Klm Case Study
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c h a p t e r 5 The Cultural Environment of International Business
Learning Objectives In this chapter, you will learn about:
1. The challenge of crossing cultural boundaries 2. The meaning of culture: foundation concepts 3. Why culture matters in international business 4. National, professional, and corporate culture 5. Interpretations of culture 6. Key dimensions of culture 7. Language as a key dimension of culture 8. Culture and contemporary issues 9. Managerial guidelines for cross- cultural success
124
American Football . . . in Europe?
There are few things more representative of U.S. culture than American football. It is an extravaganza, complete with exciting halftime shows and peppy cheerleaders. The game exemplifies national pride. The national anthem is played, flags are unfurled, and uniformed players charge up and down the field like an army in the throes of often violent conflict. The teams’? huddles divide the game into small plan- ning sessions for the next play.
In the United States, the National Football League (NFL) oversees the sport and, like any successful business, wants to score in new markets. The NFL first tackled Europe in 1991, with plans to establish American football there. After years of failed attempts, NFL Europe emerged as six teams, five of which were based in Ger- many (such as the Berlin Thunder, the Cologne Centurions, and the Hamburg Sea Devils). Earlier teams established in Spain had failed.
Why did American football triumph in Germany but fail in Spain? An excellent metaphor for Spanish culture is the bullfight, an ancient pursuit. In tradition-bound
Spain, bullfights are often held in 2,000-year-old Roman amphitheaters. Rather than a competitive sport, bullfighting is a ritual and an art. It is the demonstration of style and courage by the matador, the hero who fights the bulls. If the matador has per- Pg2Pg2CAVUMC05_124-157hr 10/10/07 1:41 PM Page 125
formed well, he receives a standing ovation by the crowds, who wave white hand- kerchiefs or throw hats and roses into the ring. The bullfight symbolizes Spanish cul- ture by combining a passionate celebration of life with an elaborate system of ritu- als, a grandiose and artistic spectacle with blood, violence, and danger. In the hearts of the Spanish people, American football cannot attain such heights. What accounts for American football’?s early success in Germany? For one, the sport strongly emphasizes the traditional German traits of rules and order. In Germany, rules are many and conformity is valued. For instance, German parks occasionally have sections marked by signs where you are “?permitted”? to throw a stick to your dog. Germans can also be very time conscious. They know how to allocate time efficiently, and frown upon tardiness. The tendency is similar to American football, where the stop-and-go pace is timed to the second. A popular metaphor for German culture is the symphony. In fact, two of the most revered symphonic composers—?Bach and Beethoven—?were German. Germans are drawn to the symmetry and order of the symphony. A conductor brings together the distinctive talents of individual performers to produce a unified sound. Like a sym- phony, football depends on a strong leader—?the quarterback—?who unites the 125 Pg3Pg3CAVUMC05_124-157hr 10/10/07 1:41 PM Page 126
126 Chapter 5 The Cultural Environment of International Business distinctive talents of the players so they perform as one. At halftime, the crowd is treated to the spec- tacle of a huge marching band and numerous other performers, all synchronized to the highest degree. Preparation, timing, precision, confor- mity, and an understanding of the individual’?s con- tribution to the “?score”? underlie both symphonic performances and American football. The major reason for NFL’?s failure in Europe has been its inability to win over Europeans shaped by ancient cultures and wedded to soc- cer (called football in most of the world). Soccer is woven into the fabric of European society. It is an outlet for inter-European rivalries that in ear- lier times manifested as armed conflict. Although superstars such as David Beckham emerge, soc- cer emphasizes a group effort—?unity aimed at achieving a common goal. The United States is a mixture of many cul- tures that form a multifaceted collection of ethnic identities. By contrast, Europe is home to many more ethnicities that lack the integration of the United States. Europeans have made great strides toward creating an all-encompassing
European culture, but the difficulties encoun- tered with unification reveal how individual nations are unwilling to give up their cultural identities in favor of some larger European
Union ideal. Thus, the appeal of American foot- ball has varied from country to country as a function of cultural differences. Most Europeans view the sport as a perversion of soccer. It rep- resents the American headstrong attitude, with emphasis on violent conflict. From the perspec- tive of many Europeans, the NFL tried to push an inferior product on a market long loyal to soccer. The NFL spent countless dollars promot- ing its teams, largely to no avail. In the end, national culture triumphed. In 2007, the NFL closed its European franchise. < Sources: Van Bottenburg, M. (2003). Thrown for a Loss: American
Football and the European Sport Space. American Behavioral Sci- entist 46 (11): 1150-62; NFL Europe. Retrieved November 2005 from en.wikipedia.org/wiki/NFL_Europe; National Football League (NFL Europe). Retrieved November 2005 from www.nfleurope.com; White, E. (2003). “?Is Europe Ready for Some Football?—?NFL Drafts Dolls, Actors in $1.6 Million Campaign to Promote the Super
Bowl.”? Wall Street Journal, Jan. 15, B4; Gannon, M. J., and Associ- ates. (1994). Understanding Global Cultures: Metaphorical Jour- neys Through 17 Countries. Thousand Oaks, CA: Sage.
The Challenge of Crossing Cultural Boundaries In cross-border business, we step into different cultural environments characterized by unfamiliar languages and unique value systems, beliefs, and behaviors. We encounter customers and business partners who display differing lifestyles, norms, and con- sumption behaviors. These differences influence all dimensions of international busi- ness. Often, they get in the way of straightforward communication, representing one of the four risks associated with international business that we introduced in Chapter 1. Cross-cultural risk A situation or event where a cultural miscommunication puts some human value at stake. Culture The learned, shared, and enduring orientation patterns in a society. People demonstrate their culture through values, ideas, attitudes, behaviors, and symbols.
We highlight these risks in Exhibit 5.1. Cross-cultural risk is defined as a situation or event where a cultural miscommunication puts some human value at stake. Cross-cultural risk arises routinely in international business because of the diverse cultural heritage of the participants. Culture refers to the learned, shared, and enduring orientation patterns in a society. People demonstrate their culture through values, ideas, attitudes, behaviors, and symbols.
Culture affects even simple greetings and partings. Greeting ceremonies are a deeply embedded cultural marker and evolve over many centuries. They specify such behaviors as how far apart to stand, what to say, and whether or not to touch or smile. The ceremonies may vary as a function of the age, gender, or status of the greeters. What people say in greeting each other also varies. For example, in China, friends express thoughtfulness by asking each other whether they have had their meal yet. In Turkey, a typical greeting is “?What is new with you?”? When meeting a person for the first time, the common question is “?Where in the country do you come from?”? in an effort to establish some commonality with the other party. The Japanese, who still exercise formal greeting and parting rituals, routinely apologize to the other party just before ending a telephone conversation.
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Commercial Risk
Risks in International Business
Country Risk
The Challenge of Crossing Cultural Boundaries 127 Exhibit 5.1 The Four Major Risks in International Business
Currency
(Financial Risk)
Unlike political, legal, and economic systems, culture has proven very diffi- cult to identify and analyze. Its effects on international business are deep and broad. Culture influences a range of interpersonal exchange as well as value-chain operations such as product and service design, marketing, and sales. Managers must design products and packaging with culture in mind, even regarding color. While red may be beautiful to the Russians, it is the symbol of mourning in South Africa. What is an appropriate gift for business partners also varies around the world. While items such as pens are universally acceptable, others may not be appropriate. Examples include sharp items such as knives or scissors, which imply cutting off the relationship or other negative sentiments, chrysanthemums, which are typically associated with funerals, and hand- kerchiefs, which suggest sadness. Most companies want their employees to learn about other cultures and acquire a degree of cross-cultural profi- ciency. In California’?s Silicon Valley, where IT firms are con- centrated, Intel offers a seminar to its staff called “?Working with India.”? The seminar aims to help employees work more effectively with the estimated 400,000 Indian nationals in the valley. Several other Silicon Valley firms offer similar training. Another computer firm, AMD, flies IT workers from India to its facilities in Texas for a month of cultural training with U.S. managers. Workers role-play, pretending to be native Indians, and study subjects like Indian political history, Indian movies, and the differences between Hin- duism and other Indian religions. Training includes lessons on assigning work (Indian workers are likely to agree to aggressive timelines and yet may not inform a manager when falling behind, so managers should make sure
Limited interaction between soci- eties, such as native Kenyans and Russians or Europeans, can mag- nify differences in values, behav- iors, and symbols. In contrast, these differences are minimized with increased interaction. Pg5Pg5CAVUMC05_124-157hr 10/10/07 1:41 PM Page 128
128 Chapter 5 The Cultural Environment of International Business timelines are reasonable), preparing food (to help those who practice Jainism, company cafeterias should clearly distinguish vegan from vegetarian food), and socializing (since it’?s polite to initially decline an invitation to a colleague’?s home, managers should offer more than once).1 Ethnocentric orientation Using our own culture as the standard for judging other cultures.
Polycentric orientation A host-country mindset where the manager develops a greater affinity with the country in which she or he conducts business. Geocentric orientation A global mindset where the manager is able to understand a business or market without regard to country boundaries.
Cross-cultural encounters are increasingly common. Maurice
Dancer (far left), head concierge at The Pierre hotel in New York, interacts with a wide variety of international cultures every day, without even leaving the United
States.
Cross-cultural risk is exacerbated by ethnocentric orientation—?using our own culture as the standard for judging other cultures. Most of us are brought up in a sin- gle culture; we have a tendency to view the world primarily from our own perspec- tive. Ethnocentric tendencies are a characteristic of virtually every society, and entail the belief that one’?s own race, religion, or ethnic group is somehow superior to oth- ers. Howard Perlmutter described ethnocentric views as “?home-country orienta- tion.”?2 He argued that managers engaged in cross-border business should give up their ethnocentric orientations in favor of a polycentric or geocentric orientation. Polycentric orientation refers to a host-country mindset where the manager devel- ops a greater affinity with the country in which she or he conducts business. Geoc- entric orientation refers to a global mindset where the manager is able to understand a business or market without regard to country boundaries. Geocentric tendencies can be likened to a cognitive orientation that combines an openness to, and aware- ness of, diversity across cultures.3 Managers with a geocentric orientation make a deliberate effort to develop skills for successful social behavior with members of other cultures.4 They develop new ways of thinking, learn to analyze cultures, and avoid the temptation to judge different behavior as somehow inferior. They learn to appreciate the best that humans have produced, no matter where it was developed.5 Unfamiliar cultures may be ever present in domestic as well as international dealings. Buyers visit from abroad to make deals, the firm may source from sup- pliers located in distant countries, and employees increasingly have diverse cul- tural backgrounds. For example, Maurice Dancer is the head concierge at The
Pierre—?a luxury hotel in New York City. In 2005, Taj Hotels, Resorts and Palaces, a subsidiary of Tata, the largest company in India, acquired the management con- tract of The Pierre. In addition to adapting his management style to fit the corpo- rate culture of the new owners, Maurice must also adapt to certain aspects of
Indian culture, demonstrated in Taj’?s administrative style. Maurice also manages employees from Asia, Europe, and Latin America. These employees bring idio- syncrasies to their jobs characteristic of their home countries. For example, Asians tend to be reserved when dealing with customers. In the past, Maurice had to encourage Asian subordinates to be more outgoing. Finally, much of The Pierre’?s clientele is foreign-born. Without even leaving the United States, Maurice inter- acts with a wide variety of foreign cultures every day.
The cross-cultural integration of firms like The Pierre is yet another manifesta- tion of globalization. But globalization is leading to convergence of cultural values as well. While people around the world are not inclined to renounce their cultural values, common norms and expectations of behavior are gradually emerging. In addition, many universal values apply to cross-cultural encounters. Keep in mind that people every- where are appreciative if you treat them with respect, try to speak their language, and show genuine interest in them. Managers regularly risk committing embar- rassing cultural blunders. Cross-cultural mis- communication can ruin business deals, hurt sales, or harm the corporate image. In this chapter, we address the risks that cultural miscommunica- tion can pose in cross-cultural encounters. Today, developing an appreciation of, and sensitivity for, cultural differences has become an imperative for any manager. Pg6Pg6CAVUMC05_124-157hr 10/10/07 1:41 PM Page 129
The Meaning of Culture: Foundation Concepts 129 The Meaning of Culture: Foundation Concepts A broad definition of culture was offered by Herskovits6 as “?the human made part of the environment.”? Culture incorporates both objective and subjective elements.
Objective or tangible aspects of culture include tools, roads, television program- ming, architecture, and other physical artifacts. Subjective or intangible aspects of culture include norms, values, ideas, customs, and other meaningful symbols. Geert Hofstede,7 a well-known Dutch organizational anthropologist, views culture as a “?collective mental programming”? of people. The “?software of the mind,”? or how we think and reason, differentiates us from other groups. Such intangible orientations shape our behavior. Another scholar, Harry Triandis,8 views culture as an interplay of sameness and differences; all cultures are simulta- neously very similar and very different. While as human beings we share many commonalities and universals, as groups of people or societies we exhibit many differences. For example, some cultures are more complex than others. Some cul- tures are more individualistic, while others are more collectivist. Some cultures impose many norms, rules, and constraints on social behavior, while others impose very few. Culture evolves within each society to characterize its people and to distin- guish them from others. First, it captures how the members of the society live—?for instance, how they feed, clothe, and shelter themselves. Second, it explains how members behave toward each other and with other groups. Third, it defines the beliefs and values of members and how they perceive the meaning of life. Having described what culture is, it is also important to define what culture is not. Culture is: •? Not right or wrong. Culture is relative. There is no cultural absolute. People of different nationalities simply perceive the world differently. They have their particular ways of doing things, and do not fit any one standard. Each culture has its own notions of what is acceptable and unacceptable behavior. For instance, in some Islamic cultures, a wife cannot divorce her husband. In many countries, nudity is entirely acceptable on TV. In Japan and Turkey, wearing shoes in the home is taboo. •? Not about individual behavior. Culture is about groups. It refers to a collec- tive phenomenon of shared values and meanings. Thus, while culture defines the collective behavior of each society, individuals often behave differently. For instance, in most countries, men wear their hair short. But a few mavericks have very long hair and stand out among their peers. In Australia, Canada, Europe, and the United States, some men wear makeup. Such nonconformist behavior does not represent the cultural values of the larger population. •? Not inherited. Culture is derived from the social environment. People are not born with a shared set of values and attitudes. Children gradually acquire specific ways of thinking and behaving as they are raised in a society. For example, in the United States, children usually acquire values of individualism and Christianity. But in China, children learn to depend on family members and acquire values based on Confucianism. Culture is passed from generation to generation—?from parents, teachers, mentors, peers, and leaders. Modern methods of communication, including transnational media, play an enormous role in transmitting culture. This process of learning the rules and behavioral patterns appropriate to one’?s society is called socialization. In other words, socialization is cultural learning. Socialization The process of Through socialization, we acquire cultural understandings and orientations that learning the rules and behavioral are shared by society. Acquiring cultural norms and patterns is a subtle process—? patterns appropriate to one’?s we adapt our behavior unconsciously and unwittingly. given society. Pg7Pg7CAVUMC05_124-157hr 10/10/07 1:41 PM Page 130
130 Chapter 5 The Cultural Environment of International Business The process of adjusting and adapting to a culture other than one’?s own is called Acculturation The process of adjusting and adapting to a culture other than one’?s own.
Exhibit 5.2 Culture as an Iceberg
acculturation. It is commonly experienced by people who live in other countries for extended periods; for example, expatriate workers.
More than any other feature of human civilization, culture signals the differ- ences among societies on the basis of language, habits, customs, and modes of thought. Yet most of us are not completely aware of how culture affects our behav- ior until we come into contact with people from other cultures.
Anthropologists use the iceberg metaphor to understand the nature of culture. Culture is likened to an iceberg: Above the surface, certain characteristics are visi- ble, but below, unseen to the observer, is a massive base of assumptions, attitudes, and values that strongly influence decision making, relationships, conflict, and other dimensions of international business. While we are conditioned by our own cultural idiosyncrasies, we are yet unaware of the nine-tenths of our cultural makeup that exist below the surface. In fact, we are often not aware of our own culture unless we come in contact with another one. Exhibit 5.2 illustrates the ice- berg concept of culture. The distinction is between three layers of awareness: high culture, folk culture, and deep culture.
Cultural Makeup That Is Visible High Culture
Cultural Makeup We Are Aware Of Folk Culture
Cultural Makeup We Are Unaware Of Deep Culture Pg8Pg8CAVUMC05_124-157hr 10/10/07 1:41 PM Page 131
Why Culture Matters in International Business 131 Why Culture Matters in International Business Effective handling of the cross-cultural interface is a critical source of a firm’?s competitive advantage. Managers need to develop not only empathy and tolerance toward cultural differences, but also acquire a sufficient degree of factual knowledge about the beliefs and values of foreign counterparts. Cross-cultural proficiency is paramount in many managerial tasks, including: •? Developing products and services •? Communicating and interacting with foreign business partners •? Screening and selecting foreign distributors and other partners •? Negotiating and structuring international business ventures •? Interacting with current and potential customers from abroad •? Preparing for overseas trade fairs and exhibitions •? Preparing advertising and promotional materials9 Let’?s consider specific examples of how cross-cultural differences may complicate workplace issues:10 Teamwork. Cooperating to achieve common organizational goals is critical to business success. But what should managers do if foreign and domestic nationals don’?t get along with each other? Try to sensitize each group to differences and develop an appreciation for them? Rally the groups around common goals? Explicitly reward joint work? Lifetime employment. Workers in some Asian countries enjoy a paternalistic relationship with their employers and work for the same firm all their lives. The expectations that arise from such devoted relationships can complicate dealings with outside firms. Western managers struggle with motivating employees who expect they will always have the same job regardless of the quality of their work. Pay-for-performance system. In some countries, merit is often not the primary basis for promoting employees. In China and Japan, a person’?s age is the most important determinant in promoting workers. But how do such workers perform when Western firms evaluate them using performance-based measures? Organizational structure. Some companies prefer to delegate authority to coun- try managers, creating a decentralized organizational structure. Others are charac- terized by autocratic structures with power concentrated at regional or corporate headquarters. Firms may be entrepreneurial or bureaucratic. But how can you get a bureaucratic supplier to be responsive about demands for timely delivery and performance? Union-Management relationships. In Germany, union bosses hold the same status as top-level managers and are required to sit on corporate boards. In general, European firms have evolved a business culture in which workers enjoy a more equal status with managers. This approach can reduce the flexibility of company operations if union representatives resist change. Attitudes toward ambiguity. In each country, nationals possess a unique capacity to tolerate ambiguity. For example, some bosses give exact and detailed instructions on work to be performed, whereas others give ambiguous and incomplete instructions. If you are not comfortable working with minimum guidance or taking independent action, then you may have difficulty fitting into some cultures. To gain a more practical perspective on culture’?s role in business, let’?s take the example of doing business in Japan. In the West, “?the customer is king,”? but in
Japan, “?the customer is God.”? Whenever customers enter retail stores in Japan, they are greeted with vigorous cries of “?Welcome”? and several choruses of “?Thank Pg9Pg9CAVUMC05_124-157hr 10/10/07 1:41 PM Page 132
132 Chapter 5 The Cultural Environment of International Business you very much”? when they leave. In some department stores, executives and clerks line up to bow to customers at the beginning of the business day. If customers have to wait in line—?which is rare—?they receive a sincere apology from store personnel. Japanese firms value maintaining face, harmony, and good standing with customers and the business community. Culturally, the most important Japanese values are tradition, patience, respect, politeness, honesty, hard work, affiliation, group consensus, and cooperation. Japan’?s orientation to customer service derives from its national culture. Good form, top product quality, and after-sale service are the keys to success for doing business in Japan. The Japanese put tremendous emphasis on providing excellent customer service. Japanese car dealers typically offer pickup and delivery for repair service and even make new-car sales calls to customers’? homes. Nissan and Toyota use customer satisfaction surveys to evaluate their dealers. In the banking industry, personal bankers maintain relationships by calling on customers at their offices or by canvassing entire neighborhoods. They may help customers sell or buy homes, find outlets for merchandise sales, provide tax advice, or locate tenants for new buildings. Japanese taxi drivers spend spare moments shining their cabs and often wear white gloves. Trains are scheduled down to the second. Japan is a small country (about the size of California) with nearly half the population of the United States. A densely populated and homogenous society has encouraged the development of a cohesive and polite culture. A focus on interpersonal relationships helps the Japanese avoid conflict and preserve har- mony. Another key element of the Japanese culture is the emotional construct of amae, roughly translated as “?indulgent dependence,”? which is a critical part of child-rearing in Japan. While Western mothers teach their children to be independent, Japanese mothers instill a sense of emotion-laden dependence in their children. Scholars believe that deeply felt amae guides social interactions in adulthood. The relationship between a senior and a junior is analogous to mother-child amae. Filial piety—?respect for one’?s parents and elders—?is the foundation of the Confucian ethic. Amae and the Confucian parent-child rela- tionship provide the basis for all other relationships. At the beginning of every working day, many firms have a group meeting intended to build harmony and team spirit, and personnel even do calisthenics together. Training of new store personnel is done in groups. The group trains together, is evaluated collectively, and may even live together. The group dis- covers the sources of problems and fixes them as a team. Training is very detailed. Stores provide instructions on how to greet people, what tone of voice to use, and how to handle complaints. Stores attach much weight to cus- tomer feedback; they typically make a detailed report to the manufacturer on any product defects and return the product to the manufacturer for careful analysis. Manufacturers and service suppliers design their offerings based on complaints and comments received from customers.11 Nevertheless, Japan is slowly changing. Modern Japan operates increasingly according to contemporary values, which Japan gradually is importing from abroad. Discount stores modeled on Carrefour, Toys-R-Us, and Wal-Mart are beginning to displace department stores as the preferred shopping venues, especially among the younger generation. Given a choice between attentive personal service and the lowest possible prices, Japanese citizens increasingly make the trade-off. The Recent Grad in IB feature highlights the cross-cultural experiences of
Chinese-born Lawrence Yu, who had first-hand experience with living, studying, and working in the United States. Having an inquiring mind and being open to new experiences certainly helped Lawrence in bridging cul- tural gaps. Pg10Pg10CAVUMC05_124-157hr 10/10/07 1:41 PM Page 133
> RECENT GRAD IN IB
Zhibo (Lawrence)
Yu
ince it opened to foreign investors in 1979, China’?s econ- omy has been growing rapidly.
product transition management.
Dell’?s notebook computer manu- facturer, which ships over 7 million Lawrence Yu lived in China and wit- nessed amazing changes there as a teenager during the 1990s. He ate at McDonald’?s, wore Nike shoes, and watched NBA games. He became very interested in the United States, which has a literal Chinese translation of a “?beautiful country.”? At the age of sixteen, Lawrence came to the United States as a foreign exchange student. After graduating from Mitchell High School, he earned a degree from Michigan State Univer- sity in supply-chain management.
While in college, he took a study- abroad trip to Mexico during a winter break. Lawrence practiced Spanish, lived with a Mexican family, attended business development conferences, and toured manufacturing firms. While interning at Whirlpool Cor- poration in Benton Harbor, Michigan,
Lawrence created an asset-tracking system for the global procurement group and conducted market research for Whirlpool in China. He also visited
Whirlpool’?s Asia headquarters in Hong
Kong and their China branch in Shen- zhen. He became familiar with the local sales and marketing teams and consequently noticed opportunities for improvement and best-practice sharing, which he presented to
Whirlpool executives at their U.S. headquarters. Following the summer at Whirlpool, he completed another eight-month internship with Unilever
North America in Chicago. After graduation, Lawrence worked at Dell Inc. as a master sched- uler for notebook computers. He was primarily responsible for MRP fore- casting, E&O (end-of-life and obso- lete) planning, lead-time setting, and
laptops annually, is located in Penang,
Malaysia. Since Chinese is the first lan- guage of most of the Malaysian team members, Lawrence was able to com- municate with them, which helped to increase communication quality and work efficiency. Dell management sent him to Dell China to work on a project with the procurement group in
Shanghai. With the knowledge of Dell business that he gained in the United
States, and with his language ability and strong interpersonal skills,
Lawrence successfully fulfilled the mis- sion of the trip and won praise from senior-level management.
After working as a master scheduler for over a year, Lawrence was recruited to Dell Global Logis- tics as a logistics program manager.
His extended team managed Dell’?s inbound logistics business globally, with total spending over $40 million annually. In addition to daily opera- tional tasks, his responsibilities also included weekly/monthly/quarterly business reviews, financial analysis, contract negotiations, and process- improvement projects. With the responsibility to oversee eight U.S. logistics centers and a 100-truck fleet, Lawrence gained people-man- agement skills and learned how to make decisions under pressure, even with incomplete information.
