Understanding Hofstede's Cultural Dimensions in International Business

Running head: International Business in Practice (UoS / RKC) INTERNATIONAL BUSINESS IN PRACTICE (UOS / RKC)

2 International Business in Practice (UoS / RKC) Table of Contents 1. Overview of the Hofstede Cultural Dimensions Model ......................................................... 3 Masculinity Vs. Femininity .................................................................................................... 3 Uncertainty Avoidance ........................................................................................................... 4 Power Distance ....................................................................................................................... 5 Collectivism and Individualism .............................................................................................. 6 Long-term and Short-term Orientation Scale ......................................................................... 7 Indulgence .............................................................................................................................. 8 2. a) Comparative Analysis of the USA and UK ........................................................................ 8 Indulgence ............................................................................................................................ 10 b) Comparative Analysis of Hong Kong and the UK ............................................................... 11 4. Ethical considerations to start up the business of Peninsula in different countries .............. 12 Reference list ............................................................................................................................ 16

3 International Business in Practice (UoS / RKC) 1. Overview of the Hofstede Cultural Dimensions Model Hofstede's Cultural Dimensions Theory, developed by Geert Hofstede, is a framework for studying how cultures vary across nations and how business is conducted in diverse cultural settings. In other ways, the paradigm is employed to evaluate the impact of each national culture on a company world and analyse the qualities of culture. The study's goal was to determine the circumstances wherein cultural differences exist. A maximum of 100000 people representing 50 various nationalities participated in this survey that spanned three parts (Gerlach & Eriksson, 2021). Using a particular statistical method known as factor analysis, Hofstede identified the first four crucial characteristics: individualism and collectivism, power distance, uncertainty avoidance, and masculinity and femininity. Long- term or short-term orientation was one of the 50 characteristics discovered later by Chinese sociologists in their research (Sochor, 2020). Masculinity Vs. Femininity The distribution of psychological duties between the genders is alluded to as masculinity and femininity (task orientation/person orientation). In masculine cultures, competition, aggressiveness, material prosperity, ambition, and authority are prized. Relationships, the standard of living, and increased concern for marginalised groups are held in higher regard in female societies. Contrary to feminine cultures, where men and women embrace the same values that emphasise modesty and care, gender roles in masculine communities differ dramatically and are significantly less flexible (Litvin, S2019).

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4 International Business in Practice (UoS / RKC) Figure 1: Masculinity and Femininity (Source: Zhou & Kwon, 2020) Uncertainty Avoidance The notion of uncertainty avoidance (UA) focuses on the amount of ambiguity and uncertainty a community can endure. It demonstrates how people in a society attempt to control their stress by decreasing ambiguity. How frightening alteration is to culture is another, more accessible approach to thinking about UA. Individuals in cultures with a high UA prefer to be more sentimental, try to minimize unplanned and unknown events, and move forward with carefully planned steps, norms, regulations, and laws (Kuo, Kuo & Whittinghill, 2022).

5 International Business in Practice (UoS / RKC) Figure 2: Uncertainty Avoidance (Source: Kaasa, 2021) Power Distance The amount less privileged organizational members (such a family) accept and expect that power is divided unevenly is alluded to as power distance (power of social hierarchy). As per Hofstede, all societies suffer a degree of disparity; however, some communities suffer it more significantly than others. Individuals in communities with a high level of power distance willingly accept hierarchies in which everyone holds a role. Low power distance civilizations seek a balanced distribution of power. Countries with comparatively lower PDI values are more inclined towards being more egalitarian (Darmawati & Herlina, 2019).

6 International Business in Practice (UoS / RKC) Figure 3: Power Distance (Beugelsdijk & Welzel, 2018) Collectivism and Individualism Collectivism and Individualism allude to how thoroughly individuals are absorbed into groups. Individualistic societies emphasize personal freedoms and self-actualization, in addition to meeting the needs of the close family. Individuals in individualistic societies pick their associations and groups, shifting among them as they deem fit. Collectivist cultures put more value on family and loyalty. In collectivist societies, people belong to fewer groups generally and are further characterized by their participation in different subgroups (Sent & Kroese, 2022).

