03 - Informal Institutions: Culture, Religion and Languages

Question 1

Informal institutions

Answer 1

• tell individuals in a society what behaviors are considered right and proper, and what would be unacceptable
• come from socially transmitted information and are part of the heritage that we call culture
  
  • Typically, cultures have no clearly defined origin, but have evolved over time
  • Those within a society tend to perceive their own culture as “natural, rational and morally right” (ethnocentrism)
  • Culture can be seen as the collective programming of the mind which distinguishes the members of one group or category from another

Question 2

Culture - definition by Barnouw 1985

Answer 2

A way of life of a group of people, the configuration of all the more or less stereotyped patterns of learned behavior, which are handed down from one generation to the next though means of language and imitation

Question 3

Culture - definition by Hofstede 1997

Answer 3

Culture is a collective phenomenon that is shared with people who live or lived within the same social environment, which is where it was learned. It is the collective programming of the mind which distinguishes the members of one group or category of people from another

Question 4

2 ways to systematically understand cultural differences

Answer 4

• cultural cluster - dimensions of culture

Question 5

Cultural dimensions (Hofstede)

Answer 5

1. Power Distance 2. Individualism vs Collectivism 3. Masculinity versus Femininity 4. Uncertainty avoidance 5. Long-term orientation

Question 6

Cultural Dimensions (Hofstede): Power Distance

Answer 6

Power Distance is the extent to which less powerful members expect and accept that power is distributed unequally

Question 7

Cultural Dimensions (Hofstede): Individualism vs Collectivism

Answer 7

Individualism refers to the perspective that the identity of an individual is fundamentally his or her own. Collectivism is the idea that the identity of an individual is primarily based on the identity of his or her collective group

Question 8

Cultural Dimensions (Hofstede): Masculinity vs Femininity

Answer 8

Masculinity vs Femininity dimension refers to the relative importance of values traditionally held by men and women

Question 9

Cultural Dimensions (Hofstede): Uncertainty avoidance

Answer 9

Uncertainty refers to the extent to which members in different cultures accept ambiguous situations and tolerate uncertainty

Question 10

Cultural Dimensions (Hofstede): Long-term Orientation

Answer 10

Long-Term Orientation emphasizes perseverance and savings for future betterment

Question 11

Low-context culture

Answer 11

A culture in which communication is usually taken at face value without much reliance on unspoken context

Question 12

High-context culture

Answer 12

A culture in which communication relies a lot on the underlying unspoken context, which is as important as the words used

Question 13

World’s largest languages in ters of the number of native speakers

Answer 13

• Chinese is the world’s largest language in terms of the number of native speakers. English is a distant seccond, followed by Hindi and Spanish

Question 14

Language barriers

Answer 14

• communication barriers between people who speak different mother tongues and lack a shared language in which they are fluent
• to facilitate communication, many MNE’s have adopted an (official or unofficial) corporate language
• English often emerges as the default language of international communication, thus becoming a global business language. This is known as lingua franca.

Question 15

Religion

Answer 15

• Religion is a major manifestation of culture, and it is the source of some of the differences in norms and values
• Knowledge about religions is crucial even for nonreligious managers
• Religious differences, more than any other differences, tend to raise emotions - and thus are challenging to handle for businesses
• Showing respect for other religions and associated values with help to avoid conflict and creating a basis for doing business

Question 16

Religious beliefs and activities affect business through:

Answer 16

• religious festivals
• daily and weekly routines -
• activities and object with symbolic values - positive or negative

Question 17

Ethics

Answer 17

• Ethics refers to the principles, standards and norms of conduct governing individual and firm behavior
• Ethics are not only an important part of informal institutions, but are also deeply reflected in formal laws and regulations
• Managing ethics overseas is challenging because what is ethical in once country may be unethical elsewhere

Question 18

Ethical relativism

Answer 18

• A perspective that suggest that all ethical standards are relative
• Follows the cliché “When in Rome, do as the Romans do”

Question 19

Ethical imperialism

Answer 19

• The absolute belief that “there is only on set of Ethics and we have it”

Question 20

Corruption

Answer 20

The abuse of public power for private benefits, usually in the form of bribery

Question 21

Texas Instrumens guidelines for employees concering bribery

Answer 21

• Reciprocity Test: Ask this question: Based on your knowledge of TI’s policy and culture, would TI under similar circumstances allow you to provide a TI business partner a gift of an equivalent nature? If the answer is now, then politely refuse the offer
• Raise-Eyebrow-Test: Ask this question: Would you “raise eye-brow” or feel uncomfortable in giving or receiving the gift in the persence of others in the work area? Would you feel comfortable in openly displaying the gift you are offering or receiving? Would you feel embarassed if it were seen by other TI business partners or by your colleagues/supervisors?