CHAPTER 2

Cross-Cultural Business

1. What is culture?
Culture is the set of values, beliefs, rules, and institutions held by a specific group
of people. Main components include: aesthetics, values and attitudes, manners
and customs, social structure, religion, personal communication, education, and
physical and material environments. (See below figure)
A subculture is a group of people who share a unique way of life within a larger,
dominant culture. It can differ from the dominant culture in language, race,
lifestyle, values, attitudes, and so on. Subcultures also can extend beyond national
borders.
Physical Environment—These heavily influence a culture’s development and pace
of change.
- Topography: all physical features that characterize the surface of a
geographic region. Cultures isolated by impassable mountains or large
bodies of water are less exposed to the cultural traits of others and
change slowly. Topography impacts product needs.
- Climate plays a large role in lifestyle, clothing, and work habits, such as
organizing production schedules for idled machines.
Need for Cultural Knowledge
1. Avoiding Ethnocentricity
a. Ethnocentricity is the belief that one’s own ethnic group or culture is
superior to that of others. It causes people to view other culture in terms of their
own and overlook beneficial aspects of other cultures.
2. Developing Cultural Literacy
a. Managers working directly in international business should develop
cultural literacy—detailed knowledge about a culture that enables a person to
function effectively within it.
b. Cultural literacy brings a company closer to customer needs and improves
competitiveness.

Components of culture
 2. Values and Behavior
Values: Ideas, beliefs, and customs to which people are emotionally attached.
Values include concepts such as honesty, freedom, and responsibility. Values are
important to business because they affect a people’s work ethic and desire for
material possessions. Some cultures value leisure while others value hard work.
Attitudes are positive or negative evaluations, feelings, and tendencies that
individuals harbor toward objects or concepts. Similar to values, attitudes are
learned from role models and formed within a cultural context. More flexible than
values.
Aesthetics: what a culture considers “good taste” in the arts, the imagery evoked
by certain expressions, and the symbolism of certain colors. Aesthetics includes
the art, images, symbols, colors, and so on.
Manners: Appropriate ways of behaving, speaking, and dressing in a culture are
called manners.
Customs: Habits or ways of behaving in specific circumstances that are passed
down through generations in a culture.
- Folk Custom: Behavior, often dating back several generations, that is
practiced by a homogeneous group of people.
- Popular Custom: Behavior shared by a heterogeneous group or by several
groups.
- Folk customs that spread to other regions develop into popular customs.
- The business custom of gift giving – although giving token gifts to
business and government associates is customary, the proper type of gift
varies. Cultures differ in their legal and ethical rules regarding bribery. The
U.S. Foreign Corrupt Practices Act prohibits companies from giving large
 gifts to win business favors, applies to U.S. firms operating at home and
abroad.

3. Social Structure and Education

Social structure embodies a culture’s fundamental organization, including groups
and institutions, social positions and relationships, and resource distribution.
Social Group Associations: Collection of two or more people who identify and
interact with each other. Two groups that play especially important roles in
affecting business activity everywhere are family and gender.
- Family: Nuclear vs. Extended
- Gender
Social Status: Positions within the structure. Social stratification is the process of
ranking people into social layers according to family heritage, income, and
occupation.
Social Mobility is the ease with which individuals can move up or down a
culture’s “social ladder.”
- Caste system: people are born into a social ranking, with no opportunity
for social mobility.
- Class system: personal ability and actions decide status and mobility.
Highly class-conscious cultures can offer less mobility but experience more
class conflict.
Education
Education passes on traditions, customs, and values. Cultures educate young
people through schooling, parenting, religious teachings, and group
memberships. Families and other groups provide informal instruction about
customs and how to socialize with others. In most countries, intellectual skills are
taught in formal educational settings. The quality of a nation’s education system
is related to its level of economic development.
- The “Brain Drain” Phenomenon
- Brain drain: departure of highly educated people from one profession,
geographic region, or nation to another.
- Reverse brain drain: professionals return to their homelands.

