Cross cultural management

Introduction
Introduction
• In international business, success requires
sensitivity to national interests and cultural
expectations. The framework in Exhibit 3.1
identifies the essential concepts for
understanding culture and its importance in
international business. In this chapter, we will
examine these concepts in detail.
 EXHIBIT 3.1
Framework on the Essential Elements of Culture
Culture and Cross-Cultural Risk
• Culture refers to the values, beliefs, customs, arts, and
other products of human thought and work that
characterize the people of a given society.
• Culture shapes our behavior. Although as human beings
we share many similarities, as groups of people or
societies, we exhibit many differences. Culture even
affects the common rituals of daily life. (ex: Greeting
ceremonies)
• Culture captures how the members of the society
live—for instance, how we feed, clothe, and shelter
ourselves.
• Culture explains how we behave toward each other
and with other groups. Culture defines our values
and attitudes and the way we perceive the meaning
of life.
Culture and Cross-Cultural Risk
• Food is among the most interesting aspects of
national culture. In Japan, pizza is often topped with
fish and seaweed.
• Look at Exhibit 3.2, which depicts numerous menu
items at McDonald’s fast-food restaurants around
the world. McDonald’s attempts to offer a relatively
standardized menu worldwide but often varies
offerings to suit tastes in individual countries.
• Many cultures are complex; some are relatively
individualistic, whereas others are more collectivist.
Some impose many norms and rules on social
behavior; others are less imposing.
Culture and Cross-Cultural Risk
Culture and Cross-Cultural Risk

• Why should we concern ourselves with culture in

cross-border business? The answer is that culture
introduces new risks.
• Cross-cultural risk is a situation or event in which a
cultural misunderstanding puts some human value at
stake.
• Misunderstanding and miscommunication arise
because people have differing values and
expectations. They do not always communicate
(verbally or nonverbally) what the other party is
anticipating or may have diverse ways of
communicating.
Culture and Cross-Cultural Risk
• Cross-cultural misunderstandings can ruin
business deals, hurt sales, or harm the corporate
image.
• Today, developing an appreciation of and
sensitivity for cultural differences is an
imperative. Managers who are well informed
about cross-cultural differences have advantages
in managing employees, marketing products,
and interaction with customers and business
partners.
Culture and Cross-Cultural Risk

• Today, firms conduct business in environments

characterized by unfamiliar languages as well
as unique beliefs, norms, and behaviors.
• Managers need to be able to reconcile these
differences to create profitable ventures.
• They must not only understand cultural
differences—they must also develop
international cultural competence.
What Culture Is Not
 Now that you have an idea of what culture is, let us define what it is
not. Culture is:
• Not right or wrong. Culture is relative. People of different
nationalities simply perceive the world differently. Each culture has its
own notions of acceptable and unacceptable behavior.
• Not about individual behavior. Culture is about groups. It refers to a
collective phenomenon of shared values and meanings. Thus, whereas
culture defines the collective behavior of each society, individuals
often behave differently.
• Not inherited. Culture comes from people’s social environment. No
one is born with a shared set of values and attitudes. Rather, children
gradually acquire specific ways of thinking and behaving as they are
raised in a society. In the United States, for example, children usually
learn to value individualism. In China, children learn to depend on
family members. Culture is passed from generation to generation by
parents, teachers, mentors, peers, and leaders. Modern methods of
communication, including the media, play an enormous role in
transmitting culture.
Socialization and Acculturation
• This process of learning the rules and behavioral patterns
appropriate to one’s society is called socialization.
• Each society has rules—do’s, don’ts, expectations, and preferences
that guide behavior particularly of children as they the mature. The
rules of socialization may be explicitly stated—for example, “We
don’t do things that way around here”—or they may be implicit,
that is, everyone is expected to know how to function at work, at
school, with friends, and so forth.
• Socialization is cultural learning and provides the means to acquire
cultural understandings and orientations that a particular society
shares. It is a subtle process; we often adapt our behavior
unconsciously and unwittingly.
• Acculturation is the process of adjusting and adapting to a culture
other than one’s own. It is commonly experienced by people who
live in other countries for extended periods, such as expatriate
workers. In many ways, acculturation is challenging because adults
are often less flexible than children.
Dimensions of Culture
• Anthropologists use the iceberg metaphor to call
attention to the many dimensions of culture,
some obvious and some not so obvious. Above
the surface, certain characteristics are visible,
but below, invisible to the observer, is a massive
base of assumptions, attitudes, and values.
• These invisible characteristics strongly influence
decision making, relationships, conflict, and other
dimensions of international business.
• We are usually unaware of the nine-tenths of our
cultural makeup that exists below the surface.
Dimensions of Culture

