Chapter 4: Differences in Culture

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Understanding how the culture of a country affects the way business is practiced
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Cross-cultural literacy
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A system of values and norms that are shared among a group of people and that when taken together constitute a design for living
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Culture
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Abstract ideas about what a society believes to be good, right, and desirable
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Values
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social rules and guidelines that prescribe appropriate behavior in particular situations
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Norms
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group of people who share a common set of values and norms
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Society
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routine conventions of everyday life
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Folkway
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norms seen as central to the functioning of a society and to its social life
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mores
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the basic social organization of a society
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social structure
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an association of two or more individuals who have a shared sense of identity and who interact with each other in structure ways on the basis of a common set of expectations about each other’s behavior
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group
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Hierarchical social categories often based on family background, occupation, and income
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social strata
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the extent to which individuals can move out of the social strata into which they are born
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social mobility
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A system of social stratification in which social position is determined by the family into which a person is born, and change in that position is usually not possible during an individual’s lifetime
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caste system
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A system of social stratification in which social status is determined by the family into which a person is born and by subsequent socioeconomic achievements mobility between classes is possible
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class system
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A tendency for individuals to perceive themselves in terms of their class background
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class consciousness
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A system of shared beliefs and rituals concerned with the realm of the sacred
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religion
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A coherent collection of beliefs about the right way to behave in a society
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ethical systems
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Theory of how a society deals with the fact that people are unequal in physical and intellectual capabilities. High power distance cultures are found in countries that let inequalities grow over time into inequalities of power and wealth ; low power distance cultures are found in societies that try to play down such inequalities as much as possible
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power distance
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Theory focusing on the relationship between the individuals and his or her fellows; in individualistic societies, the ties between individuals are loose and individuals achievement is highly valued; in societies where collectivism is emphasized, ties between individuals are tight, people are born into collectives, such as extended families, and everyone is supposed to look after their interest of his or her collective
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individualism versus collectivism
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Extent to which cultures socialize members to accept ambiguous situations and to tolerate uncertainty
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uncertainty avoidance
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Theory of the relationship between gender and work roles. In masculine cultures, sex roles are sharply differentiated and traditional “masculine values” such as achievement and the effective exercise of power determine cultural ideals; in feminine cultures, sex roles are less sharply distinguished, and little differentiation is made between men and women in the same job
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masculinity versus feminity
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Theory that confucian teachings affect attitudes toward time, persistence, ordering by status, protection of ace, respect for tradition, and reciprocation of fights and favors. The units of resources required to produce a good are assumed to remain constant no matter where one is on a country’s production possibility frontier
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confucian dynamism
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Behavior that is based on the belief in the superiority of one’s own ethnic group or culture; often shows disregard or contempt for the culture of other countries.
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ethnocentrism
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Why did Wal-mart fail in Germany?
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– Had a high degree of ignorance concerning the complexities of retaining in germany (regarding the different legal and institutional framework in the nation). – – He fail to understand the German shopping culture – Dissatisfaction towards the pay and the transferring of managers in 2 years – Ignorance of the impact of unions – Didn’t understand that in Germany quality is valued – German shoppers didn’t like Wal-mart’s greeters – Germans don’t like people handling their groceries – Germans don’t like people smiling – The chant and stretching was humiliating to them – Hated the new ethic codes
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In general, Walmart’s failure in Germany was due in large part to its inability to?
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come to grip with the cultural differences between Germany and the U.S.
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True or false: Different cultures are more or less supportive of the capitalist mode of production and may increase or lower the costs of doing business
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True (the cultural factors of Japan lowered the cost of doing business and help rise its economic ascent)
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What country has class divisions that led to a high level of industrial disputes in that country during the 60s and 70s, and thus, raised the cost of doing business?
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U.K
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True or false: Culture is static
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False (Culture is not static, because it evolves)
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True or false: Scholars have always been able to agree on a simple definition of culture.
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False (Hundred of definitions have been offered. The first by Edward Tylor in the 1980s, Geert Hofstede, and Zvi Namenwirth and Robert Weber)
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True or false: While a society may be equivalent to a country, some countries harbor several societies, and embrace more than one country
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True
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What forms the bedrock of a culture?
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Values (because they provide the context within which a society’s norms are established and justified. Also, they contain society’s attitudes)
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Values are not just abstract concepts;….?
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They are invested with considerable emotional significance (People fight and die for these, plus they are reflected in the political and economic system of a society)
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The social rules that govern people’s actions toward one another?
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Norms (divided into folkways and mores)
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What defines the way people are expected to behave, but the violation is not a serious matter?
