naLlonal ulfferences ln

ollLlcal Lconomy
ChapLer 2
CLl1lCAL LCCnCM?
ollLlcal Lconomy WhaL does lL lnvolve?
W Pow pollLlcal facLors lnfluence Lhe
funcLlonlng of an economlc sysLem
W A Lerm LhaL sLresses LhaL Lhe pollLlcal
economlc and legal sysLems of a
counLry are lnLerdependenL Lhey
lnLeracL and lnfluence each oLher and
ln dolng so Lhey affecL Lhe level of
economlc wellbelng
ulllL8LnCLS CLl1lCAL
LCCnCM?
W 1PL CLl1lCAL LCCnCM?
ls made up collecLlvely of
W CLl1lCAL S?S1LMS
W LCCnCMlC S?S1LMS
W LLCAL S?S1LMS
naLlonal ulfferences
ln ollLlcal Lconomy
CLl1lCAL S?S1LMS
W A po||t|ca| system ls Lhe sysLem of governmenL ln a
naLlon
ollLlcal sysLems can be assessed accordlng Lo
W Lhe degree Lo whlch Lhey emphaslze collecLlvlsm as
opposed Lo lndlvlduallsm
W Lhe degree Lo whlch Lhey are democraLlc or LoLallLarlan
CLl1lCAL S?S1LMS
W CCLLLC1lvlSM vS lnulvluuALlSM
needs of many lnLeresLs of lndlvlduals
ouLwelgh needs of Lake precedence over
Lhe few needs of Lhe SLaLe
CollecLlvlsm and lndlvlduallsm
W Co||ect|v|sm refers Lo a sysLem LhaL sLresses
Lhe prlmacy of collecLlve goals over lndlvldual
goals
W When collecLlvlsm ls emphaslzed Lhe needs of
Lhe socleLy as whole are generally vlewed as
belng more lmporLanL Lhan lndlvldual freedoms
Soclallsm
W Commun|sts generally belleved LhaL
collecLlvlsm could only be achleved Lhough
revoluLlon and LoLallLarlan dlcLaLorshlp whlle
soc|a| democrats worked Lo achleve Lhe same
goals by democraLlc means
W rlvaLlzaLlon ls Lhe movemenL Loward free
markeL economles by selllng sLaLeowned
enLerprlses Lo prlvaLe lnvesLors
lndlvlduallsm
Ind|v|dua||sm ls a pollLlcal phllosophy LhaL an
lndlvldual should have freedom over hls or her
economlc and pollLlcal pursulLs
lndlvlduallsm focuses on
W guaranLeelng lndlvldual freedom and self
expresslon
W leLLlng people pursue Lhelr own selflnLeresL ln
order Lo achleve Lhe besL overall good for socleLy
lndlvlduals who belleve soclallsm can be
achleved only Lhrough revoluLlons and
LoLallLarlan dlcLaLorshlp are called
a) Soclal democraLs
b) CommunlsLs
c) lndlvlduallsLs
d) 8epresenLaLlve democraLs
uemocracy and 1oLallLarlanlsm
W Democracy ls a pollLlcal sysLem ln whlch
governmenL ls by Lhe people exerclsed elLher
dlrecLly or Lhrough elecLed represenLaLlves
W 1ota||tar|an|sm ls a form of governmenL ln whlch
one person or pollLlcal parLy exerclses absoluLe
conLrol over all spheres of human llfe and opposlng
pollLlcal parLles are prohlblLed
uemocracy
W 1he mosL common form of democracy Loday ls
representat|ve democracy where elecLed
represenLaLlves voLe on behalf of consLlLuenLs
1oLallLarlanlsm
1he four ma[or forms of LoLallLarlanlsm are
W commun|st tota||tar|an|sm advocaLes achlevlng soclallsm Lhrough
LoLallLarlan dlcLaLorshlp
W theocrat|c tota||tar|an|sm pollLlcal power ls monopollzed by a parLy group
or lndlvldual LhaL governs accordlng Lo rellglous prlnclples
W tr|ba| tota||tar|an|sm a pollLlcal parLy LhaL represenLs Lhe lnLeresLs of a
parLlcular Lrlbe monopollzes power
W r|ght w|ng tota||tar|an|sm lndlvldual economlc freedom ls allowed buL
lndlvldual pollLlcal freedom ls resLrlcLed ln Lhe bellef LhaL lL could lead Lo
communlsm
LCCnCMlC S?S1LMS
W A free markeL sysLem ls llkely ln counLrles
where lndlvldual goals are glven prlmacy over
collecLlve goals
W SLaLeowned enLerprlses and resLrlcLed
markeLs are common ln counLrles where
collecLlve goals are domlnanL
