and working class.

Social Structure Individuals vs Groups In a social setting, Asian employees often say they work for Sony, while a Western employee may say he/she is an electrical engineer. In Asia, the worth of an individual is more linked to the success of the group rather than individual achievement.

Significance From business perspective, the stratification of a society is significant if it affects the operation of business organization. Class consciousness refers to a condition where people tend to perceive themselves in terms of class background and this shapes their relationship with members of other classes. If social mobility is high, then people are less class conscious. Example: USA has high mobility, so people are less class conscious and have limited implication on business. Contrarily, UK society is class conscious as social mobility is low. 8

Religious and Ethical System Religion: A system of shared beliefs and rituals that are concerned with the realm of the sacred Ethical system: A set of moral principles or values that guide and shape behavior. Most of the world’s ethical systems are the product of religion. Different religions have their own ethical system. Example: Islam prohibits payment of interest. So banks operating in Islamic nations should consider this. Religion may affect international business. E.g. McDonalds in India supply mutton patty (Maharaja Mc) as beef is taboo in Hindu religion. Women in Middle East cannot be involved in market research openly/ Single women can not work

Religions in the World Map

Language Language can be divided into two major elements; the spoken and unspoken language. Spoken language Chinese, English, Hindi, Russian & Spanish are top languages as mother tongue. English, French, Spanish and Chinese are most widely spoken languages. English is becoming the language of international business. So it is important to speak the widely spoken language. However, knowledge of the local language is beneficial, and in some cases, critical for business success 11

Language Unspoken Language Unspoken language refers to non-verbal communication. Unspoken language, such as gestures, body languages, facial expressions, etc. play an important role. Failure to understand these non verbal cues might create communication failure. Example- smile is a sign of joy; thumbs up is a gesture to indicate ‘it’s all right’ in America and Europe, while this gesture is obscene in Greece. Personal space while talking to someone

Education Education plays a dominant role as a determinant of national competitive advantage. Availability of skilled and educated workers seems to be a major determinant of the likely economic success. E.g. Japan According to Porter, good education system is not only a determinant of national competitive advantage, but it is also an important factor guiding the location choices of international business. E.g. India’s IT industry. The general education level is in also the indicator of the kind of products that might sell in a country and the type of promotional material that should be used. E.g. selling and promoting books become difficult if 70% of the people of a country cannot read.

Culture and Workplace Different countries have different work related values. Management process and practices may need to vary according to culturally determined work-related values. Hofstede’s Theory of Culture He conducted the research during 1967-1973 as an IBM Psychologist and included 100,000 employees of IBM in 40 countries. The purpose of the research was to identify difference of employees’ values and attitudes. The theory helped to compare and contrast between the nations. This is the benchmark for other cultural theories. He identified four dimensions: Power Distance, Uncertainty Avoidance, Individualism versus Collectivism & Masculinity versus Femininity.

Hofstede’s Theory of Culture Power Distance: This dimension focused on how a society deals with the fact that people are unequal in physical and intellectual capabilities. High power distance societies let inequalities grow over time into inequalities of power and wealth. (Hierarchical organizational structure & bureaucracy) Low power distance societies try to lower such inequalities as much as possible. (Encourage flat organization structure and increased cooperation)

Hofstede’s Theory of Culture Uncertainty Avoidance: This dimension measures the extent to which different cultures socialize their members into accepting ambiguous situations and tolerating uncertainty. High uncertainty avoidance culture values rules & regulation, commitment, job securities and less entrepreneurial. Low uncertainty avoidance culture values readiness to take risk and resistance to accept change.

Hofstede’s Theory of Culture Individualism versus Collectivism: Individualism implies that Individual achievement and freedom is highly valued. In societies where collectivism is emphasized, ties between individuals are tight, people live in extended families and everyone look after each other. Masculinity versus Femininity: This dimension looks at the relationship between gender and work roles. In masculine cultures, gender roles are sharply differentiated (men and Women have specific job), while in feminine cultures, gender roles are less differentiated (no difference is made between men and women in the same job). Masculine: USA, Germany, Ireland (Masculine traits include assertiveness, individual achievement, power, strength, material success, competitiveness, etc.) Feminine: Spain, Thailand, Korea (Feminine traits include emotions, caring, relationship oriented. Etc.) 17

Work Related Values for 20 Selected Countries

Was Hofstede Right? Hofstede’s work has been criticized for several reasons made the assumption there is a one-to-one relationship between culture and the nation- state study may have been culturally bound used IBM as sole source of information culture is not static – it evolves But, it is a starting point for understanding how cultures differ, and the implications of those differences for managers. While Hofstede’s results are interesting, one should be careful about reading too much into them because: He assumes a one-to-one relationship between culture and nation-state. It seems clear that a nation can include multiple cultures. The reality of culture in the workplace is considerably more complex than Hofstede’s results would suggest. His research team was composed of Europeans and Americans. This shaped their questions as well their analysis of the answers could be shaped by their own biases. All of his respondents were from a single industry – the computer industry – and were employees of a single company, IBM! 19

Does Culture Change? Culture evolves over time changes in value systems can be slow and painful for a society Social turmoil - an inevitable outcome of cultural change as countries become economically stronger, cultural change is particularly common economic progress encourages a shift from collectivism to individualism globalization also brings cultural change LO5: Demonstrate an appreciation for the economic and business implications of cultural change. For example, economic advancement is often accompanied by a shift away from collectivism towards individualism. 20

What Do Cultural Differences Mean for Managers? It is important to develop cross-cultural literacy companies that are ill-informed about the practices of another culture are unlikely to succeed in that culture To avoid being ill-informed consider hiring local citizens transfer executives to foreign locations on a regular basis Managers must also guard against ethnocentrism a belief in the superiority of one's own culture There is a connection between culture and national competitive advantage There is a connection between culture and national competitive advantage suggests which countries are likely to produce the most viable competitors has implications for the choice of countries in which to locate production facilities and do business 21