Hofstede’s Cultural Classification Framework and International Business

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Table of Contents

Introduction
Hofstede’s cultural classification framework
Culture and international business
Hofstede’s dimensions and international business
Criticism of Hofstede’s model
Conclusion
References

Introduction

Many research studies specialising in marketing are currently focusing on cross-cultural variation in consumer behaviour (Beatty, Lynn, & Pamela 1991, p.154).

Kotler and Keller (2009) and Schiffman and Kanuk (2007) widely focus on the effects of culture on various facets of consumer behaviour like purchasing, decision making, as well as behaviours associated with products or services consumption.

Besides, they focus on consumer contentment, discontentment, and complaining behaviour. Effects of cultures on consumer behaviour are prevalent in all areas of business particularly in the tourism and travel business.

The current global business has opened numerous opportunities for tourists to visit different countries with varied cultural practices.

To understand secrete behind certain behaviours portrayed by consumers, it is imperative to consider various cross-cultural differences that play a major role in these behaviours.

Hofstede (2001) came up with five dimensions of classifying cultural values, which include “individualism versus collectivism, Confucian dynamism, and masculinity versus femininity, power distance, and uncertainty avoidance” (p.19).

The five dimensions are currently recognised as the most noteworthy approaches to understanding cross-cultural variations in human behaviour. Initially, the dimensions were used in business environment in studying the behaviours portrayed by employees.

Today, the dimensions prove to apply also in consumer behaviours (Kotler, & Keller 2009, p.34).

This paper will explain the five cultural classification dimensions established by Hofstede besides looking at how international business managers may use them to improve their performance in the international markets.

Hofstede’s cultural classification framework

Individualism versus collectivism

According to Hofstede (2001), members within a particular culture are inclined to detaching themselves from the entire culture (p.16). They associate themselves with their immediate family members.

According to this dimension, people in an individualistic culture portray individual personalities besides having the freedom to choose their own associations. In this culture, personal needs are considered at the expense of the group.

A person focuses on personal achievements as he/she makes one stand out from others to appear unique. The bond between individuals is weak with everyone caring for himself and his or her close family members.

The opposite actually happens in a collectivistic culture (Schwarz 2003, p.588). In this culture, the victory of the entire group takes precedence. Personal values do not have priority in this culture.

Individuals in this cultural background are willing to work towards achievement of societal or group goals without considering their personal goals. This culture is characterised by strongly bonded social framework, in which people look forward to their relations, clan, and or group members caring for them in trade for absolute allegiance.

The primary issue in this culture is the level of interdependence a society upholds among the people. It is associated with individuals’ self-perception: ‘I’ or ‘We’.

Individualistic cultures are highly self-centred and self-actualisation is crucial. They are universalistic and suppose that their values are acceptable across the globe.

Moreover, they are low-context communiqué cultures with overt oral communication (Schwarz 2003, p.589).

On the other hand, individuals in a collectivist society are ‘we’-conscious. Their identity is entrenched in the social system and work hard to preserve their face.

Masculinity versus femininity

This is unequally powerful, but in most cases, it is an understated dimension. According to Hofstede (2001), a masculine culture is one where gender roles are clearly defined.

In this culture, men are aggressive, tough, and work towards material success (p.17). On the other hand, women are modest, focus on quality of life, and are tender.

In a masculine culture, both genders value competition ambition, assertion, and accumulation of material possessions. Femininity relates to societies where gender roles are not defined clearly: they tend to overlap (De Mooij, & Hofstede 2002, p.62).

In this culture, both men and women ought to be tender and modest focusing on improving their quality of life. This dimension addresses the basic issues about how a community distributes social (and not biological) roles to the different genders.

In a masculine society, achievements and performances are crucial and accomplishments must be verified. Physical objects like jewellery or status brands are used to show the individual’s achievements (De Mooij, & Hofstede 2002, p.63).

The most conspicuous feature of this dimension is role delineation where they are prevalent in masculine cultures and less prevalent in feminine cultures.

Domestic chores are less distributed between genders in a masculine culture while they are highly distributed between genders in a feminine culture (De Mooij 2010, p.68).

