Hofstede in International Business Review (2005, p.2) defined the word culture as "the collective programming of the mind which distinguishes the members of one category of people from another". The "category of people" can be a nation, region, or ethnic group. Women versus men (gender culture), old versus young (age group and generation culture), a social class, a profession or occupation (occupational culture), a type of business, a work organisation or part of it (organisational culture), or even a family.
To Bearden, Ingram and LarForge (2004, p.83), culture is defined as the values, ideas, attitudes, and symbols that people adopt to communicate, interpret, and interact as members of the society. These cultural factors-values, ideas, attitudes, beliefs and activities of specific population subgroups, greatly affect consumers purchasing behaviour. Thus marketers must understand important cultural characteristics and trends in different markets especially at the international level.
All too often, unfortunately, people who are familiar with only one cultural pattern may belief they have an awareness of cultural differences elsewhere, when in reality they do not. Unless they have had occasion to make comparisons with other cultures, they are probably not even aware of the important features of their own.
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How do international business people learn to live with other cultures? The first step is to realize that there are cultures different from their own. Then they must go on to learn the characteristics of those cultures so that they may adapt to them. Palmer and Perkins (2007, p.104) claim this can be accomplished in only two ways: (1) spend a lifetime in a country or (2) undergo an extensive, highly sophisticated training program that covers the main characteristics of a culture, including the language. The program he mentions must be more than a briefing on a country's customs. It should be a study of what culture is and what it does, importing some knowledge of the various ways in which human behavior has been institutionalized in a country.
It should be apparent that to be successful in their relationships with people in other countries, international businesspeople must be students of culture. They must have factual knowledge, which is relatively easy to obtain, but they must also become sensitive to cultural differences, and this is more difficult.
Bearden et al. (2004, p.29) stressed that cultural differences are important in both international and domestic markets. A cultural group's characteristics affect the types of products it desires and how it purchases and uses these products.
Becker (2000, p.8), added to this when he said that anthropologists, sociologists, psychologists, and economists have documented the fact that people in different cultures as well as people within a specific culture, hold divergent value systems on particular issues. Most newcomers to international business do not even have the opportunity for area orientation. They can, however, take the important first step of realizing that there are other cultures.
Of particular interest to international businesspeople are the formal aspects of art, color, and form because of the symbolic meanings they convey. Colors, especially, can be deceptive because they mean different things to different cultures. The color of mourning is black in the United States and Mexico, black and white in the Far East, and purple in Brazil. Green is a propitious color in the Islamic world, and any ad or package featuring green is looked at favourably there. While in the United States mints are packaged in blue or green paper, in Africa the wrapper is red. So marketers must be careful to check if colors have any special meanings before using them for products, packages or advertisements.
One should be careful of symbols, too. Seven signifies good luck in the United States but the opposite in Singapore, Ghana, and Kenya. In Japan, the number four is unlucky. If you are giving a Japanese client golf balls, make sure there are more or less than four in the package. Also, in general, avoid using a nation's flag or any symbols connected with religion.
Nike, the athletic shoe market, recalled 38,000 pairs of shoes carrying the word air written in flaming letter because. According to Muslims, it resembles the word" Attal" in Arabic. Another 30,000 pairs were diverted from Arabian countries to less-sensitive countries.
Music and Folklore
Always on Time
Marked to Standard
Musical commercials are generally popular worldwide, but the marketer must know what kind of music each market prefers, because tastes vary. Thus, a commercial that used a ballad in the United State might be better received to the tune of a bolero in Mexico or a samba in Brazil. However, if the advertiser is looking to the youth market with a product that is patently American, then American music will help reinforce its image.