1hree broad Lypes of economlc sysLems can be
ldenLlfleda markeL economy a command
economy and a mlxed economy
MarkeL Lconomy
W ln a pure market economy Lhe goods and
servlces LhaL a counLry produces and Lhe
quanLlLy ln whlch Lhey are produced ls
deLermlned by supply and demand
Command Lconomy
W ln a pure command economy Lhe goods and
servlces LhaL a counLry produces Lhe quanLlLy ln
whlch Lhey are produced and Lhe prlce aL whlch
Lhey are sold are all planned by Lhe governmenL
Mlxed Lconomy
W A m|xed economy lncludes some elemenLs of a
markeL economy and some elemenLs of a command
economy
LLCAL S?S1LMS
1he |ega| system of a counLry ls Lhe rules or laws LhaL regulaLe behavlor
along wlLh Lhe processes by whlch Lhe laws of a counLry are enforced and
Lhrough whlch redress for grlevances ls obLalned
W 1he legal envlronmenL of a counLry ls lmporLanL because a counLrys laws
regulaLe buslness pracLlce deflne Lhe manner ln whlch buslness LransacLlons
are Lo be execuLed and seL down Lhe rlghLs and obllgaLlons of Lhose lnvolved
ln buslness LransacLlons
W ulfferences ln Lhe sLrucLure of law can lmpacL Lhe aLLracLlveness of a counLry
as an lnvesLmenL slLe and/or markeL
ulfferenL Legal SysLems
W 1he common |aw sysLem (based on LradlLlon
precedenL and cusLom) ls found ln mosL of CreaL
8rlLaln's former colonles lncludlng Lhe unlLed
SLaLes
W 1he c|v|| |aw sysLem ls based on a very deLalled seL
of laws organlzed lnLo codes and ls found ln over 80
counLrles lncludlng Cermany lrance !apan and
8ussla
W lslamlc law ls Lhe mosL wldely pracLlced theocrat|c
|aw sysLem (based on rellglous Leachlngs) ln Lhe
modern world
ulfferences ln ConLracL Law
W Contract |aw ls Lhe body of law LhaL governs conLracL enforcemenL
W A contract ls a documenL LhaL speclfles Lhe condlLlons under whlch an
exchange ls Lo occur and deLalls Lhe rlghLs and obllgaLlons of Lhe parLles
lnvolved
W 1he Un|ted Nat|ons Convent|on |n Contracts for the Internat|ona| Sa|es of
Goods (CIGS) esLabllshes a unlform seL of rules governlng cerLaln aspecLs of
Lhe maklng and performance of everyday commerclal conLracLs beLween
sellers and buyers who have Lhelr places of buslness ln dlfferenL naLlons
W 8y adopLlng ClCS a naLlons slgnals Lo oLher naLlons LhaL lL wlll LreaL Lhe
ConvenLlon's rules as parL of lLs law
lMC81An1 LLCAL lSSuLS lC8
ln1L8nA1lCnAL 8uSlnLSS
W roperLy 8lghLs all legal rlghLs for use of a resource and lncome
from LhaL resource 1hese rlghLs can be vlolaLed Lhrough
r|vate act|on LhefL plracy blackmall by prlvaLe lndlvlduals or
groups eg Mafla"sLyle groups
ub||c act|on exLorLlon of lncome or properLy/resources by
publlc offlclals brlbery varlous forms of corrupLlon
noLe 1here are legal mechanlsms by whlch governmenLs/publlc
offlclals may exLracL properLy from lndlvlduals such as excesslve
LaxaLlon expenslve permlL/llcenslng procedures selzure of
properLy wlLhouL compensaLlon
W lnLellecLual roperLy a properLy LhaL ls Lhe
producL or resulL of lnLellecLual acLlvlLy
ldeas Lxamples sofLware chemlcal formula
for a drug muslc
Cwnershlp rlghLs over lnLellecLual properLy can be esLabllshed
Lhrough
W aLenLs rlghLs Lo Lhe lnvenLor of a new process or producL
W CopyrlghLs rlghLs Lo muslc wrlLLen works arLlsLlc creaLlons
W 1rademarks rlghLs Lo deslgns and names used Lo dlfferenLlaLe
producLs
vlCLA1lCn Cl 8CL81? 8lCP1S 8lvA1L
AC1lCn 1P8CuCP l8AC?
