Hofstede's cultural dimensions (HL only)

What is culture?

Culture is often described as "the way things are done here". It refers to the way of doing things are done or how things are done within an organization, community, or country. Corporate culture refers to a set of beliefs and work attitude that is accepted in an organization. It can refer to the norms within an organization (such as the dress code within a business) and national or regional cultures (and how these impact on the organizational culture). Culture penetrates all aspects of Business Management, from how workers dress for work (business attire), to how budgets are set and which leadership style is dominant in an organization.

Essentially, culture influences everything in a business, from how meetings are conducted to how decisions are made. Culture influences individuals, and can be influenced by individuals.

Culture impacts all aspects of an organization. Essentially, culture is about:

• People (relationships between employees and managers)

• Processes (how things are done)

• Policies (what is important to the organization), and

• Past experiences (institutional knowledge).

Hofstede's cultural dimensions

• Geert H. Hofstede’s cultural dimensions is a situational tool used by managers to understand the various aspects of cultures within and between organizations. It helps managers to recognize what motivates the workforce, how and why employees behave in the way they do, what they value, and how they make certain decisions.

• This tool helps managers to understanding the cultural similarities and differences that exist between and across different countries. This helps them to determine more appropriate ways to conduct their operations given different national and international settings.

• Hofstede’s research focused on managers and employees of IBM (the American technology corporation) across different parts of the world to investigate how different cultures may exist within the same organization. Hofstede developed his original model based on the results of a worldwide survey of IBM employees between 1967 and 1973. The data from his initial research covered more than 70 countries. This produced 4 cultural dimensions. He updated his model since, adding "long-term vs short-term orientation" following his subsequent research work in Hong Kong, and then "indulgence vs restraint" as the sixth cultural dimension in 2010. The DP Business Management syllabus focuses on all six cultural dimensions of Hofstede's model:

• Power distance

• Individualism vs collectivism

• Masculinity vs femininity

• Uncertainty avoidance

• Long-term vs short-term orientation, and

• Indulgence vs restraint

These six cultural dimensions provide a framework for comparing and contrasting the different values and behaviours of people from different cultures, helping decision makers and organizations to navigate cultural diversity and nuances as well as to adapt their approaches in international business and communications.

Understanding alternative cultural dimensions can enable a business to create marketing strategies that are specifically tailored to the cultural needs and preferences of its customers. The tool is particularly valuable for multinational companies with operations in different regions of the world, where cultural norms and values are different from those in the domestic country. It is also particularly important when people from different regions or countries are working together within the same organization.

Culture clashes and stakeholder conflicts can occur if managers do not understand cultural differences within and between organizations, so fail to plan and adapt their corporate strategies accordingly. 

1.Power distance

• Power distance refers to the extent to which a culture accepts and respects authority and status. A high degree of power distance exists if an organizaton has centralized decision-making, hierarchical structures, and high regard for position or ranking within the organization, such as in the military (the Army, Navy, Air Force, Marines, and Coast Guard). Those under such an organizational culture accept power differences or inequalities, and show respect for authority. Decision-making is held by those with power and authority, i.e., decision making is centralized.

• For example, in Japanese culture, there is a strong power distance with people respecting their seniors and elders. Society acknowledges, values, and rewards a person's age, seniority, status, and loyalty. Parents often make decisions on behalf of their children, without any consultation or discussions. Students accept the power and authority held by their teachers, and respect seniority in terms of older students in the school. Employees tend not to leave the office or workplace before their line managers do, out of respect. Promotion is often based on an employee's number of years of service (loyalty) rather than selecting a candidate who might be the most suitable for a job.

• Organizations with a high or strong degree of power distance are suitable for people who want to avoid conflict at all costs and do not  like to engage in unproductive competition. However, such a culture can be frustrating for younger and ambitious workers who strive to get promoted quickly within an organization.

• On the other hand, a low degree of power distance exists if there is decentralized decision-making, delegation, job empowerment, and flatter organizational structures. In such cultures, senior managers are expected to work harder so workers are not accustomed to working longer hours than their bosses.

• According to Hofstede Insights, the power distance index shows very high scores for Latin American and Asian countries, as well as areas of Africa and the Arab world. In such cultures, people inherently accept a hierarchical structure and do not require further justification. On the other hand, many European countries (including Austria, Denmark, and the UK) have a low power index. In these countries, people strive for a more equal distribution of power and therefore demand justification for inequalities of power in society.

2.Individualism vs collectivism

• This cultural dimension refers to the degree to which people are integrated into groups in society. Individualism vs collectivism is about whether a society values the individual over a team or collective group of individuals in a specific community. Hence, this cultural dimension is sometimes referred to as the “I” vs “we” cultural dimension.

• Individualism refers to cultures that emphasise the needs of the individual over the needs of the group as a whole. In individualistic cultures, people do not take responsibility for others’ actions beyond themselves and their direct family. Instead, such individuals focus on their own personal goals and achievements.

• By contrast, collectivism emphasises the importance of the group and social cooperation over the needs of any individual. Collectivist cultures integrate relationships in a community or society. From birth onwards, people in such cultures are integrated into strong and cohesive groups, such as extended families (with uncles, aunties, and grandparents), providing each other with support and protection. People are loyal to their designated group and take responsibility and accountability for one another, providing support to all members and acting in the best interest of the group. For example, in such cultures, individuals should never provide negative feedback or comments about their teams in public.

