Hofstede’s cultural dimensions

The number of companies operating internationally is growing constantly. The world is opening up for foreign firms and new destinations in the company´ business are increasing. Because of high competition the companies operating abroad are faced with a much larger task then before. So far as international business is concerned, the dimensions of culture form an important facet. Knowledge of the manner in which different features of a business are viewed in different cultures, can help a manager in understanding and sailing successfully across the international business market.In this assignment, we discuss the topic of Hofstede cultural dimensions by exploring:1) Introduction; 2) Four cultural dimensions of Hofstede; 3) Case study of cultural differences; 4) Conclusion.

GROUP ASSIGNMENT GROUP -Course : International Business Class : International Business K56 (High-Quality Educational Program) Topic: Hofstede’s cultural dimensions (Chapter 5, Research Task No.2 ) Group Members: Đặng Hương Giang Phạm Thị Hoàng Diệu Nguyễn Cẩm Tú Nguyễn Thị Dịu Nguyễn Thị Khánh Linh SUMMARY The number of companies operating internationally is growing constantly The world is opening up for foreign firms and new destinations in the company´ business are increasing Because of high competition the companies operating abroad are faced with a much larger task then before So far as international business is concerned, the dimensions of culture form an important facet Knowledge of the manner in which different features of a business are viewed in different cultures, can help a manager in understanding and sailing successfully across the international business market In this assignment, we discuss the topic of Hofstede cultural dimensions by exploring: 1) Introduction; 2) Four cultural dimensions of Hofstede; 3) Case study of cultural differences; 4) Conclusion - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - I, Introduction: Gerard Hendrik (Geert) Hofstede (born October 1928) is a Dutch social psychologist, former IBM employee, and Professor Emeritus of Organizational Anthropology and International Management at Maastricht University in the Netherlands, well known for his pioneering research on cross-cultural groups and organizations.The original theory that Hofstede proposed talked of four dimensions, namely power distance, uncertainty avoidance, individualism vs collectivism and masculinity vs femininity After conducting independent studies in Hong Kong, Hofstede included a fifth dimension, known as long-term vs short-term orientation Again in 2010, Hofstede devised another dimension, the sixth one, indulgence vs self-restraint But in thisassigment, we only discuss about the first dimensions including: • Power Distance Index (PDI) • Individualism (IDV) • Masculinity versus Femininity (MAS) • Uncertainty Avoidance (UAI) II, Four cultural dimensions of Hofstede : • Power Distance Index (PDI) This dimension expresses the degree to which the less powerful members of a society accept and expect that power is distributed unequally People in societies exhibiting a large degree of Power Distance accept a hierarchical order in which everybody has a place and which needs no further justification In societies with low Power Distance, people strive to equalise the distribution of power and demand justification for inequalities of power • Individualism (IDV) The high side of this dimension, called individualism, can be defined as a preference for a loosely-knit social framework in which individuals are expected to take care of only themselves and their immediate families Its opposite, collectivism, represents a preference for a tightly-knit framework in society in which individuals can expect their relatives or members of a particular in-group to look after them in exchange for unquestioning loyalty A society's position on this dimension is reflected in whether people’s self-image is defined in terms of “I” or “we.” • Masculinity versus Femininity (MAS) The Masculinity side of this dimension represents a preference in society for achievement, heroism, assertiveness and material rewards for success Society at large is more competitive Its opposite, femininity, stands for a preference for cooperation, modesty, caring for the weak and quality of life Society at large is more consensus-oriented • Uncertainty Avoidance The Uncertainty Avoidance dimension expresses the degree to which the members of a society feel uncomfortable with uncertainty and ambiguity Countries exhibiting strong UAI maintain rigid codes of belief and behaviour and are intolerant of unorthodox behaviour and ideas Weak UAI societies maintain a more relaxed attitude in which practice counts more than principles they tend to let everything be free to grow and take risks High PDI Low • Centralized organizations • Flatter organizations • More complex hierarchies • Supervisors and employees are • Gaps in compensation, authority, • respect High value placed on people's time and considered almost as equals • their need for privacy and freedom IDV • becoming master of something An enjoyment of challenges, • People work for intrinsic rewards expectation of individual rewards for • Maintaining harmony among group hard work • • MAS • • members overrides other moral issues Respect for privacy Strong egos – feelings of pride and • Relationship oriented/consensual importance are attributed to status • More focus on quality of life Money and achievement are important Conservative, rigid and structured, • Openness to change or innovation, and unless the danger of failure requires a more flexible attitude UAI • Many societal conventions • People are expressive, and are allowed to show anger or emotions, if necessary • Emphasis on building skills and A high energy society, if people feel that they are in control of their life instead of feeling overwhelmed by life's vagaries generally inclusive • More inclined to open-ended learning or decision making • Less sense of urgency III, Case study of cultural differences : The cultural distance of countries in which your firm operates is one of the many explanations of significant differences that your U.S.