BSA CORE 6

INTERNATIONAL BUSINESS

MODULE 2
(Wednesday)

Relationships
This refers to social structure, which embodies a culture’s fundamental
organization including its groups and institutions, its system of social positions
and their relationships, and the process by which its resources are distributed.

Social structure affects business decisions ranging from production-site selection

to advertising methods and the costs of doing business in a country.

Cultures fix human and organizational relationships by age, gender, status, and
degree of kindred, as well as by wealth, power, and wisdom.
o The family unit is the most common expression of this characteristic, and
the arrangement may go from small to large.
 Example: In a Hindu household, the joint family includes under one
roof a mother, father, children, parents, uncles, aunts, and cousins.
Gender
Socially learned traits associated with, and expected of, men or women or
another social group association refers to such socially learned behaviors and
attitudes as styles of dress and activity preferences.

Many countries have still not made any progress toward equality between men
and women in the workplace.
o Examples:
 Countries operating under Islamic law sometimes segregate
women and men in schools, universities, and social activities, and
restrict women to certain professions.
 Saudi Arabia, Iran, and, most recently, Afghanistan (Taliban rulers)
are some of the examples of countries where there is or was
discrimination against women.
 In Japan, women have traditionally been denied equal opportunity
in the workplace. While men held nearly all positions of
responsibility, women generally served as office clerks and
administrative assistants until their mid to late twenties when they
were expected to marry and stay at home tending to family needs.

Katsioloudes, Marios & Hadjidakis, Spyros. 2007. International Business: A Global Perspective. Elsevier
Inc.
 Dimensions of social values that affect business activities

o Beliefs and Attitudes

 People in all cultures seem to have a concern for the supernatural
that is evident in their different religions and religious practices.
 Religious traditions in various cultures consciously or unconsciously
influence our attitudes toward life, death, and the hereafter.

 Examples:
 Western culture seems to be largely influenced by the
Judeo-Christian–Islamic traditions
 Eastern or Asian cultures have been dominated by
Buddhism, Confucianism, Taoism, and Hinduism.
 Religion, to a degree, expresses the philosophy of a people about
important facets of life - it is influenced by culture and vice versa.

 An understanding of religious beliefs will help the international

manager understand why companies from certain cultures are
more competitive than companies from other cultures.
 It also helps us understand why some countries develop
more slowly than others do.
 Knowing how religion affects business practices is especially
important in countries with a religious form of government.

Ways of studying cultural differences

o The Kluckhohn–Strodtbeck framework

 Compares cultures along six cultural dimensions. The following six
questions assist the international manager in studying any given
culture and in comparing it to a different one:
 Do people believe that their environment controls them, that
they control the environment, or that they are part of nature?
 Do people focus on past events, on the present, or on the
future?
 Are people easily controlled and not to be trusted, or can
they be trusted to act freely and responsibly?
 Do people desire accomplishments in life, carefree lives, or
spiritual lives?
 Do people believe that individuals or groups are responsible
for each person’s welfare?
 Do people prefer to conduct most activities in private or in
public?

Katsioloudes, Marios & Hadjidakis, Spyros. 2007. International Business: A Global Perspective. Elsevier
Inc.
 o Hofstede framework value dimensions

 Power distance - level of acceptance by a society of the unequal

distribution of power in organizations. In the workplace, inequalities
in power are normal, as evidenced in hierarchical boss–subordinate
relationships. However, the extent to which subordinates accept
unequal power is socially determined.
 Examples:
 In Malaysia, the Philippines and Mexico, employees
acknowledge the boss’s authority simply by respecting that
individual’s formal position in the hierarchy, and they seldom
bypass the chain of command. This respectful response
results, predictably, in a centralized structure and in
autocratic leadership.
 In Austria, Denmark and Israel, superiors and subordinates
are apt to regard one another as equal in power, resulting in
more harmony and cooperation. Clearly, an autocratic
management style is not likely to be well received in low
power distance countries.

 Uncertainty avoidance - refers to the extent to which people in a

society feel threatened by ambiguous situations.
 Countries with a high level of uncertainty avoidance (such as
Japan, Portugal, and Greece) tend to have strict laws and
procedures to which their people adhere closely, and a
strong sense of nationalism prevails. In a business context,
this value results in formal rules and procedures designed to
provide more security and greater career stability.
 Managers have a propensity for low-risk decisions,
employees exhibit little aggressiveness, and lifetime
employment is common.
 In countries with lower levels of uncertainty avoidance (such
as Denmark, Great Britain, and, to a lesser extent, the
United States), nationalism is less pronounced, and protests
and other such activities are tolerated. Consequently,
company activities are less structured and less formal, with
some managers taking more risks, and there is high job
mobility.

 Individualism - refers to the tendency of people to look after

themselves and their immediate family only and neglect the needs
of society.

Katsioloudes, Marios & Hadjidakis, Spyros. 2007. International Business: A Global Perspective. Elsevier
Inc.
  In countries that prize individualism (such as the United
States, Great Britain, and Australia), democracy, individual
initiative, and achievement are highly valued; the relationship
of the individual to organizations is one of independence on
an emotional level, if not on an economic level.

