Hofstede Goes Regional In Search Commerce Essay

Published:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

The Euregion Meuse-Rhine was founded to fosterthe economic development in by strenghtening the cross-border business within this region of borders. However, reality shows that the cross border business within this region between South-Limburg in the Netherlands, Belgian Limburg and their neighbouring part of North Rhine-Westphalia in Germanyhas hardly increased. Earlier research about cross-border business suggests that cultural differences often hamper business development.

In this study an attempt is made to measure the extent to which different dimensions of cultural differences occur in the region. The seven dimensions that Hofstede measured in his measuring instrument VSM08 are used to determine the nature of the similarities and differences. A survey among students from Higher Vocational Education level show that on the dimensions Power Distance, Individualism, Masculinity, Uncertainty Avoidance, and Long Term-Short Term Orientation no significant differences occur. Significant differences were found on the dimension Indulgence Versus Restraint between the three regions. Significant differences were also found the dimension Monumentalism between the Dutch and German parts of the region.

Because among the future managers and entrepreneurs there are less cultural differences, possibly the future with all its developments, like social media, e-mail, and skype, will lead to a Euregion that will be one entity with one common culture and Euregional trade is not cross-border but internal.

Keywords: Euregion, Hofstede, culture, cross-border business, dimensions, cultural differences, cultural similarities, cultural proximity

Introduction

Accelerated internationalization is being observed in even the smallest and newest organizations (Obadia, 2008). Publications from very different regions in the world point at cross-border business barriers related to cultural differences with regard to aspects like personal characteristics, business values, legal systems, language (dis)similarities (among many others: (Adler & Graham, 1989; Allen Fish, 1999; Alan Fish, Bhanugopan, & Cogin, 2008; Limaye & Victor, 1991; Stephens & Greer, 1995; Sutcliffe, 1998). Given this trend toward more globalization it is quite understandable that in 2004 the EU formalized the statute for a European Company. The aim was to enable companies to establish mergers, holdings or joint subsidiaries, while avoiding the legal and practical constraints arising from the existence of many different legal systems. This act can be seen as recognition of the increasing importance of business development across borders and as an attempt to foster such business within the European Union..

Increased insight in the roles of different cultural aspects in the development of successful cross border business initiatives can help to develop strategies to enhance cross border business. Within the EU stimulation programs have been developed and implemented to enhance doing business across regional borders. About 65 regional and 2 interregional incentive programs werestarted to make Europe and its regions more attractive places to invest and work, to improve knowledge and innovation for growth, to get more and better jobs, and to manage the territorial dimension of European cohesion policy. The Chambers of Commerce developed several trans-border cooperations. The five Chambers of Commerce in the Euregion Meuse-Rhineshare a website which helps firms by offering tools to find partners in the Euregion. These programs specifically focus on SMEs.

In spite of all these efforts doubt remains about the effectiveness of these measures ("Chambers of Commerce Euregio Meuse-Rhine," 2005). Research indicates that there is less trade within the Euregion than was anticipated given the possibilities the market offers. In a report the Chambers of Commerce Euregion Meuse-Rhine have concluded that the region has some attractive aspects, but that business development is also hampered by some obstacles. As positive aspects they point at short delivery times, good customer relations, high product quality, and goodservice provision. Obstacles were among other things system differences regarding regulations and tax, cultural and language differences, and economic differences occurring in sales prices and competition ("Chambers of Commerce Euregio Meuse-Rhine," 2005).

Culture is often mentioned as one of the difficulties in cross border business development but it hard to capture empirically the differences in which it manifests itself in a relatively small size multicultural region like the Meuse-Rhine region. Culture is a popular research theme. It is used to identify and distinguish diferent groups of people. A recurrent issue is that culture is being defined and measured in different ways. In the past decades several scholars have contributed to the conceptualization and operationalization of culture. Among them are Hofstede (1984; 1988; 2008) first 4, later 5 and recently 7 dimensions), Trompenaar & Hampden-Turner (1997) (7 dimensions), Kluckhohn & Strodbeck (1961) (7 dimensions), Burell & Morgan (1979) (3 dimensions), Lessem & Neubauer (1994) (2 dimensions), Schwartz (1994) (6 dimensions), Dülfer et al. (1994) (6 dimension), and Ingelhart (2000) (4 dimensions).

