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Cultural Dimensions Theory by Hofstede

‘Culture’ is a very broad term in the history of mankind. It is just not a simple word meaning a system of knowledge and experience, but it is a way of life for the people of the world. The word is derived from the Latin word ‘cultura’ or ‘colere’ that means cultivation. It broadly means that when a way of life and knowledge is cultivated and refines in a way such that it has a powerful impact then it is called culture (Nunn 2012). Culture can be defined as the embodiment of the characteristics and the knowledge on every aspect of living, such as language, literature, cuisine, religion, social habits, attires, tastes, festivals, arts, music and outlook on life. Thus, it refers to the environment, which is man made and includes all types of material and non-material goods of life, that are transferred from one generation to the other. It includes implicit and explicit behavioral patterns of human beings. According to Birukou et al. (2013), culture is the pattern that is developed historically, through which people perpetuate, communicate and display their attitude towards their lives. Culture expresses the nature of human beings in the modes of thinking and living. The material aspect of culture consists of the physical objects of life such as attires, food, household consumption goods. The non-material aspect consists of ideas, thoughts, beliefs, idealism, religion, language, arts, and outlook (Lysgård 2013).

Culture is different from one place to another and from one country to another. It is developed on the basis of the historical progression that operates in regional or international context. For instance, people differ in terms of behavior, food habits, language, fashion, religion, social customs of greeting and living. There are many distinct cultures in the world, such as, Western, Eastern, Middle Eastern, Latin and African. Many countries, such as, USA is largely populated by immigrants from various parts of the world. Thus, it has developed a mix of various cultures. With the growth of the countries, the cultural diversities also grow (Pedersen 2013).

USA and India are two very different countries in terms of culture. USA follows the western culture while India follows eastern. There are many fundamental differences in these cultures (Ferraro and Briody 2017). These countries are compared by using the Hofstede cultural dimensions theory and Schwartz values in this essay.

The cultural dimensions theory by Professor Geert Hofstede is the framework, that consists of the patterns of cross cultural communication. It explains the impacts of the culture of a society on its members and the relation between the values of life and their behavior. The structure of this theory is based on factor analysis (Geert-hofstede.com 2017). The dimensions of this theory are:

Power Distance Index (PDI): evaluates the perception of distribution of power and acceptance of that distribution.

Individualism versus collectivism (IDV): addresses the degree of interdependence in the society.

Masculinity versus Femininity (MAS): assesses the preference of the society for achievement, assertiveness, rewards and heroism, or for cooperation, quality of life, caring for weak and modesty.

Schwartz Values

Uncertainty Avoidance Index (UAI): evaluates the outlook towards life, if it is rigid and orthodox or is relaxed towards customs.

Long Term versus Short term Orientation (LTO): addresses the approach towards change. High value considers a pragmatic approach and encourage progressive attitude. Low score indicates the attitude to avoid change.

Indulgence versus Restraint (IND):  it evaluates the attitude of people towards enjoying life. High score says people indulge in the natural drive for enjoyment and low score indicates the restrained nature of people (Storey 2015). 

Dimensions

USA

India

Examples

PDI

40

77

The existence of hierarchy is more dominant in the Indian organizations and society than in USA, where power is more equally distributed.

IDV

91

48

The societies in USA are more independent and concerned about themselves, while Indian societies are more dependent on groups.

MAS

62

56

The USA citizens are more competitive and men and women are treated equally. Over the years, the gender discrimination is getting reduced in India, hence the score is moderate.

UAI

46

40

Both the countries have similar low scores indicating that they are moderately flexible towards change.

LTO

26

51

The USA citizens are more interested in the short term objectives, but Indian citizens are always interested in long term goals, such as, long term investment are preferred due to security and more return.

IND

68

26

Americans are very liberal and they indulge in all types of activities for natural need for recreation, but Indians are very conservative regarding enjoying life.

