Understanding Uncertainty Avoidance in Cross-Cultural Management

This report discusses the importance of understanding uncertainty avoidance in cross-cultural management, how it affects the values and expectations of employees, and how employers can handle high and low UAI employees. The report also describes theories of UAI and ways to manage cultural mismatch. It includes a literature review and findings on the topic.

Running head: CROSS-CULTURAL MANAGEMENT
CROSS-CULTURAL MANAGEMENT
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Executive summary
This report has discussed uncertainty avoidance as the tool to understand the culture of
different countries. Uncertainty avoidance is one of the most important dimensions pointed
out by the cultural scholar Greet Hofstede. This report has analysed the importance of
understanding the features of uncertainty avoidance, how this can affect the values and
expectations of the employees of an organisation and how the employers can handle high and
low UAI employees in their institutions. This report has described theories of UAI and found
various ways to mange to issue of uncertainty avoidance so that any type of issues regarding
cultural mismatch can be avoided.

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Table of Contents
Introduction:...............................................................................................................................3
Literature Review:......................................................................................................................4
Uncertainty avoidance as the issue:...........................................................................................5
Findings:.....................................................................................................................................8
Conclusion:..............................................................................................................................10
References and Bibliography...................................................................................................11

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Introduction:
The aim of this report is to discuss the uncertainty avoidance dimension present in the
organization. This particular dimension deals with the tolerance of the society for ambiguity
and uncertainty (Frijns, Gilbert, Lehnert, & Tourani-Rad, 2013). This refers to the search for
the ultimate truth in working in a situation. This also indicates to what extent the couture of a
country programs builds the mentality of its members so that they can feel either comfortable
or uncomfortable in the unstructured situations.
This issue is important for discussion as based on this the organisations operating in
the global market get the best idea to understand the expectation of the employees in one
hand and their style of working in the global market (Slawinski, Pinkse, Busch, & Banerjee,
2017). This uncertainty avoidance decides how much risks the employees or the market of a
particular place can tolerate. This is the reason why uncertainty dimension based on the
cultural theory of Hofstede is used to model the characters of the organisation. This
manipulated the loyalty, rules and the power structure of the organisations.
This issue is important for gaining efficiency in cross cultural management as it
mainly identifies the risk tolerance of the firms. The global companies like Woolworths when
enters one particular market, need to follow the traditions and culture of that particular place
otherwise conflicts arise and the firm fails to do business in that market (Chavis, 2012).
Different culture has different planning method, creativity and politics which build the
psychology of the people of that particular culture. The firms when enter the market actually
try to grab that essence of the culture so that it can motivate the employees, attract the
customers and form a dependable bond with the supply chain of that particular market.

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Literature Review:
In the decision-making procedure, proper understanding of the uncertainty avoidance
is required otherwise the companies cannot properly utilise their workforce. To Broekhuizen,
Giarratana and Torres (2017) the firms’ uncertainty avoidance dimension can affect the
product innovation and brand trademark protection activities. The firms with higher
uncertainty avoidance are less competitive in the product innovation and development phase
but more competitive in the brand trademark protection stage and produce more durable
brands (Broekhuizen, Giarratana, & Torres, 2017). Giebels et al. (2017) on the other hand
examines how uncertainty avoidance manages the employees to tolerate the unknown or
uncertain situations impacting on the communication alignment in the crisis negotiations. The
data collected and interpreted by the researchers, reveals that the negotiators face issues while
communicating with the other cultures and make decisions based on the positive alliance
(Giebels, Oostinga, & Taylor, 2017). Proper understanding of how effectively the
stakeholders will respond to the communication, the companies like Woolworths operating in
the different culture can make decisions and implement rule and policies based on this
(Zhang & Zhou, 2014).
Frijns et al. (2013) examines that the role of the national culture has direct connection
with the corporate takeover decisions. These authors argue on the managerial risk tolerance
and decision making because higher the uncertainty avoidance, lower the risks. It is important
because the corporations while entering a market make various decisions mainly related to
the production, hiring, takeovers and employee creativity (Frijns, Gilbert, Lehnert, &
Tourani-Rad, 2013). The firms cannot make decisions if feel threatened by the unknown
situations and ambiguity. This is the reason why the corporations try to do business with the
firms where the beliefs and institutions are prepared to avoid any type of risks.

