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Research on Organisational Values, Preferences and Settings Based on Hofstede’s Cultural Dimension Framework

Abstract

In this literature review, culture is explored in organisations and the problems that differing cultures may encounter will be mentioned. Hofstede’s Cultural Dimension Framework will be introduced and his dimensions will be related to national culture and later, organisational culture. Using Hofstede’s Cultural Dimension Framework, researches will be cited on the differing settings of organisations and proposals of suitable management systems will be suggested.

Culture is a sort of collective behaviour that signifies people as belonging to a national society. In a way, it is the history characterising a group of people. Culture defined by Hofstede, is a mental programming that exists in people living in a particular or similar place with common practices or believes. According to DiBella (1993), “culture may be defined as a set of assumptions, values, and artifacts whose shared meaning can be acquired by members of a group”. There had been tremendous research into uncovering cultural assumptions. An important reason for looking into culture is that real cultural integration problems arise from “differences in values, in mental programming” (Hofstede, 1985).

The earliest work by Kluckhohn and Strodtbeck, represented values on “a continuum of bipolar opposites” (DiBella, 1993: 313) in the “endeavour to understand the impact of socio-cultural variables on management and organisational practices” (Negandhi, 1983: 26). Hofstede proposed another important cultural dimension framework. Various researches into management practices and the test of their effectiveness have applied the use of the cultural dimension frameworks. One of those most popularly adapted frameworks is that by Hofstede.

Today there are five dimensions to Hofstede’s Cultural Dimension Framework. Originally, he started with four. These dimensions included individualism versus collectivism, power distance, uncertainty avoidance, and masculinity versus femininity. Later, the masculinity-femininity dimension was renamed to quantity versus quality of life. A fifth dimension that was added is the Confucian dimension, which included values relating to Confucian teachings. This dimension orientated towards a time-period signifying either a long-term or short-term outlook towards life. He administered a questionnaire and collected results on the differences in people’s work-related values among 50 countries.

Individualism is the concern of oneself or his/her immediate family. The individual is preoccupied with attaining goals and benefiting themselves. A culture that is known to be collectivist believes in taking care of the ‘in-group’. They are concerned with looking after everyone in the group. People do not only take care of their immediate family, but also the general interests of the group (or community). According to results, it appeared that the degree of individualism was related to the country’s wealth. The poorer countries were more collectivist while wealthy countries were more individualistic (Hofstede, 1983: 81). A strong example of a society embedded with a collectivist culture is Japan. A highly individualistic country is America. Australia scored rather high on individualism (with a score of almost 90 out of 100). However, when it comes to caring for others, Australians are very willing and ready to offer assistance. This is exhibited in its engagement in welfare and foreign aid. This ability to naturally reach out to others in need is believed to eventuate from Australia’s personal experiences with natural disasters.

Power distance refers to the acceptance or rejection of unequal distributions of authority and wealth. This is differentiated on a

continuum of large to small power distances. Large power distances are typified by a hierarchical structure with formal rules and regulations. There are large gaps between the subordinate and manager. The subordinates are afraid of their bosses. A small power distance indicates that subordinates and bosses maintain a friendly and easily approachable environment. They need not go through a formal hierarchical top down management procedure when a problem crops up. This dimension is related to the “degree of centralisation of authority and the degree of autocratic leadership” (Hofstede, 1983: 81). Large power distance scores were reflected in Philippines, Venezuela, India, etc., while Denmark, Israel and Austria scored low. A global relationship between power distance and collectivism was examined. Collectivist countries tended to show large power distances, evidenced by the Latin European countries – France, Belgium, Italy, and Spain. However, not all individualist countries exhibited small power distances. Other wealthy countries combined smaller power distances with individualism, while all poor countries are collectivist with larger power distances. Australia scored high on individualism and low for power distance.

