Organizational Culture

What is culture, and how can culture be understood through Hofstede’s cultural framework?

As the business world becomes more global, employees will likely face someone from another country at some point in their careers, companies will negotiate with companies from other countries, and even employees of domestic companies will likely encounter someone from another country.

Furthermore, trends suggest that immigration, the movement of people from their home country to other countries, will continue to grow worldwide, a process that will contribute to making companies’ workforces increasingly diverse. Additionally, many multinational companies rely on expatriates to run their local operations. An expatriate is foreign employee who moves to and works in another country for an extended period of time. All of these trends mean that during your career you are likely to encounter someone from a different culture and that the potential for cross-cultural tensions is high. It is therefore important for any international management student to understand culture to better prepare for dealing with such tensions.

According to Geert Hofstede,a Dutch social psychologist, culture is “the collective programming of the mind which distinguishes the member of one group or category of people from another.” It tells people who they are, which behaviors are appropriate, and which are not acceptable in any society. It affects almost everything we do, see, feel, and believe. In fact, if you have heard of the “American dream,” where if one works hard, one can achieve one’s dream,  you are aware of one characteristic aspect of American culture.

Consider any aspect of your life, and it is likely influenced by your culture. The food you eat, the clothes you wear, and even how you address your boss or teacher are influenced by your culture. Societies develop cultural norms, values, and beliefs to assist their members in adapting to their environments.

Why is an understanding of culture critical to a manager in a global environment? As you have already seen, anyone from any country is likely to encounter someone from another country at the workplace. Such interactions can result in misunderstanding or tensions if not properly managed. Business magazines are full of examples of cross-cultural misunderstandings that have doomed relationships and business. For another example, U.S. managers sent to Beijing, China, get frustrated because they find that their hosts are more interested in socializing than concluding a deal. Understanding Chinese culture would have prevented the latter misunderstanding because the U.S. managers would understand that it is very important for Chinese companies to get to know who they are working with before signing any deal. In this section, you will learn about one of the most powerful tools for understanding cultural differences

Hofstede is a Dutch social scientist who developed his model by surveying over 88,000 employees in IBM subsidiaries from 72 countries. Hofstede developed this cultural model primarily on the basis of differences in values and beliefs regarding work goals. Hofstede’s framework is especially useful because it provides important information about differences between countries and how to manage such differences. Recent reviews of research have shown the utility of Hofstede’s framework for a wide variety of managerial activities, such as change management, conflict management, leadership, negotiation, and work-related attitudes.

Cultural Dimension 1: Power Distance

Hofstede’s original survey of the more than 88,000 employees of the 72 countries revealed four major cultural dimensions. The first cultural dimension is power distance, the degree to which members of a society accept differences in power and authority. In societies with high power distance, people are more likely to accept that power inequality is good and acceptable. People in high power distance societies are more likely to accept that there are some powerful people who are in charge and that these people are entitled to special benefits. In contrast, societies   with low power distance tend to consider that all members are equal. (Figure) shows the levels of power distance (and the other cultural dimensions discussed later) in 15 selected societies. Hofstede’s scores range from 100 (the highest power distance) to 0 (the lowest). In the table, we break Hofstede’s scores into high (70–100), medium (40–69), and low (0–39).


Implications of Power Distance


Type      of      Work Activity



High Power Distance



Low Power Distance


Adapted from Geert Hofstede, “Culture’s consequences: Comparing values, behaviors and institutions across nations,” 2nd edition, 2001, page 107-108, Thousand Oaks, CA: Sage Publications.


Organizational structures

Very centralized

Tall hierarchies with clear levels of managers and subordinates


Flat organizational hierarchies Decentralized structures




Managerial authority

Concentration of authority at the top

Managers rely on formal rules to manage

Authoritative managerial style and decision making

Dispersed authority

Managers      rely      on      personal experience

More consultative or collaborative forms of decision making




Relationship       with supervisors

Subordinates expect to be told what to do

Perfect boss is seen as one who is  an autocrat

Information sharing constrained by hierarchy


Subordinates often expected to be consulted

Ideal    manager    is    seen    as    a democratic leader

Openness to sharing information


Other issues


Wide salary gap between top and bottom of organization

Managers often feel underpaid and dissatisfied with careers

Low salary gap between top and bottom of company

Managers feel paid adequately and are satisfied

As (Figure) shows, many of the emerging markets in regions such as Asia and Latin America, such as India, Brazil, and Mexico, all have high power distance scores. In such countries, the concern for hierarchy and inequality in organizations is rooted in early socialization in the family and school. In these countries, children are expected to obey their parents and elders. When these children enter school, teachers assume the dominant role. Children must show respect, and they seldom challenge a teacher’s authority. As these individuals take on work roles, the allegiance to teachers is transferred to bosses. Thus, people in high power distance societies will seldom question their supervisors. In contrast, Anglo countries such as the United States, Canada, and the United Kingdom have low power distance. In these countries, people do not expect power differences, and everyone is seen as an equal.


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Organizational Behavior by Icfai Business School is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.