1
CHAPTER 2
CROSS-CULTURAL BUSINESS
LEARNING OBJECTIVES:
1. Describe culture, and explain the significance of both national culture and subcultures.
2. Identify the components of culture, and describe their impact on business activities around the
world.
3. Describe cultural change, and explain how companies and culture affect one another.
4. Explain how the physical environment and technology influence culture.
5. Describe the two main frameworks used to classify cultures and explain their practical use.
CHAPTER OUTLINE:
What Is Culture?
Accommodating Culture: Avoiding Ethnocentricity
Understanding Culture: Developing Cultural Literacy
National Culture and Subcultures
National Culture
Subcultures
Components of Culture
Aesthetics
Values and Attitudes
Attitudes Toward Time
Attitudes Toward Work
Attitudes Toward Cultural Change
Cultural Diffusion
When Companies Change Culture
When Cultures Change Companies
Is a Global Culture Emerging?
Manners and Customs
Manners
Customs
Folk and Popular Customs
The Business of Gift Giving
Social Structure
Social Group Associations
Family
Gender
Social Status
Social Mobility
Caste Systems
Class Systems
Religion
Christianity
Islam
Hinduism
Buddhism
Confucianism
J udaism
2
Shinto
Personal Communication
Spoken Language
Language Blunders
Lingua Franca
Body Language
Education
Education Level
The “Brain Drain” Phenomenon
Physical and Material Environments
Physical Environment
Topography
Topography and Communication
Climate
Climate, Lifestyle and Work
Climate and Customs
Material Culture
Uneven Material Culture
Classifying Cultures
Kluckhohn–Strodtbeck Framework
Case: Dimensions of J apanese Culture
Hofstede Framework
Bottom Line For Business
Marketing and Cultural Literacy
Work Attitudes and Cultural Literacy
Expatriates and Cultural Literacy
Gender and Cultural Literacy
A comprehensive set of specially designed PowerPoint slides (designated ‘PPT’ below) is
available for use with Chapter 2. These slides and the lecture outline below form a completely
integrated package that simplifies the teaching of this chapter’s material.
Lecture Outline
1. INTRODUCTION
This chapter describes culture in the context of international business, explains how
culture affects international business practices and competitiveness, and presents two
methods of classifying cultures.
2. WHAT IS CULTURE? (PPT #1-5)
Culture is the set of values, beliefs, rules, and institutions held by a specific group of
people. Main components include: aesthetics, values and attitudes, manners and customs,
social structure, religion, personal communication, education, and physical and material
environments.
• Accommodating Culture: Avoiding Ethnocentricity
1. Ethnocentricity is the belief that one’s own ethnic group or culture is
superior to that of others. It causes people to view other cultures in terms
of their own and overlook human and environmental differences.
3
2. Ethnocentricity can undermine business projects when a firm’s
employees are insensitive to cultural nuances.
• Understanding Culture: Developing Cultural Literacy
1. Managers working directly in international business should develop
cultural literacy—detailed knowledge about a culture that enables a
person to function effectively within it.
2. Cultural literacy brings a company closer to customer needs and desires
and improves competitiveness.
A. National Culture and Subcultures
National culture generalizes (e.g., British culture: English, Scottish, and Welsh).
1. National Culture
a. Nation-states support and promote the concept of a national
culture by building museums and monuments to preserve the
legacies of important events and people.
b. Nation-states intervene in business to help preserve their national
cultures.
c. Companies get involved in supporting culture, in part, for the
public relations benefit.
2. Subcultures
a. A subculture is a group of people who share a unique way of life
within a larger, dominant culture. It can differ from the dominant
culture in language, race, lifestyle, values, attitudes, etc.
b. Companies must be mindful of subcultures when formulating
business strategies (e.g., China has 50 ethnic groups).
c. Decisions regarding product design, packaging, and advertising
must consider distinct cultures.
d. Subcultures also can extend beyond national borders.
3. COMPONENTS OF CULTURE (PPT #6)
A people’s culture includes what they consider beautiful and tasteful, their underlying
beliefs, their traditional habits, and the ways in which they relate to one another and their
surroundings.
A. Aesthetics (PPT #7)
1. Aesthetics is what a culture considers to be in “good taste” in the arts, the
imagery evoked by certain expressions, and the symbolism of colors.
2. Affect appropriate colors for advertising, product packaging, and even
work uniforms can enhance success (e.g., Green in Islam).
3. Music is deeply cultural and must be considered in promotions.
4. Blunders can result from selecting inappropriate colors and symbols for
advertising, product packaging, and architecture (e.g., Nike “Air”).
B. Values and Attitudes (PPT #8)
• Values are ideas, beliefs, and customs to which people are emotionally
attached—such as honesty, marital faithfulness, freedom, and
responsibility. Affect work ethic and desire for material possessions.
Some cultures value leisure; others hard work.
• Attitudes are positive or negative evaluations, feelings, and tendencies
that individuals harbor toward objects or concepts. Learned from role
4
models and thus formed within a cultural context. More flexible than
values.
