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See discussions, stats, and author profiles for this publication at: OF CULTURE ON INTERNATIONAL TRADE: CASE STUDY OF SAFFRONEXPORTArticle · May 2014CITATION1READS20,9473 authors, including:Some of the authors of this publication are also working on these related projects:Marketing Research View projectHanieh ShahiSharif University of Technology4 PUBLICATIONS 1 CITATIONSEE PROFILEAll content following this page was uploaded by Hanieh Shahi on 09 July 2014.The user has requested enhancement of the downloaded file.Indian J.Sci.Res. 4 (6): 381-388, 2014 ISSN: 0976-2876 (Print)ISSN: 2250-0138(Online)1Corresponding authorEFFECT OF CULTURE ON INTERNATIONAL TRADE: CASE STUDY OF SAFFRONEXPORTALI KALHORa1, HANIEH SHAHIb AND MOHAMMAD SADEGH HORRIca Department of Executive Master of Business Administration, Arak Branch, Islamic Azad University, Iranb Department of Management System and Productivity, Faculty of Industrial Engineering, Sharif University of technology, Iranc Assistant Professor, Department of Executive Master of Business Administration, Arak Branch, Islamic Azad University, IranABSTRACTInternational commerce includes all transactions which are performed between two or more countries. To perform atransaction, companies should consider international practical structures to execute them in target market. Besides internationalstrategies management knowledge, it is also important to analyze financial results of each one of these strategies. Differencebetween a local commerce and foreign commerce generally includes economic activities, goal of managerial decisions, type of legalsystem and limitations of different countries and cultural difference of countries is one of the subsets of economic activities.Therefore, proper understanding of culture is a necessary part of development of effective marketing strategies and performanceof international transactions. Goal of this paper is to study culture and its effect on international commerce. To reach this goal, thispaper first studies role of culture as one of the successful marketing factors in development of international commerce and thenstudies saffron product as an exported sample of the country in terms of effective cultural factors.KEYWORDS: Culture, International Commerce, Marketing Strategy, SaffronOne of the factors which cause success ofcompanies in the field of global commercial activity iscultural recognition as one of the key factors in targetmarkets. For this purpose, pioneer companies in globalmarketing not only consider cultural factors fromdifferent dimensions in the field of design and attitude ofconsumption, naming, packaging, advertisement,attraction and distribution of product but also recognizetraditions , customs , norms , behavior , conduct andthought , insight , language , religion , art , feeling andbeauty , communication and negotiation and other factorsin those markets (Karimian, 2007).Sine time of Hall (1940), familiarity with culturewas considered as a silent language in foreign commerce.In study of culture, national culture is widely definedwhich had attracted international marketing researchersand managers in foreign commerce for four decades. Roleof the primary pioneers of culture study in marketing likeLee (1966) and Hall (1970) in environmental analysis ininternational commerce is valuable as a necessary elementin understanding of foreign markets. But extensive studyof culture in research and international commercialoperations in 1980s and after pilot study of Hofstede(1980-1983) in classification of national culture waspublished (Nazarian, 2012) and was applied as aframework accepted in analysis of national cultures.Application of study and role of culture in internationalmarketing were expanded in 1970s and 1980s but its realexpansion in this field occurred in 1990s (Ali Arab,2009).ROLE OF CULTURE IN INTERNATIONALMARKETINGCulture has been defined in literature ofinternational marketing has been defined through manyconcepts. Liong extensively defined culture in 2005:values, beliefs, norms and behavioral patterns of anational group. House also gave another definition in2004: the embedded values (the method with which thecases should be done) and measures (the way which casesare performed) in a society. For example, concept ofculture in national-social level can be attitude of Hofstede(Nazarian, 2012). Perhaps, definition of culture by Nakataand Hang in 2002 is the most suitable attitude in the fieldof culture in international marketing as follows: generalcombination of knowledge, belief, art, ethics, law,tradition and skills and other habits which are acquired bypeople as society members because it is an attitude whichincludes nature of culture as a personal and organizationalholistic system and social interactions (Ali Arab, 2009).Culture grows over time and is evolvedpermanently and slowly. For example, negativetendencies to material culture in some societies maydisrupt commercial activities. Gandhi believed in negativeeffects of material culture