“Ogni processo economico inserito in un contesto ecosistemico, dice l'economista romeno, incrementa inesorabilmente ed irreversibilmente l'entropia del sistema-Terra: tanta più energia si trasforma in uno stato indisponibile, tanta più sarà sottratta alle generazioni future e tanto più disordine proporzionale sarà riversato sull'ambiente.Così, 'paradossalmente', vengono meno le ragioni tipiche dei sistemi economici attuali, che puntano ad una massimizzazione del numero di merci prodotte, ed una velocizzazione del loro processo produttivo.”

The Entropy Law and the Economic Process pubblicata nel 1971Nicholas Georgescu-Roegen ( 1906 –  1994)professore di economia presso la Vanderbilt University di Nashville, Tennessee.

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Differences in Culture

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Differences in Culture

INTRODUCTION

Operating a successful international business requires cross-cultural literacy (an understanding of how cultural differences across and within nations can affect the way in which business is practiced).

A relationship may exist between culture and the costs of doing business in a country or region.

Differences in Culture

WHAT IS CULTURE?

The fundamental building blocks of culture are values (abstract ideas about what a group believes to be good, right, and desirable) and norms (the social rules and guidelines that prescribe appropriate behavior in particular situations).

The term society refers to a group of people who share a common set of values and norms.

Differences in Culture

Value and Norms

• Values provide the context within which a society’s norms are established and justified and form the bedrock of a culture

• Norms are the social rules that govern the actions of people toward one another and can be further subdivided into folkways (the routine conventions of everyday life) and mores (norms that are seen as central to the functioning of a society and to its social life)

Differences in Culture

Culture, Society, and the Nation-State

• A society can be defined as a group of people that share a common set of values and norms; that is, a group bound together by a common culture. •There is not strict one-to-one correspondence between a society and a nation-state.

The Determinants of Culture

• The values and norms of a culture are the evolutionary product of a number of factors at work in a society

Differences in Culture

The determinants of culture

Determinants of Cultural Differences

1. Which phone plan?2. Are contracts with fine print fair?

3. Who is the world’s oldest person?

4. Is it right to harass whaling ships? 5. Is that a nice jacket?

6. Who is the world’s best football player?

7. Should computer games be censored?

8. Which is the best film of 2010?

9. Should I return extra change?10.Can I afford tickets?

11. How much debt can Greece afford?

Activity

What is an ethical

decision?

•Which phone plan?•Can I afford tickets?•How much debt can Australia afford?

• Which is the best film of 2010?• Is that a nice jacket?

• Should I return extra change?• Should computer games be

censored?• Is it right to harass whaling ships? • ...or to put fine print in contracts?

•Who is the world’s oldest person?• ...the world’s best football player?

economic

objective

ethics

aesthetic

activity

• In 2s or 3s...

• Think of an ethical issue you have faced, or observed, or heard about

• What makes it an ethical issue?

What is ethics?

•practical decisions about the way we live

•practical decisions with future consequences, effects on others, often involving

standards

•pointers to an ethical issue:good, bad, right, wrong, what ought to be, what should be, duty, obligation

Three approaches:the key to explaining the issue

• Ethics as right action

Rules, doing the right thing

• Ethics as fairness

Results, doing good, right outcomes

• Ethics as virtue- Virtue, being of good character,

right relationships

Punishment without trialChild labourFavouritism in markingAffirmative action

Lowering taxes for the richHealthcare only for wealthy

Courage, speaking truthBeing true to oneselfPutting self before client

Ethics is something we all do

• putting our values into practice• not a particular functional area• not something only for business, nor excluded from it

ethics

set of values

conceptionof good

daily life, business, government

activity

Where do our conceptions of good come from?

What defines the happiness we seek?

