Proceedings of 3rd Asia-Pacific Business Research Conference
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Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1 Do China, Korea and Japan form a cultural cluster? Jong-Wook Kwon*1 and Hak-Cho Kim** The purpose of this paper is to investigate whether China, Korea and Japan form a cultural cluster. First, using Hofstede’s cultural dimension of individualism, this study found significant differences among the three countries. However, using Schwarzt’s individualism framework , no significant differences were found among these same three c ount ries. Therefore, whet her China, Korea and Japan are designated as a cultural cluster varies depending on the type of cultural value model applied. Second, whereas cultural differences were found in terms of individualism for these three Asian countries, no significant differences were found in long-term orient ation. Therefore, whether these t hree Asian countries are classified a cultural cluster may depend on the cultural dimensions analyzed. Third, we suggest that multiple-level approaches are helpful in understanding the complexity of classifying these three Asian countries as a cultural cluster. For example, employees in China’s high-income regions, including Shanghai, Shandong and Guangdong, did not show significant cultural differences from employees in high-inc ome regions of Korea and Japan with respect to Schwartz ’s individualism. However, employees in China ’s low-income regions, including Gansu, Inner Mongolia and Hubei, showed significant cultural differenc es from employees in low-income regions of Korea and Japan. Moreover, significant cultural differences between early adulthood and middle adulthood were found with res pect to Schwartz’s individualism. We concluded that the formation of an inter-country cultural cluster depends on the cultural dimensions, cultural value models and cultural changes analyzed in a given study. The results from this study suggest that even within a single cultural cluster, research regarding the influence of life stage and regional difference on cultural values must inform effective human resource management practices. Keywords: work values, China, Japan, Korea, cluster 1. Introduction Many MNCs (multinational corporations) have focused on Asian markets due to their rapid economic development, large market size and investment potentials (UNCTAD, 2012; Froese, 2012). However, to develop and implement effective human resource management strategies in their expansion into Asian markets , it is imperative for MNCs to understand Asian cultural values (Robinson, 2003; Froese, 2012). This study focuses mainly on a line of research that has attempted to establish clusters of countries based on their relative similarities. This study analyzes three Asian countries in particular: China, Korea and Japan. An understanding of the similarities and differences between countries can help managers in MNCs to more effectively place international assignees, establish * Professor, Jong-Wook Kwon, Department of International Trade and Business, Kangwon National University, Korea. Email: jwkwon@kangwon.ac.kr ** Researcher, Hak-Cho Kim, Department of International Trade and Business, Kangwon National University, Korea. Email: kimhakcho@naver.com 1 Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1 compatible regional units and gauge the extent to which their human resource approaches can be applied to multiple countries. A literature search found 12 studies within nearly 40-year period that used attitudinal data to cluster countries, from Haire, Ghiseli and Porter (1966) to GLOBE (2004). However, these previous studies did not provide consistent results with respect to the present research question for two reasons. First, China was not included in cultural cluster studies prior to Inglehart (1997), although other Asian countries, including Hong Kong, Taiwan, Japan, Singapore and Malaysia, were included. Second, prior studies found inconsistent results regarding whether China, Korea and Japan form a cultural cluster. Some studies suggested that these three Asian countries have similar cultural values, indicating that they can be considered a cultural cluster. However, other research found that China, Korea and Japan should be grouped into different clusters due to differences in their cultural values. For example, Japan was designated as an independent cluster because it has different cultural values from other Asian countries (Haire, Ghiseli and Porter, 1966; Ronen and Kraut, 1977; Hofstede, 1976; Hofstede, 1980; Ronen and Shenkar, 1986). Other research suggested that China, Korea and Japan were a value cluster. For example, China, Korea and Japan were grouped as a cultural cluster referred to as “Confucian Asians” (Inglehart, 1997). In addition, these countries, along with Taiwan, Hong Kong and Singapore, were classified as a cultural region (House et al., 2004). Thus, our research question is as follows. Do China, Korea and Japan form a cultural cluster? This study contributes to the extant research in two ways. First, this empirical study provides some evidence regarding whether China, Korea and Japan form a cultural cluster by examining possible factors that have caused inconsistent results in previous studies of cultural group formation in Asian countries, which over simplified the question by only comparing cultural values scores. These approaches may help us to understand the complexity of cultural cluster studies. For example, one factor that may have led to the inconsistent results of previous studies may be related to issues of cultural change. The most influential factor in cultural change is economic development (Hofstede, 2001; House et al., 2004; Ingelhart, 1997; Forese, 2012; Ralston, Egri, Stewart, Terpstra and Kaicheng, 1999). To answer our research question, the relationship between economic development and cultural change in the three Asian countries was investigated because those countries have already experienced (Japan) or are experiencing (China and Korea) dynamic economic development. Second, to understand the complexity of cultural cluster studies, this paper used multi-level (national vs. individual; within-nation vs. between-nations) and multi-dimensional (individualism vs. long-term orientation or both) approaches, given that micro- and macro-level issues must be analyzed together to more deeply understand cultural cluster formation (Tung and Verbeke, 2010; Au and Cheung, 2004; Steel and Taras, 2010). For example, cultural differences within individual countries may be greater than those that are found across countries within the same cultural cluster (Ronen and Shenkar, 1985). This phenomenon may be illustrated through the following hypothetical case. If China, Korea and Japan form a cultural cluster even when regional cultural differences in China are greater than cultural differences among all three countries, the country clustering suggests that managers of MNCs should design similar human resource management practices in China, Korea and Japan. However, it is desirable for MNCs to develop different human resource practices across regions in China from those in Korea and Japan despite 2 Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1 the fact that the three countries were found to from a cluster using integrated approaches. 