Assessing The Hofstede Model Of National Culture For Cross-border Business Essay.

Important note: In evaluating this assignment we will expect to see evidence that you have read and understood a good range of the essential course readings provided, as well as demonstrated understanding of the content of lectures and do&cussionsin class. 

1. Critically assess the Hofstede model of national culture.

2. Identify a specific example of a cross-border business development that is impacted, positively and/or negatively, by national cultural differences.

a) Referring to dimensions of national culture, assess and explain how national culture may have influenced the actions and behaviours of the organisations in your example.

b) Referring to the Organisational Culture Inventory, explain how organisational culture may have played a role in the success or failure of the venture in your example. 

In global economies, culture contemplation is neither unusual nor new. Culture contemplation is something which is essential for any successful business endeavor. Companies spend most of their money and time studying their culture when in need of forming mergers or alliances or even when they want to move into the global market. But researchers have discovered that understanding culture is challenging. It is therefore essential to study national culture in business to enhance success for that business willing to invest in the international market. Organizations move to global markets through practices such as acquisition, mergers or organic growth and many more. The paper will discuss more on business across culture by using relevant theoretical model and practical examples.

Hofstede dimension is a model which was developed by Professor Geert Hofstede. Professor Hofstede conducted comprehensive research on how culture influences workplace values. According to Hofstede, philosophy is the collective mind programming which distinguishes group members or a class of individuals from others. Hofstede developed six models which have a broad application on professional and academic management setting. Hofstede theory on cultural dimensions has a framework which revolves around the communication across cultures (Whalen, 2016). These dimensions portray the cultural impacts in an ingrained society. It is evident that culture influences the values of different people in the community. The aspects also demonstrate the behavior and benefits because they are based on the analysis of various factors. In simpler terms, this assumption studies important cultural aspects which allows the ratings on assessment scale.

International businesses are concerned with cultural dimensions as an essential facet. Different cultures view business features in different ways because cultures have distinct influence in organizations’. The knowledge can help managers to sail and understand concepts magnificently across the universal business market (Hofstede, 2011). The six dimensions include power distance, avoidance of uncertainty, individualism versus collectivism, masculinity versus femininity, short-term versus long-term orientation and indulgence versus restraint.

Power distance explains about the degree in which less powerful society members accept and expect inequality in the circulation of power. Uncertainty avoidance expounds on the scope in which individuals in the community fail to take uncertainty and ambiguity easily (Hofstede, 2010). Individualism versus collectivism focusses on the question of whether individuals prefer to stay in a knitted network or stay on their own. Masculinity versus femininity implies on the community’s preference for heroism, attentiveness, material reward, and achievement for attaining victory (Javidan, House, Dorfman, Hanges, and De Luque, 2006). On the other hand, Femininity refers to the preference for cooperation, life quality, caring and modesty for those who are weak. Lastly, Indulgence versus restraint expounds on the extent to which communities can practice authority over their desires and impulses.

Power distance explains about inequality which comes from below rather than above. It can also refer to how societies and organizations’ accept the differences in power. There are different features which lead to the differences in power including autocracy in management, paternalistic management methods, the presence of centralized authority, different hierarchy levels, having much supervisory staff, the expectation of inequality and differences in power, and accepting privileges associated with power (De Mooij and Hofstede, 2011). Societies, however, have small distances characterized with features such as the flat arrangement of organizations’, unacceptance and questioning of the authority, an inclination towards egalitarianism, decentralized power, and decision-making responsibility among others.

Explanation

It refers to the degree to which societal members can cope with forthcoming uncertainties without undergoing stress. Having a poor avoidance of doubt comprises of different features including flexibility, tolerance towards conflicting behaviors or opinions and undertaking of risks (Tabibi, Nasiripour,  Kazemzadeh, & Ebrahimi, 2015). Active avoidance of uncertainty has aspects such as the strong need for consensus, minimal or absence of tolerance among deviants, respect for management, promotions according to seniority or age and tendency to prevent risks.

Individualism versus collectivism defines the association defines how people tend to remain in groups or act individually. Individualistic beliefs are described by factors such as: value independence and self-sufficiency besides the placement of individual’s interest over joint interests; stress on vertical rather than horizontal relationships; the notion that individuals have unique beliefs; Emphasis on fun, pleasure and personal enjoyment over social norms and duties; and the concentration on the family and near people or self and emphasis on behavioral relationships and also own interests, needs and goals (Rarick & Han, 2015). On the contrary, different aspects characterize collectivism including a focus on hierarchy and harmony within the group; increased concern about in-group members; favoring some members in the group including family and friends; and having an influence on the groups you participate in among others.

Femininity and masculinity explain the emotional part of distribution between different sexes which is a critical problem in different societies. Masculine cultures have different characteristics such as distinct gender responsibilities, understanding, health and wealth are desired characteristics of a man by women and the act of benevolence has no significance (McSweeney, 2002). Feminine cultures have traits such as the preferred characteristics of a husband, or a boyfriend is the same, overlapping of public gender roles, and that both women and men should be tender, modest on focus on their lives.

