Hofstede - Cultural differences in international management


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Andreea Dicu, Carmen Neghina, Alina Oprea, Teodora Vasileva

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

Culture defined
Hofstede’s cultural dimensions
Implications for management

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  • Culture is very important to the practice of international business.Impacts the way strategic moves are presented.Influences decisions.The lens through which motivation occurs. Management, decision making, and negotiations are all influenced through culture. Culture influences nearly all business functions from accounting to finance to production to service.To understand the others To develop better negotiation and business strategiesTo gain business advantageThe desire to consume and enjoy foreign products and ideasAdopt new technology and practicesGrowth of cross-cultural contactsThe achievement of free circulation by people of all nationsCulture is what makes international business practice difficult or easy, depending on how similar or different cutures are. Culture is both divisive and unifying.
  • The diversity of values and truths All businesses ultimately comes down to transactions or interactions between individuals. The success of the transaction depends almost entirely on how well managers understand each other
  • Norms + Values+ Beliefs= CultureCulture = the pervasive and shared beliefs, norms, and values that guide the everyday life of a groupCultural norms = prescribed and proscribed behaviors, telling us what we can do and what we cannot doCultural values = values that tell us such things as what is good, what is beautiful, what is holy, and what are legitimate goals for lifeCultural beliefs = our understandings about what is trueCultural symbols = these may be physical (national flags, holy artifacts/ office size, cultural symbols) Cultural rituals = ceremonies, such as baptism, graduation, or the tricks played on a new worker, or the pledge to a sorority or fraternityCultural stories = these include such things as nursery thymes and traditional legends.
  • National culture is the dominant culture within the political boundaries of the nation-state. It usually represents the culture of the people with the greatest population or the greatest political or economic power.Business culture represents norms, values and beliefs that pertain to all aspects of doing business in a culture. Business cultures tell people the correct, acceptable ways to conduct business in a society.Business cultures are not separate from the broader national culture. The national culture constraints and guides the development of business culture in a societyBusiness culture affects all aspects of work and organizational life: how managers select and promote employees, how they lead and motivate their subordinates, structure their organizations, select and formulate their strategies, and negotiate. Corporate Culture is the culture adopted, developed and disseminated in an organization. Corporate culture can deviate from national norms, but that depends upon the strength of culture and the values and practices tied to it. Occupational and organizational cultures are distinct cultures of occupational groups such as physicians, lawyers, accountants and craftspeople. They are the norms, values, beliefs and expected ways of behaving for people in the same occupational group, regardless of what organization they work for.
  • Hofstede - Cultural differences in international management

    1. 1. Hofstede’s Study on Work Related-Values Concept, Methods, Results, and<br />Critique<br />
    2. 2. Agenda<br />2<br />Culture defined<br />Hofstede’s cultural dimensions<br />1) Power Distance<br />2) Uncertainty Avoidance<br />3) Individualism<br />4) Masculinity<br />5) Long-term orientation<br />Implications for management<br />Criticism<br />
    3. 3. Culture Defined<br />
    4. 4. Culture and international business<br />Why culture is important?<br />Impacts the way strategic moves are presented.<br />Influences management, decision making, negotiations<br />Culture makes international business difficult or easy <br />4<br />
    5. 5. Culture<br /> “There are truths on this side of the Pyrenees that are falsehoods on the other” <br />Blaise Pascal<br />5<br />
    6. 6. Globalization<br />6<br />
    7. 7. What is culture?<br />Main features of culture:<br />Culture is shared<br />Culture is intangible<br />Culture is confirmed by others<br />7<br />
    8. 8. Levels of culture<br />National Culture<br />Business Culture <br />Organizational and Occupational Culture<br />8<br />
