The Geert Hofstede Cultural Dimension Business Essay

This chapter is divided into two sections. The first section defines culture, its
importance in international business and the various cultural dimensions for working
globally. The next section describes the culture of India and U.K. and reviews the
impact of culture on the working of Hilton Hotel Group in both the countries. Finally, it
ends with a brief summary.
CULTURE
Hofstede (2003) defines culture as the collective programming of mind that
distinguishes the members of one human group from another.
It is evident that people from diverse environment can misunderstand each other.
When two people interact in an organization, culture characterizes their behavior and
attitude towards others. When a company plans to start a business in abroad,
employees with good communication skills and with the ability to adapt into new
environment are chosen to travel and interact with people of various cultures and
nationalities. (Mead, 1992)
This table shows the division of worlds population according to Region, Language
and Religion which are the major aspects of determining ones culture.
Taylor (1870) defines culture as that complex whole which includes knowledge,
belief, art, morals, law, customs, and other capabilities acquired by man as a member
of society.
Culture plays a very important role in business. All civilizations have its own cultural
elements like language, religion, values, attitude, customs, education, aesthetics and
social institutions. (Czinkota, 2007)
Culture passes from one generation to the other, however it can vary from one group
to the other. Every society has its own point of view and opinion about various
situations; however, it acts as a barrier to communication. (Daniels, Lee and Sullivan,
2004)


CULTURAL DIMENSIONS
Geert Hofstede, a much known professor carried out the study of impact of culture on
individuals at a workplace. It took him six years to complete this study as it consists
of interviews of more than 100,000 employees from 70 countries.
According to Hofstede 2004, the UK has 35 points in power distance, 89 in
individualism, 66in masculinity, 35 in uncertainty avoidance and 25 in long term
orientation.
Power Distance According to Hofstede, 2004, Inequality exists in every culture;
however the extent to which less powerful members of the society agree to the
inequality differs from one culture to the other. Power distance is related to the
different solutions to the basic problem of human inequality
High power creates less communication amongst the bosses and employees
whereas when the power is low, employees communicate more with their superiors
for the decision making purposes.
Individualism vs. collectivism- Individualism is defines as the capability of a human
being to only take care of himself or his family where as collectivism describes a
group of people who look after each and every member of that group. (Hofstede,
2004)
These two dimensions describe the individualist or collectivist culture of a human
being.
Masculinity vs. Femininity - The third dimension is one of the most dominating factors
of a culture. Countries where men are considered to be more strong and tough and
women are considered to be more delicate and soft follow masculine culture where
as countries where men and women are considered equal in terms of strength and
tenderness follow feminine culture. (Hofstede, 2004)
Uncertainty Avoidance - It is the level to which an individual can accept sudden
changes and situations. Companies which have the tendency to admit unpredicted
circumstances and dislike uncertainty have high uncertainty avoidance score culture
whereas countries which take things as they come and are prepared for any change
at any point of time have low uncertainty avoidance score culture. (Hofstede, 2004)
Long term vs. short term orientation - The fifth dimension known as the Long term vs.
short term orientation was discovered quite later by Hofstede with the help of a
survey intended by Chinese scholars. According to Hofstede (2004), long-term
orientation means focusing to the future whereas short term orientation is focusing on
the present and past. In long term oriented societies, pragmatism, perseverance is
valued more; in short term oriented societies, respect for tradition and return favours
is valued more.
HOME CULTURE VERSUS FOREIGN CULTURE
Tayeb (1998) says that the decision to become involved in international business
depends, among others, on the size of the companys domestic market, its
production capacity and capability, and the financial and other resources that the
foreign market requires. In that way, firms can be placed on an internationalisation
scale ranging from domestic single nation to totally globalise.
The extent to which national culture becomes relevant to a firm can be shown in the
following table. The company own home country culture is of high relevance, though
the managers and other employees may not be aware of its influence. The relevance
of other peoples culture becomes greater for a firm as it spreads its activities and
products past its national boundaries to reach foreigners with different value systems
and tastes (Tayeb 1998).
IMPORTANCE OF CULTURE IN INTERNATIONAL BUSINESS
Understanding culture and its impact on international business is very important for
the firm and its employees. Organizations differ not only on the basis of international
culture but national culture as well.
