Culture!

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Culture!

• Thursday, November 2

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What is culture?

•  Culture is the integrated sum total of learned
  behavioral traits that are shared by members of a
  society  (Hoebel).
• What are some examples of learned behavioral
  traits that are shared in society?

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3 fundamentals

• Culture is a total pattern of behavior that is
  consistent and compatible in its components. It
  is not a collection of random behaviors
• Culture is a learned behavior. It is not
  biologically transmitted. It depends on
  environment, not heredity.
• Culture is behavior that is shared by a group of
  people, a society. It is the distinctive way of
  life of a people.

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Learned behavior can mean almost anything, from
the way we dress to the way we speak to the food
we choose to eat. Whenever we brush our teeth,
cross our legs, send our parents' a birthday
card, kiss someone, listen to music, or go out
for recreation we are practicing learned
behaviors which are a part of our culture.
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So what should be know about Culture

• Understanding the cultural environment will help
  in analyzing the other macro-environments
  (political, legal, economic)

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Two levels of cultural diversity

• External cultural diversity
• Cultural determinants influencing purchasing and
  consumption behaviors (Who buys? What? Where?
  How? Why?)
• Cultural determinants influencing negotiations
  (relationships with suppliers, buyers, partners)
• Internal cultural diversity
• Observed within all MNCs
• Cultural differences that affect the way
  subsidiaries work together

Explicit culture languages, behavior, know-how,
institutions (directly observable)
Implicit culture moral values, learning process,
beliefs
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A new term to add

• A subsidiary, in business, is an entity which is
  controlled by another entity. The controlled
  entity is called a company or Corporation.
• The most common way that control of a subsidiary
  is achieved is through the ownership of shares in
  the subsidiary by the company. These shares give
  the company the necessary votes to determine the
  composition of the board of the subsidiary and so
  exercise control.

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There are quite a few reasons why companies have
subsidiaries, but one of the most important one
is.

• Risk Many businesses use subsidiaries to manage
  risk. This is achieved usually by setting up a
  subsidiary corporation to undertake the higher
  risk venture. If that venture subsequently become
  subject to litigation or liability, legally the
  subsidiary corporation would be liable and not
  the parent (unless the parent made guarantees, in
  which case the parent is liable for the
  guarantees it made).

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According to Hoebel

• There are 3 types of cultural norms in terms of
  behavior
• 10 of norms are technical
• explicit, logical and transferable written norms
  of a society (laws, technical manuals, rules,
  etc)
• 30 of norms are formal
• explicit, moral and transmissible traditions of
  a culture learned through education (manners,
  courtesy)
• 60 of norms are informal
• implicit, instinctive and imitated facial
  expressions, body language, cultural perspective
  on time and space)

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How do we measure cultural distance?

• Hofstedes Cultural Index
• - National character survey
• - 116.000 IBM employees
• - 43 countries and 20 languages
• Five different poles make up the cultural index
• - Power distance
• - Uncertainty avoidance
• - Individualism
• - Masculinity
• - (Long term orientation)

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Hofstedes cultural index

• Power distance (PDI) shows class or social
  structure. It shows how well a society accepts an
  uneven distribution of power in organizations and
  institutions and focuses on the degree of
  equality, or inequality, between people in the
  countrys society.
• Uncertainty avoidance (UAI) shows how threatened
  a society feels by uncertain or unstable
  situations. It focuses on the level of tolerance
  for uncertainty and ambiguity within the society.
• Individualism (IDV) focuses on the degree that
  society reinforces individual or collective
  achievement and interpersonal relationships. It
  distinguishes between societies where the group
  and being a member is important (collectively)
  and societies where the group is less important
  (individualism).

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Hofstedes cultural index

• Masculinity (MAS) focuses on the degree the
  society reinforces, or does not reinforce, the
  traditional masculine work role model of male
  achievement, control and power. Indicates the
  degree of gender differentiation and the
  importance of masculine values (assertiveness,
  money, material goods).
• Long-term orientation (LTO) focuses on the
  degree the society embraces, or does not embrace,
  long-term devotion to traditional, forward
  thinking values. Indicates whether the country
  prescribes to the values of long-term commitments
  and respect for tradition.

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Examples of Hofstedes Dimensions
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• Uncertainty Avoidance Index (UAI) deals with a
  society's tolerance for uncertainty and
  ambiguity it ultimately refers to man's search
  for Truth.
• It indicates to what extent a culture programs
  its members to feel either uncomfortable or
  comfortable in unstructured situations.
  Unstructured situations are novel, unknown,
  surprising, different from usual. Uncertainty
  avoiding cultures try to minimize the possibility
  of such situations by strict laws and rules,
  safety and security measures, and on the
  philosophical and religious level by a belief in
  absolute Truth 'there can only be one Truth and
  we have it'.
• People in uncertainty avoiding countries are also
  more emotional, and motivated by inner nervous
  energy. The opposite type, uncertainty accepting
  cultures, are more tolerant of opinions different
  from what they are used to they try to have as
  few rules as possible, and on the philosophical
  and religious level they allow many currents to
  flow side by side. People within these cultures
  are not expected by their environment to express
  emotions.

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Intracultural differences

• Few cultures are homogeneous in terms of cultural
  traits and norms.
• Intracultural differences based on nationality,
  religion, race, language or geographic areas have
  resulted in the emergence of distinct
  subcultures.
• It is important to distinguish relevant
  cross-cultural and intracultural differences and
  isolate potential opportunities and problems.
• However, international business may act as a
  change agent by introducing new products or ideas
  or practices.

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To summarize on culture

• Cultural distance is essential in international
  business
• Culture is complex and multi-dimensional
• Acculturation (adjusting and adapting to a
  specific culture other than ones own) is one of
  the keys to success in international operations