In order to understand national culture and its impact on business, we need some theoretical work upon which to base our discussions. You will find that, over the years, theoretical ideas have been refined as the sophistication and direction of research has evolved.

Theoretical Work

• Kluckhohn and Stodtbeck (1961) - Cultural Orientations
• Hall (1976) - Cultural Contexts
• Laurent (1983), Adler, Campbell and Laurent (1989) - Culture, Status and Function
• Hofstede (1980, 1984, 1991), Sondergaard (1994) - Culture and the Workplace
• Trompenaars (1993) - The Business Consultant’s Perspective

We begin with some early research (though not the earliest cultural research) and you can see that elements of this are still evident in the latest approaches to explanations of culture.

Cultural Orientations (Kluckhohn and Stodtbeck, 1961)

Six basic orientations -

• What is the nature of people?
• What is the person’s relationship to nature?
• What is the person’s relationship to other people?
• What is the modality of human activity?
• What is the temporal focus of human activity?
• What is the conception of space?

The dimensions of this piece of anthropological research are reflected in later work. They identify six basic orientations as shown on the slide.

The temporal focus of human activity is related to the concept of time. How time is perceived is relevant to aspects of behavior such as punctuality and the use of time.

"Time is money”, as Henry Ford once said, is a particular perception of time.

The conception of space is relevant to the design of collective areas and also to the distance between people in conversation, something that is very culture-specific. We can readily see that this work, although of a non-business nature, has wide implications for human behavior, particularly in the world of business.

High and Low Context (Hall, 1976)

Defining Feature:

Extent to which behavioral cues are made explicit (e.g., through conversation, written documents), or are inherent in the situation.

Implications for Relationships, work settings

Hall developed a two-dimensional measure, which, although not sufficient in itself, provides an interesting insight into the explicitness or otherwise of societal behavior.

Essentially, Hall argues that some societies deal with societal rules implicitly, i.e. discussion and written documents do not make cultural rules explicit, compared with societies where the rules and regulations are carefully portrayed in interactions.

Hall suggests that, in order to analyze the behavioral characteristics of a group, one must understand the context in which they exist and how members of the group react to that context.

He classifies cultures into two groups: high context and low context. Some of the main characteristics are shown below.

Using the characteristics above, examine your own domestic culture and suggest whether it displays a low or high context.

Hall’s work does not allow for the ranking of countries or for any scale of measurement, so it is of limited value. However, the work does have value in identifying those cultures which are more formal and rule-driven than less formal cultures.

Culture, Status and Function

• Laurent (1983),
• Adler, Campbell and Laurent (1989)
• Laurent - Europe and USA
• Adler et al - PRC, Indonesia and Japan

Two associated research programs come next: Laurent (1983) and Adler, Campbell and Laurent (1989). The earlier work was carried out in Europe and the USA and was extended in the latter work to SE Asia. Essentially, the researchers were considering status and function within business in different countries. They chose four quite broad areas: perception of the organization as a political system, systems of authority, how roles were formulated and the type of hierarchal systems.

Laurent, Adler et al - By-passing the hierarchy

In order to have efficient work relationships, it is often necessary to by-pass the hierarchical line

Disagree

Laurent, Adler et al. The manager as expert or the manager as facilitator

It is important for a manager to have at hand precise answers to most of the questions that subordinates may raise about their work.

Agree

Bypassing the hierarchical line to get things done would be found acceptable in countries like Sweden and the UK but not so in Italy or Japan. In those countries, things would have to be played ‘by the book’ - the hierarchical format for taking decisions would have to be followed, no matter what the situation.

The second point is particularly important - to what extent a manager is expected to have the answers to all staff queries. In Sweden, the USA and the UK, we as managers are not expected to know all the answers (perhaps only what is required to help with accessing the required information). In Japan and Indonesia, managers are assumed to be expert and thus able to provide immediate response to all staff queries.

It is readily apparent that, if a Swede is to work in a Japanese organization, a change of management approach may be needed; otherwise he or she may lose status in the eyes of staff members. On the other hand, a Chinese manager working in Europe may have to change to a more participative style of management.

If you have work experience, consider the questions above and relate them to your own experience. Do you agree, for instance, that the manager should always be able to answer subordinates’ questions immediately?

