Unit-5

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
 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. Cultural differences across the countries

significantly influence business decisions.

 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 one’s 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.
Example of SRC
When Unilever started its operations in Brazil and wanted
to introduce detergents, the biggest issues that company
faced ware that people in Brazil don't have washing
machines, in rural areas people used to wash their
clothes at the river and most of the population of Brazil
was poor and they were very much conscious about the
products.
So to avoid self-reference criterion the Unilever first
developed a formula of soap, they made the plastic
packing of soaps to conveniently use while washing
clothes on rivers and they made small packing of
detergents in order to low their prices and made them
affordable for maximum number of population that have
low incomes. This was the most successful tool used by
the company to avoid the effects of self-reference
criterion and recognized the existence of this influence in
our behaviors.
 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.
 Characteristics of culture
 Learned
 Shared
 Trans-generational
 Symbolic
 Patterned
 Adaptive
 Constituents of Culture
A variety of learned traits that influence human
behaviour can contribute to the culture of a social
group, the major constituents, include:
• value system
• norms
• aesthetics
• customs and traditions
• language
• Reg
ilo
in
 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.
 Value system
 Value systems vary among managers
across different countries :
 Eg. US managers : high achievement
orientation vs Japanese managers
who have a growth and size
orientation vs Indian Managers who
have moralistic orientation.
 Norms

Guidelines or social rules that

prescribe appropriate behaviour in

a given situation.
 Norms
 For eg. In Japan, aggressive selling is not perceived
in the positive spirit.
 Eg. Indian use hands or different types of spoons
for eating. Chinese and Japanese use chopsticks.
 Europeans and American use forks and knives to cut
the food before eating.
 Lessons: International managers need to know what
is acceptable , unacceptable in foreign culture. They
also need to know cultural tolerance to business
customs that may be grouped as :
 Cultural Imperatives; Cultural Exclusives; Cultural
Adiaphora
 Culture Imperatives
 It refers to norms that must be followed / avoided in a foreign
country.
 For Eg. Too much eye contact in Japan is considered to
completely offensive.
 On the other hand in the Gulf , strong eye contact necessary
with an Arab, to establish trustworthiness.

 Cultural Exclusives:
 Social patterns which are considered appropriate for locals and
in which foreigners are expected not to participate.
 Eg. Foreigners should stay away from discussions on local
country politics, social customs and practices.

 Cultural Adiaphora : social customs in which a foreigner may

participate, so that the Intl. manager may decide whether to
participate or avoid. Eg. Bowing in Japanese culture is not
expected from foreigners, but such display may be
appreciated .
 Aesthetics

Ideas and that a cultural

perceptions
group upholds in terms of beauty and
good taste. It includes areas related to
music, dance, painting, drama,
architecture, etc.
 Aesthetics
 Eg. Colours have different aesthetic value in
different cultures:
 Africa : bright colours are favourites
 Japan : pastel colours preferred as they express
harmony.
 China : red is lucky colour but associated with
witchcraft in Africa.
 America : blues and greys are perfect for official
environments. But blue is evil in Africa

 Death colours : Black signifies death in America,

Europe; In India, Japan & other Asian countries it is
white, For Latin Americans Purple means death;
Dark red is the mourning colour in the Ivory Coast.
 Traditions and Customs

Traditions: The elements of

culture
passed
from generation to
down

generation. established pattern of

Customs: An a society.
behaviour within
 Traditions and Customs
 International managers need to know the customs and
traditions of the culture being dealt with:
 Eg. Food Habits eg. Chocolate flavors preferred are
different in different cultures : Eg. Americans and
Germans prefer blends, French- Dark, Dutch –White.

 Coffee brews: Nescafe manufactures200 different

varieties of coffee to suit local tastes.

 The concept of Indian vegetarianism is very complex for

foreigners to understand. Vessels used for cooking both
should be different. KFC offers vegetarian dishes in its
Indian outlets. Pizza Hut offers Jain Pizza in India alone.

 Lessons: companies need to modify products/services to

suit the local customs and traditions.
 Manners and Customs...
 Manners in gift giving:
 A lot of preparation and sensitivity required while
giving gifts. What and when is important.
 China : occasion : New Year
Preferred Gifts: Modest gifts such as coffee
table, books, ties, pens.
 Japan: Oseibo( January 1)
Preferred Gifts : Brandy. Scotch, round fruits such
as melons
 Manners and Customs in the Way Products are used
should also be considered
 Example Orange juice:
 Breakfast item in US, Refreshment in France
 Moisturizers : After bath lotion in one, beauty
product in another.
 Language

A systematic means of communicating ideas

or feelings by the use of conventionalized

signs, gestures, marks, or especially

articulate vocal sounds.

 Language
The Four Roles of Language
Language aids in information gathering and
evaluation.

Language provides access to local society.

Language capability is increasingly

important in company communications.