These concepts are based on Confucian dynamism. Confucius argues that life has different aspects including unequal relationships which exist among individuals can help in sustaining stability in the community; family prototypes live in every society; virtue encompasses working hard, spending wisely, education, and also demonstrating patience and perseverance; besides treating people equally. Long-term orientation reflects on aspects like dynamic, futuristic mentality, emphasis on persistence and persistence, emphasis on thrift, and positive relationship with economic development (Marcus & Gould, 2000). Then short-term orientation has characteristics such as concentration on stability, respect for culture, and orientation towards present and past, and antagonistic relationship with economic development.

The dimension mostly focuses on the wellness of the society in regards to happiness (Kirkman, Lowe, & Gibson, 2006). Tolerance allows free gratification of necessary and natural human drives relating to pampering in life enjoyment and fun. The restraint value describes a community which holds back requires satisfaction and attempts to manage it by developing stringent communal norms.

The comparison provided is the national score rated in the scale of 1-20 (1 is the lowest while 20 is the highest. African, Asian, Latin and Arab countries have a considerable power distance while Anglo and Germanic countries have a lower mark. For example, Israel has 13 while Guatemala has 95 while the United States has is between these two countries with 40 marks. In regards to individualism, a significant gap exists between the less developed and Eastern states and developed countries and western countries also have a difference (Taras, Kirkman, & Steel, 2010). North America and European countries are incredibly individualistic while Africa, Asia, and Latin America possess strong collectivist traits. East-Asia has a Long-term high orientation in Western it is moderate while it is low in Africa and Latin America. Lastly, Anglo, certain African countries, Latin America and Nordic Europe score high in indulgence while East Asia and Eastern Europe display more the restraint.

Power distance

Hofstede model is often criticized by some researchers especially in regards to the modern world context despite its good explanations of national culture (Reisinger and Turner, 2012).  The model is often complimented and criticized the depth, import, and breadth of the study about philosophy. The study is somehow controversial, and some economists argue that it the theory has some antagonists and protagonists. Some say that the approach is not relevant because the measurements used by Hofstede cannot be used to give accurate results when measuring and determining cultural disparity. In the modern world, there are different ethnic groups, but Hofstede focuses on the homogeneous country as a whole (Jones, 2007). The model, therefore, ignores the essence of societies and the influence of community variations. During the survey, Europe had memories of World War 2, and the cold war was still being experienced, and community insurgence existed in Africa, Europe, and Asian countries. There was, therefore, a lack of information due to these instabilities meaning that it is not practical to apply them in the current world. Lastly, most economists suggest that this model is outdated because it is ancient. They argue that it is not right to use such an old model because of the current business environment because internationalism, convergence and the global setting is rapidly changing.

I think the critiques are valid because there are changes in the business environment and there are different ethnic groups in every country. But the model can still be applied because Hofstede based his results on national culture on indoctrination centuries and beliefs cannot change overnight. But there are other models which can be used instead of Hofstede such as Globe research and Trompenaars to give better results.

World values survey (WVS) is an investigation model focusing on political change and sociocultural changes. The model also hypothesis the notion that systems are advancing in different ways leading to political, social and economic consequences. The project has representatives from different regions in the world to help in giving accurate values on national cultures. The model can be used instead of Hofstede because it uses current information and understands that the world is rapidly changing which is not recognized by Hofstede.

The model explains the differences in national culture, and it can be applied in general management and businesses. The model involved surveys from many managers across different regions. The model can, therefore, be more reliable because it includes a large number of managers and countries while the Hofstede model seems like it is focusing on a single entity. It also has seven dimensions while Hofstede has six dimensions meaning that it has a broader scope.

The model also researches on cross-culture and is better than the Hofstede model in many ways. Globe research is better than Hofstede in depth, duration, sophistication, and scope making better to apply than the Hofstede model.

National principles refer to a convent of behaviors, beliefs, customs, and norms that are present in a sovereign nation’s population. These cultures determine how managers develop practices and other activities in international markets (De Mooij and Hofstede, 2010). According to Hofstede, cultural differences can lead to misunderstandings among the business and those stakeholders such as job applicants. It is difficult to measure and observe cultural differences but it something very vital (Safi, 2010). Failure to account for such things and appreciate them can cause embarrassing blunders, drag down the company’s performance and strain relationships. Let’s look at an illustration of a business affected by national culture.

Uncertainty avoidance

The paper will present a case of Sony Erickson which had a joint venture but experiences some difficulties in operations due to cultural differences. Once companies form a joint venture, they have to share ownership and assets, knowledge and pool of skills, join management and mix employees. Companies come together with the aim of specific goals which cannot be achieved by one company. Sony Ericsson was formed by a telecom giant in Swedish called Ericsson and consumer electronics producer in Japan called Sony.

Japan and Sweden have very different cultural backgrounds meaning that the two had to take care of these different market segments. The differences in culture and organizations have a significant impact on cross-cultural collaboration, but these problems can be managed to get the desired outcomes. Ericsson proposed this venture, but the company was unable to sustain the market due to competition with Nokia. The company, therefore, joined with a Japanese firm to increase its sales. The headquarters of this company in London, and Europe is relationship oriented; Short-term oriented, masculine and individualistic meaning that these factors can affect the performance of the company. Regarding the dimensions developed by Hofstede, various cultural challenges are experienced by the joint venture between Sony and Ericsson.

