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NBS8061 Managing Across Cultures

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  • Course Code: NBS8061
  • University: Newcastle University
  • Country: United Kingdom

Question:

Critically assess the Hofstede model of national culture

Identify a specific example (or several examples) of a cross-border business development that is impacted, positively and/or negatively, by national cultural differences. Referring to dimensions of national culture, assess and explain how national and corporate culture may have influenced the actions and behaviour of the organisations involved.

Identify and discuss how individual behaviour could be adapted to enhance and improve the chances of success in cross-border business development.

 

Answer:

Introduction

The cultural dimensions theory developed by Hofstede is a framework for cross- cultural communication. It demarcates the effects of the culture of a society on the values of its members along with the relation of values with behavior with the help of a structure derived from factor analysis.  A major research tradition was established by the work of Hofstede in cross- cultural psychology. Such theory is used in a number of fields in the form of paradigm for research specifically in international management, cross- cultural communication and cross- cultural psychology. Various other major cross- cultural studies related to values along with some researches on other aspects of culture are inspired by Hofstede’s cultural dimensions theory.

This report highlights the background to Hofstede’s cultural dimension model along with the dimensions of national culture, commonly held criticisms and some examples of business expansions that can be explained by the natural cultural characteristics of the companies involved. Along with this, the report specifies the personal adaptions which can assist the senior executives and managers in successfully working in cross- cultural teams or across cultures. Moreover, it determines how the understanding of the dimensions of national culture assists people to be more effective. It also throws light on the use of competencies as the model for individual behavior by international companies.

Background to Hofstede’s Cultural Dimensions Model

Geert Hofstede is one of the popular Dutch researchers of culture. One of the most comprehensive studies has been conducted by Professor Geert Hofstede regarding how culture influences the values in the workplace. Hofstede defined culture as the collective programming of mind that makes distinction among the members of one category of people or group from another (Wang, Peng, Sia, Tong & Ku, 2016).

Six dimensions of national culture have been formulated after extensive research conducted by Professor Geert Hofstede, Michael Minkov, Gert Jan Hofstede and their research team. There is a worldwide usage of the application of this research in both professional management and academic settings. Such cultural dimensions signify independent preferences that are provided to one state of affairs over another that creates a distinction between countries instead of individuals.

 

Dimensions of National Culture

Power Distance Index (PDI) - This dimension provides the point to which inequality in power distribution is accepted and expected in the society by less powerful members. The fundamental issue here is the manner of handling inequalities among people by the society. A hierarchical order is accepted by the people in the society that exhibit a large degree of Power Distance. In such hierarchical order, there is place for everyone and no further justification is required for it. In low power distance societies, people struggle for the purpose of equalizing the distribution of power along with demanding justification for power inequalities (Hofstede Insights, 2018).

Individualism Versus Collectivism (IDV) - the higher side of this dimension is known as individualism which can be defined as a liking for a social framework which is loosely- knit. In such a framework, people are expected to take care of their own selves and their immediate relatives (Engle & Nash, 2015).  On the other hand, collectivism highlights the preference for a society framework which is tightly- knit in which the people expect members of a particular group or their relatives to take care of them in response of whole-hearted faithfulness. This dimension reflects society’s position whether self-image of people is demarcated in terms of “I” or “we” (Dellner, 2014).

Masculinity versus Femininity (MAS) - a preference for assertiveness, achievement, heroism and material reward for success in society is represented by the masculinity side of this dimension. Society is considered to be very competitive. On the other hand, a preference for quality of life, modesty, caring for weak and cooperation is demarcated by femininity. Such society is considered to be consensus- oriented at large. As far as businesses are considered, masculinity versus femininity is also regarded as “tough versus tender” cultures (Cohn & Russell, 2015).

