Culture and Business

1. Culture and Business J. N. Hooker Carnegie Mellon University February 2006

2. A Popular View of Culture • Culture is all about food, language, dress, customs, holidays, etc.

3. What if all Chinese ate Sauerbraten and Spätzle • rather than jiăo zi and bāo zi?

4. It would be the same culture!!

5. The Western View of Culture • Cultures differ in language, cuisine, etiquette, etc. • But we are all basically the same inside. • Apparent differences are due to levels of development. • There is a single path of development toward a rational lifestyle. • The West is obviously ahead, whence the distinction of “developed” and “developing” countries.

6. I make no such assumptions.

7. Cultural Iceberg • Culture determines our deepest assumptions, most of which we not even aware. • Like an iceberg, culture lies mostly beneath the surface.

8. Language Dress, hairstyle Pop culture Cuisine Overt religion Concepts of space and time Guilt vs. shame Concept of authority Rule-based vs. relationship-based Management of information Apollonian vs. Dionysian Universalizing rationality? Covert religion Stress management Fundamental conception of reality

9. Cultural Ecosystems • Cultures are like ecosystems in several ways. • They are systems of mutually supporting elements. • One is not “better” than another.

10. Cultural Ecosystems • They have common elements, but differ nonetheless. • Many can coexist on the same planet. • Monoculture is a bad idea.

11. The World is Westernizing? • Capitalist market economies are spreading, and culture is profoundly shaped by how people make a living. London Shanghai Riyadh

12. The World is Westernizing? • The historical wealth and power of the West attracts elites around the world. • They speak English, adopt Western ways, send children to Western schools, cultivate Western connections, etc.

13. The World is Westernizing? • Global market and communications homogenize the world.

14. The World is Westernizing? • Youth culture is the same everywhere (movies, music, sneakers, etc.).

15. The World is Westernizing? • The world looks more and more Western • Skyscrapers, traffic jams, high tech • Surfeit of consumer goods • Pollution, overconsumption of resources. Teipei 101 Tower

16. The World is Westernizing? • People tend to exaggerate the extent to which the world is Westernizing. • Westerners do it… • Because they are universalists and want to believe that everyone is basically the same inside. • Others do it… • Because they what to emphasize the extent to which they are “developed.” Petronas Towers,Kuala Lumpur

17. Not so Western After All • Non-Western cultures are resisting Western cultural hegemony (Samuel Huntington). • China. • Lee Kuan Yew of Singapore (Harry Lee at Cambridge). • Islamic world.

18. Not so Western After All • People want the baubles and bangles of the West but may not want the culture.

19. Not so Western After All • The media and internet can actually strengthen regional differences. • It is easy to tailor news, web sites to market segments. • U.S. regional differences are greater now than ever.

20. Not so Western After All • “Youth culture” disappears at about age 26. • Many of today’s capitalists in China spent their youth in the Red Guard, the youth movement of the day.

21. Business is Business? • Must know rules of etiquette only to prevent irrelevant cultural feelings from intruding on an essential business matter. • Business behavior is governed by universal laws of supply and demand, as described in neoclassical economics.

22. Business Isn’t Just Business • But economic laws radically underdetermine economic behavior. • It is like laws of chemistry in cooking, or laws of physics in traffic. • Neoclassical economics is based on assumption of utility-maximizing, atomistic economic agents.

23. Business Isn’t Just Business • Economics says little to explain… • demand (and therefore marketing), • propensity to work, • social definition of work (Indian coffee stand), • class-defined roles, • firm loyalty, • flat vs. hierarchical organizations, • status and renegotiability of contracts, • conventions for negotiation.

24. Just to clarify… • To describe a culture is not to stereotype the individuals in it. • Every culture has the full range of personality types. • They differ in how personalities fit into a system. • Although most cultures are influenced by the West… • … not as much as people say. • … and not in the ways most people think. • I focus on what is indigenous about a culture, not what is Western about it.

25. Just to clarify… • I make no judgments about which cultures are “better.” • I talk frankly, in a clinical way, about how cultures work. • As in a medical school course. • This is not appropriate outside the classroom.`

26. Cultural Classification • One introduction to cultural difference is through classificationof cultures. • There are at least 5000 cultures in the world. • Each has a logicits own. • Cultural classification doesn’t capture this. • But it is a start.

