Business Environment

Nature of Culture
Ms. Reem Quashem
Informal Institution
• Informal institutions come from socially transmitted
information and are part of the heritage that we call culture.
They tell individuals in a society what behaviors are
considered right and proper, and what would be
unacceptable.
▫ Typically, cultures have no clearly defined origin, but have
evolved over time.
▫ Those within a society tend to perceive their own culture as
‘natural, rational and morally right’. This self-centered mentality
is known as ethnocentrism.
• Culture can be seen as the collective programming of the mind
which distinguishes the members of one group or category of
people from another.
▫ Discussion Question: How would you describe the culture in your
home country?
Culture

Language

Religion
Social
Structure

Culture
Communication
Values & attitudes
Characteristics of Culture
• Learned: culture is not inherited or biologically based, it is acquired
by learning and experience.
• Shared: People as members of a group, organization, or society
share culture; it is not specific individuals
• Transgenerational – It is passed from one generation to next
(through teaching)
• Symbolic – Culture is based on the human capacity to symbolize or
use one thing to represent another
• Adaptive- Culture is based on human capacity to change or adapt
• Culture has a purpose in terms of achieving shared objectives
Culture
• Definitions:
▫ ‘A way of life of a group of people, the configuration of all the more
or less stereotyped patterns of learned behaviour, which are
handed down from one generation to the next through means of
language and imitation’. Barnouw 1985
▫ ‘Culture is a collective phenomenon that is shared with people who
live or lived within the same social environment, which is where it
was learned. It is the collective programming of the mind which
distinguishes the members of one group or category of people from
another.’ Hofestede 1997
• 3 ways to systematically understand cultural differences:
▫ context
▫ cluster
▫ dimension
Some Cultural Consequences
KFC made some early
missteps into China –
one of them being their
famous advertising
campaign slogan:
“Finger lickin'
good!” translating to
“Eat your fingers off.”
Not so appealing
anymore...
Some Cultural Consequences
The name Coca Cola in
China was first rendered
as “Ke kou ke la”.
Unfortunately, the coke
company did not discover
until agter thousands of
signs had been printed
that the phrase means
“bite the wax tedpole”.
Coke then researched
40,000 Chinese
characters and found a
close phonetic equivalent
“ke kou ko le” which can
be loosely translated as
“happiness in the mouth”
Some Cultural Consequences
When Gerber began
selling baby food in
Africa, they decided to
use the exact same
packaging as in the US,
with their infamous baby
on the label. However,
since the majority of
people can’t read English
in Africa, companies
there sometimes put
pictures on the label of
what's inside. Oh dear…
Context
• Context is the underlying background upon which interaction takes place.
• In low-context cultures (such as in North American and Western
European countries), communication is usually taken at face value
without much reliance on unspoken context. In other words, yes means
yes.
▫ In contrast, in high context cultures (such as Arab and Asian countries),
communication relies a lot on the underlying unspoken context, which is as
important as the words used.
▫ For example, ‘yes’ does not necessarily mean ‘yes, I agree’, it might may ‘yes, I hear
you’.
Cultural Clusters
•The cluster approach groups countries that share similar
cultures together as one cluster.
•A civilization is ‘the highest cultural grouping of people and
the broadest level of cultural identity people have’.
▫ Huntington 1996 has advanced a highly controversial idea that the
Western civilization will clash with the Islamic and Confucian
civilizations in the years to come.

•GLOBE has (6) Confucian Asia, (7) Eastern Europe, (8)

Middle East, (9) Southern Asia and (10) Sub-Sahara Africa.

•The underlying idea that people and firms are more

comfortable doing business with other countries within the
same cluster. This is because common history, religion and
customs within the same cluster reduce the liability of
outsidership when operating abroad (see Chapter 1).
Cultural Clusters
Language

Chinese is the world’s largest in terms of the number of native speakers.

English is a distant second, followed by Hindi and Spanish.
Religion
• Religion is a major manifestation of culture, and it is the source of
some of the differences in norms and values that we discussed
before.
• Knowledge about religions is crucial even for nonreligious managers
• Religious beliefs and activities affect business through:
▫ religious festivals,
▫ daily and weekly routines
▫ activities and objects with symbolic values – positive or negative.
• Religious differences, more than any other differences, tend to raise
emotions – and thus are challenging to handle for businesses.
• Showing respect for other religions and associated values will help
you avoiding conflict and creating a basis for doing business.
Religion and Ethical System
• Ethical System are Set of moral Principles or
values that are used to guide or shape behavior.
• Christianity Monotheism is the belief in
• Islam the existence of one God, or
• Hinduism in the oneness of God as
• Buddhism lord of the universe standing
apart from the rest of the
• Confucianism creation.
Major Religions of the World

RELIGION NUMBER OF ADHERENTS

Christian 2,200,000,000
Muslim 1,600,000,000
Hindu 811,000,000
Chinese folk 384,000,000
Buddhist 360,000,000
Sikh 23,000,000
Judaism 18,000,000
Ethics
• Ethics refers to the principles, standards and norms of conduct governing
individual and firm behaviour.
▫ Ethics are not only an important part of informal institutions but is also
deeply reflected in formal laws and regulations.
• Managing ethics overseas is challenging because what is ethical in one country
may be unethical elsewhere.
▫ ethical relativism follows the cliché, ‘When in Rome, do as the Romans do’.
▫ ethical imperialism refers to the absolute belief that ‘There is only one set of
Ethics and we have it’.
• Donaldson’s (1996) “Middle of the road” approach (Table 3.3)
Hand Gestures Mean Different Things in
Different Countries

© 2005 Prentice Hall Inc. All rights

reserved.
10–17
Hand Gestures Mean Different Things in
Different Countries (cont’d)

© 2005 Prentice Hall Inc. All rights

reserved.
10–18
Rules When Venturing Overseas
Language Strategies in
International Business
• Get references for translators
• Ensure the translator is familiar with technical
vocabulary for the business
• Do a back translation
• Use simple words
• Avoid slang
• Repeat words and ask questions
• Expect the extra time communication will take
Major Cultural Issues
• Problems arise in international business when:
▫ Employees have subconscious reactions
▫ Employees assume all societal groups are similar
▫ Employees encounter distress because of an inability to
accept or adjust to foreign cultural behaviors
▫ Companies/employees are insensitive to foreign
consumer preferences
Cultural Orientations
• International businesses adopt an attitude
towards foreign cultures
▫ Polycentrism: control is decentralized so regional
managers can conduct business in a local manner
▫ Ethnocentrism: belief that ones own culture is
superior and ignores important factors
▫ Geocentrism: a hybrid of polycentrism and
ethnocentrism, the middle ground
• Companies MUST evaluate their practices to
ensure they account for national cultural norms