globalization part 4

7/29/2019 Globalization Part 4

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MGT 3660: International Business

Session 5: Differences in Culture


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Announcement

No classes on January 23 and 25

Use these times to prepare international business presentation I

International business presentation I on January 28 and 30

Team presentation

Team adjustment

A solid class list will come out in a week

Please, submit a hard copy of closing case on time


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Warm-up Quiz

Distribution of warm-up quiz

Average: 7.41

Standard deviation: 1.58

Distribution

Congrats: Matthew, Dylan (Kase), Abjijan, Samuel (Morgan), Arjun, Nishitkumar,

Yuhyeu, Ann, Kasmi

0

2

4

6

8

10

12

14

16

18

5 6 7 8 9 10


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Warm-up Quiz

True or false questions


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Learning Objectives

After this session, we can do followings:

Explain what is meant by the culture of a society

Identify the forces that lead to differences in social culture

Identify the business and economic implications of differences in culture

Recognize how differences in social culture influence values in the workplace

Demonstrate an appreciation for the economic and business implications of cultural

change


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Where We Are

Concepts of globalization

Chapter 1

Country differences

Chapter 2-5

The global trade and investment environment

Chapter 6-9

The strategy and structure of international business Chapter 13-15

Business operation

Chapter 16-20


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Class Activities

Discuss with your team

Choose two countries that appear to be culturally diverse. Compare the cultures ofthose countries and then indicate how cultural differences influence

(a) the costs of doing business in each country

(b) the likely future economic development of that country

(c) business practices.

2-7


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Local Culture and International Business

Understanding and adapting to the local culture is important to international

companies cross-cultural literacy - an understanding of how cultural differences across and within

nations can affect the way in which business is practiced

cross-cultural literacy is important for business success


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Culture

Culture - a system of values and norms that are shared among a group of people and

that when taken together constitute a design for living where

values are abstract ideas about what a group believes to be good, right, and desirable

Values provide the context within which a societys norms are established and

justified and form the bedrock of a culture

norms are the social rules and guidelines that prescribe appropriate behavior in particular

situations

folkways - the routine conventions of everyday life

mores - norms that are seen as central to the functioning of a society and to its social

life

Society - a group of people who share a common set of values and norms


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Determinants of Culture

The values and norms of a culture evolve over time

Determinants include


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Social Structure

Social structure - a societys basic social organization

Consider the degree to which the basic unit of social organization is the individual, as opposed to

the group

the degree to which a society is stratified into classes or castes


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Individuals and Groups

In Western societies, there is a focus on the individual

individual achievement is common

dynamism of the U.S. economy

high level of entrepreneurship

But, creates a lack of company loyalty and failure to gain company specific

knowledge

competition between individuals in a company instead of than team building less ability to develop a strong network of contacts within a firm


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Individuals and Groups

In many Asian societies, the group is the primary unit of social organization

discourages job switching between firms

encourages lifetime employment systems

leads to cooperation in solving business problems

But, might also suppress individual creativity and initiative


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Social Stratification

All societies are stratified on a hierarchical basis into social categories, or social

strata individuals are born into a particular stratum

Must consider

mobility between strata

caste system - closed system of stratification in which social position is determined

by the family into which a person is born

change is usually not possible during an individual's lifetime

class system - form of open social stratification

position a person has by birth can be changed through achievement or luck

the significance placed on social strata in business contexts

class consciousness - a condition where people tend to perceive themselves in terms

of their class background, and this shapes their relationships with others an antagonistic relationship between management and labor raises the cost of

production in countries with significant class differences


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Religious and Ethical Systems

Religion - a system of shared beliefs and rituals that are concerned with the realm

of the sacred Four religions dominate society

Christianity

Islam

Hinduism

Buddhism

Confucianism is also important in influencing behavior and culture in many parts of Asia


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Religious and Ethical Systems

