Chapter 3: Informal Institutions

Question 1

Culture

Answer 1

is the collective programming of the mind that distinguishes the members of one group
or category of people from another.

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.’ Hofstede 1997

2 ways to systematically understand cultural differences:
– Cultural cluster (The Cluster Approach Groups Countries that Share
Similar Cultures Together as one Cluster.)
– Dimensions of culture

Question 2

Cultural Dimensions

Answer 2

1. Power distance is the extent to which less powerful members expect and accept that power is
   distributed unequally.
2. 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.
3. Masculinity versus femininity dimension refers to the relative importance of values
   traditionally held by men and women.
4. Uncertainty avoidance refers to the extent to which members in different cultures accept
   ambiguous situations and tolerate uncertainty.
5. Long-term orientation emphasizes perseverance and savings for future betterment.

Question 3

High-Context Cultures vs. Low-Context Cultures

Answer 3

Low-context culture: A culture in which communication is usually taken at face value
without much reliance on unspoken context.
• High-context culture: A culture in which communication relies a lot on the underlying
unspoken context, which is as important as the words used.

Question 4

Ethics (relativism/imperialism)

Answer 4

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 one country may be
unethical elsewhere.

Ethical relativism
• A perspective that suggests that all ethical standards are relative.
• Follows the cliché, ‘When in Rome, do as the Romans do’.

Ethical imperialism
• The absolute belief that ‘there is only one set of Ethics and we have it’

Question 5

Preparing for Cultural Differences

Answer 5

• Develop cultural intelligence in terms of awareness knowledge and skills, and invest in learning foreign languages
• Beware of subtle shift in informal rules over the time, and of inconsistencies between formal and informal rules
• Respect Cultural differences –> Most important rule

Question 6

Five Profiles of Cultural Intelligence

Answer 6

The Local: A person who works well with people from similar backgrounds but does not work effectively with people from different cultural backgrounde

The Analyst:
A person who observes and learns from others and plans a strategy for interacting with people from different Backgrounds

The Natural:
A person who relies on intuition rather than on systematic learning style when he interacting with people from different cultural backgrounds

The mimic:
A person who creates a comfort zone for people from different cultural backgrounds by adopting their general posture and communication style. This is not pure imitation which might be regarding as mocking.

The Chameleon:
A person who may be mistaken as a native of the foreign country. He/ She may achieve results that natives cannot due to his her insider skills and his/her outsider perspective. This is very rare.