High-Low Context
This short essay will take a look at an informal institution, culture and see how it plays and important part in success and failures of firm’s around the world. The success and failure can be explained using a core perspective named institution-based view, which was introduced as part of the concept of global business. Formal institution includes laws, regulations, and rules (also as political systems, legal systems, and economic systems), and informal institution includes cultures, ethics, and norms. Both come under the main umbrella of institution based view of the unified framework model for global business. (Peng, 2014)
Informal institution governs individual and firm behavior in various countries. When formal institutions
The normative pillar refers to how the values, beliefs, and actions of other relevant players, together known as norms, influence the behavior of individuals and firms. (Peng, 2014)
Out of the informal institutions, culture probably is the most frequently looked at when doing global business. Culture refers to people behavior, and beliefs which differ from each other group. Four major manifestations of culture are language, religion, social structure, and education. It is seen that various cultures are based out of the grouping of any of those four components. For example, it is seen that that Chinese culture is different from Russian culture. Also, cultures are different based on social stratification and mobility. Next section discussion on how cultures systematically differ from each
Hence, firms do enough preparation when doing business between countries across clusters. People and places differ, and hence in global business the managers need to be well aware of the cultural differences in the areas they are concerned with. They need to develop skills to efficiently interact with other cultures when doing business. For example, a Japanese manager needs to know how to interact with a manager in the United States, and vice versa to ensure a smooth interaction between those business divisions. Decent awareness of different cultures helps managers to interact without hurting the values, relationship of people from other cultures. They will be able to effectively judge by including their behaviors as well when interpreting communication with a manager from different culture. With decent cultural awareness managers will be able to take better decisions without biasing to a cultural side, i.e. manager will be able to take intelligent decisions by considering all the nuances of the other culture. (Rugman & Collinson,
This theory explains the relationship between "Institutions" and "Individual actions" are aground in "practical reasoning" to which the individual connect with, and adjust the accessible institutional sources to devise a game-plan. Sociological institutionalists contend that associations regularly grasp another institutional practice, not on the grounds that it advances the methods closes effectiveness of the association but since it moves forward the "social legitimacy" of the association or its members. At the end of the day, association's affiliations get a handle on specific institutional structures or practices in light of the fact that a definitive is generally esteemed inside a more extensive social environment. Institutions have authority and power which influences the individual's activity. Eventually, this is an issue about the wellsprings of social power. A divide of the sociological institutionalists highlights the route in which a cutting edge condition of opening up administrative degree setting numerous practices on societal associations by "public fiat".
Culture is defined in many ways. It is the belief, customs, arts, and way of life for a particular society, group, place, or time (Culture, n.d.). Along with defining culture there are characteristics that come along with each and every culture you come across. There are five basic characteristics that all cultures share and differentiate from and they are learning, shared, symbols, integrated, and dynamic. “What sets worlds in motion is the interplay of differences, their attractions and repulsions. Life is plurality, death is uniformity. By suppressing differences and peculiarities, by eliminating different civilization and cultures, progress weakens life and favors death. The ideal of a single civilization for everyone, implicit in
Culture can be defined as the way of life of a particular people, shown in their behaviors and habits, their behaviors and habits toward each other, and their moral and/or religious beliefs. Many different aspects can be used when trying to define what makes up a culture of a particular group of people. The Center for Advance Research on Language Acquisition describes culture as shared patterns of behaviors and interactions, cognitive constructs, and understanding that are learned by socialization. In many countries, the culture can be derived from many different groups of people in their country. A country can be comprised of the cultures of many different groups of people making the culture of an entire country very diverse. Culture is formed
There are many things that influence our behavior from internal influences to social norms. Social norms are implicit or explicit rules that govern how we behave in society (Maluso, class notes). Social norms influence our behavior more than any of us realize but we all notice when a norm has been broken. Breaking a social norm is not an easy task and often leads us feeling uncomfortable whether we broke the norm ourselves or witnessed someone else breaking it. Sometimes however, you just have to break a norm to see what happens.
In order to be able to analyze cultural differences, one must first know the definition of culture. Culture is defined as the customary beliefs, social forms, and material traits of a racial, religious, or social group (Merriam-Webster). Being that there are so many different cultures across the world, John Ladd has given us two theses to analyze in attempt to understand cultural differences. Understanding cultural diversity is an important way in understanding how different organizations operate through their set of beliefs. I am going to explain what the diversity and dependency theses are. Then I am going to assume that the premises are true and defend my position, I will also assume that the premises are false and defend my position again. Finally, I will conclude my paper on cultural differences.
Formal institutions, both underlying and specific, provide the context within which firms operate. Property rights and contract enforcement can be seen as “market creating” institutions, without which exchange cannot occur (Rodrik 2003).
