The analysis of the cultural perspectives of doing business in this paper is concentrated on the outline of the culture of graduate students taking Business Administration in Croatia an U.S as this group is the one that will gradually assume the leading role in the Croatian and American economy and business community. The research gives comprehensive understanding of dimensions and elements of culture in Croatia and America, how these elements and dimensions are integrated by locals conducting business and lastly the implications of US businesses that wish to conduct business in Croatia.
In order be unbiased in the generalization of the findings, simple random sampling was used to select the respondents for this study.
Comparison of cultures has been done through measuring their magnitude (Hofstede, 2001). Nevertheless, the magnitudes used to weigh against cultures are usually not physical dimensions but, rather are dealings of the attitudes and values that dissimilar cultures contain. Some of the dimensions of culture were those developed by Ali & Alshawi (2005) which include: (1) Uncertainty avoidance (2) Power Distance (3) Masculinity/femininity (4) Individualism/collectivism (5) Confucian Dynamism (6) Universalism- Particularism, (7) Neutral vs. Emotional Relationship Orientations(8) Achievement vs. Ascription (9) Conservatism vs. Affective/intellectual autonomy (10) Hierarchy vs. Egalitarian (11) Harmony vs. Mastery (13) Communal Sharing Relationships (14) Authority Ranking Relationships (15) Equality Matching Relationships (16) Market Pricing Relationships.
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Investigation was conducted to establish the measurement of the customs which resulted in momentous level of sway in the viewpoints of conducting trade. The report of graduate scholars who are enrolled in Business Administration might not necessarily signify a real picture of the typical or universal outline of the business customs in Croatia, hence becoming a constraint to the study.
The paper concludes by proposing the right moves in business that can be made in order to make a successful transaction.
Key words
Culture, cultural dimensions, business environment
Introduction
Culture can be defined as the way of life of people including language, sciences and art, their interaction, spirituality as well as their social activity, convections, protocols and their negotiations (Shahla, 2002). In order to make sure that people work together proficiently and together towards business objectives in a positive and motivating environment, they need to be aware of the existence and importance of both a corporate culture and international culture. In foreign countries, getting everybody to work together might not be very easy. Apart from language issues, different countries have different approaches to work. Some cultures take offense of certain comments. A Christmas party might not be seen too keen by non-Christian religions. Cultural sets of beliefs and differences cannot be easily changed or overcome (Hofstede, 1991). But it is important for any business owner or manager to be aware of them and how they impact their business. This will help to adjust to them and improve efficiency, profitability and success of business.
Problem statement
Culture is defined as the standards and manners of a group of people or community. Culture also determines how a country does business that. Understanding the difference in cultures of different county is a step in succeeding business in a foreign country. This research paper was aimed at establishing different cultural perspectives of doing business in Croatia.
Objective
The main objective of the research was to ascertain the cultural perspectives of doing business in Croatia. This objective was achieved through the following specific research objectives.
To determine the major elements of dimensions of culture in Croatia.
To ascertain how dimensions of culture are integrated by locals in business.
To assess the difference in Croatian and US culture and Business.
To determine the implication of US business wishing to be conducted in Croatia.
Significance of the study
The study provided an understanding of Croatian culture which is indispensable when it comes to successfully running business in Croatia.
Limitation of the study
As far as this study is concerned the challenge presented here in is that the profile of the scholars may not give a real scenario of the business as far as culture is concerned in America and Croatia (Hofstede, 2001).
Financial constraints led to selection of a small sample size which might not be an entire representation of the entire population.
Literature review
Culture defined
From the perspective of a humanist, the one Mathew Arnold used the word culture to pass on to an ideal of individual human refinement, of the finest that has been thought and said in the world. This idea of culture is comparable to the German concept of building:
According to an anthropologist Kroeber and Kluckhohn culture can be defined as:
Consisting or else being made up of implicit as well as explicit patterns, and behavior transmitted and acquired through symbols with different achievements from groups of human beings (McCoy, 2003).