Uncertainty Avoidance Index (UAI) - this dimension of uncertainty avoidance represents the point to which discomfort is felt by the members of the society with ambiguity and uncertainty (Thoumrungroje, 2018). The important issue here consists of the manner of dealing the fact that future is always unknown. Rigid codes of behavior and belief is maintained by the countries that exhibit strong UAI. Such countries are often intolerant of unorthodox ideas and behavior. A more relaxed attitude is maintained by societies with weak UAI (Banfield & Kay, 2012).

Long Term Orientation versus Short Term Normative Orientation (LTO) - some links are required to be maintained by every society with its own past at the time of handling the challenges of present and future. The two existential goals are differently prioritized by societies. Low score on this dimension by the societies symbolizes their preference for maintaining time- honored norms and traditions while suspiciously viewing the changes in society. A more pragmatic approach is adopted by the culture that score high in this dimension i.e. thrifts and efforts are encouraged by them in modern education for the purpose of preparing for future (Jones, 2009).

Indulgence versus Restraint (IND) – Indulgence is used for a society in which relatively free fulfillment of regular and basic human drives are allowed for having great and enjoying life. On the other hand, restraint is used for a society in which the fulfillment of needs is suppressed and is regulated by way of strict social norms.

Commonly Held Criticism of the Model

The work of Hofstede has been criticized by claiming that it relies on fundamentally flawed assumptions like all micro-location is distinctive of national. It is further argued that the analysis of sub- national population cannot provide generalizations regarding national level culture. Moreover, the notion of Hofstede regarding uniform global occupational culture and uniform organizational culture is also criticized (Roy, 2017). It is also questioned whether the national culture dimensions are capable of being identified with the help of questionnaires and especially by the one which is not originally designed for that particular purpose. Furthermore, criticism has been faced by Hofstede relating to complexity of cultures, research methodology, globalization, internationalization, convergence of markets and one company approach (Beugelsdijk, Kostova & Roth, 2017). The approach is cultural biased and makes the use of surveys as instruments for research. The informants of Hofstede worked with IBM Company which made it impossible to provide information regarding the complete cultural system of the country.

Hofstede’ study is grounded on the notion that the domestic population of the countries is homogenous in nature. However, this is not true. Most of the countries have heterogeneous cultures (Mazanec, Crotts, Gursoy & Lu, 2015). The research made is completely west- centric and does not take into account alternative frameworks.

Now the study is considered to be outdated due to rapid changes in the global environment. This is due to the fact that cultures do not stand still.

 

Opinion Regarding Criticism of Hofstede Model

The dimensions of national culture are too simple and facilitate easy differentiation between the diversity of cultures in countries (Marshall, 2014). The global scenario has changed to a great extent from the time when these national culture dimensions were developed by Hofstede.  Modern technology is adopted in today’s era of globalization. The rate of development also subsequently varies from the rate at Hofstede’s time (Beugelsdijk, Maseland & Hoorn, 2015). Distances have also minimized with the help of e- communication. The use of fax, video- conferencing and e- mails have made doing business easier with the foreign countries.

The comparison of Hofstede’s model with other models provide how other models provide better understanding of the cultural dimensions (Minkov, 2011). The cultural dimensions model by Trompenaars is more focus- oriented and provides better knowledge regarding the minds of people and their vision. It provides understanding regarding the logical organization and framework of the behavior of individuals and relationships. In this way, this model presents the exact culture of people by showing the manner and choice in which they plan and handle their actions (Thomas & Peterson, 2017). However, such clear understanding is not presented by Hofstede model.

World Values Survey is of great help in understanding the changing beliefs, motivations and values of people across the world. A common questionnaire is used for conducting surveys in each country. The survey appears to be more reliable than gaining knowledge through the Hofstede’s model. Word Bank also utilizes the data for analyzing the linkages between the economic development and cultural dimensions (World Values Survey, 2018).

GLOBE (Global Leadership and Organizational Behavior Effectiveness) research is also more deeply analyzed as it is based on the findings of Hofstede’s model. The differences of the cultures are explored in a dedicated way which makes it better than Hofstede’s original model. Therefore, other models can also be used for understanding cultural dimensions as the changed global scenario have reduced the relevance of Hofstede’s model (Mueller, Diehl & Terlutter, 2015).