High versus low Power distance

This dimension focuses on the level to which individuals support uneven power distribution in a community. A society inclined to high power distance trust in firm authority.

Such a society portrays low egalitarianism. Individuals with limited powers in such a society appear to be satisfied with the uneven power distribution (Kopp1994, p.587).

A society that upholds the notions of low power distance stresses on shared power and egalitarianism. Leaders in such a society are perceived as “first among equals” and have no powers over the others.

Individuals in such a society accept and anticipate for power associations that are more democratic and consultative. People interact with others as contemporaries in spite of their official positions.

Support staffs in organisations that exercise low power distance are more contented with and order for the right to participate and oppose decisions made by their seniors (Kopp1994, p. 592).

Uncertainty avoidance

Uncertainty avoidance refers to the degree to which individuals feel vulnerable to ambiguity and uncertainty and use all means to circumvent this vulnerability.

Cultures that have deep running cases of uncertainty avoidance, people should adopt some structures in form of guidelines to give a sense of direction to the expected way of life. People in such a culture strive at attaining the truth and they strongly believe in experts.

Individuals of high uncertainty avoidance hardly embrace changes and inventions compared to individuals of low uncertainty avoidance (Yaveroglu, & Donthu 2002, p.56). In a high uncertainty avoidance culture, individuals reflect an inactive outlook towards health (Yeniurt, & Townsend 2003, p.379).

They value cleanliness in drinks and food and result to medication in case of health problems. To the contrary, individuals in a low uncertainty avoidance society reflect a more dynamic outlook towards health. They value physical fitness and sports (De Mooij, & Hofstede 2002, p.65).

Confucian dynamism

Confucian dynamism is at times referred to as long-term versus short-term orientation. This dimension focus on the degree to which a community portrays a realistic perspective that is inclined to the future relative to a conformist momentous or short-term outlook.

Values incorporated in long-term orientation are “thrift, perseverance, organising relations based on status, and having sagacity of disgrace, while the contradictory short-term orientation incorporates stability and personal steadiness, and respect for customs” (De Mooij 2010, p.112).

Short-term orientation focuses on the search for pleasure rather than peace of mind. Long-term orientation means devoting oneself to establishing improving future products, services or living conditions (De Mooij 2010, p.132).

Culture and international business

Businesses operating in international markets face numerous hardships and none is more intimidating than attaining an understanding of strange cultures.

The yearly reports released by international companies such as “General Electric, IBM, General Motors, Wal-Mart, McDonalds, and Coca-Cola show the activities formulated and attempts made to improve cultural awareness and understanding” (Hofstede, & McCrae 2004, p.175).

Cultural study in relation to international business is triggered to some extent by the swift pace of international business activities (Anakwe, Igbaria, & Anandarajan 2000, p.655).

The human resource department is the unit of Multinational Corporation that is affected most by cultural diversity. Hence, as organisations expand into foreign markets, they should always reassess their human resource policies.

Managers with experience in cultural practices ought to facilitate these reassessments. Sully-De Luque and Sommer (2000) warn, “A lack of sensitivity and understanding of cultural variations across varied nations may lead to expatriate and business failures” (p.832).

According to Hofstede (2001, p.19), culture acts as a major stabling block for organisations wishing to invest in international markets. This calls for the need to understand the minutiae associated with cultural values. Cultural variations hardly offer a chance for profitability.

Instead, they are a major source of altercation and possible vehicles for catastrophe. Cultural variations might lead to an administrator from one cultural background failing to understand the replies of a support staff hailing from a different cultural background (Sully-De Luque, & Sommer 2000, p.837).

Hofstede’s framework of cultural dimensions can go a long way in helping investors wishing to invest in international markets.

It is by understanding cultural practices of the potential customers that an investor may be in a position to align his or her products and services to the needs of the customers.

Hofstede’s dimensions and international business

According to the findings from Hofstede’s framework, a corporation has to be in a position to figure out how to configure its business units situated in various cultural environments across the world.

Particularly, the corporation should acclimatise its enticement system and organisational structure with the existing cultural practices in the target market (Anakwe, Igbaria, & Anandarajan 2000, p.654).

