The cultural perspectives of doing business

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Abstract

The analysis of the cultural perspectives of doing business in this paper is concentrated on the outline of the culture of graduate students taking Business Administration in Croatia as this group is the one that will gradually assume the leading role in the Croatian economy and business community. The research gives comprehensive understanding of dimensions and elements of culture in Croatia, how these elements and dimensions are integrated by locals conducting business and lastly the implications US businesses that wish to conduct business in Croatia.

Since the study concerned social and cultural phenomena, therefore a qualitative case study was most appropriate for this kind of research

Cultures have been compared by measuring their dimensions. However, the dimensions used to compare cultures are generally not physical measurements but, instead, are measures of the values and attitudes that different cultures have. Some of the dimensions of culture were those developed by Ali & Alshawi (2005) which include: (1) Uncertainty avoidance (2) Power Distance (3) Masculinity/femininity (4) Individualism/collectivism (5) Confucian Dynamism (6) Universalism- Particularism, (7) Neutral vs. Emotional Relationship Orientations(8) Achievement vs. Ascription (9) Conservatism vs. Affective/intellectual autonomy (10) Hierarchy vs. Egalitarian (11) Harmony vs. Mastery (13) Communal Sharing Relationships (14) Authority Ranking Relationships (15) Equality Matching Relationships (16) Market Pricing Relationships.

Analysis was done to show which dimension of culture shows a significant level of influence in the perspectives of doing business. The profile of graduate students taking Business Administration in Croatia may not necessary represent a true picture of the average or general profile of the business culture in Croatia, hence a limitation to the study

The paper concludes by proposing the right moves in business that can be made in order to make a successful transaction

Key words

Culture, cultural dimensions, business environment

Introduction

"Culture refers to the following Ways of Life, including but not limited to: Language: the oldest human institution and the most sophisticated medium of expression. Arts & Sciences: the most advanced and refined forms of human expression. Thought: the ways in which people perceive, interpret, and understand the world around them. Spirituality: the value system transmitted through generations for the inner well-being of human beings, expressed through language and actions. Social activity: the shared pursuits within a cultural community, demonstrated in a variety of festivities and life-celebrating events. Interaction: the social aspects of human contact, including the give-and-take of socialization, negotiation, protocol, and conventions."(Shahla, 2002) In order to make sure that people work together proficiently and together towards business objectives in a positive and motivating environment, they need to be aware of the existence and importance of both a corporate culture and international culture. In foreign countries, getting everybody to work together might not be very easy. Apart from language issues, different countries have different approaches to work. Some cultures take offense of certain comments. A Christmas party might not be seen too keen by non-Christian religions. Cultural sets of beliefs and differences cannot be easily changed or overcome. But it is important for any business owner or manager to be aware of them and how they impact their business. This will help to adjust to them and improve efficiency, profitability and success of business.

Problem statement

Culture is defined as the standards and manners of a group of people or community. Culture also determines how a country does business that. Understanding the difference in cultures of different county is a step in succeeding business in a foreign country. This research paper was aimed at establishing different cultural perspectives of doing business in Croatia.

Objective

The main objective of the research was to ascertain the cultural perspectives of doing business in Croatia. This objective was achieved through the following specific research objectives

To determine the major elements of dimensions of culture in Croatia

To ascertain how dimensions of culture are integrated by locals in business

To assess the difference in Croatian and US culture and Business

To determine the implication of US business wishing to be conducted in Croatia

Significance of the study

The study provided an understanding of Croatian culture which is indispensable when it comes to successfully running business in Croatia

Limitation of the study

The profile of graduate students taking Business Administration in Croatia may not necessary represent a true picture of the average or general profile of the business culture in Croatia, hence a limitation to the study

Literature review

Culture defined

From the perspective of a humanist, the one Mathew Arnold used the word culture to pass on to an ideal of individual human refinement, of the finest that has been thought and said in the world. This idea of culture is comparable to the German concept of building:

"...culture being a pursuit of our total perfection by means of getting to know, on all the matters which most concern us, the best which has been thought and said in the world"

A according to an anthropologist Kroeber and Kluckhohn culture can be defined as:

"Culture consists of patterns, explicit and implicit, of and for behavior acquired and transmitted by symbols, constituting the distinctive achievement of human groups, including their embodiment in artifacts; the essential core of culture consists of traditional (i.e. historically derived and selected) ideas and especially their attached values; culture systems may, on the one hand, be considered as products of action, on the other, as conditioning elements of future action"

 As a replacement for defining culture as a kind of knowledge, McGrew suggests that

