5 Cultural Dimensions of International Business
The idea of cultural dimensions of international business is not new. Geert Hofstede's model identifies five important dimensions of cultural differences that companies need to address when they operate internationally. This blog post will outline these 5 dimensions and how they can be used in your company's strategy for successful cross-cultural communication.
The five dimensions are Power Distance, Individualism vs. Collectivism, Masculinity vs Femininity, Uncertainty Avoidance, and Long-Term Orientation. These categories were created by Hofstede in collaboration with IBM's research center for international personnel development during a study on 40 countries' value systems across the world.
1) Power Distance Index:
The Power Distance Index is a measure of how power and authority are distributed in a society. In societies with low levels of power distance, people expect that everyone has equal rights and opportunities regardless of their social status or rank. This means that subordinates have the freedom to express opinions when interacting with superiors. However, in societies marked by high degrees of power distance, people accept that power is distributed unequally and therefore not everyone has the same rights and opportunities. In these societies, a hierarchical order must be maintained so as to ensure social stability.
The Power Distance Index helps companies identify whether certain teams need a more egalitarian approach or if they should maintain a hierarchy in their internal communication processes. For example, a company that is used to hiring and promoting people based on meritocracy might hire employees from cultures with low power distance. On the other hand, if this same company operates in countries where status is important and needs to be respected, it will need to adapt its promotion strategy accordingly.
A high degree of Power Distance means that managers expect their subordinates to accept their decisions without question. This can result in teams that are less willing to speak up and give opinions when needed, which might be problematic during decision-making processes or if there is a lack of information available on the topic at hand. On the other hand, low power distance means that managers need to value ideas coming from all team members, not just the ones at a higher position. For example, an American company would be more likely to promote someone based on their experience and expertise rather than for being a manager or executive of the company.
In conclusion, when working with people from cultures where power distance is high, companies need to ensure that they have enough information on all topics discussed
2) Individualism vs. Collectivism Index:
The Individualism vs. Collectivism dimension is a measure of how individualistic or collectivist a society is. In societies where people have an independent view of themselves, self-expression and the need for achievement are important motivators. On the other hand, in cultures that favor conformity, harmony with others and respecting tradition are more important.
Depending on the degree of Individualism vs Collectivism in each culture, people will have different values and ways of thinking when it comes to teamwork or leading teams. For example, a company that is used to working with independent workers who take initiative might struggle if they hire employees from highly collectivist cultures where conformity is important. Similarly, companies that are used to working in teams might struggle with workers from individualistic cultures, where people prefer to work alone.
One of the most difficult situations occurs when employees or managers come from highly collectivist societies and have to be part of a team that is composed of independent thinkers who do not always agree on what needs to be done. A common mistake is to think that everyone is the same and therefore should act in a similar way. This can result in employees from individualistic societies feeling like they are not being listened to, which might lead them to withdraw or become passive-aggressive.
On the other hand, companies need to ensure that managers do not push their own ideas onto people who come from collectivist cultures. Instead, they need to be open to suggestions and be willing to take the ideas of others into consideration. In the case of highly collectivist cultures, managers need to be particularly careful not to take criticism personally.
In conclusion, companies have a better chance at successfully working with people from individualistic societies if they promote an environment where employees can give their honest opinion without fear or judgment that will affect their relationships. On the other hand, it is important for managers from individualistic societies not to push their own ideas onto employees from collectivist cultures. In the case of highly collectivist cultures, managers need to be particularly careful not to take criticism personally and instead promote an environment where employees can give their honest opinion without fear or judgment that will affect their relationships.
3) Masculinity vs Femininity Index:
This dimension describes how society perceives gender roles. Masculine societies are ones that value assertiveness, material success, and risk-taking behaviors while feminine societies value modesty, caring for the weak, and quality of life.
Depending on the degree of masculinity vs femininity in each culture, business relationships will be different between people in masculine and feminine societies. For example, when doing business in highly masculine cultures where risk-taking is encouraged, it might be easier to negotiate if you are willing to take risks. However, for people from more egalitarian countries like the Netherlands or Sweden (feminine cultures), this can backfire since they do not like taking unnecessary risks that put their business or personal relationships at risk.
