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CHAPTER 3 : Culture Environment
Learning Objectives:
Understand how culture impacts international business
Concept and elements of culture
Cross-culture comparisons
Bribery and ethics in international business
Social responsibility of MNCs
Cross cultural training in preparing for international assignment
Understand the principles of business negotiations abroad
Business practices in host country
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There are more than 160 definitions of culture
Communicable knowledge, learned behavior passed on from
generation to generation
An Integrated system of learned behavior patterns that are
distinguishing characteristic of the members of a given
society
The collective programming of the mind which distinguishes
the members of one group or category from those of another
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Element of Culture
A. Language
Spoken Language
Written Language
Official Language
Body Language
International LanguageB. Religion
Beliefs and Norms
Sacred Objects
Philosophical Systems Prayer/ Rituals
Leading Religious of the World
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C. Values and Attitudes
Toward
Time (Monochronic (V.S) Polychronic) Achievement
Work
Change
RiskTaking
D. Education
Literacy Level
Formal Education
Vocational Training Human Resource Planning
Primary / Secondary / High education
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E. Social Organization
Social Institutions
Authority Structure Interest Groups
Status Systems
Social Mobility
F. Technology and Material Culture Science
Invention
Energy Systems
Communications Tools and Objects
Urbanization
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G. Politics
Nationalism
National Interests Power
Ideologies
Political Risks
Sovereignty
H. Law
Common Law
Code Law
Foreign law Home / Host Country Law
Regulation / Antitrust Policy
International Law
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Cross-Culture Comparisons
A. Edward Halls High-Context (V.S) Low-Context Cultures
B. Hofstedes Classification Scheme
Individualism (V.S) Collectivism
Power Distance
Uncertainty Avoidance Masculinity
Long-Termism
C. Deal-Oriented (V.S) Relationship Oriented Cultures
Deal Oriented Cultures
Relationship Oriented Cultures
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Cultural Factors
Never touch the head of a Thai or pass an object over it.
The head is considered sacred in Thailand Avoid using triangular shapes in Hong Kong, Korea and
Taiwan. It is considered a negative shape.
The number 7 is considered bad luck in Kenya, good luck in
Czech Republic and has magical connotation in Benin, Africa The number 10 is bad luck in Korea
The number 4 is means Death in Japan
Red represents witchcraft and death in many African countries
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Cultural Difference between Japanese and American Individual
lifestyles
American
A Culture of self-expression
Japanese
A Culture of Self restrain
Cultural
Background
Clear expression of Joy
and sorrow
Ambiguous of joy
and sorrowReticence
Unequivocal expression
of Yes/No.
Equivocal expression
of Yes/No.
Modesty
Strong self-assertion Weak self-assertion Reserve
Strong Personality Weak Personality Punctiliousness
Excellent Negotiating skill Poor Negotiating skill Politeness
Priority of self-interest Priority of harmony
with others Obligation
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Cultural Difference between Japanese and American
Social Life
American Society Japanese SocietyDignity of Individuals In the same boat concept
Dignity of individuals Human relation oriented
Individuals work ethic Dependence on the group
Great individuals freedom Lack of individuals freedom
Respect for rules Low regard for rules
A open and transparent
society
A close society, lacking in
transparency
Multi-cultural society Mono-cultural societyA society excelling in creativity
and versatility
An orderly and uniform
society
Individual decisions over consensus Dependence on consensus
A society which pursue that ideal A society which pursue harmonywith reality
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Cultural Differences between Japanese and American
Business
American Business
Game concept: Business is a game in
pursuit of profits under the rules of laws
and contracts
Efficiency-oriented and approximate
accuracy simplicity, clarity, and quickness
Quantity-oriented
Short-term performance evaluation
Easy layoffs, dismissals of employees, and
selling of businesses
Japanese Business
Mutual trust-oriented business:
business is based on trusting relationship
among people rather than the rules of game
Highly precision-oriented and
perfectionism-high dependency on human
awareness
Quality-oriented
Mid-to-long term evaluations
Job security
SOURCE : Norihiko Shimizu, Todays Taboos may be
gone tomorrow, Tokyo Business, February 1995, p.51.
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Cultural Differences between Japanese and American
Business
American Business Japanese Business
Top down management
Low mutual dependence between employers
and employees
Control of business by stockholders and the
management
Management by force
Heavy dependence on machinery and
technology, vs. Light dependence on human
resources
Excellent software-based technology
development
Heavy dependence on human resources bottom-
up management and teamwork
High mutual dependence between employers and
employees
Joint management of business by Employees and
Employees
Management by motivation
Heavy dependence on human resources
Inadequate software development ability
Strong loyalty and fewer incentives
Limited loyalty and incentive-oriented work
ethics
SOURCE : Norihiko Shimizu, T
odaysT
aboos may be gonetomorrow, Tokyo Business, February 1995, p.51.
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Corruption Perception Index* (Selected Countries 1997&1996)
Country CPI 1997 CPI 1998 Country CPI 1997 CPI 1998
Denmark (1) 9.94 9.33 Italy (30) 5.03 3.42
Finland ((2) 9.48 9.05 S. Korea (34) 4.29 2.96Norway (7) 8.92 8.87 Brazil (36) 3.56 2.96
Singapore (9) 8.66 8.8 China (41) 2.88 2.43
Switzerland (11) 8.61 8.76 India (45) 2.75 2.63
USA (16) 7.61 7.66 Mexico (47) 2.66 5.5
France (20) 6.66 6.96 Russia (49) 2.27 2.58Czech Rep. (27) 5.2 5.37 Nigeria (52) 1.76 0.69
The ranking is based on 52 countries studied
The maximum 10 would be corrupt free country
Bribery
Extortion
Subornation
Lubrication
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Three Ethical Principles
Principle Question
Utilitarian Ethics Does the action optimize the
common good or beneficial of all
constituencies?
Rights of parties Does the action respect the rights of
the individuals involved?
Justice of fairnessDoes the action respect the canonsof justice or fairness to all parties
involved?
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Ethical and social responsibility issues in multinational
business decisions
Does the decision efficiently optimize the common good and
benefits of :
The business firm (Stockholders, Profit, Growth, etc)
Society (T
he good of life, Culture, Order, Justice, etc) The economy (Economic growth, Production and Distribution
of goods/services) The individual (Freedom, Health and Welfare, Opportunity,
Human dignity
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Cross-Culture Training Methods (Ascending Order)
Area Briefing
Books Sensitivity Training
Field Trips
Experiential
Field Experience
Impact of Globalization
Globally competent employees
Ability to work with diverse cultures
Overcoming the self-reference criterion (SRC)
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Cross- Cultural Negotiations
Non-Task sounding
Task-Related Information Exchange
Persuasion
Concessions and agreement
T
ry to access 3 videos produced by Big world UW-W library
Cross-cultural communicating
Cross-cultural understanding
Cross-cultural negotiating
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Selected Reference on Culture and Business Practices
Around the World
Video series from Big world : Cross-cultural understanding*
Cross-cultural communicating*Cross-cultural negotiating*
Dos and taboos around the world by Roger Axtell , Wiley** Culturgrams Vol. I & II, Brigham Young University Press, 1999**
International Business Etiquette by Ann Marie Sabath, Career
Press Latin America ** Europe **Asia **
World Trade Press
Doing Business in Series* Cross-Cultural business behavior by R.R. Gesteland ,
Copenhagen Business School Press**
Richard Hill : We Europeans. Europublications **
: Euromanagers and Matians. Europublications **
* Available at UW-W Library ** Available at GBRC (C2018)