The Sociocultural Environment

A nation’s  culture  encompasses the shared knowledge,  beliefs, and values, as well as the common modes of behavior and ways of thinking, among members of a society.  Cultural factors  can be more perplexing than political and economic factors. When working or living in a foreign  country,  cultural  clashes can emerge in some unusual ways.


Culture is intangible, pervasive, and difficult for outsiders to learn. One way that managers can comprehend local cultures and deal with them effectively is to understand differences in social values.

In research that included 116,000 IBM  employees in 40 countries, Geert Hofstede identified four dimensions of national  value systems that influence organizational and em- ployee working relationships.36  Examples of how countries rate on the four dimensions are shown in Exhibit 3.4.

  1. Power distance. High power distance means that people accept inequality in power among institutions,  organizations, and people. Low power distance means that people expect equality in power. Countries that value high power distance are Malaysia,  the Philippines, and Panama. Countries that value low power distance are Denmark, Austria, and Israel.
  2. Uncertainty avoidance. High uncertainty avoidance means that members of a society feel uncomfortable with uncertainty and ambiguity and thus support beliefs that promise certainty and conformity. Low uncertainty avoidance means that people have high toler- ance for the unstructured, the unclear, and the unpredictable. Countries with high un- certainty avoidance include Greece, Portugal, and Uruguay. Countries  with a value  of low uncertainty avoidance values are Singapore and Jamaica.
  3. Individualism and collectivism. Individualism reflects  the value  of a  loosely   knit social framework in  which individuals are  expected   to  take care  of  themselves. Collectivism  denotes a preference for a tightly knit social framework in which indi- viduals  look after one another,  and organizations  protect their members’ interests.

  1. Masculinity/femininity. Masculinity represents a preference for achievement, heroism, assertiveness, work  centrality (with  resulting high  stress),  and material success. Femininity reflects the values of relationships, cooperation, group decision making, and quality of life. Societies with strong  masculine values are Japan, Austria,  Mexico, and Germany.

Countries with feminine values are Sweden, Norway, Denmark, and France. In mascu- line and feminine  cultures, men and women alike subscribe to the dominant value.

Hofstede and his colleagues later identified a fifth dimension, long-term orientation versus short-term  orientation.  The long-term orientation, found in China and other Asian countries, includes a greater concern for the future, with high values of thrift and perseverance. A short-term orientation, found in Russia and West Africa,  is more con- cerned with the past and the present and places a high value on tradition and meeting social obligations.37 Researchers continue  to explore and expand on Hofstede’s findings. In the last 25 years, more than 1,400 articles and numerous books have been published on indi- vidualism and collectivism alone.38

Research by the GLOBE Project  extends Hofstede’s  assessment and offers a broader understanding for today’s managers. The GLOBE (Global Leadership and Organizational Behavior Effectiveness) project used data collected from 18,000 managers in 62 countries to identify nine dimensions that explain cultural differences, including those identified  by Hofstede.39

  1. Assertiveness. A high value on assertiveness means that a society encourages toughness and competitiveness. Low assertiveness means that people value tenderness and concern for others over being competitive.
  2. Future orientation. Similar to Hofstede’s time orientation, this dimension refers to the extent to which  a society encourages and rewards planning for the future over short-term results and quick gratification.
  3. Uncertainty avoidance. As with Hofstede’s study, this dimension  gauges the degree to which members of a society feel uncomfortable  with uncertainty and ambiguity.
  4. Gender differentiation. This dimension refers to the extent to which a society maximizes gender role differences. In countries with low gender differentiation, such as Denmark, women typically  have a higher  status and stronger role in decision making. Countries with high gender differentiation accord men higher social, political, and economic status.
  5. Power distance. This dimension is the same as Hofstede’s  and refers to the degree to which  people expect and accept equality or inequality in relationships and institutions.
  6. Societal collectivism. This term defines the degree to which practices in institutions such as schools,  businesses, and other social organizations encourage a tightly knit collectivist society, in which people are an important part of a group,  or a highly individualistic society.
  7. Individual collectivism. Rather than looking at how societal organizations favor individu- alism versus collectivism, this dimension looks at the degree to which individuals take pride in being members of a family,  close circle of friends, team, or organization.
  8. Performance orientation. A society with a high performance orientation emphasizes per- formance and rewards people for performance improvements  and excellence. A low per- formance orientation  means that people pay less attention  to performance and more attention to loyalty, belonging, and background.
  9. Humane orientation. The final dimension refers to the degree to which a society encour- ages and rewards people for being fair, altruistic,  generous, and caring. A country that is high on humane orientation  places high value on helping others and being kind. A country that is low in this orientation  expects people to take care of themselves. Self- enhancement and gratification  are of high importance.

