chapter 4: the role of culturecontents.kocw.net/kocw/document/2015/chungbuk/you… · ·...

Chapter 4: The Role of Culture

Week 4 Day 1

Su Jin Victoria Yeon, Copyright 2015

Learning Objectives


Discuss the primary characteristics of culture Describe the various elements of culture and provide examples of how they

influence international business Identify the means by which members of a culture communicate with each

other Discuss how religious and other values affect the domestic environments

in which international business operate Describe the major cultural clusters and their usefulness for international

manager Explain Hofstede’s primary findings about differences in cultural values Explain how cultural conflicts may arise in international business

Importance of Culture in International Business


Importance of culture Virtually all facets of an international firm’s business may be affected by cultural

variation International business firms need to recognize that foreign business customers, values

and definitions of ethical behavior differ vastly from their own Culture can confer a competitive advantage or disadvantage on fimrs

Definitions and Characteristics of Culture


Definitions of Culture The collective programming of the mind that distinguishes the members of one

group or category of people from others (Hofstede, 2010) “complex whole which includes knowledge, belief, art, morals, law, custom and any other

capabilities and habits acquired by man as a member of society” (Nakata and Huang, 2002) “A group's shared set of distinct basic assumptions, values, practices, and artifacts that

are formed and retained over a long period of time” (Taras, Rowney and Steel, 2009) The collection of values, beliefs, behaviors, customs, and attitudes that distinguish one

society from another (Out Text Book; Griffin and Pustay, 2013)

Definitions and Characteristics of Culture


Characteristics of Culture Reflects learned behavior

Transmitted from one member of a society to another Transmitted inter-generationally

Inter-related Adaptive

The culture changes in response to external forces that affect the society

Shared by members of the society Defines the membership of the society Individuals who share a culture are members of a society & those who do not, are outside the

boundary

Elements of Culture


Culture

Language

Communication

ReligionValues and Attitudes

Social Structure

Culture Determines how its members

communicate and interact with each other

Social Structure


Individuals, families, and groups Societies differ in the way they define family and in the relative importance they place on the

individual’s role within groups E.g. view of family ties and responsibilities US: focuses on the nuclear family; Arabs: the extended family

Differing social attitudes Reflected in the importance of the family to business

　 E.g. family owned business – more common in Asia and Arabic firms; US firms discourage nepotism

Differ in the importance of individual relative to the group E.g. US schools: focus on self-esteem, building up individuals’ talents Japanese schools: unity, loyalty and harmony are highly valued

　 E.g. American TV show Apprentice tried to enter Japanese market

Social stratification Categorization of people to some extent on the basis of their birth, occupation, educational

achievements etc. The importance of social stratification varies by country

Social stratification is less important in other societies

Social Stratification


Social strata Defined on the basis of characteristics

Family background, occupation, income etc. Differences in social stratification

With regard to the degree of mobility between social strata

With regard to the significance attached to social strata

Social Mobility The extent to which individuals can move out of

the strata into which they are born Caste system

A closed system of stratification in which social position is determined by the family into which a person is born, and change in that position is usually not possible during their lifetime　 E.g. India

Class system A less rigid from social stratification in which social

mobility is possible A form of open stratification in which the position

a person has by birth can be changed through his/her achievements or luck　 E.g. Great Britain: Upper, upper middle, middle,

working class / America / China

Significance Class consciousness

A condition where people tend to perceive themselves in terms of their class background

Shapes their relationships with members of other classes

Business implication Conflict between management vs. labor classes Lack of cooperation

Language


Language Shapes individuals’ perceptions of the world

E.g. Research experiment in Hong Kong with 153 undergraduate students, bilingual in English and Chinese 　 divided into two groups

#1: assignment written in English; #2 assignment written in Chinese (extra precaution for perfect translation)The answers given by the two groups differed significantly 　 The language itself altered the nature of the information being conveyed

Provides clues about the cultural clues of the society & aids acculturation E.g. The existence of formal and informal version of “you” in French, German, and Spanish

The presence of more than one language group Countries dominated by one language group (e.g. Korea) 　 more homogeneous society Countries with multiple language groups (e.g. Senegal) 　 more heterogeneous

Language as a borderline of different culture E.g. English Canadians prefer soaps that promises cleanliness French Canadians prefer soaps with pleasant- or sweet-smelling soap