For instance, if a multinational business is situated in China, the manager ought to come up with incentives that foster and promote group activities. China is renowned for a collectivistic culture. Individuals within organisations work towards promoting group performance.

Every employee is identified with a certain group and decisions within an organisation are made by consulting all members of the group.

Hence, to succeed in improving employee’s performance, managers of international businesses working in China need to come up with incentive systems that reward groups and not individual performance (Anakwe, Igbaria, & Anandarajan 2000, p.657).

For an organisation to make substantial sales in a collectivistic culture, it ought to establish a strong relationship and trust with its trading partners.

Managers running international businesses may not be able to come up with such ties because of limited knowledge about the cultural practices of the target market.

A manager with knowledge in Hofstede’s dimensions of cultural classification may monitor his or her target market, identify its cultural values, and know how to restructure his or her organisation to meet these values (Sully-De Luque, & Sommer 2000, p.841).

There are countries where the success of business organisation depends on individual contribution made by every employee. Organisations working in such countries ought to establish rewarding systems that promote individual contribution.

According to Hofstede (2001, p.19), an individualistic culture focuses on individual needs. Hence, people in such a cultural context hardly consider the needs of others.

Managers working in countries that practice this culture would only manage to enhance organisational performance by establishing organisational policies that promote individual empowerment and recognition.

This would facilitate in enhancing employee’s performance as each employee seeks to be recognised and promoted.

Germany is renowned for practicing the low-power distance culture. For international managers to succeed in the German markets, they ought to establish organisational structures that define the role of every employee in the organisation (Tellis, Stremersch, & Yin 2003, p.194).

The structures ought to be hierarchical in nature to cut down on the chances of role confusion among the employees.

Hofstede’s model of cultural dimensions may go a long way in helping managers come up with far-reaching system of guidelines and procedures that outlines employee’s activities and roles in a country that embraces a low-power distance culture (Tellis, Stremersch, & Yin 2003, p.189).

Without a clear knowledge of cultural practices, managers may establish procedures that might proof unproductive in helping their organisations reap from international markets.

For instance, France is popular for practicing a high-power distance culture. In such an environment, employees like sharing their opinions on matters affecting their organisations.

Coming up with formal procedures in France may lead managers to face stiff opposition from their subordinates (Tellis, Stremersch, & Yin 2003, p.199).

Based on the cultural dimension embraced by certain employees, organisations are likely to embrace or oppose innovations and changes (Tellis, Stremersch, & Yin 2003, p.200).

Managers working in foreign countries deserve to understand the cultural backgrounds of their employees prior to implementing changes in their organisations. Employees from nations that exercise high uncertainty avoidance culture are reluctant to changes and innovation.

One of such countries is Japan. Implementing policies that result to ambiguity at workplaces in Japan may lead to employees’ resentment. Such employees believe in experts and work hard in the search for truth.

Hence, prior to implementing changes, managers ought to ensure that they have a clear knowledge of the effects the implemented changes would have on an organisation (Nezlek, Kafetsios, & Smith 2008, p.366).

This would facilitate in assuring employees that the intended changes would help in improving their working conditions and productivity.

Countries like the United States exercise a low uncertainty avoidance culture. Hence, the Americans are open to changes and innovations.

For managers operating businesses in the American market, Hofstede’s model would go a long way in helping them boost employee’s commitment (Nezlek, Kafetsios, & Smith 2008, p.367).

For instance, by understanding that the Americans embrace changes and are ever willing to go an extra mile to improve their working conditions, managers may opt to establish rewarding systems that encourage employees to take risks in their areas of specialisation thus encouraging innovations.

Furthermore, the managers would strive at achieving high level of employee empowerment in their organisations. Employee empowerment would give employees a room to implement noble changes in their workplaces whenever they feel that the changes would help in improving their performance.

Hofstede’s model of cultural dimensions outlines the features exhibited by varied cultures (Hofstede 2007, p.20). Consequently, the model may be significant to managers intending to open new businesses or entering into international business transactions.

There are business people that like striking business deals instantly while others wish to take time and ascertain if the contract may last long. This depends on their cultural background.

It would be hard for managers with limited knowledge in cultural practices to succeed in countries that exercise Confucian dynamic culture like China.

