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This chapter explores the significance of culture in international business, particularly in the context of Saudi Arabian Muslim culture. It defines culture as a sum total of learned activities, emphasizing its dynamic nature, influenced by nation, language, and religion. Key topics include behavioral practices affecting business, such as social stratification, work motivation, relationship preferences, and risk-taking behavior. The chapter introduces Hofstede's cultural value dimensions, highlighting essential factors for international business managers to consider when engaging with foreign cultures.
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International Business Chapter Two The Cultural Environments Facing Business
Understanding Culture • The chapter begins with CRN-an understanding of the Saudi, Arabian, or Muslim culture • What is Culture?: “Sum total” of all learned activities, a way of life…..of societiesor relatively homogeneous groups of people-who share attitudes, values, beliefs, and customs • Why an international business manager should study the culture of a country?
Understanding Culture National cultures are dynamic, they evolve over time, change may occur by choice or by imposition. Three features are: • The Nation or Nation-State as point of reference (identity, symbolism, common history) • Language as both a diffuser and stabilizer of culture (expression, sharing, bond) • Religion as a cultural stabilizer (beliefs, ethics, spiritualism)
Behavioral Practices Affecting Business • Issues in Social Stratification • Work Motivation • Relationship Preferences • Risk-taking Behavior • Information and Task Processing • Communications
Social Stratification Systems • Individual’s status in a culture • Ethnic and Racial • Gender-based groups • Age-based groups • Family-based groups
Work Motivation • Work vs. leisure-how it affects productivity • Role of materialism, how it motivates people • Achievement orientation • Expectation of success and reward • Hierarchy of Needs
Relationship Preferences • Power distance, i.e., the psychological and social distance between superiors and subordinates • Individualism vs. collectivism • Individualism represents a desire for personal freedom, time, and challenge. • Collectivism represents a dependence on the organization as well as a need for a safe environment. • Role of extended families/clans
Risk-taking Behavior • Uncertainty avoidance, i.e., one’s tolerance of risk • Trust, i.e., one’s belief in the reliability and honesty of another • Future orientation, i.e., the need for immediate vs. delayed gratification • Fatalism, i.e., the belief that life is pre-destined, that events are “the will of God”
Information and Task Processing • Perception of Cues • Obtaining information: Low-Context cultures [explicit, e.g., USA] vs. High-Context cultures [implicit, e.g., Saudi Arabia] • Information processing: • Monochronic [work sequentially] vs. Polychronic [multi-task] • Idealism vs. Pragmatism
Communications • Spoken and Written Language • Silent Language of time, distance/space, and friendship • Verbal vs. Nonverbal Language (kinesics: body language and gestures) • We need to be sensitive to linguistic differences
Dealing with and adapting to Cultures • Host society acceptance (i.e., accommodation of foreigners in a culture) • Degree of cultural difference-cultural distance, diffusion, and imperialism • Ability to adjust-adapting to culture shock and reverse culture shock • Company and management orientations: Polycentrism, Ethnocentrism, Geocentrism
Hofstede’s Cultural Value • Individualism/collective index (IDV): Refers to preference of behavior that promotes one’s self interest. Higher score (e.g., USA) means high on individualism. • Power distance index (PDI): Measures the tolerance of social inequality, i.e., inequality between superiors and subordinates within a social system. Higher score (e.g., Arab countries) means more hierarchical. • Uncertainty avoidance index (UAI): Refers to the intolerance of ambiguity and uncertainty among members of a society. Higher score (e.g., Greece) means less tolerance for uncertainty. • Masculinity/feminity (MAS): Refers to one’s desire for achievement and entrepreneurial tendencies. Higher score (e.g., Latin culture) means more assertiveness and masculinity. • Future orientation: Refers to the future or long-term orientation of the society
Chapter 2: Discussion Questions • Define culture? Why an international business manager should study the culture of a country? • Explain how the dynamic interplay of nation, language and religion shapes the culture of a country. • Explain the six behavioral practices that affect the business in a country. • What factors do we need consider in dealing with or in adapting to foreign cultures? Explain. • Explain the five cultural values of Hofstede.
