Chapter 2- culture environment facing business

This chapter goes through the sensitive thematic about companies going abroad and different cultures
they encounter. It’s important that a company understands and be sensitive to the culture where it
operates.
Values reflect our attitudes, beliefs and actions. We have:
 Core values, they are strong and not negotiables
 Peripheral values, that are less dominant and more flexible.
The shared values, attitudes and beliefs of a group of individuals constitutes a culture. Similarity
among people is both a cause and effect of national boundaries. Within a nation’s borders, people
share such essential attributes as values and language. National identity is perpetuated through: rites,
symbols and respect for national heroes.
Not everyone in a country shares all the same values: in fact, we talk about subcultures. Some people
have internalized more than one culture, they are bicultural or multicultural. It’s interesting to notice
that some groups can have more similarities in cultural aspects with like-groups abroad than with
their peer in their own country.
When comparing nations culturally, it’s important to be careful to examine relevant groups,
differentiating between typical attitudes of rural and urban inhabitants.
IB involves people from different national cultures. The different perspectives and experiences often
enable business to gain a deeper knowledge of how to create and deliver products/services, but at the
same time it can be difficult to manage it. In fact, the more successful teams work to understand each
other’s cultures before dealing with tasks at hand. When there’s an expectation of diversity, team
members are more prone to realize the need to prepare to deal with differences, keep open minds and
develop a nonthreatening atmosphere.
Cultural collision: when contact among divergent cultures creates problems. It may result in a
company’s implementation of practices that are less effective than intended and to its employees’
distress because of difficulty in adjusting to behaviours abroad.
It exists:
 Deal-focus (DF) culture, where people are primarily task-oriented
 Relationship-focus (RF) culture, where people put dealings with friends ahead of business
dealings
A firm doing business abroad must determine which foreign business practices differ from its own
and then decide what adjustments it should make.
Must cultural variables (daily routines, codes of social relations, language …) exist everywhere.
Almost everyone agrees that national cultures differ, BUT they disagree on what the differences are
and the importance of them.
There are common shortcomings (sbagli) in interpreting cultural research:
 Comparing countries by what people say can be risky.
  Researchers focusing on national differences in terms of averages may overlook variations
within countries. When most people are close to the average, we talk about cultural tightness,
the opposite is cultural looseness.
 Because cultures evolve, research may be outdated.
Culture is transmitted in various ways, psychologists believe that most people acquire their basic
value systems as children.
Examining individual and collective evolution of values, helps explain how cultures come to accept
or reject certain business practices. The important thing is willingness to accept a change, that may
result from either choice or imposition:
 By choice: it occurs because social and economic situations present people with new
alternatives.
 By imposition: it’s also called cultural imperialism and it imposes certain elements from an
alien culture, such as a forced change in laws.
Contact among countries brings change, known as cultural diffusion (ex. U.S. popularity of Mexican
tortillas), when the change results in mixing cultures, we have creolization (ex. U.S. has adapted the
tortillas to its tastes, creating tortilla chips or burritos).
Language is the most evident aspect of culture because it limits contact among people who can’t
communicate with each other. There are nations that have more than 1 languages and the official one
may not be the most prevalent. Language is at the heart of social identity.
Commerce expands, also, because a common language creates a sense of shared identity and on a
practical level, there’s less need to translate everything.
Certain languages have long been a regional lingua franca (ex. French) and they become a second
language when the regional isn’t the official language. These languages are often seen as the
languages of power, influence and opportunity. Nowadays, English is the top tier of these lingua
francas. This has made native English speakers more dependent on others to mediate in multicultural
and multilingual business settings.
Multinational enterprises are largely headquartered in English speaking countries and they decide on
the common language for communication among their employees in different countries. So, MNEs
from non-English speaking countries have adopted English as their operative language. This policy
can have some negative aspects:
 Overvalue people with English language competence. More competent individuals who are
less adept at English may not be hired.
 Monolingual English speakers may eventually experience more difficulty in communicating
worldwide.
The crosspollination of languages is an ongoing phenomenon that coincides with the diffusion of
cultures.
Religion has been a cultural stabilizer, because centuries of religious influence continue to shape
cultural values even in those societies where the practice of religion has been declining. It influences
specific beliefs that affect business. For example, it can cause adjustments to such operations:
McDonald’s limits sales of beef and pork in India. But, not all nations with the same dominant religion
impose the same business constraints.
Where rival religions compete for political control, a conflict can cause business upheaval
(sconvolgimento). In recent years, religious violence has erupted in such countries as India, Iraq and
Syria.
