International business environment lesson 03

33 Social and Cultural Environment UNIT UNIT II 34 International Business Environment 35 Social and Cultural Environment LESSON SOCIAL AND CULTURAL ENVIRONMENT CONTENTS 3.0 Aims and Objectives 3.1 Introduction 3.2 Culture 3.2.1 Prescriptive 3.2.2 Socially Shared 3.2.3 Culture Facilitates Communication 3.2.4 Learned 3.2.5 Subjective 3.2.6 Enduring 3.2.7 Cumulative 3.2.8 Dynamic 3.2.9 Cultural Attitude and International Business 3.2.10 Culture and Thinking Process 3.2.11 Cross-Cultural Communication Process and Negotiations 3.3 Religion 3.4 Attitude and Values 3.5 Language 3.6 Let us Sum up 3.7 Lesson End Activity 3.8 Keywords 3.9 Questions for Discussion 3.10 Suggested Readings 3.0 AIMS AND OBJECTIVES After studying this lesson, you should be able to: z Know the social and cultural environment z Study the culture, religious and languages z Learn about the attitude and values 3.1 INTRODUCTION Social and cultural factors in various countries of the globe affect the international business These factors include attitude of the people to work, attitude to wealth, family, marriage, religion, education, ethics, human relations, social responsibilities etc 36 International Business Environment Culture is, “the thought and behavior patterns that member of a society learns through language and other forms of symbolic interaction—their customs, habits, beliefs and values, the common viewpoints which bind them together as a social entity… cultures change gradually picking up new ideas and dropping old ones, but many of the cultures of the past have been so persistent and self contained that the impact of such sudden change has torn them apart, uprooting their people psychologically.” 3.2 CULTURE Culture is: z Derived mostly from the climatic conditions of the geographical region and economic conditions of the country z A set of traditional beliefs and values, which are transmitted and shared in a given society z A total way of life and thinking patterns that are passed from generation to generation z Norms, customs, art, values etc 3.2.1 Prescriptive It prescribes the kinds of behavior considered acceptable in the society It limits product choices to those, which are socially acceptable For example, consumption of wine is acceptable in the west, but it is not socially acceptable in India and it is socially and legally unacceptable in Saudi Arabia Similarly, smoking is medically unacceptable even in USA – in the recent times 3.2.2 Socially Shared Culture is based on social interaction and creation In fact, it is out of necessity For example, child marriages in India during the 18th and 19th centuries were to protect the teenaged girls Chinese parents, at one time preferred their female children to have small feet The practice of the Sikhs wearing turbans and keeping a knife was originally out of the necessity of protecting themselves from the invaders from other countries 3.2.3 Culture Facilitates Communication Culture brings common habits of thought and feeling among people Concern for other human beings, concern for physically disadvantaged people etc are the common feelings of Indians while uncaring for others are the common habit of the Europeans Thus, culture makes communication easier among diversified groups Therefore, common advertisements in foreign countries fail to communicate 3.2.4 Learned Culture is acquired through learning but not inherited genetically If a person absorbs or learns the culture of the society where he is raised, that learning is called socialization or enculturation However, some people learn the culture of the society other than the one in which they are raised Such learning is called ‘acculturation.’ The societies of Asian and African countries complain that their cultures are being contaminated by the Western influences 3.2.5 Subjective Culture is subjective in the sense that people of different cultures have different ideas about the same object Regarding the object of marriage the parents of the bridegrooms in many countries offer money (dowry) to the parents of the bride whereas the situation in India is quite opposite This is because, the patents of bridegrooms in other countries pay dowry as a compensation for raising the bride while the parents of bride in India pay dowry to the bridegroom to meet the expenses of establishing a new family 3.2.6 Enduring Culture is relatively stable as it is passed from generation to generation Taking care of the old people, respecting the elders and offering food first to the guests, next to old people and children and last to the young people are the practices from generations together in Indian society Failure of birth control in India and China is due to culture 3.2.7 Cumulative Uncertainty of rains, crop and thereby income in developing countries over years resulted in the culture of saving for to the next years Thus, culture is based on the accumulated circumstances over the hundreds or even thousands of years 3.2.8 Dynamic Culture is not immune to change It goes on changing New ideas are added and old ideas are dropped The present generation youth want to become slim Therefore, they reduced fat contents in all the food items unlike the previous generations Further, the present generation youth would like to work smart but not hard unlike their parents Japanese tastes have been changing from rice and fish to meat and dairy products 3.2.9 Cultural Attitude and International Business Dressing habits, living styles, eating habits and other consumption patterns, priority of needs are dictated/influenced by culture Some Thai and Chinese and most of the Indians not consume beef Thailand Chinese believe that consumption of beef is improper and Indians (particularly Hindus) believe that eating beef is a sin as they believe cow is sacred (Kamadhenu) The eating habits vary widely Chinese eat fish stomachs and bird’s nest soup, Japanese eat uncooked seafood, Iraqis eat dried, salted locusts and