1. PART TWO COMPARATIVE ENVIRONMENTAL FRAMEWORKS International Business Chapter Two The Cultural Environments Facing Business

2. 2-2 Chapter Objectives To understand the major causes of cultural differences and change To grasp behavioral factors influencing countries’ business practices To become familiar with cultural guidelines for companies that operate internationally To learn to discuss the problems and methods of learning about cultural environments

3. 2-3 Culture Defined Culture: the specific learned norms of a society that reflect attitudes, values, and beliefs Major problems of cultural collision are likely to occur if: -a firm implements practices that do not reflect local customs and values and/or -employees are unable to accept or adjust to foreign customs.

4. 2-4 Fig. 2.1: Cultural Influences on International Business

5. 2-5 Cultural Dynamics Cultures consist of societies, i.e., relatively homogeneous groups of people, who share attitudes, values, beliefs, and customs. Cultures are dynamic; they evolve over time. Cultural value systems are set early in life, but may change because of: -choice or imposition -contact with other cultures.

6. 2-6 The Nation as a Point of Reference The basic similarity amongst people within countries is both a cause and an effect of national boundaries. National identity is perpetuated through the rites and symbols of a country and a common perception of history. Subcultures may link groups from different nations more closely than certain groups within nations.

7. 2-7 Cultural Formation and Change Societal values and customs constantly evolve in response to changing realities. Cultural imperialism is brought about by the imposition of one culture upon that of another. Certain elements introduced from outside a culture may be known as creolization, indigenization, or cultural diffusion.

8. 2-8 Language as a Cultural Stabilizer Isolation from other groups, especially because of language, tends to stabilize cultures. Some countries see language as being so important that they regulate the inclusion of foreign words and/or mandate the use of the country’s official language for business purposes.

9. 2-9 Map 2.2: Major Languages of the World

10. 2-10 Fig. 2.2: Importance of Major Language Groups: Two Views

11. 2-11 Religion as a Cultural Stabilizer Religion is a major source of both cultural imperatives and cultural taboos. Major religions include: -Buddhism -Christianity -Hinduism -Islam -Judaism

12. 2-12 Map 2.3: Major Religions of the World

13. 2-13 Social Stratification Systems Ascribed group memberships are defined at birth; they may include gender, family, age, caste, and ethnic or national origin. Acquired group memberships are based on one’s choice of affiliation, such as political party, religion, and social and professional organizations. Social stratification affects both business strategy and operational practices.

14. 2-14 Factors Affecting Work Ethics The desire for material wealth vs. the desire for leisure (Protestant Ethic) The expectation of success and reward Assertiveness (Hofstede’s masculinity vs. femininity index) Needs satisfaction (Maslow’s Hierarchy) Motivated employees are normally more productive, and higher productivity leads to lower costs.

15. 2-15 Fig. 2.4: The Hierarchy of Needs and Need-Hierarchy Comparisons

16. 2-16 Factors Affecting Relationship Preferences Power distance, i.e., the psychological and social distance between superiors and subordinates Individualism vs. collectivism –Individualism represents a desire for personal freedom, time, and challenge. –Collectivism represents a dependence on the organization as well as a need for a safe environment.

17. 2-17 Factors Affecting Risk-taking Behavior Uncertainty avoidance, i.e., one’s tolerance of risk Trust, i.e., one’s belief in the reliability and honesty of another Future orientation, i.e., the need for immediate vs. delayed gratification Fatalism, i.e., the belief that life is pre- destined, that events are “the will of God”

18. 2-18 Factors Affecting Information and Task Processing Selective perception of cues Communication context -low-context cultures [explicit] -high-context cultures [implicit] Information processing -monochronic [work sequentially] -polychronic [multi-task] Whereas idealistic cultures are principle driven, pragmatic cultures are detail driven.

19. 2-19 Factors Affecting the Communication Process Spoken language Written language Silent language - color associations -conversational distance -perception of time -kinesics [body language and gestures] Problems in communication may arise, even when nations share the same basic language (e.g., British, Canadian, and American English).

20. 2-20 Managerial Issues Associated with Cultural Differences Accommodation of foreigners Cultural distance [degree of similarity] Culture shock and reverse culture shock Managerial orientations –polycentric –ethnocentric –geocentric

21. 2-21 Map 2.4: A Synthesis of Country Clusters

22. 2-22 Factors Affecting Strategies for Instituting Cultural Change Value systems Cost/benefits of change Resistance to change Participation in decision-making Reward sharing Role of opinion leaders Timing Opportunities to learn from abroad

23. 2-23 Implications/Conclusions Culture is dynamic and evolves over time. Economic development and globalization are two engines of cultural change. In addition to being part of a national culture, people are simultaneously part of other cultures, such as social and professional associations and business and government organizations. [continued]

24. 2-24 Host cultures do not always expect firms and individuals to conform to their norms; in some instances they may choose to accommodate differences in traditions. International firms should make a concerted effort to identify ideas and behaviors in host countries and foreign cultures that can be usefully applied across the whole of their organizations.