Hofstede, 1980, 1984, 1991

We now move to the two most important sets of studies into culture and organizations, the work of Hofstede and Trompenaars (both Dutchmen incidentally)

Hofstede carried out his research in the late 1970s and early 1980s. Initially, he made two questionnaire surveys within a single organization (IBM ), involving over 116,000 managers in 72 different countries. According to this research, Hofstede suggests that the way people in different countries perceive and interpret their organizational world varies along four dimensions: power distance, uncertainty avoidance, individualism versus collectivism and masculinity versus femininity.

Specifically, he argues the following:

• work-related values are not universal
• underlying values persist when a multi-national company tries to impose the same
• norms on all its foreign interests
• local values determine how Headquarters regulations are interpreted
• by implication, a Multinational Corporation (MNC) that insists on uniformity across its interests is in danger of creating morale problems and inefficiencies

1. Work-related values are not universal. In some countries, there exists a balance between work and home life that emphasizes the quality of life. In others, work is an economic necessity and everyone works, quite often for long hours. In some societies, work is given a religious meaning, the Protestant work ethic, for instance. People perceive the role of work differently between cultures and have implications for the way people are managed and motivated. In the UK, for instance, there have been several studies which suggest that people look for self-fulfillment through their work and that "money isn’t everything".
2. Underlying values persist when a multi-national company tries to impose the same norms on all its foreign interests. That is to say, local values persist even when work instructions seem to conflict with them. Many companies have found to their cost that export of systems from headquarters to subsidiaries has not been successful because local interests prevailed.
3. Local values determine how headquarters instructions are interpreted. Even in the most rule-oriented organization, instructions need to be interpreted by people. What Hofstede says is that local conditions will necessarily affect that interpretation.
4. By implication, a multi-national company that insists on uniformity across its interests is in danger of creating morale problems and inefficiencies. Any conflict between headquarters rules and regulations and the local culture can lead to problems within the organization and consequent loss of efficiency. In extreme situations, management may find it very difficult to function effectively because of problems associated with headquarter needs.

Hofstede’s four dimensions of culture

Hofstede originally evolved four dimensions of behaviour: power distance, uncertainty avoidance, individualism and collectivism and masculinity versus femininity (slide 22). Later on, in association with Michael Bond, he evolved a fifth dimension: Confucian Dynamism. We will now set out these dimensions in more detail and assess their application in management situations.

• Power Distance - the distance between individuals at different levels of the hierarchy
• Uncertainty Avoidance - more or less the need to avoid uncertainty about the future
• Individualism v Collectivism - the relationship between individuals and others
• Masculinity v Femininity - the division of roles in society
• Plus
• Confucian Dynamism (Hofstede and Bond 1988)

Power distance

The extent to which less powerful members of institutions accept that power is distributed unequally

Large (Mexico, South Korea, India) + blindly obey order of superiors + hierarchical organizational structure

Small (U.S., Denmark, Canada) + decentralized decision making + flat organizational structures

HIGH POWER DISTANCE - NORMS, VALUES, AND BELIEFS

• Inequality is good
• Everyone has a place
• People should depend on a leader
• The powerful are entitled to privileges
• The powerful should not hide their power

This refers to the degree of inequality between people and the readiness with which this inequality is expected in social situations. The lower the power distance, the more individuals will expect to participate in organizational decision making processes. It is likely that managers and subordinates will mix easily both in formal situations and in more informal gatherings. Outside the firm, people at various levels would mix relatively freely. In larger power distance situations, people expect instructions instead of participation - there is more dependency on direction and discretion in making decisions is not permitted. Managers would not mix socially with subordinates and would not expect any interaction with junior staff. Countries which exhibit high power distance ratings are China, Japan and Indonesia, with Denmark and other Scandinavian countries at the low power distance end of the scale.

Individualism/Collectivism

Individualism

The tendency of people to look after themselves and their immediate family only

• strong work ethic
• promotions based on merit
• U.S., Canada, Australia

Collectivism

The tendency of people to belong to groups and to look after each other in exchange for loyalty

• weaker work ethic
• promotions based on seniority
• China, South American cultures

Four Defining Features

• Independent vs. interdependent self
• Individual vs. group goals
• Norm- vs. contract-driven behavior
• Rationality vs. relatedness

Implications for…

• Professional Behavior
• Conflict resolution
• Motivation
• Ethics
• Responsibility

Individualism is the tendency for people to look after themselves and their immediate family only, although in extreme cases, the individual element is driven for that person only. On the other hand, collectivism is the tendency of people to belong to groups or collectives and to look after each other in exchange for loyalty. Individual needs are then subservient to the goals of the group as a whole. The UK, Australia and Canada show high scores for individualism while Japan, Brazil, Chile and Columbia exhibit comparatively low readings. There are several implications here for managerial processes connected with motivation, responsibility and ethics.

