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INTERNATIONAL BUSINESS MANAGEMENT

LESSON 17
THE CULTURE ENVIRONMENTS FACING BUSINESS

To Change customs is a difficult thing. -Lebanese Proverb that culture-the specific learned norms based on attitudes,
Objectives values, and beliefs that exist in every nation-is an integral part of
external environments. This chapter will first examine cultural
• To discuss the problems and methods of learning about
awareness, especially the need for building it. Second, the
cultural environments chapter will discuss the causes of cultural differences, rigidities,
• To explain the major causes of cultural difference and change and changes. Third, the chapter will describe behavioral factors
• To examine behavioral factors influencing countries’ business that affect the conduct of business internationally. Finally, the
practices chapter will explore why businesses and individuals adjustor
• To examine cultural guidelines for companies that operate don’t adjust-to another culture.
internationally Figure 6.1 Culture Influences on International business
Introduction
The opening case illustrates how important it is for companies
to adjust when entering different cultures. PRI’s lack of
adjustment led to its failure; Harvey Nichols’s adjustments are
leading to its success. The major problems of cultural collision
in international business are when
• A company implements practices that work less well than
intended.
• A company’s employees encounter distress because of an
Cultural Awareness
inability to accept or adjust to foreign behaviors.
Building cultural awareness is not an easy task, and no fool-
Business employs, sells to, buys from, is regulated by, and is proof method exists for doing so. As we just said, culture
owned by people. Because international business includes consists of specific learned norms based on attitudes, values,
people from different cultures, every business function and beliefs, all of which exist in every nation. Visitors remark
on cultural differences, experts write about them, and interna-
tional businesspeople find that they affect operations. Yet
controversy surrounds these differences because people disagree
on what they” are, whether they are widespread or exceptional
differences, and whether the differences are deep-seated or
superficial. Further, culture cannot easily be isolated from such
factors as economic and political conditions. For example, an
opinion survey of a country’s citizens that measures, say,
attitudes toward buying a new product may reflect a response to
temporary economic conditions rather than basic values and
beliefs that will have lasting effects on the product’s acceptance.
Some differences, such as those regarding acceptable attire, are
discerned easily; others may be more difficult to perceive. All
managing a workforce, marketing output, purchasing supplies, people have culturally ingrained responses to given situations
dealing- with regulators, securing funds-is subject to potential and sometimes expect that people from other cultures will
cultural problems. An international company must be sensitive respond the same way as people in their own culture do. For
to these cultural differences in order to, predict and control its example, in the opening case, the British salesmen for PRI
relationships and operations. Further, it should realize that its budgeted their time and so regarded drinking coffee and
accustomed way of doing business may not be the only or best chatting about nonbusiness activities in a cafe as “doing
way. When doing business abroad, a company should first nothing,” especially if there was “work to be done.” In fact,
determine what business practices in a foreign country differ their compensation system did not give them the privilege of
from those it’s used to. Management then must decide what, if spending much time on each business transaction. The Arab
any, adjustments are necessary to operate efficiently in the businessmen had no compulsion to finish at a given time,
foreign country. viewed time spent in a cafe as “doing something,” and consid-
ered “small talk” an indication of whether they could get along
You learned that companies need to understand external with potential business partners. Because the Englishmen
environments to operate efficiently abroad. Figure 6.1 illustrates

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believed “you shouldn’t mix business and pleasure,” they The more countries in which a company does business, the

