Digital class 10. Socio Cultural Factors – Part 1

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Socio Cultural Factors


Welcome to the tenth session of the International Socio-Economic Context Course. This class starts the review of the Sociocultural Factors Chapter that aims for the comprehension of how societal, political and cultural elements have an impact on MNCs activities..

In this session, the importance of norms related to society, politics and culture of one country might specially affect a foreign organization. Also, a discussion of how the attitudes and beliefs about crucial concepts such as time, achievement, work, change, and occupational status builds a collective perception and environment in which a firm operates.

So, by the end of this class you will be able to recognise the relevance of common elements of a national environment that affects the MNC operations, and specially the personal perceptions shared by a local community that contribute to the building of a business operation environment.

Content developement

Sociocultural Factors and International Business

Ajami., & Goddard J. (2015), state that MNCs operate in different host countries around the world and have to deal with a wide variety of political, economic, geographical, technological, and busi- ness situations. Moreover, each host country has its own society and culture, which are different in many important ways from almost every other society and culture, although there are some commonalities. Although society and culture do not appear to be a part of business situations, they are actually key elements in shaping how business is conducted, from what goods are produced and how and through what means they are sold, to the establishment of industrial and management patterns and the determination of the success or failure of a local subsidiary or affiliate.

Society and culture influence every aspect of an MNC’s overseas business, and a successful MNC operation, whether it involves marketing, finance, operations, informa- tion systems, or human resources, has to be acutely aware of the predominant attitudes, feelings, and opinions in the local environment. Differences in values and attitudes between the management at the parent offices and expatriate managers at the subsidiary or affiliate level, on the one hand, and local managers and employees, on the other, can lead to serious operational and functional problems, which arise not because there are individual problems but because of the important differences between the societies and cultures. Society and culture often mold general attitudes about fundamental aspects of life, such as time, money, productivity, and achievement, all of which can differ widely across countries and lead to differing expectations between the management in the home office and local employees of subsidiaries and affiliates.

While some sociocultural differences are obvious, others are relatively subtle though equally important. It is often difficult for international managers to catch on to these subtle differences if they have not lived or worked in cultures other than that of the home country. Cultural dif- ferences can be profound, but expatriate managers who make some attempt to understand them can ensure that these gaps do not materially affect the performance of business.

MNCs have realized, sometimes through costly blunders, that sociocultural factors are vital ingredients that make up the overall business environment and that it is essential to appreciate these differences and their influences on business before attempting to set up an operation in a host country.

Society, Culture and Sociocultural Forces

There are many definitions of culture. In general, culture can be defined as the entire set of social norms and responses that dominates the behavior of a population and makes each social environment different. Culture is the conglomeration of beliefs, rules, techniques, institutions, and artifacts that characterize a human population. It consists of the learned patterns of behavior common to members of a given society—the unique lifestyle of a particular group of people.

The various aspects of culture are interrelated; culture influences individual and group behavior and determines how things are done. Features of culture include religion, education, caste structure, politics, language differences, and production.

Society refers to a political and social entity that is defined geographically. To understand society and culture, we must relate one to the other—hence the term “sociocultural.” To be successful in their relationships with people in other countries, international managers must study and understand the various aspects of culture.

How should one begin? With as broad a concept as culture, it is necessary to utilize some type of classification scheme as a guide to studying or comparing cultures. Table 9.1 outlines Murdock’s list of cultural universals that occur in all cultures. 

Table 1. Murdock’s list of culture universals.

While this schematic is limited by its one-dimensional approach, it provides an initial guide and checklist for the international firm and manager. For example, the international firm sell- ing contraceptives must be aware that it is dealing with the family customs, population policy, and sexual restrictions of different cultures. Since many individuals base their decisions regarding contraception on religious beliefs, the seller must also consider this aspect of various cultures in the plan.

Students often experience cultural differences when they first travel abroad. The things that cause cognitive dissonance during these trips often represent the things typically taken for granted at home. These things taken for granted often help to identify elements of culture. Students should keep in mind that observing culture can often resemble ob- serving an iceberg. What lies beneath the surface may be more meaningful than things visible to the naked eye.

Elements of Culture

The number of human variables and different types of business functions preclude an exhaustive discussion of culture here. Instead, we have broken down the broad area of culture into some major topics to facilitate study.

