Theory of Cultural Diversity
Are you thinking of expanding into new markets? If that is the case you need to become intimately familiar with the target country’s cultural and business traits. That is, of course, if you want to succeed.
It was interesting to circulate around a room and observe different nationalities coming together and to remark on different customs: the formal, two-thumbed presentation of business cards, the handshake, the muted bow. We’ve all heard the stereotypes about how different cultures do business, and we all have our respective experiences and indeed biases and preconceptions of interacting and doing business with people from different backgrounds, and how they might differ from ourselves. Some academics and consultants have gone so far as to attempt to measure difference. Geert Hofstede, a consultant hired by IBM in the 1960s, is at the forefront of this blend of anthropology, business and research. He developed the cultural dimensions theory, which seeks to characterise different national cultures according to different dimensions, starting with four originally and expanding upwards to six by 2010:
- Power distance – “the acceptance of unequally distributed power by the less powerful”
- Individualism vs. collectivism –
“the degree of integration into groups”
- Uncertainty avoidance – “a society’s tolerance for uncertainty and ambiguity”
- Masculinity vs. femininity – “the distribution of emotional roles between genders”
- Long-term vs. short-term orientation – “the time horizon of a society”
- Indulgence vs. self-restraint – “the degree of instantaneous gratification”
Hofstede’s work has been influential with practitioners and academics; but how much does it reflect reality? Unfortunately, there are several inconsistencies and insufficiently expository elements, that make holistic adoption of the theory dangerous. For instance, the choice of the national level rankles because it leaves no room, not just for other organisational forms, but for the individual. Hofstede’s theory effectively condemns the citizens of nations to the attributes of nations.
This is important, perhaps now more than ever. Many businesses are keen to explore new markets abroad. A large part of their success will derive from their ability to develop successful relationships. Relying on stereotypes from experience or from overly generalised research can and will undermine their ability to do so. This is particularly true when today’s business community is more likely than ever before to have an international background. Perhaps your new business partner is Nigerian, but what if she has been educated in England and spent the majority of her working life in the United States? And how should you engage with a Brazilian investor of Japanese heritage who secured an MBA from INSEAD in France and Singapore?
This is not to say that nationality, culture or customs are not important. It is crucial to be informed and to read up on and respect local business practices. Equally or even more so, however, it is crucial to engage in relationships with an open mind, to inquire of those that you come into contact with and to make decisions based on a matrix of factors, most importantly the character and views of the individual sitting before you. It is prudent to acknowledge and prepare for the fact that the next generation of business leaders is going to be more diverse than at any time in modern history.