INTERNATIONAL BUSINESS MANAGEMENT


became irritated when friends of the Arab businessmen joined more cultural nuances it must consider.
their conversations. In contrast, the Arabs felt “people are more A company may handle foreign operations on its own or
important than business” and saw nothing private about contract with another company to handle them. The risk of
business transactions. making operating mistakes because of cultural misunderstand-
Some people seem to have an innate ability to do and say the ings goes down if it turns foreign operations over to another
right thing at the right time, and others offend unintentionally company at home or abroad that is experienced in the foreign
or misrepresent what they want to convey. Nevertheless, there is country. If the operations are contracted to a company abroad,
general agreement that businesspeople can improve their then each company needs some cultural awareness to anticipate
awareness and sensitivity and that training about other cultures and understand the other company’s reactions.
will enhance the likelihood of succeeding in those cultures.
Strategies For Dealing With Cultural Differences
Researching descriptions of a specific culture can be instructive. After a company identifies cultural differences in the foreign
But managers must carefully assess the information they gather country where it intends to do business, must it alter its
because it sometimes presents unwarranted stereotypes, offers customary practices to succeed there? How can it avoid misrepre-
an assessment of only a segment of the particular country, or senting its intent? Can individuals overcome adjustment
reports outdated information. In a given society, managers can problems when working abroad? What strategies can a com-
also observe the behavior of those people who have the respect pany follow to get host cultures to accept the innovations it
they would like themselves. Of course, it helps to study the would like to introduce? There are no easy answers to these
overseas market directly. questions.
There are so many cultural variations that businesspeople Making Little or No Adjustment
cannot expect to memorize all of them for every country. Wide Although the opening case illustrates the advantages of
variations exist even in addressing people. For example, it may adjusting, such as Harvey Nichols providing drivers’ lounges
be difficult to know whether to use a given name or surname, and prayer rooms in its Saudi Arabian department store,
which of several surnames to use, and whether a wife takes her international companies sometimes have succeeded in introduc-
husband’s name. Making a mistake may be construed by foreign ing new products, technologies, and operating procedures to
businesspeople as ignorance or rudeness, which may jeopardize foreign countries with little adjustment. That’s because some of
a business arrangement. Fortunately, there are guidebooks for these introductions have not run counter to deep-seated
particular geographical areas, based on the experiences of many attitudes or because the host society is willing to accept foreign
successful international managers. A manager may also consult customs as a trade-off for other advantages. Bahrain has
with knowledgeable people at home and abroad-from govern- permitted the sale of pork products (otherwise outlawed by
mental offices or in the private sector. religious law) as long as they are sold in separate rooms of
Not all companies need to have the same degree of cultural grocery stores where Muslims can neither work nor shop.
awareness. Nor must a particular company have a consistent Often local society looks on foreigners and its own citizens
degree of awareness during the course of its operations. differently. For example, Western female flight attendants are
Companies usually increase foreign operations over time. They permitted to wear jeans and T-shirts in public when staying
may expand their cultural knowledge as they move from one to overnight in Jidda, Saudi Arabia, even though local women
multiple foreign functions or locations, from similar to cannot. Members of the host society may even feel they are
dissimilar foreign environments, and from external to internal being stereotyped in an uncomplimentary way when foreigners
handling of their international operations. A company that is adjust too much. Moreover, Western female managers in Hong
new to international business may need only a minimal level of Kong say local people see them primarily as foreigners, not as
cultural awareness, but a highly entrenched company needs a women. There and elsewhere, foreign women are accepted as
high level of awareness because of its multifunctional opera- managers more readily than local women are.
tions in multiple countries.
Some countries are relatively similar to one another, usually
When a company engages in few foreign functions-for example, because they share many attributes that help mold their cultures,
when it just exports its home-country production-it must be such as language, religion, geographical location, ethnicity, and
aware of only those cultural factors that may influence its level of economic development. A company should expect
marketing program. Consider advertising, which may be fewer differences (and have to consider fewer adjustments)
affected by the target market’s perception of different words and when moving within a cluster (an Ecuadorian company doing
images. A company undertaking a purely resource-seeking business in Colombia) than when moving from one cluster to
foreign activity by manufacturing abroad can ignore the effects another (an Ecuadorian company doing business in Thailand).
of cultural variables on advertising but must consider factors However, there still may be significant differences within similar
that may influence management of a foreign workforce, such as countries that could affect business dealings. Managers may
the management styles and operational practices most likely to expect that seemingly similar countries (those within clusters)
motivate its workforce. For multifunctional activities, such as are more alike than they really are; a company may be lulled into
producing and selling a product in a foreign country, a company a complacency that overlooks important subtleties. For
must be concerned with a wide array of cultural relationships.

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example, women’s roles and behaviors differ substantially from translations. However, good international business managers
INTERNATIONAL BUSINESS MANAGEMENT

one Arab country to another. use rules such as the following.


