Tuesday 2nd February 2021

Hofstede’s National Culture

Hofstede’s National Culture

Hofstede stated ‘culture is the collective programming of the mind distinguishing the members of one
group or category of people from others’.
- Hofstede carried out research amongst over 100,000 employees working around the world for
IBM.
- He attempted to categorise cultures of different nationalities working at IBM.
- Hofstede has extended the categories to six based on his latest research.
- Each country is scored from 1-120.

Six groups of national culture:

1. Power distance.
2. Individualism vs. collectivism.
3. Masculinity vs. femininity.
4. Uncertainty avoidance.
5. Long-term orientation.
6. Indulgence vs. restraint.

This could be useful when considering:

- Global businesses and employees within these businesses communicating with each other and
working together.
- The problem of mergers and takeovers.
- Difficulties entering overseas markets.

Power distance (PD):

- This refers to the degree of inequity between people with and without power. A high PD score
indicates there is an unequal distribution of power. Low PD means that power is shared and
well-dispersed.

Characteristics

Low PD - Flatter organisations.

- Supervisors and employees considered equals.

High PD - Centralised structures.

- Strong hierarchies.
- Large gaps in compensation, authority and respect.

Individualism (IDV):
- Some societies value the performance of individuals.
- For others, it is more important to value the performance of the team.
 Characteristics

Low IDV - Emphasis on building skills and becoming

masters of something.
- Working for intrinsic rewards.
- Harmony is more important than
honesty.

High IDV - High valuation on people’s time and their

need for freedom.
- An enjoyment of challenges and
expectation of rewards.
- Respect for privacy.

Masculinity (MAS):
- Hofstede linked what he called a “masculine” approach to a hard-edged, fact-based and
aggressive style of decision-making.
- By contrast, “feminine” decision-making involved a much greater degree of consultation,
intuitive analysis and emphasis on a better work-life balance.

Characteristics

Low MAS - Women can do anything a man can do.

- Powerful and successful women are
admired and respected.

High MAS - Men are masculine and women are

feminine.
- There is a defined distinction between
men’s and women’s work.

Uncertainty/avoidance index (UAI):

- This refers to the degree of anxiety that society members feel when in uncertain or unknown
situations. High UAI nationals avoid ambiguous situations, and avoid change.
- Low UAI scores indicate a society that enjoys novel events and values differences; there are few
rules. As a result, they are more entrepreneurial.

Characteristics

Low UAI - Informal business attitude.

- More concern with long term strategy
than what is happening daily.
- Acceptance of change and risk.

High UAI - Very formal business conduct with lots of

rules and policies.
- Employees need and expect structure.
- Sense of nervousness spurns high levels
of emotion and expression.
 - Differences are avoided.
Long-term orientation (LTO):
- This category is concerned with the different emphases national cultures have on the time
horizons for business planning, objectives and performance.
- Some countries place greater emphasis on short-term performance (so-called short-termism),
with financial and other rewards biased towards a period of just a few months or years.
- Other countries take a much longer term perspective, which is likely to encourage more
long-term thinking. The key implication of this category is the impact on investment decisions
and risk-taking.

Indulgence vs. restraint (IVR):

- Indulgence stands for a society that allows relatively free gratification of basic and natural
human drives related to enjoying life and having fun.
- Restraint stands for a society that suppresses gratifications of needs and regulates it by means
of strict social norms.

Criticisms of the national culture model:

Critics of Hofstede’s conclusions about national cultures say that:
- They generalise about an entire national population on the basis of the analysis of a few
questionnaire responses by certain categories of employees in an IMB subsidiary in that country.
- There is no evidence that the sample questioned in each country was representative of the
people in that country.

Applications of Hofstede’s national cultures model:

- International communication. ​Cross-cultural communication, for example in relation to
negotiations about contracts, requires being aware of cultural differences because what may be
considered perfectly acceptable and natural in one country can be confusing or even offensive in
another. All types of communication are affected by cultural dimensions: verbal (words and
language), non-verbal (body language and gestures), etiquette rules (regarding clothing,
gift-giving, dining, customs and protocol), and written communication.
- Operations issues such as outsourcing. ​Outsourcing is a very important strategic issue for most
of the world’s leading companies. Outsourcing, however, is much more complex than just taking
advantage of low wages in some emerging countries. Companies need to plan it carefully and
take into account national cultures. What may be an effective and efficient way of coordination
in one country may prove to be ineffective, inefficient or even counterproductive in another.
- Marketing and customer service. ​Most aspects of consumer behaviour are culture-bound and
therefore understanding national cultures is important to ensure the success of global
marketing. For example, marketing a car in a country where the uncertainty avoidance index
(UAI) is high, might mean emphasising safety issues as the most important feature, whereas in
other countries, emphasising social image may be more important. Evidence suggests that a lack
of understanding of different cultures constitutes one of the most important reasons for failure
when establishing customer service centres across geographical borders.
- Leadership. ​National cultures indicate that people have very different views on what a good
leader is or how teams should be led. Management techniques or leadership styles that work in
one national culture do not necessarily work elsewhere. This is especially relevant for businesses
that grow and set up new divisions in other countries. Most new and emerging markets tend to
 be in countries characterised by hierarchical cultures. For many US and western European
companies, the leadership style they have been practising domestically may not be suitable for
these cultures.
- Recruitment and HR. ​For international organisations, recruiting the right people is crucial to
their success. HR departments develop job specifications that identify relevant skills and
character traits required for jobs in their organisations. However, they rarely consider the fact
that the degree to which skills and traits are desirable differs from one country to another.
Virtual working is increasingly becoming the norm in many sectors. National culture has a big
impact on this, because often a virtual team is also a cross-cultural team.