International Business: Hofstede's Dimensions in Italy and Canada

This case study examines the impact of cultural dimensions on international business, focusing on Italy and Canada. It begins with background information on both countries, highlighting their economic and social characteristics. The study selects the retail business as a suitable venture for Italy, explaining its potential for GDP growth. It analyzes the external business environment of Italy, considering globalization, economic factors, and political stability, and compares it to Canada's business landscape. A key component involves applying Hofstede's cultural dimensions (power distance, individualism, masculinity, uncertainty avoidance, and long-term orientation) to both countries, revealing significant differences in their cultural values and business practices. The analysis concludes that while Italy presents challenges, its technological advancements and recent budget surplus offer opportunities for business, whereas Canada is more developed. The study references relevant academic sources to support its findings.

Case Study Using Hofstede’s Cultural
Dimensions
1

Table of Contents
Introduction...........................................................................................................................................3
Background of the country selected...................................................................................................3
Nature of Business and reason behind such selection........................................................................3
External business environment of Italy..................................................................................................3
Differences between Canadian business world and the Italian business world......................................4
Conclusion.............................................................................................................................................7
Reference List........................................................................................................................................8
2

Introduction
In this study, how cultural dimensions affect the organizational set up in international country will be
discussed. For the discussion, Italy and Canada is selected.
Background of the country selected
In this study Italy is selected foe the business set up. Italy is a European country that is characterized
for its historical culture. The country has rich history because of its geographical location. Country
has more than 60 million people living in it. Economic parameters of Italy are considered then it is
visible that GDP of the country initially was in modest position but later on it became dynamic, the
recent GDP growth rate of the country is 1.571 which is quite low. Even the data of GDP shows that
negative growth rate is also recorded in the country (Federico & Tosti, 2017). In terms of standard of
living, a high standard of living is observed here.
Nature of Business and reason behind such selection
The business that can be set up in Italy is retail and this retail business is selected to be established in
Italy because here the international retail firm evolution is low and if this international retail firms can
emerge then it is expected that the GDP growth rate of the country will appreciate because retail
industry all over the world has proven to be beneficial for both the host and the home country (Porter
& Kramer, 2019).
External business environment of Italy
After the introduction of the globalization era, organizations can emerge in both in the national and
international purview, however this emerge of the organization has resulted in severe competition at
the market place and for this severe competition, firms sought to search for survival strategy.
Globalization has resulted in several options in front of the consumers so for an organization to
sustain in the market it is very significant to gain competitive advantage and this competitive
advantage helps the organizations to pose threat to its rivals. Italy is a country which is affected by the
globalization process a lot (Matzler et al., 2016). Globalization has enabled the country to export its
3

best quality products. Around the world, Italian products are in high demand and the most common
ones are the cars like Ferrari, Fiat and many more. If the current account balance of the country is
considered then it can be found that initially the country suffered a lot of budget deficit but after the
globalization process over the last decades the country has recorded surplus in budget owing to the
fact that country mostly leads in the deficit position. This surplus in the current account balance is due
to the increase in the volume of Italian goods and services.
The main issues that the can be observed here in Italy is weak economy and this is due to the crisis
faced by the economy. The GDP growth rate shows that country was severely affected by the global
financial crisis and it took time for the country to recover. After recovery due to political imbalance in
the country, country again suffered crisis and for this witnessed negative growth rate. Thus this
political instability can pose threat to the business set up because business set up here requires huge
confirmation from governmental bodies hence for this reason, challenges may be faced by the
business which is aiming to evolve in Italy.
Now if the standard of living in Italy if considered then it can be seen that cost of living is high here
but at the same time an extreme diversity is found in the cost of living, this is due to the fact in urban
and the rural areas cost of living differs from each other. Thus, this diversity again can act as barrier
for the business set up because in terms of prices a uniformity is very significant to be maintained
because then only the purpose of emerging in the international market may be served.
Finally, if the current account balance of the country is considered then it can be found that over the
last few years the country has recorded surplus in budget owing to the fact that country mostly leads
in the deficit position. This surplus in the current account balance is due to the increase in the volume
of Italian goods and services. This surplus in budget can provide opportunity to the business set up in
terms of providing a path of enjoying the Italian best quality products.
Differences between Canadian business world and the Italian business world
Canada is the northern part of America, here the population rate is not that high as compared to other
countries. Canada is characterized for its great measurements which are the government transparency,
4

