Lecture 3

Differences in Cultures

Outline
A.

B.
C. D. E. F.

What is Culture? National Culture Determinants of Culture Culture Change Culture & Workplace Implications for International Business

A. What is Culture?

Culture

A system of value & norms that are shared among a group of people Constitute a design for living

Values

Abstract ideas about good or bad

Norms

Social rules and guidelines

B. National Culture

Definition of Society

A group of people that share a common set of values & norms

common culture

Not strict to one-to-one correspondence between a society & a nation-state Political creations Contain a single culture or several distinct cultures Examples:

Nation-states

Canada: 3 distinct cultures in one country: an Anglo culture, a French speaking Quebecois culture, and a Native American culture

C. Determinants of Culture
Factors affecting Culture Norms & Values
Religion

Social Structure
Culture Norms & Value Systems Language Education

Political Philosophy

Economic Philosophy

C. Determinants of Culture: Social Structure

Social Structure

Basic social organization to explain differences in cultures Measured by 2 dimensions

Individual vs. Group Class system vs. Caste system Building block of many Western societies An association of 2 or more individuals who: have a shared sense of identity interact with each other in structured ways on the basis of a common set of expectations about each others behavior

Individual

Group

C. Determinants of Culture: Social Structure

Social Stratification

Caste system
A form of closed system of stratification in which social position is determined by: ~ the family into which a person is born Change in that position is usually not possible during an individual's lifetime Examples: Japan, India

Five different levels of the Indian caste system

1. Priest 2. Ruler, Warrior, Landowner 3. Merchants 4. Artisans, Farmers 5. Outside class system known as Untouchables

C. Determinants of Culture: Social Structure

Social Stratification British class system

1. The upper class involve wealthy and powerful people 2. The upper-middle class members involve in important occupations and the prestigious professions 3. The lower-middle class members involve in clerical work and the less prestigious professions
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Class system
A form of open social stratification in which the position a person has by birth can be changed through his or her achievement or luck Examples: US, Britain, China

C. Determinants of Culture: Social Structure

Significance of Social Stratification

Important implications for the management & organization of businesses In cultures where there is a great deal of consciousness over the class of others

The way individuals from different classes work together (i.e. management and labor):
may be very prescribed & strained in some cultures (e.g. Britain) or have almost no significance in others (e.g. Japan)

Class consciousness

A condition where people tend to perceive themselves in terms of their class background
This shapes their relationships with others

Example: Class consciousness in China

C. Determinants of Culture: Religious & Ethical Systems

Religion

A system of shared beliefs & rituals that are concerned with the realm of the sacred A set of moral principles or values used to guide & shape behavior The ethical practices of individuals within a culture are often closely intertwined with their religion

Ethical Systems

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C. Determinants of Culture: Religious & Ethical Systems

Four largest religions

Christianity Islam

Hinduism

Buddhism

Confucianism:

is not a religion influences behavior & shapes culture in many parts of Asia
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C. Determinants of Culture: Religious & Ethical Systems

Christianity

Largest religion Common throughout Europe, the Americas, & other countries settled by Europeans Three major branches

Protestant Roman Catholic Eastern Orthodox

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C. Determinants of Culture: Religious & Ethical Systems

Economic Implications of Christianity

Protestant Work Ethic

focuses on hard work, wealth creation for the glory of God emphasizes on individual religious freedom

Protestant

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C. Determinants of Culture: Religious & Ethical Systems

Islam:

is practiced mainly in the same underlying roots as Christianity suggests the same underlying societal mores extends the idea to more of an all-embracing way of life that governs one's being prescribes many more "laws" on how people should act & live that are entirely counter the US "separation of church & state"

Emphasis of Koran () Countrys law is based on the idea of religion

No separation of church & state ()

Cant accept interest

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C. Determinants of Culture: Religious & Ethical Systems

Economic Implications of Islam

Islam people do not own property

Act as stewards for God & thus must take care of which they have been entrusted with