The company is developed by Japan and Sweden which countries with very different national cultures. The differences can be stated as follows: Ericsson is process oriented while Sony is result oriented; Ericsson is employee oriented while Sony is job oriented; Sony believes in professional orientation while Ericsson believes in parochial alignment; Sony has a closed system while Ericsson has an open system, and Sony is pragmatic while Ericsson is normative. SonyEricsson, therefore, had to change accordingly so that the two can be able to work together.  

The international venture involved two distinct cultures, and this would affect the collaboration of these companies. The two had a different organization and national cultures which was a great challenge when forming a single entity. The culture lead to the changes in management and organization formation of this venture because they had to change accordingly. The two use different languages also, and this would lead to further complications in the mode of communication used by the company. Hofstede argues that societal norms build a national culture and it includes aspects such as values shared by the different populations. The venture is based in the UK meaning that national culture in the UK determines how the organization performs. The enterprise is said to be characterized by low avoidance of uncertainty, focusses more on individualism, long-term orientation, high masculinity, and little authority distance. National culture, therefore, allows Sonyericsson to have a flat and a decentralized structure.

In cases where companies form mergers or joint ventures, one company has to adopt the culture of the other or establish a different culture. The company has to an emphasis on national culture to ensure that its performance is not affected by the different cultures. The company focused on cultural change, management of a new culture and cultural awareness (Dumetz, 2016). The venture started by considering the views and opinions of management and employees to develop goals, strategy, and values for the new company. In its formation, the undertaking also changed its culture through capitalization of evolving and new values, practices, and knowledge. The company also takes care of problems which arise in the performance to ensure that issues do not occur because of culture.

Individualism as opposed to collectivism

Using Hofstede theory, it is evident that there is a big difference between the cultures in these two countries. For instance, it is evident that Japan like many other Asian countries focusses on collectivism while Sweden focusses on individualism. These differences make it challenging for companies to, form, a successful alliance and dealing with these challenges can help in establishing a successful venture. The two countries are expected to face various when it comes to coordination and communication as described by Hofstede due to the different cultures. There is also a notable difference when it comes to organizational culture when comparing Sony and Ericsson. As discussed in this paper, it is evident that professional orientation and open management systems are the only things which are similar when comparing the two companies. Sonyericsson adopted the culture of Ericsson because its headquarters are in the UK which is a European country. It indicates that the state believes in Sweden are not so different from that of London because they are all European based. National culture and parent organizations, therefore, influence the company's culture.

The different models of national culture have different impacts on the success of any cross-cultural business venture (Ford, Connelly, & Meister, 2003). For instance, the cultural distance between Japan and Sweden have a significant impact on the business model and can hamper with knowledge on the business. The differences in social distance and the orientation in a country can affect how the decisions in the country are made (Helmreich and Merritt, 2017). Some factors such as communication are essential in the performance of entities, and poor communication can contribute to the underperformance of companies. Companies, therefore, have to understand the different national cultures before forming alliances and form a different perception to adapt to the existing lifestyles to avoid conflicting with customers or employees (Grant, 2016). Sonyericsson has been successful because it has adopted the local culture and most of its workers initially worked with Ericsson meaning that they are conversant with the national ethos.

Corporate culture is another thing which can contribute to the failure or success of an organization. Different organizations have different cultures which guide them (Mackie, 2018). For instance, Sony is said to have a closed system while Ericsson has an open system and this will affect the decisions made by the companies. The companies have to develop a culture which will govern the venture considering both organizational cultures. Both companies need to gain equal shares by providing same services and getting equal shares. It means that the success of the company depends on the parent companies cultures (Beamish, 2013). Companies can form ventures from the same continent, and this will not require a lot of changes because they may have similar national cultures meaning that their investment may perform well. But others such as Sony and Ericsson formed their joint venture from different continents meaning that the two companies have very different corporate cultures (Yan & Luo, 2016). They, therefore, had to decide on which corporate to adapt to ensure that they beat their competitor which is Nokia (Ahmed and Pang, 2009). The company managed to become among the top electronics seller due to the joint venture meaning that it was successful (Elenkov and Manev, 2009). Considering the dimensions of culture was, therefore, essential for the company because it managed to build a reasonable basis and develop its corporate culture which was could fit in the country where it was located.

Masculinity against femininity

Conclusion

The paper has instrumental data for companies willing to form joint ventures especially those which belong to countries with diverse cultures. It is apparent that corporations should focus on organization and national cultures when building joint ventures to enhance their success. In this context, we can see that the Hofstede model is beneficial for companies because it allows the different national cultures. Different countries have different cultures, and this determines the performance of companies in foreign lands. Companies should, therefore, try to apply this model just like Sony Ericson so that they can boost their performance and avoid failures. Failures are very dangerous because they can lead to massive losses and even destroy relationships with locals.

References

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