-based employees face when travelling to different affiliates worldwide Typically, an index of cultural distance can be determined by summing the squared differences of country-level scores such as those introduced by Hofstede's cultural dimensions At the present time, your firm has operations in Czech Repulic, India, Peru, South Africa, Thailand Using the Hofstede Cultural Dimensions Resource Center based on studies involving cultural dimensions to assess all five countries,determine which affiliates are located in a culture that is least and most similar to the U.S As there are four main components of each overall cultural distance score, which component(s) can be considered most influential for each country? 1, The four cultural dimensions of the U.S : Power Distance : is fairly low(40) The American premise of “liberty and justice for all.” is evidenced by an explicit emphasis on equal rights in all aspects of American society and government American organisations have quite a flat organisational structure but with a clear chain of command and detailed instructions Hierarchy is predominantly established for convenience Superiors are accessible and managers rely on individual employees and teams for their expertise Employees are motivated strongly by their superiors but there is little direct criticism in either direction Members of staff however expect constant feedback on their work Individualism :is high (91), they are one of the most Individualist cultures in the world People look after themselves and their immediate families only and should not rely (too much) on authorities for support Americans are said to be the best joiners in the world; however it is often difficult, especially among men, to develop deep friendships.They are accustomed to doing business or interacting with people they don’t know well in order to obtain or seek information In the business world, employees are expected to be self-reliant and display initiative Also, within the exchange-based world of work we see that hiring, promotion and decisions are based on merit or evidence of what one has done or can Masculinity : is high (62) This American combination reflects itself in the following: Behavior in school, work, and play are based on the shared values that people should “strive to be the best they can be” and that “the winner takes all” As a result, Americans will tend to display and talk freely about their “successes” and achievements in life Many American assessment systems are based on precise target setting, by which American employees can show how well a job they did There exists a “can-do” mentality which creates a lot of dynamism in the society, as it is believed that there is always the possibility to things in a better way Typically, Americans “live to work” so that they can obtain monetary rewards and as a consequence attain higher status based on how good one can be Many white collar workers will move to a more fancy neighborhood after each and every substantial promotion Uncertainty Avoidance : isbelow average (46) which means there is a fair degree of acceptance for new ideas, innovative products and a willingness to try something new or different, whether it pertains to technology, business practices or food Americans tend to be more tolerant of ideas or opinions from anyone and allow the freedom of expression At the same time, Americans not require a lot of rules and are less emotionally expressive than higher-scoring cultures 2, The four cultural dimensions ofCzech Republic Power Distance :The Czech Republic has a relatively high score (57) Even though the Government does everything to reduce the PDI, the score 57 tells us that there is a hierarchical distance The bosseshave a power; theycontroltheemployees bymaking the employees motivated in order to have better results and need to know what’s going on with employee’s work Individualism:The Czech Republic, with a score of 58 is an Individualist society Everyone cares only about his/her concerns, what you don’t by yourself you don’t have it You cannot rely on anybody but yourself Masculinity: The Czech Republic scores 57 on this dimension and is thus a Masculine society In Masculine countries people “live in order to work”, managers are expected to be decisive and assertive, the emphasis is on equity, competition and performance and conflicts are resolved by fighting them out Uncertainty Avoidance: ofThe Czech Republic(74) is fairly high In this kind of country, there is an emotional need for rules: time is money, people have an inner urge to be busy and work hard, precision and punctuality are the norm, innovation may be resisted, security is an important element in individual motivation.It shows that they not like changes; however since the US has a leading role almost in everything, other states try to