The Usefulness of Models of Cultural Difference in Managing International Business

Seminar Paper 2000 9 Pages

Business economics - Business Management, Corporate Governance


The Usefulness of Models of Cultural Difference in Managing International Business

Maik Wagner - Nottingham Trent University

1. Imntroduction

More and more business is being done in an international context and more corporations are establishing themselves globally. The question arises, then, regarding whether managerial processes developed for one specific location can be transferred to another and whether they should be changed or remain unchanged during transition. (Hunter 1999)

A series of cross-cultural research has been undertaken during the last few decades suggesting that certain management styles or business techniques may be incompatible because of cultural differences. The following essay discusses the usefulness of such models in managing international business. It focuses on the main 'gurus' which have developed the principal models of cross-cultural research including Geert Hofstede as well as Fons Trompenaars. At the end the essay Richard D. Lewis, widely acclaimed author of 'When cultures collide' and his views on national cultures will be discussed.

Monir Tayeb (2000 a) defines the main advantage of cultural models as follows:

The main advantage of breaking one culture into its constituent characteristics is that it facilitates comparisons across cultures, one looks at the same trait and observes similarities or differences among the nations under investigation or even notes its absence from some cultures altogether. (Monir Tayeb: http://www.eums.ed.ac.uk/BAM2000/)

2. Geert Hofstede

Geert Hofstede has researched the nature and extend of cultural differences. He defined 'culture' as "collective programming of the mind". As individuals grow up in any culture their assumptions about the way a society should be organised are instilled into them. (Tayeb 2000b) He has shown that certain management practices can be compatible and others incompatible with the culture of a particular society. He suggests that that cultural incompatibility can endanger the successful transfer of accepted Western managerial practices to a different country.

The Usefulness of Models of Cultural Difference in Managing International Business

Maik Wagner - Nottingham Trent University

When drawing up his cultural model in 1980 Hofstede used a large sample, questioning people from 50 countries and three regions all over the world. All the employees came from the same company namely IBM being the most successful company in the world during that time. Hofstede identified four key dimensions, which in his view define the term 'culture'. (Tayeb 2000b)

Power Distance

(are inequality or hierarchical orders inevitable or are they needed?) Uncertainty Avoidance

(lack of tolerance for ambiguity and need for formal rules) Individualism vs. Collectivism

(concern for yourself vs. concern for priorities of the group) Masculinity vs. Feminity

(work goals vs. personal goals such as getting along with others)

(Hoecklin 1995)

Hofsteede claims that these four key dimensions will play an essential part when managing across cultures and should be considered when asking questions such as: 'Who's got the power to do what?' or 'What rules shall be established to achieve a common goal?'

A few years later after the initial survey, he measured the attitudes of students of 10 and 23 and introduced a fifth dimension first termed 'Confucian Dynamism' and then renamed as 'Orientation'. This dimension is argued to embrace two contrasting poles and to distinguish 'short-term oriented' cultures from the 'long-term oriented cultures'. Long-term orientation involves persistence, ordering relationships by status and observing this order, thrift, and having a sense of shame. Short-term orientation involves personal-steadiness and stability, protecting your face, respect from tradition and the reciprocation of greetings, favours and gifts.

The problem with the four key dimensions is that in Hofstede's research the dimensions tend to overlap. As an example non-conformity could be explained in terms of high masculinity OR a low power distance in that particular country. U.S. critics later remarked that the term 'individualism' has got a more competitive touch in the USA, which means that according to the Americans 'individualism' and competition go hand in hand. (Tayeb 2000b) This particular individualism is deeply rooted in American culture such as the American Dream, the idea of the 'frontier' as well as the idea of 'rags to riches'. These examples should illustrate that these ideas do have an impact on managerial decisions and are related to the economy.

Hofstede being European had a different view on individualism describing it more as having a private self. As a result of this one can see that the different key dimensions are interpreted differently among cultures and managers should first have a look at the way Hofsteede defined it to avoid misinterpretation and confusion which might then in turn lead to false assumptions on a particular culture.



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Nottingham Trent University – Nottingham Business School
usefulness models cultural difference managing international business




Title: The Usefulness of Models of Cultural Difference in Managing International Business