cultural environtment and business

8/6/2019 Cultural Environtment and Business

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CULTURAL ENVIRONTMENT

AND BUSINESS

By: Prof. Dr. Djoko Suryo



I. INTRODUCTION

One of the important non economic factors whichaffect the performance of the businessorganization is the Social-Cultural Environment.

The impact of these social and cultural factors withtheir basic local values and traditions as well asthe global interaction on the formation on thebusiness opportunities can be identified in severalpart of the Asian Countries, such as Japan, Korea,

China, and Indonesia. The relationship between Culture, Economic

Institution and non-Economic Institution arebelieved to be very closed.



One of the prominent social theories on therelation between culture and modern economicsystem was the theory of the origin of theModern/ Western Capitalism forwarded by MaxWeber .

In his work on The Protestant Ethic and the

Spirit of Capitalism, Weber argued that the riseof modern capitalism was supplied by µtheworldly asceticism´ of Puritanism, as focusedthrough the concept of the ³calling´.

According to him, that the Calvinist (Protestant)

ethic introduced an activism into the believer¶sapproach to worldly affairs, a drive to mastery ina quest for the virtue in the eyes of God.



Robert Bellah, in effort to apply Max Weber¶ssociology of religion theory, examined the origin of the Japanese capitalism / Modern Japaneseentrepreneurship as showed in his work onTokugawa Religion, The Cultural roots of the

Modern Japan (published in 1957). Bellah argued that one of the essential cultural roots

of the modern Japan in the Tokugawa period wasthe values and ethic of Bushido, the Way of theWarrior (the bushi or samurai embodied to the

central Japanese values or the national ethic). ³Bushido means the determined will to die´. It was a

kind of the religious dimension of Tokugawa periodand the economic ethic of the merchant class.



Robert F. Dernberger , in his article ³Capitalism

and the East Asian Miracle´, attempt to call thegenus of East Asian capitalist countries as³Confucian capitalism´.

According to Robert F. Dernberger, each of these economies had a cultural heritage relatedto Confucian values such as a greeter sense of community or group identity andinterdependence, a much more active role of thegovernment in initiating and directing activities inthe economy.



S. Gordon Redding, in his work The Spirit of

Chinese Capitalism (1990), argued that theEast Asian value system, ³the Spirit of ChineseCapitalism´, can be held to be significant inexplaining the success of what may be called

³petty capitalism´ ( that is, family enterprise). In similar effort, Cliffort Geertz examined the

cultural roots of the Indonesia entrepreneurshipin the Muslim merchants or traders groups and

aristocratic groups as shown in his work on ThePrinces and the Peddlers and the History of Town.



Culture is a system of knowledge and ideas (culturalknowledge), which consciously or unconsciouslybelongs to a unit of society and is acquired inaccumulative manner, that functions as the directive

and guidance for attitude and behavior of the societythat bears this system (Goodenough, 1971,Spradley, 1972, and Geertz, 1973).

Culture consist in patterned ways of thinking, feelingand reacting, acquired and transmitted mainly by

symbols, constituting the distinctive achievementsof human groups, including their embodiments inartifacts; the essential core of culture consist of traditional ideas and especially their attached values(Kluckhohn, 1951: 85.5).

II. DEFINITION AND CONCEPT OF CULTURE &

VALUES



Culture as transmitted and created contents

and patterns of values, ideas, and other

symbolic meaningful systems as factors in

shaping of human behavior and artifactsproduced through behavior (Kroeber and

Parson, 583).

Culture as the collective programming of the

mind which distinguishes the members of human group from another (Geert Hofstede,

1980, 25).



Values is a conception explicit or implicit,distinctive of an individual or characteristic of agroup, of the desirable which influences theselection from available modes, means and endof actions (Kluckhohn, 1951a: 395).

Values are distinguished into values as thedesired and values as desirable.



