Analyzing Hofstede’s Cultural Dimensions in International Business

The study delves into the complexities of international business operations within multicultural environments, highlighting the pivotal role of Hofstede’s cultural dimensions. It discusses how these dimensions—power distance, individualism vs. collectivism, masculinity vs. femininity, uncertainty avoidance, long-term orientation, and indulgence vs. restraint—shape managerial practices and decision-making processes in multinational corporations (MNCs). The paper explores real-world applications of Hofstede’s model through case studies, emphasizing its relevance in crafting effective cross-cultural communication strategies, adapting leadership styles, and navigating cultural nuances to mitigate potential conflicts. It also considers the limitations and criticisms of applying Hofstede's framework universally, proposing a nuanced approach that integrates contemporary global dynamics with traditional models. Ultimately, this research underscores the importance of understanding and respecting cultural differences as a cornerstone for successful international business expansion and sustainable organizational growth.

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Executive Summary
The purpose of this report is to understand the various cultural aspects, dimensions and
disparities that exist among the various nations and have a direct impact on the international
businesses. The paper will present the in-depth understanding of the Hofstede’s cultural
dimension framework, its criticism and comparison with various other cultural models. The
second part of the report will highlight a few examples of the internationalbusiness and their
success or failure because of diverse ordifferent cultural aspects. The next partof the report will
offer an understanding of the individualbehaviours and the roleof their personal adaptations and
competencies in managing the cross cultural teams. The paper will end with a brief sum up
highlighting the analysis of the entire report.

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Contents
Introduction......................................................................................................................................3
Hofstede’s model of national culture...............................................................................................3
Overview of Model......................................................................................................................3
Criticism of Model in modern world...........................................................................................4
Discussion in context with other models.....................................................................................5
Examples of cross-border business developments that are impacted by national cultural
differences........................................................................................................................................7
CASE 1: Uniqlo’s expansion in the United States......................................................................7
Business expansions in context with the national cultural characteristics of the company.....7
Results of business expansion: Failure and Evidence.............................................................7
CASE 2: ZARA’s expansion in...................................................................................................9
Business expansions in context with the national cultural characteristics of the company.....9
Results of business expansion: Failure and Evidence...........................................................10
Role of individual behaviour in enhancing and improving the chances of success in cross-border
business development....................................................................................................................12
Role of personal adaptations in achieving success while working across cultures or in cross-
cultural teams.............................................................................................................................12
Importance of understanding of the dimensions of national culture in becoming more effective
...................................................................................................................................................13
Analysis of ‘competencies’ as a model for individual behaviour..............................................13
Conclusion.....................................................................................................................................14
References......................................................................................................................................15

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Introduction
In the modern business world, the companies are going global on a faster pace by having
continuous international expansion. But in order to have continuousglobal expansions,
therearevarious cultural issues that take place and affect the success and growthofthe businesses
and the individuals. In the past researches, there has been developed a number of frameworks
and model that helps in assessing the cultural aspects of the countries so that a better
understanding can be gained through the various cultural dimensions (Tung and Verbeke, 2010).
The cultural dimension framework of Hofstede is one of the most reliable and recognized models
which help the companies in analysing the various cultural aspects of various countries. But
there are various other models too that both supportas well as criticize the framework developed
by Hofstede’s. The key aim of the model is to help the businesses in the international expansion
as wellas support them in having a better and improved understanding of the various cultural
afctorsbeforeexpanding in any offering nations that no sustainability or cultural issue may arise
later on. The culturalissues also lead to failure ofbusinesses (Gelfand, et al., 2017).Thus, there is
huge significanceofunderstandingthese cultural factors by the means of various cultural
dimensions.

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Hofstede’s model of national culture
Overview of Model
(Source: Wordpress, 2016)
Hofstede’s framework of various cultural dimensions is recognized as one of the most significant
and well-known model or tool for analyzing the culture of different countries. There are basically
6 factors on the basis of which the cultural analysis of any region or country is
performedcountries (Beugelsdijk, Kostova and Roth, 2017). The framework or the model helps
in understanding the similarities or dissimilarities that takes place between the nations. Power
distance is the first cultural dimension that demonstrates the various inequalities which exist
among the societies and among the individual by performing an analysis of several aspects
comprises of the distribution of power and the hierarchical orders among the people.
Collectivism versus individualism is the second cultural dimension of Hofstede’s model that
explains the manner in which the people behave in a society in context with their respective
families. The dimension explains that whether an individual take use a collective or individual
approach at the time of decision making. Masculinity index is the third most cultural dimension
which explains the arrangement of competitiveness as well as cooperativeness in the various
societies. If the level of masculinity is high then it shows that there is increased competitiveness
in the industry or the nation. On the other hand, if the level of masculinity is low then it shows
that there is high feminism and cooperativeness in the society inequalities(Hofstede,

