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National Culture's Impact on Economic Competitiveness

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Habeeb Ajwad

on 28 January 2015

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Transcript of National Culture's Impact on Economic Competitiveness

National culture's impact on Economic Competitiveness
Is the argument that national culture lies at the root of economic competitiveness highly-persuasive or fundamentally flawed?
Relationship between National culture
&
Economic Competitiveness

What is culture?
Two types of Culture
Emic
&
Etic

Geert Hofstede
Universalistic
&
Particularistic


*Economic competitiveness comes from organizational culture.

* Economic success comes from the success of organizations and industries in a nation.

*Strong organizational culture is a necessity for organizational success

Culture is a complex whole which includes knowledge, beliefs, arts, morals, law, customs, and any other capabilities and habits acquired by [a human] as
a member of society (E.B Tylor, 1971)
*Emic and Etic approaches were first introduced by Kenneth Pike in 1954.

*These terms were used to analyze human behaviors and cultures.

*The perspective can be from the outside (Etic) or from the inside (Emic).

* Dutch Anthropologist

* He is famously known for his study of IBM’s employees in over 40 countries.

* He identified 6 dimensions of work
related values is his work namely Hofstede's cultural dimensions theory.
By
Habeeb Ahamed Ajwad
Rishi Kapoor
Kwok Fong Tun Franklin
Azer Majidli
Kelvin Yeung
Philip Horn
MN3301 Presentation group 3
National culture
&
Organizational culture
Introduced by Alfonsus Trompenaars & Charles Hampden-Turner in 1997 in their work best known as Trompenaars' model of national culture differences.

*ETIC deals with outside

*ETIC approach believes in universality of human behavior thus studies more than one cultures while researching

*Example:
1. Religion
2. Law
3. Population
ETIC
*EMIC deals with the inside.

*EMIC approach beliefs that culture is an integrated system thus studies one culture at a time.

*Example:
1. Human behaviour
2. Firm size
Example of Emic & Etic
EMIC
Power Distance
Uncertainty Avoidance
Individualism vs Collectivism
Masculinity vs Femininity
Long term vs Short Term orientation
Indulgence vs Self-restraint
Hofstede's Cultural Dimension Theory
Alfred Chandler
Protestantism
VS
Confucianism
Philippe D'Iribanne
*French Researcher

*His approach shows that culture is a diverse range of practices

*Opposes Hofstede's research both methodologically and conceptually.

*He researched on USA, France
Netherlands
Michael Porter
So far...
UK
Germany

China
Japan
USA
}
}
Short-termism
Long-termism
Shalom Schwartz
HR & Reward
Systems
Long-termism vs Short-termism
Views on Money
Measurement of Economic Competitiveness
* Social Psychologist & Cross-cultural researcher.

*Follows the studies of Geert Hofstede.

*Famous for the"Theory of Basic Human Values" and "Cultural Dimensions Theory".
Hierarchy
Embeddedness
Mastery
Affective autonomy
Intellectual autonomy
Egalitarianism
Harmony
7 Values of Cultural Dimension
USA
France
Netherlands
Measurement of Economic
Competitiveness
Economical
Sociological
*GDP
*Interest Rate
*R&D Spending
*Living Standard
*Education
Education Systems
Individualist
VS
Collectivist
National culture
Organizational culture
USA
National Culture's impact on Car Industry
Attitudes towards money
Trade Unions Power
R&D Spending
USA
UK
Germany
Japan
China
High
High
Low
Medium
Medium
High
High
Medium
Low
Low
Low
High
Medium
Medium
Medium
USA- Ford
UK-Jaguar
Germany-VolksWagen
Japan-Toyota
China-Cherry
Vehicle Exports
Low
Medium
Medium
Very High
High
Purchasing Power
High
High
Medium
Medium
Low
Conclusion
We conclude by saying we believe that national culture shapes organizational culture as a culture free theoretical framework can only be maintained if the actor is left out of the picture. Moreover formal structures can be remarkably alike across societies, however different national actors perceive, interpret or live with them in very different ways due to deep rooted cultural forces.


Firm strategy, Structure
& Rivalry
Factor
Conditions
Demand
Conditions
Related and Supporting
Industries
Michael Porter's Diamond Model
Therefore we confirm that national culture lies at the root of economic competitiveness.
Thank you for watching our presentation
Any questions???
UK
Japan
Germany
China
USA UK
China
Germany
Japan
Narrow Elitism
VS
Broad Based Egalitarianism
USA, UK and Germany
China and Japan
Reward Systems
USA
UK
Germany
China
Japan
USA
UK
Germany
Japan
China
Salary bonus ; Health care

Salary bonus

Massive salary ; Other white color

Senior position in hierarchy ; Respect
benefits
Iron rice bowl ; Iron chair ; Iron wage
Long-termism
Fostering of virtues oriented towards future rewards in particular thrift.
Corporate Governance
R&D
Long-termism
vs
Short-termism
HR Systems
Power of Trade union
R&D
Savings
Family orientation
Example of long-termism activities
VS
Short-termism
Fostering of values related to the past and present, in respect to reputation, tradition and social obligations
Exampes of short-termism
Shareholder value
Immediate competitiveness
Employment policy
Wage Criteria
Results
China
Japan
USA
UK
Germany
Spending vs Saving
Indulgence vs Restraint
*Africa, Latin America & Western Europe have the highest indulgence traits

*Eastern Europe and Eastern Asia have the highest restraint traits.
Culture dictates how companies operate
In a restraint society, saving will be high. So the capital flows into the economy would be considerably less compare to a indulgent society.
Indulgence vs Restraint
Indulgence
refers to society that allows free spending for all their needs of having fun and enjoyment
Restraint
refers to a society that suppresses spending for needs as they are regulated based on social norms
UK, USA and Germany are examples of indulgent societies. As a result they all have high debts.
Protestantism
From the Christian practice and faith
16Th century
Led by Martin Luther & John Calvin
USA, UK & Germany

Confucianism
Also known as Ruism
Developed by confucius (ChinesePhilosopher)
China, Japan & South Korea
Protestantism
Promoted the rise of modern capitalism
Confucianism
Promoted the importance of specific social relationships
The largest ethnic Chinese corporation in Indonesia – SALIM GROUP
Intense Effort encourages mutual obligation by employees
Concerns the Ordering Society and the Duty of Maintaining Harmonious Relationships
Attributes
Presence of strong Individualism
Seek for efficiency
Value of performance
Respect for diligence
Forward thinking
Pragmatism
Competition
Relative male-female equality
Major variations
Work Ethic and self-Discipline
Asceticism and thrift
Pragmatic and ‘Rational’ Decision making
Short temism and long-termism
Self-Improvement and education
Individualism vs collectivism


R&D Expenditure (% of GDP)
Full transcript