Uncertainty avoidance refers to the degree of ambiguity that the culture is accustomed to. A culture that is said to be weak on uncertainty avoidance is comfortable with the changing and uncertain situation of circumstances. A strong uncertainty avoidance culture does not relate well with infrequency or ambiguity. There is a tendency to adhere strictly to rules and tight structures. They dislike uncertainty. Rules and regulations and institutions are set up to create security and avoid risk. Uncertainty avoidance was matched with power distances of the nations. The results displayed strong uncertainty avoidance and large power distance in all Latin countries, Japan, Korea, and Mediterranean countries like Yugoslavia, Greece and Turkey. German-speaking countries, Israel, and marginally Finland combined small power distance with medium to strong uncertainty avoidance. On the dimension of small power distance and weak uncertainty avoidance, Denmark, Sweden, Great Britain, and Ireland were found. The Netherlands, U.S., Norway, and the other Anglo countries were in the middle. Australia favoured a small power distance with weak uncertainty avoidance environment.

The masculinity – femininity distinction labels cultures with the more aggressive nature and need for achievement and status as being masculine. The feminine culture is thought to be caring and concerned with interpersonal relationships and their maintenance. This was later renamed to quality versus quantity of life due to its sexist nature. Japan was found to be the most masculine country, with the German-speaking countries such as German, Austria, and Switzerland following behind. Latin countries (such as Venezuela, Mexico and Italy) and Anglo countries, Philippines and India are found in the moderately masculine cluster. The four Nordic countries and Netherlands fall on the feminine side. Latin and Mediterranean countries like Yugoslavia, Chile, Portugal, Spain and France are moderately feminine. Australia is found in the scale of masculine with weak uncertainty avoidance.

The latest addition to the framework was the Confucian dynamism, which is otherwise known as time orientation. This dimension distinguishes between long-term and short-term orientations towards life and work, which displays Confucian teachings). Cultures with a long-term orientation emphasise thrift, saving, persistence with slow results, adaptations to a modern context, acceptance of unequal relationships, and a concern for virtue rather than truth. Cultures with a short-term orientation tend to respect traditions and social status regardless of cost, are concerned with saving face, and less likely to save for the future. They see things in the absolute truth (right or wrong) and expect quick results. Although there were some weaknesses, Redpath and Nielsen (1997: 329) found that Hofstede’s model helped to identify and articulate core cultural differences, which might have been ignored. Since the model seek generalisations, there was a tendency to “over-generalise or romanticise cultural characteristics”, thus bearing weaknesses typical of a nomothetic research approach.

Interesting organisational issues to be explored, include leadership and motivation.

Leadership in collectivist countries was found to be a group phenomenon while individualist countries adopted a more participative style. With a large power distance culture, employees expected to be ruled by the boss while a smaller power distance culture facilitated the participation of the subordinates where ideas are readily contributed. If the society tended to be collectivist, yet large on power distance, somehow, the subordinates in the group may influence the leader.

With motivation, individualistic cultures were driven by the need to fulfil personal gains. Collectivists tended to fulfil obligations towards their group. With masculine and weak uncertainty avoidance natures, people like challenge and are more willing to take risks to assert themselves. The strong uncertainty avoidance type preferred to perform in exchange for security. A more feminine culture with weak uncertainty avoidance style typically favoured the maintenance of good interpersonal relations.

Next, I would like to discuss the various issues that were identified or explored using Hofstede’s Cultural Dimension Framework in the following researches. Before that, I would like to briefly introduce the varying type of cultural settings available in differing organisations. Also, I would point out similarities between nations (sharing similar cultural settings) as well as contrasting ones.

Native cultures described as collectivist, egalitarian, adaptive and tolerant, inherited these values and adapted to organisational practices for self-preservation and development. The New management Ideology incorporates some of the native cultures’ approach to life and organisations.

Kramer analysed the Australian and German culture from the American perspective and discovered how two cultures while speaking the same language (using the same vocabulary or words) may differ in understanding (or embody different meanings). They place “different emphasis on certain cultural institutions and behaviours in both business and society” (Kramer, 1992: 52-56).

