Cultural and Ethical Difference Impacing International Business

Cultural and Ethical Differences Impacting International Business

A system of values and norms shared by a group of people, social culture develops from the prevailing political /economic philosophies, social structure, dominant religion, language and education within the group. The values of a culture are those beliefs that the group holds concerning what is good and right. They include such things as people’s attitudes toward collective responsibility, democracy, individual freedom, and the role of women in the society. Ethics are the accepted principles of right and wrong that govern behavior. Most ethical systems stem from religious beliefs and form the basis for the moral principles and values that guide a group’s behavior.

Social structure has two primary aspects, individualism vs collectivism and class stratification. An individualistic culture encourages entrepreneurial activity and as such, provides opportunities for the development of new products and ways of doing business. It is also a culture that leads to managerial mobility. Because it is a culture that focuses on the accomplishments of individuals, it is difficult to build teams and increases the cost of doing business due to the negative impacts of managerial stability and more limited cooperation. A culture that emphasizes collectivism has strong group identification which leads to more collective action than an individualistic culture, providing the ability to develop cooperation within and between companies. However, because of the lack of focus on the individual, this type of culture does not promote entrepreneurship to the same degree as an individualistic culture and tends to be less dynamic.

Stratification into classes or castes may occur due to family background, occupation, income level, and the ability to move between strata. For instance, in the United States it is accepted that anyone can move from poverty to wealth or from wealth to poverty, as a result of their...