In August 2006, Lawrence was promoted, and became the youngest Global Supply Manager at Dell, at the age of 24. He was responsible for managing Dell’?s $1 billion annual spending in memory (semiconductor) products. In this role, he negotiated prices with suppliers such as Sam- sung, Siemens, and Kingston.
Lawrence‘?s major: Supply Chain
Management
Objectives: Make a difference in the world by excelling in international business Internships during college:
Whirlpool Corporation and Unilever North America
Jobs held since graduating:
•? Global Supply Manager, Dell Inc.,
Austin, Texas
•? Logistics Program Manager, Dell Inc.,
Austin, Texas
•? Notebook Master Scheduler, Dell
Inc., Austin, Texas Lawrence’?s Advice for an International Business
Career
”?While it was risky, I am glad that I did it. Language barriers, cultural dif- ferences, and being apart from fam- ily were all serious difficulties. Lan- guage can be improved over time, and culture can be learned while you live in that culture. I got used to liv- ing alone pretty fast. In addition to my formal education in the class- room, by living, studying, and work- ing in another country, I was naturally learning every day. The knowledge you gain from just having been in another country cannot be learned any other way. From living on my own since the age of sixteen, I’?ve grown a lot, physically and mentally. I now have greater confidence in whatever I pursue than I ever had before, thanks to my international experience!”? 133 Pg11Pg11CAVUMC05_124-157hr 10/10/07 1:41 PM Page 134
134 Chapter 5
Exhibit 5.3
The Cultural Environment of International Business National, Professional, and Corporate Culture While cultural idiosyncrasies influence cross-border business, we cannot attribute all difficulties to differences in national culture. Exhibit 5.3 sug- gests that employees are socialized into three cultures: national culture, prof- essional culture, and corporate culture.1 2 Working effectively within these overlapping cultures is a major challenge. The influence of professional and corporate culture tends to grow as people are socialized into a profession and workplace. Most companies have a distinctive set of norms, values, beliefs, and modes of behavior that distinguish them from other organizations. Such differences are often as distinctive as the national culture. For example, Britain and the United States share a language and have a similar economic system. Two firms from the same country can have vastly different organizational cultures. The age of a com- pany and its product portfolio both influence its corporate culture. For example, Lloyds, a large British insurance firm, has a conservative culture that may be slow to change. Virgin, the British music and travel provider, has an experimental, risk- taking culture. These cultural layers present yet another challenge for the manager: To what extent is a particular behavior attributable to national culture? In companies with a strong organizational culture, it is hard to determine where the corporate influence begins and the national influence ends. For example, it is difficult to pinpoint the extent to which the culture of French cosmetics firm L’?Oreal is due to national or corporate influences. The French have long been experienced in the cosmetics and fashion industries, but L’?Oreal is a global firm staffed by man- agers from around the world. Their influence, combined with management’?s receptiveness to world culture, has shaped L’?Oreal into a unique organization that is distinctive within French culture. Thus, in international business, the ten- dency to attribute all differences to national culture is simplistic.
National Culture Professional Culture National, Professional, and Corporate Culture SOURCE: Adapted from The Cultural Environment of
International Business, Vern Terpstra and Kenneth David
(1991), Third edition, Cincinnati: Southwestern Pub- lishing Company.
Nationality
Ethnicity
Gender
Religion
Social Institutions
Social Class
Academe
Business
Banking
Engineering
Computer Programming Legal
Medical
Corporate Educational Systems Military Culture
Progressive Socializations that Occur During a Person’?s Life
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Interpretations of Culture To explore the role of culture in international business, scholars have offered sev- eral analytical approaches. In this section, we review three such approaches: cul- tural metaphors, stereotypes, and idioms. Cultural Metaphors M. J. Gannon13 offered a particularly insightful analysis of cultural orientations. A cultural metaphor refers to a distinctive tradition or institution strongly associ- ated with a particular society. As you saw in the opening vignette, bullfighting is a metaphor for the culture of Spain. A cultural metaphor is a guide to deciphering a person’?s attitudes, values, and behavior. American football, for instance, is a cultural metaphor for distinctive traditions in the United States. The Swedish stuga (a cottage or summer home) is a cultural metaphor for Swedes’? love of nature and a desire for individualism through self- development. Other examples of cultural metaphors include the Japanese garden (tranquility), the Turkish coffeehouse (social interaction), the Israeli kibbutz (commu- nity), and the Spanish bullfight (ritual). The Brazilian concept of jeito or jeitinho Brasileiro refers to an ability to cope with the challenges of daily life through creative problem- solving or manipulating the arduous bureaucracy of the country. In the Brazilian con- text, manipulation, smooth-talking, or patronage are not necessarily viewed negatively, because individuals have to resort to these methods to conduct business. Stereotypes Stereotypes are generalizations about a group of people that may or may not be factual, often overlooking real, deeper differences. The so-called maana syndrome (tomorrow syndrome) refers to the stereotype that Latin Americans tend to pro- crastinate. To a Latin American, maana means an indefinite future. A business promise may be willingly made but not kept since who knows what the future will bring? Many uncontrollable events may happen, so why fret over a promise? Stereotypes are often erroneous and lead to unjustified conclusions about oth- ers. Nevertheless, virtually all people employ stereotypes, either consciously or unconsciously, because they are an easy means to judge situations and people. Despite the harm that stereotypes can cause, scholars argue that there are real dif- ferences among groups and societies. We learn about these differences by examin- ing descriptive rather than evaluative stereotypes.14 For example, here is a sample of widely held stereotypes of people from the United States: •? Argumentative and aggressive, in comparison to the Japanese, who tend to be reserved and humble •? Individualistic lovers of personal freedom, in comparison to the Chinese, who tend to be group oriented •? Informal and nonhierarchical, in comparison to the Indians, who believe titles should be respected •? Entrepreneurial and risk-seeking, in comparison to the Saudi Arabians, who tend to be conservative, employing time-honored methods for get- ting things done •? Direct and interested in immediate returns, in comparison to the Latin Ameri- cans, who usually take time to be social and get to know their business partners Idioms An idiom is an expression whose symbolic meaning is different from its literal meaning. It is a phrase that you cannot understand by knowing only what the indi- vidual words in the phrase mean. Idioms exist in virtually every culture. People
Interpretations of Culture 135
Cultural metaphor A distinctive tradition or institution strongly associated with a particular society.
Stereotype Generalization about a group of people that may or may not be factual, often overlooking real, deeper differences. Idiom An expression whose symbolic meaning is different from its literal meaning. Pg13Pg13CAVUMC05_124-157hr 10/10/07 1:41 PM Page 136
136 Chapter 5 The Cultural Environment of International Business
Country Expression Underlying Value Japan “?The nail that sticks out gets hammered down.”? Group conformity Australia and “?The tall poppy gets cut down.”? (Criticism of a Egalitarianism New Zealand person who is perceived as presumptuous, attention-seeking, or without merit.) Sweden and other “?Janteloven”? or “?Jante Law.”? “?Don’?t think Modesty Scandinavian countries you’?re anyone special or that you’?re better than us.”? Korea “?A tiger dies leaving its leather, a man dies leaving Honor his name.”? Turkey “?Steel that works, does not rust.”? Hard work United States “?Necessity is the mother of invention.”? Resourcefulness Thailand “?If you follow older people, dogs won’?t bite you.”? Wisdom Exhibit 5.4 Idioms that Symbolize Cultural Values often use them as a short way of expressing a larger concept. For example, “?to roll out the red carpet”? is to extravagantly welcome a guest—?no red carpet is actually used. The phrase is misunderstood when interpreted in a literal fashion. In Spanish, the idiom “?no est el horno para bolos”? literally means “?the oven isn’?t ready for bread rolls.”? However, the phrase is understood as “?the time isn’?t right.”? In Japanese, the phrase “?uma ga au”? literally means “?our horses meet,”? but the everyday meaning is
“?we get along with each other.”? As with metaphors and stereotypes, managers can study national idioms to develop a better understanding of cultural values. Exhibit 5.4 offers several expressions that reveal cultural traits of various societies. Hall’?s High- and Low-Context Cultures Renowned anthropologist Edward T. Hall15 made a distinction between cultures char- Low-context culture A culture that relies on elaborate verbal explanations, putting much emphasis on spoken words.
High-context culture A culture that emphasizes nonverbal messages and views communication as a means to promote smooth, harmonious relationships.
acterized as “?low context”? and “?high context.”? Low-context cultures rely on elaborate verbal explanations, putting great emphasis on spoken words. As Exhibit 5.5 shows, the low-context countries tend to be in northern Europe and North America, which have a long tradition of rhetoric, placing central importance on the delivery of verbal messages. The primary function of speech in such cultures is to express one’?s ideas and thoughts as clearly, logically, and convincingly as possible. Communication is direct and explicit, and meaning is straightforward. For example, in negotiations Americans typically come to the point and do not beat around the bush. Low-context cultures tend to value expertise and performance and conduct negotiations as efficiently as possible. These cultures use specific, legalistic contracts to conclude agreements.
By contrast, high-context cultures such as Japan and China emphasize non- verbal messages and view communication as a means to promote smooth, harmo- nious relationships. They prefer an indirect and polite face-saving style that emphasizes a mutual sense of care and respect for others. They are on guard not to embarrass or offend others. This helps explain why it is difficult for Japanese peo- ple to say “?no”? when expressing disagreement. They are much more likely to say
“?it is different,”? an ambiguous response. In East Asian cultures, showing impa- tience, frustration, irritation, or anger disrupts harmony and is considered rude and offensive. Asians tend to be soft-spoken, and people typically are sensitive to context and nonverbal cues (body language). For example, at a business luncheon in Tokyo, the boss is almost always the senior-looking individual seated farthest away from the entrance to the room. In Japan, superiors are given such favored seating as a show of respect. To succeed in Asian cultures, it is critical for man-
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High Context
•? Establish social trust first
•? Personal relations and goodwill are valued •? Agreements emphasize trust
•? Negotiations are slow and ritualistic
Low Context
•? Get down to business first
•? Expertise and performance are valued
Chinese
Korean
Japanese
Vietnamese
Arab
Spanish
Italian
English
North American
Scandinavian
Swiss
Interpretations of Culture 137 Exhibit 5.5
Hall’?s High and Low-Context Typology of Cultures
SOURCE: Adapted from Hall, Edward T. (1975). Beyond Culture, New York: Anchor. •? Agreements emphasize specific, legalistic contract •? Negotiations are as efficient as possible German
agers to have a keen eye for nonverbal signs and body language. Negotiations tend to be slow and ritualistic, and agreement is founded on trust. Hall’?s work has gained renewed importance because of the explosion of busi- ness interaction between East Asia and the rest of the world. However, the notion of high- and low-context cultures plays a role even in communications between people who speak the same language. For instance, British managers sometimes complain that presentations by U.S. managers are too detailed. Everything is spelled out, even when meanings seem perfectly obvious. Hofstede’?s Research on National Culture Dutch anthropologist Geert Hofstede conducted one of the early empirical studies of national cultural traits. He collected data on the values and attitudes of 116,000 employees at IBM Corporation, representing a diverse set of nationality, age, and gender. Hofstede conducted two surveys, one in 1968 and another in 1972. His investigation led Hofstede to delineate four independent dimensions of national culture, which we describe next. Individualism versus Collectivism Individualism versus collectivism refers to whether a person functions primarily as an individual or within a group. In individualistic societies, ties among people are relatively loose, and each person tends to focus on his or her own self-interest. These societies prefer individualism over group conformity. Competition for resources is the norm, and those who compete best are rewarded financially. Australia, Canada, the
United Kingdom, and the United States tend to be strongly individualistic soci- eties. In collectivist societies, by contrast, ties among individuals are more important than individualism. Business is conducted in the context of a group in which others’? views are strongly considered. The group is all-important, as life is fundamentally a cooperative experience. Conformity and compromise help maintain group harmony. China, Panama, and South Korea are examples of strongly collectivist societies.
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138 Chapter 5 The Cultural Environment of International Business
Power distance Describes how a society deals with the inequalities in power that exist among people.
Uncertainty avoidance The extent to which people can tolerate risk and uncertainty in their lives.
Masculinity versus femininity Refers to a society’?s orientation, based on traditional male and female values. Masculine cultures tend to value competitiveness, assertiveness, ambition, and the accumulation of wealth. Feminine cultures emphasize nurturing roles, interdependence among people, and taking care of less fortunate people. Power Distance Power distance describes how a society deals with the inequali- ties in power that exist among people. Societies characterized by high power distance are relatively indifferent to inequalities and allow them to grow over time. There are substantial gaps between the powerful and the weak. Guatemala, Malaysia, the Philip- pines, and several Middle East countries are examples of countries that exhibit high power distance. By contrast, in societies with low power distance, the gaps between the powerful and weak are minimal. For instance, in Scandinavian countries such as Den- mark and Sweden, governments institute tax and social welfare systems that ensure their nationals are relatively equal in terms of income and power. The United States scores relatively low on power distance.
Social stratification affects power distance. In Japan, almost everybody belongs to the middle class, while in India the upper stratum controls most of the decision making and buying power. In companies, the degree of centralization of authority and autocratic leadership determines power distance. In high power-distance firms, autocratic management styles focus power at the top and grant little autonomy to lower-level employees. In low power-distance firms, by contrast, managers and subordinates are more equal and cooperate more to achieve organizational goals.
Uncertainty Avoidance Uncertainty avoidance refers to the extent to which peo- ple can tolerate risk and uncertainty in their lives. People in societies with high uncer- tainty avoidance create institutions that minimize risk and ensure financial security. Companies emphasize stable careers and produce many rules to regulate worker actions and minimize ambiguity. Managers may be slow to make decisions before they investigate the nature and potential outcomes of several options. Belgium, France, and Japan are countries that score high on uncertainty avoidance. Societies that score low on uncertainty avoidance socialize their members to accept and become accustomed to uncertainty. Managers are entrepreneurial and relatively comfortable about taking risks, and make decisions relatively quickly. People accept each day as it comes and take their jobs in stride because they are less concerned about ensuring their future. They tend to tolerate behavior and opinions different from their own because they do not feel threatened by them. India, Ireland, Jamaica, and the United States are leading examples of countries with low uncertainty avoidance.
Masculinity versus Femininity Masculinity versus femininity refers to a soci- ety’?s orientation, based on traditional male and female values. Masculine cultures tend to value competitiveness, assertiveness, ambition, and the accumulation of wealth.
They are characterized by men and women who are assertive, focused on career and earning money, and may care little for others. Typical examples include Australia and
Japan. The United States is a moderately masculine society. Hispanic cultures are rela- tively masculine and display a zest for action, daring, and competitiveness. In business, the masculinity dimension manifests as self-confidence, proactiveness, and leadership.
Conversely, in feminine cultures, such as the Scandinavian countries, both men and women emphasize nurturing roles, interdependence among people, and caring for less fortunate people. Welfare systems are highly developed and education is subsidized.
The Fifth Dimension: Long-Term versus Short-Term Orientation The four dimensions of cultural orientation that Hofstede proposed have been widely accepted. They provide us with a tool to interpret cultural differences and a foundation for clas- sifying countries. Various empirical studies have also found relationships between the four cultural orientations and geography, suggesting that nations can be similar (cul- turally close) or dissimilar (culturally distant) on each of the four orientations.
Yet, the Hofstede framework suffers from some limitations. First, as noted, the study is based on data collected during the period from 1968 to 1972. Much has changed since then, including successive phases of globalization, widespread exposure to transnational media, technological advances, and the role of women in the workforce. The framework fails to account for the convergence of cultural values that has occurred during the last several decades. Second, the Hofstede
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findings are based on the employees of a single company—?IBM—?in a single industry, making it difficult to generalize. Third, the data were collected using questionnaires—?not effective for probing some of the deep issues that surround culture. Finally, Hofstede did not capture all potential dimensions of culture. Partly in response to this last criticism, Hofstede eventually added a fifth dimen- sion to his framework: long-term versus short-term orientation. This dimension denotes the degree to which people and organizations defer gratification to achieve long-term success. That is, firms and people in cultures with a long-term orientation tend to take the long view to planning and living. They focus on years and decades. The long-term dimension is best illustrated by the so-called Asian values—?traditional cultural orientations of several Asian societies, including China, Japan, and Singapore. These values are partly based on the teachings of the Chinese philosopher Confucius (K’?ung-fu-tzu), who lived about 500 B.C. In addition to long-term orientation, Confu- cius advocated other values that are still the basis for much of Asian culture today. These include discipline, loyalty, hard work, regard for education, esteem for the fam- ily, focus on group harmony, and control over one’?s desires. Scholars often credit these values for the East Asian miracle, the remarkable economic growth and modernization of East Asian nations during the last several decades.16 By contrast, the United States and most other Western countries emphasize a short-term orientation. The Hofstede framework should be viewed as only a general guide, useful for a deeper understanding in cross-national interactions with business partners, cus- tomers, and value-chain members. Key Dimensions of Culture We saw in Exhibit 5.2 that there are numerous dimensions of national culture. We can group them into two broad dimensions: subjective and objective. The subjec- tive dimension of culture includes values and attitudes, manners and customs, deal versus relationship orientation, perceptions of time, perceptions of space, and religion. The objective dimension of culture includes symbolic and material pro- ductions, such as the tools, roads, and architecture unique to a society. In this sec- tion, we examine key examples of each dimension. Values and Attitudes Values represent a person’?s judgments about what is good or bad, acceptable or unacceptable, important or unimportant, and normal or abnormal.17 People develop attitudes and preferences based on their values. Attitudes are similar to opinions except that attitudes are often unconsciously held and may not have a rational basis. Prejudices are rigidly held attitudes, usually unfavorable and usually aimed at par- ticular groups of people.18 Typical values in North America, northern Europe, and Japan include hard work, punctuality, and the acquisition of wealth. People from such countries may misjudge those from developing economies who may not embrace such values. They may inaccurately judge the Bolivian housekeeper for not working hard enough or the Jamaican businessman for not being on time. Deal versus Relationship Orientation In deal-oriented cultures, managers focus on the task at hand and want to get down to business. At the extreme, such managers may even avoid small talk and other preliminaries. They prefer to seal agreements with a legalistic contract, and follow an impersonal approach to settling disputes. Leading examples of deal-oriented cul- tures include Australia, northern Europe, and North America. By contrast, in rela- tionship-oriented cultures, managers put more value on affiliations with people. To them, it is important to build trust, rapport, and get to know the other party in
Key Dimensions of Culture 139
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140 Chapter 5 The Cultural Environment of International Business business interactions. For instance, it took nine years for Volkswagen to negotiate the opening of an automobile factory in China, a strongly rela- tionship-oriented society. For the Chinese, Japan- ese, and many in Latin America, relationships are more important than the deal.19 Trust is valued in business agreements. In China, guanxi (literally
“?connections”?) is deeply rooted in ancient Confu- cian philosophy, which values social hierarchy and reciprocal obligations. It stresses the impor- tance of relationships within the family and between superiors and subordinates. Manners and Customs Manners and customs are ways of behaving and In Japan, bowing is the norm in both business and personal set- tings. Here, Japanese Foreign
Minister Yoriko Kawaguchi and a
U.S. Trade Representative (left) bow to each other before a 2004 meeting. Monochronic A rigid orientation to time, in which the individual is focused on schedules, punctuality, and time as a resource.
Polychronic A flexible, nonlinear orientation to time, in which the individual takes a long- term perspective and is capable of attending to multiple tasks simultaneously. conducting oneself in public and business situa- tions. Some countries are characterized by egalitarian, informal cultures, in which peo- ple are equal and work together cooperatively. In other countries, people are more for- mal, and status, hierarchy, power, and respect are very important. Customs that vary most worldwide are those related to eating habits and mealtimes, work hours and holi- days, drinking and toasting, appropriate behavior at social gatherings, gift-giving, and the role of women. Handshaking varies across the world: limp handshakes, firm hand- shakes, elbow-grasping handshakes, and no handshake at all. In Southeast Asia, the handshake involves placing the palms together in front of the chest, as in praying. In
Japan, bowing is the norm. In some settings it is appropriate to kiss the other’?s hand. In much of the world, people greet by kissing on both cheeks.20 Gift-giving is a complex ritual practiced throughout much of the world. It is ingrained in Japanese culture, where it is usually a blunder to not offer a gift in initial meetings. The Middle East is character- ized by generous gift-giving.
Perceptions of Time
In business, time dictates expectations about planning, scheduling, profit streams, and what constitutes lateness in arriving for work and meetings. For instance, Japan- ese managers tend to prepare strategic plans for extended periods such as the decade. The planning horizon for Western companies is much shorter, typically sev- eral years. Some societies are relatively more oriented to the past, others to the pre- sent, and still others to the future. People in past-oriented cultures believe that plans should be evaluated in terms of their fit with established traditions, customs, and wisdom. Innovation and change are infrequent and are justified to the extent they fit with past experience. Europeans are relatively past-oriented, insisting on the conser- vation of traditions and historical precedents.
By contrast, young countries like Australia, Canada, and the United States are rel- atively focused on the present. They can be characterized as having a monochronic orientation to time—?a rigid orientation, in which the individual is focused on sched- ules, punctuality, and time as a resource. People in these cultures view time as linear, like a river flowing into the future, carrying workers from one activity to the next. In such cultures, where people are highly focused on the clock, managers make commit- ments, set deadlines, and adhere to a strict schedule of meetings and activities. Punc- tuality is a virtue—?time is money. Throughout the day, workers glance at their watches, their computer’?s clock, or the clock on the wall. Investors are impatient and want quick returns. Managers have a relatively short-term perspective when it comes to investments and making money; performance is measured on a quarterly basis. In this way, people in the United States have acquired a reputation for being hurried and impatient. Indeed, the word business was originally spelled busyness.
By contrast, cultures in parts of Africa, Asia, Latin America, and the Middle East view time as elastic. Such cultures have a polychronic perspective on time. In poly-
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chronic societies, people are capable of attending to multiple tasks simultaneously. Long delays are sometimes needed before taking action. Punctuality per se is rela- tively unimportant. Managers consider time commitments as relatively flexible. They place a higher value on relationships and spending time with other people. Managers do not adhere strictly to the clock and schedules. They are more likely to form lifelong relationships. Chinese and Japanese firms are future oriented, focusing not on how the firm will perform next quarter, but how it will perform 10 years from now. Large Japanese firms offer lifetime employment and invest heavily in employee training, expecting them to remain with the firm for 30 or 40 years. Latin Americans similarly have a flexible perception of time, and are more inclined to arrive late for appointments than people from other cultures. In the Middle East, strict Muslims view destiny as the will of God (“?Inshallah”? or “?God willing”? is a frequently used phrase) and downplay the importance of future planning. They perceive appoint- ments as relatively vague future obligations. Perceptions of Space Cultures also differ in their perceptions of physical space; we have our own sense of personal space and feel uncomfortable if others violate it. Conversational distance is closer in Latin America than in northern Europe or the United States. When a North American national interacts with a Latin American, he or she may unconsciously back up to maintain personal space. Those who live in crowded Japan or Belgium have smaller personal space requirements than those who live in land-rich Russia or the United States. In Japan, it is common for employee workspaces to be crowded together in the same room, desks pushed against each other. One large office space might be used for 50 employees. North American firms partition individual workspaces and provide private offices for more important employees. In Islamic countries, close prox- imity may be discouraged between a man and a woman who are not married.
Key Dimensions of Culture 141 Religion Religion is a system of common beliefs or attitudes concerning a being or a system of thought that people consider to be sacred, divine, or the highest truth. Religion also incorporates the moral codes, values, institutions, traditions, and rituals associated with this system. Almost every culture is underpinned by religious beliefs. Religion influences culture, and therefore business and consumer behavior, in various ways. Protestantism emphasizes hard work, individual achievement, and a sense that people can control their environment. The Protestant work ethic provided some of the basis for the development of capitalism. In fundamentalist Islamic countries, Islam is the basis for government and legal sys- tems as well as social and cultural order. Because people raised in Islamic cultures per- ceive God’?s will as the source of all outcomes, Muslims may be fatalistic and reactive.