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2011).Uncertainty avoidance index is the fourth cultural dimension of the framework which
demonstrates the concern or consciousness of the societies, people and the organizations in
respect with the various opportunities as well as risks coming in the future and also shows the
readiness of the organisations or the individuals against these threats (Parrish and Linder-
VanBerschot, 2010).It reflects that how much any country is effective and efficient in sustaining
the risks and uncertainties of future. Indulgence versus restraint is the fifth cultural dimension of
the model which demonstrates that at what extent or level the needs of the masses are
accomplished as well as at what level the masses are regulated according to the societal
regulations and norms. Long term orientation is the sixth cultural dimension of Hofstede’s
framework which shows the extent to which the nation’s culture is time based and shows a
balance between the satisfaction of short term needs and the long term opportunities (Hofstede,
2010).
Criticism of Model in modern world
In spite of the wide acceptance of the cultural model of Hofstede, there are number of
researchers and theorists in the modern world that do not agree with the framework and have
raised a number of challenges and criticism against the model. The major criticism id done by
McSweeney (2002) in a number of ways: the key reproaches includes that the countries are nit
the correct units and the surveys are not an appropriate way for examining the cultural
differences. As well as it was also questionable to assign the outcomes gained from a single
organisation to the entire country’s scores and the only five cultural dimensions of the
framework and not sufficient for determining the various cultural aspects of the countries. In
response with the criticism of McSweeney´s (2002), Hofstede (2002) claimed that the survey
used in the framework measures the various differences among the countries but with no
absolute numbers and settles with the criticism of McSweeney (2002) that the countries are not
the adequate unit for measuring the cultural differences but usually available for undertaking
such researches. Agreeing to the criticism of McSweeney (2002), that surveys should not be
considered as a liable research instrument and there could be various other methods too but
opposes the criticism of depending upon an out-dated data by arguing that they have centuries-
old origins and the various current replications have no threat of loss of validity. Another set of
criticism was made by Jones (2007) by comparing the weaknesses and the strengths of the
framework by further illustrating the various viewpoints of McSweeney (2002). Jones criticised

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that there can be various political influences in the development of few cultural dimensions
including uncertainty avoidance and masculinity the period of Cold War. Later to these criticism,
Orr and Hauser (2008, p. 16) also argued that the theoretical construct of the framework is
required to be more thoroughly examined in the lights of modern business world and 21st century
patterns of behaviour as well as cross-cultural attitudes. Signorini et al. (2009) had a criticism
against the framework by illustrating that there was “oversimplification” of the inconsistencies
and the cultural differences among the Hofstede’s 5-D-model (Eringa, et al., 2015).
Discussion in context with other models
There are various other established and well recognized frameworks and models too which can
be used for analysing the cultural differences. This part of the paper will compare and discuss the
Hofstede cultural dimension framework with that of Trompenaars and Hampden – Turner
cultural dimensions, the Edward T. Hall’s Cultural continuum and the GLOBE research.
In comparison with the Hofstede’s framework, the GLOBE Research analyse the cultural aspects
and differences on the basis of nine different cultural dimensions that includes Power Distance,
Assertiveness, Humane Orientation, Future Orientation, In-Group Collectivism, Uncertainty
Avoidance, Gender Egalitarianism, Institutional Collectivism and Performance Orientation
(Warner-Søderholm, 2013).The most of the cultural dimensions are similar to the cultural
dimensions of the Hofstede’s framework or it can be said that it is the extension to the cultural
framework of Hofstede only and there are four more dimensions added to have a broader view
and cultural analysis so that better results can be gathered.In comparison with the Hofstede’s
framework, Cultural continuum developed by Edward T. Hall places the cultures on a continuum
of low versus high context approach to the life (Ogbuigwe, 2013). The high cultural context
demonstrates the culture where there is higher involvement of masses and establishment of a
strong bond among society, friends and family where there is a free flow of communication.
Whereas, the low cultural context shows a culture where there is high level of individualism. The
model is framed on five diverse factors that comprises of Communication, Confrontation,
Responsibility, Commitment and Social orientation (Moran, Abramson and Moran, 2014). The
framework of Hofstede is more reliable in comparison with this framework as in this only one
factor i.e. individualism versus collectivism is discussed whereas in the Hofstede’s framework it
is one of the aspect of the five dimensions and there are four other factors too for measuring the