"Culture can be viewed as a list of steps which include: (i) a new pattern of behavior is invented, or an existing one is modified. (ii) the innovator transmits this pattern to another. (iii) the form of the pattern is consistent within and across performers, perhaps even in terms of recognizable stylistic features. (iv) the one who acquires the pattern retains the ability to perform it long after having acquired it. (v) the pattern spreads across social units in a population. These social units may be families, clans, troops, or bands. (vi) the pattern endures across generations"

"Culture refers to the following Ways of Life, including but not limited to: Language: the oldest human institution and the most sophisticated medium of expression. Arts & Sciences: the most advanced and refined forms of human expression. Thought: the ways in which people perceive, interpret, and understand the world around them. Spirituality: the value system transmitted through generations for the inner well-being of human beings, expressed through language and actions. Social activity: the shared pursuits within a cultural community, demonstrated in a variety of festivities and life-celebrating events. Interaction: the social aspects of human contact, including the give-and-take of socialization, negotiation, protocol, and conventions."(Shahla, 2002)

Business culture in countries in transition cannot be explained exclusively either by their heritage from communist times, nor by their recent path through the transition period. There are three identified types of culture that are of relevance (Ali & Alshawi, 2004a). These include; national culture- a set of core values that shape the behavior of individuals as well as the whole society, organizational culture (Adler 1997; Bagchi and Cerveny 2003) and lastly, there is the individual level of culture, as shown by Dorfman and Howell (1988) in their investigation into the effects of national culture on individual behavior, e.g. technology acceptance, which influences the customer behavior even in the opposite direction that the society culture is pushing.

The business culture of a particular country is the product of many factors from its past and present that are so peculiar that they cannot ever be fully and finally understood and explained.

Overview of Croatian culture

Croatia became a constituent republic of the Federative Popular Republic of Yugoslavia after the Second World War, which inherited the ex-Yugoslav kingdom with art governed by the canon of socialist realism and science and education governed by the canon of dialectic and historical materialism.

Self-management system was introduced in 1950s. Cultural and other public domains were decentralized and regulated on the level of the six constituent republics. Modernization and the global openness of the country brought various cultural influences. Ideological control over culture loosened, followed by a national movement in which cultural and educational institutions played a visible role. Despite the ensuing political repression the public policies led to greater autonomy of the republics in the federation. The current government was appointed in 2009, after the political shifts caused by resignation of the former prime minister (2004-2009).

Greek, Roman and Byzantine are the blends of Croatia , the majority of the population is Croats. Minorities include Serbs, Hungarians and Gypsies.

Although Croatia is a sovereign nation, it has a unique culture that has been driven numerous civilizations and empires. It is well known for the rich culture it has, natural beauty, and many national parks and successful tourism industry.

Ethics

Ethics is the common agreed upon practice of different moral principles or values. It concentrates on the general nature of morals and the specific moral choice an individual makes in relationship to others. It represents the rules and/or standards governing the conduct of the member of a profession. The context of this inquiry will be ethics applied to business. Business ethics in Croatia is perceived as good. In business operation, the regulations are not violated massively, especially in transactions with domestic partners. As far as the accomplishment of contract obligations are concerned, the impression is good

Religion

Croatians are mainly Roman Catholic, with small percentages of Uniates (Eastern Orthodox Christians, recognizing the pope), Protestants, and Muslims. Some pre-Christian elements have been integrated into Christian beliefs and practices. Other influences on Croatian religious beliefs and practices have come from European and Near Eastern cultures, from rural and urban traditions alike, resulting in an amalgam of different heritages. Sacred and religious aspects of traditional culture were neglected during the Socialist period because religion was relegated solely to the private sphere of life. The Catholic Church plays a large role in Croatian society. The clergy plays a pivotal role in the country's education and culture. Croatians are especially devoted to the Blessed Virgin. There are sanctuaries throughout the country built in her honor. Each village and town has a patron saint and that saint's feast day is celebrated with a procession and church ceremony. Some villages still have a traditional bonfire on their patron saints' day. Many professionals also have their own patron saint. Religion is a uniting feature in the Croatian culture, majority of the Croatians is Roman Catholic. At work place religion is not talked about, Catholicism affects largely on everyday life of Croatians. During a Roman Catholic holiday, commercial activities close. Patrons of each and every town and city in Croatia lead the celebration of saint's holiday. The Catholic Church has for ages aided the development of Croatia's history and culture, it carry's on to be seen in everyday Croatian life. National Pride - Croatians love their heritage and country and when criticized they take it very personally. Hence, Croatians at one time can be seen as being proud, pretentious and may seem haughty to foreigners.

