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CHAPTER RESOURCES Reading Content Introduction 8.1 What Is Culture? 8.2 What Does Culture Mean for Business? 8.3 Managing Cultural Differences 8.4 Building Cultural Intelligence Summary and Case ORION: Build your

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PRACTICE Chapter 8 Reading Quiz

APPENDIX

8.2 What Does Culture Mean for Business?

LEARNING OBJECTIVE

Describe the business implications of culture.

The implications of culture on international business are profound. Because global business cuts across cultural boundaries, its leaders must be ready to cope with cultural differences and all the complications they entail. Here we cover the more common areas of difference, which have been extensively studied—social stratification, work motivation, relationship preferences, tolerance for risk, and the handling of information.

Social Stratification Social stratification is the hierarchy created by society to cluster people into groups according to characteristics such as status, power, and wealth. Every society develops a form of social stratification, but the sorting criteria can be very different because each society emphasizes different features. They can be characteristics ascribed at birth—such as gender, age, ethnicity, or family—or they can be acquired through activities and choices, such as religion, education, political affiliation, and profession. For example, U.S. culture values accomplishment and achievement regardless of age, whereas Japanese culture values the wisdom and experience of age. An interaction between people from each culture could be a failure if a manager from the United States, intending to motivate his or her employee, praises a young employee's accomplishments, while the person from Japan may interpret the praise as pride or narcissism and would have likely praised the boss of the individual or the organization as a whole.

South Korea's culture has foundations in Confucian ideology. In Confucian thought, society stratifies individuals into four categories: scholars, farmers, artisans, and merchants and traders, known in Korean as sa, nong, gong, and sang ( ). Because of this stratification, “scholars,” including university professors, are given great respect. For instance, students will not show their backs to a professor because it is a sign of disrespect. Instead they will walk backward out of the professor's office. Students also use formal titles when speaking to professors, such as “professor” or “doctor professor.” In the United States, by contrast, professorship doesn't carry the same social standing. Students may think of professors as “just” teachers and may even refer to them by first name.

A lack of understanding regarding the social stratification in a country can derail a company's success in that market. Ignorance or disregard can cause significant confusion and conflict. On the other hand, understanding how much respect to give and how to communicate in other cultures can boost a company's reputation and help it succeed in a foreign market.

Work Motivation All people work for a reason, but that reason may differ systematically across different cultures. Understanding what motivates people to work will help businesses manage employees from different cultures and countries. For instance, workers in some countries are motivated by

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DOWNLOADABLE eTEXTBOOK PRINTER VERSION BACK NEXT

CHAPTER RESOURCES Reading Content Introduction 8.1 What Is Culture? 8.2 What Does Culture Mean for Business? 8.3 Managing Cultural Differences 8.4 Building Cultural Intelligence Summary and Case ORION: Build your

Proficiency Videos Animations Multimedia Study Tools Business Hot Topics

COURSE RESOURCES

Career Center Business Hot Topics Videos Animations

PRACTICE Chapter 8 Reading Quiz

APPENDIX

8.2 What Does Culture Mean for Business?

LEARNING OBJECTIVE

Describe the business implications of culture.

The implications of culture on international business are profound. Because global business cuts across cultural boundaries, its leaders must be ready to cope with cultural differences and all the complications they entail. Here we cover the more common areas of difference, which have been extensively studied—social stratification, work motivation, relationship preferences, tolerance for risk, and the handling of information.

Social Stratification Social stratification is the hierarchy created by society to cluster people into groups according to characteristics such as status, power, and wealth. Every society develops a form of social stratification, but the sorting criteria can be very different because each society emphasizes different features. They can be characteristics ascribed at birth—such as gender, age, ethnicity, or family—or they can be acquired through activities and choices, such as religion, education, political affiliation, and profession. For example, U.S. culture values accomplishment and achievement regardless of age, whereas Japanese culture values the wisdom and experience of age. An interaction between people from each culture could be a failure if a manager from the United States, intending to motivate his or her employee, praises a young employee's accomplishments, while the person from Japan may interpret the praise as pride or narcissism and would have likely praised the boss of the individual or the organization as a whole.