freedom, education and many more. Country is considered to be the most ethical place to live in. In
Canada, the numbers of immigrants are high and all this is due to the fact of ethical country that
promotes diversity. Now if the Canadian aspects if compared to that of Italy it can be said, that in
terms of measurements like government transparency, foster of equality Italy lags far behind Canada.
In Italy, the corruption level is very high and this is the reason country is characterized by unethical
practices within the country. Thus, from first glance by comparing Canada and Italy it can be
observed that Canada is far more developed country than Italy. Now if the Hofstede’s cultural
dimension is considered then a clear view of the cultural aspects of both the countries can be obtained.
Hofstede’s dimensions help to get a clear picture about the most likely cultural impacts that can be
expected (Khlif, 2016). Hence in this study the implementation of Hofstede’s cultural dimensions is
very significant.
Hofstede’s cultural dimensions consists of six dimensions and these six dimensions will aid in
understanding a culture (Mazanec et al., 2015). If this Hofstede’s six dimensions applied to Italy it can
be observed that six cultural dimensions provides different results which is discussed below.
Power distance which shows that all individuals are not equal in a society, this dimension mainly
shows attitude of culture to the inequalities. In Italy the power distance score is 50, while in Canada
the score is 39. Thus, low score shows that in Canada inequality exits low in number while in Italy,
the inequality exits in high extent. In Canada, inhabitants are interdependent, here superiors are easily
accessible making it possible to solve issues more quickly.
Individualism which is the dimension for measuring interdependence among the members of the
society shows that in Canada the score is 80 and this shows that Canadian culture reflects individualist
culture. In Italy the score is 76 which again reflects Individualist culture. This Individualist culture
mainly shows that employees are self-reliant and takes initiatives (Damen et al., 2018).
Masculinity is another dimension which showcases whether society is driven by competition or not.
In Italy, the score is 70 which straight away indicates that the society of Italy is driven by masculine
factor here competition exist in everything. In Italy, the work environment shows that competition
5

leads to success of the employees. In Canada, the score is 52 and this shows moderate Masculine
society. Here the competition level is moderate and for this performance matters not the rank
(Ladhari, Souiden & Choi, 2015).
Uncertainty avoidance is another dimension that shows the extent to which members of the culture are
threatened by unknown situations, in Canada, this dimension scores 48 which indicates that Canadian
culture accepts uncertainty and this is the reason why innovative products, new idea fosters here
leading to business successes. In Italy, the score is 75 and this high score indicates, Italian culture are
against ambiguous situations and thus it can be said that here detailed planning is very required before
coming into business.
Long term orientation is the dimension which shows which orientation is preferred short or long
terms. In Italy the score is 60 and this shows that Italian culture is of pragmatic nature. While
Canada’s score shows that it is 36 which reflects Normative society (Miller et al., 2018).
Thus, from the above Hofstede’s analysis it can be said that Italy, will support the business set up less
although there are obstacles but removal of obstacles here is not impossible. From technological
perspectives it can be seen that Italy do have good technological upgradation which involves of
technology in most of the activities thus this technological upgradation will affect the business in a
positive way.
6

Conclusion
From the above analysis it can be seen that Italy along with obstacles provides opportunities too the
business organizations. Here although the culture does not promote innovate idea but here there is
evidences of celebrating the traditional approaches and thus this traditionality can serve as
opportunities to the organization. From the technological perspectives too , Italy provides latest
technologies which again aid the organizations to carry out the business operations smoothly. Thus, it
can be said that challenges can be overcome here by adopting proper strategies. The recent budget
surplus in Italy, is paving path of support to the business operations and this can be viewed as the
opportunities that will lead to the success of the business set up.
7

Reference List
Damen, F. W., Hofstede, G. J., Steenbekkers, B. L., Vitaglione, P., Pellegrini, N., Fogliano, V., &
Luning, P. A. (2018). Values and value conflicts in snack providing of Dutch, Polish, Indonesian and
Italian mothers. Food research international.
Federico, S., & Tosti, E. (2017). Exporters and importers of services: Firm‐level evidence on
Italy. The World Economy, 40(10), 2078-2096.
Khlif, H. (2016). Hofstede’s cultural dimensions in accounting research: a review. Meditari
Accountancy Research, 24(4), 545-573.
Ladhari, R., Souiden, N., & Choi, Y. H. (2015). Culture change and globalization: The unresolved
debate between cross-national and cross-cultural classifications. Australasian Marketing Journal
(AMJ), 23(3), 235-245.
Matzler, K., Strobl, A., Stokburger-Sauer, N., Bobovnicky, A., & Bauer, F. (2016). Brand personality
and culture: The role of cultural differences on the impact of brand personality perceptions on tourists'
visit intentions. Tourism Management, 52, 507-520.
Mazanec, J. A., Crotts, J. C., Gursoy, D., & Lu, L. (2015). Homogeneity versus heterogeneity of
cultural values: An item-response theoretical approach applying Hofstede's cultural dimensions in a
single nation. Tourism Management, 48, 299-304.
Miller, J., Snyder, G., Antoniou, D., Bitar, E., Garrett, C., Alcocer-Loredo, F., ... & Norman, G.
(2018). HOFSTEDE’S 6 DIMENSION COMPARISON OF THE UNITED KINGDOM, CHINA,
COLUMBIA, CHILE, CANADA & THE UAE. Copyright 2018 by Institute for Global Business
Research, Nashville, TN, USA, 149.
Porter, M. E., & Kramer, M. R. (2019). Creating shared value. In Managing sustainable business (pp.
323-346). Springer, Dordrecht.
8