snakes while drinking The French eat snails, Americans and Europeans eat mostly non-vegetarian food Indians eat mostly vegetarian food It was surprising to the rest of the world to know that there were pure vegetarians in India Similarly, dressing habits also vary from country to country based on their culture We observe different dress styles of West, Middle East, India, and Pacific etc Wearing ‘sari’ by Indian women is a peculiar dressing habit, which is influenced by the culture Similarly, wearing ‘burka/parda’ by the women of Middle East is another example for the influence of culture on the dressing habit 3.2.10 Culture and Thinking Process When foreigners visit the universities in India, the professors receive them at the airport, take them to the hotel, and make them feel comfortable When I went to France, I expected the same In the sense that I expected someone from my host institution to receive me at the airport This phenomenon is known as the Selfreference Criterion (SRC) Self-reference criterion indicates that we observed foreign cultures by making reference, perhaps unconsciously, back to personal cultural values When Indian-Hindus observe foreigners eating beef, they feel bad by referring it to their own culture of worshipping the cows Americans treat dogs as their family members, whereas Arabs view dogs as filthy animals The international businessmen should eliminate the SRC effect in order to understand the foreign cultures, as they have to carry on business under the existing cultures 37 Social and Cultural Environment 38 International Business Environment Most of the businessmen of USA react to the methods in ethnocentric terms and prefer to conduct business on Western lines though they know the cultures of Asia and Africa The businessman should eliminate the influence of SRC as it helps to prevent a transfer of personal culture to the overseas market This awareness helps the manager to formulate customer-oriented strategies and avoid the possible failures 3.2.11 Cross-Cultural Communication Process and Negotiations In some countries like USA, Canada, Germany and Switzerland the messages that the people convey are explicit and clear They use the actual works to convey the information These cultures are called ‘low-context cultures.’ In countries like India, Japan, Saudi Arabia, and other Middle Eastern Arab countries, communication is mostly indirect and the expressive manner in which the message delivered becomes critical Much of the information is transmitted through non-verbal communication These messages can be understood only with the reference to the content Such cultures are referred to as, “high-context cultures.” Accordingly to hall, cultures also vary based on the manner of information processing Cultures, which handle information in a direct, linear fashion, are called, “monochromic.” Americans are more monochromic Americans’ fast tempo and demand for instant responses are viewed as pushy and impatient The other type of culture is ‘polychromic.’ In this culture people work on several forms simultaneously, instead of pursuing a single task Japanese and Indians belong to polychromic culture Check Your Progress 1 Define culture …………………………………………………………………………… …………………………………………………………………………… What is law-context culture? …………………………………………………………………………… …………………………………………………………………………… 3.3 RELIGION Different peoples have their own religious convictions, belief, sentiments, customs, rituals, festivals, etc the cost of ignoring certain religious aspects could be very high, sometimes even fatal, in international business When an American fast food chain was planning to enter India, one political party state that it would oppose the marketing of beef product in the country by the multinational In a country where the cow is regarded as sacred, although there were some protests against the slaughter of cow, a sizeable population consumes beef, and the number of the beef consumers in India is larger than the total population of many countries It may, therefore, look ironic that a foreign firm should encounter this kind of a situation Pork is banned in Muslims remain closed during daytime Muslims would consume the meat of only those animals/birds slaughtered following the prescribed religious rituals Many Christians not normally consume non-vegetarian during the lent (50 days preceding Easter) during the 24 days preceding Christmas and on Fridays During these periods, Christians not conduct marriages and other celebrations like baptism Hence, the weeks following Christmas and Easter are seasons of such celebrations However, it is interesting to note that although according to the Bible, Christians are expected to fast on Sundays (the Sabbath day) and devote the whole day to God, and not to indulge in any worldly activities, most of them rather eat merrily and celebrate this holy-day A Buddhist monk from Thailand, studying in an Indian University, who was found to be a regular non-vegetarian, was asked how the disciple of the lord who preached ahimsa could be a meat eater His answer was that as a Buddhist he was expected not to kill for meat, but if meat was available in the market, he could buy and consume Religion may also influence the attitude towards work and wealth In the United States, it is common to hear people talk about the Protestant work ethics, which holds that people should work hard, be industrious, and save their money This work ethic helped to develop capitalism in the United States because of the importance it assigned to saving and to reinvestment of capital However, Americans are not the only people who work hard In Asian countries where Confucianism is strong, this attitude is known the Confucian work ethics In Japan, it is called the Shinto work ethics A renowned Indian economist has described the moderate growth rate the Indian economy achieved in the earlier Five years Plans as the Hindu Growth rate Religion may also play a role in deciding the weekly holiday, other