Taras (2008) compared 154 studies about culture, which were written between 1953 and 2009. The earliest and most used measurement instrument is the classification Individualism/Collectivism. This instrument was already used in 1954 by Kuhn & Parkland (1954). Other instruments were Power Distance, Uncertainty Avoidance, Masculinity, and Long Term Orientation. Table 1 includes the instruments Taras identified in the 154 studies to show how culture is measured in different ways.

PDI

IDV

MAS

UAI

LTO

IVR

Other instruments of measurements

15

68

8

12

6

4

76

Table 1: used instrument for measuring culture in research between 1953 and 2009 (PDI=Power Distance, IDV=Individualism, MAS= Masculinity, UAI=Uncertainty Avoidance Index, LTO=Long Term Orientation, IVR=Indulgence versus Restraint)

Source: Taras (2008)

Interestingly Hofstede has changed his conceptualization a few times, trying to incorporate new insights and developments. Recently Hofstede extended his list with the two dimensions Indulgence versus Restraint and Monumentalism (2008). As our research is focused on the cultural variety within the Euregion area, within which three or four, if one counts the Dutch and French entities of Belgium seperately, language and cultural communities live together, it is interesting to make a picture of the cultural differences in this regio through Hofstede's extended factors' lense. Our global assumption is that the proximity of the several different cultures in the region will correlate with explicitly perceived cultural differences. Such explicit differences have been suggested in research of the Chambers of Commerce (2005).

Purpose of the Research

In response to the question why entrepreneurs in the Euregion Rhine-Meuse do not make more efforts to develop cross-border business, many entrepreneurs answer that such business is difficult to develop because of many differences not only in regulations but also in language and culture. Are there actually significant cultural gaps between the regions in the Euregion Rhine-Meuse? Cultural proximity may increase difficulties in inter-organizational collaboration (Felbermayr & Toubal, 2010; Knoben & Oerlemans, 2006). The aim of our study is to investigate empirically the dimensions in which people's culture profiles within this region differ. To capture a description as comprehensive as possible we apply Hofstede's seven dimensions (2008)

We will use his original four dimensions, first supplemented with the dimensions Long Term Orientation, later supplemented with the dimensions Indulgence versus Restraint and Monumentalism. Hofstede introduced these two dimensions in his VSM08 (2008), a questionnaire he developed for measuring dimensions. Analogous to the introduction of the dimensions Hofstede also developed and improved a measuring instrument. We will use the latest version which refers to the seven dimensions. The data should provide the answers to the following research question and subquestions:

To what extent do the scores on the seven dimensions of Hofstede from the three regions of the Euregion Rhine-Meuse differ?

Are there significant differences within these scores?

What is the nature of these differences, regarding regions and significance?

Measuring Hofstede's seven culture factors: Theoretical Background

The Euregion Meuse-Rhine consists of parts of three countries (Germany, Belgium, Netherlands) and these parts are certainly not representative for these countries (the western part of the federal state North Rhine-Westphalia, the Flemish Province of Limburg and South Limburg in the Netherlands). It is not easy to adapt one of the given theories that fits adequately. Measuring the dimensions of culture will be done by using a questionnaire. Because of the correlation in the dimensions the questions are taken from the derived questionnaire VSM08 from Hofstede (Hofstede et al., 2008). Hofstede has developed a system of cultural dimensions to distinguish the cultures of different countries. Since 1983 he improved and enlarged his system from four to seven dimensions. In his research at IBM around 1970 he used the dimensions "Power Distance (PDI), Individualism (IDV), Masculinity Index (MAS), and the Uncertainty Avoidance Index (UAI). Long Term Orientation Index (LTO) is the opposite of Short Term Orientation.

Hofstede's dimensions have often been copied and sometimes complemented with extra dimensions. In one of these studies, the study from the Chinese Culture Connection (1987), researchers introduced the dimension Long Term Orientation, which "stands for a society which fosters virtues oriented towards future rewards, in particular adaptation, perseverance and thrift. Short Term orientation stands for a society which fosters virtues related to the past and present, in particular respect for tradition, preservation of "face", and fulfilling social obligations.". (Hofstede et al., 2008). Hofstede adopted this dimension (Hofstede & Bond, 1988) and used this as a fifth dimension. The dimensions Indulgence versus Restraint Index (IVR) and Monumentalism Index (MON) Hofstede adapted from the research of Minkov (2007), which he used in the VSM08 for the first time (Hofstede et al., 2008). Indulgence stands for a society which allows relatively free gratification of some desires and feelings, especially those that have to do with leisure, merrymaking with friends, spending, consumption and sex. Its opposite pole, Restraint, stands for a society which controls such gratification, and where people feel less able to enjoy their lives. Or put in another way: work to live versus live to work. Monumentalism Index (MON) describes the degree in which a society rewards people who are, metaphorically speaking, like monuments: proud and unchangeable. Its opposite, Self-Effacement, stands for a society which rewards humility and flexibility." (Hofstede et al., 2008).

