Sociocultural Forces

McGraw-Hill/IrwinInternational Business, 11/e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.

chapter six

6-3

Learning Objectives

Explain the significance of culture for international business

Identify the sociocultural components of culture

Discuss the significance of religion to businesspeople

Explain the cultural aspects of technology

Discuss the pervasiveness of the Information Technology Era

6-4

Learning Objectives

Explain the importance of the ability to speak the local language

Discuss the importance of unspoken language in international business

Discuss the two classes of relationships within a society

Discuss Hofstede’s four cultural value dimensions

6-5

Rules of Thumb for Cross Culture Business

• Be prepared

• Slow down

• Establish trust

• Understand the importance of language

• Respect the culture

• Understand the components of culture

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What is Culture

• The sum total of beliefs, rules, techniques, institutions, and artifacts that characterize human populations– Learned– Interrelated– Shared– Defines the boundaries

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Ethnocentricity

• Ethnocentricity

– Belief in the superiority of one’s own ethnic group

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Living with Other Cultures

• Realize that there are many different cultures

• Learn the characteristics of those cultures– Spend a lifetime in a country

– Do training program

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Culture Affects All Business Functions

• Marketing– Variation in attitudes

and values requires firms to use different marketing mixes

• P&G Japanese Camay commercials

• Disneyland Paris

• Human Resource Management– Evaluation of

managers

• Production and Finance– Attitudes toward

authority– Attitudes toward

change

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Sociocultural Components

• Culture is:– Aesthetics– Attitudes and beliefs– Religion– Material Culture– Language– Societal organization– Legal characteristics– Political structures

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Aesthetics

• Culture’s sense of beauty and good taste– Art conveys meaning

• Colors, symbols, numbers--Nike air• Architectural style differences• feng shui

• Music and Folklore– Musical tastes vary– Folklore discloses way of life

• Cowboys in Chile or Argentina• Mexican singing cricket

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Attitudes and Beliefs

• Attitudes Toward Time– Vary across cultures– Difficult area for some

Americans– Directness and drive

• Perceived to be rudeness

– Deadlines• Liability abroad

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Attitudes Toward Achievement and Work

• Germans put leisure first and work second

• The demonstration effect– Result of having seen others with desirable

goods

• Job Prestige – The distinction between blue-collar workers

and office employees

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Religion

• Responsible for many of the attitudes and beliefs affecting human behavior– Work Ethic

• Protestant work ethic– Duty to glorify God by hard work and the

practice of thrift

• Confucian work ethic– Drive toward hard work and thrift; similar to

Protestant work ethic

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Will this work?

6-16

Primary Asian Religions

Hinduism– Caste system

• entire society is divided into four groups (plus the outcasts) and each is assigned a certain class of work

• Buddhism– Reform of Hinduism

• Jainism (Mahavira a contemporary of Buddha)– Nonviolence a major principle

• Sikhism – Bridge between Hinduism and Islam

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Primary Asian Religions, cont’d.

• Confucianism– Inseparable from Chinese culture

• Taoism– Lao Tzu, contemporary of Confucius

• Shintoism– Indigenous to Japan

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Islam

• Youngest and second largest faith

– 1.3 billion followers

– Comparison: Christianity has 2 billion adherents

• Muhammad is Founder– Prophet of God and head of

state

• Holy Book Koran

• Five Pillars of Faith– Confession of faith– Five daily prayers– Charity– Ramadan fast– Pilgrimage to Mecca

• Jihad – holy war

• Sunni-Shia Conflict– Conflict gives rise to violent

clashes

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Religious Population of the World

Insert Figure 6.1

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Animism

• Spirit worship, incl. magic, witchcraft

• Everything in nature has its own spirit or divinity

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Material Culture

• Material Culture– All human-made objects– concerned with how people make things

(technology) and – who makes what and why (economics)

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Technology

• Technology– Mix of usable knowledge that society

applies and directs toward attainment of cultural and economic objectives

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Importance of Technology

– Enables a firm to be competitive in world markets.

– Can be sold or be embodied in the company’s products

– Can give a firm confidence to enter a foreign market

– Enables the firm to obtain better than usual conditions for a foreign market investment

– Enables a company with only a minority equity position to control a joint venture

– Can change the international division of labor

– Causes major firms to form competitive alliances

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Material Culture - Technology

• Cultural Aspects of Technology– Includes skills in marketing,

finance, and management– People not always ready to

adapt to changes technology brings

• Technological Dualism– The side-by-side presence

of technologically advanced and technologically primitive production systems

• Appropriate Technology– The technology (advanced,

intermediate, or primitive) that most closely fits the society using it

• Boomerang Effect– Situation in which technology

sold to companies in another nation is used to produce goods to compete with those of the seller of the technology.

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Information Technology

• Information Technology Era

– As early as 2000 the Internet economy

• had reached $850 billion

• exceeded the size of the life insurance and real estate industries

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Spoken Language

• Most apparent cultural distinction

• Spoken languages demarcate cultures– Switzerland: four separate cultures

• Many languages can exist in a single country, but one usually serves as communication vehicle– Lingua franca or link language– English primary language of business

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Language

• Translation– The ability to speak the language well does

not eliminate the need for translator

• Back Translation– To avoid translation problems

• Japanese hotel: “You are invited to take advantage of the chambermaid.”

• Bangkok dry cleaner: “Drop your trousers here for best results.”

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Language Issues

• Technical words do not exist in all languages– Usually use English

• Many cultures avoid saying anything disagreeable

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Unspoken Language

• Nonverbal communication– Gestures vary tremendously from one region to

another– Closed doors convey different meanings– Office size has difference meanings in various

cultures– Conversational distance small in East– Gift giving has specific etiquette in each culture

• Gift or bribe?• Questionable Payments

6-30

2003 Corruption Index Scores and Ranking

6-31

Societal Organization

• Kinship

– Extended Family• includes blood and marriage relatives

– Member’s responsibility• Although the extended family is large, each member’s feeling

of responsibility to it is strong

• Associations

– Social units based on age, gender, or common interest, not on kinship

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Societal Organization

• Associations– Age is important market segment criterion– Gender

• As nations industrialize, more women enter the job market and assume greater importance in the economy

– Free association• people joined together by a common bond:

political, occupational, religious or recreational

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Understanding National Cultures

• Hofstede’s Dimensions of Culture

• Individualism versus Collectivism

• Large versus Small Power Distance

• Strong versus Weak Uncertainty Avoidance

• Masculinity versus Femininity

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Scores for Hofstede’s Value Dimensions

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Individualism versus Collectivism

• Collectivistic cultures– people belong to groups that are supposed

to look after them in exchange for loyalty

• Individualistic cultures– People look after only themselves and the

immediate family

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Large versus Small Power Distance

• Power distance – the extent to which members of a society

accept the unequal distribution of power among individuals• In large-power-distance societies

– employees believe their supervisors are right; employees do not take any initiative in making non-routine decisions

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Strong versus Weak Uncertainty Avoidance

• Uncertainty avoidance – Degree to which members of a society feel

threatened by ambiguity and are rule-oriented– Employees in high uncertainty-avoidance cultures

tend to stay with their organizations• Japan, Greece, and Portugal

– Those from low uncertainty-avoidance nations are more mobile

• United States, Singapore, and Denmark

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Plot of Nations: Power distance and Uncertainty Avoidance

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Plot of Nations: Individualism and Power Distance

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Masculinity versus Femininity

• the degree to which the dominant values in a society emphasize assertiveness, acquisition of money and status– Masculinity

• achievement of visible and symbolic organizational rewards

– Femininity• emphasize relationships, concern for

others, and the overall quality of life