Businesses in Context: Influence of Socio-Cultural Environments on Businesses

Introduction

In the current age of advanced technology, world has truly become a global village. The contemporary world is witnessing an unprecedented level of integration across all spheres of life, be in social, political or economic. The interconnectedness of Canada and France, my case in point, demonstrate this cultural and social integration very well. An interesting point to be mentioned here is that being a former French colony, Quebec, an important metropolitan province of Canada, possesses some strikingly similar French antecedents. Nonetheless, having merged in Canada for quite long, it has also amalgamated Canadian culture. The purpose of this essay is to shed light on the similarities and differences of Canada and France on the basis of their political, economic and impact of Sociocultural environment  Business . Firstly, it scans the political and economic landscapes of both countries to see where these overlap and how are they different. Afterwards, it analyses the socio-cultural environments of both case countries by observing them through the lens of Hofstede’s cultural dimensions. The in-depth analysis of both countries has enabled me to understand how cultures influence the practices of organisations. As an aspiring international manager, this understanding is utmost important for me to excel in my career.

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On the basis of detailed analysis conducted in part 1, Part 2 of this essay will provide recommendations to a French student planning to spend a year abroad at HEC Montreal.

Part 1

Comparison of Canadian and French Business Environment

Political Environment

Although Canada has many constituencies where French influence is strong, yet the political landscape of France and Canada differs greatly. The political structure in France is centralized whereas Canada exercises decentralized political system.

Structure of Executive Systems in French versus Canadian Politics

France is predominantly a monarchy where there is a clear distinction between the rich and the poor. It was this ever widening gap which led to French revolution wherein people revolted to the monarchy and hanged royals in Public. French government has learnt from the past and now France is a parliamentary democracy (Schain, 2002, pp. 223-243). Nonetheless, president also enjoys significant power in the state. Hence, France has a semi presidential political system (Elgie, 2000). Although the current political environment is stable in the country, yet government has upheld tight regulations to ensure such events do not occur in future. Hence, it is safe to say that France exercises ‘punctuated democracy’. Talking about the separation of powers in France, president is the head of state who is elected after every five years. The president appoints Prime Minister, who further suggests the cabinet of ministers, and appoints them after gaining approval from the President. It is the responsibility of premier to allocate budget for state’s expenses and revenue (Mauss, 2002). French parliament consists of Senate- the upper house and National Assembly- the lower house. Main political parties of France are The Socialist Party, The Republicans, The Democratic Movement and The Greens (Samuel, 2017).

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Figure 1: Angry mob carrying out the execution of elites in French Revolution (Source: Iritani, 2017)

Contrary to France, Canada has a decentralised political system. The English Queen Elizabeth II is the “Head of State”. She is de-factor administrator of the government and appoints Canadian Governor General, who inducts the Prime Minister and his Cabinet. The Governor General is the head of the government and holds executive power for five years. Hence, Canada still contains traces of monarchy and has a federal structure because of its vast size. Citizenship judiciary is a hallmark of Canadian legislative system which is a fair and independent body that ensures provision of equal rights to all citizens. However, it is not empowered to establish criminal courts; that is a purely constitutional matter (Johnston, 2008).

Incumbent Governments in France and Canada

Emmanuel Macron has been elected as the president and Edouard Philippe as French Prime Minister According to the results of general elections held in May 2017. The heavy win of Macron has given rise to fears that he will run French government as ‘one-man show’. However, the elected head of the state has avowed to take all concerned stakeholders on a page regarding important matters of the state. Similarly, Justin Tradeau, the incumbent premier of Canada also holds similar beliefs. Since the start of his tenure in 2015, the minister has taken different measures to improve the status of the middle class and to support them by lowering federal government taxes. The payroll taxes have been boosted aiming to help funding a development of the Canada Pension Plan. The government also plans to create others funds in order to expand and invest in some infrastructure projects around the country. The Comprehensive Economic and Trade Agreement between Canada and EU will hopefully enhance the trades between European countries and Canada by 20% (Nordeatrade, 2018). Canada recently signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership agreements, and will soon permit a reduction of tariffs and easier access to large markets in Latin America and Asian countries. A potential benefit of all these trade agreements will be the drop in unemployment (Canada National Statistics Office, 2018).