Conceptions of good

Possible sources:• Religion, revelations from god• Human nature, the Natural Law• Laws, UN Declaration• Our parents and families• Human reasoning, philosophy• Society, a social contract• Each of us, individually• Science• Nature, Rachaels

Practical hints

1. How to tell if there is an ethical issue

2.How to tell who to take into account

3.Distinguishing between ethical problems

4. Narrative, stories, art

5. Recognising normative claims

Practical hints: 1

How to tell if there is an ethical issue

Rules ...right action• Are there rules that are obeyed or broken?

- honesty, fidelity, etc.• Are there rights that are respected or violated?

Results ...right outcomes• Is there benefit or harm to someone or other?• Is an act fair or unfair?

Character ...right relationships• Does someone show good or poor character?

Practical hints: 2

How to tell who to take into account

The stakeholder concept

‘managers bear a fiduciary relationship to stakeholders…not to be treated as a means to an end’ Freeman

Helps us to work out whysomething is wrong, or unfair

Helps us explain our concerns to others

Helps to define the issue

enterprise

local community

suppliers

customers

financiers employees

managers

Practical hints: 3

Distinguishing between ethical problems

Dilemmas

• where it is hard to identify what’s right or best- or not seeing the issue - problems of ethical identification

Weakness of will

• where we fail to do what we know is right or best- ‘spirit is willing but the flesh is weak’- problems of ethical compliance

Jackson

Practical hints: 4

Narrative, stories, art

• the interesting questions have no easy answers

• context is important: stories help us to understand people’s intentions and values and how things change over time

TV series, movies, novels, blogs• cases help us to understand how ethical

decisions are madeEnron, Parmalat, Nike,..

Practical hints: 5

Recognising normative claims

Normative claims

• Ethical statements with a ‘you should’ element

Descriptive statements

• describe actual behaviour or situations• anthropology, survey results

Cohen

Ethical decision making

make moraljudgement

establish moralintent

engage in moralbehaviour

recognise moralissue

Recognise a difficulty

Commit Implement

A 4-step decision process:

Superior ethical expertise

1. recognise moral issue- quickly and accurately read a moral situation, taking the

perspectives of others, determining what role they might play.

2. make moral judgement- solve complex moral problems by reasoning about, for example,

codes, duty, and consequences for a particular situation.

3. establish moral intent- ethical focus: revere life and deepen commitment.

4. take moral action- keep their ‘‘eye on the prize,’’ enabling them to stay on task and

take the necessary steps to get the ethical job done.Moral complexity, Narvaez, 2010

Differences in Culture

SOCIAL STRUCTURE

A society's social structure is its basic social organization.

Two dimensions to consider:• the degree to which the basic unit of social organization is the individual, as opposed to the group• the degree to which a society is stratified into classes or castes

Differences in Culture

Individuals and Groups

The Individual

• A focus on the individual, and individual achievement is common in many societies

• This contributes to the dynamism of the Western economy, but can lead to a lack of company loyalty and failure to gain company specific knowledge, competition between individuals in a company rather than team building, and a limit on people's ability to develop a strong network of contacts within a firm

Differences in Culture

The Group

• In many Asian societies, the group is the primary unit of social organization.

• This may discourage job switching between firms, encourage lifetime employment systems, and lead to cooperation in solving business problems, but might also suppress individual creativity and initiative

Differences in CultureSocial Stratification

• All societies are stratified on a hierarchical basis into social categories, or social strata that differs in terms of mobility and significance

Social Mobility

• Social mobility is the extent to which individuals can move out of the strata into which they are born• A caste system is a closed system of 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 • A class system is a form of open social stratification in which the position a person has by birth can be changed through his or her achievement or luck

Differences in Culture

Significance

• In cultures where there is a great deal of consciousness over the class of others, the way individuals from different classes work together (i.e. management and labor) may be very prescribed and strained in some cultures (i.e. Britain), or have almost no significance in others (i.e. Japan) • Class consciousness is a condition where people tend to perceive themselves in terms of their class background, and this shapes their relationships with others

Differences in Culture

RELIGIOUS AND ETHICAL SYSTEMS

Religion is a system of shared beliefs and rituals that are concerned with the realm of the sacred. The religions with the greatest following are Christianity, Islam, Hinduism, and Buddhism. Confucianism influences behavior and shapes culture in many parts of Asia.

