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PART TWO COMPARATIVE ENVIRONMENTAL FRAMEWORKS International Business Chapter Two The Cultural Environments 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

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 .

Fig. 2.1: Cultural Influences on International Business

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.

The Nation as a Point of Reference The basic similarity amongst people within countries is both a cause and an effect of national boundaries. National identity is perpetuated through the rites and symbols of a country and a common perception of history. Subcultures may link groups from different nations more closely than certain groups within nations.

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 country’s official language for business purposes.

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 one’s 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 ( Hofstede’s m asculinity vs. femininity index) Needs satisfaction (Maslow’s Hierarchy) Motivated employees are normally more productive, and higher productivity leads to lower costs .

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.

Factors Affecting Risk-taking Behavior Uncertainty avoidance, i.e., one’s tolerance of risk Trust , i.e., one’s 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 pre-destined, that events are “the will of God”

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).

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. [continued]

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Ib, Chapter#02