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Chapter 04 - Differences in Culture
Differences in Culture
Learning objectives
Explain what is meant by the culture of a society.
Identify the forces that lead to differences in social culture.
Identify the business and economic implications of differences in culture.
Understand how differences in social culture influence values in the workplace.
Demonstrate an appreciation for the economic and business implications of cultural
change.
This chapter explores the role of culture in international business: how differences in culture
across and within countries can affect the practice of business.
The discussion then addresses the major questions of the chapter: What is culture? How does it
play itself out in social structures, religious and ethical systems, language, and education? The
need for cross-cultural literacy and an appreciation of the impact of culture on competitive
advantage are all addressed.
The opening case focuses on the failures of both Best Buy and eBay in China. In both instances,
the companies failed to account for cultural differences between Chinese and American
consumers. The closing case explores the cultural implications of the upcoming World Expo
2020 in Dubai, UAE. Dubai is shown to be an ideal host for the world expo because of its
eclectic mix of cultures and its unique position as a business gateway for the Middle East.
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Education.
Chapter 04 - Differences in Culture
OUTLINE OF CHAPTER 4: DIFFERENCES IN CULTURE
Opening Case: Best Buy and eBay in China
Introduction
What Is Culture?
Values and Norms
Culture, Society, and the Nation-State
The Determinants of Culture
Social Structure
Individuals and Groups
Social Stratification
Country Focus: Using IT to Break India’s Caste System
Religious and Ethical Systems
Christianity
Islam
Country Focus: Islamic Capitalism in Turkey
Hinduism
Buddhism
Confucianism
Management Focus: DMG-Shanghai
Language
Spoken Language
Unspoken Language
Education
Culture and Business
Cultural Change
Focus on Managerial Implications
Cross-Cultural Literacy
Culture and Competitive Advantage
Chapter Summary
Critical Thinking and Discussion Questions
Closing Case: World Expo 2020 in Dubai, UAE
CLASSROOM DISCUSSION POINT
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Education.
Chapter 04 - Differences in Culture
Ask students about what they might expect in the way of cultural differences if they were to go
to Germany. What might they expect if they were to go to Saudi Arabia, Brazil, or South
Korea?
Next, ask students what they think students from Germany, Saudi Arabia, South Korea, or
Brazil might expect from American culture. As students respond, jot their ideas on the board
and try to develop categories similar to the elements of culture discussed in the text.
Then, discuss why these elements of culture exist, and why they differ between countries.
Finally, ask students to consider what they mean for international companies.
If there are foreign students in the class, draw on their special expertise by asking what
differences they experienced when they first came to the United States.
LECTURE OUTLINE
This lecture outline follows the Power Point Presentation (PPT) provided along with this
instructor’s manual. The PPT slides include additional notes that can be viewed by clicking on
“view,” then on “notes.” The following provides a brief overview of each Power Point slide
along with teaching tips, and additional perspectives.
Slide 4-3 Cultural Differences and International Business
Business success requires cross-cultural literacy. Managers need an understanding of the
culture, or cultures, that prevail in the countries where they do business.
Slide 4-4 What Is Culture?
Culture is a system of values and norms that are shared among a group of people and that
when taken together constitute a design for living.
Values are abstract ideas about what a society believes to be good, right, and desirable. Norms
are social rules and guidelines that prescribe the appropriate behavior in particular situations.
Society is a group of people who share a common set of values and norms.
The cost of doing business in a country is influenced by culture – different cultures are more or
less supportive of the capitalist approach to production. Culture is dynamic.
Slide 4-5 Values and Norms
Values and norms are the basic components of culture. Norms can be further divided into
folkways and mores.
Values include attitudes towards concepts like freedom, honesty, loyalty, justice, responsibility,
and personal relations including marriage. Norms shape the actions of people towards one
another. Norms can be divided into folkways and mores.
Slide 4-6 Culture, Society and the Nation-State
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Education.
Chapter 04 - Differences in Culture
While it is possible for a nation-state to have a uniform culture, this is not always the case.
Within a nation-state multiple cultures can exist, and cultures can also cut across national
borders.
Slides 4-7 and 4-8 The Determinants of Culture
Culture is an evolutionary product of a number of factors.
Political philosophy, economic philosophy, education, dominant language, social structure, and
dominant religion are all determinants of culture.
Slide 4-9 Social Structure
The social structure of a country can be described along two major dimensions: individualism
vs. group, and degree of stratification into classes or castes.
Slides 4-10 through 4-12 Individuals and Groups
A focus on the individual and individual achievement is common in many Western societies.
An emphasis on individual achievement has positive and negative implications.
On the positive side, the dynamism of the United States’ 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 company-specific knowledge, competition
between individuals in a company rather than team building, and a limitation of people's ability
to develop a strong network of contacts within a firm.
In sharp contrast to the Western emphasis on the individual, in many Asian societies the group
is the primary unit of social organization.
While this emphasis on the group may discourage job switching between firms, encourage
lifetime employment systems, and lead to cooperation in solving business problems, it tends to
suppress individual creativity and initiative.
Slides 4-13 through 4-15 Social Stratification
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.
Social structure is linked to the ease with which an individual can move between strata.
Additionally, the social structure created by the strata levels and the social significances of
each strata level can have implications for the way business is conducted.
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, or have almost no significance in others.
Slides 4-16 through 4-18 Religious and Ethical Systems
Religion can be defined as a system of shared beliefs and rituals that are concerned with the
realm of the sacred.
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Education.
Chapter 04 - Differences in Culture
Ethical systems refer to a set of moral principles, or values, that are used to guide and shape
behavior. The ethical practices of individuals within a culture are often closely intertwined
with their religion.