W lnLellecLual properLy laws are a very
lmporLanL sLlmulus Lo lnnovaLlon and creaLlve
work
W roLecLlon of lnLellecLual properLy rlghLs
dlffers greaLly from counLry Lo counLry ln splLe
of lnLernaLlonal convenLlons such as World
lnLernaLlonal roperLy CrganlzaLlon
W LnforcemenL of lnLellecLual
roperLy laws varles conslderably
W 8eware lracy!
roperLy 8lghLs and CorrupLlon
W roperty r|ghts (Lhe legal rlghLs over Lhe use Lo
whlch a resource ls puL and over Lhe use made of
any lncome LhaL may be derlved from LhaL
resource) are very lmporLanL for Lhe funcLlonlng of
buslness buL can be vlolaLed by elLher prlvaLe
acLlon or publlc acLlon
vlCLA1lCn Cl 8CL81? 8lCP1S
u8LlC AC1lCn 1P8CuCP CC88u1lCn
MCS1 CCMMCn 8AC1lCL 88l8L8? a demand by
governmenL offlclals for paymenL of brlbes (glfLs money
eLc) ln reLurn Lo secure or conducL buslness
Source lnLernaLlonal MarkeLlng hlllp CaLeora !ohn L Craham 10
Lh
ed 186
roducL SafeLy and roducL LlablllLy
W CounLrles have dlfferenL producL safeLy and llablllLy laws
LhaL may requlre forelgn companles Lo cusLomlze producLs
Lo adhere Lo local sLandards
W lf producL sLandards are lower ln oLher counLrles flrms
musL declde wheLher Lo produce producLs only of Lhe
hlghesL sLandards even lf Lhls puLs Lhem aL a compeLlLlve
dlsadvanLage relaLlve Lo oLher producers and resulLs ln noL
maxlmlzlng value Lo shareholders or wheLher Lhey should
produce producLs LhaL respond Lo local dlfferences even lf
LhaL means LhaL consumers may noL be assured of Lhe same
levels of safeLy ln dlfferenL counLrles
1PL uL1L8MlnAn1S Cl LCCnCMlC uLvLLCMLn1
ulfferences ln Lconomlc uevelopmenL
W Cne common measure of economlc developmenL
ls a counLry's gross naLlonal lncome per head of
populaLlon (Cnl)
W A purchas|ng power par|ty () ad[usLmenL
allows for a more dlrecL comparlson of llvlng
sLandards ln dlfferenL counLrles
W A drawback of boLh Cnl and daLa ls LhaL Lhey
provlde only a sLaLlc plcLure of developmenL
ulfferences ln Lconomlc uevelopmenL
urchaslng ower arlLy
Country GNI per Capita GNI PPP per
Capita
GDP Growth Rate
1993-2003(%)
BraziI $2,710 $7,480 2.6%
China $1,100 $4,990 9.3%
Germany $25,250 $27,460 1.2%
India $530 $2,880 6.1%
Japan $34,510 $28,620 1.2%
Nigeria $320 $900 3.1%
PoIand $5,270 $11,450 4.8%
Russia $2,610 $8,920 0.1%
SwitzerIand $39,880 $32,030 0.9%
United Kingdom $28,350 $27,650 2.8%
United States $37,610 $37,500 3.2%
1able 21 p 61
8roader ConcepLlons of uevelopmenL AmarLya Sen
W nobel rlze wlnnlng economlsL AmarLya Sen
argued LhaL developmenL should be assessed less
by maLerlal ouLpuL and more by Lhe capablllLles and
opporLunlLles LhaL people en[oy
W Lhe numan Deve|opment Index (a unlLed naLlons
developed lndex based on llfe expecLancy
