Chapter II. Literature Review
2.6. Social – Cultural Environment
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direct and immediate. Nevertheless, the execution of stock sales and stock options offer
employees much more profit potential. Besides, a PRP compensation arrangement can convey a sense of employee ownership (Pierce et al, 1991).
From our interviews, we found that companies all offer cash bonus to their foreign employees.
These five companies also maintain a clear connection between performance and pay, with the performance evaluation result underpinning managerial decisions on promotion, profit sharing and salary adjustments.
2.6. Social-Cultural Environment
In broad terms, the social-cultural environment includes everything that is not included in the economy or the political system. Economic life is organized primarily through a market in which individuals relate to one another as buyers and sellers and the purpose is production. In political life individuals relate to one another as citizens and the basic purpose is making collective decisions and rules. The economic and political systems together create the conditions—goods, services and rules—which we all need in order to live the kinds of lives that we choose. The social cultural environment, then, consists of the whole range of behaviors and relationships in which individuals engage in their personal and private lives, including: the characteristics of the population (e.g. age, sex, race or ethnicity, class), values and attitudes, lifestyles and
relationships.
Culture is an attribute of groups, and this can mean society as a whole (e.g. national culture), groups within society (sub-cultures), or even groups of societies and nations (trans-national culture).
As with other aspects of the environment, the relationship between business, culture and society involves a two-way interaction. Although we tend to think of business as operating according to a distinctive instrumental rationality of profit-and-loss and the ‘bottom line’ it is also influenced by the social-cultural setting in which it is embedded. At the same time business affects the wider culture and society profoundly. For example, a good deal of what we think of as making up the culture of modern society consists of the outputs of private sector businesses in what might be called the culture industries, such as popular music, films, literature, newspapers and magazines. These influences can be seen as either positive or negative. For example, aspects
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of the culture of a society might be seen as hindering or assisting business performance.
Therefore governments might be interested in promoting cultural change as a way of boosting economic competitiveness.
On the other hand business might be seen as having harmful or beneficial effects on the wider society or culture, and governments might want to influence or regulate business behavior for this reason.
The terms on which we interact with business have a profound influence on our lives. Work is a central aspect of our lives and the vast majority of employees work in the private sector. We also depend very largely on the private sector to supply the goods and services we consume on a daily basis. It is not surprising, then, that business has major impacts on culture and society.
The culture industries make up a significant part of business activity, reflecting the shift from manufacturing to service industries in the wealthy economies (see below—the occupational order). Culture has become increasingly big business as a growing share of consumer
expenditure is dedicated to ‘lifestyle’ purchases rather than material necessities. This can be seen in the growth of the wide range of businesses concerned with leisure and tourism.
More generally, affluent societies, the products of business growth, afford their members vastly increased lifestyle choices and opportunities. Cultural trends are driven powerfully by product innovations spurred by business’s competitive pursuit of profit.
On the other hand critics point to the negative impacts of business on culture and society.
Apart from the serious environmental risks flowing from affluence, it can be argued that consumerism (this refers to the view that achieving higher levels of consumption of goods and services leads to greater happiness. A good life means having more ‘stuff’. This attitude lies behind the belief that economic growth is always a good thing) has got out of hand and become a recipe for unhappiness. This is because we have got caught up in a continual desire for more and the latest thing that can never be satisfied. Similarly some people argue that the pursuit of
increasing affluence has lead us into an unhealthy imbalance between ‘work’ and ‘life’ in which long hours committed to work squeeze out other aspects of a good life such as family life. More
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generally it can be argued that the ‘capitalist mentality’ of self-interest and competition invades other areas of life, creating an individualistic society and undermining community.
Culture is also part of the internal environment of business. As we have said, although business can’t be isolated from the wider culture it does to some extent constitute a discrete sphere of activity with distinctive roles, attitudes and behaviors. It follows from this that the culture of a business organization can be an important factor influencing its success or failure, and that shaping this culture is a key managerial task. Organization culture may even be seen as a managerial tool (though arguably not a precision instrument). The workplace may be seen as an arena in which competition between rival value systems is played out. For example, an ‘us and them’ culture characterized by a confrontational relationship between management and
employees (fostered, in some cases, by attitudes on both sides), may be contrasted with a culture emphasizing shared interests, partnership and teamwork.
A lot of variables should be taken into account if one should decide to do a business in a certain location. One variable to consider is to what degree a social environment of the business is conducive to the business success. Business will accumulate wealth only if the business ecosystem supports the growth of business. One aspects of business ecosystem is the social environment. Decision to invest in a certain location (or community, region or state) should consider to what degree the social environment at a particular location is conducive for business development.
Stability in a community or state is a prerequisite for a good investment. The instability as created by friction amongst the component of society which lead to violence (such as burning and looting of the assets) is something to consider in making decision about investment.
Therefore it is a must for businessman to scrutinize the quality of relationship among groups within a society.
There are four types of interaction quality, namely cooperation, competition, accommodation and conflict. The cooperation occurs when groups of people from different background interact in positive way. One group supports the needs and interest of the other groups. The existence of one group becomes complementary to the other groups. For example if one ethnic group focuses their economic activity on trading, while the other group focuses on
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agriculture. Farmers work on agricultural sectors, traders work in trading. The farmers’
agriculture products would be disseminated by the traders to customers. This relationship would be harmonious in nature. The case of group cooperation and accommodation is not a problem for investment, because this situation always is a good ground for harmony in a society.
Competition is a beginning of a conflict. A group of people in a community competes to outperform the other group. If people in a community compete in a positive way by respecting the rules and the norms of society, the negative impacts of competition can be reduced substantially. If the competition grows to a more serious stage, the interaction may not develop into a conflict if there is a willingness to accommodate the needs and interest of the other party.
On the contrary if the competition escalates into a stage of uncontrollable, where no option are available to accommodate the other party’s need and interest, then the interaction develops into a conflict stage. If the conflict escalates into violence and spreading out so quickly leading to assets destruction than the possibility of lost in investment is high. It would be wise to invest in the area where potential conflict among groups, ethics, and religion at the lowest possibility.
Therefore, one should develop the awareness about this possibility.
So human social –cultural environments encompass the immediate physical surroundings, social relationships, and cultural milieus within which defined groups of people function and interact. Components of the social environment include built infrastructure; industrial and
occupational structure; labor markets; social and economic processes; wealth; social, human, and health services; power relations; government; race relations; social inequality; cultural practices;
the arts; religious institutions and practices; and beliefs about place and community.
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