Culture’s recent consequences Auckland University of Technology 11 April 2005 Geert Hofstede The individual components of this presentation and the entire presentation may be used in not-for-profit educational settings with proper attribution. Citation: Hofstede, Geert (2005) Culture’s recent consequences PowerPoint® file, [14 June 2015]

Culture (in the anthropological sense) collective programming of the mind distinguishing the members of one group or category of people from another group/category can be nation, region, organization, profession, generation, gender

Mental programmmes

Values Values are strong emotions with a minus and a plus pole Like evil-good, abnormal-normal, dangerous-safe, dirty-clean, immoral- moral, indecent-decent, unnatural- natural, paradoxical-logical, ugly- beautiful, irrational-rational What is rational is a matter of values

The learning of culture

National versus organizational cultures National culture differences are rooted in values learned before age 10 They pass from generation to generation For organizations, they are given facts Organizational cultures are rooted in practices learned on the job Given enough management effort, they can be changed International organizations are held together by shared practices, not by shared values

Research into national cultures Inhabitants of the world, William Darton, 1790

Research into national cultures Culture’s Consequences, Geert Hofstede, dimensions 1.Inequality: more or less? Power Distance large vs. small 2.The unfamiliar: fight or tolerate? Uncertainty Avoidance strong vs. weak 3.Relation with in-group: loose or tight? Individualism vs. Collectivism 4.Emotional gender roles: different or same? Masculinity vs. Femininity 5.Need gratification: later or now? Long vs. Short term orientation

National culture dimensions: now scores showing relative positions of > 70 countries Initially based on employees of IBM subsidiaries in 40 countries around 1970 Until 2002, 6 major replications (elites, employees of other corporations, airline pilots, consumers, civil servants) Results very stable – even if cultures shift, countries shift together so relative scores remain valid

Dimension 1: Power Distance Extent to which the less powerful members of institutions and organizations expect and accept that power is distributed unequally Transferred to children by parents and other elders

Dimension 2: Uncertainty Avoidance Extent to which members of a culture feel threatened by ambiguous and unknown situations Not to be confused with risk avoidance: risk is to uncertainty as fear is to anxiety. Uncertainty and anxiety are diffuse feelings – anything may happen

SMALL PD, WEAK UA LARGE PD, WEAK UA SMALL PD, STRONG UALARGE PD, STRONG UA NORDIC CTRS ANGLO CTRS, USA NETHERLANDS GERMAN SPK CTRS HUNGARY ISRAEL CHINA, HK, SINGAPORE INDIA, BANGLADESH INDONESIA, MALAYSIA TAIWAN, THAILD, PAKIST LATIN CTRS, E-EUROPE JAPAN, KOREA

Dimension 3: Individualism vs. Collectivism Individualism: A society in which the ties between individuals are loose: everyone is expected to look after self and immediate family Collectivism: A society in which individuals from birth onwards are part of strong in-groups which last a lifetime

Dimension 4: Masculinity vs. Femininity Masculinity: A society in which emotional gender roles are distinct: men are supposed to be assertive, tough and focused on material success, women on the quality of life Femininity: A society in which emotional gender roles overlap: both men and women are supposed to be modest, tender, and focused on the quality of life

COLLECTIVIST,FEMININECOLLECTIVIST,MASCULINE INDIVIDUALIST, FEMININEINDIVIDUALIST,MASCULINE THAILAND, KOREA, VIETN INDON, MALAYS, SINGAP COSTA RICA, CHILE PORTUGAL, RUSSIA HK, CHINA, JAPAN, PHILS INDIA, BANGLADESH MEXICO, VENEZUELA GREECE, ARAB WORLD SPAIN FRANCE NETHERLANDS NORDIC COUNTRIES CZECHIA, HUNGARY POLAND, ITALY GERMAN SPK CTRIES ANGLO COUNTRIES, USA

Validations of country scores against over 400 measures from other sources Examples: Power distance: Respect for elders; corruption; polarization and violence in national politics Uncertainty avoidance: Religiosity; xenophobia; identity card obligation; faster driving Individualism: GNP per capita; faster walking; weak family ties; frequency of using the word “I” Masculinity: Assertiveness; performance versus solidarity; fewer women elected; homophobia

Dimension 5: Long Term vs. Short Term Orientation Long Term Orientation is directed at the future and seeks future rewards through perseverance and thrift Short Term Orientation is directed at the past and present through respect for tradition, fulfilling social obligations and seeking immediate rewards

LONG TERM ORIENTATION CHINA, HK, TAIWAN JAPAN, VIETNAM KOREA BRAZIL, INDIA THAILAND, SINGAPORE NETHERLANDS, NORDIC COUNTRIES BANGLADESH BELGIUM, FRANCE, GERMANY AUSTRALIA, NEW ZEALAND USA, BRITAIN, CANADA SPAIN, PHILIPPINES AFRICAN COUNTRIES PAKISTAN SHORT TERM ORIENTATION