• Culture emerges through the integration of

our values and attitudes; manners and
customs; time and space perceptions;
symbolic, material, and creative expressions;
education; social structure; language; and
religion. Let’s examine these in more detail.
Dimensions of Culture
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. Values are the
basis for our motivation and behavior. Our values guide
the development of our attitudes and preferences.
They guide us in the decisions we make and in how we
lead our lives.
• Attitudes are similar to opinions but are often
unconsciously held and may not be based on logical
facts. Prejudices are rigidly held attitudes, usually
unfavorable and usually aimed at particular groups of
people.
Dimensions of Culture
Manners and Customs
• Manners and customs are ways of behaving and
conducting oneself in public and business situations.
• Some countries are characterized by informal cultures;
people treat each other as equals and work together
cooperatively. In other countries, people tend to be more
formal; status, power, and respect are relatively more
important.
• Customs that vary most worldwide relate to work hours
and holidays, appropriate behavior at social gatherings, gift
giving, and women in the workforce.
• Gift giving is complex in much of the world. In Japan, it is
usually a mistake not to offer a gift in initial meetings. The
Middle East is characterized by generous gift giving.
• Handshaking varies across the world: limp handshakes, firm
handshakes, elbow-grasping handshakes, and no
handshake at all.
Dimensions of Culture
Perceptions of Time
• Time has a strong influence on business. It affects
people’s expectations about planning, scheduling,
profit flows, and promptness in arriving for work and
meetings.
• Japanese managers tend to prepare strategic plans
for extended periods, such as a decade. The planning
horizon for Western companies is much shorter,
typically a few years.
• Some societies are more oriented to the past, others
to the present, and still others to the future.
Dimensions of Culture
Perceptions of Time
• People in past-oriented cultures believe plans should
be evaluated in terms of their fit with established
traditions, customs, and wisdom. Innovation and
change do not occur very often and are justified to the
extent they fit with experience. Europeans are
relatively past-oriented and prefer to conserve
traditional ways of doing things.
• Young countries such as Australia, Canada, and the
United States are relatively focused on the present.
They tend to have a monochronic orientation to time—
a rigid orientation in which people are focused on
schedules, punctuality, and time as a resource.
Dimensions of Culture
Perceptions of Time
• Some cultures have a polychronic perspective on time.
In such societies, instead of performing single tasks
serially, people are inclined to do many things at once.
• In this way, members of polychronic cultures are easily
distracted. They can change plans often and easily, and
lengthy delays are sometimes needed before taking
action. Punctuality per se is relatively unimportant, and
managers consider time commitments flexible. They do
not strictly follow the clock and schedules. They put
more value on relationships and spending time with
people
Dimensions of Culture
Perceptions of Time
• So, Polychronic is a flexible, nonlinear orientation
to time, in which the individual takes a long-term
perspective and emphasizes human relationships.
• Chinese and Japanese firms typically are future-
oriented. They focus not on how the firm will
perform next quarter but on how it will perform a
decade from now. Many large Japanese firms
offer lifetime employment and invest heavily in
employee training. They expect workers to
remain with the firm for decades.
Dimensions of Culture
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.
• In Japan, it is common for employee workspaces
to be crowded together in the same room, desks
pushed against each other. U.S. firms partition
individual workspaces and provide private offices
for more important employees.
Dimensions of Culture
Symbolic Productions
• A symbol can be letters, figures, colors, or other
characters that communicate a meaning. Symbols can
represent nations, religions, or corporations, and they
can help to unite people.
• Businesses have many types of symbols, in the form of
trademarks, logos, and brands. Think how easy it is to
identify popular company logos such as Tesla’s T-
shaped badge, Apple’s apple, and Cadbury’s unique
lettering.
• Colors carry diverse meanings in different cultures.
Color meanings in each country are based on spiritual,
social, cultural, historic and political influences.
Dimensions of Culture
Symbolic Productions
• Black is frequently associated with death in Western
culture, but white is associated with death in much of
Asia. Red is often associated with danger in the United
States but signifies happiness and celebration in China.
Blue is a safe color choice with many positive
associations.
• Colors are one of the most influential factors that
affect perceptions in branding and advertising.