4. Religion
Human values often derive from religious beliefs. Different religions take different
views of work, savings, and material goods.
Christianity: Christianity was born in Palestine around 2,000 years ago. Most
Christians belong to the Roman Catholic, Protestant, or Eastern Orthodox
churches. With 2 billion followers, Christianity is the world’s single largest religion.
Islam: Founded by Muhammad in 600 A.D. in Mecca, Saudi Arabia—the holy city
of Islam. World’s second largest religion with 1.3 billion adherents.
Islam thrives in North Africa, the Middle East, Central Asia, Pakistan, and some
Southeast Asian nations. Muslim concentrations are also found in most European
and U.S. cities.
Hinduism: Founded 4,000 years ago in present-day India, where more than 90
percent of its nearly 900 million adherents live. Some say it is a way of life rather
than a religion. Hinduism recalls no founder and recognizes no central authority
or spiritual leader. Caste system is integral to the Hindu faith. Hindus believe in
reincarnation—the rebirth of the human soul at the time of death.
Buddhism: Founded 2,600 years ago in India by a Hindu prince named
Siddhartha Gautama. About 380 million followers, mostly in Asia: China, Tibet,
Korea, Japan, Vietnam, and Thailand. Unlike Hinduism, Buddhism rejects the caste
system of Indian society. But like Hinduism, promotes a life centered on spiritual
rather than worldly matters.
Confucianism: Founded 2,500 years ago by exiled politician and philosopher
Confucius. China is home to most of the 225 million followers. Confucian thought
ingrained in the cultures of South Korea, Japan, and nations with large numbers
of ethnic Chinese, including Singapore. South Korean business practice reflects
Confucian thought in its rigid organizational structure and reverence for authority.
Judaism: Founded more than 3,000 years ago and 18 million followers. Was the
first religion to teach belief in one God. Marketers must take into account foods
banned among observant Jews (e.g., pork and shellfish prohibited, meat stored
and served separately from milk) and “kosher” foods.
Shinto: Means “way of the gods” and arose as the native religion of the Japanese.
Teaches sincere and ethical behavior, loyalty and respect toward others, and
enjoyment of life. Shinto claims about 4 million strict adherents in Japan.

5. Personal Communication
Communication: System of conveying thoughts, feelings, knowledge, and
information through speech, writing, and actions.
Forms of Communication:
- Spoken and Written Language
a. Implications for managers: Language proficiency is also crucial in
production facilities where non-native managers are supervising local
employees.
b. Language blunders: Advertising slogans and company documents must
be translated carefully so that messages are received precisely as
intended. If they are not carefully translated, a company can make a
language blunder in its international business dealings.
c. Lingua franca: A third or “link” language understood by two parties who
speak different native languages.
- Culture’s Body Language: Communicated through unspoken cues,
including hand gestures, facial expressions, physical greetings, eye contact,
and the manipulation of personal space.
 6. Culture in the Global Workplace
Perception of Time: People in many Latin American and Mediterranean cultures
are casual about their use of time. By contrast, people in Japan and the United
States typically arrive promptly for meetings, keep tight schedules, and work long
hours.
View of Work: Some cultures display a strong work ethic; others stress a more
balanced pace in juggling work and leisure. (e.g., “Work to live, or live to work”)
Material Culture: All the technology used in a culture to manufacture goods and
provide services is called its material culture. Material culture is often used to
measure the technological advancement of a nation’s markets or industries.
Cultural Change
- Cultural Trait is anything that represents a culture’s way of life, including
gestures, material objects, traditions, and concepts.
- Cultural Diffusion is the process whereby cultural traits spread from one
culture to another. As new traits are accepted and absorbed into a culture,
cultural change occurs naturally and gradually. Globalization and
technology are increasing the pace of cultural diffusion and change.
- Cultural Imperialism is the replacement of one culture’s traditions, folk
heroes, and artifacts with substitutes from another.
Studying Culture in the Workplace
- Kluckhohn-Strodtbeck Framework
a. Relation to nature
b. Time orientation
c. Trust and control
d. Material or spiritual
e. Responsibility to others
f. Public or private activities
- Hofstede Framework
a. Individualism versus collectivism
b. Power distance
c. Uncertainty avoidance
d. Masculinity vs. femininity
e. Long-term orientation
f. Indulgence versus restraint