CULTURAL ENVIRONTMENT AND BUSINESS

By: Prof. Dr. Djoko Suryo

I. INTRODUCTION


One of the important non economic factors which affect the performance of the business organization is the Social-Cultural Environment. The impact of these social and cultural factors with their basic local values and traditions as well as the global interaction on the formation on the business opportunities can be identified in several part of the Asian Countries, such as Japan, Korea, China, and Indonesia. The relationship between Culture, Economic Institution and non-Economic Institution are believed to be very closed.

One of the prominent social theories on the relation between culture and modern economic system was the theory of the origin of the Modern/ Western Capitalism forwarded by Max Weber. In his work on The Protestant Ethic and the Spirit of Capitalism, Weber argued that the rise of modern capitalism was supplied by the worldly asceticism of Puritanism, as focused through the concept of the calling. According to him, that the Calvinist (Protestant) ethic introduced an activism into the believers approach to worldly affairs, a drive to mastery in a quest for the virtue in the eyes of God.

Robert Bellah, in effort to apply Max Webers sociology of religion theory, examined the origin of the Japanese capitalism / Modern Japanese entrepreneurship as showed in his work on Tokugawa Religion, The Cultural roots of the Modern Japan (published in 1957). Bellah argued that one of the essential cultural roots of the modern Japan in the Tokugawa period was the values and ethic of Bushido, the Way of the Warrior (the bushi or samurai embodied to the central Japanese values or the national ethic). Bushido means the determined will to die. It was a kind of the religious dimension of Tokugawa period and the economic ethic of the merchant class.

Robert F. Dernberger, in his article Capitalism and the East Asian Miracle, attempt to call the genus of East Asian capitalist countries as Confucian capitalism. According to Robert F. Dernberger, each of these economies had a cultural heritage related to Confucian values such as a greeter sense of community or group identity and interdependence, a much more active role of the government in initiating and directing activities in the economy.

S. Gordon Redding, in his work The Spirit of Chinese Capitalism (1990), argued that the East Asian value system, the Spirit of Chinese Capitalism, can be held to be significant in explaining the success of what may be called petty capitalism ( that is, family enterprise). In similar effort, Cliffort Geertz examined the cultural roots of the Indonesia entrepreneurship in the Muslim merchants or traders groups and aristocratic groups as shown in his work on The Princes and the Peddlers and the History of Town.

II. DEFINITION AND CONCEPT OF CULTURE & VALUES



Culture is a system of knowledge and ideas (cultural knowledge), which consciously or unconsciously belongs to a unit of society and is acquired in accumulative manner, that functions as the directive and guidance for attitude and behavior of the society that bears this system (Goodenough, 1971, Spradley, 1972, and Geertz, 1973). Culture consist in patterned ways of thinking, feeling and reacting, acquired and transmitted mainly by symbols, constituting the distinctive achievements of human groups, including their embodiments in artifacts; the essential core of culture consist of traditional ideas and especially their attached values (Kluckhohn, 1951: 85.5).

Culture as transmitted and created contents and patterns of values, ideas, and other symbolic meaningful systems as factors in shaping of human behavior and artifacts produced through behavior (Kroeber and Parson, 583). Culture as the collective programming of the mind which distinguishes the members of human group from another (Geert Hofstede, 1980, 25).

Values is a conception explicit or implicit, distinctive of an individual or characteristic of a group, of the desirable which influences the selection from available modes, means and end of actions (Kluckhohn, 1951a: 395). Values are distinguished into values as the desired and values as desirable.

III. CULTURAL VALUES ORIENTATION

Five categories of cultural values orientation of a society according to Kluckhohn and Strodtbeck (1961): Human nature orientation (orientation toward relationship between human and life (evil-mixedgood). Man-nature orientation (orientation toward the relationship between man and environment (subjugation-harmony-mastery). The orientation in time (orientation toward pastpresent-future). The orientation toward activity (orientation between human and works). Relational orientation (orientation toward human and others relationship).

