Differences in Cultures

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Lecture 3

• Differences in Cultures

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Outline

• What is Culture?
• National Culture
• Determinants of Culture
• Culture Change
• Culture Workplace
• Implications for International Business

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A. What is Culture?

• Culture
• A system of value norms that are shared among a
  group of people
• Constitute a design for living
• Values
• Abstract ideas about good or bad
• Norms
• Social rules and guidelines

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B. National Culture

• Definition of Society
• A group of people that share a common set of
  values norms
• common culture
• Not strict to one-to-one correspondence between a
  society a nation-state
• Nation-states
• Political creations
• Contain a single culture or several distinct
  cultures
• Examples
• Canada 3 distinct cultures in one country an
  Anglo culture, a French speaking Quebecois
  culture, and a Native American culture

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C. Determinants of Culture

• Factors affecting Culture Norms Values

Religion
Political Philosophy
Social Structure
Culture Norms Value Systems
Economic Philosophy
Language
Education
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C. Determinants of Culture Social Structure

• Social Structure
• Basic social organization to explain differences
  in cultures
• Measured by 2 dimensions
• Individual vs. Group
• Class system vs. Caste system
• Individual
• Building block of many Western societies
• Group
• An association of 2 or more individuals who
• have a shared sense of identity
• interact with each other in structured ways on
  the basis of a common set of expectations about
  each others behavior

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C. Determinants of Culture Social Structure

• Social Stratification

• Caste system
• A form of closed system of
• stratification in which social
• position is determined by
• the family into which a
• person is born
• Change in that position is
• usually not possible during
• an individual's lifetime
• Examples Japan, India

• Five different levels of
• the Indian caste system
• Priest
• Ruler, Warrior, Landowner
• Merchants
• Artisans, Farmers
• Outside class system - known as Untouchables

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C. Determinants of Culture Social Structure

• Social Stratification

• British class system
• The upper class involve wealthy and powerful
  people
• The upper-middle class members involve in
  important occupations and the prestigious
  professions
• The lower-middle class members involve in
  clerical work and the less prestigious professions

• Class system
• A form of open social
• stratification in which the
• position a person has by birth
• can be changed through his
• or her achievement or luck
• Examples US, Britain, China

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C. Determinants of Culture Social Structure

• Significance of Social Stratification
• Important implications for the management
  organization of businesses
• In cultures where there is a great deal of
  consciousness over the class of others
• The way individuals from different classes work
  together (i.e. management and labor)
• may be very prescribed strained in some
  cultures (e.g. Britain) or
• have almost no significance in others (e.g.
  Japan)
• Class consciousness
• A condition where people tend to perceive
  themselves in terms of their class background
• This shapes their relationships with others
• Example Class consciousness in China

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C. Determinants of Culture Religious Ethical
Systems

• Religion
• A system of shared beliefs rituals that are
  concerned with the realm of the sacred
• Ethical Systems
• A set of moral principles or values used to guide
  shape behavior
• The ethical practices of individuals within a
  culture are often closely intertwined with their
  religion

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C. Determinants of Culture Religious Ethical
Systems

• Four largest religions
• Confucianism
• is not a religion
• influences behavior shapes culture in many
  parts of Asia

Christianity
Islam
Hinduism
Buddhism
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C. Determinants of Culture Religious Ethical
Systems

• Christianity
• Largest religion
• Common throughout Europe, the Americas, other
  countries settled by Europeans
• Three major branches
• Protestant
• Roman Catholic
• Eastern Orthodox

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C. Determinants of Culture Religious Ethical
Systems

• Economic Implications of Christianity
• Protestant Work Ethic
• focuses on hard work, wealth creation for the
  glory of God
• Protestant
• emphasizes on individual religious freedom

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C. Determinants of Culture Religious Ethical
Systems

• Islam
• is practiced mainly in the same underlying roots
  as Christianity
• suggests the same underlying societal mores
• extends the idea to more of an all-embracing way
  of life that governs one's being
• prescribes many more "laws" on how people should
  act live that are entirely counter the US
  "separation of church state"
• Emphasis of Koran (???)
• Countrys law is based on the idea of religion
• No separation of church state (????)
• Cant accept interest

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C. Determinants of Culture Religious Ethical
Systems

• Economic Implications of Islam
• Islam people do not own property
• Act as stewards for God thus must take care of
  which they have been entrusted with
• They use property in a righteous, socially
  beneficial, prudent manner
• Not exploit others for their own benefit
• Have obligations to help the disadvantaged
• The way of practicing business is prescribed
• Example Islamic Banking in Pakistan (Global
  Business Today P.109)