and declared that westerntechnology and industrialization removed human valuesKALHOR ET AL.: EFFECT OF CULTURE ON INTERNATIONAL TRADE: CASE STUDY OF SAFFRON EXPORTIndian J.Sci.Res. 4 (6): 381-388, 2014and converted human into machine. If his thoughtcontinued in India, it would prevent this country fromindustrialization. Therefore, familiarity with culture offoreign countries is of special importance for internationalcommerce and whatever we move toward internationalmarkets from local environment and markets, role andsensitivity of cultural factors will increase (Karimian,2007).Specifications of international marketsDifferences among the transacting parties andtheir international markets are characterized by differencein social, cultural, political, technical and economicenvironments. The differences such as time of the regionand language in exchange of methods and managementpattern models cause problems and create considerableeffects on legal management of cross -border relations. Instudy of international distribution channels, concepts ofmental distance and environmental uncertainty haveattracted many attentions (Esmaeil Poor, 2011; Ali Arab,2009).Cultural factors affecting international marketsAttention to cultural factors in internationalcommerce is very important because language, lifestyleand values change from a society to another society(Karimian, 2007). Cultures include two parts: localculture or manufacturer and foreign culture or targetmarket. Some cases such as product packaging, label,quality, services, place and time of purchase, price andadvertisement all are affected by culture of societies andpeople and relate to culture of target culture. Study andresearch in this regard lead to conformity of product orservice in that market and success in the relatedcommerce in international level. But necessity ofadaptation to environmental culture of target market isone of the local cultural factors which require avoidanceof cultural prejudices and attention to culture of theforeign countries from different viewpoints so thatadaptation of product to taste and culture of customer isthe priority of production. Then, a series of culturalfactors affecting international commerce and briefdescription of each one of them are given.Mental distance: a key factor in description ofinternationalization process is concept of mental distance.Mental distance is a class of elements which come from aspecial foreign market and control information flow.Based on work of Russ and Klein in 1990, mentaldistance is suggested as different perception of theimporter with operational environments of the exchangeparties, lower degree of dissimilarity and lower level ofmental distance in relations of importer and exporter. Toimprove quality of relations, a set of purchaser and sellerrelations who interacted with each other for long term isnecessary. But mental distance stops communication flowand social interactions among exchange parties andparties cannot trust in each other. For example, people notonly should travel long distance and face manydifficulties but also lingual differences disrupt descriptionand solution oft complex technical problems and they willface problem in careful and detailed transfer ofinformation. Mental distance may reduce tendency toestablish relations which aim to guarantee maximumactivity and effort and determine communication channelsof members because the groups which interact with eachother are far from each other and lack a commonframework of references. In addition, there are thedifferences in operational environments of internationalexchange patterns which increase potentialmisunderstandings among groups and reduce satisfactionwith relations (Ali Arab, 2009).Language: language is the most importantcommunication means between people and one of themost important factors which should be considered ininternational commerce. All large commercial companieshave their own brands but they should consider somepoints at time of export such as meaning of trade name intarget language, conveyance of meaning of form andsymbol applied in product advertisement for the people oftarget market (Marek Kania, 2010).For example, “Hevrolets Nova” was a knownbrand for automobile of General Motors Company inAmerica while sale of this brand in Spain faced problembecause “Nova” means “it doesn’t move” in Spanishlanguage . It is clear that name of automobile will not bereceived by the customers as it means “it doesn’t move”in a country. In another case, IBM supplied its computer,series 44 to Japan under other numbers because number 4is similar to Japanese word which means death (Karimian,2007).Color: colors in different cultures convey differentsymbolic concepts and a company which wantsinternational commerce should be familiar to thesecultural patterns in the field of colors to make desirableplanning in the field of packaging and advertisement ofKALHOR ET AL.: EFFECT OF CULTURE ON INTERNATIONAL TRADE: CASE STUDY OF SAFFRON EXPORTIndian J.Sci.Res. 4 (6): 381-388, 2014products. (Marek Kania, 