As a replacement for defining culture as a kind of knowledge, McGrew suggests that
“Culture can be looked into as a number of steps which may include the following (i) a novel prototype of performance is made-up, or else one which is already existing is modified. (ii) Modernizer transforms this prototype to another one. (iii) A kind of the prototype is steady across and within players, conceivably even in terms of identifiable features considered stylistic. (iv) One who obtains the prototype keeps the capability to do it long post acquiring it. (v) The prototype extends across units which constitute a population e.g. troops, clans, or bands just to mention but a few. (vi) The prototype bears transversely generations”
There exist three kinds of culture which are of great significance according to Ali & Alshawi (2004a). They include; national culture which includes several core values meant to shape the individuals’ behavior and the entire society not forgetting organizational culture (Adler 1997; Bagchi and Cerveny 2003). Finally, there exist a level of individual culture according to Dorfman and Howell (1988). Their study shows the impact of national civilization on the behavior of an individual.
The business civilization of a particular country is as a result of a number causes from its present and past which are so abnormal such that they can never be finally and fully explained or understood.
Overview of Croatian culture
Croatia became a constituent republic of the Federative Popular Republic of Yugoslavia after the Second World War, which inherited the ex-Yugoslav kingdom with art governed by the canon of socialist realism and science and education governed by the canon of dialectic and historical materialism.
Self-management system was introduced in 1950s. Cultural and other public domains were decentralized and regulated on the level of the six constituent republics. Modernization and the global openness of the country brought various cultural influences. Ideological control over culture loosened, followed by a national movement in which cultural and educational institutions played a visible role. Despite the ensuing political repression the public policies led to greater autonomy of the republics in the federation. The current government was appointed in 2009, after the political shifts caused by resignation of the former prime minister (2004-2009).
Greek, Roman and Byzantine are the blends of Croatia, the majority of the population is Croats. Minorities include Serbs, Hungarians and Gypsies.
Although Croatia is a sovereign nation, it has a unique culture that has been driven numerous civilizations and empires. It is well known for the rich culture it has, natural beauty, and many national parks and successful tourism industry.
Ethics
Ethics is the common agreed upon practice of different moral principles or values. It concentrates on the general nature of morals and the specific moral choice an individual makes in relationship to others. It represents the rules and/or standards governing the conduct of the member of a profession. The context of this inquiry will be ethics applied to business. Business ethics in Croatia is perceived as good. In business operation, the regulations are not violated massively, especially in transactions with domestic partners. As far as the accomplishment of contract obligations are concerned, the impression is good.
Religion
Croatians are mainly Roman Catholic, with small percentages of Uniates (Eastern Orthodox Christians, recognizing the pope), Protestants, and Muslims. Some pre-Christian essentials have been included into Christian practices and beliefs. Other influences on Croatian religious beliefs and practices have come from European and Near Eastern cultures, from rural and urban traditions alike, resulting in an amalgam of different heritages. Sacred and religious aspects of traditional culture were neglected during the Socialist period because religion was relegated solely to the private sphere of life. Catholic Church has a role to play as far as Croatian society is concerned. The pastor participates significantly in the country’s culture as well as education education. Croatians are particularly loyal to Blessed Virgin Mother Mary. There exist asylums all over the nation state put up in her honor. Every town and village has a supporter saint and that saint’s feast day is distinguished with a church and parade rite. Some of the rural communities still do have a conventional beacon on their supporter saints’ day. Many specialized persons also do have their own supporter saint. Religious conviction is a key in uniting the culture of Croatian, greater part of the Croatians is subscribed to Roman Catholic. During a Roman Catholic holiday, commercial activities close. Patrons of each and every town and city in Croatia lead the celebration of saint’s holiday. The Catholic Church has for ages aided the development of Croatia’s history and culture, it carry’s on to be seen in everyday Croatian life. National Pride – Croatians love their heritage and country and when criticized they take it very personally. Hence, Croatians at one time can be seen as being proud, pretentious and may seem haughty to foreigners.
Nationalists
Croats can be considered as extremely self-important of their custom and ethnicity and hence are considered to be staunch nationalists. Croats refer their nation as “Our Beautiful Homeland” (“Lijepa naÅ¡a”).This emerges that it is the same title as that one of the national anthem of their country. The intellect of patriotism emerges both from their extended and wealthy civilization as well as a inheritance of foreign control and invasion. Folklore plays an important part in culture preservation. Life understanding is transformed into poetic songs, verse, fairy tales, melodies, symbolic rituals, costumes, dance, music as well as jewellery just to mention but a few. Poems and Folksongs frequently show to the feeling and consider between members of the family.