• Companies must choose color schemes carefully when
developing product features, advertising, packaging,
and marketing programs. When buyers encounter a
product for the first time, the perception of the
product is significantly influenced by its color
Dimensions of Culture
Material Productions and Creative Expressions
• Material productions are artifacts, objects, and technological
systems that people construct to function within their
environments. They are integral to human life and provide the
means to accomplish objectives as well as communicate and
conduct exchanges within and between societies.
• The most important technology-based material productions are the
infrastructures that supply energy, transportation, and
communications.
• Others 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 support
marketing-related activities such as ad agencies).
• Creative expressions of culture include arts, folklore, music, dance,
theater, and high cuisine. Education is an especially important
system that emerges within cultures.
 Dimensions of Culture
Education
• Cultural values, ideas, beliefs, traditions, and
attitudes are passed from one generation to the
next through education.
• Education takes place in many ways, especially
through lessons and behavior acquired from
parents, family, and peers; participation in groups
(social, business, and religious); and formal
schooling.
• In most countries, academic education usually
occurs through schooling.
Dimensions of Culture
Social Structure
• Social structure refers to the pattern of social arrangements and organized
relationships that characterize a society. It refers to how a society is
organized in terms of individuals, families, groups, and socioeconomic
strata. All cultures have a social structure that influences our status or
class in society. Understanding the social structure of international
employees, clients, and suppliers is vital for avoiding cultural
misunderstandings and optimizing business transactions.
 Individuals. Because Western cultures emphasize individualism and
individual success, social status often is determined by individual
performance. Excessive individualism, however, can reduce the
effectiveness of teams, particularly in collectivist cultures typical of Asia.
 Family. In many cultures, immediate and extended family holds particular
importance in the nation’s social structure. In such cultures, the family
often plays a substantial role in the formation and structure of business
activities. In China, for example, family-owned and family-run businesses
are relatively common, and ownership often passes on to successive
generations.
Dimensions of Culture
Social Structure
 Reference groups. In some societies, people’s social status
is defined by group or employer affiliation rather than by
individual performance. When meeting business people in
Tokyo, for instance, they typically will identify themselves in
terms of the companies where they work rather than by
their function or job title at that firm. In Japanese firms,
objectives and strategies are typically decided by groups
rather than by individual managers.
 Social stratification. In most cultures, individuals are
classified within classes or social layers depending on their
occupation, income level, or family history. However,
societies differ in the importance they place on social strata
and on the ease with which people can advance to higher
strata.
Dimensions of Culture
Social Structure
 Social mobility. Social mobility refers to the ease with which a
person can move up within social strata. The most rigid type of
social mobility operates in a caste system in countries such as India.
In a caste system, a person’s social status is determined by birth,
and he or she has little opportunity for social mobility. Individuals
are often restricted to working in a specific occupation, such as a
farmer or factory worker, depending on the caste they were born
into. Understanding social norms in caste system countries is
necessary to successfully manage employees who work at different
levels of the social strata. Advanced economies are characterized by
the class system, a more flexible form of social stratification within
which people usually have greater mobility to move to higher strata
and change their social status. Social mobility in caste and class
systems alike influences people’s attitude toward work,
entrepreneurship, and labor relations.
Dimensions of Culture
Role of Language and Religion in Culture
• Language and religion are among the most important manifestations of
culture. Often described as the expression or mirror of culture, verbal
language is not only essential for communications, it also provides insights
into culture. It’s a major differentiator between cultural groups and castes
and provides an essential means for business leaders to communicate
effectively with employees, suppliers, and customers.
• Language can be classified as verbal and nonverbal.
 Verbal Language
• The world has approximately 7,000 active languages, including more than
2,000 in each of Africa and Asia. Most of these languages have only a few