Ethical systems - a set of moral principles, or values, that are used to guide and

shape behavior Religion and ethics are often closely intertwined

ex. Christian or Islamic ethics


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Christianity

Christianity

the worlds largest religion found throughout Europe, the Americas, and other countries settled by Europeans

the Protestant work ethic (Max Weber, 1804)

hard work, wealth creation, and frugality is the driving force of capitalism


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Islam

Islam

the worlds second largest religion dating to AD 610 there is only one true omnipotent God

an all-embracing way of life that governs one's being

associated in the Western media with militants, terrorists, and violent upheavals

but, in fact teaches peace, justice, and tolerance

fundamentalists have gained political power and blame the West for many social

problems

people do not own property, but only act as stewards for God

supportive of business, but the way business is practiced is prescribed


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Hinduism

Hinduism

practiced primarily on the Indian sub-continent focuses on the importance of achieving spiritual growth and development, which may

require material and physical self-denial

Hindus are valued by their spiritual rather than material achievements

promotion and adding new responsibilities may not be important, or may be infeasible

due to the employee's caste


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Buddhism

Buddhism

has about 350 millions followers stresses spiritual growth and the afterlife, rather than achievement while in this world

does not emphasize wealth creation

entrepreneurial behavior is not stressed

does not support the caste system, individuals do have some mobility and can work with

individuals from different classes


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Confucianism

Confucianism

ideology practiced mainly in China teaches the importance of attaining personal salvation through right action

high morals, ethical conduct, and loyalty to others are stressed

three key teachings of Confucianism - loyalty, reciprocal obligations, and honesty - may

all lead to a lowering of the cost of doing business in Confucian societies


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Role of Language in Culture

Language - the spoken and unspoken (nonverbal communication such as facial

expressions, personal space, and hand gestures ) means of communication countries with more than one language often have more than one culture

Canada, Belgium, Spain


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Role of Language in Culture

Language is one of the defining characteristics of culture

Chinese is the mother tongue of the largest number of people English is the most widely spoken language in the world

English is also becoming the language of international business

but, knowledge of the local language is still beneficial, and in some cases, critical for

business success

failing to understand the nonverbal cues of another culture can lead to communication

failure


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Role of Education in Culture

Formal education is the medium through which individuals learn many of the

language, conceptual, and mathematical skills that are indispensable in a modernsociety

important in determining a nations competitive advantage

Japans postwar success can be linked to its excellent education system

general education levels can be a good index for the kinds of products that might sell in a

country

ex. impact of literacy rates


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Culture and Workplace

Management processes and practices must be adapted to culturally-determined

work-related values Geert Hofstede studied culture using data collected from 1967 to 1973 for 100,000

employees of IBM

Hofstede identified four dimensions that summarized different cultures


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Hofstedes dimensions of culture:

Power distance - how a society deals with the fact that people are unequal in physicaland intellectual capabilities

Uncertainty avoidance - the relationship between the individual and his fellows

Individualism versus collectivism - the extent to which different cultures socialize their

members into accepting ambiguous situations and tolerating ambiguity

Masculinity versus femininity -the relationship between gender and work roles


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Work-Related Values for 20 Countries


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Hofstede later expanded added a fifth dimension called Confucian dynamism or

long-term orientation captures attitudes toward time, persistence, ordering by status, protection of face, respect

for tradition, and reciprocation of gifts and favors

Japan, Hong Kong, and Thailand scored high on this dimension

the U.S. and Canada scored low


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Was Hofstede Right?

Hofstedes work has been criticized for several reasons

made the assumption there is a one-to-one relationship between culture and the nation-state

study may have been culturally bound

used IBM as sole source of information

culture is not staticit evolves

But, it is a starting point for understanding how cultures differ, and the implications

of those differences for managers


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Dynamics of Culture

Culture evolves over time

changes in value systems can be slow and painful for a society

Social turmoil - an inevitable outcome of cultural change

as countries become economically stronger, cultural change is particularly common

economic progress encourages a shift from collectivism to individualism

globalization also brings cultural change


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What Do Cultural Differences Mean For Managers?

It is important to develop cross-cultural literacy

companies that are ill informed about the practices of another culture are unlikely tosucceed in that culture

To avoid being ill-informed

consider hiring local citizens

transfer executives to foreign locations on a regular basis

Managers must also guard against ethnocentrism

a belief in the superiority of one's own culture


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What Do Cultural Differences Mean For Managers?

There is a connection between culture and national competitive advantage

suggests which countries are likely to produce the most viable competitors

has implications for the choice of countries in which to locate production facilities and

do business


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Next Time

Ethics in International Business

globalization part 4

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