This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.
Over the last decade, global business has turned out to be a progressive new business paradigm which multinational corporations have used as a media to bridge the gap apparent in distance, culture, and time in order to achieve their quest for global dominance Moitra (2004). In a bid to sustain market competitiveness and enhance business values, many multinational corporations have adopted globalization strategy. Globalization according to Hill (2008) is the move for a more integrated and interdependent world economy. International marketing according to Muhlbacher et al (2006) is the application of marketing orientation and marketing capabilities to international business. International marketing takes into account the differences in consumers and segments in order to make marketing mix decision across national boundaries.
The present day global business environment challenges multinational corporations to perform operations in an increasingly complex, interdependent and dynamic environment (Deresky 2008). Business competitiveness is extremely sophisticated and in order for multinationals to compete aggressively, it is of the essence that they invest overseas. In their drive to invest in overseas countries, multinational corporations are faced with a number of management issues. These management issues are Political, Economic, Technological, Legal, Cultural, Social responsibility and Ethics, and Human resource management. The main focus of this paper is to lay emphasis on the similarities and differences between Hofstedes frameworks of cultural dimensions and the GLOBE (Global Leadership and Organizational Behavior Effectiveness) study.
Culture is a very key issue in present day global business environment. Hofstede (1994) said the business of international business is culture. Culture can be broadly discussed in two ways, where societal culture deals with shared values and organizational culture represents the expectations, norms and goals that an organization upholds. Imperatively, managers must possess and retain a clear understanding of the nature, culture and practices of business environments they wish to create their markets in. Cultural savvy according to Deresky (2008) is a critical skill for effective people and process management that multinationals should adopt in operating in other countries. Perhaps the most frequently discussed cultural sphere is corporate culture. Many managers more quickly recognize the difference between companies than between countries (Schneider et.al, 2003). Paradoxically, culture can be said to encompass power which is invisible thus the consequences are remote. Culture is a force that becomes woven through the thinking, behavior, and identity of those within the group, Lorsch (2002). Corporate culture is established naturally and automatically. Whenever people converge with a collective rationale, culture is established and is also automatically created out of the combined thoughts, energies, and attitudes of the people in the group. The corporate culture determines a company's dress code, work environment, work hours, rules for getting ahead and getting promoted, how the business world is viewed, what is valued, who is valued, and much more. Culture shows up in both visible and invisible ways. Some expressions of corporate culture are easy to observe. Dress code, work environment, and titles in a company are some of the visible stratum of culture. The far more influential standpoints of corporate culture are invisible. The cultural core is composed of the values, beliefs, and learned attitudes, Daniels et.al. (2009).
Hofstede's Dimensions of National Culture
In the research on culture, among subsidiaries of a multinational enterprise(IBM) in 64 countries and the other two among students in 10 and 23 countries, respectively, in total five dimensions of national culture differences were identified (Hofstede, 1980, 1983, 1986, 1991; Hofstede and Bond, 1984,1988; The Chinese Culture Connection, 1987).
Power distance: This element determines what the less influential members of organizations anticipate the allocation of power. It suggests that the levels of inequality in the society are approved with leaders and followers consent. It is pertinent to note that power and inequality are the essentials of any society. In low power distance societies for example, the lower class look forward to being conferred with while in the high power distance, they assume they should be told what to do. Thus, Low vs. High Power Distance attempts to determine how a person observes power differences. Power distance scores are high in African, Asian, and Latin countries while the scores are low for Germanic countries.
Individualism and collectivism: This is the extent to which individuals are incorporated into groups. In individualist society, the development of individualistic personalities and affiliations are expected while collectivist society's enable people from birth to be blended in to form unified whole; strong and cohesive in-groups such among others. Individualism is predominant in countries such as the US while collectivism exists in Asian and African countries.
Masculinity and femininity: This element describes sexes and their roles and evaluates male and female values. According to the study, masculine society's value ambition, assertiveness, and competitiveness, quality of life and relationships are valued in feminine cultures. For example the masculinity dimension resolves conflicts by fighting them out while feminine societies resolve conflicts by negotiation and compromise. Masculinity is dominant in countries like, Germany, and Austria while it tends to be low in some Latin and Asian countries such as Spain and Thailand.
Uncertainty avoidance: This deals with how individuals of a society endeavour to tolerate uncertainty and ambiguity. In the study, people in cultures with high uncertainty avoidance are emotional in addition to believing in the absolute truth while in the cultures with low uncertainty avoidance flexibility of rules, guidelines and also familiar activities are valued, and the employees tend to change employers regularly. Uncertainty avoidance scores high in Latin countries, Japan, and Germany while it is lower in Chinese and Nordic culture countries.