IV. MORAL UNIVERSAL AS CULTURAL REALITIES AND BUSINESS

    

People Ought to Respect the Others with Whom They Seek to Reach. Agreement as Willing and Interested Persons. People Ought to Keep Their Promises. People Ought to Make Their Communications Honest and Not Deceptive. People Ought to Honor Their Reciprocal Obligations.

V. MORAL PRINCIPLES THAT MAKE MORALITY CRIDIBLE



 

Five General Principles are as follows: Individuals Ought to Choose as Spouses and Sexual Partners those Persons outside Their Natural Families with whom it is Fitting for Them to Mary have Sexual Relations. Parents Ought to Care for, protect, and educate Their Children. People Should Not Exercise Physical Violence to the Injury of Others Except as means to Defend Themselves against, and to disarm, Those Who Threaten or Exercise Physical Violence against them. Social Goods and Burden Ought to Be Allocated in Keeping with Publicly Recognized Rules and Procedures the accord to People What is their Due. People Should Not Steal.

VI. CHARACTERISTIC OF ASIAN CULTURAL TRAITS AND GROUPS BEHAVIOUR AND BUSINESS  The religious and civic traditions of Confucianism, Buddhism, Hinduism and Islam in Asian Societies have transmitted a legacy of behavior, attitudes and beliefs which have deep and constantly evolving impact on Asian Entrepreneurial culture.  Culture affects government policies, social norms, consumption patterns, business transactions, management practices and labour relations.  Cultural traits vary according to ethnic, religious and national groups.  However, it is possible to identify certain enduring characteristics of Asian social organization and group behavior which are present across the region.

Group Reference : Group versus Individual Identity.  Group belonging is asserted before individual instinct;  Compliance with group norms is expected;  Individualistic behavior is condemned;  Individual transaction are based on intragroup affiliation leading to networking.

Extended Family and Nepotism Family support is considered the norm;  Organization are seen as extension of the family support structure and hence as providers of social welfare;  It is considered proper behavior to give preference to family members in business dealing.


VII. THE CASE OF KOREA, JAPAN AND CHINESE OVERSEAS 1. Korean Confucian Ethical Codes. The essence of Confucian Ethical Codes could be in four items:
Politeness, Harmony, Loyalty, and Educational-based social status system.
2.

Confucian Ethical Codes define the five cardinal human relations:

Between the king and his subject; Between father and son; Between husband and wife; Between young and old; and Between friends.

3.

Based on the concept of the Confucian ethical codes, employees attitudes and behaviors toward the their seniors and superiors are defined as the following five items: Treating seniors as elders; Respecting seniors; Compliance with seniors opinions; Obedience to superiors directions; Accepting superiors informal directions.

The Korean CHAEBOL : The Korean Modern Business Players



The term chaebol means financial clique, it is used to describe a large business group, originally created by a talented entrepreneur and still largely family controlled, and spread over many diversified area. The chaebol are the offspring of Koreas forced industrialization.

The Ten Largest Korean Chaebol (Group: Business sectors)

          

SAMSUNG: Electronic, aerospace, chemicals, semiconductors, food, textile, service HYUNDAI: Motor vehicles, electronics, oil, heavy industries, engineering, machinery, construction materials. LUCKY: Electronics, chemicals, oil. GOLDSTAR: insurance, telecommunication, engineering, instruments. DAEWOO: Motor vehicles, machinery, electronics, distribution, shipbuilding, construction, finance. SUNKYONG: Energy, chemicals, distribution, shipping. SSANGYONG: Motor vehicles, cement, oil. HANJIN: Airline, shipping, machinery, construction. KIA : Motor vehicles, machinery, steel. LOTTE: Distribution, food and beverage, chemicals. HANWHA: Energy, petrochemicals, distribution.

Japaneses Bushido Ethical Codes:

1. 2.