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7 International Business in Practice (UoS / RKC) Figure 4: Individualist and Collectivist Culture (Source: Gallego-Álvarez & Pucheta-Martínez, 2021) Long-term and Short-term Orientation Scale The phrases "long term" and "short term" relate to a society's temporal perspective and, correspondingly, to the extent societies push individuals to put off gratifying their economic, social, or emotional needs. Future-focused, practical values which are driven by advantages like perseverance, frugality, and flexibility are given more weight by LT. Short- term values focus on pressing needs, fast results, and excessive spending, usually in response to societal or ecological pressures, and are linked to the past and present (Minkov & Kaasa, 2020).

8 International Business in Practice (UoS / RKC) Figure 5: Long-term and Short-term Culture (Source: Nikolov & Krumova, 2019) Indulgence This aspect can be characterized as how people attempt to regulate their emotions and desires according to how they were educated. Thus, indulgence and restraint are manifestations of the reasonably strong and ineffective regulation. Cultures might well be characterized as indulgent or restrained as an outcome. 2. a) Comparative Analysis of the USA and UK When UK and USA are compared in terms of cultural similarities and differences, the following results occur: Power Distance The UK is seen sitting low in terms of PDI indicating that this country nurtures a society that believes that inequalities among individuals need to be reduced. On the other side, USA has scored 40 which is a bit higher than the UK implying their belief system for reducing inequalities among people. Masculinity and Femininity

9 International Business in Practice (UoS / RKC) The UK has scored 66 at this dimension. While nations with low degrees of masculinity permit far greater crossover in the professional and social roles of men and women masculine societies like the UK also are more likely to hold strong views about what constitutes jobs that men versus women work (Luo et al., 2021). The typical American behavioural patterns correspond to the high 62 ratings the US earned on the masculinity scale. This can be characterized by the interplay between a solid masculine drive and the most significant and potent Individualist drive. Individualism and Collectivism Only some of the commonwealth countries of the world, including Australia and the USA, rank better than the UK's 89 in terms of the Individualist index. Britain are a relatively lonely and independent society. Below are a few consequences of the reasonably low Power Distance (40) rating and one of the world's strongest Individualist (91) cultures: "Liberty and equality for all" is a fundamental American ideal. The clear focus on racial equality in every area of American culture and government proves this. In individualistic societies, communication is much more straightforward, in collectivist cultures, it is more indirect (Cranfield et al., 2021). Uncertainty Avoidance On the uncertainty-avoidance dimension, the US gets a poor grade of 46, below the median. Consequently, instead of the culture getting a low or high grade, the perceived setting in which Americans locate themselves will have a much more significant impact on behaviour. The UK, in comparison, has a poor grade of 35 on the uncertainty avoidance metric, showing that as a country, they are willing to "make up things as they come along," altering intentions as new information becomes accessible. Long-term and Short-term Orientation It is impossible to detect a prevalent choice in British culture with an intermediary rating of 51 on this dimension. With a low rating of 26, the USA receives a normative rating on the fifth dimension. This is shown by Americans' propensity to evaluate new data to assess its validity (Kuo et al., 2022).

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10 International Business in Practice (UoS / RKC) Indulgence The USA receives an Indulgent (68) society score on the sixth dimension. This contradictory behaviour and attitudes suggest, coupled with an average score, mean, "Work very hard and have a good time”. And though the British culture is classified as Indulgent, it received a very high score of 69. Figure 6: Cultural Differences between UK and USA (Source: Hofstede Insights, 2022)

11 International Business in Practice (UoS / RKC) b) Comparative Analysis of Hong Kong and the UK Figure 7: Cultural Differences between Hong Kong and UK (Source: Hofstede Insights, 2022) Power Distance At 68, Hong Kong has a high-Power distance rating, suggesting that it is a society that considers existing inequalities acceptable, contrasted to Britain's score of 35, indicating that it is a culture that believes social inequality as something that is reduced. Individualism and Collectivism Only a few commonwealth nations it birthed, such as USA and Australia, rank better than the UK's 89 on the Individualist scale. The UK is a reasonably solitary and independent people. On the contrary hand, Hong Kong, with a rank of 25, is a collectivist society in which individuals behave in the team’s best interests rather than exclusively in their own. Masculinity and Femininity At 57, Hong Kong has a primarily masculine and success-driven culture. The fact that many people will put in a lot of time at work illustrates the necessity to ensure achievement. On the other side, Britain is a Masculine society at 66, with a considerable emphasis on achievement (Hofstede Insights, 2022).