1. Attitudes Toward Time
a. Latin American and Mediterranean cultures are casual about
time; in J apan and the United States people arrive promptly for
meetings and keep tight schedules.
b. Americans strive toward workplace efficiency and may leave
work early if their work is done because they value individual
results. Meanwhile, the J apanese look busy even when business
is slow to demonstrate dedication—an attitude grounded in
cohesion, loyalty, and harmony.
2. Attitudes Toward Work
a. Some cultures have a strong work ethic, others stress a balanced
pace in work and leisure (e.g., “Work to live, or live to work”).
b. Many European nations are trying to foster an entrepreneurial
spirit to achieve the job growth realized in the United States.
3. Attitudes Toward Cultural Change
A cultural trait is anything that represents a culture’s way of life
including gestures, material objects, traditions, and concepts.
a. Cultural diffusion is the process whereby cultural traits spread
from one culture to another. Globalization and technology are
increasing the pace of cultural diffusion and change.
b. Cultural imperialism is the replacement of one culture’s
traditions, folk heroes, and artifacts with substitutes from
another.
c. Culture can force companies to adjust business policies and
practices, such as using situational management.
d. Rapid cultural diffusion and increased human interaction across
borders cause cultures to converge. Convergence is taking place
in some market segments for some products.
C. Manners and Customs (PPT #9)
It is important to understand manners and customs to avoid mistakes abroad. In-
depth knowledge improves the abilities of managers.
1. Manners are appropriate ways of behaving, speaking, and dressing in a
culture (e.g., conducting business during meals in US).
2. Customs are habits or ways of behaving in specific circumstances that
are passed down through generations in a culture. Customs define
appropriate habits or behaviors in specific situations.
a. Folk customs are behaviors, dating back several generations,
practiced within a homogeneous group of people (e.g., turbans).
b. A popular custom is behavior, often dating back several
generations, that is practiced by a homogeneous group of people.
(e.g., “burgers ‘n’ fries” and “fish ‘n’ chips”).
c. Although giving token gifts to business and government
associates is customary, the proper type of gift varies.
d. Cultures differ in their legal and ethical rules against giving or
accepting bribes. The U.S. Foreign Corrupt Practices Act, which
prohibits companies from giving large gifts to win business
favors, applies to U.S. firms operating at home and abroad.
5
D. Social Structure (PPT #10)
Social structure embodies a culture’s fundamental organization, including groups
and institutions, social positions and relationships, and resource distribution.
1. Social Group Associations
A social group is a collection of two or more people who identify and
interact with one another. Social groups contribute to identity and self-
image.
a. Family
i. A nuclear family consists of immediate relatives,
including parents, brothers, and sisters. It prevails in
Australia, Canada, USA, and in Europe.
ii. An extended family includes grandparents, aunts and
uncles, cousins, and relatives through marriage. It is a
more important social group in Asia, the Middle East,
North Africa, and Latin America.
b. Gender
i. Gender refers to socially learned traits associated with,
and expected of, men or women. Sociologists regard
gender as a category—people who share some status.
ii. Although many countries have gender equality in the
workplace, others do not.
2. Social Status
a. Social Stratification is the process of ranking people into social
layers according to family heritage, income, and occupation.
b. Royalty, government officials, and top business leaders occupy
the highest social layer. Scientists, medical doctors, and others
with a university education occupy the middle rung. Below are
those with vocational training or a secondary-school education,
who dominate the manual and clerical occupations.
c. Rankings can change over time.
3. Social Mobility
a. Social Mobility is the ease with which individuals can move up
or down a culture’s “social ladder.”
b. A caste system is a system of social stratification in which
people are born into a social ranking, with no opportunity for
social mobility.
c. A class system is a system of social stratification in which
personal ability and actions decide social status and mobility.
Highly class-conscious cultures offer less mobility and can
experience more class conflict.
E. Religion (PPT #11)
Human values often derive from religious beliefs. Different religions take
different views of work, savings, and material goods. Cultural views influence
the competitiveness of companies, the pace of economic development, and the
need to adapt strategies and methods.
1. Christianity
6
a. Palestine 2,000 years ago among J ews who believed that J esus of
Nazareth was the messiah. Nearly 2 billion followers today and
is the world’s single largest religion.
b. More than 300 denominations within Christianity, but most are
Roman Catholic, Protestant, and Eastern Orthodox.
c. The Roman Catholic faith asks its followers to refrain from
placing material possessions above God and others. Protestants
believe that salvation comes from faith in God and that hard
work gives glory to God.
d. Christian organizations sometimes get involved in social causes
that affect business policy (e.g., Volkswagen, Ryanair).
2. Islam
a. Muhammad around 600 A.D. in Mecca, the holy city of Islam, in
Saudi Arabia. Islam is the world’s second largest religion with
1.3 billion adherents. The word Islam means “submission to
Allah” and Muslim means “one who submits to Allah.”
b. Religion strongly affects the kinds of goods and services
acceptable to Muslim consumers (e.g., alcohol, pork, interest).
