Comparing frameworks of cultural dimensions

Introduction:

To do business in different countries the managing corporate has to work in a multicultural environment. The international marketing has to manage two different sources of cultural diversity.

1) External diversity.

2) Internal diversity.

The managers of the marketing department has to face numerous obvious and less obvious effects according to the culture on buying and consumption of product (who, what, where, how, why), cultural traits and generally doing business with the partners of other countries (suppliers, distributors, others). This is an external diversity.

Marketing managers who are working in different subsidiaries of multinational companies have to cooperate with the teams working in different countries on the key issues. E.g. strategic decision making to implementation and execution of marketing programmes.(designing, advertising campaigns and conducting local marketing research). (Ref: http://books.google.co.uk/books?id=nZVMX_T8D8YC&printsec=frontcover&dq=cross+cultural+marketing&source=bl&ots=PuX059gHcl&sig=TZBfmLB3Ck_rpA7l-Dd2WCtjlr4&hl=en&ei=ROV2S9LHM4f80wStn_myCQ&sa=X&oi=book_result&ct=result&resnum=3&ved=0CBMQ6AEwAg#v=onepage&q=&f=false).

Trompenaar’s 7 Cultural demiensions.

1. Universalism Vs Particularism- What is important- rules or relationships?
2. Comminitarianism Vs Individualism- Do we function in a group or as an individual?
3. Neutral Vs Emotional- Do we display our emotions?
4. Diffuse Vs Specific cultures- How far do we get involved?
5. Achievement Vs Ascription- Do we have to prove ourselves to receive status or is it given to us.
6. Internal Vs-External
7. Human-Nature relationship

Universalism Vs Particularism: Universalism means finding out the general rules that relates to the situation, When no rules fit, it finds the best rule.

Particularism means finding exceptions, when no rule fits, it tries to find out a rule on its own rather that forcing to use the existing rule.Companies from different culture when negotiating with the joint venture partner in China must recognize that the relationships matters and also takes time to develop. They form a base of trust which is very much necessary to carry business in different countries with different culture. In a particularist culture, contracts are only rough guideline or approximation.

Communitarianism Vs Individualism- Communitarianism relates to the right or a group or a society. According to the Communitarianism individualism is selfish and short-sighted.

Individualism refers to the right of an individual. It lets every person to succeed or fail on their own.Companies from individualistic cultures such as USA will face problems in implementing new methods of individual incentives such as pay on performance and individual assessments in subsidiaries in communitarian cultures such as Germany and Japan.

Neutral Vs Emotional-The individuals from highly neutral and highly affective culture teams should have careful management and proper inter-cultural understanding in Multinational teams. Otherwise the neutral person would be considered as ice-cold by the affective person and they will be considered out of control by the neutral people.

Specific Vs Diffuse: There are managers who criticize their subordinates a lot directly and openly without taking into consideration that the their criticism is their personal matter. E.g. Managers of Denmark, in the context of diffuse culture such as Russia, this may enact a loss which is unacceptable.

Achievement Vs Ascription: Achieved status mean gaining a status on performance. It menas that every individual in the organisation gains and loses its status every single day and other approaches are types of failure.

Ascribes status means gaining status through different means. E.g. Seniority. It seems to be that the status is acquired by right and not by performance, which may lack experience, judgement. When appointing a younger manager in a traditional culture such as India to run the business will bring a lot of difficulty, rather than promoting younger people within the business on basis of their performance. (Ref: “Riding the Waves of Culture” 1997. Trompenaars and Hampden-Turner identify seven value orientations.)

Internal Vs External- Internal means about thinking in the mind and making the personal judgement “in our heads” It assumes that thinking is the most powerful tool and that is the best way to approach. External means carrying out a survey from the market and seeking the data in outer world. It assumes that we live in the “real world” and that is the place where should we look for to get the exact data and can get the decisions from. (Ref: http://changingminds.org/explanations/culture/trompenaars_culture.htm).

“Culture is the collective programming of the human mind that distinguishes the members of one human group from those of another. Culture in this sense is a system of collectively held values.”- GeertHofstede.(Ref: http://changingminds.org/explanations/culture/what_is_culture.htm).