Although one cannot compare the score of the VSM08 with Hofstede's original studies, because "comparisons of countries should be based on matched samples of respondents" (Hofstede et al., 2008) like the IBM population, one can say something about the differences in proportion between the scores of the different groupes when using the VSM08. The research should show if there is more similarity within the Euregion or if the different regions do incline to the rest of their countries, and if so, how. The expectation is that the differences between the scores on the cultural dimensions of the Euregion Meuse-Rhine are smaller than the differences between the national scores of Germany, Belgium and the Netherlands ones implied, looking at the scores of the original dimensions of Hofstede. By using the questionnaire we want to get a detailled result because if we do not know the details we can not expect to get a well-grounded insight in Business Development.

Data gathering

The following sections describe how the research questions will be answered, using the Values Survey Module 08 (VSM08) of Hofstede among inhabitants of South-Limburg (201), of North-Limburg (60), other parts of the Netherlands (22), Belgian-Limburg (33) and Nordrhein-Westfalia (50). Because the groups, that are to be compared, should be matched groups (Hofstede et al., 2008) we asked students economics from Higher Vocational Education level to fill in the questionnaire. There 183 first year students and 100 third year students of Zuyd University in South Limburg, 30 first year students and 20 third year students of the Fachhochschule Aachen in Germany and 33 first year students of Hogeschool Hasselt in Belgian Limburg). Also the average ages were taken into account. For all the regions the average ages of the respondents are between 21 and 24. Looking at the gender: the proportion between male and female students at Zuyd University was 48% against 52 %, at the Fachhochschule Aachen it was 72% against 28% and at the Hogeschool Hasselt it was 62% against 38%. North-Limburg and the other parts of the Netherlands are taken as reference groups to look if distance to the Euregion Meuse-Rhine also plays a role. The group of respondents was chosen as representatives of the future entrepreneurs. The nature of the questions is a motive. The questions leading to the scores of Long-Term Orientation, Indulgence versus Restraint, and of Monumentalism are very centred on the personal frame of mind a person is in. All the other questions are related to the professional frame of mind. The formulas of The VSM08 are composed of mean scores of the different questions. Hofstede suggests the use of a constant to get scores between 0 and 100. Since the means of the scores of the different regions are meant for comparison, the constants will not be used and negativ outcomes will occur.

Cultural Dimension

Formula

Power Distance

(PDI) = 35*(mean of question 07 - mean of question 02) + 25*(mean of question 23 - mean of question 26)

Individualism

(IDV) = 35*(m04-m01) + 35*(m09-m06)

Masculinity

(MAS) = 35*(m05-m03) + 35*(m08-m10)

Uncertainty Avoidance

(UAI) = 40*(m20 - m16) + 25*(m24 - m27)

Long Term-Short Term Orientation

(LTO) = 40*(m18-m15) + 25*(m28-m25)

Indulgence Versus Restraint

(IVR) = 35*(m12-m11) + 40*(m19-m17)

Monumentalism

(MON) = 35*(m14-m13) + 25*(m22-m21)

m(i) is the mean score for question (i)

Table 2: Formulas used to calculate scores dimensions Hofstede

Source: (Hofstede et al., 2008)

Hofstede (2009) adopted and developed all together seven dimensions to describe the different national cultures. So there are scores for the Netherlands, for Belgium and for Germany and they differ for the three countries. These scores should be a representation of the total population, so they are an average. Since the three regions of the Euregion Meuse-Rhine are not a real representation of the average population the actual scores for each region should differ from the national score. Moreover, since these regions share a rich past and because of the geographical proximity, it is to be expected that the regions, on a cultural level are not that different and so the scores are expected to be similar. But since the expected cross-border business remains behind, one can wonder if the assumption about the cultural similarity is a realistic one. This leads to the research questions, that will be measured using all 7 dimension in the five regions, including the reference regions. If there is a significant chance on differences of dimensions, it will be further analyzed within the Euregion untill an answer can be given, what differences there are, on what dimensions and between which regions within the Euregion.