Overlaps and Differences in Political Environment: France versus Canada

There are some similarities between the socio-political environment of France and Canada. Like France, Canada has implemented a pension and social security plan, aiming to help retired people. Retirement can be claimed from 62 years of age (Investopedia, 2018).

Although both countries are democratic regimes, yet the constitution of both governments are different. The historic background of the countries makes a lot of difference in terms of political decisions. If one observes the political orientation of Quebec, which was historically a French colony, it can be seen that its system is very similar to the French political matrix. The province has distinguished itself from the rest of the Anglo-Saxon country. Internationally, it has been able to extract itself from the other regions, and mirror its own particular international visibility. The Quebec’s government has been developing a para-diplomacy through the expansion of its provincial competencies internationally. For example, Quebec has its own International Relations’ ministry and is an active member of international francophone network. It also has a unique identity at the UNESCO forum. Canada’s relation, or more specifically, Quebec’s relation with France has always been unique. This is based on cultural and historical associations. Recently, a high influx of French expatriates in Quebec has been observed, who are attracted by its French antecedents and a myriad of opportunities that the province offers. For example, the government of Quebec offers the benefit of free social security to all French students immigrating to Quebec. Thus, Quebec actively facilitates the entry of French speaking communities, which result in almost 4000 French citizens moving to its metropolitan heart Montréal annually (La France au Quebec, 2018).

Figure 2: Map demarking QC (Quebec) from Canada (Coutesy: Google Maps, n.d.)

Figure 3: Map showing distance between Canada and France (Courtesy: DistanceFromTo, n.d.)

Economic Environment

Canada and France are two powerful world economies. Canada had record GDP growth in 2017, which made it the fastest growing economy of G7 countries (Statistics Canada, 2017). In the same vein, France’s economy is considered to be the fifth biggest economy worldwide. Different industries of these countries have collaborated to make them successful worldwide. For instance, Canada relies heavily on its exports, which are usually traded with the United States. Similarly, exports is the main decisive factor in the French GDP as well, and most of them are traded with Germany.

Nature of Economies

Talking about the nature of economies, Canadian economy is service-based. It represents 70.2% of the GDP. Similarly, service sector contributes largely to the French GDP as well, as it employs 78% of the labor force of the country, and with 77.4 billion of US dollars exported in 2017 to Canada (United Nations Statistics Division, 2018). In addition, France is also one of the most visited countries in the world, so tourism and telecommunications are the dynamic service sectors which boosts its economy. France also has a very productive aerospace, railway and automotive sector, as well as being a leader in cosmetics and luxury goods. On the other hand, Canada is one of the largest exporters of agricultural products, and most particularly of wheat, producing 10% of the world’s GMO harvest. It also produces important mineral products like gas, nickel, zinc and uranium, and is positioned third largest in terms of oil reserves and sixth in terms of oil production.

Prospects and Challenges of Both Economies

The taxation level exercised by fiscal policy may be the main factor that inhibits the development of new small and media companies. In 2004, the ‘tax wedge’ in France was 40%, which included 33.3% standard company tax, 0.15%-1.5% company payroll tax and the rest was social charges. This is why labor cost is very high in France as compared to USA and UK. French economy is built on a floating global environment as well as rising domestic businesses. Nonetheless, due to a hardworking and dedicated workforce, France’s economy is striding and its GDP is predicted to grow by at least 1.7% in 2017 and 2018, up from 1.2% in 2016. However, even the recovery of GDP has driven only a small reduction in the rates of unemployment, from 10% in 2016 to 9.5% in 2017, despite the fact that job creation has exceeded labour force. All these statistics imply that tapping labour market is one of the key challenges faced by France’s economy.

Another blow to France’s economy is large trade deficits, which are expected to rise from

€48.1 billion in 2016 to € 63 billion in 2017 and 2018. Although France has made progress in global exports yet its exports are weaker as compared to its contending economies. Nevertheless, the efforts of incumbent French government in controlling trade deficit are commendable. Government has implemented the fiscal consolidation strategy to exit the Excessive Deficit Procedure. Moreover, the newly elected President Macron has devised legislation to make labour market flexible by relieving redundancies, abridging social dialogue structures in companies, and giving greater room for deals on work time and compensation at company rather than industrial level.