2. Theoretical Background and Hypotheses Cluster Approach A cluster approach was used to determine the similarities and differences between clusters, taking a holistic view with the assumption that countries within the same cultural clusters have similar cultural values (Ronen and Shenkar, 1985). The cluster approach offers the advantage of including many countries and simplifying research by grouping several countries into clusters. MNCs can use the cluster approach by adopting a standardized human resource strategy when they operate within countries that are part of a cultural cluster. However, a localization strategy must be implemented within different clusters. This study reviews the published literature on country clustering with a focus on cultural values and attitudes. For example, Haire et al. (1966) classified the world into several clusters by using psychological variables, with 3,641 respondents from 14 countries. They found that economic variables, religion and language were important determinants of cultural clusters. The importance of work goals for sales and services employees in 25 countries was surveyed by Sirota and Greenwood (1971) and later utilized by Ronen and Kraut (1977) who grouped 15 countries. Hofstede (1976) also classified the world into cultural groups based on religion, language and geographical latitude. Later, an influential cluster study by Ronen and Shenkar (1986) reviewed previous studies prior to the 1980s and grouped the world into nine cultural clusters: Anglo, Germanic, Near East, Nordic, Arab, Far Eastern, Latin European, Latin American and Independent. However, some limitations of this study were identified: for example, Eastern Europe, Africa and some Asian countries were not included (House et al., 2004). In addition, Furnham et al. (1994) simply grouped the world into east and west based on 41 countries. Inglehart and Baker (2000) identified seven clusters after investigating 41 countries: Catholic Europe, English-Speaking, Latin American, African, South Asia, Ex-Communist and Confucian countries. Recently, the GLOBE (Global Leadership and Organizational Behavior Effectiveness) model, developed by House et al. (2004), found 10 cultural clusters: Anglo, Latin European, Nordic, Germanic European, Eastern European, Latin American, SouthSaharan, Middle Eastern, South-East Asian and Confucian Asian. The clusters of countries that were identified by extending Ronen and Shenkar (1980) are presented in Table 1. Determinants of a Cultural Cluster Table 2 indicates that language, religion, ethnicity, migration and geography are major determinants in the formation of cultural clusters (Ronen and Shenkar, 1986). For example, Hofstede (1980) demonstrated how geographical latitude is associated with the power distance index. The geographical characteristics of a country can limit interactions among its inhabitants and give rise to differences in fundamental beliefs, which can, in turn, result in different cultural values within a country 3 Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1 <Table 1> Country Clusters Cluster ANGLO Haire, Ghiselli, & Porter (1966) U.K. U.S. Sirota & Greenw ood (1971) U.K. U.S. Australia Canada India New Zealand South Africa Austria Switzerland Ronen & Kraut(1977) U.K. U.S. Australia Canada India New Zealand South Africa Hofstede (1976) U.K. U.S. Sweden Redding (1976) Ronen & Kraut (1977) Badaw y (1979) U.K. Ireland South Africa Israel Griffeth, Hom, Denist & Kirchner (1980) U.K. Canada Hofstede (1980) Ronen & Shenkar (1986) U.K. U.S. Australia Canada New Zealand South Africa U.K. U.S. Australia Canada New Zealand Ireland South Africa Ingelhart (1997) GLOBE (2004) U.K. U.S. Australia Canada New Zealand Ireland South Africa Total 2~8 ENGLISHSPEAKING U.K. U.S. Ireland Canada 4 PROTESTANT EUROPE Belgium France Austria Italy Portugal Spain 6 NORTHERN EUROPE Germany Sweden Netherlands Finland Norway Ireland Denmark Switzerland 8 EASTERN EUROPE Russia Estonia Latvia Bulgaria Hungary Czech Belarus Slovenia Romania GERMANIC NORDIC Denmark Germany Norway Sweden Denmark Finland Norway Austria Germany Switzerland Austria Germany Switzerland Austria Germany Switzerland Denmark Finland Norway Denmark Norway Denmark Finland Norway Sweden Austria Denmark Finland Germany Norway Sweden Switzerland Greece Hungary Albania Slovenia Poland Russia Georgia Kazakhstan 10 Austria Germany Israel Switzerland Germany Austria Switzerland Austria Netherlands Switzerland Germany 3~7 Denmark Finland Netherlands Norway Sweden Finland Norway Denmark Sweden Denmark Finland Sweden 2~5 Israel Italy Switzerland Spain Portugal France LAT IN EUROPEAN Belgium France Italy Spain Belgium France Belgium France Brazil France Italy Switzerland Argentina Belgium Brazil France Spain Italy Belgium France 4 France Belgium Italy Spain Portugal 2~6 Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1 Cluster LATIN AMERICAN Haire, Ghiselli, & Porter (1966) Argentina Chile India Sirota & Greenw ood (1971) Argentina Chile Peru Colombia Mexico Ronen & Kraut(1977) Hofstede (1976) Redding (1976) Ronen & Kraut (1977) Badaw y (1979) Griffeth, Hom, Denist & Kirchner (1980) Argentina Chile Colombia Mexico Peru Venezuela Hofstede (1980) Chile Colombia Mexico Peru Portugal Venezuela Ronen & Shenkar (1986) Argentina Venezuela Chile Mexico Peru Colombia AFRICA Greece Iran Turkey Yugoslavia NEAR EAST Ingelhart (1997) Mexico Argentina Chile Brazil 3~6 South Africa Nigeria Zimbabwe Namibia Zambia Nigeria South Africa 2 Turkey Iran Greece 3 Turkey Egypt Kuwait Morocco Qatar Abu-Dhabi Bahrain Oman Kuwait Saudi Arabia Emirates ARABIC Abu-Dhabi Bahrain Oman Kuwait Saudi Arabia Emirates Hong Kong Japan Indonesia Malaysia Philippines Singapore Vietnam Thailand FAR EAST Hong Kong India Pakistan, Philippines, Singapore Taiwan, Thailand 6 Malaysia Hong Kong Singapore Taiwan, Indonesia Vietnam Thailand 7~8 Philippines Indonesia Malaysia India Thailand Iran SOUTHEAST ASIA Japan Brazil Germany Japan Israel Sweden Venezuela Brazil Israel Japan Sweden India Iran Brazil Japan India Israel Japan Japan 1~6 Korea China Japan CONFUCIAN ASIA No. of Cluster Total Ecuador El Salvador Colombia Bolivia Brazil Guatemala Argentina Costa Rica Venezuela Mexico MIDDLE EAST INDEPENDENT GLOBE (2004) 5 5 6 5 1 4 1 Note: additional studies were added based on Ronen & Shenkar (1986)‟s study, 5 3 8 9 7 Korea China Japan Hong Kong Singapore Taiwan, 10 3~6 Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1 . Mass migration is another dimension that influences the formation of clusters. Although Anglo