The Cultural Environment in International Business PDF

The Cultural Environment in International Business lecturer Radu Cristian Mușetescu 1 Hampden – Trompenaars, 2000 = should your friend expect that you lie in order to help him? (no expectation = 100%)...

The Cultural Environment in International Business lecturer Radu Cristian Mușetescu 1 Hampden – Trompenaars, 2000 = should your friend expect that you lie in order to help him? (no expectation = 100%) 2 The cultural dilemma = what am I allowed to do? / what am I expected to do? when I relate to another individual, especially when he belongs to another culture (for example, to another country)? Is it possible that, by doing what I consider to be „normal”, to „damage” the relationship up to the point it is compromised? → „cross-cultural risk” = erroneous inter-cultural communcation may put into question a business relationship or the image of a company in a particular community 3 Definitions of culture: more than 160, according to A. L. Kroeber și Clyde Kluckhohn (1952) = “that entire complex that includes knowledge, faith, art, morality, law, habits and any other capability and custom acquired by an individual as a member of a society” (Edward Taylor, 1871); = “the historically created design for lifestyle, both explicit and implicit, rational and irrational or non-rational, that exists in a particular moment as potential guides for individual behavior” (Clyde Kluckhohn and W. H. Kelly, 1945); = “that part of the environment which is man made” (M. J. Herskovits, 1955); = “a mental map that guides us in our relations with what is around us and with other people” (James Downs, 1971); 4 Definitions of culture: more than 160, according to A. L. Kroeber și Clyde Kluckhohn (1952) = “the way in which people live their lives” (Elvin Hatch, 1985); = „the culture is what people have, think and do as members of society” = „the collective mental programming” or „software of the mind” (Geert Hofstede) 5 Components of culture: - objective = tools, infrastructure, television, architecture and so on - subjective = values, ideals, attitudes, behaviors, symbols → the cultural metaphor = a distinct tradition or institution strongly associated with a particular society (the „frontier” for Americans) → cultural stereotype = generalized at the level of a group of individuals which can be real or not, frequently simplifying real differences between individuals („Scots are …”) → idiom = an expression whose symbolic understanding is different than the real one („butter or war”) 6 7 What is not culture? Not right or wrong = cultural values are relative (but not everything is relative) Not about individual behavior = culture is about patterns of behavior in groups and not only individuals Not inherited = culture is derived from the social environment and is not inherited / genetic 8 The transfer of cultural values Culture is transmitted through learning and interaction with a particular community / environment and not through inheritance from previous generation socialization = to behave in accordance with social norms and expectations (American Heritage Dictionary) acculturation = the process of adopting the cultural traits and social patterns of another group, especially a dominant one (Random House Kernerman Webster) 9 Culture – business A two way causation: any company operates in a human community, with particular cultural values = its success depends on taking into consideration such values; any human community is impacted by the actions / behavior of companies that operates there = products can change consumption patterns, the way in which individuals interacts on social level 10 The relevance of culture in business relationships: product and service development („acceleration syndrome” for European cars in USA); business communication and interaction, especially with foreign partners; the search and selection of foreign distributors but also suppliers; negotiating and structuring the contracts with such foreign partners; interaction with existing and potential customers; participation at industry fairs and exhibitions; marketing / advertising; etc. 11 Sensitive issues related to culture in a firm: team work; length of employment; seniority and reward; organizational structure; relationships with different categories of stakeholders (trade unions, creditors, business partners so on); attitudes related to uncertainty / ambiguity; so on 12 How an individual relate to other cultures ethnocentric perspective: the use of his own standards in order to assess the values of other cultures policentric perspective: keeping his own cultural perspective, he develops an afinity for other cultures multicultural perspective: he adopts values from other cultures in order to emulate a model that includes all these values universal values perspective: all cultures share a set of minimum moral assumptions that bridge cultural gaps („natural” ethics / law) 13 Cultural typologies Edward T. Hall (1976, „Beyond Culture”): low context culture = based on elaborate explanations, a focus on verbal language → you need to tell a lot of things in order to transfer a message high context culture = a cultures which is based on non-verbal language and implies a lot of other aspects which are not explicit → messages imply a lot of things which are already implied by the other 14 The 5 cultural dimenssions of Geert Hofstede (Dutch psychologue, after a survey in 1968 of 116,000 employees of IBM from 70 countries): individualism = the relative importance of individual interests as opposed to the group = a global average of 40, China has 22 as opposed to 91 in the case of USA; power distance = how close individuals are related to power / authority structures = a global average of 60, China (80) and India (77) have bigger values than USA (40) or United Kingdom (35) uncertainty avoidance = the emotional answer to change and uncertainty = for a global average of 69, United Kingdom has, for example, a value of 35; masculinity = material gains versus general welfare = for a global average of 50, USA has a score of 62 while China and United Kingdom of 66; long term objective = time horizon on which individuals operate = for a global average of 44, China has a value of 118 while India 61 and USA and UK of 25. 15 16 Other dimensions: transactional approach (discrete) versus relational approach (continuous) sequential perspective (focus on deadlines, unique tasks, clear schedules, so on) versus synchronous (long term approach, simultaneous tasks, deadlines are not important, so on) 17 Culture and economic/political behavior does culture determine the nature of the political system in a country? Ex. do collectivist values allow the emergence of social-democracy or socialism? or does the nature of the political system determine the type of relations between individuals and how do they relate to each other? What is more important? culture or political institutions? 18 Impact of the nature of the political system on social relationship (Hans Hoppe) the lack of a legal system to protect private property and freedom of exchange leads to the impossibility of maximizing wealth through market transactions individuals are obliged to use different mechanisms in order to get access to resources = the political means → in this context, „personal relations” become an essential factor in the allocation of resources in a non-market economy lack of legal enforcement leads to ignorance of norms and rules = individuals know that contracts are not so important than personal connections 19 Culture: particularism versus universalism there are several common elements of almost every culture in the world → such universal values allow peaceful interaction between individuals from different cultures Harry Triandis = cultures are in the same time very similar and very different it is argued that globalization and increase in the frequency of intercultural transactions leads to a convergence of cultural values 20 Challenges of the cultural argument it is ultimate = you cannot (easily) change culture creates stereotypes and cannot differentiate between individuals (the „exceptions”) different analysts can formulate different profiles (who is entitled to draw the painting?) how do you deal with misfits (those who do not fit into the model)? “theory” versus “practical wisdom” = profiling cultures has a certain practical use but should not be taken in absolute terms 21 Cultural values: irrespective of their nature, they are manifested in free choices of individuals = individuals prove they belong to a certain culture only when they have the freedom to choose; when choices are imposed (taken by others), there are no more cultural values but only legal rules → in this case, the core difference is induced by the political organization of society; 22 „Studying culture without experience culture shock is like practicing swimming without water” „open-minded skepticism” 23