holidays and working hours In several countries religious festival times are great business times People working hours, in several countries religious festival time are great business times People buy new cloths, exchange gifts, spend a lot on food, etc companies doing heavy promotions, including discounts and other incentive schemes, have become very common during festive seasons in Indian Many religious groups consider certain days of the week or certain periods auspicious for launching new ventures On the other hand, certain days and periods are regarded as bad Interestingly, certain days considered auspicious by some community are considered bad days by some others Many people, particularly Hindus, not commence any auspicious thing or start out for any important matter during Rahu Kala; important matters have to be done or commenced at Shubha Muhurta Many years ago, a foreign bank in Chennai introduced a promotion scheme to attract new customers The scheme ran for a month Although there were many enthusiastic enquiries about the details, when the period of the scheme approached then, the bank management was disappointed that the number of new accounts opened was nowhere near satisfactory It was then that the management realized that they chose the wrong period for the promotion The scheme was, therefore, extended for some more time The Islamic holy book Koran prohibits payment or acceptance of interest (interest is considered riba or usury) Islamic banks not pay regular predetermined interest to depositors nor they charge predetermined interest rates to borrowers Rather, the banks take a share of the profits (or loss), which are again shared with depositors What makes profit sharing, unlike interest, permissible in Islam is that only the profit sharing ratio, not the rate of return itself, is predetermined Islamic banks now handle more than $ 100 billion in assets worldwide and asset growth at Islamic banking institutions has been well over 10 per cent per year in the 1990s Even some large Western banks now have Islamic braches Muslims in other countries, however, banking in the normal system prevailing there The influence of religion on politics is on the increase in many parts of the world And politics often plays an important role in shaping economic policies and business regulation and promotion In a number of countries, religion and government are inseparably united Check Your Progress What is the main feature of Islamic Bank? …………………………………………………………………………….…… …………………………………………………………………………….…… 39 Social and Cultural Environment 40 International Business Environment 3.4 ATTITUDE AND VALUES The needs, capacities, and wishes of the various peoples of the world appear everywhere to be much alike and, in the presence of similar situations, have given rise to similar culture facts Everywhere man has developed the same cultural patterns and organized similar institutional forms for the expression of the organic needs and for the regulation of the human wishes There are, of course, wide and marked differences in detail The conditions of life are not everywhere the same and each group has, as a result of its unique life-experiences, evolved a set of social practices and developed a group of institutional arrangements peculiar to it This fund of values—the institutions, practices, beliefs, etc., the sum and coordination of which makes up the objective culture of any group comprise any and all data that have a meaning for human activity The fund of values differs from group to group and more or less from person to person An object, whether the content be sensual or imaginary, may be an object of desire to one group, an objection of aversion to a second, and to a third remain indifferent—that is, be not a value at all And to the same person, an object that is one time indifferent may take on either a positive or a negative value The fund of social values is thus subject to change; a thing that at one time occupies a place in the culture of the group may presently disappear or be replaced by a different value Within a century dueling has disappeared as a value in Western society In the present decade, prize fighting has been reintroduced as a moral value into American culture Whatever the nature of the social values—the content of the culture complex—the members of the group are responsive to them The values are objects of human desire This appreciation of the social value is an attitude If it is general in the group, as a result of communication, it is a social attitude It is, indeed, as a result of this human responsive reaction that any object becomes a value The attitude may be one of desire or one of aversion but in no case may it be one of indifference else the object drops out of the culture of the group and ceases to be a value The attitude is thus the subjective element in the culture; complex, the individual counterpart of the social value It is the individual tendency to react, either positively or negatively, to a given social value Certain of the human behavior tendencies appear to be natural in the sense that they are the expression of general human need or the sublimate of racial experience They correspond to something stable and uniform in the physical conditions of life Some fear responses, for example, appear to be of this nature Certain disgusts appear to be of the nature of organic attitudes, and a limited number of other behavior tendencies appear to have their origin in the complex of heritable characters These, as a result of experience, tend to become defined into social attitudes Attitudes of this type may be general in the group without being social They are of concern in the study of the individual but interest the sociologist only in so far as they are culturally conditioned or result in behavior of cultural significance For example, disgust as an organic attitude is not of direct interest to the student of social behavior It comes within the orbit of his interest to the extent