2010). In a foreign market,selection of colors should be based on aesthetic sense ofthe purchaser’s culture not seller’s culture. For example,in Japan, green color is symbol of national color andshould not be used in packaging of goods. An Englishbank was willing to expand its activity in Singapore andgreen color was used in brand of this bank but marketresearch clarified that green represented death in thiscountry and bank had to change its mark (Karimian,2007).Traditions, customs and culture of productsconsumption: any country has special tradition, normsand customs. A manufacturer should research onconsumption of product before compiling marketing planbecause habits, tastes, public culture and differentpreferences cause the product or brand which is receivedwarmly in a market of a country may be less received inanother market. The following examples include theabove cases:• The German and French people almost consumepackaged and branded spaghetti compared with theItalian people.• Sale of a type of shampoo in Latin America was notsuccessful because it was found after market researchthat people of this region wash their head with soapand seldom use shampoo.• American company decided to supply its goodswhich was a mixture of chocolate and peanut and wassuccessful in Japan. As a result, marketing researchfound that the old women in Japan believe thatconcurrent eating of chocolate and peanut causednosebleed.• Polisher of floor of the manufacturing room ofJohnson Company first failed in Japan because thisfloor polisher made room very slippery and thiscompany didn’t notice that Japanese people didn’twear shoes at their homes.• In France, wholesalers don’t want to take actions forpromotion of sale for their products. They ask theretailers what they need to send the required productsto them. In case a company wants to establish salepromotion strategy based on French wholesalers andwill not succeed. In Middle Asian countries, retailingis more important than wholesale (Karimian, 2007).Packaging pattern: differences in marketingenvironment require special conformity in terms ofpackaging type of the product. Submission of package tocountries sometimes requires adaptation to that market. Anumber, color and form which seem suitable in a countrymay reduce sale and even completely prevent sale of thatgoods in another country. For example, 1-kg package oftomato paste attracts most customers because thisfoodstuff is used in most foods but 250-g package ishighly demanded among the European family. 4-liter milkpackages which are highly used in America change to 0.5-liter packages in Iran due to low per capita of milk. InAustralia, the number of cigars on a package should beprinted in front of the package. In Canada, it is necessaryto write the text into two languages. Packages depend ontradition and customs of consumer market in terms of sizeand form. For example, American people prefer topurchase goods in glass but the German people tend topurchase it in cans (Karimian, 2007).Religion: a company with target of internationalcommerce should know that religion has considerableeffect on economy of a society and marketing activities.Religion creates attitudes and values among people whichare effective on their consumption and purchase patterns.For example, holidays have considerable effect onpurchase trend of some products and Sunday is a religiousholiday for the Christians and Friday is a religious holidayfor the Muslims. In Christian countries, Christian holidaysare suitable time for sale of products such as clothes,shoes and types of pastry. In Iran, Norooz holidays playthe same role. Failure to drink alcoholic drinks in Muslimcountries increased sale of nonalcoholic drinks in thesecountries and created a good market for the companiessuch as Coca Cola and Pepsi (Karimian, 2007).Negotiation: negotiation is a process which is madebetween two parties and attempt is made to make anagreement on the interesting subjects of the parties. Whennegotiation is made with between people of two countrieswith different cultural history, failure to pay attention tothis difference can be effective on negotiation process andconverted into a barrier to success (Shahdadnejad andNakhaie, 2011). For example, Japanese managers in faceto face commercial communication seldom answer no totheir American commercial parties and this behaviorconfuses Americans who are used to make immediate andexpress conclusion and they don’t known what positionthey should take up (Karimian, 2007).Success factors during a commercial negotiationin four different cultures are summarized in Table 1.KALHOR ET AL.: EFFECT OF CULTURE ON INTERNATIONAL TRADE: CASE STUDY OF SAFFRON EXPORTIndian J.Sci.Res. 4 (6): 381-388, 2014Table 1: Hierarchy of success factors during a commercial negotiation in four different cultures (Danciu, 2011) Brazilian negotiatorTaiwanese negotiatorJapanese negotiatorAmerican negotiatorCapacity of preparationand planningInsistence anddeterminationWorking commitmentCapacity of preparationand planningCapacity of preparationand