Wednesday, September 5, 2007

IMPACT OF CULTURE ON INTERNATIONAL BUSINESS USING VARIOUS CULTURAL FRAMEWORKS


With the terms like globalization and liberalization the competition amongst the global players all over the world has increased manifolds. The company’s nowadays are very sophisticated about selecting their suppliers and distributors. The case becomes more intense when an organization seeks for international business partners. In international channels strategies, there are few important parameters to be taken care of. One such parameter is ‘Culture’ of target country (market). “The cultural environment is of paramount concern in international marketing because culture shapes the values, assumptions, and behavior of individuals and organizations in society.” (Cateora and Graham, 1999) The word culture comes from the Latin root ‘colere’ (to inhabit, to cultivate, or to honor). There have been several definitions given to define the word ‘Culture’. “The culture is like nose, you cannot see it, but everybody else can see it, and thinks it is peculiar if it differs from theirs, in addition, you always go where it leads you, and it is always in the way.” (Geert Hofstede, 1990)

In another definition, “Culture is the collective programming of the mind that distinguishes the members of one group or category of people from another and also culture is called software of mind.”(Geert Hofstede, 1990) “Culture is construct that means it is not directly accessible to observation but inferable from verbal statements and other behavior and useful in predicting still other observable and measurable verbal and non-verbal behavior.” (Levitin, 1973:492) “Culture may be defined as patterns of thoughts and manners which are widely shared. The boundaries of the social collectively within which this sharing takes place are problematic, so that it may make as much sense to refer to a class or regional culture as to a national culture.” (Child and Kieser, 1977, p.2)

“A culture is the configuration of learned behavior and results of behavior whose component elements are shared and transmitted that society can impose on an individual. (Ralph Linton, 1945, p.21) “Culture is a set of beliefs and standards, shared by a group of people, which helps the individuals to decide what is, what can be, how to feel, what to do and how to go about doing it.” (Goodenough, 1971) Culture has been called "the way of life for an entire society." As such, it includes codes of manners, dress, language, religion, rituals, norms of behavior such as law and morality, and systems of belief. Culture or civilization, taken in its wide ethnographic sense, is that complex whole which includes knowledge, belief, art, morals, law, custom, and any other capabilities and habits acquired by man as a member of society.” (Edward Burnett Tylor, 1871)

"... Culture should be regarded as the set of distinctive spiritual, material, intellectual and emotional features of society or a social group, and that it encompasses, in addition to art and literature, lifestyles, ways of living together, value systems, traditions and beliefs".( The United Nations Educational, Scientific and Cultural Organization UNESCO, 2002)

“For the purposes of the Inter-cultural Studies Project, culture is defined as the shared patterns of behaviors and interactions, cognitive constructs, and affective understanding that are learned through a process of socialization. These shared patterns identify the members of a culture group while also distinguishing those of another group.” (CARLA (Centre for advance research on language acquisition))

The above mentioned definitions of ‘culture’ indicate various interpretations of the term culture in different countries and different researchers having different cultural background. The global business environment continues to look for new customers and suppliers to keep feeding their down-stream and up-stream supply chain management. The rules and regulations for doing business change from country to country. “The national element is not always the main source of culture when regarded from an ‘operational culture’ perspective.” (Goodenough, 1971).
Researchers have developed various cultural frameworks to describe impact of culture on business in domestic market as well as international market. A country’s culture can be defined on the basis of below stated elements of culture.

“Language is vehicle of culture and is often one of the most visible and audible ways of the expression, without ignoring that several cultures may use the same language or that one language may serve more than one culture.” (Ulijn and Strother, 1995) The use of different language settings in different countries can create problem for international managers. “So, an international managers should be able to understand cultural differences by linguistic skills; language as gateway to culture.” (Kaplan and Ulijn, 1995)

For example, India is made up of highly diversified ethnic and religious groups including Muslims, Hindus, Sikhs, Christian, etc., and several regional languages, which makes India a deeply multi-cultural country. So, any domestic as well as international organization thinking to do business in India may have to adapt them according to multi-cultural society prevailing in India. Multiple languages / dialects and different language usage patterns within countries might affect promotion activities, including advertising and consumer research - e.g. in China and India (Drago, 1998).