According to Ball et al. (1996), doing business with another culture is not an easy
task and to be successful, every foreign company should be aware and follow some
rules that make their business activity more compatible. They state that there are six
rules of thumb for doing business in another culture. Even if these can be important
when doing business in the home country, they become more crucial when going
abroad.
Johansson (2000) states that it should be kept in mind that even if adaptation to the
foreign culture is good when it comes to future negotiations and co-operations, there
is a limit for how far a manager should go to try to accommodate this foreign culture.
Mistrust from the other part can be created if for example a manager is trying to
adapt to the foreign culture and is doing this superficial and with lack of deeper
meaning. This can lead to misinterpretation and seen as matter of insincerity. When a
company begins to work outside its national country, it encounters various
environmental and cultural changes which is not the case in own country. If one does
not understand these cultural differences, then he might to face barriers in the
success of the organization globally. (Lane et al, 2001).
More international operations lead to more interaction and communication with
people and companies working in different culture. Therefore, in order to operate
productively, it is a basic need to understand or have knowledge of different cultural
attributes and contrast. (Adler 1983).
Ferner and Quintanilla (1998), state that companies need to operate as one
organisation which face global environment although they are consisted of different
subunits which carry the characteristics of the local environment they operate in and
the companies also bring the cultural elements of the home countries which they
originated in
Since the study of national and international cultures has become of the most
acknowledged topic, therefore, it is important to learn culture, its importance and
impacts in international business.
IMPACT OF CULTURE ON INTERNATIONAL BUSINESS
According to the article on Cultural impact on international Business, 2011, Culture
influences international business in many ways. When culture and business
interrelate with each other, it directs to the growth of fascinating circumstances or
situation. When diverse cultures come together at an ordinary point with business as
the podium, the spar is bound to happen. But most significantly, such circumstances
assist us in becoming accustomed to demanding situations. Various societies or
nations around the globe pursue different gestures and manners. The technique to
see a difficulty might vary from country to country in the world. The global business
culture, altogether, is an assembly of a variety of industry tradition, cultural power and
the consideration development followed in different countries. Below are discussed
the impacts of culture on an international business on the basis of body language,
communication, time etc.
Body Language
Every country follows a different culture, which can be clearly found or seen in the
behaviour and body language of its people. In order to work internationally, accepting
the facts about underneath gesture or motion becomes essential. There is likelihood
that people can get the wrong impression about the actions of different cultures.
Thus, it calls for an accomplished planner to handle tricky state of affairs for the
duration of conference. (Moran et al,2011)
Communication
Communication is another aspect of culture that affects the international business.
Different countries have different ways of communication. The words and vocabulary
used by a few people might sound unkind to others. The pronunciation of some
words could have a different impact on the cultural ways of communicating in the
commercial sector. This can also act as an obstacle in the progression of business
communication. (Moran et al, 2011)
Time
The first thing that comes to mind when we talk about time in business in Punctuality.
Britishers and Germans are very punctual and follow a time-bound schedule. The
various 'time-cultures' could be one of the major factors for creating differences
amongst people from miscellaneous ethnicity. Multinational Companies follow a
schedule for meetings while doing a business and the way in which meetings are
handles could also be the cause of having different point of views. (Moran et al,
2011)
It is necessary for corporate houses to understand the social conditions of different
countries, to successfully tap the respective markets. Being sensitive to the values
and beliefs of different cultures of the world is necessary. (Leung 2005)
The marketing executives sent abroad to operate business out of the country go
through various problems and difficulties in trading with the commercial tradition and
customs of that country. To target the international market and customers is not an
easy task. It requires qualified experts who are trained and talented to deliver the
best of their capability to the clients.
CULTURE OF INDIA
India is a vast country which houses diverse cultures, ethnic groups and races. The
immense population of more than a billion people has resulted from invasions,
relocations and inter-marriages that took place over the centuries.
According to an article published in the Inter science Management Review (2012),
the various customs and traditions followed by people reflects in the business mores
of India. With the advent of technology, the companies have now started to venture
out into international markets. It has thus helped the human resources and the
organizations to get exposed to diverse working environments across nations. India
has greatly benefited by this turn of events as the gap in the work culture of India and
other nations has thus decreased to some extent.
