6. Masculinity – Femininity04
Long-Term vs. Short-Term
Orientation
05
Indulgence vs. Restraint06
Individualism vs. Collectivism 01
Uncertainty avoidance 02
Power distance index 03
02 Literature Review
Hofstede’s 6 Cultural Dimensions
Scan the QR code to check out
cultural dimensions of your country
7. 02 Literature Review-Individualism vs. Collectivism
Individualism Collectivism
Everyone is supposed to take care of him- or
herself and his or her immediate family only
People are born into extended families or clans
which protect them in exchange for loyalty
"I" – consciousness "We" –consciousness
Right of privacy Stress on belonging
Speaking one's mind is healthy Harmony should always be maintained
Others classified as individuals Others classified as in-group or out-group
Personal opinion expected: one person one vote Opinions and votes predetermined by in-group
Transgression of norms leads to guilt feelings Transgression of norms leads to shame feelings
Languages in which the word "I" is
indispensable
Languages in which the word "I" is avoided
Purpose of education is learning how to learn Purpose of education is learning how to do
Task prevails over relationship Relationship prevails over task
8. 02 Literature Review-Uncertainty Avoidance
Weak Uncertainty Avoidance Strong Uncertainty Avoidance
The uncertainty inherent in life is accepted and each
day is taken as it comes
The uncertainty inherent in life is felt as a continuous
threat that must be fought
Ease, lower stress, self-control, low anxiety Higher stress, emotionality, anxiety, neuroticism
Higher scores on subjective health and well- being Lower scores on subjective health and well-being
Tolerance of deviant persons and ideas: what is
different is curious
Intolerance of deviant persons and ideas: what is
different is dangerous
Comfortable with ambiguity and chaos Need for clarity and structure
Teachers may say ‘I don’t know Teachers supposed to have all the answers
Changing jobs no problem Staying in jobs even if disliked
Dislike of rules - written or unwritten Emotional need for rules – even if not obeyed
In politics, citizens feel and are seen as competent
towards authorities
In politics, citizens feel and are seen as incompetent
towards authorities
In religion, philosophy and science: relativism and
empiricism
In religion, philosophy and science: belief in ultimate
truths and grand theories
9. 02 Literature Review-Power distance index
Small Power Distance Large Power Distance
Use of power should be legitimate and is subject to
criteria of good and evil
Power is a basic fact of society antedating good or evil:
its legitimacy is irrelevant
Parents treat children as equals Parents teach children obedience
Older people are neither respected nor feared Older people are both respected and feared
Student-centered education Teacher-centered education
Hierarchy means inequality of roles, established for
convenience
Hierarchy means existential inequality
Subordinates expect to be consulted Subordinates expect to be told what to do
Pluralist governments based on majority vote and
changed peacefully
Autocratic governments based on co-optation and
changed by revolution
Corruption rare; scandals end political careers Corruption frequent; scandals are covered up
Income distribution in society rather even Income distribution in society very uneven
Religions stressing equality of believers Religions with a hierarchy of priests
10. 02 Literature Review-Masculinity – Femininity
Feminity Masculinity
Minimum emotional and social role differentiation
between the genders
Maximum emotional and social role differentiation
between the genders
Men and women should be modest and caring
Men should be and women may be assertive and
ambitious
Balance between family and work Work prevails over family
Sympathy for the weak Admiration for the strong
Both fathers and mothers deal with facts and feelings Fathers deal with facts, mothers with feelings
Both boys and girls may cry but neither should fight
Girls cry, boys don’t; boys should fight back, girls
shouldn’t fight
Mothers decide on number of children Fathers decide on family size
Many women in elected political positions Few women in elected political positions
Religion focuses on fellow human beings Religion focuses on God or gods
Matter-of-fact attitudes about sexuality; sex is a way of
relating
Moralistic attitudes about sexuality; sex is a way of
performing
11. 02 Literature Review- Long-Term vs. Short-Term Orientation
Short-Term Orientation Long-Term Orientation
Most important events in life occurred in the past or
take place now
Most important events in life will occur in the future