3. Hinduism
a. Around 4,000 years ago in present-day India, where over 90
percent of its nearly 900 million adherents live.
b. Some consider it to be a way of life rather than a religion.
Integral to the Hindu faith is the caste system. Hindus believe in
reincarnation—the rebirth of the human soul at the time of death.
Hindus do not eat or willfully harm any living creature because it
may be a reincarnated human soul.
c. Because Hindus consider cows sacred animals they do not eat
beef (e.g., McDonald’s replaces beef with lamb).
4. Buddhism
a. About 2,600 years ago in India by a Hindu prince named
Siddhartha Gautama. Buddhism has approximately 360 million
followers, mostly in Asian nations such as China, Tibet, Korea,
J apan, Vietnam, and Thailand.
b. Buddhism promotes a life centered on spiritual rather than
worldly matters. Buddhists seek nirvana (escape from
reincarnation) through charity, modesty, compassion for others,
restraint from violence, and general self-control.
5. Confucianism
a. China nearly 2,500 years ago founded by exiled politician and
philosopher named Confucius. China is home to most of
Confucianism’s 225 million followers.
b. Confucian thought is ingrained in the cultures of Japan, South
Korea, and nations with large numbers of ethnic Chinese,
including Singapore.
c. South Korean business practice reflects Confucian thought in its
rigid organizational structure and reverence for authority (e.g.,
Korean-style management in overseas subsidiaries).
d. For centuries, as people despised merchants because earning
money violated Confucian beliefs, many Chinese moved to
Indonesia, Malaysia, Singapore, and Thailand to launch
successful businesses.
7
6. J udaism
a. First religion to believe in one God and is more than 3,000 years
old, and claims 18 million followers worldwide. Orthodox
(“fully observant”) J ews make up 12 percent of Israel and
constitute an increasingly important economic segment.
b. Important observances are Rosh Hashanah (the J ewish New
Year), Yom Kippur (the Day of Atonement), Passover (the
Exodus from Egypt), and Hanukkah (a victory over the Syrians).
c. Employers must be aware of those J ewish holidays. Also,
because the Sabbath lasts from sundown on Friday to sundown
on Saturday, work schedules might need adjustment.
d. Marketers must take into account foods that are banned among
observant J ews (e.g., Pork and shellfish prohibited, meat stored
and served separately from milk). Also, “kosher” foods.
7. Shinto
a. Means “way of the gods,” arose as the native religion of the
J apanese, and teaches sincere and ethical behavior, loyalty and
respect toward others, and enjoyment of life. Today Shinto
claims about 3.5 million strict adherents in J apan.
b. Shinto beliefs are reflected in the workplace through lifetime
employment (although this is waning today) and the traditional
trust extended between firms and customers.
c. J apanese competitiveness in world markets has benefited from
loyal workforces, low employee turnover, and good labor–
management cooperation.
F. Personal Communication (PPT #12-13)
Every culture has a communication system to convey thoughts, feelings,
knowledge, and information through speech, actions, and writing. Understanding
a culture’s spoken and unspoken language provides insight into why people think
and behave in a certain way.
1. Spoken Language
a. Spoken Language is the part of a culture’s communication system
embodied in its spoken and written vocabulary.
b. Linguistically different segments of a population are often culturally,
socially, and politically distinct (e.g., Malaysia is Malay [60%],
Chinese [30%], and Indian [10%]).
c. Companies have made language blunders in their international
business dealings.
d. A lingua franca is a third or “link” language that is understood by
two parties who speak different languages.
e. Some languages are dying out, while some languages are growing,
including Mandarin, Spanish, and English.
2. Body Language
a. Body Language is communicated through unspoken cues,
including hand gestures, facial expressions, physical greetings,
eye contact, and the manipulation of personal space.
b. Body language communicates information and feelings and
differs among cultures. Most body language is subtle and takes
time to interpret.
8
c. Proximity is an element of body language; standing too close
may invade personal space and appear aggressive (e.g., in North
America cultures stand about 19 inches apart while Middle
Eastern cultures stand about 8 to 12 inches apart).
G. Education (PPT #14-15)
Education is crucial for passing on traditions, customs, and values. Cultures
educate young people through schooling, parenting, religious teachings, and
group memberships. Families and other groups provide informal instruction
about customs and how to socialize with others.
1. Education Level
a. Nations with excellent basic education attract high-wage
industries that invest in training and increases productivity.
Nations with skilled, well-educated workforces attract high-
paying jobs; poorly educated attract low-paying jobs.
b. Newly industrialized economies in Asia owe much of their
economic development to solid education systems.
2. The “Brain Drain” Phenomenon
a. Brain drain is the departure of highly educated people from one
profession, geographic region, or nation to another.
b. Some countries lure professionals back to their homelands—a
process known as reverse brain drain.
c. Australia has experienced a brain gain in recent years with a net
gain of over 155,000 skilled workers in a five-year period.
H. Physical and Material Environments (PPT #16)
The physical environment and material surroundings of a culture heavily
influence its development and pace of change.
