Introduction to Global

Business
Chapter 5
The Cultural Environment

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 After studying this chapter, you should be able to:

1. Define culture and identify the four characteristics

of culture that companies doing business abroad
need to recognize.
2. Name several elements of culture.
3. Name and distinguish among the cultural
dimensions proposed by Hofstede and
Trompenaars.
4. Identify the primary and secondary sources that
can be used to learn about foreign countries’
cultures.
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 After studying this chapter, you should be able to:

5. Describe the cultural aspects of doing

business in various countries, including East
Asian countries, Arab countries, and Latin
America.
6. Explain why culture is important in global
management and marketing.

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Defining Culture and Its
Characteristics
• Culture is learned behavior; a way of life for one group of
people living in a single, related, and independent
community
• Characteristics of culture
Culture is not inherited.
It is nearly impossible to change an entire country’s culture.
A global firm must ascertain the level of importance of
various aspects of culture in the foreign markets it serves
and recognize these aspects when doing business
overseas.
Companies’ operations need to recognize and adjust to the
cultural environment in the countries the global company
serves.
Elements of Culture: Language
• Verbal communication
A message’s actual contents intended to be conveyed to the
receiver (i.e., what the message says)
• Nonverbal communication
Tone of voice, gestures, eye contact, body positions, facial
grimaces, and other body language that accompanies
verbal communication
• Backward translation
Translating a message from English into a foreign language,
then translating it back into English to check for accuracy
 Elements of Culture:
Religion, Values, and Attitudes
Religion’s effects Values
Business operations Basic beliefs or philosophies that
Manufacturing and marketing of are pervasive in a society
products Attitudes
Observance of holidays Feelings or opinions
Working days and working hours
Elements of Culture: Manners and Customs,

Material Elements, and Aesthetics

• Manners and customs

The usual way a society does things
• Material culture
A direct result of technology; best demonstrated by
economic, social, financial, and marketing infrastructures
of a society
• Aesthetics
Color, form, and music are the major components of
aesthetics─what is perceived as taste and beauty by a
society.
Elements of Culture: Education
• The level of education of people in foreign countries is a
major factor in explaining economic growth.
• Level of education must be such that host-country
personnel can work or be trained for a variety of jobs.
• Some countries emphasize different educational
specialties:
South Korea and Japan stress education in sciences and
engineering.
Russia is strong in mathematics and computer programming.
India emphasizes engineering and software development.
• Some countries have tiered system of higher education
with prestigious colleges and universities.
Elements of Culture: Social
Institutions
• Social institutions
The way people in a society relate to one another
within group settings
• Reference groups
Groups that are important to individuals
• Social stratification
The extent to which groups at the top of the social
pyramid exert control over others at lower levels
of the pyramid
 Clustering Countries and Regions by Culture