Personal steadiness and stability: a good person is
always the same
A good person adapts to the circumstances
There are universal guidelines about what is good and
evil
What is good and evil depends upon the circumstances
Traditions are sacrosanct Traditions are adaptable to changed circumstances
Family life guided by imperatives Family life guided by shared tasks
Supposed to be proud of one’s country Trying to learn from other countries
Service to others is an important goal Thrift and perseverance are important goals
Social spending and consumption Large savings quote, funds available for investment
Students attribute success and failure to luck
Students attribute success to effort and failure to lack
of effort
Slow or no economic growth of poor countries
Fast economic growth of countries up till a level of
prosperity
12. 02 Literature Review- Indulgence vs. Restraint
Indulgence Restrained
Higher percentage of people declaring
themselves very happy
Fewer very happy people
A perception of personal life control
A perception of helplessness: what happens to me is
not my own doing
Freedom of speech seen as important Freedom of speech is not a primary concern
Higher importance of leisure Lower importance of leisure
More likely to remember positive emotions Less likely to remember positive emotions
In countries with educated populations, higher
birthrates
In countries with educated populations, lower
birthrates
More people actively involved in sports Fewer people actively involved in sports
In countries with enough food, higher percentages of
obese people
In countries with enough food, fewer obese people
In wealthy countries, lenient sexual norms In wealthy countries, stricter sexual norms
Maintaining order in the nation is not given a high
priority
Higher number of police officers per 100,000
population
14. 03-1 Knowing the Question Matter
Does Geert Hofstede national cultural awareness
have any significance in International Finance?
15. What is International Financial Management?
03-1 Knowing the Question Matter
16. 03-1 Knowing the Question Matter
International Financial Management
o Simply means the financial management of businesses
operating oversees with more than one subsidiary across
different countries.
18. Culture
o Culture has been defined as collective programming of the mind that
each individual carry, which consecutively affects people behavior to
be different from each other (Hofstede 1984)
03-1 Knowing the Question Matter
19. 03-2 Effect of culture in relation to international finance by
focusing on Geert Hofstede six cultural dimensions
Individualism Vs Collectivism
o Individualism- simply means the right of an individual to own property
and act independently with less concern belonging to a group (nations
involve in individualism are more innovative, example, USA).
• Information can be easily spread with no pressure from the society
• Example of organization that benefits from individualism is Google
o Collectivism- collectivism nations are people who always want to
belong to a group or society and thus, put the society first before an
individual. (Most Arab countries have this kind of collectivism cultural
system)
• A multinational company such as Google who mainly put emphasis on
innovation will not make much impact operating in a country like
Egypt
20. 03-2 Effect of culture in relation to international finance by
focusing on Geert Hofstede six cultural dimensions
Uncertainty Avoidance
o High-Uncertainty Avoidance Nations- are considered nations that are
more risk adverse, that is, nations who are scared of the unknown
(Example, Italy and Mexico)
o Low-Uncertainty Avoidance Nation- are nations who engage in risky
businesses and are ready for changes. (Example, U.S.A and Nigeria)
21. 03-2 Effect of culture in relation to international finance by
focusing on Geert Hofstede six cultural dimensions
Power Distance
o High-Power Distance Nation are very strict with their organizational
policy with no room for employees to be innovative without the consent
of his/her employers
o Hence, have a high hierarchy organizational structure (Example, Ghana
and Nigeria)
o Low-power Distance Nation are considered organizations in countries
where there is no much power assigned to one person
o Has flat or low hierarchy organizational structure (Example, U.S.A)
22. 03-2 Effect of culture in relation to international finance by
focusing on Geert Hofstede six cultural dimensions
Masculinity Vs Feminism
o Masculinity- Geert Hofstede defined masculinity culture as a situation
in which the dominant values in society are success, money, and things
• Individuals in the masculinity culture tend to strive for position and are
