InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
Instructor Manual
Chapter 3: Informal Institutions: Culture, Religion and
Languages
to accompany Mike Peng & Klaus Meyer: International Business, Cengage Learning
Prepared by Klaus Meyer
version February 2011
Introduction to the Topic
Learning Objectives
1. Define what culture is and articulate two of its manifestations: language and religion
4. Explain how religions shape cultures
5. Understand the importance of ethics
General Teaching Suggestions
One way to help students appreciate the importance of others’ cultures and their ethics and
norms is to ask them if they have ever observed any violation of what is acceptable behaviour
in their own country by someone from a different country. If they have not, identify a
Opening Case Discussion Guide
Ask your students how many favour freedom of speech? How many oppose “political
correctness?” How many believe that we should strive for peace and good will among
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
nations and be respectful of other religions? There is a good chance that most will favour
freedom of speech and oppose political correctness while at the same time desiring peace,
Chapter Outline, Section by Section
Section 1: where do informal institutions come from?
Key Ideas
This section introduces the idea of informal institutions, and discusses the unfortunate
tendency of many people to approach them with an ethnocentric perspective.
Key Concepts
informal institutions
Section 2: Cultures
Key Ideas
This section introduces different perspectives on the notion of culture, perhaps the most
important concept in international business, but also the most difficult to define. We use
Hofstede’s definition as our main base (as is common in the IB literature and textbooks) but
we contrast it with other definitions and concepts.
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
impressions? This way you will be able to guide the discussions from ‘artefacts of culture’
to the underlying traditions, norms and values.
Key Concepts
culture
The collective programming of the mind that distinguishes the members of one group or category of
people from another.
high-context culture
A culture in which communication relies a lot on the underlying unspoken context, which is as
important as the words used.
cluster
Countries that share similar cultures together.
individualism
The perspective that the identity of an individual is fundamentally his or her own.
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
masculinity
values traditionally associated with male role, such as assertive, decisive and aggressive
long-term orientation
a perspective that emphasizes perseverance and savings for future betterment.
Section 3: Languages
Key Ideas
Often overlooked, but essential for doing business in Europe and beyond, are language
competences. Languages are carriers of culture, and thus we included them here (or, frankly,
Key Concepts
lingua franca
the dominance of one language as a global business language.
Section 4: Religions
Key Ideas
Religion may be the most sensitive subject to discuss for many instructors. The opening case
points to its explosiveness. Yet, it is important for business (and politics), and structuring the
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
discussion may help taking out some of the sensitivities and encouraging tolerance. In this
spirit we have written this section.
Key Concepts
holy
Section 5: Ethics
Key Ideas
Ethics is essentially about what is right and what is wrong, and it is closely aligned to the
notion of culture and its underling norms of values. Ethics, however creates challenges when
engaging in business overseas as adapting to local standards of ethics may be seen as
unethical by folks back home, and vice versa.
Key Concepts
ethics
the principles, standards, and norms of conduct governing individual and firm behavior.
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
A perspective that suggests that all ethical standards are relative.
Section 6: Debates and Extensions
Key Ideas
The first debate concerns group-level culture: culture exists not only at national level (though
that’s what we most discuss in IB) but also in much smaller entities.
Key Concepts
in-group
Individuals and firms regarded as part of “us.”
out-group
Individuals and firms not regarded as part of “us.”
Section 7: Implications for Practice
Key Ideas
The implications for practice section focuses on the concept of cultural intelligence, and how
Key Concepts
cultural intelligence
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
An individual’s ability to understand and adjust to new cultures.
Review Questions
Review questions are provided to students on the website accompanying the book. They
directly ask to summarize the material provided in the text. Instructors may also use the
questions to structure their lectures or review sessions.
Review Questions
(as provided to students on the website)
Material in the Book
1. What are informal institutions?
2. What is culture?
6. What are the limitations of Hofstede’s dimensions
approach?
7. How do language differences affect international
business?
11. Why does corruption vary across countries, and how
should MNEs deal with that?
12. When is the nation state not the appropriate unit to
identify cultures?
13. How do culture converge, or diverge, over time?
Page 67-68
Page 68-69
In Focus 3.1
Page 77-78, incl In Focus 3.2
& 3.3
Page 84-85, In Focus 3.4
Page 86
Page 86
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Critical Discussion Questions
At the end the chapter, we provide discussion questions that aim to stimulate students
thinking beyond memorizing the material learned in the chapter. They are designed to be
used at a basis for in-class discussions, group work, or individual assignments. Below,
provide some indicative answers of issues that may be raised in response to these questions.