Culture constitutes common characteristics of a particular group of people or a society such as behaviors, beliefs, objects, and any other characteristics of such a people. It is thus through culture, that groups of people define their unique characteristics that conform to their shared values and contribute towards building the society as sociologist suggests. Therefore, culture includes different societal aspects such as the customs, language, norms, values, tools, rules, products, technologies, morals, institutions, and organizations. The terms organizations and institutions will thus refer to the set of rules associated with specific activities within the society. For instance, healthcare, education, security, family, religion, and work
Since the end of World War II, international operations have become a reality for an increasing number of corporations. Many of these initial efforts began as simple export schemes to sell goods overseas to supplement domestic sales. Over time, however, international operations have become increasingly more complex: from joint-ventures to purchasing existing foreign firms to ‘green-field’ start-ups. While export operations usually require no more than extended business trips overseas, more complex international operations demand long-term assignments of key personnel outside their home-country. What would normally be considered routine business transactions in the home country can become very complicated when they are conducted between individuals and organizations from different cultures. In this essay we will examine how this cultural gap can affect international business and joint ventures.
Understand and heed cultural differences - cultural variables in transacting international business. (1991, January 28). Business America. FindArticles.com., Retrieved March 20, 2009, from http://findarticles.com/p/articles/mi_m1052/is_n2_v112/ai_10412261/pg_4?tag=content;col1
In recent decades, the process of globalization has accelerated and the world economy has become increasingly interdependent. The rise in the number of businesses that extensively operate in more than one foreign country, which is known as multinational corporations, plays an important role in the ongoing procedure of globalization. The United Nations has reported that multinational corporations hold one-third of world’s productive assets and control 70 percent of world trade (Schermerhorn et al., 2014). As there is a considerable growth in international businesses, worldwide economy is becoming more highly competitive. The global economy not only offers great opportunities for multinational enterprises but also on the other hand, creates many difficulties for them. Therefore, success in the large-scale economy requires a number of elements. One of the major determinants is dependent on global managers. In the operation of organizations, managers may encounter different international management challenges that restrict their business development. These challenges often include issues associated with the host countries, the global workforce diversity management, management across cultures, difficulties in competitive global business environment as well as in the process of global planning and controlling. This essay is going to discuss the above international management challenges in a broad sense and giving illustration in aspects of each challenge.
Sonderberg, A-M & N Holden. (2002), Rethinking cross cultural management in a globalizing business world' International Journal of Cross Culture Management 2(1): 103-121
To be successful in today’s global market, managers and leaders need to understand more than just technical skills. Managers and leaders should also understand globalization and organizational behavior. Globalization is the tendency of businesses, technologies, or philosophies to spread throughout the world, or the process of making this happen. The global economy is sometimes referred to as a globality, characterized as a totally interconnected marketplace, unhampered by time zones or national boundaries (Search CIO). Organizational behavior is a field of study that studies individuals groups, and structure. Organizational behavior applies the knowledge gained about individuals, groups, and the effect of structure on behavior in order to make organizations work more effectively (Robbins,2014).Gaining an understanding of globalization and its effect on organizational behavior is crucial to interacting effectively in the modern global economy. Globalization affects an organization’s behavior in several ways like stimulating hyper competitive pricing for a product or service, perpetuating continuous operations and communicating around the clock and globe, capitalism is replacing governmental control and organizations are no longer constrained by borders, and corporations are becoming more heterogeneous and adapting to people who are from different nationalities and cultures. To be successful in a global economy, professionals should have a thorough knowledge of sociology, psychology, communication, and management.
Culture refers to the collection of values, customs, and attitudes of a group of people belonging to certain area, country or a place. It shapes individuals’ habits, knowledge, experiences, and their perspectives. It is important to avoid ethnocentricity since it creates a bias in which, one views their own culture to be superior over other cultures. In the age of globalization, such single-minded bias can prove to be costly as it can lead to undermining positive characteristics of other cultures. This in return can create negative relationship with citizens from other cultures as well as their governments.
With the rapid growth in globalization there are a number of firms who have taken their businesses abroad. Their challenge, cross cultural management and communication. An effective communication strategy begins first with understanding who the sender of the message is and who the receiver of the message is. Many companies have realized this and offer training in the different cultures to help better facilitate communication between leaders (Cross-Cultural Communication, mindtools.com). Without this basic understand between sender and receiver it can be very difficult for companies of multicultural to even begin to communicate. The second important understanding is that leaders must demand a cultural tolerance of acceptable behavior between cultures to facilitate effective communication (Cross-Cultural Communication, mindtools.com).
Before I begin this endeavor of exploring various cultures and their diverse components and differences, particularly that which concerns the culture I most indentify with and that which I wish to explore a bit further, I must first define briefly what culture mean. Culture is the set of ideas, behaviors, attitudes, and traditions that exist within large groups of people. These ideas, behaviors, religious beliefs, or the lack thereof, and governing methodology are transferred from generation to generation and are usually resistant to change as time elapse.