BUS7049 Cross Cultural Management : Misuse of National Culture Dimensi

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.

Summarise the background and content of the Hofstede model; think about and refer to the commonly-held criticisms of the model, particularly in the context of the modern world; what do you think of the criticisms you identify? What are the responses to such criticisms? Refer to and use examples from other models and research (such as Trompenaars, Hall, the World Values Survey (WVS), the GLOBE research).Section 2:At the level of individual organisations, identify example(s) of business expansion perhaps by organic growth, or by merger, acquisition [M&A] or joint-venture [JV] – that are explained by the national cultural characteristics of the company (or companies) involved. What were they trying to do? How did it go? What were the results? Explain if and how success or failure is explained by characteristics of national and corporate culture. What is the evidence?

What personal adaptations might senior executives, managers or technicians have to make to be more successful when working across cultures or in cross-cultural teams? How can an understanding of the dimensions of national culture help people to be more effective? Many international companies use competencies as a model for individual behaviour do they help?

Introduction:

The report analyses the six dimensions of Hofstede’s cultural dimension theory and its popular criticism. Hofstede model has helped many organisations to develop their trade successfully in foreign countries. The simple and comparative model has assisted many businesses to enter the international market. However, the scholars have presented concrete view of the flaws presented in Hofstede model that differentiates the cultures.

This analysis identifies The Fred Hollows Foundation, an Australia based NGO working in China and discusses the foundation’s strategies and its national cultural characteristics. It elaborates the foundation’s actions and methods that helped it to operate successfully for 20 years in the market of Hong Kong. It also raises some issues that create problems in the company’s policy making and recommends some aspects of personal adaptations that can help the foundation to overcome the challenges and achieve its goal.

The report encompasses the Hofstede theory and its applications, its limitations. It discusses the strategies adopted by The Fred Hollows Foundation to operate successfully in Chinese market and needed adaptations to work successfully in China.

Hofstede's cultural dimension theory:

This theory by Greet Hofstede describes the impact of the culture of the society on the behaviours and values of the members by using a framework obtained from the factor analysis.

This structure of  cross-cultural communication was developed to examine the outcome of a global survey of the employee values from 1967 to 1973c by IBM. Hofstede's cultural dimension theory suggested four dimensions or perspectives. along these dimensions, the cultural values are analysed (Beugelsdijk, Maseland and Hoorn 2015). These are: uncertainty avoidance, individualism-collectivism, power distance or power of social hierarchy and task orientation vs person-orientation popularly known as masculinity-femininity. The other two dimensions were added later by Hofstede. These are- long term orientation and self-restraint vs indulgence. The theory has established a dominant research tradition in the cross-cultural psychology and widely used by the researchers as well as consultants in international business along with communication.  This theory has been applied in the fields of international management, cross-cultural communication and psychology.

Dimensions of cultures:

Power distance: this index is explained as the area in which the less strengthened members of any institution or organization expect and accept of equal distribution of power. In this perspective, the power and inequality are seen from the point of view of the followers or from the lower level (Brewer and Venaik 2012). Higher degree indicates that the hierarchy has been clearly established as well as executed without any confusion in the society. Lower degree of the index defines that members are not satisfied with the authority and want an equal division of power in the organization.

Uncertainty avoidance: this index is explained to define the tolerance of society for ambiguity. In this dimension the member averts or embrace anything unexpected or distant for their status quo. Higher degree of the Uncertainty avoidance index reveals that the society choose for strict behavioural codes and guidelines that rely on the absolute or widely accepted truth. Lower degree reveals greater acceptance of different ideology. The society imposes lesser amount of regulations therefore; the ambience is more expansive.

Collectivism versus individualism: this dimension discovers the degree of coherence in the society. Collectivism in a society defines tight bond or integrated relationship among the members of the society. These relationships integrate extended families as well as everybody in groups (de Mooij 2013). These groups are fastening with unquestionable loyalty and assist each other in crisis or at the time of conflict with another groups. Its counterpart, individualism, defines a society where there is an absence of closely tied relationships and relates only an individual with his immediate family.

