How Is Cultural Distance Defined Business Essay

Culture shapes demand. Marketers have to identify different Cultures of the target markets (if they have sub-cultures) , in order to successfully market a product. However, the problem is that almost every region differs in their culture. The target market may be a particular region or regions within the same country, different states or countries in case of international marketing. Every Culture is different from the other.

The reason that culture has such a profound effect on marketing is that the culture of a particular target market affects the business relationships and the type of communication required for the marketing mix. The marketers have to choose the right approach and the pefect marketing plan for each market individually, depending on its culture among the other factors.There can not be a unified approach for all the culturally diverse markets.

However, even though there are differences in the cultures across the world, there are similarities too. The similarities can be in the form of food [e.g. Mc Donald’s(Levitt,1980)], music (people from different cultures may listen to the same type of music), clothing, etc. The similarities in cultures is rising due to reasons such as use of internet, television, people travelling to other countries and experiencing their culture and implementing it in their own life, the exposure to fashion across other cultures, etc.). ‘Marketing managers often use similarities among markets as a decision rule for when it is appropriate and effective to standardize international marketing activities. ([22] Karande et al. , 2006) (cited in International Marketing Review. London: 2008. Vol. 25, Iss. 2; pg. 183)

As cultures have differences as well as similarities, it becomes very difficult for marketers to create marketing plans which can be applied globally or across cultures. Culture has been notoriously difficult to conceptualize and scale (Boyacigiller, Kleinberg,

Phillips and Sackmann, 1996

Cultural distance has been defined by Geert Hofstede as “the collective programming of the mind distinguishing the members of one group or category of people from another”.(2001)

The word category in this definition refers to nations, regions within or across nations, ethnicities, religions, occupations, organizations, or genders, as described by Geert-hofstede(no date).The beliefs and values of individuals are influenced by factors such as their sorrounding environment, family background, religion, friends,etc. Which in turn frames their culture. ‘Few constructs have gained broader acceptance in the international business literature than cultural distance’, Oded Shenkar(cited in cultural distance revisited,pg 519)

Another definition of cultural distance is, ‘the concept of cultural distance has its origins in early international trade theory as an explanation for why trade tended to be concentrated in foreign markets most similar to domestic markets’, Mueller (1996, pg 109)

The most important stage after defining cultural distance is to measure it and understand the differences between them. There have been several models to measure cultural distance like the Hofstede model, the GLOBE project and the Schwartz value model.

The model created by Geert Hofstede was one of the most important researsch works in this field. The attitude survey of 116,000 employees of the multinational firm IBM, having susidiaries in around 40 countries, was taken into consideration from 1967 and 1973 Mc Sweeney(human relations,pg 91, January 2002). After examination, he reached the conclusion that there are five dimensions on the basis of which countries differ culturally: POWER DISTANCE,INDIVIDUALISM VS COLLECTIVISM,MASCULINITY VS FEMININITY,UNCERTAINTY AVOIDENCE,CONFUCIAN DYNAMISM (WHICH WAS LATER DERIVED). According to him, the first four dimensions could be used to successfully determine cultural distances between countries.

Geert Hofstede’s dimensions of culture have been used in determining the differences in behaviour of certain business people of the USA and Brazil and to ascertain whether successful business can take place between them. The following chart describes the application and results:

source: Hsu O’Keefe et al (International Journal of Social Economics. Bradford: 2004. Vol. 31, Iss. 5/6; pg. 614)

The Hofstede model has been criticised on many grounds. Hofstede’s framework is based more upon the notion of national cultures and giving less or no importance to sub-cultures or meta-cultures within countries. ‘Hofstede supposes that in IBM there is a singular, uniform and monopolistic organizational culture’ (cf. parker,2000; Risberg, 1999). It may not prove to be practical as the number of employees of IBM in different countries is different alongwith their age, sex and position in the company’s hierarchy.The vast amount of literature which is argued upon for the recognition of multiple, dissenting, emergent, organic, counter, plural, resisting, incomplete, contradictory, cultures in organization is ignored (cf. Jelinek et al, 1983; smircich 1983 spender, 1998;Mc Sweeney cited human relations, volume. 55, no.1, january 2002 pg 98) Also the age of the data in Hofstede model is old (the survey was conducted between in 1967 to 1973),Mc Sweeney(human relation,pg 91, January 2002). According to Lewin (1948), Hofstede’s research is not ‘action research’, as it does not involve various steps such as fact finding, planning, action steps, evaluation, amended plans, and further action until planned change has been achieved.

‘We may think about the national culture, we may believe in national culture, but Hofstede has not demonstrated that national culture is how we think’ Mc Sweeney(human relations, pg 116). However, even McSweeney’s critique’s have been questioned by many as he questions whether culture is the reason for the differences of behaviour between people from different countries, Williamson(2002)

However, Geert Hofstede’s dimensions of measuring cross-culture distances is used widely for measuring cross-cultural distance and is considered to be one of the most ‘influential’ approaches (Lee and Carter, pg 129).

Another approach comes from Shalom Schwartz (1992, 1994; see also Dahl, 2004), cited in Lee and Carter (2nd edition, published 2009; pg no.127) who uses the Schwartz value inventory (SVI). Schwartz seperated the individual values from the cultural values and also differentiated between value types and value dimensions.

