Chapter 7: International Cultural Environment

Chapter 7
INTERNATIONAL CULTURAL ENVIRONMENT
Chapter 7: International Cultural Environment
Learning Objectives
To understand the significance of culture in international business decisions To elucidate the concept of culture and its constituents To explain comparisons of cross-cultural behaviour To discuss cultural orientation in international
business
To appreciate emic versus etic dilemma and its operationalization

Significance of Culture
A firm operating internationally comes across a wide range of diverse cultural environments, which significantly influence international business decisions. Managers operating internationally need to appreciate the differences among cultural behaviours of
their
business
partners
and
consumers
across various countries.

Self Reference Criterion (SRC)

An unconscious reference to ones own cultural
values, experiences, and knowledge as a basis

for decision-making. SRC significantly influences ability of international managers to objectively evaluate environmental factors and make
business decision.
Approach to Eliminate SRC

Step 1:Define the business problem or goal in home-country traits, habits, or norms. Step 2:Define the business problem or goal in foreign country cultural traits, habits, or norms. Make no value judgments.
Step 3:Isolate the SRC influence in the problem and examine it carefully to see how it complicates the problem.
Step 4:Redefine the problem without the SRC influence and solve for the optimum business goal situation.
The Concept of Culture

Culture is the way of life of people, including their attitudes, values, beliefs, arts, sciences, modes of perception, and habits of thought and activity. Cultiral differences across the countries
significantly influence business decisions.

Constituents of Culture
A variety of learned traits that influence human behavior can contribute to the culture of a social group, the major constituents, include: value system
norms
aesthetics customs and traditions language religion
Value System
Shared assumptions of a group about how things ought to be or abstract ideas
about what a group believes to be good,

desirable, or right.
Norms
Guidelines or social rules that
prescribe appropriate behaviour in a given situation.
Aesthetics
Ideas and perceptions that a cultural group upholds in terms of beauty and good taste. It includes areas related to
music,
dance,
painting,
drama,
architecture, etc.
Traditions and Customs
Traditions:
passed
The
elements
from
of
culture
to
down
generation
generation.
Customs: An established pattern of
behaviour within a society.

Language
A systematic means of communicating ideas or feelings by the use of conventionalized signs, gestures, marks, or especially articulate vocal sounds.
Religion
Religious beliefs significantly influence business decision making. Religion elements: encompasses three distinct
Explanation: God seen as a first cause behind

the creation of the universe A standard organization: Consisting of places of
worships and rituals

Moral rules of good behaviour
Comparison of Cross Cultural Behavior

An appreciation of cultural differences to
facilitates
international and
managers
conceptualize
implement
business
strategies in view of cultural sensitivities in various countries.

Hofstedes Cultural Classification

Power distance
The extent to which less powerful members
of an institution accept that power is
distributed unequally.
High social inequalities tolerated with differences in power and income distribution Organizational structures are hierarchical based an inequality among superiors and subordinates Decision making is centralized Juniors blindly follow the orders of their superiors For instance, Malaysia, countries, India etc. Mexico, Arab
High Power Distance Countries
Low Power Distance Countries
Superiors and subordinates consider each other equal Organizations are relatively flatter Decision making is decentralized
For instance, Austria, Sweden, Great Britain, the US etc.
Individualism vs. Collectivism

Individualism:
The tendency of people to look after themselves
and their immediate family.
Strong work ethics
Promotions based on merit

Involvement of employees is calculative
Countries with high individualism include, the US,

Great Britain, France, South Africa etc
Collectivisms: The tendency of people to belong to groups and to look after each other in exchange for loyalty. In such cultures, interest of groups have precedence over individual interest For instance, Guatemala, Pakistan, Singapore, Malaysia etc.
In masculine societies, the dominant values emphasize on work goals, such as earnings, advancement, success, and material belongings. e.g. Japan, Switzerland, Great Britain, the US etc. In feminine societies the dominant values are achievement of personal goals, such as quality of life, caring for others, friendly atmosphere, getting along with boss and others. e.g. Sweden, Norway, Denmark, Thailand etc.
Masculinity vs. femininity
Uncertainty avoidance
The extent to which people feel threatened by ambiguous situations.
In high uncertainty avoidance societies there

is lack of tolerance for ambiguity and the
need for formal rules. For instance, Greece,

Portugal, Japan, France etc.
Low uncertainty avoidance countries include

Singapore, Denmark, India, the US etc.
Trompenaars Cultural Classification
Universalism vs. Particularism
Universalism: The belief that ideas and practices can be defined and applied everywhere without modification e.g. the US, Australia, Germany, Sweden etc.
Particularism: The belief that unique circumstances and relationships, rather than abstract rules are more important considerations that determine how ideas and practices should be applied e.g. Venezuela, the US, Indonesia, China etc.
Individualism vs. Communitarianism

Individualism: people regarding themselves as
individuals.
For instance the US, Czechoslovakia, Argentina,
the CIS, Mexico, and the UK . Communitarianism: people regarding themselves as part of a group.
For instance, Singapore, Thailand, Japan, and