Nationalists

Croats are enormously conceited of their tradition and ethnicity and are thus staunch nationalists. They call their country "Our Beautiful Homeland" ("Lijepa naša"), which is also the title of the national anthem. The sense of nationalism comes both from their long and rich culture as well as a legacy of foreign invasion and control. Folklore plays a key role in preserving the culture. Life experiences are translated into verse, poetic songs, melodies, fairy tales, symbolic rituals, music, dance, costumes, and jewellery. Folksongs and poems often attest to the sentiment and regard between family members.

Social structure

The family is still the basis of the social structure. The extended family is the norm and relatives remain quite close with both the mother and the father's sides. The family provides its members with a social network and assistance in times of need. Even though it is becoming increasingly common for the nuclear family to have its own house, Croatians will take in elderly parents rather than send them to a nursing home. Weekends are considered family time. Few Croatians will allow business concerns to interfere with this important part of their lives.

Dimensions of culture

Hofstede's cultural dimensions are the most quoted reference about culture within (McCoy 2003). Ali, and Alshawi (2005) have proposed a comprehensive cultural dimensions framework, including Hofstede's cultural dimensions, through a normative survey of the culture literature. These dimensions are labeled: (1) Uncertainty avoidance (2) Power Distance (3) Masculinity/femininity (4) Individualism/collectivism (5) Confucian Dynamism (6) Universalism- Particularism, (7) Neutral vs. Emotional Relationship Orientations(8) Achievement vs. Ascription (9) Conservatism vs. Affective/intellectual autonomy (10) Hierarchy vs. Egalitarian (11) Harmony vs. Mastery (13) Communal Sharing Relationships (14) Authority Ranking Relationships (15) Equality Matching Relationships (16) Market Pricing Relationships.

Hofstede identified four dimensions:

Uncertainty avoidance (UA)

Uncertainty avoidance reflects a culture's tolerance of ambiguity and acceptance of risk. Degree to which people in a country prefer structured over unstructured situations: from relatively flexible to extremely rigid.

Power Distance (PD)

Power distance refers to the distribution of influence within a culture. Degree of inequality among people, which the population of a country considers as normal: from relatively equal to extremely unequal.

Masculinity/femininity (MF)

The masculinity femininity dimension describes how a culture's dominant values are assertive or nurturing. Degree to which "masculine" values like assertiveness, performance, success and competition prevail over "feminine" values like the quality of life, maintaining warm personal relationships, service, caring, and solidarity: from tender to tough.

Individualism/collectivism (IC)

Degree to which people in a country have learned to act as individuals rather than as members of cohesive groups: from collectivist to individualist. This dimension refers to how people define themselves and their relationships with others. In an individualist culture, the attention of the individual prevails over the interests of the group. Ties between individuals are loose. People look after themselves and their immediate families. Masakazu (1994) defines modern individualism as "a view of humanity that justifies inner beliefs and unilateral self-assertion, as well as competition based on these" . In a collectivist culture, the attention of the group prevails over the interest of the individual. People are integrated into strong, cohesive in-groups that continue throughout a lifetime to protect in exchange for unquestioning loyalty. Difference is displayed in who is taken into account when goals are set. In individualist cultures, goals are set with minimal consideration given to groups other than perhaps your immediate family. In collectivist cultures, other groups are taken into account in a major way when goals are set. Individualist cultures are loosely integrated; collectivist cultures are tightly integrated. In individualist cultures such as the United States, for example, when meeting a new person, one wants to know what that person does. One tends to define people by what they have done, their accomplishments, what kind of car they have. The question is do we function in a group or as individuals? Cultures of communitarism stress common goals and collective work (teamwork), while cultures of individualism value more individual success and creativity

Confucian Dynamism

Hofstede and Bond (1984) identified the fifth dimension, a Confucian dynamism labeled long-term orientation versus short-term orientation to life. The Confucian dynamism dimension depicts cultures that range from short-term values with respect for tradition and reciprocity in social relations to long-term values with persistence and ordering relationships by status. Degree to which people in a country promote collective welfare and harmony, resulting in psychological collectivism

Trompenaars (1993) defines the following dimensions:

Universalism-Particularism

Degree to which people in a country compare generalist rules about what is right with more situation-specific relationship obligations and unique circumstances. In the business perspective it considers what is more important for an individual's behavior.T he low level of this dimension (particularism) indicates giving preference to a flexible approach to every particular problem, while the high level (universalism) means strict adherence to standards and rules.