Language


Language as a competitive weapon Linguistic ties often create important competitive advantages The ability to communicate is important in conducting business transaction

Commerce among Australia, Canada, NZ, the UK, the US　 E.g. American firm, a Soquel, manufacturer of bicycle helmets decided to manufacture its European products in Ireland 　 Spain’s Telefonica moved into Latin America

Lingua Franca The predominant common language of international business 　 English

　 Some countries with multiple linguistic groups have adopted English as an official language to facilitate communication amongthe diverse groups E.g. India and Singapore

The existence of cross-cultural misunderstanding The interpretation of the meaning of common words

　 E.g. American “I’d like something done by next Thursday.” 　Thursday is the deadline　 Thailand might view it as a preference rather than a demand

The importance (advantage) of knowing (host nation’s) native language Language serves as a window on the culture of a society

Gives clues about cultural norms and attitudes

Language


Translation Translation problems creating marketing disaster

E.g. KFC’s “Finger Lickin’ Good” into Chinese 　 “Eat Your Fingers Off.” Back-translation

One person translates a document, then a second person translates the translated version back into the original language

One way to minimize translation problem; Provides a check The use of common words “Simplified English”

　 E.g. Caterpillar’s communication with its diverse international users

Saying No Words may have different meanings to persons with diverse cultural backgrounds

E.g. Spanish word “mañana” 　 tomorrow In parts of Latin America the word is used to mean “some other day – not today”

The use of “yes” and “no” E.g. American: clear yes and no Asians: “no” is considered very impolite or inhospitable 　 “presents many difficulties” “further studies”

Communication


Misunderstanding caused by different cultural filters E.g. Boeing & its Japanese supplier: “Mirror finish”

Non-verbal Communication According to some researchers, 80% of communication is non-verbal Non-verbal cues (gestures)

Nodding heads Thumbs up: obscene in Greece Okay sign: a vulgar sexual invitation in Greece and Turkey

Personal space The Western vs. Korea vs. Latin America E.g. People discussing business at a party; American & Saudi Arabian

The meaning of silence E.g. Americans tend to abhor silence at meetings 　 reflects inability to communicate or emphasize Japan silence may indicate that the individual is thinking

Gift-giving and Hospitality


Gift-giving　 Japanese business culture: gifts are opened in private not to cause the giver to lose face in case if the gift

is too expensive or too cheap relative to the gift in return　 Arabic business culture: gifts are opened in public for everyone for be aware of the giver’s generosity

Hospitality　 Americans: seek the most conspicuous table in a fancy restaurant 　 so show their status　 Chinese: a private dining room of an expensive restaurant 　 privacy

Delivering a bad news　 American: bad news is delivered as soon as it is known　 Korea: bad news is delivered at day’s end so that the recipient will not ruin the day but usually hinted at

Religion


Protestant ethic Max Weber – a German sociologist, in 1904

Made a connection between Protestant ethics and “the spirit of capitalism” Associated with the rise of capitalism in Western Europe

Protestant ethic Stresses individual hard work, frugality, and achievement as means of glorifying God “The Protestant ethic makes a virtue of high saving rates, constant striving for efficiency, and reinvest

ment of profits to improve future productivity, all of which are necessary for the smooth functioning of a capitalist economy.” (text book, p.119)

“You cannot serve both God and Money” (Jesus) – Luke 16: 13 (The Bible) “Whoever is generous to the poor lends to the Lord, and he will repay him for his deed.” (Proverbs 19:17)

Hinduism Emphasizes spiritual accomplishment

To achieve union with Brahma, more ascetic and pure lives as one’s reincarnated soul goes through cycles of death

Little support for capitalistic activities

Religion & Business


Islam Supportive of capitalism Places more emphasis on the individual's obligation to society

Profits earned in fair business dealings are justified All Muslims are expected to act charitably, justly and humbly

Religion affecting business The roles of individuals

E.g. the caste system of Hinduism; Islam and women’s job opportunities

The way products are sold E.g. Nigerian advertisements 　 North (Muslim) vs. South (Christian)

The types of products consumers may purchase

Values and Attitudes


Culture affects and reflects the secular values and attitudes of the members of a society Value

The principles and standards accepted by the members Attitude

Encompass the actions, feelings, and thoughts that result from the values Cultural differences in

Time (Attitudes about time) Anglo-Saxon cultures – Time is important “time is money” 　 punctual, meetings start on time Latin American culture – few minutes (45 minutes) late is not unusual Arab cultures – meetings often start later than the scheduled time, often interrupted by family and friends

