International Business and Culture 2

Managing across cultures and contexts
MN20598
René Ceipek
SESSION 2

Wrap up
• We have extensively discussed the general course
information
• We have looked at the general course framework with its 12
sessions
• We have shortly discussed the importance of culture in
international business
• We made our first tweets, entered our Facebook group, made
our first quiz (have you checked the results?)
16/02/2018 René Ceipek - University of Bath 2

Quiz results last week
Need to review the following question:
What is NOT a driver of increased importance to consider culture in international management?
• Innovation policy
• International teams
• International subsidiaries
• Globalization
Besides national culture, which of the following is NOT an important dimensions of culture in IB?
• Innovation culture
• Supranational culture
• Sub-cultures
• Digital Culture

Questions
Do you have any question regarding last week?
Do you have any questions regarding the overall course design,
assignments etc.?
Let’s check our Twitter-wall
https://twitter.com/hashtag/culturebath?src=hash

Where are we?

Announcement
• We will have a guest speaker from Google European HQ
Dublin later in this semester
• She has gained work experience in AirBnB and Google and will
speak about her experiences as German working in large
digital MNEs with customers, employees etc. from all over
the world and all different sorts of cultures

Content session 2
1. What is context and what forms of context do we know?
2. Where is culture positioned in this context?
3. What different forms of culture are considered to be
important for IB?
BREAK
4. Extensive group work as preparation for session 3

What is context?
Context can be divided into different layers and contains different
levels (Johnson et al., 2017):
• Macro environmental context
• Industry context
• Strategic groups etc.
We especially look at macro-environment. You should be familiar
with two important concepts/frameworks to understand it:
• Institutional context
• PESTEL

Why does macro context matter?
“Siemens is strongly affected by changes in general economic
and business conditions.”
Peter Loescher, CEO of Siemens, 2012
Broader environmental context determines ...
• ... managerial cognition and decision making
• ... strategy and strategic development ... (Nadkarni and Barr,
2008)
• such as e.g. diversification strategy (international) or
performance (Hautz et al., 2014)

Macro environment – Institutional context
• Institutional context is determining “the rules of the game”
(North 1990, p3)
• Institutions are “the humanly devised constraints that structure
human interaction” (North 1990, p3)
• Institutions are “regulative, normative, and cognitive structures
and activities that provide stability and meaning to social
behaviour” (Scott 1995, p33)
• Formal institutions
• The financial system
• The skill development and control system
• The state
• Informal institutions
• Dominant conventions governing trust and authority relations

Macro environment – PESTEL
• Most famous textbook framework to analyse the macro
environment (Burt et al., 2006)
• Many different forms, such as ...
• PEST (political, economical, societal, technological)
• STEEP (societal, technological, economic, environmental, and political)
• PESTEL (political, economical, societal, technological, environmental
and legal)
• PESTELD (political, economical, societal, technological, environmental,
legal and demographic)
• A very comprehensive approach towards all environmental
factors influencing firms16/02/2018 René Ceipek - University of Bath 11

New Delhi,
India
https://www.nzte.go
vt.nz/contact-
us/international-
offices/india-
middle-east-and-
africa/new-delhi
Frankfurt,
Germany
https://www.thelocal
.de/20171018/swiss
-tax-spy-goes-on-
trial-in-frankfurt-
over-espionage-
claims

• Mini Group Work:
• Form 6 groups and brainstorm factors of the following six
macro-environmental aspects relevant for international
business:
• Political
• Economic
• Social
• Technological
• Environmental/Ecological
• Legal
• 5 minutes time to brainstorm and write results on the board

Political context
Some of the most important political factors defining the
macro-environmental environment
• Government policy
• Political stability
• Corruption
• Foreign trade policy
• Tax policy
• Labour law
• Trade restrictions etc.
P
E
S
T
E
L

Economic context
Some of the most important economic factors defining the
• Economic growth
• Exchange rates
• Interest rates
• Inflation rates
• Disposable income
• Unemployment rates etc.
P
E
S
T
E
L

Social context
Some of the most important social factors defining the
• Age
• Population growth
• Lifestyle attitudes
• Health consciousness
• Safety emphasis
• Cultural barriers etc.
P
E
S
T
E
L