INDIAN WORK CULTURE
First and foremost, the Indian etiquette calls for Namaste being a fundamental mode
of greeting or saying goodbye. Recently though, education has brought about a
reform in this practice as men and women now prefer to shake hands.
Due to their politeness and respect towards their guests, Indian people have trouble
saying no. This aspect of their nature may act as a hurdle in sealing of contracts or
doing negotiations. Paramount respect, courtesy and generosity is showered upon
guests in India. It is a utopia for the international travellers. (Rai and Neelankavil,
2009)
Rai and Neelankavil, 2009 also state that one of the major drawbacks of the Indian
work culture is that there is no management of time. Indians dont score too well in
terms of punctuality; long delays in meetings, cancellation or rescheduling of the
same are a common sight. This has found its roots in the basic mindset of people
and the Indian culture.
Another major failing of the Indian work system is the general slack of work in the
Government offices which leads to delays in meting out results, excess of the red
tape baggage that leads people not to have confidence in the system. Therefore, any
transactions in India call for a huge amount of patience to be able to meet with the
results.
The article published in Inter Science Management Review, 2012 also states that
Despite other shortcomings, Indians fare well in matters of the English language. The
adeptness of the average middle class over the language is laudable. There is
absolutely no hitch in sending and receiving of official letters, emails or faxes.
The office environment in India is usually very formal and there are no personal
relationship between the bosses and the subordinates. The decision making in
almost all of the private companies is from top to bottom, which may take a long time
for the decision to be made and implemented. This accounts for the general lack of
management inside the working sector. Most of the Indians carry their work pressure
home. They put in extra hours at work hence losing the work-life balance. This
creates more pressure on them as the workplace demands are entirely different from
that of the family. All this is done in an effort to earn monetary benefits and climb
higher on the ladder of hierarchy of the workplace. Indians generally dont make good
mentors, they are soft critics and dont stand up against something wrong as much as
they should. This is thought to be because of the process of appraisal, the appraiser
demands positive feedback despite the gaping holes in management and work. The
lack of dexterity of the appraiser is usually the main reason behind lack of the much
needed critical review. Indians have a hard time coping with changes of any sort, be
it changes in management or work timings. A lot of time and energy is required for
Indians to bring the change to practice.
IMPACT OF CULTURE ON HILTON HOTEL, INDIA
One such new path is the concern with national culture. Whereas traditional IB
research has been concerned with economic/legal issues and organizational forms
and structures, the importance of national culture broadly defined as values,
beliefs, norms, and behavioural patterns of a national group has become
increasingly important in the last two decades, largely as a result of the classic work
of Hofstede (1980). National culture has been shown to impact on major business
activities, from capital structure to group performance Gibson (2002).
Cross-cultural experimental literature examining the influence of individual
characteristics has evolved, yielding greater sophistication and specification to our
understanding of cultures influence. Much early cross-cultural work tested only for
the main effects of culture often using national culture as a proxy variable for a
given cultural orientation. That work, exploring the influence of the presence (a main
effect) of a given cultural orientation, laid the groundwork for more complex
experiments to follow, which test how differences in the levels (a moderating
influence) of a cultural orientation (even a primed, temporary one) influence
behaviours or perceptions. The research of Gelfand et al. (2002) examined
both the main effects and the moderating effects of individual characteristics on the
Hilton Hotel in India. Using national culture as proxy for cultural orientation, their
results support robust findings of self-serving biases in individualist cultures
(Thompson and Lowenstein, 1992), where the self is served by enhancing ones
positive attributes to stand out and be better than others, but find relatively less bias
in a collectivistic culture, in which the self is served by focusing on ones weaknesses
to blend in and maintain interdependence with others. However, they also measured
individual self-construal, and demonstrate that independent self-construal are higher
in India and are positively related to self-serving biases. Thus, not only is a main
effect of culture on the working of Hilton Hotel in India, but the examination of
individual self-construal helps to explain why such an effect exists. Research of this
type is especially valuable given that much of the theory underlying business
research has been developed and tested exclusively in Western contexts.