Hofstede Trompenaars

individualism vs. collectivism universalism vs. particularism

power distance neutral vs. emotional

masculine vs. feminine specific vs. diffuse

uncertainty avoidance achievement vs. ascription

time orientation

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Hofstede’s Cultural Dimensions
• Power Distance
The extent to which less powerful members accept
that power is distributed unequally
High power distance countries: people blindly obey
superiors; centralized, tall organizational structures
(Mexico, South Korea, India)
Low power distance countries: flatter, decentralized
organizational structures, smaller ratio of supervisor to
employee (Austria, Finland, Ireland)
Hofstede’s Cultural Dimensions
• Uncertainty Avoidance
– The extent to which people feel threatened by
ambiguous situations; create beliefs/institutions to try
to avoid such situations
• High uncertainty avoidance countries: high need for security,
strong belief in experts and their knowledge; structure
organizational activities, more written rules, less managerial
risk taking (Germany, Japan, Spain)
• Low uncertainty avoidance countries: people more willing to
accept risks related to unknown, less structured
organizational activities, fewer written rules, more managerial
risk taking, higher labor turnover, more ambitious employees
(Denmark and Great Britain)
Hofstede’s Cultural Dimensions
• Individualism
– The extent to which people look after themselves and
immediate family only
• Collectivism
– The tendency of people to belong to groups and to look
after each other in exchange for loyalty
• High individualism countries: wealthier, Protestant work
ethic, greater individual initiative, promotions based on
market value (U.S., Canada, Sweden)
• High collectivism countries: poorer, less support of
Protestant work ethic, less individual initiative, promotions
based on seniority (Indonesia, Pakistan)
Hofstede’s Cultural Dimensions
• Masculinity
– A cultural characteristic in which the dominant social
values are success, money, and things
• Femininity
– A cultural characteristic in which the dominant social
values are caring for others and quality of life
• High masculine countries: stress earnings, recognition,
advancement, challenge, wealth; high job stress (Germanic
countries)
• High feminine countries: cooperation, friendly atmosphere,
employment security, group decision making; low job stress
(Norway)
Hofstede’s Cultural Dimensions
• Time Orientation (1988)
A cultural characteristic dealing with society’s search
for virtue
Long-term oriented societies: focus on the future, able
to adapt traditions when conditions change, tend to
save and invest, focus on achieving long-term results
(Asian countries)
Short-term oriented cultures: focus on quick results, do
not tend to save, service to others, belief in absolutes,
value stability and leisure (U.S., UK, Spain)
Hofstede’s Cultural Dimensions

• Indulgence vs. Restraint (2010)

Indulgent: trait related to relative happiness based on
instant gratification
Restraint: a cultural characteristic based on regulating
and controlling behavior according to social norms
Indulgent societies: perceived happiness, life in control,
positive emotions, basic needs satisfied (U.S., UK, Australia,
Chile)
Restrained societies: less happiness, sense of helplessness,
less likely to remember positive emotions, basic needs not
always met (China, Egypt, Romania)
Trompenaars’s Cultural
Dimensions
• Universalism vs. Particularism
– Universalism: belief that ideas/practices can be
applied everywhere
• High universalism countries: formal rules, close
adherence to business contracts (U.S., UK, Germany,
Sweden, Australia)
– Particularism: belief that circumstances dictate
how ideas/practices apply
• High particularism countries: legal contracts often
modified, the way deals executed change as people get
to know each other (China, Indonesia, Venezuela)
Trompenaars’s Cultural
Dimensions
• Individualism vs. Communitarianism
Individualism: people regard themselves as
individuals
Countries with high individualism: stress personal and
individual matters; assume great personal responsibility
(U.S., UK, Argentina, Mexico, Thailand)
Communitarianism: people regard themselves as
part of a group
Value group-related issues; committee decisions; joint
responsibility (Malaysia, Korea)
Trompenaars’s Cultural
Dimensions
• Neutral vs. Emotional
Neutral: culture in which emotions are held in check
High neutral countries: people act stoically and maintain
composure (Japan and UK)
Emotional: emotions are expressed openly and
naturally
High emotion cultures: people smile a lot, talk loudly,
greet each other with enthusiasm (Mexico,
Netherlands, Switzerland)
Trompenaars’s Cultural
Dimensions
• Specific vs. Diffuse
– Specific: large public space shared with others and
small private space guarded closely
• High specific cultures: people open and extroverted,
strong separation of work and personal life (Austria, UK,
U.S., Switzerland)
– Diffuse: public and private spaces have similar size,
public space guarded because shared with private
space
• Diffuse cultures: people indirect and introverted,
work/private life closely linked (Venezuela, China, Spain)
Trompenaars’s Cultural
Dimensions
• Achievement vs. Ascription
Achievement culture: people accorded status based
on how well they perform functions
High status to high achievers (Austria, Switzerland, U.S.,
UK)
Ascription culture: status based on who or what a
person is
Status based on age, gender, social connections (China,
Indonesia)
Trompenaars’s Cultural
Dimensions
• Time
– Sequential: only one activity at a time, appointments
kept strictly, follow plans as laid out (U.S.)
– Synchronous: multitask, appointments are
approximate and easily changed, schedules
subordinate to relationships (France, Mexico)
– Past/Present vs. Future:
• Future more important (Italy, U.S., Germany)
• Past/Present more important (Venezuela, Indonesia,
Spain)
• All 3 time periods equally important (France, Belgium)
Trompenaars’s Cultural
Dimensions
• The Environment
Inner-directed: people believe in controlling
outcomes
Dominant (sometimes aggressive) attitude toward
environment (U.S., Switzerland, Australia)
Outer-directed: people believe in letting things take
their course
“Go with the flow,” flexible attitude, willingness to
compromise and maintain harmony (China, many other
Asian countries)
Gannon’s Cultural Metaphors
• Gauge a specific culture by using an image
(“metaphor”) that depicts how people in a
specific culture think and behave:
French wine—Purity; classification; composition;
compatibility; maturation
German symphony—Orchestra; conductors;
performance; society; education and politics
British house—Laying the foundation; building the
brick house; living in the brick house

