Geert Hofstede Analysis
The Geert Hofstede Analysis was developed by Professor Geert Hofstede, an internationally recognized expert in organizational culture and strategy. While working at IBM as a psychologist, Geert Hofstede collected and analyzed data from over 100,000 individuals from 50 countries.
Who might benefit from using this Index?
“Our web site, family-business-experts.com is a content-rich site and is the highest ranked, full service family business resource site on the Internet. Each month we register more than 100,000 page views and we host visitors from more than a 100 different countries each month,” says Don Schwerzler.
“From our web site, we support the Family Business Help Desk and when a question comes in from another country, I will use the Geert Hofstede Analysis to compare that country’s index to that of the United States. It helps me to frame and present my answer to a question within a practical context.”
“For instance, a few months ago I was asked to do an
interview with Manager Magazine in Bulgaria - on entrepreneurship and family
business. The Geert Hofstede Analysis proved very helpful for me to better
understand business culture in that country.”
Schwerzler, a leading expert in family business dynamics, has been studying and advising family business entrepreneurs since 1967 – a career span of more than 40 years. He is the founder of the Atlanta-based Family Business Institute and their web organization Family-Business-Experts.com
Dr. Hofstede developed the Geert Hofstede Analysis model that identified five primary dimensions to assist in differentiating cultures: Power Distance, Individualism, Masculinity, Uncertainty Avoidance and Long-Term Orientation.
Geert Hofstede Analysis Model
Power Distance Index (PDI) focuses on the degree of equality, or inequality, between people in the country's society. A High Power Distance ranking indicates that inequalities of power and wealth have been allowed to grow within the society. These societies are more likely to follow a caste system that does not allow significant upward mobility of its citizens. A Low Power Distance ranking indicates the society de-emphasizes the differences between citizen's power and wealth. In these societies equality and opportunity for everyone is stressed.
Individualism (IDV) focuses on the degree the society reinforces individual or collective, achievement and interpersonal relationships. A High Individualism ranking indicates that individuality and individual rights are paramount within the society. Individuals in these societies may tend to form a larger number of looser relationships. A Low Individualism ranking typifies societies of a more collectivist nature with close ties between individuals. These cultures reinforce extended families and collectives where everyone takes responsibility for fellow members of their group.
Masculinity (MAS) focuses on the degree the society reinforces, or does not reinforce, the traditional masculine work role model of male achievement, control, and power. A High Masculinity ranking indicates the country experiences a high degree of gender differentiation. In these cultures, males dominate a significant portion of the society and power structure, with females being controlled by male domination. A Low Masculinity ranking indicates the country has a low level of differentiation and discrimination between genders. In these cultures, females are treated equally to males in all aspects of the society.
Uncertainty Avoidance Index (UAI) focuses on the level of tolerance for uncertainty and ambiguity within the society - i.e. unstructured situations. A High Uncertainty Avoidance ranking indicates the country has a low tolerance for uncertainty and ambiguity. This creates a rule-oriented society that institutes laws, rules, regulations, and controls in order to reduce the amount of uncertainty. A Low Uncertainty Avoidance ranking indicates the country has less concern about ambiguity and uncertainty and has more tolerance for a variety of opinions. This is reflected in a society that is less rule-oriented, more readily accepts change, and takes more and greater risks.
Long Term Orientation (LTO) focuses on the degree the society embraces, or does not embrace, long-term devotion to traditional, forward thinking values. High Long-Term Orientation ranking indicates the country prescribes to the values of long-term commitments and respect for tradition. This is thought to support a strong work ethic where long-term rewards are expected as a result of today's hard work. However, business may take longer to develop in this society, particularly for an "outsider". A Low Long-Term Orientation ranking indicates the country does not reinforce the concept of long-term, traditional orientation. In this culture, change can occur more rapidly as long-term traditions and commitments do not become impediments to change.
The Hofstede Centre
If you are a family business that is thinking about doing business in another country, take a few minutes to compare the culture index in the United States (or your home country) and the country being considered.
If you are already doing business in a foreign country and are planning to move into another country, compare the index for each country to be better informed about cultural differences – before you begin your negotiations.