Those who wish to steep themselves in a culture find it useful to study its folklore, which can disclose much about a society's way of life. The incorrect use of folklore can sometime cost the firm a share of the market. For example, associating a product with the cowboy would not obtain the same results in Chile or Argentina that it does in the United States, because in these countries the cowboy is a far less romantic figure-it's just a job. On the other hand, Smirnoff's use of an image of late revolutionary leader Emesto "Che" Guevara in an advertisement for spicy vodka sparked controversy in Cuba, where Guevara is a national hero. In another instance, a U.S. company may be paying handsome royalties to use American cartoon characters in its promotion, only to find they are considerably less important in foreign markets. In Mexico, songs of the "singing Cricket" are known to all youngsters and their mothers, and a commercial tie-in with that character would be as advantageous to the firm as its use of peanuts or Mickey Mouse. In many areas, especially where nationalistic feeling is strong, local firms have been able to compete successfully with foreign affiliates by making use of indigenous folklore in the form of slogans and proverbs. Tales of folklore are valuable in maintaining a sense of group unity. Knowing them is an indication that one belongs to the group which recognizes that the outsider is unfamiliar with its folklore.
Every culture has a set of attitudes and beliefs that influence nearly all aspects of human behaviour and help bring order to a society and its individuals. The more managers can learn about certain key attitudes, the better prepared they will be to understand why people behave as they do, especially when their reactions differ from those that the managers have learned to expect in dealing with their own people.
Among the wide variety of subjects covered by attitudes and beliefs, some are of price importance to the businessperson. These include attitudes toward time, toward achievement and work, and toward change.
Attitudes toward Time
This cultural characteristic probably presents more adaptation problems for Americans overseas than does any other. Time is important in the United States, and if one must wait past the appointed hour to see an individual, he may assume the person is not giving their meeting the importance it deserves. Yet the wait could mean just the apposite elsewhere. Latin American or Middle Eastern executives may be taking care of the minor details of their business so that they can attend to their important visitor without interruption.
Probably even more critical than short-term patience is long-term patience. American preoccupation with monthly profit and loss statements is a formidable barrier to the establishment of successful business relationships with Asian and Middle Eastern executives, especially during the development of joint ventures and other business relationships that have good potential in the long run-precisely the factors in which these people are most interested.
Attitudes toward Achievement and Work
Ball et al (2004 p.300) pointed out "Germans put leisure first and work second, "says a German-born woman now living in the United States. "In America, it's the other way around"
Angela Clark was born in Germany but now works for J.C. Penney as a merchandising manager in Washington, DC, Andreas Drauschke had a comparable job for comparable pay in Berlin. There is no comparison, however, in the hours each works. Draushke works a 37-hour week, with a six-week annual vacation. The store closes at 2:00 P.M. on Saturday and opens again on Monday. It is open one night a week. Clark works a minimum of 44 hours a week, including evening and often Saturday and Sundays. She brings work home and never takes more than one week's vacation at a time. "If I took any more, I d feel like I was losing control, "she says.
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To the consternation of the production manager with a huge back order in developing countries, the promise of overtime often fails to keep workers on the job. In fact, raising employees' salaries frequently results in their working less (economists call this effect the backward-bending labor supply curve)
It is important, however, to note that an additional change has occurred repeatedly in many developing countries as more consumer goods have become available. The demonstration effect (seeing others with these goods) and improvements in infrastructure (roads to bring the products to them and electric power to operate the products) cause workers to realize they can have greater prestige and pleasure by owning more goods. Thus, their attitude toward work changes not because of any alteration of their moral or religious values but because they now want what only money can buy.
Job Prestige. Another aspect of the attitude toward work is the prestige associated with certain kinds of employment. Many developing countries exhibit a disdain for physical labor. The result is an overabundance of attorneys and economists and a lack of toolmakers and welders even when the wages are higher for the latter.
Managers are likely to encounter sharp differences in attitudes toward work and achievement in other cultures compared to their own. However, they must recruit subordinates with a need to "get ahead'" whatever the underlying motive. One good source for such people is among relatively well-educated members of the working class who view work as a route to the prestige and social acceptance that have been denied them because of their birth.
Attitudes toward Change
Becker (2000, p.4) points out "American people constantly change things. Their images, homes, products services and the way they do things. To Americans, change is good, change is improvement. However European and Asian cultures do not so easily discard their long and proud histories. They believe that patience and an established way of doing things are virtues not weaknesses".