In addition, the government is expected to implement more protective social policy reforms e.g. pensions, health insurance and educational reforms to improve the status of French citizens’ lives.

Moving towards the prospects and challenges of Canadian economy, it is safe to say that it is faring quite well than French economy. GDP grew by 1.4 increase in the first quarter of 2018. Canada’s economy propagated at the fastest pace in a year as its exports increased (Gov.UK, 2018). However, a reduction in business investment might cloud the optimistic economic picture. This development has also made interest rate stagnant in the bank of Canada (Financial Post, 2018). Moreover, the prime minister in office i.e. Justin Tradeau has taken several measures to ensure best living standards for Canadians. The concerted efforts of government have resulted fastest economic growth among G7 countries, more than 400,000 jobs have been created and country has observed lowest unemployment rate since 2008 (Gov.UK, 2018).

Figure 4: Growth Domestic Product growth of Canada (Courtesy: Trading Economics, n.d.a)

Figure 5: Growth Domestic Product growth of Canada (Courtesy: Trading Economics, n.d.b)

Comparing Canada’s and France’s Socio-Cultural Environment

Before visiting any country, it is vital to have a clear understanding of its social and cultural environment. Literature is a great repository for understanding the variances between different cultures. To understand the socio-cultural differences between Canada and France, this section will present their comparison using Hofstede’s cultural model. In 1980, Hofstede gave four dimensions i.e. power distance, individualism, masculinity and uncertainty avoidance (Hofstede, 1980). To date, two other dimensions have also been added but this essay will only discuss the above mentioned ones. Hofstede’s culture dimensions will also help to understand the impact of society and culture on the business and management of Canada and France. As a future international manager, this understanding will help me to be mindful of the influence of socio-cultural environment on organisational processes. Furthermore, this cross cultural analysis will justify the differences in business environment of both countries on the basis of cultural antecedents.

Figure 6: Hofstede’s Cultural Dimensions put forwarded in 1980 (Adapted from Hofstede, 1980)

Power Distance

This dimension deals with the power variance existing in different cultures. It shows the extent to which individuals from a society are unequal, and communicates the manners of the culture of a nation concerning these inequalities. It also holds that “the less powerful members of institutions and organisations of a country expect and accept that power is distributed unequally” (Hofstede Insights, n.d.).

Figure 7 shows that Canada scores 39 on the power distance matrix while France scores 68; a mighty difference of 19 points exist between the two countries. This difference in scores highlights the variance between both countries regarding their cultural views on hierarchy and authority.

The Canadian culture’s power distance score is even less than the global average of 55. This portrays Canada as an egalitarian society where citizens are interdependent. No overt class status exists in the society and everyone is given equal respect and honor. Low power distance manifests itself in the form of a convenient society in Canada where superiors are readily available to help those in need. There exists a greater equality between all strata of society, including government, organizations, and even inside families. The orientation towards equality strengthens a helpful interaction across power levels and engenders a stable socio- cultural environment (Javidan et al., 2006).

Contrarily, France scores a legitimately high power distance score, suggesting a hierarchical structure existing in the French society. This high power distance stems from the history of France. It is predominantly an aristocratic state whereby superior positions in government are held only by those belonging to noble lineage (Zheng, 2010). Thus, French citizens inherently deem inequality to be an inextricable phenomenon. Moreover, power is centralized in France. French government enforces strict laws and regulations and citizens have to abide by at it any cost. As far as the business and management world is considered, the attitude towards managers is highly formal. Organizational structure consists of many ranks and the information flows through multiple tiers. Individuals at the lower ranks accept that they have to work under the rule of higher authorities (Zheng, 2010). These facts indicate that the social order of France is built upon the concept of Ruism, as elaborated by Elstein (2015) who argued that in a society where Ruism is applied, there is a commonly held belief that “different things happen to different people”. More explicitly, the philosophy behind Ruism concept mandates high respect for superiors. French citizens are, therefore, more willing to recognise hierarchy and the order of society.

These differences of power distance affect the leading management structures.

Leaders and communication

Canada’s low score on the power distance dimension implies an organisation culture where superiors are accessible and managers trust employees and their teams’ skills. A custom of teamwork and collaboration is evident in the country whereby managers ensure that opinions of every team member are heard. Important decisions are made with consensus. This ensures straight and easy exchange of information between executives and employees.