thousand speakers. Just 23 languages are spoken by half the world’s
population.
• National languages, dialects, and translation tend to complicate verbal
communication. It is sometimes difficult to find words to convey the same
meaning in a different language. Even when a word can be translated well
into other languages, its concept and meaning may not be universal.
Dimensions of Culture
Role of Language and Religion in Culture
• Advertising themes often lose their original meaning in translation or give
the wrong impression. Popular slogans of some languages might be
translated into unintended phrases in other languages.
• Even people from different countries who speak the same language may
experience communication problems because some words are unique to a
particular language.
• Sometimes business jargon—vocabulary unique to a particular country—
can cause communication problems.
• An idiom is an expression whose symbolic meaning is different from its
actual or literal meaning. It is a phrase you cannot understand by knowing
only what the individual words in the phrase mean. For example, to “roll
out the red carpet” is to welcome a guest extravagantly—no red carpet is
actually used. The phrase is misunderstood when interpreted in a literal
way.
• Idioms exist in virtually every culture, and people often use them as a
short way to express a larger concept. Managers should study national
idioms to gain a better understanding of cultural values.
Dimensions of Culture
Role of Language and Religion in Culture
 Nonverbal Communication
• Nonverbal communication is unspoken and includes facial
expressions and gestures. In fact, nonverbal messages
accompany most verbal ones. These include facial
expressions, body movements, eye contact, physical
distance, posture, and other nonverbal signals. Exhibit 3.4
lists several types of nonverbal communication.
• Nonverbal communications frequently can lead to
confusion and misunderstandings because of cultural
differences. Certain facial expressions and hand gestures
have different meanings in different cultures, and a lack of
awareness of the meanings of these gestures in the local
culture can lead to negative consequences.
 Exhibit 3.4
Nonverbal Communication
Dimensions of Culture
Role of Language and Religion in Culture
• Religion
• Religion is a system of common beliefs or attitudes concerning a being or
a system of thought that people consider sacred, divine, or the highest
truth and includes the moral codes, values, institutions, traditions, and
rituals associated with this system. Religious concepts of right and wrong
have played a key role in the development of ethical values and social
responsibility.
• Almost every culture is underpinned by religious beliefs. Religion
influences culture and, therefore, managerial and customer behavior in
many ways.
• For example: The Qur’an condemns charging interest for money loaned.
Thus, banks in Islamic countries have devised methods for financing debt
without violating Sharia law.
• The Qur’an prohibits drinking alcohol, so, Heineken, the Dutch brewing
giant, rolled out the nonalcoholic malt drink Fayrouz for the Islamic
market. Nokia launched a mobile phone application that shows Muslims
the direction toward Mecca.
Culture’s Effect in International Business
 Culture can differ sharply, even between neighboring countries.
Effective handling of the cross-cultural interface is a critical source
of firms’ competitive advantage. Managers not only need to
develop empathy and tolerance toward cultural differences but also
must 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:
 Managing employees
 Communicating and interacting with foreign business partners
 Negotiating and structuring international business ventures
 Developing products and services
 Preparing advertising and promotional materials
 Preparing for international trade fairs and exhibitions
 Screening and selecting foreign distributors and other partners
 Interacting with current and potential customers from abroad
Culture’s Effect in International Business
• Let’s consider specific examples of how cross-cultural differences
may complicate company activities.
• Developing products and services. Cultural differences necessitate
adapting marketing activities to suit the specific needs of target
markets. Johnson & Johnson developed different varieties of its
mouthwash, Listerine, for foreign markets. For instance, it created
alcohol-free Listerine Zero for Muslim countries where spirits are
forbidden. For Asian markets, it launched Green Tea Listerine. In
Europe, consumers want their mouthwash to solve more complex
problems, so the firm developed an advanced gum treatment rinse.
• Organizational structure. Some companies prefer to delegate
authority to country managers, which results in a decentralized
organizational structure. Other firms have centralized structures, in
which power is concentrated at regional or corporate headquarters.
Firms may be bureaucratic or entrepreneurial. How do you deal
with a bureaucratic partner or manage distantly located,
decentralized subsidiaries?
Thank you; have a nice day ..