Technological context
Some of the most important technological factors defining
the macro-environmental environment
• Innovation level
• Patent system
• Technological change
• R&D efforts etc.
P
E
S
T
E
L

Environmental context
Some of the most important environmental factors
defining the macro-environmental environment
• Climate
• Climate change
• Environmental policies
• Pollution
• Natural catastrophes etc.
P
E
S
T
E
L

Legal context
Some of the most important legal factors defining the
• Antitrust laws
• Employment laws
• Consumer protection laws
• Copyright and patent laws etc.
P
E
S
T
E
L

PESTEL – Emerging markets
Many of the factors often very relevant in the emerging
markets context
e.g. BRICs (Brazil, Russia, India, China)
• Assessment of potential target markets
• Investment risk assessment
• Stability and business environment
• Consumer base and market characteristics
• Development status in general
P
E
S
T
E
L

Culture and its role in context
Where do we allocate culture in this array of environmental
factors to be considered by businesses and MNEs?
... culture is a “substratum of institutional arrangement“
(Peng et al 2008, p922)
... “we can view culture as part of informal institutions in the
environment that underpin formal institutions.” (Peng et al
2008, p922)
... culture as essential part of the social macro environment
in the PESTEL framework (Leung et al, 2005)16/02/2018 René Ceipek - University of Bath 21

Culture and its advantages
• Culture, as many other factors in the macro environment, is
important
• Is it more important than any other factors? Presumably very
context dependent!
• B2C or B2B?
• Manufacturing or service industry?
• Emerging or mature industry?
• Specific sensitive products? (e.g. religious or political characteristics)
• etc. etc.
• Amount and quality of research indicates its strong
importance as macro-environmental component in IB16/02/2018 René Ceipek - University of Bath 22

Culture and its advantages
• http://geerthofstede.com/ is saying the following on the
question “Do we need to bother about culture?”
“Every visitor of this site has her or his unique personality, history,
and interest. At the same time, we share our human nature. We
are group animals. We use language and empathy, and
practice collaboration and inter-group competition. The unwritten
rules of how we do these things differ from one human group
to another. “Culture” is how we call these unwritten rules
about how to be a good member of the group.”
How is this statement telling us why culture is important in
the international business context?16/02/2018 René Ceipek - University of Bath 23

Culture – Definition
Recognition of difficulty to derive at a universally valid definition
for culture!
Culture is the collective programming of the mind which distinguishes
the members of one human group from another ... Culture, in this
sense, includes systems of values; and values are among the building
are among the building blocks of culture. (Hofstede 1984, p21)
vs.
Culture consists of explicit and implicit patterns of historically derived
and selected ideas and their embodiment in institutions, practices and
artifacts; cultural patterns may, on one hand, be considered as
products of action, and on the other as conditioning elements of
further action. (Gould et al, 2009)
vs.
“Culture is represented at three levels: (1) behaviour and artifacts;16/02/2018 René Ceipek - University of Bath 24

Culture – Definition
Let us agree on some important features of culture to
continue on our journey:
• Shared behaviours and artifacts, values, beliefs, assumptions
• To call it culture, there needs to be a critical mass of people
sharing such features
• Culture can be stable, but also dynamic and change over time
• Let’s consider it at the history of Great Britain / England

History and Culture UK
Homo Sapiens (very long time ago!)
Celtic tribes in the bronze age (1500 – 500 BC)
Roman empire (43 AD – 500 AD)
Anglo-Saxons (500 AD – 850 AD)
Vikings from the North (850 AD – 1100 AD)
Normans coming from France (1100 AD – 1300 AD)
French – English wars ...
Colonialism and migration ...
World war I and II ... etc. etc.
English cultureEnglish culture

What types of culture do we know?
Culture can be captured on different very formal levels:
• Nation – National culture
• Corporation – Corporate culture
But also along less formal e.g. groups:
• Subgroups – Corporate subcultures (divisions, groups, projects)
• Community – City, villages, associations etc.
• Technology (early) adopters – Digital culture

National culture
• Culture most famously captured around nation states in
international business
• Broadly defined as “values, beliefs, norms and behavioural
patterns of a national group” (Leung et al, 2005)
• Mainly shaped by the extensive work of Geert Hofstede
• Born in 1928 – Wow, old?!
• Social psychologist who managed to become highly relevant to IB and
general management research and practice
• Knighted by the Queen of Netherlands in 2011
• Professor, Honorary doctor and distinctions from many of the world’s
leading institutions

