In this chapter, you will come to understand the role of culture in international business. You will also learn the importance of national culture, subculture, and how each component of culture affects business activities. Understand how cultures and companies change each other, and how the physical environment and technology influence cultures. And acquaint yourself with two popular frameworks used to classify cultures.
2 CrossCultural Business Copyright © 2014 Pearson Education, Inc Chapter Objectives • Describe culture and explain the significance of both national culture and subcultures • Identify the components of culture and describe their impact on international business • Describe cultural change and explain how companies and culture affect each other • Explain how the physical environment and technology influence culture • Describe two frameworks used to classify cultures and explain their practical use Copyright © 2014 Pearson Education, Inc 2-2 Haribo • Problem: Not serving $2 billion subculture • Culprit: Pork-based gelatin in the candies • Solution: New bacteria-based compound Copyright © 2014 Pearson Education, Inc 2-3 What is Culture? Set of values, beliefs, rules, and institutions held by a specific group of people Ethnocentricity Cultural literacy Belief that one’s own ethnic group or culture is superior to that of others Detailed knowledge of a culture that enables a person to function happily and effectively within it X Copyright © 2014 Pearson Education, Inc √ 2-4 Culture Matters: Creating a Global Mindset Cultural Adaptability Bridging the Gap Building Global Mentality Flexibility Is Key Copyright © 2014 Pearson Education, Inc 2-5 National Culture Nation states build museums and monuments to preserve the legacies of important events and people Filmmaking and Broadcasting Copyright © 2014 Pearson Education, Inc Guggenheim and Hong Kong Disney 2-6 Subculture People who share a unique way of life within a larger culture (language, race, lifestyle, attitudes, etc.) EXAMPLES Goth, Punk, Emo China’s Dialects Groups in U.S Copyright © 2014 Pearson Education, Inc 2-7 Discussion Question Why should business people try to avoid ethnocentricity and develop cultural literacy? Copyright © 2014 Pearson Education, Inc 2-8 Answer to Discussion Question Ethnocentricity distorts our view of other cultures and causes us to overlook important human and environmental differences among cultures Cultural literacy improves the ability of managers to manage employees, develop and market products, and conduct negotiations in local markets Copyright © 2014 Pearson Education, Inc 2-9 Components of Culture Physical environments Education Aesthetics Culture Personal communication Values & attitudes Manners & customs Social structure Religion Copyright © 2014 Pearson Education, Inc - 10 Global Sustainability: Speaking in Fewer Tongues • Many endangered languages • Yet English, Mandarin, and Spanish are expanding • Lost languages means lost knowledge • Linguists are recording most threatened languages Copyright © 2014 Pearson Education, Inc - 23 Lingua Franca ¿Hola? Guten Tag? Ni Hao? Bonjour? Hello?? Hello!!! Copyright © 2014 Pearson Education, Inc - 24 Mixed Signals Copyright © 2014 Pearson Education, Inc - 25 Discussion Question How does an understanding of the spoken, written, and body language in a market abroad contribute to business success? Copyright © 2014 Pearson Education, Inc - 26 Answer to Discussion Question Knowledge of a culture’s spoken, written, and body language gives international managers insight into why people think and act the way they Copyright © 2014 Pearson Education, Inc - 27 Education Cultures pass on traditions, customs, and values through schooling, parenting, group memberships, etc Education level Well-educated attract high-paying jobs, while poorly educated attract low-paying manufacturing jobs Brain drain Departure of highly educated people from one profession, geographic region or nation to another Copyright © 2014 Pearson Education, Inc - 28 Problem of Illiteracy Copyright © 2014 Pearson Education, Inc - 29 Physical and Material Culture These influence a culture’s development and pace of change Topography Physical features characterizing the surface of a geographic region Climate Weather conditions of a geographic region Material Culture Technology used to manufacture goods and provide services Copyright © 2014 Pearson Education, Inc - 30 KluckhohnStrodtbeck Framework Relation to nature Material or spiritual Time orientation Responsibility to others Trust and control View of personal space Copyright © 2014 Pearson Education, Inc - 31 Hofstede Framework Individualism Individualism vs. collectivism vs. collectivism Power Power distance distance Uncertainty Uncertainty avoidance avoidance Masculinity Masculinity vs vs femininity femininity Copyright © 2014 Pearson Education, Inc Longterm Longterm orientation orientation - 32 Power Distance & Individualism vs. Collectivism Source: Geert Hofstede, “The Cultural Relativity of Organizational Practices and Theories,” Journal of International Business Studies, Fall 1983, p 82 Copyright © 2014 Pearson Education, Inc - 33 Power Distance & Uncertainty Avoidance Source: Geert Hofstede, “The Cultural Relativity of Organizational Practices and Theories,” Journal of International Business Studies, Fall 1983, p 84 Copyright © 2014 Pearson Education, Inc - 34 Discussion Question Cultures with small tend to display greater equality and a more equal distribution of rewards a Individualism b Power distance c Uncertainty avoidance Copyright © 2014 Pearson Education, Inc - 35 Answer to Discussion Question Cultures with small tend to display greater equality and a more equal distribution of rewards a Individualism b Power distance c Uncertainty avoidance Copyright © 2014 Pearson Education, Inc - 36 All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher Printed in the United States of America Copyright © 2014 Pearson Education, Inc - 37 ... Inc 2-2 Haribo • Problem: Not serving $2 billion subculture • Culprit: Pork-based gelatin in the candies • Solution: New bacteria-based compound Copyright © 2014 Pearson Education, Inc 2-3 What is Culture?.. .Chapter Objectives • Describe culture and explain the significance of both national culture and subcultures • Identify the components of culture and describe their impact on international business. .. Pearson Education, Inc 2-7 Discussion Question Why should business people try to avoid ethnocentricity and develop cultural literacy? Copyright © 2014 Pearson Education, Inc 2-8 Answer to Discussion Question