Another Perspective: The International Business Ethics Institute
{http://www.business-ethics.org} promotes ethical business practices around the world. The
site contains a number of articles that can be used to expand a discussion of business ethics in
foreign markets, and a “top ten mistakes” list for companies doing business in other countries.
Slide 4-19 Christianity
Christianity, the largest religion, is common throughout Europe, the Americas, and other
countries settled by Europeans and has three major branches: Protestant, Roman Catholic, and
Eastern Orthodox.
The "Protestant work ethic" – a focus on hard work, wealth creation, and frugality – is
considered the driving force of capitalism. In the workplace this work ethic translates into a
significant emphasis on quality and productivity.
Slide 4-20 Islam
The world’s second largest religion, Islam has the same underlying roots of Christianity (Christ
is viewed as a prophet), and suggests many of the same underlying societal mores. Islam,
however, extends this to more of an all-embracing way of life that governs one's being. Islam
also prescribes many more rules by which people should act and live.
In Islam people do not own property, but only act as stewards for God and thus must take care
of that with which they have been entrusted. They must use property in a righteous, socially
beneficial, and prudent manner; not exploit others for their own benefit; and they have
obligations to help the disadvantaged. Thus, while Islam is supportive of business, the way
business is practiced is strictly prescribed. For instance, no interest may be paid on business
loans.
Slide 4-21 Hinduism
Hinduism, practiced primarily on the Indian subcontinent, focuses on the importance of
achieving spiritual growth and development, which may require material and physical
self-denial. Since Hindus are valued by their spiritual rather than material achievements, there
is not the same work ethic or focus on entrepreneurship found in some other religions.
Likewise, promotion and adding new responsibilities may not be the goal of an employee,
Slide 4-22 Buddhism
Buddhists also stress spiritual growth and the afterlife, rather than achievement while in this
world. Buddhism, practiced mainly in Southeast Asia, does not support the caste system,
however, so individuals do have some mobility not found in Hinduism, and can work with
individuals from different classes.
Slide 4-23 Confucianism
Confucianism, practiced mainly in China, teaches the importance of attaining personal salvation
through right action. Unlike religions, Confucianism is not concerned with the supernatural and
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Education.
Chapter 04 - Differences in Culture
has little to say about the concept of a supreme being or an afterlife. The needs for high moral
and ethical conduct and loyalty to others are central in Confucianism.
Three key teachings of Confucianism – loyalty, reciprocal obligations, and honesty – may all
lead to a lowering of the cost of doing business in Confucian societies.
Slides 4-24 and 4-25 Language
Language refers to the spoken and unspoken means of communication, and is one of the
defining characteristics of culture.
While English is clearly the language of international business, knowing at least some of the
local language can greatly help when working in another country.
In some situations knowing even a bit of the local language can be critical for business success.
Such knowledge may be understood as a sign that the businessperson is willing to learn from
the local firm.
Unspoken language refers to nonverbal communication such as facial expressions, personal
space, and hand gestures. Managers who fail to understand the nonverbal cues of another
culture may experience a breakdown in communication.
Slide 4-26 Education
Formal education is the medium through which individuals learn many of the language,
conceptual, and mathematical skills that are indispensable in a modern society.
Education is part of the social structure of a country and is instrumental in shaping many
cultural values and norms. The knowledge base, training, and educational opportunities
available to a country's citizens can contribute to a competitive advantage in the marketplace.
Slide 4-27 Think Like a Manager: Analyze Your School Culture
Slides 4-28 through 4-32 Culture in the Workplace
Geert Hofstede conducted what is probably the most famous study about the connection
between culture and values in the workplace. Hofstede made a study of IBM employees
worldwide, and identified four dimensions to describe cultures: power distance, individualism
vs. collectivism, uncertainty avoidance, and masculinity vs. femininity.
Power distance focuses on how a society deals with the fact that people are unequal in
physical and intellectual capabilities. Individualism versus collectivism focuses on the
relationship between the individual and his or her fellows. Uncertainty avoidance measures
the extent to which different cultures socialize their members into accepting ambiguous
situations and tolerating ambiguity. Masculinity versus femininity looks at the relationship
between gender and work roles.
Hofstede later expanded his study to include a fifth dimension called Confucian dynamism
which captures attitudes toward time, persistence, ordering by status, protection of face, respect
for tradition, and reciprocation of gifts and favors.
Slide 4-33 Cultural Change
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Education.
Chapter 04 - Differences in Culture
Culture is not a constant, but evolves over time. As countries become economically stronger,
cultural change is particularly common.
Slides 4-34 and 4-35 Implications for Managers
Managers need to be aware that societies differ because their cultures vary, and cultures vary
because of profound differences in social structure, religion, language, education, economic
philosophy, and political philosophy.
Individuals and firms must develop cross-cultural literacy. International businesses that are ill
informed about the practices of another culture are unlikely to succeed in that culture. One way
to develop cross-cultural literacy is to regularly rotate and transfer people internationally.
Managers need to be aware of ethnocentric behavior, or a belief in the superiority of their own
culture.
Another Perspective: To give students an opportunity to “experience” cultural differences create
a mock business meeting. Executive Planet maintains a web site,
{http://www.executiveplanet.com/index.php?title=Main_Page}, with guidelines for doing
business in different countries. The site allows visitors to explore relevant issues in a variety of
cultures. A recent article in Entrepreneur magazine provides some strategies on how to avoid
cultural missteps when doing business in other countries
{http://www.entrepreneur.com/article/22686}.
The connection between culture and competitive advantage is important because it suggests
which countries are likely to produce the most viable competitors, and it has implications for
the choice of countries in which to locate production facilities and do business.
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