28. Relationships vs. Rules • Business meetings • Business deals • Personal trust vs. contracts & law • Traffic behavior • Negtiation vs. regulation • Dealing with stress • Family & friends vs. technology & engineering

29. Relationships vs. Rules • Rule-based: • Northern Europe, USA, Canada, Australia • Including Germany, Czech Republic • Relationship-based: • Asia, Middle East, Africa, Latin America

30. Power Distance • High power distance = hierarchy, authority are accepted • Low power distance = equality preferred • Parents • Authoritarian vs. lenient • Protection vs. independent. • Government • Personal authority vs. legal authority.

31. Power Distance • Highest power distance (according to Hofstede): • Malaysia, Central America (except Cost Rica), Philippines, Mexico, Venezuela, Arab countries, Indonesia, India, West Africa, Yugoslavia, Singapore, Brazil, Hong Kong • Germany: high by European standards

32. Power Distance • Lowest power distance: • Austria (?), Denmark, New Zealand, Ireland, Sweden, Norway, Finland, Switzerland, U.K. (business only), Germany, Australia (business only), Netherlands, Canada (business only), USA (business only) • Czech Republic

33. Shame vs. Guilt • Shame-based = behavior is regulated by personal supervision • Guilt-based = behavior is regulated by guilt. • Employee supervision • Constant vs. occasional • Security • Personal presence vs. laws

34. Shame vs. Guilt • Shame based: • Same as relationship-based. • Guilt-based: • Same as rule-based • Germany: particularly extreme case

35. Context • High-context = information about what to do is implicit • Low-context = information about what to do is spelled out • Signs & instructions. • Personnel management • Personal decision vs. company policy

36. Context • High context: • Japan, China, Mexico, etc. • Low context: • USA, northern Europe, etc. • Germany and Czech Republic

37. Time • Polychronic = people do many things at once. • Monochronic = people do one thing at a time. • Queues • Appointments and punctuality • Mobile phones

38. Time • Polychronic • India, much of Africa, Latin America, southern Europe, Middle East • Monochronic • USA, Canada, northern Europe • Germany (extreme case), Czech Republic (somewhat)

39. Courtesy • In a polite culture, people are courteous to associates and deferential to superiors. • But rudeness to strangers may be tolerated. • In a rude culture, people are more interested in being right than being nice. • But courtesy to strangers may be required. • Saving face vs. in-your-face.

40. Courtesy • Courteous: • Malaysia, Japan, Korea, Mexico • Rude: • Israel, Australia, USA, much of Europe • Germany, Czech Republic

41. Corruption • Corruption as bribery • Short cut to relationship building. • Corruption as cheating. • Violation of rules. • Business dealings and hiring • Nepotism & cronyism vs. transparency.

42. Corruption • Bribery in relationship-based countries (endemic): • Much of Africa, east and south Asia, Middle East • Bribery in rule-based countries (system breakdown): • Russia, Eastern Europe (Czech Rep. less so) • Cheating in rue-based countries (endemic): • USA, southern Europe

43. Masculine vs. Feminine • Masculine: • Tough, aggressive, ambitious, martial values. • Competitive. • Men take charge. • Feminine: • Cooperation, reluctance to excel. • Men & women’s roles more similar.

44. Masculine vs. Feminine • Feminine (according to Hofstede): • Scandinavia, western Slavic countries, Thailand, some Latin American countries • Masculine: • Japan, Austria, Switzerland, Ireland, Jamaica, U.K., Germany, Philippines, India, Arab countries, some Latin American countries

45. Uncertainty • Uncertainty avoiding: • Prefer familiar, predictable surroundings. • Dysfunctional bureaucracy serves as ritual. • Risk-averse in business • Uncertainty tolerant: • Willing to take risks. • Entrepreneurial in business.

46. Uncertainty • Uncertainty avoiding (according to Hofstede): • Greece, Portugal, Latin America, Belgium, Slavic countries, France • Czech republic, Germany (to some extent) • Uncertainty tolerant: • Singapore, Jamaica, Scandinavia (?), Hong Kong, Ireland, Malaysia (?), U.K., USA

47. Frauenskirche and Rathaus in Munich (Münnchen)

48. Marienplatz in Munich

49. Clockwork in Rathaus