An exploration into whether cultural differences explained the problems faced by western firms in China, focused on the wide differences on the Individualism-Collectivism cultural dimension. The Western nations, in particular the English-speaking ones, seemed to favour a more individualist style whereby people are independent and compete for recognition and rewards. On the other hand, Chinese or Asian nations encouraged a collectivist attitude, with subordination of self-interest to collective interest. It is believed that the roots of collectivism lay in Confucianism, its traditional Asian culture. This displayed that Asian cultures tended to look at things in a longer-term perspective, as suggested by the last, Confucian scale (or orientation to life – long term Vs short-term). They have strong desires for harmony, respect for the elderly or authority and dignity of others. From the basis of their differences in their general approach to life, most of their firms adapt to similar underlying management practices. However, their differences caused Western partners to misinterpret and view the apparently passive Chinese behaviour as “time-wasting, evasive, and inefficient” (Edward Vaughan); and generally lacking in information reciprocity (Selmer, 1998: 80, 81). In conclusion, the way to solve their problem of differences to the company’s benefit was to integrate the good practices from each culture.

To distinguish the differing models of organisation, four of the value dimensions belonging to Hofstede prove useful. The power distance and uncertainty avoidance scales affect the way organisations function or are structured. The main concern of an act by organisation is the way power is distributed, and how uncertainty or ambiguous situations is dealt with. The practices of organisations pertaining to this concern will be job titles, written instructions, rewards and punishments. The different levels and combinations of power distance and uncertainty avoidance gives people an idea of the type of organisational model adopted. A hierarchical bureaucracy usually entails a large power distance and strong uncertainty avoidance. Instances of such cultures will be France, other Latin and Mediterranean countries. An impersonal type of bureaucracy will have a small power distance and strong uncertainty avoidance. Typical countries that fall into this category are Germany and other Central-European countries. A small power distance plus weak uncertainty avoidance is ad-hocracy. Britain and other Anglo and Nordic countries belong to this type of model. A more family style of organisation is one where there is large power distance and weak uncertainty avoidance. The differing types of organisational models depend on four factors, an obvious one being nationality. The other two will be the affects of the purpose of an organisation and the specific values of any specific organisation. These models can also be related to social class. Power distances have a tendency to decrease with increasing social class. In countries with small power distance, the working class subculture will maintain a larger power distance to facilitate the integration of migrant workers from large power distance countries.

The scales of individualism-collectivism and masculinity-femininity affect a person’s self-concept. Triandis et al (1986) investigated individualism-collectivism in the relative effectiveness of social reinforcements and the person’s self-concept. In a collectivist culture, the person will feel a strong sense of belongingness to the group, which extends beyond their nuclear family into a community. An individualist society will only be concerned with an individual’s self- interest and self-actualisation. They believe that people ought to be treated equally and friendships are easily made but superficial. In a masculine society, men are expected to be aggressive and assertive and challenging. However, there are women who adopt such attributes. On the other hand, a feminine society both male and females are “expected to be both ego-boosting and ego-effacing at times” (Hofstede, 1985: 355). People in the latter would try to self- relate to one another; thus opposing the former which competes with others. This dimension is important because it brings to attention a self-concept crisis that a person entering into another organisation might face.

Harrison (1994, 1995) studied the levels of job satisfaction, tension and stress, and interpersonal relations in Singapore and Australia. Singapore managers reported lower levels satisfaction and experienced greater job-related tension and stress than Australians. Singapore managers also perceived that their relationships among superiors and peers to be poorer. Australian managers perceived the adverse. The results could be generalised to other high power distance and low individualist nations of East Asia (in this study, represented by Singapore) and low power distance and high individualist cultures (represented by Australia). It was proposed that personal and interpersonal relations might be improved by changes in planning and control processes.

With relevance to the different preferences to work as explored above, different management strategies may be employed. Next, a few of the management practices such as budget planning, performance evaluations and implementation of reward systems would be discussed.

Harrison’s study in 1994, checked for differences in management styles between Australia, US, Singapore and Hong Kong. Under the design of management control systems, issues such as the degree of centralisation of authority, the use of responsibility centres, type of decision making, and evaluation methods in budget attainment were explored. In Chinese based organisations, they found that it was best to work with greater centralisation of authority; less reliance on responsibility centres; less emphasis on quantitative techniques in decision making and more on synthetic analysis; a greater opportunity for group and committee decision making; and a greater emphasis on objective criteria and budget attainment in performance evaluation (Harrison, 1994: 14-22). High power distance and low individualist cultures would prefer to be evaluated under a high reliance on budget attainment method. Low power distance and high individualist cultures preferred more participation in planning and budget setting.