Neutral vs. Emotional Relationship Orientations

Degree to which people in a country compare 'objective' and 'detached' interactions with interactions where emotions is more readily expressed. Do people display their emotions? Cultures where emotions are strictly restricted and rarely displayed (neutral); and cultures where showing emotions in business relationships is usual (affective).

Specific vs. Diffuse Orientations

The degree to which people in a country are involved in business relationships and in which encounters (private and work) are demarcated and segregated out What is of concern is responsibility specifically assigned or diffusely accepted? Difference between cultures with a low level of intermixing business and private relationships (specific), and cultures where different types of relationships are intertwined (diffuse)

Achievement vs. Ascription

Degree to which people in a country compare cultural groups which make their judgments of others on actual individual accomplishments (achievement oriented societies) with those where a person is ascribed status on grounds of birth, group membership or similar criteria

Do people have to prove themselves to receive status or is it given to them? Status and power are attributed based on competences and results attained (achievement), or based on formal status in hierarchy, title, gender, age, etc. (ascription).

Schwartz, (1994) defined the following dimensions:

Conservatism vs. Affective/intellectual autonomy

Degree to which people in a country emphasis maintenance of status quo (Conservatism), or emphasis creativity or affective autonomy emphasis the desire for pleasure and an exiting life.

Culture Dimension Definition Hierarchy vs. Egalitarian

Degree to which people in a country believe in freedom and equality and a concern for others (Egalitarian), vs. emphasis the legitimacy of fixed roles and resources (Hierarchy)

Harmony vs. Mastery

Degree to which people in a country concerned with overcoming obstacles in the social environment (Mastery) vs. concern beliefs about unity with nature and fitting harmoniously into the environment.

Fiske ( 1992) came up with the following dimensions:

Communal Sharing Relationships

Degree to which people in a country see the members of a particular group as equivalent and undifferentiated Group members favour their own group, and can be highly hostile to those outside that group (this concept is so close to Hofstede's notion of Collectivism).

Authority Ranking Relationships

Degree to which people in a country involve a linear ordering of relations, with people high in rank having not only prestige, privileges and decision-making rights, but also possibly some responsibility for those lower down the hierarchy - this concept has an overlap with Hofstede's notion of power distance.

Equality Matching Relationships

Degree to which people in a country stress equality in social relations. People here are aware of where imbalances occur and, operating under the norm of reciprocity.

Market Pricing Relationships

Degree to which people in a country think in terms of prices and investment

Perception of dominant business culture

This was analyzed with Trompenaars' model of four diversity cultures. A model built on two major dimensions: 1) person vs. task-oriented behavior, and 2) centralized /hierarchical vs. decentralized/egalitarian i.e. Eiffel Family (power oriented), Tower (role oriented) Guided Missile (project oriented) and Incubator (fulfillment oriented):

RESEARCH APPROACH

Research Problem

Following the Trompenaars' model of four diversity cultures this study aimed to ascertain the cultural perspectives of doing business in Croatia

Research Methodology

The case study is one of several ways of doing social science research. It has a distinct advantage dealing with qualitative data i.e. how and why questions (Yin, 1994). In this research the aim was to explore the cultural perspectives of doing business in Croatia.Since the study concerns social and cultural phenomena within business, therefore a qualitative case study was most appropriate for this kind of research. The research used an interpretive approach to look at cultural occurrences through Trompenaars' model

Research Questions:

The research questions were how and in what ways might the cultural dimensions, and their elements of Croatian locals affect their perspectives of doing business and the implications of US businesses wishing to be conducted in Croatia.

Research hypothesis

As an alternative to adopting research hypothesis, the research identified a research rationale in line with the interpretive perspective. The research rationale was to ascertain the cultural perspectives of doing business in Croatia.

Research sample

To define the case, the research unit of analysis was the cultural perspectives of doing business in graduate students taking Business Administration from the Faculty of Economics at the University of Ljubljana

Case Study Protocol

A case study protocol was the instrument used. The protocol contained the instrument, the procedures and general rules that were followed in using the instrument. The following is a summary of the case protocol used in this study:

Case Study Overview

Aim

To ascertain the cultural perspectives of doing business in Croatia

Objectives

To determine the major elements of dimensions of culture in Croatia

To ascertain how dimensions of culture are integrated by locals in business

To assess the difference in Croatian and US culture and Business

To determine the implication of US business wishing to be conducted in Croatia

Issues

Identify dimensions of Culture in business perspective

Use a Trompenaars' approach to study cultural aspects.