Exhibit 3.5 gives examples of how some countries  rank on several of the GLOBE dimensions. These dimensions offer managers an added tool for identifying and managing cultural differences. Although Hofstede’s dimensions are still valid, the GLOBE research provides a more comprehensive view of cultural similarities and differences.

Social values greatly influence organizational functioning  and management styles. Con- sider the difficulty that managers encountered when implementing self-directed work teams in Mexico. As shown in Exhibit 3.4, Mexico is characterized by very high power distance and a relatively  low tolerance for uncertainty—characteristics that often conflict with the American concept of teamwork,  which  emphasizes shared power and authority,  with team members working  on a variety of problems without formal guidelines, rules, and structure.

Many workers in Mexico, as well  as in France and Mediterranean  countries, expect or- ganizations to be hierarchical.  In Russia, people are good at working in groups and like competing as a team rather than individually. Organizations in Germany and other central European countries typically strive to be impersonal, well-oiled  machines. Effective man- agement styles differ in each country, depending on cultural  characteristics.40


Other cultural characteristics that influence international  organizations are language, reli- gion, attitudes, social organization, and education. Some countries, such as India,  are char- acterized by linguistic pluralism, meaning that several languages exist within the country. Other countries rely heavily on spoken versus written language. Religion  includes sacred objects, philosophical attitudes toward life, taboos, and rituals. Attitudes toward achieve- ment, work, and people can all affect organizational productivity.

One study found that the prevalent American attitude that treats employees as resources to be used (an instrumental attitude toward people) can be a strong impediment to business success in countries where people are valued as an end in themselves rather than as a means to an end (a humanistic attitude).  U.S. companies sometimes use instrumental human re- source policies that conflict with local humanistic values.41

Ethnocentrism, which refers to a natural tendency of people to regard their own cul-ture as superior  and to downgrade or dismiss other cultural  values, can be found in all countries. Strong ethnocentric attitudes within a country make it difficult for foreign firms to operate there.

Other factors include social organization,  such as status systems, kinship and families, social institutions,  and opportunities for social mobility. Education influences the literacy level, the availability of qualified  employees, and the predominance of primary or secondary education degrees.

American  managers are regularly accused of an ethnocentric attitude that assumes that the American  way is the best way. At an executive training seminar at IMD,  a business school in Lausanne, Switzerland, managers from Europe  expressed a mixture  of admira- tion and disdain for U.S. managers. “They admire the financial  results,” says J. Peter  Killing, an IMD  professor, “but when they meet managers from the United States, they  see that even these educated, affluent  Americans  don’t speak any language besides English,  don’t know how or when to eat and drink properly, and don’t know anything about European history, let alone geography.”42

As business grows increasingly global, U.S. managers are learning  that cultural differ- ences cannot be ignored  if international operations are to succeed. Coke had to withdraw its two-liter bottle from the Spanish market after discovering that compartments of Span- ish refrigerators were too small for it. Wal-Mart goofed by stocking footballs in Brazil,  a country  where soccer rules.43 Companies  can improve  their success by paying attention to culture. U.S. companies could take a lesson from South Korean appliance maker LG Elec- tronics, which rules in emerging markets.

Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.

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