National culture
• Geert Hofstede became famous mostly for defining the following 6
dimensions of national culture:
• Original 4
• Collectivism versus Individualism
• Power distance
• Feminity versus Masculinity
• Uncertainty avoidance
• Additional 2
• Long term orientation
• Indulgence

National culture
• However, there has been major criticism towards his world
famous 6D national culture framework which we will discuss
next week
• We will discuss his six dimensions in detail next week
• But also look at the weaknesses and alternative models of
explanation!

Supranational culture
• Some research suggests that the national level alone fails to
explain culture, as relevant to international business
• Globalization in its many facets as a major driver of this view
• Some ideas of culture beyond the national level
• Cultural cosmopolitanism (Katz-Gerro, 2017) – belonging
to more than one national culture...
• World society theory and supranational culture
(Fernandez and Lutter, 2013) – Supranational norms
determine national and domestic policy and legal rules
• World culture (Meyer et al, 1997) as a major determinant of16/02/2018 René Ceipek - University of Bath 31

Supranational culture
• All concepts such as cultural cosmopolitanism, world
society theory and world culture are discussed in session 5
• How does it relate to national culture?
• Where does it succeed against national culture and where not?
• What are the drivers of such supranational cultures? And what
the consequences on different levels?

Corporate culture
Captures culture in all its aspects at the level of the
corporation/organization
• It is “the way we do things here” (Schein, 2009)
• It is about the human relations in the corporation
• A number of typologies to classify corporate culture along
different dimensions (Schein, 2009):
• “Autocratic versus democratic culture”
• Levels of “sociability” and “solidarity”
• “Internal versus external focus”
• “Flexibility versus stability and control” etc.16/02/2018 René Ceipek - University of Bath 33

Corporate culture
A series of questions, particularly relevant to the IB context arise
with regards to corporate culture:
• Who is leading the cultural development process in a MNE?
• Why is it particularly difficult to manage corporate culture in
MNEs?
• How does difference in home and host country culture affect
corporate culture?
• What’s the role of sub-cultures within subsidiaries or divisions in
international markets?
• How are multi-cultural teams etc. affecting corporate culture?
• What is the right culture for a MNE?

Digital culture
Digital culture is a blanket concept that describes the idea that
technology and the Internet significantly shape the way we
interact, behave, think, and communicate as human beings in
a societal setting. It is the product of pervasive technology and
limitless access to information — a result of disruptive
technological innovation within our society.
Digital culture is the Internet, transhumanism, AI, cyber ethics,
security, privacy, and policy. It is hacking, social engineering,
and modern psychology. More contextually, digital culture is using
social media as our main mode of interaction with others;
sharing every moment of your life on the internet; the selfie
phenomenon; the live streaming obsession; the anonymity
provided by online communities; Apple Pay and Android Pay;
wearable technology; the use of emoji to enhance16/02/2018 René Ceipek - University of Bath 35

Digital culture
• A multitude of new technological innovations strongly affecting
the way we live
• Has been coined also as the “The fourth industrial
revolution” (Schwab, 2017)
• The sum of all innovations that have such a great effect on
social exchange
• “... it all boils down to one: the relationship between
humans and technology...”
• How does it affect corporate culture, and how does corporate
culture affect digital?16/02/2018 René Ceipek - University of Bath 36

Other culture
Subculture is cultural homogeneity at a lower level of another
superordinate culture
• Subculture relative to the overall national cultures in towns,
townships, cities, counties etc. (Liesek, 2010)
• Subculture as a “lifestyle” significantly different to other large
parts of a e.g. national group; The example of “Goths” and
their distinct characteristics of subculture (Hodkinson, 2002) or
also the Hippie sub-culture
• Subculture on the corporate level with subordinate cultures in
subsidiaries, divisions, local teams etc. due to varying e.g.16/02/2018 René Ceipek - University of Bath 37