• Individualism vs Collectivism can be applied to the business of competitive sports. For example, in certain sports, the individual determines the outcome, whereas in other sports the outcome is totally dependent on the team working together. 

• This cultural dimension will affect employees’ behaviour at work. In some organizations and occupations, such as the gig economy, workers focus on themselves. Examples include self-employed couriers, ride-sharing taxi drivers, and food delivery cyclists. Teamwork is relied upon in other organizations and occupations, such as marketers, film production, and

• According to Hofstede Insights, individualism is high in Australia, Italy, the US, and the UK. Contrarily, Costa Rica, Guatemala, Malaysia,  Portugal, Serbia, Taiwan, and Venezuela are considered to be collectivist societies.

3. Masculinity vs femininity

Masculinity vs femininity is Hofstede's third cultural dimension, focusing on stereotypical male and female traits and the roles they play in communities. In Hofstede's model, a masculine community exists when men are assertive and competitive while women are caring and nurturing.

Masculinity refers to societies or cultures defined by a focus on achievement, competition, status, power, and wealth. Society is generally more competitive and driven by material rewards. Such cultures are highly competitive and may come across as overly aggressive by others.

On the other hand, femininity refers to societies or cultures that focus on cooperation, relationships, modesty, cooperation, and overall quality of life. Society is generally more consensus-oriented and driven by intrinsic rewards.

Recall that Hofstede's original research took place back in the 1960s and early 1970s, so times have certainly changed since. In the modern business context, Masculinity versus Femininity is sometimes also referred to as as “tough versus tender” cultures, as these are not necessarily gender-specific. Neither of these cultures are dominant in determining success. As stated by Jacinda Arden, New Zealand's Prime Minister, “We’ve placed over time so much emphasis on notions of assertiveness and strength that we have assumed it means you can’t have those other qualities of kindness and empathy.”

According to Hofstede Insights, femininity is extremely high in Nordic countries, like Denmark, Iceland, Norway, and Sweden. In contrast, masculinity is very high in Japan, Venezuela, and in some European countries like Austria, Hungary, and Switzerland.

6. Indulgence vs restraint

• An indulgent culture refers to a society or organization that fosters the natural human drive to be free, to have fun, and to generally enjoy life. By contrast, a restraining culture means there is a tendency for society to suppress people's personal needs and desires by a system of strict social norms and self-regulation. As this sixth element of the model was only included by Hofstede in 2010,there are less data about the indulgence vs restraint cultural dimension of different nations.

• Countries with a high indulgence versus restraint index (so have an indulgent culture) facilitate the free fulfilment of an individual’s desires or wants. These societies encourage having fun, enjoying life, and freedom of speech. Such countries include Australia, Canada, New Zealand, Sweden, the United Kingdom, and the United States.

• Countries with a moderate indulgence versus restraint index include Finland, France, Greece, Japan, Luxembourg, Malaysia, Norway, the Philippines, Singapore, and Thailand. Societies with a low indulgence versus restraint index (so have a restraining culture) tend to put their onus on suppressing gratification (the pleasurable emotional reaction of happiness in response to the fulfilment of a desire or goal). Success is not widely and openly acknowledged or celebrated. Such economies include Bangladesh, Bulgaria, China, Estonia, Hong Kong, Kazakhstan, Romania, and Russia.

Like any model, there are both advantages and disadvantages of using Hofstede’s six cultural dimensions as a Business Management tool.

Advantages of of Hofstede’s six cultural dimensions

• The tool provides managers with an overall view and a broad understanding of different cultures. This can be extremely useful for cross-cultural communications and international cooperation with customers, suppliers, and governments.

• Managers of multinational companies can use the tool to improve the motivation of employees and to minimize potential conflicts. It will help improve the performance and productivity of worker, which benefits the business organization, its employees, and shareholders (thereby protecting shareholder value).

• It is valuable for international marketing as managers need to consider country-specific values and not just internal corporate values.

• It enables businesses to modify their goods and services based on local preferences and customs, thereby giving the business competitive advantages in highly competitive international markets.

Limitations of Hofstede’s six cultural dimensions

• The original research methodology was limited to only employees and managers of IBM. Therefore, critics argue that Hofstede’s cultural dimensions are based on unrepresentative and inconclusive research, despite the research being extensive in data.

• The world has changed in terms of political movements and cultural shifts. Globalization and the international movement of labour has also blurred some cultural dimensions for multinational corporations, such as individualism vs collectivism.

• It is not realistic for managers of multinational companies with expatriate workers from across the world to cater for everyone's needs. There is no universal approach to all cultural dimensions for all expatriate workers. Hence, businesses might find it impractical to consider every unique culture in the workplace and develop appropriate strategies for integrating them all in the organization.

• Technology has progressed, which has revolutionized the way people access information and changed the way they think. In particular, technological advances have enabled people to change the way they work, shifting the patterns of behaviour worldwide, such as flex-time, working from home, and the gig economy. Hofstede's research back in the 1960s and 1970s could not have accounted for such changes and developments.