South Korea's culture has foundations in Confucian ideology. In Confucian thought, society stratifies individuals into four categories: scholars, farmers, artisans, and merchants and traders, known in Korean as sa, nong, gong, and sang ( ). Because of this stratification, “scholars,” including university professors, are given great respect. For instance, students will not show their backs to a professor because it is a sign of disrespect. Instead they will walk backward out of the professor's office. Students also use formal titles when speaking to professors, such as “professor” or “doctor professor.” In the United States, by contrast, professorship doesn't carry the same social standing. Students may think of professors as “just” teachers and may even refer to them by first name.

A lack of understanding regarding the social stratification in a country can derail a company's success in that market. Ignorance or disregard can cause significant confusion and conflict. On the other hand, understanding how much respect to give and how to communicate in other cultures can boost a company's reputation and help it succeed in a foreign market.

Work Motivation All people work for a reason, but that reason may differ systematically across different cultures. Understanding what motivates people to work will help businesses manage employees from different cultures and countries. For instance, workers in some countries are motivated by

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different cultures and countries. For instance, workers in some countries are motivated by materialism, or the ability to buy and own property and merchandise. Harder, smarter work is encouraged because it earns greater rewards, enabling individuals to acquire more goods. This materialistic drive in a culture is likely to lead to more development and to foster economic growth, but it also is likely to lead to greater concentration of wealth and higher income disparity.

By contrast, increasing the opportunity for leisure is a motivator for work in countries that highly value spare time. People in these cultures are likely to prefer to work fewer hours, take more time off, and spend more of their hard-earned money on leisure activities rather than acquiring things. A classic example is the culture of France. The French have 30 days of mandated vacation time, compared with the 0 days mandated in the United States. Full-time work in France consists of 35 hours a week, compared with 40 hours in the United States.

Other forms of motivation include fame or honor, stability and security, avoiding disdain or saving face, providing for family, and meeting other personal needs and goals. For instance, saving face and preserving the family name are critical in Korea. A South Korean woman sold her expensive home in Seoul and moved into a cheap apartment so that she could give the money to her brother, who had made some bad investments and needed money to avoid bankruptcy. She noted, “it was needed to save the reputation of the family.” Hence, culture also shapes the factors that motivate people.

Relationship Preferences Different cultures often have different perceptions about how interpersonal relationships should function and how power is distributed within the work place. This cultural characteristic affects both management styles and interpersonal relationships between the employee and the company. Several measures of culture have been created to classify country cultures, including Hofstede's dimensions of national culture (https://geert-hofstede.com/national-culture.html) and the GLOBE's model of national culture (see http://globeproject.com/). We highlight a few of the key measures here.

Power distance is the degree to which subordinates in an organization accept that power is distributed unequally. Higher power distance means little consultation is likely to occur between managers and subordinates. Either the managers will act with unlimited authority (exercising autocratic, top-down leadership), or they will manage by anticipating and supplying the needs of those under them, as a parent does for a child (using paternalistic leadership). For example, a professor got a job in a country with high power distance and strong paternalistic leadership. When asked what her annual salary would be, she replied, “I don't know. They said they would take care of me.” In other words, with high power distance, it is inappropriate to ask questions that might seem fundamental in the United States, like that of salary, but the paternalistic nature of the culture allowed her to trust that what the managers say, goes. She took the job.

On the other hand, low power distance results in a more collaborative environment. Managers are open to and may solicit the ideas and opinions of their subordinates, who usually feel they are on a more equal footing with their manager. Yet, while low power distance may increase collaboration, it may also increase inefficiency. Most militaries around the world instill a high degree of power distance to speed decision making. Imagine an army with low power distance calling a “time out” so that they could work out a mutually agreed approach to their battle.