The Japanese KAISHA The Japanese KEIRETSU

Japanese KAISHA


The Javanese Firms as typically Japanese; Devoted Employee and Patient Capital. The devotion of Javanese employee to their kaisha is the resulted of two factors: 1. The strong desire of the Japanese to identify with a group rather than striving for individual achievement; 2. As a member of a group, employee is implicitly offered life-long employment in exchange for life-long commitment and loyalty. In return, it is expected that the employees future is closely tied to the wellbeing of the firm as life-long employment not only offers job security, but also reduces lateral job mobility.

Japanese KEIRETSU


Most of the larger firm are connected with affiliated companies with whom they form a keiretsu system whereby companies maintains long-standing business ties with each other that are sometimes, but not always, cemented by mutual ownership of some of each others share. Japans industrial landscape is dominated by six very large keiretsu, MITSUBISHI, MITSUI, SUMITOMO, FUYO, DAIICHI-KANGYO AND SANWA.

The Overseas Chinese Conglomerate: The Third Distinctive Type of Regional Local Asian Business Players


Historical Origin: The Chinese Diasporas began in South China with different waves of emigration starting as early as the seventh century and accelerating during the nineteenth and twentieth centuries. Most of them established large immigrant communities throughout Southeast Asia. Confident of their eventual return to the Chinese mainland, these immigrants avoided investing in illiquid assets, preferring to specialize in commerce and service occupations.

Historical Origin: Their trading networks grew and at certain stages succeeded in providing an alternative, parallel framework to colonial European multinationals and trading companies. The Communist Revolution in China triggered another wave of the ethnic Chinese Diasporas, with many established Chinese capitalist fleeing to Hong Kong and Taiwan. This group has been more inclined towards industry and manufacturing and has gradually linked up with existing Overseas Chinese network.

Major Overseas Chinese Group in Asia Pacific Countries



INDONESIA
Salim (Liem Sioe Liong ) Sinas Mas (Eka Tjipta Wijaya) Astra (FounderW. Soerajaya)

MALAYSIA
Kuoak Group (Robert Kuok) Hong Leong (Quek Leng Chan) Genting Group (Lim Goh Tong)

THAILAND
Chaeroen Pokphand (Dhanin Chearavanon); Bangkok Bank (Chatri Sophonpanich) Siam Motors (Khunying Phornthip).

PHIPIPPINES
Fortune Tobacco (lucio Tan); J.G. Summit Holdings (John Gongkonwei); SM Prime Holding (Heny Sy)

SINGAPORE
Hong Leong (Kwek LengJoo); United Overseas Bank (Wee Cho Woo); Overseas Chinese Bankning Corporation (Lee Seng Wee).

TAIWAN
Formosa Plastic (Yung Ching Wang); President Enterprises (Kao Chin Yen) Acer Group (Stan shih).

HONG KONG
Hutchinson Whampoa & Cheung Kong Hong Kong Electric (li Ka Shing); Sun Hung Kai (Kwok brothers) New World (Cheng Yu Tung)

VIII. INDONESIAN CULTURE AND ITS IMPACT UPON BUSINESS Culture History: the Indonesia Republics History; The Pattern of Authority; Indonesian society in the industrial perspective; The diversity of the people: Pluralism / Multiculturalism.

IX. SOME ASPECT OF CULTURE OF BUSINESS IN INDONESIA Cultural diversity The Indonesian Way Feeling and emotions Relationship based on worth-wile projects and mutual friendship, trust and benefit; Respect; Women in government and business Islam

Non Javanese Javanese cultural influences. Traditional attitude: gotong royong, unggahungguh, sumonggodawuh,alon-alon asal klakon, tuna satak bathi sanak, gemi nastiti ngati-ati dsb. (Jv.). Conflict with modern business practices Peacefulness and harmony Self centeredness The unsaid

Friends Face- and losing it Humor Fate and curiosity The works place Paternalism and sharing Village influences Changing attitudes affected by rapid social change.

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