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MGT520 - International Business - Lecture Handout 15

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What is Culture?

  1. Culture has been defined a number of different ways. In this course we will view culture as a system of values and norms that are shared among a group of people and that when taken together constitute a design for living.
  2. While culture is a characteristic of society as a whole, it shapes individual behavior by identifying appropriate and inappropriate forms of human interaction.
  3. The fundamental building blocks of culture are values and norms.
  4. Values are abstract ideas about what a society believes to be good, right, and desirable. As was discussed in Chapter 2, values affect political and economic systems as well as culture. Values include attitudes towards concepts like freedom, honesty, loyalty, justice, responsibility, and personal relations including marriage.
  5. Norms are social rules and guidelines that prescribe the appropriate behavior in particular situations. Norms shape the actions of people towards one another. Norms can be divided into folkways and mores.
  6. Folkways are the routines conventions of everyday life, but generally have little moral significance. Examples would be dress, eating habits, and social graces. Foreigners may be easily excused for making a few faux pas. Timeliness is a good example, and you can discuss when timeliness is critical (test days) as well as when one may be expected to be "fashionably late." If students come from different parts of the country or world, you can ask for opinions on when they should arrive for a party if the invitation says 8pm. Even typically American students have different concepts about lateness. The concept of time as a commodity is peculiar to Western society. Time can be spent, saved, wasted. That is quite different from many other societies, especially some areas of Latin
    America, where time is seen as an item to be enjoyed and savored.
  7. Mores are more serious standards of behavior, the breaking of which may be very inappropriate or even illegal. Examples would be theft, adultery, murder, or use of mind-altering substances (including alcohol, caffeine, and marijuana). Mores can vary greatly between countries: what in one country may be viewed as an innocent flirt in another may constitute a serious affront to someone's dignity or even harassment. While it is acceptable, and even expected, to consume alcohol with business associates in Japan, where evening business contacts often border on drunkenness, such actions would be disallowed in the United Arab Emirates.
  8. Norms and values are an evolutionary product of a number of factors that are at work in a society, including political and economic philosophy, social structure, religion, language, and education. Culture affects both of these factors and is affected by them.
  9. The nation-state is only a rough approximation of a culture. Within a nation-state multiple cultures can easily exist (as we can only too painfully see in the former Yugoslavia), and cultures can also cut across national borders. That can often be easily illustrated by describing the differences that exist between people in a country. It is quite easy to get a class of students in the Western US to agree that the people in New York are really different and generally rude, while Eastern students will comment on Californians or Southerners, etc. Likewise, students in Stockholm will have clear opinions about how different Swedes are from the far North or far South. In virtually any country or state students will easily be able to describe the differences between city-folks and country-folks,
    and some students will “defend” their culture while making disparaging remarks about the other.

The Nation as a Point of Reference:

Each country has cultural variations within its borders. However, cultural differences within countries tend to be considerably less than across countries. Therefore it makes sense to talk about and compare national cultures.

Cultural Formation and Dynamics:

Cultural norms are passed down from generation to generation. By age 10, most children have their value system (largely supplied by their parents) in place. However, cultures also change over time—sometimes due to increased exposure to cultural norms of other countries. When a change in culture is imposed by a foreign nation, it is considered cultural imperialism.

Language as a Cultural Stabilizer:

Language is a key component of culture. In areas that speak the same language, similar cultural attitudes spread quickly. Countries that have many competing languages within their borders tend to be more culturally diverse.

Religion as a Cultural Stabilizer:

Religion helps shape cultural values. Religion also affects business practices across countries. It may determine what days businesses must be closed, working hours, and what kinds of foods will be consumed.

Social Structure:

  1. The social structure of a country can be described along two major dimensions: individualism vs. group and degree of stratification into classes or castes.
  2. A focus on the individual and individual achievement is common in many Western societies. In Chapter 2 we discussed the implications of this for political and economic systems. An emphasis on individual achievement has positive and negative implications. On the positive side, the dynamism of the US economy owes much to people like Sam Walton, Steve Jobs, and Bill Gates - people who took chances, tried new things, succeeded, and encouraged others to do likewise. On the other hand, individualism can lead to a lack of company loyalty and failure to gain companyspecific knowledge, competition between individuals in a company rather than team building, and limitation of people's ability to develop a strong network of contacts within a firm.
  3. In sharp contrast to the Western emphasis on the individual, in many Asian societies the group is the primary unit of social organization. While in earlier times the group was usually the family or the village, today the group may be a work team or business organization. In a social setting, Asian employees may often say they work for Sony, while a Western employee may say he/she is an electrical engineer. In Asia, the worth of an individual is more linked to the success of the group rather than individual achievement. This emphasis on the group may discourage job switching between firms, encourage lifetime employment systems, and lead to cooperation in solving business
    problems. On the other hand, it tends to suppress individual creativity and initiative.
  4. All societies have some sort of stratification, where individuals in higher strata or castes are likely to have a better education, standard of living, and work opportunities. What matters is less what these strata are, but rather the mobility between strata and the significance of strata levels for business.
  5. The mobility permitted by culture affects whether individuals can move up (or down) in strata, and can limit the types of jobs and education available. In the US individuals are very mobile ("anyone can become president"), in Britain there is less mobility, and the caste system in India severely limits mobility. Despite the laws against it, the effects of the caste system in India still exist today, and are especially prevalent in the practice of people in non-urban areas.
  6. The significance of the social strata can have important implications for the management and organization of businesses. In cultures where there is a great deal of consciousness over the class of others, the way individuals from different classes work together (i.e. management and labor) may be very prescribed and strained in some cultures (i.e. Britain), or have almost no significance in others (i.e. Japan). The class of a person may be very important in some hiring and promotion decisions, particularly in sales organizations where the person will be dealing with customers that may also come from a particular class.


