Culture on Business

By Sarah Jones,2014-07-07 19:20
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Culture on Business

Culture has been described as an elusive concept, that is ‘‘a fuzzy, difficult-to-define

    construct’’ (Triandis et al., 1986), capturing the essence of the problems many have had in trying to definitively explain culture. Subsequently, Hofstede and Bond (1988) gave us a reasonable way to view culture as ‘‘the collective programming of the mind that distinguishes the members of one category of people from those of another.’’ This programming tends to be securely established in an individual by adolescence, but does evolve from generation to generation (Ajiferuke & Boddewyn, 1970). Thus, culture may be viewed as ‘‘those beliefs and values that are widely shared in a specific society at a particular point in time’’ (Ralston et al., 1993). Religion, proximity, history, and education

    are factors that have been identified as important in defining a culture (Harris, 1979; Ronen & Shenkar, 1985).

    In our study, we will focus upon the Eastern and Western cultures. We selected the East-West contrast because of the importance of the Pacific Rim and industrialized Western nations to international business, and because of the substantial differences between these cultures (Ronen & Shenkar, 1985). While a range of behaviors certainly exists within each of these culture groups, important constants within the Eastern and Western cultures also differentiate them from one another (Bontempo, Lobel, & Triandis, 1990; Triandis et al., 1986, 1990). A primary influence, if not the primary influence, within the Eastern culture is Confucianism

    (Engardio, 1995; Pye, 1985). Confucius lived approximately 2,500 years ago, and his teaching of the importance of society, the group, and hierarchical relationships within a society has endured through the ages. Likewise, Buddhism and Taoism, the primary religions of the Eastern cultures, place similar emphasis on the importance of the group in society (Dollinger, 1988; Waley, 1938). In contrast, the Judeo-Christian religion has been the primary influence in the West. The Protestant Work Ethic epitomizes the Judeo-Christian emphasis on personal achievement and individual self-worth (Furnham, 1984; Wayne, 1989). Thus, a primary contrast underlying the difference between Eastern and Western cultures is the relative focus on the goodof- the-group (Collectivism) in the East versus the good-of-the-individual (Individualism) in the West.

    General view on influence of national culture difference to international business operations

    The study on this particular issue is also based on the methodology of literature review. It is noticed that cross-national joint ventures have been reported to suffer from communication, cooperation, commitment, and conflict resolution problems caused by partners or employees’ value and behaviour differences, which in turn cause interaction

    problems that adversely influence joint venture performance [4]. Values and behavioural differences between culturally distant partners influence interpretation and responses to strategic and managerial issues, compounding transactional difficulties in international joint ventures [5].

    Lane and Beamish [] state that the problems in international joint ventures often stem from the unobtrusive influence of national culture on behaviour and management systems that often create unresolved conflicts. For example, cooperation-generating mechanisms vary between individualist and collectivist cultures because of the differences in their instrumental and expressive motives []. In the context of international joint ventures, diversity along each cultural characteristic can be instrumental in erecting significant barriers to effective cooperation [].

    Commitment generating mechanisms are also different among different cultures, and cultural differences make it difficult to generate commitment between partners in joint ventures []. For example, Cullen et al. [] found that while both U.S and Japanese partners related their level of commitment to perceived benefits (satisfaction and economic performance), they differed in their perception of satisfaction, The Japanese partners perceived long-term organizational performance as an indicator of satisfaction and emphasized the nature of relationships as an important factor for commitment, while the U.S. partners were concerned with more immediate results. Further, on the assumption that personal relationships based on trust would lead to commitment, the Japanese managers, in contrast to the Western managers, preferred to personalize business practices and de-emphasize formal contracts []. Overall, cross-cultural partners seek commitment based on different expectations and mechanisms.

    Shenkar and Zeira [] argued because priorities and expectations of their parent firms may be different, managers of joint ventures are prone to role conflict. Methods of resolving conflicts may also vary across different cultures []. For example, whereas American managers prefer to use direct and confrontational legal tactics in dealing with others firms when other methods fail, Japanese executives prefers to be flexible in responding to unfolding problems and to avoid using formal, detailed contracts that stress strict performance enforcement []. Research also suggests that conflict resolution methods cannot be applied effectively from one culture to another. Johnson, Sakano and Onzo [] studied the role of cultural differences in conflict resolution between U.S and Japanese firms and found that aggressive influence, as practiced in western channels, is not effective with the Japanese counterparts.

    Overall, the underlying uncertainty due to cultural differences makes it costly to negotiate and transfer management practices and firm-specific technologies. Since national culture is perceived to be the fundamental differential factor in an international joint venture, even superficial differences might result in the partners choosing national culture as a primary form of identity []. A salient social identity leads to accentuation of similarities and differences between partners, perhaps causing individual differences to be associated with nationality []. Accordingly, international joint ventures partners from different national

    cultures experience greater difficulty in their interactions [], which would adversely influence joint venture business and management strategy,

    From all of these points of view, we can conclude the hypothesis that national culture difference does have negatively influence to the international business operations. 3 Conventional influence of cultural difference

    In the context of open market, the merging of two or even more corporations is a natural trend of capital concentration and centralization. If the market is completely opened without the administration of governments or powerful organizations, the industrial monopoly is the destination of business society. However, to some extent, resource integration is a positive factor to the development of open market which could accelerate the development and implementation of new techniques as well as it is also able to bring us the advantages of resources sharing.

    Western countries are the area where the capital society has developed for more than 400 years. Meanwhile, the merging of corporations is a phenomenon which appears along with the rapid developing of capital society. According to Marx, capital has the tendency for concentration and centralization the hands of richest capitalists. He concluded that this phenomenon derives from the increasing concentration and centralization of capital. Increasing concentration of capital occurs as individual capitalists accumulate more and more capital, thereby increasing the absolute amount of capital under their control. The size of the firm or economic unit of production is increased correspondingly, and the degree of competition in the market tends to be diminished. Obviously, this happens under the assumed model of perfectly competitive markets with a large number of small firms in each industry.

    In the latter half of the 19th century, people achieved a magnificent progress in science and technology realm which accelerate the development of social productive forces. This trend provided the conditions for some representative industries to carry out large scale merging and acquisition, such as railway, metallurgy industry, petrochemical engineering, mechanical engineering and so on. By the power of capital concentration and centralization, large amount of enterprises composed together and formed giant companies in almost every industry. In 1899, the peak period of American merging and acquisition, there were 1208 merging and acquisition cases which is 4 times to 1896’s.

    The related total capital arrived 2.26 billion dollars. In the peak period of merging and acquisition from 1895 to 1904, 75% of companies vanished because of merging and acquisition in America. The Great Britain, which is the birthplace of the Industrial Revolution, also had an increase on merging and acquisition activities. From 1880 to 1981, 665 medium and small enterprises composed 74 large enterprises by merging and acquisition, which monopolized primary industries. The subsequent capitalist country Germany finished their industrial revolution lately. However, enterprise merging and acquisition developed quickly in this country as well. In 1875, the first cartel appeared in Germany, and it increased to 500-600 in 1911, which controlled the primary industries of German national economy. In this wave of enterprise merging and acquisition, the market

share of the large companies increased rapidly in all the industries, which formed a large

scale of monopoly.

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