CHAPTER 2
CROSS-CULTURAL BUSINESS
LEARNING OBJECTIVES:
2.1 Explain culture and the need for cultural knowledge.
2.2 Summarize the cultural importance of values and behavior.
2.3 Describe the roles of social structure and education in culture.
2.4 Outline how the major world religions can influence business.
2.5 Explain the importance of personal communication to international business.
2.6 Describe how firms and culture interact in the global workplace.
CHAPTER OUTLINE:
Introduction
What Is Culture?
National Culture
Subcultures
Physical Environment
Need for Cultural Knowledge
Avoiding Ethnocentricity
Developing Cultural Literacy
Values and Behavior
Values
Attitudes
Aesthetics
Appropriate Behavior
Manners
Customs
Folk or Popular Customs
The Business Customs of Gift Giving
Social Structure and Education
Social Group Associations
Family
Gender
Social Status
Social Mobility
Caste System
Class System
Education
The “Brain Drain” Phenomenon
Religion
Christianity
Islam
Hinduism
Buddhism
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Confucianism
Judaism
Shinto
Personal Communication
Spoken and Written Language
Implications for Managers
Language Blunders
Lingua Franca
Body Language
Culture in the Global Workplace
Perception of Time
View of Work
Material Culture
Cultural Change
When Companies Change Cultures
When Culture Changes Companies
Studying Culture in the Workplace
Kluckhohn-Strodtbeck Framework
Case: Dimensions of Japanese Culture
Hofstede Framework
Bottom Line for Business
A comprehensive set of specially designed PowerPoint slides 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
I. 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.
II. WHAT IS CULTURE?
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.
A. National culture
1. 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.
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B. Subcultures
1. 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
3. Decisions regarding product design, packaging, and advertising
must consider distinct cultures.
4. Subcultures also can extend beyond national borders.
C. Physical Environment—These heavily influence a culture’s development
and pace of change.
1. Topography: all physical features that characterize the surface of a
3. Climate affects where people settle and directs systems of
distribution (e.g., Australian desert, jungles, and coastal areas).
4. Climate plays a large role in lifestyle, clothing, and work habits,
such as organizing production schedules for idled machines.
D. Need for Cultural Knowledge
1. Avoiding Ethnocentricity
a. Ethnocentricity is the belief that one’s own ethnic group or
2. Developing Cultural Literacy
a. Managers working directly in international business should
develop cultural literacy—detailed knowledge about a
culture that enables a person to function effectively within
it.
b. Cultural literacy brings a company closer to customer needs
and improves competitiveness.
III. VALUES AND BEHAVIOR
A. Values are ideas, beliefs and customs to which people are emotionally
attached. They affect work ethic and desire for material possession. Some
cultures value leisure while others value hard work.
B. Attitudes
1. Attitudes are positive or negative evaluations, feelings, and
tendencies that individuals harbor toward objects or concepts.
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Learned from role models and formed within a cultural context.
More flexible than values.
C. Aesthetics
1. Aesthetics is what a culture considers to be in “good taste” in the
3. Blunders can result from selecting inappropriate colors and
symbols for advertising, product packaging, and architecture.
4. Music is deeply cultural and must be considered in promotions.
5. It is also an important consideration in marketing over the Internet.
D. Appropriate Behavior—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 the United
States). Another current example: Jack Ma founded Alibaba
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 generations,
practiced within a homogeneous group of people (e.g.,
dragon boat festival in China).
b. A popular custom is behavior practiced by a heterogeneous
group or by several groups (e.g., blue jeans, “burgers ’n
fries”).
c. The business custom of gift giving – slthough giving token
gifts to business and government associates is customary,
IV. SOCIAL STRUCTURE AND EDUCATION
Social structure embodies a culture’s fundamental organization, including groups
and institutions, social positions and relationships, and resource distribution.
A. Social Group Associations
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b. Reverse brain drain: professionals return to their
homelands.
V. RELIGION
Human values often derive from religious beliefs. Different religions take
different views of work, savings, and material goods. Beliefs influence
competitiveness, economic development, and business strategies.
A. Christianity
1. Founded in Palestine 2,000 years ago among Jews who believed
3. Roman Catholics are to refrain from placing materialism above
God and people. Protestants believe that salvation comes from
faith in God and that hard work gives glory to God.
4. Christian organizations sometimes get involved in social causes
that affect business policy (e.g., Walt Disney Company, Ryanair,
Hyundai).