Social Stratification Systems:

Every culture values some people more highly than others. What determines a person’s ranking (or social stratification) varies widely from country to country. Sometimes a person’s ranking is determined by birth (ascribed group membership) and sometimes by other factors such as achievement, political affiliation, religion, or other factors (acquired group membership). Social stratification may help determine a firm’s target market, human resource policies, and other activities. Below are some cultural characteristics that often affect a person’s social ranking.

  1. Role of competence: Countries like the United States usually base a person’s eligibility for jobs and promotions on their competence. This usually creates a working environment driven by competition. Other countries use other criteria. For example, Japan emphasizes seniority in promotion decisions—which leads to less competition based on performance.
  2. Gender-based groups: Different countries have different attitudes toward the role of males and females in society. Recall the PRI case and the attitude toward women in the Middle East. In Afghanistan, the 1996 takeover by religious fundamentalists led to prohibiting women from attending school and working.
  3. Age-based groups: While in many countries age is believed to be associated with wisdom, mandatory retirement at 60 or 65 in the United States suggests youth has a professional advantage. Our preference for youth is also illustrated in the abundance of products sold in the United States to help people look younger.
  4. Family-based groups: In some societies, an individual’s acceptance depends on the family’s social status, not the individual’s achievements. In such cultures, family-owned businesses and familybased business associations are more common. Often it may be difficult for non-family members to move up in the business.
  5. Occupation: In each society, some occupations carry greater economic and social prestige than others. For example, in Korea and Japan greater prestige is accorded university professors than in the United States and the United Kingdom. Cultural differences may dictate the number and qualifications of individuals seeking a specific position.


Members of different cultures may be motivated by different factors. Leisure and wealth, for example, are valued differently across cultures. Some workers may be motivated to higher productivity in order to enjoy greater leisure. In other cultures, workers may be motivated to higher productivity in order to make more money, as discussed below.

  1. Materialism and leisure. Max Weber argued that religion and work ethic were related. According to him, Calvinist thought placed greater emphasis on the importance of material blessings and led to a society that was more motivated to work to achieve economic success. In such societies, workers put in longer hours, take fewer vacations, and are loath to “retire.” In rural India, however, living a simple life with minimum material achievements is a desirable end in itself.
  2. Expectation of success and reward. People will usually work harder at any task when the reward for success is high compared to failure. In certain cultures where the probability of economic failure is almost certain and the rewards for success are low, work will often be viewed as necessary but unsatisfying, and motivation to work is low.
  3. Masculinity index. A worker’s motivation will depend on whether s/he has a “live to work” attitude (high masculinity) or a “work to live” attitude (low masculinity). For example, a purchasing manager from a low masculinity country will emphasize smooth social relations, while a manger from a high masculinity culture would emphasize lowering costs or speeding delivery.
  4. Need hierarchy. What motivates people changes according to their perceived needs? Lower-order needs (such as food and shelter) are more important motivators and must be mostly filled before needs for peer acceptance and self-actualization becomes powerful motivators.

Relationship Preferences:

Attitudes toward relationships are also affected by culture. These attitudes will also affect work behavior from country to country.

  1. Power distance. In high power-distance countries, superiors and subordinates have little interaction. Managers tend to be autocratic or paternalistic. In low power-distance countries, workers and managers prefer a more consultative management style.
  2. Individualism versus collectivism. Workers in countries high on individualism will prefer not to be dependent on their firm and will strive for more personal time, freedom, and challenge. Workers in countries high on collectivism will be more dependent on their firms for training, benefits, and good working conditions. When collectivism is high, companies find that successful advertising should express group (not individual) values.

Risk-Taking Behavior:

Three cultural aspects affect a country’s attitude toward risk-taking behavior: uncertainty avoidance, trust, and fatalism.

  1. Uncertainty avoidance. In countries high on uncertainty avoidance, workers prefer set rules which are not to be broken and tend to stay with the same company a long time. When uncertainty avoidance is low, workers will “go out on a limb” more frequently and will be quicker to change jobs to improve their careers.
  2. Trust. Some cultures (such as Norway) tend to be trusting of other people. Other cultures (such as Brazil) tend to not trust others. The lower the trust, the higher the cost of doing business since managers have to spend time trying to foresee every possible precaution they must take to reduce the possibility of being tricked.
  3. Fatalism. If people feel strongly that they control their own destiny, they will tend to work hard to achieve their goals and aspirations. In fatalistic countries where it is believed that one’s destiny is pre-determined, people will be less likely to try to alter their conditions or work toward a different future. Fatalists believe that whatever God wills will happen and that trying to change God’s will is futile.

Information and Task Processing:

People process information and reach conclusions differently. So do cultures.

  1. Perception of cues. The precision of a language affects the way cues are conveyed. Some cultures are therefore more precise in conveying certain ideas than other cultures. For example, in Arabic there are more than 6000 different words for camels, their body parts, and the equipment associated with them. Arabic speakers can note things about camels that other language speakers cannot.
  2. Obtaining information. Low-context cultures (such as the United States and northern Europe) tend to consider as relevant only information directly related to the decision at hand. High-context cultures place higher value on peripheral information.
  3. Information processing. Cultures categorize information differently. In the United States, telephone directories are alphabetized by last name—in Iceland, they are alphabetized by first name. Monochronic countries do their processing sequentially, finishing one item before starting another. Polychronic cultures work simultaneously with all the tasks they face.

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