that it is an element of importance in determining attitudes that are social The attitude of society toward women is a social attitude But the peculiar nature of this attitude, in at least some of its historic expressions, appears not to be susceptible of explanation without the aid of the natural organic disgust reaction toward things unclean Again, racial prejudice is a cultural attitude and, in the main, to be explained in historic and cultural terms But if, and to the extent that, the characteristic body odor of one race is offensive to persons of a different race and arouses a disgust reaction, the natural attitude becomes a thing of social significance and of interest to the sociologist since it is then a vital element in the determination of social behavior It is of course true that variations in temperament play some part in the determination of attitudinal differences But the biological disposition of individuals is in general subject to indefinite modification through conformity to the social code The human being is the most plastic of organisms He is born into a social order with relatively fixed and definite behavior patterns to which he must conform Whatever his original individuality of wish and temperament, he is moulded by the social framework into which he must fit and the social order becomes a part of him as he becomes a part of it Society provides the code of behavior, a definition of the situation that covers all phases of life and has become fixed as a result of experience, and from this social code, rather than from original nature, the individual values and attitudes have their rise The code does not correspond to the natural disposition of any person and to the extent that persons react alike to the stimuli set by the society it is because of social training, because of their assimilation to the traditional rules of behavior Most of the attitudes are fixed below the region of consciousness and are passed on by the social inheritance The importance of the attitude lies in the fact that it determines the behavior of the person and provides the mechanism of social control It is by definition a tendency toward activity Toward any value in the society there are possible or actual a variety of attitudes The actual attitude always represents an effort on the part of the individual to get some sort of recognition in the group organization Life organization demands membership in a group and the attitudes are the expression of a desire for status The attitude is thus vital from the point of view of social control The overt activity of the individual not only expresses a preexisting attitude, it arouses on the part of the group an attitude of approval or of condemnation according as it is in conformity with or in violation of the social code The approval and recognition of his fellows reinforces conventional behavior and so the attitude of conformity The social disapproval of the non-conformist person operates as the strongest and generally as the only effective inhibiting force to the repetition of a type of activity socially unacceptable When the social code lacks uniformity, as is usual in the larger societies of complex organization, the behavior of the person may provoke on the part of some an attitude of approval and on the part of others an attitude of disapproval The subsequent activity of the person' is then determined by the group in which he desires status and recognition Acts of vandalism express preexisting attitudes; they arouse on the part of the organized group attitudes of condemnation But they may bring applause and coveted recognition from the fellow members of the gang Subsequent behavior is here determined by whether the individual is more desirous of status in the one group or in the other Any effective control depends upon so changing the attitudes that they will lead to activity in conformity with the social code; by so modifying them that the incipient criminal will desire the approval of the social group rather than that of the criminal group Changes in attitude are accompanied always by the appearance of new values The changes may be slight or profound, gradual or abrupt, concern a single or a few attitudes or a large related group An abrupt change that involves a radical modification of many attitudes is commonly spoken of as a conversion It is a radical departure made in order to secure recognition and approval in a new group and is followed, if the change is to be permanent, by the gradual habituation and accommodation of the person to the fund of values characteristic of the new group But the acceptance of most attitudes lies in the region of the unconscious, and changes usually and normally go on by the imperceptible modifications of a single or a few attitudes rather than by a sudden and violent reorganization of the whole system 41 Social and Cultural Environment 42 International Business Environment 3.5 LANGUAGE Differences in the language are a very important problem area in business The estimates of the number of languages in the world range from 4000 to 10,000 Switzerland is a country with three fairly distinct cultures, divided between the French, Italian and German speaking Swiss and the regional difference are profound In South America there are more than 40 languages The African continent has the largest number of languages spoken Zaire alone has more than 200 languages Kenya has about 40 ethnic groups, each with its own language and culture Some 750 languages, each distinct and mutually unintelligible, are spoken in Papua, New Guines India has numerous languages and their dialects, besides the 18 officially recognized languages Of the 1652 mother tongues, listed by the Census of India, 33 are spoken by people numbering one lakh or more The Arabic language is read from right to left and many Arabians sequence things from right to left A multinational blundered in the Middle East when in the advertisement of its detergent it pictured soiled