Responses to Criticisms of Hofstede Model

The model of cultural dimensions developed by Hofstede tries to go in the deep layers of culture and also provides forecasts of behavior of people on the basis of the obtained knowledge. Though the work of Hofstede is highly being criticized but its importance is visible from the fact that his work is still being referred by a large number of publications. It is still the most relevant and comprehensive study of cultural differences. (Eringa, Caudron, Rieck, Xie & Gerhardt, 2015)

Examples of Business Expansions 

HERO HONDA

The joint venture of Hero group of India and Honda of Japan as HERO HONDA was one of the biggest and most profitable joint ventures of the world.  Such joint venture can be also be explained by the national cultural characteristics of the company involved.

The national cultural characteristics of India highlighted the empowerment of rural India and increasing urbanization which will certainly add new families to economic mainstream. Motor cycles were more popular in India during 1980’s i.e. at the time when such joint venture was entered. This was due to low income of people in India which encouraged them to prefer motorcycles for low costs and fuel economy. The expansive market of India was served by Hero with an excellent network of dealers. Honda motor company chose Hero group for the manufacturing of motor cycles as joint venture. This formed an opportunity for HERO HONDA to sustain for a number of years. The complete advantage    

HERO HONDA was trying to take the benefit of joint venture by increasing their sales by way of combining the machinery of Honda with the parts of Hero. The manufacturer and capital was shared by the both the businesses. The joint venture provided the companies with low cost benefits and fuel economy.  

The entire joint venture was effective due to the demand for two- wheelers in India which was influenced by the poor culture. The rural and semi- urban areas in India suffered from inadequate public transportation system. People in India prefer low maintenance and fuel efficient models for daily use. The stable growth in per capita income, the changes in the demographic profile and the increased availability of cheap consumer financing increased the demand for two- wheeler in India.

This joint venture attained tremendous success due to the popularity and preference of motorcycles in India. The popular advertising campaign undertaken by HERO HONDA based on the slogan ‘Fill it- Shut it- Forget it’ placed greater emphases on the fuel efficiency of motorcycles which significantly assisted in the growth of the company (Petersen, Kushwaha & Kumar, 2015). In the year 2001, the company became the largest two wheeler manufacturing company across India and the entire globe.  The global industry leadership obtained by the company is maintained till date. The company made the sales of over 47 million two- wheelers from the time of its inception in 1984 till March 2013. Therefore, the success of the joint venture of Hero and Honda can be explained by the characteristics of national and corporate culture. The corporate culture of HERO HONDA provided best possible support by taking the best advantage of the requirements of people in India. Such success is evident from the fact that the company made the sales of over 47 million two- wheelers from the time of its inception in 1984 till March 2013.

 

Kellogg Company and Wilmar International Limited

Another example of business expansion is the joint venture of Kellogg Company and Wilmar International Limited. A joint venture agreement was entered into by Kellogg Company with Wilmar International Limited after anticipating the rise of China to the top of food and beverage market across the globe. Wilmar International Limited in engaged in the selling and distribution of snack foods and cereals to consumers in China.

The national cultural characteristics of China provide that the people in China have growing concerns for consuming safe food. Moreover, Chinese people are developing taste for foreign foodstuffs (EU SME Centre, 2015). There is growing urbanization and a rise in the disposable income of people. This has resulted in the adoption of new varieties of food on daily basis. This appeared to be an opportunity for Kellogg Company. In order to grab the opportunity, the joint venture was entered with Wilmar International Limited by Kellogg by bringing in an extensive collection of internationally renowned products along with expertise in the Chinese industry. On the other hand, marketing and sales infrastructure was offered by Wilmar in China along with an extensive supply chain and distribution network.