Discussion Questions
(as provided in the book)
Indicative Responses
1. You meet a classmate who has
just arrived from a distant
country. What are the most
2. Have a look at the postcards of
Valencia. Do they represent the
culture of Valencia as
experienced by foreign tourists?
Do you think local people of
Valencia like to be associated
3. Your new male colleague
informs you that he cannot
shake hands with female
colleagues or clients because his
1. The main challenge here is to find out what
the other person does not know. People
who have been abroad may find some
2. These images reflect what foreigners find
interesting – which tends to be superficial
aspects of local culture, some of which
locals may find old-fashioned or not
representative of what they stand for. This
3. This question is based on a case that
actually happened in a hospital in
Hamburg, Germany. Discriminating
between male and female customers would
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
5. Assume you work for a
Norwegian company exporting
a container of salmon to
Azerbaijan or Haiti. The
customs official informs you
that there is a delay in clearing
your container through customs,
and it may last a month.
Answers vary with students own
experience.
5. There are subtle differences between bribes
and so-called “grease payments.” In
essence, in such a case it would be legal to
pay the official to do his or her job but it
would not be legal to pay the official to let
Closing Case
The closing case provides further opportunities to apply ideas and concepts learned in this
chapter in a real world setting. The Closing Case for this Chapter is “Alstom: Prty Invitations
in Saudi Arabia and in China” and focuses on “how colleagues socialize in different
countries”.
Stories are often more powerful than theories to convey the substance of cultural differences.
In this a Swiss research project has gathered stories from ALSTOM expatriates (mostly
frequent project workers) as a source for other expats, and from that study these two
quotations have been taken.
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
Below are some indicative responses to the case discussion questions.
Case Discussion
Questions
(as provided in the book)
Indicative Responses
1. If you were invited
to a party in Saudi
Arabia, how would
you behave? What
2. Do you think it is
appropriate, or
necessary, to join
the drinking when
being invited to a
party in China (or
Russia)?
3. How would you
treat you Saudi
Different expats are likely to give quite different advise on this
sort of issues. It is important, however, that students reflect and
explain there suggested actions. This is how I personally would
handle these situations:
2. This is a difficult one. I myself have managed to avoid
excessive drinking even though I have been in Greater
China many times on business. But perhaps I have just
been lucky because my academic friends drink less than
business persons. Advice for women: if you want to stay
out, tell everyone that you don’t drink at all – many
Asian women do that. For men it is rarely seen as
credible.
3. My two points of advice would be: a) party in your
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
Further Learning Activities
In addition to the cases and discussion questions provided in the book, instructors may want
to use any of the following activities to further engage students with the material.
1. The text mentions PepsiCo as an example of a company that succeeded despite
adverse circumstances in Russia. In a new article in The Economist, the story is told in
more detail. PepsiCo has been in Russia since the mid 1970s, well ahead of the fall of
2. Religion is an integral component of your company’s operations because it
manufactures food products according to Islam’s Halal requirements. Upper
management wants information concerning the largest populations of Islam
worldwide to develop its distribution capabilities. Provide a report with any
information relevant to this company-wide initiative. What recommendations can you
provide to the company?
3. One approach to understanding corruption perceptions is to compare information
across a variety of countries. As such, your company has had operations in South
America for some time. However, there has not been an internal evaluation of
perceived regional corruption to date. Therefore, you have been asked to provide
insight on this topic for each country in South America. Based on an annual
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
© Klaus Meyer (2011)
For use with International Business by Mike Peng and Klaus Meyer
1408019566 Cengage Learning, 2011 Page 12
Further Readings
At the end the chapter, suggested further readings are provided. The primary aim is to
provide students a starting point for further work, for example when preparing a class
assignment or dissertation. These references also are recommended for instructors not
familiar with the topic and wishing to ‘get ahead of the students’ before lecturing on a topic.
N.A. Boyacigiller, R.A. Goodman & M.E. Philips, eds, 2003, Crossing Cultures: Insights from the Master
Teachers, London: Routledge – A collection of teaching materials for practical learning about the
challenges of cross-cultural management.
G. Hofstede, 1997, Cultures and Organizations, New York: McGraw-Hill – introduces and explains
Hofstede’s five dimensions of culture and their implications for business.
Note: I found the Boyacigiller et al. book a very useful resource for teachers thinking of
creative new ways how to engage students in exercise through which they can learn to
appreciate and manage cultural diversity.
InstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.