Social structure
In as far as this society is concerned; the family still remains to be the basic unit of the society. Extended family is also recognized in this society and the member’s remains very close to each other. Basic commodities as well as security to some extent, is provided by the family to its members. Weekends are well thought-out as time meant to be spent by the members of the family together. This society values family to an extent that they will not allow business matters to interfere with their family lives.
Dimensions of culture
According to McCoy (2003), the highly considered concept of culture is the dimensions of culture by Hofstede. An all-encompassing dimensions of culture were projected by Alshawi and Ali (2005) using a normative review of literature in the field of culture. These dimensions are labeled: (1) Uncertainty avoidance (2) Power Distance (3) Masculinity/femininity (4) Individualism/collectivism (5) Confucian Dynamism (6) Universalism- Particularism, (7) Neutral vs. Emotional Relationship Orientations(8) Achievement vs. Ascription (9) Conservatism vs. Affective/intellectual autonomy (10) Hierarchy vs. Egalitarian (11) Harmony vs. Mastery (13) Communal Sharing Relationships (14) Authority Ranking Relationships (15) Equality Matching Relationships (16) Market Pricing Relationships.
Hofstede identified four dimensions:
Uncertainty avoidance (UA)
Vagueness evasion echoes or rather shows a culture’s acceptance of vagueness and reception of menace. Degree to which community in a nation state prefers prearranged over formless situations: from relatively flexible to extremely rigid.
Power Distance (PD)
Power distance refers to the sharing of power within a society. Extent of disparity in the midst of people, which the inhabitants of a nation state do consider as normal: from relatively equal to extremely unequal.
Masculinity/femininity (MF)
The masculinity femininity measurement does explain the extent to which culture’s overriding values are nurturing or assertive.
Individualism/collectivism (IC)
Extend to which persons in nation gain knowledge of acting as an individual instead of collective members of a cluster, moving to individualist from collectivist. Referred in this dimension is how individuals identify and relate with others. Individual attention compared to group interests dominates in an individualistic culture. It is therefore evident that the links in between are very tight. Communities ensure that they do take care of entire community. That is the elderly and the young. Masakazu (1994) defines modern individualism as “a vision of humankind that gives good reason for internal unilateral self-assertion and beliefs, as well as antagonism based on these”. In a communalist society, the considerations of the group triumph upon the attention of the personality. People are incorporated into strong and cohesive in-groups that carry on throughout a life span to defend in exchange for unthinking loyalty. Variation is displayed in who is considered when goals are set. In nonconformist societies, goals are set with negligible deliberation given to groups other than possibly your direct family. In communalist societies, other crowds are taken into consideration seriously when goals are set. Individualist societies are freely incorporated; communalist societies are strongly incorporated (McGrew, 1998). One tends to define people by what they have done, their accomplishments, what kind of car they have. The question is do we function in a group or as individuals? Cultures of communitarism stress common goals and collective work (teamwork), while cultures of individualism value more individual success and creativity.
Confucian Dynamism
The fifth dimension of culture was acknowledged by Bond and Hofstede (1984). It is also tagged as long term vs. short term life orientations. This dimension portrays cultures that vary from values that have a short duration in relation to customs and reciprocity in relations in the society to values that are persistent and order a relationship on the criteria. The extent to which, communities or rather citizens promote collective harmony and welfare, resulting in psychological collectivism.
Trompenaars (1993) defines the following dimensions:
Universalism-Particularism
The extent to which, communities or rather citizens weigh against generalist rules about what is right with more situation-specific relationship obligations and unique circumstances.
In the context of business, what is of importance is regarded to be individual’s behavior
Particularism is the lower level in this type of dimension which implies giving inclination to an approach that is flexible for each specific problem
Whereas universalism is the higher level of this dimension, it has the meaning of being strict in observing rules and other set standards.
Neutral vs. Emotional Relationship Orientations
The extent to which, communities or rather citizens weigh against ‘objective’ and ‘detached’ interactions with interactions where emotions is more readily expressed.