Age (Attitude towards age) US: to identify young “fast-trackers” Asians & Arab cultures: age is respected and manager’s stature is correlated with age

　 E.g. Negotiations between American and Asian

Education – formal system of public and private education Status – by which status is achieved

Whether it is inherited vs. can be accomplished

Scholarly Works on “Culture”


Hall’s Low-Context-High-Context Approach High-Context culture

The context in which a conversation occur is just as important as the words that are actually spoken

Cultural clues are important in understanding what is being communicated 　 E.g. Asians, Arab countries

Low-Context culture The words used by the speaker explicitly convey the speaker’s message to the listener 　 E.g. Anglo-Saxon countries

In Business Meetings and/or negotiation situations　 High context: interested in relations, presence of lawyer would be viewed as a sign of distrust　 Low context: specific terms of a transaction, presence of lawyer

The Cultural Cluster Approach


Cultural Cluster Technique for classifying and making sense of national cultures Similarities exist among many cultures Comprises countries that share many cultural similarities Based on language similarities

Link with business Many IB can utilize the cultural cluster approach in formulating their

internationalization strategies Closeness of culture may affect the firms use to enter foreign markets

Hofstede’s Dimensions


- Studied 116,000 IBM employees

*Original Four Dimensions from Hofstede’s National Cultural Dimension (1980) Individualism – Collectivism (Social Orientation) Power Distance (Power Orientation) Avoidance of uncertainty (Uncertainty Orientation) Masculinity – Femininity (Goal Orientation)

**Additional Dimensions which later Hofstede Adopted Long Term Orientation [Chinese Value Survey] (Time Orientation)

From Michael Harris Bond and colleagues in 1991 Conducted a study among students in 23 countries using a survey instrument developed with Chinese

employees and managers. Initially called Confucian dynamism

Indulgence – Restraint In 2010, by Michael Minkov Minkov's World Values Survey data analysis of 93 representative samples of national populations

Individualism – Collectivism (Social Orientation)


Social Orientation A person’s beliefs about the relative importance of the individual and the group to which that

person belongs Individualist Society The society with which the interest of the individual prevails over the interest of the group High degree of self-respect and independence

Collectivist Society The society with which the interest of the group prevails over the interest of the individual High degree of social harmony, well-defined social networks Individual behavior in such cultures is strongly influenced by the emotion of shame Group members try to fit into their group harmoniously with a minimum conflict

Business Hiring, payment scheme, CEO’s pay, job mobilit

Power Distance (Power Orientation)


Power distance The extent to which the less powerful members of institutions and organizations within a country

expect and accept that power is distributed unequally Power respect (High Power Distance)

People in a culture tend to accept the power and authority of their superiors’ positions in the hierarchy Respect superiors’ right to that power

　 Hofstede: France, Spain, Mexico, Japan, Brazil, Indonesia and Singapore

Power tolerance (Low Power Distance) Attach much less significance to a person’s position in the hierarchy People are more willing to question a decision or mandate from someone at a higher level Believe that hierarchies exist to solve problems and organize tasks within organizations

　 Hofstede: US, NZ, Germany, Norway, Denmark, Ireland, Israel and Austria

PD and Business Negotiating with each other: a firm from a power tolerant & respect company

Sending junior managers, calling names KAL pilots in 1990s (the second-in-command pilots)

Avoidance of uncertainty (Uncertainty Orientation)


Uncertainty avoidance (Uncertainty orientation) the extent to which the members of a culture feel threatened by ambiguous or

unknown situations Uncertainty acceptance (Low Uncertainty Avoidance)

Stimulated by change and thrive on new opportunities Ambiguity is seen as a context within which an individual can grow, develop and carve out new

opportunities

Uncertainty avoidance (High Uncertainty Avoidance) Dislike ambiguity and will avoid it whenever possible Change are seen as undesirable

Source: from https://culcesfandia.wordpress.com/author/alirezae90/


Masculinity – Femininity (Goal Orientation)


Goal Orientation (book) The manner in which people are motivated to work toward different kinds of goals

Masculine society When emotional gender roles are clearly distinct Men are supposed to be assertive, tough, and focused on material success Women are supposed to be more modest, tender and concerned with the quality of

life Feminine society When gender roles over lap Both men and women are supposed to be modest, tender, and concerned with the

quality of life

Long Term Orientation (Time Orientation)