Schwartz used the SVI to create the frame work by asking 60,000 people from 63 countries to assess 57 values as the principles which guide their life and their behaviour in various aspects Lee and Carter (2009). The SVI was used to identify ten individual value types : power, achievement, stimulation, self-direction, universalism, benevolence, tradition, conformity and security and seven value types (motivational principles): conservatism, intellectual autonomy, affective autonomy, hierarchy, mastery, egalitarian commitment and harmony.

Schwatrz’s framework has been praised for being contemporary, theoritically sound, and involving sophisticated and systematic sampling techniques (cited International Marketing Review. London: 2008. Vol. 25, Iss. 2; pg. 183).

Agreeing with Jan-Benedict E. M. Steenkamp, the seven cultural domains developed by Schwartz have similarities across diiferent cultures of the globe and tends to have a broader level of application as compared to Hofstede’s framework. Even though Hofstede’s model has a wider application in the field of international marketing, considering its strong theoritical foundations it has great potential for internatinal marketing research. (2001, pg. 30).

Although Hofstede’s and Schwartz’s frameworks are similar in the respect that they focus on the ethics when comparing, that values are at the core of cultures and that culture is contained within countries, the Schwartz model is considered much more complex than the Hofstede model. According to De Mooij (2005, pg 55), the reason for this is that the relationship between the cultural dimensions and the individual values is complex and also that the Schwartz model has less consistent results and rather a limited coverage area and thus, has limited applicability in marketing.

The third framework that we will discuss is the GLOBE MODEL (global leadership and organizational effectiveness). The GLOBE project was initialised by Robert J. House in 1991. It involved collection of data by collaborators from approximately 17,000 managers in 951 non-multinational organizations belonging to the food-processing indusrty, financial services and telecommunication services, from 62 societies.’The GLOBE study is one of four major cross-cultural research projects carried out in the 1990s’, Geert hofstede (Journal of International Business Studies 2006, pg 883).

The GLOBE project is based on the Hofstede framework for cross-cultural analysis and it also contains many citations. Even the preface of the GLOBE book is ‘We have a very adequate dataset to replicate Hofstede’s (1980) landmark study and extend that study to test hypotheses relevant to relationships among societal-level variables, organizational practices, and leader attributes and behavior'(House et al,2004),cited in (Geert Hofstede, Journal of International Business Studies 2006, pg883).

The GLOBE project research resulted into nine dimensions for cross-cultural analysis which were: Power distance, uncertainty avoidance, institutional collectivism, in-group collectivism, assertiveness, gender egalitarianism, future orientation, humane orientation and performance orientation. The GLOBE distinguished between cultural practices and cultural values and also between organizational culture and societal culture. (Geet Hofstede, 2006).

The Hofstede model, Schwartz model and the GLOBE project are widely used to determine cross-cultural distance, however, there are similarities as well as differences between the above stated models when compared with each other. We shall now compare these frameworks in the following part of the essay.

One of the first estimates for finding out the level of differences between the GLOBE project and the Schwartz framework for measuring cultural values was by fischer (in press), who asked students from 10 countries to rate the 57 value types in the Schwartz value survey on the ‘people in my country’ point of view, which is contrary to the usual procedure. The ratings were first averaged with Schwartz’s value types and then aggregated on the national level. A comparison was then made between these means and the previously published means for Schwartz’s seven value types. Fischer found out that the corelations were very high for the value types of embeddedness affective autonomy and emotional expression, however, Fischer predicted that the corelations would be absent or very low for the remaining values. He concluded that the measures for individual values and societal values will depend on the values that are sampled.

Fischer’s values, however, were not similar when compared to the GLOBE project. Fischer had asked the respondents about the values of others in the society, whereas, the GLOBE asked respondents how others in the society should behave. He found out that respondents percieve that the societal values differ from their individual values. He also found out that the GLOBE respondents feel that others in the society should change their current practices.

Fischer concluded that the GLOBE value dimensions could be helpful in studying intergroup and international realtions. (cited Peter Smit, Journal of International Business Studies, pg 917)

Siew Imm Ng et al.( 2006) used Kogut and Singh’s formula to determine if the two most common frameworks of cultural distance (Geert Hofstede’s and Shalom Schwartz’s frameworks) have congruency, by calculating their cultural distance scores for 23 countries.

The similarity between the Hofstede and Schwartz model is that both of them found greater cultural distance between countries than within countries, which suggested that these models could be used to compare countries.Siew Imm Ng et al.( 2006, pg 167).

Schwartz (1994) reported that Hofstede’s individualism dimension had positive corelation with affective autonomy, uncertainty avoidance with harmony and masculinity with mastery . Smith et al.(2002) also found some over laps im hoefstede’s and Schwartz models. He stated that hofstede’s individualism positively corelated with Schwartz autonomy embeddedness and egalitarianism with hierarchy. He also found Hofstede’s uncertainty avoidance to have a positive corelation with Schwartz egalitarianism-hierarchy.

Siew imm ng. et al. (2006) reported that, even though there is some over lap between the Hofstede and Schwartz models, there are many differences too which need more research and investigation.

Agreeing with the authors ( Siew imm ng. et al.) According to the examinations based on the Kogut and Singh’s formula, both models were found not to be congruent and that Schwartz model was found to be more suitable atleast in the context of internal trade.

As a conclusion, it is believed that even though Geert Hofstede’s model has a wide spread application for measuring cultural distance, the GLOBE model and the Schwartz model have used more recent data for creation of the framework and may have more application in certain fields like that of international trade or for market surveys and calculation of differences between surveys of nations, which can be very important and helpful to marketers.

Now, we shall examine the impact of cultural distance on advertising and how it influences marketing decisions across cultures.