Hofstedes Dimensions of Culture - Case Study Example

Hofstede’s Dimensions of Culture: An Analysis in Business Perspectives Introduction The concept of culture has a rich theoretical background. Its definition, framework, interpretation and application differ according to perspective. Diversity in culture is eminent and is closely evaluated in terms of their impact and effect on business operations especially of multinational companies (MNCs). Culture affects people – their needs, wants, aspirations, all of which the leader must tap. The value of taking into account cultural dimensions in day-to-day operations of MNCs must be viewed by management as training grounds for business practitioners. The evolution of business organizations have transcended barriers due to the rapid technological advancement that occurred within the last century. The classifications and categories of enterprises continue to increase due to factors encompassing developments in time, space and culture. Multinational corporations must be aware that the nature of the business relationship with diverse governments is of primary importance to manage factors influencing its performance. One of the elements that MNCs closely and continuously evaluate is culture. As the components and diverse perspectives of culture pervade global organizations, this research aims to proffer significant cultural dimensions which impact multinational corporations. A study conducted by Hofstede (1980) used five cultural dimensions to explain how and why people from various cultures behave as they do. In this regard, this essay is written with the objective of critically evaluating the five dimensions that constitute Hofstede’s model of culture. Likewise, each dimension would be linked to actual examples of MNCs to determine how they influence business operations, in general. Definition of Terms According to Martires & Fule (2000), culture is the “accumulated system of ideas, values, beliefs, customs, mores, and traditions transferred from one generation to another that affects and influences the pattern of living as well as lifestyle of a people in a given society” (pp. 226 – 227). The impact of culture on global organizations is so relevant and profound that it cannot be discounted in its unique attributes. An article entitled Culture (n.d., par.1) contained interesting and diverse definitions of culture depending on perspectives: Culture encompasses diverse elements of traditions, attitudes, knowledge, beliefs, religions, concepts of time and space, universal concepts, artifacts, among others, which are unique to a group of individuals across generations. Culture is defined as a set of knowledge accumulated and shared by diverse collection of individuals. Culture is considered a form of communication. Culture is enhanced behavior, cultivated and learned; it is considered a series of experiences accumulated through time and transferred socially. Culture is more famously known as a way of life unique to a common set of individuals learned through values, behaviors, symbols and beliefs which are accepted unconsciously and generally; ultimately passed through generations by imitation and communication. Hofstede actually distinguishes national culture by defining it as ‘the collective programming of the mind which distinguishes the members of one group or category of people from another” (Hofstede, 1991, 5). The concept of culture encompassing a particular nation or country became the basis for his research on the dimensions of culture. Lee Iwan, a professional with extensive cultural and international experiences international business proffered a clear distinction between global, transnational, international, multinational organizations. He averred that international organizations are considered either importers or exporters of products and services with absolutely no financial investment across borders. Multinational companies, on the other hand, have investments across borders. However, the products and services offered in foreign markets are adapted to local situations. Global organizations have predominantly more investments in various foreign markets. Their strategy employs a coordination of one brand and image in each and every market. There is a centralized corporate office which oversees the implementation of a global strategy emphasizing on the management of costs, volume, and increased efficiency. In global and multinational organizations, culture plays an important part in influencing and affecting the host organizations’ operations in terms of interacting with a collective group of people, whose values, beliefs and traditions are diversely variant from theirs. Finally, transnational organizations are more complex in nature. Accordingly, “they have invested in foreign operations, have a central corporate facility but give decision-making, R&D and marketing powers to each individual foreign market” (Iwan 2007, 1). Apart from operating across borders, the amount of investment and coordination of business strategy in terms of products and services differentiate domestic from international enterprises. The following portion would hereby present Hofstede’s cultural dimensions and the impact of each dimension in the operations of multinational corporations. Hofstede’s Cultural Dimensions Accordingly, “Hofstede used survey results from people in 70 different countries and developed four dimensions: power distance, uncertainty avoidance, individualism, and masculinity. The first, power distance, means that less powerful members of a group accept that power is not distributed evenly. Uncertainty avoidance relates to the extent that people are threatened by ambiguous situations. Individualism is the tendency of people to take care of themselves and their immediate family, as opposed to collectivism where people form groups and the group takes care of its members. Masculinity has as its dominant features success, money and things, as opposed to femininity where caring for others and the quality of life dominate.” (Cobb, 2000, 9) The fifth dimension, long term orientation, was recently added to the list. The study could be used by MNCs