The American firm, accustomed to the rapid acceptance by Americans of something new, is frequently surprised to find that newness does not carry that kind of magic in markets where something tried and proven is preferred to the unknown. Europeans are fond of reminding Americans that they are a young nation lacking traditions. The near reverence for traditional methods makes it more difficult for a production manager to install a new process, a marketer to introduce a new product, or a treasurer to change an accounting system.
The New Idea. Yet undeniably, international firms are agents of change, and their personnel must be able to counter resistance to it. The new idea will be more readily acceptable the closer it can be related to the traditional one while at the same time being made to show its relative advantage. In other wards, the more consistent a new idea is with a society's attitudes and experiences, the more quickly it will be adopted.
Religion, an important component of culture, is responsible for many of the attitudes and beliefs affecting human behavior. Knowledge of the basic tenets of some of the more popular religions will contribute to a better understanding of why people's attitudes vary so greatly from country to country.
There are marked differences in attitudes across nations toward work and achievement. Europeans and Americans generally view work as a moral virtue and look unfavorably on the idle. This view stems in part from the Protestant work ethic as expressed by Luther and Calvin, who believed it was the duty of Christians to glorify God by hard work and the practice of thrift.
Hill (2003, p.97), agrees with Luther by stating that protestants in Christianity emphasize the importance of hard work and wealth creation (for the glory of God) and frugality (abstinence from worldly pleasures) this is just the kind of value system needed to facilitate the development of capitalism. Protestants therefore work hard and systematically to accumulate wealth.
In Asian countries where Confucianism is strong, the same attitude toward work is called Confucian work ethic, and in Japan, it's called the Shinto work ethic after the principal religion of that nation. As mentioned, because of other factors, such as a growing feeling of prosperity and a shift to a five-day workweek (with two days off, workers develop new interest) Japanese employers are finding that younger workers no longer have the same dedication to their jobs that their predecessors had. Workers rarely show up early to warm the oil in their machines before their shifts start, and some management trainees are actually taking all of their 15 days of vacation time.
People from the Western world will encounter some very different notions about God, people, and reality in Asian religions. In the Judeo-Christian tradition, this world is real and significant because it was created by God. Human beings are likewise significant: so is time, because it began with God's creation and will end when His will has been fulfilled. Each human being has only one lifetime to heed God's word and achieve everlasting life.
In the religions of India, the ideas of reality are different. There is a notion that this world is an illusion because nothing is permanent. Time is cyclical, and so all living things, including humans, are in a constant process of birth, death, and reincarnation. The goal of salvation is to escape from the cycle and move into a state of eternal bliss (nirvana). The notion of karma (moral retribution) holds that evil committed in one lifetime will be punished in the next. Thus, karma is a powerful impetus to do good so as to achieve a higher spiritual status in the next life. Asians who hold these views cannot imagine that they have not had past lives when they may have been plants, animals, or human beings. Of the seven best-known religions that originated in Asia, four came from India (Hinduism. Buddhism, Jainism, and Sikhism), two from China (Confucianism and Taosism), and one from Japan (Shintoism).
About 1.3 billion followers make this young faith the second largest after Christianity, which has 2 billion adherents. Islam accepts as God's eternal word the Koran, a collection of Allah's (God's) revelations to Muhammad, the founder of Islam. Unlike the founders of other major religions, Muhammad was not only the prophet of God but also the head of State, In Muslim nations, there is no separation of church and State.
The basic spiritual duties of all Muslims consist of the five pillars of faith: (1) accepting the confession of faith ("There is no God but God, and Muhammad is the Messenger of God"), (2) making the five daily prayer hours of Ramadan, a 29-or 30-day month in Islam's lunar calendar, and (5) making a pilgrimage to Mecca at least once in a person's lifetime.
Hill (p.99, 2003) points out an economic implication of Islam as a religion in a nation. Many of the economic principles of Islam are profree enterprise. The Koran speaks approvingly of free enterprise and of earning legitimate profit through trade and commerce (Prophet Mohammed was once a trader). The protection of private property is also embedded within Islam, although Islam does assert that all property is a favour from Allah (God), who created and so owns everything.