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Cultural Dimensions of Doing Business in
Japan

• Upon meeting a Japanese executive, a slight bow and

handshake are appropriate.
• Business card etiquette is important.
Information should be in English on one side of the card.
The other side should have the same information in
Japanese.
• It is not appropriate to look directly into the eyes of your
Japanese hosts.
• It is important for your Japanese hosts to know your title
and rank.
Cultural Dimensions of Doing Business in
Japan (continued)

• Japanese business has a group orientation,

rather than an individualistic one.
• Japanese executives expect foreign business
representatives to arrive prepared and to have
decision-making authority.
• New potential business partners must have been
referred to Japanese business representatives
through a third party.
Cultural Dimensions of Doing Business in
Korea
• Elders are respected for their knowledge and
wisdom.
• “Yangban” refers to the noble class’s culture of
honor, reputation, and dignity (similar to the
concept of gravitas in Western cultures).
• “Inwa” involves harmony among unequals:
loyalty is owed to parents and authority figures,
yet superiors are responsible for the well-being
of their subordinates.
• A personal relationship needs to occur before
business matters can be discussed with
foreigners.
Cultural Dimensions of Doing Business in
China
• Guanxi
A philosophy denoting friendships among unequals (as
between subordinates and superiors) and the unlimited
exchanges of favors; it is utilitarian and not based on
sentiment, emotions, or a group orientation
Exchanges are often uneven, an advantage for weaker
member in the guanxi relationship.
Persons of low rank may be powerful and influential due to
guanxi relationships with superiors.
Foreigners who want to conduct business in China may need
to seek out lower-level persons and obtain their favor in
order to gain access to more powerful superiors who are
decision makers.
Cultural Dimensions of Doing Business in
Arab Countries
• Avoid sitting so that the sole of one’s shoe is
shown.
• The left hand is viewed as “unclean.”
• Good posture is imperative.
• Foreign business representatives should not
inquire about the wives of Arab business
representatives.
• Do not overly praise the possessions of Arab
hosts, as this could create a perception that you
expect your hosts to give them to you.
Cultural Dimensions of Doing
Business in Arab Countries
(continued)
• Arab business representatives will probably be
reluctant to do business with women.
• If a woman is accepted, modest dress is
appropriate.
• Arab business representatives may frequently
divert from the topic initially discussed, then
return to it.
Cultural Dimensions of Doing Business in
Latin America
• Potential customers will want to develop a
personal relationship before doing business with
foreign executives.
• Latin Americans are more flexible about time
than are North Americans.
• Latin Americans are not as immersed in their
work as the business people in the United
States.

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The Importance of Culture for Managing
and Marketing in Overseas Markets

• A country’s culture affects its attitudes toward

work.
• Management styles can give rise to challenges or
lead to success.
• When developing new products, management
styles must be considered along with many other
aspects of marketing.
• Advertising campaigns must be carefully tailored
to local cultures.
• Culture has an impact on communication styles.
 Key Terms
culture social stratification
acculturation individualism vs. collectivism
verbal communication power distance
nonverbal communication masculine vs. feminine
backward translation uncertainty avoidance
values time orientation
attitudes universalism vs. particularism
manners and customs neutral vs. emotional
material culture specific vs. diffuse
aesthetics achievement vs. ascription
social institutions inwa
reference groups guanxi
© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitt
ed in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.