Cultural Determinants of International Business

International Business (IB)

• IB transactions involve devising and carrying out business activities across national borders to satisfy individual and organizational objectives.
• IB forms include export/import trade, contract manufacturing, licensing, franchising, joint ventures, M&A, and turnkey operations.

International Orientations (EPRG Framework)

• Ethnocentric: home country and market experience are considered superior, with similarities seen in foreign countries, and local business strategies are extended globally.
• Polycentric: each host country is unique, with differences in foreign markets, and strategies are adapted differently for each market.
• Regiocentric: the world is divided into regions, with similarities and differences seen within regions, and strategies are integrated within but not across regions.
• Geocentric: the world is becoming smaller, with similarities and differences seen in home and host countries, and a global approach is taken with local adaptations.

Environment of International Business

• SLEPT formula:
  • Social and cultural factors
  • Legal factors
  • Economic factors
  • Political factors
  • Technological factors

Culture in International Business

• Culture is the collective programming of the mind that distinguishes one human group from another, including systems of values.
• Culture is learned, shared, interrelated, and transmitted across generations.
• Key aspects of culture:
  • Shared motives, values, beliefs, identities, and interpretations of significant events
  • Resulting from common experiences of collective members
  • Transmitted across age generations
• Culture has structure and is integrated, with changes in one part bringing changes in another.

Levels of Culture

• Universal level
• Collective level:
  • Wider cultural environment:
    • Supra-culture: shared by nations with similar economic systems, development, ethnic roots, religion, etc.
    • Macro-culture: shared by people of the same nationality, origin/country of residence (national culture)
      • Elements include:
        • Values, attitudes, moral codes, religion, aesthetics, art, tastes, symbols, places, language (verbal/non-verbal)
        • Tradition, manners, and customs (dress code)
        • Social interactions and institutions
        • Education, technology, and material culture