In a number of African Latin American countries, animism, a kind of spirit worship that includes magic and witchcraft, is a major religion. It is often combined with Catholicism to present a mixture of mysticism, taboos, and fatalism. Animists believe their dead relatives are ever present and will be pleased if the living acts in the same way as their ancestors. The resultant strong tendency to perpetuate traditions makes it extremely difficult for marketers and production managers to initiate changes. To be accepted, these changes must relate to the animists' beliefs. A foreign manager must also be cognizant of the proper religious protocols in situations such as factory and store dedications. If the evil spirits are not properly exorcised, they will remain to cause all sorts of problems, such as worker injuries, machinery breakdowns, and defective products.
In many of those cultures, religions have a pervasive influence on business. How effective can offers to pay overtime and bonuses based on productivity be in a company whose workers are mainly Buddhists or Hindus? Strict adherents to these religions attempt to rid themselves of desires, and thus they have little need for an income beyond that which permits them to attain the basic necessities of life. When their incomes begin to rise, they may tend to reduce their efforts so that personal incomes remain unchanged.
Religious holidays and rituals can affect employee performance and work scheduling. When members of different religious groups work together, there may even be strife, division, and instability within the work force. Managers must respect the religious beliefs of others and adapt business practices to the religious constraints present in other cultures. Of course, to be able to do this, they must first know what those beliefs and constraints are:
Material culture refers to all human-made objects and is concerned with how people make things (technology) and who makes what and why (economics).
The technology of a society is the mix of the usable knowledge that the society applies and directs toward the attainment of cultural and economic objectives; it exists in some form in every cultural organization. It is significant in the efforts of developing nations to improve their level of living and a vital factor in the competitive strategies of multinational firms.
Technological superiority is the goal of most companies, of course, but it is especially important to international companies because: (see Ball et al. 2004. pp. 306-307 )
It enables a firm to be competitive or even attain leadership in world markets.
At one time, Procter & Gamble and Unilever were competing worldwide for the laundry detergent market, but then P&G introduced Tide, a synthetic detergent with superior cleaning power. Its sales took off and left Unilever far behind. Finally, Unilever introduced its own synthetic detergent, but P&G had stolen the lea.
It can be sold (via licensing or management contract), or it can be embodied in the company's products.
It can give a firm confidence to enter a foreign market even when other companies are already established there.
it can enable the firm to obtain better than usual conditions for a foreign market investment because the host government wants the technology that only the firm has (for example, permission for a wholly owned subsidiary in a country where the government normally insists on joint ventures with a local majority.
IBM, confident of its superior technology, insisted on and obtained permission from the Mexican government to set up a wholly owned subsidiary when other computer manufacturers were forced to accept local partners.
It can enable a company with only a minority equity position to control a joint venture and preserve it as a captive market for semi processed input that it-but not the joint venture -produces.
It can change the international division of labor, some firms that moved production overseas where labor was cheaper have returned to their home countries because production methods based on new technology have reduced the direct labor content of their products. With labor costs as low as 5 percent of total production costs, going overseas to save 30 to 40 percent in labor costs, for example, produces only about a 2 percent cost saving.
It is causing major firms to form competitive alliances in which each partner shares technology and the high costs of research and development. This is known as strategic technology leveraging, which is the concept of using external technology to complement rather than substitute for internal technology.
Cultural Aspects of Technology: Technology includes not only the application of science to production but also skills in marketing, finance and management. Its cultural aspects concern governments because their people may not be ready to accept the cultural changes a new technology may bring. Some say the shah of Iran's overthrow resulted in part from his trying to introduce new technology too rapidly.
Technology's cultural aspects are certainly important to international managers, because new production methods and new products often require people to change their beliefs and ways of living. A self-employed farmer may find that learning to be a factory worker is excessively demanding. If workers have been accustomed to the production conditions of cottage industries in which each individual performs all the operations, they find it difficult to adjust to the monotony of tightening a single bolt. The "throw away instead of repair" philosophy behind the design of so many new products necessitates a change in the use habits of people who have been accustomed to repairing something to keep it operating until it is thoroughly worn out. Generally, the greater the difference is between the old and the new method or product, the more difficult it is for the firm to institute a change.