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Folkways (If broken they are considered eccentric, ill-mannered, or a tourist)
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Time and culture….explain
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People are keenly aware of the passage of time in the U.S. and northern European culture, but not for Arabic, Latin, and African cultures
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Do folkways include rituals and symbolic behavior? What are rituals and symbols? What is an example of this?
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Yes; are the most visible manifestation of a culture and constitute the outward expression of deeper values; business card transaction between a Westerner and a Japaneses.
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Which one has a much greater significance? Mores or folkways?
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Mores (violationing mores can bring serious retribution. Most mores have been turned into laws. However, it still differs by country. For example, Americans you can drink, but not in Saudi Arabia)
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Is there a strict one-to-one correspondence between a society and a nation state?Example?
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No (Canada having Anglo, French, and Native American culture)
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What is a culture that embrace several nations?
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Islamic society/culture that is embraced int he Middle East, Asia, and Africa
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Is it possible to talk about culture at different levels? Example.
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Yes; Numerous American societies each with it’s own American culture (The relationship between culture and country is often ambiguous)
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Within the context of societal culture, what are values and norms?
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What are the differences between folkways and mores?
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What is the relationship between the nation states and culture?
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True or false: The values and norms of a culture emerge fully formed? (6)
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False (they evolve over time in response to political and economic philosophies, social structure of a society, dominant religion, language and education)
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What are the two dimensions when explaining differences among culture?
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– The degree to which the basic unit of social organization is the individual, as opposed to the group – Degree to whi ha society is stratified into classes or castes
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True or false: Human social life is group life?
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True (Although found in all societies, it differs according to the degree to which the group is viewed as the primary means of social organization)
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Western societies emphasize individual achievement? Yes/No?
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yes
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True or False: The emphasis on individualism in the U.S., while helping to create a dynamic entrepreneurial economy, may raise the cost of doing business due to its adverse impact on managerial stability and cooperation?
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True
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True or false: The group to which an individual belongs often evolves into a deeply emotional attachment in which identification with the group becomes all-important in one’s life
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True (In Japan, the social status of an individual is determine as much by the standing of the group to which he or she belongs as by his or her individual performance)
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True or false: The primacy of the value of group identification also discourages managers and workers from moving from company to company?
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True (Over the years, managers/workers build up knowledge therefore performing their jobs more effectively and achieve cooperation with others)
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What is the main difference between group and individual?
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The group lacks dynamism and entrepreneurship
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What are the differences between social stratification?
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The degree of mobility between social strata and the significance attached to social strata in business context
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True or false: Social mobility within a class system is the same from society to society. Example?
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False (The British have upper, middle, & lower-middle)
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What is the big difference between the U.K. and U.S. class society?
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U.K.: Has class society that governs the status of people. Depending on your accent, this could be the difference from entering a good school or getting a good job. It takes generations to move up the classes. U.S.: Still has classes, but you can move from class to class much quickly. We respect those who came from humble beginnings. China: Also went through class restriction until its reforms in the 70s and 80s. Socialist know think that a new class system is emerging in China based less on the rural-urban divide and more on urban occupation
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True or false: The high degree of social mobility and the extreme emphasis on individualism limits the impact of class background on business operations? What are two examples? What is an opposite example?
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True; U.S., Japan, opposite example = U.K. (The terrible relationship between classes, lack of cooperation, and high level of industrial disruption, tend to raise the cost of production in countries like China and the U.K.)
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Where is class consciousness reemerging?
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Urban China
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Most of the world’s ethical systems are the product of religion; however, what is the exception?
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Confucianism
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What are the four dominating religion?
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Christianity, Islam, Hinduism, and Buddhism
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Who says that a strong religious beliefs, particularly beliefs in heaven, hell, and an afterlife, have a positive impact on economic growth rates?
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Economist Barro and McCleary (Higher religious belief stimulate economic growth because they help to sustain aspects of individuals behavior that lead to higher productivity)
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Tell me things about Christianity?
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– Most widely practiced religion in the world (20%) – Came from Judaism – Judaism is split into Roman Catholic Church (Southern Europe and Latin America) and Orthodox Church (Greece and Russia) and Protestantism (Baptist, Methodist, and Calvinist)
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What did Weber say between the connection between Protestant ethics and capitalism?
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That Protestant ethics understood the importance of hard work and wealth creation and frugality to facilitate the development of capitalism (Catholics, who were promised salvation in the next world, didn’t work like this). Foster the economy of Europe and U.S.
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True or false: Protestantism gave individuals significantly more freedom to develop their own relationship with God?