    9. 9. Key Cultural Issues<br />Cultural Etiquette – the manners and behavior that are expected in a given situation<br />Cultural Stereotypes – our beliefs about others, their attitudes and behavior<br />Ethnocentrism – looking at the world from a perspective shaped by our own culture<br />Relativism– all cultures are good<br />Cultural sensitivity<br />Self-reference criteria<br />9<br />
    10. 10. Contingency management<br />Determining the problem or goal in terms of home country culture, habits and norms. <br />Determining the same problem or goal in terms of host country culture, habits and norms. <br />Isolating the SRC influence on the problem and how it complicates the issue. <br />Redefining the problem without the SRC influence and solving it according to the specific foreign market situation. <br />10<br />
    11. 11. Universal cultural variables<br />Kinship<br />Politics<br />Economy<br />Religion<br />Recreation<br />Education<br />11<br />
    12. 12. Universal cultural variables<br />Kinship<br />Politics<br />Economy<br />Religion<br />Recreation<br />Education<br />12<br />
    13. 13. Universal cultural variables<br />Kinship<br />Politics<br />Economy<br />Religion<br />Recreation<br />Education<br />13<br />
    14. 14. Universal cultural variables<br />Kinship<br />Politics<br />Economy<br />Religion<br />Recreation<br />Education<br />14<br />
    15. 15. Universal cultural variables<br />Kinship<br />Politics<br />Economy<br />Religion<br />Recreation<br />Education<br />15<br />
    16. 16. Universal cultural variables<br />Kinship<br />Politics<br />Economy<br />Religion<br />Recreation<br />Education<br />16<br />
    17. 17. Hofstede’s Cultural Dimensions<br />
    18. 18. Hofstede’s Cultural Dimensions<br />Prof. Geert Hofstede<br />“Culture is more often a source of conflict than of synergy.<br />Cultural differences are a nuisance at best and often a<br />disaster.”   <br />18<br />
    19. 19. Hofstede’s Cultural Dimensions<br />Prof. Geert Hofstede<br />Conducted perhaps the most comprehensive study of how values in the workplace are influenced by culture<br />Analyzed a large data base of employee values scores collected by IBM (HERMES)<br />1967 – 1973 <br />more than 50 countries<br />Developed a model that identifies four primary Dimensions to assist in differentiating cultures: <br />Power distance<br />Uncertainty avoidance<br />Individualism<br />Masculinity<br />+ Long-term orientation (added later)<br />19<br />
    20. 20. Hofstede’s Cultural Dimensions<br />Hofstede’s work <br />20<br />
    21. 21. Power Distance<br />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<br />21<br />
    22. 22. Power Distance<br />High power distance<br />22<br />Low power distance<br />Inequalities among people should be minimized<br />Interdependence between less and more powerful people<br />Hierarchy in organizations means an inequality of roles<br />Decentralization is popular<br />Narrow salary range<br />Subordinated expect to be consulted<br />The ideal boss is a resourceful democrat<br />Privileges and status are disapproved<br />Inequalities among people are both expected and desired<br />Less powerful people should be depended on the more powerful<br />Hierarchy in organizations reflects the existential inequality<br />Centralization is popular<br />Wide salary range<br />Subordinated expect to be told what to do<br />The ideal boss is a benevolent autocrat or good father<br />Privileges and status are both expected and popular<br />
    23. 23. Power Distance<br />23<br />High<br />Malaysia<br />Arab Countries<br />Mexico<br />India<br />France<br />Italy<br />Japan<br />Spain<br />Argentina<br />US<br />Germany<br />UK<br />Denmark<br />Israel<br />Austria<br />Orientation towards authority<br />Low<br />
    24. 24. Power Distance<br />Example<br />A company from Austria (low power distance) is considering entering the Mexican (high power distance) market.<br />24<br />Power Distance Index<br />
    25. 25. Power Distance<br />Example (cont.)<br />Communication tips for the Austrian manager: <br />Give clear and explicit directions to those working with him <br />Deadlines should be highlighted and stressed<br />Do not expect subordinates to take initiative<br />Be more authoritarian in his management style<br />Show respect and deference to those higher up the ladder<br />25<br />
    26. 26. Uncertainty Avoidance<br />Uncertainty avoidance – The extent to which members of a society feel threaten by uncertain or unknown situations.<br />26<br />