In the neutral concept, emotions are barred from being displayed or shown. Where as in the effective concept, displaying emotions in a business relationship is acceptable
Specific vs. Diffuse Orientations
The extent to which communities in are engaged in a business relation and encounters are marked and set apart both in private and work. What matters is the acceptance of specific responsibilities assigned. The higher level of this dimension is diffuse where various relations interwoven compared to the lower level – specific in which there is little intermixing of private relations
Achievement vs. Ascription
The extent to which, communities or rather citizens consider individual achievements as a measure with those where an individual is give specific status on the basis of membership to a group or birth grounds etc
In the concept of achievement, status is got when an individual shows competence unlike in ascription where its achieved though a recognized status in title, gender, age, hierarchy, etc
Schwartz (1994), defined the following dimensions:
Conservatism vs. Affective/intellectual autonomy
It is the extent to which citizen insist on maintaining the initial status (conservatism) or intellectual autonomy – gaining pleasure and a life that is exiting
Culture Dimension Definition Hierarchy vs. Egalitarian
It is the extent to which individuals consider equality and freedom as a distress to others (Egalitarian), vs. Hierarchy – This emphasizes on the genuineness of flat resources and responsibilities
Harmony vs. Mastery
It is the extent to which citizen concerned with conquering impediments in a societal setup – mastery versus the distressful point of view regarding unity with the natural set up and harmoniously being fit in the environment
These dimensions were emphasized by Fiske (1992):
Communal Sharing Relationships
This perception is related to Hofstede’s opinion of collectivism. It is the extent to which citizen see the members of a given cluster as equal and at times are quite unreceptive to those coming from outside of the cluster.
Authority Ranking Relationships
It is the extent to which citizen involve linearity in relationship ordering with higher ranking individuals who have the rights to make decisions, enjoys privilege and are responsible for individuals at the bottom in the hierarchy. According to Schwartz (1994), this idea does not correspond with Hofstadter’s conception of power distance
Equality Matching Relationships
It is the extent to which citizens emphasize on social equalities in relations. The community has knowledge of the inequalities.
Market Pricing Relationships
It is the extent to which individuals have their mentality fixed to investments and
Perception of dominant business culture
It was examined with Trompenaars’ replica of four different cultures. This included a framework built on two dimensions i.e. (1) Task orientation versus person and (2) Centralization or hierarchy versus decentralization or egalitarian implying power, role, project and fulfillment orientations
Research Problem
Following the Trompenaars’ model of four diversity cultures this study aimed to ascertain the cultural perspectives of doing business in Croatia.
Research Methodology
Probability sampling approach was used as the research method. This method had the advantage of non biasness in generalization of findings. The research used simple random sampling; the instruments for data capture were open ended questionnaires formulated using interpretive approach to look at cultural occurrences through Trompenaars’ model.
Research Questions
The research questions were how and in what ways might the cultural dimensions, and their elements of Croatian locals affect their perspectives of doing business and the implications of US businesses wishing to be conducted in Croatia.
Research hypothesis
Instead of developing a hypothesis, the research was underpinned to determine different perspectives of culture in the Croatian community in relation to doing business,
Research sample
To define the case, the research unit of analysis was the cultural perspectives of doing business in graduate students taking Business Administration from the Faculty of Economics at the University of Ljubljana in Croatia and Stanford Graduate school of Business
Sample size
University
Sample Size
Percentage
University of Ljubljana
68
61.81%
Stanford Graduate school of Business
42
38.19%
Total
110
100%
Answer to research Questions
Question 1: what are the major elements and Dimensions of Culture in Croatia?
For Universalism versus Particularism dimension: Croatians are individualistic, a practice that results in lack of understanding when relating in an organization and dealing with clients. Also, Croatians are used to television and other forms of media than reading magazines and the internet; this is as a result of their system of education.
In the dimension Individualism vs. Communitarism, The cultural dimension affects the organizational staffing (organizations) more than people in the society.
For Uncertainty avoidance dimension: Croatians have a need to work hard, provision of rules and regulations and observe punctuality
For Power Distance dimension: the Croatian community have a view that is more power with those at senior most management levels ; although the organizational culture would have a view different from the insight of power distance
This affect how clients are having their issues resolved since the rely on individuals high ranking in an organization as they are considered to be powerful
For Masculinity/femininity dimension, Croatians are inclined to having very affectionate relationship which cultivates a tight association with family members and acquaintances which from time to time make them reliant on each other in making decisions. It has got the advantage or remaining in contact for a long time.