countries, including the U.S. and U.K., are located in different territories, they have similar Anglo cultures due to massive migration (Cattell, 1950). A review of the previous research shows the following main research streams. First, language, religion, ethnicity, geography and economic development are the main determinants of cultural clusters. Second, there are inconsistent results regarding the cluster to which Asian countries belong. Some studies have identified Japan as an independent group (Haire, Chiselli and Porter, 1966; Sirota and Greenwood, 1971; Ronen and Kraut, 1977). Other studies have classified Japan as existing within the same cultural group as other Asian countries such as Korea (Inglehart, 1997; House et al., 2004). The main purpose of this study is to provide evidence as to why prior studies have found inconsistent results regarding whether Asian countries should be included within the same cultural clusters. To develop the logic underlying its hypotheses, this study begins by investigating possible reasons for the inconsistent results from previous studies regarding whether China, Korea and Japan form a cultural cluster. Three possible reasons found through a review of cluster studies: cultural changes, a difference in cultural value models and a difference in cultural dimensions. This logic was derived from the fact that, as table 1 indicates, research that was performed prior to the 1990s, including Sirota et al. (1971), Hofstede (1980) and Ronen and Shenkar (1988) found that China, Korea and Japan did not form a cultural cluster. Nevertheless, studies conducted after the 1990s, including Inglehart (1997) and House et al. (2004), found that China, Korea and Japan clustered as a Confucian Asian group. Therefore, it is possible to assume that these three countries have recently developed similar cultural values due to economic development in China and Korea. This logic was derived from previous studies that demonstrate how cultures become similar due to economic development (Hofstede, 2001; Inglehart, 1997; Inglehart and Baker, 2000; Huo and Randall, 1991; Tang and Koveos, 2008). There is a second possible reason for these differences in cultural value models. The Value Survey Module (VSM), derived from Hofstede, suggests that Japan can be classified as an independent cluster, meaning that Japan has different cultural values from other countries. In contrast, the world value survey (Inglehart) and GLOBE model in House et al.‟s study (2004) demonstrated that Japan could be included within the same cultural group as Korea and China. Similarly, a third possible reason that inconsistent results arose is because each study utilized different cultural value dimensions. For example, Sirota and Greenwood (1971) used 14 work goals and nine cultural dimensions in their GLOBE model, whereas four dimensions, including traditional, secular-rational, survival and self-expression, were used by Inglehart (1997). 1) Examination of the possibility of cultural change We deigned our research model to test three possible sources of inconsistent results in prior studies. We applied three logic systems, cultural changes, different research models and different cultural dimensions, to three countries: China, Korea and Japan. To consider the first logic system, several potential factors of cultural change were derived from previous studies and applied to China, Korea and Japan to determine whether they form a cultural cluster due to cultural changes. 6 Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1 Several factors, language, religion, ethnic group, geographical characteristics and economic development, were indicated as potential determinants of cultural change. To analyze these factors within the context of China, Korea and Japan, the characteristics of the determinants needed to be examined. For example, geographical characteristics, language, religion and ethnicity are less likely to change, whereas economic development among these three countries is more likely to change. Geographical characteristics were measured mostly in terms of climate (House et al., 2004; Kwon, 2012b), geographical latitude (Hofstede, 2001) and geographical proximity. However, although the U.K., the U.S. and New Zealand are classified as Anglo countries, they are geographically distant from one another. Therefore, ethnic group and language must also be included with geography. <Table 2> Determinants of cultural change and stability Changeabil ity Determinants Low Geographic al characteristi cs Language Low Korea China Japan Cultural Change Climate 11 11 14 Low Geographical proximity Close Close Close Low Linguistic Homogeneity Pronoun-drop Korea Chinese Japanese Low Drop Drop Drop Low Medium Religion Confucianism influence Similar Similar Similar Low Medium Ethnicity Ethnic heterogeneity Economic development Homogene ous Medium Homogene ous Low Homogene ous High Low High Economic High developmen t Note: temperature was measured according to an average of each country‟s capital city (℃) It was expected that analyzing geographical factors in China, Korea and Japan would reveal similar cultural values because these three countries are geographically close. With regard to language, people in these countries have distinct languages: Chinese, Korean and Japanese, respectively. These three countries were expected to have very similar collectivism because their languages are all categorized as “pronoun drop” languages (Kashima and Kashima, 1998). Although the Catholic and Protestant religions are associated with uncertainty avoidance and power distance, no evidence suggested tendency toward individualism within those religions. China, Korea and Japan were influenced by Confucianism, so it is unlikely that people in these three countries would have different cultural values. In terms of ethnic groups, over 92 percent of Chinese are Han Chinese. Korea and Japan also include homogeneous ethnic groups. In sum, people in China, Korea and Japan are expected to have similar cultural values ; therefore, they can be grouped into a cultural cluster in terms of geography, language, ethnicity, and religion. In contrary, economic development is more likely to influence cultural differences among these three countries. This study developed hypotheses based on the 7 Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1 relationship between economic development and individualism. Individualism is the most influential cultural value dimension in this study, given that previous studies have provided stronger evidence of positive relationship between economic development and individualism than any other cultural value dimension (Hofstede, 2001). Considering that China, Korea and Japan are experiencing different stages of economic development, it was expected that these three countries would have different cultural values with respect to individualism. 