    27. 27. Uncertainty Avoidance<br />Strong uncertainty avoidance<br />27<br />Weak uncertainty avoidance<br />Uncertainty: normal feature of life and each day is accepted as it comes<br />Low stress – subjective feeling of well-being<br />Aggression and emotions must not be shown<br />Comfortable in ambiguous situations and with unfamiliar risk<br />There should not be more rules than necessary<br />Precision and punctuality have to be learned<br />Tolerance to innovation<br />Motivation by achievement<br />Uncertainty : continuous threat that must be fought<br />High stress – subjective feeling of anxiety<br />Aggression and emotions may be shown at proper times<br />Fear of ambiguous situations and of unfamiliar risk<br />Emotional need for rules, even if they never work<br />Precision and punctuality come naturally<br />Resistance to innovation<br />Motivation by security<br />
    28. 28. Uncertainty Avoidance<br />28<br />High<br />Greece<br />Japan<br />France<br />Korea<br />Arab Countries<br />Germany<br />Australia<br />Canada<br />USUK<br />India<br />Denmark<br />Singapore<br />Desire for stability<br />Low<br />
    29. 29. Uncertainty Avoidance<br />29<br />Example<br /><ul><li>A company from France (high uncertainty avoidance) is considering investing in Denmark (low uncertainty avoidance)</li></ul>Uncertainty Avoidance Index<br />
    30. 30. Uncertainty Avoidance<br />Example (cont.)<br />Communication tips for the French manager: <br />Try to be more flexible or open in his approach to new ideas than he may be used to<br /> Be prepared to push through agreed plans quickly as they would be expected to be realized as soon as possible<br />Allow employees the autonomy and space to execute their tasks on their own; only guidelines and resources will be expected of him<br />30<br />
    31. 31. Individualism<br />Individualism – Thetendency of people to look after themselves and their immediate family and neglect the needs of society<br />31<br />
    32. 32. Individualism<br />32<br />High individualism<br />Low individualism<br />Individuals learn to think in terms of “we”<br />High-context communication<br />Diplomas provide entry to higher status groups<br />Relationship employer- employee is perceived in moral terms, like a family<br />Hiring and promotion decisions take employees’ ingroup into account<br />Management is management of groups<br />Relationship prevails over task<br />Individuals learn to think in terms of “I”<br />Low-context communication<br />Diplomas increase economic worth and/or self- respect<br />Relationship employer-employee is a contract based on mutual advantage<br />Hiring and promotion are supposed to be based on skills and rules only <br />Management is management of individuals<br />Task prevails over relationship<br />
    33. 33. Individualism<br />33<br />High<br />Australia<br />US<br />UK<br />Canada<br />France<br />Germany<br />Spain<br />Japan<br />MexicoItaly<br />Korea<br />Singapore<br />Low<br />
    34. 34. Individualism<br />34<br />Example<br /><ul><li>A company from UK (high individualism) is considering investing in Mexico (low individualism)</li></ul>Individualism Index<br />
    35. 35. Individualism<br />Example (cont.)<br />Communication tips for the UK manager: <br />Note that individuals have a strong sense of responsibility for their family <br /> Remember that praise should be directed to a team rather than individuals<br />Understand that promotions depend upon seniority and experience<br />Be aware that the decision making process will be rather slow, as many members across the hierarchy need to be consulted<br />35<br />
    36. 36. Masculinity<br />Masculinity – The tendency within a society to emphasize traditional gender roles<br />36<br />
    37. 37. Masculinity<br />37<br /> High masculinity<br />Low masculinity<br />Dominant values: caring for others and preservation<br />People and warm relationships are important<br />Sympathy for the weak<br />In family, both fathers and mothers deal with facts and feelings<br />Stress on equality, solidarity , and quality of work life<br />Managers use intuition and strive for consensus <br />Resolution of conflicts by compromise and negotiation<br />Dominant values: material success and progress<br />Money and things are important<br />Sympathy for the strong<br />In family, fathers deal with facts and mothers with feelings<br />Stress on equity, competition among colleagues and performance<br />Managers are expected to be decisive and assertive<br />Resolution of conflicts by fighting them out<br />
    38. 38. Masculinity<br />38<br />High<br />Japan<br />Mexico<br />Germany<br />UK<br />US<br />Arabia<br />France<br />Korea<br />PortugalDenmark<br />Sweden<br />Low<br />
    39. 39. Masculinity<br />39<br />Example<br /><ul><li>A company from Denmark ( low masculinity) is considering investing in Mexico (high masculinity)</li></ul>Masculinity Index<br />
    40. 40. Masculinity<br />Example (cont.)<br />Communication tips for the Danish manager : <br />Be aware that people will discuss business anytime, even at social gatherings<br />Avoid asking personal questions in business situations<br />Take into account that people are not interested in developing closer friendships<br />Communicate directly, unemotionally and concisely<br />In order to assess others use professional identity, not family or contacts<br />40<br />