Although education in its widest sense can be thought of as any part of the learning process that equips an individual to take his or her place in the adult society, nearly everyone equates education with formal schooling.
A firm contemplating foreign investment has no indicators of the educational level of a country's inhabitants except the usual yardsticks of formal education: literacy rate, kinds of schools quantity of schools and their enrollments, and possibly the amount per capita spent on education. Such data underestimate the size of the vocationally trained group in the many countries where people learn a trade through apprenticeships. And, like other international statistics, the published literacy rate must be suspect.
UNESCO recommends defining a literate person as one who can both read and write a short, simple statement on his or her everyday life. In some countries, the literacy census consists of asking respondent whether they can read and write, and the signing of their names is taken as proof of their literacy. Nevertheless, these data do provide some assistance. Marketers are interested in the literacy rate because it helps them decide what type of media to employ and at what level they should prepare advertisements. Labels, point-of-purchase displays, and owner's manuals. The personnel manager will use the literacy rate as a guide in estimating what kinds of people will be available to staff the operation.
As with most kinds of data, the trends in education should be studied. It is important to realize that the general level of education is rising throughout the world.
Until the 1970s, there was a feeling in Europe that managers were born, not made, and that they could be trained only on the job. Thus, there was little demand for formal business education. However, a combination of factors has caused a proliferation of European business schools patterned on the American model:
1. Increased competition in the European Union, resulting in a demand for better-trained managers.
The return to Europe of American business school graduates
The establishment of American-type schools with American faculties and frequently with the assistance of American universities. Among elite European business schools we might find the London School of Economics and Political Science, the University of Mannheim in Germany, the University of St. Gallen and the IMD in Switzerland, INSEAD in France, and the London Business School.
This trend has been somewhat slower in developing countries, where, historically, higher education has emphasized the study of the humanities, law, and medicine. Business education has been less popular than other fields because a business career lacked prestige.
Probably the most apparent cultural distinction that the newcomer to international business perceives is in the means of communication. Differences in the spoken language are readily discernible, and after a short period in the new culture it becomes apparent that there are variations in the unspoken language (manners and customs) as well.
Language is the key to culture, and without it, people find themselves locked out of all but a culture's perimeter. At the same time, in learning a language, people can't understand the nuances, double meanings of words, and slang unless they also learn the other aspects of culture. Fortunately, the learning of both goes hand in hand: a certain feel for a people and their attitudes naturally develops with a growing mastery of their language.
Languages Delineate Cultures. Spoken languages demarcate cultures just as physical barriers do. Infarct, nothing equals the spoken language for distinguishing one culture from another. If two languages are spoken in a country, there will be two separate cultures (Belgium); if four languages are spoken, there will be four cultures (Switzerland); and so forth.
Further, the Swiss are divided on what languages their children should be taught. A meeting of education officials broke up over disagreements about whether English should be taught as the first foreign language learned instead of any of the four official languages. The 64 percent of German-speaking Swiss learn French as their first foreign language, as do the small number of Romansh speakers. French -and Italian speaking Swiss now learn German. However, many cantons intend to switch to English as the primary second language.
What is occurring in Canada because of the sharp divisions between the English and French-speaking regions is ample evidence of the force of languages in delineating cultures. The differences among the Basques, Catalans, and Spaniards and the differences between the French and Flemish in Belgium are other notable examples of the sharp cultural and often political differences between language groups. However, it does not follow from this generalization that cultures are the same wherever the same language is spoken. As a result of Spain's colonization, Spanish is the principal language of 21 Latin American nations, but no one should believe that they are culturally similar. Moreover, generally because of cultural differences, many words in both the written and the spoken languages of these countries are completely different. A Chilean told one of the authors of her surprise at seeing Pueto Rican coffee selling under the "EI Pico" brand. In Chile, she said, el Pico is a reference to the male sex organ. (Ball, et al, 2004, p.314)
Foreign Language. When many spoken languages exist in a single country (India and many African nations), one foreign language usually serves as the principal vehicle for communication across cultures. Nations that were formerly colonies generally use the language of their ex-rulers; thus French is the lingua franca, or "link" language, of the former French and Belgian colonies in African, English in India, and Portuguese in Angola. Although they serve as a national language, these foreign substitutes are not the first language of anyone and consequently are less effective than the native tongues for reaching mass markets or for day-to-day conversions between managers and workers. Even in countries with only one principal language, such as Germany and France, there are problems of communication because of the large numbers of "guest workers" who were recruited to ease labor shortages. A German supervisor may have workers from three or four countries and be unable to speak directly with any of them. To ameliorate this situation, managements try to separate the work force according to origin; for instance, all Turks are placed in the paint shop, all Greeks on the assembly line, and so on. But the preferred solution is to teach mangers the language of their workers. Invariably, such training has resulted in an increase in production, fewer product defects, and higher worker morale.
