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National culture plays an important role in understanding employees‘ behavior in different cultures. It is important for any company competing internationally to understand cultural differences. The most valuable framework to help managers to better understand differences between national cultures was developed by Geert Hofstede. His research showed that national culture had a major impact on employees‘ work- related values and attitudes. In fact, it explained more of the differences than did age, sex, profession, or organizational position. Thus cultural differences do affect individuals‘ work related attitudes. Hofstede found five dimensions of cultural differences that formed the basis for work related attitudes. These dimensions are further discussed below.

Individualism versus Collectivism; Individualism refers to a loosely knit social framework in which people are supposed to look after their own interests and those of their immediate family. They can do so because of the large amount of freedom that an individualistic society allows its citizens. The opposite is collectivism, which is characterized by a tight social framework in which people expect others in groups of which they are part ( such as family or an organization) to look after them and to protect them when they are in trouble. In exchange, they feel they owe absolute loyalty to the group.

Hofstede found that the degree of individualism in a country was closely related to that country‘s wealth. Wealthier countries such as the United States, Great Britain, and the Netherlands are very individualistic. Poorer countries such as Colombia and Pakistan are very collectivistic.

Power Distance: The second dimension of cultural differences identified by Hofstede examines the acceptance of unequal distribution of power. In countries with a high power distance, bosses are afforded more power simply because they are the bosses. Titles are used, formality is the rule, and authority is seldom bypassed. Power holders are entitled to their privileges, and managers and employees see one another as fundamentally different kinds of people. India is a country with high power distance, as well as Venezuela , Mexico and Nigeria.

In countries with low power distance, people believe that inequality in society should be minimized. People at various power levels are less threatened by, and more willing to trust, one another. Managers and employees see one another as similar. Managers are given power only if they have expertise. Employees frequently bypass the boss in order to get work done in countries with a low power distance, such as Demark and Australia.

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Uncertainty Avoidance; Some cultures are quite comfortable with ambiguity and uncertainty, whereas others do not tolerate these conditions well. Cultures with high uncertainty avoidance are concerned with security and tend to avoid conflict. A society that is high in uncertainty avoidance is characterized by high level of anxiety among its people, which manifests itself in nervousness, high stress, and aggressiveness. Robbins and Coulter (2003) posit that because people in these cultures feel threatened by uncertainty and ambiguity, political and social mechanisms are created to provide security and reduce risk. Organizations in these cultures are likely to have formal rules and little tolerance for unusual ideals and behaviors

Individualism /Collectivism; Individualism refers to the extent to which individuals in society see themselves as independent and autonomous human beings. Here the interests of the individual take precedence. High individualist countries include countries such as the United States, the UK, Canada and Australia. On the other hand in collectivist societies, the interests of the group take precedence. Here individuals look after one another and organizations protect their members‘ interests. Countries with collectivist values are mainly in Asia, Latin America, and Africa.

Masculinity/Femininity; Masculinity stands for preference for achievement, heroism, assertiveness, work centrality (with resultant high stress) and material success. On the other hand femininity reflects the values of relationships, cooperation, group decision making, and quality of life. Societies with strong masculine values are Japan, Austria, Mexico, and Germany. Countries with feminine values are Sweden, Norway, Denmark, and the former Yugoslavia.

Long term orientation/Short term orientation; In long term orientation, people t embrace a long-term view of life. Here savings is emphasized. On the other hand, in societies with short-term orientation, people tend to stress the ‗here and now‘.

4.0 CONCLUSION

Certainly, business is affected by the traditions, values, customs, beliefs, literacy levels of the society in which it operates. Products of businesses should conform to the requirements of the society in respect of the listed dimensions

5. 0 SUMMARY

Culture is an important aspect of the general business environment. Culture denotes the norms, customs, and values of the general population. Culture generally refers to a complex set of values, norms, beliefs, attitudes, customs, systems and artifacts which are handed down from generation to generation through the process of socialization and which influence how individuals see the world and how they behave in it. There are cultural differences which affects the operations of an organization. Organizations must seek to understand the culture of the society in which it operates if they are to succeed in their operations. Managers need to learn and adjust to the culture of their area of operation.

171 6.0 SELF-ASSESSMEN QUESTIONS

1 Define Culture

2 How does Culture affect the activities of Business Organizations?

3 Distinguish between Power Distance and Uncertainty Avoidance

4 How does these concepts affect the operation of Business Organizations?

7.0 TUTOR-MARKED ASSIGNMENT

Discuss Hofstede cross cultural analysis and its usefulness in the management of international organizations.

8.0 REFERENCES/FURTHER READING

Bateman, T. S. & Snell, S.A. (2009). Management: Leading & collaborating in the competitive world. Boston: McGraw-Hill Irwin.

Daft, R. L. (1997). Management. San Diego: Harcourt Grace College Publishers.

Hellriegel, D., Jackson, S. E. & Slocum J. W. J. (2002). Management: a Competency- Based Approach. South-Western

Rue, L. W. & Byars L. L. (2001). Business M anagement-Road wild applications &

Connections. New York: McGraw Hill Irwin.

Rue, L. W. & Byars L. L. (2007). Management. Boston: McGraw Hill Irwin.

Smith, O.N. (2011). Fundamentals of Management. London: McGraw Hill.

Stoner J. A. F. (1978). Management. New Jersey: Prentice Hall.

Stoner, J. A. F, Freeman A. E, and Gilbert Jr. D.R. (2002). Management. New Jersey: Prentice Hall

Worthington, I. and Britton, C. (2009). T he B usiness Environment. London: Prentice Hall.

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UNIT 5 THE ENVIRONMENTAL ANALYSIS