LCBS5042 Business Across Culture: Hofstede Model and Amazon Case

This report provides a comprehensive analysis of the Hofstede model of national culture, exploring its dimensions and applications in cross-border business. It begins with an introduction to the importance of cross-cultural management and the role of Hofstede's model in understanding cultural differences. The report critically analyzes the model, reviews relevant literature, and examines each of the six dimensions with examples. It then delves into the criticisms of the model and compares it with alternative models like Trompenaars. The report further investigates the impact of national culture on organizations, using Amazon as a case study to illustrate both the positive and negative effects of cultural differences in international business. It also discusses the Organizational Culture Inventory. The report concludes by summarizing the key findings and implications for managing cross-cultural challenges.

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Table of Contents
Introduction......................................................................................................................................2
Critical analysis of Hofstede’s model..............................................................................................2
Literature review..........................................................................................................................2
Hofstede’s study of cultural dimensions:.................................................................................3
Cultural defined:.......................................................................................................................3
National culture:.......................................................................................................................4
Organizational culture:.............................................................................................................4
Dimensions of Hofstede’s model:............................................................................................4
Criticism of Hofstede’s model:....................................................................................................5
Comparison of alternative model:................................................................................................6
Impact of National Culture on the organization..............................................................................7
Organizational Culture Inventory....................................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

Introduction
Global platforms are changing faster than expected and that increases the need for managers and
organization to understand the concept of cross culture management. The concept of cross
cultural is taking importance due to increased global trade and cross border transactions. Due to
that Hofstede’s model of cultural dimensions culture gets attention. His model is used by the
organizations to develop a proper workshop and training framework. Cross culture management
is done also through knowing the cultural differences that exist between the host country and
domestic country (Kwantes and Glazer 2017). In contrast to this theory, some other theories or
models also contributed to gaining knowledge about cross cultural management. Hofstede’s
Model is a tool to examine the cultural differences between two dimensions on the basis of
different dimensions between the two countries. According to Martin Luther King “The same
boat stands metaphorically for cross border relations and international businesses, and the
different ships for the employees and managers of an organization who come from different
countries, cultures and backgrounds”. The same concept applies to cross border businesses in
order to work effectively there is a need to understand the cultural diversity and take necessary
step for cultural management (Beugelsdijk, Kostova and Roth 2017).
This report consists of critically analyzing the Hofstede’s Model and its comparison with other
models. The six dimensions of culture are explained in this report with some examples. Further
sections of the report concentrate on examining the negative and positive effect of national
cultural differences on the cross border businesses. To understand this aspect a case of Amazon
will be discussed and the problems that the company faces due to national cultural differences
and the positive factors that lead to the success of the organization in many cross border trade.
Critical analysis of Hofstede’s model
Literature review
This section emphasizes the key elements of this study that is how culture affects cross border
businesses. This analysis can be done with the help of a tool that is the Hofstede Model. Further,
the literature review includes criticism of this model and its comparison with other tools to
analyze the cultural differences in the countries (Piepenburg 2011).

Hofstede’s study of cultural dimensions:
The Hofstede cultural dimension was introduced by the Geert Hofstede a Dutch psychologist and
his landmark study is called “culture consequences”. By his cross-cultural studies, he recognized
four important dimensions. In his book, Alvesson and Sveningsson (2015) identified four
dimension of culture initially and then the study later on extended to six dimensions of culture.
These dimensions are uncertainty avoidance, power distance index, feminism and masculine,
collectivism and individualism, level of indulgence and short and long term orientation.
Hofstede model helps in understanding the shifting of the modern world from traditional
methods to modern methods that influence greatly the cultural aspects of different countries. The
study was done by many researchers from different fields and this model was used earlier to
know the cultural differences but in this modern era this model fails to define the cultural
behaviors of the countries in context to organizations.
Cultural defined
The culture is defined as the values and belief of a particular community or country and the way
people perceive or used their rituals, customs and working in the current era. “Culture is derived
from a Latin word cultus”. Alvesson and Sveningsson (2015) define culture as the stable set of
belief and values that are usually seen in or followed by a group of people in countries or the
effect of those beliefs and values on the outside people. The most cited and preferred definition
of culture is provided by Alvesson and Sveningsson (2015) “culture is a collective programming
of the mind which distinguishes the one human group’s members from the other”. The
comparison of different definitions and taking these definitions together, Piepenburg (2011)
recognized some key characteristics of culture:
1. Firstly, culture can be learned from observation and practice as it cannot be inherited.
2. The main characteristic is that culture is shared by the group of people as it is the
common characteristics of a group not an individual.
3. Culture cannot be developed instantly; it is passed from one generation to another
generation.
4. Culture is something that differentiates the countries values and traditions and helps in
recognizing the value of them in their own ways.