With the help of a joint venture they were trying to benefit from the synergistic relationship. Together, complementary expertise will be leveraged by Kellogg and Wilmar for maximizing the manufacturing and marketing synergies. The expectation from Chinese market to become the largest food and beverage market across the globe was due to the growth of the middle class consumer base across large cities and increased demand for a large variety of branded and packaged food. Therefore, it was an effort by Kellogg to capture the market with the help of Wilmar.

For achieving this, the key strengths of Wilmar and Kellogg were brought under the globally recognized brands Kellogg’s and Pringles. They made mutual commitment for customer- focused innovation by considering the requirements of Chinese people.  Wilmar shared its local knowledge relating to the Chinese market along with a sizeable supply chain, a sturdy infrastructure and extensive sales and distribution network throughout the country. On the other hand, Kellogg added its strong brand recognition and portfolio and strengthened the growth of business with its expertise in snacks and cereal segment (Culliney, 2012).

The success of this joint venture is visible from the fact that the share of Kellogg in the breakfast and snack market significantly increased. Moreover, there is an impressive jump produced by Kellogg and Wilmar in the net sales in the year 2014 in Chinese market. The success is encouraging Kellogg to mark its presence in the Middle East as well with an 85.93% acquisition deal equal to $125 million of BiscoMisr which is a biscuit company of Egypt (Kellogg Company, 2012). Such success can be explained by the characteristics of national culture as it was the knowledge of Chinese culture with Wilmar which facilitated Kellogg to take the advantage of Wilmar’s monopoly in the Chinese market. The corporate culture of the joint venture company established in Shanghai, China facilitated the development of cereal and snacks business together with the help of shared vision (Deephouse, Newburry & Soleimani, 2016).        

Personal adaptations to be made for successful working across cultures or in cross- cultural teams

For being successful when working across cultures and in cross- cultural teams, some personal adaptations are required to be made by the senior executives, managers and technicians.

The personal adaptation include considering change as positive, normal and a source of opportunity. They are required to prepare themselves for confronting new situations and relying on creative and outsider thinking (Thomas, 2008). Whenever they move into new settings, they are required to be capable of reinventing themselves and experimenting with new identities. Also, they need to gain expertise at the delicate and emotional aspects of transition. They also need to adapt themselves to easily learn and utilize new ways of taking risks, thinking that lead towards the path of self- efficacy (Brimm, 2016).

They should aim at openly acknowledging the cultural gaps and working around them. The managers, senior executives and the technicians need to adopt cross cultural knowledge by way of knowing how their business partners, colleagues and team members from diverse countries anticipate to be communicated with. Moreover, cross cultural training should be obtained regarding how diversity gets impacted by culture. They need to be an active listener in order to avoid confusion across cultures. The active listening will provide the opportunity to people to effectively clarify their misunderstandings. Open questions should be asked if there is any confusion. They also require socializing with people personally. This plays an important role for those belonging from relationship- oriented cultures. For this purpose, something creative needs to be introduced by managers and senior executives for stimulating discussions or socializing in smaller groups (Maude, 2016).  

The cross- cultural expectations should be determined in advance for the purpose of adapting the correct leadership style. This is due to the fact that some cultures prefer their managers to make all the decisions while some prefer letting others make decisions. The leadership style will let the managers and senior executives know the requirement of their teams and will assist in avoiding frustration and disengagement. In-depth knowledge is also required to be gained by them regarding which incentives work across cultures i.e. promotion, rewards, etc. The adaptations also include being patient for evaluating the cross cultural strategies and enhancing the art of meeting cultural expectations and diverse needs.  

 

Understanding of the dimensions of national culture help people to be more effective

Effectiveness of people is enhanced by way of gaining understanding of the national culture dimensions. The theory related to Hofstede’s cultural dimensions comprise of a framework that revolves around cross- cultural communication (Hurn & Tomalin, 2013). The dimensions significantly portray how the values of the members of a particular society get impacted by the culture embedded in the society. Such dimensions also explain the relationship between behavior and values through a structure based on factor analysis (Ferraro & Briody, 2017). This means that this theory takes into account the important aspects of culture and rating is provided to them on a comparison scale.