On the other hand, in highly feminine societies where the quality of life is valued over material success and assertiveness, people might be less likely to take risks. For example, when negotiating with someone from a feminized culture like Norway (highly feminine), it would not make sense to talk about how much money could be made because this would not matter as much to them.
It is important for managers and employees coming from masculine cultures who are used to working in an aggressive, risk-taking environment to avoid pressuring people from more egalitarian societies into taking unnecessary risks that can put their business or personal relationships at risk. They should instead focus on the long-term goal of the relationship and not just the short-term gains.
On the other hand, it is important for managers and employees coming from more egalitarian cultures who are used to working in a risk-free environment to understand that people from masculinized societies need reassurance about long-term goals before they will be willing to take risks. If someone comes from a feminine culture, it would not make sense to talk about how much money could be made because this is less important in their culture.
In conclusion, managers and employees should adjust the way they work with people depending on whether their cultures are masculine or feminine. For example, if doing business in a highly masculinized country where risk-taking is encouraged, it might be easier to negotiate if you are willing to take risks. Instead, for people from more egalitarian countries where the quality of life is valued over material success and assertiveness, it might make sense to focus on long-term goals before they will be willing to take risks.
4) Uncertainty Avoidance Index:
The uncertainty avoidance index describes the extent to which people feel threatened by uncertain or unknown situations. People from cultures high in this dimension like predictability, clear rules and procedures, concrete goals, and precise arrangements whereas people from low-uncertainty avoidance countries are more comfortable with ambiguity and appreciate flexibility instead of planning everything far ahead.
People from high uncertainty avoidance cultures like predictability, clear rules and procedures, concrete goals, and precise arrangements. For example, in countries with this kind of culture (e.g., Germany), people are very accustomed to their schedule which is highly planned out for them at work or school. While they might be uncomfortable making unplanned social plans because everything needs to be organized far ahead, they are much more comfortable with the idea of planning for a few days at work.
On the other hand, people from low-uncertainty avoidance cultures like countries such as Colombia or Mexico appreciate flexibility and spontaneity instead of planning everything far ahead. For example, in these kinds of cultures, it would not make sense to plan a meeting for next week because people might want to be spontaneous and decide last minute that they do not want to go.
In conclusion, managers should make sure their employees from high uncertainty avoidance cultures are comfortable with the workplace schedule since it is highly planned out at work or school. In addition, managers should avoid making plans too far ahead with people from low-uncertainty avoidance cultures because they appreciate flexibility instead of planning everything far ahead.
5) Long-Term Orientation:
The long-term orientation index describes the extent to which people focus on obtaining and maintaining power by any means. People from cultures high in this dimension like having a lot of influence over others, respecting traditions and customs, upholding social order for its own sake, saving money instead of spending it right away, putting their personal affairs before work matters.
On the other hand, individuals from cultures low in this dimension are less interested in having power over others and close family members. For example, people have a tendency to be more individualistic instead of focusing on tradition or being concerned with saving money.
People from high long-term orientation countries like having a lot of influence over others, respecting traditions and customs, upholding social order for its own sake. For example, in Japan, it is very common to uphold tradition and customs because people think that these practices are part of their national identity which has been passed down from generation to generation. In addition, they have a strong sense of respect towards the elderly and close family members so much so that even if someone is very tired, they would not dare to leave work until the end of their shift because it is disrespectful.
On the other hand, people from low long-term orientation cultures like having a lot of influence over others and close family members. For example, in Colombia or Mexico (both countries with this kind of culture), individuals are much more individualistic and less concerned with tradition or saving money. They are more concerned with living in the moment and would rather spend money right away than save it.
Understanding the values of your customers is essential to maximizing revenue and customer satisfaction. The five dimensions that were created by Hofstede in collaboration with IBM's research center for international personnel development during a study on 40 countries' value systems across the world, can help you uncover different characteristics about how people think and behave around decisions related to money or making purchases. We want to know what you've learned from these categories so we can better serve our readers! Have any of these dimensions helped influence your decision-making process? Please share below and subscribe if this article was helpful!