5. Results

Analyzing the data from the questionnaire, applying the formulas (Table 2) Hofstede suggests, the following output is generated for the three parts of the Euregion, completed with the scores of the Netherlands and of North-Limburg as references.

Value Survey Module 08

Dimension

South-Limburg

North-Limburg

Nether-lands

Belgium

Germany

Power Distance

13.91

14.08

1.36

26.52

12.30

Individualism

44.93

38.50

42.95

18.03

28.70

Masculinity

1.39

-8.17

7.95

-13.79

0.00

Uncertainty Avoidance

-65.45

-80.17

-58.64

-55.61

-39.80

Long-Term Orientation

34.58

44.83

40.45

50.00

36.10

Indulgence versus Restraint

99.70

102.67

92.50

42.12

63.10

Monumentalism

-20.10

-52.42

-33.18

-20.00

1.10

Table 3: Score dimensions Hofstede

Source: Own research (using Value Survey Module 08)

We want to compare all the groups or regions on the seven dimensions of Hofstede. The relevant outcomes are:

Test Statisticsa,b

Score Power Index

Score Individu-alism

Score Masculi-nity

Score Uncertainty Avoidance

Score Long Term Orientation

Score Indulgence versus Restraint

Score Monumenta-lism

Chi-square

5.589

4.292

2.655

9.108

1.306

34.764

19.757

Df

4

4

4

4

4

4

4

Asymp. Sig.

.232

.368

.617

.058

.860

.000

.001

a. Kruskal Wallis Test

b. Grouping Variable: Region

Table 4: comparison of the scores of all regions

From these results we can conclude that there is little difference among the regions based on the scores on these dimensions. And the distance to the Euregion does not play a significant role in this. On the different scores on Indulgence versus Restraint (IVR) and Monumentalism (MON): with regard to the p-value with an α of 0.05 we can conclude that there is significant difference among the regions based on the scores on these dimensions. On these two scores, we want to compare the scores on the dimensions of the three regions within the Euregion (South-Limburg, Belgian Limburg and the German part). We compare the scores pair wise, using the Mann-Whitney U test, with the following outcomes: A comparison between Belgian Limburg, South-Limburg and the German part:

Test Statisticsa B-D

Test Statisticsa B-SL

Test Statisticsa D-SL

Score Indulgence versus Restraint

Score Monumen-talism

Score Indulgence versus Restraint

Score Monumen-talism

Score Indulgence versus Restraint

Score Monumentalism

Mann-Whitney U

639.500

720.500

1419.000

3019.500

3566.000

4079.500

Wilcoxon W

1200.500

1281.500

1980.000

23320.500

4841.000

24380.500

Z

-1.734

-.976

-5.286

-.826

-3.189

-2.063

Asymp. Sig. (2-tailed)

.083

.329

.000

.409

.001

.039

Table 5: comparison of the scores of the scores of Belgium (B), the German part (D) and South-Limburg (SL)

This leads to the conclusion that 0n the different scores on Indulgence versus Restraint (IVR): there is little difference between Belgian Limburg and the German part and there is a significant difference between South Limburg and the other regions, Belgian Limburg and the German part, which means that the people in South Limburg incline to work to live, whereas the people in the other parts incline to live to work. In addition the idea to live to work is slightly stronger in Belgian Limburg than in the German part.

On the different scores on Monumentalism (MON): there is little difference between Belgian Limburg and the German part and between Belgian Limburg and South Limburg and there is a significant difference between South Limburg and the German part. This leads to the conclusion that the people in the German part value people that serve as an example to others more than the inhabitants of the other parts.

Implications

Overall we can conclude that cultural differences, based on the seven dimensions of Hofstede, are not significant with the exception of Indulgence versus Restraint (IVR) between South Limburg and the other regions and of Monumentalism (MON) between the German part and South Limburg. This means that the assumed cultural differences between the three regions within the Euregion are in fact hardly present, although in South Limburg people are working to live and people that serve as an example are less valued in comparison to the other regions. This indicates a less loyal position to the organization by people in South Limburg than in the other parts. And so the argument that cultural differences prevent cross-border trade within the Euregion Meuse-Rhine is not a valid argument. This has policy and scientific implications.