1. Physical Environment
a. Topography refers to all the physical features that characterize
the surface of a geographic region. Cultures isolated by
impassable mountains or large bodies of water are less exposed
to the cultural traits of others and change slowly. Topography
impacts product needs.
b. Topography impacts personal communication (e.g., mountains
and the Gobi Desert consume two thirds of China).
c. Climate affects where people settle and directs systems of
distribution (e.g., Australian desert, jungles, coastal areas).
d. Climate plays large role in lifestyle, clothing, and work habits.
Production schedules must be adjusted to allow for hours during
which machines stand idle.
2. Material Culture
Material Culture includes the technology employed in a culture to
manufacture goods and provide services. Can be used to measure a
culture’s technological advancement.
a. A firm enters a market under one of two conditions: (1) demand
for its products has developed, or (2) the market is capable of
supporting its production operations.
b. Changes in material culture often cause changes in other aspects
of culture.
9
c. Uneven Material Culture Material culture displays uneven
development across geography, markets, and industries.
4. CLASSIFYING CULTURES
People in different cultures respond differently in similar business situations. There are
two ways to classify cultures based on characteristics such as values, attitudes, and social
structure.
A. Kluckhohn-Strodtbeck Framework (PPT #17)
The Kluckhohn-Strodtbeck Framework compares cultures along six dimensions,
asking the following questions:
Do people believe that their environment controls them, that they control the
environment, or that they are part of nature?
Do people focus on past events, on the present, or on the future implications
of their actions?
Are people easily controlled and not to be trusted, or can they be trusted to
act freely and responsibly?
Do people desire accomplishments in life, carefree lives, or spiritual and
contemplative lives?
Do people believe that individuals or groups are responsible for each
person’s welfare?
Do people prefer to conduct most activities in private or in public?
1. Dimensions of J apanese Culture:
J apanese believe in a delicate balance between people and
environment that must be maintained.
J apanese culture emphasizes the future.
J apanese culture treats people as quite trustworthy.
J apanese are accomplishment-oriented for employers and work units.
J apanese culture emphasizes individual responsibility to the group
and group responsibility to the individual.
The culture of J apan tends to be public.
B. Hofstede Framework (PPT #18-20)
The Hofstede Framework grew from a study of more than 110,000 people
working in IBM subsidiaries by Dutch psychologist Geert Hofstede. He
developed four dimensions for examining cultures.
1. Individualism versus Collectivism: Identifies the extent to which a
culture emphasizes the individual versus the group.
a. Individualist cultures value hard work, entrepreneurial risk-
taking, and freedom to focus on personal goals.
b. Collectivist cultures feel a strong association to groups,
including family and work units. The goal is to maintain group
harmony and work toward collective rather than personal goals.
2. Power Distance: Identifies the degree to which a culture accepts social
inequality among its people.
a. Large power distance is characterized by inequality between
superiors and subordinates. Organizations are hierarchical, with
power derived from prestige, force, and inheritance.
b. Small power distance means equality, with prestige and rewards
equally shared between superiors and subordinates. Power
derives from hard work and is considered more legitimate.
10
c. Refer to Figure 2.2. Tight grouping of nations within the five
clusters (plus Costa Rica): African, Asian, Central and South
American, and Middle Eastern nations in Quadrant 1 (cultures
with large power distance and lower individualism). Quadrants 2
and 3 include Australia and the nations of North America and
Western Europe (cultures high in individualism and smaller
power distance scores).
3. Uncertainty Avoidance: Identifies the extent to which a culture avoids
uncertainty and ambiguity.
a. Cultures with large uncertainty avoidance value security and
place faith in strong systems of rules and procedures in society.
Also tend to have lower employee turnover, formal rules for
employee behavior, and more difficulty implementing change.
b. Low uncertainty avoidance cultures are more open to change and
new ideas.
c. Refer to Figure 2.3. Quadrant 4 contains nations characterized by
small uncertainty avoidance and small power distance, including
Australia, Canada, J amaica, the United States, and many
Western European nations. Quadrant 2 contains many Asian,
Central American, South American, and Middle Eastern
nations—nations having large power distance and large
uncertainty avoidance indexes.
4. Achievement versus Nurturing: Identifies the extent to which a culture
emphasizes personal achievement and materialism versus relationships
and quality of life.
a. Cultures scoring high are characterized by assertiveness and the
accumulation of wealth, and entrepreneurial drive.
b. Cultures scoring low have relaxed lifestyles, with more of a
concern for others than material gain.
5. BOTTOM LINE FOR BUSINESS
In this chapter we discussed many of the cultural differences among nations that affect
international business. We saw how problems can erupt from cultural misunderstandings
and learned how companies can improve their performance with cultural literacy. Being
culturally literate can mean the difference between returning home with a signed contract
and returning empty-handed. Localizing business policies and practices can promote
success. Understanding a people’s values, beliefs, rules, and institutions makes managers
more effective at their jobs.
doc_469481164.pdf
CHAPTER 2
CROSS-CULTURAL BUSINESS
LEARNING OBJECTIVES:
1. Describe culture, and explain the significance of both national culture and subcultures.
2. Identify the components of culture, and describe their impact on business activities around the
world.
