Cultural Difference

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Chapter 11 Cultural Characteristics and Effective Business in China
Maria Fernanda Pargana Ilhéu

Abstract For firms in the international market the cultural characteristics of host country societies, where their managers are going to deal and work, must be learned, absorbed and adopted. A person’s perception of market needs is framed by his or her own cultural experience. More than factual knowledge of Chinese culture the interpretative knowledge is very important and difficult, since it comes from a matrix of philosophic, religion and political explanations which are completely different of the western one. Chinese “guanxi”, emphasizes personal trust building, the use of social bonds in dealing with partners,
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“Individualism versus collectivism” (IDV), the value of individual’s identity and rights, compared with those of the group, cultures high in collectivism are group oriented. Members of more collectivist cultures tend to protect one another more and threat out-group members more harshly than do individualistic cultures. The relational emphasis in collectivist societies justifies for instance strong network ties between businesses and customers (Nakata and Sivakumar, 2001). Network forms of organization, have been developed, most exclusively, in the so-called collective social and economic cultures, and China is a good example of it (Kao, 1993, Fukuyama, 1995, Achrol, 1997, Yeung, 1997, Ritcher, 1999). 2. “Uncertainty avoidance”(UAI), which basically measures tolerance for risk, cultures with high uncertainty avoidance tends to seek ways to create closed protective ways to control their environments. To reduce uncertainty SMEs engage in coalition activities such as alliance formation (Steensma et al., 2000). 3. “Masculinity versus femininity”(MAS), high masculinity cultures favor material achievements; femininity cultures value quality of life and relationships. 4. “Power distance”(PDI), indicates the tolerance for social hierarchy and class structures, high power distance cultures, exhibit class and power differences by

11 Cultural Characteristics and
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