Chapter 4

Differences in Culture
 How Do Cultural Differences Affect
International Business?
• Understanding and adapting to the local cultural is
important international companies
– cross-cultural literacy - an understanding of how cultural
differences across and within nations can affect the way in
which business is practiced
• cross-cultural literacy is important for business success

• A relationship may exist between culture and the

costs of doing business in a country or region
• MNEs can be agents of cultural change
– McDonald’s, Subway
– Best buy & ebay : China
 What Is Culture?
• Culture - a system of values and norms that are
shared among a group of people and that when
taken together constitute a design for living
where
– values are abstract ideas about what a group believes to
be good, right, and desirable
– norms are the social rules and guidelines that prescribe
appropriate behavior in particular situations. Pooja,death
• Society - a group of people who share a common set
of values and norms
 How Are Culture, Society,
And The Nation-State Related?
• The relationship between a society and a nation state
is not strictly one-to-one
• Nation-states are political creations
– can contain one or more cultures
• A culture can embrace several nations
 What Determines Culture? (1 of 2)
• The values and norms of a culture evolve over time
• Determinants include
– religion
– political and economic philosophies
– education
– language
– social structure
What Determines Culture? (2 of 2)
Determinants of Culture
 What Is A Social Structure?
• Social structure - a society’s basic social organization

• Consider
– the degree to which the basic unit of social organization is
the individual, as opposed to the group
– the degree to which a society is stratified into classes or
castes
 How Do Religious And Ethical Systems
Differ? (1 of 3)
• Religion - a system of shared beliefs and rituals that
are concerned with the realm of the sacred
• Four religions dominate society
1. Christianity
2. Islam
3. Hinduism
4. Buddhism
How Do Religious And Ethical Systems
Differ? (2 of 3)
World Religions
What Is The Role Of Language In Culture? (1 of 2)

• Language - the spoken and unspoken (non-verbal

communication such as facial expressions, personal
space, and hand gestures ) means of communication
– countries with more than one language often have more
than one culture
• Canada, Belgium, Spain
What Is The Role Of Language In Culture? (2 of 2)
Language is one of the defining characteristics of
culture
– Chinese is the mother tongue of the largest number of
people
– English is the most widely spoken language in the world

– but, knowledge of the local language is still beneficial, and

in some cases, critical for business success
– failing to understand the nonverbal cues of another culture
can lead to communication failure
 What Is The Role Of Education In Culture?
Formal education is the medium through which
individuals learn many of the language, conceptual, and
mathematical skills that are indispensable in a modern
society
– important in determining a nation’s competitive advantage
• Japan’s postwar success can be linked to its excellent education
system

– general education levels can be a good index for the kinds

of products that might sell in a country
• Example: impact of literacy rates
 Does Culture Change?
• Culture evolves over time
– changes in value systems can be slow and painful for a
society

• Social turmoil - an inevitable outcome of cultural

change
– as countries become economically stronger, cultural
change is particularly common
• economic progress encourages a shift from collectivism to
individualism
– globalization also brings cultural change
What Do Cultural Differences Mean For
Managers? (1 of 2)
1. It is important to develop cross-cultural literacy
– companies that are ill informed about the practices
of another culture are unlikely to succeed in that
culture

• To avoid being ill-informed

– consider hiring local citizens
– transfer executives to foreign locations on a regular
basis.