 Table 1: Hofstede Values for USA and India

(Source: Author)

Figure 1: Comparison of USA and India in Hofstede values

(Source: Geert-hofstede.com 2017)

Schwartz values refer to the values of countries based on the theory of basic human values by Shalom H. Schwartz. This theory helps in intercultural research. It measures universal values across all the cultures (Schwartz 2013). The model is divided into four basic sections:

Openness to change: motivation or drive to pursue innovation in life

Conservation: drive to maintain the status quo

Self-enhancement: driven by self-interest

Self-transcendence: promoting welfare of others

The factors are presented in a circular way. These dimensions are clustered into 7 divisions, namely:

Embeddedness: status quo, avoidance of inclinations that can disturb others

Harmony: protection of environment and world peace

Egalitarian commitment: Transcendence of equality, helpfulness, social justice, world peace

Intellectual autonomy: creativity and self-enhancement

Affective autonomy: stimulation

Mastery: efforts put to modify the surroundings and move ahead of others

Hierarchy: legitimacy of hierarchical power in society and organizations (Usdkexpats.org 2017) 

Figure 2: Schwartz Cultural Dimensions

(Source: Usdkexpats.org 2017)

USA

India

Harmony

3.46

3.92

Embeddedness

3.67

3.97

Hierarchy

2.37

3.05

Mastery

4.09

4.28

Affective Autonomy

3.87

3.48

Intellectual Autonomy

4.19

4.02

Egalitarian

4.68

4.45

Table 2: Comparison of USA and India in Schwartz values

(Source: Schwartz 2013)

In the survey method, the scores for each dimension ranged from -1 to 7. Thus, from the above table, it is seen that, both the countries have scores that are similar to each other. USA places high importance in mastery, intellectual autonomy and egalitarian commitment, and places least importance on hierarchy. This follows the scores of Hofstede theory. On the other hand, in India the mastery, intellectual autonomy and egalitarian commitment hold high value followed by embeddedness and hierarchy (Australian National University 2017).

Impact of cultural differences on negotiations

Negotiations refer to the discussions between two parties with an aim to reach to an agreement. It usually happens between two countries in international economy. It can also be referred to as the bargaining process to arrange a trade-off regarding their own needs (Ribbink and Grimm 2014).

Negotiations in international business are not easy. Apart from economic issues, the cultural differences also affect the negotiations. Culture has an influence on the thought process, communication, attitude and behavior of people, and that would influence the negotiations between them. The huge diversity in the cultures of world make it difficult for any negotiator to understand all the aspects completely and this sometimes creates barriers in negotiations. According to Prof. Conlon of Michigan State University, the four major dimensions that influence the international negotiations are Power distance, Individualism and collectivism, Masculinity and Femininity, and Uncertainty Avoidance (Shahmoradi, Nassiri-Mofakham and Nemati 2014).

Comparison of USA and India on Hofstede's Cultural Dimensions

In many countries, the hierarchical powers are more dominant than in others, which are not apparent to the other negotiator party. In western countries, people are more individualistic and in others, such as in the Pacific Rim, countries are more collectivist. Again, some countries focus more on competition while some focus on cooperation, depicting masculinity and femininity of nature. Lastly, some countries are comfortable with uncertain terms and risky situations in negotiations, while some prefer the secured way (Conlon 2013).

From the comparison scores of USA and India in table 1 above, it is seen that, USA scores higher in individualism, and masculinity, lower power distance index, and moderate in uncertainty avoidance index. While India scores very high in power distance and moderate in the other three. This indicates that, the hierarchy of powers and authority plays a very crucial role in India’s negotiations, while it is not much important for USA. Again, USA places very high importance for individualism than India. This affects the way that the societies are systematized and decisions for the societies are made. USA is much more aggressive and competitive, while India is cooperative and emphasizes quality of life in the relationships in negotiations, justifying the scores for masculinity and femininity. Lastly, the Americans are comfortable with uncertain situation due to its strong economy and history of immigration, while Indians are comparatively less comfortable with uncertainties. However, it has a moderate score in this category (Foster 2015).

