Hofstede - Cultural differences in international management

Hofstede’s Study on Work Related-Values Concept, Methods, Results, and
Critique

Agenda
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Culture defined
Hofstede’s cultural dimensions
1) Power Distance
2) Uncertainty Avoidance
3) Individualism
4) Masculinity
5) Long-term orientation
Implications for management
Criticism

Culture Defined

Culture and international business
Why culture is important?
Impacts the way strategic moves are presented.
Influences management, decision making, negotiations
Culture makes international business difficult or easy
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Culture
“There are truths on this side of the Pyrenees that are falsehoods on the other”
Blaise Pascal
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Globalization
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What is culture?
Main features of culture:
Culture is shared
Culture is intangible
Culture is confirmed by others
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Levels of culture
National Culture
Business Culture
Organizational and Occupational Culture
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Key Cultural Issues
Cultural Etiquette – the manners and behavior that are expected in a given situation
Cultural Stereotypes – our beliefs about others, their attitudes and behavior
Ethnocentrism – looking at the world from a perspective shaped by our own culture
Relativism– all cultures are good
Cultural sensitivity
Self-reference criteria
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Contingency management
Determining the problem or goal in terms of home country culture, habits and norms.
Determining the same problem or goal in terms of host country culture, habits and norms.
Isolating the SRC influence on the problem and how it complicates the issue.
Redefining the problem without the SRC influence and solving it according to the specific foreign market situation.
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Universal cultural variables
Kinship
Politics
Economy
Religion
Recreation
Education
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Kinship
Politics
Economy
Religion
Recreation
Education
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Kinship
Politics
Economy
Religion
Recreation
Education
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Kinship
Politics
Economy
Religion
Recreation
Education
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Kinship
Politics
Economy
Religion
Recreation
Education
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Kinship
Politics
Economy
Religion
Recreation
Education
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Hofstede’s Cultural Dimensions

Prof. Geert Hofstede
“Culture is more often a source of conflict than of synergy.
Cultural differences are a nuisance at best and often a
disaster.”
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Prof. Geert Hofstede
Conducted perhaps the most comprehensive study of how values in the workplace are influenced by culture
Analyzed a large data base of employee values scores collected by IBM (HERMES)
1967 – 1973
more than 50 countries
Developed a model that identifies four primary Dimensions to assist in differentiating cultures:
Power distance
Uncertainty avoidance
Individualism
Masculinity
+ Long-term orientation (added later)
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Hofstede’s work
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Power Distance
Power distance - The extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally
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Power Distance
High power distance
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Low power distance
Inequalities among people should be minimized
Interdependence between less and more powerful people
Hierarchy in organizations means an inequality of roles
Decentralization is popular
Narrow salary range
Subordinated expect to be consulted
The ideal boss is a resourceful democrat
Privileges and status are disapproved
Inequalities among people are both expected and desired
Less powerful people should be depended on the more powerful
Hierarchy in organizations reflects the existential inequality
Centralization is popular
Wide salary range
Subordinated expect to be told what to do
The ideal boss is a benevolent autocrat or good father
Privileges and status are both expected and popular

Power Distance
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High
Malaysia
Arab Countries
Mexico
India
France
Italy
Japan
Spain
Argentina
US
Germany
UK
Denmark
Israel
Austria
Orientation towards authority
Low

Power Distance
Example
A company from Austria (low power distance) is considering entering the Mexican (high power distance) market.
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Power Distance Index

Power Distance
Example (cont.)
Communication tips for the Austrian manager:
Give clear and explicit directions to those working with him
Deadlines should be highlighted and stressed
Do not expect subordinates to take initiative
Be more authoritarian in his management style
Show respect and deference to those higher up the ladder
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Uncertainty Avoidance
Uncertainty avoidance – The extent to which members of a society feel threaten by uncertain or unknown situations.
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Strong uncertainty avoidance
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Weak uncertainty avoidance
Uncertainty: normal feature of life and each day is accepted as it comes
Low stress – subjective feeling of well-being
Aggression and emotions must not be shown
Comfortable in ambiguous situations and with unfamiliar risk
There should not be more rules than necessary
Precision and punctuality have to be learned
Tolerance to innovation
Motivation by achievement
Uncertainty : continuous threat that must be fought
High stress – subjective feeling of anxiety
Aggression and emotions may be shown at proper times
Fear of ambiguous situations and of unfamiliar risk
Emotional need for rules, even if they never work
Precision and punctuality come naturally
Resistance to innovation
Motivation by security

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High
Greece
Japan
France
Korea
Arab Countries
Germany
Australia
Canada
USUK
India
Denmark
Singapore
Desire for stability
Low

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Example

A company from France (high uncertainty avoidance) is considering investing in Denmark (low uncertainty avoidance)

