Culture in a Global Economy

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Culture in a global economy is a critical factor in international business. While many business transactions make economic sense, the ability to successfully fulfill profitable relationships often depends on being able to reconcile international differences arising from separate cultures. Understanding cultural differences is an initial step, but managers also need to engage in learning processes to develop international cultural competence. Cross-cultural training enables managers to acquire both knowledge and skills to fulfill the role of cultural agents. Advancing cultural intelligence and international cultural competence is critical to the future success of managers and leaders working in a global context. Culture, as defined in Kroeber and Kluckhohn's classic, Culture: A Critical Review of Concepts and Definitions, is the "patterned ways of thinking, feeling, and reacting, acquired and transmitted mainly by symbols, constituting the distinctive achievements of human groups, including their embodiments in artifacts; the essential core of culture consists of traditional (i.e., historically derived and selected) ideas and especially their attached values" (1952). In international management research, Hofstede defined culture as "…the collective programming of the mind which distinguishes the members of one group or category of people from those of another" (1991). Many other definitions of culture are available. Common elements in the definitions are the shared and dynamic nature revolving around norms, values, and beliefs that are expressed in different behaviors, artifacts, and interactions. Within the context of international business, culture involves multiple levels that span from broad to narrow and different dimensions. On a broad level, supranational culture differences span multiple countries and include regional, ethnic, religious, and linguistic dimensions. On a national level, governments create sovereign boundaries to distinguish different nations with political and legal regulatory systems. In the business literature, most research on culture uses the nation-state as a proxy for culture. Other levels of analysis for culture include subcultures, as well as professional and organizational groups. In addition to various levels, culture also involves different dimensions. Four major classifications schemes provide frame-works for identifying international differences in culture. First, anthropologist Edward T. Hall (b. 1914) classified cultural differences along five different dimensions: time, space, things, friendships, and agreements. Second, Kluckhohn and Strodtbeck developed a cultural orientations framework that identified six issues, with variations in each one: relation to nature, relationships among people, mode of human activity, belief about basic human nature, orientation to time, and use of space. Third, Hofstede's framework is one of the most prominent one in international management. He identified four major dimensions of cultural values—individualism-collectivism, power distance, uncertainty avoidance, and masculinity-femininity—along with a fifth dimension subsequently identified as Confucian Dynamism, or long-term orientation. Finally, Trompenaars and Hampden-Turner extended Hofstede's classification with seven dimensions that include universalism versus particularism, collectivism versus individualism, affective versus neutral relationships, specificity versus diffuseness, achievement versus ascription, orientation toward time, and internal versus external control. The four different classifications provide different and overlapping approaches to organize the many complex dimensions that make up culture. A major premise underlying the need for organizing different cultural dimensions is a means to avoid costly mistakes in conducting international business. The different classifications provide a map to make sense of the complex nature of culture. Important caveats to keep in mind are that...
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