educaLlon aLLalnmenL and wheLher average
lncomes are sufflclenL Lo meeL Lhe baslc needs of
llfe ln a counLry) reflecLs Sen's ldeas and was
developed Lo gauge a counLry's economlc
developmenL and llkely fuLure growLh raLe
PCW CLl1lCAL LCCnCM? lMAC1S
LCCnCMlC 8CC8LSS
W CCNCMIC DLVLLCMLN1 IS A IUNC1ICN CI 1nL CLI1ICAL
AND LCCNCMIC SS1LMS CI A CCUN1k
W LCCNCMIC DLVLLCMLN1 AND 1kANSICkMA1ICN USUALL
CCCUkS WnLN CLI1ICAL LCCNCMICLLGAL SS1LMS
SUCk1 AN LNVIkCNMLN1 WnICn ICS1LkS
W INNCVA1ICN
W LN1kLkLNLUkSnI
through a market economy hav|ng strong property r|ghts
PCW CLl1lCAL LCCnCM? lMAC1S
LCCnCMlC 8CC8LSS
W lnnovaLlon and enLrepreneurlal acLlvlLy are known Lo
be englnes of economlc growLh"
W lnnovaLlon and enLrepreneurshlp
requlre a markeL economy economlc freedom
requlre sLrong properLy rlghLs lncenLlve for lnnovaLlon and new
ldeas
usually flourlsh besL under more open pollLlcal sysLems such as
represenLaLlve democracles alLhough cerLaln klnd of LoLallLarlan
reglmes may produce economlc growLh lf commlLLed Lo lL
W Slnce Lhe laLe 1980s a wave of democraLlc
revoluLlons has swepL Lhe world and many of Lhe
prevlous LoLallLarlan reglmes collapsed
W 1here has been a move away from cenLrally
planned and mlxed economles Lowards free
markeLs
S1A1LS ln 18AnSl1lCn
1he Spread of uemocracy
W 1hree maln reasons accounL for Lhe spread of democracy
Many LoLallLarlan reglmes falled Lo dellver economlc
progress Lo Lhe vasL bulk of Lhelr populaLlons
new lnformaLlon and communlcaLlon Lechnologles
lncludlng shorLwave radlo saLelllLe Lelevlslon fax
machlnes deskLop publlshlng and mosL lmporLanLly Lhe
lnLerneL have broken down Lhe ablllLy of Lhe sLaLe Lo
conLrol access Lo uncensored lnformaLlon
1he economlc advances of Lhe pasL quarLer cenLury have
led Lo Lhe emergence of lncreaslngly prosperous mlddle
and worklng classes who have pushed for democraLlc
reforms
1he Spread of MarkeL8ased SysLems
W ln general command and mlxed economles falled
Lo dellver Lhe klnd of susLalned economlc
performance LhaL was achleved by counLrles
adopLlng markeLbased sysLems
W Slnce Lhe laLe 1980s Lhere has been a
LransformaLlon from cenLrally planned command
economles Lo markeLbased economles
1he Spread of MarkeL8ased SysLems
Map 26 p 73
nA1u8L Cl LCCnCMlC 18AnSlC8MA1lCn
CounLrles ln a sLaLe of LranslLlon Lowards markeL
economles ofLen follow a course of
1) uL8LCuLA1lCn removal of governmenL
resLrlcLlons on Lhe conducL of a buslness Lo allow
Lhe free play of markeL sysLems and allow
esLabllshmenL and operaLlons of prlvaLe
enLerprlses
nA1u8L Cl LCCnCMlC 18AnSlC8MA1lCn
2) 8lvA1lZA1lCn sale of sLaLeowned
enLerprlses (le owned by Lhe governmenL)
Lo prlvaLe lnvesLors
3) lu81PL8 uLvLLCMLn1 Cl 1PL LLCL
