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 cross cultural literacy is important for business success A relationship may exist between culture and the costs of doing business in a country or region MNEs can be agents of cultural change McDonald s 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 4 4 What Are Values And Norms Values provide the context within which a society s norms are established and justified and form the bedrock of a culture Norms include folkways the routine conventions of everyday life mores norms that are seen as central to the functioning of a society and to its social life 4 5 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 4 6 What Determines Culture The values and norms of a culture evolve over time Determinants include religion political and economic philosophies education language social structure 4 7 What Determines Culture Determinants of Culture 4 8 What Is A Social Structure Social structure a society s basic social organization Consider the degree to which the basic unit of social organization is the individual as opposed to the group the degree to which a society is stratified into classes or castes 4 9 How Are Individuals And Groups Different 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 other s behavior individuals are involved in families work groups social groups recreational groups etc Societies place different values on groups 4 10 How Are Individuals And Groups Different In Western societies there is a focus on the individual individual achievement is common dynamism of the U S economy high level of entrepreneurship But creates a lack of company loyalty and failure to gain company specific knowledge competition between individuals in a company instead of than team building less ability to develop a strong network of contacts within a firm 4 11 How Are Individuals And Groups Different In many Asian societies the group is the primary unit of social organization discourages job switching between firms encourages lifetime employment systems leads to cooperation in solving business problems But might also suppress individual creativity and initiative 4 12 What Is Social Stratification All societies are stratified on a hierarchical basis into social categories or social strata individuals are born into a particular stratum Must consider 1 mobility between strata 2 the significance placed on social strata in business contexts 4 13 What Is Social Stratification 1 Social mobility the extent to which individuals can move out of the strata into which they are born caste system closed system of stratification in which social position is determined by the family into which a person is born change is usually not possible during an individual s lifetime class system form of open social stratification position a person has by birth can be changed through achievement or luck 4 14 What Is Social Stratification 2 The significance attached to social strata in business contacts class consciousness a condition where people tend to perceive themselves in terms of their class background and this shapes their relationships with others an antagonistic relationship between management and labor raises the cost of production in countries with significant class differences 4 15 How Do Religious And Ethical Systems Differ Religion a system of shared beliefs and rituals that are concerned with the realm of the sacred Four religions dominate society 1 2 3 4 5 Christianity Islam Hinduism Buddhism Confucianism is also important in influencing behavior and culture in many parts of Asia 4 16 How Do Religious And Ethical Systems Differ World Religions 4 17 How Do Religious And Ethical Systems Differ Ethical systems a set of moral principles or values that are used to guide and shape behavior Religion and ethics are often closely intertwined ex Christian or Islamic ethics 4 18 What Is Christianity Christianity the world s largest religion found throughout Europe the Americas and other countries settled by Europeans the Protestant work ethic Max Weber 1804 hard work wealth creation and frugality is the driving force of capitalism 4 19 What Is Islam Islam the world s second largest religion dating to AD 610 there is only one true omnipotent God an all embracing way of life that governs one s being associated in the Western media with militants terrorists and violent upheavals but in fact teaches peace justice and tolerance fundamentalists have gained political power and blame the West for many social problems people do not own property but only act as stewards for God supportive of business but the way business is practiced is prescribed 4 20 What Is Hinduism Hinduism practiced primarily on the Indian sub continent focuses on the importance of achieving spiritual growth and development which may require material and physical self denial Hindus are valued by their spiritual rather than material achievements promotion and adding new responsibilities may not be important or may be infeasible due to the employee s caste 4 21 What Is Buddhism Buddhism has about 350 millions followers stresses spiritual growth and the afterlife rather than achievement while in this world does not emphasize wealth creation entrepreneurial behavior is not stressed does not support the caste system individuals do have some mobility and can work with individuals from different classes 4 22 What Is