English, the Link Language of Business. When a Swedish businessperson talks with a Japanese businessperson, the conversation generally will be in English. English as a business lingua franca has spread so rapidly in Europe that well over half of EU adults can speak English. Over 40 percent of the EU speak it as a second language. An even larger percentage-69percent-agree that "everyone should speak English.
At the same time, other language are not being abandoned. For example, EU headquarters in Brussels estimates that, when the EU is next enlarged, interpreters will be needed for all possible combinations of about 22 languages-a total of 462 combinations.
Must Speak the Local Language. Even though more and more businesspeople are speaking English, when they buy, they insist on doing business in their own language. The seller who speaks it has a competitive edge. Moreover, knowing the language of the area indicates respect for its culture and people.
Usually it is a social blunder to begin a business conversation by talking business. Most foreigners expect to establish a social relationship first, and the casual, exploratory conversation that precedes business talks may take from 15 minutes to several meetings, depending on the importance of the meetings. Obviously, people can establish a better rapport in a one-on-one conversation than through an interpreter.
Nonverbal communication, or the unspoken language, can often tell businesspeople something that the spoken language does not-if they understand it. Unfortunately, the differences in customs among cultures may cause misinterpretations of the communication.
Gestures. Although gestures are a common form of cross cultural communication, gestures vary from one region to another. For instance, Americans and most Europeans understand the thumbs-up gesture to mean "all right," but in southern Italy and Greece, it transmits the message for which we reserve the middle finger. Making a circle with the thumb and the forefinger is friendly in the United States, but it means "you're worth zero" in France and Belgium and is a vulgar sexual invitation in Greece and Turkey.
The Language of Gift Giving
Gift giving is an important aspect of every business people's life both here and overseas. Entertainment outside office hours and the exchange of gifts are part of the process of getting better acquainted. However, the etiquette or language of gift giving varies among cultures, just as the spoken language does, and although foreigners will usually be forgiven for not knowing the language, certainly they and their gifts will be better received if they follow local customs.
Acceptable Gifts. In Japan for example, one never gives an unwrapped gift or visit a Japanese home empty-handed. A gift is presented with the comment that it is only a trifle, which implies that the humble social position of the giver does not permit giving a gift in front of the giver because he knows better than to embarrass him by exposing the trifle in the giver's presence.
The Japanese use gift giving to convey thoughtfulness and consideration for the receiver, who over time builds up trust and confidence in the giver. White and yellow flowers are not good choices for gifts because in many areas they connote death. In Germany, red roses given to a woman indicate strong feelings for her, and if you give cutlery, always ask for a coin in payment so that the gift will not cut your friendship. Cutlery is a friendship cutter for the Russians and French also. Traditions vary greatly throughout the world, but generally safe gifts everywhere are chocolates, red roses, and a good Scotch whiskey (not in the Arab world, however-instead, bring a good book or something useful for the office).
Gifts or Bribes? The questionable payment scandals (called bribery scandals by the press) exposed the practice of giving very expensive gifts and money to well-placed government officials in return for special favors, large orders, and protection. Some payments were bribes; that is, payments were made to induce the payee to do something for the payer that is illegal. But others were tips to induce government officials to do their jobs.
All three are payments for services, and usually they are combinations of two or possibly all three types. To distinguish among them, look at this example. If you tip the headwaiter to get a good table, that is a tribe, but if you tip him because you know that without it he'll put you near the kitchen, that's extortion. If you tip him for good service after eating, that is a tip.
