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National culture is an influential part of an organization because members of these organizations must be aware of the societal and cultural difference.  If they are able to accomplish this successfully an organization will be able to obtain their certain objectives.  The definition of national culture is "the shared values, beliefs, knowledge, and general patterns of behavior that characterize a country's citizens"(OB,35).  There are several ways and frameworks to measure culture.  However, we will be explaining the most influential. This framework was offered by Geert Hofstede. (Below)

Hofstede produced his model through the data he collected when studying IBM employees.  From 1967 to 1973 he gathered data on cross-cultural differences and the implications between 100,000 employees over 64 countries.

Hofstede's model consists of five dimensions, originally only having four, but a fifth was added to include Asian countries. These five dimensions are as follows:

• Individualism
• Materialism
• Short-Term Orientation
• Power Distance
• Uncertainty Avoidance

This model can be used in organizations around the world for communication, negotiation, management, and marketing.  It has become and integral piece of cross-cultural communication.
This is not only an important model, but it has inspired others to formulate more models as well.
The purpose of this web page is to convey how the model works, by first explaining each individual step, then look at the application of the model in real life examples.  There will then be a short quiz to test users on their comprehension of the topic.

Comparing Countries

Importance in Business

*Sources

Individualism

Individualism is the "emphasis on individual self-interests"(OB,35), and in American culture, organizations push this quite strongly. This sense of individualism creates a workplace where employees are encouraged to act in their own self-interests.  As a result, people in these organizations are going to try to achieve for personal gain.  A great way to create productivity is a piece-rate system, which allows employers to give promotions and salary on the individuals performances.

https://commons.wikimedia.org/wiki/File:Ten_Differences_Between_Collectivist_and_Individualist_Societies.png

Other countries focus on a more collectivist way of conducting their organization.  In collectivism, organizations hold the interests of the group over the interests of the individual.  This system focuses on employees looking out for other employees, which build a sense of loyalty to the group.  An example of a country that emphasizes collectivism would be Japan, where people stay together for overtime and promotions are given in regards to seniority.  A societies dimensions are usually determined through an I or we mentality, which can be seen in the U.S. and Japan.  

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Materialism

Materialism is what describes how much a culture values physical, material possessions. Cultures that value materialism put a high emphasize on achievement and the monetary value of jobs. Individuals in these cultures are more motivated by immediate, extrinsic rewards. These rewards could be could be a raise in salary, a bonus, and moving up on the corporate ladder. This fuels a competitive environment where everyone has to watch their own back because of the fight for resources and rewards.

The view that is opposite of materialism is that of cultures who place a high value on individuals. The strive for a high quality of life, but not through the means of wealth and possessions.These cultures are focused on relationships, the overall well being of a person, and achieving goals through cooperation rather than competition. Individuals in non-materialistic cultures are not motivated by monetary gains such as financial rewards, but rather look for a job that is intrinsically motivating by being meaningful.

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Time Orientation

Time Orientation is the term Hofstede uses in regards to the different types of decision making and their effects on the future of the individual or company. Different cultures and countries have different orientations compared to time and the future. There are those who are short-term oriented and others who are long-term oriented. 

   Short-term orientation is focused on living in the present. Members of cultures that are focused on how decisions are in the short-term, prefer immediate rewards rather than other types of delayed gratification. They also tend make decisions that are best in the moment but ignore any negative affects later down the road. Examples of these countries are Pakistan, the Philippians, the United Kingdom, and the United States. 

   On the other hand, countries, such as Japan and China, have long-term orientation. This means that they have a greater concern for the future than the immediate “quick fix.” They look to see how possible decision may effect future generations. They are okay with being patient and making sacrifices in the short-term, if it would lead to a better outcome in the future, even if that means for the generation that comes after them.

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Power Distance vs. Challenge Authority

Power distance is a term that describes how people belonging to a specific culture view power relationships - superior-subordinate relationships - between people including the degree that people not in power accept that power is spread unequally.

Individuals in cultures demonstrating a high power distance are very deferential to figures of authority and generally accept an unequal distribution of power. This is normally in governments of totalitarian and with a very distinct class system. The example of this would be in a business the manager would be the main person in charge/manager  had all the ideas and choose everything that would happen for the company and no one would ever try to disrespect him or even voice a disagreement. 

 Individuals in cultures demonstrating a low power distance readily question authority and expect to participate in decisions that affect them. This is normally in governments with more democratic procedures. An example of this in a business would be no real manager in charge for example Zappos, where there is no real person in charge everyone is on the same level. 