Islam’?s holy book, the Qur’?an, prohibits drinking alcohol, gambling, usury, and immod- est exposure. These prohibitions affect firms that deal in alcoholic beverages, resorts, entertainment, and women’?s clothing, as well as ad agencies, and banks and other insti- tutions that lend money. A growing number of businesses are reaching out to Muslim communities. For example, Nokia launched a mobile phone that shows Muslims the direction toward Mecca, Islam’?s holiest site, when they pray. Heineken, the Dutch brew- ing giant, rolled out the nonalcoholic malt drink Fayrouz for the Islamic market.21 Exhibit 5.6 shows the dominant religions around the world. The major religions, based on number of adherents, are Christianity (2.1 billion), Islam (1.3 billion), Hinduism (900 million), Buddhism (376 million), Judaism (14 million), and Shintoism (4 million). Some people adhere to more than one belief system, such as the Japanese, who may practice both Buddhism and Shintoism. Although the exhibit displays the most common religion in each location, most countries are home to people of various beliefs. Now that we have reviewed the subjective dimensions of culture, we turn to the objective dimensions of culture—?symbolic and material productions. Pg19Pg19CAVUMC05_124-157hr 10/10/07 1:41 PM Page 142
Exhibit 5.6 World Religions
SOURCE: Ethnologue Volume I: Languages of the world,
14thed. (2000). Accessed at www.ethnologue.com
GREENLAND
ALASKA
ARCTIC
ICELAND
PACIFIC OCEAN
HAWAII
C A N A D A
UNITED STATES
OF AMERICA
MEXICO CUBA JAMAICA
NORTH ATLANTIC OCEAN
DOMINICAN
REPUBLIC
UNITED DEN KINGDOM
IRELAND NETHER- LANDS GERM BELGIUM LUXEMBOURG FRANCE LIECH. SWITZ. MONACO HE ANDORRA SPAIN
PORTUGAL
TU
MOROCCO
ALGERIA
WESTERN
SAHARA MAURITANIA BELIZE GUATEMALA HONDURAS
HAITI PUERTO
RICO SENEGAL
MALI
NIG
BURKINA EL SALVADOR NICARAGUA COSTA RICA
TRINIDAD &
TOBAGO
GAMBIA FASO
GUINEA-BISSAU GUINEA NIGERI IVORY PANAMA VENEZUELA GUYANA
FRENCH
GUIANA
SIERRA LEONE COAST
LIBERIA
CAMERO SWEDEN DENMARK NETHER- LANDS GALAPAGOS
LATVIA COLOMBIA ISLANDS
LITHUANIA ECUADOR
RUSSIA
BELARUS
SURINAME EQUATORIAL GUINEA GABON
B R A Z I L POLAND BELGIUM GERMANY CZECH LUXEMBOURG REP. SLOVAKIA PERU
U K R A I N E SOUTH BOLIVIA ATLANTIC FRANCE LIECHENSTEIN SWITZERLAND
AUSTRIA HUNGARY
SLOVENIA
MOLDOVA OCEAN PARAGUAY
ROMANIA
SAN MONACO MARINO
CROATIA
BOSNIA- SERBIA AND Black Sea ANDORRA
HERZEGOVINA
ITALY
MONTENEGRO
BULGARIA
MACEDONIA
URUGUAY ALBANIA T U R K E Y
ALGERIA
TUNISIA
142 G R E E C E
MALTA CYPRUS
L I B YA
ARGENTINA
FALKLAND ISLANDS/
MALVINAS
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IC OCEAN
FINLAND R U S S I A ESTONIA LATVIA
DENMARK LITHUANIA
HER- RUSSIA
NDS GERMANY POLAND
IUM CZECH-
MBOURG REP.
BELARUS
U K R A I N E
E LIECH. WITZ.
AUSTRIA SLOVAKIA KAZAKHSTAN
HUNGARY MOLDOVA
SLOVENIA ROMANIA
CROATIA BOSNIA-SERBIA AND
MONGOLIA O HERZEGOVINA MONTENEGRO BULGARIA
A ITALY MACEDONIA ALBANIA GREECE TURKEY
GEORGIA UZBEKISTAN KYRGYZSTAN
ARMENIA AZERBAIJAN NORTH
TURKMENISTAN KOREA TAJIKISTAN
A
TUNISIA CYPRUS SYRIA LEBANON ISRAEL JORDAN
LIBYA
E G Y P T
IRAQ KUWAIT QATAR
SAUDI
AFGHANISTAN
I R A N
PAKISTAN
UNITED ARAB
EMIRATES
C H I N A
NEPAL BHUTAN
BANGLADESH
SOUTH
KOREA
TAIWAN
JAPAN
PACIFIC ARABIA OMAN I N D I A NIGER CHAD ERITREA YEMEN
MYANMAR
(BURMA) LAOS THAILAND OCEAN VIETNAM SUDAN IGERIA CENTRAL AFRICAN
AMEROON REPUBLIC
DJIBOUTI
SOMALIA
ETHIOPIA SRI LANKA
CAMBODIA PHILIPPINES
BRUNEI RIAL
INEA CONGO UGANDA REPUBLIC
GABON CONGO KENYA DEMOCRATIC RWANDA REPUBLIC BURUNDI (ZAIRE) TANZANIA ANGOLA
INDIAN
OCEAN
MALAYSIA
SINGAPORE
I N D O N E S I A PAPUA NEW SOLOMON GUINEA ISLANDS MALAWI ZAMBIA MOZAMBIQUE
NAMIBIA B
ZIMBABWE MADAGASCAR OTSWANA
SWAZILAND
VANUATU FIJI
MAURITIUS
RUNION NEW A U S T R A L I A CALEDONIA
SOUTH AFRICA
LESOTHO
Christianity Judaism Hinduism Islam
Buddhism NEW ZEALAND
Nature religion
Chinese religion
Other groups
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144 Chapter 5 The Cultural Environment of International Business Symbolic Productions A symbol can be letters, figures, colors, or other characters that communicate a meaning. For instance, the cross is the main symbol of Christianity. The red star was the symbol of the former Soviet Union. National symbols include flags, anthems, seals, monuments, and historical myths. These symbols represent nations and national values, and help to unite people. Mathematicians and scien- tists use symbols as types of languages. Businesses have many types of symbols, in the form of trademarks, logos, and brands. Can you easily identify popular company logos such as Nike’?s swoosh, Apple’?s small apple, and Coca-Cola’?s unique letters? Material Productions and Creative Expressions of Culture Material productions are artifacts, objects, and technological systems that people construct to cope with their environments. Material productions are integral to human life and provide the means to accomplish objectives, as well as a medium for communication and exchange within and between societies. The most impor- tant technology-based material productions are the infrastructure related to energy, transportation, and communications systems. Other material productions include social infrastructure (systems that provide housing, education, and health care), financial infrastructure (systems for managing means of exchange in banks and other financial institutions), and marketing infrastructure (systems that sup- port marketing-related activities, such as ad agencies). Creative expressions of cul- ture include arts, folklore, music, dance, theater, and high cuisine. Food is among the most interesting cultural markers. For example, in Japan, pizza is often topped with fish and seaweed. In the United States, pizzas can be piled high with meat. In
France, pizza often comes with a variety of cheeses. Language as a Key Dimension of Culture Language is such an important dimension of culture that it requires extensive treatment. Often described as the expression or mirror of culture, language is not only essential for communications, it provides insights into culture. At present the world has nearly 7,000 active languages, including over 2,000 each in Africa and Asia. But most of these languages have only a few thousand speakers. Exhibit 5.7 highlights the major languages of the world.22 Note that while Arabic is listed in sixth place, it comprises 15 major and often highly distinct language variants across 46 countries. Linguistic proficiency is a great asset in international business because it facilitates cross-cultural understanding. Learning one or more of the frequently spoken languages can greatly enhance an international business career. Language has both verbal and nonverbal characteristics. Much language is unspoken23 and entails facial expressions and gestures. In fact, most verbal messages are accompanied by nonverbal ones. In this and other ways language is extremely subtle. Language is conditioned by our environment. Thus, for instance, while the language of the Inuits (an indigenous people of Canada) has several different words for “?snow,”? English has just one; the Aztecs, moreover, used the same word stem for snow, ice, and cold. Sometimes it is difficult to find words to convey the same meaning in a different language. For instance, a one-word equivalent to “?aftertaste”? does not exist in many languages. There are also semantic gaps in languages. The concept and meaning of a word are not universal, even though the word can be translated well into another lan- Pg22Pg22CAVUMC05_124-157hr 10/10/07 1:42 PM Page 145
Language as a Key Dimension of Culture 145
Approximate number Countries with substantial Rank Language native speakers (millions) number of native speakers 1 Mandarin Chinese 874 China, Singapore 2 Hindi 365 India 3 English 341 United States, United Kingdom 4 Spanish 322 Argentina, Mexico, Spain. 5 Bengali 207 Bangladesh, India 6 Arabic 198 Algeria, Egypt, Saudi Arabia 7 Portuguese 176 Brazil, Portugal 8 Russian 167 Russian Federation, Ukraine 9 Japanese 125 Japan 10 German 100 Germany, Austria 11 Korean 78 South Korea, North Korea 12 French 77 France, Belgium 13 Turkish 75 Turkey, Central Asia, Eastern Europe Exhibit 5.7 The Most Common Primary Languages in the World SOURCE: Ethnologue Volume I: Languages of the World, 14th ed. (2000). Accessed at www.ethnologue.com guage. The Japanese word “?muzukashii,”? for example, can be variously translated as “?difficult,”? “?delicate,”? or “?I don’?t want to discuss it,”? but in business negotiations it usually means “?out of the question.”? National languages, dialects, and translation have a tendency to complicate straightforward communication. Ignorance of a language can be embarrassing.
Advertising themes often lose their original meaning in translation or convey unfa- vorable interpretations. Even those from different countries who speak the same language may experience communication problems because of unique colloquial words. The same word can convey different meanings in the two countries. Exhibit 5.8 shows how the popular slogans of some languages translate into offensive phrases in other languages. Exhibit 5.9 shows how two English-speaking countries interpret the same word in very different ways. These exhibits demonstrate how easy it is for misinterpretations to get in the way of conveying intended meaning.
Company and Location Intended Ad Slogan Literal Translation Parker Pen Company in “?Use Parker Pen, avoid “?Use Parker Pen, avoid pregnancy!”? Latin America embarrassment”?! Pepsi in Germany “?Come Alive with Pepsi”? “?Come out of the grave with Pepsi.”? Pepsi in Taiwan “?Come Alive with Pepsi”? “?Pepsi brings your ancestors back from the dead.”? Fisher Body (car exteriors) in Belgium “?Body by Fisher”? “?Corpse by Fisher”? Salem cigarettes in Japan “?Salem—?Feeling Free”? “?Smoking Salem makes your mind feel free and empty.”? Exhibit 5.8 Blunders in International Advertising Pg23Pg23CAVUMC05_124-157hr 10/10/07 1:42 PM Page 146
146 Chapter 5 The Cultural Environment of International Business Exhibit 5.9 Examples of Differences in Meaning between U.S. and British English
Word Meaning in U.S. English
Scheme A somewhat devious plan
Redundant Repetitive
Sharp Smart
Meaning in British English
A plan
Fired or laid off
Conniving, unethical To table To put an issue on hold To take up an issue To bomb To fail miserably To succeed grandly Windscreen A screen that protects Automobile windshield against wind
Business jargon that is unique to a culture can also impede communication. For example, many words and expressions that have crept into U.S. business executives’? jargon from sports or military terminology pose problems for non-U.S. businesspeo- ple. Here is some business jargon used in American English that may be puzzling for non-natives to understand: “?the bottom line,”? “?to beat around the bush,”? “?shoot- ing from the hip,”? “?feather in your cap,”? and “?get down to brass tacks.”? Imagine the difficulty that professional interpreters may encounter in translating such phrases! Culture and Contemporary Issues We have seen that culture is relatively stable. However, contemporary issues such as globalization of markets, transnational media, technological advances, and govern- ment regulations do influence culture, and culture influences these contemporary issues. Culture is so powerful and pervasive that it continues to exert a strong effect on emergent issues. In this section, we explore the linkage between culture and key issues. Culture and the Services Sector Services such as lodging and retailing are increasingly international. In the most advanced economies, firms that offer services account for a greater share of FDI than firms that manufacture products.24 Contact-based services bring service providers into direct contact with foreign customers through cross-border transactions. These service providers include architects, consultants, and lawyers. Assetbased services are those in which someone offers to establish a brick-and-mortar facility abroad, such as banks, restaurants, and retail stores.25 However, cultural differences create problems for services firms, leading to mishaps in the exchange process. The greater the cultural distance between the service producer and its customers, the more likely there will be cognitive and communication gaps. Imagine, for example, a Western lawyer who tries to establish a law office in China. Without a thorough knowledge of Chinese culture and language, the lawyer ’?s efforts are largely futile. Imagine how much success a Western restaurant chain would have in Russia if it knew nothing of Russian food culture or the work customs of Russian workers! Differences in language and national character have the same effect as trade barri- ers. Service firms that internationalize via FDI are particularly vulnerable, because each firm is shaped by both a national culture and an organizational culture, which originate from the source of the firm’?s funding.26 For example, a Japanese bank established in
New York or London remains distinctly Japanese because the capabilities that it brings with it are based on Japanese culture and the firm’?s Japan-based corporate culture.27 To overcome these challenges, services firms seek to understand the cultures and languages of the countries where they do business. For example, at the global express company FedEx, management constantly seeks to hire, train, and moti- Pg24Pg24CAVUMC05_124-157hr 10/10/07 1:42 PM Page 147
Culture and Contemporary Issues 147 vate hundreds of sales representatives who speak different languages, represent different cultures, and service different markets.28 Without such efforts, services firms like FedEx would not likely succeed at international business. Technology, the Internet, and Culture Technological advances are a key determinant of culture and cultural change.
These advances have led to more leisure time for culture-oriented pursuits and to the invention of computers, multimedia, and communications systems that encourage convergence in global culture. The rise of the transnational media, high- tech communications, and modern transportation systems has brought geographi- cally separated cultures in closer contact than ever before. The death of distance refers to the demise of the boundaries that once separated people, due to the inte- grating effects of modern communications, information, and transportation tech- nologies. Just as distinctive cultures developed in the distant past because regions had limited contact with each other, somewhat homogenized cultures are develop- ing today due to modern technologies that increase contact among the people of the world. For example, Hollywood movies and the ability to easily travel through- out the world homogenize customs, fashions, and other manifestations of culture.
Today, university students listen to much the same music and wear similar clothing styles worldwide. Technology also provides the means to promote culture. For example, local artistic traditions from Africa, Asia, and Latin America have received a big boost from the rise of world cinema and television. Movies and TV provide artists with tools for expressing themselves and facilitate contact with consumers. In a similar way, communications technology permits us to choose our information sources.
For example, people usually prefer information in their native language that rep- resents cultural traits similar to their own. Thus, Spanish speakers in the United
States increasingly select mass media sources—?TV, movies, the Internet—?in Span- ish, limiting the homogenizing effect that would result from relying on English- speaking media. In addition, the broadening of global communications allows ethnic groups scattered around the world to remain in touch with each other.29 The Internet also promotes the diffusion of culture. The number of Internet users is growing rapidly worldwide, and the potential for cultural blunders arising from international e-mail use is higher than ever. To minimize such problems, interna- tional managers now access software that translates e-mail and text messages into foreign languages. After typing in a phrase, the software instantly converts messages into any of dozens of languages, including Chinese, Hebrew, and Portuguese.30 Globalization’?s Effect on Culture: Are Cultures Converging? There is little consensus about globalization’?s effects on culture. While many believe that globalization is a destructive force, others see it as positive. Critics charge that globalization is harmful to local cultures and their artistic expressions and sensibilities, and is responsible for their replacement by a homogeneous, often
Americanized, culture. Others argue that increased global communications is posi- tive because it permits the flow of cultural ideas, beliefs, and values. In short, glob- alization is a major factor in the emergence of common culture worldwide. Many products, services, and even holidays are becoming common to world markets. The homogenization (or the banalization) of culture is demonstrated by the grow- ing tendency of people in much of the world to consume the same Big Macs and Coca-
Colas, watch the same movies, listen to the same music, drive the same cars, and stay in the same hotels. Although food often represents a distinct culture, hamburgers, tacos, and pizza are increasingly popular around the world.31 In Trinidad, the U.S. television series “?The Young and the Restless”? is so popular that in many places work effectively stops when it airs, and it has inspired calypso songs of the same name. In recent years, Baywatch and CSI Miami were among the most popular TV series Pg25Pg25CAVUMC05_124-157hr 10/10/07 1:42 PM Page 148
148 Chapter 5 The Cultural Environment of International Business worldwide. The Barbie doll has become a global phenomenon, even as the values that this icon represents may not always agree with values in more conservative cultures.32 However, in reality, the larger trend is more complex than these examples imply. As cross-border business integrates the world’?s economies, it also increases the choices available to local people by making their countries culturally richer.
Cultural homogeneity and heterogeneity are not mutually exclusive alternatives or substitutes; they may exist simultaneously. Cross-cultural exchange promotes innovation and creativity. Globalization brings a wider menu of choices to con- sumers and increases diversity within society.33 Cultural flows originate in many places. Just as McDonald’?s hamburgers have become popular in Japan, so has Viet- namese food in the United States and Japanese sushi in Europe. Integration and the spread of ideas and images tend to provoke reactions and resistance to cultural homogenization, thereby spurring individual peoples to insist on their differences.
While some past customs will be eclipsed in globalization, the process is also liber- ating people culturally by undermining the ideological conformity of nationalism. Managerial Guidelines for Cross-Cultural Success Cross-cultural proficiency helps managers connect with their foreign counterparts. Seasoned managers attest to the importance of a deep knowledge of culture and language in international business. Managers can achieve effective cross-cul- tural interaction by keeping an open mind, being inquisitive, and not rushing to conclusions about others’? behaviors. Experienced managers acquire relevant facts, skills, and knowledge to avoid offensive or unacceptable behavior when interacting with foreign cultures. They undergo cultural training that emphasizes observational skills and human relations techniques. Skills are more important than pure information because skills can be transferred across countries, while information tends to be country specific. Various resources are available to managers for developing skills, including videotape courses, cross-cultural consultants, and programs offered by governments, universi- ties, and training institutes. Planning that combines informal mentoring from expe- rienced managers and formal training through seminars and simulations abroad and at home go far in helping managers meet cross-cultural challenges. Although every culture is unique, certain basic guidelines are appropriate for Cross-cultural proficiency consistent cross-cultural success. Let’?s review three guidelines managers can fol- increases the effectiveness of meetings and other encounters in international business.
low in preparing for successful cross-cultural encounters.
Guideline 1: Acquire factual and interpretive knowledge about the other cul- ture, and try to speak their language. Successful managers acquire a base of knowledge about the values, attitudes, and lifestyles of the cultures with which they interact. Managers study the political and economic background of target countries—?their history, current national affairs, and perceptions about other cultures. Such knowledge facili- tates understanding about the partner ’?s mindset, organi- zation, and objectives. Decisions and events become sub- stantially easier to interpret. Sincere interest in the target culture helps establish trust and respect, laying the foun- dation for open and productive relationships. Even modest attempts to speak the local language are welcome. Higher levels of language proficiency pave the way for acquiring competitive advantages. In the long run, managers who can converse in multiple languages are more likely to negotiate successfully and have positive business interac- tions than managers who speak only one language. Pg26Pg26CAVUMC05_124-157hr 10/10/07 1:42 PM Page 149
Managerial Guidelines for Cross-Cultural Success 149 Guideline 2: Avoid cultural bias. Perhaps the leading cause of culture-related problems is the ethnocentric assumptions managers may unconsciously hold.
Problems arise when managers assume that foreigners think and behave just like the folks back home. Ethnocentric assumptions lead to poor business strategies in both planning and execution. They distort communications with foreigners. Man- agers new to international business often find the behavior of a foreigner hard to explain. They may perceive the other ’?s behavior as odd and perhaps improper.
For example, it is easy to be offended when our foreign counterpart does not appreciate our food, history, sports, or entertainment, or is otherwise inconsider- ate. This situation may interfere with the manager’?s ability to interact effectively with the foreigner, even leading to communication breakdown. In this way, cul- tural bias can be a significant barrier to successful interpersonal communication. A person’?s own culture conditions how he or she reacts to different values, behav- ior, or systems. Most people unconsciously assume that people in other cultures expe- rience the world as they do. They view their own culture as the norm—?everything else may seem strange. This is known as the self-reference criterion—?the tendency to view other cultures through the lens of one’?s own culture. Understanding the self-reference criterion is a critical first step to avoiding cultural bias and ethnocentric reactions. Critical incident analysis (CIA) refers to an analytical method for analyzing awkward situations in cross-cultural interactions by developing empathy for other points of view. It is an approach to avoiding the trap of self-reference crite- rion in cross-cultural encounters. Critical incident analysis encourages a more objective reaction to cultural differences by helping managers develop empathy for other points of view. The Global Trend feature on page 150 details how man- agers can learn to deliberately avoid the self-reference criterion. Guideline 3: Develop cross-cultural skills. Working effectively with counterparts from other cultures requires an investment in your professional development. Each culture has its own ways of carrying out business transac- tions, negotiations, and dispute resolution. As an example, you will be exposed to high levels of ambiguity; concepts and relationships that can be understood in a variety of ways.34 You must make an effort to gain cross-cultural proficiency to be successful in international business. Cross-cultural profi- ciency is characterized by four key personality traits: •? Tolerance for ambiguity—?the ability to tolerate uncertainty and apparent lack of clarity in the thinking and actions of others. •? Perceptiveness—?the ability to closely observe and appreciate subtle infor- mation in the speech and behavior of others. •? Valuing personal relationships—?the ability to recognize the importance of interpersonal relationships, which are often much more important than achieving one-time goals or winning arguments. •? Flexibility and adaptability—?the ability to be creative in devising innovative solu- tions, to be open-minded about outcomes, and to show grace under pressure. As discussed earlier in the chapter, managers function better with a geocentric or cosmopolitan view of the world. Managers with this view believe they can understand and accommodate similarities and differences among cultures. Successful multina- tional firms seek to instill a geocentric cultural mindset in their employees and use a geocentric staffing policy to hire the best people for each position, regardless of their national origin. Over time, such firms develop a core group of managers who feel at home working in any cultural context. One way for managers to determine the skills they need to approach cultural issues is to measure their cultural intelligence.35 Cultural intelligence (CQ) is a person’?s capability to function effectively in situations characterized by cultural diversity. It focuses on specific capabilities that are important for high-quality personal relation- ships and effectiveness in culturally diverse settings and work groups.
Self-reference criterion The tendency to view other cultures through the lens of one’?s own culture. Critical incident analysis
(CIA) An analytical method for analyzing awkward situations in cross-cultural interactions by developing empathy for other points of view. Pg27Pg27CAVUMC05_124-157hr 10/10/07 1:42 PM Page 150
> GLOBAL TREND Minimizing Cross-Cultural Bias with Critical Incident Analysis irms develop and seek to maintain relationships with
and Mazda (Japan) interact intensively with each other. Ford wants to share
So what should you do as a man- ager when confronted with an awk-
customers and partners that
its engineering studies and critical
ward or uncomfortable situation in a span the globe. To compete effec- tively, companies must continually improve ways to communicate with and manage customers, wherever they are located. One recent trend is the rise of global account management, which puts a single manager or team in charge of a key customer and all its needs worldwide. The global account manager draws on various resources, including communication and inter- action skills in cross-cultural set- tings, to market products and services. Another trend is the rise of global project teams. The teams comprise members from a variety of cultural backgrounds. Global teams enable firms to profit from knowl- edge amassed across the organiza- tion’?s entire worldwide operations.
Such teams function best when the members engage in high-quality communications, which involves mini- mizing miscommunications based on differences in language and culture. Nevertheless, inexperienced man- agers often find the behavior of for- eign counterparts hard to explain.
They often perceive others’? behavior as “?odd”? and perhaps improper, which hinders their ability to interact effectively with foreigners. One way to minimize cross-cultural bias and the self-reference criterion is to engage in critical incident analysis, a method that helps managers develop empathy for other points of view. Consider the following scenario.
Working on a joint product design, engineers from Ford (United States)
150
materials with its Japanese counter- part. Following a week of interaction, the Ford team grows increasingly uncomfortable with the seeming lack of interest from the Japanese. The
Japanese engineers appear strangely indifferent and do not exhibit much reaction. When the teams meet, the
Japanese appear to keep conversa- tion among themselves and offer little feedback. Eventually, the Ford team’?s surprise turns into frustration and anger. They now believe that the
Japanese are arrogant, uninterested in Ford’?s technical designs, and care little about the collaboration. In reality, the Ford team has jumped to conclusions. They have failed to consider other plausible explanations for the Japanese behav- ior because they have judged the
Japanese using their own culturally bound expectations. An independent observer familiar with Japanese culture and business organization could have provided alternative explanations for this situation. For one, the Japanese engineers may have not been profi- cient in English. They could not explain themselves easily or understand the
Ford team’?s briefings, which all took place in English. Furthermore, Japan- ese usually refrain from speaking out before the entire team meets in private and reaches consensus. Japanese are generally thoughtful and typically show their respect for counterparts by listen- ing intently while remaining quiet.
These and other explanations are all plausible within the context of the
Japanese culture.
cross-cultural interaction? Critical incident analysis advocates the fol- lowing steps:
Step One: Identify the situations where you need to be culturally aware to interact effectively with people from another culture. These may include socializing, working in groups, attending meetings, negoti- ating, and reaching agreement. Step Two: When confronted with a seemingly strange behavior, disci- pline yourself not to make value judg- ments. Learn to suspend judgment.