to closely examine the impact of culture of the host country on MNCs attitudes and practices. Power Distance Curtis (n.d.) clearly explained the dimension of power distance, to wit: “ it shows how much a culture does or does not value hierarchical relationships and respect for authority. Thus, if those in authority in your country openly demonstrate their rank, through either dress or behavior, or if class divisions within your society are accepted and reinforced, you can be pretty sure that your country has a high power distance score. That is, the gap between ordinary folk and those of a higher social status is rarely bridged, and co-mingling between the classes is virtually unheard of.” (par. 3) The higher the score, the greater the gap in equality of power. Countries that were indicated to generate high scores in power distance are: China, India, Philippines, Arabic speaking countries, among others. Those with lower scores are the USA, Sweden, Denmark, to name a few. As indicated, the US is considered one of the countries manifesting a low score in power distance; meaning, leadership styles encourage open communication, equality and cooperation to achieve organizational goals. The concrete example of this is the leadership style of Jack Welsh, or John Francis Welch, Jr., former Chief Executive Officer of General Electric, known as Jack to many. Concurrent with his philosophy of enforcing the element of surprise in GE, Welch made “unexpected visits to plants and offices, hurriedly scheduled luncheons with managers several layers below him, and countless handwritten notes to GE people that suddenly churn off their fax machines, revealing his bold yet neat handwriting. All of it is meant to lead, guide, and influence the behavior of a complex organization.” (Byrne, 1998, par. 22) Welch personally sets precise performance targets and vigilantly monitors them throughout the year. He directly meets and interacts with thousands of his employees; regularly reviewing their performance and motivating them to exceed their expectations. He has a unique and charismatic way of motivating them by making them feel that any of them can talk to him directly and informally at all times. He encourages sharing of success and failure as a continuous learning experience for growth and development. He manifests the characteristics of an intent listener, always aware of critical organizational issues, has exemplary business acumen, with commitment to the growth of people. His style made GE one of the leaders in the industry and one of the most financially successful multinationals of his time. In contrast, big corporations in the Philippines are layered with levels in the organizational hierarchy designed to limit open communication to the top honcho. According to Buenaventura (2008), “the Philippines is the 4th highest in the global Power-Distance index list” (par. 2) Superiors are treated as superiors and most people are trained from birth not to speak up in the presence of authority. Accordingly, exceedingly subtle language (the technical term is “mitigated speech“) is used in an effort to get messages relayed without offending the boss, or clients, or anyone else that one is socially obligated to show respect to (Buenaventura, 2008, par. 3). In this regard, relevant and critical messages or suggestions are not immediately relayed to decision makers and cause backlogs in communication and operational activities. Uncertainty Avoidance The dimension on uncertainty avoidance is best manifested in countries such as India and Latin America. According to Dave of Induslatin (2008, par. 3), “the concept of uncertainty avoidance describes people’s attitude towards the ambiguity and unpredictability of life stemming from interactions with society, the natural and spiritual worlds. Laws and regulations, tools and technology and religion are ways used to address uncertainty in each of these corresponding areas”. In addition, a country such as India has businesses manifesting low uncertainty avoidance while those from Latin America, especially in areas of Uruguay, Brazil, and Argentina, exhibit high uncertainty avoidance. A specific example on this dimension concerning both countries is shown as follows: “An individual was attempting to broker a commodity purchase from a Brazilian seller and Indian-management led Emirate-based buyer. The Brazilians sent a list of 8 to 10 procedures to be followed and the India buyer felt a few of those procedures were unnecessary (e.g could be replaced by electronic instead of paper verifications) and were wasting time. Moreover, the Indians added a couple of other procedures they expected the Brazilians to comply with. The Brazilians flatly refused. On each side, there was a failure to understand where the other side was coming from with regard to this “uncertainty avoidance” dimension. Each side thought the other was out of their mind for asking for a certain procedure to be complied with or bypassing a listed procedure. Despite repeated attempts, weak in retrospect, at facilitating this understanding proved futile.” (Induslatin, 2008, par. 8). India was found to have a score of 40 in Hofstede’s cultural dimension (Itim, 2009), one among a few countries with low uncertainty avoidance. The implication of this is that business organizations are more open to explore opportunities and venture into the unknown. This is the reason why Indian culture has been growing and developing in the recent years after the liberalization of 1991. In contrast, Brazil scored 76 in uncertainty avoidance (Itim, 2009) confirming its low level of tolerance for the unknown. As such, management composed of Brazilians are more risk averse and very conservative in indulging in new ventures. Individualism The experience of MNCs in Kenya was explored by K’Obonyo & Dimba (2007, 12) who averred that Kenya is considered high in collectivism rather than individualism. As such employees have high expectations that business organizations would look after them like family members. This dimension was further confirmed in studies made by Blunt & Jones (1986) and Nzelibe (1986) who emphasized that employees in Kenya