Correlates of LTO Short term Good and evil are absolute Concern with Truth Analytical thinking Weaker at mathematics Old age seen as a bad time but starting late Higher rates of imprisonment Spending rates Focus on bottom line Past and present economic stagnation Long term Good and evil are relative Concern with Virtue Synthetic thinking Better at mathematics Old age seen as a good time and starting early Lower rates of imprisonment Savings rates Aim at market position Past and present economic growth

Are there national management and leadership cultures ? In national cultures, all spheres of life and society are interrelated: family, school, job, religious practice, economic behavior, health, crime, punishment, art, science, literature, management, leadership There is no separate national management or leadership culture – management and leadership can only be understood as part of the larger culture

Other examples of research results (last 10 years) 1.Consumer behavior 2.Entrepreneurship 3.Business goals 4.Human rights 5.Perceived corruption

1. Consumer behavior 15 EU countries, 1970 – 2000 When national incomes become more similar, consumer behavior converges as long as a product is scarce After scarcity is over, consumer behavior diverges, following cultural values, especially Uncertainty Avoidance and Masculinity/Femininity which are unrelated to income Research: de Mooij, 2004

Examples of consumer behavior divergence: cars in 15 European countries Cars per 1000 inhabitants: correlation with GNP/capita 1969r =.93*** 1994 r =.42 ns Percent households with 2 cars: correlation with GNP/cap with MAS index 1970r =.58*r =.43 ns 1997 r =-.28r =.62** Prefers new over second hand: correlation with GNP/cap with UncAv index 1970r =.47*r =.79*** 1997 r =-.32r =.80*** Source: De Mooij, 2000

Example of consumer behavior: new communication technology in Europe Adoption of PC’s, internet and mobile phones: no influence of national wealth, but slower where Uncertainty Avoidance was stronger Research: de Mooij, 2004

Example of consumer behavior: use of internet in Europe Lasting differences in what internet is used for: Feminine cultures use internet more for education and leisure (chatting) Small Power Distance cultures use internet more for business Weak Uncertainty Avoidance cultures use internet more for mail Research: de Mooij, 2004

2. Entrepreneurship European database on % self-employed in 23 countries (excl. agriculture), Varied from Greece18.6% to Finland 5.7% Correlated positively with Uncertainty Avoidance Especially with UA component: dissatisfaction with life and with democracy For 12 EU countries, economic factors explained 32% of variance. Adding cultural factors: 64% Self-employment arises out of dissatisfaction Wennekers, Noorderhaven, Thurik & Hofstede, 2002

3. Business goals “Goals of successful business persons in your country” As perceived by evening MBA students with full-time day jobs 21 groups, 16 universities, 15 countries, period List of 15 possible goals Clustering of universities and countries based on their answers Country scores correlated with PDI, UAI, IDV, LTO, GNP/capita Research: Hofstede et al, 2002

Business goals: examples of country differences 1 relatively most important ascribed goals in USA in UK and NZ Growth of the businessThis year’s profits This year’profitsStaying within the law Personal wealthResponsib. tds employees PowerContinuity of the business Staying within the lawPatriotism, national prideRespecting ethical norms

Business goals: examples of country differences 2 relatively most important ascribed goals Hong Kong, Hawaii (As)in China Profits 10 years from nowRespecting ethical norms Creating something newPatriotism, national pride Game and gambling spirit Honor, face, reputation Growth of the businessPower Honour, face, reputationResponsib. tds society Personal wealth Profits 10 years from now

4. Culture and Human Rights HR Index 1992 based on 1948 Universal Declaration Regression on wealth (GNP/cap) plus culture indices If we want more respect for Human Rights we should combat povertyAcross 52 countries: only wealth explains differences (50%) If we want more respect for Human Rights we should combat poverty

Human Rights Index 27 poor countries: still only poverty explains differences (38%) 25 wealthy countries: individualism explains differences (53%) “Universal” declaration of human rights is based on individualist values

5. Perceived corruption An annual Corruption Perception Index (CPI), including almost all countries in the world, is composed by Transparency International of Berlin and published on Internet. It is based on data from business, media and diplomats Globally, the CPI is primarily a matter of national poverty, not of culture (poor countries are perceived as more corrupt)

When the analysis is limited to wealthy countries, corruption perception differences no longer depend on wealth, but on culture. In 1984, Michael Hoppe collected scores for the first 4 culture dimensions from Western political and intellectual elites, including prominent politicians, based on their own values. 76% of the CPI differences among 18 Western countries in 2002 could be predicted from their elites’ self-scored Power Distance in Sources: Hoppe,Salzburg Seminar; own research Perceived corruption

“ Power tends to corrupt, and absolute power corrupts absolutely ” (Lord Acton, 1890)

General conclusion from culture studies There is no such thing as a universal economic or psychological rationality NATIONALITY constrains RATIONALITY

Student-level book, 2005 Academic book, 2001