5. Culture is patterned and this is integrated with the values and rituals that varied from
country to country and impacted others if applied to them.
6. Lastly, culture is adaptive as humans can adapt to the culture of one group or can learn it
through observation or by practicing it (Yoo, 2018).
National culture:
National culture is the broadest level of the culture as it is seen on the national level, or the
culture in which an individual upbringing is done by assumptions, belief and values that are
inherited in them. Furthermore, it is considered as the characteristics that can be learned and are
not genetic. They simply define national culture distance as a degree to that norm is not same
between countries. This model suggests that three reasons are there for the existence of the
differences between the countries that is sociological, political and psychological. The main
comparison factor of national culture differences is social factor or difference in the social
behavior of people in the country.
Organizational culture:
Organization culture is considered as the culture in which organization or businesses run,
organizational culture is based on the national culture and domestic culture of the country. The
culture in any organization is developed or framed by the internal and external forces that have a
great influence on maintaining and framing the organizational culture. Thus, organizational
culture is taken as the way that is natural in knowing the business environment and taking the
actions accordingly (Minkov, 2018).
Dimensions of Hofstede’s model:
1. Power distance index: it is the degree of inequality which presents and is accepted among
people with or without the power. According to this model, in the high power distance
index such as Malaysia, the group or team will not going to take initiate as the team is
dependent on the direction and guidance of their team leader as he possesses all the
power to take decision that leads to less innovative things and keeps the employees in the
comfortable zone.
2. Collectivism and Individualism: Individualism index of any country if higher than it
means that the culture of country is to work individually and focused on their benefits
rather than working on teams and initiate collaboration. Central American countries such

as Guatemala and Panama have low individualism versus collectivism scores that are 11
and 6. In these countries the people believe in collectivism and work in teams to attain
the objectives as addressed all people as part of a group and worked in teams to ensure
collectivism.
3. Femininity and Masculinity: It refers to the characteristics of women and men in a
country like countries that followed masculine characteristics believe to be more strong
and dominating whereas the countries that have feminine culture are adaptable and
flexible in nature and work according to the changing environment whether international
or national. As it is highlighted that japan has a high score of MAS that is 95 whereas
Sweden has a low measure value that is 5. Thus, if a person opens an office in japan they
should identify they are operating in the hierarchical, traditional and deferential
patriarchal society. Long working hours are norms and in turn this makes it tough for
women to gain advancement due to commitments of the family (Huang, Et al, 2019).
4. Uncertainty avoidance index: it refers to the situation of how better the individuals can
cope with the anxiety. In this model, Greece top the UAI scale that is 100 while
Singapore scores lower that is 8. Therefore, during the meeting in Greece, people might
be curious to create discussion as they identify that cultural tendency is there for the
members of team to make the safe, conservative decision in place of any emotional
outburst. Their aim is to encourage them to become open to various approaches and ideas
but it might be useful to provide limited structured set of the solutions (Moulettes, 2017).
5. Short and long orientation: This refers to the duration or horizon individual in any
community displays like the US has a short orientation. This reflects that the short term
signifies quick outcomes and countries that have culture to set short term goals and
review them in a shorter time period.
6. Indulgence versus restraint: this is discovered together with Michael minkov which is
relatively new and goes with by less data. According to this model Eastern European
nations including Russia have low IVR score. Hofstede’s argues that these nations are
characterized by the reserved culture, where tendency is there towards the pessimism.
Individuals put less focus on the leisure time and as this suggest that individual try to
reserve themselves to a high degree (Deephouse, Et al, 2016).

Criticism of Hofstede’s model
Many authors claim that this model is best suitable for analyzing the cultural differences between
countries and is effective in comparison to the diverse culture of different countries. But some of
the authors criticized this model and argued that the model has certain drawbacks and cannot be
applied or used in this modern era. The model failed because it lacks the reliability and validity
of culture differences. Further some of the dimensions that are not included in the Hofstede
model were culture perception, and methodology.
Non Cultural factors and National culture: It is known that culture is complex to understand as
every individual group or countries have their own cultural values and belief. The main criticism
of Hofstede model was the limited survey to explain the reasons and values of the dimensions.
Whereas it was not reliable as on the basis of limited data and information conclusion cannot be
made so all these dimensions of model required more analysis at the high level. However this
model didn’t focus on the society and the changes in the societal impact on the culture (Pelau,
2018).
Homogeneity of country culture: the model ignores the nation is consisted of diverse ethics
having diverse cultures. In China, 56 ethnic minorities are there. These have different cultures,
language etc. it is far-fetched to accept that one culture is there in china as they are all Chinese.
Another area where the model was lacking includes distinguishing between culture and
subcultures of the countries and the subcultures shift due to historical, political and economic
factors was not considered in the model (Barkley and Eggertsson, 2017).
Comparison of alternative model:
Hofstede’s and Trompenaars comparison:
From the seven dimensions that were given by Trompenaars; two dimensions were identical and
same as Hofstede model that are power distance and individualism and collectivism.
Trompenaars and Hampdetuner model include a dimension named communitarianism and
individualism was identical to the dimension collectivism and individualism. Further the
achievement value orientation was identical to power distance dimension. Trompenaars didn’t
touch the aspect of power rather he focused on the status of an individual and its impact on the
cultural aspects. However these two models are not completely matched with each other but