and other African countries expect policies and practices from management to cater to interpersonal relations as employees value group harmony and community relations more than personal and individual wellbeing. In this regard, as Kenya was considered to value group ties and collective harmony more, MNCs are challenged to design systems and processes, as well as motivational incentives based on collective ties and increasing the productivity of the group to achieve organizational goals. In contrast, Canada was viewed in Hofstede’s cultural dimensions as exhibiting the highest ranking in individualism with a score of 80 (Itim, 2009). Individualistic cultures are those which prioritize the individual and value independence, privacy, and personal fulfillment (Triandis et al., 1990). Accordingly, MNCs in Canada must be aware of the dimension of individualism in designing management strategies which work towards maintaining privacy and motivating for personal achievement. By acknowledging each individual as self-reliant and works more in an individualistic environment, management creates a working environment that is conducive to personal growth. Masculinity According to Yates (2005), the cultural dimension of masculinity emphasizes “stress on equity, competition, and performance. Managers are expected to be decisive and assertive”. (par. 1) In Germany, masculinity is high in Hofstede’s cultural dimensions. In fact, in the article written by Singe (2005, 3), the masculinity trait was manifested, to wit: “recognition of the usefulness of US models in context cannot however be equated with adopting them. German interest in American methods has always retained a critical perspective and Gergs and Schmidt have argued that simple adoption of American management models by German employers is therefore unlikely (Gergs/Schmidt 2002).” On the other hand, Netherlands was scored as the most feminine nation in terms of its innate national trait of being caring and nurturing individuals among the rest of countries in the world. According to the book entitled Masculinity and Femininity: The Taboo Dimensions of National Culture edited by Hofstede, “evidence suggests that U.S. students value earnings, advancement, and benefits relatively more than the Dutch students, who tended to value freedom on the job, being consulted by their boss, and training opportunities. Relatively more important to men of both countries were earnings, advancement, prestigious company, and benefits. These quantitative survey results were enhanced by qualitative interview data that indicated national differences in feelings toward welfare, relaxation, and caring.” In this regard, MNCs operating in the Netherlands must be aware of these distinct characteristics in according benefits and in involving critical personnel in decision making processes. Long Term Orientation The fifth dimension, long term orientation “focuses on the degree the society embraces, or does not embrace, long-term devotion to traditional, forward thinking values.” (International Business Center 2008). As expected, China scored the highest in this dimension with Pakistan scoring the lowest. The implications for MNCs operating in these countries are as follows: management and decision makers in China must accept the fact that employees China have deep respects for their traditional culture and are therefore more contemplative in nature. They need to reflect on repercussions of decisions to cultural orientations. According to Workman, (2009, par. 8), “International trade negotiators need to carefully consider the Chinese mindset that values perseverance and slow progress. Chinese business partners are often offended by Western businesspersons who try to impose tight deadlines and agendas on business decisions.” Conclusions The incorporation of ethical norms and cultural dimensions in MNCs code of ethical standards would ensure that the standards were evaluated and assessed according to cultural and ethical beliefs of both host and home countries – and are therefore applicable to business practices of both countries. The impact of culture on leadership and on the people being managed is tremendous. This concept has been acknowledged by the leaders themselves who operate with due consideration for the values, needs, aspirations, beliefs of their work force and even of their clientele. According to Martires & Fule (2000), culture is the “accumulated system of ideas, values, beliefs, customs, mores, and traditions transferred from one generation to another that affects and influences the pattern of living as well as lifestyle of a people in a given society” (pp. 226 – 227). Effective management is measured in terms of how successful organizational goals were achieved through the utilization of the most cost efficient mix of the company’s resources. The manager’s task is to apply management concepts and theories on production, motivation, group behavior, leadership and power, culture, conflict and change, among others. All of these affect people – those who are actually employed in the organization and those who they interact with from their external environment (the patients, local and state organizations, the community and global markets). The influence of culture on multinational strategies is critical and relevant in terms of making host organizations aware and adept in applying strategic measures towards the achievement of organizational goals. Multinational organizations cannot merely exist and survive by imposing its national and corporate culture to foreign markets. There is a need to closely examine, not only theoretical frameworks on cultural dimensions affecting MNCs, but more so, the practical applications of actual experiences of MNCs delving into foreign lands. Reference List Buenaventura, L 2008. Power Distance, or Why I Have to Call you “Ser”. Viewed 06 April 2010. < http://guttervomit.com/2008/11/16/power-distance-or-why-i-have-to-call-you-ser/> Cobb, SL 2000. 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Cultural Differences: Its More than Geography that Matters. Viewed 07 April 2010. < http://www.growing-global.com/detail.asp?ID=23> Read More