Hofstedes Cultural Dimensions - Case Study Example

International Business Would you agree that Hofstede’s cultural dimensions could help international businesses manage their operations more effectively? Discuss!! Hofstede’s cultural dimensions – brief overview Geert Hofstede, a Dutch psychologist has explored the issues of cultural difference at national level aiming thus to identify key cultural aspects prevalent in each country. He carried out a cultural study in management, analysing IBM operations in 70 different countries (Rugman, and Collinson, 2011). Hofstede has identified four independent dimensions of cultural differences, including the following: (1) power distance (small/large); (2) individualism vs. collectivism; (3) masculinity vs. femininity; and (4) uncertainty avoidance (weak/strong) (Chatterjee, 2014). Power distance implies the extent to which a national culture of specific country accepts unequal distribution of power in organisations. The organisations with prevalent high power distance are characterised by strong hierarchy, limited involvement of employees to decision making process, and more autocratic style of leadership (Rugman, and Collinson, 2011). The dimension of uncertainty avoidance can be explained as the extent to which representatives of a specific nation or society are ready to take risk and how comfortable they feel with uncertainty. The nations with high uncertainty avoidance level prioritise rituals, procedures, and routines in their everyday live and at work. The nations where the uncertainty is lower demonstrate informality, flexibility and readiness to take risks (Rugman, and Collinson, 2011). Individualism is the degree to which nations are supposed to be emotionally independent from other and are capable to take care of themselves (Rugman, and Collinson, 2011). In corporate life, cultures characterised by high level of individualism are working for their personal achievements and do not focus much on their relationships with colleagues and teamwork. Cultures with low individualism level, on the contrary, prioritise their relationships with colleagues, team cooperation, and team achievements. Masculinity is the fourth cultural dimension – “the value attributed to assertiveness, achievement, and material success as opposed to the stereotypical feminine values of relationships, modesty, caring and the quality of life” (Rugman, and Collinson, 2011: 141). Therefore, the nations with strong masculinity pursue material goals, such as money, success, recognition. The nations with weak masculinity dimension are more relationship and family-oriented. Two decades later, Hofstede added a fifth cultural dimension of long-term vs. short-term orientation (Chatterjee, 2014). This dimension determines how nations view their past and deal with the challenges of present and future (Geert-hofstede.com, 2015). Nations with the long-term orientation, prefer to maintain norms and traditions while being quite suspicious to societal change. Nations with short-term orientation are more pragmatic in their views and they recognise modern education as the way to move forward and get prepared for the future (Geert-hofstede.com, 2015). Hofstede’s model of five dimensions has been widely researched and many researchers used it as the foundation for other cross-cultural studies. Nowadays, the theoretical framework of cultural dimensions developed by Hofstede is widely applied and accepted not only by academicians and researchers, but also by practitioners (Chatterjee, 2014). Managers employed by international organisations increasingly focus on exploring and learning different cultures in order to be more effective in their decision making processes. This paper aims to explore how Hofstede’s cultural dimensions could help international businesses manage their operations more effectively. International business and Hofstede’s cultural dimensions International business is a complex set of international operations, which require both strategic and operational decisions. While analyzing how the Hofstede’s framework of different cultural dimensions can be utilized by managers of international companies, it might be helpful to identify several key areas where this framework could have the greatest impact. These areas include: international management, international human resource management, and international marketing. Below is provided more detailed overview of each field and discussions of how Hofstede’s cultural dimensions could be useful in each case. International Human Resource Management National cultures influence not only leadership styles and strategic decisions in organisations, but also human resource management practices. It is widely recognized that human resource practice predetermines the success of the overall organisation (Dartey-Baah, 2013).Without effective human resource management approach the company will not be able to develop effective motivation, performance appraisal, leadership, training and development for its employees. The situation is even more challenging when the company needs to expand its human resource function to overseas affiliate. Inability to recognize major cultural differences and adopt appropriate human resource practices might result in cultural clashes and overall failure (Dartey-Baah, 2013). Hofstede’s model of cultural dimensions can be especially helpful tool for HR managers, operating in international environment. For example, cultures where power distance needs absolutely different approach and management than those cultures with low power distance. For example, the United States has a moderate score of power distance (40), and therefore, hierarchy differences and acceptance of status are also moderate (Dartey-Baah, 2013). In India, a country with high power distance score, people