Impact of Cultural Differences on Organisations

What is Culture?

Set of values, beliefs, rules, and institutions held by a specific group of people

Cultural literacyDetailed knowledge of a

culture that enables a person to function effectively within it

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EthnocentricityBelief that one’s own ethnic group or culture is superior

to that of others

X

Culture Matters:Creating a Global Mindset

CulturalAdaptability

Bridgingthe Gap

FlexibilityIs Key

BuildingGlobal Mentality

National Culture

Nation states build museums and monuments to preserve the legacies of important events and people

Filmmakingand

Broadcasting

Guggenheimand

Hong Kong Disney

Subculture

People who share a unique way of life within a larger culture (language, race, lifestyle, attitudes, etc.)

EXAMPLES

Goth, Punk, Emo

China’s Dialects

Groups in U.S.

Arabs Globally

Discussion Question

Why should business people try to avoid ethnocentricity and develop cultural literacy?

Answer to Discussion Question

Ethnocentricity distorts one’s views of other cultures and causes them to overlook important human and environmental differences among cultures. Cultural literacy improves the ability of managers to manage employees, develop and market products, and conduct negotiations in local markets.

Components of Culture

Physicalenvironments

Education

Personalcommunication

Religion

Social structure

Manners &customs

Values &attitudes

Aesthetics

Culture

Aesthetics

Music

Painting

Dance

Drama

Architecture

Values and Attitudes

ValuesValues AttitudesAttitudesPositive or negative

evaluations, feelings, and tendencies people hold toward

objects or concepts

Ideas, beliefs, and customs to which people are

emotionally attached

• Freedom• Responsibility• Honesty

• Time• Work• Cultural change

Manners and Customs

MannersAppropriate behavior, speech, and dressing

in general

CustomsTraditional ways or behavior in specific

circumstances

Customs

Gift Giving

Folk

Popular

Discussion Question

Customs differ from _______ in that they define appropriate ways or behaviors in specific situations. a. Values b. Attitudes c. Manners

Answer to Discussion Question

Customs differ from _______ in that they define appropriate ways or behaviors in specific situations. a. Values b. Attitudes c. Manners

Social Structure

Social groupTwo or more people who identify and

interact with each other

Social stratificationProcess of ranking people into social layers

Social mobilityEase of moving up or down a culture's

"social ladder"

World Religions

Christianity

Islam

Hinduism

Buddhism

Confucianism

Judaism

Shinto

Origin ofHuman Values

Origin ofHuman Values

Language Blunders

Japanese knife manufacturer labeled its exports to the United States with “Caution: Blade extremely sharp! Keep out of children.”

English sign in a Moscow hotel read, “You are welcome to visit the cemetery where famous Russians are buried daily, except Thursday.”

Sign for non-Japanese-speaking guests in a Tokyo hotel read, “You are respectfully requested to take advantage of the chambermaids.”

Sign in English at Copenhagen ticket office read, “We take your bags and send them in all directions.”

Braniff Airlines’ English-language slogan “Fly in Leather” was translated into “Fly Naked” in Spanish.

Lingua Franca

¿Hola? Guten Tag?

Hello??

Ni Hao? Bonjour?

Hello!!!

Mixed Signals

Discussion Question

How does an understanding of the spoken, written, and body language in a market abroad contribute to business success?

Answer to Discussion Question

Knowledge of a culture’s spoken and written language gives international managers insight into why people think and act the way they do.

Education

Cultures pass on traditions, customs, and values through schooling, parenting, group memberships, etc.

Education level

Well-educated attract high-paying jobs, while poorly educated attract low-paying manufacturing jobs

Brain drain

Departure of highly educated people from one profession, geographic region or nation to another

Problem of Illiteracy

Source: Based on World Development Indicators, World Bank Web site (www.worldbank.org).

Kluckhohn-Strodtbeck Framework

Relation to nature

Time orientation

Trust and control

Material or spiritual

Responsibility to others

View of personal space

Hofstede Framework

Individualism vs. collectivismIndividualism

vs. collectivismPower

distancePower

distance

Achievementvs. nurturing

Achievementvs. nurturing

Uncertaintyavoidance

Uncertaintyavoidance

Long-termorientationLong-termorientation

Power Distance &Individualism vs. Collectivism

Source: Geert Hofstede, “The Cultural Relativity of Organizational Practices and Theories,” Journal of International Business Studies, Fall 1983, p. 82.

Power Distance &Uncertainty Avoidance

Source: Geert Hofstede, “The Cultural Relativity of Organizational Practices and Theories,” Journal of International Business Studies, Fall 1983, p. 84.

Discussion Question

Cultures with small ____________ tend to display greater equality and a more equal distribution of rewards.a. Individualismb. Power distancec. Uncertainty avoidance

Answer to Discussion Question

Cultures with small ____________ tend to display greater equality and a more equal distribution of rewards.a. Individualismb. Power distancec. Uncertainty avoidance

International Business: Strategy, Management, and the New Realities

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Cross-Cultural Risk

• A situation or event where a cultural miscommunication puts some human value at stake

• Arises when we enter environments characterized by unfamiliar languages and unique value systems, beliefs, attitudes, and behaviors

• One of the four major risks in international business

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Manifestations of Cross-Cultural Risk

• Ethnocentric orientation: using our own culture as the standard for judging other cultures

• Polycentric orientation: a mindset in which the manager develops a greater affinity with the country in which he/she does business than the home country.

• Geocentric orientation: a global mindset in which the manager is able to understand a business or market without regard to national boundaries.

Managers should strive for a geocentric orientation

International Business: Strategy, Management, and the New Realities

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What Culture Is not

Culture is:

• Not right or wrong. Culture is relative. There is no cultural absolute. Different nationalities simply perceive the world differently.

• Not about individual behavior. Culture is about groups. It refers to a collective phenomenon of shared values and meanings.

• Not inherited. Culture is derived from the social environment. We are not born with a shared set of values and attitudes; we learn and acquire as the grow up.

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Culture is Learned

• Socialization:The process of learning the rules and behavioral patterns appropriate to one's given society, i.e. cultural learning.

• Acculturation: The process of adjusting and adapting to a culture other than one's own, commonly experienced by expatriate workers.

• Culture is like an iceberg – above the surface, certain characteristics are visible; below the surface is a massive base of assumptions, attitudes and values that strongly influence decision-making, relationships, conflict, and other dimensions of business.

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Cross-Cultural Proficiency is Paramount in Managerial Tasks

Examples• Developing products and services• Communicating and interacting with foreign business partners• Negotiating and structuring international business ventures• Interacting with current and potential customers• Preparing advertising and promotional materials

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Cross-Cultural Differences may Create Challenges

• Teamwork. What should managers do if foreign and domestic nationals don’t get along?

• Lifetime employment. Workers in Japan often expect to work for the same firm throughout their careers; How should a foreign firm handle this?

• Pay for performance system. In China and Japan, a person’s age is important in promoting workers. Yet how do such workers perform when merit performance-based measures are used?

• Organizational structure. Preferences for centralized, bureaucratic structures may deter information sharing.

• Union-management relationships. Workers in European firms enjoy a more equal status with managers.

• Attitudes toward ambiguity. If you’re uncomfortable working with minimum guidance or taking independent action, you may have difficulty fitting into some cultures.