Environments & Operations: 15e Daniels Radebaugh Sullivan

International
Business
Environments & Operations
15e
Daniels ● Radebaugh ● Sullivan
Copyright © 2015 Pearson Education, Inc. 1-1

Chapter 2
The Cultural
Environments Facing
Business

Introduction

Introduction

Learning Objectives
 To understand methods for learning about
cultural environments
 To analyze the major causes of cultural difference

and change
 To discuss behavioral factors influencing

countries’ business practices
 To understand cultural guidelines for companies

that operate internationally
Introduction
Culture
Culture refers to learned

norms based on the
values, attitudes, and
beliefs of a group of
people
Introduction
 peoplebelong to different groups
based on nationality,
ethnicity, religion, gender,
work organization,
profession, age, political
party membership, and
income level, and each group
comprises a culture
Introduction
 The People Factor
Business involves people. Every
business employs, sells to, buys
from, and is owned and regulated by
people. International business, of
course, involves people from
different national cultures, which
affects every business function

Introduction
Cultural Diversity
Cultural Collision
Sensitivity and Adjustment

Introduction
Cultural Diversity
As different nationalities come together

through projects and teams, their diverse
backgrounds, perspectives, and
experiences often enable businesses to
gain a deeper knowledge of products and
services and how to create and deliver
them. Copyright © 2015 Pearson Education, Inc. 1-10
Introduction
Cultural Collision
 When a company implements practices
that are less effective than intended
 When a company’s employees encounter
distress because of difficulty in accepting
or adjusting to foreign behaviors

Introduction
Sensitivity and Adjustment
A firm doing business in another country

must determine which of that nation’s
business practices differ from its own and
then decide what adjustments, if any, are
needed to operate efficiently.

Introduction
Cultural Awareness
 There is no foolproof way to build your
awareness of culture
 Hard to isolate culture from economic and

political conditions
 Education about a culture helps Studies of

cultures have shortcomings
Introduction
Cultural Awareness
 British sales reps expected their potential
Saudi customers to be punctual and give
them their undivided attention; in fact, the
reps’ compensation system discouraged
them from spending much time on each
business transaction. Their response was
typical of countries with a deal-focus
(DF) culture,

Introduction
Cultural Awareness
 the Saudis, meanwhile, had less
compulsion to wrap things up; they
regarded time spent in small talk at a café
as a means to identify good business
partners. They also put dealings with
friends ahead of business dealings, a
situation typical in a relationship-focus
(RF) culture.

The Nation as a Point of Reference
 National boundaries act as proxy for
culture
 Not everyone in a country shares the

same culture
 Dual or Multi Nationality_bicultural or

multicultural,
 Certain cultural attributes may link groups

from different nations more closely than
certain groups within nations
How Cultures Form and Change
 Cultural values set early in life but

 Changes may occur from:
 Choice
 Imposition

 Change by Choice
may occur as a reaction to social and
economic situations that present people
with new alternatives.
When rural people choose to accept factory jobs,

for example, they change some basic customs—
notably, working regular hours doesn’t allow
them the sort of work-time social interactions
that farm work allowed.
 Change by Imposition
sometimes called cultural imperialism—
involves imposing certain elements from
an alien culture,
such as a forced change in laws by an
occupying country that, over time,
becomes part of the subject culture.


Slide 5.5
Elements of culture
Alan M Rugman and Simon Collinson,

International Business, 5th Edition, © Pearson Education
Limited 2009
Slide 5.7
Language
• Language is critical to culture because it is the
primary means used to transmit information and
ideas.
• Knowledge of local language can:
–
 permit a clearer understanding of a
–
situation; provide access to local people;
–
 allows the person to pick up nuances,
implied meanings, and other information
that is not stated outright.

Limited 2009
Language as a Cultural Stabilizer
 Like national boundaries and geographic
obstacles, language limits people’s contact
with other cultures.
 The people of the world speak thousands

of different languages, but only a few of
them remain important in the
dissemination of culture.

 A significant portion of countries, for
example, speaks English, French, or
Spanish.
 China is the only place where people speak
Mandarin,
The classification “Regional” actually takes
in two categories:
 (1) countries in which the dominant language is
not dominant anywhere else (e.g., Japan)
 (2) countries in which several different languages
are spoken (e.g., India).
 When people from different areas speak
the same language, culture spreads more
easily
 Among nations that share a same
language, commerce is easier
 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.
Religion as a Cultural Stabilizer
 Religions influence lifestyles, beliefs, values and
attitudes and can have a dramatic effect on the
way people in a society act toward each other and
towards those in other societies.
 Religion also influences:
 the work habits of people;
 the work and social customs (from the days of the week
on which people work to their dietary habits);
 politics and business.