Every society has a structure or an organization that is the patterned arrangement of relationships defining and regulating the manner by which its members interface with one another. Anthropologists generally study this important aspect of culture by breaking down its parts into two classes of institutions: those based on kinship and those based on the free association of individuals.
The family is the basic unit of institutions based on kinship. Unlike the American family, which is generally composed of the parents and their children, families in many nations especially the developing ones are extended to include all relatives by blood and by marriage.
Extended Family. For the foreign firm, the extended family is a source of employees and business connections. The trust that people place in their relatives, however distant, may motivate them to buy from a supplier owned by their cousin's cousin, even though the price is higher. Local personnel managers are prone to fill the best jobs with family members, regardless of their qualifications.
Understanding National Culture
To help managers of IBM understand the many national cultures in which the company operates, Geert Hosfstede, a Dutch sociologist, interviewed thousands of employees in 67 countries. He found that the differences in their answers to 32 statements could be based on four value dimensions: (1) individualism versus collectivism, (2) large versus small power distance, (3) strong versus weak uncertainty avoidance, and (4) masculinity versus femininity. (Hofstede later added a fifth dimension, Long Term Orientation).
Hosfstede (1991, pp. 148-150)
Individualism versus Collectivism
According to Hosftede, people in collectivistic cultures belong to groups that are supposed to look after themselves and the immediate family. Therefore, organizations operating in collectivistic cultures are more likely to rely on group decision making than are those in individualistic cultures where the emphasis is on individual decision making.
Large versus Small Power Distance
Power distance is the extent to which members of a society accept the unequal distribution of power among individuals. In large power distance societies, employees do not take any initiative in making non-routine decisions. On the other hand, a participative management style of leadership is likely to be productive for an organization in a low power distance country.
Strong versus Weak Uncertainty Avoidance
This is the degree to which the members of a society feel threatened by ambiguity and are reluctant to take risks. Employees in high risk-avoidance cultures such as Japan, Greece, and Portugal tend to stay with their organizations for a long time. Those from low risk-avoidance nations such as the United States, Singapore, and Denmark, however, are much more mobile, it should be apparent that organizational change in high uncertainty-avoidance nation is likely to receive strong resistance from employees, which makes the implementation of change difficult to administer.
Masculinity versus Femininity
This is the degree to which the dominant values in a society emphasize assertiveness, acquisition of money and status, and achievement of visible and symbolic organizational rewards (masculinity) compared to the degree to which they emphasize relationships, concern for others, and the overall quality of life (femininity).
Generally, as individuals are so wrapped up in their own culture, it is difficult for them to develop an open attitude which transcends their own norms. Eliminating this lack of cultural sensitivity or what Lee in Welford and Prescott (pp102-103 1994) called "Self Reference Criteria" (SRC) allows the development of strategies based on host market needs and wants and not those pertaining to the domestic market.
Lee proposes a four step approach to minimizing SRC when planning for cultural differences.
Determining the problem or goal in terms of home country, culture, habits or norms.
Determining the same problem or goal in terms of host country culture, habits, and norms.
Isolating the SRC influence on the problem and how it communicates the issue.
Redefining the problem without the SRC influence and solving it according to the specific foreign market situation.
It is important to state at this point that cultural analysis is quite important for any international management to be effective. Identifying differences between nations suggests directions for adaptation of products and strategies. Knowing your customer is just as important anywhere in the world as it is at home, whether one is aiming to sell computers at Abidjan or soft drinks in Soweto. Each culture has its logic, and within that logic are real, sensible reasons for the way foreigners do things. If the salesperson can figure out the basic pattern of the culture, he or she will be more effective interacting with foreign clients and colleagues.
Knowledge about other cultures and how they affect the way people do business may show business people working in a culture different from their own that their solutions are not always the appropriate ones for a given task. Understanding this is the first step in learning to use cultural differences to gain a strategic advantage.
Mishandling or ignoring cultural differences can cause numerous problems such as lost sales, the departure of competent employees, and low morale that contributes to low productivity. However when these differences are blended successfully, they can result in innovative business practices superior to those that either culture could produce by itself.