PART TWO

COMPARATIVE ENVIRONMENTAL FRAMEWORKS

International Business

Chapter Two
The Cultural
Environments Facing
Business
Chapter Objectives
• To understand the major causes of cultural
differences and change
• To grasp behavioral factors influencing
countries’ business practices
• To become familiar with cultural guidelines
for companies that operate internationally
• To learn to discuss the problems and
methods of learning about cultural
environments

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Culture Defined

Culture: the specific learned norms of a

society that reflect attitudes, values, and
beliefs
Major problems of cultural collision are likely to
occur if:
-a firm implements practices that do not
reflect local customs and values and/or
-employees are unable to accept or adjust
to foreign customs.

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Fig. 2.1: Cultural Influences
on International Business

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Cultural Dynamics

• Cultures consist of societies, i.e., relatively

homogeneous groups of people, who share
attitudes, values, beliefs, and customs.
• Cultures are dynamic; they evolve over time.
• Cultural value systems are set early in life, but
may change because of:
-choice or imposition
-contact with other cultures.

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The Nation as a Point of
Reference

• The basic similarity amongst people

within countries is both a cause and an
effect of national boundaries.
• National identity is perpetuated through
the rites and symbols of a country and a
common perception of history.
Subcultures may link groups from different nations
more closely than certain groups within nations.

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Cultural Formation and
Change
• Societal values and customs constantly
evolve in response to changing realities.
• Cultural imperialism is brought about by the
imposition of one culture upon that of
another.
• Certain elements introduced from outside a
culture may be known as creolization,
indigenization, or cultural diffusion.

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Language as a Cultural
Stabilizer
• Isolation from other groups, especially
because of language, tends to stabilize
cultures.
• Some countries see language as being so
important that they regulate the inclusion
of foreign words and/or mandate the use
of the country’s official language for
business purposes.

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Map 2.2: Major Languages
of the World

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Fig. 2.2: Importance of Major
Language Groups: Two Views

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Religion as a Cultural
Stabilizer
• Religion is a major source of both cultural
imperatives and cultural taboos.
• Major religions include:
-Buddhism
-Christianity
-Hinduism
-Islam
-Judaism

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Map 2.3: Major Religions
of the World

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Social Stratification Systems
• Ascribed group memberships are defined
at birth; they may include gender,
family, age, caste, and ethnic or national
origin.
• Acquired group memberships are based
on one’s choice of affiliation, such as
political party, religion, and social and
professional organizations.
Social stratification affects both business strategy and
operational practices.

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Factors Affecting Work
Ethics
• The desire for material wealth vs. the desire for
leisure (Protestant Ethic)
• The expectation of success and reward
• Assertiveness (Hofstede’s masculinity vs.
femininity index)
• Needs satisfaction (Maslow’s Hierarchy)
Motivated employees are normally more productive, and
higher productivity leads to lower costs.

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 Fig. 2.4: The Hierarchy of
Needs and Need-Hierarchy
Comparisons

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Factors Affecting Relationship
Preferences

• Power distance, i.e., the

psychological and social distance
between superiors and subordinates
• Individualism vs. collectivism
– Individualism represents a desire for
personal freedom, time, and challenge.
– Collectivism represents a dependence
on the organization as well as a need for
a safe environment.
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Factors Affecting Risk-taking
Behavior
• Uncertainty avoidance, i.e., one’s tolerance
of risk
• Trust, i.e., one’s belief in the reliability and
honesty of another
• Future orientation, i.e., the need for immediate
vs. delayed gratification
• Fatalism, i.e., the belief that life is pre-destined,
that events are “the will of God”

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Factors Affecting Information
and Task Processing
• Selective perception of cues
• Communication context
-low-context cultures [explicit]
-high-context cultures [implicit]
• Information processing
-monochronic [work sequentially]
-polychronic [multi-task]
Whereas idealistic cultures are principle
driven, pragmatic cultures are detail driven.
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Factors Affecting the
Communication Process
• Spoken language
• Written language
• Silent language
-color associations
-conversational distance
-perception of time
-kinesics [body language and gestures]
Problems in communication may arise, even
when nations share the same basic language
(e.g., British, Canadian, and American English).

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Managerial Issues Associated
with Cultural Differences

• Accommodation of foreigners
• Cultural distance [degree of similarity]
• Culture shock and reverse culture shock
• Managerial orientations
– polycentric
– ethnocentric
– geocentric

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Map 2.4: A Synthesis of
Country Clusters

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Factors Affecting Strategies for
Instituting Cultural Change
• Value systems
• Cost/benefits of change
• Resistance to change
• Participation in decision-making
• Reward sharing
• Role of opinion leaders
• Timing
• Opportunities to learn from abroad
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Implications/Conclusions

• Culture is dynamic and evolves over time.

Economic development and globalization
are two engines of cultural change.
• In addition to being part of a national
culture, people are simultaneously part of
other cultures, such as social and
professional associations and business and
government organizations. [continued]

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• Host cultures do not always expect firms and
individuals to conform to their norms; in
some instances they may choose to
accommodate differences in traditions.
• International firms should make a concerted
effort to identify ideas and behaviors in host
countries and foreign cultures that can be
usefully applied across the whole of their
organizations.

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