12 International Business in Practice (UoS / RKC) Uncertainty Avoidance The UK has scored 35 in this dimension indicating that it is a country which is extremely happy by not knowing what the next day will bring and is contented to change plans along with new information. In contrast, Hong Kong performed very poorly on uncertainty avoidance, scoring 29 (Minkov & Kaasa, 2020). In only certain situations, complying with the law and following rules could be adaptable, and pragmatism is a solid fact. Long-term and Short-term Orientation A perfect score of 61 indicates how realistic Hong Kong's society is. Individuals in pragmatic organisations believe that circumstance, location, and time are essential in deciding what is real. It is impossible to determine a prevalent choice in British culture with just an intermediary score of 51 on this dimension. Indulgence With a score of 69, the UK culture is classified as Indulgent indicating a high score. Individuals who live in communities with higher indulgence ratings usually show a willingness to pursue their instincts and desires whenever it comes to enjoying and having fun with life. Hong Kong rated very poorly on this aspect (17), suggesting it is more restrained. Societies that rank low on this aspect tend to be pessimistic and gloomy (Luo et al., 2021). 4. Ethical considerations to start up the business of Peninsula in different countries There are some potential issues present inside Peninsula, which are considered unethical contexts in order to start up the business. In this aspect, discrimination is a crucial point to increase the ethical issues in every country during the expansion of business. Cross- culture discrimination between employees is the main point because there is a contradiction between their thoughts, approaches, and decisions. Peninsula is a multinational company, so it is quite difficult for a manager and leader to communicate and convince employees to in the right track (Sayers, Martin & Bell, 2022). As a manager, the person should respect

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13 International Business in Practice (UoS / RKC) everyone’s approach and cultural context, and the person should balance the work process based on their thinking power. There is a high chance to introduce the ethical issue in the absence of any measurements. The core mode of business is a point is an ethical issue of the company, which can be affected the business expansion process in other countries. Based on the feminine and masculine ratio , where most of the employees are male, which is a sign of discrimination. In the case of expansion of the business in other countries, this will be a sign of potential ethical issue for the company. In other countries, it becomes an ethical issue, which may reduce organizational growth and revenue. In this aspect, this is necessary to make a smooth organizational structure, which is the responsibility of the manager. Therefore, before starting a business in another country, the rules, trait approaches , and regulations of the business should be clarified thoroughly. In this aspect, the female and male ratio in business approaches should be known before starting the business (Gal, Jensen & Stein, 2020). Sometimes, rules and regulations related to the business and traits should be followed properly, so that there is no issue to make a smooth business environment. In this aspect, Peninsula has some unethical approaches related to employees' work processes, which should be modified. Peninsula gives 24 hours service to their customers to give smooth and clear solutions related to their problems and health approaches. This indicates a poor availability of employee work flexibility because it is related to the hard work of a full day. Therefore, the absence of a “health and safety” process is a potential unethical issue for the organization. The manager has the responsibility to conduct the management activities and the entire team management process. Transparency in the work process for the employees plays a vital role to increase the reputation of the company. Therefore, before starting the business in the UK or US, this is mandatory to rectify the entire

14 International Business in Practice (UoS / RKC) employee’s principles and rules to give them a comfort zone in the workplace (Przegalinska et al. 2019). The modern age is called the age of technology, and most of the information and approaches of every multinational company are reflected through the application of social media platforms. Therefore, it becomes a potential issue, which should reduce the chance of expansion in another country. In this condition, the manager and the higher authority of Peninsula should focus on this process. Legal issues and trait license-related approaches of the company should be rectified so that it will be useful for making a relevant and truthful business process based on HR and safety solutions. There are some issues including consumption issues and internet issues, which will reduce the application of ethical consideration of business. In order to expand the business growth in another country, this is necessary to carry out every rule and regulation, which are based on the legal business (Inigo & Blok, 2019). There is an unethical issue of poor application of CSR strategy, which needs a balanced corporate business style. Inside Peninsula, there are various types of sectors, pharmacy, hospitality, hair and beauty products, construction, agriculture, retail, manufacturing, and useful and popular sectors. The application of these sectors needs an excessive level of energy used and there is a high chance of environmental pollution . With the application of various methods of production and service systems, there is a high chance to increase carbon footprints. Besides this, the emission of harmful gases , including carbon dioxide, methane, and oxide of nitrogen is a potential point to introduce unethical considerations in business. Therefore, this may reduce the business growth rate and value of the organization throughout the world. In this way, the chance to get permission from another country for conducting the business will be very hard and complicated (Keskinbora, 2019). Therefore, the higher authority of the Peninsula should concentrate on this aspect to make a smooth and correct

