Bundoora

Campus

MGT1
IB
oduction to International Busines

Lecture 4: The Cultural

Environment

INNOVATIVE | RESPONSIBLE | ENGAGED

 latrobe.edu.au/busines

Lecture 4 - Objectives

1. Recognise the challenge of crossing cultural boundaries

2. Interpret the meaning of culture: foundation concepts
3. Explain why culture matters in international business
4. Analyse different interpretations of culture
6. Distinguish between key dimensions of culture
7. Analyse language as a key dimension of culture
8. Apply managerial guidelines for cross-cultural success
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The challenges of crossing

cultural boundaries
The learned, shared and enduring orientation patterns in
• Culture: a society. People demonstrate their culture through
values, ideas, attitudes, behaviours and symbols.

• In cross-border business we step into different cultural environments

characterised by unfamiliar languages and unique value systems, beliefs and
behaviours.

• Cross-cultural risk: A situation

or event where a cultural
miscommunication puts some
human value at stake.

Source: International Business: The New Realities2nd Edition

By Cavusgil, Knight, Riesenberger, Rammal and Rose
 latrobe.edu.au/busines

The challenges of crossing

cultural boundaries
• Ethnocentric orientation: Using our own culture as the
standard for judging other cultures. Many of us are brought
up in a single culture; we have a tendency to view the
world primarily from our own perspective. This
exacerbates cross-cultural risk.

• Polycentric orientation: A host-country mindset where

the manager develops a greater affinity with the country in
• Three managerial
which he or she conducts business. A manager does not
approaches to cross-
make a judgment about another culture, but instead
cultural interactions
attempts to gain an understanding of what makes the
culture and society unique.
Geocentric orientation: A global mindset where the
manager is able to understand a business or market without
regard to country boundaries; a cognitive orientation that
combines openness to, and awareness of, diversity across
cultures. Managers with a geocentric orientation make a
deliberate effort to develop skills for successful social
behaviour with members of other cultures.
 latrobe.edu.au/busines

The challenges of crossing

cultural boundaries
• Unfamiliar cultures may be ever-present in domestic as well as international
dealings.
• 2011 Australian census data: About 26 per cent of the Australian population was
born overseas and a further 20 per cent had at least one parent who was born
overseas.
• Such cultural diversity provides opportunities for firms to sell products that
suit the needs and tastes of certain communities within the country.
• Convergence: People around the world are not inclined to renounce their
cultural values, but common norms and expectations of behaviour are gradually
emerging.
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The meaning of culture:

foundation concepts
Culture is relative. There is no cultural absolute. People
Not right or wrong of different nationalities simply perceive the world
differently.

Not about individual Culture is about groups. It refers to a collective

behaviour phenomenon of shared values and meanings.

Culture is derived from the social environment. People

Not inherited are not born with a shared set of values and attitudes.

The process of learning the rules and behavioural

Socialisation:
patterns appropriate to one’s given society.

The process of adjusting and adapting to a culture

Acculturation: other than one’s own.
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The meaning of culture:

foundation concepts

Ask yourself. How much of the

makeup of yours and others’
cultures are you aware of?

Source: International Business: The New Realities2nd Edition

By Cavusgil, Knight, Riesenberger, Rammal and Rose
 latrobe.edu.au/busines

Why culture matters in

international business
• Cross-cultural proficiency is paramount in many managerial tasks,
including:

• developing products and services

• preparing advertising and promotional materials
• communicating and interacting with foreign business partners and
customers
• negotiating and structuring international business ventures
 latrobe.edu.au/busines

Interpretations of culture

• Hall’s high and low-context cultures

A culture that relies on elaborate verbal explanations,

putting great emphasis on spoken words.
Low-context cultures • Northern Europe and North America have a long
tradition of rhetoric and give central importance to
delivery of verbal messages.

A culture that emphasises non-verbal messages and

views communication as a means to promote smooth,
High-context cultures harmonious relationships.
• Japan and China prefer an indirect and polite face-
saving style that emphasises a mutual sense of
care and respect for others.
 latrobe.edu.au/busines

Interpretations of culture

• Hall’s high and low-context cultures

Source: International Business: The New Realities2nd Edition

By Cavusgil, Knight, Riesenberger, Rammal and Rose
 latrobe.edu.au/busines

Interpretations of culture
• Hofstede’s four dimensions of cultural orientation

Describes whether a person functions primarily as an individual

or within a group.
Individualism vs. • Individualistic societies—ties between people are
collectivism relatively loose; each person tends to focus on his or her
own self-interest.
• Collectivist societies—ties between individuals are more
important than individualism.

Describes how a society deals with the inequalities in power that

exist between people.
• High power-distance societies—relatively indifferent to
Power distance inequalities and allow them to grow over time.
• Low power-distance societies—gaps between the
powerful and weak are minimal.
 latrobe.edu.au/busines

Interpretations of culture
• Hofstede’s four dimensions of cultural orientation

The extent to which people can tolerate risk and uncertainty in

their lives.
• High uncertainty avoidance societies—create
Uncertainty avoidance institutions that minimise risk and ensure financial
security.
• Low uncertainty avoidance societies—socialise their
members to accept and become accustomed to
uncertainty.

Refers to a society’s orientation, based on traditional male and

female values.
• Masculine cultures—tend to value competitiveness,
Masculinity versus assertiveness, ambition and the accumulation of wealth.
femininity • Feminine cultures—emphasise nurturing roles,
interdependence between people and taking care of less
fortunate people.
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Interpretations of culture
• The Hofstede framework fails to account for the convergence of cultural values; are
difficult to generalise; do not capture all potential dimensions of culture.

