International Business Fourth Edition CHAPTER 3 Differences in

International Business Fourth Edition CHAPTER 3 Differences in Culture 3-3 Chapter Focus What is culture/ Focus on differences in: Social structure. Religion. Language. Influence of education. Discuss cultural change. McGraw-Hill/Irwin 2003 The McGraw-Hill Companies, Inc., All Rights

3-4 What is Culture? A system of values and norms shared among a group of people and, when taken together, constitute a design for living. McGraw-Hill/Irwin 2003 The McGraw-Hill Companies, Inc., All Rights 3-5 Norms and Values Norms: Social rules and guidelines that prescribe appropriate behavior in particular

situations. Folkways: Routine conventions of everyday life. Mores: Central to functioning of society and its social life. McGraw-Hill/Irwin Values: Abstract ideas about what a group believes to be good, right, and desirable. The bedrock of culture. Have emotional significance. Freedom. 2003 The McGraw-Hill Companies, Inc., All Rights 3-6

Culture, Society and the Nation-State NationStates are political creations Not a strict one-to-one correspondence McGraw-Hill/Irwin 2003 The McGraw-Hill Companies, Inc., All Rights 3-7 Determinants of Culture Economic Philosophy Political Philosophy Education

Culture: Norms and Value Systems Language Social Structure Religion McGraw-Hill/Irwin 2003 The McGraw-Hill Companies, Inc., All Rights 3-8 Social Structure Hard to Build Teams

Individual Western Mobile Managers Entrepreneurship Group two or more individuals with a shared sense of identity Lack of Loyalty Group Nonmobile Managers Lack of Entrepreneurship Identity Lifetime

Employment Eastern McGraw-Hill/Irwin 2003 The McGraw-Hill Companies, Inc., All Rights 3-9 Social Stratification Typically defined by family background, occupation, and income. Caste: Virtually no mobility Class: some social mobility Class Consciousness:

May play a role in a firms operations McGraw-Hill/Irwin 2003 The McGraw-Hill Companies, Inc., All Rights 3-10 Religion Shared beliefs and rituals concerned with the realm of the sacred. Ethical Systems: Moral principles or values used to guide and shape behavior. Shapes attitudes toward work and entrepreneurship and can affect the cost of doing business. McGraw-Hill/Irwin 2003 The McGraw-Hill Companies, Inc., All Rights

3-11 Worlds Religions Christian I slam 20% 43% 18% Hindu Buddhist 4% 5% 10% Conf ucian Other/ Nonreligious

McGraw-Hill/Irwin 2003 The McGraw-Hill Companies, Inc., All Rights 3-12 Religion and Economic Implications Christianity Protestant Work Ethic and The Spirit of Capitalism. Islam Favors market-based systems. No payment or receipt of interest. Hinduism Asceticism may have an impact. Caste system plays a role. Buddhism Little emphasis on entrepreneurial behavior. Confucianism

Loyalty, reciprocal obligations, and honesty in dealings. McGraw-Hill/Irwin 2003 The McGraw-Hill Companies, Inc., All Rights 3-13 Language Allows people to communicate. Structures the way the world is perceived. Directs attention to certain features of the world rather than others. Helps define culture. Creates separatist tendencies? McGraw-Hill/Irwin 2003 The McGraw-Hill Companies, Inc., All Rights 3-14 Spoken Language

6% 5% 4% 3% Other 62% 20% Chinese English Hindi Russian Spanish McGraw-Hill/Irwin 2003 The McGraw-Hill Companies, Inc., All Rights

3-15 Nonspoken Language Nonverbal cues: eyebrows fingers/thumbs hand gestures feet personal space body gestures McGraw-Hill/Irwin 2003 The McGraw-Hill Companies, Inc., All Rights 3-16 Education Formal education supplements family role in teaching values and norms

For intl business, it is a determinant of national competitive advantage Medium to learn language, conceptual, and math skills Cultural norms such as respect, obedience, honesty Value of personal achievement and competition Focus on facts of social and political nature of society Obligations of citizenship McGraw-Hill/Irwin

2003 The McGraw-Hill Companies, Inc., All Rights 3-17 Hofstede Study (IBM) is a general way to look at differences between cultures. 4 dimensions: Power distance. Individualism versus collectivism. Uncertainty avoidance. Masculinity versus femininity. But: Assumption of one-to-one relationship between culture and nation-state. Research may be culturally bound. Respondents worked within a single company. Work is beginning to look dated (1967-1973). McGraw-Hill/Irwin 2003 The McGraw-Hill Companies, Inc., All Rights

3-18 Work Related Values for Selected Countries Power Distance Uncertainty I ndividualism Masculinity Avoidance Argentina 49 86 46 56 Brazil 69

76 38 49 France 68 86 71 43 I ndia 77 40

48 56 J apan 54 92 46 95 Mexico 81 82 30 69

Netherlands 38 53 80 14 U.S.A. 40 46 91 62 Table 3.1 McGraw-Hill/Irwin

2003 The McGraw-Hill Companies, Inc., All Rights 3-19 Culture is Dynamic Cultural Change McGraw-Hill/Irwin 2003 The McGraw-Hill Companies, Inc., All Rights 3-20 Culture and Competitive Advantage The connection suggests: Which countries are likely to be the most viable competitors. Which countries in which to locate production facilities and do business. McGraw-Hill/Irwin

2003 The McGraw-Hill Companies, Inc., All Rights 3-21 Culture and Ethics Do the right thing. Thomas Donaldsons Three Principles: Respect for core human values (human rights), which determine the absolute moral threshold for all business activities. Respect for local tradition. The belief that context matters when deciding what is right and what is wrong. McGraw-Hill/Irwin 2003 The McGraw-Hill Companies, Inc., All Rights