Geertz Hofstede (1980, 1984a, b, 1991) defines five dimensions of culture. The first dimension is Power Distance, degree of amongst the people which the population of country considers as normal, from relatively equal (small power distance) to extremely unequal (large power distance).The second dimension is Individualism, degree to which people in a country prefer to act as individuals rather than a members of groups. The opposite to individualism is Collectivism, in which societies respect the group to which they belongs, usually family, and to differentiate between the in-group members and out-group members. The third dimension is Masculinity (tough values like assertiveness, performance, success and competition) and its opposite as Femininity (maintaining warm personal relationships, service, care for weak and solidarity). The fourth dimension is Uncertainty Avoidance, degree to which people in a country prefer structured (rules and regulations lay down as how to behave) over unstructured situations. The fifth dimension is Long-term (one finds values rather oriented towards the past and present, like respect for tradition and fulfilling social obligation versus short-term Orientation. The businesses opting for international business partners have to take care as to which category their distributors and suppliers belong to and they should act accordingly. Otherwise, there can be conflicts later on.

Using an anthropological approach, Hall (1976) dichotomized cultures in to lower context and higher context. In lower context cultures, most of the meaning of a communication are embedded in explicit verbal expressions, whereas, in high context cultures the meaning of a communication depends heavily on the context or non-verbal aspects of communications. A supplier or an organization from high contexts can be difficult to enter, if you are an outsider, because you don't carry the context information internally, and because you can't instantly create close relationships. The opposite is not true as low contexts are relatively easy to enter if you are an outsider member of distribution, because the environment contains much of the information you need to participate, and because can you form relationships fairly soon, and because the important thing is accomplishing a task rather than feeling your way into a relationship. Thus, when a person from high context culture interacts with a low context culture, misunderstandings, frustrations, and conflicts may raise that hinder business interactions.

“Culture is a shared system of meaning, which functions as a process leading to automatic solutions to frequently recurring problems. This part of culture is unconscious or subconscious. These things we take for granted are called basic assumptions. Basic assumptions are so unconscious that we need help in recalling them.” (Fons Trompenaars on Cross Cultural Management, 1998)

To conclude, author would like to say that to avoid situations of ‘cultural shock’, Multi-national company (MNCs) tends to follow ‘Adaptation’ process instead of ‘Standardization’, and to come up with adapted marketing mix to avoid failure and to succeed in any foreign market.

For example, the Indians do not consume beef (for religious belief), which Mc Donald did not realized when they went international in India, for which they faced lots of agitation and losses. Later on they have to change their product strategy which should suits Indian market, by introducing chicken burgers instead of beef. Johnson’s floor wax (which made wooden floors very slippery) failed in Japan because they failed to take into account the Japanese custom of not wearing shoes at home. Product colours might mean different things across cultures, e.g. White is colour of mourning in Japan while black has similar symbolism in the USA and Europe; the equivalent colour in Singapore is green. Green and white and blue have sectarian connotations in Glasgow. A recent study showed that Cadbury’s dominant colour, purple is associated with luxury, style, sophistication, youth and femininity in Britain, but in Taiwan, it is perceived as warm, old, quiet, serious, a little sad but dignified.

Thus, companies while entering international markets have to take care of nitty-gritty of culture and the consequences which can come up later on if they do not adapt themselves according to respective market’s culture.

Please do not hesitate to ask for original document from me (anuragloach@gmail.com).

Many Thanks,
--Anurag Loach

1 comment:

Anurag Loach said...

Guys, what I have observed from my international studies is that there is lot of impact of culture on international business. I have tried to explain this using different frameworks, but still I feel there are lots of other points which I may be lacking in this small article. So, please provide feedback, as what you think is missing, so that I can improve and readers can get the best thing to read and understand.........Cheers.

To advertise on our blog write in to us at aggarwal.prabal@gmail.com

Disclaimer

All the content, information and comments presented on the Management Informatika blog at http://www.managementinformatika.blogspot.com are those of the authors of posts and comments and not of the blog Management Informatika.