Time to work
As preparation for next week’s focus on national culture, we want to set the
stage for it
Individual work
1. Grab a piece of A4 paper and a pen
2. Close or do not use any of your digital devices
3. Draw a world map ALONE WITHOUT ANY HELP OF PEERS (take your
time, you get 10 minutes)
Group work
1. Get together into groups of five to six people
2. Exchange your drawings and try to identify differences and similarities
3. Let’s exchange what we have seen

Wrap up exercise
The goal of the exercise was to demonstrate that we usually
have very little knowledge about the geographic position of
countries
• How should we then know anything about the culture of these
places?
• How would you as a CEO of a company assess
internationalization strategy given our cultural biases?
• Given this little knowledge we possess, how can we manage
such complex MNEs?
More on that next session on “national culture”!16/02/2018 René Ceipek - University of Bath 39

Quizizz
• Our second in-class live quiz is about to start
1. Enter the following URL on one of your devices (Laptop,
Tablet, Smartphone etc.): https://quizizz.com/join/
2. Enter the shown 6-digit code on the landing page
3. Enter your name
4. Wait until the game is started
5. The quicker you answer questions, the more points you will
receive

To Dos next week
• Check the updated version of the course outline on
MOODLE and familiarize yourself with the readings
• Check-in at our Facebook group and share something
interesting
• Provide a short comment at our Twitter wall by using the
discussed hashtag combination

Contact details
Feel free to contact me via e-mail for any specific administrative
questions regarding our course:
• rc858@bath.ac.uk
Use our social media channels to interact with me and the group
with regards to our course content:
• Twitter - https://twitter.com/Ceipek_Rene /
https://twitter.com/search?q=%23culturebath&src=typd
• Facebook course group –
https://www.facebook.com/groups/cultureunibath/

End of today’s session
Thank you for your attention!

References
Johnson, G., Whittington, R., Regener, P., Scholes, K., Angwin, D. (2017). Exploring Strategy: Text and Cases. Pearson Education.
Ndakarni, S., Barr, P. (2008). Environmental context, managerial cognition, and strategic action: an integrated view. Strategic Management Journal,
29(13), pp. 1395 – 1427.
Hautz, J., Mayer, M., Stadler, C. (2014). Macro-Competitive Context and Diversification: The Impact of Macroeconomic Growth and Foreign Competition.
Long Range Planning, 47(6), pp. 337-352.
North, D. (1990). Institutions, Institutional Change and Economic Performance. Cambridge University Press.
Scott, R. (1995). Institutions and Organizations. Ideas, Interests and Identities. Sage.
Burt, G., Wright, G., Bradfield, R., Cairns, G., Van der Heijden, K. (2006). The role of scenario planning in exploring the environment in view of limitations
of PEST and its derivatives.
Peng, M., Sun, S.L., Pinkham, B., Chen H. (2009). The Institution-Based View as a Third Leg for a Strategy Tripod. Academy of Management
Perspectives, 23(3), pp. 63-81.
Leung., K., Bhagat, R., Buchan, N., Erez, M., Gibson, C. (2005). Culture and international business: recent advances and their implications for future
research. Journal of International Business Studies, 36, pp. 357-378.
Hofsteede, G. (2001). Culture’s consequences: Comparing values, behaviors, institutions, and organizations across nations. Sage: Thoursand Oaks, CA.
Gould, S. & Grein, A. (2009). Think glocally, act glocally: a culture-centric comment on Leung, Bhagat, Buchan, Erez and Gibson (2005). Journal of
International Business Studies, 40 (237), 237-254.
Schneider, S. C. (1988). National vs. corporate culture: Implications for human resource management. Human Resource Management, (27): 231–246.
Katz-Gerro, T. (2017). Cross-National Differences in the Consumption of Non-National Culture in Europe . Cultural Sociology, 11(4), pp. 438 – 467.
Fernandez, J., Lutter, M. (2013). Supranational cultural norms, domestic value orientations and the diffusion of same-sex union rights in Europe, 1988–
2009. International Sociology, 28(1), pp. 102 – 120.
Meyer, J., Boli, J., Thomas, G., Ramirez, F. (1997). World Society and the nation state. American Journal of Sociology, 103(1), pp. 144-181.
Schein, E. (2009). The corporate culture survival guide. John Wiley & Sons.
Schwab, K. (2017). The fourth industrial revolution. World Economic Forum.

Other Resources
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