The Cultural Dimension of Global Business

Gary P. Ferraro, Elizabeth K. Briody

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781315410999
• Edition: 8
• Topic: Social Sciences
• Subtopic: Anthropology
• Index: Social Sciences

Now in its eighth edition, The Cultural Dimension of Global Business continues to provide an essential foundation for understanding the impact of culture on global business and global business on culture. The highly experienced authors demonstrate how the theory and insights of cultural anthropology can positively influence the conduct of global business, examining a range of issues that individuals and organizations face as they work globally and across cultures. The cross-cultural scenarios presented in each chapter allow students of business, management, and anthropology alike to explore cultural difference while gaining valuable practice in thinking through a variety of complex and thorny cultural issues.

The fully updated eighth edition offers:
•an expanded focus on organizational activities, with two new chapters that provide greater insight into organizational culture and change, and customer engagement;
•fresh case study material with a range of examples drawn from around the world;
•further resources via a companion website, including a fully updated Instructor's Manual and new interactive quiz questions for students.

---

Chapter 1
Cultural anthropology and global business

---

Chapter objectives:

1 Discuss some of the complex interconnectedness of world economies and cultures.

2 Explain how the insights, theories, and methods of cultural anthropology have been applied to global management, negotiations, and marketing.

3 Analyze why cross-cultural communication sometimes gets short-circuited in spite of our best intentions.

4 Identify how culture is acquired through learning, influences our biological processes, and is constantly undergoing change.

5 Distinguish between ethnocentrism and cultural relativism and how each influences the conduct of global business.

Introduction: global connections

In little more than two decades, the world has become increasingly more interrelated. To illustrate, computer parts manufactured in six different countries are assembled in Malaysia before being transported by a Dutch freighter and sold to a Russian entrepreneur. Since joining the World Trade Organization in 2001, China has become one of the largest (and certainly one of the most rapidly expanding) economies in the world, and its present day economic challenges pose a real threat to other world economies. Clothing for children’s dolls, sewn on Korean-made machines by Taiwanese workers, are assembled on dolls by Mexican workers according to U.S. specifications and then sold to parents in London and Chicago in time for Christmas. The American-based computer giant IBM has more than 430,000 employees working in some 40 different countries. Recently, a North Carolina man traveled to Bangkok, Thailand, to receive 22 dental crowns (and other dental work) by a Western-trained oral surgeon for less than one-third of what it would have cost back home. A German becomes the president of a Swedish kitchenware company, while an Indian university professor purchases (online) shares from a Swiss-based mutual fund for his retirement portfolio. The examples of the world becoming inextricably interconnected are simply too numerous to count.

To remain competitive in this rapidly globalizing world, most businesses, both here and abroad, have needed to enter into international/cross-cultural alliances. The overall consequences of this trend have been that more and more companies have engaged in activities such as joint ventures, licensing agreements, turnkey projects, and foreign capital investments. Since the end of the Cold War in the late 1980s, world economies have experienced dramatic changes; collectively these changes have been subsumed under the term globalization. This term has become one of the most overused and poorly understood words in the English language.

To be certain, countries and cultures have been interdependent for centuries, but when the Berlin Wall came down in 1989, the world began to change in some dramatic ways. Forces were unleashed that have had, and will continue to have, profound effects on all cultures and nations of the world. They include a new integration of world markets, technology, and information that is oblivious to both national and cultural borders. This post-Cold War globalization is driven by free-market capitalism and the questionable idea that the more a country opens up its markets to free trade, the healthier its economy will become. The economics of globalization involve lowering tariff barriers while privatizing and deregulating national economies. The North American Free Trade Agreement (NAFTA) and the European Union (EU) are two examples of the globalization of markets. The result of the globalization of markets is that goods, services, and ideas from all over the world are making their way into other cultures.

Box 1.1 A flatter world

What follows are just a few illustrations of how extensively the lives of all of the world’s peoples are interconnected:

• The percentage of the U.S. population that is foreign-born has grown from 4.7 percent in 1970 to 8 percent in 1990 and to 14 percent in 2016.

