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 5

-Course : International Business

Class : International Business K56 (High-Quality Educational Program) Topic: Hofstede’s cultural dimensions (Chapter 5, Research Task No.2 )

Group Members:

4 Nguyễn Thị Dịu

5 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 2 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 4 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

PDI

• Centralized organizations

• More complex hierarchies

• Gaps in compensation, authority,

respect

• Flatter organizations

• Supervisors and employees are considered almost as equals

IDV

• High value placed on people's time and

their need for privacy and freedom

• An enjoyment of challenges,

expectation of individual rewards for hard work

• Respect for privacy

• Emphasis on building skills and becoming master of something

• People work for intrinsic rewards

• Maintaining harmony among group members overrides other moral issues

MAS

• Strong egos – feelings of pride and

importance are attributed to status

• Money and achievement are important

• Relationship oriented/consensual

• More focus on quality of life

UAI

• Conservative, rigid and structured,

unless the danger of failure requires a more flexible attitude

• Many societal conventions

• People are expressive, and are allowed

to show anger or emotions, if necessary

• A high energy society, if people feel that

they are in control of their life instead of feeling overwhelmed by life's vagaries

• Openness to change or innovation, and 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 do 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 do

Masculinity : is high (62) This American combination reflects itself in the following:

1 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

2 Many American assessment systems are based on precise target setting, by which American employees can show how well a job they did

3 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 do things in a better way

4 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 do 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 do 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 do 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 do 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 do 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 do 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

do not come naturally, innovation is not seen as threatening

6,The four cultural dimensions of Thailand