Language provides more than the ability to

communicate because it extends beyond
mechanics to the interpretation of contexts
that may influence business operations.
 Languages
Top Ten World Languages

Language Population (in millions)

1. Chinese, Mandarin 8 8 5
2. Spanish 3 3 2
3. English 3 2 2
4. Bengali 1 8 9
5. Hindi 1 8 2
6. Portuguese 1 7 0
7. Russian 1 7 0
8. Japanese 1 2 5
9. German, Standard 9 8
10. Chinese, W u 7 7
 Language … some lessons for
managers
 Even though English is considered lingua-franca for non
English speaking countries, it fails to provide non-verbal
cues … for example:
 Coca – Cola was named Ke-kou-ke-la in China which
translates in Mandarin to ‘Bite the wax tadpole’.
Subsequently Coke found a close phonetic equivalent
Ko-kou-ko-Le which translates to ‘Happiness in the
mouth’ after researching 40,000 Chinese characters.
 The Swedish vacuum cleaner Manufacturer Electrolux
introduced the same print ad which was successful in
Britain in the US Market with the tag line ‘ Nothing sucks
like an Electrolux’. Later they found this to be a disaster
in the US because ‘sucks’ in American means ‘really
Bad’. i.e. Electrolux is a ‘really bad vacuum cleaner’
 Religion
Religious beliefs significantly influence
people behaviour and business decision
making.
 Religion encompasses three
elements:
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 : concerning principles of right
and wrong in human behaviour.
Dominant Religions
Christianity

Islam

Hinduism

Buddhism

Confucianism
Religion : lessons for managers
Considerable influences international business
decisions.
For. Eg. Location of commerical buildings and office
interiors need to be as per Fen shui in China and
Vastu Shastra in India, as it concerns free flow of
cosmic energy and keeps evil spirits away.

Advertisements and corporate communications

must keep religious sentiments in mind. For eg.
Islam does not permit shaving. So Shaving
equipment makers like Gillette need to be
sensitive while advertising their product in Islamic
countries.
 Comparison of Cross Cultural
Behavior
An appreciation of cultural differences

facilitates international managers to

conceptualize and implement business

strategies in view of cultural sensitivities in

various countries.
 Hofstede’s Cultural Classification

Power distance

The extent to which less powerful members

of an institution accept that power is

distributed unequally.
 High Power Distance Countries
• 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 of their
orders superiors

For instance, Malaysia, Mexico, Arab

countries, India etc.
 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.
Lessons: In view of the power distance, the international
manager has to asses the organizational dynamics, identify
the key decision makers and accordingly formulate their
business strategy for different countries.
 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 in the organization
employees calculative. is

 Ability to be independent of others is considered to be

the key criterion for success in individualistic
societies.
Countries with high individualism include, the US, Great
Britain, France, South Africa etc
Collectivism:
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.
Lessons: International Business strategy is greatly
influenced by individualism vs. collectivism in terms of
decision making and market communication. For a
product to be successful. In collective societies, it
should have group acceptability unlike in the
individualistic societies.
 Masculinity vs. femininity
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.

India falls in between.

Summarily, in masculine societies, people ’live to work’,

whereas in feminine societies people’ work to live’.
 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 are the most uncertainty avoidance
countries.

Low uncertainty avoidance include

countries
Singapore, Denmark, India, the US etc.
 Long-Term Orientation vs. Short-
Term Orientation
Long-term orientation shows focus on the future and involves
delaying short-term success or gratification in order to achieve
long-term success. Long-term orientation emphasizes
persistence, perseverance, and long-term growth.
Short-term orientation shows focus on the near future, involves
delivering short-term success or gratification and places a
stronger emphasis on the present than the future. Short-term
orientation emphasizes quick results and respect for tradition.
Indulgence vs. Restraint
The indulgence vs. restraint dimension
considers the extent and tendency for a society
to fulfill its desires. In other words, this
dimension revolves around how societies can
control their impulses and desires.
Indulgence indicates that a society allows
relatively free gratification related to enjoying
life and having fun.
Restraint indicates that a society suppresses
gratification of needs and regulates it through
social norms.
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, CIS,

the Mexico, and the UK .

Societies with high individualism make frequent references to ‘I’

and ‘me’. And achievement and responsibility are personal.

Communitarianism: people regarding themselves as part of a

group.

For instance, Singapore, Thailand, Japan, and Indonesia.

In collectivist societies ‘we’ is used more frequently than ‘I’ and

achievement is considered group achievement.
 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.

Will consider anger, delight or intensity in the workplace

as ‘unprofessional’

Affective Cultures: Cultures where emotions are

expressed openly.

For instance, Mexico, Netherlands, Switzerland, China,

Brazil, etc.

Will consider holding back of emotions by colleagues to signify

‘emotionally dead’ or a ‘mask of deceit’.
 Specific vs. Diffused
The relative size of ‘Public space and Private space ‘ and
the degree to which individuals feed comfortable sharing it
with others differ considerably across societies.
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, China, Korea, Japan and Arab
countries.

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 share beliefs, speak the same
language, and practice the same religion.
For instance, Japan, Korea and 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 with high emphasis

on
deadlines punctuality.
Japan, China,
Britain,
For USA, Canada, Australia, Germany,
instance, Denmark
Singapore,
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 one’s own

cultural perspective.

Simplification: Exhibiting same

cultural orientation towards

different cultural groups.

 EPRG Approach

Ethnocentric orientation

The belief which considers one’s 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 the belief that
substantial

differences exist among various countries.

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.

For example Mc Donald’s strategy is to not serve beef based

products in India, but serves beef based products in other

countries. Also in the Middle East, it does not serve pork and all

meat based preparations are made out of halal process only.

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.

Examples: the Harry Potter series of books and films,

cartoon characters and their serials, apparels like

Jeans, T-shirts etc…

 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
country’s 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.