Communications • Get references on the people who will do the translation for
Thus far, we’ve seen how language affects culture-and interna- you.
tional business. We now look at problems of • Make sure your translator knows the technical vocabulary of
communications-translating spoken and written language. your business.
These problems occur not only in moving from one language • Do a back translation for written work by having one person
to another but also in communicating from one country to go, say, from English to French and a second person
another that has the same official language. Second, we discuss translate the French version back into English. If it comes
communications outside the spoken and written language, the back the same way it started, it is probably satisfactory.
so-called “silent language.”
• Use simple words whenever possible, such as ban instead of
Spoken and Written language Translating one language interdiction.
directly into another can be difficult, making international
• Avoid slang. Such U.S. phrases as blue chip stocks and
business communication difficult. First, some words do not
ballpark figures are likely to be meaningless to most
have a direct translation. For example, there is no one word in
businesspeople outside the United States.
Spanish for everyone who works in a business (i.e., employees).
Instead, there is a word, empleados, which means “white-collar • When you or your counterpart is dealing in a second
workers,” and another, obreros, which means “laborers.” This language, clarify communications in several ways (such as by
distinction shows the substantial class difference that exists repeating in different words and asking questions) to assure
between the groups, and it affects international business that all parties have the same interpretation.
because there may be miscommunication when managers in • Recognize the need for and budget from the start for the
Spanish-speaking and English-speaking countries come extra time needed for translation and clarification.
together. Second, languages and the common meaning of When dealing with someone from another country that shares
words are constantly evolving. For example, Microsoft pur- your official language, don’t assume that communication will
chased a thesaurus code for its Spanish version of Word 6.0, go smoothly. For example, between the United States and the
but the meaning of many synonyms had changed and become United Kingdom, approximately 4,000 words have different
insulting. The company corrected the software after newspapers meanings.
and radio reports denounced the program, but by then,
Silent language Of course, spoken and written language is not
Microsoft had alienated many potential customers. Third,
our only means of communicating. We all exchange messages
words mean different things in different contexts. One
through a host of nonverbal cues that form a silent language.
company described itself as an “old friend” of China. However,
Colors, for example, conjure up meanings that come from
it used the word for old that meant “former” instead of long-
cultural experience. In most Western countries, black is associ-
term.” Finally, grammar and pronunciation are complex, and a
ated with death. White has the same connotation in parts of
slight misuse of vocabulary or word placement may change
Asia and purple in Latin America. For products to succeed, their
meanings substantially. Consider the following examples of
colors must match the consumers’ frame of reference. For
signs in English observed in hotels around the world.
example, United Airlines promoted a new passenger service in
France: “Please leave your values at the desk.” Hong Kong by giving white carnations to its best customers
Mexico (to assure guests about the safety of drinking water): there. The promotion backfired because people in Hong Kong
“The manager has personally passed all the water served here.” give white carnations only in sympathy for a family death.
Japan: “You are invited to take advantage of the chamber- Another aspect of silent language is the distance between
maid.” people during conversations. People’s sense of appropriate
Norway: “Ladies are requested not to have children in the bar.” distance is learned and differs among societies. In the United
States, for example, the customary distance for a business
Switzerland: “Because of the impropriety of entertaining guests
discussion is 5 to 8 feet. For personal business, it is 18 inches to
of the opposite sex in the bedroom, it is suggested that the
3 feet. When the distance is closer or farther than is customary,
lobby be used for this purpose.”
people tend to feel uneasy. For example, a U.S. manager
Greece (at check-in line): “We will execute customers in strict conducting business discussions in Latin America may be
rotation.” constantly moving backward to avoid the closer conversational
The above examples offer a humorous look at language distance to which the Latin American official is accustomed.
barriers, and, in fact, the wrong choice of words usually is just a Consequently, at the end of the discussion, each party may feel
source of brief embarrassment. However, a poor translation uncomfortable with the other.
may have tragic consequences. For example, inaccurate transla- Perception of time and punctuality is another unspoken cue
tions have caused structural collapses and airplane crashes, such that differs by context and may differ across cultures and create
as the collision between aircraft from Air Kazakhstan and confusion. In the United States, participants usually arrive early
Saudia Air over India. In contracts, correspondence, negotia- for a business appointment, a few minutes late for a dinner at
tions, advertisements, and conversations, words must be someone’s home, and a bit later for a cocktail party. In another
chosen carefully. There is no foolproof way of handling

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country, the concept of punctuality in these situations may be learned to accept what they have encountered abroad. Dealing