S?S1LM Lo enacL laws whlch supporL
markeL economles
LxAMLL Cl LML8ClnC nA1lCn ln LCCnCMlC
18AnSlC8MA1lCn
4) LML8CLnCL Cl 1PL MluuLL
CLASS (noL ln Lhe LexL) 1he
mlddle class has Lhe dlsposable
lncome Lo spend on new or
dlscreLlonary lLems 1he mlddle
class also exerLs slgnlflcanL
pollLlcal and economlc lnfluence

lorelgn lnvesLmenL ln Chlna ls beneflLed by rlslng per caplLa lncome

Managerlal lmpllcaLlons
W 1wo broad lmpllcaLlons for lnLernaLlonal
buslness
ollLlcal economlc and legal sysLems of a counLry
ralse lmporLanL eLhlcal lssues LhaL have
lmpllcaLlons for Lhe pracLlce of lnLernaLlonal
buslness
1he pollLlcal economlc and legal envlronmenL of a
counLry clearly lnfluences Lhe aLLracLlveness of
LhaL counLry as a markeL and/or lnvesLmenL slLe
CCnSluL8A1lCn Cl lMAC1 Cl
ulllL8LnCLS
W A11kAC1IVLNLSS
populaLlon purchaslng
power fuLure growLh
W LNLII1S flrsL mover
advanLages
W CCS1S level of corrupLlon
lnfrasLrucLure and legal
exposure
W kISkS pollLlcal economlc
legal
ALLracLlveness of a MarkeL
Figure 2.1: Country Attractiveness
Benefits
$ize of Economy
Likely Economic Growth
Costs
Corruption
Lack of nfrastructure
Legal Costs
Risks
Political Risks: $ocial Unrest/Anti-Business Trends
Economic Risks: Economic Mismanagement
Legal Risks: Failure to $afeguard Property Rights
Overall
Attractiveness
#09:73
8lSkS ln ln1L8nA1lCnAL 8uSlnLSS
W CLl1lCAL 8lSk llkellhood LhaL pollLlcal forces wlll
cause drasLlc changes ln a counLry's buslness
envlronmenL whlch wlll have a negaLlve lmpacL on Lhe
proflL and oLher goals of a buslness enLerprlse
W LCCnCMlC 8lSk llkellhood LhaL economlc evenLs
lncludlng economlc mlsmanagemenL wlll cause drasLlc
changes ln a counLry's buslness envlronmenL whlch wlll
have a negaLlve lmpacL on Lhe proflL and oLher goals of
a buslness enLerprlse
8lSkS ln ln1L8nA1lCnAL 8uSlnLSS
W LLCAL 8lSkS llkellhood
LhaL a Lradlng parLner
wlll opporLunlsLlcally
break a conLracL or
exproprlaLe lnLellecLual
properLy rlghLs
8lSkS ln ln1L8nA1lCnAL
8uSlnLSS
W CurrenL slLuaLlon of
Zlmbabwe reflecLs Lhe
rlsks ln lnLernaLlonal
buslness economlc
collapse creaLed by
pollLlcal forces whlch
passed laws Lo resLrlcL
cerLaln buslness
acLlvlLles and Lypes of
ownershlp
W Soclal/culLural envlronmenL
1he soclal or culLural envlronmenL encompasslng Lhe
rellglous aspecLs language cusLoms LradlLlons and
bellefs LasLes and preferences soclal sLraLlflcaLlon
soclal lnsLlLuLlons buylng and consumpLlon hablLs
eLc are all very lmporLanL facLors for buslness
Meanlng of culLure
CulLure ls Lhe sofLware of Lhe mlnd Lhe soclal
programmlng LhaL runs Lhe way we Lhlnk acL and
percelve ourselves and oLhers lL ls a learned
behavlor and hence can be changed
WhaL ls CulLure?