According to Hofstede who works for the international business have to keep in mind the cultures of different people in different countries where they carry on their business. Everyone has a common human instinct “deep inside” that all humans are the same-but they are actually not. Therefore if we carry on business into some other country and make decisions based on how we operate in our home country can result into very bad decisions. Hofstede’s research gives us explanation about the cultures of different countries so that we can be more effective when doing business or interacting with the people of other countries. If properly understood and implemented, it should reduce the level of frustration, anxiety and concern. He explains his theory in five different cultural dimensions. (Ref: http://www.geert-hofstede.com/)

Hofstedes five cultural dimensions are

1. Power distance index.
2. Individualism
3. Masculinity
4. Uncertainty avoidance index
5. Long term orientation

Power Distance Index- PDI means the members of the organisation and the institutions who has less powers accept and expect that the power is not distributed equally among the members. This defines inequality from the bottom levels and not from the top levels. It shows that the level of inequality is acknowledged by the followers as much as leaders. Power and inequality are obviously an essential part of the society and anybody with an experience in an international business would be having knowledge about the societies that they are not equal, but some are more unequal than others.

Individualism- It means one side versus the opposite side, collectivism that is a degree to which an individual is integrated into a group. On the individuals side they have to look after themselves and their immediate family. On the collective side people since birth are integrated into strong group like extended families (with uncles, aunts and grandparents). Hence the word collectivism is referred to a group and not a state.

Masculinity-versus the opposite, femininity. It refers to the distribution of different roles between genders. It is another fundamental issue for any society in which the solutions are found. The studies reveal that 1) women’s value differ less among the societies than men’s values. 2) Men’s values in different countries contain dimensions from assertive, competitive and completely different than women’s values. The women on the other side have modest and caring dimensions. The assertive pole is called “Masculine” and the caring and modest pole is called “Feminine”.

Uncertainty Avoidance Index- It refers to the society’s uncertainty and inequality. It refers to truth. It refers to how the members of the organisation feel, whether comfortable or uncomfortable in unstructured situation. Unstructured situations are unknown, surprising or different than usual. The uncertainty avoiding cultures try to minimize the these situations by strict laws and rules, safety measures and belief in absolute Truth.

Long term Orientation-versus short term orientation. A questionnaire was designed by Chinese scholars which was said to deal with the Virtue regardless of Truth and on behalf of that the fifth dimension was found in a study among students from 23 countries around the world. The values of Long term Orientation are thrift and perseverance and values for Short Term Orientation are respect for tradition, fulfilling social obligations and protecting ones face. Both the negative and positive rated values are found in the teaching of the most influential Chinese philosopher who lived around 500 B.C named “Confucius”. The dimension also applies to the countries without Confucian heritage. (Ref: http://www.geert-hofstede.com/)

COMPARISON OF HOFSTEDE AND TROMPENAARS THEORY

Out of the Seven dimensions of Hofstede and Trompenaars, two dimensions are closely related to each other. Trompenaars Communitarianism/ndividualism is closely related to Hofstedes Collectivism and Individualism. Trompenaars Achievement/ Ascription how the status is linked with the Hofstedes power distance index. If one of them accepts it then it would be nature rather than achievement and that reflects a greater willingness to accept power distances.   The Universalism/Particularism describing to prefer more on rules rather than trusting relationships can also be compared to the Hofstedes Uncertainty avoidance dimension on one side and collectivists/individualist to some extent.

The Hofstede theory is grouped into different types of cultural values: strong, high, medium-high, medium, low medium, small, low. Some of the Hofstedes findings are :

New Zealand- New Zealand is a country where the they believe in individualistic, and they does not avoid uncertainty. They believe in inequality and traditional male values. This refers to the individual decision making and with flat organisation structure.

Whereas Japan is a collective society and they believe highly in avoiding uncertainty and also on masculinity. They believe in power distance. They have a clear distinctions in terms of power. Jobs are provided on the basis of sex.