How does power distance affect international businesses? Sweden has a comparatively low power distance, for instance. How do you think the Swedish multinational company IKEA had to adapt when entering the Philippine market, characterized by high power distance?

Another way relationship preferences vary across cultures is in whether the individual or the collective is more important. This distinction is known as “individualism versus collectivism.” High collectivism means that individuals defer to the collective rather than looking for individual

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different cultures and countries. For instance, workers in some countries are motivated by materialism, or the ability to buy and own property and merchandise. Harder, smarter work is encouraged because it earns greater rewards, enabling individuals to acquire more goods. This materialistic drive in a culture is likely to lead to more development and to foster economic growth, but it also is likely to lead to greater concentration of wealth and higher income disparity.

By contrast, increasing the opportunity for leisure is a motivator for work in countries that highly value spare time. People in these cultures are likely to prefer to work fewer hours, take more time off, and spend more of their hard-earned money on leisure activities rather than acquiring things. A classic example is the culture of France. The French have 30 days of mandated vacation time, compared with the 0 days mandated in the United States. Full-time work in France consists of 35 hours a week, compared with 40 hours in the United States.

Other forms of motivation include fame or honor, stability and security, avoiding disdain or saving face, providing for family, and meeting other personal needs and goals. For instance, saving face and preserving the family name are critical in Korea. A South Korean woman sold her expensive home in Seoul and moved into a cheap apartment so that she could give the money to her brother, who had made some bad investments and needed money to avoid bankruptcy. She noted, “it was needed to save the reputation of the family.” Hence, culture also shapes the factors that motivate people.

Relationship Preferences Different cultures often have different perceptions about how interpersonal relationships should function and how power is distributed within the work place. This cultural characteristic affects both management styles and interpersonal relationships between the employee and the company. Several measures of culture have been created to classify country cultures, including Hofstede's dimensions of national culture (https://geert-hofstede.com/national-culture.html) and the GLOBE's model of national culture (see http://globeproject.com/). We highlight a few of the key measures here.

Power distance is the degree to which subordinates in an organization accept that power is distributed unequally. Higher power distance means little consultation is likely to occur between managers and subordinates. Either the managers will act with unlimited authority (exercising autocratic, top-down leadership), or they will manage by anticipating and supplying the needs of those under them, as a parent does for a child (using paternalistic leadership). For example, a professor got a job in a country with high power distance and strong paternalistic leadership. When asked what her annual salary would be, she replied, “I don't know. They said they would take care of me.” In other words, with high power distance, it is inappropriate to ask questions that might seem fundamental in the United States, like that of salary, but the paternalistic nature of the culture allowed her to trust that what the managers say, goes. She took the job.

On the other hand, low power distance results in a more collaborative environment. Managers are open to and may solicit the ideas and opinions of their subordinates, who usually feel they are on a more equal footing with their manager. Yet, while low power distance may increase collaboration, it may also increase inefficiency. Most militaries around the world instill a high degree of power distance to speed decision making. Imagine an army with low power distance calling a “time out” so that they could work out a mutually agreed approach to their battle.

How does power distance affect international businesses? Sweden has a comparatively low power distance, for instance. How do you think the Swedish multinational company IKEA had to adapt when entering the Philippine market, characterized by high power distance?

Another way relationship preferences vary across cultures is in whether the individual or the collective is more important. This distinction is known as “individualism versus collectivism.” High collectivism means that individuals defer to the collective rather than looking for individual

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High collectivism means that individuals defer to the collective rather than looking for individual outcomes. For instance, during the Asian financial crisis of the 1990s, South Korea was in need of foreign currency or gold equivalent to prop up the economy and avoid defaulting on its loans. The government asked citizens to donate any gold they might have, and thousands took off wedding rings and other gold jewelry and gave it to the government. All told, the government collected over 227 tons of gold, valued at more than $3 billion, which it used to pay down government loans. In collectivist cultures, employees are more likely to rely on the organization for benefits, training, and socialization. They usually prefer working in groups to complete projects, and job security is a principal motivator.