III. CULTURAL VALUES ORIENTATION

Five categories of cultural values orientation of asociety according to Kluckhohn and Strodtbeck(1961):

Human nature orientation (orientation towardrelationship between human and life (evil-mixed-

good). Man-nature orientation (orientation toward the

relationship between man and environment(subjugation-harmony-mastery).

The orientation in time (orientation toward past-present-future).

The orientation toward activity (orientation betweenhuman and works).

Relational orientation (orientation toward human and

others relationship).



People Ought to Respect the Others with

Whom They Seek to Reach.

Agreement as Willing and Interested Persons.

People Ought to Keep Their Promises.

People Ought to Make Their Communications

Honest and Not Deceptive. People Ought to Honor Their Reciprocal

Obligations.

IV. MORAL UNIVERSAL AS CULTURAL REALITIES

AND BUSINESS



V. MORAL PRINCIPLES THAT MAKE MORALITY

CRIDIBLE

Five General Principles are as follows:

Individuals Ought to Choose as Spouses and SexualPartners those Persons outside Their Natural Familieswith whom it is Fitting for Them to Mary have SexualRelations.

Parents Ought to Care for, protect, and educate Their Children.

People Should Not Exercise Physical Violence to theInjury of Others Except as means to Defend Themselvesagainst, and to disarm, Those Who Threaten or Exercise

Physical Violence against them. Social Goods and Burden Ought to Be Allocated in

Keeping with Publicly Recognized Rules and Proceduresthe accord to People What is their Due.

People Should Not Steal.



The religious and civic traditions of Confucianism,Buddhism, Hinduism and Islam in Asian Societieshave transmitted a legacy of behavior, attitudes and

beliefs which have deep and constantly evolvingimpact on Asian Entrepreneurial culture.

Culture affects government policies, social norms,consumption patterns, business transactions,management practices and labour relations.

Cultural traits vary according to ethnic, religious andnational groups.

However, it is possible to identify certain enduringcharacteristics of Asian social organization andgroup behavior which are present across the region.

VI. CHARACTERISTIC OF ASIAN CULTURAL

TRAITS AND GROUPS BEHAVIOUR ANDBUSINESS



Group Reference : Group versus

Individual Identity.

Group belonging is asserted before

individual instinct;

Compliance with group norms is expected;

Individualistic behavior is condemned;

Individual transaction are based on intra-

group affiliation leading to networking.



Extended Family and Nepotism

Family support is considered the norm;

Organization are seen as extension of the

family support structure and hence asproviders of social welfare;

It is considered proper behavior to give

preference to family members in businessdealing.



1. Korean Confucian Ethical Codes.The essence of Confucian Ethical Codes couldbe in four items: Politeness,

Harmony, Loyalty, and

Educational-based social status system.

2. Confucian Ethical Codes define the fivecardinal human relations: Between the king and his subject;

Between father and son;

Between husband and wife;

Between young and old; and

Between friends.

VII. THE CASE OF KOREA, JAPAN AND

CHINESE OVERSEAS



3.

Based on the concept of the Confucianethical codes, employees attitudes and

behaviors toward the their seniors and

superiors are defined as the following five

items: Treating seniors as elders;

Respecting seniors;

Compliance with seniors opinions;

Obedience to superiors¶ directions;

Accepting superiors¶ informal directions.



The term chaebol means ³financial clique´, it

is used to describe a large business group,

originally created by a talented entrepreneur and

still largely family controlled, and spread over

many diversified area.

The chaebol are the offspring of Korea¶s forced

industrialization.

The Korean CHAE BOL : The Korean Modern

Business Players



Japanese¶s Bushido Ethical Codes:

1. The Japanese KAISHA

2. The Japanese KEIRETSU



Japanese KAISHA

The Javanese Firms as ³typically Japanese´;Devoted Employee and Patient Capital. Thedevotion of Javanese employee to their kaishais the resulted of two factors:

1. The strong desire of the Japanese to identifywith a group rather than striving for individualachievement;

2. As a member of a group, employee isimplicitly offered life-long employment in

exchange for life-long commitment andloyalty. In return, it is expected that theemployee¶s future is closely tied to the well-being of the firm as life-long employment notonly offers job security, but also reduces

lateral job mobility.



