Lecture 2.
7
International Business
Environment –
Cultural Environment
LEARNING OUTCOMES
01 02 03
Understand Appreciate Understand
what culture the theory what culture
means of culture - means to
Hofstede businesses
2
WHAT IS
CULTURE?
System of values and social
norms
Shared among a group of
people
Influences how they behave.
BASED ON NEEDLE, 2019 3
HOW WE INTERPRET THINGS?
Americans: a fish leads
the group
Asians: group chasing
the fish
Hong, Y., Morris, M., Chiu, C. & Benet-Martinez,
V. (2000) Multicultural minds: a dynamic
constructivist approach to culture and
cognition, American Psychologist, 55, 709-720
BASED ON NEEDLE, 2019 4
HOW DOES CULTURE WORK?
Culture as a perspective:
a set of “glasses” that shape responses, reinforced in early childhood and
by cultural environment:
What we see
What we infer
What we believe
What we fear
What we value and try to achieve
What trade-offs we make 5
BASED ON NEEDLE, 2019
WHAT TRADE-OFFS WE MAKE?
Trade-offs are out special class of values that are shaped by culture
(You tell me!)
Time vs. money
Quality vs. price
Now vs. later
Self-interests vs. collective-interests
Profits vs. social responsibilities
BASED ON NEEDLE, 2019
ELEMENTS OF CULTURE
Artefacts – visible products, institutions, structures and processes
(visible representation e.g. food, language, architecture)
Espoused values as a component of attitudes, philosophies, goals and strategies
(deeper level e.g. morals)
Basic underlying assumptions comprising unconscious beliefs, perceptions and
feelings (deepest level e.g. autopilot mode, doing things without thinking).
All 3 levels shape how we all interpret the world; causing ppl to behave differently
7
BASED ON NEEDLE, 2019
WHAT IS CULTURE TO YOU?
https://www.youtube.com/watch?v=GOHvMz7dl2A
BASED ON NEEDLE, 2019
DEFINITIONS OF CULTURE
“Culture is a body of learned behaviour, a collection of beliefs, habits and traditions,
shared by a group of people and successively learned by people who enter society”
(Margaret Mead 1951)
“Culture is the collective programming of the mind, which distinguishes the members of
one group or category of people from another”
(Geert Hofstede, 1994)
“Shared motives, values, beliefs, identities and interpretations or meanings of significant
events that result in common experiences of members of collectives and are transmitted
across generations.”
(Javidan and House 2001)
9
BASED ON NEEDLE, 2019
DIFFERENT FORMS OF CULTURE (AFTER HOFSTEDE, 1994)
1. National differences macro level
2. Sub-cultural differences based on region, religion
and language regional differences
3. Gender differences
4. Generational differences
5. Social class differences
6. Differences between cultures in organizations
THE CONTRIBUTION OF GEERT HOFSTEDE
Based on a study of IBM 1967-73 and studies in Asia in
1980s.
Identified 5 values that were the basis of cultural
difference and caused differences in business practice and
behaviour.
1. Power distance
2. Uncertainty avoidance
3. Individualism-collectivism
4. Masculinity-femininity
5. Long versus short-term orientation
POWER DISTANCE
Extent to which unequal distribution of power is socially acceptable
(inequality)
High power distance (Malaysia, Mexico, Russia)*
- Unequal power distribution accepted
- Social arrangements reflect this
- Importance of titles, wealth and status (luxury goods, business
example)
- High dependence on bosses
Low power distance (Austria, Denmark, Sweden, Germany)*
- A wish to equalize power in society
- Low dependence on bosses
*inequality based on physical/economic/intellectual differences
HOW GROUPIST CULTURE AND SOCIAL MEDIA ARE
FUELLING SOUTH KOREANS CRAZY LUXURY GOODS?