Masculinity versus femininity: masculinity is a preference of the society where the members seek for achievement, assertiveness, heroism and rewards to scale success. On the contrary, the femininity prefers for modesty, collaboration and caring for the quality of life and weak members. In both these respective societies women indicate different values.  In the masculine societies the women are more competitive and vehement though notable less emphatic then male members. In this society the members recognize the male female gaps and this dimension is viewed to be a taboo (Fang 2012). In the feminine society both the men and the women share modest values and male female gap is much less visible.

Long-term orientation vs. short-term orientation: this perspective defines the society’s connection with the past and its impact on present as well as future challenges. Lower degree indicates past conventions are obeyed and honoured and reliability is valued. Whereas the societies that believe in long-term orientation view the adaptation of logical and circumstantial problem solving method as necessary.  The short term oriented view prevents a society to be economically developed and long term orientation helps in continuation of development.

Indulgence vs. restraint: this index measures the happiness or satisfaction of the members. The indulgent societies are relatively free and allow more gratification or fulfilment of the basic needs as well as natural desires for enjoying life. Whereas the restraint society regulates the members’ natural needs and control them by strict norms of society (Mazanec et al. 2015). In this society, the members allow other factors to control their own happiness and emotions. On the contrary, the indulgent societies control their life themselves.

Value dimensions in different cultures: Hofstede's cultural dimensions allow comparative research among the international cultures.

• In the power distance index, the Asian, Arabian, African and Latin countries show higher degree in compared to Germanic and Anglo countries which score low.
• Masculinity index is very high in Japan, Anglo and Germanic countries and Latin as well as Nordic countries score low, tend to be more feminine.
• Long term orientation is displayed in East Asian countries, moderate in west and east Europe and very low in the Muslim world, African, Anglo and Latin countries.
• Indulgence index is higher in Latin America, Nordic and Anglo countries. Restrain is found in the Muslim and east Asian countries.

Importance of cross cultural awareness:

There are clear evidences that every society or group is different from each other but they are believed to be same as human being are same all over world. This is because the cultural awareness is not extensive (Garcia-Gavilanes, Quercia and Jaimes 2013). Therefore, cultural differences are minimised and often misunderstood. Hofstede's cultural dimension theory focusses on these variations and can be utilized to understand other cultures, how the members behave towards other cultural groups and what are to be expected.

Practical application:

Hofstede's cultural dimension theory helps in better understanding of the international business. It assumes that promotion of cultural sensitivity helps people in completing work more efficiently by interacting with people from Another culture and accomplish the transaction successfully.

International communication: Communication is a primary concern in business. The people who work multinational companies or engaged in daily interactions with people from different cultural groups, need to be aware of the cultural differences. The reason is, some behavioural trait and attitudes can be acceptable or natural in one culture but may not be accepted therefore seen offensive to the other one (Hofstede, Jonker and Verwaart 2012).  

International negotiation: the communication style, goals and expectations varies for culture to culture. Therefore, proper understanding of the attitudes and communication style will increase success amount in negotiation and reduce conflicts. For example, the procedure of negotiation in the western countries are different from the Middle Eastern countries (Jobs and Gilfoil 2012). The European style of shaking hands reflects the mutual agreement and understanding whereas in the Middle East, much negotiations take place leading into the 'agreement', signified by hand-shakes. Here, the shaking hands is a sign of beginning a serious negotiation.

International management: Hofstede’s cultural dimension model provide guidelines to define the approached that are culturally acceptable to the corporate organizations. These considerations are true to the cross-cultural management and leadership because the business decisions are usually taken according to the custom and values of the respective country. Mangers when operate in any international countries, provide their employees training to increase the cross cultural awareness and train them recognise cultural differences, develop module business practices along with the protocols of that country (Ahlstrom et al. 2014). 

International marketing: the dimensions provide a useful framework for international marketing and defines the national values from the business context as well as general. This model has its application on advertising strategies, global branding including consumer behaviour (Mazanec et al. 2015). In order to adapt the products including the services to the local consumers, the companies must recognise the specificity of the country’s market. For example, for a company that trades on mobile phones, needs to display the benefits of collective experiences when market their products in China but can successfully market the mobile phones in the USA only by displaying the individual utility.