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Uncertainty avoidance as the issue:
Uncertainty refers to the state in which the conditions and outcome both remain
unknown as well as unpredictable. Some employees and organisations remain more
comfortable with the uncertainty with the others as this completely depends upon the national
culture of the companies and people (Hwang & Lee, 2012). On the contrary the degree to
which the people participate in the certain behaviours for staying in the comfortable
situations is referred as uncertainty avoidance. Uncertainty avoidance reflects the extent to
which the security intentionally embraces as well as avoids the unseen or unknown. The
culture which has a high uncertainty avoidance dimension actually value risk taking
mentality, ambiguity and limited structure (Broekhuizen, Giarratana, & Torres, 2017). The
people from uncertainty avoiding culture tend to have a low tolerance capacity for the
conflicts. These cultures value security over risks. The societies which have experience of
military conflict, war, political instability and repression, possess the population with low
uncertainty avoidance.
In this regard, the examples of high uncertainty avoidance in the organisations and
their response to the day to day business can be elaborated. The organisational culture of
Latin America, Germany and Japan are some examples which have high uncertainty
avoidance factor in their operations and mentality (De Mooij, 2013). In this culture, the
employees stay with the one organisation for longer period of time and the decisions are
made by the consensus of all. In this organisational culture the job roles require higher level
of expertise as well as creativity so that any type of uncertainty or issue does not emerge
(Slawinski, Pinkse, Busch, & Banerjee, 2017). On the contrary, the low uncertainty
avoidance is quite open to the new and creative ideas. This is the reason why there is an
amplified readiness and willingness to take risks. The people in this particular organisational
culture approach their projects from different angles as well as perspectives. They possess

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more flexible attitude to the deadlines (Giebels, Oostinga, & Taylor, 2017). The organisations
possessing this outlook allow the employees to indulge in the informal activities and enjoy
flexible rules to enhance the productivity and creativity of the firms. The countries like the
United Kingdom, United States and Denmark follow these low levels of uncertainty
avoidance (Minkov & Hofstede, 2014).
The theories applied in roper understanding of uncertainty avoidance, the cross-
cultural theory of Greet Hofstede and Edward Hall can be discussed. According to the cross-
cultural theory of Hofstede, there are six dimensions based on which, the organisational
culture of the firms in a market can be identified. This uncertainty avoidance dimension by
Hofstede relates to the degree to which the individuals of one particular society or an
organisation work comfortably with uncertainty as well as unknown situations (Minkov &
Hofstede, 2014). To Hofstede, the countries that display a strong uncertainty avoidance
index, behave as well as behave in the strict manner. The individuals in this particular culture
avoid unconventional process of thinking as well as behaving. The weaker uncertainty
avoidance index organisations show more acceptances with change and uncertain situation
(Zhang & Zhou, 2014).
According to the cultural dimension theory of Greet Hofstede, there are numerous
ways for detecting where the market has higher tolerance with the risks and uncertainties
(Hwang & Lee, 2012). Typically, the usage of formalities in the interactions with other
people, dependence on the formalised procedures, resistance of the change and the intolerant
behaviour for the usage of untraditional processes are the chief characteristics of the high
uncertainty avoidance. To this theory, the people with higher level of uncertainty avoidance
factors, often afraid to accept those people who are different from them (Kong, 2013). For
instance, the societies like Portugal, Greece and Guatemala have limited level of changes in
themselves for which, the innovation in the social structure and administration along with

