An introduction to business cultures
An introduction to business cultures

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An introduction to business cultures

1 National cultures

1.1 Hofstede's five Cultural Dimensions

A series of perspectives that we might use to achieve a different insight into business was introduced by Morgan (1986) in his book entitled Images of an Organization. One of these was the business as a culture, a type of micro-society where people work and ‘live’ together on a daily basis, with certain rules and understandings about what is acceptable and what is not. The idea of a business having a culture was developed from the work of Hofstede on national cultures (1980). His research focused on ways of measuring national culture and how these ‘measures’ might work differently in different contexts. The cultural values that are important in a national culture, he suggested, could be reflected in the way businesses within that country are operated and organised.

Hofstede's five dimensions (he developed four in 1980, then added a fifth in 1991) were:

Power distance This concerns the extent to which less powerful members of organisations within a country expect and accept that power is distributed unequally. National cultures that demonstrated what Hofstede called a ‘low power distance’ are ones in which there is a concern to minimise inequalities. Hofstede included Sweden and New Zealand as examples of this. In general, Hofstede found that Latin American and Latin European (France and Spain) countries had higher power distance scores. The less powerful in these societies tend to look to those with power to make decisions, and inequalities within society are more acceptable. This is represented by a tendency for the centralisation of power and the subordination of those with less power within businesses.

Individualism/collectivism In an individualistic society, people are expected to look after themselves and their families. In the case of business this is reflected in, for example, employment contracts based on hiring and firing. Two examples of countries with high scores on this dimension were Australia and Canada. In more collective societies, people are more concerned for others and the culture is based around more cohesive groups, such as the family, which offer protection in exchange for loyalty. This tendency is reflected in businesses as well as elsewhere in society. Hofstede cited Ecuador and Indonesia as examples of more collective societies.

Masculinity/femininity This refers to the degree to which gender roles are distinct and adhered to within a society. In high femininity societies, social gender roles overlap, with both men and women valuing ‘feminine’ qualities such as modesty, intuition and quality of life above the more traditionally ‘masculine’ qualities of aggression and competition. Hofstede's research suggested that Denmark and the Netherlands were more feminine cultures, while many other Western countries exhibited more masculine values. The USA was ranked fifteenth out of 53 nations on this masculinity score. Japan, the UK and West Germany also scored highly on masculine values.

Uncertainty avoidance This concerns the extent to which the members of a society feel threatened by uncertain and unknown situations. Hofstede suggested that Jamaica and Singapore were relatively low uncertainty avoidance cultures, where precision and punctuality are less important, innovation is encouraged and people are motivated by being esteemed by, or belonging to, others above other things. High uncertainty avoidance scores mean that there is a fear of ambiguous situations, a preference for being busy and being precise and punctual. Relatively high scores on this dimension were found for Latin American and Latin European countries, Japan and South Korea.

Confucian/dynamism This refers to the extent to which long-termism or short-termism appears to be the dominant approach. Long-termism stresses perseverance and being sparing with resources. Short-termism, in Hofstede's analysis, involves a greater emphasis on quick results. Hofstede found that the USA tended towards short-termism, while the Netherlands was the most long-termist European nation, ranked tenth out of 23 countries surveyed.

These differences between national cultures are based in deep-rooted values and so are largely implicit rather than openly acknowledged. They create all sorts of problems for employees in multinational companies who go to work abroad, or for representatives doing business with suppliers or customers in other countries. We can use the simple activity below to explore some of these differences.

Activity 1

Timing: Allow 10 minutes for this activity

Purpose: to consider business practices in different cultural contexts.

Task: consider each item in the following list. In your country's culture, is this behaviour considered to be acceptable or not?

  • Paying an agent for an introduction to a business opportunity.

  • Paying a government agent for bureaucratic procedures to be bypassed or speeded up.

  • Making a copy of a product that you have seen at an international trade fair.

  • Paying people to find loopholes in tax laws.

  • Giving gifts to the purchasing manager in a large business organisation.

  • Charging high interest rates for unsecured loans to individuals.

Discussion

If you and I came from different cultures, we would give different answers here. You might think some of these behaviours were inappropriate or unethical, but I might think you were wrong. In either of our countries, these business behaviours could be against the law, but, as a visitor, we might not know that, nor realise that we were offending the people with whom we were attempting to do business.

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