Limitations of the model:

The model provided by Greet Hofstede has been generally accepted by the researchers of business culture. To them it provides a comprehensive substructure of national cultural values but the validity and limitations are also extensively criticized.

Choice of national level:

To the critics, except these six dimensions, there are other factors or perspectives from which cultural values can be discussed or assessed. These factors are overlooked due to the nature of the formation of these dimensions. There are discrepancies in sampling also that avert the survey to be authoritative on societies, organizations and nations because the interviews are only based on the views of a few engineering and sales personnel (Minkov and Blagoev 2012). Despite the fact that nation indices were used to measure the wealth, population and growth but engineers of a country are among privileged section therefore cannot be a true representative of the nation.

As a matter of fact, this criticism directly questions the validity of the evidences because they were drawn involving particularly middle-class workers from a single company. However, Hofstede has responded that involving one international company eliminates the impact of different management practices and different corporate policies of different employers (Minkov and Hofstede 2012). Therefore, only explain national culture instead of cultural differences. Hall on the other had argued that organisational, national and work cultures are not dependant. There are wide variety of dimensions that affect a culture including human nature and non-cultural elements. These are affected by the economic conditions, social structures and institutional influences (Liu, Wang and Wilkinson 2016). Excluding the corporate policies as well as management practices. According to Trompenaars' model of national culture Hofstede has neglected the importance and impression of community. Therefore, his assumptions based on the survey of IBM staffs cannot be reasonable. 

Choice of Individual level:

Hofstede’s model supposes a domestic population to be a homogeneous whole. It ignores the presence of variety of ethnic units in the nation. This cultural dimensions assists to differentiate among the countries and cultures but do not distinguish among the members of societies. The indexes cannot be an interpreter of determiners of individuals. The Globe research has found that China has more than 50 ethnic groups and each of these groups have different customs, language and beliefs. Therefore, to consider that there is only a single culture in a nation will lead to misconceptions. there can be subcultures that are hard to differentiate form the chief one due to political, historical and economic factors.

 Simplicity of the dimensions:

Hofstede’s model is simple and incapable to differential among the diverse cultures in a nation. For example, the training procedure, possibility of total usage of abilities and skills in collectivism and satisfactory working conditions are not enough to derive accurate score of a country (Minkov, Blagoev and Hofstede 2013). However, this idea has been defended by Williamson who finds a beautiful parsimony in Hofstede’s model that displays success within a functionalist paradigm. however, Mc Sweeney has objected that the model explains a balance between providence of powerful explanation and powerful communication.

Bilateral model

Hofstede’s dimension uses a bilateral model that has aroused debates on its relevancy. The researchers say that cultures can influence when they interact among each other. The model only displays the high and low level of power distance dimension. This restricts the capability to measure therefore, does not reveal the changes in various cultures. This is the reason why the Hofstede model cannot be used widely in anthropology and social sciences. Mc Sweeney points out that major contentions of this model does not equate culture with nations. Hence, the culture of a broad range of country cannot be generalised and only can be justified if human societies become isolated from each other.

Categorization issues:

The researchers have also shown concerns regarding the labelling aspects of Hofstede’ dimensions. The masculinity and femininity index does not magnify the sexual domination and therefore creates confusion (Rienties and Tempelaar 2013). The model explains that the masculine behaviours such as belligerence, achievement and power preferred to the feature of the feminine behaviours like quality of life, personal relationships and modesty. Adler says that these indicators must be changed to career success or collaboration instead of sexist indicators.

Methodology:

Hofstede’s method of data collection displays that he used the survey to peruse the six dimensions. The researchers argue that he used only one method to measure and explain different cultures. This is not reliable as well as unrealistic. Mc Sweeney agreed that the collected data from the interview questionnaires were very much limited hence unrealistic to determine as well as measure the national cultural discrepancy.

Inconsistence of Research Outcome:

According to Hofstede, his style of cross cultural analysis is appropriate because he has reckoned cultural differences but not produced any absolute touchstone (Shafritz, Ott and Jang 2015). For example, Hofstede has mentioned that individualism and wealth are interrelated and wealthier states tend to be more individualistic. Such as, wealthier countries like UK and USA are individualists but Japan though wealthier, falls on collectivist category.