2) Examination of the Cultural Model As mentioned above, there is a possibility that the inconsistent results of cluster studies were caused by different research models. To examine this possibility, the cultural dimension of individualism from Hofstede and Schwartz‟s research models were included in this study. These two cultural models are considered to be the most widely used, and both include the cultural dimension of individualism. 3) An Examination of Cultural Dimensions To test whether the inconsistent results of cluster studies were caused by different cultural dimensions, the cultural dimensions of individualism and long-term orientation were included in the present study. China, Korea and Japan are considered to be Confucian countries inasmuch as they are most strongly influenced by Confucianism (Ing lehart, 1997; House et al., 2004). No significant differences were expected among these countries in terms of long-term orientation, although they have different cultural values with respect to individualism. 4) A Complementary Examination of Cultural Clusters: Multi-level and Multi-dimensional This study extends upon and complements previous cultural cluster studies by adopting a multi-level analysis: economic development at the macro level, regional difference at the intermediate level and life-stage at the micro level (Steel and Taras, 2010; Tung and Verbeke, 2010). Individual characteristics at the micro level play an important role in cultural values. Similarly, cross-regional differences within a country were also considered in this study because regional cultural differences within a country can be greater than those between countries. Large countries, such as India and China, are likely to show great cultural differences across regions. It would be useful for MNCs to develop specific human resource management practices that correspond to regional cultural differences within countries, although China, Korea and Japan, with their many similarities, can be identified a cultural cluster. 3. Hypotheses Economic development As an economy develops, people tend to become more individualized (Hofstede, 2001; Inglehart, 1997; Ralston et al., 1997). People with increased incomes tend to pay more attention to quality of life and self-expression, thereby becoming more individualistic. Of the three countries studied, Japan has the most developed economic level, followed by Korea and China. Japan had already achieved a percapita GDP (Gross Domestic Product) of USD 20,000 in 1988, whereas in 2007, 8 Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1 Korea had not yet reached that level. In 2012, the per-capita GDP of Japan, Korea and China were USD 45,900, 23,900 and 5,200, respectively (CIA World Fact 2012). People in these three countries were expected to have a range of cultural differences with regard to individualism due to their different levels of economic development. Specifically, employees in Japan demonstrate greater individualism than those in Korea, and those in Korea will have greater individualism than those in China. In terms of long-term orientation, people in China, Korea and Japan are strongly influenced by Confucianism (Inglehart, 1997; House et al., 2004). Therefore, no differences among the three countries were expected with regard to long-term orientation, given that the value dimension of long-term orientation is derived from Confucianism. Based on these discussions, we developed the following hypotheses: Hypothesis 1a Employees in Japan display greater individualism than those in Korea, and those in Korea display greater individualism than those in China ( J >K > C). Hypothesis 1b There are no differences in the long-term orientations of employee across Korea, China and Japan (J = K = C). Regional differences As Hofstede (1980) acknowledged, a complementary analysis of the differences in national cultures with subcultural differences needs to be performed due to the complex and subcultural heterogeneity of modern nations. From this perspective, one may still find varying degrees of collectivism within China owing to the country‟s varied rates of economic development, although Hofstede (1984) found that China tends to be very collectivistic compared with Western nations. However, China also has economic disparities between its large eastern and western regions which give rise to cultural differences across its regions (IsHak and Moore, 1988; Child and Stewart, 1997; Huo and Randall, 1991; Kwon, 2012a). The regional cultural differences in China maybe greater than those between China, Korea and Japan, even though these countries form a cultural cluster as previous studies have indicated (House et al., 2004; Inglehart, 1997). According to convergence theory, countries with more developed economies are more likely to have similar cultural values. In 2010, the average per-capita GDP in China was USD 5,450. However, China has regional disparities. For example, Tanjin, Shanghai and Beijing showed higher regional income per capita: 13,392; 12,784; and 12,447, respectively. In contrast, the other 20 regions, including Quinching, were found to be below China‟s national GDP per capita average. Therefore, we expected that employees in high-income regions in China would have similar cultural values with employees in Korea and Japan rather than those in China‟s low-income regions, given that previous studies have found a positive association between economic development and individualism. Given the lack of theoretical basis for the impact of economic development on long-term orientations of people in China, Korea and Japan, and given that the strong Confucian influence in these countries, the longterm orientation of these countries is understood to be largely derived from their shared Confucian influence. Based on these discussions, we have developed the following hypotheses. 9 Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1 Hypothesis 2a There are no differences in individualism of employees in low-income regions of China and employees in Korea and Japan. Hypothesis 2b Employees in low-income regions of China have lower level of individualism than those in Korea and Japan. Hypothesis 2c There are no differences in the long-term orientation of employees in high- income regions of China and employees in Korea and Japan. Hypothesis 2d There are no differences in the long-term orientation of employees in low- income regions of China and employees in Korea and Japan. Life Stage Theory Life stage theory is a model of the stages of human thinking and learning that tracks an individual‟s development throughout his/her life. At different life stages, people have different personalities, cognitive abilities and psychological profiles. Thus, life stage theory is a useful model with which to compare cultural values among different groups at different stages of life (Erikson, 1997; Ralston, Hallinger, Egri and Naothinsuhk, 2005; Egri et al., 2010). Erikson (1997) posited an eightstage theory of human development. However, the present