Goals and preferences of negotiators

In any kind of negotiation, there are some key concepts, such as target point (TP), reservation point (RP), best alternative to a negotiated agreement (BATNA). Target point refers to the best option, and reservation point refers to the walk away point, i.e. the lowest acceptable point in a negotiation. BATNA refers to the standard benchmark against which an agreement is measured. It protects a party from accepting unfavorable terms or rejecting terms that would be best to accept (Sebenius 2017).

Thus, the goals and preferences of the negotiators are to achieve the target point and avoid he reservation point. They should refer the agreement against the BATNA of that particular negotiation (Brett and Thompson 2016).

Type of negotiating behavior and strategies

Negotiating behavior represents the relationship among the parties, and their communication styles. Negotiating strategies involve the final outcome along with the relationship. U.S.A. and India have been involved in many deals and negotiation since long. Along with the economic factors, the culture also influenced the negotiation process. For any deal, both the parties have to consider the impact on the societies (Negotiation Journal 2017). In India, there is rigid hierarchy in the society and organization, thus, a subordinate can meet another subordinate only and not the higher authority, and therefore, the top manager has to take the responsibility of any negotiation. Interpersonal skills are more important than professional skills. Hospitality is an important part of Indian culture, and hence, it is present in every negotiation or meeting. Presence of emotion and faith of the citizens are more important in India and the work culture is characterized by delays (Tudoran and Boglu? 2014). On the other hand, the American work culture is more professional. The hierarchy is not rigid, hence, the subordinates are also entrusted with responsibility and that make them feel confident to work efficiently. Facts and impacts are more important than emotions of the people. Americans are hard on meeting deadlines, punctuality and do not prefer delays. They prefer to negotiate for what is best for the company and not for the government. Hence, the scores for both the countries in the Hofstede cultural theory are justified (Barston 2014).

Comparison of USA and India on Schwartz Values

Nature and level of emotional expression and communication forms in negotiation

Emotions are associated with negotiations, especially in India, where the relationships are more valued than the business. Negotiations can lead to variety of emotions, especially anger and fear, and can even break down a negotiation. Emotions can have positive or negative effects on negotiation. The positive effect of emotions can be expressed in terms of caring for the individual as well as for the people. It can facilitate better communication and empathy. Hiding or expressing emotions are effective tactics of negotiation. If one party expresses anger for legitimate reasons, then it displays the sincerity and commitment of the party towards its people (Thomas and Peterson 2017). This mostly happens in India, where collectivism is more dominant than individualism. Similarly, anger or fear has a negative impact on negotiations. Anger can arise when there are time constraints, uncertain outcomes or a potential negative impact on the people. Misrepresentation or misinterpretation can also lead to anger among the parties, unjustified demands, and irrational behavior. This disrupts a negotiation process. In case of US-India negotiation process, while Indians are driven by emotions, Americans remain focused on logic and do not give high value to emotional sensitivity (Moran, Abramson and Moran 2014).

Key challenges

The key challenges faced by the countries in cross-cultural negotiations are as follows:

  • The basic concept of negotiation topic and the goals: whether it is beneficial for both or not.
  • The protocols of the countries regarding the organizational and social structure
  • Verbal and non-verbal communication forms
  • The risk taking propensity or level of uncertainty avoidance of the countries
  • Decision making system
  • Outlook towards value of time
  • Type of agreement
  • Individual attitude
  • Power distance
  • Knowledge about the other country’s culture (McFarlin and Sweeney 2014)

The above challenges can occur in a cross-cultural negotiation between U.S.A. and India. India in general has a laid-back attitude, which is reflected in negotiations also. There is delay in agreements and works. The presence of hierarchy also creates delay in the processes and in decision making. The gestures and forms of hospitality are different. The lack of knowledge about the other country’s cultures creates the major challenge, that is, the insensitivity and intolerance towards the other culture (Adair et al. 2004).