• Fifth and sixth dimensions:

Denotes the degree to which people and organisations defer
gratification to achieve long-term success.
• Long-term orientation—emphasizes the long view in
Long-term vs. short-term
planning and living, focusing on years and decades;
orientation Asian cultures
• Short-term orientation—Australia, the United States,
and most other Western and South American countries

Describes a society’s views on the gratification of basic and

natural human drives related to the enjoyment of life.
• Indulgence signifies a society that tends to allow free
Indulgence versus gratification of basic and natural human drives that are
restraint related to enjoying life and having fun.
• Restraint refers to a society that, through strict social
norms, regulates and suppresses the gratification of
needs.

The Hofstede framework should be viewed as a general guide, useful foundation for a deeper
understanding in cross-national interactions with business partners, customers and value-chain
members.
 latrobe.edu.au/busines

Interpretations of culture

Source: International Business: The New Realities2nd Edition

By Cavusgil, Knight, Riesenberger, Rammal and Rose
 latrobe.edu.au/busines

Key dimensions of culture

Represent a person’s judgments about what is good or bad,
Values acceptable or unacceptable, important or unimportant, and
normal or abnormal.

Are similar to opinions, except that attitudes are often

Attitudes unconsciously held and may not have a rational basis.

Ways of behaving and conducting oneself in public and business

Manners and customs situations.

Time dictates expectations about planning, scheduling, profit

Perception of time streams and what constitutes lateness in arriving for work and
meetings (e.g. monochronic vs. polychronic orientation)

Cultures also differ in their perceptions of physical space;

Perception of space conversational distance is closer in Latin America than in
Australia, Northern Europe or the United States.

A system of common beliefs or attitudes concerning a being or a

system of thought that people consider to be sacred, divine or
Religion
the highest truth; incorporates the associated moral codes,
values, institutions, traditions and rituals.
 latrobe.edu.au/busines

Key dimensions of culture

Source: International Business: The New Realities2nd Edition

By Cavusgil, Knight, Riesenberger, Rammal and Rose
 latrobe.edu.au/busines

Key dimensions of culture

A symbol can be letters, figures, colours or other characters that

Symbolic productions communicate a meaning. National symbols include flags,
anthems, seals, monuments and historical myths.

Material productions Artefacts, objects and technological systems that people

and creative construct to cope with their environments. Creative expressions
expressions of culture of culture include arts, folklore, music, dance, theatre and high
cuisine.
 latrobe.edu.au/busines

Language as a key dimensions of

culture

• The ‘mirror’ or expression of culture; essential for communications; provides

insights into culture.
• Linguistic proficiency is a great asset in international business; facilitates
cross-cultural understanding.
• Language has both verbal and non-verbal characteristics (facial expressions
and gestures).
• There are nearly 7000 active languages, including over 2000 each in Africa
and Asia.
 latrobe.edu.au/busines

Language as a key dimensions of

culture

Source: International Business: The New Realities2nd Edition

By Cavusgil, Knight, Riesenberger, Rammal and Rose
 latrobe.edu.au/busines

Language as a key dimensions of

culture
• National languages, dialects and translation have a tendency to complicate
straightforward communication.

Source: International Business: The New Realities2nd Edition

By Cavusgil, Knight, Riesenberger, Rammal and Rose
 latrobe.edu.au/busines

Language as a key dimensions of

culture
• Even those from different countries who speak the same language may
experience communication problems because of unique colloquial words.

• Business jargon that is unique to a culture can also impede communication.

Source: International Business: The New Realities2nd Edition

By Cavusgil, Knight, Riesenberger, Rammal and Rose
 latrobe.edu.au/busines

Managerial Guidelines for Cross-

Cultural Success
1. Acquire factual and interpretive knowledge about the other culture, and try to
speak their language.

2. Avoid cultural bias.

• Self-reference criterion. The tendency to view other cultures through

the lens of one’s own culture.
• Critical incident analysis (CIA). An analytical method for analysing
awkward situations in cross-cultural interactions by developing empathy
for other points of view.
• Critical incident analysis advocates the following steps:

1. Identify the situations where you need to be culturally aware to interact

effectively with people from another culture.
2. When confronted with a seemingly strange behaviour, discipline yourself
not to make value judgments.
3. Learn to make a variety of interpretations of the foreigner’s behaviour, to
select the most likely interpretation and then to formulate your own
response.
4. Learn from this process and continuously improve.
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Managerial Guidelines for Cross-

Cultural Success
3. Develop cross-cultural skills.

• Cross-cultural proficiency is characterised by four key personality traits:

1. Tolerance for ambiguity—the ability to tolerate uncertainty and an apparent lack
of clarity in the thinking and actions of others.

2. Perceptiveness—the ability to observe closely and appreciate subtle information

in the speech and behaviour of others.

3. Valuing personal relationships—the ability to recognise the importance of

interpersonal relationships.

4. Flexibility and adaptability—the ability to be creative in devising innovative

solutions, to be open-minded about outcomes and to show grace under pressure.
 latrobe.edu.au/busines

Managerial Guidelines for Cross-

Cultural Success

• Cultural intelligence (CQ): A person’s capability to function effectively in

situations characterised by cultural diversity.

• Focuses on specific capabilities that are important for high-quality personal

relationships and effectiveness in culturally diverse settings and work groups.
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