On the other hand, in a culture of high individualism people are more focused on individual activities and outcomes. They are likely to prefer working independently, and they will look outside the organization to satisfy personal needs such as friendship and to find leisure activities and even training. They want money rather than benefits as compensation, and they take more responsibility for their life independent of the organization. The opportunity to overcome challenges and grow is often a main motivator for employees.

Risk-Taking Behavior Risk taking is another important business-related aspect of culture. Risk-taking behavior reflects people's belief in their ability to control the outcomes of their lives. It depends on factors such as uncertainty avoidance, level of trust, future orientation, and assertiveness.

Uncertainty avoidance measures how we deal with an unknown future. High uncertainty avoidance suggests that employees are more risk averse. They prefer to avoid the unknown by following established rules and regulations—even when those rules are perceived to be ineffective. Managers in cultures with high uncertainty avoidance are often more successful when they provide detailed instructions and clear guidelines. On the other hand, employees in cultures with low uncertainty avoidance typically are less loyal to their current employers because they are willing to face the uncertainty of unemployment in an attempt to find more favorable work conditions. Consumers also display their degree of uncertainty avoidance in their willingness to adopt new products early. Those with high uncertainty avoidance are less likely to try products that have not been proven safe, effective, or desirable by the majority of the market.

As the name suggests, future orientation is the degree to which a culture chooses future rather than immediate results. A culture with a strong future orientation, such as the Netherlands, is more willing to postpone rewards now for greater benefit in the future. People with a strong future orientation are more willing to save resources and place more emphasis on long-term success. Cultures with weak future orientation are more likely to spend now and to emphasize short-term goals and objectives.

Assertiveness measures how competitive and aggressive a culture is. Cultures that are highly assertive tend to have more competitive work environments. Communication is more direct and unambiguous. People like to have control over their environments and are more willing to take responsibility for events. Low-assertion cultures place greater value on teamwork and relationships than on results. Their communication tends to be more indirect and vague in order to avoid placing blame and causing confrontation.

Information A final dimension of culture relevant to international business is the way different cultures acquire and process information. This characteristic often influences cultures' perceptions of products, people, and ideas. For instance, communication varies across cultures. Some cultures are low-context cultures and rely on direct means of conveying messages with little

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High collectivism means that individuals defer to the collective rather than looking for individual outcomes. For instance, during the Asian financial crisis of the 1990s, South Korea was in need of foreign currency or gold equivalent to prop up the economy and avoid defaulting on its loans. The government asked citizens to donate any gold they might have, and thousands took off wedding rings and other gold jewelry and gave it to the government. All told, the government collected over 227 tons of gold, valued at more than $3 billion, which it used to pay down government loans. In collectivist cultures, employees are more likely to rely on the organization for benefits, training, and socialization. They usually prefer working in groups to complete projects, and job security is a principal motivator.

On the other hand, in a culture of high individualism people are more focused on individual activities and outcomes. They are likely to prefer working independently, and they will look outside the organization to satisfy personal needs such as friendship and to find leisure activities and even training. They want money rather than benefits as compensation, and they take more responsibility for their life independent of the organization. The opportunity to overcome challenges and grow is often a main motivator for employees.

Risk-Taking Behavior Risk taking is another important business-related aspect of culture. Risk-taking behavior reflects people's belief in their ability to control the outcomes of their lives. It depends on factors such as uncertainty avoidance, level of trust, future orientation, and assertiveness.

Uncertainty avoidance measures how we deal with an unknown future. High uncertainty avoidance suggests that employees are more risk averse. They prefer to avoid the unknown by following established rules and regulations—even when those rules are perceived to be ineffective. Managers in cultures with high uncertainty avoidance are often more successful when they provide detailed instructions and clear guidelines. On the other hand, employees in cultures with low uncertainty avoidance typically are less loyal to their current employers because they are willing to face the uncertainty of unemployment in an attempt to find more favorable work conditions. Consumers also display their degree of uncertainty avoidance in their willingness to adopt new products early. Those with high uncertainty avoidance are less likely to try products that have not been proven safe, effective, or desirable by the majority of the market.