The fundamental factor for success in cross-cultural negotiations is the respecting the differences in culture and accepting that. The other key predictors of success could be:

  • Openness to different point of views and aspects of different cultures
  • Empathy
  • Interest in the host culture
  • Willingness to overcome language barrier
  • Acceptance of stereotypes
  • Broad categorization of goals and objectives
  • Cultural flexibility
  • Intercultural sensitivity
  • Social orientation
  • Accepting differences
  • Willingness for communication
  • Willingness for cooperation and coordination
  • Patience
  • Professionalism (Ahammad et al. 2016)

All the above factors or elements for success can occur from different situations in cross-cultural negotiations between two countries like U.S.A. and India, where there is a big difference in culture. In a cross-cultural negotiation, representatives of both the countries can face situations where there is a need to understand the language, gestures, emotions, religion impacts, economic conditions, attitude towards work, and different point of views regarding the negotiation topic. In such situations, if the negotiators are flexible and sensitive towards these factors, the negotiation can be successful. The Americans must consider the socio-cultural aspects of India, while Indians must also consider the competitive behavior of a developed country like U.S.A. They must be willing to be flexible in understanding the cultural differences, so that the negotiation is successful (Gelfand and Brett 2004).

According to table 1, the above-mentioned countries differ variedly in the scores in six categories. The key differences in the countries were that U.S.A. does not give much importance to hierarchy compared to India, thus the PDI score is low. U.S.A. is more focused on individualism than collectivism as in India. U.S.A. displays more aggressiveness and competitiveness, thereby displays masculinity, while India displays more femininity by expressing cooperation. In case of indulgence, U.S.A. is more carefree and liberal while India is more conservative regarding any aspect in life.

Impact of Cultural Differences on Negotiations

Therefore, to gain success in a cross-cultural negotiation, both the countries must consider the above factors and differences in the cultures. For example, both the countries can engage in a negotiation for student exchange program. In such programs, two universities from each country negotiate with each other to send some students to the other country for a semester or two. It is an example for cross-cultural negotiation (Adair et al. 2004). In this case, the representatives of the universities must consider the cultural differences that can affect the students positively or negatively. Firstly, they should think about the language barrier, food habits, weather, fashion, and attitude towards life, which are vastly apart in these countries. Hence, the students should be given an induction about these. Secondly, the universities must take the responsibility to make the students aware about the hierarchy, that is, power distance. While the Indian students should know how to address the situation where the presence of power is less, the American students should be given an idea about the hierarchy in the system. Thirdly, all the students must be sensitive, respectful and not be judgmental about the other culture. The indulging attitude of Americans and restrained nature of Indians should not be an issue in the process of education. Fourthly, the Americans are casual regarding uncertainties, while Indians are not. Therefore, the students must be willing to adapt to the differences and to integrate with the cultures of the host country. They should maintain their culture, at the same time, not disregard the other. Fifthly, Indians are more interested in long term goals, while the Americans are inclined towards short term goals. Thus, they should be advised that, while staying in other country, they should act accordingly to avoid any conflict and at the same time maintain their own principles. Sixthly, the students in both countries should be given advice on how to adapt to the different cultural situations, such as, assimilation, integration, marginalization and separation. They should be tolerant about the different cultural factors, such as, food, dresses, arts, music etc.

Therefore, it can be said that, the difference in the cultures in two countries, such as U.S.A. and India, plays a major role in negotiation between these countries. People should be more tolerant and respectful towards the other culture to maintain peace and bring success to the negotiation process. They should be willing to accept the other culture and integrate with them. U.S.A. is a nation of immigrants. The descendants of the Europeans, who moved into this country and settled down, are more tolerant towards new cultures and more liberal towards life. On the other hand, India has a history of more than two thousand years. Hence, way of life is more conservative. Thus, there is difference in culture. But people must overcome the challenges to get the benefits of negotiations between the nations.

References

Adair, W., Brett, J., Lempereur, A., Okumura, T., Shikhirev, P., Tinsley, C. and Lytle, A., 2004. Culture and negotiation strategy. Negotiation Journal, 20(1), pp.87-111.

Ahammad, M.F., Tarba, S.Y., Liu, Y. and Glaister, K.W., 2016. Knowledge transfer and cross-border acquisition performance: The impact of cultural distance and employee retention. International Business Review, 25(1), pp.66-75.