ownership-oriented
• For example multinational companies who deal mostly on exotic cars
such has BMW and Benz will excel in Masculine nations (Australia and
U.K)
o Feminism-However, femininity culture can be defined as a situation in
which the dominant values in society are caring for others and the
quality of life (Geert Hofstede)
• People in high feminine culture are more focus about the cooperation
with other people and are looking for friendly environment and care
towards others
• Non-for Profit Organization such as UNICEF will succeed more in a
feminine culture nations (Norway, Denmark and Sweden)
23. 03-2 Effect of culture in relation to international finance by
focusing on Geert Hofstede six cultural dimensions
Short-term Orientation Vs Long-term Orientation
o Short-term Orientation- Nations with short-term orientation culture are
“centers on a desire for immediate gratification” (Dainton & Zelley)
o Short-term Orientation cultures put more importance in the past,
stability, universal morality, nationalism, and luck
o Countries such as U.S.A (26) and Canada (36) that is considered a short-
term orientation culture would not be advisable for multinational
companies to enter without seeking for partnership (joint venture) with
its citizen due to its nationalism nature
24. Short-term Orientation Vs Long-term Orientation
o Long-term Orientation- is characterized by Dainton & Zelley, as the
“thrift, savings, perseverance, and the willingness to subordinate one’s
self to achieve a goal”.
o Countries with long-term orientation cultures place importance on the
future, internationalism, situational morality, adaptability, and effort
(Hofstede, 2011).
o Multinational Companies who want to do business in a nation such as
China (87) and Germany (83) who has good score in long term
orientation will succeed without any form of partnership (Joint Venture)
due to internationalism.
03-2 Effect of culture in relation to international finance by
focusing on Geert Hofstede six cultural dimensions
25. 03-2 Effect of culture in relation to international finance by
focusing on Geert Hofstede six cultural dimensions
Indulgence
o According to Hofstede, a culture involving indulgence suggests “a
society that allows relatively free gratification of basic and natural human
desires related to enjoying life and having fun”
o Culture with high indulgence score place greater value on seeking for
happiness, while culture with low score do not put priority on happiness
o Research concerning this dimension show an indulgence score of "24 for
China, 48 for France, 68 for the U.S.A, 72 for Ghana, and 80 for Trinidad
and Tobago" (The Hofstede Centre, n.d.).
26. 03-2 Effect of culture in relation to international finance by
focusing on Geert Hofstede six cultural dimensions
• What are the criteria to consider before a nation can be term a
Happy Nation?
27. Indulgence Continuation
o According to the World Happiness Report’s researchers say that most
people’s happiness is associated by solid economic growth, healthy life
expectancy, trust, generosity, quality social relationships, and the
freedom to live and work as they want.
o Some reasons why Multinational Companies will choose nations with
Happy Culture for investment purposes are
• Trust
• Economic Growth
03-2 Effect of culture in relation to international finance by
focusing on Geert Hofstede six cultural dimensions
28. Business Implication of Cultural Dimension
The effect of cultural dimension impact on four types of
international flows:
o Information
o People
o Product
o Capital
which are important factor in business decision making at multinational
level such as choices at foreign entry modes.
29. Business Implication of Cultural Dimension
Cultural dimensions relationship with business
o Participative management can improve profitability in low power
distance cultures but worsen it in high power distance cultures
o Quick fixes can improve profitability in more short-term oriented
cultures but worsen it in more long-term oriented cultures
o Merit-based pay and promotion policies can improve profitability in
more masculine cultures and reduce it in more feminine cultures
o Emphasizing individual contributions can improve profitability in more
individualistic cultures and worsen it in more collectivistic cultures
31. 04 Conclusion
Multinational companies
Distinct cultural values
Ever-changing global market
Particular region
Products/Services
Focus more on national cultures
Different regions
Different customs
32. THANK YOU FOR
WATCHINGPRESENTED BY Happy Coker, Hongjia Zhu,
Kaizhao Tong, Kilian Etong,
Shruti Tapadia, Siyuan Zhang
Instructor : Dr. Mohamed MUSA
