CHAPTER 4

Differences in Culture

• Copyright Information: T. Kothari Chapter 4 Differences in Culture © 2013 by The McGraw-Hill Companies, Inc.

How Do Cultural Differences Affect International Business?

• Understanding local culture is vital for international companies.

• Cross-Cultural Literacy: Understanding how cultural differences influence business practices is crucial for success.

• There may be a correlation between culture and business costs in various regions.

• Multinational Enterprises (MNEs) can act as agents of cultural change, exemplified by global brands like McDonald's.

What Is Culture?

• Definition: Culture consists of shared values and norms within a group that formulate a design for living.

• Values: Abstract concepts regarding what a group deems good, right, and desirable.

• Norms: Social rules that dictate appropriate behavior in specific contexts.

• Society: A collective that shares common values and norms.

What Are Values And Norms?

• Values set the foundation for norms in a society, guiding behavior and interactions.

• Types of norms include:

  • Folkways: Routine conventions of everyday life.

  • Mores: Norms crucial to societal function and social life.

How Are Culture, Society, And The Nation-State Related?

• The link between a society and nation-state is complex and not one-to-one.

• Nation-states are political creations that may encompass multiple cultures.

• A single culture may span across numerous nation-states.

What Determines Culture?

• Culture's values and norms evolve over time. Key determinants include:

  • Religion

  • Political and economic philosophies

  • Education

  • Language

  • Social structure

What Is A Social Structure?

• Definition: Basic organization of a society.

• Considerations include:

  • Whether individuals or groups are the primary social unit.

  • The stratification levels present in society (classes or castes).

How Are Individuals And Groups Different?

• Group Definition: An association of two or more people with shared identity and structured interactions based on expectations.

• Individuals participate in various groups such as families, work, and social organizations.

• Societies value groups differently depending on cultural context.

Individualism versus Collectivism in Societies

• Western Societies:

  • Emphasis on individual achievement.

  • Higher entrepreneurship and economic dynamism, but lack of company loyalty and specific knowledge development.

  • Promotes competition over collaboration.

• Asian Societies:

  • Group as primary social unit.

  • Practices like lifetime employment Systems and cooperation in business problems.

  • However, this structure may suppress individual initiative.

What Is Social Stratification?

• Societies are hierarchically arranged into strata, where individuals are born into specific categories.

• Important aspects include:

  1. Social Mobility: The ability of individuals to change their social status.

     • Caste System: Closed system with little to no mobility.

     • Class System: Open system where mobility is possible through achievement.

  2. Significance of Social Strata in Business: Class consciousness can affect professional relationships.

How Do Religious And Ethical Systems Differ?

• Religion: A system of shared beliefs and rituals pertaining to the sacred.

• Dominant Religions: Christianity, Islam, Hinduism, Buddhism, and the impact of Confucianism in Asia.

• Ethical Systems: Moral principles guiding behavior, often intertwined with religion.

What Is Christianity?

• The largest global religion, predominant in Europe and the Americas.

• Features the Protestant work ethic, emphasizing hard work and frugality as keys to capitalism.

What Is Islam?

• The second-largest religion, founded in AD 610.

• Teaches a single omnipotent God and promotes peace and justice but is often mischaracterized by media.

• Emphasizes stewardship of property rather than ownership.

What Is Hinduism?

• Religion primarily in the Indian subcontinent, focusing on spiritual growth and self-denial.

• Success measured by spiritual, not material, achievements.

What Is Buddhism?

• With 350 million followers, it highlights spiritual growth over material success.

• Rejects the caste system, allowing for some social mobility.

What Is Confucianism?

• An ideology prominent in China, centered around personal salvation through moral living and loyalty.

• Key teachings include loyalty, reciprocal obligations, and honesty, potentially lowering business costs.

What Is The Role Of Language In Culture?

• Language: A crucial element of culture including spoken and non-verbal communication.

• Multilingual countries often have diverse cultures (e.g., Canada, Belgium, Spain).

Education's Role In Culture

• Formal education fosters language and conceptual skills essential for modern societies.

• Influences a nation's competitive edge; Japan's education system is linked to its economic success.

• Literacy rates can inform market potential for products.

How Does Culture Impact The Workplace?

• Management practices must adjust to culturally-determined work values.

• Geert Hofstede's research identified four core dimensions of cultural differences:

  1. Power Distance: Management of inequality.

  2. Individualism vs. Collectivism: The role of the individual in society.

  3. Uncertainty Avoidance: Tolerance of ambiguity in cultures.

  4. Masculinity vs. Femininity: Gender roles at work.

Hofstede's Dimensions Expansion

• A fifth dimension, Confucian dynamism or long-term orientation, reflects a culture's approach to time and societal respect.

• Notable high scores in Japan and low in the U.S. and Canada.

Critique of Hofstede's Work

• Criticisms include potential cultural bias in data collection and the static assumption of culture.

• Despite this, his work provides a foundation for understanding cross-cultural differences in management.

Conclusion on Cultural Change

• Culture is not static and evolves over time, often amidst social turmoil.

• Economic power can lead to shifts from collectivism to individualism.

• Globalization plays a significant role in cultural evolution.

Implications for Managers

1. Developing cross-cultural literacy is essential for success.

   • Hiring locals and regular executive transfers can prevent cultural missteps.

   • Vigilance against ethnocentrism is crucial to avoid skewed perceptions of other cultures.

2. Understanding the link between culture and competitive advantage can inform strategic business decisions on location and operations.