Australian National University, 2017. Values: Schwartz theory of basic values - Integration & Implementation Sciences. [online] I2s.anu.edu.au. Available at: https://i2s.anu.edu.au/resources/schwartz-theory-basic-values [Accessed 20 Jun. 2017].

Barston, R.P., 2014. Modern diplomacy. Routledge.

Birukou, A., Blanzieri, E., Giorgini, P. and Giunchiglia, F., 2013. A formal definition of culture. In Models for Intercultural Collaboration and Negotiation (pp. 1-26). Springer Netherlands.

Brett, J. and Thompson, L., 2016. Negotiation. Organizational Behavior and Human Decision Processes, 136, pp.68-79.

Conlon, D., 2016. How International Cultural Differences Can Affect Negotiations. [online] Michiganstateuniversityonline.com. Available at: https://www.michiganstateuniversityonline.com/resources/leadership/how-international-cultural-differences-can-affect-negotiations/#.WUkZ1miGPDc [Accessed 20 Jun. 2017].

Ferraro, G.P. and Briody, E.K., 2017. The cultural dimension of global business. Taylor & Francis.

Foster, J., 2015. Hofstede's dimensions of Culture as a tool for global marketing. [online] Linkedin. Available at: https://www.linkedin.com/pulse/hofstedes-dimensions-culture-tool-global-marketing-jeffrey-foster [Accessed 20 Jun. 2017].

Geert-hofstede.com., 2017. United States - Geert Hofstede. [online] Available at: https://geert-hofstede.com/united-states.html [Accessed 20 Jun. 2017].

Gelfand, M.J. and Brett, J.M., 2004. The handbook of negotiation and culture. Stanford University Press.

Lysgård, H.K., 2013. The definition of culture in culture-based urban development strategies: antagonisms in the construction of a culture-based development discourse. International journal of cultural policy, 19(2), pp.182-200.

McFarlin, D. and Sweeney, P.D., 2014. International Management: Strategic Opportunities & Cultural Challenges. Routledge.

Moran, R.T., Abramson, N.R. and Moran, S.V., 2014. Managing cultural differences. Routledge.

Negotiation Journal, 2017. Negotiation Journal - PON - Program on Negotiation at Harvard Law School. [online] PON - Program on Negotiation at Harvard Law School. Available at: https://www.pon.harvard.edu/publications/negotiation-journal/ [Accessed 22 Jun. 2017].

Nunn, N., 2012. Culture and the historical process. Economic History of Developing Regions, 27(sup1), pp.S108-S126.

Pedersen, P., 2013. Multiculturalism as a fourth force. Routledge.

Ribbink, D. and Grimm, C.M., 2014. The impact of cultural differences on buyer–supplier negotiations: An experimental study. Journal of Operations Management, 32(3), pp.114-126.

Schwartz, S., 2013. The 7 Schwartz cultural value orientation scores for 80 countries. [online] Available at: https://www.researchgate.net/publication/304715744_The_7_Schwartz_cultural_value_orientation_scores_for_80_countries [Accessed 20 Jun. 2017].

Sebenius, J.K., 2017. BATNAs in Negotiation: Common Errors and Three Kinds of “No”. Negotiation Journal, 33(2), pp.89-99.

Shahmoradi, H., Nassiri-Mofakham, F. and Nemati, F., 2014, April. Cross-cultural time sensitivity in a bilateral e-negotiation system. In e-Commerce in Developing Countries: With Focus on e-Trust (ECDC), 2014 8th International Conference on (pp. 1-6). IEEE.

Storey, J., 2015. Cultural theory and popular culture: An introduction. Routledge.

Thomas, D.C. and Peterson, M.F., 2017. Cross-cultural management: Essential concepts. Sage Publications.

Tudoran, D. and Boglu?, A., 2014. Types of negotiation tactics. Research Journal of Agricultural Science, 46(2).

Usdkexpats.org, 2017. Schwartz's Culture Model. [online] Usdkexpats.org. Available at: https://usdkexpats.org/theory/schwartzs-culture-model [Accessed 20 Jun. 2017].

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