Global Business Perspectives
Durga93
GBE4lecture3.pptxThe Global Business Environment
LeCTURE 3
Challenges and responsibilities
Culture and societies
How cultural and social environments impact on international business
Summary of contents
What is culture?
National culture
Languages
Religions
Culture theories
Organizational culture
Changing societies
Migration
Urbanization
Changing populations
Challenges and responsibilities
Conclusions
What is culture?
Culture – A shared way of life of a group of socially interacting people
A cohesive social group
Can be a whole society or a smaller group
How do we view other cultures?
Ethnocentrism – relating to the world only in terms of our own culture
Polycentrism – openness and understanding of other cultures
Facets of culture
Are cultures converging?
Cultural convergence – a growing cosmopolitan culture and lifestyle, perceived as an aspect of globalization
Persisting divergence – national differences persist despite globalization
Cultural learning leads to ‘crossvergence’, or gradual process of cultural integration
National culture
National culture – the distinctive values and norms which distinguish one nation from another
Nation-state – administrative and territorial unit into which the world’s peoples are divided
Most states contain multiple cultural and national identities -
Can lead to social tensions between majority and minority groups
Subcultures distinguish minority groups
Discrimination against minority groups has a long history
Languages
Language is the basic means of communication, which facilitates social interaction
Low-context culture – clear and direct communication
High-context culture – communication relies heavily on relationships and behaviour
Majority and minority languages exist in most states, due to immigration and colonization (where indigenous cultures already existed)
The linguistic family of Chinese is spoken by the largest number of people globally
Religions
Religion provides a set of personal beliefs, and it can be a significant unifying force among people
Freedom to practise religion is a human right, recognized in international law –
The International Covenant of Civil and Political Rights (ICCPR)
Most governments have ratified the ICCPR, but restrictions exist in practice
The world’s religions
Religions may be monotheistic (belief in one god) or polytheistic (belief in multiple gods)
Some religions are proselytising, that is, deliberately aiming to expand numbers and make new converts
The world’s major religions are organized, with adherents around the globe, but there exist many indigenous, local religions which are less formal, based on traditional practices
Leading religions
Christianity
Islam
Asian religions
Buddhism
Hinduism
Confucianism
16% of the world’s population (over a billion people) are not adherents of any of the main religions, although they might observe some religious practices
Culture theories: Hofstede
Hofstede’s cultural dimensions – based on national cultures
5 cultural dimensions:
Power distance – To what extent do people accept unequal power structure?
Uncertainty avoidance – How do people cope with life’s uncertainties?
Individualism – Do people see themselves as independent or members of a group (collectivist)
Masculinity – Are people inclined towards aggressive behaviour, or more caring (feminine)?
Long-term or short-term orientation
Hofstede’s cultural dimensions
Hofstede’s research is now dated, although cultural dimensions are a helpful classification
He highlighted correlations between groups of countries:
High power distance and low individualism
Low power distance and high individualism
Theory risks classifying cultures as ‘either-or’, whereas cultures are likely to have elements of both
Trompenaars’ theory of relationships
5 relationship orientations:
Universalism vs particularism
Individualism vs collectivism
Neutral vs emotional
Specific vs diffuse
Achievement vs ascription
Culture theories point to the fact that there is no one ‘best way’ of managing people, and adaption to cultural background is essential
Organizational culture
Organizational or corporate culture – values, norms and management style of the organization
Despite globalization, companies tend to reflect national culture of their home country
MNEs encounter cultural diversity in internationalization:
Acquisition of foreign subsidiaries
Merger with another company
Joint ventures
MNEs can gain from having a unifying culture, but need also to recognize cultural diversity within the organization
MNE organizations and culture
Bartlett and Ghoshal’s typology highlights localization and the role of corporate culture
Four models of organization:
Multinational model – decentralized
International model – decentralized but with global strategic oversight
Global model – highly centralized
Transnational model – central control and local responsiveness
Changing managerial culture
Contrast craftsman production with ‘Fordism’, which typifies the large factory producing standardized products in large volumes
The worker in an assembly line has lost control over the overall process, repeating the same task over and over
Fordism based on Taylor’s scientific management
Outcomes: cheaper products for consumers but poor job satisfaction for workers
Taylorist scientific management theory
Changing societies: migration
Migration is the movement of people from one place to another, due to:
Push factors – escape from poverty, natural disasters, religious persecution
Pull factors – prospect of work and economic betterment
Migration can occur within a country or between countries
Migrants form a substantial percentage of some populations
Remittances sent by migrants back to families contribute to the economies of many developing countries, such as China and India
Urbanization
Movement of people from rural to urban areas
Associated with industrialization, but climate change is a factor in developing countries, especially in Africa
Precarious agriculture that threatens rural livelihoods
Desertification/flooding associated with climate change
Urbanization in poor developing countries gives rise to concern over sustainability of development
Issues of security, poor housing, unemployment, poor health provision
Changing populations
Demographic change refers to changes in whole populations brought about by rises and falls in the birth rate and death rate, and migration
The ageing society sees a rising proportion of older people
Ageing has become a particular concern in developed countries
Developing countries generally have younger populations, but also face issues of ageing populations in the future
Elements of human well-being
Challenges and responsibilities
As global business and economic development reach more societies, MNEs must address impacts on societies
Responsibilities of business for changes taking place in societies: employment, urbanization, the use of migrant workers
Governments and business alike bear responsibilities to serve human needs in sustainable ways
Conclusions
Cultural values are shaped in social contexts, encompassing language, religion and sense of belonging
Theories of culture identify cultural dimensions based on national cultures, which remain divergent despite globalization
MNE supply chains encompass ever more countries, bringing economic gains but also greater urgency to considerations of impacts in societies.