According to Hofstede, Japanese organisations have high power distance but some of their firms’ base on equality and focus on the individual development of the employees. These are the reasons why the researchers see western biasness in the model’s research in eastern part of Asia therefore find ambiguity in the research.

The research lacks the data from the third world countries for the political sensitivity of that time. The research has been affected widely due to the war memories on the people’s mind. For the political reason, it does not collect data from the socialist countries that has altered Hofstede’s research reliability.

Context of the modern world: 

According to the sociologists, Modern world is an age of technology and globalization. A drastic change can be seen in the tempo of progress than it was in Hofstede’s time. To Schumpeter, globalisation means creative destruction. People now use advance technologies, e-communication has minimized the distance (Taras, Steel and Kirkman 2012). Therefore, the communication with other countries has become easier and cross cultural issues have lost its priority.

Hofstede in response to this criticism has stated that cross-cultural outcomes have been produced in centuries (Bock et al. 2012) Other researchers have supported this response by stating that the culture of a country do not change in short period. Therefore, cultural values are steady and consistent. However, Hofstede’s model has helped many organizations to enter and develop their business in the international markets (Venaik and Brewer 2013). Due to the fact that globalization has mixed up the cultures, the model needs to be amended from time to time.

The Fred Hollows Foundation

The Fred Hollows Foundation is an eye health NGO from Australia working in China and other developing countries of Asia. The company has been working for almost 20 years to restore the eyesight of people around the globe. The company started working in 1992 (Hollows.org 2017). It focuses on providing training to the surgeons for carrying out the eye operations in the developing countries and supplying donor support to continue this vital responsibility.

The Foundation’s Director of Public Affairs Nick Martin says that for the company initially it was difficult to start engaging with the regional government and China’s ministry of Health. The company has been working in a partnership with the NGO named The China Disabled Persons’ Federation to create awareness about the causes of blindness and its prevention. The company has influenced the government for dedicating funds and programs to strengthen the country’s health system instead of only subsidizing the free surgeries. The company’s broadening focus is raising fund and increasing engagement in china. Unlike other companies working in Hong Kong, The Fred Hollows Foundation do not only dedicate in eye health programs.

Company’s strategy:

• The company has a clear proposition
• Market research
• They use their Australian reputation as well as connection
• Adapted the regional culture
• Prepared for cross cultural challenges
• Taking advantages of new trends in China

Clear proposition:

The company has a simple and clear proposition that is to restore sight of people. Therefore, it has become an advantage for the company to receive funds and donations for its authentic responsibility (Chen et al. 2014). In building the brand of the foundation in China was crucial because in Australia the donors were well-known with the legacy of Professor Hollows with which China was unfamiliar. The company’s single proposition not only reveals its authenticity but a great transparency that helped the foundation reach its potential donors.

Market research:

The foundation has done enough market research to know its position as well as the requirements of the market in China. It focuses on the VISION 2020 goals in which the foundation has been playing active role along with the regional health bureaus as well as the hospitals of China (Thomas 2017). The research reveals that sustainable and affordable high quality eyesight care services and sight-saving interventions are rare in the country. Therefore, the company strategies a compelling and compassionate message for the consumers as well as the donors (Kleinman and Lin 2013).

Australian reputation: 

The company has been capable to utilize advantage of its native connections to assuage the way into Chinese market (Ardichvili et al. 2012) The company already has a strong connection with Australian government, a major beneficiary of its activities. Recently it has also established a link with diplomatic missions of Australia to Asia to acquire best support for achieving its targets (McLuhan 2015). One of the reasons why the company has chosen its base in China is that 100,000 Australians stay there. These Australians know some dynamics therefore help the foundation to navigate the challenges. The company has created people-to-people exchange between Australia and China which has helped it as well as its partners to gain credibility (Gao 2013). The foundation gains financial backing from Goodman Property. This company demonstrates its stakeholders that it has a strong CSR corporate social responsibility partner. This has helped the foundation to record success and enhance Chinese connections. 

