International Business: Opportunities and Challenges in a Flattening World, 1e

By Mason Carpenter and Sanjyot P. Dunung

© Sanjyot Dunung 2011, published by Flat World Knowledge 3-1

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© Sanjyot Dunung 2011, published by Flat World Knowledge 3-2

 Chapter 3
Culture and Business

© Sanjyot Dunung 2011, published by Flat World Knowledge 3-3

 Learning Objectives

• Understand what is meant by culture

• Know that there are different kinds of culture
• Identify several different kinds of culture
• Know several methods to describe cultures
• Define and apply Hofstede’s and Hall’s categories for cultural identifica-
tion
• Identify and discuss additional determinants of culture

© Sanjyot Dunung 2011, published by Flat World Knowledge 3-4

 Learning Objectives

• Identify the ways that culture can impact how we do business

• Understand the aspects of business most impacted by culture
• Define what global business ethics are, and discover how culture impacts
business ethics
• Learn how ethical issues impact global business
• Identify how companies develop, implement, and enforce ethical stan-
dards

© Sanjyot Dunung 2011, published by Flat World Knowledge 3-5

 What Is Culture

• Culture is the beliefs, values, mind-sets, and practices of a group of peo-

ple
• It includes the behavior pattern and norms of that group—the rules, the
assumptions, the perceptions, and the logic and reasoning that are spe-
cific to a group
• It’s the collective programming of our minds from birth
– It’s this collective programming that distinguishes one group of people from
another
• Challenge - Whenever we deal with people from another culture, we ex-
pect people to behave as we do and for the same reasons
© Sanjyot Dunung 2011, published by Flat World Knowledge 3-6
 What Is Culture

• Culture awareness - Having an understanding of another culture’s values

and perspective
– Understanding another culture’s mind-set and how its history, economy, and so-
ciety have impacted what people think
• Cross-cultural understanding: The requirement that we reorient our
mind-set and, most importantly, our expectations, in order to accurately
interpret the gestures, attitudes, and statements of the people we en-
counter from other cultures

© Sanjyot Dunung 2011, published by Flat World Knowledge 3-7

 What Is Culture

• Value: Something that we prefer over something else—whether it’s a be-

havior or a tangible item
– Values are acquired early in life and are usually nonrational—although we may
believe that ours are actually quite rational
– Our values are the key building blocks of our cultural orientation
– Each of us has been raised with a considerably different set of values from
those of our colleagues and counterparts around the world

© Sanjyot Dunung 2011, published by Flat World Knowledge 3-8

 What Is Culture

• In coming to terms with cultural differences, we tend to employ general-

izations
– Generalizations can save us from sinking into what may be abstruse, esoteric
aspects of a culture
• Cultures and values are not static entities
– They’re constantly evolving—merging, interacting, drawing apart, and reform-
ing
• Understanding what we mean by culture and what the components of cul-
ture are will help us better interpret the impact on business at both the
macro and micro levels
© Sanjyot Dunung 2011, published by Flat World Knowledge 3-9
 What Kinds of Culture Are There?

Nationalities Subcultures Organizations

© Sanjyot Dunung 2011, published by Flat World Knowledge 3-10

© Sanjyot Dunung 2011, published by Flat World Knowledge 3-11
 Hofstede and Values

• Geert Hofstede: An influential Dutch social psychologist who studied the

interactions between national cultures and organizational cultures
• Value dimensions: The specific values included in Hofstede’s research.
Values, in this case, are broad preferences for one state of affairs over
others, and they are mostly unconscious

© Sanjyot Dunung 2011, published by Flat World Knowledge 3-12

 Key Methods Used to Describe Cultures
Power Dis- • The value dimension referring to how openly a society or culture accepts or does not ac-
tance cept differences between people in hierarchies in the workplace, in politics

• The value dimension referring to people’s tendency to take care of themselves and their
Individualism immediate circle of family and friends, perhaps at the expense of the overall society