Harrison, McKinnon, Panchapakesan, and Leung (1985) found similar results in that there was a greater use of decentralisation and responsibility centres in organisational design in Australia and US as compared to Singapore and Hong Kong. Thus proving the hypotheses to be in concordance. There is a greater emphasis on long-term planning; group-centred decision making and lesser emphasis on quantitative techniques in Singapore and Hong Kong compared to Australia and US. These studies were similar in findings to those done by Neale O’ Connor (1995), and Grame L. Harrison (1992).

Hodgetts and Luthans (1993) investigated compensation management in relation to the cultural dimensions of power distance, individualism, masculinity and uncertainty avoidance. In high power distance cultures, compensation strategies were pursued in a hierarchical fashion, depending on the status and position of the worker, with the manager earning much more than his subordinate. Participative garnishing and profit sharing plans and closely related salaries were much preferred in a low power distance company. With a highly individualistic culture, workers preferred to gain self- rewards while a collectivist attitude prompted for rewards for the group to share. The collectivist group also preferred compensation packages influenced by seniority, family needs and health status of their family. In masculine cultures where there is a great deal of significance placed on achievements, the compensation strategy recognises and rewards competitiveness, aggressiveness, and dominance. For low masculine cultures, social benefits, quality of work life, and equity are focused on when developing compensation benefits. In organisations valuing high uncertainty avoidance, a structured and bureaucratic pay plan is adopted. The suggestion is to centralise salary and benefits decisions with little or no emphasis on variable pay plans or discretionary salary allocations. Employees from such organisations would be more suited to a consistent scheme. In low uncertainty avoidance cultures, the compensation strategy is closely related to performance. Managers are expected to share some of the organisation’s risks and successes. The salaries have to be highly competitive so that “other companies do not raid the top talent” (Hodgetts & Luthans, 1993: 42-48).

Next, I would discuss the differences in levels of co-operation and the effectiveness of teams in different cultural settings.

Individualism versus collectivism and fostering co-operation was explored. Collectivists were found to be more co-operative. They were more likely to co-operate to retain harmony within the environment. Individualists tend to be more competitive and co- operation mechanisms that satisfy and appeal to individual rationality and individuality will be more effective. In a culture in which the normative values are collectivists, the collective rationality and sociality is more effective for a co-operation mechanism.

Kirkman and Shapiro (1997) identified the differences in different cultures’ response to self-management work teams (SMWTs). Where power distances are low, employees will perceive decisions in compensation designs and performance evaluations to be fair when they have input. In high levels of power distance, there would be greater resistance to SMWTs. In high power distance organisations with low individualism, the SMWTs should reserve the key characteristics that employees are comfortable with working. For instance, the more important decisions should still be finalised by the leader like in tradition. Close supervision and other forms of assistance should be offered to employees to ensure a greater sense of control over their work and “group oriented work activities and rewards should be an important part of the SMWT experience” (Kirkman & Shapiro, 1997: 750). They prefer to receive recognition and reward and/or blame as a cohesive whole rather than be singled out or embarrassed. Responsibility is to be shared by the group. The countries with such styles are those of Malaysia, Indonesia, Philippines and Mexico (as cited in the article). In contrast, the low power distance and individualist countries like Australia, Great Britain and US would prefer to be consulted on decisions and work closely together. They enjoy team competitions, rewards and recognition for self.

When Selmer investigated well being in relation to work-, interaction- and general- adjustment, she administered questionnaires to expatriate managers working in People’s Republic of China, USA, France, Germany, Australia and UK. She found work adjustment to contribute more in positive ways to the well being of expatriates than either general- or interaction- adjustment. Western expatriates on the average felt more adjusted and indicated positive feelings towards their current situation in a different culture. This exhibited that if one felt positive and considered oneself to be well adjusted generally; they experience a high degree of well being.

In conclusion, it appeared that through the numerous researches, Hofstede’s model was widely applied and useful in gathering information. These important issues were regarding job satisfaction, tension, stress, interpersonal relationships, style of management systems (such as budget planning, performance evaluations, reward systems, co-operation mechanisms, effective use of teams, etc.), and finally the adjustment level of overseas expatriates.

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