CULTURE
IN INTERNATAIONAL BUSINESS
CHAPTER NO: 3.1 Definitions & Understanding
DEFINITION OF CULTURE
The complex whole which includes knowledge, belief, art,
morals, law, custom & other capabilities acquired by man as a
member of the society.”
-Edward Taylor
Culture is the acquired knowledge that people use to interpret experiences & to generate social behavior.
Culture is ever-evolving with time, education, financial growth.
Example in case: Walmart In Germany
McDonald's Long-term approach in Pakistan.
CHAPTER NO: 3.2 Challenges & Risks of Culture
CHALLANGES OF CULTURE
• In cross-border business we step into different cultural environments characterized by
unfamiliar languages and unique value systems, beliefs, and behaviors.
• Cross-cultural risk: A situation or event where a cultural miscommunication
puts some human value at stake.
• Culture influences a range of interpersonal exchange as well as value-chain operations
such as product and service design, marketing, and sales.
• Ethnocentrism: A belief in the superiority of one’s own ethnic culture or
group.
• Culture & Competitive Advantage: Cultures help firms/organizations to benefit or
lose out competitive advantage.
CHAPTER NO: 3.3 Different Aspects of Culture
ASPECTS OF CULTURS
VALUES:
Our beliefs about what is good, right, or wrong
NORMS:
Social behaviors that people in society are expected to follow.
They are unwritten code of conduct that is desirable. and those
members of society who flout these norms are looked down upon.
Norms are imposed from the outside while Values are made from
the inside of the human mind.
*Folkways *More
CHAPTER NO: 3.4 Determinants of Culture.
DETERMINANTS Economic
OF CULTURE Philosophy
• Capitalism Education
• Socialism
Political Social
Philosophy Structure
• Collectivism • Individuals
• Democracy • Groups (Cast
System/Group
System)
Religion
• Islam
• Christianity CULTUR Language &
• Buddhism
• Confucianism E Space
• Atheist/ Agonistic
CHAPTER NO: 3.5 HOFSTEDE Dimensions of
Culture.
INTRO
Analysis of Culture at
Workplace by Geert Hofstede
A study from 1967 to 1973
Based on 100,000 employees of
IBM
Background of 40 countries
GEET HOFSTEDE DIMENSION OF CULTURES
1. Individualism versus collectivism: Describes whether a
person functions primarily as an individual or within a group.
• Individualistic societies—ties between people are relatively loose; each person
tends to focus on his or her own self-interest.
• Collectivist societies—ties between individuals are more important than
individualism.
2. Power distance: Describes how a society deals with the
inequalities in power that exist between people.
• High power-distance societies—relatively indifferent to inequalities and allow
them to grow over time.
• Low power-distance societies—gaps between the powerful and weak are
minimal.
(cont’d)
3. Uncertainty avoidance: The extent to which people can
tolerate risk and uncertainty in their lives.
• High uncertainty avoidance societies—create institutions that minimize
risk and ensure financial security.
• Low uncertainty avoidance societies—socialize their members to accept and
become accustomed to uncertainty.
4. Masculinity versus femininity: Refers to a society’s
orientation, based on traditional male and female values.
• Masculine cultures—tend to value competitiveness, assertiveness,
ambition, and the accumulation of wealth.
• Feminine cultures—emphasize nurturing roles, interdependence between
people, and taking care of less fortunate people.
(cont’d)
5. Long-term vs. short-term orientation: Denotes the
degree to which people and organizations defer gratification to
achieve long-term success.
• Long-term orientation—emphasizes the long view in planning and living,
focusing on years and decades; Asian cultures
• Short-term orientation—Australia, the United States, and most other Western
and South American countries
6. Indulgence versus restraint: Describes a society’s
views on the gratification of basic and natural human drives
related to the enjoyment of life.
• Indulgence signifies a society that tends to allow free gratification of basic
and natural human drives that are related to enjoying life and having fun.
• Restraint refers to a society that, through strict social norms, regulates
and suppresses the gratification of needs.
Source:
G.Hofstede,
G.J.Hofstede & M. Minkor (2010)
Cultures & Organization: 3RD Edi
CRITICISM
Time has elapsed and new dimensions have evolved
One organization v/s one country analysis
Composition of Research team
Introduction of Cultural Convergence
CHAPTER NO: 3.6 Managerial Guidelines.
Managerial Guidelines for Cross-Cultural Success
1. Acquire factual and interpretive knowledge about the other culture and
try to speak their language.
2. Make a careful choice of HR.
3. Avoid cultural bias.
• Self-reference criterion. The tendency to view other cultures
through the lens of one’s own culture.
• Critical incident analysis (CIA). An analytical method for
analyzing awkward situations in cross-cultural interactions by
developing empathy for other points of view.
Managerial Guidelines for Cross-Cultural Success (cont’d)
• Cultural intelligence (CQ): A person’s capability to function
effectively in situations characterized by cultural diversity.
• Commitment to Community: Firms have to social action plan in
place for improving the situation of a community.
• Focuses on specific capabilities that are important for high-quality
personal relationships and effectiveness in culturally diverse
settings and work groups
Q&A