Ways to relate culture to business, from a behavioural point of view:
 Issues in social stratification. Social stratifications create hierarchies and influences a
person’s class, status and financial rewards within a culture. In business, it entails (comporta)
ranking members groups more highly than production group members.
o Social stratification can be determined by: individual’s achievement and talents
(meritocracy) and their group membership. It varies among cultures!
o In most societies, meritocracy is important in business, but this isn’t always the case.
About the group membership stratification, there are two types of classification:
ascribed group membership (it includes gender, family, age, ethnic and national
origin)/born-in and acquired group membership (based on religion, political
affiliation, education place …)/up-into.
Laws and policies often try to reinforce or remove group difference.
o Some of the group memberships that influence how a person is viewed from country
to country:
 Ethnic and racial groups
 Gender-based groups (ex. Women at work)
 Age-based groups
 Family-based groups (ex. In Latin America, family is the most important
group. A person’s position, in society, depends heavily on the family’s social
status rather than on individual achievement)
 Work motivation. We summarize some studies that show differences in how and why nations
differ in work motivation.
o Max Weber observed that protestant countries were the most economically developed.
It reflects the idea that work is a pathway to salvation and that material success doesn’t
impede redemption. In general, people are motivated because of material wealth and
this is positive for economic development.
o Some culture value leisure time more than others do.
o The perceived likelihood of success and its rewards versus failure influence work
motivation. In fact, people are more eager to work if rewards for success are high
relative to failure and there’s some uncertainty of success.
o In cultures where the probability of economic failure is certain, people tend to view
work as unsatisfying. This prevails in very poor areas or in subcultures subject to
discrimination. When high outcome uncertainty is combined with a positive reward
for success and little or no reward for failure, we find the greatest work enthusiasm.
o Performance and achievement:
 The masculinity-femininity index measures attitudes toward achievement. A
high-masculinity indicates a preference for “live to work”, while a high-
femininity indicates a preference for “work to live”. This index helps explain
national differences in behaviours.
 Hierarchy-of-needs theory says that people try to fulfil (adempiere) lower-
level needs before moving on to higher-level ones.
 1. Physiological (food, water, sex)
 2. Security needs (safe physical and emotional environments)
  3. Affiliation needs (peer acceptance)
 4. Esteem needs (self-image through recognition, attention)
 5. Self-actualization self-fulfilment)
This theory helps in distinguishing among employees’ reward preferences in
different part of the world. (compensation can’t fully explain differences in
work motivation)
Now, we examine some of the values underlying interpersonal differences in behaviour:
 Power distance is a measurement of employee preferences of interaction between superiors
and subordinates. With high power distance: people prefer little consultation between bosses
and subordinates. They prefer management style that are autocratic (ruling with unlimited
authority. Managers preferring this type are generally willing to delegate and accept decision-
making by most subordinates. What they don’t accept is consultative interaction that implies
a more equal relationship) or paternalistic (regulating subordinate conduct by supplying their
needs). While, with low power distance, people prefer consultative styles.
 Individualism vs collectivism. High individualism describes a preference to fulfil leisure
time, build friendships and improve skills independently of the organization. Their primary
need is self-actualization. On the contrary, high collectivism implies dependence on the
organization through training, satisfactory workplace conditions and good benefits. Their
primary need is security.
Cultures differ in people’s satisfaction with the status quo vs taking risks to change situations.
There’re 4 types of risk-taking behaviour that reflect these attitudes:
1. Uncertainty avoidance describes an aspect of being uncomfortable with ambiguity. People
prefer to follow set rules and stay with current employers for a long time. They don’t want to
be responsible.
2. Trust. Where trust is high, business cost tends to be lower, because manager spends less time
worrying about every possible contingency that extend the time of production. Trust may
differ between people’s in-group and others: in some family-oriented societies, people have
high trust of other family members, but low trust of people they know less.
3. a future orientation denotes willingness to delay gratification to obtain more in the future.
People develop this characteristics as pre-schoolers.
4. If people are fatalistic, they are less likely to accept the basic cause-and-effect relationship
between work and reward.
Ways in which people perceive, obtain and process information:
Perception of cues. We are selective in perceiving cues (features that inform us about the
nature of something), but there are differences in perception of cues that may result from
genetics (colours) and language (vocabulary).
some countries are low-context cultures, that means people regard as relevant only first-hand
information. Business people tend to get to the point. In high-context cultures, people tend
to understand and regard indirect information as pertinent, like tone of voice, dress …low vs
high context cultural differences can cause misunderstanding in international litigation.
Information processing. Every culture has its own systems for ordering and classifying
information. To perform efficiently and work amicably in a foreign environment, you need to
understand such differences in processing systems. Different processing systems create
challenges in sharing global data.