Chinese believe in perseverance and that to overcome an obstacle, it requires time (Hofstede 2007, p.21). This is not the case with the Western cultures, which believe in meeting targeted goals within the shortest time possible.

Time would be one of the challenges managers hailing from the Western countries may confront with when venturing into the Chinese market.

Failure to understand that Chinese take time before signing a deal with business operators may lead to a manager calling off the contract thinking that the Chinese partners are not interested (Hofstede 2007, p.20).

Normally, the Chinese people opt to take time before entering into a contract with new business partners. This gives them an opportunity to determine if the relationship will be of mutual benefit and long lasting.

Hence, managers from western countries may give up after the first meeting due to lack of adequate experience on how the Chinese behave during their first encounter with business partners.

Criticism of Hofstede’s model

In spite of the Hofstede’s model of cultural classification being of great significance to managers operating in international markets, various weaknesses have been identified in the model and managers ought to be cautious when operating in countries that practice different cultures from their home culture.

For Hofstede’s model to hold, personal differences ought to be at minimal (McShane, & Von Glinow 2000, p.81). He assumed that national culture is general to all people. Nevertheless, there are individuals that appear not to exhibit cultural practices embraced in their countries.

Consequently, managers ought to closely examine their employees and target consumers before coming up with business strategies.

It is by identifying cultural inclination of individual employees that the manager would be in a position to unleash their potential.

In most cases, there are prevalent differences in a culture caused by religious affiliations and gender. Hence, cultural dimensions proposed by Hofstede do not always apply in all countries.

Failure to consider these variations may lead to managers establishing unproductive business strategies or associating with the wrong trading partners. In some countries, there are great deviations in terms of gender roles (McShane, & Von Glinow 2000, p.112).

Therefore, sticking to Hofstede’s dimension of masculinity versus femininity may lead to a manager distributing responsibilities at workplaces in a way that does not make good use of employee capabilities. Women do better in some tasks associated with men.

A manager referring to masculinity versus femininity dimension when allocating duties in an organisation may end up not exploiting the potential of such women.

Besides, a manager may fail to understand there is a deviation from cultural norms thus sticking to the culture and denying one’s gender a chance to exploit its capacity (McShane, & Von Glinow 2000, p.99).

Conclusion

As businesses continue expanding their frontiers to the international market, managers need to have a clear understanding of cultural dimensions.

To attain competitive advantage and reduce problems, international businesses cannot apply an ethnocentric method of employment. To understand how organisations need to be structured globally, substantial research has been carried out to discover the existing cultural dimensions.

One of the regularly cited models of cross-cultural dimensions is the Hofstede’s framework of cultural dimensions. The model identifies five cultural dimensions.

They include “individualism versus collectivism, Confucian dynamism, and masculinity versus femininity, power distance, and uncertainty avoidance” (Hofstede 2001, p.19).

These dimensions are of great significance to managers working or intending to venture into international markets. By understanding the cultural dimension of a target country, managers would be able to come up with business strategies that fit the market.

For instance, if a manager understands that people in his or her target market are inclined to a high uncertainty avoidance dimension, he would plan on modalities of introducing changes to his or her organisation.

Understanding the cultural dimension of a particular country would help business managers to structure their organisations in a way that every employee understands his or her duties.

Besides, the managers would outline the channels to follow when presenting complaints or opinions. For instance, Germany is renowned for low power distance cultural dimension.

A manager working in Germany would structure his or her organisation hierarchically to curb chances of role ambiguity at workplaces. Nevertheless, to benefit from Hofstede’s model, managers need to examine their target market closely to identify individual differences existing in their cultures.

The model assumes that all people in a certain culture exhibit similar characteristics. However, factors like gender and religious affiliations distort a culture leading to individual differences within a culture.

Failure to learn this may lead to managers establishing unproductive business strategies. It is the duty of the managers to use Hofstede’s model in combination with other models when they intend to venture into international markets.

References

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Yeniurt, S & Townsend, J 2003, ‘Does culture explain acceptance of new products in a country?’, International Marketing Review, vol. 20 no. 4, pp. 377–396.

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