From a policy point of view, it is of the upmost importance that the regions in the Euregion should work and trade together since the expectations for the future of this region are far from positive if the entrepreneurs do not expand their outlet (Chambers of Commerce Euregio Meuse-Rhine, 2005). They should grow together to improve the possibilities of cooperation. Inside their countries all the regions are rather far away from the political centre, and the data concerning economic and demographic development doesn't show sign of a real positive movement (EIS, 2007, 2008). This is especially important for the central region, South Limburg. For the entrepreneurs in this part it is even more important to have partners outside their own country, since the population in this region is dramatically increasing, combined with the problem of a sharp rise in the ageing population and a decline of the younger population. But figures show a different picture (EIS, 2007, 2008). That culture is often mentioned as a main obstacle is a surprise since all the regions were at any time part of a same country. The research shows that it is only partly true. Remarkable is, that the two dimensions that Hofstede adopted last are just the two dimensions that show the divergence and that the original dimensions from Hofstede, that most researchers, that used Hofstede theory, applied do not show this divergence .

The scientific implications are that in research about culture researchers often describe culture and cultural similarities of people in geographic areas, like Northwest Europe, North America, Asia, and of countries. Sometimes they study cross-border culture between two countries. In those studies they seek a way to describe the differences between the cultures in a structured way using single or multiple dimensions. Less often culture is described as a characteristic property of a region within a country. This research not only looks at a culture of a region within a country, but of three regions within three countries and a possibility to find corresponding scores on cultural dimensions instead of differences. The results, namely that the differences between the scores on the dimensions are, with most of the dimensions, not as significant as was to be expected, looking at the actual rate of cross-border trade and the arguments, leads to the assumption that here we have to deal with a kind of reversed cultural, geographical proximity. Since the geographical distance is so small, combined with a common history and development, even the smallest cultural difference is visible and overdrawn and transformed into a barrier, whereas in fact there should not be a barrier at all. In this particular context there are reasons to doubt the proximity assumption. Instead of underlining the cultural differences between the neighbouring countries and even objecting to them, which is a common phenomenan (Felbermayr & Toubal, 2010) there are hardly any differences and it even seems to be, that the regions share a common euregional culture. Research among entrepreneurs (Chambers of Commerce Euregio Meuse-Rhine. (2005) shows that cultural differences hinder the cross-border business. Since this research is conducted among future managers and entrepreneurs this might have a positive influence on the cross-border business development.

Reflection

The picture that is drawn here of a Euregion Rhine-Meuse with limited cultural differences shows a promising development. The respondents were future managers, for whom borders have different dimensions as the present managers. The respondents grew up in a European Union without borders and they use communication means without limitations like social media, e-mail, skype and so on, where linguistic differences can be by-passed by using English as a Lingia Franca. When Hofstede executed his original research the world was a different one: at the borders you always had to deal with customs and communication was not easy. You had to write a letter in a difficult foreign language and telephone did not make it easier. Possibly the future with all its developments will lead to a Euregion that will be one entity with one common culture and Euregional trade is not cross-border but internal.

For future research it could be interesting to compare the data of the four border regions we gathered in this study with analogous data from regions in Germany, Belgium and the Netherlands that are far away from the border. This comparison could give an insight in the effect of geographical proximity or the influence of the modern ways of communication of which is said that they make the world into a smaller place.

Writing Services

Essay Writing
Service

Find out how the very best essay writing service can help you accomplish more and achieve higher marks today.

Assignment Writing Service

From complicated assignments to tricky tasks, our experts can tackle virtually any question thrown at them.

Dissertation Writing Service

A dissertation (also known as a thesis or research project) is probably the most important piece of work for any student! From full dissertations to individual chapters, we’re on hand to support you.

Coursework Writing Service

Our expert qualified writers can help you get your coursework right first time, every time.

Dissertation Proposal Service

The first step to completing a dissertation is to create a proposal that talks about what you wish to do. Our experts can design suitable methodologies - perfect to help you get started with a dissertation.

Report Writing
Service

Reports for any audience. Perfectly structured, professionally written, and tailored to suit your exact requirements.

Essay Skeleton Answer Service

If you’re just looking for some help to get started on an essay, our outline service provides you with a perfect essay plan.

Marking & Proofreading Service

Not sure if your work is hitting the mark? Struggling to get feedback from your lecturer? Our premium marking service was created just for you - get the feedback you deserve now.

Exam Revision
Service

Exams can be one of the most stressful experiences you’ll ever have! Revision is key, and we’re here to help. With custom created revision notes and exam answers, you’ll never feel underprepared again.