15 International Business in Practice (UoS / RKC) solution to these problems. During the time of the pandemic situation, there was a problem to conduct the employment structure and their payment system , which is a sign of their poor economic condition. From that pandemic situation, there is a high chance of having an unstable financial condition, and this introduces a decreasing rate of employment ratio. Therefore, ratting from employment strategy through the social media platforms may reduce the chance to introduce their business in the advanced level of countries, UK, and US. Through the social media platforms, the visualization, and the presence of the 3D structured advertisement, will be effective in attracting customers. Besides this, the content and structure of the organization are very tight, which gives an ideal look at the company’s structure. On the other hand, after the COVID-19 pandemic situation, the pricing rate of consultancy of Peninsula is going to be increased extremely (Char, Abràmoff, & Feudtner, 2020). From this time, the customer chain of the company is increasing spontaneously, as they are concerned about their mental and physical health. This may be considered an ethical issue for the company, and it is a reason to reduce the popularity of the company. In the future, it may reduce the business growth of the company, and it will be the reason to get restrictions on business in other countries. It is necessary to analyse the business strategy and entire infrastructure of the company before starting the business in other countries. In this aspect, the higher authority and the managers should focus on the ethical side of the organization, as consumers always focus on the sensitive corners of any company.

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16 International Business in Practice (UoS / RKC) Reference list Char, D. S., Abràmoff, M. D., & Feudtner, C. (2020). Identifying ethical considerations for machine learning healthcare applications. The American Journal of Bioethics , 20 (11), 7-17. doi https://www.tandfonline.com/doi/abs/10.1080/15265161.2020.1819469 Gal, U., Jensen, T. B., & Stein, M. K. (2020). Breaking the vicious cycle of algorithmic management: A virtue ethics approach to people analytics. Information and Organization , 30 (2), 100301.doi https://www.sciencedirect.com/science/article/pii/S1471772720300257 Inigo, E. A., & Blok, V. (2019). Strengthening the socio-ethical foundations of the circular economy: Lessons from responsible research and innovation. Journal of cleaner production , 233 , 280- 291.doi https://www.sciencedirect.com/science/article/pii/S0959652619320062 Keskinbora, K. H. (2019). Medical ethics considerations on artificial intelligence. Journal of clinical neuroscience , 64 , 277-282. doi https://www.sciencedirect.com/science/article/pii/S0967586819300256 Przegalinska, A., Ciechanowski, L., Stroz, A., Gloor, P., & Mazurek, G. (2019). In bot we trust: A new methodology of chatbot performance measures. Business Horizons , 62 (6), 785- 797.doi https://www.sciencedirect.com/science/article/pii/S000768131930117X Sayers, J., Martin, L., & Bell, E. (2022). Posthuman affirmative business ethics: reimagining human–animal relations through speculative fiction. Journal of Business Ethics , 178 (3), 597-608.doi https://link.springer.com/article/10.1007/s10551-021-04801-8