On the contrary, as France is a high-distance power society, so direct communication is deemed discourteous and impolite. Studies have proved that hierarchical levels exist within French organizations. The lines between managers and employees are clearly marked with the former being more prestigious and powerful than the latter. CEOs hold eminent position within organizations and it is mandatory for them to attend prestigious university.

According to Fikret Pasa (2000), the leaders in a high-power distance society are usually authoritarian, dictate tasks, and enforce centralized decision making. Same holds true for France where managers have the final say and opinions of lower ranked employees are not regarded. On the other hand, authority is disseminated in Canada. Thirteen provinces have been created after the World War I under a single constitution, but the power has been divided in a federal model, thereby enabling each province to become autonomous. This socio-cultural autonomy is also embodies in organizations which foster liberty and allow teams and employees to be independent and creative.

Figure 7: Comparative Account of Canadian and French Socio-Cultural Environment (Adapted from: Hofstede Insights, n.d.)

Individualism

Both France and Canada score a high individualism level i.e. 71 and 80 respectively. It reflects the degree of interdependence a society maintains among its members (Hofstede, 1980). A high individualism score is indicative of independent attitudes and less reliance on others. It reflects that inhabitants are self-sufficient and expected to look after themselves and their families only. Privacy is considered the cultural norm and attempts at invading personal space may meet with rejection (Nishimura et al., 2008).

In the business environment, this high individualism dimension signifies that employees are autonomous and launch initiatives by themselves (Schimmack et al., 2005). Meritocracy is dominant in both countries. As both societies are individualistic, it reflects that employees are intrinsically motivated to work. In fact, individual productivity and efficiency lead to bonuses and promotions. High individualism encourages these two societies to perform better and fight fierce competition. The educational system of France aims at inculcating emotional independence in the students. Such a combination of a high power distance and high individualism score shows a paradox existing in French society. In France, the families and teachers still have an important emotional hold on individuals than in Canada. The high power distance mandates formal respect for the superior, however does not account for the rejection of power that may occur due to high individualism. Ironically, France is considered to be one of the societies that retaliated to power, through strikes and revolutions. Because of their emotional dependence, French feel the need of distinguishing their work life from their family life, therefore they struggle to maintain work-life more than Canadians.

An example that differentiates the two cultures in their core beliefs could be in the customer service experience: the French have a low customer service rate, whereas the Canadian one is much higher, closer to the Anglo-Saxon system. Canadians are self-committed to personally achieve better in their job, therefore expecting respect for their work.

Masculinity

This dimension denotes a highly competitive society, driven by accomplishments and success and always aiming to beat the competition (Arrindell et al., 2003). France scores 43 while Canada fares well at 51. The low score of France shows the prevailing Feminism in the society whereby the quality of life is a symbol of success. This feminine dimension is also reflected by its socio- security system (welfare), its worker protecting rules, its famous five weeks of vacations per year and the strive to achieve a high-quality life.

On the other hand, Canada scores slightly higher, which denotes the masculine dimension of its society. It indicates that Canadian society has set tangible standards like high achievement in work and professional excellence for measuring success. In fact, Canadians tend to fight to perform high standards in work and sports. Success and achievement are key values of this society, however, still not comparable to the United States’ level. The medium score is underpinned by the tendency to maintain an equilibrium between work and life. Nonetheless, the francophone Canadians (those living in Quebec) are more influenced by French culture which is depicted by their masculinity score which lies close to that of France i.e. at 45.

On business front, low masculinity score implies that competition is low in France as compared to Canada. Although individuals are hard working in both countries, yet the need for achievement is high in Canadian citizens as compared to their French counterparts.

Uncertainty Avoidance

This dimension refers to the extent to which a society copes with the unexpected future i.e. whether it tries to control the future or let things unfold at their own pace. Anxiety stems from the hastiness to control the future, and countries adopt different mechanism to avoid this anxiety. Thus, uncertainty avoidance shows the degree to which individuals feel threatened by uncertain future and the mechanisms that they espouse to avoid the uncertainty (Litvin et al., 2004). Scoring a massive 86, France is very much an uncertainty averse country. In fact, advanced technologies and systems such as nuclear power, high-velocity trains and the aviation equipments have been industrialised by French. Moreover, emotional safety is a key concept in the French society, laws are very strong, and regulation is the base structure of the society guiding French’s lives.