It is generally believed that all people are same but this is not true. The awareness regarding the different cultures of different countries significantly avoids misunderstandings and misinterpretations among people belonging to different countries.  The dimensions of national culture provided by Geert Hofstede throw light on the cultural differences (Vaiman & Brewster, 2015). Such dimensions provide general overview and an estimated understanding of other cultures including the manner of behavior with the groups belonging to other countries and expectations from them.  The effectiveness of people automatically increases with the understanding of the dimensions of national culture. Such understanding makes people capable making cross- cultural communication by understanding the cultural differences. Cultural dimensions will affect all the levels in communication including verbal, non- verbal, etiquettes, etc.  Such knowledge of making effective cross- cultural communication will contribute towards the overall success of the people in all aspects.

Moreover, the understanding about the expectations, communication style, customs and values of the country also assist people in making international management and international negotiation. The understanding of the dimensions of national culture also makes people capable of undertaking international marketing as the model defines national values in both general and business context.  Such understanding also enables a person to effectively address the fields of advertising strategy, global branding and consumer behavior (Saleem & Larimo, 2017).  The specificity of market can be better understood with the help of dimensions which in turn assists in adapting the products and services to local preferences and habits. The dimensions allow a person to analyze the differences between the cultures of two countries and create awareness regarding what is acceptable in one country can be offensive in another.

Use of Competencies as the Model for Individual Behavior by International Companies

International companies are increasingly making the use of competencies as a model for individual behavior.  Some researchers suggest that the productivity of some individuals may be 20 times more than others.   Therefore, the individual competencies are required to be matched with the job competency models for the purpose of putting the individuals in a position where their maximum contribution can be obtained. However, the adoption of competency model does not guarantee a 20 times increase in the productivity but it will assist people in moving towards the right direction (Kim, 2017).

In other words, the behavior of the individuals is moulded by the international organizations by the adoption of competencies as a model. The term competency is not concerned about duties but it is about people.  The job descriptions of the individuals are completely focused on the work and not on the unique characteristics of such individuals who are effective in doing the work.  This leads to failure of the job descriptions to effectively address quantifiable results. Since job descriptions are grounded on duties or activities, they may change rapidly after the recognition of work assignments by organizations or changes the manner of doing the work.

International organizations have recognized that competencies are more lasting than the job tasks.  The focus of the competencies is on the characteristics of individuals who are successful performing the jobs.  Competencies are considered to be the part of individuals and not the jobs they do. Success can be easily attained by way of pinpointing the exceptional characteristics of individuals. Traditional job descriptions basically overlooked this aspect by covering only technical skills and poorly identifying the skills, knowledge and abilities which are not so relevant for the job (Hauff, Richter & Tressin, 2015).

Therefore, international organizations are able to develop competitive advantage by understanding the characteristics of those who get exceptional results. The competency model help such organizations by keeping them in a better position to recruit, select, develop, promote and reward the most successful people. Competencies act as an important tool for such international companies as it makes it easier to communicate with the workers (Sanghi, 2014). Various ways are provided to the individuals for assessing themselves by involving the valuable feedback of others.  Information is gained by the individuals which can be effectively utilized for comparing their own competencies with those required for various other positions within the company.  Their behavior is automatically changed for the purpose of preparing themselves for more advanced positions (Rothwell, 2018).