INTERNATIONAL BUSINESS MANAGEMENT


different. For example, a U.S. businessperson in Latin America with transfers to a foreign country is a significant concern for
may consider it discourteous if a Latin American manager does companies and transferees, , “Human Resource Management.”
not keep to the appointed time. Latin Americans may find it
Case Study
equally discourteous if a U.S. businessperson arrives for dinner
Leonard Prescott, vice president and general manager of
at the exact time given in the invitation. In one case, a U.S.
Weaver-Yamazaki Pharmaceutical of Japan, believed that John
company made a presentation in Mexico in competition with a
Higgins, his executive assistant, was losing effectiveness in
French company. The U.S. Company was confident that it
representing the U.S. parent company because of an extraordi-
would win the contract because it had the better technology. It
nary identification with the Japanese culture.
scheduled a one-day meeting in Mexico City very tightly,
allowing what it thought was plenty of time for the presenta- The parent company, Weaver Pharmaceutical, had extensive
tion and questions. However, the Mexican team arrived one international operations and was one of the largest U.S. drug
hour late. One Mexican team member was called out of the firms. Its competitive position depended heavily on research
room for an urgent phone call, and the whole Mexican team and development (R&D). Sales activity in Japan started in the
became upset when the U.S. team tried to proceed without the early 1930s, when Yamazaki Pharmaceutical, a major producer
missing member. The French team allocated two weeks for of drugs and chemicals in Japan, began distributing Weaver’s
discussions and won the contract even though its technology products. World War II disrupted sales, but Weaver resumed
was widely known to be less sophisticated. exporting to Japan in 1948 and subsequently captured a
substantial market share. To prepare for increasingly keen
Another silent language barrier concerns a person’s position in a
competition from Japanese producers, Weaver and Yamazaki
company. A U.S. businessperson who tends to place a great
established in 1954 a jointly owned and operated manufacturing
reliance on objects as prestige cues may underestimate the
subsidiary to produce part of Weaver’s product line.
importance of foreign counterparts who do not have large,
plush, private offices. A foreigner may underestimate U.S. Through the combined effort of both parent companies, the
counterparts who open their own doors and mix their own subsidiary soon began manufacturing sufficiently broad lines of
drinks. products to fill the general demands of the Japanese market.
Imports from the United States were limited to highly special-
Body language, or kinesics (the way in which people walk,
ized items. The subsidiary conducted substantial R&D on its
touch, and move their bodies), also differs among countries.
own, which was coordinated through a joint committee
Few gestures are universal in meaning. For example, the “yes”
representing both Weaver and Yamazaki to avoid unnecessary
of a Greek, Turk, or Bulgarian is indicated by a sideways
duplication of efforts. The subsidiary turned out many new
movement of the head that resembles the negative headshake
products, some marketed successfully in the United States and
used in the United States and elsewhere in Europe. In some
elsewhere. Weaver’s management considered the Japanese
cases, one gesture may have several meanings, as Figure 2.5
operation to be one of its most successful international
shows.
ventures and felt that the company’s future prospects were
Culture Shock promising, especially given the steady improvement in Japan’s
A person who moves to another country often encounters standard of living.
culture shock-the frustration that results when experiencing a Shozo Suzuki headed the subsidiary, but, as executive vice
new culture and having to learn and cope with a vast array of president of Yamazaki and president of several other subsidiar-
new cultural cues and expectations. People working in a very ies, he limited his participation in Weaver-Yamazaki to
different culture may pass through stages. First, like tourists, determining basic policies. Prescott, assisted by Higgins and
they are elated with quaint differences. several Japanese directors, managed daily operations.
Weaver Pharmaceutical had a policy of moving U.S. personnel
from one foreign post to another with occasional tours in the
home office international division. Each assignment generally
lasted for three to five years. There were a limited number of
expatriates, so company personnel policy was flexible enough to
allow an employee to stay in a country for an indefinite time if
he or she so desired. A few expatriates had stayed in one foreign
post for over 10 years. Prescott replaced the former general
Figure 11.5 Kinesics Are Not Universal manager, who had been in Japan for six years. An experienced
Later, they may feel depressed and confused-the culture shock international businessman who had spent most of his 25-year
phase-and their usefulness in a foreign assignment may be career at Weaver abroad, Prescott had served in India, the
greatly impaired. Fortunately for most people, culture shock Philippines, and Mexico, with several years in the home-office
begins to ebb after a month or two as optimism grows and international division. He was delighted to be challenged with
satisfaction improves. Interestingly, some people also encounter expanding Japanese operations, and after two years, he felt a
culture shock when they return to their home countries-a sense of accomplishment in having developed a smoothly
situation known as reverse culture shock-because they have functioning organization. Born in a small midwestern town,
Higgins entered his state university after high school. Midway

