Uncertainty Avoidance in 10 minutes Geert Hofstede January 2015

Origin of the term “uncertainty avoidance” One of the key concepts in a “behavioral theory of the firm” published in 1963 by U.S. management experts Richard Cyert and James March, applied to the level of organizations In the 1970s, borrowed by Hofstede for describing differences between national societies

Uncertainty avoidance as a societal culture dimension Extent to which the members of a culture feel threatened by ambiguous or unknown situations Not to be confused with risk avoidance; members of an uncertainty avoiding culture take risks as long as they believe they know them 3

Uncertainty Avoiding societies The uncertainty inherent in life is a threat that must be fought High stress and anxiety Aggression and emotions may sometimes be vented What is different, is dangerous Need for rules, even if not practical and/or not practised Formalization Adoption of innovations slow Staying in the same job Xenophobia Uncertainty Accepting societies Uncertainty is normal, life is accepted as it comes Low stress and anxiety Aggression and emotions should be controlled What is different, is curious Fewer rules, which may be broken if necessary Deregulation Adoption of innovations fast Changing jobs easily Tolerance

How is societal uncertainty avoidance measured? There is no absolute standard for uncertainty avoidance What we can measure is differences between national societies The position of societies relative to each other is expressed in an Uncertainty Avoidance Index score (UAI) UAI values have been plotted on a scale from 0 to 100; scores close to 0 stand for weaker, scores close to 100 for stronger uncertainty avoidance societies

Some Uncertainty Avoidance Index scores, out of 76 High 95 Russia 92 Japan 86 France 82 Mexico 75 Italy 68 Arab ctrs 65 Germany Low 53 Netherlands 51 Australia 46 U.S.A. 40 India 35 Britain 30 China 23 Denmark

Some examples of what these UAI scores correlate with Uncertainty Avoiding societies Higher speed limits on motorways More alcoholism Carrying ID card compulsory Fewer nurses per doctor In wealthy countries, more corruption perceived Consumers buy more pure and clean products In advertising, more “experts” Uncertainty Accepting societies Lower speed limits on motorways Less alcoholism Carrying identity card optional More nurses per doctor In wealthy countries, less corruption perceived Consumers buy more ready- made convenience products In advertising, more humor

SMALLER PD, WEAKER UA LARGER PD, WEAKER UA SMALLER PD, STRONGER UALARGER PD, STRONGER UA NORDIC CTRS ANGLO CTRS, USA NETHERLANDS GERMAN SPK CTRS BALTIC STATES HUNGARY CHINA INDIA FRANCE, LATIN CTRS RUSSIA, SE EUROPE JAPAN, KOREA Uncertainty Avoidance versus Power Distance: implicit organization models in people’s minds market machine family pyramid

Don’t the UAI scores change over time ? The scores reflect values transferred from parents to children; these values rarely change after adulthood Research by Sjoerd Beugelsdijk comparing answers to the same questions by two successive generations 30 years apart showed no worldwide shift and no changes in the position of countries Data periodically collected since 1935 suggest that in high UAI societies, national stress levels oscillated with a wave length of years, associated with wars and economic crises However, this did not change the rank orders on which the UAI scores were based