3. Describe cultural change, and explain how companies and culture affect one another.
4. Explain how the physical environment and technology influence culture.
5. Describe the two main frameworks used to classify cultures and explain their practical use.
CHAPTER OUTLINE:
What Is Culture?
Accommodating Culture: Avoiding Ethnocentricity
Understanding Culture: Developing Cultural Literacy
National Culture and Subcultures
National Culture
Subcultures
Components of Culture
Aesthetics
Values and Attitudes
Attitudes Toward Time
Attitudes Toward Work
Attitudes Toward Cultural Change
Cultural Diffusion
When Companies Change Culture
When Cultures Change Companies
Is a Global Culture Emerging?
Manners and Customs
Manners
Customs
Folk and Popular Customs
The Business of Gift Giving
Social Structure
Social Group Associations
Family
Gender
Social Status
Social Mobility
Caste Systems
Class Systems
Religion
Christianity
Islam
Hinduism
Buddhism
Confucianism
J udaism
2
Shinto
Personal Communication
Spoken Language
Language Blunders
Lingua Franca
Body Language
Education
Education Level
The “Brain Drain” Phenomenon
Physical and Material Environments
Physical Environment
Topography
Topography and Communication
Climate
Climate, Lifestyle and Work
Climate and Customs
Material Culture
Uneven Material Culture
Classifying Cultures
Kluckhohn–Strodtbeck Framework
Case: Dimensions of J apanese Culture
Hofstede Framework
Bottom Line For Business
Marketing and Cultural Literacy
Work Attitudes and Cultural Literacy
Expatriates and Cultural Literacy
Gender and Cultural Literacy
A comprehensive set of specially designed PowerPoint slides (designated ‘PPT’ below) is
available for use with Chapter 2. These slides and the lecture outline below form a completely
integrated package that simplifies the teaching of this chapter’s material.
Lecture Outline
1. INTRODUCTION
This chapter describes culture in the context of international business, explains how
culture affects international business practices and competitiveness, and presents two
methods of classifying cultures.
2. WHAT IS CULTURE? (PPT #1-5)
Culture is the set of values, beliefs, rules, and institutions held by a specific group of
people. Main components include: aesthetics, values and attitudes, manners and customs,
social structure, religion, personal communication, education, and physical and material
environments.
• Accommodating Culture: Avoiding Ethnocentricity
1. Ethnocentricity is the belief that one’s own ethnic group or culture is
superior to that of others. It causes people to view other cultures in terms
of their own and overlook human and environmental differences.
3
2. Ethnocentricity can undermine business projects when a firm’s
employees are insensitive to cultural nuances.
• Understanding Culture: Developing Cultural Literacy
1. Managers working directly in international business should develop
cultural literacy—detailed knowledge about a culture that enables a
person to function effectively within it.
2. Cultural literacy brings a company closer to customer needs and desires
and improves competitiveness.
A. National Culture and Subcultures
National culture generalizes (e.g., British culture: English, Scottish, and Welsh).
1. National Culture
a. Nation-states support and promote the concept of a national
culture by building museums and monuments to preserve the
legacies of important events and people.
b. Nation-states intervene in business to help preserve their national
cultures.
c. Companies get involved in supporting culture, in part, for the
public relations benefit.
2. Subcultures
a. A subculture is a group of people who share a unique way of life
within a larger, dominant culture. It can differ from the dominant
culture in language, race, lifestyle, values, attitudes, etc.
b. Companies must be mindful of subcultures when formulating
business strategies (e.g., China has 50 ethnic groups).
c. Decisions regarding product design, packaging, and advertising
must consider distinct cultures.
d. Subcultures also can extend beyond national borders.
3. COMPONENTS OF CULTURE (PPT #6)
A people’s culture includes what they consider beautiful and tasteful, their underlying
beliefs, their traditional habits, and the ways in which they relate to one another and their
surroundings.
A. Aesthetics (PPT #7)
1. Aesthetics is what a culture considers to be in “good taste” in the arts, the
imagery evoked by certain expressions, and the symbolism of colors.
2. Affect appropriate colors for advertising, product packaging, and even
work uniforms can enhance success (e.g., Green in Islam).
3. Music is deeply cultural and must be considered in promotions.
4. Blunders can result from selecting inappropriate colors and symbols for
advertising, product packaging, and architecture (e.g., Nike “Air”).
B. Values and Attitudes (PPT #8)
• Values are ideas, beliefs, and customs to which people are emotionally
attached—such as honesty, marital faithfulness, freedom, and
responsibility. Affect work ethic and desire for material possessions.
Some cultures value leisure; others hard work.
• Attitudes are positive or negative evaluations, feelings, and tendencies
that individuals harbor toward objects or concepts. Learned from role
4
models and thus formed within a cultural context. More flexible than
values.