study focuses primarily on the stage of early adulthood (20-39) and middle adulthood (40-59 years), which are the most suitable life stages for the purpose of this study, which focuses primarily on employee‟ work values (Egri et al., 2010). Early adulthood is the stage at which people are about to begin their careers and face challenges. Young adults are required to develop qualities of cooperation and competition. In contrast, middle adulthood is the stage of an individual‟s maturity, in which s/he acquires qualities of leadership in family and work. These adults are more likely to invest in their future education and social welfare. During middle adulthood, a person focuses on social contributions and building a legacy (Levinson, 1997). According to a previous studies (Kwong, 1994; Egri and Ralston, 2004), younger generations show more individualistic tendencies than older generations. Thus, it is expected that employees in early adulthood will have greater individualism than those in middle adulthood in China, Korea and Japan. However, given the lack of theoretical basis for a correlation between age and long-term orientation and that people in these countries are strongly influenced by Confucianism, we expect that no differences in long-term orientation between early adulthood and middle adulthood. Hypothesis 3a Employees in early adulthood display greater individualism than those in middle adulthood (E > M). Hypothesis 3b There are no differences in the long-term orientations of employees in early adulthood and employees in middle adulthood (E = M). 4. Methods Samples Table 3 illustrates the location of Chinese employees and the number of respondents for each location. The data collection was designed to reflect the three countries (China, Korea and Japan) and two intra-country locations to compare cultural similarities between and within all of the countries. The Chinese respondents were 10 Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1 drawn from two regions (high income and low income). The study‟s two criteria were gross regional product (100million Yuan) and household consumption expenditure (Yuan), which divided China into two groups of high- and low-income regions. We used statistical data derived from the Chinese Statistical Yearbook 2012. This source provides statistics on gross regional product and household consumption expenditure in 31 regions in China. We divided China into two principal regions based on cluster analysis. Cluster 1 was composed of high-income regions, including seven provinces, such as Jiangsu, Shandong and Guangdong. The other 14 regions were included in cluster 2, including Inner Mongolia and Yunnan. After the two groups were clustered, representative cities and provinces from each cluster were selected. Shanghai, Shandong and Guangdong were selected as representative of cluster 1. Inner Mongolia, Gansu and Anhui were selected for cluster 2. <Table 3> Summary of characteristics of the high- and low-income regions of China Regions Low Income Inner Mongolia Regions Gansu Anhui High Income Shanghai Regions Shandong Guangdong Regional Gross Regional Product (100million Yuan) 7,761.80 3,176.11 8,874.17 Household Consumption Expenditure (Yuan) 8,108 4,869 6,377 13,698.15 27,343 31,072.06 35,696.46 9,573 14,390 As Table 3 demonstrates, these two regional groups show differences in income level. Questionnaires were distributed to employees in Korea, Japan and six provinces in China. Questionnaires from a total of 643 employees were collected in three countries. Among the 643 employees, 453 respondents worked within the six regions in China, 95 worked in Korea and 95 worked in Japan. The demographics of the three Asian country samples are presented in Table 4. <Table 4> Sample Characteristics China C1 (N=386) Age C2 (N=67) Korea (N=95) Japan (N=95) 28.9 30.4 40.2 38.9 53.6% 58.2% 63.2% 25.3% Rank Non-supervisory First-level manager Middle-level manager Upper-level manager 49.7 12.1 22.0 5.2 73.1 19.4 6.0 1.5 33.7 7.4 8.4 50.5 66.3 4.2 5.3 24.2 Tenure(months) 80.4 76.3 89.8 80.4 Gender(% male) 11 Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1 Education High school Undergraduate university Graduate university 16.6 76.1 7.3 Industry (%) Manufacturing 57.3 Construction 10.1 Financing/Banking 6.3 Retail 17.1 Others 9.2 C1: High-income regions, C2: Low-income regions 14.9 81.6 4.5 36.8 55.8 7.4 37.9 61.1 1.0 74.5 3.9 2.0 9.8 9.8 18.9 4.2 6.4 31.6 38.9 15.8 7.4 7.4 12.6 56.8 Measurement We used the Hofstede VSM (1994 version) to measure individualism and long term orientation work values and the Schwartz Value Survey (SVS) model for individualism. Both questionnaires, originally in English, were translated into Chinese, Japanese and Korean and then back-translated to check for accuracy (Brislin, 1970). The discrepancies in the translations were adjusted by the translators. Individualism was calculated as - 50m(N1) + 30m(N2) + 20m(N4) - 25m(N8) + 130 based on the following four conditions: (N1) personal time (having sufficient time for one‟s personal or family life), (N2) physical workplace conditions (having good physical working conditions, including adequate ventilation, lighting and work space), (N4) employment security and (N8) variety (elements of variety and adventure in one‟s job). All content questions were scored on five-point scales in which, for example, m(03) was the mean score for question 03. Long-term orientation was calculated as +45 m(09) –30 m(10) –35m (11) +15 m(12) +67 based on persistence (perseverance), ordering relationships by status, thrift and sense of shame. The SVS contains 56 items belonging to 10 value types at the individual level (Schwartz, 1994). All items were measured using seven point Likert scales. Power, stimulation, hedonism, achievement and self-direction were included from 10 value types as determinants of individualism. 5. Results Hypothesis Tests As Table 5 shows, a multivariate analysis of covariance (MANCOVA) was used to test the study‟s hypotheses. Gender, education and industry were entered as control variables and country, life stage and regional diffe rences were analyzed. Whereas Schwartz‟s individualism (S_IDV) and Hofstede‟s long-term orientation (H_LTO) did not show significant differences among Chinese, Korean and Japanese respondents, significant differences were found regarding Hofstede‟s cultural dimension of individualism (Wilks λ =.95, F = 2.67, p < .05). Among Hofstede‟s individualism (H_IDV), Schwartz‟s individualism (S_IDV) and Hofstede‟s long-term orientation (H_LTO), there were no significant differences between life stages of early adulthood and middle adulthood. By contrast, significant differences were found across the 12 Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1 studied regions in China (Wilks λ =.99, F = 2.65, p < .05). In addition to country, region and life stage, significant differences were found in terms of age and education levels. In particular, there were