Instead, try to view the situation or the problem in terms of the unfamiliar culture. Make observations and gather objective information from native citizens or secondary sources.
In this way, you can isolate the self- reference criterion leading you to your inaccurate conclusion. Step Three: Learn to make a vari- ety of interpretations of the foreigner’?s behavior, to select the most likely interpretation, and then to formulate your own response. By doing so, you will react to the situation without the self-reference criterion, and will likely produce the optimal response. Step Four: Learn from this process and continuously improve. Sources: Keller, Robert. (2001). “?Cross-
Functional Project Groups in Research and
New Product Development.”? Academy of
Management Journal 44(3): 547-55; Senn,
Christoph, and Axel Thoma. (2007). “?Worldly
Wise: Attracting and Managing Customers
Isn’?t the Same When Business Goes Global.”?
Wall Street Journal March 3, 2007, p. R5;
Solomon, C. (1998). “?Building Teams Across
Borders.”? Workforce 52 (4): 12-17. Pg28Pg28CAVUMC05_124-157hr 10/10/07 1:42 PM Page 151
CLOSING CASE Hollywood and the Rise of Cultural Protectionism AACSB: Reflective Thinking The most commercially successful filmmaker of all time, Steven Spielberg, is synonymous with American cinema. He has directed and produced international blockbusters like ET,
Jurassic Park, and War of the Worlds. As U.S. dominance of the international film industry grows, Spielberg has been the target of complaints about how Hollywood is changing world cultures. The values represented in Spielberg’?s films are often viewed as part of the larger trend of the homogenization, or worse, the Americanization of global values and beliefs. Jurassic Park ignited a storm of protest and calls for cul- tural protectionism. Film critics and cultural ministries around the globe found Jurassic Park to be a brainless film, lacking plot, and succeeding entirely through special effects and big-budget bells and whistles. French officials labeled the film a threat to their national identity. Three leading filmmakers—?Pedro Almodvar, Bernardo Bertolucci, and
Wim Wenders—?wrote Spielberg to reprimand him for the poor quality of the film, proclaiming he was personally responsible for undermining their efforts to keep culturally rich European cinema afloat. Another popular American movie, Lost in Translation, came under fire from Los Angeles to Tokyo. Set in Japan’?s capital and starring Bill Murray, the film won an Academy
Award for best screenplay, three Golden Globes, and was nominated for three additional Oscars. The film was criti- cized for its portrayal of Japanese people as robotic cari- catures who mix up their L’?s and R’?s. The image-conscious
Japanese were disappointed at their depiction as comic relief for foreign audiences. In a scene where Bill Murray’?s character is taking a shower in what is meant to be a five- star hotel, he has to bend and contort to get his head under the shower head. In reality there isn’?t a five-star hotel in Tokyo that hasn’?t accounted for the varying heights of its potential guests. Another scene, in which
Murray is shown towering at least a foot above an elevator full of local businessmen, mocks the smaller physique of the Japanese. The film is seen to reinforce negative stereotypes about the Japanese. Is the U.S. film industry overwhelming the cultures of the world? And if so, can the world really blame Hollywood?
Here are some relevant statistics. Hollywood produces 80 percent of the films viewed internationally, having doubled the U.S. global market share since 1990. The European film industry is now about one-ninth the size it was in 1945.
Behind aerospace, Hollywood is the United States’? largest net export. The copyright-based industries, which also include software, books, music, and TV, contributed more to the U.S. economy in the early 2000s than any single manu- facturing sector. While the United States imports few for- eign films, Hollywood’?s output remains in high demand worldwide. Today, foreign films hold less than one percent of the U.S. market.
Distorting History and Religious Values
Under attack since their origin, Hollywood war films are widely accused of presenting biased accounts of history.
War movies portray American soldiers as patriotic heroes, protecting all that is good from all that is evil.
Apocalypse Now may have painted a particularly ethno- centric view of the Vietnam War, focusing on the Ameri- can tragedy while ignoring that of the Vietnamese. While many nations are steadfast in their belief of the separation of church and state, this was decidedly not the case when The Passion of Christ was released. The film enraged religious groups in almost every corner of the world. Mel Gibson’?s controversial film retells the last 12 hours of the life of Jesus Christ. The government of
Malaysia found The Passion of Christ inappropriate for its largely Muslim population, and banned its initial release in the country. The country subsequently permitted only Chris- tians to view the film. International organizations and indi- viduals also attacked The Passion of Christ as anti-Semitic. Crucial to U.S. dominance of world cinema are the cul- tural associations inherent in Hollywood films. The global recognition and acceptance of American English and cul- tural references are obstacles that competitors face. Ameri- can stars and Hollywood directors are well established in the international movie scene, and they enjoy a drawing power that transcends national boundaries. The CEO of
Time Warner attributed Hollywood’?s global success to the association of “?American style with a way of existence that to one degree or another [people] wish to share in.”? Movies and Comparative Advantage
According to the theory of comparative advantage, coun- tries should specialize in producing what they do best and import the rest. Economists argue that this theory applies as much to films as to any industry. They argue that movies are like any other commodity, and the United States has advantages in producing entertainment and exporting it to the rest of the world. Nevertheless, critics suggest that such an assertion, while satisfying to economists, ignores the fact that movies are unlike other commodities. The dif- ference lies in film’?s ability to influence national culture and social development. The motion picture industry is a venue for enhancing cultural identity.
The world is no longer immigrating to the United States, but the United States is attempting to emigrate to the world, through its films and the values, stereotypes, and sometimes erroneous history that they portray. As former Canadian Prime Minister Kim Campbell remarked, “?Movies are culture incarnate. It is mistaken to view culture as a com- modity. . . . Cultural industries, aside from their economic impact, create products that are fundamental to the survival 151 Pg29Pg29CAVUMC05_124-157hr 10/10/07 1:42 PM Page 152
152 Chapter 5 The Cultural Environment of International Business
of Canada as a society.”? This view highlights why govern- ments often engage in cultural protectionism—?that is, the application of trade barriers that aim to prevent local film industries from being swamped by U.S. imports. Critics argue that protectionism is needed to prevent
U.S. culture from being imposed on the rest of the world.
Cultural protectionism is achieved by coddling the domestic industry and implementing high trade barriers, aimed espe- cially at imports from the United States. The specific methods vary by country but usually involve subsidies, quotas, or a combination of both. Subsidies that the government gives to domestic filmmakers are often funded directly by taxes placed on box office sales of U.S. movies. But subsidies can be a crutch to a weak industry. They are employed when tra- ditional funding sources—?bank loans, stock and bond sales—?prove insufficient to maintain an industry. Quotas limit the number of screens allowed to show U.S. films or require a certain number of movies to be produced domestically. Subsidies can weaken industries. Quotas prevent consumers from seeing the films they want to see. The whole system results in the local production of films sim- ply to fulfill government mandates. France once boasted its own booming film industry. But its complex system of quotas and subsidies has done little to slow its gradual demise. The insulation from competitive pressures pro- vided by cultural protectionism can weaken protected industries, reducing their ability to create globally com- petitive films. Meanwhile, the proportion of Hollywood revenues generated from abroad continues to grow. A Cultural Dilemma Despite plenty of arguments on both sides of this ongo- ing debate, critics can no longer point a finger at Holly- wood, because Hollywood is not as “?American”? as it once was. The Passion of Christ, funded by its Australian director and filmed in Italy, is a prime example of the technicolor that globalization has given to an issue that was once black and white. Two of the seven major film companies that are collectively known as Hollywood aren’?t even U.S. firms. Many big-budget Hollywood films these days are in fact multinational creations. Russell
Crowe, Heath Ledger, Charlize Theron, Penelope Cruz,
Nicole Kidman, Jude Law, and Catherine Zeta-Jones are just a few of the many stars who do not hail from the
United States. As the lines connecting Hollywood with the United
States are increasingly blurred, the world needs to recon- sider the methods by which to conquer this so-called beast. Protectionists should not abandon their quest to salvage the intellectual and artistic quality of films. They
should heed the words of Eric Rohmer. In an interview with the New York Times, the French director stated that his countrymen should fight back with high-quality movies, not protection. “?I am a commercial film maker. I am for free competition and am not supported by the state.”? Case Questions
1. Like an iceberg, most aspects of culture are largely invisible to the casual observer (for example, gen- der roles, ways to solve problems, conversational patterns). What aspects of culture do Hollywood films promote around the world? In what ways do Hollywood movies affect the cultural values of peo- ple outside the United States?
2. Hollywood movies are very popular in world markets, but foreign films are little viewed in the United States.
What factors determine the high demand for Holly- wood films in world markets? That is, why are they so popular in Europe, Japan, Latin America, and else- where? Why are foreign films so little demanded in the
United States? What can foreign filmmakers do to increase demand for their movies in the United States? 3. Worldwide, protectionism of most goods is insignifi- cant or declining. Do movies constitute a separate cat- egory (culture incarnate, as stated in the case study), or should they be treated like any other good? That is, given the nature of movies, is it okay for a country to shield and support its own film industry via protection- ism? Are there any other cultural industries that gov- ernments should protect? Justify your answers. 4. Are subsidies and quotas the right way to protect cultural industries? What are the advantages and disadvantages of subsidies and quotas for protect- ing local film industries? Are there better ways to maintain and enhance home-grown film industries? Justify and elaborate your answer. <
This case was written by Sonia Prusaitis, under the supervision of Dr. Gary Knight. Sources: “?Moreover: Culture Wars.”? Economist, Sep, 12, 1998, pp. 97-00; Barth,
Steve. (1998). “?Cultural Protectionism,”? World Trade, March, 1998, p. 43; Cowen,
Tyler. (1998). “?French Kiss-Off: How Protectionism has Hurt French Films,”? Reason
Magazine July, 1998, pp. 40-48; Day, Kiku. (2004).”?Totally Lost in Translation,”?
The Guardian, January 24, 2004; Delacroix, Jacques, and Julien Bornon. (2005).
Can Protectionism Ever Be Respectable? The Independent Review 9(3): 353-65;
Marvasti, Akbar, and E. Canterbery. (2005). “?Cultural and Other Barriers to Motion
Picture Trade,”? Economic Inquiry, January, 2005, pp. 39-55; Motion Picture Asso- ciation. (2002). U.S. Entertainment Industry, February 5, 2005, at www.mpaa.org;
Munroe, J. Richard. (1998). “?Good-Bye to Hollywood: Cultural Imperialism and the New Protectionism,”? Vital Speeches of the Day, June 15; Teachout, Terry.
(1998). “?Cultural Protectionism: The World’?s Culture Czars Move to Repel the
Hollywood Invasion,”? The Wall Street Journal, July 10, 1998, p. W11. Pg30Pg30CAVUMC05_124-157hr 10/10/07 1:42 PM Page 153
CHAPTER ESSENTIALS Key Terms acculturation, p. 130 critical incident analysis (CIA), p. 149 cultural metaphor, p. 135 cross-cultural risk, p. 126 culture, p. 126 ethnocentric orientation, p. 128 geocentric orientation, p. 128 high-context culture, p. 136 Summary
idiom, p. 135 individualism versus collectivism, p. 137 long-term versus short-term orientation, p. 139 low-context culture, p. 136 masculinity versus femininity, p. 138 monochronic, p. 140
polycentric, p. 128 polychronic orientation, p. 140 power distance, p. 138 self-reference criterion, p. 149 socialization, p. 129 stereotype, p. 135 uncertainty avoidance, p. 138
In this chapter, you learned about: 1. The challenge of crossing cultural boundaries In cross-border business, we step into different cul- tural environments characterized by unfamiliar lan- guages, distinctive motivations, and different values. Culture refers to learned, shared, and enduring orien- tations of a society, which are expressed in values, ideas, attitudes, behaviors, and other meaningful symbols and artifacts. Cross-cultural risk arises from a situation or event where a cultural miscommunica- tion puts some human value at stake. Ethnocentric orientation refers to using our own culture as the standard for judging how good other cultures are.
Polycentric orientation refers to a host country mind- set where the manager develops greater affinity with the country in which she or he conducts business.
Geocentric orientation refers to a global mindset where the manager is able to understand a business or market without regard to country boundaries. 2. The meaning of culture: foundation concepts Culture is the collective mental programming of peo- ple. It influences consumer behavior, managerial effectiveness, and the range of value-chain opera- tions, such as product and service design, marketing, and sales. Culture is not inherited, right or wrong, or about individual behavior. Culture is like an iceberg in that most of its elements and influence are hidden below the surface. 3. Why culture matters in international business Managers need to develop understanding and skills in dealing with other cultures. Culture matters in inter- national business in areas such as developing prod- ucts and services; interaction with foreign business partners; selecting foreign distributors; business nego- tiations; dealing with customers; preparing for trade
fairs; and preparing promotional materials. Cross- cultural differences complicate workplace issues such as teamwork, employment, pay-for-performance sys- tems, organizational structures, union-management relationships, and attitudes toward ambiguity.
4. National, professional, and corporate culture
There are three layers of culture: national, profes- sional, and corporate. Working effectively within these cultures is a major challenge. The influence of professional and corporate cultures grows as people are socialized into a profession and their workplace.
Most companies exhibit a distinctive set of norms, values, and beliefs that distinguish them from other organizations. Such differences are often as distinc- tive as the differences in culture between nations.
Managers can misinterpret the extent to which a counterpart’?s behavior is attributable to national, professional, or corporate culture.
5. Interpretations of culture
Culture can be interpreted through metaphors, a distinc- tive tradition or institution that serves as a guide or map for deciphering attitudes, values, and behavior. Stereo- types are generalizations about a group of people that may or may not be factual. An idiom is an expression whose symbolic meaning is different from its literal meaning. Low-context cultures rely on elaborated ver- bal explanations, putting much emphasis on spoken words. High-context cultures emphasize nonverbal communications and a more holistic approach to com- munication that promotes harmonious relationships.
Hofstede’?s typology of cultural dimensions consists of individualism versus collectivism, power distance, uncertainty avoidance, masculinity versus femininity, and long-term versus short-term orientation. 153 Pg31Pg31CAVUMC05_124-157hr 10/10/07 1:42 PM Page 154
154 Chapter 5 The Cultural Environment of International Business
6. Key dimensions of culture The dimensions of culture include values and atti- tudes, which are shared beliefs or norms that indi- viduals have internalized. Deal-versus-relationship orientation describes the intensity with which managers get down to business, as opposed to developing relationships. Manners and customs are ways of behaving and conducting oneself in public and business situations. Perceptions of time refer to the temporal focus of life, and dictate expectations about planning, scheduling, profit streams, and what constitutes lateness in arriving for work and meetings. Monochronic cultures tend to exhibit a rigid orientation to time in which the individual is focused on schedules, punctual- ity, and time as a resource. In contrast, polychronic cultures refers to a flexible, nonlinear orientation to time in which the individual takes a long-term perspective and is capable of multitasking. Percep- tions of space represent the area or physical room within which people feel comfortable. Religion provides meaning and motivation and is very sig- nificant in defining peoples’? ideals and values.
Symbolic and material productions refer to the intangible and tangible meanings, institutions, and structures that individual cultures construct for themselves. 7. Language as a key dimension of culture Language is a “?mirror”? of culture. It is essential for communication and provides cultural insights. There are nearly 7,000 active languages, but most have only a few thousand speakers. The major languages include Mandarin Chinese, Hindi, English, Spanish, and Arabic. Language has both verbal and nonverbal characteristics. It is conditioned by our environment.
Sometimes it is difficult to find words to convey the Test Your Comprehension
same meaning in two different languages. Learning one or more common languages will enhance a per- son’?s international business career.
8. Culture and contemporary issues
While culture is relatively stable, contemporary issues influence culture. In contact-based ser- vices such, as found in law and architectural firms, providers interact directly with foreign nationals in culture-laden transactions. Cultural differences may lead to mishaps in the exchange process. Technological advances are a key deter- minant of culture and cultural change. Improved transportation and the spread of communica- tions technology have removed the boundaries that once separated nations. Technology also promotes culture. The Internet emphasizes the role of language in communications. Globaliza- tion promotes common culture and the con- sumption of similar products and services worldwide. 9. Managerial guidelines for cross-cultural success
Managerial guidelines include the need to acquire factual and interpretive knowledge about the other culture, and to try to speak their language. Man- agers should avoid cultural bias and engage in critical incident analysis to avoid the self-reference criterion. Critical incident analysis involves being culturally aware, not making value judgments, and selecting the most likely interpretation of for- eign behaviors. Experienced managers develop cross-cultural skills, including a tolerance for ambiguity, perceptiveness, valuing personal rela- tionships, and being flexible and adaptable. Cultural intelligence is the ability to function effectively in culturally diverse situations.
1. Describe culture and cross-cultural risk. 2. Distinguish between socialization and acculturation. 3. Explain why culture matters in international busi- ness. In what types of contexts can cross-cultural dif- ferences cause concerns for managers? 4. Distinguish between the three layers of culture. What are the major elements of country-level and profes- sional culture?
5. How does a manager with a deal orientation differ from a manager with a relationship orientation?
6. What are the two major perceptions of time, and how does each affect international business?
7. What are the five dimensions that make up Hofstede’?s model of culture?
8. Distinguish between cultural metaphors and stereotypes.
9. Summarize the three major guidelines for success in cross-cultural settings. Pg32Pg32CAVUMC05_124-157hr 10/10/07 1:42 PM Page 155
Chapter Essentials 155 Apply Your Understanding AACSB: Communication, Reflective Thinking, Multicultural and Diversity
1. Suppose you get a job at Kismet Indemnity, a life insurance company. In its 45-year history, Kismet has never done any international business. Now the president of Kismet, Mr. Randall Jay, wants to expand Kismet’?s business abroad. You have noted in meetings that Mr. Jay seems to lack much awareness of the role of culture. Although you have always been careful about appearing too smart around your superiors, write a memo to Mr. Jay in which you explain why culture matters in international busi- ness. In your memo, be sure to speculate on the effects of various dimensions of culture on sales of life insurance. 2. People tend to see other cultures from their own point of view. They accept their own culture and its ways as the norm—?everything else seems foreign, or even mysterious. This chapter describes a technique called critical incident analysis (CIA) that encourages an objective reaction to cultural differences by helping managers develop empathy for other points of view. Using the CIA approach, define a situation that you or someone else has experienced that led to a cross-cultural misunderstanding. Perhaps it involved an interaction with a fellow student, a visit to a store in your town, or an experience you had while traveling abroad. Explain what actually happened, and how a more cul- turally sensitive response might have been possible if you or your fellow student had used CIA.
3. Examine the following comparison of cultural values in Mexico and the United States. Based on your analysis, use the discussion in this chapter on the dimensions and drivers of culture, as well as their management implications, to formulate a policy for marketing automobiles to consumers from each of these countries. What features should you emphasize in cars? What attributes should you emphasize in advertising cars?
Typical Values of Mexico
•? Leisure considered essential for full life •? Money is for enjoying life
•? Long-term orientation
•? Relatively collectivist society
•? Strongly male-dominated society
•? Relationships are strongly valued
•? Subordinates are used to being assigned tasks, not authority Typical Values of the United States
•? Leisure considered a reward for hard work •? Money is often an end in itself
•? Short-term orientation
•? Strongly individualistic society
•? Men and women are relatively equal
•? Getting the transaction done is more important than building lasting relationships
•? Subordinates prefer higher degree of autonomy Pg33Pg33CAVUMC05_124-157hr 10/10/07 1:42 PM Page 156
Internet Exercises (http://globalEDGE.msu.edu) AACSB: Reflective Thinking
Refer to Chapter 1, page 27, for instructions on how to access and use globalEDGE™?. 1. Ethnologue (www.ethnologue.com/web.asp) is a comprehensive listing of the world’?s known lan- guages. It is an excellent resource for linguists, scholars, and others with language interests. Ethnologue contains statistical summaries on the number of language speakers by language size, family, and country. Visit the Ethnologue Web site and answer the following questions: (a) Visit the “?Languages of China”? site. What is the population of China? Of the more than 200 lan- guages in China, which one has the largest num- ber of speakers? Which has the second most speakers? What is the common name of the Chinese language known as yue? How do these figures compare to the total number of English speakers in the main English-speaking countries of Australia, Canada, the United Kingdom, and the United States? (b) Visit the “?Languages of Spain”? site. Most people know that Spanish originated in Spain. How many people live in Spain? How many native Spanish speakers are in Spain? How many languages altogether are spoken in Spain? (c) Switzerland is one of the smallest European countries. What are the major languages of Switzerland, and how many
156
speakers does each have? (d) Find the table
“?Linguistic Diversity of Countries,”? which shows the population of each language as a propor- tion of the total population, for most countries.
What are the most linguistically diversified coun- tries in the world? What are the least diversified countries?
2. Cultural intelligence is a person’?s capability to function effectively in situations characterized by cultural diversity. globalEDGE ™? and other online resources feature cultural intelligence scales. What are the components of cultural intelligence? Answer the questions on this scale and calculate your score on cultural intelligence?
Compare your score to those of your classmates.
3. Various online sites list cultural blunders or faux pas (false steps) that people make in their interna- tional interactions. One such site is International Education Systems (www.marybosrock.com).
Neglecting to develop relationships (as in “?Just sign the contract, I’?m in a hurry!”?) and casual use of first names (as in “?Just call me Bill!”?) are exam- ples of the cultural blunders that seem to persist.
Research online sources to identify examples of improper cultural behaviors. How can managers avoid such blunders?
Pg34Pg34 CAVUMC05_124-157hr 10/10/07 1:42 PM Page 157 CKR
Cavusgil Knight Riesenberger Management Skill Builder eveloping an Incentive Plan for Sales Personnel from ferent Cultures Professional selling is the art of determining the needs of the client and then providing solutions for those needs in the form of appropriate products and services. Done properly, this produces satisfied customers who are motivated to buy again from the same firm. Selling is particularly important in cross-border business-to-business exchanges, which tend to be more relationship-based than business-to-consumer exchanges. AACSB: Analytic Skills, Multicultural Diversity Successful companies are staffed with an interna- tional sales management team that understands local country client needs and excels at understand- ing the social, political, regulatory, and cultural nuances of the local market. Successful international sales management teams excel at the ability to moti- vate in-country sales representatives, who come from various cultural backgrounds, to meet and exceed established sales goals. Managerial Challenge Selling across cultures requires a high level of sophistication. As emphasized throughout this text, the international environment is characterized by a range of differences in culture, economic circum- stances, political systems, regulatory requirements, and other factors, all of which strongly influence the company’?s selling efforts. A key managerial chal- lenge for international sales management teams is to develop proficiency in understanding foreign cul- tures, and to leverage these cultural skills to maxi- mize the performance of the local, in-country sales professionals. Background In staffing sales personnel, firms usually prefer to hire host-country nationals because of their local knowledge and expertise and because they are less expensive to employ and house than expatriates.
Employing in-country nationals poses its own chal- lenges because of the cultural differences that char- acterize such personnel. To inspire a culturally diverse sales force, managers charged with sales administration must be sensitive to the needs and personality traits of the sales personnel whom they supervise. Managers often need to appeal to differ-
ing motives to induce sales personnel from various cultures to perform at their best.
Managerial Skills You Will Gain
In this C/K/R Management Skill Builder, as a prospective manager, you will:
1. Understand the factors that motivate sales person- nel in different countries.
2. Learn cultural traits in various countries and how these traits influence behaviors among sales per- sonnel.
3. Learn how to increase company sales through more effective personnel management.
4. Gain market research skills in acquiring knowledge of social and political realities in planning company selling activities in different countries. Your Task
Assume you are an international sales administration specialist on the management team of a firm that man- ufactures personal computers. Your task is to assist the international sales manager, who supervises three sales representatives from three different countries. You have been asked to design an incentive plan for each of the employees that is most likely to maximize his or her selling effort and comply with all local country rules and regulations.
Go to the C/K/R Knowledge Portal www.prenhall.com/cavusgil Proceed to the C/K/R Knowledge Portal to obtain the expanded background information, your task and methodology, suggested resources for this exercise, and the presentation template.
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c h a p t e r 5 The Cultural Environment of International Business
Learning Objectives In this chapter, you will learn about:
1. The challenge of crossing cultural boundaries 2. The meaning of culture: foundation concepts 3. Why culture matters in international business 4. National, professional, and corporate culture 5. Interpretations of culture 6. Key dimensions of culture 7. Language as a key dimension of culture 8. Culture and contemporary issues 9. Managerial guidelines for cross- cultural success
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American Football . . . in Europe?
There are few things more representative of U.S. culture than American football. It is an extravaganza, complete with exciting halftime shows and peppy cheerleaders. The game exemplifies national pride. The national anthem is played, flags are unfurled, and uniformed players charge up and down the field like an army in the throes of often violent conflict. The teams’? huddles divide the game into small plan- ning sessions for the next play.