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through college, however, he joined the army. Because he had Higgins to intercede on their behalf. He did so, insisting their
INTERNATIONAL BUSINESS MANAGEMENT

shown an interest in languages in college, he was able to attend demands were justified.
the Army Language School for intensive training in Japanese. Although Prescott believed it was helpful to learn the feelings
Fifteen months later, he was assigned as an interpreter and of middle managers from Higgins, he disliked having to deal
translator in Tokyo and took more courses in Japanese lan- with Higgins as an adversary rather than as an ally. Prescott
guage, literature, and history. He made many Japanese friends, became hesitant to ask his assistant’s opinion because Higgins
fell in love with Japan, and vowed to return there. After five invariably raised objections to changes that were contrary to the
years in the army, Higgins returned to college. Because he Japanese norm. Prescott believed that there were dynamic
wanted to use Japanese as a means rather than an end in itself, changes occurring in traditional Japanese customs and culture,
he finished his college work in management, graduating with and he was confident that many Japanese were not tied to
honors, and then joined Weaver. After a year in the company existing cultural patterns as rigidly as Higgins seemed to think
training program, Weaver assigned him to Japan, a year before they were. Indeed, Japanese subordinates were more willing
Prescott’s arrival. than Higgins to tryout new ideas. Prescott also thought that
Higgins was pleased to return to Japan, not only because of his there was no point in a progressive U.S. company’s merely
love for the country but also because of the opportunity to copying the local customs. He felt that the company’s real
improve the “ugly American” image held abroad. His language contribution to Japanese society was in introducing innova-
ability and interest in Japan enabled him to intermingle with tions.
broad segments of the Japanese population. He noted with There were more incidents that made. Prescott doubt Higgins’s
disdain that U.S. managers tended to impose their value judgment. One was the dismissal of a manager who, in
systems, ideals, and thinking patterns on the Japanese. Prescott’s opinion, lacked initiative, leadership, and general
Under both Prescott and his predecessor, Higgins’s competency. After two years of continued prodding by his
responsibilities included troubleshooting with major Japanese superiors, including Prescott, the manager still showed little
customers, attending trade meetings, negotiating with govern- interest in improvement. Both Higgins and the personnel
ment officials, conducting market research, and helping with manager objected vigorously to the dismissal because the
day-to-day administration. Both general managers sought his company had never fired anyone before. They also argued that
advice on many difficult and complex administrative problems the employee was loyal and honest and that the company was
and found him capable. Prescott became concerned, however, partially at fault for having kept him on for the last 10 years
with Higgins’s attitude and thinking. He felt that Higgins had without spotting the in competency. A few weeks after the
taken to the Japanese culture to such a degree that he had lost dismissal, Prescott learned that Higgins had interceded on
the U.S. point of view. He had “gone native,” resulting in a behalf of the fired employee, so that Yamazaki Pharmaceutical
substantial loss of administrative effectiveness. transferred him to its own operation. When confronted,
Prescott mentally listed a few examples to describe what he Higgins said that he had done what was expected of a superior
meant by Higgins’s complete emotional involvement with in any Japanese company by assuring a subordinate’s continued
Japanese culture. The year before, Higgins had married a employment.
Japanese woman. At that time, Higgins had asked for and Prescott believed these incidents suggested a serious problem.
received permission to extend his stay in Japan indefinitely. Higgins had been an effective and efficient manager whose
According to Prescott, this marked a turning point in Higgins’s knowledge of the language and the people had proved
behavior. Higgins moved to a strictly Japanese neighborhood; invaluable. Prescott knew that Higgins had received several
relaxed in a kimono at home; used the public bath; and was outstanding offers to go with other companies in Japan. On
invited to weddings, neighborhood parties, and even Buddhist numerous occasions, Prescott’s friends in U.S. companies said
funerals. Although Weaver had a policy of granting two they envied him for having a man of Higgins’s qualifications as
months of home leave every two years, with paid transporta- an assistant. However, Prescott felt Higgins would be far more
tion for the employee and his family, Higgins declined to take effective if he had a detached attitude toward Japan. In
trips, preferring instead to visit remote parts of Japan with his Prescott’s view, the best international executive was one who
wife. retained a belief in the fundamentals of the home point of
At work, Higgins also had taken on many characteristics of a view while also understanding foreign attitudes.
typical Japanese executive. He spent considerable time listening
Questions
to the personal problems of his subordinates, maintained close
social ties with many men in the company, and had even 1. How would you describe Higgins’s and Prescott’s attitudes
arranged marriages for some of the young employees. Conse- toward implementing U.S. personnel policies in the Japanese
quently, many employees sought out Higgins to register operations?
complaints and demands. These included requests for more 2. What are the major reasons for the differences in attitude?
liberal fringe benefits, such as recreational activities and the 3. If you were the Weaver corporate manager responsible for
acquisition of rest houses for employees to use at resort areas. the Japanese operations and the conflict between Higgins
Many employees also complained to Higgins about a new and Prescott came to your attention, what would you do? Be
personnel policy, which Prescott instituted, that moved away sure to identify some alternatives first and then make your
from basing promotions on seniority, considering instead recommendations.
superiors’ evaluations of subordinates. The employees asked

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