Exam 2 Study Guide—MHR 2000Professor MorrisChapter 6: The Cultural EnvironmentCultureCulture- knowledge, beliefs, art, law, morals, and customs and other capabilities of one group distinguished from other groupsHofstede’s definition: collective programming of the human mindCulture isSharedIntangibleConfirmed by othersCulture is a source of cohesion and friction in international businessDoes not explain everything such as economic, politics, social issues, etcLanguageLanguage- systematic means of communicating ideas or feelings by the use of conventionalized signs, gestures, marks, or articulate vocal soundsSlogan and brand names can mean different things in different languagesGrammar and structural format produce differences in languages- Chinese is backwards from English-> the punch line comes last in a thoughtLingua franca- a language developed by the franks as a mixture of Arabic, Italian, Greek, Spanish, and Portuguese; today denotes any knowledge shared by people of different national and linguistic originsEnglish is the lingua franc of businessHofstede’s Dimensions of CultureDeveloped from a study of 100,000 IBM employeesPower Distance (PD)Extent to which hierarchical differences are accepted in society and articulated in the form of deference to senior echelonsDo not confuse with distribution of wealth and power in nationLow: Austria, Israel, Denmark, Sweden, NorwayLess centralization, flatter organizational pyramids, fewer supervisory panel, smaller wage differentialsHigh: Philippines, Mexico, Venezuela, India, BrazilGreater centralization, tall organizational pyramids, more supervisory panel, large wage differentialsUncertainty AvoidanceExtent to which uncertainty and ambiguity are toleratedLow: Denmark, Sweden, Great Britain, US, IndiaLess structured activities, fewer rules, more generalists, variability, greater willingness to take risks, less ritualistic behaviorHigh: Greece, Portugal, Japan, Peru, FranceStructured activities, written rules, specialists, standardization, less risks, ritualistic behavior*Most critical dimension for foreign investment because of its implication on risk taking and investment*Individualism/CollectivismExtent to which the self or the group constitutes the center point of identification for the individualLow: Venezuela, Colombia, Taiwan, Mexico, GreeceOrganization as family, organization depends on employee interests, practices based on loyalty, sense of duty, and group participationHigh: US, Australia, Great Britain, Canada, NetherlandsOrganization is more impersonal, employees defend their own self-interest, practices encourage individual initiativeMasculinity/FemininityExtent to which traditional masculine values such as aggressiveness and assertiveness are emphasizedExplains consumer behaviorLow: Sweden, Denmark, Thailand, Finland, YugoslaviaSex roles minimized, organizations do not interfere with personal lives, women in more qualified jobs, soft, intuitive skills are rewarded, social rewards are valuedHigh: Japan, Austria, Venezuela, Italy, MexicoSex roles clearly defined, organizations interfere to protect their interests, fewer women in qualified jobs, aggression, competition, and justice are rewarded, work is valued as central life interestLong-term OrientationOriginally termed Confucian dynamismConnotes underlying meaning and business ramificationsHigh LTO cultures: organization is key to long term horizon, individuals delay gratificationNot one of the original dimensions from Hofstede’s 1980 book; result of cooperation with Michael Bond who developed Chinese Values SurveyChina is number one in this categoryCriticismIndividualism/collectivism has most support, power distance, uncertainty avoidance, masculinity/femininityMeasures, data, and methodologySingle companyTime-dependent resultsBusiness culture, not valuesNonexhaustive-don’t cover entire cultural phenomenonPartial geographic coverageWestern biasAttitudinal rather than behavioral measuresEcological fallacyCorporate CultureEthnicityRise of a minority ethnicities in the US impacts dimensions, more subculturesIndustryHigh-tech industry is flexible, informal, and innovative-> most global industryProfession provides important source of cultural affiliationDemographicsEducation, age, seniority, and hierarchical level strongly affect differences in values, but not differences in practicesNew Chinese managers are more individualisticSubcultures vary geographically making country unit less homogenous and making MNE integration more complexIdeologyNot stable, not consistent with cultures and can vary through time and across regionsCultural Etiquette/StereotypesCultural EtiquetteSet of manners and behavior that are expected in a given situationViolations are highly offensive in high uncertainty avoidance countriesCultural StereotypesEthnocentric-look at the world from a perspective shaped by our own culture and upbringing- shapes mental maps (perceptions of world around us)Stereotypes- beliefs about others, their attitudes and behaviorAuto-stereotypes-how we see ourselves as a group distinguished from othersUS stereotypesDistrust in others and individual change is possibleMan mastering predictable environment; situations are problems to be resolvedEmphasis on doing than beingPresent to slightly future orientation; immediate gratification but change is constantInformal, materialistic, nondeterministic, egalitarian, individualistic, achievement/action oriented, open/direct, practical/efficient, litigious, culturally ignorant/monolingualHetero-stereotypes- how we are seen by othersConvergence and DivergenceConvergence hypothesis-assumes that the combination of technology and economies is making countries more alike, and that with global integration of markets and the diffusion of MNC practices, convergence will accelerateProliferation of global products (McDonalds, Coca-Cola)Forces: migration, developments in communications, transportation, and travelDivergence hypothesis- assumes that countries will continue to maintain their distinctive characteristics, and that those differences may even be accentuated over timeChapter 19: Social Responsibility and Corruption in the Global MarketplaceReading: 513-532Economic/Legal/PoliticalEconomicConform to economic and social development policiesDo no disturb balance of payments or currency exchange ratesCooperate with government policies about local equity participationDo not dominate capital marketsProvide all necessary information for
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