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2. Cultural globaloney?
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From the course by IESE Business School
Globalization of Business Enterprise
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From the lesson
Week 3 - Cultural Distance
This session will focus on the first dimension of the CAGE Distance Framework, namely Culture. Cultural distance encompasses differences in such things as religious beliefs, race/ethnicity, language, social norms and values. Our focus will be on how cultural differences at the national level affect international interactions and, particularly, international business.
Meet the Instructors
Pankaj GhemawatProfessor of Strategic Management Anselmo Rubiralta Chair of Strategy and Globalization
Department of Strategic Management
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What we're going to talk about in this session more generally is first of all,
looking beyond fruits and vegetables, how much cultural contact,
how much cul, cultural influence is there across borders?
And in particular, does it line up with this notion very common among some people,
of a global, cultural tsunami that threatens to swamp all cultural variation,
eliminate all cultural variety.
And once again, we're going to conclude that this notion of
a global cultural tsunami really is glo-baloney.
In the second part of this session, we'll look at the international interactions
that do take place, and how they actually are influenced by cultural variables.
So, we'll go beyond saying the world isn't culturally, completely globalized to
looking at the cultural influences on the forms of globalization that we do observe.
Third; we'll look beyond some of the visible
indicators of cultures such as language, ethnic group, etc.,
to also ponder some of the deeper differences between
national cultures that sociologists, psychologists, and
others have nominated and try and figure out how useful those are.
And then finally, we're going to come back and
start a discussion that's going to continue throughout the globe course
on how given the vast amount of cross-cultural heterogeneity in the world,
how it's possible to stretch oneself to overcome at least partially,
some of the limitations associated with one's national culture of origin.
So, that's the plan and let's start of with globaloney and
some basic measurement issues and here, things are a little bit
complicated by the fact that culture is defined very, very broadly.
One definition I found, for instance, is culture is everything that makes us who we
are which obviously, is very, very hard to get one's hands around.
So given the slipperiness of cultural concepts,
what I thought I would do is focus on looking at three
different types of indicators of cross-border cultural context.
We'll start on the outermost ring of this onion model on
this particular slide by focusing on artifacts or
objects that have cultural content that get exported across countries.
Then we'll sort of look a little bit more deeply and
think not just about artifacts, but about flows of information,
flows of ideas and we'll cut into those in several different ways.
And then finally, we'll wrap up by discussing people's identities and
how people themselves define their own identities,
as a way of getting a handle on how culturally globalized we are.
So let's start on the outmost ring of this onion,
let's start by looking at what percentage of the output of the cultural sector,
here we're talking films, TV programs, music, design, architecture,
et cetera, what percentage are actually accounted for by exports?
Based on some UNESCO data, it turns out that the share of
the output of the cultural sector as UNESCO defines it, that's accounted for
by exports, is only about 5%.
This is vastly less than people's intuitions about how
much of the output of the cultural sector is exported which often exceeds 30%.
Also notice that the actual level of exports of cultural products is way lower
than the level of trade as a percentage of world GDP overall which highlights
the fact that actually in many respects, products with cultural content have,
are more subject to barriers at national borders,
barriers associated with national differences, than products that are,
shall we say, poor commodi, pure commodities like say soya beans.
So at least when we look at the most visible aspect of cultural influence, what
percentage of the outputs of the cultural sector are exported around the world?
The answer falls very,
very far short of the levels that we would expect to see if there
really were a global cultural tsunami going on through this particular channel.
So that's the out most ring of the onion.
Let's now turn to thinking about information flows across borders and
what we can say about them.
Well in session one I
already showed you certain measures of informational globalization and
these are really measures of cross border contact in some sense.
To what extent do phone calls connect up across national borders,
to what extent do people in one country look at news websites from another, etc.,
etc.
And I also made the point during session one that these levels of
informational globalization fall far short of what we
would expect if national borders didn't matter much at all.
But measures of informational contact are not the only kinds of
informational measures we might think of using.
We can also try and see what we can say about not just contact, but
content of information flows.
And here, let's just look at a couple of assorted data points.
When we look at all the books published in the world,
only about 4% of the titles published on average, although there
are huge variations across regions, are accounted for by translated titles.
So that's not a very high level
of cross-border cultural transmission via books.