WCulLure ls a sysLem of values and norms LhaL are shared
among a group of people and LhaL when Laken LogeLher
consLlLuLe a deslgn for llvlng
where
values are absLracL ldeas abouL whaL a group belleves Lo
be good rlghL and deslrable (knowledge and bellefs)
norms are Lhe soclal rules and guldellnes LhaL prescrlbe
approprlaLe behavlor ln parLlcular slLuaLlons(ldeals)
WSocleLy refers Lo a group of people who share a common
seL of values and norms (preferences)
values And norms
Wvalues provlde Lhe conLexL wlLhln whlch a
socleLy's norms are esLabllshed and [usLlfled and
form Lhe bedrock of a culLure
Wnorms lnclude folkways (Lhe rouLlne
convenLlons of everyday llfe) and mores (norms
LhaL are seen as cenLral Lo Lhe funcLlonlng of a
socleLy and Lo lLs soclal llfe)
CulLure SocleLy And 1he naLlonsLaLe
W1here ls noL a sLrlcL oneLoone relaLlonshlp
beLween a socleLy and a naLlon sLaLe
WnaLlonsLaLes are pollLlcal creaLlons LhaL can
conLaln one or more culLures
WSlmllarly a culLure can embrace several naLlons
1he ueLermlnanLs Cf CulLure
W1he values and norms of a culLure are Lhe
evoluLlonary producL of a number of facLors aL
work ln a socleLy lncludlng rellglon pollLlcal and
economlc phllosophles educaLlon language
and soclal sLrucLure
Soclal SLrucLure
WSoclal sLrucLure refers Lo a socleLy's baslc soclal
organlzaLlon
1wo dlmenslons Lo conslder
WLhe degree Lo whlch Lhe baslc unlL of soclal
organlzaLlon ls Lhe lndlvldual as opposed Lo Lhe
group
WLhe degree Lo whlch a socleLy ls sLraLlfled lnLo
classes or casLes
lndlvlduals And Croups
WA group ls an assoclaLlon of Lwo or more people
who have a shared sense of ldenLlLy and who
lnLeracL wlLh each oLher ln sLrucLured ways on
Lhe basls of a common seL of expecLaLlons abouL
each oLher's behavlor
WSocleLles dlffer ln Lerms of Lhe degree Lo whlch
Lhe group ls vlewed as Lhe prlmary means of
soclal organlzaLlon
lndlvlduals And Croups
Wln many WesLern socleLles Lhere ls a focus on Lhe
lndlvldual and lndlvldual achlevemenL ls common
W1hls conLrlbuLes Lo Lhe dynamlsm of Lhe uS
economy and hlgh level of enLrepreneurshlp
W8uL leads Lo a lack of company loyalLy and fallure
Lo galn company speclflc knowledge compeLlLlon
beLween lndlvlduals ln a company lnsLead of Lhan
Leam bulldlng and less ablllLy Lo develop a sLrong
neLwork of conLacLs wlLhln a flrm
lndlvlduals And Croups
Wln many Aslan socleLles Lhe group ls Lhe
prlmary unlL of soclal organlzaLlon
W 1hls may dlscourage [ob swlLchlng beLween
flrms encourage llfeLlme employmenL sysLems
and lead Lo cooperaLlon ln solvlng buslness
problems
W8uL mlghL also suppress lndlvldual creaLlvlLy
and lnlLlaLlve
Soclal SLraLlflcaLlon
WAll socleLles are sLraLlfled on a hlerarchlcal basls
lnLo soclal caLegorles or soclal sLraLa
Whlle all socleLles are sLraLlfled Lo some exLenL
Lhey dlffer by
WLhe degree of moblllLy beLween soclal sLraLa
WLhe slgnlflcance aLLached Lo soclal sLraLa ln
buslness conLacLs
Soclal SLraLlflcaLlon
WSoclal moblllLy ls Lhe exLenL Lo whlch lndlvlduals
can move ouL of Lhe sLraLa lnLo whlch Lhey are born
WA casLe sysLem ls a closed sysLem of sLraLlflcaLlon ln
whlch soclal poslLlon ls deLermlned by Lhe famlly
lnLo whlch a person ls born and change ln LhaL
poslLlon ls usually noL posslble durlng an
lndlvlduals llfeLlme
WA class sysLem ls a form of open soclal sLraLlflcaLlon
ln whlch Lhe poslLlon a person has by blrLh can be
changed Lhrough hls or her achlevemenL or luck
Soclal SLraLlflcaLlon
W1he soclal sLraLlflcaLlon of a socleLy ls slgnlflcanL lf
lL affecLs Lhe operaLlon of buslness organlzaLlons
WClass consclousness ls a condlLlon where people
Lend Lo percelve Lhemselves ln Lerms of Lhelr class
background and Lhls shapes Lhelr relaLlonshlps
wlLh oLhers
Wln culLures where class consclousness ls hlgh Lhe
way lndlvlduals from dlfferenL classes work
LogeLher may be very prescrlbed and sLralned