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cultural analysis. In the comparison of Hofstede’s framework, there is another model named
Turner’s Cultural Dimensions develop by Trompenaars and Hampden (Ogbuigwe, 2013).In this
model instead of five dimensions, there are seven dimensions for the basis of cultural analysis
that comprises of Universalism vs. Particularism, Inner – Directed Orientation Vs Outer –
Directed orientation, Individualism vs. Collectivism, Achievement vs. Ascription, Specific vs.
diffused, Neutral vs. Affective and Time Orientation. The most of the cultural dimensions are
similar to the cultural dimensions of the Hofstede’s framework or it can be said that it is the
extension to the cultural framework of Hofstede only and there are two more dimensions added
to have a broader view and cultural analysis so that better results can be gathered (Yeganeh, Su
and Sauers, 2009).
Examples of cross-border business developments that are impacted by
national cultural differences
CASE 1: Uniqlo’s expansion in the United States
Business expansions in context with the national cultural characteristics of the company
Uniqlo is a Japanese company which had acquired huge success in number of global markets but
the company has faced a number of issues while expanding into the United States in respect with
the cultural aspects (Zhenxiang and Lijie, 2011). The human resource management and the
cross-cultural aspect are the two key areas where the company faced issues due to a number of
differences in the cultures of both the nations. There are number of data and reports that show the
loss of revenue as well as high turnover rate due to cultural issues faced by Uniqlo. The
Hofstede’s cultural framework helped in understanding the ley cultural issues which were the
major reason s behind the failure of the business expansion of Uniqlo in the United States.

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Results of business expansion: Failure and Evidence
(DCTC, 2013)
As per the cultural analysis performed by the means of Hofstede’s cultural dimension, the US
individuals have a believe that the rules and the policies should be limited and the Japanese
individuals follow strict rules and regulations as well as high code of conducts and this shows the
high level of difference in the Uncertainty Avoidance Index (Fischer and Mansell, 2009).As per
the analysis and the data gathered, it is analysed that all the business operations that took place at
Uniqlo in Japan were highly with huge norms and regulations and no change was possible but
while performing in US, there were less policies and rules that leads to change in processes. And
therefore, the issues of cultural disparity on the basis of uncertainty avoidance index became one
of the reasons behind the failure of the expansion (Uriarte Elizaga, 2016). The second factor or
the cultural dimension that is another vital reason behind the failure is long term orientation. In
US, there is a low level of long term orientation and in Japan; there is high level of long term
orientation. In Japan, people are more concerned with the long term gain and satisfaction and in
maintaining long term associations whereas in US individuals prefer short term business
associations and have their major focus on attaining sort term gains. And this isone of the
primary cultural disparitiesthat exists in both the nations and became one of the reasons for
failure of Uniqlo in the US (Kirtley, 2013).From the various analysis and reports, it has also been

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analysed that one of the primary cause of challenges faced by Uniqlo in US was the cultural
dimension of cooperativeness among Japan and US.
As per the framework of Hofstede, the cultures of United States is cooperative as well as have
their emphasis on the group goals and achievements in comparison with Japanese culture where
people are more concerned with their personal objectives and goals as well as have low level of
cooperation. Thus, it also a big cultural difference among the people as the managers in Japan do
not involve the employees or the subordinates in the discussion and the decision making but in
US, there is high involvement of all the individuals in the discussions and the decision making at
the organisation. This resulted in increased human resource issues at Uniqlo in US (Jang, et al.,
2012).In the business operation at US, there is absence of direct and clear communication
channels because of diverse cultural factors. These communication issues are majorly because of
the language barriers and the diversity in policies and rules and regulations. Thus, as a result
ofthese cultural disparities, there occurred increased turnover rate of the employees at Uniqlo US
and made the international expansionof the company more troubled (Liu, 2013). Therefore the
cultural disparity among the masculinity index of both the countries is one of the major reasons
behind the failure of the international expansion of Uniqlo in US. At Japan, the organisational
culture is highly centralized and at US, the organisations are required to have a decentralized
organisational culture so that so that there can be effective involvement of the workforce but
Uniqlo tried to have its centralized culture at US which resulted a situation of chaos and also
challenges in the business operations (Ralston, 2008). Thus, the absence of decentralisation
resulted in declined sales, dissatisfaction of the employees,closing of the stores and increased
turnover rate of the employees (Kimura,n.d.). From the overall discussion and analysis, it has
been analysed that there were a number of challenges and issues experienced by the company in
its international expansion in US due to the various cultural disparities in both the nations ad this
was the only key reason behind the failure of the business in a foreign nation (Chen and Fan,
2017).
CASE 2: ZARA’s expansion in
Business expansions in context with the national cultural characteristics of the company
Zara being a renowned global player in the retail market has gained rapid success and growth but
had also had to sustain and manage the challenges of cross cultural issues in the international