B. Islam
1. Founded by Muhammad in 600 A.D. in Mecca, Saudi Arabia—the
2. Religion strongly affects the goods and services acceptable to
Muslim consumers (e.g., alcohol, pork, interest on loans).
C. Hinduism
1. Founded 4,000 years ago in present-day India, where more than 90
percent of its nearly 900 million adherents live.
2. Some say it is a way of life rather than a religion. Caste system is
3. Cows considered sacred animals so eating beef is not allowed (e.g.,
McDonald’s replaces beef with lamb).
D. Buddhism
1. Founded 2,600 years ago in India by a Hindu prince named
2. 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.
E. Confucianism
1. Founded 2,500 years ago by exiled politician and philosopher
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2. Confucian thought ingrained in the cultures of Japan, South Korea,
3. South Korean business practice reflects Confucian thought in its
4. For centuries, people despised merchants because earning money
violated Confucian beliefs. Many Chinese moved to Indonesia,
Malaysia, Singapore, and Thailand to do business.
F. Judaism
1. Founded more than 3,000 years ago and 18 million followers. Was
2. Important observances are Rosh Hashanah (the Jewish New Year),
3. Employers must be aware of Jewish holidays. Because Sabbath
lasts from sundown on Friday to sundown on Saturday, work
schedules might need adjustment.
4. Marketers must take into account foods banned among observant
Jews (e.g., pork and shellfish prohibited, meat stored and served
separately from milk) and “kosher” foods.
G. Shinto
1. Means “way of the gods” and arose as the native religion of the
2. Shinto beliefs are reflected in the workplace through lifetime
employment (although this is waning today) and the traditional
trust extended between firms and customers.
3. Japanese competitiveness in world markets has benefited from
loyal workforces, low employee turnover, and good labor–
management cooperation.
VII. PERSONAL COMMUNICATION
Every culture has a communication system to convey thoughts, feelings,
knowledge, and information through speech, writing, and actions. A culture’s
spoken and body language can help explain people’s thoughts and behaviors.
A. Spoken and Written Language
1. Linguistically different segments of a population are often
culturally, socially, and politically distinct. The importance of
understanding local languages is becoming increasingly apparent
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production facilities where non-native managers are supervising
local employees. Finally, it is important to marketers because they
prize insights into the interests, values, attitudes, and habits of
teenagers to better target their promotions.
3. A lingua franca is a third or “link” language that is understood by
two parties who speak different languages.
4. Some languages are dying out, whereas some languages are
growing, including Mandarin, Spanish, and English.
B. Body Language
1. Communicated through unspoken cues, including hand gestures,
3. Proximity is an element of body language; standing too close may
invade personal space and appear aggressive.
VIII. CULTURE IN THE GLOBAL WORKPLACE
A. Perceptions of Time
1. Latin American,Indian and Mediterranean cultures are casual about
2. Americans strive toward workplace efficiency and may leave work
early if their work is done because they value individual results.
Japanese look busy even when business is slow to demonstrate
dedication—an attitude grounded in cohesion, loyalty and harmony
B. View of Work
1. 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”)
2. Many European nations are trying to foster an entrepreneurial
spirit to achieve the job growth realized in the United States.
C. Material Culture—includes all technology a culture uses to manufacture
goods and provide services, and can measure a culture’s technological
advancement.
1. A firm enters a market under one of two conditions: (1) demand
3. Many nations display uneven levels of material culture across
geography, markets, and industries.
D. Cultural Change
1. Cultural trait is anything that represents a culture’s way of life
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1. Individualism versus Collectivism: Identifies the extent to which a
culture emphasizes the individual versus the group.
2. Power Distance: Identifies the degree to which a culture accepts
social inequality among its people.
a. Large power distance is characterized by inequality
3. Uncertainty Avoidance: Identifies the extent to which a culture
avoids uncertainty and ambiguity.
a. Cultures with large uncertainty avoidance value security,
place faith in strong systems of rules and procedures, have
lower employee turnover, formal rules for employee
4. Masculinity versus Femininity: Identifies the extent to which a
culture emphasizes masculinity versus femininity.
5. Long-Term Orientation: Indicates a society’s time perspective and
an attitude of overcoming obstacles with time. It attempts to
capture the differences between Eastern and Western cultures.
6. Indulgence versus restraint: This dimension captures the extent to
which a society allows free expression.
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a. An indulgent society (one scoring high on this dimension)
allows people to rather freely satisfy human needs related
to enjoying life and having fun.