In the United States, the National Football League (NFL) oversees the sport and, like any successful business, wants to score in new markets. The NFL first tackled Europe in 1991, with plans to establish American football there. After years of failed attempts, NFL Europe emerged as six teams, five of which were based in Ger- many (such as the Berlin Thunder, the Cologne Centurions, and the Hamburg Sea Devils). Earlier teams established in Spain had failed.
Why did American football triumph in Germany but fail in Spain? An excellent metaphor for Spanish culture is the bullfight, an ancient pursuit. In tradition-bound
Spain, bullfights are often held in 2,000-year-old Roman amphitheaters. Rather than a competitive sport, bullfighting is a ritual and an art. It is the demonstration of style and courage by the matador, the hero who fights the bulls. If the matador has per- Pg2Pg2CAVUMC05_124-157hr 10/10/07 1:41 PM Page 125
formed well, he receives a standing ovation by the crowds, who wave white hand- kerchiefs or throw hats and roses into the ring. The bullfight symbolizes Spanish cul- ture by combining a passionate celebration of life with an elaborate system of ritu- als, a grandiose and artistic spectacle with blood, violence, and danger. In the hearts of the Spanish people, American football cannot attain such heights. What accounts for American football’?s early success in Germany? For one, the sport strongly emphasizes the traditional German traits of rules and order. In Germany, rules are many and conformity is valued. For instance, German parks occasionally have sections marked by signs where you are “?permitted”? to throw a stick to your dog. Germans can also be very time conscious. They know how to allocate time efficiently, and frown upon tardiness. The tendency is similar to American football, where the stop-and-go pace is timed to the second. A popular metaphor for German culture is the symphony. In fact, two of the most revered symphonic composers—?Bach and Beethoven—?were German. Germans are drawn to the symmetry and order of the symphony. A conductor brings together the distinctive talents of individual performers to produce a unified sound. Like a sym- phony, football depends on a strong leader—?the quarterback—?who unites the 125 Pg3Pg3CAVUMC05_124-157hr 10/10/07 1:41 PM Page 126
126 Chapter 5 The Cultural Environment of International Business distinctive talents of the players so they perform as one. At halftime, the crowd is treated to the spec- tacle of a huge marching band and numerous other performers, all synchronized to the highest degree. Preparation, timing, precision, confor- mity, and an understanding of the individual’?s con- tribution to the “?score”? underlie both symphonic performances and American football. The major reason for NFL’?s failure in Europe has been its inability to win over Europeans shaped by ancient cultures and wedded to soc- cer (called football in most of the world). Soccer is woven into the fabric of European society. It is an outlet for inter-European rivalries that in ear- lier times manifested as armed conflict. Although superstars such as David Beckham emerge, soc- cer emphasizes a group effort—?unity aimed at achieving a common goal. The United States is a mixture of many cul- tures that form a multifaceted collection of ethnic identities. By contrast, Europe is home to many more ethnicities that lack the integration of the United States. Europeans have made great strides toward creating an all-encompassing
European culture, but the difficulties encoun- tered with unification reveal how individual nations are unwilling to give up their cultural identities in favor of some larger European
Union ideal. Thus, the appeal of American foot- ball has varied from country to country as a function of cultural differences. Most Europeans view the sport as a perversion of soccer. It rep- resents the American headstrong attitude, with emphasis on violent conflict. From the perspec- tive of many Europeans, the NFL tried to push an inferior product on a market long loyal to soccer. The NFL spent countless dollars promot- ing its teams, largely to no avail. In the end, national culture triumphed. In 2007, the NFL closed its European franchise. < Sources: Van Bottenburg, M. (2003). Thrown for a Loss: American
Football and the European Sport Space. American Behavioral Sci- entist 46 (11): 1150-62; NFL Europe. Retrieved November 2005 from en.wikipedia.org/wiki/NFL_Europe; National Football League (NFL Europe). Retrieved November 2005 from www.nfleurope.com; White, E. (2003). “?Is Europe Ready for Some Football?—?NFL Drafts Dolls, Actors in $1.6 Million Campaign to Promote the Super
Bowl.”? Wall Street Journal, Jan. 15, B4; Gannon, M. J., and Associ- ates. (1994). Understanding Global Cultures: Metaphorical Jour- neys Through 17 Countries. Thousand Oaks, CA: Sage.
The Challenge of Crossing Cultural Boundaries In cross-border business, we step into different cultural environments characterized by unfamiliar languages and unique value systems, beliefs, and behaviors. We encounter customers and business partners who display differing lifestyles, norms, and con- sumption behaviors. These differences influence all dimensions of international busi- ness. Often, they get in the way of straightforward communication, representing one of the four risks associated with international business that we introduced in Chapter 1. Cross-cultural risk A situation or event where a cultural miscommunication puts some human value at stake. Culture The learned, shared, and enduring orientation patterns in a society. People demonstrate their culture through values, ideas, attitudes, behaviors, and symbols.
We highlight these risks in Exhibit 5.1. Cross-cultural risk is defined as a situation or event where a cultural miscommunication puts some human value at stake. Cross-cultural risk arises routinely in international business because of the diverse cultural heritage of the participants. Culture refers to the learned, shared, and enduring orientation patterns in a society. People demonstrate their culture through values, ideas, attitudes, behaviors, and symbols.
Culture affects even simple greetings and partings. Greeting ceremonies are a deeply embedded cultural marker and evolve over many centuries. They specify such behaviors as how far apart to stand, what to say, and whether or not to touch or smile. The ceremonies may vary as a function of the age, gender, or status of the greeters. What people say in greeting each other also varies. For example, in China, friends express thoughtfulness by asking each other whether they have had their meal yet. In Turkey, a typical greeting is “?What is new with you?”? When meeting a person for the first time, the common question is “?Where in the country do you come from?”? in an effort to establish some commonality with the other party. The Japanese, who still exercise formal greeting and parting rituals, routinely apologize to the other party just before ending a telephone conversation.
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Commercial Risk
Risks in International Business
Country Risk
The Challenge of Crossing Cultural Boundaries 127 Exhibit 5.1 The Four Major Risks in International Business
Currency
(Financial Risk)
Unlike political, legal, and economic systems, culture has proven very diffi- cult to identify and analyze. Its effects on international business are deep and broad. Culture influences a range of interpersonal exchange as well as value-chain operations such as product and service design, marketing, and sales. Managers must design products and packaging with culture in mind, even regarding color. While red may be beautiful to the Russians, it is the symbol of mourning in South Africa. What is an appropriate gift for business partners also varies around the world. While items such as pens are universally acceptable, others may not be appropriate. Examples include sharp items such as knives or scissors, which imply cutting off the relationship or other negative sentiments, chrysanthemums, which are typically associated with funerals, and hand- kerchiefs, which suggest sadness. Most companies want their employees to learn about other cultures and acquire a degree of cross-cultural profi- ciency. In California’?s Silicon Valley, where IT firms are con- centrated, Intel offers a seminar to its staff called “?Working with India.”? The seminar aims to help employees work more effectively with the estimated 400,000 Indian nationals in the valley. Several other Silicon Valley firms offer similar training. Another computer firm, AMD, flies IT workers from India to its facilities in Texas for a month of cultural training with U.S. managers. Workers role-play, pretending to be native Indians, and study subjects like Indian political history, Indian movies, and the differences between Hin- duism and other Indian religions. Training includes lessons on assigning work (Indian workers are likely to agree to aggressive timelines and yet may not inform a manager when falling behind, so managers should make sure
Limited interaction between soci- eties, such as native Kenyans and Russians or Europeans, can mag- nify differences in values, behav- iors, and symbols. In contrast, these differences are minimized with increased interaction. Pg5Pg5CAVUMC05_124-157hr 10/10/07 1:41 PM Page 128
128 Chapter 5 The Cultural Environment of International Business timelines are reasonable), preparing food (to help those who practice Jainism, company cafeterias should clearly distinguish vegan from vegetarian food), and socializing (since it’?s polite to initially decline an invitation to a colleague’?s home, managers should offer more than once).1 Ethnocentric orientation Using our own culture as the standard for judging other cultures.
Polycentric orientation A host-country mindset where the manager develops a greater affinity with the country in which she or he conducts business. Geocentric orientation A global mindset where the manager is able to understand a business or market without regard to country boundaries.
Cross-cultural encounters are increasingly common. Maurice
Dancer (far left), head concierge at The Pierre hotel in New York, interacts with a wide variety of international cultures every day, without even leaving the United
States.
Cross-cultural risk is exacerbated by ethnocentric orientation—?using our own culture as the standard for judging other cultures. Most of us are brought up in a sin- gle culture; we have a tendency to view the world primarily from our own perspec- tive. Ethnocentric tendencies are a characteristic of virtually every society, and entail the belief that one’?s own race, religion, or ethnic group is somehow superior to oth- ers. Howard Perlmutter described ethnocentric views as “?home-country orienta- tion.”?2 He argued that managers engaged in cross-border business should give up their ethnocentric orientations in favor of a polycentric or geocentric orientation. Polycentric orientation refers to a host-country mindset where the manager devel- ops a greater affinity with the country in which she or he conducts business. Geoc- entric orientation refers to a global mindset where the manager is able to understand a business or market without regard to country boundaries. Geocentric tendencies can be likened to a cognitive orientation that combines an openness to, and aware- ness of, diversity across cultures.3 Managers with a geocentric orientation make a deliberate effort to develop skills for successful social behavior with members of other cultures.4 They develop new ways of thinking, learn to analyze cultures, and avoid the temptation to judge different behavior as somehow inferior. They learn to appreciate the best that humans have produced, no matter where it was developed.5 Unfamiliar cultures may be ever present in domestic as well as international dealings. Buyers visit from abroad to make deals, the firm may source from sup- pliers located in distant countries, and employees increasingly have diverse cul- tural backgrounds. For example, Maurice Dancer is the head concierge at The
Pierre—?a luxury hotel in New York City. In 2005, Taj Hotels, Resorts and Palaces, a subsidiary of Tata, the largest company in India, acquired the management con- tract of The Pierre. In addition to adapting his management style to fit the corpo- rate culture of the new owners, Maurice must also adapt to certain aspects of
Indian culture, demonstrated in Taj’?s administrative style. Maurice also manages employees from Asia, Europe, and Latin America. These employees bring idio- syncrasies to their jobs characteristic of their home countries. For example, Asians tend to be reserved when dealing with customers. In the past, Maurice had to encourage Asian subordinates to be more outgoing. Finally, much of The Pierre’?s clientele is foreign-born. Without even leaving the United States, Maurice inter- acts with a wide variety of foreign cultures every day.
The cross-cultural integration of firms like The Pierre is yet another manifesta- tion of globalization. But globalization is leading to convergence of cultural values as well. While people around the world are not inclined to renounce their cultural values, common norms and expectations of behavior are gradually emerging. In addition, many universal values apply to cross-cultural encounters. Keep in mind that people every- where are appreciative if you treat them with respect, try to speak their language, and show genuine interest in them. Managers regularly risk committing embar- rassing cultural blunders. Cross-cultural mis- communication can ruin business deals, hurt sales, or harm the corporate image. In this chapter, we address the risks that cultural miscommunica- tion can pose in cross-cultural encounters. Today, developing an appreciation of, and sensitivity for, cultural differences has become an imperative for any manager. Pg6Pg6CAVUMC05_124-157hr 10/10/07 1:41 PM Page 129
The Meaning of Culture: Foundation Concepts 129 The Meaning of Culture: Foundation Concepts A broad definition of culture was offered by Herskovits6 as “?the human made part of the environment.”? Culture incorporates both objective and subjective elements.
Objective or tangible aspects of culture include tools, roads, television program- ming, architecture, and other physical artifacts. Subjective or intangible aspects of culture include norms, values, ideas, customs, and other meaningful symbols. Geert Hofstede,7 a well-known Dutch organizational anthropologist, views culture as a “?collective mental programming”? of people. The “?software of the mind,”? or how we think and reason, differentiates us from other groups. Such intangible orientations shape our behavior. Another scholar, Harry Triandis,8 views culture as an interplay of sameness and differences; all cultures are simulta- neously very similar and very different. While as human beings we share many commonalities and universals, as groups of people or societies we exhibit many differences. For example, some cultures are more complex than others. Some cul- tures are more individualistic, while others are more collectivist. Some cultures impose many norms, rules, and constraints on social behavior, while others impose very few. Culture evolves within each society to characterize its people and to distin- guish them from others. First, it captures how the members of the society live—?for instance, how they feed, clothe, and shelter themselves. Second, it explains how members behave toward each other and with other groups. Third, it defines the beliefs and values of members and how they perceive the meaning of life. Having described what culture is, it is also important to define what culture is not. Culture is: •? Not right or wrong. Culture is relative. There is no cultural absolute. People of different nationalities simply perceive the world differently. They have their particular ways of doing things, and do not fit any one standard. Each culture has its own notions of what is acceptable and unacceptable behavior. For instance, in some Islamic cultures, a wife cannot divorce her husband. In many countries, nudity is entirely acceptable on TV. In Japan and Turkey, wearing shoes in the home is taboo. •? Not about individual behavior. Culture is about groups. It refers to a collec- tive phenomenon of shared values and meanings. Thus, while culture defines the collective behavior of each society, individuals often behave differently. For instance, in most countries, men wear their hair short. But a few mavericks have very long hair and stand out among their peers. In Australia, Canada, Europe, and the United States, some men wear makeup. Such nonconformist behavior does not represent the cultural values of the larger population. •? Not inherited. Culture is derived from the social environment. People are not born with a shared set of values and attitudes. Children gradually acquire specific ways of thinking and behaving as they are raised in a society. For example, in the United States, children usually acquire values of individualism and Christianity. But in China, children learn to depend on family members and acquire values based on Confucianism. Culture is passed from generation to generation—?from parents, teachers, mentors, peers, and leaders. Modern methods of communication, including transnational media, play an enormous role in transmitting culture. This process of learning the rules and behavioral patterns appropriate to one’?s society is called socialization. In other words, socialization is cultural learning. Socialization The process of Through socialization, we acquire cultural understandings and orientations that learning the rules and behavioral are shared by society. Acquiring cultural norms and patterns is a subtle process—? patterns appropriate to one’?s we adapt our behavior unconsciously and unwittingly. given society. Pg7Pg7CAVUMC05_124-157hr 10/10/07 1:41 PM Page 130
130 Chapter 5 The Cultural Environment of International Business The process of adjusting and adapting to a culture other than one’?s own is called Acculturation The process of adjusting and adapting to a culture other than one’?s own.
Exhibit 5.2 Culture as an Iceberg
acculturation. It is commonly experienced by people who live in other countries for extended periods; for example, expatriate workers.
More than any other feature of human civilization, culture signals the differ- ences among societies on the basis of language, habits, customs, and modes of thought. Yet most of us are not completely aware of how culture affects our behav- ior until we come into contact with people from other cultures.
Anthropologists use the iceberg metaphor to understand the nature of culture. Culture is likened to an iceberg: Above the surface, certain characteristics are visi- ble, but below, unseen to the observer, is a massive base of assumptions, attitudes, and values that strongly influence decision making, relationships, conflict, and other dimensions of international business. While we are conditioned by our own cultural idiosyncrasies, we are yet unaware of the nine-tenths of our cultural makeup that exist below the surface. In fact, we are often not aware of our own culture unless we come in contact with another one. Exhibit 5.2 illustrates the ice- berg concept of culture. The distinction is between three layers of awareness: high culture, folk culture, and deep culture.
Cultural Makeup That Is Visible High Culture
Cultural Makeup We Are Aware Of Folk Culture
Cultural Makeup We Are Unaware Of Deep Culture Pg8Pg8CAVUMC05_124-157hr 10/10/07 1:41 PM Page 131
Why Culture Matters in International Business 131 Why Culture Matters in International Business Effective handling of the cross-cultural interface is a critical source of a firm’?s competitive advantage. Managers need to develop not only empathy and tolerance toward cultural differences, but also acquire a sufficient degree of factual knowledge about the beliefs and values of foreign counterparts. Cross-cultural proficiency is paramount in many managerial tasks, including: •? Developing products and services •? Communicating and interacting with foreign business partners •? Screening and selecting foreign distributors and other partners •? Negotiating and structuring international business ventures •? Interacting with current and potential customers from abroad •? Preparing for overseas trade fairs and exhibitions •? Preparing advertising and promotional materials9 Let’?s consider specific examples of how cross-cultural differences may complicate workplace issues:10 Teamwork. Cooperating to achieve common organizational goals is critical to business success. But what should managers do if foreign and domestic nationals don’?t get along with each other? Try to sensitize each group to differences and develop an appreciation for them? Rally the groups around common goals? Explicitly reward joint work? Lifetime employment. Workers in some Asian countries enjoy a paternalistic relationship with their employers and work for the same firm all their lives. The expectations that arise from such devoted relationships can complicate dealings with outside firms. Western managers struggle with motivating employees who expect they will always have the same job regardless of the quality of their work. Pay-for-performance system. In some countries, merit is often not the primary basis for promoting employees. In China and Japan, a person’?s age is the most important determinant in promoting workers. But how do such workers perform when Western firms evaluate them using performance-based measures? Organizational structure. Some companies prefer to delegate authority to coun- try managers, creating a decentralized organizational structure. Others are charac- terized by autocratic structures with power concentrated at regional or corporate headquarters. Firms may be entrepreneurial or bureaucratic. But how can you get a bureaucratic supplier to be responsive about demands for timely delivery and performance? Union-Management relationships. In Germany, union bosses hold the same status as top-level managers and are required to sit on corporate boards. In general, European firms have evolved a business culture in which workers enjoy a more equal status with managers. This approach can reduce the flexibility of company operations if union representatives resist change. Attitudes toward ambiguity. In each country, nationals possess a unique capacity to tolerate ambiguity. For example, some bosses give exact and detailed instructions on work to be performed, whereas others give ambiguous and incomplete instructions. If you are not comfortable working with minimum guidance or taking independent action, then you may have difficulty fitting into some cultures. To gain a more practical perspective on culture’?s role in business, let’?s take the example of doing business in Japan. In the West, “?the customer is king,”? but in
Japan, “?the customer is God.”? Whenever customers enter retail stores in Japan, they are greeted with vigorous cries of “?Welcome”? and several choruses of “?Thank Pg9Pg9CAVUMC05_124-157hr 10/10/07 1:41 PM Page 132
132 Chapter 5 The Cultural Environment of International Business you very much”? when they leave. In some department stores, executives and clerks line up to bow to customers at the beginning of the business day. If customers have to wait in line—?which is rare—?they receive a sincere apology from store personnel. Japanese firms value maintaining face, harmony, and good standing with customers and the business community. Culturally, the most important Japanese values are tradition, patience, respect, politeness, honesty, hard work, affiliation, group consensus, and cooperation. Japan’?s orientation to customer service derives from its national culture. Good form, top product quality, and after-sale service are the keys to success for doing business in Japan. The Japanese put tremendous emphasis on providing excellent customer service. Japanese car dealers typically offer pickup and delivery for repair service and even make new-car sales calls to customers’? homes. Nissan and Toyota use customer satisfaction surveys to evaluate their dealers. In the banking industry, personal bankers maintain relationships by calling on customers at their offices or by canvassing entire neighborhoods. They may help customers sell or buy homes, find outlets for merchandise sales, provide tax advice, or locate tenants for new buildings. Japanese taxi drivers spend spare moments shining their cabs and often wear white gloves. Trains are scheduled down to the second. Japan is a small country (about the size of California) with nearly half the population of the United States. A densely populated and homogenous society has encouraged the development of a cohesive and polite culture. A focus on interpersonal relationships helps the Japanese avoid conflict and preserve har- mony. Another key element of the Japanese culture is the emotional construct of amae, roughly translated as “?indulgent dependence,”? which is a critical part of child-rearing in Japan. While Western mothers teach their children to be independent, Japanese mothers instill a sense of emotion-laden dependence in their children. Scholars believe that deeply felt amae guides social interactions in adulthood. The relationship between a senior and a junior is analogous to mother-child amae. Filial piety—?respect for one’?s parents and elders—?is the foundation of the Confucian ethic. Amae and the Confucian parent-child rela- tionship provide the basis for all other relationships. At the beginning of every working day, many firms have a group meeting intended to build harmony and team spirit, and personnel even do calisthenics together. Training of new store personnel is done in groups. The group trains together, is evaluated collectively, and may even live together. The group dis- covers the sources of problems and fixes them as a team. Training is very detailed. Stores provide instructions on how to greet people, what tone of voice to use, and how to handle complaints. Stores attach much weight to cus- tomer feedback; they typically make a detailed report to the manufacturer on any product defects and return the product to the manufacturer for careful analysis. Manufacturers and service suppliers design their offerings based on complaints and comments received from customers.11 Nevertheless, Japan is slowly changing. Modern Japan operates increasingly according to contemporary values, which Japan gradually is importing from abroad. Discount stores modeled on Carrefour, Toys-R-Us, and Wal-Mart are beginning to displace department stores as the preferred shopping venues, especially among the younger generation. Given a choice between attentive personal service and the lowest possible prices, Japanese citizens increasingly make the trade-off. The Recent Grad in IB feature highlights the cross-cultural experiences of
Chinese-born Lawrence Yu, who had first-hand experience with living, studying, and working in the United States. Having an inquiring mind and being open to new experiences certainly helped Lawrence in bridging cul- tural gaps. Pg10Pg10CAVUMC05_124-157hr 10/10/07 1:41 PM Page 133
> RECENT GRAD IN IB
Zhibo (Lawrence)
Yu
ince it opened to foreign investors in 1979, China’?s econ- omy has been growing rapidly.
product transition management.
Dell’?s notebook computer manu- facturer, which ships over 7 million Lawrence Yu lived in China and wit- nessed amazing changes there as a teenager during the 1990s. He ate at McDonald’?s, wore Nike shoes, and watched NBA games. He became very interested in the United States, which has a literal Chinese translation of a “?beautiful country.”? At the age of sixteen, Lawrence came to the United States as a foreign exchange student. After graduating from Mitchell High School, he earned a degree from Michigan State Univer- sity in supply-chain management.
While in college, he took a study- abroad trip to Mexico during a winter break. Lawrence practiced Spanish, lived with a Mexican family, attended business development conferences, and toured manufacturing firms. While interning at Whirlpool Cor- poration in Benton Harbor, Michigan,
Lawrence created an asset-tracking system for the global procurement group and conducted market research for Whirlpool in China. He also visited
Whirlpool’?s Asia headquarters in Hong
Kong and their China branch in Shen- zhen. He became familiar with the local sales and marketing teams and consequently noticed opportunities for improvement and best-practice sharing, which he presented to
Whirlpool executives at their U.S. headquarters. Following the summer at Whirlpool, he completed another eight-month internship with Unilever
North America in Chicago. After graduation, Lawrence worked at Dell Inc. as a master sched- uler for notebook computers. He was primarily responsible for MRP fore- casting, E&O (end-of-life and obso- lete) planning, lead-time setting, and
laptops annually, is located in Penang,
Malaysia. Since Chinese is the first lan- guage of most of the Malaysian team members, Lawrence was able to com- municate with them, which helped to increase communication quality and work efficiency. Dell management sent him to Dell China to work on a project with the procurement group in
Shanghai. With the knowledge of Dell business that he gained in the United
States, and with his language ability and strong interpersonal skills,
Lawrence successfully fulfilled the mis- sion of the trip and won praise from senior-level management.
After working as a master scheduler for over a year, Lawrence was recruited to Dell Global Logis- tics as a logistics program manager.
His extended team managed Dell’?s inbound logistics business globally, with total spending over $40 million annually. In addition to daily opera- tional tasks, his responsibilities also included weekly/monthly/quarterly business reviews, financial analysis, contract negotiations, and process- improvement projects. With the responsibility to oversee eight U.S. logistics centers and a 100-truck fleet, Lawrence gained people-man- agement skills and learned how to make decisions under pressure, even with incomplete information.
In August 2006, Lawrence was promoted, and became the youngest Global Supply Manager at Dell, at the age of 24. He was responsible for managing Dell’?s $1 billion annual spending in memory (semiconductor) products. In this role, he negotiated prices with suppliers such as Sam- sung, Siemens, and Kingston.
