Culture and Differences in Culture Chapter Three Culture and Differences in Culture

Our plan for first half of today What is culture? Social Structure Culture and the Workplace Cultural Change Bombay Tyre case

Last week: Political economy Political systems: They differ radically from one country to the next The ease of doing business varies with the system You have to understand the rules where you are Level and nature of economic development also differs radically from one place to the next Gross National Income (GNI) and Purchasing Power Parity GNI measure the differences

Today: Culture and cultural differences

What is Culture? “The collective programming of the mind which distinguishes one human group from another” - Hofstede Text has several definitions. And there are good reasons for being aware of several definitions, because there is no agreed on definition of culture. A 19th century anthropologist defined culture as “that complex whole which includes knowledge, belief, art, morals, law, custom, and other capabilities acquired by man as a member of society.” Wow! Everything! “Culture” / values, norms vs. Institutions / rules of the game as different ways of capturing what’s going on in a society. If you want to understand politics and economics and political/economic differences, think in terms of institutions/rules of the game. It’s an economist or political scientist’s way to analyze what’s happening. It tries to make things simple. Culture / values, norms – a way used by some sociologists or anthropoligists. They want to acknowledge the full complexity of the human experience.

Components of Culture: One standard approach Values – basic attitudes about what is important Norms – social rules Society Values – core ideas – freedom in US; group harmony in Japan Norms – social rules that govern action – Mores – we’ve gotten so individualistic and there are so many cultures in San Jose that it’s hard to define a more. In Japan – big companies practice lifetime employment for their elite workers. Folkways – Our attitude towards time. I’ll let you be a minute late. I’m struggling to prevent you from being more than that. Couldn’t do that in Peru, Italy.

Values – assumptions about how things ought to be Values form the bedrock of a culture They provide the context within which a society’s norms are established and justified They include attitudes toward Individual freedom Democracy Truth Justice Honesty Loyalty Social obligations Values are also reflected in the political and economic systems Return

Norms Norms are the social rules that govern people’s actions toward one another Folkways – little moral significance Americans expect you to come on time to appointments In Italy, people weren’t usually on time Mores Norms seen as central to functioning of society Marriage Honesty

Culture, Society, and the Nation State There is not a strict one-to-one correspondence between a society and a nation state Nation State: Is a political creation May contain a single culture or several cultures Canada India Multi-tribal African nations

Societies contain subcultures ethnic cultures business or professional cultures

The Determinants of Culture The values and norms of a culture do not emerge fully formed. They are the evolutionary product of a number of factors, including the prevailing political and economic philosophies, the social structure of a society, and the dominant religion, language, and education systems as shown in this figure. Figure 3.1 – The Determinants of Culture, p. 93

Social Structure Social structure refers to its basic social organization Two dimensions that are particularly important include: The extent to which society is group or individually oriented Degree of stratification into castes or classes Group-oriented = Collectivism (Japan, China) Stratification – India, England not the same as gap between rich and poor, though correlated with it. Peru, Mexico – tends to be a stratification between people associated with the old cultures from the rural areas and European-dominated elites. In England and also in Peru, if you make money you still have to build connections in the elite if you want to be elite. Changing with globalization? Is globalization creating its own castes?

Religious and Ethical Systems Religion: a system of shared beliefs and rituals that are concerned with the realm of the sacred Ethical systems: a set of moral principles, or values, that are used to guide and shape behavior Most of the world’s ethical systems are the product of religions Among the thousands of religions in the world today, four dominate in terms of numbers of adherents: Christianity with 1.7 billion adherents Islam with 1 billion adherents Hinduism with 750 million adherents Buddhism with 350 million adherents

Religious and Ethical Systems Map 3.1 The Map of World Religions, p. 97

Religions are hugely important, but Prof Religions are hugely important, but Prof. Hill may not be too expert on them I am not holding you responsible for the information about specific religions on pp. 96-105 But the sidebars on ‘Islamic capitalism’ and ‘McDonald’s and Hindu culture’ illustrate well how religion interacts with business

Language Spoken Unspoken Verbal cues Language structures perception of world Unspoken Body language Personal space One obvious way in which countries differ is language. By language, we mean both the spoken and the unspoken means of communication.

Be alert for unexpected meanings of ‘silent language’ Colors Black symbolizes death in U.S. White indicates death in Asia Purple indicates death in (some situations in) Latin America Gestures Sideways head movement that means ‘yes’ in Greece looks like negative ‘no’ head shake in U.S. See book p 66 for alternative readings of US ‘OK’ gesture.

Culture in the Workplace Four dimensions of culture Power distance – the extent to which people are comfortable with inequalities of power and wealth Uncertainty avoidance - the extent to which people accept ambiguous situations and tolerate uncertainty Individualism versus collectivism - this dimension focuses on the relationship between the individual and his/her fellows within a culture Masculinity versus femininity - this dimension looks at the relationship between gender and work roles Of considerable importance for an international business with operations in different countries is how a society’s culture affects the values found in the workplace. Management process and practices may need to vary according to culturally determined work related values. For example, if the cultures of the United States and France result in different work-related values, an international business with operations in both countries should vary its management process and practices to account for these differences. Probably the most famous study of how culture relates to values in the workplace was undertaken by Geert Hofstede.44 As part of his job as a psychologist working for IBM, Hofstede collected data on employee attitudes and values for more than 100,000 individuals from 1967 to 1973. These data enabled him to compare dimensions of culture across 40 countries. Hofstede isolated four dimensions that he claimed summarized different cultures—power distance, uncertainty avoidance, individualism versus collectivism, and masculinity versus femininity.

Work-Related Values for 20 Selected Countries Table 3.1 – Work-Related Values for 20 Selected Countries, p. 109

Problems with Hofstede Assumes one-to-one relationship between culture and the nation state Research may have been culturally bound Survey was of IBM employees, conducted by Europeans and Americans Survey respondents were from a single industry (computer) and a single company (IBM)

Other scholars have proposed many other dimensions of culture, but none have been shown more significant than the first three Hofstede developed

Cultural Change Culture evolves over time Since 1960s American values toward the role of women have changed Japan moved toward greater individualism in the workplace Globalization will continue to impact cultures around the world

Managerial Implications Cross-cultural literacy You need to understand differences between cultures Culture and competitive advantage Some cultures make business easier than others Culture and business ethics As we’ll see, cultural differences create big ethical issues

Looking Ahead to Chapter 4 Ethics in International Business Ethical Issues in International Business Ethical Dilemmas The Roots of Unethical Behavior Philosophical Approaches to Ethics Ethical Decision Making