significant cultural differences in education with regard to H_IDV, S_IDV and H_LTO (Wilks λ =.95, F = 6.47, p < .01). <Table 5> MANCOVA results: Influence of country, region and life-stage on cultural values H_IDV F S_IDV F H_LTO F Wilks' Lamda(F) Country 5.92 0.07 1.09 .95(F=2.67* ) Life-stage 0.32 0.04 0.04 .99(F=0.12) Region 4.38* 0.15 2.35 .98(F=2.51* ) Gender 4.22* 3.00ϯ 1.10 .97(F=2.91* ) Education 5.64* 3.42ϯ 6.90** .95(F=6.47** ) Position level 0.01 4.47* 0.95 .98(F=1.67) Industry 1.37 0.03 0.89 .99(F=0.76) p<.05, ** p<.01. Note) H_IDV: Hofstede‟s Individualism, S_IDV: Schwartz‟s individualism, H_LTO: Long-term orientation * 1) Country and cultural values (1) Economic development and cultural values: H 1-1 We expected that there would be significant differences in cultural values among China, Korea and Japan. Specifically, employees in China were expected to have greater individualism than those in Korea, and those in Korea were expected to have greater individualism than those in Japan. The results found that employees in Korea had the greatest individualism (mean = 75.57), and employees in China and Japan did not show significant differences in terms of individualism (H_IDV) (Japanese mean= 56.21, Chinese mean = 58.36). Although there were no significant cultural differences between China and Japan, Korea showed greater individualism than China and Japan in terms of individualism (H_IDV), thus partially supporting hypothesis 1. However, in terms of individualism (S_IDV), there were no significant cultural differences (Korean mean = 5.49, Japanese mean = 5.59, Chinese mean = 5.52). (2) Confucianism and Cultural Values: H 1-2 Given that people in China, Korea and Japan are strongly influenced by Confucianism, we expected that these three Asian countries would have similar cultural values in terms of long-term orientation (H_LTO). As hypothesized, no significant differences were found regarding long-term orientation (H_LTO) (Korean 13 Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1 mean = 45.21, Japanese mean = 42.84, Chinese mea = 48.87), supporting hypotheses 1 and 2. (3) Regional Cultural Values: H 2-1 to H 2-4 Analysis of variance (ANOVA) was used to compare individualism among Korea, Japan and low-income regions in China. With regard to individualism (H_IDV), the results found that employees from low-income regions in China demonstrated the lowest individualism (low-income region mean = 35.28), followed by Japanese employees (Japanese mean = 56.21) and Korean employees (Korean mean = 75.57). There were no significant cultural differences among the three countries with regard to individualism (S_IDV). However, this study compared individualism (S_IDV) among Korea, Japan and low-income regions in China. The results demonstrated that employees in the low-income regions in China showed the lowest individualism (low-income region mean = 5.30), followed by Korean employees (Korea mean = 5.49) and Japanese employees (Japanese mean = 5.59). Similarly, whereas no significant differences were found among the three countries with respect to long-term orientation (H_LTO), employees in low-income regions in China showed lower long-term orientation (low-income region mean = 56.85) than Korean and Japanese employees (Korea n mean = 45.21, Japanese mean = 42.84). By contrast, employees in high-income regions in China did not show any significant difference from those in Korea and Japan in terms of Hofstede‟s individualism (H_IDV) (high-income regions in China = 62.75; Japan = 58.36; Korea = 75.57), Schwartz‟s individualism (S_IDV) (high-income regions in China = 5.53; Japan = 5.59; Korea = 5.49) or long-term orientation (high-income region in China = 47.56; Korea = 45.21; Japan= 42.84). In sum, H 2-1 to H 2-4 were fully supported. <Table 6> ANOVA results: Country differences for individualism and long-term orientation Korea(K)Japan (J) Total(C) China C1 Duncan C2 H_IDV 75.57 56.21 58.36 35.28 62.75 K>J=C K>J>C1 K=J=C2 S_IDV 5.49 5.59 5.52 5.30 5.53 K=J=C K>J>C1 K=J=C2 H_LTO 45.21 42.84 48.87 56.85 47.56 K=J=C K=J<C1 K=J=C2 Note) H_IDV: Hofstede‟s individualism, S_IDV: Schwartz‟s individualism, H_LTO: Long-term orientation; J: Japan, K: Korea, C: China (C1: Low-income region, C2: High-income region) (4) Life-stage and cultural values: H 3-1, H 3-2 Hypothesis 3-1 proposed that employees in early adulthood would have greater individualism than those in middle adulthood in China, Korea and Japan. In addition, this hypothesis proposed that there were no differences between early 14 Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1 adulthood and middle adulthood with regard to long-term orientation. A t-test was used to test the influence of life-stage on individualism and long-term orientation. While no significant differences were found for individualism (H_IDV) between the two life-stage groups (early adulthood = 62.67; middle adulthood = 62.87), employees in early adulthood had greater individualism (S_IDV) than those in middle adulthood (early adulthood = 5.49, middle adulthood = 5.35). As proposed, there were no significant differences between early adulthood and middle adulthood (early adulthood = 43.81; middle adulthood = 43.13) for long-term orientation. Thus, hypothesis 3-1 was partially supported and hypothesis 3-2 was fully supported. <Table 7> T-test results: Influence of life-stage on personal values Early adulthood (E) Middle adulthood (M) t-value Results H_IDV 62.67 62.87 -0.05 E=M S_IDV 5.49 5.35 1.99* E>M H_LTO 43.81 43.13 0.18 E=M * p<.05. Note) H_IDV: Hofstede‟s Individualism, S_IDV: Schwartz‟s individualism, H_LTO: Long-term orientation; E: Early adulthood, M: Middle adulthood 6. Conclusions and discussion The main purpose of this paper is to investigate why previous studies did not show consistent results regarding whether China, Korea and Japan form a cultural cluster. Despite the advantage of cultural cluster studies, the Far East cluster may be seriously oversimplified given the diversity of religion, language and economic development. Our study contributes to the international management literature by examining the reasons for inconsistent results and adopting a macro-level (national) / intermediate-level (regional) / micro-level (individual) framework. Our study examines economic development in the three countries as a macro factor, regional differences in China as an intermediate factor and life-stage as a micro factor. A multi-level analysis provides a more complete understanding of the complexity forming cultural clusters (Tung and Verbeke, 2010; Au and Cheung, 2004; Steel and Taras, 2010). First, whether China, Korea and Japan are clustered as one group depends on the type of cultural value models applied. Our study applied the individualism dimension derived from two different cultural value models: the Hofstede and Schwartz cultural value models. Although not completely consistent with our expectations, significant differences among the