471 Case Analysis 1

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Chapter 3 Emphasizing Informal Institutions: Cultures, Ethics, and Norms

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

3-1 define culture and articulate its four main manifestations: language, religion, social structure, and education.

3-2 discuss how cultures systematically differ from each other.

3-3 understand the importance of ethics and ways to combat corruption.

3-4 identify norms associated with strategic responses when firms deal with ethical challenges.

3-5 participate in three leading debates concerning cultures, ethics, and norms.

3-6 draw implications for action.

INFORMAL INSTITUTIONS

informal institution – institution represented by cultures, ethics, and norms

ethnocentrism – a self-centered mentality by a group of people who perceive their own culture, ethics, and norms as natural, rational, and morally right

CULTURE

culture – the collective programming of the mind that distinguishes the members of one group or category of people from another

? How is your culture unique?

COMPONENTS OF CULTURE

Language

Religion

Social Structure

Education

LANGUAGE

lingua franca – a global business language

English-speaking countries contribute the largest share of global output

Recent globalization has called for the use of one common language

RELIGION

Religion is a major manifestation of culture

Knowledge about religions is crucial, even for non-religious managers

RELIGION (cont’d)

Largest Religions
Christianity	1.7 billion
Islam	1.6 billion
Hinduism	1 billion
Buddhism	500 million

SOCIAL STRUCTURE

social structure – the way a society broadly organizes its members

social stratification – the hierarchical arrangement of individuals into social categories (strata) such as classes, castes, or divisions within a society

social mobility – the degree to which members from a lower social category can rise to a higher status

EDUCATION

Education is an important component of culture

Education can be used to maintain social stratification or to break down social barriers

CULTURAL DIFFERENCES

Three ways to understand cultural differences

Contact

Cluster

Dimensions

THE CONTEXT APPROACH

context – the underlying background upon which social interaction takes place

low-context culture – a culture in which communication is usually taken at face value without much reliance on unspoken context

high-context culture – a culture in which communication relies a lot on the underlying unspoken context, which is as important as the words used

Figure 3.1 High-Context versus Low-Context Cultures

THE CLUSTER APPROACH

cluster – countries that share similar cultures

civilization – the highest cultural grouping of people and the broadest level of cultural identity people have

Table 3.1 Cultural Clusters

Figure 3.2 Hofstede Dimensions of Culture

THE DIMENSION APPROACH

power distance – the extent to which less powerful members within a country expect and accept that power is distributed unequally

THE DIMENSION APPROACH (cont’d)

individualism – the idea that an individual’s identity is fundamentally his or her own

collectivism – the idea that an individual’s identity is fundamentally tied to the identity of his or her collective group

THE DIMENSION APPROACH (cont’d)

masculinity – a relatively strong form of societal-level sex role differentiation whereby men tend to have occupations that reward assertiveness and women tend to work in caring professions

femininity – a relatively weak form of societal-level sex role differentiation whereby more women occupy positions that reward assertiveness and more men work in caring professions

THE DIMENSION APPROACH (cont’d)

uncertainty avoidance – the extent to which members in a culture accept or avoid ambiguous situations and uncertainty

THE DIMENSION APPROACH (cont’d)

long-term orientation – dimension of how much emphasis is placed on perseverance and savings for future betterment

CRITICISMS OF HOFSTEDE’S DIMENSIONS

Cultural boundaries are not the same as national boundaries

Hofstede’s own cultural biases

Responses could be unique to the industry or the company

The original data is now 40+ years old

Table 3.2 Some Cross-Cultural Blunders

ETHICS

ethics – the principles, standards, and norms of conduct that govern individual and firm behavior

code of conduct – a set of guidelines for making ethical decision

? Can you think of a recent example in which a firm engaged in unethical behavior? What happened?

MANAGING ETHICS OVERSEAS

ethical relativism – a perspective that suggests that all ethical standards are relative

ethical imperialism – a perspective that suggests that “there is one set of Ethics (with the capital E), and we have it.”

Table 3.3 Managing Ethics Overseas: Three “Middle-of-the-Road” Approaches

Table 3.4 Texas Instruments (TI) Guidelines on Gifts in China

ETHICS AND CORRUPTION

corruption – the abuse of public power for private benefits, usually in the form of bribery

Foreign Corrupt Practices Act (FCPA) – a US law enacted in 1977 that bans bribery of foreign officials

Table 3.5 Strategic Responses to Ethical Challenges

DRIVERS OF ECONOMIC DEVELOPMENT: WESTERN VALUES VERSUS EASTERN VALUES

Western values: Protestant work ethic

Challenged by Eastern values: Islam and Asian (Confucianism)

OPPORTUNISM VERSUS INDIVIDUALISM/COLLECTIVISM

Opportunism is a major source of uncertainty

Opportunists are a minority in any population

OPPORTUNISM VERSUS INDIVIDUALISM/COLLECTIVISM (cont’d)

in-group – individuals and firms regarded as a part of “us”

out-group – individuals and firms not regarded as a part of “us”

OPPORTUNISM VERSUS INDIVIDUALISM/COLLECTIVISM (cont’d)

Individualists may be more opportunistic when dealing with in-group members

Collectivists may be more opportunistic when dealing with out-group members

CULTURAL INTELLIGENCE

cultural intelligence – an individual’s ability to understand and adjust to new cultures

Three phases of cultural intelligence

Awareness

Knowledge

Skills

Table 3.6 Implications for Action: Six Rules of Thumb When Venturing Overseas