On the other hand, Canada, scoring 48, seems to be more receptive and comfortable to unexpected situations. Canadians tend to be more flexible and creative. This quick adaptability is also reflected in the working environment of Canadian organizations which readily implement changes in face of difficult situations (Mangundjaya, 2011).

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PART 2: Recommendations to Study and Work in Montreal

Emma Vernes is studying Economics and Business Studies at the Sorbonne University, Paris and she is about to come to HEC Montréal for her year abroad exchange. She has contacted her friend Lara, who she has been attending the same school since her first year of university, to get some insights about Montreal and HEC before arriving to Canada.

From: emma.vernes@gmail.fr

To: lara.s@hecmontreal.ca

Subject: recommendations Montréal HEC

Hi Lara,

Long time no see! I hope your studies are going great. I am super happy that we will finally get to see each other in Montréal. As I was preparing myself mentally for this exciting departure and to live in Montreal, your name occurred to my mind. I hope you would be able to give me some advice to familiarise myself with the Canadian culture, on the basis of the experience you have gotten in transiting from a Parisian life to a Canadian one.

Thanking you in advance,

Emma

From: lara.s@hecmontreal.ca

To: emma.vernes@gmail.fr

Subject: RE: recommendations Montréal HEC

Hey Emma!

Super excited that you will be coming to HEC this year! I am sure you will adapt here very easily, however, I will try to give you as much information as I can, hoping that it will facilitate your reorientation to a Canadian life.

Life in Montréal

Montréal is a very economic city: you will find an apartment very easily to live in, at a very convenient price, and your room will probably be doubled as big as what you would have had in Paris. The cost of living is reasonable as well. It is worth mentioning here that Montréal is a huge city, downtown is not spacious enough but new parts of the city have been recently being developed where you could find a nice place to live in. However, due to the weather conditions during winter, where snow storms are very frequent, I would recommend not to live too far from a metro station or from the school itself, as it can become extremely troublesome to travel around the city in the morning.

Montreal is considered a safe city, you will not face any security issues here. As a French person, you will notice that travelling around and shopping in Montreal is much easier if one is able to speak French. Canadians from Montréal adore French people, their government is trying to attract a lot of them by providing them different benefits, for instance, social security. It is much easier for French citizens to find a part -time or even regular job, because when you would apply to the state to get an internship or a job, the visa processing timeline is quicker than it is for any other nationality. This is because the Canadian government is trying to implement French as the main language of the province. As you will get to do some shopping around the city, you will notice that some shopkeepers do not greet you with “Hi” anymore at the entrance: in fact, a year ago, a new law has been put in place, to “Frenchise”. Hence, the city, shops and restaurants have to say “Bonjour” when a customer comes in. However, as you go to the East of the city, where the Italian and Greek communities live, French is barely spoken at all.

Speaking about cosmopolitan nature of Montreal, it is an international city, full of students and professionals from across the world. Canadian students and professors are much more “relaxed” than what you could have been experiencing in France previously. The dynamisms of the city are also very different from what you could experience in France. In fact, a large number of French families, students or young workers have been moving to Montréal because of hassle-free visa process, the opportunities that the city offers and the convenience in terms of similar language. The amount of work required at Montreal’s academic institutions is also different from what I had expected. Each module has 3 different notations, which is way different than our French education system. Therefore it is important for you to get familiar with the learning methodology to adjust yourself to the HEC rhythm.

At a professional level, the working opportunities that are offered in Montréal are much diverse than those we could grab in France. I have interviewed some post graduate students at HEC, and a lot of them had already planned to stay for a longer term in Montreal, because of the immense working opportunities that the city offers. Similar to the French employment system, Canada has also adopted the “35hours a week” method, which makes it easier for French to fit in themselves at Canadian workplaces.

I hope I have been broad and precise enough to roughly give you an explanation of the dynamics of Montreal and HEC. To add to your excitement, you will also have plenty of opportunities to travel around North and South America (especially during winter!) and discover the beautiful landscapes this country preserves.

Let me know if you have any other questions.

Hoping to see you soon in Montréal,

Lara

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