As the name suggests, future orientation is the degree to which a culture chooses future rather than immediate results. A culture with a strong future orientation, such as the Netherlands, is more willing to postpone rewards now for greater benefit in the future. People with a strong future orientation are more willing to save resources and place more emphasis on long-term success. Cultures with weak future orientation are more likely to spend now and to emphasize short-term goals and objectives.

Assertiveness measures how competitive and aggressive a culture is. Cultures that are highly assertive tend to have more competitive work environments. Communication is more direct and unambiguous. People like to have control over their environments and are more willing to take responsibility for events. Low-assertion cultures place greater value on teamwork and relationships than on results. Their communication tends to be more indirect and vague in order to avoid placing blame and causing confrontation.

Information A final dimension of culture relevant to international business is the way different cultures acquire and process information. This characteristic often influences cultures' perceptions of products, people, and ideas. For instance, communication varies across cultures. Some cultures are low-context cultures and rely on direct means of conveying messages with little

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are low-context cultures and rely on direct means of conveying messages with little background information (or context). The most important factor in understanding the message is the words themselves, and they are often straightforward and concise. For instance, the message “Your performance was poor due to your frequent absences” is a low-context phrase.

On the other hand, high-context cultures use more implicit messaging and contextual elements to convey information, including body language and tone of voice. Speakers of Korean don't say “my house” or even “my spouse”; rather, they say “our house” or “our wife/husband.” Whether they are referring to their own house or their friend's house is implied by the context surrounding the conversation. Low-context cultures include those in much of North America and Western Europe, whereas high-context cultures include those throughout much of Asia, Africa, and South America. Some differences are highlighted in Figure 8.8.

FIGURE 8.8 Cultural dimensions This chart shows where particular countries fall with regard to various cultural dimensions. Source: G. Hofstede, “Dimensionalizing Cultures: The Hofstede Model in Context,” Online Readings in Psychology and Culture 2, no. 1 (2011), 8; Edward T. Hall, Beyond Culture (New York: Anchor Books, 1989).

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Concept Check 8.2 ! "

Question 1 of 2 NEXT NEXT

Question 1

Which types of traits are factors in social stratification?

Acquired and empirical

Ascribed and acquired

Analytical and aspiring

Demographics and ascribed

are low-context cultures and rely on direct means of conveying messages with little background information (or context). The most important factor in understanding the message is the words themselves, and they are often straightforward and concise. For instance, the message “Your performance was poor due to your frequent absences” is a low-context phrase.

On the other hand, high-context cultures use more implicit messaging and contextual elements to convey information, including body language and tone of voice. Speakers of Korean don't say “my house” or even “my spouse”; rather, they say “our house” or “our wife/husband.” Whether they are referring to their own house or their friend's house is implied by the context surrounding the conversation. Low-context cultures include those in much of North America and Western Europe, whereas high-context cultures include those throughout much of Asia, Africa, and South America. Some differences are highlighted in Figure 8.8.

FIGURE 8.8 Cultural dimensions This chart shows where particular countries fall with regard to various cultural dimensions. Source: G. Hofstede, “Dimensionalizing Cultures: The Hofstede Model in Context,” Online Readings in Psychology and Culture 2, no. 1 (2011), 8; Edward T. Hall, Beyond Culture (New York: Anchor Books, 1989).

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Concept Check 8.2 ! "

Question 1 of 2 NEXT NEXT

Question 1

Which types of traits are factors in social stratification?

Acquired and empirical

Ascribed and acquired

Analytical and aspiring

Demographics and ascribed

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Copyright © 2018 by John Wiley & Sons, Inc. All rights reserved.

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Demographics and ascribed

Copyright © 2018 by John Wiley & Sons, Inc. All rights reserved.

Question Attempts: 0 of 1 used CHECK ANSWER

Demographics and ascribed

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