Corporate culture
Corporate culture is a term used to
characterize, how the managers and
employees of particular companies tend
to behave.
 Corporate culture is also used by human resource

managers and senior management in their attempts to
proactively shape the kind of behavior (“innovative”,
“open”, “dynamic”, etc.) they hope to nurture in their
organizations.
Slide 5.12
The importance of
culture in different
business contexts

Limited 2009
Slide 5.13
Influences of Culture
on International Management
Culture influences strategic management in a number of
ways:
• Work attitudes
• Achievement motivation
• Time and future
• Ethics

Limited 2009
Slide 5.14
Culture and strategic management

Cross-cultural management issues arise
in a number of situations, including:
 Within a firm: Work attitudes, achievement

motivation, time and future and ethics, etc.
 Between firms: M&As, joint ventures, alliances
and buyer-supplier relationships.
 Between a firm and customers: Dealing with
customers.

Limited 2009
Slide 5.15
Figure 5.1 Cross-cultural business contexts

Limited 2009
Slide 5.16
National stereotypes
and key dimensions
of culture

Limited 2009
Slide 5.18
Geert Hofstede’s four cultural

dimensions
1. Power distance: measures the degree to
which less powerful members of
organizations and institutions accept the fact
that power is not distributed equally.
2. Uncertainty avoidance: measures the

extent to which people feel threatened by
ambiguous situations and have created
institutions and beliefs for minimizing or
avoiding those uncertainties.
Limited 2009
Slide 5.18

dimensions
• What might happen, if a Dutch company assigned domestic
managers, who typically prefer low power distance, to work
in Morocco, where workers typically prefer high power
distance?
• The Dutch managers might consult with Moroccan
subordinates in an attempt to improve employee
productivity. Unfortunately, subordinates may lose
confidence in their superiors (“Why don’t they know what to
do?”), so that performance deteriorates rather than
improves.

Limited 2009
Slide 5.19

dimensions (Continued)
3. Individualism vs. collectivism
Individualism: the tendency of people to look

after themselves and their immediate family only.
Collectivism: the tendency of people to belong to

groups who look after each other in exchange for
loyalty.

Limited 2009
 Japan and Mexico are both characterized as collectivist cultures,
Mexico’s collectivist preference is based more on kinship relations
that do not carry over easily into the workplace.56 Moreover, the
Mexican concept of family sometimes includes not only the nuclear
family (husband, wife, and minor children) but also the vertically
extended family (members of several generations) and the
horizontally extended family (aunts, uncles, and cousins).
 Such differences can affect business in a variety of ways:
Individualists in a family-oriented collectivists country may be less
motivated to receive material rewards from their work because of
dividing the rewards among more family members.
US Example
 Levi Strauss attempted to introduce team-based
production into several U.S. plants because its
management had observed high productivity
when the system was used in the highly
collectivist culture of Japan. However, U.S.
employees, especially the most skilled workers,
detested the system; productivity went down,
and Levi returned to a more individualistic
system that better suited the culture of its U.S.
workforce.

Slide 5.20

4. Masculinity vs. femininity
Masculinity: the degree to which the dominant

values of a society are success, money and
material goods.
Femininity: the degree to which the dominant

values of a society are caring for others and the
quality of life.

Limited 2009
Slide 5.22
Fons Trompenaars’ seven cultural

dimensions
1. Universalism vs. particularism
Universalism: the belief that ideas and practices
can be applied everywhere in the world without
modification.
Particularism: the belief that circumstances

dictate how ideas and practices should be applied
and something cannot be done the same
everywhere.

Limited 2009
Slide 5.22

dimensions
1. Universalism vs. particularism
The example used by Trompenaars refers to a
salesman who does not fulfill his monthly sales
quota because he was looking after his sick son.
Should he be penalized according to standard

company regulations or should he be excused
because of the particular circumstances?

Limited 2009
Slide 5.23

2. Individualism vs. collectivism: centres on
whether individual rights and values are dominant
or subordinate to those of the collective society.
3. Neutral culture vs. emotional culture:

Neutral culture: A culture in which emotions are
held in check.
Emotional culture: A culture in which emotions
are expressed openly and naturally.

Limited 2009
Slide 5.24

4. Specific vs. Diffuse: measures whether work
relationships (e.g. the hierarchical relationship
between a senior manager and a subordinate)
are workplace ‘specific’ or extend (diffuse) into
the social context outside the workplace.
5. Achievement vs. Ascription: measures
whether one’s status within organizations is
based on merit (“achieved”) or on class, gender,
education or age (“ascribed”).

Limited 2009
Slide 5.25

6. Attitudes toward time
Sequential: cultures that view time in a sequential
or linear fashion; order comes from separating
activities and commitments.
Synchronic: cultures that view events in parallel
over time; order comes from coordinating multiple
activities and commitments.
7. Attitudes toward the environment: measures
the emphasis, a particular culture places on
people’s relationship with nature and the natural
environment.
Limited 2009
Slide 5.29
conclusion
Different styles of communication and interaction
result from the cultural differences listed above.
These can lead to workplace misunderstandings,
poor interpersonal and intergroup relationships,
inefficiency, and higher costs. Two examples
provide some insights into how we can apply the
above typologies.