planningWinning respect and trustPerception and capacityof taking advantage ofpowerCapacity of thinkingunder pressureCapacity of thinkingunder pressureCapacity of preparationand planningWinning respect andtrustJudgment andunderstandingVerbal expressivenessProduct knowledgeIntegrityVerbal expressivenessProduct knowledgeInterestAbility of listeningProduct knowledgePerception and capacityof taking advantage ofpowerJudgment andunderstandingLarge perspectivePerception and capacityof taking advantage ofpowerCompetitiveness–Verbal expressivenessIntegrity STUDING CULTURAL FACTORSAFFECTING EXPORT OF SAFFRONSaffron has had special position in civil historyand culture of Iran as the most valuable crops and themost expensive spice of the world and is regarded as apart of exported traditional products. Saffron is one of theexceptional plants and perhaps, the only plant which hasgood economic return while requiring less water. Atpresent, saffron is the fifth exported non-oil product(Ghods and Kamali, 2012). While it is one of theimportant exported products which has few competitors inthe world and considering the previous trend of saffronproduction, Iran is able to be recognized as the bestexporter. 80% of the saffron is produced in the world andmonopolistically which can imply dominance of Iran onglobal market of saffron (Hosseini and Ahoo Ghalandari ,2008). But, Iran doesn’t play role in determination ofglobal [rice for this product. One of the major reasons forineffectiveness of Iran in market is monopolistic purchaseof saffron in global markets. Most of the Iranian saffron isexported to one or two countries in bulk such as UAEwith 36%, Spain with 28% and China with 9% and SaudiArabia and India each with 7 and 4.5% (Ghods andKamali, 2012). In these countries, saffron enters globalmarkets as main producer after packaging them withoutmentioning name of Iran. For this reason, name of Iran isunknown for many saffron consumers. Of the majorexporters of saffron in the world after Iran are Spain,India, Turkey and Greece (Hosseini and AhooGhalandari, 2008). Recognition of factors affecting asuccessful marketing in international commerce can havedirect effect on local production and creation of capital.Certainly, many factors interfere in pathology of saffronexport and its problems and in this Section, we studycultural factors and their effect on export of theseproducts.Effective Cultural FactorsPackaging : weak packaging of saffron has been themost important harm to export of this product(now, only15% of the saffron of Iran is exported to other countries insmall, well-shaped and suitable form and 85% of saffronof Iran is exported in bulk and in large packages to othercountries. In this regard, while considerable part of valueadded and wealth resulting from this product are easilytransferred to the competitors, role of Iran as the mostimportant and the most effective factor in global marketof this product is gradually reduced (Hashem Poor ,2010). In North America, Europe and East Asia which aresuitable purchase markets for saffron (Hashem Poor,2010), people have more trust in packaged products andthis subject is so important that one of the foreign foodexporting companies has conducted a research for sellingKALHOR ET AL.: EFFECT OF CULTURE ON INTERNATIONAL TRADE: CASE STUDY OF SAFFRON EXPORTIndian J.Sci.Res. 4 (6): 381-388, 2014its products indicating that people in America tend topurchase products in glass packages while people inGermany tend to purchase cans (Karimian , 2007). At thesame time, saffron is exported again with another brandafter suitable packaging in Spain and all the world regardsSpain as the largest exporter of saffron which preventsdirect communication of purchaser with local sellers andlack of effect of Iran as the largest producer on globalprice (khademolmahdieh, 2013). On the other hand, theshorter the path of production to consumption, the lessexpensive the product will be and the more competitivethe price of the product in global market (Ghorbani,2008). The following points should be considered insaffron• Since saffron is regarded as luxurious product inmost countries due to its high price , having a modernand stylish package plays important role in itspurchase (of course, these packages will not be soexpensive).• Due to high speed of life in most industrial anddeveloped countries, characteristic of “easyconsumption” is one of the factors of productselection by the consumers. Local producers shouldconsider that packaging of the product should keepquality of product in addition to easy use (whether interms of opening, closing or storage) duringconsumption term. In eastern countries, people put itin a closed container to prevent spread of its odor ifthe package is nylon but people in western countriesexpect the package to have such characteristic anddon’t want to use the accessory tools.Product consumption culture: in this Section, somecases of traditions and culture governing consumption ofthe product are mentioned.The first case, distribution method: distributionmethod is