Chapter 3 nations using a statistical analysis of two unique

databases.
Culture and Business
The first and largest database composed of answers
Culture the beliefs, values, mind-sets, and practices that matched employee samples from forty different
of a specific group of people; refers to how and why countries to the same survey questions focused on
we think and function. attitudes and beliefs. The second consisted of
answers to some of the same questions by
Cultures exist in all types of groups. Hofstede’s executive students who came from
fifteen countries and from a variety of companies
Cultural awareness most commonly refers to having
and industries
an understanding of another culture’s values and
perspective. This framework focused on value dimensions.
Values, in this case, are broad preferences for one
Cross-cultural understanding requires that we
state of affairs over others, and they are mostly
reorient our mind-set and, most importantly, our
unconscious.
expectations, in order to interpret the gestures,
attitudes, and statements of the people we Power distance refers to how openly a society or
encounter. We reorient our mind-set, but we don’t culture accepts or does not accept differences
necessarily change it. between people, as in hierarchies in the workplace,
in politics, and so on.
Value is defined as something that we prefer over
something else. Individualism it refers to people’s tendency to take
care of themselves and their immediate circle of
Values are usually acquired early in life and are
family and friends, perhaps at the expense of the
usually nonrational. Our values are the key building
overall society
blocks of our cultural orientation.
Masculinity, which may sound like an odd way to
Human nature is such that we see the world through
define a culture; masculine or feminine cultures,
our own cultural shades
we’re not talking about diversity issues. It’s about
Kinds of Culture how a society views traits that are considered
masculine or feminine.
National culture is—as it sounds—defined by its
geographic and political boundaries and includes Uncertainty avoidance (UA) this refers to how much
even regional cultures within a nation as well as uncertainty a society or culture is willing to accept.
among several neighboring countries
Long-term orientation, which refers to whether a
Subcultures many groups are defined by ethnicity, culture has a long-term or short-term orientation
gender, generation, religion, or other characteristics
with cultures that are unique to them.
Edward T. Hall was a respected anthropologist who
Every organization has its own workplace culture,
applied his field to the understanding of cultures and
referred to as the organizational culture. This
intercultural communications.
defines simple aspects such as how people dress
(casual or formal), how they perceive and value High and low context refers to how a message is
employees, or how they make decisions (as a group communicated.
or by the manager alone)
Space refers to the study of physical space and
Hofstede and Values people. Hall called this the study of proxemics,
which focuses on space and distance between
Geert Hofstede, sometimes called the father of
people as they interact.
modern cross-cultural science and thinking, is a
social psychologist who focused on a comparison of
polychronic cultures “many times”—people can do Chapter 4
several things at the same time. In monochronic
cultures, or “one-time” cultures, people tend to do World Economies
one task at a time.
GDP is the value of all the goods and services
Language is one of the more conspicuous produced by a country in a single year. The income
expressions of culture. As Hall showed, per person, a better indicator of the strength of the
understanding the context of how language is used is local economy and the market opportunity for a new
essential to accurately interpret the meaning consumer product, is the nominal per capita GDP—
the GDP divided by the population of the country.
Body Language how you gesture, twitch, or scrunch Finally, to compare production and income across
up your face represents a veritable legend to your countries, economists adjust this number to reflect
emotions. the different costs of living in specific countries.

Ethnocentrism is the view that a person’s own PPP adjusts the exchange rate between countries to
culture is central and other cultures are measured in ensure that a good is purchased for the same price in
relation to it. the same currency.

Professionals often err when they think that in HDI measures people’s satisfaction in three key
today’s shrinking world, cultural differences no areas: (1) long and healthy life in terms of life
longer pertain. People mistakenly assume that expectancy; (2) access to quality education equally;
others think alike just because they dress alike and and (3) a decent standard of living in the form of
even sound similar in their choice of words in a income. Health is measured by life expectancy at
business setting. Even in today’s global world, there birth; knowledge is measured by a combination of
are wide cultural differences and these differences the adult literacy rate and the combined primary,
influence how people do business. Culture impacts secondary, and tertiary gross enrollment ratio; and
many elements of business, including the following: standard of living by (income as measured by) per
capita GDP.
 the pace of business
 business protocol—how to physically and Standards are constantly evolving to meet changing
verbally meet and interact global scenarios; for instance, in 1997, the UNDP
 decision making and negotiating added the HPI to factor in the denial of basic
 managing employees and projects opportunities and choices to those who live in
 propensity for risk taking poverty. It’s critical to understand why the changes
 marketing, sales, and distribution are occurring, what attitudes and perceptions are
shifting, and if they are supported by real, verifiable
data.