 In monochronic cultures, people prefer to work sequentially, while polychronic people are
more comfortable when working simultaneously on a variety of tasks.
Some cultures tend to focus first overall and then on the parts; others do the opposite. We talk
about idealism (the whole then the details) and pragmatism (the details to go to the whole).
Problems in communicating across cultures. Cross-border communications don’t always translate as
intended. Some suggestions for IB: use a translator that knows technical vocabulary of your business;
for written use basic translations, use a right tone, use simple words, avoid slangs, repeat things
differently and ask questions …
Silent/written language:
 Colours: for a product to succeed, its colours must coincide with consumers’ frame of
reference. It invokes distinct connotations in different countries (ex. Black in western
countries means death, in Africa is the white)
 Distance: in US people tend to maintain larger distances during conversations than people in
Mexico.
 Time and punctuality: different perceptions of time and punctuality.
 Body language: the way people walk, touch and move their bodies.
 Prestige: it relates to a person’s status, particularly in an organizational setting.
4 issues that affect degrees of successful adjustment for a firm that wants to operate internationally:
1. Extent to which a culture is willing to accept of something new and different: sometimes
companies succeed with relatively little alteration, because they are introducing something
that doesn’t run against core values of the host culture.
2. Cultural differences small or great: when doing business in a similar culture, companies
usually have to make fewer adjustment (low cultural distance) and overlook (trascurare)
subtle (sottili) differences. It can happen that even if home and host countries have similar
cultures, people in the host country may reject the influx of foreign practices because they see
them as additional steps that threaten their self-identities (ex. Disney in France vs Japan).
3. Ability of individuals to adjust to what they find in foreign cultures: culture shock (the
frustration that results from having absorb a vast array of new cultural cues and expectations).
At the beginning, everything is wonderful (honey moon phase), then you have the period of
culture shock. After that, you’ve culture adjustment. At the end, there’s mastery
(padronanaza).
4. General management orientation of the company involved: whether and how a company
and its managers adapt abroad depends not only on the host-country but also on their own
attitudes. There’re 3 attitudes/orientations:
a. Polycentrism: a firm adapts to each culture, but this causes a loose of its identity. If it
adapts too much, it loses its differentiation. It’s positive for local people that haven’t
to adapt to your firm.
b. Ethnocentrism: a firm that retains its home culture the best and underestimates the
complexity of introducing new management methods, products …
c. Geocentrism: it’s a mix of polycentrism and ethnocentrism. Company tries to balance
home and host knowledge of the organizational cultures. It’s the preferred approach
for most companies. It’s the most difficult to practice and maintain.
Because people don’t necessarily accept change readily, the management of change is important.
Focusing on the following areas, successful approaches can help change:
  Value systems. If something contradicts core values, it will likely not be accepted. But, even
contradictions to peripheral values face obstacles.
 Resistance to too much change: gradually change is needed not to create problems in long-
term.
 Participation: one way to avoid problems with stakeholders. Discussion might help
management assess the strength of the resistance and stimulate stakeholders to recognize the
need for change.
 Reward sharing: production workers may have little incentive to try new work practices it
they don’t see some imminent benefit for themselves.
 Opinion leadership: it can help and facilitate the acceptance of change.
 Bicultural as mediators: useful to present and explain changes to stakeholders.
 Timing: find the right time.
 Learning abroad: being open-minded.
Future scenarios on the evolvement of national cultures:
 New hybrid cultures will develop, and personal horizons will broaden. As companies and
people get used to operating internationally, they should continue to gain confidence in
applying the benefits of cultural diversity and global inspired. People get more advantage of
greater mobility and broadening their concepts of what it means to enjoy global citizenship.
On the other hand, this multiculturalism can cause cultural strife within nations, because the
number of immigrants is so large that they don’t have to assimilate the culture of their new
residency.
 Distinct values will tend to remain stable. Although certain material and behavioural facets
of cultures will become more universal, certain fundamental values and attitudes will continue
to vary. Like, religion and language.
 Nationalism will continue to reinforce cultural identity. Some nation make effort to
promote the “national culture”, reinforcing language and religion, propagandizing against
foreign influences. Further, even though people will be more internationally mobile, peer
(simili) pressure will force them to adhere to their national cultures.
 Accommodation of ethnic differences. Several countries are showing more evidence of
subcultural power and influence, because of immigration and rise of religious
fundamentalism. There’s this growing desire among ethnic groups for independence from
dominant groups where they reside. Business will have to pay attention to all the myriad
factors that contribute to distinctions in values, attitudes and behaviours.