This document discusses Hofstede's study on cultural dimensions and how it can be applied to international business. It provides an overview of Hofstede's research analyzing IBM data from over 50 countries to identify 5 cultural dimensions: power distance, uncertainty avoidance, individualism, masculinity, and long-term orientation. Examples are given of how these dimensions impact leadership styles, organizational structures, and communication between cultures with differing scores. The document also notes some criticisms of Hofstede's study and poses discussion questions.

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

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

3. Culture Defined

4. 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 4

5. Culture “There are truths on this side of the Pyrenees that are falsehoods on the other” Blaise Pascal 5

6. Globalization 6

7. What is culture? Main features of culture: Culture is shared Culture is intangible Culture is confirmed by others 7

8. Levels of culture National Culture Business Culture Organizational and Occupational Culture 8

9. 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 9

10. 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. 10

11. Universal cultural variables Kinship Politics Economy Religion Recreation Education 11

12. Universal cultural variables Kinship Politics Economy Religion Recreation Education 12

13. Universal cultural variables Kinship Politics Economy Religion Recreation Education 13

14. Universal cultural variables Kinship Politics Economy Religion Recreation Education 14

15. Universal cultural variables Kinship Politics Economy Religion Recreation Education 15

16. Universal cultural variables Kinship Politics Economy Religion Recreation Education 16

17. Hofstede’s Cultural Dimensions

18. 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.” 18

19. Hofstede’s Cultural Dimensions 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) 19

20. Hofstede’s Cultural Dimensions Hofstede’s work 20

21. 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 21

22. Power Distance High power distance 22 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

23. Power Distance 23 High Malaysia Arab Countries Mexico India France Italy Japan Spain Argentina US Germany UK Denmark Israel Austria Orientation towards authority Low

24. Power Distance Example A company from Austria (low power distance) is considering entering the Mexican (high power distance) market. 24 Power Distance Index

25. 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 25

26. Uncertainty Avoidance Uncertainty avoidance – The extent to which members of a society feel threaten by uncertain or unknown situations. 26

27. Uncertainty Avoidance Strong uncertainty avoidance 27 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

28. Uncertainty Avoidance 28 High Greece Japan France Korea Arab Countries Germany Australia Canada USUK India Denmark Singapore Desire for stability Low

30. Uncertainty Avoidance 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 30

31. Individualism Individualism – Thetendency of people to look after themselves and their immediate family and neglect the needs of society 31

32. Individualism 32 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

33. Individualism 33 High Australia US UK Canada France Germany Spain Japan MexicoItaly Korea Singapore Low

35. 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 35

36. Masculinity Masculinity – The tendency within a society to emphasize traditional gender roles 36

37. Masculinity 37 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

38. Masculinity 38 High Japan Mexico Germany UK US Arabia France Korea PortugalDenmark Sweden Low

40. 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 40

41. Long- term orientation Long- term orientation – A basic orientation towards time that values patience 41

42. Long- term orientation 42 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

43. Implications

44. Work Centrality How important is work? 44

45. What do people value in work? 45

46. Employees and Leaders 46

47. Employees and Leaders 47

48. Leadership Styles 48 Power Distance Uncertainty Avoidance

49. Leadership Styles 49 Power Distance Uncertainty Avoidance

50. Leadership Styles 50 Power Distance Uncertainty Avoidance

51. Leadership Styles 51 Power Distance Uncertainty Avoidance

52. 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 52 Power Distance Uncertainty Avoidance

53. Organizational Structures Adhocracy Professional Bureaucracy Standardization of skills Centralized decision making Order and compartmentalization Full Bureaucracy Family Bureaucracy 53 Power Distance Uncertainty Avoidance

54. Organizational Structures Adhocracy Professional Bureaucracy Full Bureaucracy The most formalized Organization dominated by rules, procedures and hierarchical relationships Standardization of the work process Predictability & control Family Bureaucracy 54 Power Distance Uncertainty Avoidance

55. Organizational Structures Adhocracy Professional Bureaucracy 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 55 Power Distance Uncertainty Avoidance

56. Criticism

57. Criticism Single company Time dependent Business culture, not values culture Western bias 57 Non-exhaustive Partial geographic coverage Attitudinal rather than behavioral measures Ecological fallacy

58. Discussion Questions 58

59. Discussion Questions 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? 59

60. Discussion Questions 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

61. References

62. References 62 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

63. Thank you for your attention! 63