8ellglous And LLhlcal SysLems
W8ellglon ls a sysLem of shared bellefs and rlLuals
LhaL are concerned wlLh Lhe realm of Lhe sacred
WLLhlcal sysLems are a seL of moral prlnclples or
values LhaL are used Lo gulde and shape behavlor
W8ellglon and eLhlcs are ofLen closely lnLerLwlned
Wlour rellglons domlnaLe socleLy ChrlsLlanlLy lslam
Plndulsm and 8uddhlsm
WConfuclanlsm ls also lmporLanL ln lnfluenclng
behavlor and culLure ln many parLs of Asla
Language
WLanguage refers Lo Lhe spoken and unspoken
means of communlcaLlon
WLanguage ls one of Lhe deflnlng characLerlsLlcs
of culLure
Spoken Language
WCounLrles wlLh more Lhan one language ofLen
have more Lhan one culLure
W1he mosL wldely spoken language ln Lhe world
buL Chlnese ls Lhe moLher Longue of Lhe largesL
number of people
WLngllsh ls also becomlng Lhe language of
lnLernaLlonal buslness buL knowledge of Lhe
local language ls beneflclal and ln some cases
crlLlcal for buslness success
unspoken Language
Wunspoken language refers Lo nonverbal
communlcaLlon such as faclal expresslons
personal space and hand gesLures
Wlalllng Lo undersLand Lhe nonverbal cues of
anoLher culLure can lead Lo communlcaLlon
fallure
LducaLlon
Wlormal educaLlon ls Lhe medlum Lhrough whlch
lndlvlduals learn many of Lhe language
concepLual and maLhemaLlcal skllls LhaL are
lndlspensable ln a modern socleLy
WLducaLlon ls lmporLanL ln deLermlnlng a
naLlon's compeLlLlve advanLage
WCeneral educaLlon levels can also be a good
lndex for Lhe klnds of producLs LhaL mlghL sell ln
a counLry
CulLure And 1he Workplace
WlL ls lmporLanL for companles Lo undersLand
how a socleLy's culLure affecLs workplace values
WManagemenL processes and pracLlces musL be
adapLed Lo culLurallydeLermlned workrelaLed
values
WCeerL PofsLede ldenLlfled four dlmenslons of
culLure power dlsLance uncerLalnLy avoldance
lndlvlduallsm versus collecLlvlsm and
mascullnlLy versus femlnlnlLy
CulLure And 1he Workplace
Wower dlsLance focuses on how a socleLy deals wlLh Lhe
facL LhaL people are unequal ln physlcal and lnLellecLual
capablllLles
Wlndlvlduallsm versus collecLlvlsm focuses on Lhe
relaLlonshlp beLween Lhe lndlvldual and hls or her fellows
WuncerLalnLy avoldance measures Lhe exLenL Lo whlch
dlfferenL culLures soclallze Lhelr members lnLo accepLlng
amblguous slLuaLlons and LoleraLlng amblgulLy
WMascullnlLy versus femlnlnlLy looks aL Lhe relaLlonshlp
beLween gender and work roles
CulLure And 1he Workplace
1able 31 Work8elaLed values for 20 SelecLed CounLrles
CulLural Change
WCulLure evolves over Llme alLhough changes ln
value sysLems can be slow and palnful for a
socleLy
WSoclal Lurmoll ls an lnevlLable ouLcome of
culLural change
WAs counLrles become economlcally sLronger
culLural change ls parLlcularly common
lmpllcaLlons lor Managers
WSocleLles dlffer because Lhelr culLures vary
WCulLures vary because of profound dlfferences ln
soclal sLrucLure rellglon language educaLlon
economlc phllosophy and pollLlcal phllosophy
1here are Lhree lmporLanL lmpllcaLlons LhaL flow
from Lhese dlfferences
1 1here ls a need Lo develop crossculLural llLeracy
2 1here ls a connecLlon beLween culLure and
naLlonal compeLlLlve advanLage
3 1here ls a connecLlon beLween culLure and eLhlcs
ln declslon maklng
CrossCulLural LlLeracy
WCrossculLural llLeracy ls crlLlcal Lo Lhe success
of lnLernaLlonal buslnesses
WCompanles LhaL are lll lnformed abouL Lhe
pracLlces of anoLher culLure are unllkely Lo
succeed ln LhaL culLure
WManagers musL also beware of eLhnocenLrlc
behavlor or a bellef ln Lhe superlorlLy of ones
own culLure
CulLure And CompeLlLlve AdvanLage
1he connecLlon beLween culLure and
compeLlLlve advanLage ls lmporLanL because
WlL suggesLs whlch counLrles are llkely Lo produce
Lhe mosL vlable compeLlLors
WlL has lmpllcaLlons for Lhe cholce of counLrles ln
whlch Lo locaLe producLlon faclllLles and do
buslness