some dimensions are identical and more research was carried on the dimensions of national
culture of Hofstede model. Trompennars and Hampden-tuner’s other dimensions seem to focus
more on some resulting effects of underlying value dimensions. Their neutral or emotional
dimensions define the extent to which feelings are openly expressed that is a behavioral aspect
rather than a value in itself (McSweeney, 2016).
Impact of National Culture on the organization
National culture differences are mainly reflected on the decisions taken by the organizations,
such decisions include merger and acquisitions, cross border trade and foreign entry modes. In
relevant to Hofstede model, focusing on participative management can result in improving
profitability in low power distance cultures but it may worsen the situation in high power
distance culture. Quick fixes or solving problems in the management quickly can help in
improving the profitability in the countries where culture is focused on short term goals, but in
the long term oriented cultures the situation gets worse due to quick fixes. Further focusing on
the masculine and feminine dimension, the merit pay structure and some promotion strategies
can improve the profitability in the masculine culture but in the feminine culture the promotion
strategies don’t have any influence on the people (Deephouse, Newburry and Soleimani 2016).
To understand how national cultures affect the cross border transaction an example is taken,
Amazon and Whole Foods. Whole Foods was acquired by Amazon in 2017. The strategy of the
company behind this deal was to go beyond e commerce platform and make its presence felt in
the stores. The acquisition leads to disappointed after a year because of their cultural
compatibility. The problem in this acquisition was the difference in cultures of the countries, one
believes in tight culture and other on loose culture. Whereas tight company cultures focused on
routine and consistency in work and they have zero tolerance for unethical behavior, in this
cultures companies adhere to strict processes and rules to uphold cultural traditions. Loose
cultures mainly focus on the new ideas, avoid rules, focus on innovation and creativity, empower
their workers, prefer to be a visionary leader but people in these culture are disorganized. In this
case, Whole Food culture is considered as a loose culture that is the reason that employees are
not able to accept the cultural differences of Amazon and due to that organization employee
turnover increases (Nadar 2018). On other side, people in tight culture possess confidence, strong

decision making power and extreme confidence. In Amazon, tight culture is followed; leaders
are dedicated towards discipline and productivity that leads to failure of the acquisition deal
between Amazon and Whole Foods.
The joint venture of Amazon and JP Morgan is an example to study the positive impact of
culture on the cross border trade. In a joint venture organizations comes together to fulfill their
common goal and Amazon joint venture with Morgan’s leads to positive result. The main focus
of the deal was capturing the insurance market. Cultural differences are the reasons behind the
failures of mergers and international deals (Lopez, Gonzale and Vidal 2016). This becomes a
source of hostility, confusion and distrust between employees of these merging organizations.
Some organizational also experience positive impact of the national culture on the merger; for
example joint venture of Amazon and JP Morgan. Both these companies have the tight culture
and they are mainly focused on innovativeness and creativeness. Comparing the culture of these
organizations on the basis of Hofstede model it can be concluded that both the organization
focused on collectivism, have low power distance, and are long term oriented. These culture
dimensions are to be considered while deciding on mergers and joint ventures. In a nutshell,
national culture has negative as well as positive impact on joint ventures. As many companies
face cultural challenges like workforce diversity, communication issues, values of the
companies, working ethics and much more. These differences lead to failure of many deals at
national or global platform.
Organizational Culture Inventory
Organizational Culture Inventory is a tool to assess or measure the organizational culture. The
OCI goes beyond company culture, workplace culture and corporate culture. This tool is used to
measure the cultural dimension of all the type of companies. The OCI assess the current culture
of the organizations in relation to shared behavioral norms (Yuan, Cooke and Chaudhry 2016).
OCI helps in providing guidance or assistance to the members of the organization at all levels.
The expectations of the management from the members are disclosed to them so that they can
work according to that culture and values. The OCI is a source that gives the data to members
and leaders and a language of conversation about where they want to go and where they are now.

Managers or leaders of different countries take different approach to solve the same problem
because of their values and culture.
Amazon corporate culture focuses on the values and traditions, as this impact the employee’s
behavior in the organization. The corporate culture of the company forces the employees to go
beyond their limit and think innovative for the expansion of the organization and contribute best
to their ability. Corporate culture Amazon is the biggest factor of the company’s success; some
of the positive impact of the corporate culture of Amazon is boldness, peculiarity and customer
centricity. Employees of Amazon are induced to take risks and contribute to the growth of the
company with new ideas. The positive impacts of the corporate culture is that it promotes
creativity and innovation in the organization like Amazon whereas the negative impact of
corporate culture is that, it imposes stress on the human resource of the organization especially
by forcing the employees to take bold moves and unusual approaches to do their work.
Conclusion
The main focus of the assignment was to understand the impact of national culture on the cross
border businesses. With the help of Hofstede model it is known that culture of countries are
different and can be categorized using six dimensions of this model. Further, this was understood
with the help of a case of Amazon. That includes how amazon would be successful in the
mergers and to which extent culture plays the role in the success of those mergers. Other sections
were dealt with the negative impact of national culture on the cross border business. The national
culture has greater impact on the cross border businesses as corporate culture, organizational
culture and workplace culture affect the way management take decisions and that strategic
decision leads to success or failure of any ventures.

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