copy that so young people are more willing to make changes in their lives 3, The four cultural dimensions ofPeru Power Distance :There is ample evidence for Peru´s high PDI score of 67.Some observers trace back Peru´s PDI score to the tightly structured and centralized Inca empire; others point out that it has been fostered by colonial and authoritarian governments as well as the church However, subordinates still perceive superiors as difficult to access and not trust them Superiors consider subordinates as being of a different kind and ask for respect – particularly if the latter are of black or indigenous origin Individualism :Peru shows a very collectivistic score like other Latin American countries Peruvian find large companies attractive and that, particularly among blue collar workers, the involvement with the company is moral and not calculative Managers endorse more traditional points of view and only slowly start supporting employee initiative and group activity They aspire to conformity and prefer having security over having autonomy in their position Masculinity :At 42 Peru is a rather Feminine society This trait has been the source of many cultural clashes and misunderstandings For expatriates, locals were aloof or downright lazy The actual reasons, however, were the locals weaker achievement motivation, their preference for human contacts and family over recognition or wealth, and the marginal role awarded to work by large sectors of the population Uncertainty Avoidance :Peru(87) scores high like majority countries belonged to the Spanish kingdom They show a strong need for rules and elaborate legal systems in order to structure life The individual’s need to obey these laws, however, is weak Corruption is widespread, the black market sizeable If rules cannot be kept, additional rules are dictated A logical consequence of such abundance is that each legal disposition has another that corrects, denies or mitigates it That means those who are immersed in such a sea of juridical contradictions live transgressing the law, or that – perhaps even more demoralizing – within such a structure, any abuse or transgression may find a legal loophole that redeems or justifies it 4, The four cultural dimensions of India Power Distance :India scores high on this dimension, 77, indicating an appreciation for hierarchy and a top-down structure in society and organizations If one were to encapsulate the Indian attitude, one could use the following words and phrases: dependent on the boss or the power holder for direction Employees expect to be directed clearly as to their functions and what is expected of them Control is familiar, even a psychological security, and attitude towards managers are formal even if one is on first name basis Communication is top down and directive in its style and often feedback which is negative is never offered up the ladder Individualism :India is a society with both collectivistic and Individualist traits The employer/employee relationship is one of expectations based on expectations – Loyalty by the employee and almost familial protection by the Employer Hiring and promotion decisions are often made based on relationships which are the key to everything in a Collectivist society The Individualist aspect of Indian society is seen as a result of its dominant religion/philosophy - Hinduism The Hindus believe in a cycle of death and rebirth, with the manner of each rebirth being dependent upon how the individual lived the preceding life People are, therefore, individually responsible for the way they lead their lives and the impact it will have upon their rebirth This focus on individualism interacts with the otherwise collectivist tendencies of the Indian society which leads to its intermediate score on this dimension Masculinity :India scores 56 on this dimension and is thus considered a Masculine society India is actually very Masculine in terms of visual display of success and power The designer brand label, the flash and ostentation that goes with advertising one’s success, is widely practiced This often reigns in people from indulging in Masculine displays to the extent that they might be naturally inclined to In more Masculine countries the focus is on success and achievements, validated by material gains Work is the center of one’s life and visible symbols of success in the work place are very important Uncertainty Avoidance:In India, there is acceptance of imperfection, nothing has to be perfect nor has to go exactly as planned India is traditionally a patient country where tolerance for the unexpected is high, even welcomed as a break from monotony People generally not feel driven and compelled to take action-initiatives and comfortably settle into established rolls and routines without questioning Rules are often in place just to be circumvented and one relies on innovative methods to “bypass the system” 5, The four cultural dimensions of South Africa Power Distance:South Africa scores in the middle of the two extremes with a 49 The country is in a process of moving from a high power distance to a low power distance culture During the apartheid era the white people held all the power positions giving no power to the nonwhite population The gap was dramatically large between the powerful and the less wealthy/powerful community of South Africa Now that a new government has formed, they are working towards closing that gap and making sure the country is run by a people's government This is still in