17 International Business in Practice (UoS / RKC) Cranfield, D.J., Tick, A., Venter, I.M., Blignaut, R.J. & Renaud, K., (2021). Higher education students’ perceptions of online learning during COVID-19—A comparative study. Education Sciences , 11 (8), p.403. https://doi.org/10.3390/educsci11080403 Luo, C., Chen, A., Cui, B., & Liao, W., (2021). Exploring public perceptions of the COVID- 19 vaccine online from a cultural perspective: Semantic network analysis of two social media platforms in the United States and China. Telematics and Informatics , 65 , p.101712. https://doi.org/10.1016/j.tele.2021.101712 Nikolov, H.S. & Krumova, M., (2019). Hofstede's Model in the Context of E-Government and Open Government in EU Countries: Countries Clustering Based on Similarities and Differences. Smart Cities and Regional Development (SCRD) Journal, Universul Academic Publishing House , 3 (1), pp.29-46. https://papers.ssrn.com/sol3/papers.cfm? abstract_id=3413480 Minkov, M. & Kaasa, A., (2020). A test of Hofstede's model of culture following his own approach. Cross Cultural & Strategic Management . https://www.emerald.com/insight/content/doi/10.1108/CCSM-05-2020-0120/full/html Gallego-Álvarez, I. & Pucheta-Martínez, M.C., (2021). Hofstede’s cultural dimensions and R&D intensity as an innovation strategy: a view from different institutional contexts. Eurasian Business Review , 11 (2), pp.191-220. https://link.springer.com/article/10.1007/s40821-020-00168-4 Gerlach, P. & Eriksson, K., (2021). Measuring cultural dimensions: External validity and internal consistency of Hofstede's VSM 2013 Scales. Frontiers in psychology , 12 , p.662604. https://www.frontiersin.org/articles/10.3389/fpsyg.2021.662604/full

18 International Business in Practice (UoS / RKC) Sochor, J., (2020). Comparison of Selected Attributes in Cultural Dimensions as Defined by Hofstede and the GLOBE Project. Central and eastern Europe in the changing business environment , 270 . https://ceeconference.vse.cz/wp- content/uploads/proceedings2020.pdf#page=279 Litvin, S.W., (2019). Hofstede, cultural differences, and TripAdvisor hotel reviews. International Journal of Tourism Research , 21 (5), pp.712-717. https://doi.org/10.1002/jtr.2298 Zainuddin, M., Yasin, I.M., Arif, I. & Abdul Hamid, A.B., (2018), December. Alternative Cross-Cultural Theories: Why Still Hofstede?. In Proceedings of International Conference on Economics, Management and Social Study (pp. 4-6). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3309633 Zhou, Y. & Kwon, J.W., (2020). Overview of Hofstede-inspired research over the past 40 years: The network diversity perspective. Sage Open , 10 (3), p.2158244020947425. https://doi.org/10.1177/2158244020947425 Kuo, Y.T., Kuo, Y.C. & Whittinghill, D.M., (2022). Exploring the Reliability of a Cross- Cultural Model for Digital Games: A Systematic Review. International Journal of Emerging Technologies in Learning , 17 (13). Kaasa, A., (2021). Merging hofstede, schwartz, and inglehart into a single system. Journal of cross-cultural psychology , 52 (4), pp.339-353. https://doi.org/10.1177/00220221211011244 Hofstede Insights, (2022). Country Comparison. What About the UK? [Online] Available at: https://www.hofstede-insights.com/country-comparison/the-uk,the-usa/ Accessed on: 11.08.2022.

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19 International Business in Practice (UoS / RKC) Beugelsdijk, S. & Welzel, C., (2018). Dimensions and dynamics of national culture: Synthesizing Hofstede with Inglehart. Journal of cross-cultural psychology , 49 (10), pp.1469-1505. https://doi.org/10.1177/0022022118798505 Sent, E.M. & Kroese, A.L., (2022). Commemorating Geert Hofstede, a pioneer in the study of culture and institutions. Journal of Institutional Economics , 18 (1), pp.15-27. https://www.cambridge.org/core/journals/journal-of-institutional- economics/article/commemorating-geert-hofstede-a-pioneer-in-the-study-of-culture- and-institutions/CEFFE024FDAC0F44D45146707351EE40 Darmawati, B. & Herlina, A., (2019), October. Bugis Cultural Taxonomy: An Overview of Hofstede’s Cultural Dimension. In 6th International Conference on Community Development (ICCD 2019) (pp. 108-110). Atlantis Press. https://doi.org/10.2991/iccd- 19.2019.30 Zhang, Y., Liu, S. & Jun, J., (2022), June. A Comparative Study on the Cultural Dimensions and Health Perception of the COVID-19 Pandemic between China and the United States. In Healthcare (Vol. 10, No. 6, p. 1081). Multidisciplinary Digital Publishing Institute. https://doi.org/10.3390/healthcare10061081

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