Ethical systems are a set of moral principles, or values, that are used to guide and shape behavior. The ethical practices of individuals within a culture are often closely intertwined with their religion.

Differences in Culture

Dominant religions across the world.

Differences in Culture

Christianity

• Christianity is the largest religion and is common throughout Europe, the Americas, and other countries settled by Europeans

Economic Implications of Christianity: The Protestant Work Ethic• At the turn of the century Weber suggested that it was the Protestant work ethic (focus on hard work, wealth creation, and frugality) that was the driving force of capitalism

Differences in Culture

Islam

Islam extends the underlying roots of Christianity to an all-embracing way of life that governs one's being.

Islamic Fundamentalism• In the West, Islamic fundamentalism is associated in the media with militants, terrorists, and violent upheavals. However, the vast majority of Muslims point out that Islam teaches peace, justice, and tolerance. Fundamentalists have gained political power in many Muslim countries, and have tried to make Islamic law the law of the land. Economic Implications of Islam• In Islam, people do not own property, but only act as stewards for God and thus must take care of that which they have been entrusted with. While Islam is supportive of business, the way business is practiced is prescribed.

Differences in Culture

Hinduism

• Hinduism, practiced primarily on the Indian sub-continent, focuses on the importance of achieving spiritual growth and development, which may require material and physical self-denial

Economic Implications of Hinduism• Since Hindus are valued by their spiritual rather than material achievements, there is not the same work ethic or focus on entrepreneurship found in some other religions• Promotion and adding new responsibilities may not be the goal of an employee, or may be infeasible due to the employee's caste

Differences in Culture

Buddhism

• Buddhists stress spiritual growth and the afterlife, rather than

achievement while in this world

• Buddhism, practiced mainly in South East Asia, does not support the caste system, however, so individuals do have some mobility and can work with individuals from different classes

Differences in Culture

Confucianism

• Confucianism, practiced mainly in China, teaches the importance of attaining personal salvation through right action• The need for high moral and ethical conduct and loyalty to others is central in Confucianism

Economic Implications of Confucianism • Three key teachings of Confucianism - loyalty, reciprocal obligations, and honesty - may all lead to a lowering of the cost of doing business in Confucian societies

Differences in Culture

LANGUAGE

Language, both spoken and unspoken, is one of the defining characteristics of culture.

Spoken Language • While English is the language of international business, knowledge of the local language is beneficial, and in some cases, critical for business success

Unspoken Language• Unspoken language such as facial expressions and hand gestures can be important for communication. However, because these can have different interpretations in different cultures, misunderstandings are common

Differences in Culture

EDUCATION

Formal education is the medium through which individuals learn many of the language, conceptual, and mathematical skills that are indispensable in a modern society.

The knowledge base, training, and educational opportunities available to a country's citizens can also give it a competitive advantage in the market and make it a more or less attractive place for expanding business.

Differences in Culture

Culture evolves over time, although changes in value systems can be slow and painful for a society. Social turmoil is an inevitable outcome of cultural change.

As countries become economically stronger, cultural change is particularly common.

Differences in Culture

IMPLICATIONS FOR MANAGERS

Cross-Cultural Literacy

• Individuals and firms must develop cross-cultural literacy• International businesses that are ill informed about the practices of another culture are unlikely to succeed in that culture • Individuals must also beware of ethnocentric behavior, or a belief in the superiority of one's own culture

Differences in Culture

Culture and Competitive Advantage

For international companies, the connection between culture and competitive advantage is important because:• the connection suggests which countries are likely to produce the most viable competitors• the connection between culture and competitive advantage has important implications for the choice of countries in which to locate production facilities and do business