IBUS 311 1st Edition Lecture 5Outline of Last Lecture I. How is Culture Defined?II. How Does Culture Affect International Business?III. How is Culture Interpreted? Outline of Current Lecture I. What Dimensions does Culture Have? II. What Contemporary Issues does Culture Face Today? III. How to Overcome/manage Cross-cultural Risk? Current LectureI. What Dimensions does Culture Have? - Low-context Cultures: Rely on explicit explanations with an emphasis on spoken words. Such cultures emphasize clear, efficient, logical delivery of verbal messages. Communication is direct. Agreements are concluded with specific, legal contracts.- High-context Cultures: Emphasize nonverbal or indirect language. Communication aims to promote smooth, harmonious relationships. Such cultures prefer a polite, “face-saving” style that emphasizes a mutual sense of care and respect for others. Care is taken not to embarrass or offend others. - Individualism vs. Collectivism: Refers to whether a person primarily functions as an individual group.o In individualistic societies, each person emphasizes his or her own self-interest; competition for resources is the norm; individuals who compete best are rewarded. o In collectivist societies, ties among individuals are important; business is conducted in a group context; life is a fundamentally cooperative experience; conformity and compromise help maintain harmony. - Power distance: Describes how a society deals with inequalities in power that exists among people.o High power distance societies exhibit big gas between the weak and powerful; in firms, top management tends to be autocratic, giving little to lower-level employees. These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.o Low power distance societies have small gaps between the weak and powerful. Firms tend toward flat organizational structures, with relatively equal relations between managers and workers. - Uncertainty Avoidance: Refers to the extent to which people can tolerate risk and uncertainty in their liveso High uncertainty avoidance societies create institutions to minimize risk and ensure security. Firms emphasize stable careers and regulate worker actions. Decisions are made slowly. Examples: Belgium, France, Japano In low uncertainty avoidance societies, managers are relatively entrepreneurial and comfortable with risk. Firms make decisions quickly. People are comfortablechanging jobs. Examples: Ireland, Jamaica, U.S. - Masculinity vs. Femininity: Refers to a society’s orientation based on traditional male and female values.o Masculine cultures value competitiveness, ambition, assertiveness, and the accumulation of wealth. Both men and women are assertive, focused on career and earning money. o Feminine cultures emphasize nurturing roles, interdependence among people, and caring for less fortunate people – for both men and women. Examples: Scandinavian countries where welfare systems are highly developed, and education is subsidized. - Long-term vs. short-term orientation: The degree to which people and organizationsdefer gratification to achieve long-term success. o Long-term orientation emphasizes the long view in planning and living, focusing on years and decades. o Short-term orientation is typical in the United States and most other Western countries. - Values represent a person’s judgments about what is good or bad, acceptable or unacceptable, important or unimportant, and normal or abnormal.- Attitudes and preferences are developed based on values and are similar to opinions, except that attitudes are often unconsciously held and may not have a rational basis. - In deal-oriented cultures, managers focus on the task at hand, are impersonal, typically use contracts, and want to just “get down to business.” Examples: Australia, Northern Europe, and North America.- In relationship-oriented cultures, managers value affiliations with people, rapport, and getting to know the other party in business interactions. Relationships are more important than individual deals; trust is much valued in business agreements.- Guanxi: Refers to social connections and relationships based on mutual benefits. Emphasizes a reciprocal exchange of favors as well as mutual obligations. Extremely important in business in China.- Monochronic: A rigid orientation to time in which the individual is focused on schedules, punctuality, time as a resource, time is linear, “time is money”. For example, people in the U.S. are hurried and impatient. - Polychronic: A flexible, non-linear orientation to time in which the individual takes a long-term perspective; time is elastic, long delays are tolerated before taking action. Punctuality is relatively unimportant. Relationships are valuedII. What Contemporary Issues does Culture Face Today? - The most rapidly internationalizing services are lodging, retailing, construction, banking, insurance, publishing, IT, transport, travel, and entertainment. Because of close interaction between providers and consumers, culture strongly affects services,especially when the cultural distance is substantial.- The ‘death of distance’ is the demise of boundaries that once separated people due to integrating effects of information, communications, and transportation technologies. Culture is becoming more homogenous around the world. - Critics argue globalization promotes the replacement of indigenous cultures with homogeneous, often ‘Americanized’, culture. Worldwide, consumption patterns are converging. People exhibit uniformity in preferences for food, soft drinks, clothing, cars, hotels, websites, movies, TV shows, music, and other goods. - Others argue globalization encourages the worldwide free flow of ideas, beliefs, values, and products. Today, from around the world, people are exposed to a diversity of beliefs, values, approaches, and products, and adopt the best of what theworld has to offer. III. How to Overcome/manage Cross-cultural Risk? - Acquire factual and interpretive knowledge about the other culture; try to speak their language. - Avoid cultural bias. - Develop cross-cultural skills, such as perceptiveness, interpersonal skills, and adaptability. - Self-reference criterion: The tendency to view other cultures through the lens of one's own culture ─ understanding this is the first step.- Critical incident