Attitudes and Beliefs

In every society there are norms of behavior based on the attitudes, values, and beliefs that constitute a part of its culture. The attitudes and beliefs of a culture, which vary from country to country, influence nearly all aspects of human behavior, providing guidelines and organization to a society and its individuals. Identifying the attitudes and beliefs of a society, and how or whether they differ from one’s own culture, will help the business- person more easily understand people’s behavior.

Attitudes about time

Everywhere in the world people use time to communicate with one another. In inter- national business, attitudes about time are displayed in behavior regarding punctuality, responses to business communications, responses to deadlines, and the amounts of time that are spent waiting in an outer office for an appointment. For example, while Ameri- cans are known to be punctual, other cultures give less importance to being on time. In terms of business communications, Japanese companies may not respond immediately to an offer from a foreign company. What a foreign company may see as rejection of an offer or disinterest may simply be the lengthy time the Japanese company takes to review the details of a deal. In fact, the US emphasis on speed and deadlines is often used against Americans in foreign business dealings in which local business managers have their own schedules.

Attitudes about work and leisure

Most people in industrial societies work many more hours than are necessary to satisfy their basic needs for food, clothing, and shelter. Their attitudes toward work and achieve- ment are indicative of their view of wealth and material gain. These attitudes affect the types, qualities, and numbers of individuals who pursue entrepreneurial and management careers as well as the way workers respond to material incentives.

Many industrial psychologists have conducted research in this area to determine what motivates people to work more than is necessary to provide for their basic needs. One explanation is the Protestant ethic, which has its basis in the Reformation, when work was viewed as a means of salvation and people preferred to transform productivity gains into additional output rather than additional leisure. Europeans and Americans are typically considered to adhere to this work ethic because they generally view work as a moral virtue and look unfavorably on the idle. In comparison, in places where work is considered necessary only to obtain the essentials for survival, people may stop working once they obtain the essentials.

Today, few other societies hold to this strict basic concept of work for work’s sake, and leisure is viewed more highly in some societies than in others. It has been argued that many Asian economies are characterized by limited economic needs that reflect the culture. Therefore, it is expected that if incomes start to rise, workers would tend to re- duce their efforts, so personal income would remain unchanged. The promise of overtime pay may fail to keep workers on the job, and raising employees’ salaries could result in their working less, a phenomenon that economists have called the backward-bending labor supply curve. In contrast, the pursuit of leisure activities may have to be a learned process. After a long period of sustained work activity with little time for leisure, people may have difficulty in deciding what to do with additional free time.

These attitudes, however, can change. The demonstration effect of seeing others with higher incomes and better standards of living has motivated workers in such cultures to put in longer hours to improve their own financial status and material well-being. Ad- ditionally, attitudes about work are shaped by the perceived rewards and punishments of the amount of work. In cultures where both rewards for greater amounts of work and punishments for lesser amounts of work are low, there is little incentive for people to work harder than absolutely necessary. Moreover, when the outcome of a particular work cycle is certain, there is little enthusiasm for the work itself. Where high uncertainty of success is combined with some probability of a very positive reward for success, one finds the greatest enthusiasm for work.

Attitudes about achievement

Cultural differences in the general attitude toward work are also accompanied by significant national differences in achievement motivation. In some cultures, particularly those with highly stratified and hierarchical societies, there is a tendency to avoid personal responsibility and to work according to precise instructions that are received from supervisors and followed to the letter. In many societies, especially where social security is low and jobs are prized, there is both a tendency to avoid taking risk and little innovation in work or production processes. In such cultures, the prospect of higher achievement is not considered attractive enough to warrant taking avoidable risks. In many industrial societies, however, attitudes toward personal achievement are quite different. Personal responsibility and the ability to take risk for potential gain are considered valuable instru- ments in achieving higher goals. In fact, in many cultures the societal pressure to achieve is so intense that individuals are automatically driven to attempt ambitious goals.

Attitudes among workers and managers often influence the types of management that has to be utilized to achieve corporate goals. In a culture that emphasizes risk-taking, personal responsibility, and individual decision-making, a decentralized management s

ystem would be appropriate. In a culture where there is a tendency to put in only ad- equate amounts of work and where achievement is not a valued personal attribute, the company will follow a more centralized management system, with only limited delegation of decision-making authority.