Long and short term orientation: In long term oriented societies, actions and attitudes such as persistence, thrift, and perseverance are valued. Values associated with short term orientation are, respect for tradition, protecting ones face, and fulfilling social obligations. It was originally called "Confucian dynamism". These cultural differences express averages not the trait of individuals. Long term orientation is particularly found in East Asian countries like Japan, China, and South Korea.
An all embracing study carried out so far on national cultural dimensions has been made available by the GLOBE (Global Leadership and Organizational Behavior Effectiveness) Project Team made up of 170 researchers who collected data over 7 years on cultural values, practices, and leadership attributes from 18,000 managers in 62 countries representing a wide variety of industries and organizational sizes. Nine cultural dimensions distinguishing societies were highlighted by the team and the implications for managers (Javidan & House, 2001).
Four dimensions identified by the GLOBE study are directly related to Hofstedes dimensions (Uncertainty avoidance, Power distance, Institutional collectivism vs. individualism, In-group collectivism) as described above. The following are the distinctive dimensions.
Assertiveness: This refers to the degree to which individuals in a society are expected to be tough, confrontational, and competitive, against being modest and tender. Austria for example is highly assertive because emphasis is laid on competition while Sweden is less assertive as a country because cooperative relations are preferred.
Future orientation: This refers to the degree of emphasis a society attaches to future-oriented behaviors like planning, investing in the future, and delaying gratification. Switzerland and Singapore are highly rated on this dimension as a result of their ability to plan for the future and long term decision making, while Russia and Argentina are rated low.
Performance orientation: This measures the relevance of performance, improvement, and excellence in society and whether people are encouraged to strive for continuous improvement. Hong Kong and the United States score high on this element. Emphasis is made on training and development interwoven with the style of communication which may either be direct or explicit. On the other hand, Italy, Russia and Argentina are rated low on this element with an emphasis more on loyalty and belonging. Value is placed on an individual's family and background against performance.
Humane orientation: This is the degree to which a society encourages and rewards individuals for being, altruistic, generous, caring, fair, selfless and kind. Countries such as Egypt, Malaysia and Ireland score high on this element because emphasis is made on giving support to the weak while countries such as Spain and France are scored the lowest because emphasis is made on material possessions and self enhancement.
Gender differentiation: This refers to the degree to which a society maximizes gender role differences. For example, Poland, and Denmark report the least amount of gender-differentiated practices, meaning that women have a higher status and role in decision making. Individuals in low gender differentiated cultures tend to have the same amount education, regardless of gender, and a higher percentage of women are in positions of authority compared to countries rated high on this dimension, such as South Korea, and China, where more men tend to have higher social status and few women hold positions of authority.
Hofstede's Dimensions of National Culture and the GLOBE Study.
The introduction of the dimensions paradigm by Hofstede, (1980) set the precedent for the approach to cross-cultural business studies and demonstrated that cultural differences among nations could be measured, and answers to discrepancies in the human society could be proffered. The GLOBE study was modelled after Hoftede, (1980,1991) dimensions of national culture and retained some of the constructs such as Power Distance, Uncertainty Avoidance, Collectivism (Institutional and In-group collectivism), while Masculinity and Femininity were incorporated as Assertiveness and Gender Egalitarianism, and Long term Orientation became Future Orientation. The fundamental similarity of the two frameworks is that data was collected from an industrial setting and the GLOBE framework is an extension of Hofstede's existing literature and dimensions, it is rather more relevant to identify the disparities and relevant development of the framework.
In contrast to Hofstedes cultural framework, the GLOBE study distinguishes between societal values (termed "should be") and societal practices (termed "as is"). This distinction actually relies on the postulation that culture is a multi- layer concept characterized by practices at the exterior and by attitudes, values, and basic assumptions at the interior (Hofstede, 2001). A significant disparity between Hofstedes framework and the GLOBE study is observed in the distinct dimensions such as "performance orientation" which is related more to organizational culture in terms human resource management than a broad national cultural perspective which makes its applicability limited.
The analysis of the GLOBE data was done by a team using managers as its respondents while Hofstedes framework was an individual effort whose respondents were groups of employees in 7 work related categories (2 managerial and 5 non-managerial). Hofstede, 2006 opined that a research measuring leadership from surveys answered leaders was questionable.
According to Hofstede (2006), the expansion and breakdown of the GLOBE questionnaire was theoretically based on the existing literature and on statistical pre-tests in contrast to the IBM attitude survey questionnaires that had been designed as a management tool and developed through open-ended pilot interviews with employees in nine countries which made these surveys action-driven and took in hand problems of IBM employees from different categories which management regarded as significant in their occupational state of affairs. However, Hofstede, 2006 posited that the GLOBE study did not take into consideration the Masculinity against Femininity element thereby sticking to the trend of North American social science research which emphasizes more on the Individualism against Collectivism dimension (Schimmack et al., 2005).