• The value dimension referring to how a society views traits that are considered feminine
Masculinity or masculine

Uncertainty • The value dimension referring to how much uncertainty a society or culture is willing to
Avoidance accept
(UA)

Long-Term • The value dimension referring to whether a culture has a long-term or short-term orienta-
Orientation tion

© Sanjyot Dunung 2011, published by Flat World Knowledge 3-13

 Figure 3.1 - The United States’ Five Value
Dimensions

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 Edward T. Hall

• Edward T. Hall: A respected anthropologist who applied his field to the

understanding of cultures and intercultural communications
– Hall is best noted for three principal categories of how cultures differ: context,
space, and time
• High- and low-context communication: How a message is communicated
– In high-context cultures, the physical context of the message carries a great
deal of importance
– In low-context cultures, people verbally say exactly what they mean
• Space: The study of physical space and people; called proxemics, one of
Hall’s principal categories on describing how cultures differ
© Sanjyot Dunung 2011, published by Flat World Knowledge 3-15
 Attitudes toward Time: Polychronic versus
Monochronic Cultures

• Polychronic culture: A culture in which people can do several things at

the same time
• Monochronic culture: A culture in which people tend to do one task at a
time

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© Sanjyot Dunung 2011, published by Flat World Knowledge 3-17
 Ethnocentrism

• The view that a person’s own culture is central and other cultures are
measured in relation to it
• The challenge occurs when we feel that our cultural habits, values, and
perceptions are superior to other people’s values

© Sanjyot Dunung 2011, published by Flat World Knowledge 3-18

 Understanding How Culture Impacts Local
Business Practices
• Culture impacts:
– The pace of business
– Business protocol—how to physically and verbally meet and interact
– Decision making and negotiating
– Managing employees and projects
– Propensity for risk taking
– Marketing, sales, and distribution
• To conduct business with people from other cultures, you must put aside
preconceived notions and strive to learn about the culture of your coun-
terpart
© Sanjyot Dunung 2011, published by Flat World Knowledge 3-19
 Understanding How Culture Impacts Local
Business Practices

• Your understanding of culture will affect your ability to:

– Enter a local market
– Develop and maintain business relationships
– Negotiate successful deals
– Conduct sales
– Conduct marketing and advertising campaigns
– Engage in manufacturing and distribution

© Sanjyot Dunung 2011, published by Flat World Knowledge 3-20

 Global Business Ethics

• Ethics: A branch of philosophy that seeks to address questions about

morality—that is, about concepts such as good and bad, right and wrong,
justice, and virtue
• The areas of business impacted by global perceptions of ethical, moral,
and socially responsible behavior include the following:
– Ethics and management
– Ethics and corruption
– Corporate social responsibility

© Sanjyot Dunung 2011, published by Flat World Knowledge 3-21

 Corporate Social Responsibility

• The corporate conscience, citizenship, social performance, or sustainable

responsible business, and is a form of corporate self-regulation integrated
into a business model
• Corporate social responsibility encompasses what companies do with their
profits and how they make them
– It goes beyond philanthropy and compliance and addresses how companies
manage their economic, social, and environmental impacts, their relationships
in all key spheres of influence:
• The workplace, the marketplace, the supply chain, the community, the public policy
realm

© Sanjyot Dunung 2011, published by Flat World Knowledge 3-22

 Enforcement of Ethical Guidelines and Stan-
dards

• In the interest of expediency, many governments may not strictly enforce

the rules governing corporate ethics
– Example: The practice of gift giving
• Governments do not enforce laws until it’s politically expedient to do so
– Example: Child labor

© Sanjyot Dunung 2011, published by Flat World Knowledge 3-23

 The Evolution of Ethics

• Ethics evolves over time

• Changing values, as influenced by global media, and changing perceptions
and cultures will impact global ethics
• The most challenging aspect is that global business does not have a single
definition of “fair” or “ethical

© Sanjyot Dunung 2011, published by Flat World Knowledge 3-24