Part Two Chapter Differences in Culture Country Differences

Part Two Chapter Differences in Culture Country Differences Three

Slide 3 -1 What is culture? l Culture is a society’s (group’s) system of shared, learned values and norms; as a whole, these values and norms are the society’s (group’s) design for living Values: abstract ideas about the good, the right, the desirable u Norms: social rules and guidelines; determine appropriate behavior in specific situations u n Folkways: u dress code; table manners; timeliness n Mores: u Irwin/Mc. Graw-Hill norms of little moral significance norms central to functioning of social life bring serious retribution: thievery, adultery, alcohol Copyright 2001 The Mc. Graw-Hill Companies, Inc. All rights

Slide 3 -2 National culture l Nation u a useful definition of society similarity among people a cause -- and effect -- of national boundaries l Nation is a useful way to bound and measure culture for conduct of business u culture is a key characteristic of society and can differ significantly across national borders n Can also differ significantly within national borders laws are established along national lines u Culture is both a cause and an effect of economic and political factors that vary across national borders u Irwin/Mc. Graw-Hill Copyright 2001 The Mc. Graw-Hill Companies, Inc. All rights

Slide 3 -3 Social Structure and Culture l Degree to which Unit of social organization is the individual or the group u Society is stratified into classes or castes u n High-low stratification n High-low mobility between strata l The individual: building block of many Western societies Entrepreneurship u Social, geographical and inter-organizational mobility u Irwin/Mc. Graw-Hill Copyright 2001 The Mc. Graw-Hill Companies, Inc. All rights

Slide 3 -4 Individual vs Group societal Characteristics l Individual l Group Managerial mobility between companies u Economic dynamism, innovation u Good general skills u Team work difficult, non-collaborative u Exposure to different ways of doing business u e. g. , U. S. companies u Irwin/Mc. Graw-Hill Loyalty and commitment to company u In-depth knowledge of company u Specialist skills u Easy to build teams, collaboration u Emotional identification with group or company u e. g. , Japanese companies u Copyright 2001 The Mc. Graw-Hill Companies, Inc. All rights

Slide 3 -5 Religion, Ethics and Culture l Religion: system of shared beliefs about the sacred l Ethical systems: moral principles or values that shape and guide behavior; often products of religion l Major religious groups and some economic implications Christianity u Islam u Hinduism u Buddhism u Confucianism u Irwin/Mc. Graw-Hill protestant work ethic Islamic fundamentalism anti-materialistic, socially stratified anti-materialistic, social equality hierarchy, loyalty, honesty Copyright 2001 The Mc. Graw-Hill Companies, Inc. All rights

Slide 3 -6 Language and Culture l Language, spoken “private” does not exist as a word in many languages u Eskimos: 24 words for snow u Words which describe moral concepts unique to countries or areas: “face” in Asian cultures, “filotimo” in Greece u Spoken language precision important in low-context cultures u l Language, u unspoken Context. . . more important than spoken word in low context cultures Irwin/Mc. Graw-Hill Copyright 2001 The Mc. Graw-Hill Companies, Inc. All rights

Slide 3 -7 High/Low Context Cultures Source: E. T. Hall & M. R. Hall, Understanding cultural differences, 1990, Intercultural Press

Slide 3 -8 Education and Culture l Education Medium through which people are acculturated u Language, “myths, ” values, norms taught u Teaches personal achievement and competition u l Critical element of national competitive advantage l Education system itself may be a cultural outcome Irwin/Mc. Graw-Hill Copyright 2001 The Mc. Graw-Hill Companies, Inc. All rights

Slide 3 -9 Culture and the workplace (Hofstede) l Hofstede groups national cultures along dimensions meaningful to business: Work related values not universal u National values may persist over MNC efforts to create culture u Local values used to determine HQ policies u MNC may create unnecessary morale problems if it insists on uniform moral norms u l Starting point for understanding of business situations across-cultures l MUST understand own culture AND other culture(s) Irwin/Mc. Graw-Hill Copyright 2001 The Mc. Graw-Hill Companies, Inc. All rights

Slide 3 -10 l Hofstede Work Limitations Hofstede's methodology: Study based on 64 national subsidiaries, 116, 000 workers (not just managers), three world regions u Reports means; may not fit exact individual situations u Is valid for broader groups not individuals u l IBM values may overwhelm national values u Yet, if IBM culture so overwhelming, differences across countries may be attributable to “national” culture. . . Privileged group l Researcher bias? Western stereotypes and culturally biased conclusions? l Many recent studies validate Hofstede’s dimensions l Irwin/Mc. Graw-Hill Copyright 2001 The Mc. Graw-Hill Companies, Inc. All rights

Slide 3 -11 Hofstede's Dimensions l Power Distance: degree of social inequality considered normal by people u distance between individuals at different levels of a hierarchy u scale is from equal (small power distance) to extremely unequal (large power distance) u l Individualism versus Collectivism: degree to which people in a country prefer to act as individuals rather than in groups u the relations between the individual and his/her fellows u Irwin/Mc. Graw-Hill Copyright 2001 The Mc. Graw-Hill Companies, Inc. All rights

Slide 3 -12 Hofstede's Dimensions l Uncertainty Avoidance: more or less need to avoid uncertainty about the future u degree of preference for structured versus unstructured situations u structured situations: have tight rules may or may not be written down (high context society? ) u high uncertainty avoidance: people with more nervous energy (vs easy going), rigid society, "what is different is dangerous. " u l Masculinity versus Femininity: division of roles and values in a society u Masculine values prevail: assertiveness, success, competition u Feminine values prevail: quality of life, maintenance of warm personal relationships, service, care for the weak, solidarity u Irwin/Mc. Graw-Hill Copyright 2001 The Mc. Graw-Hill Companies, Inc. All rights

Slide 3 -13 Cultural Distance l Geographic and cultural (or pshychic) distance among countries may not be the same l Key concept which can affect IB strategy and conduct Irwin/Mc. Graw-Hill Copyright 2001 The Mc. Graw-Hill Companies, Inc. All rights

Slide 3 -14 Cultural Difference Reconciliation l Ethnocentrism vs Polycentrism l Must a company adapt to local cultures or can corporate -- often home-country dominated -- culture prevail? l Cross-cultural Irwin/Mc. Graw-Hill literacy essential Copyright 2001 The Mc. Graw-Hill Companies, Inc. All rights