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expansions. A number of complications and culture related issues were faced by Zara in Sweden
as identified in various reports and the financial data of the organisation. As a result of improper
cultural analysis, there were raised issues in context with turnover rate, employee dissatisfaction
and other operational issues. This piece of information will make a clear vision about the
problems which were faced by Zara while performing its business activities in Sweden in the
lights of Hofstede’s dimension. Troubles arises during the amalgamation of Zara are discussed
here. Difference between both country’s culture and their resolutions are analysed in this theory.
Following are the dimensions of Hofstede’s theory which shows the cultural disparities between
Spain and Sweden (Keller, 2012).
(Source: Ljungberg and Peña, 2012)
Results of business expansion: Failure and Evidence
As per the cultural analysis performed by the means of Hofstede’s cultural dimension, the first
factor that laid down the failure of Zara in Sweden is Masculinity index. Masculinity index can
be defined as more competition between the individuals rather than helping each other to achieve
common goals. According to Hofstede’s cultural dimension framework, in Spain a person focus
more on their own work and believes in establishing a competition while in Sweden people
believe in bringing coordination among individuals to accomplish organisational goals. This

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clears that there are many differences between both the countries. From the observation, one
more point of discussion is analysed that the option of worker’s involvement in decision making
is present only in Sweden culture (Göransson, Jönsson andPersson, 2007). The managers of
Spanish culture do not make any interference of workers while taking decisions. This confirms
that that Swedish culture is more reliable than Spanish culture. As the cultures of Sweden and
Spain were different, it was usual to have more complications in working criteria. Study of both
cultures confronts that flow of communication between employees and managers was more
difficult in Sweden rather than in Spain. As the Spanish workers believed in competition but for
Swedish employees it was quite difficult to work in competitive world and doing overtimes in
their jobs. For employees there was the situation of do or die because if they do not perform well
they would be fired from the organisation (Oliveira, 2011). Because of differences in masculinity
index of both the countries, the outcomes were quite dissatisfactory. Both Spanish and Swedish
managers had different working procedures which resulted as barriers in the path of success.
Usually the Sweden organisation follows decentralization which was not available in the rule
book of Zara. Zara is an organisation which works in a centralized manner and this way of
working brings negative result of disparity in cultures (Keller, 2012). This demotivated the
employees because they felt pressure of working without any involvement in organisational
decisions. As per the uncertainty avoidance cultural dimension, it is analysed that in Swedish
culture, people think that an employee can work better with less rules and regulations. Therefore
they believe in keeping less rules and policies so that employees get better working environment.
On the other hand, for Spanish workers, rules and regulations plays the key role in maintaining
discipline among employees. Any kind of misbehaviour or rule breaking would not be tolerated
in the organisation. From the given information it is clear that Zara is an organisation which
prefers a high code of conducts to complete all its tasks. In Spanish working culture there must
not be any exploitation of rules or policies by the employees while finishing the given tasks
(Matic and Vabale, 2015). But as per the Swedish culture, less rules and regulations will results
in better performances. Thus, huge cultural disparities were there on the basis of the uncertainty
avoidance index became a reason of failure for Zara in Sweden. As per the power distance
cultural dimension, the culture of Spain is highly concerned with the organisational cultural
development where the people have their particular position which is there in the society and
there takes place unequal distribution of power (Ljungberg and Peña, 2012). The power distance