• Coca-Cola sells more of its product in Japan (population: 127 million) than it sells in the United States (population: 319 million).

• Internet users worldwide increased approximately 832 percent between 2000 and 2015.

• Direct foreign investments in the United States have increased from $50 billion in 1990 to $148 billion in 2013, an increase of 294 percent. And, in the opposite direction, U.S. direct investment abroad has grown from $46 billion in 1990 to $365 billion in 2013, an increase of 790 percent (Jackson 2013: 2).

• The nationality of many globally branded products is often difficult to pin down. For example, Stolichnaya vodka, originally made from grains grown in Russia, uses Latvian spring water, is filtered, blended, and bottled in Riga, the capital of Latvia, is sold throughout the world in bottles made in Poland and Estonia, and is sealed with caps made in Italy.

• Many high-skilled jobs formerly performed in the developed world are now being performed abroad, such as a CPA in Bangalore, India, filling out auditing forms for a company in Copenhagen; a mathematician in Mumbai, India, tutoring a high school student in London via email; or a Western-trained Thai surgeon in Bangkok performing a heart valve operation in Thailand (which costs over $200,000 in the United States) on a New Yorker for $10,500.

• More than half of U.S. franchise operators (e.g., Dunkin’ Donuts or KFC) are in markets outside the United States.

• Owing to a shortage of priests in North America, local Catholic parishes are sending mass intentions (requests for masses said for a sick or deceased relative) to India. Catholic priests in India (who have more time than North American priests and need the money) are now conducting the masses in Hindi on behalf of North American Catholics after receiving the requests via email. Americans are outsourcing not only manufacturing jobs, but also their religious rituals to India.

• Artistic styles and traditions also are being globalized. In recent years we have witnessed recording artist Paul Simon collaborating musically with Ladysmith Black Mambazo, a singing group from South Africa; Sting recording fusion music with Cheb Mami from Algeria; and Jaz Coleman, lead singer with a British rock group, collaborating with Maori singer and poet Hinewehi Mohi.

At the same time that world trade barriers are falling, a concomitant revolution is going on in the world of information technology (IT). In the mid-1980s, only a handful of people in the world could operate a computer. Today, computers are as common in the home as the radio was in the 1940s. Moreover, the development of digitization, fiber optics, satellite communication, and the Internet now enables people to communicate with one another instantaneously. With the advent of e-commerce, anyone with a good product, a computer, a telephone, access to the Internet, a website, and a FedEx account can become a potential entrepreneur. Globalization has encouraged the participation of large numbers of new players in the world market. It is now possible to enter the global economy virtually overnight, with very little capital outlay, and become a global competitor by the next afternoon.

Indeed, the nation-state of the twenty-first century sometimes plays second fiddle to the powerful forces of the highly integrated global economy. During the early summer of 2002, India and Pakistan, both with nuclear capabilities, were on the brink of war over the issue of Kashmir. The two countries were rattling their sabers, as the leaders of the United States and Western Europe tried to bring the two parties back from the brink. In the end, the de-escalation of hostilities between India and Pakistan was brought about by pressure exerted by the IT industry—not the U.S. government (which has more military firepower than the next 15 most powerful nations).

Since the early 1990s, the global revolution in IT has had an enormous impact on the Indian economy, accounting for 40 percent of India’s gross domestic product. Drawing upon the large tech-savvy Indian population, many of the world’s largest companies (including American Express, Motorola Solutions, Siemens, Shell, Nike, Sony, and General Electric) have their back rooms and research facilities in India. If you lose your luggage anywhere in the world, it will likely be tracked down by an Indian techie in Bangalore (India’s Silicon Valley). Accounting, inventory control, payroll, billing, credit card approval, and customer service, among other functions, for many of the world’s largest corporations are electronically managed by highly skilled engineers, computer scientists, and information technicians in India. With India so intimately involved in the IT lifeblood of so many large corporations, the possibility of India going to war could seriously disrupt the world’s economy. In the final analysis, it was the powerful international corporations that convinced the Indian government to disengage with the Pakistanis under the threat of taking their IT business elsewhere. Thus, in the words of Thomas Friedman (2002: 13), “in the crunch, it was the influence of General Electric, not General [Colin] Powell, that did the trick.”