    41. 41. Long- term orientation<br />Long- term orientation – A basic orientation towards time that values patience<br />41<br />
    42. 42. Long- term orientation<br />42<br /> Long-term orientation<br />Short- term orientation<br />Respect for traditions<br />Little money available for investment<br />Quick results expected<br />Respect for social and status obligations regardless of cost <br />Concern with possessing the Truth<br />Adaptation of traditions to a modern context<br />Funds available for investment<br />Perseverance towards slow results<br />Respect for social and status obligations within limits<br />Concern with respecting the demands of Virtue<br />
    43. 43. Implications<br />
    44. 44. Work Centrality<br />How important is work?<br />44<br />
    45. 45. What do people value in work?<br />45<br />
    46. 46. Employees and Leaders<br />46<br />
    47. 47. Employees and Leaders<br />47<br />
    48. 48. Leadership Styles<br />48<br />Power Distance<br />Uncertainty Avoidance<br />
    49. 49. Leadership Styles<br />49<br />Power Distance<br />Uncertainty Avoidance<br />
    50. 50. Leadership Styles<br />50<br />Power Distance<br />Uncertainty Avoidance<br />
    51. 51. Leadership Styles<br />51<br />Power Distance<br />Uncertainty Avoidance<br />
    52. 52. Organizational Structures<br />Adhocracy<br />Flat organizational pyramid<br />People can tolerate ambiguity in organizational roles<br />Less need for formalized rules and regulations<br />Distance between management and workers tends to be small<br />Professional Bureaucracy<br />Full Bureaucracy<br />Family Bureaucracy<br />52<br />Power Distance<br />Uncertainty Avoidance<br />
    53. 53. Organizational Structures<br />Adhocracy<br />Professional Bureaucracy<br />Standardization of skills<br />Centralized decision making<br />Order and compartmentalization<br />Full Bureaucracy<br />Family Bureaucracy<br />53<br />Power Distance<br />Uncertainty Avoidance<br />
    54. 54. Organizational Structures<br />Adhocracy<br />Professional Bureaucracy<br />Full Bureaucracy<br />The most formalized<br />Organization dominated by rules, procedures and hierarchical relationships<br />Standardization of the work process<br />Predictability & control <br />Family Bureaucracy<br />54<br />Power Distance<br />Uncertainty Avoidance<br />
    55. 55. Organizational Structures<br />Adhocracy<br />Professional Bureaucracy<br />Full Bureaucracy<br />Family Bureaucracy<br />Parallels an extended family: dominant father figure<br />Small<br />Less specialization of roles<br />Control: personal supervision <br />Direct contact<br />Highly centralized decision making<br />55<br />Power Distance<br />Uncertainty Avoidance<br />
    56. 56. Criticism<br />
    57. 57. Criticism<br />Single company<br />Time dependent<br />Business culture, <br />not values culture<br />Western bias<br />57<br />Non-exhaustive<br />Partial geographic coverage<br />Attitudinal rather than behavioral measures<br />Ecological fallacy<br />
    58. 58. Discussion Questions<br />58<br />
    59. 59. Discussion Questions<br />Do you notice any cultural differences among your classmates? How do those differences affect the class environment and your group projects?<br />Give some examples of cultural differences in the interpretation of body language. What is the role of such nonverbal communication in business relationships?<br />59<br />
    60. 60. Discussion Questions<br />Do you notice any cultural differences among your classmates? How do those differences affect the class environment and your group projects?<br />Give some examples of cultural differences in the interpretation of body language. What is the role of such nonverbal communication in business relationships?<br />60<br />
    61. 61. References<br />
    62. 62. References<br />62<br /> Cullen, J. (2002). Multinational Management, 2nd ed. Ohio: Sounth-Western Thomson Learning.<br />Deresky, H. (2003). International Management , 4th ed. New Jersey: Prentice Hall. <br /> Harris, P. & Moran, R. (2000). Managing cultural differences. Houston: Gulf Publishing Company.<br />Hofstede, G. (1982). Culture’s Consequences. International Differences in Work-Related Values. Newbury Park: SAGE Publications.<br />Hofstede, G. (1997). Cultures and organizations: software of the mind. New York: McGraw Hill.<br /> Intercultural Business Communication. Retrieved March 1, 2008 from Kwintessential Cross Cultural Solutions <br /> Website: http://www.kwintessential.co.uk/intercultural-business-communication/tool.php?culture1=17&culture2=17<br />
    63. 63. Thank you for your attention!<br />63<br />