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Cultural Factors in International Business

Chapter 4

Leila Samii

on 19 September 2013

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Transcript of Cultural Factors in International Business

photo credit Nasa / Goddard Space Flight Center / Reto Stöckli
Chapter 4
Cultural Factors in the International Business Environment
Current Events

Review of Political and Government

Criteria for Background

Cross Cultural Risks
What is Culture?
National Culture
Stereotypes and Idioms
What are stereotypes?
Measurements of Culture
Other Aspects of Culture
What are the 4 types of Risk?
What is Cross Cultural Risk?
A situation or event where a cultural miscommunication puts some human value at stake
Country Risk
Economic Risk
Economic Risk
Cross Cultural Risk
Why does cross cultural
risk occur?
When in different environments characterized by unfamiliar languages and unique value systems, believes, and behaviors
Manifestations of Cross Cultural Risk
Ethnocentric orientation
using our own culture as the standard for judging other cultures
Polycentric orientation
Geocentric orientation
a host country a mindset where the manager develops a greater affinity with the country in which she/he conducts business
a global mindset where the manager is able to understand a business or market without regard to country boundaries
If you were a manager what type of mindset should you have?
What type of mindset do you have?

Culture relates to a system of shared assumptions, ideas, beliefs, and values that guide human behavior
Appears in statements, actions, material items
Culture is acquired and inculcated; acquisition of cultural norms and patterns is a subtle process
Culture is transmitted from generation to generation; with embellishment and adaptation over time
What Culture Is NOT
Culture is:
Not right or wrong – culture is relative. There is no cultural absolute. Different nationalities simply perceive the world differently.
Not about individual behavior – culture is about groups. It refers to a collective phenomenon of shared values and meanings.
Not inherited – culture is derived from the social environment. We are not born with a shared set of values and attitudes; we learn and acquire as the grow up.
How is culture learned?
Socialization:The process of learning the rules and behavioral patterns appropriate to one's given society, i.e. cultural learning.
Acculturation: The process of adjusting and adapting to a culture other than one's own, commonly experienced by expatriate workers.
What is an expatriate worker?
What makes culture?
Culture incorporates both objective and subjective elements.
Objective or tangible- tools, roads, television programming, architecture, and other physical artifacts.
Subjective or intangible- norms, values, ideas, customs, and other meaningful symbols
What is a stereotype?

What are some stereotypes of people in the US?
Regionally (South vs. North vs. West)

What are some stereotypes of people internationally?
Examples of Stereotypes
Some stereotypes about people from the U.S. relative to others:
Argumentative and aggressive, compared to Japanese who tend to be reserved and humble.
Individualistic lovers of personal freedom, compared to Chinese who tend to be group oriented.
Entrepreneurial and risk-seeking, compared to Saudi Arabians who tend to be conservative, employing time-honored methods for getting things done.
Direct and interested in immediate returns, compared to Latin Americans who usually take time to be social and get to know their business partners
Idioms exist in virtually every culture and are used as a short way of saying something else. Examples:
"To roll out the red carpet" is to extravagantly welcome a guest; no red carpet is actually used.
What are some common idioms you have heard?
Objective and Subjective Dimensions of Culture
Objective dimensions- symbols, material productions, and creative expressions of culture.
Subjective dimensions- values and attitudes, manners and customs, deal versus relationship orientation, perceptions of time, perceptions of space, and religion.
E.T. Hall's High- Low Context Cultures
Verbal and Non Verbal Communication
High Context Culture
A high-context culture emphasizes nonverbal messages and use communication as a means to promote smooth, harmonious relationships.
Prefer an indirect, polite, “face-saving” style that emphasizes a mutual sense of care and respect for others; careful not to embarrass or offend others.
It is difficult for Japanese people to say “no” when expressing disagreement. Much more likely to say “it is different” -- an ambiguous response.
In East Asian cultures, showing impatience, frustration, irritation, or anger disrupts harmony and is considered rude and offensive.
In Japan, superiors are given favored seating as a show of respect, i.e., farthest away from the entrance to the room.
To succeed in Asian cultures, it is critical to notice nonverbal signs and body language.
Low-context cultures rely on elaborate verbal explanations, putting much emphasis on spoken words.
They tend to be in northern Europe and North America.
Communication is direct and explicit, meaning is straightforward, i.e. no “beating around the bush,” and agreements are concluded with specific, legal contracts.
Low Context Culture
What problems could arise if you are a high context culture working in a low context culture? and Vice Versa?

