Chapter 2

Cultural Environment
Facing Business
When in Rome do as the Romans do

Learning Outcome

To understand culture and its dimensions

To understand and apply the degrees of

cultural adaptation

To know the religious and ethical systems and

their business implications

To prepare for managing cultural diversity

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Introduction

Why do you need to study culture?

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Introduction
Successful

international
managers need crosscultural literacy - an
understanding of how cultural
differences across and within
nations can affect the way in
which business is practiced.

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What is 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.

Hofstede, Namenwirth and Weber

The collective programming of the

mind

Human-made part of human society

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What is Culture?

In doing international business, what

you have to do with culture?

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Culture: Degree of Adaptation

Cultural Imperatives

The business customs and expectations that

must be met and conformed to or avoided if
relationships are to be successful.
What may be an imperative to avoid in one culture
is an imperative to do in another.

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Culture: Degree of Adaptation

Cultural Electives:

Relate to areas of behavior or to customs that

cultural aliens may wish to conform to or
participate in but that are not required.

A cultural elective in one county may be an

imperative in another.

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Culture: Degree of Adaptation

Cultural Exclusives:

Those customs or behavior patterns

reserved exclusively for the locals and
from which the foreigner is barred.

Ill curse my brother, but if you curse him, youll

have a fight.

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Culture, Society and Nation States

Society is a group of people who share a

common culture

No one-to-one correspondence between society

and a nation state

Nation states are political creations

Many cultures can co-exist within a nation state
Canada
India
Malaysia

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Determinants of Culture

Social structure
Religion
Language
Education

The degree of influence of different determinants on

culture varies from culture to culture.

Middle east?
France?
India?
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Individuals and Groups

In many Western societies, there

is a focus on
the individual, and individual achievement is
common
Significance

to business?

This

contributes to the dynamism of the US economy,

and high level of entrepreneurship
But,

leads to a lack of company loyalty

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Individuals and Groups

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

Significance to business?
This may
discourage job switching between firms,
encourage lifetime employment systems, and

lead to cooperation in solving business

problems
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**Social Stratification

Social Stratification All societies are

stratified on a hierarchical basis into social
categories, or social strata

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**Social Stratification

Social Mobility the extent to which individuals

can move out of the strata into which they are born

Caste System closed system of stratification

Class System less rigid social stratification
where social mobility is possible

Significance

In cultures where class consciousness is high, the

way individuals from different classes work
together may be very prescribed and strained
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**Social Stratification

Indian student hacked

to death for intercaste
marriage (Daily Mail
(UK)/14 March 2016)

Fresh riots, arson in

deadly north India
caste crisis (The Star/21
February 2016)

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**Social Stratification

Why is social stratification

important for international
business?
HR?
Marketing?

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Religious and Ethical systems

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Religious and Ethical systems

Religion is a system of shared beliefs and rituals that

are concerned with the domination of the holy.

Ethical systems are a set of moral principles, or

values, that are used to guide and shape behavior

Religion and ethics are often closely intertwined

Four religions dominate society -Christianity, Islam,

Hinduism, and Buddhism

Confucianism is also important in influencing

behavior and culture in many parts of Asia
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Christianity

worlds largest religion (1.7 billion adherents )

Europe
the Americas
other countries settled by Europeans

Perhaps the most important economic

implication of Christianity is the Protestant
work ethic

hard work
wealth creation
frugality

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Islam

worlds second largest religion (1 billion adherents )

The central principle

there is but the one true omnipotent God.

unconditional acceptance of the uniqueness, power, and
authority of God
worldly gain and temporal power are an illusion.

In the West, Islamic fundamentalism is associated in

the media with militants, terrorists, and violent
disorders,
but in fact Islam teaches peace, justice, and tolerance
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Islam

The key economic implication of Islam

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

God
interest is prohibited

The Koran establishes some explicit economic

principles, many of which are pro-free
enterprise

The Koran speaks positively of free enterprise and of earning

legitimate profit through trade and commerce (the prophet
Mohammed was once a trader)

The protection of the right to private property is also embedded

within Islam

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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

There is no apparent work ethic or business focus

(since the religion is completely spiritual-based)

Promotion and adding new responsibilities may not be

the goal of an employee, or may be infeasible due to the
employee's caste
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Buddhism

About 350 millions followers

Stresses spiritual growth and the afterlife,

rather than achievement while in this world

Buddhism does not emphasize wealth creation

However, because Buddhism does not support

the caste system, individuals do have some
mobility and can work with individuals from
different classes
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Confucianism

an ideology practiced that teaches the importance

of attaining personal salvation through right
action

Three key teachings of Confucianism

loyalty
reciprocal obligations
honesty

may all lead to a lowering of the cost of doing

business in Confucian societies
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Religious and Ethical systems

Western European nations are economically more

developed than other parts of Europe. The same
applies for North American countries compared to
Latin American nations. How is the practice of
religion related to these differences?

CASE:
McDolands and Hindu Culture
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Language

Spoken (Tiz razor in Iran and Qatar)

Unspoken
Facial expression
Personal space
Hand gesture

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Language

Which of the functional areas of business

is considered to be most sensitive to
language? Why?

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Cultural Change: Cultural Borrowing

Culture is not a constant; it evolves over time.

Since 1960s American values
toward the role of women are changing.
Japan moves toward greater individualism in the
workplace
Bangladesh (food, shopping, outing)
Effects of globalization

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How Do I Manage Cultural Diversity?

Admit that you dont know.

Suspend judgments.
Show empathy.

standing in others shoes

Become comfortable with ambiguity.

Celebrate diversity.

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