Conclusion

Therefore, it can be concluded that the cultural dimension model developed by Hofstede is of great use for the purpose of gaining understanding about the differences in cultures and taking the advantage of such knowledge by effectively managing cultural differences. However, the model still faces criticism regarding its inapplicability in the modern world. The examples of HERO HONDA and Kellogg and Wilmar International Limited helps in understanding how the business expansion plans of these companies can be explained by the national cultural characteristics of the companies involved. Such examples provide the evidence regarding how the knowledge of the national culture can contribute towards the success of business. Moreover, the reports assists in concluding that the senior executives, managers and technicians require to make certain personal adaptations for the purpose of successfully working across cultures or in cross cultural teams. The effectiveness of people automatically increase when they gain knowledge regarding the dimensions of national culture. Also, the international companies are increasingly making the use of competencies model for the purpose of moulding the behavior of individuals. Such model is assisting people in moving towards the right direction.

 

References

Banfield, P. and Kay, R. 2012. Introduction to Human Resource Management. OUP Oxford.

Beugelsdijk, S., Kostova, T. and Roth, K., 2017. An overview of Hofstede-inspired country-level culture research in international business since 2006. Journal of International Business Studies, 48(1), pp.30-47.

Beugelsdijk, S., Maseland, R. and Hoorn, A., 2015. Are scores on Hofstede's dimensions of national culture stable over time? A cohort analysis. Global Strategy Journal, 5(3), pp.223-240.

Brimm, L. 2016. What the Best Cross-Cultural Managers Have in Common, [Online]. Available at: https://hbr.org/2016/06/what-the-best-cross-cultural-managers-have-in-common [Accessed on: 18 April 2018].

Cohn, R. and Russell, J. 2015. Hofstede's Cultural Dimensions Theory. Book on Demand.

Culliney, K. 2012. Kellogg Company and Wilmar International Limited, [Online]. Available at: https://www.bakeryandsnacks.com/Article/2012/09/24/Kellogg-Wilmar-joint-venture-China [Accessed on: 18 April 2018].

Deephouse, D.L., Newburry, W. and Soleimani, A., 2016. The effects of institutional development and national culture on cross-national differences in corporate reputation. Journal of World Business, 51(3), pp.463-473.

Dellner, A. 2014. Cultural Dimensions: The Five-Dimensions-Model according to Geert Hofstede. GRIN Verlag.

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Eringa, K., Caudron, L.N., Rieck, K., Xie, F. and Gerhardt, T., 2015. How relevant are Hofstede's dimensions for inter-cultural studies? A replication of Hofstede's research among current international business students. Research in Hospitality Management, 5(2), pp.187-198.

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Hauff, S., Richter, N.F. and Tressin, T., 2015. Situational job characteristics and job satisfaction: The moderating role of national culture. International business review, 24(4), pp.710-723.

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Kim, S., 2017. National culture and public service motivation: investigating the relationship using Hofstede’s five cultural dimensions. International Review of Administrative Sciences, 83(1_suppl), pp.23-40.

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Mazanec, J.A., Crotts, J.C., Gursoy, D. and Lu, L., 2015. Homogeneity versus heterogeneity of cultural values: An item-response theoretical approach applying Hofstede's cultural dimensions in a single nation. Tourism Management, 48, pp.299-304.

Minkov, M. 2011. Cultural Differences in a Globalizing World. Emerald Group Publishing.

Mueller, B., Diehl, S. and Terlutter, R., 2015. GLOBE cultural dimensions: Providing insights for advertising execution in the Global marketplace. In Advances in Advertising Research (Vol. V) (pp. 161-175). Springer Gabler, Wiesbaden.

Petersen, J.A., Kushwaha, T. and Kumar, V., 2015. Marketing communication strategies and consumer financial decision making: The role of national culture. Journal of Marketing, 79(1), pp.44-63.

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Vaiman, V. and Brewster, C., 2015. How far do cultural differences explain the differences between nations? Implications for HRM. The International Journal of Human Resource Management, 26(2), pp.151-164.

Wang, Q., Peng, C.H., Sia, C.L., Tong, Y. and Ku, Y.C., 2016, July. Website location strategies review under Hofstede’s cultural dimensions. In International Conference on HCI in Business, Government and Organizations (pp. 258-269). Springer, Cham.

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