Chapter 04 – Differences in Culture
Differences in Culture
Learning Objectives
• LO4-1: Explain what is meant by the
culture of a society.
• LO4-2: Identify the forces that lead to
differences in social culture.
• LO4-3: Identify the business and
economic implications of differences
in culture.
• LO4-4: Recognize how differences in
social culture influence values in
business.
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 explores the history and
culture of Singapore, the tiny nation-state
between Malaysia and Indonesia. With its
4
Chapter 04 – Differences in Culture
OUTLINE OF CHAPTER 4: DIFFERENCES IN CULTURE
Opening Case: Singapore: One of the World’s Most Multicultural Places
Introduction
What Is Culture?
Values and Norms
Culture, Society, and the Nation-State
Determinants of Culture
Social Structure
Individuals and Groups
Social Stratification
Country Focus: Determining Your Social Class by Birth
Language
Spoken Language
Unspoken Language
Education
Culture and Business
Cultural Change
Chapter 04 – Differences in Culture
CLASSROOM DISCUSSION POINT
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.
OPENING CASE: Singapore: One of the World’s Most Multicultural
Places
Summary
The opening case explores Singapore’s history as a nation and how it has contributed to its
unique diverse culture. With four official languages, a young population, and ethnic diversity,
Singapore embraces differences and encourages harmony among people. Despite being one of
the most expensive cities to live in the world, Singapore is attractive to many. Today,
Singapore’s welcoming business environment and strong infrastructure attracts companies
from around the world. Discussion of the case can begin with the following questions:
QUESTION 1: The United States is often referred to as being a melting pot of cultures. How
is it different from Singapore? In your opinion, is the melting pot of cultures in the United
States seen as a good thing? How does it compare to Singapore?
ANSWER 1: Responses to this question will vary by student. Many students are likely to
suggest that the United States, a land of immigrants, prides itself on being a cultural melting
pot with a common identity of being American. Some students though, may contend that
especially in recent years, that perspective is beginning to show some cracks and the country
nation’s multicultural makeup is viewed as a strength and harmonious diversity is encouraged.
Chapter 04 – Differences in Culture
QUESTION 2: How does Singapore manage to attract so many foreign companies? What
influence do these foreign companies have on its culture?
ANSWER 2: Since gaining its independence in 1965, Singapore has been a beacon for
companies hoping to do business in the region. Indeed, companies appear to be willing to
overlook the fact that the nation is one of the most expensive places in the world to live,
QUESTION 3: Singapore’s Board of Tourism proclaims that “Singapore is where cultures,
religions, and even passions meet.” How does Singapore’s diversity promote further
diversity? Could other countries follow in Singapore’s footsteps? Discuss.
ANSWER 3: Responses to this question will vary by student. Most students will agree that
Singapore’s unique heritage is the starting point for its diversity. Some students may wonder
whether Singapore, as a young country both in terms of its existence as a stand-alone entity
and in terms of the age of its population, is more open to diversity than other countries might
be. Other students may consider religion as a basis for Singapore’s diversity. Students sharing
this view may point out that while multiple religions are practiced in Singapore, some of them
focus on tolerance and peace. Still other students may explore ideas related to the country’s
LECTURE OUTLINE
This lecture outline follows the Power Point Presentation (PPT) provided along with this
instructor’s manual. 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
prevailing culture or cultures in the countries where they do business.
Chapter 04 – Differences in Culture
Slide 4-4 – 4-9 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 either
more or less supportive of the capitalist approach to production. Culture is dynamic.
CONNECT
Click and Drag
The Determinants of Culture
Summary
This activity focuses on the determinants of culture. A nation’s culture reflects a nation’s political and
economic philosophies, its social structure, dominant religions, language, and education. As such, a
nation’s culture is not static, but instead evolves over time.
Culture, Society, and the Nation-State
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.
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.
Chapter 04 – Differences in Culture
Slides 4-10 – 4-14 Social Structure
The social structure of a country can be described along two major dimensions:
individualism versus group, and the degree of stratification into classes or castes.
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.
Social Stratification
All societies have some sort of stratification, where individuals in higher social 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,
referred to as social mobility. In a caste system, social position is determined by the family
into which a person is born and change in that position is difficult. In contrast, in a class
system, mobility is possible. 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.
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.
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 recent decades, there has been a rise in Islamic fundamentalism. Fundamentalists, who
demand a commitment to traditional religious beliefs and rituals, are often anti-Western.
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 are obliged
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.
Chapter 04 – Differences in Culture
however, so individuals do have some mobility not found in Hinduism, and can work with
individuals from different classes.
CONNECT
Click and Drag
Economic Implications of Major Religions
Summary
This activity focuses on the role of religion in business; its effect on entrepreneurship; and religious
ethics. Understanding religion and how it influences the way of doing business in a nation is important
to understanding how to do business in that country.
Activity
Students are asked to match various economic implications of religion to the correct religion.
Slides 4-22 – 4-23 Language
Language refers to the spoken and unspoken means of communication and is one of the
defining characteristics of culture.
