Understanding Cultural Values Developed by Hofstede: The Key to Effective Global Business
Globalisation has expanded the opportunities for businesses to venture into international markets. With diverse cultural backgrounds, however, businesses must understand cultural values and norms to succeed. Therefore, we will discuss the importance of cultural values developed by Hofstede and their application in effective global business.
The Cultural Dimensions Model
Hofstede’s cultural dimensions model explains that values are significant elements that shape culture. Hofstede identified six cultural dimensions that affect the way people think, act, and behave in social interactions. They are:
- Power Distance Index (PDI)
- Individualism vs collectivism
- Masculinity vs Femininity (MAS)
- Uncertainty Avoidance Index (UAI)
- Long-Term vs Short-Term Orientation (LTO)
- Indulgence vs Restraint (IVR)
Application of Hofstede’s Cultural Values in Business
The understanding of cultural values developed by Hofstede gives businesses an edge to operate efficiently in new markets across the borders. For instance, PDI measures the level of inequality in society and reflects the acceptance of authority. A high PDI scoring society places a higher value on status and rank, while a low scoring society emphasises equality and democracy. A business intending to operate in a high PDI society should take a hierarchical approach in its business models.
In contrast, individualistic cultures value personal achievement, independent work, and self-expression, while collectivist cultures emphasise group responsibility, interdependence, and teamwork. A business must identify the cultural values of the society it intends to do business in to prevent misunderstandings and conflicts.
Examples of Effective Global Businesses through Understanding Cultural Values
Several companies have made significant strides in the international market by embracing cultural diversity and values of the new environment. McDonald’s, for example, successfully adjusts its menus to local tastes, featuring specific items that reflect the culture of the particular location. The company respects cultural differences while maintaining a global brand image.
Another example is the international consultancy firm, KPMG. KPMG hires staff who represent diverse cultures, languages and nationalities that reflect their client base.
Conclusion
In conclusion, cultural values developed by Hofstede are critical in understanding the differences and similarities between cultures. It offers a solution to businesses expanding into new markets or operating internationally to communicate and cooperate effectively. Therefore, businesses must recognise the cultural values of their local employees, their consumers, and business partners to build mutual cultural respect and understanding.
