The Differences Of Individualism And Collectivism Commerce Essay

Published: Last Edited:

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

Individualism and collectivism characterise opposite ends of a broad continuum.According to Hofstede 'Individualism pertains to societies in which the ties between individuals are loose: everyone is expected to look after himself or herself and his or her immediate family'. Therefore individualism refers to the frame of mind in which an individual is governed by the need to protect oneself. 'Collectivism as its opposite pertains to societies in which people from birth onwards are integrated into strong, cohesive ingroups, which throughout people's lifetime continue to protect them in exchange of unquestioning loyalty' [2] .

Cindy Harpster illustrates that the importance of independence and individual achievement is one of the most distinctive traits of the US culture. This sense of individuality can be one of the largest barriers when conducting business in a foreign country. In order to determine whether the US is an individualistic culture, it is important to familiarise oneself with the characteristics synonymous with the individualistic culture [3] . In individualistic cultures people are usually considered self centred and empathise with their own goals. In addition, like Westerners, they tend to use direct modes and clear methodologies of communication. Non-westerners prefer to speak indirectly and politely pass their opinion across through inferences [4] . In contrast, group achievement, group harmony and saving face are supremely important than individual achievement in Asian cultures [5] . For example Australian's tend to conduct their private lives independently, valuing individual achievement, accomplishments, promotions and wealth, above group goals [6] . On the other hand countries such as China and Japan are more "we" conscious, and the group is the basic building block of social life and work [7] .

Moreover another way in which the individualistic trait can hinder with international business accomplishment is when managers have unrealistic expectations of their employees. In the US, "micro-managing" is a term used to describe 'the action of exercising excessive and unnecessary control over the minimal detail on other people's activities' [8] . This over-bearing management style is insulting and offensive and can create a sense of resentment and lack of trust in workers intelligence and capabilities, especially in fields where team members have a high degree of professional and technical expertise [9] . It is more common for managers in the US and Australia to ask their team members how long it will take them to complete a task, where as in other cultures such as China or Thailand, managers are expected to dictate schedules and steps of action [10] .


In order to work overseas, managers must consider and research the various cultural dimensions if they are to prosper abroad. Several studies have been completed that compare cultures. One of the most admired is the Geert Hofstedes Cultural dimension model. His model aims to develop a framework for understanding how basic values motivate organizational behaviour [11] . He proposes five value dimensions by which to identify national and regional cultural differences: those of power distance, uncertainty avoidance, individualism, masculinity and long term orientation [12] .

The first of these value dimensions is power distance which focuses on the degree to which 'a culture believes how institutional and organisational power should be distributed (equally or unequally) and how the decisions of the power holders should be viewed (challenged or accepted)' [13] . In countries such as Asia people accept high power distance, formal positions in the hierarchy are respected, where as in Australia where people display low power distance, officers tend to accord each other with mutual respect. In other words, in all societies some inequalities of power are acknowledged in all organisations, however, the degree of these power distributions seems to be communally determined [14] .

The second value dimension uncertainty avoidance focuses on the level of tolerance for uncertainty and ambiguity within a society and tries to avoid them by establishing more structures [15] . All governments and legal systems enforce strict laws and procedures on their citizens, however in countries, such as Japan, with a high level of uncertainty, avoidance rules tend to be more specific and precise [16] . In countries with a lower level of uncertainty avoidance such as Australia and the US, company activities are less formal, less structured and managers seem to take more risks [17] . The risk taking nature of the West is reflective of the third Value dimension, involving individualism and collectivism. The west is more accepting of risk takers as they are a individualist society where personal accomplishments reflect directly on the employee, not as much on the team as Eastern cultures. The effects of that risk do not affect the reputation of the group to the same extent as collectivist culture. An individual is responsible for their own actions, as opposed to a group being responsible for a members actions.

The third value dimension individualism vs. collectivism describes the 'degree to which a culture relies on and has allegiance to the self or the group' [18] . In Countries that prize individualism, such as Australia and America, people highly value individual initiative and achievement. As the article states "From our schools to our boardrooms, individuals compete with each other to be the best.". in continuation, it is highlighted that the West has attempted to stress the importance of group collaboration through modern education and business there is still great emphasis on the individual through performance reviews and grading still given as individuals.On the other hand countries such as china, the emphasis is on the strength of the family [19] . There are clear benefits of both Individual and Collectivist cultural orientations. Individualism hold the individual accountable for their own actions, and issues such as a group member not contributing are minimised. However the sense of achievement as a team, such as in Chinese business is reflective of the strong family mentality. Working towards a common goal promotes stronger peer involvement and heightens the sense of organisational culture which leads to the goals of the organisation becoming the goal of the employee's at large. In this sense the Organisation is seen as being like a family, reflective of the cultural values of society.