They use property in a righteous, socially beneficial, & prudent manner

Not exploit others for their own benefit Have obligations to help the disadvantaged Example: Islamic Banking in Pakistan (Global Business Today: P.109)
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The way of practicing business is prescribed

C. Determinants of Culture: Religious & Ethical Systems

Hinduism

Practiced primarily on the Indian sub-continent Focuses on the importance of achieving spiritual growth & development

Require material and physical self-denial

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C. Determinants of Culture: Religious & Ethical Systems

Economic Implications of Hinduism

Hindus are valued by their spiritual rather than material achievements

Not the same work ethic or focus on entrepreneurship found in some other religions

Promotion & adding new responsibilities may not be the goal of an employee, or may be infeasible due to the employee's caste Caste systems & religious beliefs exist Negative economic consequences Example: McDonalds and Hindu Culture (Global Business Today: P.125-126)

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C. Determinants of Culture: Religious & Ethical Systems

Buddhism

Practiced mainly in South East Asia Stresses spiritual growth & the afterlife Does not support the caste system Represents a religion which is between Protestantism & Hinduism

Buddhist societies may represent more fertile ground for entrepreneurial activity than Hindu culture

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C. Determinants of Culture: Religious & Ethical Systems

Confucianism

Practiced mainly in China Teaches the importance of attaining personal salvation through right action Not concerned with the supernatural & has little to say about the concept of a supreme being or an afterlife

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C. Determinants of Culture: Religious & Ethical Systems

Economic Implications of Confucianism

3 key teachings of Confucianism

Loyalty Reciprocal obligations Honesty

Lowering of the cost of doing business in Confucian societies

Example: Japanese auto companies & their suppliers are facilitated by loyalty, reciprocal obligations, & honesty Costs of doing business are probably higher in countries where these relationships are more adversarial & not bound by these same values
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C. Determinants of Culture: Language & Education

Language

Spoken language

Examples: English, Cantonese Examples: Facial expression, tone of voice, gestures

Unspoken communication

Education

Knowledge-based Consists of training and educational opportunities Enhances competitive advantage of the firm
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D. Culture Change

Cultural change characteristics:

Improvement in the quality of life (economic progress) Availability of education (economic progress)

Urbanization (economic progress)

Rise of global corporations e.g. Multi-National Corporations (MNCs)

Advances in transportation & communication technology

Example: Matsushitas & Japans Changing Culture (Global Business Today: P.119120)
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E. Culture & Workplace

How does a society's culture impact on the values found in the workplace? Need to vary management process & practices to take different culturally determined work-related values into account

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F. Implications for International Business

Cross-Cultural Literacy

International businesses that are ill-informed about the practices of another culture are unlikely to succeed in that culture Method:

Regularly rotate & transfer people internationally Deal negotiations Incentive pay systems for salespeople Structure of organization Name of brand & product Relationship between management & labor Promotional manner

Aspects that should pay more attention:

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F. Implications for International Business

Cultural & Competitive Advantage

Connection between culture & competitive advantage is important for international business Reasons

1) Connection suggests the most viable competitors

Example: US enterprises face competitors from Pacific Rim nations where having competitive advantages of free market economics, Confucian ideology, group-oriented social structures & advanced education systems E.g. South Korea, Taiwan, Japan & China

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F. Implications for International Business

2) Connection provides information with the businessmen about the suitable countries to locate production facilities & do business
Consider 8 factors when Making Investment Decision:

Market size

Labour cost

Stage of economic development

Education Religion system stress Access to Social Linguistic work stratification group market
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F. Implications for International Business

Conclusion

Cultural values can influence:

the costs of doing business in different countries the countrys competitive advantage Some positive & negative aspects of US & Japanese culture contribute to their economic success look for potential competitors in world markets decide where to undertake international expansion

Research

Understanding different cultures have implications to:

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F. Implications for International Business

Culture & Business Ethics

In the West

The legal system helps to assure people that business agreements will be honored Emergence of other institutions help to assure people that business agreements will be honored, like guanxi networks Example:
Guanxi-Ties that Bind (Global Business Today: P.9092)

In nations that lack a similar legal tradition

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