SOCIETAL CULTURAL VALUES
The most pervasive impact on the business culture and practices in a country comes from broad cultural values of society. These values influence the business in different ways, and at different levels.
Firstly, at macro level, cultural values allow certain kinds of businesses to flourish, while not providing the right climate for others. For example, French culture is known for its emphasis on elegance, elitism, and concern regarding form. Not only is this reflected in its 1200 museums, its 5000 varieties of wines (which are classified, like the French society, in arrange starting from superior to ordinary table wine), more than 50,000 drama performances per year, but also in the fact that France has always been the capital of the fashion industry.
On the other hand, Mexican culture is known for its â€œpro-deathâ€? values. Mexicans celebrate â€˜The day of the Deads.â€™ Folk art forms, the skeletons features, have Museums of Mummies, adorn their graves as a work of art, and even have a popular magazine called La Calavera (meaning The Skeleton)!! Not surprisingly, the life insurance industry is not a flourishing business in Mexico. In the mid-90s, less than 20% of the employed population had life insurance cover, and insurance premium formed just about 1.5% of the GDP (as compared to 5.5% in Brazil, and close to 9% in the US)
Secondly, the cultural values of the society define the meaning and reason of a business, and how it is organized. In many cultures, high profits and market capitalization are not the criteria for doing business. In many Arab and Latin countries (e.g. Italy, Spain, Latin American countries, Saudi Arab etc) the business firm is seen as an extension of family, and family honor comes before profits. Similarly, in France, business firms are culturally seen as social institutions that uphold national pride.
Such cultural differences have a direct impact on the strategic orientation of companies across cultures. For instance, one study of comparison between the financial and strategic focus of US and Japanese companies found that while US companies emphasized more on the profits, dividends, and stock prices, Japanese Companies focused more on new product development and market share.
Cultural values also influence how a business is organized and conducted in a particular society. In collective societies (e.g. China, Saudi Arab, Spain etc), for instance, personal contacts play an important role conducting business. For instance, the guanxi (interpersonal relationships) system In China encourages people to conduct business based on personal relationships. This is in sharp contrast to more individualistic societies, where personal relationships are deliberately kept away from professional relationships.
Lastly, cultural values have a major influence on the way people relate to each other and what they aspire for in a job. In many hierarchical cultures, the meaning and value of job lies in its status, more than in its pay packet. In these cultures, people also expect to be recognized for their seniority.
Similarly, work is not equally central to life in all cultures and countries. For instance, in many European and Scandinavian countries, work is seen as just another part of life. In these countries five to seven weeks of annual vacation (in some cases, even mandatory) is normal and acceptable. In sharp contrast, in countries such as the US and Japan, work is an essential part of oneâ€™s personal identify, and a quest for leisure would be perceived as unprofessional.