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True (This paved the way for individual economic and political freedoms as well as the development of individualism) (But don’t look to much into it, because we see entrepreneurial activity and economic growth in heavy Catholic countries)
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What is the second largest religion of the world? Had a Prophet Muhammad? Contributed in 40 countries, mostly in northwest Africa, Middle east, China, and Malaysia?
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Islam (religion) Muslim (people who practice Islam)
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Explain a little bit of Islam?
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– Has roots in Judaism and Christianity – Monotheistic religion – Only one God (Allah) and he requires unconditional acceptance of the uniqueness, power, and authority of God and the understanding that the objective of life is to fulfill the dictates of his will in the hope to be in paradise – Worldly gains are an illusion – Islam is an all-embracing way of life governing the totality of a Muslim’s being
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Associated in the media with militants, terrorists, and violent upheavals
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Radical Islamic fundamentalism (The vast majority of Muslims point out the Islam teaches peace, justice, and tolerance)
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What was the cause of the rise of Islamic fundamentalism?
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– Response to the social pressures toward modernization and Western ideas (like liberal democracy, materialism, equal rights, and attitudes towards sex, marriage, and alcohol) Has caused people to cling to all this change – Fundamentalists demand commitment to traditional religious beliefs and rituals (They blame Western influence for a range of social ills) – Fundamentalists have gained political power and have used this to try to make Islamic law
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The koran establishes what type of explicit economic principles?
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Pro – free enterprise (They believe in trade, and being trustee of property. They are entitled to the profits, but must use it in a socially beneficial manner. In other words, it’s fine to earn a profit, but not based on the exploitation of others. They also keep their words and try not to deceive)
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True or false: Businesses that are perceived as making an unjust profits through the exploitation of others, by deception, or by breaking contractual obligations are unlikely to be welcomed in an Islamic country
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True (Fundamentalism increases –> hostility towards Western owned business increases)
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One economic principle of Islam prohibits what?
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Usury (interest/riba in Arabic) because it’s exploitative and unjust
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What are the two types of ways that ISlamic banks make money?
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mudarabah (similar to a profit-sharing scheme or they take a share in the profits from the bank’s investment according to an agree-on ratio. They say it encourage long term saving and investment) and Murabaha (Most widely used, because the bank buys the thing you want and then they make you pay it back at their price)
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Explain Hinduism
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– Oldest major religion – No founding to a particular person or a book – dharma: acceptance of certain responsibilities – Believe in Karma and reincarnation – nirvana: state of complete spiritual perfections that renders reincarnation no longer necessary
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How to reach nirvana?
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To lead a severe ascetic lifestyle of materials and physical self-denial, devoting life to a spiritual rather than material quest
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Why did Weber think that Hinduism wasn’t like Protestant?
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Because Hinduism emphasize that individuals should be judged not by their material achievements but by their spiritual achievements; therefore, devout Hindus will not engage in entrepreneurial activity
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Did Mahatma Gandhi affect the economy?
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Can’t really say because India is a very dynamic entrepreneurial society
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How come Hinduism support the India’s caste system?
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The concept of mobility is done through achieving spiritual progression and reincarnation. (Although abolish, there are still signs of the caste system in India that prevent people from going up the ladder because of their social class)
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Explain Buddhism
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– Founded in India in the 6th century by Siddhartha Gautama (an India prince who renounced his wealth to reach spiritual perfection) – Prince –> Buddha – Suffering comes from people’s desires for pleasure – Noble Eightfold Path: emphasize right seeing, thinking, speech, action, living, effort, mindfulness, and meditation – No caste system – Stress the afterlife and spiritual achievement
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Which is much better to produce entrepreneurial activity? Hindu or Buddha?
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Buddha (Protestantism still better than both)
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Explain Confucianism
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– Founded in 5th century – Heavy in China, Korea, and Japan – teaches the importance of attaining personal salvation through right action (not a religion) – build around a comprehensive ethical code that sets down guidelines for relationship with other – Focus on high moral and ethical conduct and loyalty to others – No afterlife!
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What are the three values central to the Confucian system of ethics are of particular interest?
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Loyalty (one’s superiors is regarded as a sacred duty. It makes it easier to cooperate between management and labor, but it’s not blind loyalty. It focus on the concept of reciprocal obligation), reciprocal obligations (Guanxi), and honesty in dealing with other (the risk of a company not following through is minimal in this type of system. Thus, the cost of achieving cooperation between companies is lower here)
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What is Guanxi? Is it a substitute for the legal system? Y/N?
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Important mechanism for building long-term business relationships. In other words, a relationship networks supported by reciprocal obligations. If you don’t reciprocate, you will be tarnished! Yes
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True or false: The language of a society can direct the attention of its members to certain features of the world rather than others?
