To Infinity…

Hofstede Analysis

To accurately define culture there are three key aspects to understand - the pervasive shared beliefs, norms, and values which guide everyday life. An important distinction to make is the fact that culture does not exist - instead it is constructed by humans, as a tool to identify and explain behaviour (Hofstede, 2002). It is generally understood that business culture is largely influenced by national culture. These organization-specific (or professional) cultures are often discovered or created as members deal with internal and external problems. As the business world continues to adapt to a truly globalized marketplace it is important for organizations to recognize the subtle differences among national cultures and how this impacts operations. The firm Sodexo requires an astute understanding from managers of cultural difference - especially considering they operate in over 80 countries worldwide. The complexity of business interactions can be minimized with better understanding of the “acceptable ways to conduct business in a society” (Cullen/Parboteeah, 2005).

Geert Hofstede has led the way in developing accurate models for measuring and comparing the subtleties of national culture. Originally Hofstede published a report after extensive participant-based research at IBM in the 1980s. His most recent work, released in 2001, added great clarification and empirical evidence to his five dimensions of national culture: Power Distance, Uncertainty Avoidance, Individualism, Masculinity, and Long-term Orientation. These dimensions have now been researched in seventy different countries - and have come to be accepted in the international business community as reliable measures of national culture.

Understanding of these five dimensions will give business managers the knowledge to have meaningful and effective interactions between cultures. In the case of Sodexo, where the corporate headquarters are located in France with subsidiaries across the world, their success has largely been in the way they leverage their market penetration experience in various cultural contexts. A thorough examination of the cultural differences between the subsidiary host country, Canada, and the corporate headquarters demonstrates potential issues, and how this may impact manager effectiveness. The following provides a brief overview of Hofstede’s five dimensions and how this pertains to Sodexo.

Power distance (PDI) refers to the distribution of power among a group within society. It is generally understood that inequality naturally exists in society, across nations however these differences become much more noticeable. According to Hofstede’s study the world PDI average is 55 - this represents a distinct inequality in power distribution. Examining the impacts of PDI across the operating environments of Sodexo - from corporate headquarters to the subsidiary the differences are apparent. Compared to the world average France has a high PDI (70), representative of inequalities that are generally accepted among the population. Canada’s PDI is 39, which demonstrates greater equality within society and according to Hofstede promotes cooperation and creates a more stable cultural environment.

The second measure of national culture according to Hofstede is Individualism (IDV), which assesses the affinity for members to integrate into groups. Both Canada and France rank relatively high with a tendency towards individualism, (ranking 80 and 71 respectively). This represents relatively loose bonds between individuals, who are primarily concerned with immediate family and themselves. According to Hofstede countries with high IDV rankings tend to value personal achievement and are much more self-reliant. The world average IDV ranking is 40, which signifies a collectivist-attitude, with high value placed on group cohesiveness and loyalty. The similarities between Canada and France do not indicate cultural hurdles to overcome.

Masculinity (MAS) is another cultural dimension which varies significantly across nations. Essentially this measure examines the difference in gender attitudes, where masculinity reflects an assertive and competitive nature, opposite to this is femininity which is represented by modest and caring values. Hofstede’s research suggests two common characteristics of this measure: (a) women’s values differ less among societies than men’s values; (b) men’s values from one country to another contain [polar differences] from very assertive and competitive (masculine) on one side, to modest and caring on the other (feminine) (Hofstede, Geert Hofstede Cultural Dimensions, 2008). Applying the concept of masculinity to Canada and France the raw scores indicate similarities to the world average (48 ) - which suggests a balance of assertiveness and modesty.

An important element for measuring national culture is the Uncertainty Avoidance Index (UAI). Simply put UAI represents the level of comfort in unstructured situations - which represents deviation from the “norm”. Cultures that seek to avoid uncertainty will often utilize strict laws and rules, or even a religious belief in absolute Truth. This characterizes France’s culture, with a raw score of 80 and a tendency towards codification and a rule based society. On the other end of the spectrum, there are cultures which embrace change, uncertainty, and are relativistic in nature. Canada ranks relatively low in UAI, with a score of 43, which represents a higher tolerance towards different beliefs, thoughts, and values - and little codification of rules and minor concern for controlling outcomes. The differing scores for both countries represent a call to attention for regional managers, who must understand the differing thought-process of Canadian employees towards the future.

The final dimension of Hofstede’s analysis of national culture is that of Long-Term Orientation (LTO). This fifth element was recently added by Hofstede in an attempt to incorporate more Eastern attitudes, and is based on Confucian principles. “Values associated with LTO are thrift and perseverance; values associated with short-term orientation are respect for tradition, fulfilling social obligations, and protecting one’s ‘face’” (Hofstede, Geert Hofstede Cultural Dimensions, 2008). Since this element of Hofstede’s analysis was recently added no data exists for France: this makes accurate analysis difficult. The world average was 44, and Canada ranked relatively low at 20.

Overall, we should expect smooth operations from Sodexo’s headquarters to the Canadian subsidiary. France ranks with a high Power Distance Index compared to Canada (70-39), this allows for hierarchal relations to exist between firm operations. In terms of Individualism both countries rank relatively equal (71-80) which emphasizes personal motivation and success; the same is true of masculinity which represents similar attitudes towards gender roles. An interesting difference was in the Uncertainty Avoidance Index - which ranked France high (80-43), meaning issues could arise in the future over rules and the importance of central planning. Since no data exists for France on Long-Term Orientation it is difficult to compare the two countries, we do know Canada ranks low (20) which is on par with countries such as Norway and the United Kingdom.

———

This was written by Curtis Goodman in April 2008.

–/

References:

Cullen/Parboteeah. (2005). Culture and Multinational Management. In Multinational Management: A Strategic Approach (3rd ed., pp. 42-77). Thomson Nelson.

Datamoniter. (2008). Sodexho Alliance SWOT analysis. Business Source Complete.

Hofstede, G. (2002). Dimensions do Not Exist: A Reply to Brendan McSweeney. Human Relations , 55 (11).

Hofstede, G. (2008, 03 25). Geert Hofstede Cultural Dimensions. Retrieved from http://www.geert-hofstede.com/geert_hofstede_resources.shtml