Spoken Language
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.
Chapter 04 – Differences in Culture
Unspoken Language
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.
Slides 4-25 – 4-30 Culture and Business
Geert Hofstede conducted what is probably the most famous study about the connection
between culture and values in the workplace. Hofstede studied IBM employees worldwide,
and identified four dimensions to describe cultures: power distance, individualism versus
collectivism, uncertainty avoidance, and masculinity versus femininity.
Hofstede recently added another dimension, called indulgence versus restraint to capture the
notion of relatively free gratification of basic and natural human drives related to enjoying life
and having fun versus suppressed gratification of needs and regulated by means of strict social
norms.
While Hofstede’s work on culture is the world’s leading research on culture, it is not without
criticism. Two newer frameworks on culture are the Global Leadership and Organizational
Behavior Effectiveness (GLOBE) instrument and the World Values Survey (WVS).
Slide 4-30 Cultural Change
Culture is not a constant, but evolves over time. As countries become economically stronger,
cultural change is particularly common.
Chapter 04 – Differences in Culture
CONNECT
Click and Drag
Geert Hofstede’s Big Idea
Summary
This activity focuses Geert Hofstede’s study of culture. Hofstede’s identified several dimensions of
culture that he claimed summarized the differences between cultures. Hofstede’s study helped
managers better understand the effects of cultural differences in the workplace.
Activity
Students are asked to match various cultural differences to the correct dimension of culture as
identified by Geert Hofstede.
Slides 4-32 – 4-34 Focus on Managerial Implications
Cultural Literacy and Competitive Advantage
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.
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.
Chapter 04 – Differences in Culture
CONNECT
Case Analysis
The Emirates Group and Employee Diversity
Summary
This activity explores employee diversity at the Emirates Group and the importance of developing
cross-cultural literacy. It is important for managers to recognize cultural differences and the
implications of those differences for international business.
Activity
Students are asked to read a case on the Emirates Group and then respond to questions about the case.
CRITICAL THINKING AND DISCUSSION QUESTIONS
QUESTION 1: Discuss why the culture of a country might influence the cost of doing
business in that country. Illustrate your answer with country and company examples.
ANSWER 1: Responses to this question will vary by student. When there are different norms
for how individuals from different countries interact, the costs of doing business rise as people
grapple with unfamiliar ways of doing business. For example, in the United States it is
common to get down to business first, and then get to know each other socially later. In
Chapter 04 – Differences in Culture
QUESTION 2: Do you think that business practices in an Islamic country are likely to differ
from business practices in a Christian country? If so how? If not, why?
ANSWER 2: Many students will probably agree that business practices in a Muslim country
are likely to differ from those in a Christian country. The cultural differences between a
Muslim country and the United States will cause business practices to differ dramatically—
taking into consideration the public role women can take on; practicing appropriate etiquette
(including simple things like not passing objects with the left hand); celebrating holidays; and
wining and dining all differ from patterns in Christian countries. But beyond these, the
underlying ideal and understanding of the role of business differs. Since Muslims are stewards
QUESTION 3: Choose two countries that appear to be culturally diverse (e.g., Sweeden and
Colombia). Compare the culture of those countries and then indicate how cultural differences
influence (a) the costs of doing business in each country, (b) the likely future economic
development of that country, and (c) business practices.
ANSWER 3: Responses to this question will obviously vary based on the countries chosen by
students, and their knowledge of the countries. Hopefully, students can present some
information on the dimensions of culture including values, norms, social structure, religion,
language, and education of the countries and also describe the key differences and similarities
QUESTION 4: Reread the Country Focus “Turkey, Its Religion, and Politics.” Then answer
the following questions:
a. Can you see anything in the values and norms of Islam that is hostile to business? Explain.
b. What does the experience of the region around Kayseri teach about the relationship
between Islam and business?
c. What are the implications of Islamic values toward business for the participation of a
country like Turkey in the global economy or becoming a member of the European Union?
Chapter 04 – Differences in Culture
ANSWER 4:
a. Many students will probably focus on the comment made by furniture producer Saffet
Arslan that Muslims typically eschew the notion of making money and instead focus on
b. The area around Kayseri that has been growing rapidly is strongly influenced by Islam.
However, it is Islamic Calvinism that is contributing to the growth. Islamic Calvinism is a
fusion of traditional Islamic values and the type of strong work ethic traditionally associated
c. Some students might focus on the lack of competitiveness that is sometimes associated with
Islam. Others might note though that, at least for Turkey, this does not seem to be an issue.
QUESTION 5: Reread the Management Focus “China and Its Guanxi” and then answer the
following questions:
a. Why do you think that it is so important to cultivate guanxi and guanxiwang in China?
b. What does the experience of DMG tell us about the way things work in China? What would
likely happen to a business that obeyed all the rules and regulations rather than trying to find a
way around them as Dan Mintz apparently does?
c. What ethical issues might arise when drawing upon guanxiwang to get things done in
China? What does this suggest about the limits of using guanxiwang for a Western business
committed to high ethical standards?