Understanding the culture of the people you are

dealing with is important to successful business
interactions as well as to accomplishing business
objectives. For example, you’ll need to understand
the following:

 how people communicate Developed economies, also known as advanced

economies, are characterized as postindustrial
 how culture impacts how people view time
countries—typically with a high per capita income,
and deadlines
competitive industries, transparent legal and
 how people are likely to ask questions or
regulatory environments, and well-developed
highlight problems
commercial infrastructure.
 how people respond to management and
authority Developed countries also tend to have high human
 how people perceive verbal and physical development index (HDI) rankings (i.e., long life
communications expectancies, high-quality health care, equal access
 how people make decisions
to education, and high incomes). In addition, these The poorest countries of the world are often
countries often have democratically elected referred to as the Third World. However, the Third
governments. World is not synonymous with the developing world,
instead it is part of an outdated model of the
Major developed economies; geopolitical world from the time of the Cold War. It
encompasses three-quarters of the world’s
Canada, United States, Western Europe, Japan, population and consists of the states that were not
South Korea, Australia, and New Zealand. aligned with either the democratic-industrial bloc or
the eastern, communist-socialist bloc.
United States is the fourth-largest country in the
world—after Russia, China, and Canada. However, Developing country, in order to evolve into an
the United States is the world’s largest single- emerging market, must (1) seek to implement
country economy and accounts for nearly 25 percent transparency in its government as well as in its
of the global gross domestic product (GDP). The political and economic institutions to help inspire
strength of the US economy is due in large part to its business confidence in its country, (2) develop the
diversity. Today, the United States has a service- local commercial infrastructure and reduce trade
based economy. In 2009, industry accounted for 21.9 barriers to attract foreign businesses, and (3)
percent of the GDP; services (including finance, educate the population equally and create a
insurance, and real estate) for 76.9 percent; and healthy domestic workforce that’s both skilled and
agriculture for 1.2 percent. relatively cheap.
Bull market is one in which prices rise for a There are some common characteristics of emerging
prolonged period of time, while a Bear market is one markets in terms of the size of the local population,
in which prices steadily drop in a downward cycle. the opportunity for growth with changes in the local
commercial infrastructure, the regulatory and trade
Germany, a member of the EU (European Union),
policies, improvements in efficiencies, and an
has the fifth-largest economy in the world. The
overall investment in the education and well-being
country is a leading exporter of machinery, vehicles,
of the local population, which in turn is expected to
chemicals, and household equipment and benefits
increase local incomes and purchasing capabilities.
from a highly skilled labor force. It is the largest and
strongest economy in Europe. Services drive the Emerging market is a country that can be defined as
economy, representing 72.3 percent (in 2009) of the a society transitioning from a centrally managed
total GDP. Industry accounts for 26.8 percent of the economy to a free-market-oriented economy, with
economy, and agriculture represents 0.9 percent. increasing economic freedom, gradual integration
within the global marketplace, an expanding middle
Japan’s post–World War II success has been the
class, and improving standards of living, social
result of a well-crafted economic policy closely
stability, and tolerance, as well as an increase in
administered by the government in alliance with
cooperation with multilateral institutions.
large businesses. It also benefits from its highly
skilled workforce. Japan has very few mineral and
energy resources and relies heavily on imports to
bring in almost all of its oil, iron ore, lead, wool, and
cotton. It is the world’s largest importer of numerous
raw materials including coal, copper, zinc, and
lumber. As with other developed nations, services
lead the economy, representing 76.5 percent of the
national GDP, while industry accounts for 21.9
percent of the country’s output.

Developing world refers to countries that rank lower

on the various classifications. The residents of these
economies tend to have lower discretionary income
to spend on nonessential goods.