Chapter 2 Cultural Environment

Chapter 2
The Cultural
Environments
Facing Business
Copyright © 2015 Pearson Education, Inc. 2-1

Learning Objectives
 Understand methods for learning about
cultural environments
 Grasp the major causes of cultural
difference and change
 Discuss behavioral factors influencing
countries’ business practices
 Recognize the complexities of cross-
cultural information differences, especially
communications

Introduction
 What is Culture?
 “Sum total” of all learned activities, a way of life-- refers
to the learned norms based on values, attitudes, and
beliefs of a group of people living in a geographic area, in
a society or a nation
 Why an international business manager should
study the culture of a country?
 Culture is an integral part of a nation’s business and
operating environment
 Companies need to decide how and when to make
cultural adjustments
 Fostering cultural diversity can offer global competitive
advantage
Cultural Awareness
 We need a GLOBAL MINDSET to succeed--
managers that educate themselves about other
cultures have a greater chance of success.
Problem areas that can hinder managers’ cultural
awareness…
 Subconscious reactions to circumstances (self-
reference criterion)
 The assumption that all societal subgroups are
similar
 Cultural collision can occur when a company
implements practices that are counters a country’s
cultural norms
Understanding Culture
National cultures are dynamic, they evolve
over time, change occurs by choice or by
imposition. Three features are:
The Nation or Nation-State as point of
reference (identity, symbolism, common
history)
Language as both a diffuser and stabilizer of
culture (expression, sharing, bond)
Religion as a cultural stabilizer (beliefs,
ethics, spiritualism)
5
How Cultures Form and Change
 Cultural value systems are established
early in life but may change through
 choice or imposition
 cultural imperialism
 contact with other cultures

 cultural diffusion
 creolization

Language:
Cultural Diffuser and Stabilizer
 A common language within a country is a
unifying force
 A shared language between nations
facilitates international business
 Native English speaking countries account for a
third of the world’s production
 English is the international language of
business

Religion: Cultural Stabilizer
 Religion impacts almost every business
function
 It influences our consumption and
expenditure
 Centuries of profound religious influence
continue to play a major role in shaping
cultural values and behavior
 many strong values are the result of a
dominant religion

Behavioral Practices Affecting
Business
 Social Stratification
 Work Motivation
 Relationship Preferences
 Risk-taking Behavior
 Information and Task Processing
 Communications
9
Social Stratification
 Social ranking is determined by
 an individual’s achievements and qualifications
 an individual’s affiliation with, or membership in, certain
groups
 Group affiliations can be
 Ascribed group memberships
 based on gender, family, age, caste, and ethnic,
racial, or national origin

 Acquired group memberships
 based on religion, political affiliation, professional
association
 Two other factors affecting social stratification are:
education and social connections
Work Motivation
 The motivation to work differs across
cultures
 Studies show
 the desire for material wealth is a prime
motivation to work
 promotes economic development
 people are more eager to work when the

rewards for success are high
 masculinity-femininity index
 high masculinity score prefers “to live to
work” than “to work to live”
Work Motivation
 Hierarchy of needs theory
 Individuals will fill lower-level needs before
moving to higher level needs
 The ranking of needs differs among
cultures

Work Motivation
The Hierarchy of Needs and Need-Hierarchy Comparisons

Relationship Preferences
 Relationship preferences differ by culture
 Power distance
 high power distance implies little superior-
subordinate interaction
 autocratic or paternalistic management style
 low power distance implies consultative style

 Individualism versus collectivism
 high individualism – welcome challenges
 high collectivism – prefer safe work
environment
Risk Taking Behavior
 Risk taking behavior differs across cultures
 Uncertainty avoidance
 handling uncertainty
 Trust
 degree of trust among people
 Future orientation
 delaying gratification
 Fatalism
 attitudes of self-determination

Information and
Task Processing
 Cultures handle information in different
ways
 Perception of cues
 Obtaining information
 low context versus high context cultures
 Information processing
 Monochronic versus polychronic cultures

Communications
 Cross border communications do not
always translate as intended
 Spoken and written language
 Silent language
 Color
 Distance
 Time and punctuality
 Body language
 Prestige

Communications
Body Language Is Not A Universal Language

Dealing with
Cultural Differences
 Do managers have to alter their customary
practices to succeed in countries with
different cultures?
 Must consider
 Host society acceptance
 Degree of cultural differences
 cultural distance
 Ability to adjust
 culture shock and reverse culture shock
 Company and management orientation

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

Hofstede’s Five Cultural Values
 Individualism/collective index (IDV): Refers to preference
of behavior that promotes one’s self interest. Higher score
(e.g., USA) means high on individualism.
 Power distance index (PDI): Measures the tolerance of
social inequality, i.e., inequality between superiors and
subordinates within a social system. Higher score (e.g.,
Arab countries) means more hierarchical.
 Uncertainty avoidance index (UAI): Refers to the
intolerance of ambiguity and uncertainty among members
of a society. Higher score (e.g., Greece) means less
tolerance for uncertainty.
 Masculinity/feminity (MAS): Refers to one’s desire for
achievement and entrepreneurial tendencies. Higher score
means more assertiveness and masculinity.
 Future orientation: Refers to the future or long-term
orientation of the society
21
Chapter 2: Discussion
Questions
1. Define culture? Why an international business manager
should study the culture of a country?
2. Explain how the dynamic interplay of nation, language and
religion shapes the culture of a country.
3. How can we deal with, adapt to, and influence foreign
cultures? Explain.
4. Explain the five cultural values of Hofstede. I may ask you
to explain any two or three of them also.
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Chapter 2

Copyright © 2015 Pearson Education, Inc. 2-1

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 contact with other cultures

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racial, or national origin

 people are more eager to work when the

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 low power distance implies consultative style

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 Company and management orientation

 overlook national differences

Copyright © 2015 Pearson Education, Inc. 2-20

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