Lawrence‘?s major: Supply Chain
Management
Objectives: Make a difference in the world by excelling in international business Internships during college:
Whirlpool Corporation and Unilever North America
Jobs held since graduating:
•? Global Supply Manager, Dell Inc.,
Austin, Texas
•? Logistics Program Manager, Dell Inc.,
Austin, Texas
•? Notebook Master Scheduler, Dell
Inc., Austin, Texas Lawrence’?s Advice for an International Business
Career
”?While it was risky, I am glad that I did it. Language barriers, cultural dif- ferences, and being apart from fam- ily were all serious difficulties. Lan- guage can be improved over time, and culture can be learned while you live in that culture. I got used to liv- ing alone pretty fast. In addition to my formal education in the class- room, by living, studying, and work- ing in another country, I was naturally learning every day. The knowledge you gain from just having been in another country cannot be learned any other way. From living on my own since the age of sixteen, I’?ve grown a lot, physically and mentally. I now have greater confidence in whatever I pursue than I ever had before, thanks to my international experience!”? 133 Pg11Pg11CAVUMC05_124-157hr 10/10/07 1:41 PM Page 134
134 Chapter 5
Exhibit 5.3
The Cultural Environment of International Business National, Professional, and Corporate Culture While cultural idiosyncrasies influence cross-border business, we cannot attribute all difficulties to differences in national culture. Exhibit 5.3 sug- gests that employees are socialized into three cultures: national culture, prof- essional culture, and corporate culture.1 2 Working effectively within these overlapping cultures is a major challenge. The influence of professional and corporate culture tends to grow as people are socialized into a profession and workplace. Most companies have a distinctive set of norms, values, beliefs, and modes of behavior that distinguish them from other organizations. Such differences are often as distinctive as the national culture. For example, Britain and the United States share a language and have a similar economic system. Two firms from the same country can have vastly different organizational cultures. The age of a com- pany and its product portfolio both influence its corporate culture. For example, Lloyds, a large British insurance firm, has a conservative culture that may be slow to change. Virgin, the British music and travel provider, has an experimental, risk- taking culture. These cultural layers present yet another challenge for the manager: To what extent is a particular behavior attributable to national culture? In companies with a strong organizational culture, it is hard to determine where the corporate influence begins and the national influence ends. For example, it is difficult to pinpoint the extent to which the culture of French cosmetics firm L’?Oreal is due to national or corporate influences. The French have long been experienced in the cosmetics and fashion industries, but L’?Oreal is a global firm staffed by man- agers from around the world. Their influence, combined with management’?s receptiveness to world culture, has shaped L’?Oreal into a unique organization that is distinctive within French culture. Thus, in international business, the ten- dency to attribute all differences to national culture is simplistic.
National Culture Professional Culture National, Professional, and Corporate Culture SOURCE: Adapted from The Cultural Environment of
International Business, Vern Terpstra and Kenneth David
(1991), Third edition, Cincinnati: Southwestern Pub- lishing Company.
Nationality
Ethnicity
Gender
Religion
Social Institutions
Social Class
Academe
Business
Banking
Engineering
Computer Programming Legal
Medical
Corporate Educational Systems Military Culture
Progressive Socializations that Occur During a Person’?s Life
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Interpretations of Culture To explore the role of culture in international business, scholars have offered sev- eral analytical approaches. In this section, we review three such approaches: cul- tural metaphors, stereotypes, and idioms. Cultural Metaphors M. J. Gannon13 offered a particularly insightful analysis of cultural orientations. A cultural metaphor refers to a distinctive tradition or institution strongly associ- ated with a particular society. As you saw in the opening vignette, bullfighting is a metaphor for the culture of Spain. A cultural metaphor is a guide to deciphering a person’?s attitudes, values, and behavior. American football, for instance, is a cultural metaphor for distinctive traditions in the United States. The Swedish stuga (a cottage or summer home) is a cultural metaphor for Swedes’? love of nature and a desire for individualism through self- development. Other examples of cultural metaphors include the Japanese garden (tranquility), the Turkish coffeehouse (social interaction), the Israeli kibbutz (commu- nity), and the Spanish bullfight (ritual). The Brazilian concept of jeito or jeitinho Brasileiro refers to an ability to cope with the challenges of daily life through creative problem- solving or manipulating the arduous bureaucracy of the country. In the Brazilian con- text, manipulation, smooth-talking, or patronage are not necessarily viewed negatively, because individuals have to resort to these methods to conduct business. Stereotypes Stereotypes are generalizations about a group of people that may or may not be factual, often overlooking real, deeper differences. The so-called maana syndrome (tomorrow syndrome) refers to the stereotype that Latin Americans tend to pro- crastinate. To a Latin American, maana means an indefinite future. A business promise may be willingly made but not kept since who knows what the future will bring? Many uncontrollable events may happen, so why fret over a promise? Stereotypes are often erroneous and lead to unjustified conclusions about oth- ers. Nevertheless, virtually all people employ stereotypes, either consciously or unconsciously, because they are an easy means to judge situations and people. Despite the harm that stereotypes can cause, scholars argue that there are real dif- ferences among groups and societies. We learn about these differences by examin- ing descriptive rather than evaluative stereotypes.14 For example, here is a sample of widely held stereotypes of people from the United States: •? Argumentative and aggressive, in comparison to the Japanese, who tend to be reserved and humble •? Individualistic lovers of personal freedom, in comparison to the Chinese, who tend to be group oriented •? Informal and nonhierarchical, in comparison to the Indians, who believe titles should be respected •? Entrepreneurial and risk-seeking, in comparison to the Saudi Arabians, who tend to be conservative, employing time-honored methods for get- ting things done •? Direct and interested in immediate returns, in comparison to the Latin Ameri- cans, who usually take time to be social and get to know their business partners Idioms An idiom is an expression whose symbolic meaning is different from its literal meaning. It is a phrase that you cannot understand by knowing only what the indi- vidual words in the phrase mean. Idioms exist in virtually every culture. People
Interpretations of Culture 135
Cultural metaphor A distinctive tradition or institution strongly associated with a particular society.
Stereotype Generalization about a group of people that may or may not be factual, often overlooking real, deeper differences. Idiom An expression whose symbolic meaning is different from its literal meaning. Pg13Pg13CAVUMC05_124-157hr 10/10/07 1:41 PM Page 136
136 Chapter 5 The Cultural Environment of International Business
Country Expression Underlying Value Japan “?The nail that sticks out gets hammered down.”? Group conformity Australia and “?The tall poppy gets cut down.”? (Criticism of a Egalitarianism New Zealand person who is perceived as presumptuous, attention-seeking, or without merit.) Sweden and other “?Janteloven”? or “?Jante Law.”? “?Don’?t think Modesty Scandinavian countries you’?re anyone special or that you’?re better than us.”? Korea “?A tiger dies leaving its leather, a man dies leaving Honor his name.”? Turkey “?Steel that works, does not rust.”? Hard work United States “?Necessity is the mother of invention.”? Resourcefulness Thailand “?If you follow older people, dogs won’?t bite you.”? Wisdom Exhibit 5.4 Idioms that Symbolize Cultural Values often use them as a short way of expressing a larger concept. For example, “?to roll out the red carpet”? is to extravagantly welcome a guest—?no red carpet is actually used. The phrase is misunderstood when interpreted in a literal fashion. In Spanish, the idiom “?no est el horno para bolos”? literally means “?the oven isn’?t ready for bread rolls.”? However, the phrase is understood as “?the time isn’?t right.”? In Japanese, the phrase “?uma ga au”? literally means “?our horses meet,”? but the everyday meaning is
“?we get along with each other.”? As with metaphors and stereotypes, managers can study national idioms to develop a better understanding of cultural values. Exhibit 5.4 offers several expressions that reveal cultural traits of various societies. Hall’?s High- and Low-Context Cultures Renowned anthropologist Edward T. Hall15 made a distinction between cultures char- Low-context culture A culture that relies on elaborate verbal explanations, putting much emphasis on spoken words.
High-context culture A culture that emphasizes nonverbal messages and views communication as a means to promote smooth, harmonious relationships.
acterized as “?low context”? and “?high context.”? Low-context cultures rely on elaborate verbal explanations, putting great emphasis on spoken words. As Exhibit 5.5 shows, the low-context countries tend to be in northern Europe and North America, which have a long tradition of rhetoric, placing central importance on the delivery of verbal messages. The primary function of speech in such cultures is to express one’?s ideas and thoughts as clearly, logically, and convincingly as possible. Communication is direct and explicit, and meaning is straightforward. For example, in negotiations Americans typically come to the point and do not beat around the bush. Low-context cultures tend to value expertise and performance and conduct negotiations as efficiently as possible. These cultures use specific, legalistic contracts to conclude agreements.
By contrast, high-context cultures such as Japan and China emphasize non- verbal messages and view communication as a means to promote smooth, harmo- nious relationships. They prefer an indirect and polite face-saving style that emphasizes a mutual sense of care and respect for others. They are on guard not to embarrass or offend others. This helps explain why it is difficult for Japanese peo- ple to say “?no”? when expressing disagreement. They are much more likely to say
“?it is different,”? an ambiguous response. In East Asian cultures, showing impa- tience, frustration, irritation, or anger disrupts harmony and is considered rude and offensive. Asians tend to be soft-spoken, and people typically are sensitive to context and nonverbal cues (body language). For example, at a business luncheon in Tokyo, the boss is almost always the senior-looking individual seated farthest away from the entrance to the room. In Japan, superiors are given such favored seating as a show of respect. To succeed in Asian cultures, it is critical for man-
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High Context
•? Establish social trust first
•? Personal relations and goodwill are valued •? Agreements emphasize trust
•? Negotiations are slow and ritualistic
Low Context
•? Get down to business first
•? Expertise and performance are valued
Chinese
Korean
Japanese
Vietnamese
Arab
Spanish
Italian
English
North American
Scandinavian
Swiss
Interpretations of Culture 137 Exhibit 5.5
Hall’?s High and Low-Context Typology of Cultures
SOURCE: Adapted from Hall, Edward T. (1975). Beyond Culture, New York: Anchor. •? Agreements emphasize specific, legalistic contract •? Negotiations are as efficient as possible German
agers to have a keen eye for nonverbal signs and body language. Negotiations tend to be slow and ritualistic, and agreement is founded on trust. Hall’?s work has gained renewed importance because of the explosion of busi- ness interaction between East Asia and the rest of the world. However, the notion of high- and low-context cultures plays a role even in communications between people who speak the same language. For instance, British managers sometimes complain that presentations by U.S. managers are too detailed. Everything is spelled out, even when meanings seem perfectly obvious. Hofstede’?s Research on National Culture Dutch anthropologist Geert Hofstede conducted one of the early empirical studies of national cultural traits. He collected data on the values and attitudes of 116,000 employees at IBM Corporation, representing a diverse set of nationality, age, and gender. Hofstede conducted two surveys, one in 1968 and another in 1972. His investigation led Hofstede to delineate four independent dimensions of national culture, which we describe next. Individualism versus Collectivism Individualism versus collectivism refers to whether a person functions primarily as an individual or within a group. In individualistic societies, ties among people are relatively loose, and each person tends to focus on his or her own self-interest. These societies prefer individualism over group conformity. Competition for resources is the norm, and those who compete best are rewarded financially. Australia, Canada, the
United Kingdom, and the United States tend to be strongly individualistic soci- eties. In collectivist societies, by contrast, ties among individuals are more important than individualism. Business is conducted in the context of a group in which others’? views are strongly considered. The group is all-important, as life is fundamentally a cooperative experience. Conformity and compromise help maintain group harmony. China, Panama, and South Korea are examples of strongly collectivist societies.
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138 Chapter 5 The Cultural Environment of International Business
Power distance Describes how a society deals with the inequalities in power that exist among people.
Uncertainty avoidance The extent to which people can tolerate risk and uncertainty in their lives.
Masculinity versus femininity Refers to a society’?s orientation, based on traditional male and female values. Masculine cultures tend to value competitiveness, assertiveness, ambition, and the accumulation of wealth. Feminine cultures emphasize nurturing roles, interdependence among people, and taking care of less fortunate people. Power Distance Power distance describes how a society deals with the inequali- ties in power that exist among people. Societies characterized by high power distance are relatively indifferent to inequalities and allow them to grow over time. There are substantial gaps between the powerful and the weak. Guatemala, Malaysia, the Philip- pines, and several Middle East countries are examples of countries that exhibit high power distance. By contrast, in societies with low power distance, the gaps between the powerful and weak are minimal. For instance, in Scandinavian countries such as Den- mark and Sweden, governments institute tax and social welfare systems that ensure their nationals are relatively equal in terms of income and power. The United States scores relatively low on power distance.
Social stratification affects power distance. In Japan, almost everybody belongs to the middle class, while in India the upper stratum controls most of the decision making and buying power. In companies, the degree of centralization of authority and autocratic leadership determines power distance. In high power-distance firms, autocratic management styles focus power at the top and grant little autonomy to lower-level employees. In low power-distance firms, by contrast, managers and subordinates are more equal and cooperate more to achieve organizational goals.
Uncertainty Avoidance Uncertainty avoidance refers to the extent to which peo- ple can tolerate risk and uncertainty in their lives. People in societies with high uncer- tainty avoidance create institutions that minimize risk and ensure financial security. Companies emphasize stable careers and produce many rules to regulate worker actions and minimize ambiguity. Managers may be slow to make decisions before they investigate the nature and potential outcomes of several options. Belgium, France, and Japan are countries that score high on uncertainty avoidance. Societies that score low on uncertainty avoidance socialize their members to accept and become accustomed to uncertainty. Managers are entrepreneurial and relatively comfortable about taking risks, and make decisions relatively quickly. People accept each day as it comes and take their jobs in stride because they are less concerned about ensuring their future. They tend to tolerate behavior and opinions different from their own because they do not feel threatened by them. India, Ireland, Jamaica, and the United States are leading examples of countries with low uncertainty avoidance.
Masculinity versus Femininity Masculinity versus femininity refers to a soci- ety’?s orientation, based on traditional male and female values. Masculine cultures tend to value competitiveness, assertiveness, ambition, and the accumulation of wealth.
They are characterized by men and women who are assertive, focused on career and earning money, and may care little for others. Typical examples include Australia and
Japan. The United States is a moderately masculine society. Hispanic cultures are rela- tively masculine and display a zest for action, daring, and competitiveness. In business, the masculinity dimension manifests as self-confidence, proactiveness, and leadership.
Conversely, in feminine cultures, such as the Scandinavian countries, both men and women emphasize nurturing roles, interdependence among people, and caring for less fortunate people. Welfare systems are highly developed and education is subsidized.
The Fifth Dimension: Long-Term versus Short-Term Orientation The four dimensions of cultural orientation that Hofstede proposed have been widely accepted. They provide us with a tool to interpret cultural differences and a foundation for clas- sifying countries. Various empirical studies have also found relationships between the four cultural orientations and geography, suggesting that nations can be similar (cul- turally close) or dissimilar (culturally distant) on each of the four orientations.
Yet, the Hofstede framework suffers from some limitations. First, as noted, the study is based on data collected during the period from 1968 to 1972. Much has changed since then, including successive phases of globalization, widespread exposure to transnational media, technological advances, and the role of women in the workforce. The framework fails to account for the convergence of cultural values that has occurred during the last several decades. Second, the Hofstede
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findings are based on the employees of a single company—?IBM—?in a single industry, making it difficult to generalize. Third, the data were collected using questionnaires—?not effective for probing some of the deep issues that surround culture. Finally, Hofstede did not capture all potential dimensions of culture. Partly in response to this last criticism, Hofstede eventually added a fifth dimen- sion to his framework: long-term versus short-term orientation. This dimension denotes the degree to which people and organizations defer gratification to achieve long-term success. That is, firms and people in cultures with a long-term orientation tend to take the long view to planning and living. They focus on years and decades. The long-term dimension is best illustrated by the so-called Asian values—?traditional cultural orientations of several Asian societies, including China, Japan, and Singapore. These values are partly based on the teachings of the Chinese philosopher Confucius (K’?ung-fu-tzu), who lived about 500 B.C. In addition to long-term orientation, Confu- cius advocated other values that are still the basis for much of Asian culture today. These include discipline, loyalty, hard work, regard for education, esteem for the fam- ily, focus on group harmony, and control over one’?s desires. Scholars often credit these values for the East Asian miracle, the remarkable economic growth and modernization of East Asian nations during the last several decades.16 By contrast, the United States and most other Western countries emphasize a short-term orientation. The Hofstede framework should be viewed as only a general guide, useful for a deeper understanding in cross-national interactions with business partners, cus- tomers, and value-chain members. Key Dimensions of Culture We saw in Exhibit 5.2 that there are numerous dimensions of national culture. We can group them into two broad dimensions: subjective and objective. The subjec- tive dimension of culture includes values and attitudes, manners and customs, deal versus relationship orientation, perceptions of time, perceptions of space, and religion. The objective dimension of culture includes symbolic and material pro- ductions, such as the tools, roads, and architecture unique to a society. In this sec- tion, we examine key examples of each dimension. Values and Attitudes Values represent a person’?s judgments about what is good or bad, acceptable or unacceptable, important or unimportant, and normal or abnormal.17 People develop attitudes and preferences based on their values. Attitudes are similar to opinions except that attitudes are often unconsciously held and may not have a rational basis. Prejudices are rigidly held attitudes, usually unfavorable and usually aimed at par- ticular groups of people.18 Typical values in North America, northern Europe, and Japan include hard work, punctuality, and the acquisition of wealth. People from such countries may misjudge those from developing economies who may not embrace such values. They may inaccurately judge the Bolivian housekeeper for not working hard enough or the Jamaican businessman for not being on time. Deal versus Relationship Orientation In deal-oriented cultures, managers focus on the task at hand and want to get down to business. At the extreme, such managers may even avoid small talk and other preliminaries. They prefer to seal agreements with a legalistic contract, and follow an impersonal approach to settling disputes. Leading examples of deal-oriented cul- tures include Australia, northern Europe, and North America. By contrast, in rela- tionship-oriented cultures, managers put more value on affiliations with people. To them, it is important to build trust, rapport, and get to know the other party in
Key Dimensions of Culture 139
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140 Chapter 5 The Cultural Environment of International Business business interactions. For instance, it took nine years for Volkswagen to negotiate the opening of an automobile factory in China, a strongly rela- tionship-oriented society. For the Chinese, Japan- ese, and many in Latin America, relationships are more important than the deal.19 Trust is valued in business agreements. In China, guanxi (literally
“?connections”?) is deeply rooted in ancient Confu- cian philosophy, which values social hierarchy and reciprocal obligations. It stresses the impor- tance of relationships within the family and between superiors and subordinates. Manners and Customs Manners and customs are ways of behaving and In Japan, bowing is the norm in both business and personal set- tings. Here, Japanese Foreign
Minister Yoriko Kawaguchi and a
U.S. Trade Representative (left) bow to each other before a 2004 meeting. Monochronic A rigid orientation to time, in which the individual is focused on schedules, punctuality, and time as a resource.
Polychronic A flexible, nonlinear orientation to time, in which the individual takes a long- term perspective and is capable of attending to multiple tasks simultaneously. conducting oneself in public and business situa- tions. Some countries are characterized by egalitarian, informal cultures, in which peo- ple are equal and work together cooperatively. In other countries, people are more for- mal, and status, hierarchy, power, and respect are very important. Customs that vary most worldwide are those related to eating habits and mealtimes, work hours and holi- days, drinking and toasting, appropriate behavior at social gatherings, gift-giving, and the role of women. Handshaking varies across the world: limp handshakes, firm hand- shakes, elbow-grasping handshakes, and no handshake at all. In Southeast Asia, the handshake involves placing the palms together in front of the chest, as in praying. In
Japan, bowing is the norm. In some settings it is appropriate to kiss the other’?s hand. In much of the world, people greet by kissing on both cheeks.20 Gift-giving is a complex ritual practiced throughout much of the world. It is ingrained in Japanese culture, where it is usually a blunder to not offer a gift in initial meetings. The Middle East is character- ized by generous gift-giving.
Perceptions of Time
In business, time dictates expectations about planning, scheduling, profit streams, and what constitutes lateness in arriving for work and meetings. For instance, Japan- ese managers tend to prepare strategic plans for extended periods such as the decade. The planning horizon for Western companies is much shorter, typically sev- eral years. Some societies are relatively more oriented to the past, others to the pre- sent, and still others to the future. People in past-oriented cultures believe that plans should be evaluated in terms of their fit with established traditions, customs, and wisdom. Innovation and change are infrequent and are justified to the extent they fit with past experience. Europeans are relatively past-oriented, insisting on the conser- vation of traditions and historical precedents.
By contrast, young countries like Australia, Canada, and the United States are rel- atively focused on the present. They can be characterized as having a monochronic orientation to time—?a rigid orientation, in which the individual is focused on sched- ules, punctuality, and time as a resource. People in these cultures view time as linear, like a river flowing into the future, carrying workers from one activity to the next. In such cultures, where people are highly focused on the clock, managers make commit- ments, set deadlines, and adhere to a strict schedule of meetings and activities. Punc- tuality is a virtue—?time is money. Throughout the day, workers glance at their watches, their computer’?s clock, or the clock on the wall. Investors are impatient and want quick returns. Managers have a relatively short-term perspective when it comes to investments and making money; performance is measured on a quarterly basis. In this way, people in the United States have acquired a reputation for being hurried and impatient. Indeed, the word business was originally spelled busyness.
By contrast, cultures in parts of Africa, Asia, Latin America, and the Middle East view time as elastic. Such cultures have a polychronic perspective on time. In poly-
Pg18Pg18 CAVUMC05_124-157hr 10/10/07 1:41 PM Page 141
chronic societies, people are capable of attending to multiple tasks simultaneously. Long delays are sometimes needed before taking action. Punctuality per se is rela- tively unimportant. Managers consider time commitments as relatively flexible. They place a higher value on relationships and spending time with other people. Managers do not adhere strictly to the clock and schedules. They are more likely to form lifelong relationships. Chinese and Japanese firms are future oriented, focusing not on how the firm will perform next quarter, but how it will perform 10 years from now. Large Japanese firms offer lifetime employment and invest heavily in employee training, expecting them to remain with the firm for 30 or 40 years. Latin Americans similarly have a flexible perception of time, and are more inclined to arrive late for appointments than people from other cultures. In the Middle East, strict Muslims view destiny as the will of God (“?Inshallah”? or “?God willing”? is a frequently used phrase) and downplay the importance of future planning. They perceive appoint- ments as relatively vague future obligations. Perceptions of Space Cultures also differ in their perceptions of physical space; we have our own sense of personal space and feel uncomfortable if others violate it. Conversational distance is closer in Latin America than in northern Europe or the United States. When a North American national interacts with a Latin American, he or she may unconsciously back up to maintain personal space. Those who live in crowded Japan or Belgium have smaller personal space requirements than those who live in land-rich Russia or the United States. In Japan, it is common for employee workspaces to be crowded together in the same room, desks pushed against each other. One large office space might be used for 50 employees. North American firms partition individual workspaces and provide private offices for more important employees. In Islamic countries, close prox- imity may be discouraged between a man and a woman who are not married.
Key Dimensions of Culture 141 Religion Religion is a system of common beliefs or attitudes concerning a being or a system of thought that people consider to be sacred, divine, or the highest truth. Religion also incorporates the moral codes, values, institutions, traditions, and rituals associated with this system. Almost every culture is underpinned by religious beliefs. Religion influences culture, and therefore business and consumer behavior, in various ways. Protestantism emphasizes hard work, individual achievement, and a sense that people can control their environment. The Protestant work ethic provided some of the basis for the development of capitalism. In fundamentalist Islamic countries, Islam is the basis for government and legal sys- tems as well as social and cultural order. Because people raised in Islamic cultures per- ceive God’?s will as the source of all outcomes, Muslims may be fatalistic and reactive.
