Business Across Culture: Critical Assessment of Hofstede Model and Impact of Cultural Diversity on Cross Border Business

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Business across Culture
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Section 1
Critical assessment of Hofstede model of national culture
Hofstede model of national culture is also known as the Hofstede’s cultural dimensions
theory. In this model, social psychologist Geert Hofstede presented the result of his research on
the ways that the businesses are conducted between different nations and how the cultural
differences impact the businesses. This model is the result of one of the most comprehensive
studies about impact of culture on the workplace values. Hofstede defined culture as mind’s
collective programming that distinguishes the individuals of one category or group from the
others (Hofstede 2018). Hofstede carried out the research on this subject over 100,000
employees of IBM, working across the world. He categorized the cultures of people belonging to
different nationalities to evaluate the impact of culture on the working environment. The aspects
of culture are divided into six dimensions, namely, Power Distance Index (PDI), Individualism
versus Collectivism (IDV), Masculinity versus Femininity (MAS), Uncertainty Avoidance Index
(UAI), Long Term Orientation versus Short Term Normative Orientation (LTO) and Indulgence
Versus Restraint (IND). The cultural dimensions stand for the independent preferences for one
type of affairs over the other, which distinguishes the countries and not the individuals from each
other (Hofstede Insights 2018).

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Figure 1: 6 dimensions of Hofstede model for national culture
(Source: Hofstede 2018)
The dimensions of the model are as follows:
Power Distance Index (PDI): this measures the extent to which the inequality in power or
hierarchy is tolerated and if there is a strong sense of status and power among the people. In
other words, it represents the degree to which the members of a society, who are less powerful,
expect and accepts the unequal distribution of power. This shows how inequality among the
people is treated by the society. The hierarchy has more importance in countries with more PDI
score (Fang 2012). A higher PDI score indicates that the culture accepts and encourages the
national bureaucracy and pays high respect to the authority and rank in the system, while a
culture with a lower PDI score encourages a flatter bureaucracy with equal distribution of power
and more emphasis on autonomy and personal responsibility.

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Individualism v Collectivism (IDV): This aspect focuses on the importance of individuals and
the societies. Higher IDV score represents the emphasis on the individual efforts more than that
of the group effort. It has bigger implications for the financial rewards at the workplace, in terms
of individual bonus versus the profit sharing for the larger groups (Taras, Steel and Kirkman
2012).
Masculinity versus Femininity (MAS): The aggressiveness and competitiveness of a culture to
achieve something is measured by this score. This mainly focuses on decision making style of a
culture. The nation with a high MAS score is focused on aggressiveness, competitiveness,
assertiveness and material rewards for accomplishing success, while the nation with a low score
adopts cooperation, modesty, quality of work and life and compassion while making a decision.
Uncertainty Avoidance index (UAI): This score measures the risk aversion nature of the
culture. A low score indicates that people are willing to accept more risk and ambiguity and
embrace the change, representing entrepreneurial nature, while a high score indicates a rigid and
orthodox society, not much willing to take risk or adopt the entrepreneurial nature.
Long-term orientation versus Short Term Normative Orientation (LTO): LTO score
indicates how much the nation puts emphasis on long term planning and perspective in regards to
the business objectives, planning and performance and investment decisions.
Indulgence versus Restraint (IND): This score indicates how much the society indulges in the
free living and enjoys fun. Restraint stands for a culture, which suppresses the gratification of
needs and imposes strict social norms to restrict it.

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Criticisms to Hofstede model
The most common criticisms of the Hofstede model address the assumptions of
homogeneity of the country culture, simplicity due to one company approach, factors of national
culture versus non-cultural factors, inclination towards the western culture and assuming that
culture is constant. The Hofstede model assumes that the domestic population of the country is
homogeneous (Mazanec et al. 2015). It ignores the fact that the population belongs to different
ethnic units having different dimensions of culture. One nation does not have one particular
culture pattern, language, customs and norms and the model does not consider that. Even the
difference between the culture and the subcultures is also ignored in the model.
The model is too simplified. Hofstede took the employees of one particular company to
conduct his study. According to Taras, Steel and Kirkman (2012), few employees of only one
organization cannot represent the entire culture of a nation. It is also said that, in the Hofstede
model, the non-cultural factors were ignored, which have significant impact on the national
culture. There are economic, political, institutional and many social factors that have influence
on the national culture and the critics say that, studying only one company and making
conclusion based on that is not justified (Minkov and Hofstede 2012). Apart from that, using
survey as the only research instrument for constructing a theory has faced criticism too.
According to Dartey-Baah (2013), there should be other methods or strategy also to support the
results of the survey and make the theory more grounded. The study also does not take into
account the rapid changes in the global environment, that is, impact of globalization and
convergence. Due to these factors, there is a rapid change in the business environment and
organizational cultures, which also reflect the changes in the society and cultures. Cultures are
dynamic and these are changing very rapidly. These are not addressed in the Hofstede model of

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national culture, and hence, in the modern world, which is largely dominated by the
globalization, the Hofstede model does not hold significance in many cases.
Responses of the criticism (Other theories)
There are some other theories formulated by other eminent scholars in response to the
criticism of the Hofstede model. Those theories are Trompenaars' model of national culture
differences, Hall's theory of cultural context, World Values Survey and the GLOBE research
project.
In the Trompenaars' model of national culture differences, a cross cultural
communication framework was designed and applied to the general business and management.
This model has seven dimensions, namely, Universalism versus Particularism, Individualism
versus Communitarianism, Neutral versus Emotional, Specific versus Diffuse, Achievement
versus Ascription, Sequential versus Synchronic and Internal versus External control
(Beugelsdijk, Maseland and Hoorn 2015). This theory focuses on the more detailed approach
towards cultural dimensions while keeping some similarity with the Hofstede model.
Individualistic natures and approach towards the cultural aspects are addressed in this theory.
Hall's theory of cultural context addresses the high-context and low-context cultures
and the way of businesses done in those two types of culture. According to Hall, in the high-
context cultural countries, there is implicit meaning of the messages that carries more
information than the actual spoken words, while in the low context countries, messages carry
transparency in meaning and information to be conveyed. Hence, context is relative and plays a
major role in measuring the cultural metrics of the country. High–context cultures are relational,
intuitive, collectivist and contemplative (Crane, Kawashima and Kawasaki 2016). With