GLOBAL4 Peng Ch03

Chapter 3 - Emphasizing Cultures,
Ethics, and Norms
3
Emphasizing
Cultures,
Ethics, and
Norms
Copyright ©2018 Cengage Learning. All Rights Reserved. May not be

scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part.
Learning Objectives
LEARNING OUTCOMES
1. Explain where informal institutions come from

2. Define culture and articulate its two main
manifestations
3. Articulate three ways to understand cultural
differences
4. Explain why understanding cultural differences is
crucial for global business
Copyright ©2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part. GLOBAL4 | CH3 2
Learning
LEARNINGOutcomes (Continued)
OUTCOMES (continued)
5. Explain why ethics is important

6. Identify ways to combat corruption
7. Identify norms associated with strategic responses
when firms deal with ethical challenges
8. Explain how you can acquire cross-cultural literacy
LO 1
Informal Institutions
• Originate from socially transmitted

information
• Part of the heritage that is considered
cultures, ethics, and norms
• Ethnocentrism: Mentality held by a group of
people who perceive their own culture, ethics,
and norms as natural, rational, and morally
right
LO 2
Culture
• Collective programming of the mind

• Distinguishes the members of one group or
category of people from another
• Strict one-to-one correspondence between
cultures and nations does not exist
• Subcultures exist in multiethnic countries
• Consists of regional, ethnic, and religious
layers
LO 2
Components of Culture
• Language
• Lingua franca: A global business language
➖Dominated by English
• Disadvantage of English dominance
➖Expatriate managers miss cultural subtleties
• Religion
LO 3
Classifying Cultural Differences: Context Approach
• Focuses on context
• Context: Background against which interaction
takes place
• Low-context cultures
• Communication is usually taken at face value
without much reliance on unspoken conditions
or assumptions
• High-context cultures
• Communication relies on the underlying
unspoken conditions or assumptions
LO 3
Exhibit 3.1 - High-Context versus Low-Context

Cultures
LO 3
Classifying Cultural Differences: Cluster Approach
• Groups countries that share similar cultures

as one cluster
• Underlying idea
• People and firms are more comfortable doing
business with other countries within the same
cluster or civilization
LO 3
Exhibit 3.2 - Cultural Clusters
LO 4
Classifying Cultural Differences: Dimension

Approach
Power distance
Individualism versus collectivism
Masculinity versus femininity
Uncertainty avoidance
Long-term orientation
LO 4
Classifying Cultural Differences: Dimension

Approach (continued)
• Societal-level sex-role differentiation

• Masculinity: Strong form
➖Men tend to have occupations that reward
assertiveness
➖Women tend to work in caring professions
• Femininity: Relatively weak form
➖Women occupy positions that reward
assertiveness
➖More men work in caring professions
LO 4
Understanding Cultural Differences to Do Global

Business
• Global business activity is consistent with

the context, cluster, and dimension
approaches
• Average length of contracts is longer in low-
context countries than in high-context countries
• Many agreements are unspoken in high-context
countries
• Preparation
• Firms are cautious when dealing with countries
from other clusters
LO 4

Business (continued 1)
• Individualistic societies foster higher level

of entrepreneurship
• Individualist firms aim to differentiate
themselves
• Collectivist firms
• Follow each other
• Managers in high masculinity societies
• Assertive, decisive, and aggressive
LO 4

Business (continued 2)
• Managers in high femininity societies

• Less visible, intuitive, and seek consensus
• Managers in low uncertainty avoidance
countries
• Rely more on experience and training
• Managers in high uncertainty avoidance
countries
• Rely more on rules
LO 5
Ethics
• Principles, standards, and norms of conduct

that govern individual and firm behavior
• Reflect in formal laws and regulations
• Code of conduct: Set of guidelines for
making ethical decisions
LO 5
Views on Ethical Motivation of Firms
Negative
Positive view
view
Instrumental
view
LO 5
Schools of Thought for Managing Ethics Overseas
• Ethical relativism
• All ethical standards are relative
• Ethical imperialism
• Absolute belief that there is only one set of
ethics, and one possesses it
LO 5
Exhibit 3.4 - Managing Ethics Overseas: Three