Islam’?s holy book, the Qur’?an, prohibits drinking alcohol, gambling, usury, and immod- est exposure. These prohibitions affect firms that deal in alcoholic beverages, resorts, entertainment, and women’?s clothing, as well as ad agencies, and banks and other insti- tutions that lend money. A growing number of businesses are reaching out to Muslim communities. For example, Nokia launched a mobile phone that shows Muslims the direction toward Mecca, Islam’?s holiest site, when they pray. Heineken, the Dutch brew- ing giant, rolled out the nonalcoholic malt drink Fayrouz for the Islamic market.21 Exhibit 5.6 shows the dominant religions around the world. The major religions, based on number of adherents, are Christianity (2.1 billion), Islam (1.3 billion), Hinduism (900 million), Buddhism (376 million), Judaism (14 million), and Shintoism (4 million). Some people adhere to more than one belief system, such as the Japanese, who may practice both Buddhism and Shintoism. Although the exhibit displays the most common religion in each location, most countries are home to people of various beliefs. Now that we have reviewed the subjective dimensions of culture, we turn to the objective dimensions of culture—?symbolic and material productions. Pg19Pg19CAVUMC05_124-157hr 10/10/07 1:41 PM Page 142
Exhibit 5.6 World Religions
SOURCE: Ethnologue Volume I: Languages of the world,
14thed. (2000). Accessed at www.ethnologue.com
GREENLAND
ALASKA
ARCTIC
ICELAND
PACIFIC OCEAN
HAWAII
C A N A D A
UNITED STATES
OF AMERICA
MEXICO CUBA JAMAICA
NORTH ATLANTIC OCEAN
DOMINICAN
REPUBLIC
UNITED DEN KINGDOM
IRELAND NETHER- LANDS GERM BELGIUM LUXEMBOURG FRANCE LIECH. SWITZ. MONACO HE ANDORRA SPAIN
PORTUGAL
TU
MOROCCO
ALGERIA
WESTERN
SAHARA MAURITANIA BELIZE GUATEMALA HONDURAS
HAITI PUERTO
RICO SENEGAL
MALI
NIG
BURKINA EL SALVADOR NICARAGUA COSTA RICA
TRINIDAD &
TOBAGO
GAMBIA FASO
GUINEA-BISSAU GUINEA NIGERI IVORY PANAMA VENEZUELA GUYANA
FRENCH
GUIANA
SIERRA LEONE COAST
LIBERIA
CAMERO SWEDEN DENMARK NETHER- LANDS GALAPAGOS
LATVIA COLOMBIA ISLANDS
LITHUANIA ECUADOR
RUSSIA
BELARUS
SURINAME EQUATORIAL GUINEA GABON
B R A Z I L POLAND BELGIUM GERMANY CZECH LUXEMBOURG REP. SLOVAKIA PERU
U K R A I N E SOUTH BOLIVIA ATLANTIC FRANCE LIECHENSTEIN SWITZERLAND
AUSTRIA HUNGARY
SLOVENIA
MOLDOVA OCEAN PARAGUAY
ROMANIA
SAN MONACO MARINO
CROATIA
BOSNIA- SERBIA AND Black Sea ANDORRA
HERZEGOVINA
ITALY
MONTENEGRO
BULGARIA
MACEDONIA
URUGUAY ALBANIA T U R K E Y
ALGERIA
TUNISIA
142 G R E E C E
MALTA CYPRUS
L I B YA
ARGENTINA
FALKLAND ISLANDS/
MALVINAS
Pg20Pg20CAVUMC05_124-157hr 10/10/07 1:42 PM Page 143
IC OCEAN
FINLAND R U S S I A ESTONIA LATVIA
DENMARK LITHUANIA
HER- RUSSIA
NDS GERMANY POLAND
IUM CZECH-
MBOURG REP.
BELARUS
U K R A I N E
E LIECH. WITZ.
AUSTRIA SLOVAKIA KAZAKHSTAN
HUNGARY MOLDOVA
SLOVENIA ROMANIA
CROATIA BOSNIA-SERBIA AND
MONGOLIA O HERZEGOVINA MONTENEGRO BULGARIA
A ITALY MACEDONIA ALBANIA GREECE TURKEY
GEORGIA UZBEKISTAN KYRGYZSTAN
ARMENIA AZERBAIJAN NORTH
TURKMENISTAN KOREA TAJIKISTAN
A
TUNISIA CYPRUS SYRIA LEBANON ISRAEL JORDAN
LIBYA
E G Y P T
IRAQ KUWAIT QATAR
SAUDI
AFGHANISTAN
I R A N
PAKISTAN
UNITED ARAB
EMIRATES
C H I N A
NEPAL BHUTAN
BANGLADESH
SOUTH
KOREA
TAIWAN
JAPAN
PACIFIC ARABIA OMAN I N D I A NIGER CHAD ERITREA YEMEN
MYANMAR
(BURMA) LAOS THAILAND OCEAN VIETNAM SUDAN IGERIA CENTRAL AFRICAN
AMEROON REPUBLIC
DJIBOUTI
SOMALIA
ETHIOPIA SRI LANKA
CAMBODIA PHILIPPINES
BRUNEI RIAL
INEA CONGO UGANDA REPUBLIC
GABON CONGO KENYA DEMOCRATIC RWANDA REPUBLIC BURUNDI (ZAIRE) TANZANIA ANGOLA
INDIAN
OCEAN
MALAYSIA
SINGAPORE
I N D O N E S I A PAPUA NEW SOLOMON GUINEA ISLANDS MALAWI ZAMBIA MOZAMBIQUE
NAMIBIA B
ZIMBABWE MADAGASCAR OTSWANA
SWAZILAND
VANUATU FIJI
MAURITIUS
RUNION NEW A U S T R A L I A CALEDONIA
SOUTH AFRICA
LESOTHO
Christianity Judaism Hinduism Islam
Buddhism NEW ZEALAND
Nature religion
Chinese religion
Other groups
143 Pg21Pg21CAVUMC05_124-157hr 10/10/07 1:42 PM Page 144
144 Chapter 5 The Cultural Environment of International Business Symbolic Productions A symbol can be letters, figures, colors, or other characters that communicate a meaning. For instance, the cross is the main symbol of Christianity. The red star was the symbol of the former Soviet Union. National symbols include flags, anthems, seals, monuments, and historical myths. These symbols represent nations and national values, and help to unite people. Mathematicians and scien- tists use symbols as types of languages. Businesses have many types of symbols, in the form of trademarks, logos, and brands. Can you easily identify popular company logos such as Nike’?s swoosh, Apple’?s small apple, and Coca-Cola’?s unique letters? Material Productions and Creative Expressions of Culture Material productions are artifacts, objects, and technological systems that people construct to cope with their environments. Material productions are integral to human life and provide the means to accomplish objectives, as well as a medium for communication and exchange within and between societies. The most impor- tant technology-based material productions are the infrastructure related to energy, transportation, and communications systems. Other material productions include social infrastructure (systems that provide housing, education, and health care), financial infrastructure (systems for managing means of exchange in banks and other financial institutions), and marketing infrastructure (systems that sup- port marketing-related activities, such as ad agencies). Creative expressions of cul- ture include arts, folklore, music, dance, theater, and high cuisine. Food is among the most interesting cultural markers. For example, in Japan, pizza is often topped with fish and seaweed. In the United States, pizzas can be piled high with meat. In
France, pizza often comes with a variety of cheeses. Language as a Key Dimension of Culture Language is such an important dimension of culture that it requires extensive treatment. Often described as the expression or mirror of culture, language is not only essential for communications, it provides insights into culture. At present the world has nearly 7,000 active languages, including over 2,000 each in Africa and Asia. But most of these languages have only a few thousand speakers. Exhibit 5.7 highlights the major languages of the world.22 Note that while Arabic is listed in sixth place, it comprises 15 major and often highly distinct language variants across 46 countries. Linguistic proficiency is a great asset in international business because it facilitates cross-cultural understanding. Learning one or more of the frequently spoken languages can greatly enhance an international business career. Language has both verbal and nonverbal characteristics. Much language is unspoken23 and entails facial expressions and gestures. In fact, most verbal messages are accompanied by nonverbal ones. In this and other ways language is extremely subtle. Language is conditioned by our environment. Thus, for instance, while the language of the Inuits (an indigenous people of Canada) has several different words for “?snow,”? English has just one; the Aztecs, moreover, used the same word stem for snow, ice, and cold. Sometimes it is difficult to find words to convey the same meaning in a different language. For instance, a one-word equivalent to “?aftertaste”? does not exist in many languages. There are also semantic gaps in languages. The concept and meaning of a word are not universal, even though the word can be translated well into another lan- Pg22Pg22CAVUMC05_124-157hr 10/10/07 1:42 PM Page 145
Language as a Key Dimension of Culture 145
Approximate number Countries with substantial Rank Language native speakers (millions) number of native speakers 1 Mandarin Chinese 874 China, Singapore 2 Hindi 365 India 3 English 341 United States, United Kingdom 4 Spanish 322 Argentina, Mexico, Spain. 5 Bengali 207 Bangladesh, India 6 Arabic 198 Algeria, Egypt, Saudi Arabia 7 Portuguese 176 Brazil, Portugal 8 Russian 167 Russian Federation, Ukraine 9 Japanese 125 Japan 10 German 100 Germany, Austria 11 Korean 78 South Korea, North Korea 12 French 77 France, Belgium 13 Turkish 75 Turkey, Central Asia, Eastern Europe Exhibit 5.7 The Most Common Primary Languages in the World SOURCE: Ethnologue Volume I: Languages of the World, 14th ed. (2000). Accessed at www.ethnologue.com guage. The Japanese word “?muzukashii,”? for example, can be variously translated as “?difficult,”? “?delicate,”? or “?I don’?t want to discuss it,”? but in business negotiations it usually means “?out of the question.”? National languages, dialects, and translation have a tendency to complicate straightforward communication. Ignorance of a language can be embarrassing.
Advertising themes often lose their original meaning in translation or convey unfa- vorable interpretations. Even those from different countries who speak the same language may experience communication problems because of unique colloquial words. The same word can convey different meanings in the two countries. Exhibit 5.8 shows how the popular slogans of some languages translate into offensive phrases in other languages. Exhibit 5.9 shows how two English-speaking countries interpret the same word in very different ways. These exhibits demonstrate how easy it is for misinterpretations to get in the way of conveying intended meaning.
Company and Location Intended Ad Slogan Literal Translation Parker Pen Company in “?Use Parker Pen, avoid “?Use Parker Pen, avoid pregnancy!”? Latin America embarrassment”?! Pepsi in Germany “?Come Alive with Pepsi”? “?Come out of the grave with Pepsi.”? Pepsi in Taiwan “?Come Alive with Pepsi”? “?Pepsi brings your ancestors back from the dead.”? Fisher Body (car exteriors) in Belgium “?Body by Fisher”? “?Corpse by Fisher”? Salem cigarettes in Japan “?Salem—?Feeling Free”? “?Smoking Salem makes your mind feel free and empty.”? Exhibit 5.8 Blunders in International Advertising Pg23Pg23CAVUMC05_124-157hr 10/10/07 1:42 PM Page 146
146 Chapter 5 The Cultural Environment of International Business Exhibit 5.9 Examples of Differences in Meaning between U.S. and British English
Word Meaning in U.S. English
Scheme A somewhat devious plan
Redundant Repetitive
Sharp Smart
Meaning in British English
A plan
Fired or laid off
Conniving, unethical To table To put an issue on hold To take up an issue To bomb To fail miserably To succeed grandly Windscreen A screen that protects Automobile windshield against wind
Business jargon that is unique to a culture can also impede communication. For example, many words and expressions that have crept into U.S. business executives’? jargon from sports or military terminology pose problems for non-U.S. businesspeo- ple. Here is some business jargon used in American English that may be puzzling for non-natives to understand: “?the bottom line,”? “?to beat around the bush,”? “?shoot- ing from the hip,”? “?feather in your cap,”? and “?get down to brass tacks.”? Imagine the difficulty that professional interpreters may encounter in translating such phrases! Culture and Contemporary Issues We have seen that culture is relatively stable. However, contemporary issues such as globalization of markets, transnational media, technological advances, and govern- ment regulations do influence culture, and culture influences these contemporary issues. Culture is so powerful and pervasive that it continues to exert a strong effect on emergent issues. In this section, we explore the linkage between culture and key issues. Culture and the Services Sector Services such as lodging and retailing are increasingly international. In the most advanced economies, firms that offer services account for a greater share of FDI than firms that manufacture products.24 Contact-based services bring service providers into direct contact with foreign customers through cross-border transactions. These service providers include architects, consultants, and lawyers. Assetbased services are those in which someone offers to establish a brick-and-mortar facility abroad, such as banks, restaurants, and retail stores.25 However, cultural differences create problems for services firms, leading to mishaps in the exchange process. The greater the cultural distance between the service producer and its customers, the more likely there will be cognitive and communication gaps. Imagine, for example, a Western lawyer who tries to establish a law office in China. Without a thorough knowledge of Chinese culture and language, the lawyer ’?s efforts are largely futile. Imagine how much success a Western restaurant chain would have in Russia if it knew nothing of Russian food culture or the work customs of Russian workers! Differences in language and national character have the same effect as trade barri- ers. Service firms that internationalize via FDI are particularly vulnerable, because each firm is shaped by both a national culture and an organizational culture, which originate from the source of the firm’?s funding.26 For example, a Japanese bank established in
New York or London remains distinctly Japanese because the capabilities that it brings with it are based on Japanese culture and the firm’?s Japan-based corporate culture.27 To overcome these challenges, services firms seek to understand the cultures and languages of the countries where they do business. For example, at the global express company FedEx, management constantly seeks to hire, train, and moti- Pg24Pg24CAVUMC05_124-157hr 10/10/07 1:42 PM Page 147
Culture and Contemporary Issues 147 vate hundreds of sales representatives who speak different languages, represent different cultures, and service different markets.28 Without such efforts, services firms like FedEx would not likely succeed at international business. Technology, the Internet, and Culture Technological advances are a key determinant of culture and cultural change.
These advances have led to more leisure time for culture-oriented pursuits and to the invention of computers, multimedia, and communications systems that encourage convergence in global culture. The rise of the transnational media, high- tech communications, and modern transportation systems has brought geographi- cally separated cultures in closer contact than ever before. The death of distance refers to the demise of the boundaries that once separated people, due to the inte- grating effects of modern communications, information, and transportation tech- nologies. Just as distinctive cultures developed in the distant past because regions had limited contact with each other, somewhat homogenized cultures are develop- ing today due to modern technologies that increase contact among the people of the world. For example, Hollywood movies and the ability to easily travel through- out the world homogenize customs, fashions, and other manifestations of culture.
Today, university students listen to much the same music and wear similar clothing styles worldwide. Technology also provides the means to promote culture. For example, local artistic traditions from Africa, Asia, and Latin America have received a big boost from the rise of world cinema and television. Movies and TV provide artists with tools for expressing themselves and facilitate contact with consumers. In a similar way, communications technology permits us to choose our information sources.
For example, people usually prefer information in their native language that rep- resents cultural traits similar to their own. Thus, Spanish speakers in the United
States increasingly select mass media sources—?TV, movies, the Internet—?in Span- ish, limiting the homogenizing effect that would result from relying on English- speaking media. In addition, the broadening of global communications allows ethnic groups scattered around the world to remain in touch with each other.29 The Internet also promotes the diffusion of culture. The number of Internet users is growing rapidly worldwide, and the potential for cultural blunders arising from international e-mail use is higher than ever. To minimize such problems, interna- tional managers now access software that translates e-mail and text messages into foreign languages. After typing in a phrase, the software instantly converts messages into any of dozens of languages, including Chinese, Hebrew, and Portuguese.30 Globalization’?s Effect on Culture: Are Cultures Converging? There is little consensus about globalization’?s effects on culture. While many believe that globalization is a destructive force, others see it as positive. Critics charge that globalization is harmful to local cultures and their artistic expressions and sensibilities, and is responsible for their replacement by a homogeneous, often
Americanized, culture. Others argue that increased global communications is posi- tive because it permits the flow of cultural ideas, beliefs, and values. In short, glob- alization is a major factor in the emergence of common culture worldwide. Many products, services, and even holidays are becoming common to world markets. The homogenization (or the banalization) of culture is demonstrated by the grow- ing tendency of people in much of the world to consume the same Big Macs and Coca-
Colas, watch the same movies, listen to the same music, drive the same cars, and stay in the same hotels. Although food often represents a distinct culture, hamburgers, tacos, and pizza are increasingly popular around the world.31 In Trinidad, the U.S. television series “?The Young and the Restless”? is so popular that in many places work effectively stops when it airs, and it has inspired calypso songs of the same name. In recent years, Baywatch and CSI Miami were among the most popular TV series Pg25Pg25CAVUMC05_124-157hr 10/10/07 1:42 PM Page 148
148 Chapter 5 The Cultural Environment of International Business worldwide. The Barbie doll has become a global phenomenon, even as the values that this icon represents may not always agree with values in more conservative cultures.32 However, in reality, the larger trend is more complex than these examples imply. As cross-border business integrates the world’?s economies, it also increases the choices available to local people by making their countries culturally richer.
Cultural homogeneity and heterogeneity are not mutually exclusive alternatives or substitutes; they may exist simultaneously. Cross-cultural exchange promotes innovation and creativity. Globalization brings a wider menu of choices to con- sumers and increases diversity within society.33 Cultural flows originate in many places. Just as McDonald’?s hamburgers have become popular in Japan, so has Viet- namese food in the United States and Japanese sushi in Europe. Integration and the spread of ideas and images tend to provoke reactions and resistance to cultural homogenization, thereby spurring individual peoples to insist on their differences.
While some past customs will be eclipsed in globalization, the process is also liber- ating people culturally by undermining the ideological conformity of nationalism. Managerial Guidelines for Cross-Cultural Success Cross-cultural proficiency helps managers connect with their foreign counterparts. Seasoned managers attest to the importance of a deep knowledge of culture and language in international business. Managers can achieve effective cross-cul- tural interaction by keeping an open mind, being inquisitive, and not rushing to conclusions about others’? behaviors. Experienced managers acquire relevant facts, skills, and knowledge to avoid offensive or unacceptable behavior when interacting with foreign cultures. They undergo cultural training that emphasizes observational skills and human relations techniques. Skills are more important than pure information because skills can be transferred across countries, while information tends to be country specific. Various resources are available to managers for developing skills, including videotape courses, cross-cultural consultants, and programs offered by governments, universi- ties, and training institutes. Planning that combines informal mentoring from expe- rienced managers and formal training through seminars and simulations abroad and at home go far in helping managers meet cross-cultural challenges. Although every culture is unique, certain basic guidelines are appropriate for Cross-cultural proficiency consistent cross-cultural success. Let’?s review three guidelines managers can fol- increases the effectiveness of meetings and other encounters in international business.
low in preparing for successful cross-cultural encounters.
Guideline 1: Acquire factual and interpretive knowledge about the other cul- ture, and try to speak their language. Successful managers acquire a base of knowledge about the values, attitudes, and lifestyles of the cultures with which they interact. Managers study the political and economic background of target countries—?their history, current national affairs, and perceptions about other cultures. Such knowledge facili- tates understanding about the partner ’?s mindset, organi- zation, and objectives. Decisions and events become sub- stantially easier to interpret. Sincere interest in the target culture helps establish trust and respect, laying the foun- dation for open and productive relationships. Even modest attempts to speak the local language are welcome. Higher levels of language proficiency pave the way for acquiring competitive advantages. In the long run, managers who can converse in multiple languages are more likely to negotiate successfully and have positive business interac- tions than managers who speak only one language. Pg26Pg26CAVUMC05_124-157hr 10/10/07 1:42 PM Page 149
Managerial Guidelines for Cross-Cultural Success 149 Guideline 2: Avoid cultural bias. Perhaps the leading cause of culture-related problems is the ethnocentric assumptions managers may unconsciously hold.
Problems arise when managers assume that foreigners think and behave just like the folks back home. Ethnocentric assumptions lead to poor business strategies in both planning and execution. They distort communications with foreigners. Man- agers new to international business often find the behavior of a foreigner hard to explain. They may perceive the other ’?s behavior as odd and perhaps improper.
For example, it is easy to be offended when our foreign counterpart does not appreciate our food, history, sports, or entertainment, or is otherwise inconsider- ate. This situation may interfere with the manager’?s ability to interact effectively with the foreigner, even leading to communication breakdown. In this way, cul- tural bias can be a significant barrier to successful interpersonal communication. A person’?s own culture conditions how he or she reacts to different values, behav- ior, or systems. Most people unconsciously assume that people in other cultures expe- rience the world as they do. They view their own culture as the norm—?everything else may seem strange. This is known as the self-reference criterion—?the tendency to view other cultures through the lens of one’?s own culture. Understanding the self-reference criterion is a critical first step to avoiding cultural bias and ethnocentric reactions. Critical incident analysis (CIA) refers to an analytical method for analyzing awkward situations in cross-cultural interactions by developing empathy for other points of view. It is an approach to avoiding the trap of self-reference crite- rion in cross-cultural encounters. Critical incident analysis encourages a more objective reaction to cultural differences by helping managers develop empathy for other points of view. The Global Trend feature on page 150 details how man- agers can learn to deliberately avoid the self-reference criterion. Guideline 3: Develop cross-cultural skills. Working effectively with counterparts from other cultures requires an investment in your professional development. Each culture has its own ways of carrying out business transac- tions, negotiations, and dispute resolution. As an example, you will be exposed to high levels of ambiguity; concepts and relationships that can be understood in a variety of ways.34 You must make an effort to gain cross-cultural proficiency to be successful in international business. Cross-cultural profi- ciency is characterized by four key personality traits: •? Tolerance for ambiguity—?the ability to tolerate uncertainty and apparent lack of clarity in the thinking and actions of others. •? Perceptiveness—?the ability to closely observe and appreciate subtle infor- mation in the speech and behavior of others. •? Valuing personal relationships—?the ability to recognize the importance of interpersonal relationships, which are often much more important than achieving one-time goals or winning arguments. •? Flexibility and adaptability—?the ability to be creative in devising innovative solu- tions, to be open-minded about outcomes, and to show grace under pressure. As discussed earlier in the chapter, managers function better with a geocentric or cosmopolitan view of the world. Managers with this view believe they can understand and accommodate similarities and differences among cultures. Successful multina- tional firms seek to instill a geocentric cultural mindset in their employees and use a geocentric staffing policy to hire the best people for each position, regardless of their national origin. Over time, such firms develop a core group of managers who feel at home working in any cultural context. One way for managers to determine the skills they need to approach cultural issues is to measure their cultural intelligence.35 Cultural intelligence (CQ) is a person’?s capability to function effectively in situations characterized by cultural diversity. It focuses on specific capabilities that are important for high-quality personal relation- ships and effectiveness in culturally diverse settings and work groups.
Self-reference criterion The tendency to view other cultures through the lens of one’?s own culture. Critical incident analysis
(CIA) An analytical method for analyzing awkward situations in cross-cultural interactions by developing empathy for other points of view. Pg27Pg27CAVUMC05_124-157hr 10/10/07 1:42 PM Page 150
> GLOBAL TREND Minimizing Cross-Cultural Bias with Critical Incident Analysis irms develop and seek to maintain relationships with
and Mazda (Japan) interact intensively with each other. Ford wants to share
So what should you do as a man- ager when confronted with an awk-
customers and partners that
its engineering studies and critical
ward or uncomfortable situation in a span the globe. To compete effec- tively, companies must continually improve ways to communicate with and manage customers, wherever they are located. One recent trend is the rise of global account management, which puts a single manager or team in charge of a key customer and all its needs worldwide. The global account manager draws on various resources, including communication and inter- action skills in cross-cultural set- tings, to market products and services. Another trend is the rise of global project teams. The teams comprise members from a variety of cultural backgrounds. Global teams enable firms to profit from knowl- edge amassed across the organiza- tion’?s entire worldwide operations.
Such teams function best when the members engage in high-quality communications, which involves mini- mizing miscommunications based on differences in language and culture. Nevertheless, inexperienced man- agers often find the behavior of for- eign counterparts hard to explain.
They often perceive others’? behavior as “?odd”? and perhaps improper, which hinders their ability to interact effectively with foreigners. One way to minimize cross-cultural bias and the self-reference criterion is to engage in critical incident analysis, a method that helps managers develop empathy for other points of view. Consider the following scenario.
Working on a joint product design, engineers from Ford (United States)
150
materials with its Japanese counter- part. Following a week of interaction, the Ford team grows increasingly uncomfortable with the seeming lack of interest from the Japanese. The
Japanese engineers appear strangely indifferent and do not exhibit much reaction. When the teams meet, the
Japanese appear to keep conversa- tion among themselves and offer little feedback. Eventually, the Ford team’?s surprise turns into frustration and anger. They now believe that the
Japanese are arrogant, uninterested in Ford’?s technical designs, and care little about the collaboration. In reality, the Ford team has jumped to conclusions. They have failed to consider other plausible explanations for the Japanese behav- ior because they have judged the
Japanese using their own culturally bound expectations. An independent observer familiar with Japanese culture and business organization could have provided alternative explanations for this situation. For one, the Japanese engineers may have not been profi- cient in English. They could not explain themselves easily or understand the
Ford team’?s briefings, which all took place in English. Furthermore, Japan- ese usually refrain from speaking out before the entire team meets in private and reaches consensus. Japanese are generally thoughtful and typically show their respect for counterparts by listen- ing intently while remaining quiet.
These and other explanations are all plausible within the context of the
Japanese culture.
cross-cultural interaction? Critical incident analysis advocates the fol- lowing steps:
Step One: Identify the situations where you need to be culturally aware to interact effectively with people from another culture. These may include socializing, working in groups, attending meetings, negoti- ating, and reaching agreement. Step Two: When confronted with a seemingly strange behavior, disci- pline yourself not to make value judg- ments. Learn to suspend judgment.
Instead, try to view the situation or the problem in terms of the unfamiliar culture. Make observations and gather objective information from native citizens or secondary sources.
