International Business Environments Operations Chapter 2 The Cultural

International Business Environments & Operations Chapter 2 The Cultural Environments Facing Business 2 -1

Introduction p Culture refers to the learned norms based on values, attitudes, and beliefs of a group of people n n p Group of people have different cultures. E. g. , youth culture, national culture, organizational culture People from different cultures differ on values, attitudes, and beliefs Culture is an integral part of a nation’s operating environment n n It is important for companies to understand adjust to ever-changing operating environments. every business function is subject to potential cultural differences 2 -2

Introduction Cultural Factors Affecting International Business Operations 2 -3

Knowing Culture p Business involves people: Every business employs, sells to, buys from, and is owned and regulated by people. n Every business function (managing, marketing, transporting, purchasing, dealing, security funds) is subject to cultural differences p International Business involves people from different cultures 2 -4

Advantages of knowing and sensitivity to Culture p p Companies need to decide when to make cultural adjustments Fostering cultural diversity can allow a company to gain a global competitive advantage n p (Cultural diversity: bringing together people of diverse backgrounds and experience) Cultural collision occur when divergent cultures come into contact TWO conditions n when a company implements practices that are less effective n when employees encounter distress because of difficulty in accepting or adjusting to foreign behaviors 2 -5

Cultural Awareness p Learning the cultural differences n Discuss the cause of cultural differences, rigidities, and changes p p p Consult with knowledgeable people at home and abroad Go there directly and interact with people Problem areas that can hinder managers’ cultural awareness: p p n n n Subconscious reactions to circumstances The assumption that all societal subgroups are similar (ethnocentrism) Comparisons may be incorrect if responses were corrected for social desirability Specific variations are overlooked when averages are observed Cultures evolve and change over time 2 -6

Culture and the Nation-State p Nation as a point of reference n Similarity among people is a cause and an effect of national boundaries People share attributes such as values, language, race National identity represented through rites and symbols like flags, parades, rallies, and preservation of national sites, documents, monuments, and museums (promote a common perception of history) n laws apply primarily along national lines n n p Country-by-country analysis can be difficult because subcultures, ethnic groups, races, and classes exist within nations n similarities link groups from different countries 2 -7

How cultures Form and Change p Transformed from parent to child, teacher to pupil, social leader to follower, and peer to peer n n p By age 10, most children have their basic value systems Both individual and collective values may evolve over time Sources of Change n n Change by choice: as a reaction to social and economic situations that present people with new alternatives Change by imposition (cultural imperialism): imposed introduction of certain elements into a culture from an alien culture, such as, forced change in law by an occupying country, overtime become part of the subject culture. 2 -8

How cultures Form and Change p Contact among countries brings change (people travel and access foreign information through a variety of sources) n The process is known as cultural diffusion p When cultural diffusion results in mixing cultural elements, the process is known as creolization 2 -9

Language: Cultural Diffuser and Stabilizer p A common language within a country is a unifying force. Language is an integral part of a culture n p Therefore, linguistic changes are regulated A shared language between nations facilitates international business n n Native English speaking countries account for a third of the world’s production English is the main international language of business; functional and operating language p p English media is very influential in promoting US lifestyle Hybrid tongue: intrusion of English into another language: Spanglish and Chinglish 2 -10

Religion: Cultural Stabilizer p p Religion impacts almost every business function Centuries of profound religious influence continue to play a major role in shaping cultural values and behavior (Buddhism, Hinduism, Islam, Christianity, etc. ) n n p many strong values are the result of a dominant religion Religion may lead to much disagreement and violence Religion inhibits production and/or sale of certain products or work activities at certain time or day 2 -11

Behavioral Practices Affecting Business 1 - Social Stratification p p p Attitudes and values constitute cultural variables Decisions about what products to sell AND decisions about organizing, managing, and controlling operations are influenced by attitudes and behaviors within cultures Social ranking (social class or status within a culture) is determined by n n an individual’s achievements and qualifications an individual’s affiliation with, or membership in, certain groups 2 -12

Social Stratification p Group affiliations can be n n p Ascribed group memberships (affiliation determined by birth) p Gender, family, age, caste, and ethnic, racial, or national origin Acquired group memberships (by choice) p based on religion, political affiliation, professional association Two other factors that are important n education (how much and from where) and social connections (who do you know and in what places) 2 -13