the works and will take many years before a country that was once so divided, can work together to govern South Africa Individualism :South Africa has a score of 65 which meansSouth Africa is individualistic country, their preferences are more focused on a loose tie with social connections while still taking care of oneself.In Individualist societies offence causes guilt and a loss of self-esteem, the employer/employee relationship is a contract based on mutual advantage, hiring and promotion decisions are supposed to be based on merit only, management is the management of individuals Masculinity :This scores is above the averagewhich means they are more of a Masculine society The culture is driven more by competition, success, and accomplishment Uncertainty avoidance:South Africa scores 49 – lower than the average Low UAI societies maintain a more relaxed attitude in which practice counts more than principles and deviance from the norm is more easily tolerated In the country like South Africa, people believe there should be no more rules than are necessary and if they are ambiguous or not work they should be abandoned or changed Schedules are flexible, hard work is undertaken when necessary but not for its own sake, precision and punctuality not come naturally, innovation is not seen as threatening 6,The four cultural dimensions of Thailand Power Distance :Thailand scores 64 It is a society in which inequalities are accepted; a strict chain of command and protocol are observed Each rank has its privileges and employees show loyalty, respect and deference for their superiors in return for protection and guidance This may lead to paternalistic management Thus, the attitude towards managers are more formal, the information flow is hierarchical and controlled Individualism: Thailand is a highly collectivist country This is manifest in a close long-term commitment to the member 'group' (a family, extended family, or extended relationships) Loyalty to the in-group in a collectivist culture is paramount, and over-rides most other societal rules and regulations The society fosters strong relationships where everyone takes responsibility for fellow members of their group In order to preserve the in-group, Thai are not confrontational and in there communication a “Yes” may not mean an acceptance or agreement An offence leads to loss of face and Thai are very sensitive not to feelshamed in front of their group Personal relationship is key to conducting business and it takes time to build such relations thus patience is necessary as well as not openly discuss business on first occasions Masculinity :Thailand scores 34 on this dimension and is thus considered a Feminine society Thailand has the lowest Masculinity ranking among the average Asian countries of 53 and the World average of 50 This lower level is indicative of a society with less assertiveness and competitiveness, as compared to one where these values are considered more important and significant This situation also reinforces more traditional male and female roles within the population Uncertainty Avoidance :Thailand scores an intermediate 64, it slightly indicating a preference for avoiding uncertainty In order to minimize or reduce this level of uncertainty, strict rules, laws, policies, and regulations are adopted and implemented The ultimate goal of this population is to control everything in order to eliminate or avoid the unexpected The society does not readily accept change and is very risk adverse Change has to be seen for the greater good of the in group IV, Conclusions : As there are four main components of each overall cultural distance score, which component(s) can be considered most influential for each country? The United States: Individualism ranks highest and is a significant factor in the life of U.S It indicates a society with a more individualistic attitude and relatively loose bonds with others The populace is more self-reliant and looks out for themselves and their close family members Czech Republic The highest-ranking culture dimension for the Czech Republic according to Geert Hofstede isuncertainty avoidance.The Czech Republic scores 74 on this dimension and thus has a high preference for avoiding uncertainty compared to the world’s average of 64 , they have less ability to deal with uncertainty Peru Uncertainty avoidance is the most influential in Peru At 87 Peru scores high on UAI In Peru, because of the high Power Distance certain guidelines should be followed Formal titles and respect are expected from Peruvian businessmen and women Also, because of the high Uncertainty Avoidance score, there are strict laws and an extensive legal system, however, these systems are oftentimes misused and corrupt India: India has Power Distance as the highest Hofstede Dimension for the culture, with a ranking of 77 compared to a world average of 56.5 It indicates a high level of inequality of power and wealth within the society.There is only one country with over 50% of its population practicing the Hindu religion – India The Hofstede Dimension that correlates most with the Hindu religion is Power Distance (PDI) South Afica: The Geert Hofstede analysis for South Africa illustrates their emphasis on Individualism This means there is a high preference for a loosely-knit social framework in which individuals are expected to take care of themselves and their immediate families only Thailand Uncertainty avoidance is considered as the most influential for Thailand because