Culture and Management A Precis of Geert Hofstede’s Ideas about Culture and Organizations Culture’s Consequences: International Differences in Work-Related Values, Beverly Hills, CA: Sage Publications, 1980. Cultures and Organizations: Software of the Mind. London: McGraw-Hill, 1991.

Agenda Why Culture and Management? Hofstede’s Method The Four Dimensions Later Refinements Critique

Why Culture and Management? Managers are humans and exist in cultures They make decisions, have rituals, heroes, and use and understand symbols. Hence they must be influenced by something other than mere instinct or biology

“Culture” Patterns of thinking, feeling and acting Mental software, “Software of the Mind.” Source is social environments, almost certainly from childhood Culture is learned, not inherited

Concept Ladder Behavior Personal Definition Knowledge Opinions Reality Personal Definition Knowledge Experience Malleability Opinions Experience Attitudes Relationships Beliefs Peers, Heroes Values Parents

Hofstede’s View of Culture Symbols Practices Heroes Rituals Values

Hofstede’s Question What are the components of culture, a small set of dimensions or characteristics, that enable us to classify culture-in-the-large (at a national level)? And do nations differ and can they be clustered into culturally-similar nations? What he didn’t ask: Can we capture culture in a small set of dimensions? Is culture stable? Is it a characteristic of individuals? Do people enact culture or have it set on them?

Hofstede’s Method Late 60s, questionnaires were distributed to thousands of IBM employees worldwide. They answered the questions about work modes, methods, and meanings on desirable and desired situations and characteristics The results were subjected to factor analysis. Questions were based on prior work on culture by Inkeles and Levinson (a sociologist and psychologist)

Factor Analysis Goal is to reduce, statistically, the number of dimensions it takes to describe a phenomenon completely while losing as little information as possible. The following example shows how factor analysis would reduce what looks like a two dimensional distribution to only one dimension:

How Much Money are you worth? Age+Wealth=? Age and Worth are closely related, so much so that if you know one, you can estimate the other… How Much Money are you worth? How OLD are you?

Age+Wealth=ONE Dimension In other words, there is only ONE dimension called “agewealth” that captures most of the information about both. The red lines indicate the errors that using one dimension brings about. The longer the sum of these lines, the less well one dimension captures these two dimensions

The Four Dimensions And a fifth was added later… Power-Distance Uncertainty Avoidance Masculinity Individualism And a fifth was added later… Temporal Orientation

Interpreting the Dimensions Range is generally 0 to 100, although some countries were surveyed later and hence ended up with scores > 100* Mean value is 50; consider the standard deviation to be about 15, so the bulk of countries are between 35 and 65. Hofstede was more interested in ranks rather than ratings; he later grouped countries in several dimensions…

Power-Distance How a culture handles notions of equality and power (US=40; ZA=49; Thailand=64) High Low Malaysia 104 Austria 11 Guatemala 95 Israel 13 Panama 95 Denmark 18 Philippines 94 New Zealand 22 Mexico 81 Ireland 28 Arab Countries 80 UK 35

Uncertainty Avoidance How a culture handles risk and uncertainty(US=46; ZA=49; Thailand=64) High Low Greece 112 Singapore 8 Portugal 104 Jamaica 13 Guatemala 101 Denmark 23 Uruguay 100 Sweden 29 Belgium 94 Hong Kong 29 Japan 92 UK 35

Masculinity How a culture handles assertiveness vs. modesty (US=62; ZA=63; Thailand=34) High Low Japan 95 Sweden 5 Austria 79 Norway 8 Venezuela 73 Netherlands 14 Italy 70 Denmark 16 Switzerland 70 Costa Rica 21 Mexico 69 Yugoslavia 21

Individualism How a culture handles the individual vs. the group (US=91; ZA=65; Thailand=20) High Low USA 91 Guatemala 6 Australia 90 Equador 8 UK 89 Panama 11 Canada 80 Venezuela 12 Netherlands 80 Colombia 13 New Zealand 79 Indonesia 14

Latin America, SE Asia UK US Power-Distance Uncertainty Avoidance Masculinity Individualism Israel SE Asia, Latin America Singapore, Jamaica Japan Nordic Countries Japan Latin America, SE Asia UK US High Low

Extensions Later Hofstede added temporal orientation basically, how a culture treats time. Currently Hofstede’s four (or five) dimensions are the basis for almost all organizational and national business culture studies.

Critique Is the conceptualization valid? Is the measurement technique valid? Is the measurement technique reliable? Can individual measures tell us anything about a culture at large? Does the culture at large tell us much about individual beliefs and behavior? Is it politically correct to characterize large groups with small numbers of descriptors? Isn’t this the basis of bias and prejudice? Shouldn’t we treat people as individuals?

Some Interesting Questions Aren’t managers’ perceptions shaped as much by what others perceive as what they perceive? Aren’t managers’ expressions of their perceptions shaped by what they think others expect of them? What does this mean for multinationals and NGOs with expatriate management and for global outsourcers with global workforces?

Beyond Hofstede Low Uncertainty Avoidance High Uncertainty Avoidance Low Power Distance Market (US) Machine (Germany) High Power Distance Family (India) Pyramid (Mexico)