The perspective of cultural anthropology

Cultural anthropology seeks to understand how and why contemporary peoples of the world differ in their customs and practices and how and why they share certain similarities. It is, in short, the comparative study of cultural differences and similarities found throughout the world. But learning about the wide range of cultural variations serves as a check on those who might generalize about “human nature” solely on observations from their own society. It is not at all unusual for people to assume that their own ways of thinking and acting are unquestionably rational, “natural,” or “human.”

Consider, for example, the nonverbal gesture of negation, shaking the head from side to side, found in certain parts of the world. In parts of India, people use this very same gesture to communicate not negation but affirmation. In fact, there are any number of ways of nonverbally communicating the idea of negation, all of which are no more or no less rational than shaking the head from side to side. The study of cultural anthropology provides a look at the enormous variations in thinking and acting found in the world today and how many different solutions have been generated for solving the same set of human problems. Moreover, the cross-cultural study of the workplace and consumers by anthropologists can help global corporations craft solutions to problems of working together as efficiently as possible.

Anthropology does more than simply document the enormous variation in human cultures. As a social science, anthropology works to identify, describe, and explain the commonalities. For example, for any society to continue to exist over the long run, it must solve the basic problem of how to pass on its total cultural heritage—all the ideas, values, attitudes, behavior patterns, and so on—to succeeding generations. Should that complexity of cultural traditions not be passed on to future generations, that society will very likely not survive. Saudis have solved this problem by developing Koranic schools, which pass on the cultural traditions to the younger generations; in parts of West Africa, “bush schools” train young adolescents to become adults; in our own society, we rely on a formal system of compulsory education, complete with books, desks, and teachers. Although the details of these educational systems vary enormously, all societies in the world—today or in the past—have worked out a system for ensuring that new generations will learn their culture. Thus, the science of anthropology attempts to document the great variations in cultural forms while looking for the common strands that are found in all cultures.

In addition to being comparative, the anthropological perspective has several other distinctive features. First, to a greater extent than other social scientist, anthropologists analyze cultural differences and similarities firsthand. Rather than relying on secondary information gleaned (often by other people) from questionnaires, interviews, and census reports, cultural anthropologists use participant observation as a major method for collecting culturally comparative information. When cultural anthropologists use participant observation, they share in the everyday activities of the local people while making systematic observations of people eating, working, playing, conversing, dancing, exchanging goods, fighting, or any other activity that might illuminate their cultural patterns.

A second distinguishing feature of anthropology is holism in that it is concerned with (1) all peoples throughout the world and (2) many different aspects of human experience, including family structure, marital regulations, house construction, methods of conflict resolution, means of livelihood, religious beliefs, language, space usage, and art among many others. And finally cultural anthropology, unlike other social science disciplines, emphasizes viewing another culture from the perspective of an insider. For decades, anthropologists have made the distinction between the emic (insider) approach (describing another culture in terms of the categories, concepts, and perceptions of the people being studied) and the etic (outsider) approach (in which anthropologists use their own categories and concepts to describe the culture under analysis). For the last half century, there has been an ongoing debate among anthropologists as to which approach is more valuable for the scientific study of comparative cultures.

Thus, cultural anthropologists are trained to analyze the sociocultural organizations of various types of societies. In the early twentieth century, cultural anthropologists devoted their energies to the analysis of small-scale, technologically simple, and usually non-Western peoples. Over the last half century, however, cultural anthropologists have become more involved in the study of complex societies. Yet whether dealing with simple or complex societies, the focus of cultural anthropologists has been the comparative study of sociocultural organizations wherever, or in whatever form, they may be...