Cultural Environment of International Business - Essay Example

Hofstede’s Power Distance Index (PDI) refers to the extent subordinates accept that power is unequally distributed. According to Hofstede, power distance is either low or high whereby democratic cultures endorse low power distance whereas authoritarian cultures endorse high power distance (Hofstede, 1984). The US endorses low power distance, which affects the government and large organizations’ daily operations. US citizens expect accountability and transparency from those in influential positions. This prevents powerful individuals or institutions from taking advantage of those that are less privileged. Legislation in the US safeguards the rights of regular citizens from oppression. As a result, businesses operating in low PDI cultures such as the US are keen on Corporate Social Responsibility (CSR) (Lodgson & Wood, 2002). In the US, organizations are transforming to become social enterprises.

Social enterprises negate principles of the traditional business model, which advocated for concise distinctions about a business’s primary intentions; for example, organizations defined themselves as either private profit-driven entities, governmental parastatals, or non-profit entities. Ridley-Duff et al (2011) defined social enterprise as any organization that directs its efforts towards the application of commercial strategies in improving environmental and human well-being rather than maximizing shareholder profits. Unlike the traditional business model, social enterprises are flexible and capable of adopting either profit or non-profit structures, as their central agenda concerns advancing social, human justice, and environmental agendas. For such organizations, aligning their business strategies to encompass Corporate Social Responsibility (CSR) strategies is not mandatory, as their core mission and vision entail helping society. Social enterprise organizations exhibit diversity in the fields they specialize in; for example, retail, contracted providers of human and social services, fee-based consultation and research services, community development and financing services, and sponsoring art and literal exhibitions. Efficiency results from these organizations' ability to mitigate social problems suffocating the limited resources possessed by various governments (Ridley-Duff et al., 2002).