More on Social Stratification p p p Performance orientation: competence or seniority (humaneness) Open vs Closed societies: Open or egalitarian societies give less importance to ascribed group membership Gender-based: gender equality and discriminations or choices of profession Age-based: age of vote, marry, license to drive, buy alcohol, retire, serve the nation Family-based: stay with family run business Prestige of jobs: some jobs win more social respect and are better paid 2 -14

2 - Work Motivation p p p The motivation to work and Work ethics differ across cultures Materialism: The desire for material wealth is a prime motivation to work p promotes economic development– allows higher productivity and low production costs Rewards offered and rewards expectation: People are motivated to work when the rewards for success are high n masculinity-femininity index p high masculinity score prefers “to live to work” than “to work to live”. They are more assertive, aggressive, and confronting. p Low masculinity scorers prefer smooth and 2 -15 friendly social relationships, consider welfare

Work Motivation p Hierarchy of needs theory n n n Individuals will fill lower-level needs before moving to higher level needs Once a need is satisfied, it is no more motivating Different cultures place different degree of importance to different needs That is, there are Different reward preferences p 2 -16

Relationship Preferences p p Relationship preferences interacting with superiors/subordinates Power distance n n p high power distance implies little superiorsubordinate interaction or little consultation p autocratic (ruling with unlimited authority) or paternalistic (regulating conduct by supplying needs) management style low power distance implies consultative/participative style Individualism versus collectivism n n high individualism – welcome challenges high collectivism – prefer safe work environment 2 -17

Risk Taking Behavior p Risk taking behavior differs across cultures n Uncertainty avoidance (preference for ‘known’) and handling uncertainty p n Trust (degree of trust among people) p n n prefer to stay with the same employer; with clear job instructions High trust leads to investments and innovations Future orientation p delaying gratification (e. g. , retirement plans) Fatalism p attitudes of self-determination versus belief in pre-destined fate or will of God 2 -18

Information and Task Processing p Cultures handle information in different ways n n Perception of cues Obtaining information low context cultures: prefer first hand directed to the point information p high context cultures: seek peripheral and indirect information p n Obtaining and processing information p Ordering and classifying (e. g. , First name and surname) 2 -19

Information and Task Processing Types of Cultures in how they prcoess information and tasks n Monochronic (work sequentially) polychronic (work simultaneously on various tasks) n Idealism (focus on whole and then parts/issues/details Pragmatism (focus on parts first and then whole) 2 -20

Selective Perceptions p Selective in perceiving cues n n n Color (e. g. , colors of joy and sadness) Depth (attention to details; vocabular) Shape (decent or bold) 2 -21

Communications p p p Cross border communications do not always translate as intended Spoken and written language Silent language (other than spoken or written) n Color (hue and intensity) n Distance (proximity) n Time and punctuality (time as an event) n Body language (kinesics): how people walk, touch, or move their bodies n Prestige (perform services by oneself or otherwise) 2 -22

Communications Body Language Is Not A Universal Language 2 -23

Dealing with Cultural Differences Do managers have to alter their customary practices to succeed in countries with different cultures? p Must consider p n n Host society acceptance/willingness to accommodate Degree of cultural differences (language, religion, geography, economic development) p cultural distance § GLOBE: Global Leadership Organizational Behavior Effectiveness- clusters countries based on values, attitudes of middle managers towards leadership characteristics 2 -24

Cultural Differences n n Ability to adjust p culture shock (exposure to foreign practices and having to absorb new cues and expectations may be traumatic § Stages of adjusting abroad: Delight, depression and confusion, settlement and job satisfaction p reverse culture shock (after spending some time in another culture, things at home country appear confusing upon return) Company and management orientation p Adaptation depends on the host and home country culture 2 -25

Dealing with Cultural Differences p Three company and management orientations n n n Polycentrism p business units abroad should act like local companies Ethnocentism p home culture is superior to local culture p overlook national differences Geocentrism p integrate home and host practices 2 -26

Strategies for Instituting Change Value Systems p Cost-Benefit Analysis of change p Resistance to too much change p Participation p Reward Sharing p Opinion Leadership p Timing p Learning Abroad p 2 -27