Japanese KEIRETSU

Most of the larger firm are connected with

affiliated companies with whom they form a

keiretsu system whereby companies maintains

long-standing business ties with each other thatare sometimes, but not always, cemented by

mutual ownership of some of each others¶ share.

Japan¶s industrial landscape is dominated by

six very large keiretsu, MITSUBISHI, MITSUI,

SUMITOMO, FUYO, DAIICHI-KANGYO AND

SANWA.



The Overseas Chinese Conglomerate: The Third

Distinctive Type of Regional Local Asian Business

Players

Historical Origin:

The Chinese Diasporas began in South Chinawith different waves of emigration starting as

early as the seventh century and acceleratingduring the nineteenth and twentieth centuries.

Most of them established large immigrantcommunities throughout Southeast Asia.Confident of their eventual return to the Chinese

mainland, these immigrants avoided investing inilliquid assets, preferring to specialize incommerce and service occupations.



Historical Origin:

Their trading networks grew and at certainstages succeeded in providing an alternative,

parallel framework to colonial Europeanmultinationals and trading companies.

The Communist Revolution in China triggeredanother wave of the ethnic Chinese Diasporas,with many established Chinese capitalist fleeing

to Hong Kong and Taiwan. This group has been more inclined towards

industry and manufacturing and has graduallylinked up with existing Overseas Chinesenetwork.



INDONESIA Salim (Liem Sioe Liong )

Sinas Mas (Eka Tjipta Wijaya)

Astra (FounderW. Soerajaya)

MALAYSIA Kuoak Group (Robert Kuok)

Hong Leong (Quek Leng Chan)

Genting Group (Lim Goh Tong)

THAILAND Chaeroen Pokphand (Dhanin Chearavanon);

Bangkok Bank (Chatri Sophonpanich)

Siam Motors (Khunying Phornthip).

Major Overseas Chinese Group in Asia Pacific

Countries



PHIPIPPINES Fortune Tobacco (lucio Tan);

J.G. Summit Holdings (John Gongkonwei); SM Prime Holding (Heny Sy)

SINGAPORE Hong Leong (Kwek LengJoo);

United Overseas Bank (Wee Cho Woo);

Overseas Chinese Bankning Corporation (Lee Seng Wee).

TAIWAN Formosa Plastic (Yung Ching Wang);

President Enterprises (Kao Chin Yen)

Acer Group (Stan shih).

HONG KONG Hutchinson Whampoa & Cheung Kong Hong Kong Electric (li Ka

Shing);

Sun Hung Kai (Kwok brothers)

New World (Cheng Yu Tung)



Culture

History: the Indonesia Republic¶s History;

The Pattern of Authority;

Indonesian society in the industrial

perspective;

The diversity of the people: Pluralism /Multiculturalism.

VIII. INDONESIAN CULTURE AND ITS IMPACT

UPON BUSINESS



Cultural diversity

The Indonesian Way

Feeling and emotions

Relationship based on worth-wile projectsand mutual friendship, trust and benefit;

Respect;

Women in government and business

Islam

IX. SOME ASPECT OF CULTURE OF BUSINESS

IN INDONESIA



Non Javanese

Javanese cultural influences.

Traditional attitude: gotong royong, unggah-

ungguh, sumonggodawuh,alon-alon asal klakon, tuna satak bathi sanak, gemi nastiti ngati-ati dsb. (Jv.).

Conflict with modern business practices

Peacefulness and harmony Self centeredness

The unsaid



Friends

Face- and losing it

Humor

Fate and curiosity The works place

Paternalism and sharing

Village influences Changing attitudes affected by rapid social

change.



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