 Masculinity - refers to the degree of traditionally “masculine” values

- assertiveness, materialism, and a lack of concern for others - that
prevail in a society.
 In comparison, femininity emphasizes “feminine” values - a
concern for others, for relationships, and for the quality of
life.
o In highly masculine societies (e.g., Japan and
Austria), women are generally expected to stay at
home and raise a family.
o In organizations, one finds considerable job stress,
and organizational interests generally encroach on
employees’ private lives.
o In countries with low masculinity (such as Switzerland
and New Zealand), one finds less conflict and job
stress, more women in high-level jobs, and a reduced
need for assertiveness.

International managers must remember that the evaluation of an entire country

on the basis of any one cultural value dimension is a generalization and thus a
possible oversimplification, for variations may occur according to subcultures,
regions, and individuals.
Culture in the Workplace
The effects of culture on specific management functions are particularly
noticeable when we attempt to impose our own values and beliefs on those from
another society.
o For example:
 American managers plan activities, schedule them, and judge their
timely completion based on the belief that people influence and
control the future, rather than assuming that events will occur only
at the will of Allah
 Managers in an Islamic nation might believe in the will of Allah.

What should international managers do?

o An international manager should understand his/her own culture.

Katsioloudes, Marios & Hadjidakis, Spyros. 2007. International Business: A Global Perspective. Elsevier
Inc.
  This awareness helps guard against adopting either a parochial or
an ethnocentric attitude.
 Ethnocentrism describes the attitude of those who operate from the
assumption that their ways of doing things are best no matter
where or under what conditions they are applied.

After studying his/her own culture, the manager’s next step toward
establishing effective cross-cultural relations is to develop cultural sensitivity.

International managers not only must be aware of cultural variables and their
effects on behavior in the workplace but also must appreciate cultural
diversity and should understand how to build constructive working
relationships anywhere in the world.
Cross-cultural Management and Training
International managers will be faced with more cultures to understand, more
social responsibilities to master, more time pressures to juggle, and more
relationships to rethink.

Because an international manager is confronted with all these challenges, it is

clear that his or her preparation for cross-cultural interactions is critical.

Both cross-cultural adjustment problems and practical differences in everyday life

present challenges for expatriates and their families.
o Examples:
 Brazil: Expatriates stress that cell phones are essential because
home phones do not work.
 China: Adjustment is a continuing problem for expatriates; one
complained that at his welcome banquet he was served duck
tongue and pigeon head.
 India: Returning executives complain that the pervasiveness of
poverty and street children is overwhelming.
 Indonesia: Here you need to plan ahead financially because
landlords typically demand rent two to three years in advance.
 Japan: Expatriates and their families remain concerned that
although there is excellent medical care, Japanese doctors reveal
little to their patients.
Goal of training
To ease the adjustment to the new environment by reducing culture shock.
o Cultural shock is the state of disorientation and anxiety about not knowing
how to behave in an unfamiliar culture.

Katsioloudes, Marios & Hadjidakis, Spyros. 2007. International Business: A Global Perspective. Elsevier
Inc.
 o Subculture shock occurs when a manager is transferred to another part of
the country where there are cultural differences - essentially from what
he/she perceives to be a “majority” culture to a “minority” one.
o Example - when someone moves from the northern part of France to the
southern part, where people are friendlier, hospitable, and have a
Mediterranean temperament.
Closing Case: Adjusting to the American Culture
A group of Arab oil workers sent to Texas for training found American teaching methods
impersonal. Several Japanese workers at a US manufacturing plant had to learn how to
put courtesy aside and interrupt conversations when there was trouble. Executives of a
Swiss-based multinational company could not understand why its American managers
demanded more autonomy than their European counterparts.
To all these people, America is a foreign country with a strange corporate culture. Just
as Americans doing business abroad must grapple with unfamiliar social and
commercial practices, so too must a growing number of European, Asian, and Latin
American managers of US subsidiaries struggle with diversity. “Most people think that
culture is manners, food, dress, arts and crafts,” says Clifford Clarke, president of IRI
International, a Redwood City, California, consulting company. “They don’t realize that
how you motivate a guy is culturally determined. Every managerial task is culturally
determined.” Occasionally, transferees find that behavior suitable at home may irritate
coworkers here. A recent training film portrays a Japanese employee living in the United
States angering an American colleague by repeatedly apologizing for a late report; the
American expects explanations and solutions. “In America, if you talk around things,
people get frustrated with you,” says Lennie Copeland, who helped produce the film.
Jose Carlos Villates, a business manager for animal health products at American
Cyanamid Company, also had a problem with office protocol. In Puerto Rico and the
Dominican Republic, where he was raised, businesspeople would begin meetings with
relaxed chitchat. At the company’s headquarters in Wayne, New Jersey, however, he
says he picks up “signals or body language” that Americans find such sociability a
waste of time. Even after 15 months in the United States, Villates feels uncomfortable
plunging abruptly into business. “It strikes us as cold-blooded,” he says.
Europeans, on the other hand, can be flummoxed by “a deceiving appearance of
informality,” says French-born Andre Rude, who counsels international tranferees at
Hewlett-Packard in Palo Alto, California. “They don’t realize the urgency of the request
and find themselves in trouble” when work isn’t done on time.
Question: How would you go about adjusting to the American culture based on the
various scenarios presented above?

Katsioloudes, Marios & Hadjidakis, Spyros. 2007. International Business: A Global Perspective. Elsevier
Inc.
Katsioloudes, Marios & Hadjidakis, Spyros. 2007. International Business: A Global Perspective. Elsevier
Inc.