The fourth value dimension masculinity vs. femininity indicates the degree to which 'a culture values such behaviours as assertiveness, achievement, acquisition of wealth or caring for others, social supports and the quality of life' [20] . A highly masculine society such as Australia and the US, experience a high degree of gender differentiation. In these cultures males dominate a significant segment of the society and power structure, with females being controlled by male domination [21] . Traditionally women were not expected to work outside home when they were married, and those who did shamed their husbands [22] . A low masculine ranking indicates the country has a low level of differentiation and discrimination between genders. In these cultures, females are treated equally to males in all aspects of the society [23] .

Geert Hofstedes fifth value dimension, which is based on Confucian dynamism, is long term orientation vs. short term orientation. Values associated with long term orientation are thrift and perseverance as in china, however short term orientation is described as being more social, materialistic and self centred which is likened to Australia and the US [24] . Research suggests that both the positively and negatively rated values of this dimension are found in the teachings of Confucius, the most influential Chinese philosopher who lived around 500BC [25] .


As illustrated above, the article; "Culture and barriers it creates in international business" lends itself quite strongly to Hofstedes' theory. The article in question quite clearly demonstrates the importance of management's ability to understand sections of theory such as Individualism vs. Collectivism to account for the vast cultural differences, especially apparent between the US and Asian nations. It can be seen within these different theories that different cultures commonly operate under different business and social frameworks, and therefore have different expectations of management functions and business operational procedures. This article shows that understanding the different aspects of theory such as Geert Hofstede's cultural dimension model can greatly increase the likelihood of successful growth when entering into an international venture or operating within a new or different cultural climate. A lack of research and understanding of new cultures and/or markets before entry, will often result in lower levels of business success and in some cases, failure.

Culture and barriers it creates in international business

by Cindy Harpster

Each of us views the world according to our own cultural biases. Within the United States, our country is so full of differing viewpoints that we sometimes tend to believe that we are generally more accepting and diverse than most other countries. In reality, though, there are several traits that are more-or-less universal throughout our culture, and they color the way we look at the rest of the world, and the way the world views us.

One of the most distinctive traits of US culture is the importance of independence and individual achievement. From our schools to our boardrooms, individuals compete with each other to be the best. Although modern education and business techniques have recently stressed the importance of group collaboration, our culture still emphasizes the individual. Raises and performance reviews are given to individuals, not groups, and students are graded independently of their peers.

This sense of individuality can be one of the biggest barriers when doing business overseas. In many cultures other than the US or Western Europe, group achievement and group harmony is much more important than individual achievement. Singling out an employee for an achievement might be a great motivator in the US as the rest of the team strives to attain the same reward, but in Asia it could be disastrous to group dynamics. In most Asian cultures being a harmonious part of the group is far more important than standing out from the crowd. Being recognized for personal achievement can even be seen as shameful, as it is viewed as putting personal goals ahead of those of the team. The US expatriate assigned to an overseas assignment might find themselves discouraged when innovative ideas aren't praised or if credit is not attributed to their own intelligence and success.

Another way in which this individualistic trait can interfere with international business success is when managers have unrealistic expectations of their workers in other cultures because of this bias. In the US, "micro-managing" is a disparaging term used to describe a manager that interferes too much in the day to day operations. This over-bearing management style is seen as insulting to workers, especially in fields where the team members have a high degree of professional or technical expertise. It is more common for a manager in the US to ask their team members to estimate how long a project will take, and what the best course of action would be for success. In other cultures, however, this insistence on independent thinking by the team members may not be well-received. In many other countries, managers are expected to dictate schedules and steps of action, and workers may be very uncomfortable with developing their own workflow plans.

Working in another culture requires research to understand the cultural norms and how workplace environments differ from those in the United States. Several studies have been done that compare cultures. One of the most popular is the Geert Hofstede cultural dimension model. This indicator of how different cultures compare on several key indicators is widely-used in international business courses to help illustrate regional differences in such areas as time orientation and individualism. Understanding these indicators before beginning an international venture can greatly improve the chance of success. Even more important is keeping an open mind, being aware of the bias that cultural influences create, and being willing to learn new techniques and behaviors for interacting with others in the workplace.