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C. Determinants of Culture Religious Ethical
Systems

• Hinduism
• Practiced primarily on the Indian sub-continent
• Focuses on the importance of achieving spiritual
  growth development
• Require material and physical self-denial

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C. Determinants of Culture Religious Ethical
Systems

• Economic Implications of Hinduism
• Hindus are valued by their spiritual rather than
  material achievements
• Not the same work ethic or focus on
  entrepreneurship found in some other religions
• Promotion adding new responsibilities may not
  be the goal of an employee, or may be infeasible
  due to the employee's caste
• Caste systems religious beliefs exist
• ? Negative economic consequences
• Example McDonalds and Hindu Culture (Global
  Business Today P.125-126)

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C. Determinants of Culture Religious Ethical
Systems

• Buddhism
• Practiced mainly in South East Asia
• Stresses spiritual growth the afterlife
• Does not support the caste system
• Represents a religion which is between
  Protestantism Hinduism
• Buddhist societies may represent more fertile
  ground for entrepreneurial activity than Hindu
  culture

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C. Determinants of Culture Religious Ethical
Systems

• Confucianism
• Practiced mainly in China
• Teaches the importance of attaining personal
  salvation through right action
• Not concerned with the supernatural has little
  to say about the concept of a supreme being or an
  afterlife

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C. Determinants of Culture Religious Ethical
Systems

• Economic Implications of Confucianism
• 3 key teachings of Confucianism
• Example Japanese auto companies their
  suppliers are facilitated by loyalty, reciprocal
  obligations, honesty
• Costs of doing business are probably higher in
  countries where these relationships are more
  adversarial not bound by these same values

Loyalty
Reciprocal obligations
Honesty
Lowering of the cost of doing business in
Confucian societies
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C. Determinants of Culture Language Education

• Language
• Spoken language
• Examples English, Cantonese
• Unspoken communication
• Examples Facial expression, tone of voice,
  gestures
• Education
• Knowledge-based
• Consists of training and educational
  opportunities
• Enhances competitive advantage of the firm

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D. Culture Change

• Cultural change characteristics

Availability of education (economic progress)
Urbanization (economic progress)
Improvement in the quality of life (economic
progress)
Rise of global corporations e.g. Multi-National
Corporations (MNCs)
Advances in transportation communication
technology
Example Matsushitas Japans Changing Culture
(Global Business Today P.119120)
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E. Culture Workplace

• How does a society's culture impact on the values
  found in the workplace?
• ? Need to vary management process practices
  to take different culturally determined
  work-related values into account

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F. Implications for International Business

• Cross-Cultural Literacy
• International businesses that are ill-informed
  about the practices of another culture are
  unlikely to succeed in that culture
• Method
• Regularly rotate transfer people
  internationally
• Aspects that should pay more attention
• Deal negotiations
• Incentive pay systems for salespeople
• Structure of organization
• Name of brand product
• Relationship between management labor
• Promotional manner

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F. Implications for International Business

• Cultural Competitive Advantage
• Connection between culture competitive
  advantage is important for international business
• Reasons
• 1) Connection suggests the most viable
  competitors
• Example US enterprises face competitors from
  Pacific Rim nations
• where having competitive advantages of free
  market economics, Confucian ideology,
  group-oriented social structures advanced
  education systems
• E.g. South Korea, Taiwan, Japan China

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F. Implications for International Business

• 2) Connection provides information with the
  businessmen
• about the suitable countries to locate
  production
• facilities do business
• Consider 8 factors when Making Investment
  Decision

Market size
Labour cost
Religion stress
Education system
Stage of economic development
Access to work market
Linguistic group
Social stratification
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F. Implications for International Business

• Conclusion
• Cultural values can influence
• the costs of doing business in different
  countries
• the countrys competitive advantage
• Research
• Some positive negative aspects of US Japanese
  culture contribute to their economic success
• Understanding different cultures have
  implications to
• look for potential competitors in world markets
• decide where to undertake international expansion

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F. Implications for International Business

• Culture Business Ethics
• In the West
• The legal system helps to assure people that
  business agreements will be honored
• In nations that lack a similar legal tradition
• Emergence of other institutions help to assure
  people that business agreements will be honored,
  like guanxi networks
• Example
• Guanxi-Ties that Bind (Global Business Today
  P.9092)