generally divided into two wholesale orretailing methods and one of two methods is used in anycountry based on type of economy and society. Theexporting companies should be familiar with type ofdistribution in target country as one of the main steps ofsale to found sale promotion strategies on its basis(Ghorbani , 2008). Saffron producers export it to othercountries in bulk while if they want to transact withFrance or Middle East countries, they will face problembecause distribution system of these countries will bebased on retailing (Karimian, 2007).The second case, collective taste: taste is one ofthe most important factors affecting use of food productsby people and cultural factors are effective on itsformation. Therefore, recognition of people’s taste can bevery determining in export of these products andproduction of byproducts according to taste of customer.For example, one of the common cultures in westparticularly in North American countries and Europeancountries is abundant use of chocolate and pastry bypeople. One of the byproducts of saffron is saffronpowder and sugar powder mixture. In this regard, sale ofthis product particularly with very low price comparedwith saffron is expected to be received by people in thesecountries. In this case, if saffron powder which is usuallydiscarded after processing stages is used and value addedfor production is created.Advertisement: one of the most effective factors ofservices provision or sale of a product in today’s world isadvertisement so that extensive and suitableadvertisement can guarantee success of a commercialproduct (Jakštien S et al, 2008). Unfortunately, mostexported products of Iran such as saffron lack this factorand they don’t have suitable advertisement in targetcountries to identify product among people (AmiriAghdaie and Seidi, 2012).Many factors interfere in advertisement but oneof the infrastructures and basic factors which causeattraction and effectiveness of an advertisement is properrecognition of cultural issues and social norms of peopleof target society and planning of advertisement messagebased on it. For this reason, if advertisement is performed,it should be made for target society and based on culturaland intellectual space. For example, in most foreigncountries, main message of an advertisement istransferred by a young person to addressee because theyoung will affect a message more in society. The youngare always symbol of being pioneer, progress, energy anda prosperous future and since concept of “progress “hashigh value in these societies, the young are the best classfor transferring message and persuading people to useservices or purchase a product (Advertising and youngpeople research , 2011). On the contrary in Iran,traditional culture has more efficiency in society with allchanges in culture of society and movement of societyfrom tradition to modernity and living in transient period.In this vulture, there is higher trust in selection and viewof the old people or worldly-wise people. For this reason,the old people play main role in transfer of message inKALHOR ET AL.: EFFECT OF CULTURE ON INTERNATIONAL TRADE: CASE STUDY OF SAFFRON EXPORTIndian J.Sci.Res. 4 (6): 381-388, 2014most advertisement notices. In this regard, exportingcompanies should consider this point that they shouldprepare their product advertisement based on culture ofthe target market.Forgery: unfortunately, export of saffron throughunspecialized and informal channels intensified issue offraud and submission of forged saffron and it is very vitalto study this issue considering high price of saffron.The most common type of forgery is painting cream withthe paint available in braid or chemical synthetic paintswhich is recognizable considering analysis method andquality control of such forgeries in the countries whichreceive saffron (Hashem Poor, 2010). Since forgery anddeception are culturally improper in most countriesparticularly developed countries, this action will preventthe public from purchasing Iranian product. This subjectis so important in western societies that it affects andneutralizes all efforts of the exporting companies to dosuccessful national branding and stabilize name of Iraniansaffron in foreign markets and it will be the largestnegative advertisement for sale of this product in globalmarkets.Environment: in western and especially Europeancountries, environmental protection is an importantprinciple in public culture of these countries so that theproducts which have not observed this point are rejectedby the people and will not have utility and good salemarket. Therefore, for submission of product to thesecountries, it should be noted that packaging of productshould be made from recyclable and nature-friendlymaterials and insertion of this point on package can beconverted into one of the competitive factors of product inthese countries.Ease of communication: in today’s advanced world,communication plays important role in commerce andease of communication is regarded as the first step in thiscase (Hutchinson, 