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

ValuesParents

Concept LadderM

alle

abil

ity

BeliefsPeers, Heroes

AttitudesRelationshipsOpinions

ExperienceKnowledge

ExperienceBehavior

Reality

Per

sona

l Def

init

ion

Symbols

Heroes

Rituals

Hofstede’s View of Culture

Values

Practices

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:

Age+Wealth=?

How OLD are you?

How Much Money are you worth?

Age and Worth are closely related, so much so that if you know one, you can estimate the other…

Age+Wealth=ONE Dimension

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

In other words, there is only ONE dimension called “agewealth” that captures most of the information about both.

The Four Dimensions

• 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 LowMalaysia 104 Austria 11Guatemala 95 Israel 13Panama 95 Denmark 18Philippines 94 New Zealand 22Mexico 81 Ireland 28Arab Countries 80 UK 35

Uncertainty Avoidance

• How a culture handles risk and uncertainty(US=46; ZA=49; Thailand=64)

High LowGreece 112 Singapore 8Portugal 104 Jamaica 13Guatemala 101 Denmark 23Uruguay 100 Sweden 29Belgium 94 Hong Kong 29Japan 92 UK 35

Masculinity

How a culture handles assertiveness vs. modesty (US=62; ZA=63; Thailand=34)

High LowJapan 95 Sweden 5Austria 79 Norway 8Venezuela 73 Netherlands 14Italy 70 Denmark 16Switzerland 70 Costa Rica 21Mexico 69 Yugoslavia 21

Individualism

How a culture handles the individual vs. the group (US=91; ZA=65; Thailand=20)

High LowUSA 91 Guatemala 6Australia 90 Equador 8UK 89 Panama 11Canada 80 Venezuela 12Netherlands 80 Colombia 13New Zealand 79 Indonesia 14

Israel SE Asia, Latin America

Singapore, Jamaica Japan

Nordic Countries Japan

Latin America, SE Asia UK US

Power-Distance

Uncertainty Avoidance

Masculinity

Individualism

Low High

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)