In this way, you can isolate the self- reference criterion leading you to your inaccurate conclusion. Step Three: Learn to make a vari- ety of interpretations of the foreigner’?s behavior, to select the most likely interpretation, and then to formulate your own response. By doing so, you will react to the situation without the self-reference criterion, and will likely produce the optimal response. Step Four: Learn from this process and continuously improve. Sources: Keller, Robert. (2001). “?Cross-
Functional Project Groups in Research and
New Product Development.”? Academy of
Management Journal 44(3): 547-55; Senn,
Christoph, and Axel Thoma. (2007). “?Worldly
Wise: Attracting and Managing Customers
Isn’?t the Same When Business Goes Global.”?
Wall Street Journal March 3, 2007, p. R5;
Solomon, C. (1998). “?Building Teams Across
Borders.”? Workforce 52 (4): 12-17. Pg28Pg28CAVUMC05_124-157hr 10/10/07 1:42 PM Page 151
CLOSING CASE Hollywood and the Rise of Cultural Protectionism AACSB: Reflective Thinking The most commercially successful filmmaker of all time, Steven Spielberg, is synonymous with American cinema. He has directed and produced international blockbusters like ET,
Jurassic Park, and War of the Worlds. As U.S. dominance of the international film industry grows, Spielberg has been the target of complaints about how Hollywood is changing world cultures. The values represented in Spielberg’?s films are often viewed as part of the larger trend of the homogenization, or worse, the Americanization of global values and beliefs. Jurassic Park ignited a storm of protest and calls for cul- tural protectionism. Film critics and cultural ministries around the globe found Jurassic Park to be a brainless film, lacking plot, and succeeding entirely through special effects and big-budget bells and whistles. French officials labeled the film a threat to their national identity. Three leading filmmakers—?Pedro Almodvar, Bernardo Bertolucci, and
Wim Wenders—?wrote Spielberg to reprimand him for the poor quality of the film, proclaiming he was personally responsible for undermining their efforts to keep culturally rich European cinema afloat. Another popular American movie, Lost in Translation, came under fire from Los Angeles to Tokyo. Set in Japan’?s capital and starring Bill Murray, the film won an Academy
Award for best screenplay, three Golden Globes, and was nominated for three additional Oscars. The film was criti- cized for its portrayal of Japanese people as robotic cari- catures who mix up their L’?s and R’?s. The image-conscious
Japanese were disappointed at their depiction as comic relief for foreign audiences. In a scene where Bill Murray’?s character is taking a shower in what is meant to be a five- star hotel, he has to bend and contort to get his head under the shower head. In reality there isn’?t a five-star hotel in Tokyo that hasn’?t accounted for the varying heights of its potential guests. Another scene, in which
Murray is shown towering at least a foot above an elevator full of local businessmen, mocks the smaller physique of the Japanese. The film is seen to reinforce negative stereotypes about the Japanese. Is the U.S. film industry overwhelming the cultures of the world? And if so, can the world really blame Hollywood?
Here are some relevant statistics. Hollywood produces 80 percent of the films viewed internationally, having doubled the U.S. global market share since 1990. The European film industry is now about one-ninth the size it was in 1945.
Behind aerospace, Hollywood is the United States’? largest net export. The copyright-based industries, which also include software, books, music, and TV, contributed more to the U.S. economy in the early 2000s than any single manu- facturing sector. While the United States imports few for- eign films, Hollywood’?s output remains in high demand worldwide. Today, foreign films hold less than one percent of the U.S. market.
Distorting History and Religious Values
Under attack since their origin, Hollywood war films are widely accused of presenting biased accounts of history.
War movies portray American soldiers as patriotic heroes, protecting all that is good from all that is evil.
Apocalypse Now may have painted a particularly ethno- centric view of the Vietnam War, focusing on the Ameri- can tragedy while ignoring that of the Vietnamese. While many nations are steadfast in their belief of the separation of church and state, this was decidedly not the case when The Passion of Christ was released. The film enraged religious groups in almost every corner of the world. Mel Gibson’?s controversial film retells the last 12 hours of the life of Jesus Christ. The government of
Malaysia found The Passion of Christ inappropriate for its largely Muslim population, and banned its initial release in the country. The country subsequently permitted only Chris- tians to view the film. International organizations and indi- viduals also attacked The Passion of Christ as anti-Semitic. Crucial to U.S. dominance of world cinema are the cul- tural associations inherent in Hollywood films. The global recognition and acceptance of American English and cul- tural references are obstacles that competitors face. Ameri- can stars and Hollywood directors are well established in the international movie scene, and they enjoy a drawing power that transcends national boundaries. The CEO of
Time Warner attributed Hollywood’?s global success to the association of “?American style with a way of existence that to one degree or another [people] wish to share in.”? Movies and Comparative Advantage
According to the theory of comparative advantage, coun- tries should specialize in producing what they do best and import the rest. Economists argue that this theory applies as much to films as to any industry. They argue that movies are like any other commodity, and the United States has advantages in producing entertainment and exporting it to the rest of the world. Nevertheless, critics suggest that such an assertion, while satisfying to economists, ignores the fact that movies are unlike other commodities. The dif- ference lies in film’?s ability to influence national culture and social development. The motion picture industry is a venue for enhancing cultural identity.
The world is no longer immigrating to the United States, but the United States is attempting to emigrate to the world, through its films and the values, stereotypes, and sometimes erroneous history that they portray. As former Canadian Prime Minister Kim Campbell remarked, “?Movies are culture incarnate. It is mistaken to view culture as a com- modity. . . . Cultural industries, aside from their economic impact, create products that are fundamental to the survival 151 Pg29Pg29CAVUMC05_124-157hr 10/10/07 1:42 PM Page 152
152 Chapter 5 The Cultural Environment of International Business
of Canada as a society.”? This view highlights why govern- ments often engage in cultural protectionism—?that is, the application of trade barriers that aim to prevent local film industries from being swamped by U.S. imports. Critics argue that protectionism is needed to prevent
U.S. culture from being imposed on the rest of the world.
Cultural protectionism is achieved by coddling the domestic industry and implementing high trade barriers, aimed espe- cially at imports from the United States. The specific methods vary by country but usually involve subsidies, quotas, or a combination of both. Subsidies that the government gives to domestic filmmakers are often funded directly by taxes placed on box office sales of U.S. movies. But subsidies can be a crutch to a weak industry. They are employed when tra- ditional funding sources—?bank loans, stock and bond sales—?prove insufficient to maintain an industry. Quotas limit the number of screens allowed to show U.S. films or require a certain number of movies to be produced domestically. Subsidies can weaken industries. Quotas prevent consumers from seeing the films they want to see. The whole system results in the local production of films sim- ply to fulfill government mandates. France once boasted its own booming film industry. But its complex system of quotas and subsidies has done little to slow its gradual demise. The insulation from competitive pressures pro- vided by cultural protectionism can weaken protected industries, reducing their ability to create globally com- petitive films. Meanwhile, the proportion of Hollywood revenues generated from abroad continues to grow. A Cultural Dilemma Despite plenty of arguments on both sides of this ongo- ing debate, critics can no longer point a finger at Holly- wood, because Hollywood is not as “?American”? as it once was. The Passion of Christ, funded by its Australian director and filmed in Italy, is a prime example of the technicolor that globalization has given to an issue that was once black and white. Two of the seven major film companies that are collectively known as Hollywood aren’?t even U.S. firms. Many big-budget Hollywood films these days are in fact multinational creations. Russell
Crowe, Heath Ledger, Charlize Theron, Penelope Cruz,
Nicole Kidman, Jude Law, and Catherine Zeta-Jones are just a few of the many stars who do not hail from the
United States. As the lines connecting Hollywood with the United
States are increasingly blurred, the world needs to recon- sider the methods by which to conquer this so-called beast. Protectionists should not abandon their quest to salvage the intellectual and artistic quality of films. They
should heed the words of Eric Rohmer. In an interview with the New York Times, the French director stated that his countrymen should fight back with high-quality movies, not protection. “?I am a commercial film maker. I am for free competition and am not supported by the state.”? Case Questions
1. Like an iceberg, most aspects of culture are largely invisible to the casual observer (for example, gen- der roles, ways to solve problems, conversational patterns). What aspects of culture do Hollywood films promote around the world? In what ways do Hollywood movies affect the cultural values of peo- ple outside the United States?
2. Hollywood movies are very popular in world markets, but foreign films are little viewed in the United States.
What factors determine the high demand for Holly- wood films in world markets? That is, why are they so popular in Europe, Japan, Latin America, and else- where? Why are foreign films so little demanded in the
United States? What can foreign filmmakers do to increase demand for their movies in the United States? 3. Worldwide, protectionism of most goods is insignifi- cant or declining. Do movies constitute a separate cat- egory (culture incarnate, as stated in the case study), or should they be treated like any other good? That is, given the nature of movies, is it okay for a country to shield and support its own film industry via protection- ism? Are there any other cultural industries that gov- ernments should protect? Justify your answers. 4. Are subsidies and quotas the right way to protect cultural industries? What are the advantages and disadvantages of subsidies and quotas for protect- ing local film industries? Are there better ways to maintain and enhance home-grown film industries? Justify and elaborate your answer. <
This case was written by Sonia Prusaitis, under the supervision of Dr. Gary Knight. Sources: “?Moreover: Culture Wars.”? Economist, Sep, 12, 1998, pp. 97-00; Barth,
Steve. (1998). “?Cultural Protectionism,”? World Trade, March, 1998, p. 43; Cowen,
Tyler. (1998). “?French Kiss-Off: How Protectionism has Hurt French Films,”? Reason
Magazine July, 1998, pp. 40-48; Day, Kiku. (2004).”?Totally Lost in Translation,”?
The Guardian, January 24, 2004; Delacroix, Jacques, and Julien Bornon. (2005).
Can Protectionism Ever Be Respectable? The Independent Review 9(3): 353-65;
Marvasti, Akbar, and E. Canterbery. (2005). “?Cultural and Other Barriers to Motion
Picture Trade,”? Economic Inquiry, January, 2005, pp. 39-55; Motion Picture Asso- ciation. (2002). U.S. Entertainment Industry, February 5, 2005, at www.mpaa.org;
Munroe, J. Richard. (1998). “?Good-Bye to Hollywood: Cultural Imperialism and the New Protectionism,”? Vital Speeches of the Day, June 15; Teachout, Terry.
(1998). “?Cultural Protectionism: The World’?s Culture Czars Move to Repel the
Hollywood Invasion,”? The Wall Street Journal, July 10, 1998, p. W11. Pg30Pg30CAVUMC05_124-157hr 10/10/07 1:42 PM Page 153
CHAPTER ESSENTIALS Key Terms acculturation, p. 130 critical incident analysis (CIA), p. 149 cultural metaphor, p. 135 cross-cultural risk, p. 126 culture, p. 126 ethnocentric orientation, p. 128 geocentric orientation, p. 128 high-context culture, p. 136 Summary
idiom, p. 135 individualism versus collectivism, p. 137 long-term versus short-term orientation, p. 139 low-context culture, p. 136 masculinity versus femininity, p. 138 monochronic, p. 140
polycentric, p. 128 polychronic orientation, p. 140 power distance, p. 138 self-reference criterion, p. 149 socialization, p. 129 stereotype, p. 135 uncertainty avoidance, p. 138
In this chapter, you learned about: 1. The challenge of crossing cultural boundaries In cross-border business, we step into different cul- tural environments characterized by unfamiliar lan- guages, distinctive motivations, and different values. Culture refers to learned, shared, and enduring orien- tations of a society, which are expressed in values, ideas, attitudes, behaviors, and other meaningful symbols and artifacts. Cross-cultural risk arises from a situation or event where a cultural miscommunica- tion puts some human value at stake. Ethnocentric orientation refers to using our own culture as the standard for judging how good other cultures are.
Polycentric orientation refers to a host country mind- set where the manager develops greater affinity with the country in which she or he conducts business.
Geocentric orientation refers to a global mindset where the manager is able to understand a business or market without regard to country boundaries. 2. The meaning of culture: foundation concepts Culture is the collective mental programming of peo- ple. It influences consumer behavior, managerial effectiveness, and the range of value-chain opera- tions, such as product and service design, marketing, and sales. Culture is not inherited, right or wrong, or about individual behavior. Culture is like an iceberg in that most of its elements and influence are hidden below the surface. 3. Why culture matters in international business Managers need to develop understanding and skills in dealing with other cultures. Culture matters in inter- national business in areas such as developing prod- ucts and services; interaction with foreign business partners; selecting foreign distributors; business nego- tiations; dealing with customers; preparing for trade
fairs; and preparing promotional materials. Cross- cultural differences complicate workplace issues such as teamwork, employment, pay-for-performance sys- tems, organizational structures, union-management relationships, and attitudes toward ambiguity.
4. National, professional, and corporate culture
There are three layers of culture: national, profes- sional, and corporate. Working effectively within these cultures is a major challenge. The influence of professional and corporate cultures grows as people are socialized into a profession and their workplace.
Most companies exhibit a distinctive set of norms, values, and beliefs that distinguish them from other organizations. Such differences are often as distinc- tive as the differences in culture between nations.
Managers can misinterpret the extent to which a counterpart’?s behavior is attributable to national, professional, or corporate culture.
5. Interpretations of culture
Culture can be interpreted through metaphors, a distinc- tive tradition or institution that serves as a guide or map for deciphering attitudes, values, and behavior. Stereo- types are generalizations about a group of people that may or may not be factual. An idiom is an expression whose symbolic meaning is different from its literal meaning. Low-context cultures rely on elaborated ver- bal explanations, putting much emphasis on spoken words. High-context cultures emphasize nonverbal communications and a more holistic approach to com- munication that promotes harmonious relationships.
Hofstede’?s typology of cultural dimensions consists of individualism versus collectivism, power distance, uncertainty avoidance, masculinity versus femininity, and long-term versus short-term orientation. 153 Pg31Pg31CAVUMC05_124-157hr 10/10/07 1:42 PM Page 154
154 Chapter 5 The Cultural Environment of International Business
6. Key dimensions of culture The dimensions of culture include values and atti- tudes, which are shared beliefs or norms that indi- viduals have internalized. Deal-versus-relationship orientation describes the intensity with which managers get down to business, as opposed to developing relationships. Manners and customs are ways of behaving and conducting oneself in public and business situations. Perceptions of time refer to the temporal focus of life, and dictate expectations about planning, scheduling, profit streams, and what constitutes lateness in arriving for work and meetings. Monochronic cultures tend to exhibit a rigid orientation to time in which the individual is focused on schedules, punctual- ity, and time as a resource. In contrast, polychronic cultures refers to a flexible, nonlinear orientation to time in which the individual takes a long-term perspective and is capable of multitasking. Percep- tions of space represent the area or physical room within which people feel comfortable. Religion provides meaning and motivation and is very sig- nificant in defining peoples’? ideals and values.
Symbolic and material productions refer to the intangible and tangible meanings, institutions, and structures that individual cultures construct for themselves. 7. Language as a key dimension of culture Language is a “?mirror”? of culture. It is essential for communication and provides cultural insights. There are nearly 7,000 active languages, but most have only a few thousand speakers. The major languages include Mandarin Chinese, Hindi, English, Spanish, and Arabic. Language has both verbal and nonverbal characteristics. It is conditioned by our environment.
Sometimes it is difficult to find words to convey the Test Your Comprehension
same meaning in two different languages. Learning one or more common languages will enhance a per- son’?s international business career.
8. Culture and contemporary issues
While culture is relatively stable, contemporary issues influence culture. In contact-based ser- vices such, as found in law and architectural firms, providers interact directly with foreign nationals in culture-laden transactions. Cultural differences may lead to mishaps in the exchange process. Technological advances are a key deter- minant of culture and cultural change. Improved transportation and the spread of communica- tions technology have removed the boundaries that once separated nations. Technology also promotes culture. The Internet emphasizes the role of language in communications. Globaliza- tion promotes common culture and the con- sumption of similar products and services worldwide. 9. Managerial guidelines for cross-cultural success
Managerial guidelines include the need to acquire factual and interpretive knowledge about the other culture, and to try to speak their language. Man- agers should avoid cultural bias and engage in critical incident analysis to avoid the self-reference criterion. Critical incident analysis involves being culturally aware, not making value judgments, and selecting the most likely interpretation of for- eign behaviors. Experienced managers develop cross-cultural skills, including a tolerance for ambiguity, perceptiveness, valuing personal rela- tionships, and being flexible and adaptable. Cultural intelligence is the ability to function effectively in culturally diverse situations.
1. Describe culture and cross-cultural risk. 2. Distinguish between socialization and acculturation. 3. Explain why culture matters in international busi- ness. In what types of contexts can cross-cultural dif- ferences cause concerns for managers? 4. Distinguish between the three layers of culture. What are the major elements of country-level and profes- sional culture?
5. How does a manager with a deal orientation differ from a manager with a relationship orientation?
6. What are the two major perceptions of time, and how does each affect international business?
7. What are the five dimensions that make up Hofstede’?s model of culture?
8. Distinguish between cultural metaphors and stereotypes.
9. Summarize the three major guidelines for success in cross-cultural settings. Pg32Pg32CAVUMC05_124-157hr 10/10/07 1:42 PM Page 155
Chapter Essentials 155 Apply Your Understanding AACSB: Communication, Reflective Thinking, Multicultural and Diversity
1. Suppose you get a job at Kismet Indemnity, a life insurance company. In its 45-year history, Kismet has never done any international business. Now the president of Kismet, Mr. Randall Jay, wants to expand Kismet’?s business abroad. You have noted in meetings that Mr. Jay seems to lack much awareness of the role of culture. Although you have always been careful about appearing too smart around your superiors, write a memo to Mr. Jay in which you explain why culture matters in international busi- ness. In your memo, be sure to speculate on the effects of various dimensions of culture on sales of life insurance. 2. People tend to see other cultures from their own point of view. They accept their own culture and its ways as the norm—?everything else seems foreign, or even mysterious. This chapter describes a technique called critical incident analysis (CIA) that encourages an objective reaction to cultural differences by helping managers develop empathy for other points of view. Using the CIA approach, define a situation that you or someone else has experienced that led to a cross-cultural misunderstanding. Perhaps it involved an interaction with a fellow student, a visit to a store in your town, or an experience you had while traveling abroad. Explain what actually happened, and how a more cul- turally sensitive response might have been possible if you or your fellow student had used CIA.
3. Examine the following comparison of cultural values in Mexico and the United States. Based on your analysis, use the discussion in this chapter on the dimensions and drivers of culture, as well as their management implications, to formulate a policy for marketing automobiles to consumers from each of these countries. What features should you emphasize in cars? What attributes should you emphasize in advertising cars?
Typical Values of Mexico
•? Leisure considered essential for full life •? Money is for enjoying life
•? Long-term orientation
•? Relatively collectivist society
•? Strongly male-dominated society
•? Relationships are strongly valued
•? Subordinates are used to being assigned tasks, not authority Typical Values of the United States
•? Leisure considered a reward for hard work •? Money is often an end in itself
•? Short-term orientation
•? Strongly individualistic society
•? Men and women are relatively equal
•? Getting the transaction done is more important than building lasting relationships
•? Subordinates prefer higher degree of autonomy Pg33Pg33CAVUMC05_124-157hr 10/10/07 1:42 PM Page 156
Internet Exercises (http://globalEDGE.msu.edu) AACSB: Reflective Thinking
Refer to Chapter 1, page 27, for instructions on how to access and use globalEDGE™?. 1. Ethnologue (www.ethnologue.com/web.asp) is a comprehensive listing of the world’?s known lan- guages. It is an excellent resource for linguists, scholars, and others with language interests. Ethnologue contains statistical summaries on the number of language speakers by language size, family, and country. Visit the Ethnologue Web site and answer the following questions: (a) Visit the “?Languages of China”? site. What is the population of China? Of the more than 200 lan- guages in China, which one has the largest num- ber of speakers? Which has the second most speakers? What is the common name of the Chinese language known as yue? How do these figures compare to the total number of English speakers in the main English-speaking countries of Australia, Canada, the United Kingdom, and the United States? (b) Visit the “?Languages of Spain”? site. Most people know that Spanish originated in Spain. How many people live in Spain? How many native Spanish speakers are in Spain? How many languages altogether are spoken in Spain? (c) Switzerland is one of the smallest European countries. What are the major languages of Switzerland, and how many
156
speakers does each have? (d) Find the table
“?Linguistic Diversity of Countries,”? which shows the population of each language as a propor- tion of the total population, for most countries.
What are the most linguistically diversified coun- tries in the world? What are the least diversified countries?
2. Cultural intelligence is a person’?s capability to function effectively in situations characterized by cultural diversity. globalEDGE ™? and other online resources feature cultural intelligence scales. What are the components of cultural intelligence? Answer the questions on this scale and calculate your score on cultural intelligence?
Compare your score to those of your classmates.
3. Various online sites list cultural blunders or faux pas (false steps) that people make in their interna- tional interactions. One such site is International Education Systems (www.marybosrock.com).
Neglecting to develop relationships (as in “?Just sign the contract, I’?m in a hurry!”?) and casual use of first names (as in “?Just call me Bill!”?) are exam- ples of the cultural blunders that seem to persist.
Research online sources to identify examples of improper cultural behaviors. How can managers avoid such blunders?
Pg34Pg34 CAVUMC05_124-157hr 10/10/07 1:42 PM Page 157 CKR
Cavusgil Knight Riesenberger Management Skill Builder eveloping an Incentive Plan for Sales Personnel from ferent Cultures Professional selling is the art of determining the needs of the client and then providing solutions for those needs in the form of appropriate products and services. Done properly, this produces satisfied customers who are motivated to buy again from the same firm. Selling is particularly important in cross-border business-to-business exchanges, which tend to be more relationship-based than business-to-consumer exchanges. AACSB: Analytic Skills, Multicultural Diversity Successful companies are staffed with an interna- tional sales management team that understands local country client needs and excels at understand- ing the social, political, regulatory, and cultural nuances of the local market. Successful international sales management teams excel at the ability to moti- vate in-country sales representatives, who come from various cultural backgrounds, to meet and exceed established sales goals. Managerial Challenge Selling across cultures requires a high level of sophistication. As emphasized throughout this text, the international environment is characterized by a range of differences in culture, economic circum- stances, political systems, regulatory requirements, and other factors, all of which strongly influence the company’?s selling efforts. A key managerial chal- lenge for international sales management teams is to develop proficiency in understanding foreign cul- tures, and to leverage these cultural skills to maxi- mize the performance of the local, in-country sales professionals. Background In staffing sales personnel, firms usually prefer to hire host-country nationals because of their local knowledge and expertise and because they are less expensive to employ and house than expatriates.
Employing in-country nationals poses its own chal- lenges because of the cultural differences that char- acterize such personnel. To inspire a culturally diverse sales force, managers charged with sales administration must be sensitive to the needs and personality traits of the sales personnel whom they supervise. Managers often need to appeal to differ-
ing motives to induce sales personnel from various cultures to perform at their best.
Managerial Skills You Will Gain
In this C/K/R Management Skill Builder, as a prospective manager, you will:
1. Understand the factors that motivate sales person- nel in different countries.
2. Learn cultural traits in various countries and how these traits influence behaviors among sales per- sonnel.
3. Learn how to increase company sales through more effective personnel management.
4. Gain market research skills in acquiring knowledge of social and political realities in planning company selling activities in different countries. Your Task
Assume you are an international sales administration specialist on the management team of a firm that man- ufactures personal computers. Your task is to assist the international sales manager, who supervises three sales representatives from three different countries. You have been asked to design an incentive plan for each of the employees that is most likely to maximize his or her selling effort and comply with all local country rules and regulations.
Go to the C/K/R Knowledge Portal www.prenhall.com/cavusgil Proceed to the C/K/R Knowledge Portal to obtain the expanded background information, your task and methodology, suggested resources for this exercise, and the presentation template.
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American football as we know it originated from rugby played in Britain in the mid-19th century. The person who Americans consider the “Father of American Football” is Walter Camp. Professional football can be traced back to 1982, when there was a $500 contract for the Allegheny Athletic Association and the Pittsburgh Athletic Club to play a game against each other. Originally football was primarily a sport of the Midwestern industrial towns in the United State. In 1902, the American Professional Football Association was formed and two years later the National Football League. The competition was fierce between the two leagues, which led the two leagues to merge. Football eventually became national. When the two leagues merged is when…
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realise value from their large-scale investments in information technology (IT) and ITenabled change. IT-enabled investments can bring huge rewards, but only with the right…
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For assignment 2 I have chosen KLM. KLM is a Dutch airline with its headquarters in Amstelveen the Netherlands. I have chosen this company because I am very interested in aviation and when asked to choose a global Dutch company the first thing I thought about was KLM. In this assignment I will evaluate KLM’s operations on 2 different continents and compare these operations. To do so I will make use of different sources, and KLM's partner airlines.…
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