Which culture is more efficient in doing business do you think?
Hofstede Classification of National Culture
Individualism versus collectivism refers to whether a person primarily functions as an individual or within a group.
Power distance describes how a society deals with inequalities in power that exist among people.
Uncertainty avoidance refers to the extent to which people can tolerate risk and uncertainty in their lives.
Masculinity versus femininity refers to a society’s orientation based on traditional male and female values.
Deal vs. Relationship Orientation
Deal-oriented cultures- managers focus on the task at hand, are impersonal, typically use contracts, and want to just “get down to business.”
Relationship-oriented cultures- managers value affiliations with people, rapport, and get to know the other party in business interactions; relationships are more important than the deal- trust is highly valued in business agreements.
Monochronic vs. Polychronic Orientation
Monochronic - rigid orientation to time in which the individual is focused on schedules, punctuality, time as a resource, time is linear, “time is money.”
Polychronic- A flexible, non-linear orientation to time in which the individual takes a long-term perspective and is capable of multi-tasking; time is elastic, long delays are tolerated before taking action.
Perception of Physical Space
Conversational distance is closer in Latin America than in Northern Europe or the U.S.
Those who live in crowded Japan and Belgium have smaller personal space requirements than those who live in Russia or the U.S.
In Japan, it is common for employee workspaces to be crowded together in the same room- one large office space might be used for 50 employees.
North American firms partition individual workspaces and provide private offices for more important employees.
In Islamic countries, close proximity may be discouraged between a man and a woman who are not married
Time dictates expectations about planning, scheduling, profit streams, and what constitutes tardiness in arriving for work and meetings.

Longer planning horizon- Japan- prepare strategic plans for the decade.

Shorter planning horizon- Western companies- strategic plans-several years.
Perceptions of Time
Religion is a system of common beliefs or attitudes concerning a being or system of thought people consider to be sacred, divine, or highest truth, as well as the moral codes, values, institutions, traditions, and rituals associated with this system.
Religion influences culture, and therefore business and consumer behavior.
Manners and Customs
Manners and customs are ways of behaving and conducting oneself in public and business situations.
Informal cultures -egalitarian, in which people are equal and work together cooperatively.
Formal cultures- status, hierarchy, power, and respect are very important.
Varying customs: eating habits, mealtimes, work hours and holidays, drinking and toasting, appropriate behavior at social gatherings (handshaking, bowing, kissing), gift-giving (complex), and the role of women
Language as a Key Dimension of Culture
The “mirror” or expression of culture, language is essential for communications, it also provides insights into culture.
Linguistic proficiency is a great asset in international business because it facilitates cross-cultural understanding.
Language has both verbal and nonverbal (unspoken, facial expressions and gestures).
At present the world has nearly 7,000 active languages, including over 2,000 in Africa and Asia, respectively.
Technology, the Internet, and Culture
Technological advances are a key determinant of culture and cultural change- more leisure time, and computers, multimedia, and communications systems that encourage convergence in global culture.
The “death of distance” refers to the demise of the boundaries that once separated people, due to integrating effects of modern communications, information, and transportation technologies- more homogenized cultures are developing.
The Internet also promotes the diffusion of culture, with rapidly growing number of Internet users.
Are Cultures Converging?
What do you think?
Chapter 4 Review thus far...
Current Events
What is country risk?
What are political and legal system?
What are the types of political systems?
What are the types of legal systems?
Who are actors in political and legal systems?
What types of country risk produced by the political system and legal system?
How can you manage country risk?
Superbowl Paper
Current Events
Superbowl Paper
Review of Chapter 7 and Culture

Finish Culture- Decide Criteria

Finding Poverty http://mashable.com/2013/01/31/one-you-choose-campaign/
Super Bowl Monday http://mashable.com/2013/01/31/super-bowl-monday-petition/
Super Bowl Paper- In 500 words double spaced, please explain the culture of the
Superbowl. What cultural factors are connected i.e. symbolism, rituals etc. Make sure
you include what you have learned in Chapter 4 about culture.
Review Ch. 7
What is cross cultural risk?
What are the 3 types of manifestations of cross cultural risks? with definitions (ex. centric)
How do you define culture?
How does one take in culture?
How is culture learned?
What are 3 stereotypes of culture, with definitions? And examples....
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