https://www.scmp.com/news/asia/east-asia/article/3207657/how-groupist-culture-and-
social-media-are-fuelling-south-koreans-craze-luxury-goods
BASED ON NEEDLE, 2015 13
UNCERTAINTY AVOIDANCE
Extent to which we feel threatened by ambiguity/uncertainty
/
High uncertainty avoidance (Greece, Portugal, Japan)*
- Rejection of deviant ideas
- Careful consideration of proposals
- Procedures to avoid ambiguity – rules, low job mobility
Kaizen: https://www.youtube.com/watch?v=fcBXtwGexNc
- Slow decision-making
i.e more risk adverse / anxious about the future
Low uncertainty avoidance (Singapore, Sweden, UK)*
- Welcome new ideas
- Relaxed attitude to rules
INDIVIDUALISM-COLLECTIVISM
Extent to which society is organized around individuals or groups
Individualism (USA, Australia, UK)*
- Focus on self and immediate family
- Loose social networks
Collectivism (Central America, China, S. Korea)*
- Collaboration for the collective good
- Importance of the extended family
- Strong wide networks
- Concern for belonging to extended groups; community (Music
Industry)
MASCULINITY-FEMININITY
Masculinity (Japan, Austria, Italy)*
- Assertiveness
- Competitive and concern for performance
- Focus on financial rewards
- Clear differentiation of male and female roles
- focus on achievement and material success
Femininity (Sweden, Norway, Netherlands)*
- Sensitivity towards others
- Concern for welfare and security
- Concern for quality of life
- Overlap of male and female roles
LONG VERSUS SHORT TERM ORIENTATION
Based on Hostede’s later work with Michael Bond
Long-termism (China, Japan, S. Korea)*
- Pursuit of long-term goals long term planning; thinking about next generation
Short-termism (Pakistan, Nigeria, USA, UK)*
- Pursuit of short-term gain and advantage live in the present
Market share versus profit motive (long vs short)
Long-termism associated with Confucian dynamism
- Commitment to the work ethic
- Respect for tradition
- Savings
* As identified by Hofstede
INDULGENCE VERSUS RESTRAINT
A recent addition to Hofstede’s work (in 2012) based on the World Values
Survey.
Indulgence (high in Latin America, Nordic Europe and Anglo-Saxon
countries). There is a focus on satisfying basic drives.
Importance is attached to leisure and free speech.
Sexual norms are fairly lenient.
Restraint (East Asia, Eastern Europe, Muslim countries)
Suppression of gratification and control of impulses.
Importance of savings.
Sexual norms are much stricter.
BASED ON NEEDLE, 2019 19
CRITIQUE OF HOFSTEDE
Small sample size for some countries Based on a
single company/case study
Focuses on a limited number of variables.
Narrow sample drawn from a single company cannot be
representative.
Overstates similarity of organizational and occupational
cultures in IBM.
Hofstede makes a leap of faith in attributing differences
to culture. In general his methodology has been
criticised by many people.
CULTURE IN BUSINESS
Our socialization shapes our values and
behaviour and determines our perspectives on
and attitudes to work.
Organizations are micro-societies, each with
their own culture.
We use culture as an analytical tool to explain
differences in business practices in different
countries or groups of countries.
21
BASED ON NEEDLE, 2019
IMPLICATIONS OF CULTURAL DIVERSITY FOR
MANAGEMENT
Recognition of the difficulty of transferring business
practices across cultures
Managing employees and groups from different cultures
Policies and practices of multinationals may need to vary
between cultures
Culture has an impact operationally on all business levels
e.g. product content and design, on methods of
promotion, and on HR policies and practices, the way
employees are grouped together
22
BASED ON NEEDLE, 2019
WHERE TO EXPECT CULTURAL DIFFERENCES?
In the way/mode in which decisions get made
Protocol or level of formality
Calculation, emotion, or rule-based mode used
in different situations
In decisions or negotiations that involve trade-offs
Short-term vs. long-term outcomes
Process vs. outcome variables
That involve uncertainty/risk
23
BASED ON NEEDLE, 2019
THE DECLINE OF CULTURE?
Are cultural differences increasingly of less importance? Possible reasons are:
Advances in transportation. More people experience different cultures.
Migration. The mixing of cultures.
Globalisation. The spread of American and Western European culture.
Internet.
Economic development. This usually leads to:
o Less collectivism and more individualism
o Less risk aversion – economic growth increases financial security
Weakening of traditional values – urbanisation and education.
Decline of gender roles – greater female paid employment. 24
BASED ON NEEDLE, 2019
QUESTION:
Or are people becoming more
defensive of their cultures?
Are new cultures developing in
their place?
25
BASED ON NEEDLE, 2019
TED TALKS ON CULTURE
https://www.youtube.com/watch?v=l-Yy6poJ2zs
BASED ON NEEDLE, 2015 26
READING:
Needle, 2090: Chapter 5
Tutorial topic next week: Culture clash in the board room
27
BASED ON NEEDLE, 2019
