The Cultural Environment Facing Business

Chapter Objectives
To understand the major causes of
cultural differences and change To grasp behavioral factors influencing countries business practices To become familiar with cultural guidelines for companies that operate internationally To learn to discuss the problems and methods of learning about cultural environments
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Culture Defined
Culture: the specific learned norms of a society that reflect attitudes, values, and
beliefs
Major problems of cultural collision are likely to occur if: -a firm implements practices that do not reflect local customs and values and/or -employees are unable to accept or adjust to foreign customs.

Cultural Influences on Business Environment

Cultural Dynamics
Cultures consist of societies, i.e., relatively
homogeneous groups of people, who share attitudes, values, beliefs, and customs. Cultures are dynamic; they evolve over time. Cultural value systems are set early in life, but may change because of:
-choice or imposition -contact with other cultures.

Cultural Formation and Change

Societal values and customs constantly
evolve in response to changing realities. Cultural imperialism is brought about by the imposition of one culture upon that of another. Certain elements introduced from outside a culture may be known as creolization, indigenization, or cultural diffusion.

Language as a Cultural Stabilizer

Isolation from other groups, especially
because of language, tends to stabilize cultures. Some countries see language as being so important that they regulate the inclusion of foreign words and/or mandate the use of the countrys official language for business purposes.

Map 2.2: Major Languages of the World

Fig. 2.2: Importance of Major Language Groups: Two Views

Religion as a Cultural Stabilizer

Religion is a major source of both cultural

imperatives and cultural taboos. Major religions include: -Buddhism -Christianity -Hinduism -Islam -Judaism

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Map 2.3: Major Religions of the World

Social Stratification Systems

Ascribed group memberships are defined
at birth; they may include gender, family, age, caste, and ethnic or national origin. Acquired group memberships are based on ones choice of affiliation, such as political party, religion, and social and professional organizations.
Social stratification affects both business strategy and operational practices.

Factors Affecting Work Ethics

The desire for material wealth vs. the
desire for leisure (Protestant Ethic) The expectation of success and reward Assertiveness (Hofstedes masculinity vs.

Needs satisfaction (Maslows Hierarchy)

Motivated employees are normally more productive, and higher productivity leads to lower costs.

femininity index)

Fig. 2.4: The Hierarchy of Needs and Need-Hierarchy Comparisons

Factors Affecting Relationship Preferences

Power distance, i.e., the psychological and
social distance between superiors and subordinates

Individualism vs. collectivism

Individualism represents a desire for personal freedom, time, and challenge. Collectivism represents a dependence on the organization as well as a need for a safe environment.
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Factors Affecting Risk-taking Behavior

Uncertainty avoidance, i.e., ones tolerance

of risk Trust, i.e., ones belief in the reliability and honesty of another Future orientation, i.e., the need for immediate vs. delayed gratification Fatalism, i.e., the belief that life is predestined, that events are the will of God
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Factors Affecting Information and Task Processing

Selective perception of cues Communication context
-low-context cultures [explicit] -high-context cultures [implicit] Information processing -monochronic [work sequentially] -polychronic [multi-task]
Whereas idealistic cultures are principle driven, pragmatic cultures are detail driven.

Factors Affecting the Communication Process

Spoken language Written language Silent language
-color associations

-conversational distance -perception of time -kinesics [body language and gestures]

Problems in communication may arise, even when nations share the same basic language (e.g., British, Canadian, and American English).

Managerial Issues Associated with Cultural Differences

Accommodation of foreigners Cultural distance [degree of similarity] Culture shock and reverse culture shock Managerial orientations
polycentric ethnocentric geocentric

Factors Affecting Strategies for Instituting Cultural Change

Value systems Cost/benefits of change Resistance to change Participation in decision-making Reward sharing Role of opinion leaders Timing Opportunities to learn from abroad

Implications/Conclusions
Culture is dynamic and evolves over time.
Economic development and globalization are two engines of cultural change. In addition to being part of a national culture, people are simultaneously part of other cultures, such as social and professional associations and business and government organizations.
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 Host cultures do not always expect firms

and individuals to conform to their norms; in some instances they may choose to accommodate differences in traditions. International firms should make a concerted effort to identify ideas and behaviors in host countries and foreign cultures that can be usefully applied across the whole of their organizations.