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business, the countries cannot change themselves hence come under economic problems like
recession (Qu & Yang, 2015). The countries with low uncertainty avoidance have lower level
of informality both in their communication as well as decision making process. This culture
relies on the informal norms as well as behaviours in most of the matters. In addition to this,
they also show moderate level of resistance to change. This type of societies of culture do not
have any problem to interact or comfy others, different from them (Frijns, Gilbert, Lehnert, &
Tourani-Rad, 2013).
In this regard, the theory of culture by Edward Hall can be associated. As mentioned
by Hofstede, the communication system of the low uncertainty tolerant countries is more
formal than the high uncertainty avoiding countries. To Hall, these cultures have similarities
with the low context cultures where the members are outspoken and straightforward (Chavis,
2012). Each of their messages is simple to understand and clear. This low context cultures are
more focussed on the verbal language so that any issue of ambiguity does not arise. The
members react in a visible and outward manner (Kong, 2013). In this culture, the task has
more importance than the relationships so that any conflict does not arise and create scope for
uncertainty. Time in this culture is also given utmost importance so that any type of threat or
risk does not arise in the firms.
On the other hand, the cultures which are quite comfortable with taking risks mainly
transmit their ideas through indirect and non-verbal ways (De Mooij, 2013). Most of the
members in this particular context indulge in gestures as the means of expressing their own
opinions. This is the reason why the possibility of risk arises if the listeners do not pay
attention to the messages properly. On the other hand, the information passes among the
members quite spontaneously and in a wide network hence the information flow works
quickly among the members (Minkov & Hofstede, 2014). This is the reason why the
organizations focus and analyse the culture of the market before they enter the market of the

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country. This helps the organizations to understand the expectations, style of working, values
and traditions of the employees and other stakeholders.
The culture with low uncertainty avoidance has some features which can be seen in
the communication, decisions and actions of its members. The culture follows its
conventional ideas and believes on them solely (Minkov & Hofstede, 2014). The members of
this type of culture are loyal to the established institutions for example, the customers of this
culture show more loyalty to one brand for which they are loyal. As this culture does not
allow any type of uncertainty, follow a strict systemization of predictable rules. The power
structure of this couture is also different from the others (Chavis, 2012). This culture has
power imbalance in the society where the subordinates cannot question the authorities. To
avoid any type of anxiety, the culture clearly defines roles for each of the individuals.
Findings:
From this above analysis it has been found that there are some features poses by both the
cultures having high uncertainty avoidance as well as low uncertainty avoidance (Zhang &
Zhou, 2014). From the theories of cultural dimension, some features of high uncertainty
avoiding cultures have been understood. These include-
 Conservative, structured and rigid society with limited flexible attitude
 Numerous societal conventions
 People are energetic as well as expressive. They are allowed to display their emotions
(Minkov & Hofstede, 2014).
In order to enter and operate in such a culture, the business organizations need to follow some
very important measures which include-
o Being clear as well as concise regarding goals.

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o Encouraging creativity
o Recognizing that there are numerous unspoken rules according to the cultural
expectations
o Recognising the emotions of the members and understanding that showcasing of
anger and hand gestures can be part of conversation.
On the contrary, the culture with low uncertainty avoidance shows the features like-
 Openness to innovation and changes
 Generally an inclusive society
 More inclined to the open ended learning as well as decision making
 Lesser sense of urgency
The business organisations operating in the low UAI societies need to follow some steps
which include-
o Negotiation, collaboration and input from all the levels are grated to be the success
factors
o Felicity in the workplace and balance between work and life is important for the
members
o Proper utilisation of risk taking mentality is needed so that success rate heightens.
Both from the cultural dimension theory by Hofstede and cultural context theory by
Hall, it can be understood that the global organisations if want to operate in the different
markets in different countries need to have proper understanding of the organisational
cultures of that region otherwise they will not be able to grab the attraction of the customers,
build connection with the supply chain and result in the conflict among the local employees
(Giebels, Oostinga, & Taylor, 2017).

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Conclusion:
Therefore, it can be concluded that different companies situated in different part of the
world have different culture and values. These cultures affect the operation of the
organisations in the market. These also affect the understanding, decisions and actions of
these companies which are quite different from the other. This is the reason why the
organisations operating in all over the world needs to have proper information of that market
before entering there. These described theories of UAI help to find various ways to mange to
issue of uncertainty avoidance so that any type of issues regarding cultural mismatch can be
avoided. This help them to understand the style of working of the employees thus mitigate
any type of conflicts in the workplace. This also helps to negotiate with the supply chain of
that region without the support of which the companies cannot do business successfully in
that particular market. Uncertainty avoidance factor is associated with the risk-taking
mentality of the societies based on which the international companies decide which way they
must follow to operate successfully matching their needs which creates scope for further
research on the effectiveness of the organizational culture. For some companies high UAI
culture is needed and for the other, low UAI society. Hence to avoid loss, proper knowledge
about this is mandatory.

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References and Bibliography
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