2002). Since the simplestcommunication way in today’s world is internet (email,website etc.), local producers and exporting companiesshould move ahead in coordination with general culture ofthe world. Foreign purchasers tend to acquire a series ofprimary information relating to product and the best andthe safest way is communication with the exportingcompany. Perhaps, giving such primary information leadsto performance of a profitable exporting transaction androle of broker may be deleted and if purchaser concludesthat establishing primary communication with localcompany is hard and requires cost and time, he may stopcontinuing the next stages. Therefore, one of the keyfactors which cause coordination between companies andlocal producers and modern technology is use of internetand using personal portals which require increase ofculture of increasing technology inside society.Provision of information: one of the cultural problemsof the country is prevention from provision of informationabout the product which indicates lack of enoughawareness of the producers with difference betweenuseful but not necessarily confidential information forsale and the information which leads to loss of salemarket for the seller. In other words, it is regarded assecret information for seller and his work field. In today’sworld, general belief is that giving more information topurchaser causes him to purchase product more carefullyand safely which is a type of respect for purchaser and hispersonality which has a high cultural value in advancedsocieties and leads to continuity of purchase (Gibson,2009). This case is also subset of customer focus culturewhich is unfortunately less important in Iran and sellerfocus is the common culture of local commerce of Iran. Inadvanced countries, exchange of any information, thoughsmall, is regarded as social value because there is a beliefthat transfers of information and increase of knowledgelead to progress. Most producers and owners of localindustries refuse to give information or reluctantly giveless information to customer while this information is notharmful for their industry and its foreign samples giveinformation to customers easily. Customers naturally tendto purchase from a company which gives enoughinformation to them and do not like blindfold shopping.DISCUSSION AND CONCLUSIONConsidering the mentioned cases, it can beconcluded that culture and social factors are importantpart of international commerce and any exportingcompany which tries to enter international market shouldplan and execute its activities based on culture of thecountry of target market. In this case, recognition ofculture as one of the main factors of successful marketingpromotes local production. Of course, as mentionedabove, culture is divided into two major parts of localculture and culture of the desired country and extensivestudies should be conducted on both cases to have asuccessful export. In this regard, large step can be takenfor export of non-oil products of the country which can beconverted into economic basis by promoting local cultureKALHOR ET AL.: EFFECT OF CULTURE ON INTERNATIONAL TRADE: CASE STUDY OF SAFFRON EXPORTIndian J.Sci.Res. 4 (6): 381-388, 2014into global customer-focus culture and recognizingculture and community of the importing countries.Considering the mentioned points, the followingcases can be considered as strategies for more successfulexport of saffron product to foreign countries:• Increasing customer-focus culture in the country andamong owners of industries. People in Iran should becareful that adaptation of product to taste and cultureof customer should be on top of production priorities.• National branding as one of the main factors ofcommercial culture of the world• Making different advertisement according to culturaltaste of target market• Including simple advertisement on the package andusing packaging as a primary advertisement ofproduct in target country. In this regard, packagingnaturally can be applied for advertisement of thecountry and the desired product such as use ofmarquetry designs of Faradis Exporting Company orinsertion of slogans and visual advertisement on thepackaging.• Use of national symbol of the target country besidesymbol of exported product which attracts primaryattention of the purchaser and indicates concept ofcultural interaction and communication andcooperation of two countries.• Packaging based on cultural and social factors• Recruitment of specialists in target markets toinvestigate tastes and consumption patterns ofcountries• Observance of quality of product and preventionfrom submission of any forged products• Use of recyclable and nature-friendly packagesparticularly in European countries• Establishing easy communication with purchasers• Insuring gardens of farmers as mental factor affectingbetter and high quality production• Training farmers and increasing their awareness withexport of a high quality product in national andglobal levelREFERENCESAli Arab S.,2009. 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