Cross cultural challenges: 

The company has done a lot of research work before moving into the Hong Kong market. To the company, the most important thing was understanding the local NGOs, representative of the work culture of the country. China already has a vibrant and active civil society therefore, no company can just move into the country and start working (Shao, Feng and Liu 2012). The Fred Hollows Foundation has market tested its messaging and took help from a Hong Kong based branding agency. This ensured the foundation that all its materials are culturally appropriate for the Chinese market. The foundation has also adopted traditional regional name that translates as conclusive action to reinstate eyesight. This is one of the crucial step to engage unfamiliar audiences with the reputation of Professor Hollows.

The foundation wants to ensure to establish its Hong Kong office to have skilled staffs building local expertise instead of fly in fly out operation (Hubbard and Williams 2017). The company recruits the staffs who has experience of working in NGO sector, possessing philanthropic behaviour and most importantly understand local culture (Cavusgil et al. 2014). To the company’s strategies, cultural awareness is a continuous learning process that are beneficial for the key staffs (Jiang 2013). They encourage the employees to take part in programs like Asialink Leaders which help them to share their expertise more widely. It is important for them to manage the local employees effectively and culturally appropriately. It is the power distance dimension that allows the employees to understand their role in the hierarchy. The company has a simple flat structure that give employees status as well as access to talk when necessary. The Hong Kong office has been treated like a start-up, where the employees are encouraged to act differently (Liu and Almor 2016).  They are allowed to be creative, dynamic and flexible. The foundation’s internal practices neither constrain the workers nor distract them from the core business.

Initially the foundation needed an expert regional advice on the registration requirements as well as their business operations which was costly for a foreign company operating in China. The international banking system also was too difficult to navigate. Therefore, the foundation tried to raise funds closer to their source countries that helped it to involve in linking to a major banking partner.

New trends in China:

The company has taken advantage of the growing awareness in health sector and philanthropy at personal and governmental level. This growth has created concerns among the local organizations and government therefore they are seeking expertise actively to incorporate into own work. Due to the government’s new plans and policies, China’s market has proved to be diverse and growing for medical work. Their perspectives are changing with economic development and they are not asking for westerners teach them the process but seeking for actual experts so that they can learn from them and incorporate expertise in their own organisations.

Needed adaptations: 

Smiley Wang has led the development of a comprehensive rural eye care model project. He has contributed his knowledge as well as experiences to end the avoidable blindness in China. The possible changes that the senior executive bring in the foundation is localising value propositions. China is still a developing country that has inexperienced customers, less reputed brands, undercapitalized organisations and unique regional business traditions and customs. The quality here defines the local needs. Localization allows the companies to capture values through the products they offer to their consumers and partners.

In Australian culture, the ideal manager sets strategies for the organizations and empowers his subordinates to execute but the foundation must follow the Chinese idea of boss as benevolent father. The Chinese work culture believes in maintaining discipline and attending details. The femininity index is high in Chinese organizations therefore; the foundation must be caring for personal welfare of its employees. This will help in getting quick results are caring out the critical missions.

Operating in China for an expatriate company is quite difficult for everything has a political connotation in this country. The managers must acquire a grasp of social and political trends and produce a nonmarket strategy (Liu and Woywode 2013). This will help in developing a network to intersect customers, the government, business partners including public stakeholders.

In China management is a contact sport therefore the managers are expected to pay personal attention to the employees. European traits of management often fail in China because the senior executives succumb to the time pressure (Warner 2014). The executives may have excellent track records but do not attend the employees’ observations. This can be a threat to the foundation therefore the company must work towards common targets achieved through mutual respect.

Conclusion:

Therefore, from the above discussion it can be concluded that Greet Hofstede’s model of national culture has helped many organizations to operate in different countries. Some scholars oppose this model as they find risk in applying Hofstede model. They find this model unreliable and invalid in modern world. The report has discussed the cross border business development strategies of The Fred Hollows Foundation an Australian company operating in China. It concludes with some personal adaptations that will help the company to be more successful in working with cross cultural teams.

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