Uncertainty Avoidance Index

Example (cont.)
Communication tips for the French manager:
Try to be more flexible or open in his approach to new ideas than he may be used to
Be prepared to push through agreed plans quickly as they would be expected to be realized as soon as possible
Allow employees the autonomy and space to execute their tasks on their own; only guidelines and resources will be expected of him
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Individualism
Individualism – Thetendency of people to look after themselves and their immediate family and neglect the needs of society
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Individualism
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High individualism
Low individualism
Individuals learn to think in terms of “we”
High-context communication
Diplomas provide entry to higher status groups
Relationship employer- employee is perceived in moral terms, like a family
Hiring and promotion decisions take employees’ ingroup into account
Management is management of groups
Relationship prevails over task
Individuals learn to think in terms of “I”
Low-context communication
Diplomas increase economic worth and/or self- respect
Relationship employer-employee is a contract based on mutual advantage
Hiring and promotion are supposed to be based on skills and rules only
Management is management of individuals
Task prevails over relationship

Individualism
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High
Australia
US
UK
Canada
France
Germany
Spain
Japan
MexicoItaly
Korea
Singapore
Low

Individualism
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Example

A company from UK (high individualism) is considering investing in Mexico (low individualism)

Individualism Index

Individualism
Example (cont.)
Communication tips for the UK manager:
Note that individuals have a strong sense of responsibility for their family
Remember that praise should be directed to a team rather than individuals
Understand that promotions depend upon seniority and experience
Be aware that the decision making process will be rather slow, as many members across the hierarchy need to be consulted
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Masculinity
Masculinity – The tendency within a society to emphasize traditional gender roles
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Masculinity
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High masculinity
Low masculinity
Dominant values: caring for others and preservation
People and warm relationships are important
Sympathy for the weak
In family, both fathers and mothers deal with facts and feelings
Stress on equality, solidarity , and quality of work life
Managers use intuition and strive for consensus
Resolution of conflicts by compromise and negotiation
Dominant values: material success and progress
Money and things are important
Sympathy for the strong
In family, fathers deal with facts and mothers with feelings
Stress on equity, competition among colleagues and performance
Managers are expected to be decisive and assertive
Resolution of conflicts by fighting them out

Masculinity
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High
Japan
Mexico
Germany
UK
US
Arabia
France
Korea
PortugalDenmark
Sweden
Low

Masculinity
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Example

A company from Denmark ( low masculinity) is considering investing in Mexico (high masculinity)

Masculinity Index

Masculinity
Example (cont.)
Communication tips for the Danish manager :
Be aware that people will discuss business anytime, even at social gatherings
Avoid asking personal questions in business situations
Take into account that people are not interested in developing closer friendships
Communicate directly, unemotionally and concisely
In order to assess others use professional identity, not family or contacts
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Long- term orientation
Long- term orientation – A basic orientation towards time that values patience
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Long- term orientation
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Long-term orientation
Short- term orientation
Respect for traditions
Little money available for investment
Quick results expected
Respect for social and status obligations regardless of cost
Concern with possessing the Truth
Adaptation of traditions to a modern context
Funds available for investment
Perseverance towards slow results
Respect for social and status obligations within limits
Concern with respecting the demands of Virtue

Implications

Work Centrality
How important is work?
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What do people value in work?
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Employees and Leaders
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Employees and Leaders
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Leadership Styles
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Power Distance

Leadership Styles
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Power Distance

Leadership Styles
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Power Distance

Leadership Styles
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Power Distance

Organizational Structures
Adhocracy
Flat organizational pyramid
People can tolerate ambiguity in organizational roles
Less need for formalized rules and regulations
Distance between management and workers tends to be small
Professional Bureaucracy
Full Bureaucracy
Family Bureaucracy
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Power Distance

Adhocracy
Standardization of skills
Centralized decision making
Order and compartmentalization
Full Bureaucracy
Family Bureaucracy
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Power Distance

Adhocracy
Full Bureaucracy
The most formalized
Organization dominated by rules, procedures and hierarchical relationships
Standardization of the work process
Predictability & control
Family Bureaucracy
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Power Distance

Adhocracy
Full Bureaucracy
Family Bureaucracy
Parallels an extended family: dominant father figure
Small
Less specialization of roles
Control: personal supervision
Direct contact
Highly centralized decision making
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Power Distance

Criticism

Criticism
Single company
Time dependent
Business culture,
not values culture
Western bias
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Non-exhaustive
Partial geographic coverage
Attitudinal rather than behavioral measures
Ecological fallacy

Discussion Questions
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Do you notice any cultural differences among your classmates? How do those differences affect the class environment and your group projects?
Give some examples of cultural differences in the interpretation of body language. What is the role of such nonverbal communication in business relationships?
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Do you notice any cultural differences among your classmates? How do those differences affect the class environment and your group projects?
Give some examples of cultural differences in the interpretation of body language. What is the role of such nonverbal communication in business relationships?
60

References

References
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Cullen, J. (2002). Multinational Management, 2nd ed. Ohio: Sounth-Western Thomson Learning.
Deresky, H. (2003). International Management , 4th ed. New Jersey: Prentice Hall.
Harris, P. & Moran, R. (2000). Managing cultural differences. Houston: Gulf Publishing Company.
Hofstede, G. (1982). Culture’s Consequences. International Differences in Work-Related Values. Newbury Park: SAGE Publications.
Hofstede, G. (1997). Cultures and organizations: software of the mind. New York: McGraw Hill.
Intercultural Business Communication. Retrieved March 1, 2008 from Kwintessential Cross Cultural Solutions
Website: http://www.kwintessential.co.uk/intercultural-business-communication/tool.php?culture1=17&culture2=17

Thank you for your attention!
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