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True (One word for snow here, but the Inuit (Eskimos) have 24 words)
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Countries with more than one language often have more than one culture? Y/N? Example?
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Yes (Canada, Belgium, Basque, Cyprus,)
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___ is the mother tongue of the largest number of people, followed by English and Hindi (India)? However, what is the most widely spoken language in the world?
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Chinese; English (French, Spanish, and CHinese)
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____ is increasingly becoming the language of international business?
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English (learning the local language yields considerable advantages. It makes them comfortable and builds raport)
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True or false: International business that do not understand the local language can make major blunders through improper translation?
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True (Nova and Mist-stick)
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____ language refers to nonverbal communication?
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Unspoken (when we communicate with each other by a host of nonverbal cues)
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True or false: Many nonverbal cues, however, are culturally bound?
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True (A failure to understand the nonverbal cues of another culture can lead to a communication failure
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What is another aspect of nonverbal communication that explain the comfortable amount of distance between you and someone you are talking with in a country?
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Personal space! (An example is the distance between an American and a Latin American. They like 5-8 feet, we like 3-5 feet)
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The medium through which individuals learn many of the language, conceptual, and mathematical skill that are indispensable in a modern society.
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Formal Education
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Do school teach values and norms both directly and indirectly? Examples?
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Yes (Schools generally teach basic facts about the social and political nature as well as the obligation of citizenship. It also teach cultural norms like respect, honesty, and etc. It’s called the hidden curriculum)
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What is the one important aspect of education?
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its a determinant of national competitive advantage, and an important factor guiding the location choices of international businesses (most will base production operations that require only unskilled labor in a country, not skilled labor that is rare)
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True or false: the general education level of a country is also a good index of the kind of products that might sell in a country, and the type of promotional material that should be used?
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True
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What are the main determinants of societal culture?
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What is a possible difference between societies where individualism is highly valued and those where group identification is highly valued?
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What is the business significance of social stratification in a society?
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How might religion and economic activity in a nation be related?
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What are the potential implications of differences in spoken and unspoken language?
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What is the role of education in economic progress?
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What did Geert Hofstede do? What four dimensions did he summarized?
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Psychologists working for IBM who collected data on 100,000 different employees. Power distance, uncertainty avoidance, individualism vs collectivism, and masculinity vs. femininity.
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What countries score high on the individualism scale and low on the power distance scale? What about the opposite? Country with strong uncertainty avoidance and high masculinity? The opposite?
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Western nations – U.S., Canada, and Britain ; Latin American and Asian countries; Japan; Denmark and Sweden
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Criticism of Hofstede’s work?
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– Assumes there is a 1 to 1 correspondence between culture and the nation-state, but in reality countries have different cultures sometimes – Research was culturally bound -The work is limited within one company – Data is now dated – Limited to social classes
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What are the four main dimensions in Hofstede’s model?
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What are the business implications of Hofstede’s work?
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What are the limitations of Hofstede’s work?
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True or false: Culture is constant; it does not evolve over time?
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False (Changes in value systems be be slow and painful for a society, but it still happens) (A few examples are women/U.S. and gaijin/Japan)
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True or false: Several studies have suggested that economic advancement and globalization may be important factors in societal change?
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True (Once people are better able to take care of their own needs, this collectivism declines) (Once people are able to get a better education their traditional values start to decline!)
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This 25 year study called the World Values Survey link what changes in values to changes in a country’s level of economic development? What about the quality of life attributes?
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Traditional and secular rational values; Survival (the values people hold when the struggle for survival is of paramount importance) and self-expression values (stresses the importance of diversity, belonging, and participation in political processes) However, takes time!
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What is the convergence hypothesis?
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A slow but steady convergence occurring across different cultures toward some universally accepted values and norms
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True or false: Cultural changes is no unidirectional, with national cultures converging toward some homogenous global entity. Although some elements of change are changing quite rapidly – particularly the use of material symbols – other elements change slowly if at all.
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True
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What is the potential relationship between economic progress and cultural change?
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How might globalization be impacting on societal culture around the world?
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What are the three important implications for international business flow from the difference of society and cultures?
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– The need to develop cross-cultural literacy – on the connection between culture and national competitive advantage – connection between culture and ethics
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How to combat the danger of being ill-informed?
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employing local citizens, home-country executives are cosmopolitan enough to understand the difference in business, teaching executives about other cultures
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Why is the connection between culture and competitive advantage is important?
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Connection suggests which country are likely to produce the most viable competitors Has important implications for the choice of countries in which to locate production facilities and do business

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