cloths on the left, the box of detergent in the middle and clean cloths on the right Non-verbal communications create equally, perhaps even more, difficult problems Body language has different interpretations in different cultures The same symbols and gestures may mean different things in different countries and sometimes in different regions of the same country A symbol or gesture that represents an appreciation in one society may mean quiet a different thing in another For example, the thumbs up sign with the thumb held straight up and four fingers kept folded, represents approval in counties such as the USA, the UK and Russia; it is highly offensive in Iran and regarded as rude in Australia The ‘OK’ sign with the thumb and index finger forming a circle and the other tree fingers held straight up means every thing is great in the USA and Germany and thins are just good, not excellent, in Mexico In most of Europe and Argentina, it means an absolute zero or worthless It is regarded as a vulgar gesture in countries such as Spain, Russia, Brazil and Uruguay In Japan it symbolizes money, mostly coins In Tunisia it conveys a threat of bodily harm A backward victory symbol is an insulation gesture in Europe Shaking head left to right, while it conveys no in the United States and most of the world, it means yes in some countries such a Bulgaria, Saudi Arabia and Malaysia A pat on the shoulder is offensive in Thailand while it connotes encouragement/sympathy in several countries 3.6 LET US SUM UP Culture is, the thought and behavior patterns that member of a society learns through language and other forms of symbolic interaction—their customs, habits, beliefs and values, the common viewpoints which bind them together as a social entity… cultures change gradually picking up new ideas and dropping old ones, but many of the cultures of the past have been so persistent and self contained that the impact of such sudden change has torn them apart, uprooting their people psychologically 3.7 LESSON END ACTIVITY Prepare a study note on the impact of social and cultural environment on international business 3.8 KEYWORDS Cultural Attitude and International Business: Dressing habits, living styles, eating habits and other consumption patterns, priority of needs are dictated / influenced by culture Some Thai and Chinese and most of the Indians not consume beef Thailand Chinese believe that consumption of beef is improper and Indians (particularly Hindus) believe that eating beef is a sin as they believe that cow is sacred (Kamadhenu) Learned: Culture is acquired through learning but not inherited genetically If a person absorbs or learns the culture of the society where he is raised, that learning is called socialization or enculturation However, some people learn the culture of the society other than the one in which they are raised Such learning is called ‘acculturation.’ The societies of Asian and African countries complain that their cultures are being contaminated by the Western influences Subjective: Culture is subjective in the sense that people of different cultures have different ideas about the same object Regarding the object of marriage the parents of the bridegrooms in many countries offer money (dowry) to the parents of the bride whereas the situation in India is quite opposite This is because, the patents of bridegrooms in other countries pay dowry as a compensation for raising the bride while the parents of bride in India pay dowry to the bridegroom to meet the expenses of establishing a new family Enduring: Culture is relatively stable as it is passed from generation to generation Taking care of the old people, respecting the elders and offering food first to the guests, next to old people and children and last to the young people are the practices from generations together in Indian society Failure of birth control in India and China is due to culture Cumulative: uncertainty of rains, crop and thereby income in developing countries over years resulted in the culture of saving for to the next years Thus, culture is based on the accumulated circumstances over the hundreds or even thousands of years 3.9 QUESTIONS FOR DISCUSSION What are the various factors included in the concept culture? Distinguish between the attitude and values Check Your Progress: Model Answers CPY 1 Culture: A set of traditional beliefs and values, which are transmitted and shared in a given society Low-context culture: In some countries like USA, Canada, Germany and Switzerland the messages that the people convey are explicit and clear They use the actual works to convey the information These cultures are called ‘low-context cultures.’ CYP Islamic Bank: Islamic banks not pay regular predetermined interest to depositors nor they charge predetermined interest rates to borrowers Rather, the banks take a share of the profits (or loss), which are again shared with depositors 43 Social and Cultural Environment 44 International Business Environment 3.10 SUGGESTED READINGS Daniels, D and Radebangh H., “International Business”, Pearson Education Asia, New Delhi, 2002 Griffin and Pustay, “International Business”, Pearson Education Asia, New Delhi, 2002 Subba Rao, “International Business”, Himalaya, Mumbai, 2001 Schaffer, “International Business Law and its Environment”, Thomson, 2002 Onkwist and,Shaw, “International Marketing” Philip R Careora, “International Marketing”  ... Environment 44 International Business Environment 3.10 SUGGESTED READINGS Daniels, D and Radebangh H., ? ?International Business? ??, Pearson Education Asia, New Delhi, 2002 Griffin and Pustay, ? ?International. .. psychologically 3.7 LESSON END ACTIVITY Prepare a study note on the impact of social and cultural environment on international business 3.8 KEYWORDS Cultural Attitude and International Business: Dressing...34 International Business Environment 35 Social and Cultural Environment LESSON SOCIAL AND CULTURAL ENVIRONMENT CONTENTS 3.0 Aims and Objectives 3.1