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Uncertainty Avoidance

As the name suggests, this stage of the model helps managers have a better understanding as to how certain countries handle risk. The way that the Hofsted Model gauges this is with what is known as an uncertainty avoidance score. Each country has an uncertainty avoidance score and depending on how high or low that score is, determines that country's stance on risk. To give an example of this, Countries such as China and Sweden have a low uncertainty avoidance score and thus are more accepting to risk, while other countries such as Greece or Poland have a high uncertainty avoidance score, and thus are less accepting to risk. More detailed info can be found at this site: http://www.clearlycultural.com/geert-hofstede-cultural-dimensions/uncertainty-avoidance-index/

You can learn more about uncertainty avoidance from the video link below:

http://study.com/academy/lesson/hofstedes-uncertainty-avoidance-index-definition-example-cultures.html

Comparing Countries

Power Distance Index (PDI) In America everyone is so different, everyone believes in equality and no one person is better than the rest and everyone can speak there mind. In China it is very rigged, you have to be very careful who you talk to; there is a manager and they are in charge. They are the top person where as in America more people can put in their input on the subject. 
Individualism (IDV) In America everyone is so different and you can be anyone you want to be. Everyone comes from different backgrounds and different cultures. In China outsiders are not so welcomed.  
Masculinity (MAS) In America there has not been a women president and about 15% of the top executives in the workplace are women. In China the same thing is relevant, there has been no women as president. http://www.bloomberg.com/news/articles/2012-11-20/women-in-china-leadership-fewer-than-under-mao-chart-of-the-day This article describes the difference between China and the United States women in power in the government since Richard Nixon was President.


Uncertainty Avoidance Index (UAI)  In America we can be very worried about what we do not know. In America people like stability in their life with job security, owning a home and even having a certain amount of kids in their family. In China as well they want a lot of stability that they do not even go against anything so that they can keep their job and keep the life they need with nothing surprising them. 

Long-Term Orientation (LTO)America is very short termed oriented, as the chart shows, China is at the opposite end of the spectrum. In China, organizations are very conscious of how their decisions will affect future generations, even three or four generations down the road. They are focus on long and sustainable solutions rather than quick fixes. America on the other hand, is short term oriented. Business will look for quick advantages that may not last long or be good in the long run. They are focused a lot on the here and now and will sometime over look the affects that can come from decisions.

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Importance in Business

Now that we have broken down the 5 elements of Hofsted's Model, lets take a closer look at why this model is so important for business implementation:

   As expressed through the different dimensions, the one key aspect within this model is the understanding of culture. Culture can be defined as "the beliefs, customs, arts, etc., of a particular society, group, place, or time" (www.merriam-webster.com). There is no denying that the impact of globalization on business tends to lead towards international impact of some kind. For businesses to thrive in the new cultural setting of interest, they need to gain a better understanding of how their company's inclusion will affect that culture. If used effectively and efficiently this can lead to great success for the company in its endeavors. To better understand this, let's take a look at some real-life examples of the Hofsted model's impact.

Here is an interesting example of how a business has implemented the Hofsted model for practical application: A study was done on airline pilots where the various dimensions of the Hofsted model were used as a way of better understanding how those pilots act in various situations. Through this method they determined that Uncertainty avoidance and power distance were the main dimensions that provided the best results (geert-hofstede.com).


To learn more about the Hofsted Model's impact and affect on business, you can check out this link: http://www.halogensoftware.com/blog/the-business-of-culture-how-culture-affects-management-around-the-world

Sources

http://geert-hofstede.com/applications.html
http://www.halogensoftware.com/blog/the-business-of-culture-how-culture-affects-management-around-the-world
http://www.merriam-webster.com/dictionary/culture

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Quiz

1. What step of the system emphasises the individual self-interests?

• Collectivism
• Individualism
• Uncertainty-Avoidance
• Power Distance

2.  What part of the model focuses on immediate and extrinsic rewards?

• Individualism 
• Materialism 
• Short-Term Orientation
• Power Distance

3.  What sub-category of Time Orientation has a greater concern for the future?

• Long-Term Orientation
• Power Distance
• Uncertainty-Avoidance
• Short-Term Orientation

4.  An individual that shows readiness to question authority and expect to participate in decisions that affect them are involved in...

• Low Power Distance
• Materialism
• High Power Distance
• Long-Term Orientation

5.  The part of Hofstede's Model that deals with handling risk is...

• Collectivism
• Short-Term Orientation
• Uncertainty-Avoidance
• High Power Distance

*Answers

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Quiz Answers

The correct answer to question # 1 was Individualism.

The correct answer to question # 2 was Materialism.

The correct answer to question # 3 was Long-Term Orientation.

The correct answer to question # 4 was Low Power Distance.

The correct answer to question # 5 was Uncertainty Avoidance.

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Sources

Works Cited

Hofstede, Geert H. Culture's Consequences: Comparing Values, Behaviors, Institutions, and Organizations across Nations. Thousand Oaks, CA: Sage Publications, 2001. Print.

Hofstede, Geert H., Gert Jan Hofstede, and Michael Minkov. Cultures and Organizations: Software of the Mind: Intercultural Cooperation and Its Importance for Survival. Maidenhead: McGraw-Hill, 2010. Print.

Hofstede, Geert H. Masculinity and Femininity: The Taboo Dimension of National Cultures. Thousand Oaks, CA: Sage Publications, 1998. Print.

Minkov, Michael. Cross-cultural Analysis: The Science and Art of Comparing the World's Modern Societies and Their Cultures. Thousand Oaks, CA: SAGE, 2012. Print.

"National Culture." Dimensions. N.p., n.d. Web. 20 Nov. 2015.

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