1. Attitudes Toward Time
a. Latin American and Mediterranean cultures are casual about
time; in J apan and the United States people arrive promptly for
meetings and keep tight schedules.
b. Americans strive toward workplace efficiency and may leave
work early if their work is done because they value individual
results. Meanwhile, the J apanese look busy even when business
is slow to demonstrate dedication—an attitude grounded in
cohesion, loyalty, and harmony.
2. Attitudes Toward Work
a. Some cultures have a strong work ethic, others stress a balanced
pace in work and leisure (e.g., “Work to live, or live to work”).
b. Many European nations are trying to foster an entrepreneurial
spirit to achieve the job growth realized in the United States.
3. Attitudes Toward Cultural Change
A cultural trait is anything that represents a culture’s way of life
including gestures, material objects, traditions, and concepts.
a. Cultural diffusion is the process whereby cultural traits spread
from one culture to another. Globalization and technology are
increasing the pace of cultural diffusion and change.
b. Cultural imperialism is the replacement of one culture’s
traditions, folk heroes, and artifacts with substitutes from
another.
c. Culture can force companies to adjust business policies and
practices, such as using situational management.
d. Rapid cultural diffusion and increased human interaction across
borders cause cultures to converge. Convergence is taking place
in some market segments for some products.
C. Manners and Customs (PPT #9)
It is important to understand manners and customs to avoid mistakes abroad. In-
depth knowledge improves the abilities of managers.
1. Manners are appropriate ways of behaving, speaking, and dressing in a
culture (e.g., conducting business during meals in US).
2. Customs are habits or ways of behaving in specific circumstances that
are passed down through generations in a culture. Customs define
appropriate habits or behaviors in specific situations.
a. Folk customs are behaviors, dating back several generations,
practiced within a homogeneous group of people (e.g., turbans).
b. A popular custom is behavior, often dating back several
generations, that is practiced by a homogeneous group of people.
(e.g., “burgers ‘n’ fries” and “fish ‘n’ chips”).
c. Although giving token gifts to business and government
associates is customary, the proper type of gift varies.
d. Cultures differ in their legal and ethical rules against giving or
accepting bribes. The U.S. Foreign Corrupt Practices Act, which
prohibits companies from giving large gifts to win business
favors, applies to U.S. firms operating at home and abroad.
5
D. Social Structure (PPT #10)
Social structure embodies a culture’s fundamental organization, including groups
and institutions, social positions and relationships, and resource distribution.
1. Social Group Associations
A social group is a collection of two or more people who identify and
interact with one another. Social groups contribute to identity and self-
image.
a. Family
i. A nuclear family consists of immediate relatives,
including parents, brothers, and sisters. It prevails in
Australia, Canada, USA, and in Europe.
ii. An extended family includes grandparents, aunts and
uncles, cousins, and relatives through marriage. It is a
more important social group in Asia, the Middle East,
North Africa, and Latin America.
b. Gender
i. Gender refers to socially learned traits associated with,
and expected of, men or women. Sociologists regard
gender as a category—people who share some status.
ii. Although many countries have gender equality in the
workplace, others do not.
2. Social Status
a. Social Stratification is the process of ranking people into social
layers according to family heritage, income, and occupation.
b. Royalty, government officials, and top business leaders occupy
the highest social layer. Scientists, medical doctors, and others
with a university education occupy the middle rung. Below are
those with vocational training or a secondary-school education,
who dominate the manual and clerical occupations.
c. Rankings can change over time.
3. Social Mobility
a. Social Mobility is the ease with which individuals can move up
or down a culture’s “social ladder.”
b. A caste system is a system of social stratification in which
people are born into a social ranking, with no opportunity for
social mobility.
c. A class system is a system of social stratification in which
personal ability and actions decide social status and mobility.
Highly class-conscious cultures offer less mobility and can
experience more class conflict.
E. Religion (PPT #11)
Human values often derive from religious beliefs. Different religions take
different views of work, savings, and material goods. Cultural views influence
the competitiveness of companies, the pace of economic development, and the
need to adapt strategies and methods.
1. Christianity
6
a. Palestine 2,000 years ago among J ews who believed that J esus of
Nazareth was the messiah. Nearly 2 billion followers today and
is the world’s single largest religion.
b. More than 300 denominations within Christianity, but most are
Roman Catholic, Protestant, and Eastern Orthodox.
c. The Roman Catholic faith asks its followers to refrain from
placing material possessions above God and others. Protestants
believe that salvation comes from faith in God and that hard
work gives glory to God.
d. Christian organizations sometimes get involved in social causes
that affect business policy (e.g., Volkswagen, Ryanair).
2. Islam
a. Muhammad around 600 A.D. in Mecca, the holy city of Islam, in
Saudi Arabia. Islam is the world’s second largest religion with
1.3 billion adherents. The word Islam means “submission to
Allah” and Muslim means “one who submits to Allah.”
b. Religion strongly affects the kinds of goods and services
acceptable to Muslim consumers (e.g., alcohol, pork, interest).
