International

Business 9e
By Charles W.L. Hill
McGraw-Hill/Irwin

Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

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

A relationship may exist between culture and the

costs of doing business in a country or region
MNEs can be agents of cultural change

4-3

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

Society - a group of people who share a

common set of values and norms
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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

the values and norms of a culture evolve over
time

4-5

What Determines
Culture?
Determinants of Culture

4-6

What Is A Social
Structure?
Social structure - a societys basic social
organization
A group is an association of two or more people
who have a shared sense of identity and who
interact with each other in structured ways on
the basis of a common set of expectations about
each others behavior
individuals are involved in families, work groups,
social groups, recreational groups, etc.

4-7

What Is Social
Stratification?
All societies are stratified on a hierarchical
basis into social categories, or social strata
1.

2.

Social mobility - the extent to which individuals can

move out of the strata into which they are born
caste system
class system
The significance attached to social strata in business
contacts
class consciousness

4-8

How Do Religious And

Ethical Systems Differ?
Religion - shared beliefs and rituals that are
concerned with the realm of the sacred
1.
2.
3.
4.
5.

Christianity
Islam
Hinduism
Buddhism
Confucianism influences behavior and culture

Ethical systems - a set of moral principles, or

values, that are used to guide and shape
behavior
4-9

How Do Religious And

Ethical Systems Differ?
World Religions

4-10

What Is The Role

Of Language In Culture?
Language - the spoken and unspoken
(nonverbal communication such as facial
expressions, personal space, and hand
gestures) means of communication
Chinese is the mother tongue of the largest number of
people
English is the most widely spoken language in the
world and is also becoming the language of
international business
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
4-11

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 nations competitive
advantage
Japans 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
ex. impact of literacy rates

4-12

How Does Culture

Impact The Workplace?
Hofstedes dimensions of culture:
1. Power distance - how a society deals with the
fact that people are unequal in physical and
intellectual capabilities
2. Uncertainty avoidance - the relationship
between the individual and his fellows
3. Individualism versus collectivism - the extent to
which different cultures socialize their members
into accepting ambiguous situations and
tolerating ambiguity
4. Masculinity versus femininity -the relationship
between gender and work roles
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How Does Culture

Impact The Workplace?
Work-Related Values for 20 Countries

4-14

How Does Culture

Impact The Workplace?
Hofstede later expanded added a fifth
dimension called Confucian dynamism or
long-term orientation
captures attitudes toward time, persistence,
ordering by status, protection of face, respect
for tradition, and reciprocation of gifts and
favors
Japan, Hong Kong, and Thailand scored high on
this dimension
the U.S. and Canada scored low

4-15

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

4-16

What Do Cultural
Differences Mean For
Managers?

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

2. There is a connection between culture and

national competitive advantage
suggests which countries are likely to produce the
most viable competitors
has implications for the choice of countries in which
to locate production facilities and do business

4-17