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MGT520 - International Business - Lecture Handout 17

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Information and Task Processing:

People from different cultures obtain, perceive, and process information in different ways; thus, they may also reach different conclusions.

Perception of Cues:

People identify things by means of their senses in various ways with each sense. The particular cues used vary both for physiological and cultural reasons. [For example, the richer and more precise a language, the better one’s ability to express subtleties.]

Obtaining Information:

Language represents a culture’s means of communication. In a low-context culture, people rely on firsthand information that bears directly on a decision or situation; people say what they mean and mean what they say. In a high-context culture, people also rely on peripheral information and infer meaning from things communicated indirectly; relationships are very important. [For example, while Germany is considered to be a low-context culture, Saudi Arabia is considered to be a high-context culture.

Information Processing:

All cultures categorize, plan and quantify, but the ordering and classification systems they use often vary. In monochromic cultures (e.g., northern Europeans) people prefer to work sequentially, but in polychromic cultures (e.g., southern European) people are more comfortable working on multiple tasks at one time. Likewise, in some cultures people focus first on the whole and then on the parts; similarly, in idealistic cultures people will determine principles before they attempt to resolve issues, but in pragmatic cultures they will focus more on details than principles.


Once a company identifies cultural differences in the foreign countries in which it operates, must it alter its customary practices?

Making Little or No Adjustment:

Some countries are relatively similar to one another because they share the same language, religion, geographical location, ethnicity and/or level of economic development. If products and operations do not run counter to deep-seated attitudes, or if the host country is willing to accept foreign customs as a trade-off for other advantages, significant adjustments may not be required. Generally, a company should expect to have to consider fewer adjustments when moving within a culturally similar cluster than when it moves from one distinct cultural cluster to another.


Problems in communications may arise when moving from one country to another, even though both countries share the same official language, as well as when moving from one language to another.

Spoken and Written Language:

Translating one language into another can be very difficult because (a) some words do translate directly, (b) the common meaning of words is constantly evolving, (c) words may mean different things in different contexts and (d) a slight misuse of vocabulary or word placement may change meanings substantially. Poor translations may have tragic consequences.

Silent Language:

Silent language incorporates the wide variety of nonverbal cues through which messages are sent— intentionally or unintentionally. Color associations, the distance between people during conversations, the perception of time and punctuality, a person’s perceived status and kinesics (body language) are all significant. Misunderstandings in any of these areas can have a very negative impact.

Culture Shock:

Culture shock represents the trauma one experiences in a new and different culture because of having to learn to cope with a vast array of new cues and expectations.
Reverse culture shock occurs when people return home, having accepted the culture encountered abroad and discovering that things at home have changed during their absence

Company and Management Orientations:

Whether and to what extent a firm and its managers adapt to foreign cultures depends not only on the conditions within those cultures but also on the policies of the company and the attitudes of its managers.


Polycentrism represents a managerial approach in which foreign operations are granted a significant degree of autonomy in order to be responsive to the uniqueness of local cultures and other conditions.


Ethnocentrism represents a belief that one’s own culture is superior to others, and that what works at home should work abroad. Excessive ethnocentrism may lead to costly business failures.


Geocentrism represents a managerial approach in which foreign operations are based on an informed knowledge of both home and host country needs, capabilities and constraints.

Strategies for Instituting Change:

Companies may need to transfer new products and/or operating methods from one country to another in order to gain or maintain a competitive advantage. To maximize the potential benefits of their foreign presence, firms need to treat learning as a two-way process and transfer knowledge from host countries back home as well as from home to host countries.

Value System:

The more change upsets important values, the more resistance it will encounter. Accommodation is much more likely when changes do not interfere with deep-seated customs.

Cost Benefit of Change:

Some adjustments to foreign cultures are costly to undertake, but their benefits are only marginal. The expected cost-benefit of any change must be carefully considered.

Resistance to Too Much Change:

Resistance to change may be reduced if only a few demands are made at one time; additional changes may be phased in incrementally.


A proposed change should be discussed with stakeholders in advance in order to ease their fears of adverse consequences—and hopefully gain their support.

Reward Sharing

A company may choose to provide benefits for all the stakeholders affected by a proposed change in order to gain support for it.

Opinion Leaders:

Characteristics of opinion leaders often vary by country. By discovering the local channels of influence, an international firm may seek the support of opinion leaders to help speed the acceptance of change.


Many good business changes fail because they are ill-timed. Attitudes and needs change slowly, but a crisis may stimulate the acceptance of change.

Learning Abroad:

The essence for undertaking transnational practices is to capitalize on diverse capabilities by transferring learning among all the countries in which a firm operates.


To Intervene or Not to Intervene:

Neither international firms nor their employees are always expected to adhere to a host government’s behavioral norms. Some firms choose not to operate in locales where objectionable social and political practices are the norm; others may operate in such places while pressuring the host country to change; still others may rationalize or simply tolerate the status quo. A difficult question concerns international business practices that may undermine a host country’s long-term cultural identity. The Society for Applied Anthropology advises governments and agencies on instituting change in different cultures; its code of ethics considers whether a project or planned change will actually benefit the target population. However, the trade-off between economic gains and the loss of cultural identity and traditions is often very difficult to

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