3. Hinduism
a. Around 4,000 years ago in present-day India, where over 90
percent of its nearly 900 million adherents live.
b. Some consider it to be a way of life rather than a religion.
Integral to the Hindu faith is the caste system. Hindus believe in
reincarnation—the rebirth of the human soul at the time of death.
Hindus do not eat or willfully harm any living creature because it
may be a reincarnated human soul.
c. Because Hindus consider cows sacred animals they do not eat
beef (e.g., McDonald’s replaces beef with lamb).
4. Buddhism
a. About 2,600 years ago in India by a Hindu prince named
Siddhartha Gautama. Buddhism has approximately 360 million
followers, mostly in Asian nations such as China, Tibet, Korea,
J apan, Vietnam, and Thailand.
b. Buddhism promotes a life centered on spiritual rather than
worldly matters. Buddhists seek nirvana (escape from
reincarnation) through charity, modesty, compassion for others,
restraint from violence, and general self-control.
5. Confucianism
a. China nearly 2,500 years ago founded by exiled politician and
philosopher named Confucius. China is home to most of
Confucianism’s 225 million followers.
b. Confucian thought is ingrained in the cultures of Japan, South
Korea, and nations with large numbers of ethnic Chinese,
including Singapore.
c. South Korean business practice reflects Confucian thought in its
rigid organizational structure and reverence for authority (e.g.,
Korean-style management in overseas subsidiaries).
d. For centuries, as people despised merchants because earning
money violated Confucian beliefs, many Chinese moved to
Indonesia, Malaysia, Singapore, and Thailand to launch
successful businesses.
7
6. J udaism
a. First religion to believe in one God and is more than 3,000 years
old, and claims 18 million followers worldwide. Orthodox
(“fully observant”) J ews make up 12 percent of Israel and
constitute an increasingly important economic segment.
b. Important observances are Rosh Hashanah (the J ewish New
Year), Yom Kippur (the Day of Atonement), Passover (the
Exodus from Egypt), and Hanukkah (a victory over the Syrians).
c. Employers must be aware of those J ewish holidays. Also,
because the Sabbath lasts from sundown on Friday to sundown
on Saturday, work schedules might need adjustment.
d. Marketers must take into account foods that are banned among
observant J ews (e.g., Pork and shellfish prohibited, meat stored
and served separately from milk). Also, “kosher” foods.
7. Shinto
a. Means “way of the gods,” arose as the native religion of the
J apanese, and teaches sincere and ethical behavior, loyalty and
respect toward others, and enjoyment of life. Today Shinto
claims about 3.5 million strict adherents in J apan.
b. Shinto beliefs are reflected in the workplace through lifetime
employment (although this is waning today) and the traditional
trust extended between firms and customers.
c. J apanese competitiveness in world markets has benefited from
loyal workforces, low employee turnover, and good labor–
management cooperation.
F. Personal Communication (PPT #12-13)
Every culture has a communication system to convey thoughts, feelings,
knowledge, and information through speech, actions, and writing. Understanding
a culture’s spoken and unspoken language provides insight into why people think
and behave in a certain way.
1. Spoken Language
a. Spoken Language is the part of a culture’s communication system
embodied in its spoken and written vocabulary.
b. Linguistically different segments of a population are often culturally,
socially, and politically distinct (e.g., Malaysia is Malay [60%],
Chinese [30%], and Indian [10%]).
c. Companies have made language blunders in their international
business dealings.
d. A lingua franca is a third or “link” language that is understood by
two parties who speak different languages.
e. Some languages are dying out, while some languages are growing,
including Mandarin, Spanish, and English.
2. Body Language
a. Body Language is communicated through unspoken cues,
including hand gestures, facial expressions, physical greetings,
eye contact, and the manipulation of personal space.
b. Body language communicates information and feelings and
differs among cultures. Most body language is subtle and takes
time to interpret.
8
c. Proximity is an element of body language; standing too close
may invade personal space and appear aggressive (e.g., in North
America cultures stand about 19 inches apart while Middle
Eastern cultures stand about 8 to 12 inches apart).
G. Education (PPT #14-15)
Education is crucial for passing on traditions, customs, and values. Cultures
educate young people through schooling, parenting, religious teachings, and
group memberships. Families and other groups provide informal instruction
about customs and how to socialize with others.
1. Education Level
a. Nations with excellent basic education attract high-wage
industries that invest in training and increases productivity.
Nations with skilled, well-educated workforces attract high-
paying jobs; poorly educated attract low-paying jobs.
b. Newly industrialized economies in Asia owe much of their
economic development to solid education systems.
2. The “Brain Drain” Phenomenon
a. Brain drain is the departure of highly educated people from one
profession, geographic region, or nation to another.
b. Some countries lure professionals back to their homelands—a
process known as reverse brain drain.
c. Australia has experienced a brain gain in recent years with a net
gain of over 155,000 skilled workers in a five-year period.
H. Physical and Material Environments (PPT #16)
The physical environment and material surroundings of a culture heavily
influence its development and pace of change.