ANSWER 5:
a. Guanxi literally means relationships, although in business settings in can better be
understood as “connections.” The concept of guanxi is deeply rooted in Chinese culture and
Confucianism. The Chinese will often cultivate a guanxiwang, or “relationship network,” for
help. In China, there is a tacit acknowledgement that if you have the right guanxi, legal rules
Chapter 04 – Differences in Culture
companies could get into trouble if they are asked to return a favor to a network partner that
involves unethical actions. Other students may note that in China, it is not what you know that
is important, it is who you know. These students may point out that since success depends on
others, firms doing business in China are not in complete control of their own destiny—a
situation that could result in ethical standards being compromised.
CLOSING CASE: China, Hong Kong, Macau, and Taiwan
The closing case explores the cultural complexity of the Greater China Region. While it is
often thought of as simply being Chinese, the Greater China Region, frequently known as
simply China, is actually composed of China, Hong Kong, Macau, and Taiwan. Each of these
brings its own political, economic, and cultural differences to the region making it important
for international businesses and indeed countries to fully understand “Chinese” culture and
what it means to trade relations, the investment climate, and so on. Discussion of the case can
begin with the following questions:
QUESTION 1: When Goldman Sachs chief economist Jim O’Neill coined the acronym
BRIC in 2001 to refer to Brazil, Russia, India, and China, the focus was to highlight the
immense collective economic potential of these countries. Since that time, China and Russia
have influenced the international marketplace in political ways as well. How do you think
these four countries—or a subset of them—will likely influence the world’s cultures in the
next 10 years?
ANSWER 1: Responses to this question will vary by student. For example, many will focus
on Russia, and to a lesser extent China, and how they have influences election outcomes in the
United States and Europe. Already, the world has seen the United States, which had followed
a fairly consistent foreign policy for 70 years, shift toward a more isolationist policy, which of
QUESTION 2: Anyone who has been to Hong Kong typically says it is different from
mainland China, more like Singapore, albeit with a strong connection to China. Do you think
Hong Kong will become more like China in the next few years, or will China leverage Hong
Kong as an asset to engage more capitalistically in the international marketplace instead?
ANSWER 2: This question will likely generate some debate among students. Recent protests
in Hong Kong against Beijing’s efforts to impose its policies on Hong Kong illustrate the
Beijing has. Hong Kong has proved to be capable of attracting Western business, but as the
Chapter 04 – Differences in Culture
current conflict continues and particularly if it intensifies, many companies are likely to
reassess their strategic commitments in the country.
QUESTION 3: Macau was under Portuguese influence until 1999, which is not that long ago.
Many in Macau welcomed the Chinese takeover so that the area could be better taken care of
(e.g., infrastructure, economy). But being part of the Portuguese administration from 1887 to
1999 clearly has imbued their cultural values and beliefs in the mindset of Macau’s citizens.
How are these values and beliefs likely to influence the Macau–China relationship in the years
to come?
ANSWER 3: Responses to this question will vary by student. Many will likely suggest that as
QUESTION 4: Taiwan maintains diplomatic relations with some 76 member states of the
United Nations (19 in an official capacity and 57 in an unofficial capacity). The nation’s
culture is a blend of Confucianist Han Chinese and Taiwanese aboriginal influences. How
would you handle the link between China and Taiwan—culturally, economically, and
politically?
ANSWER 4: Responses to this question will vary by student. Many students will agree that
Taiwan’s firm belief that it is an independent nation, the Republic of China, and China’s
equally firm stance that it has sovereignty over Taiwan, suggests that political conflict
Chapter 04 – Differences in Culture
MHE INTERNATIONAL BUSINESS VIDEO LIBRARY
stream of updated video suggestions correlated by key concept and major topic. Every new
clip posted is supported by teaching notes and discussion questions. Please feel free to leave
comments in the library that you feel might be helpful to your colleagues.
CONNECT
Geography
Summary
This activity is designed to test the student’s knowledge of geography. Questions related to chapter
material are asked, requiring students to understand the topics and the locations of the countries
involved.
Activity
Students are asked to respond to a series of questions related to the geographic location of several
countries.
INCORPORATING globalEDGE™ EXERCISES
Exercise 1
You are preparing for a business trip to Brazil, where you will need to interact extensively
with local professionals. As a result, you want to collect information about the local culture
Exercise 2
Typically, cultural factors drive the differences in business etiquette encountered during
international business travel. In fact, Middle Eastern cultures exhibit significant differences in
Chapter 04 – Differences in Culture
Answers to Exercises
Exercise 1 Answer
Search phrase: “Centre for Intercultural Learning”
Resource Name: Centre for Intercultural Learning (Foreign Affairs and International Trade
Additional Info:
The data can be accessed by searching for the term “Centre for Intercultural Learning” at
Exercise 2 Answer
Additional Info:
The data can be accessed by searching for the term “Business Etiquette Around the World” at