Culture in International Business

What Is Culture and Why Is It Important?

• International business managers must learn to live, work, and meet business goals in other cultures.
• They must accept that other cultures are different and learn to adapt to them.
• Culture affects all business functions, including marketing, human resources, production and procurement, and accounting and finance.

Culture Affects All Business Functions

Marketing

• Variations in attitudes and values across markets often require different marketing mixes to reach potential consumers.
• Companies must be sensitive to potential cultural issues related to product design, advertising, and pricing.

Human Resources

• Culture plays key roles in motivating and evaluating employees.
• Managers must understand how authority is viewed in different cultures (e.g., as a patron or first among equals).

Production and Procurement

• Values and attitudes toward change influence acceptance of new production methods.
• Cultural norms structure the acquisition of resources, such as using social relationships or relying on price.

Accounting and Finance

• Accounting controls directly relate to assumptions about the basic nature of people.
• Tight controls suggest a lack of trust, while loose controls suggest people act honestly even without close monitoring.

Major World Religions

• The five major world religions are Christianity, Islam, Hinduism, Buddhism, and Judaism.
• The number of followers for each religion is:
  • Christianity: 2,300 million
  • Islam: 1,800 million
  • Hinduism: 1,100 million
  • Buddhism: 500 million
  • Judaism: 14 million
• Each religion has a distinct cultural tradition:
  • Christianity: West Asian/Abrahamic
  • Islam: West Asian/Abrahamic
  • Hinduism: Indian
  • Buddhism: Indian
  • Judaism: West Asian/Abrahamic

How Culture Shows Itself

Material Culture or Artifacts

• Material culture refers to all human-made objects of a culture.
• People who study material culture are concerned with how people make things (technology) and who makes what and why (economics).

Language

• Language is the most obvious and distancing cultural distinction.
• Nonverbal communication reveals a lot about social interactions and values.
• Gestures vary in meaning between cultures, and spatial relationships also differ.

Culture Frameworks

Kluckhohn and Strodtbeck’s Cultural Orientations Framework

• This framework classifies cultures based on five universal problems:
  1. What relationship should people have to nature?
  2. What sorts of relationships should exist among individuals?
  3. What are the preferred forms or modes of human activity?
  4. What is the best way to think about time?
  5. What is the basic nature of humans?

Hofstede’s Six Dimensions

• Hofstede identified six dimensions to help managers understand how cultural differences affect organizations and management methods.
• The dimensions are primarily concerned with work values.

Trompenaars’ Seven Dimensions

• Internal versus external dimension reflects attitude toward controlling nature.
• In internal direction cultures, people believe they control nature.
• In external direction cultures, people believe the natural world controls them, and they need to work with their environment.

When Does Culture Matter?

• Culture matters all the time, but in different ways at different times.
• A global mind-set involves an openness to diversity along with an ability to synthesize across diversity.
• The Map-Bridge-Integrate model (MBI) is useful for discerning what matters across cultures.

Going Forward: Cultural Paradoxes and a Caution

• Cultural paradoxes involve contradictions between culture’s values and what is actually observed.
• Managers must be able to identify paradoxes within cultures.

Rules of Thumb for Managers Doing Business Across Cultures

• Be prepared when approaching a foreign market.
• Slow down.
• Establish trust.
• Understand the importance of language.
• Respect the culture.
• Understand the components of culture—surface and deep.

Learn about the importance of cultural understanding in international business, including adapting to different cultures and their effects on business functions.