Chapter 13: Differences in Culture and Social Risk in International Trade

13.1 What Is Culture?

There is no consensus among scholars of different disciplines on the definition of culture.

Social psychologist Greet Hofstede defined culture as the programming of the human mind by which one group of people distinguishes itself from another group (Culture Factor Group, 2023). But according to anthropologist Edward B. Tylor, “culture or civilization, taken in its wide ethnographic sense, is that complex whole which includes knowledge, belief, art, morals, law, custom, and other capabilities and habits acquired by man as a member of society” (as cited in Logan, 2012).

In general, sociologists define culture in two ways: nonmaterial and material. The nonmaterial aspect of culture is defined as values and beliefs shared by a group of people. In contrast, material culture consists of things made by humans, ranging from buildings and clothing to arts and literature. Emile Durkheim, a French sociologist, believes that both material and nonmaterial culture holds society together (Cole, 2019). Sociologists consider culture to be the production of social order and norms, which play an important role in how members of a society function, cooperate and interact with each other.

For the purpose of this text, we will define culture as a system of collective programming (values and norms) shared by a group of people, which, when taken together, determines a society’s way of living.

Culture as a system of values and norms guides the social behaviour of people and serves as the foundation of social structure. Therefore, ignorance of cultural differences can result in a negative return on investment or weak market share, legal challenges, termination of contracts, or even lead to outright business failure.

Values

Values are shared ideas of what a group considers good or bad, right or wrong. Individuals get values from groups in which they are members (Differences Between Norms and Values, n.d.). For example, loving animals is a value that individuals get from the group to which they belong. Some social groups will not let dogs inside the house or to touch them, while others will prosecute someone for being unkind to dogs. Furthermore, helping others, being honest, and saving the environment are all examples of values that people derive from their groups. Values play a strong role in the development of one’s personality and behaviour. They vary from one place to another and from one culture to another (Conerly et al., 2021).

Norms

Norms are social rules and guidelines that define appropriate behaviour in a specific situation (Cole, 2018). Norms can be divided into two categories:

  • Mores (formal norms)  are written rules which support social institutions such as public schools, the healthcare system, the military, etc. These norms exist in all societies.
  • Folkways (informal norms) are unwritten routine conventions of everyday life learned through socialization; therefore, members of the same group of people show consistency in their behaviour. Examples of informal norms are dress codes, good social manners, rituals, etc. (Crossman, 2019).

Social Structure

Social structure is the design of social relations. How people and groups treat each other and interact shows how that society is organized. Social structure also indicates how society is organized in terms of values and norms (New World Encyclopedia, 2008).

There are many dimensions when explaining differences across social structures; however, to understand the business and economic implications of different social structures, the following two dimensions are particularly important:

  • Is the basic unit of a social structure an individual or a group?
  • What is the stratification of a society based on castes or classes?

References

Cole, N. L. (2018, August 27). What is a norm? Why does it matter? Thought Co. https://www.thoughtco.com/why-a-norm-matter-3026644

Cole, N. L. (2019, August 2). So, what is culture, exactly? ThoughtCo. https://www.thoughtco.com/culture-definition-4135409

Conerly, T. R., Holmes, K., & Tamang, A. L. (2021). Introduction to sociology (3rd ed.). OpenStax. https://openstax.org/books/introduction-sociology-3e/

Crossman, A. (2019, October 4). Folkways, mores, taboos, and laws: An Overview of Core Sociological Concepts. ThoughtCo. https://www.thoughtco.com/folkways-mores-taboos-and-laws-3026267

The Culture Factor Group. (2023, May). What do we mean by “culture”? The Culture Factor Group. https://news.hofstede-insights.com/news/what-do-we-mean-by-culture

Differences Between Norms and Values. (n.d.). Key Differences. Retrieved April 13, 2023, from https://keydifferences.com/difference-between-norms-and-values.html.

Logan, P. M. Logan (2012, July). On culture: Edward B. Tylor’s Primitive Culture, 1871. Branch. https://branchcollective.org/?ps_articles=peter-logan-on-culture-edward-b-tylors-primitive-culture-1871

Social structure. (2008, August 29). New World Encyclopedia,. Retrieved May 3, 2024, from https://www.newworldencyclopedia.org/p/index.php?title=Social_structure&oldid=795172


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International Trade and Finance, Part 2 Copyright © 2024 by Dina Majid is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.

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