Derived from Chinese Value Survey done by Michael Bond in 1991 Confucius dynamism Time Orientation The extent to which members of a society adopt a long-term vs. short-term outlook

on work, life, and other aspects of society Long-term orientation

The fostering of virtues oriented toward future rewards Perseverance and thrift　 E.g. East Asian countries

Short-term orientation The fostering of virtues related to the past and present Respect for tradition, preservation of “face” and fulfilling social obligations　 E.g. Anglo Saxon countries

Indulgence vs. Restraint


Subjective well-being vs. survival Happiness, life control, and importance of leisure

Indulgence A tendency to allow relatively free gratification of basic and natural human desires

related to enjoying life and having fun

Restraint A conviction that such gratification needs to be curbed and regulated by strict social

norms

Other Scholarly works on Culture


Hofstede (1980; 1991; 2010) – 6 dimensions Collectivism-Individualism Power Distance Masculinity-Feminity Uncertainty Avoidance Long vs. Short term orientation (since 1991 – Michael Bond); Asian

Values; Confucius Dynamism Indulgence-Restraint (since 2010- Michael Minkov); World Value

Survey

Schwartz (1994) – 6 culture-level value types Conservatism Intellectual and affective autonomy Hierarchy Mastery Egalitarian commitment Harmony

Universal structure of values Identifies universal psychological values and proposes a

theory of the universal content and structure of values

Trompenaars and Turner (1997; 2012) – 7 dimensionsFive dimensions of human relationships

Universalism vs. particularism (rules vs. relationships) Individualism vs. communitarianism (the individual vs. the group) Neutral vs. affective (the degree to which feelings are expressed) Diffuse vs. specific (the degree of involvement) Achievement vs. ascription (how status is accorded)

Two additional dimensions Sequential time vs. synchronous time (how we manage time) Inner vs. outer direction (how we relate to nature)

Other Scholarly works on Culture


Inglehart (1997) – World Value Survey Traditional values vs. Secular-rational values Survival values vs. Self-expression values

GLOBE (Global Leadership and Organizational Behavior Effectiveness) (House et. al, 2004) – 9 dimensions Power distance Uncertainty avoidance Institutional collectivism In-group collectivism Assertiveness Gender egalitarianism Future orientation Humane orientation Performance orientation

Shavitt et al. (2006) Horizontal vs. Vertical nature of cultures IND-COL Horizontal Individualistic (self-direction value), Vertical Individualistic (power values), Horizontal Collectivistic (benevolence values), Vertical C

ollectivistic (Conformity values)

Understanding Cultures


Ethnocentrism Judging another culture solely by the values and standards of one's own culture

Self-reference Criterion The unconscious use of one’s own culture to help assess new surroundings

Cross-cultural literacy Having knowledge about other cultures Ways to achieve cross-cultural literacy

Through personal experience of traveling around the world Talking and interacting with people from other cultures Published sources e.g. “Culturegrams”, “Country Studies”

Multi-cultural Community


Cultural Convergence Acculturation The process by which people not only understand a foreign culture but also modify

and adapt their behavior to make it compatible with that culture

Multi-cultural Nations Successful international businesspeople must recognize the attributes of the primary

national culture as well as any important subcultures in culturally heterogeneous societies

Changes in Cultural Boundaries


Craig & Douglas, (2006) “Beyond National Culture” Cultural interpenetration

Flows of information, ideas and products from one culture enter another transforming its nature Deterritorialization

A particular culture is no longer defined exclusively in terms of a specific geographic location Cultural contamination

A culture becomes tainted by elements of other cultures making it more difficult to identify the central “ethnie” core of the culture

Cultural pluralism Individuals within a culture exhibit elements of multiple cultures. Sometimes this is a product of a transition from one culture to another. It may also be a product of close contact with different cultures

Cultural hybridization A fusion of two or more elements from different cultures resulting in a new cultural element

Homework #6 – due next Friday


Read the case “Quacking up a Storm of Business” Answer the four case discussion questions Do not spend more than 2 pages answering the questions You may use bullet points Keep your answers brief but think! Type your answers

Due date: Friday, 27th of March by 11 a.m.

Group discussion Report #3 (due next Friday)


With your group members discuss; About fourth week reading About fourth week case And discuss based on case discussion questions

Discuss following statement“How would you evaluate your country on each of Hofstede’s dimensions? Why?”