Attitudes about change

The international manager must understand what aspects of a culture resist change, how those areas of resistance differ among cultures, how the process of change takes place in different cultures, and how long it will take to implement change. There are two conflict- ing forces within a culture regarding change. People attempt to protect and preserve their culture with an elaborate set of sanctions and laws invoked against those who deviate from their norms. Differences are perceived in light of the belief that “my method is right; thus, the other method must be wrong.”

These contradictory forces suggest the public’s awareness that the cultural environment is continually changing and that a culture must change in order to ensure its own continu- ity. In other words, to balance these attitudes, the manager must remember that the closer a new idea can be related to a traditional one when illustrating its relative advantage, the greater the acceptance of that new concept. Usually cultures with centuries-old traditions that have remained closed to outside influences are more resistant to change than other cultures. The level of education in a society and the exposure of its people to knowledge and the experience of other cultures is an extremely important determinant of its attitude toward change. The influence and nature of religious beliefs in a society also influence attitudes about change.

Attitudes about jobs

The type of job that is considered most desirable or prestigious varies greatly across dif- ferent cultures. Thus, while the medical and legal professions are considered extremely prestigious in the United States, civil service is considered the most prestigious occupation in several developing countries. The importance of a particular profession in a culture is an important determinant of the number and quality of people who seek to join that profession. Thus, in a country where business is regarded as a prestigious occupation, the MNC will be able to tap a large, well-qualified pool of local managers. On the other hand, if business is not considered an important profession, much of the country’s talent will be focused elsewhere.

There is great emphasis in some countries on being one’s own boss, and the idea of working for someone, even if that happens to be a prestigious organization, tends to be frowned on. In many countries, however, MNCs are able to counter the lower prestige of business as a profession by offering high salaries and other forms of compensation. Some MNCs, in fact, have succeeded in luring some of the best local talent away from jobs that are traditionally considered the most prestigious in those countries. In most cultures, there are some types of work that are considered more prestigious than others, and certain occupations carry a perception of greater rewards than others, which may be because of economic, social, or traditional factors. 

Does Religion Affect business?

foundation of a culture. Business can bring about modernization that disrupts religious traditions, and international business can conflict with holy days and religious holidays. Cultural conflicts in the area of religion can be quite serious. For example, an MNC would have problems with a subsidiary where employees traditionally enjoy a month-long religious holiday.

Religion can also impose moral norms on culture. It may insist on limits, particularly the subordination of impulse to moral conduct. Islamic finance is a variant of international business in Muslim countries that ban the assessment of risk and look unfavorably on excessive risk-taking or speculative endeavors, given their religious beliefs. Another example of business conflicting with religion is the development of a promotional campaign for contraceptives in any of the predominantly Roman Catholic countries.

In certain countries, religion may require its followers to dress in a particular manner or maintain a certain type of physical appearance, which may conflict with the MNC’s appearance and presentation norms. Certain products manufactured by the MNC or some ingredients used in manufacturing may be taboo in some religions. For example, beef and tallow are taboo in the Hindu religion and cannot be used as ingredients in soap manufac-turing in India. Similarly, pork products cannot be sold or used in manufacture in Muslim countries because pork is religiously impure according to the tenets of Islam.

In many religions, the general philosophy of life is completely different from that in the Western world. Some Asian religions, for example, teach that nothing is permanent and therefore the world is an illusion. To followers of such beliefs, time is cyclical— from birth to death to reincarnation—and the goal of salvation is to escape the cycle and move into a state of eternal bliss (nirvana). These religious beliefs directly affect how and why people work; for example, Buddhists and Hindus are supposed to eliminate all desires and therefore may have little motivation for achievement and the acquisition of material goods.


In this session, some important factors of society, politics and cultural shared norms were discussed. These patterns are, to some extent, common in one society at national level so it is important for any organization or individual that intends to enter one nation to know, understand and appropriate them.

Additionally, in this session was explained how different conceptions about time, achievement, work, change and religion are directly related to the operations in an international context not only of MNCs, but also any domestic firm. However, the key point arises when it is comprehended that a foreign firm might be at a disadvantage by ignoring or obviating these elements when developing their business strategy.

Information sources

Ajami R., & Goddard J. G. (2015). International Business: Theory and Practice. Routledge (271-278).

Hoeks, V. (July 22nd, 2014). Cultural difference in business. Ted Talks. Youtube (Video)