this index is higher than all the remains There is a reasonable high uncertainty avoidance - they want to reduce risk Besides power distance is also the most influential index for Thailand It means Thai are less disagreed with the power distribution The people who have less power show respect and loyalty to superior without doubt Using the Hofstede Cultural Dimensions Resource Center based on studies involving cultural dimensions to assess all five countries,determine which affiliates are located in a culture that is least and most similar to the U.S? 1, South Africa is most similar to the U.S A firm based in the United States of America with branches in all five countries employees from USA would be more a custom to a country like South Africa because they have approximately on three dimensions: power distance, masculinity, uncertain avoidance Regarding power distance, South Africa scores a 49 and the United States, has a score of 40 in this area They are not very far in terms of cultural distance Masculinity gap between South Africa and the United States is just only point(63 and 62), they “ live to work” The culture is driven more by competition, success, and accomplishment.Uncertainty avoidance is also very similar between these two societies This indicates that the people of these cultures are more laid back and those who violate social norms experience less cultural sanctions for their behavior It also indicates that society is more flexible and innovation is encouraged In terms of individualism, South Africa has a score of 65, while the United States has a score of 91 This value is very different, and could pose some potential South Africa is less individualistic, and while they still prefer individualism to collectivism, their preferences are more focused on a loose tie with social connections while still taking care of oneself than we are in the United States Considering that the main difference between South Africa and the United States in in terms of individualism (one of the United States most prominent features) It would not be too difficult to acclimate to South African culture Because both countries have a high number of people from similar background and would have more of the same services and industry standard 2, Peru is least similar to the U.S Although both countries are in America, Peru has culture least similar to the United States Individualism dimension of two countries has the biggest distance United States has very high score with 91 and its just only 16 in Peru It is because Latin America countries have strongly collectivist values In general they aspire to conformity and prefer having security over having autonomy in their position Peruvian culture has a high Power Distance score of 64 and an extremely high Uncertainty Avoidance score of 87 In comparison, the US has a Power Distance score of 40 and an Uncertainty Avoidance score of 46 In Peru, because of the high Power Distance certain guidelines should be followed When immersed in Peruvian culture to adapt to both the high Power Distance and Uncertainty Avoidance, changing behaviors and attitudes relating to these cultural dimensions is a must, especially when coming from a culture that has a low rating on both On the contrast, Masculinity of United States is higher 20 scores than Peru At 42 Peru is a rather Feminine society, which is one where quality of life is the sign of success and standing out from the crowd is not admirable [...]... Thailand It means Thai are less disagreed with the power distribution The people who have less power show respect and loyalty to superior without doubt Using the Hofstede Cultural Dimensions Resource Center based on studies involving cultural dimensions to assess all five countries,determine which affiliates are located in a culture that is least and most similar to the U.S? 1, South Africa is most similar... from USA would be more a custom to a country like South Africa because they have approximately on three dimensions: power distance, masculinity, uncertain avoidance Regarding power distance, South Africa scores a 49 and the United States, has a score of 40 in this area They are not very far in terms of cultural distance Masculinity gap between South Africa and the United States is just only 1 point(63... Distance certain guidelines should be followed When immersed in Peruvian culture to adapt to both the high Power Distance and Uncertainty Avoidance, changing behaviors and attitudes relating to these cultural dimensions is a must, especially when coming from a culture that has a low rating on both On the contrast, Masculinity of United States is higher 20 scores than Peru At 42 Peru is a rather Feminine... accomplishment.Uncertainty avoidance is also very similar between these two societies This indicates that the people of these cultures are more laid back and those who violate social norms experience less cultural sanctions for their behavior It also indicates that society is more flexible and innovation is encouraged In terms of individualism, South Africa has a score of 65, while the United States has... unexpected The society does not readily accept change and is very risk adverse Change has to be seen for the greater good of the in group IV, Conclusions : As there are four main components of each overall cultural distance score, which component(s) can be considered most influential for each country? The United States: Individualism ranks highest and is a significant factor in the life of U.S It indicates