Limited 2009
USA & Russian
US managers, according to all of the above studies, are highly
assertive and performance oriented, direct and explicit. They tend to use
facts, figures, and logic to link specific steps to measurable outcomes,
and this is the main focus of workplace interaction.
Greeks and Russians are less individualistic, less performance
oriented, and show lower levels of uncertainty avoidance (are less driven
by procedures) than the Americans.
When Russian and Greek managers, employees, customers,
suppliers, or public-sector officials interact with US counterparts,
they may well find their approach too direct and results focused.
For them communication is likely to be more about mutual learning
and an exploration of relevant issues than an explicit agreement
about specific expectations and
Copyright © end results.
2015 Pearson Education, Inc. 1-45
Korea & Denmark
The Koreans and Japanese have highly gender-differentiated
societies with males tending to dominate decision making and leading
most face-to-face communication. The agenda for discussion is likely set
by males, and traditional language forms differ according to whether a
man is addressing a woman or an older person talking to a younger
person, and vice versa.
Denmark lie at the other end of the continuum on the gender-
differentiation dimension. Perhaps even more than other Western
managers, their lack of awareness of this cultural difference runs the risk
of both embarrassing female employees and offending and alienating
senior Japanese male managers. This kind of clash can make
negotiations and interaction of all kinds between these groups that much
more difficult. Copyright © 2015 Pearson Education, Inc. 1-46
Slide 5.29
Cross-cultural
management

Limited 2009
Message for International managers
None of the above examples means that international managers
should (or ever could) entirely change their behavior to suit local
values and practices. Like many of the challenges facing
managers, cultural sensitivity and cross-cultural effectiveness
come from striking a balance between one’s own norms, values,
and principles and those of the “foreigner.”

Approaches to Cross Cultural
Management
Polycentrism: A polycentric organization tends to believe that
its business units abroad should act like local companies.
Ethnocentrism: reflects the conviction that one’s own culture is
superior to that of other countries.
Geocentrism: Between the extremes of polycentrism and
ethnocentrism__which integrates company and host-country
practices as well as some entirely new ones.

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International

Daniels ● Radebaugh ● Sullivan

Copyright © 2015 Pearson Education, Inc. 1-1

Copyright © 2015 Pearson Education, Inc. 1-2

Copyright © 2015 Pearson Education, Inc. 1-3

Copyright © 2015 Pearson Education, Inc. 1-4

 To analyze the major causes of cultural difference

 To discuss behavioral factors influencing

 To understand cultural guidelines for companies

Culture refers to learned

Copyright © 2015 Pearson Education, Inc. 1-8

Sensitivity and Adjustment

Copyright © 2015 Pearson Education, Inc. 1-9

As different nationalities come together

Copyright © 2015 Pearson Education, Inc. 1-11

A firm doing business in another country

Copyright © 2015 Pearson Education, Inc. 1-12

 Hard to isolate culture from economic and

 Education about a culture helps Studies of

Copyright © 2015 Pearson Education, Inc. 1-14

Copyright © 2015 Pearson Education, Inc. 1-15

 Not everyone in a country shares the

 Dual or Multi Nationality_bicultural or

 Certain cultural attributes may link groups

 Cultural values set early in life but

Copyright © 2015 Pearson Education, Inc. 1-17

When rural people choose to accept factory jobs,

Copyright © 2015 Pearson Education, Inc. 1-19

Copyright © 2015 Pearson Education, Inc. 1-20

Alan M Rugman and Simon Collinson,

Alan M Rugman and Simon Collinson,

 The people of the world speak thousands

Copyright © 2015 Pearson Education, Inc. 1-23

Copyright © 2015 Pearson Education, Inc. 1-26

 Corporate culture is also used by human resource

Alan M Rugman and Simon Collinson,

Alan M Rugman and Simon Collinson,

Culture and strategic management

 Within a firm: Work attitudes, achievement

Alan M Rugman and Simon Collinson,

Figure 5.1 Cross-cultural business contexts

Alan M Rugman and Simon Collinson,

Geert Hofstede’s four cultural

2. Uncertainty avoidance: measures the

Geert Hofstede’s four cultural

Alan M Rugman and Simon Collinson,

Geert Hofstede’s four cultural

Individualism: the tendency of people to look

Collectivism: the tendency of people to belong to

Alan M Rugman and Simon Collinson,

Copyright © 2015 Pearson Education, Inc. 1-37

Geert Hofstede’s four cultural

Masculinity: the degree to which the dominant

Femininity: the degree to which the dominant

Alan M Rugman and Simon Collinson,

Fons Trompenaars’ seven cultural

Particularism: the belief that circumstances

Alan M Rugman and Simon Collinson,

Fons Trompenaars’ seven cultural

Should he be penalized according to standard

Alan M Rugman and Simon Collinson,

Fons Trompenaars’ seven cultural

3. Neutral culture vs. emotional culture: