International Business

by
Daniels and Radebaugh

Chapter 2

Cultural Environments
Facing Business
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Objectives
To relate the problems and methods of learning about cultural
environments
To explain the major causes of cultural difference and change
To examine behavioral factors influencing countries business
practices
To examine cultural guidelines for companies that operate
internationally

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Introduction
Culture
The specific learned norms based on attitudes, values, and
beliefs that exist in every nation
An integral part of external environments
Problems of cultural collision occur when
Company practices work less well than intended
Employees are unable to accept or adjust to foreign
environment
Every business function subject to cultural problems

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Cultural Influences on International Business

EXTERNAL INFLUENCES
PHYSICAL AND
SOCIETAL FACTORS
Political policies and
legal practices
Cultural factors
Economic forces
Geographical influences

COMPETITIVE
ENVIRONMENT

OPERATIONS

OBJECTIVES

Cultural awareness
Identification and
dynamics of cultures
Behavioral practices
affecting business
Strategies for dealing
with cultural differences

STRATEGY

MEANS

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Cultural Awareness
Problems that hinder cultural awareness
Subconscious reactions to circumstances
Assumption that all societal subgroups are similar
Cultural awareness can be improved
Research descriptions of specific cultures
Observe behavior or respected foreign nationals
Study foreign market directly
Companys need for cultural knowledge increases as it
Moves from one to multiple foreign functions
Increases the number of countries in which it operates
Moves from similar to dissimilar foreign environments
Converts from external to internal handling of international
operations

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Identification and Dynamics of Cultures

The nation as a point of reference
Each nation has certain human, demographic, and behavioral
Characteristics that give it a national identity
people share values, language, and race
Laws governing business apply along national lines
Problems using a country-by-country approach
individual differences within a country
similarities link groups from different countries
Cultural formation and dynamics
Value systems set early in life, but may change
Values may change due to choice or imposition
cultural imperialism
IB increases change in cultures and governments

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Identification and Dynamics of Cultures (cont.)

Language as a cultural stabilizer
Culture spreads rapidly when people from different areas speak
the same language
Stronger adherence to a culture if it does not share its language
with other peoples
English, French, and Spanish are widespread
most of IB conducted in English
Religion as a cultural stabilizer
Religion has a strong influence on values
Specific beliefs may affect business
not all nations that practice the same religion have the same
constraints on business
where rival religions vie for political control, resulting strife
may disrupt business

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Behavioral Practices Affecting Business

Social stratification systems
Every culture values some people more than others, thereby
dictating social class or status
Ascribed group membership based on:
gender, family, age, and caste
ethnic, racial, or national origin
Acquired group membership based on
religion, political affiliation, and professional and other
associations
Characteristics that affect status differently from country to
country include
Competencecompetition versus cooperation
gender-based groups
age-based groups
family-based groups
occupation
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Behavioral Practices Affecting Business (cont.)

Motivationcountries differ in how much people are motivated to work
and why
Materialism and leisure
countries differ in emphasis on materialism
Protestant ethicwork a means to salvation
most people consider economic achievement to be
commendable, regardless of culture
Expectation of success and reward people are more eager to
work if:
rewards for success are high
same tasks performed in different countries may have
different rewards for success and consequences of
failure
there is some uncertainty of success
same task performed in different countries may have
different probabilities of success
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Behavioral Practices Affecting Business (cont.)

Masculinity indexdegree of admiration for success, sympathy for
unfortunate, preference for being better than others
High masculinity cultures
roles differentiated by gender
men should dominate
Low masculinity culture
need for smooth social relationships
employee and social welfare has higher priority than growth
and efficiency
Need hierarchylower-order needs must be fulfilled prior to higher-order
needs
Workers in poor countries motivated by lower-order needs
People from different countries may rank needs differently

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Relationship Preferences
Power distancedescribes relationship between superiors and
subordinates
Highpeople prefer little consultation
autocratic or paternalistic management
Lowconsultative styles preferred
easier to implement worker participation
Individualism versus collectivism
Individualismlow dependence on organization and desire for
personal time, freedom, and challenge
self-actualization a prime motivator
Collectivismdependence on organization
value secure physical and social environments
Influences how employees interact with their colleagues
Influences marketing strategies

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Risk-Taking Behavior
Uncertainty avoidance
Highprefer set rules and lifetime employment
supervisors need to be precise when issuing directives
customers less willing to try new products
Trust
Leads to lower cost of doing business
Fatalismbelief in inevitability of events rather than self-determination
High fatalismpeople plan less for contingencies

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Information and Task Processing

Perception of cues
Cues perceived selectively
Each culture is able to perceive some subjects more precisely
than other cultures perceive them
Obtaining information
Low-context culturefocuses on firsthand information that bears
directly on issues to be decided
High-context culturefocuses on information peripheral to the
issue to be decided
Information processing
All cultures have ordering and classifying systems
Monochronicpreference for sequential work
Polychroniccomfortable working on several tasks
simultaneously
Idealism versus pragmatism

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Strategies for Dealing with Cultural Differences

Making little or no adjustment
Host cultures do not always expect foreigners to adjust to them
Less adjustment necessary when moving to a country with a
similar culture
Communications
Spoken and written language
Difficult to directly translate one language into another
Silent language
Color associations, sense of appropriate distance, time and status
cues, and body language (kinesics)
Culture Shock
Frustration from having to learn to cope with new cultural cues and
expectations

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Stages of Culture Shock

High

Acceptance of New Culture

Understanding

Elation

Frustration
Low

2
3
4 5 6
Months Living in New Culture
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Company and Management Orientations

Polycentrism
Overly cautious response to cultural variety
imitation of local practices
Decentralized structure
home office may lose control over local operations
Ethnocentrism
Belief that home-country practices and objectives should prevail
Ignores important local factors
Believes that change is not difficult
Geocentrism
Between polycentrism and ethnocentrism
Based on informed knowledge of home- and host-country needs,
capabilities, and constraints
Preferred approach to IB

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Strategies for Instituting Change

Value system
The more a change upsets important values, the more resistance
it will engender
Cost benefit of change
Company must consider the expected cost-benefit relationship of
any adjustments it makes abroad
Resistance to too much change
Resistance to change may be lower if the number of changes is
not great
Make fewer demands at one time and phase in other policies
more slowly
Participation
Discussing proposed change with stakeholders in advance may
reduce resistance
Participation must not violate prevailing value system

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Strategies for Instituting Change (cont.)

Reward sharing
Employees are more apt to support change when they expect
personal or group rewards
Opinion leaders
Should be convinced first about benefits of change
Can help speed up the acceptance of change
Timing
Change should be timed to occur when resistance is likely to be
low
Must attend to attitudes and needs of culture
Learning abroad
International companies should learn things abroad that they can
apply at home

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