tend to accept supervisor feedback and orders without arguments and discussions. A manager, who was transferred to India from the US will more likely face challenges in achieving set plans and managing workforce if he will not take into consideration cultural difference of power distance. In order to succeed in managing employees, managers will need to introduce relevant feedback mechanisms and adapt appropriate HRM practices (Dartey-Baah, 2013). Another example illustrating the necessity to adopt different HRM practices is associated with individualism dimension. For example, China is a country with low individualism extent whereas collectivist values are prevalent and transferred to employee’s behavior. Therefore, if a company will fail to recognize this factor, it will more likely meet opposition and resistance on behalf of its Chinese employees (Dartey-Baah, 2013). The company will fail to adopt effective motivation, relevant recognition, training, etc. to its employees, demonstrating thus disrespectful behavior (Dartey-Baah, 2013). Another example related to human resource practices relates to life-time employment, which is absolutely uncommon in USA but popular in Japan (Dartey-Baah, 2013). If the US-based company operating in Japan will take into consideration this cultural difference and will offer recreational opportunities and social activities it will more likely succeed in its human resource management, making employees more satisfied with their employment (Dartey-Baah, 2013). International Marketing In addition to managing its international workforce the international companies need to take into consideration cultural differences while communicating with and marketing to their customers. Despite the fact that initially Hofstede’s framework was initially applied to human resource management, it also can be used in international marketing and consumer behavior studies (Soares et al., 2007). Thus, for example, the individualism dimension could navigate managers in marketing and advertising appeals. Power distance also is an important dimension in advertising appeals, innovativeness, and information exchange behavior (Soares et al., 2007). Masculinity dimension impacts service performance, innovation, and sex role portrays. Long-term orientation impacts on innovativeness (Soares et al., 2007). Below is provided a table summarizing the key areas of international marketing and consumer behavior influenced by Hofstede’s dimensions. Individualism Uncertainty avoidance Power distance Masculinity Long-term orientation Innovativeness ✓ ✓ ✓ ✓ ✓ Service performance ✓ ✓ ✓ Advertising appeals ✓ ✓ ✓ Information exchange behavior ✓ ✓ Sex role portrays ✓ Table 1: Impact of Hofstede’s dimensions in international marketing and consumer behavior (Source: Soares et al., 2007). Limitations of Hofstede’s model Even though Hofstede’s model of cultural framework is definitely a useful tool that can be used by international companies in order to handle and improve their operations, it is worth to mention that this model is focused on national differences and fails to take into account differences of local and regional subcultures (Dartey-Baah, 2013). Hofstede’s model is more generalized summary of common cultural patterns on national level, and it fails to recognize individual cultural differences (Dartey-Baah, 2013). Still, the model can be applied in different spheres of international operations, including international management, international human resource management, and international marketing. Conclusion Multi-national and international organisations operate in different countries and therefore, they face with a challenge of dealing with different cultural environments. There exist many different theories and concepts aiming to help international managers to be aware of cross-cultural communication practices. Hofstede’s model of five dimensions is recognised to be one the helpful tools that can be used not only by theorists and academicians, but also by practicing managers. Hofstede’s model is comprised of five key cultural dimensions that address different cultural patters. His model can be applied in different spheres of international operations, including international management, international human resource management, and international marketing. However, even though Hofstede’s model of cultural framework is definitely a useful tool that can be used by international companies in order to handle and improve their operations, it was found that this model is focused on national differences and fails to take into account differences of local and regional subcultures. Hofstede’s model is more generalized summary of common cultural patterns on national level, and it fails to recognize individual cultural differences. Therefore, international managers aiming to improve their international operations need to combine Hofstede’s cultural framework with other models, practices and approaches of intercultural communication. References: Chatterjee, D. 2014, "Management control systems and Hofstedes cultural dimensions: an empirical study of innovators and low innovators", Global business review, vol. 15, no. 3, pp. 565-582. Dartey-Baah, K. 2013, "The Cultural Approach to the Management of the International Human Resource: An Analysis of Hofstedes Cultural Dimensions", International Journal of Business Administration, vol. 4, no. 2, pp. 39-n/a. Geert-hofstede.com, 2015. Dimensions - Geert Hofstede. [online] Available at: http://geert-hofstede.com/national-culture.html [Accessed 22 Jun. 2015]. Rugman, A., and Collinson, S. 2011, International business, Pearson Education. Soares, A.M., Farhangmehr, M. & Shoham, A. 2007, "Hofstedes dimensions of culture in international marketing studies", Journal of business research, vol. 60, no. 3, pp. 277-284. Read More