Approaches
LO 6
Corruption
• Abuse of public power for private benefits

usually in the form of bribery
• Causes misallocation of resources
• Slows economic development
• Discourages foreign direct investment (FDI)
LO 6
Fighting Corruption
• Foreign Corrupt Practices Act (FCPA)

• Bans bribery of foreign officials
• Enacted by the US Congress in 1977
• Makes exceptions for small grease payments to
get through customs abroad
• UN Convention against Corruption
• Corruption can be eradicated if:
• All countries criminalize bribery
• All firms resist corruption
LO 7
Norms
• Prevailing practices of relevant players that

affect the focal individuals and firms
• Influence the way in which firms respond to
ethical challenges
LO 7
Exhibit 3.6 - Strategic Responses to Ethical Challenges
LO 7
Implications for Savvy Managers
• Managers should:
• Enhance their cultural intelligence
➖Cultural intelligence: Individual’s ability to
understand and adjust to new cultures
• Be aware of the prevailing norms and their
transitions globally
LO 8
Phases in Acquisition of Cultural Intelligence
Awareness
• Recognition of pros and cons of one’s cultural mental software
• Appreciation of people from other cultures
Knowledge (cross-cultural literacy)

• Ability to identify symbols, rituals, and taboos in other cultures
Skills
• Good practices based on awareness and knowledge of other
cultures
LO 8
Exhibit 3.7 - Implications for Action
Key Terms
KEY TERMS
• Ethnocentrism • Power distance

• Culture • Individualism
• Lingua franca • Collectivism
• Context • Masculinity
• Low-context culture • Femininity
• High-context • Uncertainty
culture
avoidance
• Cluster
• Long-term
• Civilization
orientation
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Copyright wholeCengage
or in part.
Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. GLOBAL4
GLOBAL4||CH2
CH3 27
Key Terms (Continued)
KEY TERMS (continued)
• Ethics • Defensive strategy

• Code of conduct • Accommodative
• Ethical relativism strategy
• Ethical • Proactive strategy
imperialism • Cultural
• Corruption intelligence
• Norm
• Reactive strategy
website, in ©2018
or in part.
GLOBAL4||CH2
CH3 28
Summary
SUMMARY
• Informal institutions come from socially

transmitted information and heritage
• Language and religion are the components
of culture
• Approaches to understand cultural
differences
• Context, cluster, and dimension
website, in ©2018
or in part.
GLOBAL4||CH2
CH3 29
Summary
SUMMARY
(continued 2)
• Managing ethics overseas is challenging
• Strategic responses to ethical challenges
• Reactive, defensive, accommodative, and
proactive
• Managers should enhance their cultural
intelligence and be aware of prevailing
norms
website, in ©2018
or in part.
GLOBAL4||CH2
CH3 30

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Chapter 3 - Emphasizing Cultures,

Ethics, and Norms

Copyright ©2018 Cengage Learning. All Rights Reserved. May not be

1. Explain where informal institutions come from

5. Explain why ethics is important

• Originate from socially transmitted

• Collective programming of the mind

Classifying Cultural Differences: Context Approach

Exhibit 3.1 - High-Context versus Low-Context

Classifying Cultural Differences: Cluster Approach

• Groups countries that share similar cultures

Exhibit 3.2 - Cultural Clusters

Classifying Cultural Differences: Dimension

Individualism versus collectivism

Masculinity versus femininity

Classifying Cultural Differences: Dimension

• Societal-level sex-role differentiation

Understanding Cultural Differences to Do Global

• Global business activity is consistent with

Understanding Cultural Differences to Do Global

• Individualistic societies foster higher level

Understanding Cultural Differences to Do Global

• Managers in high femininity societies

• Principles, standards, and norms of conduct

Views on Ethical Motivation of Firms

Schools of Thought for Managing Ethics Overseas

Exhibit 3.4 - Managing Ethics Overseas: Three

• Abuse of public power for private benefits

• Foreign Corrupt Practices Act (FCPA)

• Prevailing practices of relevant players that

Exhibit 3.6 - Strategic Responses to Ethical Challenges

Implications for Savvy Managers

Phases in Acquisition of Cultural Intelligence

Knowledge (cross-cultural literacy)

Exhibit 3.7 - Implications for Action

• Ethnocentrism • Power distance

• Ethics • Defensive strategy

• Informal institutions come from socially

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