Report due date: 27th of March by 11 a.m. Group report / Individual Report (sheets are downloadable from the

website http://ecampus.cbnu.ac.kr)

Case StudyQuacking Up a Strom of Business

Week 4 Day 2


Class Discussion


The Role of Culture


Discuss the following issue

“How would you evaluate your country on each of Hofstede’s dimensions? Why?”

Individualism-Collectivism (Social Orientation)Power Distance (Power Orientation)Uncertainty Avoidance (Uncertainty Orientation)Masculinity-Feminity (Goal Orientation)Long vs. Short Term Orientation (Time Orientation)Indulgence-Restraint

Case Study Discussion

Quacking Up a Storm of Business - AFLAC


Quacking Up a Storm of Business


AFLAC (an American insurance company that specializes in supplemental insurance) operations in the United States and Japan. Despite being an American firm, AFLAC is much larger and more successful in Japan than it has been in the United States. The case discusses recent moves by AFLAC as it works to maintain its dominance in Japan despite a more open regulatory environment.



AFLAC, despite significant growth in the U.S. over the years, is still relatively small ($4.4 billion in sales) compared to other insurance companies such as AIG, Prudential, or MetLife.

AFLAC’s assets in Japan are worth more than $54.1 billion. 25 percent of the Japanese population is estimated to have purchased AFLAC insurance. 72 percent of all of AFLAC’s business in done in Japan.

AFLAC’s strength in Japan is largely attributed to its distribution network comprised of 100,000 licensed sales associates and 18,400 independent insurance agencies.

AFLAC is a high-quality service provider (settling claims, on average, in less than two days) and has adapted its Japanese operations to fit local customs and practices.

AFLAC has also added U.S.-style innovations to its Japanese operations, such as giving stock options to its Japanese employees.



Changes in the Japanese regulatory environment (the regulatory Big Bang in 2001) – now allowing greater competition in the insurance business – threaten AFLAC’s once-protected dominant position.

In response to the regulatory changes, AFLAC has entered into a strategic alliance with Dai-ichi Mutual (the second largest insurance company in Japan) and has introduced its famous duck to the Japanese market where the translation for “quack” is “gaga.”



AFLAC introduced the AFLAC duck in the US market to build brand awareness there. However, AFLAC’s brand awareness is very high in Japan. Should AFLAC use the same advertising campaign in Japan as it does in the United states?

Is there any value to having identical advertising in both markets? Having introduced the maneki neko duck in Japan, should it now introduce it in

the US market as well?



How important is it for AFLAC to adapt its business practices to the Japanese way of doing things?

Should AFLAC act more Japanese or more American in doing business in Japan?



AFLAC built its dominant position in the Japanese supplemental insurance market because Japanese regulators actively discouraged new entrants into this market. The Financial Big Bang policy now encourages new entrants into the supplemental insurance market.

What has AFLAC done to protect its market position? What else can AFLAC do?



AFLAC is a rarity among US companies inasmuch as the Japanese market accounts for more than 70% of its business.

Does this reliance on the Japanese market create any special challenges for AFLAC?

Does it present any unique opportunities for the company?

Homework #6 – due next Wednesday


Read Chapter 5 – Ethics and Social Responsibility in International Business Answer following questions

1. What are ethics?2. What role does culture play in the formation of ethics?3. What is social responsibility?4. What is the difference between ethics and social responsibility?5. Identify the major areas of social responsibility for international business.6. What are the four general approaches a firm can take with regard to social responsibility?7. What is a whistle-blower?

Do not spend more than 2 pages (Type your answers) Try and keep your answers brief Due date: Wednesday, 1st of April by10 a.m.

Homework #7 – due next Friday


Read the case “A Pipeline of Good Intentions” Answer the first four case discussion questions Do not spend more than 2 pages answering the questions You may use bullet points Keep your answers brief but think! Type your answers

Due date: Friday, 3rd of April by 11 a.m.

Group discussion Report #4 (due next Friday)


With your group members discuss; About fifth week reading About fifth week case And discuss based on case discussion questions

Discuss following statement“Do you think social responsibility for a multinational corporation is something best managed locally or best managed globally?”

Report due date: 3rd of April by 11 a.m. Group report / Individual Report (sheets are downloadable from the

website http://ecampus.cbnu.ac.kr)

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