power distance in international business
TRANSCRIPT
POWER DISTANCE IN INTERNATIONAL BUSINESS
VIKAS KUMAVAT
International Business: Strategy, Management, and the New Realities
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What is Culture?Culture is the sum total of beliefs, rules,
techniques, institutions, and artifacts that characterize human populationsCulture is learnedIts aspects are interrelatedCulture is shared (as opposed to individual
traits)It defines the boundaries of different groups
LO1
International Business: Strategy, Management, and the New Realities
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Components of Culture
Physicalenvironments
Education
Personalcommunication
Religion
Social structure
Manners &customs
Values &attitudes
Aesthetics
Culture
International Business: Strategy, Management, and the New Realities
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Understanding National Cultures
Hofstede’s Dimensions of CultureIndividualism versus CollectivismLarge versus Small Power DistanceStrong versus Weak Uncertainty
AvoidanceMasculinity versus Femininity
LO9
International Business: Strategy, Management, and the New Realities
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Large versus Small Power Distance
Power distance refers to the extent to which members of a society accept the unequal distribution of power among individualsIn large-power-distance societies employees
believe their supervisors are right; employees do not take any initiative in making non-routine decisions
LO9
Power Distance &Individualism vs. Collectivism
• Uncertainty avoidance refers to the degree to which members of a society feel threatened by ambiguity and are rule-oriented– Employees in high uncertainty-avoidance
cultures tend to stay with their organizations Japan, Greece, and Portugal
– Those from low uncertainty-avoidance nations are more mobile United States, Singapore, and Denmark
Strong versus Weak Uncertainty Avoidance
Power Distance & Uncertainty Avoidance
Hofstede Calculations and Matrix
Low
Pow
er D
ista
nce
Hig
h11
44
94
8 56 112Low Uncertainty AvoidanceHigh
Power Distance and Individualism Scales-
ARG ArgentinaBRA BrazilCHL ChileCOL ColumbiaGRE GreeceHOKHong KongIND IndiaIRA IranJAP JapanMEXMexicoPAK PakistanPER PeruPHI PhilippinesPOR PortugalSIN SingaporeTAI TaiwanTHA ThailandTUR TurkeyVEN VenezuelaYUG Yugoslavia
Small LargePower Distance
Indi
vidu
alis
mC
olle
ctiv
ist
12
50
30
Small power distance collectivist
Large power distance collectivist
Reprinted by permission of the author from Culture’s Consequences, published by Sage Publications. ©1990 by Gert Hofstede
•PAK •COL
•VEN•TAI•PER
•THA •SIN•CHL•POR •HO
K •YUG•MEX •PHI•GR
E •TUR •BRA•IR
A•ARG
•JAP•IND+11 +28 +44 +64 +77 +94
Power Distance and Individualism Scales
AUL AustraliaAUT AustriaBEL BelgiumCAN CanadaDEN DenmarkFIN FinlandFRA FranceGER GermanyGBR Great BritainIRE IrelandISR IsraelITA ItalyNET NetherlandsNZL New ZealandNOR NorwaySAF South AfricaSPA SpainSWE SwedenSWI SwitzerlandUSA United States
Small LargePower Distance
Indi
vidu
alis
mIn
divi
dual
ist
53
91
71
Small power distance individualist
Large power distance individualist
Reprinted by permission of the author from Culture’s Consequences, published by Sage Publications. ©1990 by Gert Hofstede
•SPA
•SAF
•FRA
•BEL•ITA
•AUT•ISR
•FIN
•GER•NOR •SWI
•SWE
•IRE•DEN
•NZL •CAN•NET•GBR
USA•
AUL•+11 +28 +44 +64 +77 +94
Hofstede’s Classification of Triad Countries
3-8
Japan North America W. Europe (Canada, USA,
Great Britain)
Northern Continent Greece
Individualism low high high high low
Power distance high low low high high
Masculinity high high low high high
Uncertainty avoidance
high low low high high
Context high low high low
Exhibit 3.4
SMALL V/S LARGE POWER DISTANCE It is small in countries where bosses and subordinates work close together and consult each
other. Subordinates and superiors consider each other as or less equal even there is a difference in education level. The hierarchical system can always change depending on the circumstances. The hierarchies are flat with a decentralized organization and a small number of supervisors who are expected to be accessible for their subordinates. Within a company the degree for unequal treatment is reduced to a low level. There is a interdependence between employer and employee. The salary range is narrow between the top and bottom in companies. Subordinates expect to be consulted within the decision-making process.
In contrast in large power distance countries the relation between boss and subordinate is strictly ruled and dependent on the decisions of the boss. In companies with larger power distance which have a very centralized organization, subordinates expect to be told what to do from their superiors because they consider each other as unequal. Inequalities are normally expected and privileges are seen as desirable by superiors. There is a large extend to centralization and the salary range is wide. People in high power distance cultures positive emotions are expressed to superiors and negative emotions to subordinates.
POWER DISTANCE INDEXEngland’s power distance is 35. This means
that England has a low power distance. The United States has a power distance of 40. In comparison England’s power distance is just a bit lower than the United States. Generally, it is much easier for international business to occur when countries have close power distance
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