Chapter 3

DIFFERENCE IN CULTURE
SALMIWATI MOHAMAD JAMILI (2011248904)

INTRODUCTION
Operating a successful international business requires cross-cultural literacy (an understanding of how cultural differences across and within nations can affect the way in which business is practiced). A relationship may exist between culture and the costs of doing business in a country or region.

WHAT IS 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. Hofstede, Namenwirth and Weber

DIFFERENT COMPONENTS OF CULTURE

Values
Abstract ideas/ assumptions about what a group believes to be good, right and desirable Invested with emotional significance-reflected in political & economical

Norms

social rules and guidelines that prescribe appropriate behavior in particular situations

Subdivided further into two major categories- Folkways & Mores

FOLKWAYS VS MORES
FOLKWAYS Routine everyday life Little moral significance Generally, social conventions such as dress codes, social manners, and neighborly behavior MORES Norms central to the functioning of society and its social life Greater significance than folkways Violation can bring serious retribution (alcohol & theft)

DETERMINANTS OF CULTURE
Political Philosophy

Language

Economy Philosophy

Culture
Education

Social Structure

Religion
6

SOCIAL STRUCTURE
individual or the group

3Dimension

classes or castes

economics or political influences

INDIVIDUAL VS GROUP
INDIVIDUAL GROUP Loyalty and commitment to company In-depth knowledge of company Specialist skills Easy to build teams, collaboration Emotional identification with group or company e.g., Japanese companies Managerial mobility between companies Economic dynamism, innovation Good general skills Team work difficult, non-collaborative Exposure to different ways of doing business e.g., U.S. companies

RELIGIOUS & ETHICAL SYSTEM

Christianity- 1.7 billion Islam- 1 billion Hinduism-750 million Buddhism -350 million
Source: Requejo H.H (2012).Global Business Today.New York. Mc Graw Hill 9

RELIGION- ECONOMIC IMPLICATION

Christianity (Protestant)

-Emphasize the importance of the hard work and wealth creation.

-Support the expansion of capitalist

Islam

-Receptive to International Business as long as those business behave in a manner consistent with Islam ethics
-Unwelcomed business that are perceived as making profit through exploitation of others. Hinduism -Focus on Spiritual Growth-do not encourage the kind of entrepreneurial activity.

-Caste system limit individuals opportunities in business or career.

10

RELIGION- ECONOMIC IMPLICATION

Buddha
Not emphasize the wealth creation Opportunities for entrepreneur activity not being blocked by caste system like Hinduism

Confucianism
3 values- loyalty, reciprocal obligations and honesty The loyalty binds employees to organizationreduce conflict
11

LANGUANGE
Language is one defining characteristic of culture- spoken & unspoken language. Countries with more than one spoken language, we tend to find more than one culture. Learning local language can build rapport.

Failure to understand local language can lead to wrong interpretation and decrease the business success.
12

EDUCATION
Availability of a pool of skilled and educated workers- major determinants of economic success of country

Education can be a source of competitive advantage

Example: Japan & India

13

CULTURE AND THE WORKPLACE

Source: Requejo H.H (2012).Global Business Today.New York. Mc Graw Hill

14

WORK RELATED VALUES FOR 20 SELECTED COUNTRIES

Power distance Cultures are ranked high or low on this dimensions based on the particular societys ability to deal with inequalities High: Panama & Indonesia, India Low: Denmark Individualism versus collectivism Individualistic societies: loose ties, individual achievement and freedom highly valued (Australia) Collectivist societies-tight ties, tend to be more relationship oriented (Panama, Indonesia) Uncertainty avoidance This dimension measures the extent to which a culture socializes its members into accepting ambiguous situations and tolerating uncertainty High: Japan Low: Denmark Masculinity This dimension looks at the relationship between gender and work roles High: Japan Low: Sweden

15

PROBLEMS WITH HOTSFEDE FINDING

Assumes one-to-one relationship between culture and the nation-state His research may have been culturally bound Survey respondents were from a single industry (computer) and a single company (IBM)

16

CULTURAL CHANGE
Culture is not a constant; it evolves over time Since 1960s American values toward the role of women are changing. Japan moves toward greater individualism in the workplace Effects of globalization

17

IMPORTANT IMPLICATION FOR INTERNATIONAL BUSINESS

Develop Employing local citizens Cross Culture Transferring executive overseas Literacy Culture and Competitive Advantage
The value system and norms of a country can affect the cost of doing business in that country.
18

DISCUSSION QUESTION
1. Outline why the culture of a country influences the costs of doing business in that country. Illustrate your answer with examples.

19

DISCUSSION QUESTION
costs of doing business normally rise as people grapple with unfamiliar ways of doing business a country's education system - important implications for the costs of business

religion also affect the costs of business

Different class structures and social mobilitylimit the business growth

20

DISCUSSION QUESTION
2. Do you think business practices in an Islamic country are likely to differ from business practices in the United States? If so, how?

21

DIFFERENCE BUSINESS PRACTICE ISLAM COUNTRIES VS US

Appropriate etiquette Wining & dining Use resource carefully Relationship man- woman Prohibition on interest Fairness to all parties

22

23