Diversity: Most organizations in the India, particularly large ones, strive for
consistency, standardization, and agreement, largely from the misleading assumption
that the elimination of divergence/diversity automatically results in efficiency and
success. This traditional view of organizational structure assumes that contradictions
are to be first prioritized, and then eliminated, so that everything will run smoothly.
We have all known managers and executives who need their subordinates to agree
with their decisions, tell them they are doing a terrific job, and avoid challenging their
authority. While this may be organizationally neat and psychologically comforting, it is
stifling, stagnating, and, over the long haul, counterproductive.
Experimental research focusing on the moderating influence of individual
characteristics contributes to this literature because it directly tests whether these
processes, biases, and behaviours are indeed universal phenomena, or whether they
are specific to Western populations. As Oyserman et al. (2002b) point out in their
Meta-analysis of research on collectivism/individualism, cultural priming is one of the
most promising areas of cross-cultural research. The theoretical underpinnings of
priming stem from social cognition research, which shows that accessible knowledge
influences behaviour, and that temporarily accessible and chronically salient
knowledge produce equivalent effects in the laboratory. Thus, priming techniques
create an experimental analogue of chronic differences between cultural groups by
temporarily focusing participants attention on different cultural content or values.
(Hong et al., 2000)
Examples of this research would be the study mentioned in an earlier section, as well
as which primed participants with cues that were or were not congruent with their
cultural orientation (e.g., using pronouns such as I and me for an independence
priming or we and our for an interdependent priming) and examined the influence
on factors such as cognitive speed and accuracy, memory, and attitudes. Results
across all the experiments indicate the existence of a chronic cultural orientation, and
one that is more malleable in the face of a primed orientation.
CULTURE OF U.K
There are about 3.7 million businesses in the U.K which includes 75% of jobs in
service industry like hotels, restaurants, travelling, shopping, computers and finance.
This sector consists of more than 20 million employees and 22 percent of British
workers work more than 48 hours a week. (Pryce, 2007)
According to the Central Intelligence Agency (2007), the United Kingdom is one of
the most developed countries in the world and being a leader in trade as well as the
leader as the financial centre. It is seen as one of the largest five economies in
Europe, with banking, insurance and other business services being an integral part of
it. As the United Kingdom is a part of the EU, most of the institutions and policies are
in accordance with the regulations laid out by the EU. As the UK has a monarchical
constitution, the government rarely gets involved in the matters of economy, its main
concern is with improving public services like education and health (The Economist,
2007). A large number of international and global enterprises find home in the United
Kingdom (Ferner and Varul, 2000). Due to diverse work environments provided by
these global enterprises, the British companies get to experience the work culture
provided by the international markets and manage it efficiently. An argument
provided by Ferner and Varul (2000) states that the British enterprises have a niche
above other companies in terms of development of customer friendly policies and
structures. Also, these enterprises play an integral role in globalization of industries,
thus placing UK in the top realm to play the role of international operations armed
with international companies.
Hence, the UK could be expected to be the place with the most number of globalized
companies with leading role of international operations.
KEY CONCEPT AND VALUES OF BRITISH CULTURE
According to an article on International Business Negotiations 2005, United Kingdom
consists of a blend of four cultural and ethnic backgrounds named as England,
Scotland, Northern Ireland and Wales. Such a multicultural country persists to bring
together its rich culture and modern attitude. The understanding of the basic
principled business standards of the United Kingdom is very important for any
company that wishes to operate business in such an inherited and reputable country.