Indonesia.
Neutral vs. Affective

Neutral Cultures: Cultures in which people tend to hold back their emotions and try not to exhibit
their feelings.
For instance, Japan, the UK, Singapore, Australia, etc. Affective Cultures: Cultures where emotions are expressed openly.
For instance, Mexico, Netherlands, Switzerland,

China, Brazil, etc.
Specific vs. Diffused

Specific Cultures: Cultures in which individuals tend to have a large public space which is readily shared, and a smaller private space. For instance, Australia, the UK, the USA and Switzerland. Diffused Cultures: Culture in which public and private space are more or less similar and public space is guarded more carefully. For instance, Venezuela, China and Spain
Achievement vs. Ascription

Achievement Cultures: Culture in which status is
accorded to high achievers and high performers. For instance Austria, the USA, Switzerland, the UK, Sweden and Mexico etc. Ascription Cultures: Culture in which status is
accorded to those who naturally evoke admiration

from others such as elderly, seniors, highly qualified and skilled people. For instance, Venezuela, Indonesia, China, the
CIS, and Singapore etc.
Other Cross-Cultural
Classifications
High Context vs. Low Context

High Context Cultures: Culture in which high significance is given to implicit communications, such as non-verbal and subtle situational cues. For instance, countries. China, Korea, Japan and Arab
Low Context Cultures: Cultures in which communication is more explicit with heavy reliance on words to convey the meanings. For instance, Germany, Switzerland, Scandinavia, North America and Britain.
Homophilous vs. Heterophilous

Homophilous Cultures: Cultures where people For share instance, beliefs, speak the same and
language, and practice the same religion.

Japan, Korea Scandinavian countries. Heterophilous Cultures: Countries that have a fair amount of differentiation in
languages, beliefs, and religions followed.

For instance, India and China.
Relationship vs. Deal-focused

Relationship-focused Cultures: Cultures in which strong orientation towards building relationships and developing mutual trust. For instance, India, Japan, China, Singapore, Saudi Arabia, United Arab Emirates, Egypt, Brazil, Mexico, and Russia. Deal-focused Cultures: Task-oriented cultures with openness to hold direct business talks with strangers. For instance, Britain, USA, Germany, Denmark, Australia, Canada, Finland etc.
Formal vs. informal cultures

Formal Cultures: Status differences are large and valued and formality is used to show respect. For instance, India, UAE, Egypt, Brazil, Russia, Poland, Japan, China,, Singapore, France, Belgium,
Britain, Germany, Denmark, Finland etc.

Informal Cultures: Status differences are not
valued and Informal behaviour is not considered disrespectful. For instance, the USA, Canada, and Australia etc.
Polychronic vs. Monochronic

Polychronic Cultures: Cultures in which time schedules and deadlines are flexible and relationships
take precedence. For instance,
India, Thailand,
Philippines, UAE, Egypt, Brazil, Russia etc. Monochronic Cultures: Cultures with rigid time schedules and deadlines with high emphasis on punctuality. For instance, Japan, China, Singapore,
Britain, USA, Canada, Australia, Germany, Denmark etc.

Expressive vs. Reserved Cultures

Expressive cultures: people are more expressive with direct eye contact. For instance, Russia, Poland, Romania, USA, Australia, and Canada
Reserved cultures : people restrain their facial expression and gesturing.

For instance, India, Japan, China, Singapore, Britain, Germany, Denmark, Finland etc.
Parochialism vs. Simplification

Parochialism: Belief that views the rest of the world from ones own cultural perspective. Simplification: Exhibiting same cultural
orientation
groups.
towards
different
cultural
EPRG Approach
Ethnocentric orientation
The belief which considers ones own culture as
superior to others. The belief that the business strategy which has worked in the home country would also be suitable in alien cultures.
Polycentric orientation
It is based on exist the belief that substantial countries.
differences
among
various
Therefore, a single business strategy cannot be
effective
across
the
world
and
customized
business strategies need to be adapted in
different countries.
Regiocentric orientation
A firm treats the region as a uniform
cultural segment and adopts a similar business strategy within the region but not across the region.
Geocentric orientation
The approach considers the whole world a single
market and attempts to formulate integrated
business strategies. A geocentric firm attempts

to identify cultural similarities across countries and formulates a globally uniform business strategy.
Emic vs. Etic Dilemma
The Emic school holds that attitudes, interests, and behaviour are unique to a culture and best understood in their own terms. It emphasizes studying the business research problem in each countrys specific context and identifying and understanding its unique facets. The Etic school emphasizes identifying and assessing universal attitudinal and behavioural concepts and developing pan-cultural measures. Thus, etic is basically concerned with measuring universal behavioural and attitudinal traits.
Operationalisation of Emic and Etic
Emphasis is often placed an identifying and developing constructs that are
feasible across countries and cultures,

while conducting cross country research.

Chapter 7: International Cultural Environment

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Chapter 7

INTERNATIONAL CULTURAL ENVIRONMENT