X 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. Localizing business policies and practices can promote
success. Understanding a people’s values, beliefs, rules, and institutions makes
managers more effective at their jobs.
Quick Study Questions
Quick Study 1
1. Q: How might a subculture differ from the dominant culture?
2. Q: What do we call the belief that one man’s culture is superior to that of others?
3. Q: What do we call detailed knowledge about a culture that enables a person to
work happily within it?
Quick Study 2
1. Q: What are examples of values?
2. Q: What type of custom might a conservative group oppose in a culture?
3. Q: The law that restricts the gift giving by U.S. firms at home and abroad is
called?
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gifts to government officials, in order to win business favors.
Quick Study 3
1. Q: Social structure embodies a culture’s fundamental organization, including
what?
A: Social structure embodies a culture’s fundamental organizations; including its
2. Q: A person and his or her immediate relatives including parents and siblings, is
called what?
3. Q: The departure of highly educated people from one profession, region, or
nation to another is called what?
Quick Study 4
1. Q: Which denomination of Christianity has a “work ethic” named after it?
2. Q: India is home to more than 90 percent of the adherents of which religion?
3. Q: The Dalai Lama is the spiritual and political head of what religion?
Quick Study 5
1. Q: Every culture has a communication system that it uses to convey what?
2. Q: A special language understood by two parties who speak different native
languages is called what?
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Nigeria, and Singapore) and roughly one-quarter of the world’s population is
fluent or competent in it.
3. Q: An interesting fact about body language is what?
A: Body language is important because it reflects cultural communication styles
Quick Study 6
1. Q: People living in different cultures often have different views regarding their
what?
2. Q: What is an example of cultural imperialism?
A: Fears of cultural imperialism still drive some French to oppose the products of
3. Q: The Kluckhohn-Strodtbeck framework does investigate whether people do
what?
A: The Kluckhohn-Strodtbeck Framework compares cultures along six
dimensions, asking the following questions:
1. Do people believe that their environment controls them, that they control the
environment, or that they are part of nature?
6. Do people prefer to conduct most activities in private or in public?
4. Q: In the Hofstede framework, the term “power distance” refers to what?
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Ethical Challenge
You are the vice president of operations for a U.S.-based software firm that is exploring
building a software design operation in India. Typically when international firms enter
the Indian market, they quickly learn how a caste system can affect business activities.
Although officially banned, the caste system still dictates everyday life for many people in
India. You are confident regarding the likelihood of business success there, but you have
strong misgivings about the caste system.
2-4 Do you think it will be possible to import and uphold a U.S. management style in
India despite lingering effects of the caste system?
A. A caste system is a system of social stratification in which people are born
into a social ranking, or caste, with no opportunity for social mobility. India is
2-5 How do you think your company’s stakeholders would feel about your company
simply adjusting to local management practices?
A: Students must understand that understanding cultural differences is crucial to
Teaming Up
Two groups of four students will debate the benefits and drawbacks of individualist
versus collectivist cultures. After the first student from each side has spoken, the second
will question the opponent’s arguments, looking for holes and inconsistencies. The third
student will attempt to answer these arguments. The fourth student will present a
summary of each side’s arguments. Finally, the class will vote on which tem has offered
the more compelling argument.
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A: Students may want to use the content of this chapter as a guide to create the questions
they will ask the interviewee. Students should include in their report a full account of the
cultural elements their interview uncovers. Student teams may also enjoy comparing their
findings to look for similarities and differences among companies.
Practicing International Management Case
A Tale of Two Cultures
2-14. Q: If you worked for an international firm doing business in Asia, is there
anything you would suggest to ease the tensions these cultures are experiencing?
Be specific.
A: This question presents students with an ethical dilemma. Some students will
say that their company is in business to earn a profit and that Asian consumers are
not being forced to buy Western goods—they make a conscious decision when
2. Q: Social ills in any country are normally born from a multitude of factors. What
role if any, do you think globalization is having in higher reported rates of
divorce, crime, and drug abuse in Asia?
A: Many students will agree that the forces of globalization are exposing people
3. Q: Broadly defined, Asia comprises more than 60 percent of the world’s
population—a population that practices Buddhism, Confucianism, Hinduism,
Islam, and numerous other religions. Do you think it is possible to carry on a
valid discussion of “Asian” values? Explain?
A: Clearly, there are important and significant differences between Asian
societies. But some values tend to be Pan-Asian, including the extended family
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about “Asian values” depends on the depth of the discussion. The deeper we
explore Asian cultures, the more differences we uncover.