three countries were found in terms of Hofstede‟s individual cultural dimension, whereas there were no significant differences based on Schwartz‟s individualism. As a result, China, Korea and Japan can be defined as a cultural cluster based on Schwartz‟s individualism, whereas these same countries do not form a cultural cluster based 15 Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1 on Hofstede‟s individualism. A possible explanation for this result is that the two cultural value models are composed of different survey items. We further examined the items measuring individualism for each scale. Hofstede‟s individualism includes four items: personal time, physical workplace conditions, employment security and variety. In contrast, Schwartz‟s individualism is composed of power, achievement, hedonism, stimulation and self-direction. Our results finding differences between the two individualism scales are consistent with previous studies. For example, when cultural distance was calculated based on both Hofstede‟s and Schwartz‟s frameworks, the results from the two frameworks were not congruent (Ng et al., 2007). Whereas cultural distance based on Schwartz‟s model was significantly related to international trade, cultural distance based on Hofstede‟s model was not significant. These differences suggest that researchers should carefully consider which cultural model is most appropriate for use in their studies (Ng et al., 2007). In sum, we argue that although different cultural value models employ the cultural dimension of individualism, the variation in composition of the different cultural value measurement items could lead to countries being classified as either within the same cultural cluster or different cultural clusters. Second, whether China, Korea and Japan form a single cultural cluster depends on cultural dimensions. Whereas cultural differences among the three Asian countries were found in terms of individualism, no significant differences were found regarding long-term orientation; thus, these countries can be identified as a single Confucian cultural cluster. Theoretically, several methods can be used to conduct cultural cluster research. The first would use only one cultural dimension to investigate the possibility of cultural cluster formation. The second would involve two cultural dimensions that could be used conjointly. For example, Hofstede (2001) grouped the world into several clusters based on two cultural dimensions: power distance and individualism. Japan and India formed a cultural cluster based on power distance and individualism scales. However, these two countries formed different cultural clusters based on, first, power distance and masculinity and, second, power distance and uncertainty avoidance. India was grouped with Hong Kong in having high power distance and weak uncertainty avoidance. In contrast, Japan belongs to a cluster featuring high power distance and strong uncertainty avoidance. Thus, formation of cultural clusters in Japan and India varies based on differences in cultural dimensions. Further, many cultural dimensions can be used in combination to group the world into several cultural clusters. For example, House et al. (2004) suggested that China, Korea and Japan were grouped as one Confucian cluster based on all nine cultural dimensions developed by their cultural model. It is logical to conclude that the results from studies that use one or two cultural dimensions independently would be different from those that use several cultural dimensions simultaneously. We classified cultural cluster research methods into two approaches: an integrated approach vs. a separate approach. We have identified the separated approach as cultural cluster research that is conducted based on one or two cultural dimensions independently and integrated approach as cultural cluster research that uses all of the cultural dimensions provided by the various research models simultaneously. 16 Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1 <Table 8> Comparison of results for integrated and separate approaches INTEGRATED APPROACH: Nine Cultural Dimensions (GLOBE 2004) Cluster Countries ANGLO U.K. U.S. Australia Canada New Zealand Ireland South Africa SEPARATE APPROACH: In-Group Collectivism Cluster Countries 1 Australia Austria Canada Costa Rica U.K. Finland Franc e Georgia Greece Germany Indonesia Ireland Is rael Japan Kazakhstan Netherlands Poland Singapore Slovenia U.S. ENGLIS HSPEAKING PROTES TA NT EUROPE NORTHE RN EUROPE EASTERN EUROPE GERMANIC NORDIC LATIN EUROPEAN Greece Hungary Albania Slovenia Poland Russia Georgia Kazakhstan Austria Netherlands Switzerland Germany Denmark Finland Sweden Israel Italy Switzerland Spain Portugal France SEPARATE APPROACH: Future Orientation Cluster Countries 1 U.S. Canada France Germany 2 Albania Australia Austria Costa Rica U.K. Finland Germany Greece Ireland Israel Kazakhstan Netherland Poland 2 Sweden 3 Sweden Switzerland Taiwan 3 Italy Korea Mexico Malaysia Qatar Turkey Thailand Zimbabwe Zambia Hungary 4 Mexico Nigeria Turkey Zambia Argentina Guatemala Korea Malaysia 4 5 Denmark Brazil Egypt India Hong Kong Nigeria Kuwait 5 6 Denmark Colombia Georgia India Hong Kong Indonesia, Portugal Singapore Slovenia 17 Japan Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1 LATIN AMERICAN AFRICA MIDDLE EAST Ecuador El Salvador Colombia Bolivia Brazil Guatemala Argentina Costa Rica Venezuela Mexico Zimbabwe Namibia Zambia Nigeria South Africa Turkey Egypt Kuwait Morocco Qatar ARABIC Philippines Indonesia Malaysia India Thailand Iran CONFUCIAN ASIA Korea China Japan Hong Kong Singapore Taiwan, Implications FDI, Trade, Entry mode, IHRM practices Case The more culturally distant the investing firm‟s country is from a host country, the more likely that the investing firm will choose to set up a joint venture (Kogut and Singh, 1988). Cultural distances are predicted for market selection in exporting and foreign direct investment (Johanson and WiedersheimPau, 1975; Davidson, 1980; Kogu and Singh, 1988) Related Theory Transaction cost theory Note: IHRM: International human resource management 6 Argentina Bolivia Colombia Ecuador Guatemala P hilippines Portugal Russia Spain Venezuela 7 Albania South Africa 8 Morocco Namibia 9 El Salvador New Zealand SOUTHEAST ASIA 10 China Taiwan Switzerland 7 Bolivia Brazil Ecuador Egypt Kuwait Philippines Russia South Africa Spain Venezuela 8 9 El Salvador Italy New Zealand Qatar Zimbabwe Thailand Namibia 10 China IHRM practices IHRM practices Healt h care program and collectivism (Hempel, 1998): Individual choice in care provides more desirable and separate plans that are acceptable for for different employee groups. Work unit solidarity and team-based reward are emphasized (Neman and Nollen, 1995) Long-term employment and management practices solutions are preferred for the long term (Neman and Nollen, 1995) Motivation theory Motivation theory 18 Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1 