Masculinity/Femininity

Masculinity (Vs. Femininity)

• the dominant values in society are success, money and things
• emphasis on earning and recognition
• high stress workplace
• Japan

Femininity

• the dominant values in society are caring for others and the quality of life
• employment security
• employee freedom
• Scandinavian cultures

MASCULINITY - NORMS, VALUES, AND BELIEFS

• Clear definitions of gender roles
• Men are assertive and dominant
• Support for Machismo
• Men should be decisive
• Work is priority
• Growth, success, and money are important

This factor relates to the degree to which ‘masculine’ values, such as achievement, performance, success, money and competition prevail over feminine values such as the quality of life, maintaining warm personal relationships, the idea of service, care for the weak and solidarity. Masculine cultures exhibit separate roles for women and men. The more feminine cultures tend to express a desire for a high quality of life and the environment over materialistic ends. The USA and Italy are at the high end of the masculine scale, whereas Denmark and Sweden are positioned at the feminine end of the scale. Differences in masculinity scores are also reflected in the types of career opportunity available in organizations and consequent job mobility.

Uncertainty Avoidance

Uncertainty Avoidance (High or Low)

The extent to which people feel threatened by ambiguous situations

High( Germany, Japan, Spain)

• high need for security
• strong beliefs in experts

Low (Denmark, UK)

• willing to accept risks
• less structuring of activities

UNCERTAINTY AVOIDANCE - NORMS, VALUES, AND BELIEFS

• Avoid conflict
• Low tolerance of deviant people and ideas
• Respect for laws and rules
• Experts and authorities are usually correct
• Consensus is important

Uncertainty Avoidance concerns the degree to which people prefer rules, with fixed patterns of life and formal structures governing behavior. Risk taking is not a comfortable process and people prefer to have the maximum amount of relevant information before deciding on a plan of action. There is an expectation that rules and regulations will be followed closely, with a low tolerance for deviancy of action or ideas. In low uncertainty avoidance countries, people are happy to face the future with less formal rules and to interpret rules to fit the situation. Risk-taking is part of everyday life and following a hunch is as good as formal long-term planning. Control systems tend to be less detailed in low uncertainty avoidance areas. The USA and Canada show lower uncertainty avoidance while Japan, Greece and Portugal display relatively high levels.

Briefly describe the four dimensions in your own words. Think about your own work experiences and identify those processes which may be related to one or more of these dimensions. For example, are the payment systems based on individual effort or group achievement?

Confucian Dynamism

1. Integration

Noncompetitiveness, trustworthiness, filial piety (obeying parents, honoring ancestors), patriotism

2. Work Dynamism

Thrift, persistence, sense of shame, respect for tradition, protecting your “face”

3. Human-Heartedness

Kindness, patience, courtesy, sense of righteousness

4. Moral Discipline

Moderation, being disinterested & pure, having few desires

Implications for... Economic Growth

With the recent rise of China and other SE Asian economies, it became obvious that the four dimensions would not be adequate. Perhaps a strong point of Hofstede is that his work is evolving over time and this is a good example of a theory being extended to fit changing patterns of organizational life. Together with Michael Bond, Hofstede developed the idea of Confucian Dynamism.

This is a complex dimension, for westerners at least, since Confucianism is in itself complex. Essentially, Hofstede and Bond have identified some highly important and relatively important characteristics, which are listed below:

Highly important

• Persistence and perseverance
• Ordering relationships by status and observing that order
• Thrift
• Self-effacing attitudes

Relatively important

• Personal sturdiness and stability
• Issues of ‘face’
• Respect for tradition
• Reciprocation of greetings, favors and gifts

Although some of my Chinese colleagues consider that these characteristics are changing as China develops economically, especially a growing tendency towards individualism, they can be seen in action in many Chinese-foreign interactions. The formal rules are important, not only in everyday situations but also in negotiations.

HOFSTEDE’S VALUE DIMENSIONS BY COUNTRIES

Anglo cultures (US, GB, Australia)

• High on individualism and masculinity, low on power distance and uncertainty avoidance

Latin European

• High uncertainty avoidance

Nordic

• Low masculinity

Far Eastern

• high power distance, low individualism

The four dimensions are summarized by area; in fact, Hofstede’s results present certain clusters of countries which display similar characteristics. Nordic countries tend to be feminine, whereas the US and the UK tend to be more masculine.