When we turn to news, the numbers are a bit higher, but again raise some concerns.
So the average foreign share of TV news coverage ranges between 15% and
25% around the world, depending on exactly how one counts stories
that involve the focal country, the home country interacting with other countries.
If those are counted counted as international coverage,
the percentage is higher, closer to 25%.
If those aren't included in international coverage,
the percentage is lower, about 15%.
The other thing that's concerning about news coverage,
the content of news coverage is that for many countries such as the U.S., there
are actually indications of declining foreign share of news coverage over time.
And so things have been getting less internationalized rather than
more internationalized in terms of news coverage at large.
Third, we can look at music.
One study estimates that foreign artists' share of all the music listened to around
the world dropped from about one-half in the 1980s to about one-third by 2007.
One third is still a pretty high number, but
the trend here is very interesting, a very, very, clear decline.
And finally, in some sense, the exception to the rule, Hollywood.
It is true that Hollywood's share of world demand is still in the 40 or
50% range which is quite high, but it's also worth noticing that
the overseas share of Hollywood's total revenue actually has been stagnant for
decades now, which is a little bit of a concern as markets outside the U.S.
grow faster in most instances than the market within the U.S..
Also worth adding to this on the, in respect to film is this idea that,
of the films that do travel well across borders, action adventure films
typically account for half, or more than half of the top box office successes
around the world, and whatever else these films do, it's hard to argue that
the typical action adventure film, say, The Transformers, actually has
a great deal of cultural content to transmit from one culture to the next.
A certain amount of cultural superficiality is more what comes to
mind which reminds us that even these cross-border flows of film
may somewhat be overstating how much cross-border cultural influence there is.
So when we supplement the measures of informational contact on
the previous slide with these measures of information content, one's again left
with a picture of globalization that while non-negligible, is far from complete.
And that's borne out finally by the third kind of
look we're going to take at information flows and
here we're going to focus on a proxy in a business context for Memes.
Memes as defined by Richard Dawkins are the fundamental units of
cultural transmission that can take place,
and while memes again are a very large, very slippery category,
I thought it might be interesting to look at brands as Memes Plus,
because unlike the typical meme which may just be out there with no
particular entity, particularly interested in whether it gets adopted broadly or
not, brands are things that the corporations who promote them,
do have an interest in spreading as broadly as possible.
And so, it seems to me that, one way of getting at least a partial handle on this
notion of lots of memes being transmitted effectively across national boarders
is to look at how well brands do in projecting themselves across
national borders given all the resources behind them, behind their projection.
So a market research firm called Millward Brown did a study of 10,000
top brands in 31 countries, and concluded that
only16% of these top brands were actually achieved
significant recognition in more than one country and only 3% of these
top brands in the world actually achieved recognition in more than seven countries.
And so while this is not definitive, this analysis of
brands as strong form memes is a little bit of a reminder that
ideas themselves still don't travel nearly as
easily across borders as one would expect, if borders didn't matter at all.
Finally, let me turn to the third inner most ring of the little onion that I
put up a few slides ago and talk a little bit about identities.
At the end of all the products that they import or
export, at the end of all the informational interactions that they have,
how do people conceptualize of themselves, or
how at least do they describe themselves as thinking of themselves.
And, here we have some interesting data from The World Value
survey which asks people whether in the first instance,
they would primarily describe themselves as citizens of the world, of a continent,
of a country, or a locality or region within that country and
it turned out that only 12% of the respondents to the World Values Survey
described themselves as belonging first of all to the world.
And second, when you add it in, the percentage of people who describe
themselves as belonging first of all to their continent, that increased the total
number of quote unquote internationally minded people or people with international
identities by another 3% to 15% of the total respondents.
So again, this is not definitive, but
it does align with the evidence that I've already suggested, it is consistent with
the notion that cross border cultural interactions are still quite limited
which is why 85% of the people in the world would still describe them,
their identities, their identities primarily in national or
sub-national terms rather than in international terms.
The other point worth adding is that there is
considerable stability in these kinds of self assessments over time.
So, not only are people inclined to overwhelmingly describe
themselves as national as having national or sub national identities,
that's a robust pattern that has held up for decades which should provide
some perspective on how likely this is to change quickly going forward.
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