Indirectness The most important aspect of British culture is its way of approach and
communication. In the U.K, people are known well for their graciousness and good
manners like courtesy, politeness and civility. While undertaking business in the UK,
it is seen that straight questions obtain indistinct answers and the exchange of
dialogues takes place in detail. In order to understand what one really means to say,
it is necessary to take note of the nature of voice and facial expressions. (Whittaker,
2009)
Stiff upper lip The term stiff upper lip is often used to describe the traditionally
British portrayal of reserve and restraint when faced with difficult situations. All
business meetings and deals are done with entire regulations and customs. Any
positive or negative form of emotion should be neglected in the british work
environment. (Whittaker, 2009)
Humour A vital element in all aspects of British life and culture is the renowned
British sense of humour. The importance of humour in all situations, including
business contexts, cannot be overestimated. Humour is frequently used as a defence
mechanism, often in the form of self depreciation or irony. It can be highly implicit and
in this sense is related to the British indirect communication style. (Whittaker, 2009)
The United Kingdom is renowned for its colourful history and strong sense of tradition
that has been shaped by a colonial empire, both civil and European war and a
constitutional monarchy. The fourth largest trading nation, the UK is fast becoming
Europes leading business centre. Supported by a long-established system of
government and economic stability, the UK is an attractive base for overseas
business, offering skills in areas such as research, development and technology.
However, in order to operate successfully in the UK business environment, there are
a number of important issues to take into consideration both before and during your
time there. (Kenna and Lacy, 1995)
IMPACT OF CULTURE ON HILTON HOTEL, U.K.
There are quite a few Hilton Hotels in the U.K. The most important cultural factors
that affect the business of Hilton Hotel in U.K. are as follows:-
PRICING
Price plays a key role in creating customer value and building customer relationship,
as well is one of the four elements of the marketing mix and an indicator that affects
buyer choice. Many companies today compete with each other with different prices in
both the domestic and the international market. Price is the only element in the
marketing mix that produces revenue; all other elements represent cost (Kotler et al.
2007).
Pricing is one of the most complicated decision areas encountered by Hilton Hotel,
U.K. Market prices at the customer level are much more difficult to control in
international markets than in domestic market. The pricing of the Hilton Hotels in the
U.K. in general is more complex and critical than those located in India.
According to Chee et al. (1998), the price is critical because it affects the firms ability
to stay in the market. The price is also complex, because of the diversity of markets,
with their different environment such as, political, legal, social, technological,
consumer characteristics, etc. Thereby, price is an issue that can affect the
international business and the companys co-operations in the foreign country
NEGOTIATIONS
According to Tayeb (1998) language is one of the major issues when it comes to
negotiations with trade partners from other cultures. Although it is not always
indispensable to know the partners language, several studies shows that a link exists
between successful company performance in winning new business in foreign
markets, and the ability of the company to conduct its business in the language of the
customer. Tayeb (1998) also states that there are some aspects of culture that
manifest themselves in a negotiation situation. Foreign partners not only speak
languages other than ones own, but also have a tendency, for cultural reasons, to
think in different ways and have different priorities in the way in which they do
business. For example, some people prefer to do their business meetings with
foreigners in a formal way, and would be offended to be addressed by their first
name; some might believe that the use of an informal style and first name would
signal to the partners that they are trusted. Two partners from these different cultural
backgrounds could easily misunderstand each other if they negotiate without a
previous knowledge of one anothers assumptions and values.
SUMMARY
In todays time of globalisation, international business is getting bigger and escalating
for both multinational as well as local companies. Due to this, cross cultural matter
have gained a lot of importance. In this literature review, the main focus has been to
discuss culture, its importance and impact on Hilton Group of Hotel in India and U.K.
This chapter has been presented to help the reader understand the basic theoretical
concepts which helps in the findings of the case study and answering the research
question.
This part of the thesis helped us in understanding the relationship between culture
and international business. Development in the fields of technology and
communication etc, companies from various cultures have started working together,
thus making culture an important subject of discussion in International Business.
This chapter discussed the Hofstedes five cultural dimensions named Individualism,
Power distance, Uncertainty, Masculinity and Long-Term orientation. It also explains
the working culture of India and U.K and the impact of culture on the business of
Hilton Hotel, India and Hilton Hotel, U.K.
In international business negotiations, it is important to learn about the counterparts
culture and thus ameliorate the problems that can arise in the course of the
negotiations. From this study, we can see that there are marked differences in the
Indian and British negotiation styles which stem from cultural differences among the
two countries. Knowledge of these differences will enable negotiators understand the
negotiation behaviour of their counterparts with a view to making negotiations
proceed with more ease. However, it is also important not to allow cultural
stereotypes to determine the relationships with the potential business partners. This
is because individuals may have their own distinct culture which does not always
mirror the countrys perceived culture.