The Cultural Environment

of International Business
• Culture is the knowledge, beliefs, art, law,
morals, customs, and other capabilities of one
group, distinguishing it from other groups.
• “ Collective mental programming” of people-
Hofstede
 Characteristics of Culture

• Comprehensive
• Acquired (learned)
• Manifested in boundaries of acceptable
thought and behavior--norms and
sanctions
• Conscious awareness limited (frequently
taken for granted)
• Dynamic
 Key dimensions of culture
• Values and Attitudes
• Deal Vs.Relationship Orientation
• Manners and Customs
• Perception of time
• Perception of Space
• Religion
• Language
• Influence of Culture on Consumption
Consumption patterns , living styles, priority of
needs
• Influence of culture on thinking processes
Self reference criteria(SRC)
Ex. Fire insurance in US and Brazil,
 Influence of culture on communication process

• Low-Context cultures-messages are explicit

and clear, North America and Europe
• High-context cultures-communication may be
indirect, the way of expression becomes
critical. Japan, France,Spain,Italy, Asia, Africa,
Mid-East.
Correlates of Culture: Verbal and Nonverbal
Language

• Linguistics – or the meanings of words

• Proxemics – or the distance that speakers
stand from one another
• Pragmatics – the cultural interpretations
of words, gestures, and nonverbals
• Nonverbals – The gestures and body
language that accompanies spoken words
Hofstede’s Cultural Dimensions
• Individualism (vs. collectivism) Based on interviews
• Power distance with
IBM executives
• Masculine vs. feminine throughout
• Strong vs. weak uncertainty the World—1968-72
avoidance
• Short vs. long term
orientation
 Individualism vs. collectivism
• The extent to which
– Individuals as opposed to groups are rewarded
– It is desirable to “stand out” from others
• In collectivism, the unit of responsibility can be
(sometimes depending on context)
– Work group
– Family
– Nation, community, or society as a whole
 Power Distance
• The extent to which “rank” is important in work and
relationships
• Rank can be based on
– Position
– Family/ethnic status
– Age
• Implications for
– Strategy formation
– Delegation
– Correcting mistakes
 “Masculine” vs. “Feminine”
• “Masculine” values: Dominating environment,
“conquering” nature, “progress”
– E.g., damming, tunnels, land development, land
reclamation
• “Feminine” values: Harmony, preserving
environment
– E.g., environmental impact, working around
nature
 Uncertainty Avoidance
• Low uncertainty avoidance
– Willingness to
• Take risks
– Investments
– Social situations
– Consider new ideas
• High uncertainty avoidance
– Reliance on authority for decision making
 Long vs. short term orientation
• Not included in Hofstede’s original work
• Complications—is U.S. shortsighted?
– Short term financial performance
– Investment in new technologies; firms with high
price/earnings ratios
• Net present value (NPV) analysis/discounted cash
flows
• Economic structure
– Accountability to stockholders; disclosure of information