For Confucian Dynamism Dimension: The Confucian work dynamism is now refereed to as long term orientation versus short term orientation to life. This dimension encompasses such principles as frugality, perseverance, having a sense of embarrassment, and an ordered relationship. Confucian work dynamism attributes to committed, aggravated, accountable, and knowledgeable people with a sense of dedication and organizational uniqueness and fidelity.
Example of countries where long term orientation supports prudence, reservations, perseverance in achieving results and being willing to lessen oneself for a reason are South Korea, Japan, and Singapore
On the other hand a short term orientation is in line with the expenditure to uphold the pressure from the society, less reservations, preferring immediate results and apprehension with a face
Croatians build on the welfare of their family unit and that is the strongest affiliation according to their perception (Yin, 1994).
Croatians in a working environment are inclined to have a high turn over, particularly in the private sector of the economy, since there is deficiency in competent staff. As a result it rises the cost incurred in staff training.
For the Neutral vs. Emotional Relationship Orientations dimension: this dimension mostly influences the satisfaction of customers
Croatians are inclined to be more emotional, and allow some space for mastery so that they can be contented when they feel happy and get concerned for; this is more connected to the treatment and at what time they feel that they are special to the organization.
For the Specific vs. Diffuse Orientations dimension: Since Croatia is switching from an economy based on public sector to more private organizations, which have an effect on how Croatians perceive and their expectation regarding the quality or service.
For the Achievement vs. Ascription dimension, Croatians have a propensity to try to get to a superior societal level as the traditions and norms give people more esteem according to which societal class they are from or have attained.
For the Market Pricing Relationships dimension: Croatians are vigilant to prices and to them it is most important thing while considering a product being produced or services being offered
For Structured or organized vs. unstructured or unorganized behavior: Croatians have a propensity to have a formless approach in their every day life; they like to adjust all the time even when it is coming to regulations and procedures in a working environment
Regarding candidness to Others’ cultures, they show an open approach to acceptance of other people’s cultures and other principles and traditions.
For the Internal vs. External (locus of control) dimension, Croatians have a strong attitude that they can have control over their destiny, which is without doubt consistent with the high levels of masculinism present in their culture
Question 2: How are dimensions and elements of culture integrated by locals conducting business in Croatia?
In doing business, Croatians integrate their culture in the following ways:
They have long meetings which do not follow specific agenda
Relationships are build only after negotiating business matters
Chatting and any other form of small talks only surface after all negotiations in a meeting.
Personal relationships in business is not encouraged hence an appropriate relationship that incorporates professionalism must be maintained.
Education, experience that comes with status, knowledge and confidence are respected by Croatians.
Superiors which are authoritative are highly valued.
Success and major decisions an be made by an individual.
No single person accepts the responsibility that is accompanied by failure.
Decisions can be made without appropriate consultations.
Flexible deadlines.
Managers do not need to account for how and why decisions were reached.
Question 3: What is the Comparison between the Croatian and US business Culture?
The following differences arise between the Croatian and American cultures. In American culture:
Meeting are short and with specific agenda
Democratic leaders are valued
Individuals accept responsibility of failure
Consultation must be done before decision making
Managers are accountable for decisions made
Deadlines are strict
In both cultures:
Relationships are build only after negotiating business matters.
Chatting and any other form of small talks only surface after all negotiations in a meeting.
Personal relationships in business is not encouraged hence an appropriate relationship that incorporates professionalism must be maintained.
Education, experience that comes with status, knowledge and confidence are respected.
Question 4: What are the implications for US businesses that wish to conduct
business in that region?
In order to successfully do business in Croatia:
Show respect to everybody.
In addressing a colleague use the title and the first name.
Avoid talks about money and problems as it depicts weak behaviors.
Allow personal space.
Speak directly and authoritatively.
Do not criticize a Croatian but you can make suggestions.
Religion war and ethnicity is never discussed.
In summary cultural values are relatively stable in Croatia, for a foreigner in Croatia, the first impression is conveyed starting with courtesies and the first greeting. Frustration is avoided by knowing how and when decisions are made; acquainting one self with the outcomes of a meeting and understanding how women are engaged in into the business framework. Of importance is networking and Personal contacts in Croatian business culture than formal marketing techniques.
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