There are commentators who do not agree with the Hofstede theory as there are man y cultural differences. This theory refers to industrialisation and modern technologies are breaking down cultural, social and economic differences across the world at a fast pace rather than differences in the cultural, social and economical difference across the world. (Ref- http://www.marcbowles.com/courses/adv_dip/module11/chapter2/amc11_ch2_seven1.htm).

An example of the Swedish company to start their subsidiary in Australia. In Sweden people believe in equality and staying together. They always belive in that and that is the reason they live in groups whereas in Australia people are brought up in a different culture. They believe in independency and does believes in inequality. Sweden is low-power, feminine and neutral culture. The time aspect in not flexible communicated in Sweden but it is in Australia. Sweden is a team oriented, open and they have equal communication style, on the other hand Australians use more hierarchical assertive and unilateral style. (Ref-http://www.essays.se/essay/9caeabdcff/).

The disadvantages of the Trompenaars are they meet practical needs rather than academic needs.

Examples of the theories with the Companies.

We will take a company in India where the Hofstede theory could be applied. The Larsen and Tubro is a company where we can apply this theory and it will give a comple information about ow the company works and whether this theory is supporting the company or not. This company is a world leading cement manufacturing company where the Hofstede findings could be applied. As per Hofsted theory it is true that these kind of companies does have the power / distance. There is also and inequality within the company. The labourers with or without power have no right to do anything and they have to accept what is told to them by the higher management and they have no right to interfere in their decisions. The There is no individualism in the company, instead people work in huge teams and performs well. Masculanity plays an important role in this company as the staff in Indian culture is appointed as per the Company and more preferred is males rather than females.This company completely runs on the rules setup by the higher management, due to which the labours are uncertain in some situation where they cannot do anything without the permission from the higer authority. Indian tradition and values are for long term rather than compared to the western cultures. According to Hofsted people in United Kingdom and United States of America has low Long term Orientation. Hence you can pretty much expect anything from this culture. Japan and India are weak in respect to individualism according to trompenaar and Hofstede both, where as Denmark, UK and USA are completely individualistic according to Trompenaar but not through Hofstede. According to the Trompenaars findings, the countries which used to be communists countries in the past such as Russia, Hungary, Czech Republic are individualistic. He has further extended his research on examining corporate cultures by its nationality. According to Trompenaar North America and UK are low in terms so Power Distance, than France and Spain whic has hierarchical term and are high in terms of Power distance.

Trompenaar theory with an example of a company.

We can take an example of an Indian company as Call centres in India. In a call centre there is particularism where every employee of the company has to work together and they prepare a kind of environment where the employees like to work. The Indian people

Examples of the theories with Countries.

According to Hofstede China is ranking very high in long term orientation, very low in individualism, high in power distance and uncertainty avoidance. These are very accurate cultural dimensions. The hofstedes long term orientation dimension refers to overcoming obstacles over the time and that is what Chinese culture believes in.Building strong, reliable and lasting relationship is a key of success in China. There should be a certain amount of trust before making a decision. It may take be three to for times more time consuming to finish a business deal compared to cultural standards. Low individualism is also an important key to success in China. They stay more close to groups such as family, work, team etc. They have a collectivist attitude compared to individualism. Chinese maintains loyalty by staying with the same partners and not deteriorating the relationships. So when doing business with others, its a good idea to find a partner with whom you can maintain the relationship for longer time. The power distance remains high in company or in society in China. Its difficult to grow in Chinese companies so one should be aware of the larger hierarchy gap there. (Ref- http://ezinearticles.com/?Doing-Chinese-Business-Based-On-Hofstede&id=797967).

Trompenaars Dimension in India.

Indian always believe on the circumstances on how the ideas and the practices should be applied. Indians believe that the envirom and the surrounding controls them and so they accept he fate to conform it. In Indian everyone likes to be a part of a group and believes in team success. They themselves refer them to groups because they have strong family values and caste system there. Indians are always neutral and are allowed to show assertiveness. They are never violent, that is what thought to Indians. Both public and private space are similar in India, so the individuals guard about their public space carefully otherwise entry into public space will give a permission to allow into private space as well. Friendships are accepted in India. Most Indians value ascriptions because of the caste system reliability. Age Level and degrees are the caste level indicators of status. Friendship are most important than kinship than expertise.