03_Determinants of Culture Flashcards
Determinants of Culture
7 items
- poltiical system
- legal system
- economic system
- social structure
- religion
- language
- education
Political System
- system of governmen
- 2 dimensions which are interrelated
-
Collectivism vs. Individualism
- represents more the general philosophy -
Democratic vs. Totalitarian System
- represent more the actual reality
- system that emphasize collectivism tend to be totalitarian
- systems that emphasize individualism tend to be democratic
Plato vs Aristotle
- Plato advocates Collecitivism in The Republic
- Aristotle advocates Individualism
Individualism Philosophies
- early economists David Hume, Adam Smith, John Stuart Mill refined Individualism reborn in Protestant nations of England and Netherlands during 16th century
- “welfare of a society is best served by letting people pursue their own economic self-
interest” - advocacy for free markets: concept of the invisible hand, meaning that free markets have self-regulating forces and will reach optimal welfare, state interventions and ownership should be reduce to minimum (Smith)
- 20th century Milton Friedman, Friedrich von Hayek and James Buchanan have championed the phiolosophy
2 tenets of Individualism
- individual freedom and self expression
- welfare of society is best served by letting people purse their own economic self-interest as opposed to some collective body (such as government) dictating what is in society’s best interest
4 major forms of totalitarinism
1. Communist Totalitarianism: Collectivism advocating that socialism can be achieved only through a totalitarian dictatorship
2. Theocreatic Totalitarianism: political power is monopolized by a party, group or individual that governs according to religious principles e.g. Iran
3. Tribal Totalitarianism: party group or individual represents interests of a particular tribe (ethnic group) monopolizes political power e.g. Uganda
4. Right-Wing Totalitarianism
Attributed necessary for democratic systems
- Regular, free and fair elections
- Right to freedom of expression, opinion and organization
- A free media
- Limited terms for elected representatives
- A fair and independent court system
- Nonpolitical state bureaucracy
- A nonpolitical police and armed services
- Relatively free access to state information
4 Criteria to distinguish different forms of economic systems
- Ownership of productive activities: privately owned vs. owned by government
- Determination of production: by supply and demand vs. government control
- Determination of prices: by supply and demand vs. government control
- Role of the government: Actively involved in economic issues vs. just giving structure and rules
3 Types of Economic Systems
1. Market Economy: supply and deamdn determine # and price of goods and services produced; government encourages free and fair competition and aims to prevent monopolies
2. Command Economy: government plans # and price of goods and services produced and sold
3. Mixed Economy: certain sectors are left to private ownership and free market mechanisms while other sectors have state ownership and government planning; certain degree of industry regulation
[Traditional economy: basically in ancient times]
3 types of Legal Systems
1. Common Law
- based on tradition, precedent and custom
- larger flexibility of interpreting the law
- judges have the power to “interpret” the law
- e.g. UK, US
2. Civil Law
- based on detailed set of laws organized into codes
- less flexibility in interpreting the law
- judges have the power only to “apply” the law
- in more than 80 countries
- eg. Japan, France, Germany
3. Theocratic Law
- based on religious teaching
- mainly concerned with moral behaviour
- e.g. Isamlic law and until 20th century Hindu and Jewish Law
4 Determinants of the legal system in the business environment
Economic system is implemented through a conductive legal code
- property rights and level of coruption
- protection of IP
- product safety and liability
- contract law
Economic Freedom index
4 categories of economic freedom
Heritage Foundation
- measure of economic freedom in country based on 12 quantitative and qualitative factors rated on scale from 0 to 100
4 categories of economic freedom
- rule of law [property rights, government integrity, judicial effectiveness]
- government size [government spending, tax burden, fiscal health]
- regulatory efficiency [business, labour, monetary freedom]
- open markets [trade, investment, financial freedom]
- positive relationship between economic freedom and economic progress, healthier societies, cleaner environments, greater per capita wealth, human development, democracy and poverty elimination
Social System
2 dimensions
- Individuals vs. Groups
- Degree of Social Stratification
Social System = basic social organization of a society
Private Action vs. Public Action
In context of legal system
Private Action
- theft, privacy, blackmail and the like by private individuals or groups
- e.g. Mafia activity due to weak legal system
Public Action
- extortion of income or resources of property holders by public officials such as politicans and government bureaucrats
- e.g. excessive taxation, requiring expensive licenses or permits from property holders or corruption by demanding bribes from busineses in return to rights to operate in a country, industry or location
Individual vs. Groups
In Context of Social System
Focus on
Focus on Individual
- emphasis of individual achievement
- predominant in western societies especially US
- high value of entrepreneurship as an expression of high individualism
- high managerial mobility and less loyalty to one firm (=group)
- less team work and cooperation surveyed than in more group related societies
Focus on Group
- important for social standing is group, to which one belongs
- less emphasis on individual performance
- strong identification with group and the firm an individual is working for
- less managerial mobility, more life-time employment
- bus less dynamism and entrepreneurship recognized