Field Procedures

Case study sites

Faculty of Economics at the University of Ljubljana

Case study questions

Categories of Information

Culture definition, dimensions and elements.

Students' :

Ways of managing change

Attitudes

Ways of thinking and learning

Attitude to authority

Relationships with others

Potential source of information

Graduate students taking Business Administration from the Faculty of Economics at the University of Ljubljana

Guide for case study report

Outline

Logical structure

Format for narrative

Clearly communicate the findings and lessons

Results, Discussions, Conclusions and recommendations

In the dimension Universalism vs. Particularism, Croatians clearly tend towards universalism which causes a lot of misunderstanding in the relationship between the organization and its customers. Also, they are more oriented to TV and media than magazines and websites as a source of information, mainly this stems from their educational system.

In the dimension Individualism vs. Communitarism, The cultural dimension affects the organizational staffing (organizations) more than people in the society.

In the dimension Uncertainty avoidance, Students from high uncertainty avoidance cultures expect their teachers to be experts who have all the answers. And in the workplace, there is an inner need to work hard, and there is a need for rules, precision, and punctuality. Students from low uncertainty avoidance cultures accept teachers who admit to not knowing all the answers. And in the workplace, employees work hard only when needed, there are no more rules than are necessary, and precision and uncertainty avoidance it was clear that most croatians would try to avoid any kind of unstructured situations, and they tend to avoid any risk, but in the same society you would find people who are not like that and are risk

In the dimension Power Distance, power may affect the way customers try to get their problems solved as they tend to ask for higher management levels as they perceive higher management are more powerful. Croatian society sees that there is more power with more senior management; even though the organizational culture would have a different perception of power distance

In the dimension Masculinity/femininity, Croatians tend to have very warm relationships that create very tight relationships with family and friends which sometimes make them dependent on each other in taking decisions; this might create trend of being in contact all the time

In the dimension Confucian Dynamism, Confucian work dynamism, now more commonly called long-term orientation versus short-term orientation to life. This dimension includes such values as thrift, persistence, having a sense of shame, and ordering relationships. Confucian work dynamism refers to dedicated, motivated, responsible, and educated individuals with a sense of commitment and organizational identity and loyalty. Japan, South Korea, and Singapore-popularly referred to as Long-term orientation encourages thrift, savings, perseverance toward results, and willingness to subordinate oneself for a purpose. Short-term orientation is consistent with spending to keep up with social pressure, less savings, preference for quick results, and a concern with face. Croatians are building on their family welfare and that is the strongest relationship from their perspectives. Inside the work environment, Croatians tend to have a high turn over, especially in the private sector, as there is a lack of qualified staff. This also increases the cost of training staff.

In the dimension Neutral vs. Emotional Relationship Orientations, this dimension mainly affects customer satisfaction, as Croatians tend to be more emotional, and give some space for mastery so they are satisfied when they feel happy and cared for, which is more related to the treatment and when they feel that they are in some way special to the organization.

In the dimension Specific vs. Diffuse Orientations, Croatia is in the transition from public sector based economy to more private organizations, which affects Croatians perception and expectation concerning quality or service.

In the dimension Achievement vs. Ascription, Croatians tend to try to get to a higher social level as the traditions and norms give people more respect according to which social class they are from or have reached

In the dimension Market Pricing Relationships, they keep an eye on prices and it seems that it is the most important thing in a product or services.

Structured or organized vs. unstructured or unorganized behavior, Croatians tend to have an unstructured approach in their life; they like to change all the time even when it is coming to rules and procedures in work environments.

Openness to Others' cultures, they show a very open attitude to accept other cultures and other values and norms

Trust, The involvement of public sector based economy has create a fear of people in the society about getting their rights, so people do as much as they can to have their own rights.

In the dimension Internal - External (locus of control), Croatians expressed strongest the attitude that they could have control over their future, which is certainly consistent with the high level of masculinism in their culture.

In summary Cultural values are relatively stable, but they can change over the course of generations from contact with other cultures. For a foreigner in Croatia, the first impression is conveyed starting with courtesies and the first greeting. Frustration is avoided by knowing how and when decisions are made; acquainting one self with the outcomes of a meeting and understanding how women are engaged in into the business framework. Croatian is the official language also German and English and German are broadly spoken; thus communications is generally ruled out of problems. Of importance is networking and Personal contacts in Croatian business culture than formal marketing techniques. The business culture in Croatia is conservative and quite formal but this varies among organizations. Risk taking and room for innovation is open for smaller companies run by Croatians who have lived overseas. Otherwise their larger counterparts are dominated by procedures and rules

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