Hofstede‟s model is representative of separate approach in cultural cluster studies. He grouped the world into several clusters based on two cultural dimensions: power distance and individualism. In contrast, the GLOBE model represents an integrated approach. The GLOBE project groups 62 societies into 10 cultural clusters. These 10 societal clusters are based on the following nine cultural dimensions: power distance, uncertainty avoidance, human orientation, institutional collectivism, in-group collectivism, assertiveness, gender egalitarianism, future orientation and performance orientation (see House et al., 2004). To demonstrate how these different approaches to cluster studies may yield different results, we conducted several analyses in Asian countries based on the GLOBE score for 60 countries along nine cultural dimensions. House et al. (2004) grouped 62 societies into the following 10 cultural clusters with an integrated approach using nine cultural dimensions. According to this approach, six Asian countries (Singapore, Hong Kong, Taiwan, China, Korea and Japan) were found to form a Confucian Asian cluster. We then employed a separate approach using the cultural scores for 60 societies. Singapore, Korea and Japan were grouped as a cultural cluster when ingroup collectivism was the only dimension analyzed. By contrast, Singapore, Hong Kong and Japan were classified as a cultural group according to the dimension of future orientation. In sum, the results from the three separate approaches were different from those from the integrated approach. It should be noted that we do not argue that one approach is better than the other. These two approaches are based on different theoretical backgrounds and have different uses. Integrated approaches are based on transaction cost theory to explain foreign direct investment, export and MNC entry mode. By contrast, the separate approach is based on motivational theory and can provide MNCs with useful information for human resource management practices. Thus, these two different approaches can be used in complementary ways. However, these approaches should be used carefully because the results of country cluster studies can vary, thus influencing MNCs to develop different designs for human resource management strategies. For example, the Nordic cluster is the most dissimilar from Eastern European, whereas China, Korea and Japan have similar cultural values and belong to the same Confucian Asian cluster. Trade and FDI within the three Asian countries are greater than within the Nordic cluster and the Asian cluster due to cultural distance (Whitley, 1992; Hofstede 1980; Berry et al., 2010). Although China, Korea and Japan were found to form a cluster through the integrated approach, it is desirable for MNCs to develop differentiated human resource practices for each country individually, given that six Asian countries can be grouped as different clusters with different cultural dimensions. Specifically, collective management practices emphasize work unit solidarity and team -based rewards (Newman & Nollen, 1995). According to the results from this study regarding in-group collectivism, MNCs entered Singapore, Korea and Japan with the same human resource management practices, but not Taiwan (Newman & Nollen, 1995; Hempel, 1998). Similarly, MNCs entered Singapore, Hong Kong and Japan with the same human resource management practices, but not Korea and Taiwan, because establishing employment and problem-solving management practices for the long term is consistent with a long-term cultural orientation rather than “quick fix” management practices (Newman & Nollen, 1995). Third, the results from this research show that using a multiple level approach is useful for facilitating an understanding cultural change in these three Asian countries 19 Proceedings of 3rd Asia-Pacific Business Research Conference 25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1 and that it complements the limitations of cultural cluster studies described by Ronen and Shenkar (1985). For example, China, Korea and Japan can be considered as a cultural cluster, given that employees in these countries have similar cultural values in terms of Schwartz‟s individualism. From the perspective of a multi-level approach, employees in China‟s low-income regions (including Gansu, Inner Mongolia and Hubei) show significant differences from those in Korea and Japan, although employees in Korea and Japan and in high-income regions of china (including Shanghai, Shandong and Guangdong) did not show any significant differences in terms of Schwartz‟s individualism. In addition, significant differences between early adulthood and middle adulthood were found with respect to Schwartz‟s individualism. In summary, as indicated in Egri et al.‟s study (2012), an analysis of the influence of micro- and intermediate-level factors, including life stage and regional difference on cultural value, needs to be performed to fully understand the complexity of cultural values between and within cultural clusters. As a result, we argue that cultural cluster studies should be conducted with consideration of cultural change, cultural value models, integrated and separate approaches and multi-level approaches. Limitations and Future Research Some limitations of this paper should be addressed. First, this study includes only three Asian countries to investigate cultural similarities. It would be interesting to examine the cultural similarities between Confucian countries and other Asian countries, such as India and the Philippines. This approach would determine whether all Asian countries can be considered an Asian cluster, or whether they should be grouped into different cultural clusters. Second, this study included only two cultural dimensions, individualism and long-term orientation, for two reasons. First, previous studies suggest that there is a positive correlation between economic development and individualism. Second, people in China, Korea and Japan were strongly influenced by Confucianism. Other cultural dimensions, such as uncertainty avoidance, masculinity and power distance, may be considered in future studies. As expected, employees in Korea showed greater individualistic tendencies than those in China. However, employees in Japan did not display greater individualism than those in Korea. It would be interesting to learn the reasons for this result. As Hofstede argues, in the case of Japan, crossvergence theory was supported in that although Japan has high income levels, employees in Japan did not show greater individualistic tendencies than employees in Korea and China. Future studies may analyze the reason for this result. For example, path dependence theory provides a possible explanation by recognizing that i nstitutional factors such as language, legal system, climate and religion are strong cultural influences in Japan. 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