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INTERNATIONAL BUSINESS. LECTURE 7 : The role of culture in international business Gregor Pfajfar, MSc Faculty of Economics University of Ljubljana E-mail: gregor.pfajfar @ef.uni-lj.si December 16th 200 9. What is culture?. Culture and its impact on business. Competitive environment.

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international business

INTERNATIONAL BUSINESS

LECTURE 7:

The role of culture in international business

Gregor Pfajfar, MSc

Faculty of Economics University of Ljubljana

E-mail: gregor.pfajfar@ef.uni-lj.si

December 16th 2009

culture and its impact on business
Culture and its impact on business

Competitive environment

Competitive environment

Culture is

the context in which a company (people) operates!

STRATEGY

coordination

STRUCTURE & SYSTEMS

ORG. CULTURE

NATIONAL CULTURE

culture is contextually based
Culture is contextually based!

The common grasshopper (Acrididae)

Culture is an important part of international business and marketing!!!

USA: Pest!

CHINA: House pet!

Thailand: A snack!

culture is
Culture is…
  • “ Collective programming of the mind which distinguishes the members of one human group from another... Includes system of values; and values are among the building blocks of culture...” (Hofstede, 1980)
  • Glue that binds groups together. Without cultural patterns, organized system of significant symbols, people would have difficulty living together (De Mooij, 2004)
  • Set of control mechanisms – plans, recipes, rules, instructions – for governing behavior (Geertz, 1973)
  • Includes shared believs, attitudes, norms, roles and values found among speakers of a particular language who live during the same period in a specific geographic region (Triandis, 1995).
  • And soo much more…
hofstede culture software
Hofstede: culture= software

person=hardware

personality & culture =software

characteristics of culture
Characteristics of culture
  • Culture is learned
  • Common to members of a certain group
  • Determines the behavior of group members
  • Culture (customs, values, habits) makes life more effective

AN INDIVIDUAL DOESN’T HAVE CULTURE!

AN INDIVIDUAL HAS A PERSONALITY!

layers of culture
Layers of culture

Physical objects, heroes,

symbols & artifacts

Habits, routines &

procedures

“a man should have only 1 wife”

Values & norms

Core believes

& expectations

“Slovene values:

work, family, security”

implicit

“walking other ladders”

explicit

culture ingredients elements
Culture ‘ingredients’ / elements
  • Institutions
  • Norms
  • Values
  • Believes
  • Religion
  • Language
  • Education system
  • Art and aesthetics
  • Material culture and life-style…
culture as a normal distribution
Culture as a normal distribution

Culture A

Culture B

Stereotypes

Stereotypes

Norms & values

levels of culture
Levels of culture

TRANSNATIONAL CULTURE

NATIONAL CULTURE

INDUSTRY CULTURE

PROFESSIONAL CULTURE

ORGANIZATIONAL CULTURE

SUBCULTURES

INDIVIDUAL

effects of organizational culture
Defining boundaries

Conveying identity

Promoting commitment

Controlling behavior

Increasing effectiveness of communication and behavior

Impeding change

Inhibiting diversity

Promotes groupthink

Blocking acquisitions

Effects of organizational culture

Positive

Negative

organizational culture example
Organizational culture: example
  • HP Diversity Value Chain
  • At HP we have recognized that creating a diverse, inclusive work environment is a journey of continuous renewal
impact of culture on business
Impact of culture on business
  • Differences in consumer behavior:
    • Segmentation
    • Positioning
    • Marketing mix
    • Buying habits
  • Business customs and etiquette:
    • Negotiation styles
    • Communication
    • Business protocol
    • Level of formality of arrangements
    • Payment
    • etc.
culture and the marketing mix
Culture and the marketing mix

Why doesn’t this work in India?

culture and the marketing mix16
Culture and the marketing mix

“the plague”

Ford Kuga

some useful categorizations for cross cultural communication
Some useful categorizations for cross-cultural communication
  • Cultures can be described according to specific characteristics or dimensions.
  • Two relevant categorizations for cross-cultural communications are:
  • High vs. low context cultures (Hall)
  • Dimensions of national cultures (Hofstede)
context and communication 1 3
Context and communication 1/3
  • The context explains the degree of directness of communication.
  • In high context communication message most of the info is either part of the context or internalized in the person. Very little is made explicit. Use of symbolism or indirect verbal expressions.
  • In low context communication message is direct and unambiguous.
context and communication 2 3
Context and communication 2/3

http://www.youtube.com/watch?v=8tIUilYX56E

context culture results
Context culture results

+

Japanese

Arabians

LatinAmericans

Spanish

Context

Italians

French

English

North America

Scandinavians

Germans

Swiss

-

message

explicit

implicit

hofstede s cultural dimensions
Hofstede’s cultural dimensions
  • Power Distance Index (PDI) measures the extent to which the less powerful members of a society accept that power is distributed unequally.
  • Individualism (IDV) measures how the individuals define themselves in relationships with close others. On the individualist side we find societies in which the ties between individuals are loose: everyone is expected to look after him/herself and his/her immediate family. On the collectivist side, we find societies in which people from birth onwards are integrated into strong groups (extended families)
hofstede s cultural dimensions23
Hofstede’s cultural dimensions
  • Masculinity (MAS) versus its opposite, femininity, refers to the endorsement of women’s (security, family, quality of life etc.) vs. men’s (success, competitiveness, social status etc.) values.  
  • Uncertainty Avoidance Index (UAI) deals with a society's tolerance for uncertainty and ambiguity; It indicates to what extent a culture programs its members to feel either uncomfortable or comfortable in novel, unknown, surprising situations.
  • Long-Term Orientation (LTO) versus short-term orientation distinguishes between long-term and short-term thinking, e.g. Chinese Confucianism
hofstede s cultural dimensions scores by countries
Hofstede’s cultural dimensions – scores by countries

http://www.geert-hofstede.com/marketing.shtml

advertising styles
Advertising styles

Source: De Mooij, 2004

culture focus china 1 2
Culture focus: China 1/2

http://www.youtube.com/watch?v=ijpbhile6aY&feature=related

culture focus china 2 2
Culture focus: China 2/2

Source: Hofstede, 2001, pp. 500-2.

organizational culture typology by trompenaars

Guided

missile

Incubator

Egalitarian

People oriented

Task oriented

Hierarchical

Family

Eiffel tower

Source: Trompenaars & Wooliams, 2004

Organizational culture typology by Trompenaars
  • Individualization
  • Creativity
  • Passion
  • Loose

organizational

structure

  • Tasks
  • Goals
  • Performance
  • Authority of a

manager

  • People
  • Loyalty
  • Paternalism
  • Leadership
  • Structure
  • Stability
  • Processes
organizational cultures young managers between countries
Organizational cultures – young managers between countries

GUIDED MISSILE

  • Tasks, goals, efficiency, authority of manager

EIFFEL TOWER

  • Structure, stability, processes

INCUBATOR

  • Individualization, creativity, passion, flat organizational structure

FAMILY

  • People, loyalty, paternalism, leadership

Source: Zagoršek, 2005.

Source: Zagoršek, 2005.

organizational cultures observed and ideal young managers in slovenia
Organizational cultures – observed and ideal – young managers in Slovenia

Source: Zagoršek, 2005.