1. Physical Environment
a. Topography refers to all the physical features that characterize
the surface of a geographic region. Cultures isolated by
impassable mountains or large bodies of water are less exposed
to the cultural traits of others and change slowly. Topography
impacts product needs.
b. Topography impacts personal communication (e.g., mountains
and the Gobi Desert consume two thirds of China).
c. Climate affects where people settle and directs systems of
distribution (e.g., Australian desert, jungles, coastal areas).
d. Climate plays large role in lifestyle, clothing, and work habits.
Production schedules must be adjusted to allow for hours during
which machines stand idle.
2. Material Culture
Material Culture includes the technology employed in a culture to
manufacture goods and provide services. Can be used to measure a
culture’s technological advancement.
a. A firm enters a market under one of two conditions: (1) demand
for its products has developed, or (2) the market is capable of
supporting its production operations.
b. Changes in material culture often cause changes in other aspects
of culture.
9
c. Uneven Material Culture Material culture displays uneven
development across geography, markets, and industries.
4. CLASSIFYING CULTURES
People in different cultures respond differently in similar business situations. There are
two ways to classify cultures based on characteristics such as values, attitudes, and social
structure.
A. Kluckhohn-Strodtbeck Framework (PPT #17)
The Kluckhohn-Strodtbeck Framework compares cultures along six dimensions,
asking the following questions:
Do people believe that their environment controls them, that they control the
environment, or that they are part of nature?
Do people focus on past events, on the present, or on the future implications
of their actions?
Are people easily controlled and not to be trusted, or can they be trusted to
act freely and responsibly?
Do people desire accomplishments in life, carefree lives, or spiritual and
contemplative lives?
Do people believe that individuals or groups are responsible for each
person’s welfare?
Do people prefer to conduct most activities in private or in public?
1. Dimensions of J apanese Culture:
J apanese believe in a delicate balance between people and
environment that must be maintained.
J apanese culture emphasizes the future.
J apanese culture treats people as quite trustworthy.
J apanese are accomplishment-oriented for employers and work units.
J apanese culture emphasizes individual responsibility to the group
and group responsibility to the individual.
The culture of J apan tends to be public.
B. Hofstede Framework (PPT #18-20)
The Hofstede Framework grew from a study of more than 110,000 people
working in IBM subsidiaries by Dutch psychologist Geert Hofstede. He
developed four dimensions for examining cultures.
1. Individualism versus Collectivism: Identifies the extent to which a
culture emphasizes the individual versus the group.
a. Individualist cultures value hard work, entrepreneurial risk-
taking, and freedom to focus on personal goals.
b. Collectivist cultures feel a strong association to groups,
including family and work units. The goal is to maintain group
harmony and work toward collective rather than personal goals.
2. Power Distance: Identifies the degree to which a culture accepts social
inequality among its people.
a. Large power distance is characterized by inequality between
superiors and subordinates. Organizations are hierarchical, with
power derived from prestige, force, and inheritance.
b. Small power distance means equality, with prestige and rewards
equally shared between superiors and subordinates. Power
derives from hard work and is considered more legitimate.
10
c. Refer to Figure 2.2. Tight grouping of nations within the five
clusters (plus Costa Rica): African, Asian, Central and South
American, and Middle Eastern nations in Quadrant 1 (cultures
with large power distance and lower individualism). Quadrants 2
and 3 include Australia and the nations of North America and
Western Europe (cultures high in individualism and smaller
power distance scores).
3. Uncertainty Avoidance: Identifies the extent to which a culture avoids
uncertainty and ambiguity.
a. Cultures with large uncertainty avoidance value security and
place faith in strong systems of rules and procedures in society.
Also tend to have lower employee turnover, formal rules for
employee behavior, and more difficulty implementing change.
b. Low uncertainty avoidance cultures are more open to change and
new ideas.
c. Refer to Figure 2.3. Quadrant 4 contains nations characterized by
small uncertainty avoidance and small power distance, including
Australia, Canada, J amaica, the United States, and many
Western European nations. Quadrant 2 contains many Asian,
Central American, South American, and Middle Eastern
nations—nations having large power distance and large
uncertainty avoidance indexes.
4. Achievement versus Nurturing: Identifies the extent to which a culture
emphasizes personal achievement and materialism versus relationships
and quality of life.
a. Cultures scoring high are characterized by assertiveness and the
accumulation of wealth, and entrepreneurial drive.
b. Cultures scoring low have relaxed lifestyles, with more of a
concern for others than material gain.
5. BOTTOM LINE FOR BUSINESS
In this chapter we discussed many of the cultural differences among nations that affect
international business. We saw how problems can erupt from cultural misunderstandings
and learned how companies can improve their performance with cultural literacy. Being
culturally literate can mean the difference between returning home with a signed contract
and returning empty-handed. Localizing business policies and practices can promote
success. Understanding a people’s values, beliefs, rules, and institutions makes managers
more effective at their jobs.
doc_469481164.pdf