Cultural Differences

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Michael Richarme, Ph.D.
Senior Vice President
Decision Analyst, Inc.
Two Main Items of Discussion
 How are people doing economically around the world?
 How are people similar or different?
Monthly Economic Index
 Conducted in the last week of each month for over 11
years
 Sample of over 30,000 consumers each month
 Nine economic indicators measured
 Results in a forward-looking index of 9-12 months in
the future
United States in February 2010
Decision Analyst Economic Index
United States
120
Index
110
100
95
90
80
Feb-07
Aug-07
Feb-08
Aug-08
Month
Feb-09
Aug-09
Feb-10
Decision Analyst U.S. Economic Index by Census Division
(Three-Month Moving Average*)
United States by Census Division
Major Global Economies
North America
Index
South America
Index
Canada
100
Brazil
131
United States
95
Argentina
84
Mexico
90
Europe
Index
Asia-Pacific
Index
Germany
97
China
139
Italy
95
India
117
Spain
88
Australia
99
Great Britain
87
France
81
Trading Blocks Suffer Together
 Major trading blocks (North America, European
Union) are suffering similarly in this economic
recession
 Some areas of the world are countering that trend
The BRIC Economies
 Brazil, Russia, India, China
 Economic growth engines
 All but Russia doing very well in this recession
 China and India are major exporters
 Brazil is heading toward energy self-sufficiency and
has a trading agreement with the EU
China Over the Past 3 Years
Decision Analyst Economic Index
China*
140
130
Index
120
110
100
90
80
70
Feb-07
Aug-07
Feb-08
Aug-08
Month
Feb-09
Aug-09
Feb-10
India Over Past 3 Years
Decision Analyst Economic Index
India
140
130
Index
120
110
100
90
80
70
Feb-07
Aug-07
Feb-08
Aug-08
Month
Feb-09
Aug-09
Feb-10
Brazil Over the Past 3 Years
Decision Analyst Economic Index
Brazil
140
130
Index
120
110
100
90
80
70
Feb-07
Aug-07
Feb-08
Aug-08
Month
Feb-09
Aug-09
Feb-10
A Study of Cultural Differences
 Geert Hofstede, the Netherlands
 Large scale study in the 1980’s
 Over 116,000 questionnaires
 About 150 questions in length
 Twenty different languages
 50 countries
 Adults
Fundamental Issues Examined
 Ways in which organizations are structured
 Motivations of people within organizations
 Issues people face within their society
Four Dimensions
 Power Distance
 Uncertainty Avoidance
 Individualism/Collectivism
 Masculinity/Femininity
Power Distance
 Defined as the degree to which power is exerted in
either an autocratic manner or a democratic manner
 Autocratic – what the boss says, goes
 Democratic – let’s discuss it before deciding
Typical PDI Statements
 Low PDI – “Inequality in society should be minimized;
the system is to blame for things going wrong;
cooperation among the powerless can be based on
solidarity”
 High PDI – “Everyone has his rightful place; power is a
basic fact of society; the underdog is to blame for
things that go wrong”
Countries PDI
Country
Power Distance Index
World Rank
Austria
11
1
Great Britain
35
10
Canada
39
15
United States
40
16
Japan
54
21
Korea
60
60
Chile
63
29
India
77
42
Philippines
94
47
Highly Autocratic
Low scores
Highly Democratic
High Scores
Uncertainty Avoidance
 Degree of risk acceptance and tolerance for
uncertainty
 Low Uncertainty – not a lot of anxiety about the future
 High Uncertainty – need reassurance about what is
going to happen
Typical Uncertainty Statements
 Low UAI – “hard work is not a virtue; more acceptance
of dissent; authorities there to serve the citizens; belief
in common sense”
 High UAI – “Uncertainty is a continuous threat; time is
money; strong need for consensus; ordinary citizens
are incompetent compared with the authorities”
Countries UAI
Country
Uncertainty Avoidance
Index
World Rank
Austria
70
27
Great Britain
35
6
Canada
48
12
United States
46
11
Japan
92
44
Korea
85
34
Chile
86
36
India
40
9
Philippines
44
10
Highly Comfortable
Low scores
Highly Anxious
High Scores
Individualism/Collectivism
 Individualism is the relative importance of freedom,
challenge, use of personal time
 Collectivism is the relative importance of training, use
of skills, physical conditions, and benefits
 This dimension indicates the degree to which a person
“goes it alone as an entrepreneur” or “feels at home in
the pack”
Typical Individualism Statements
 Low IDV – “Belief in group decisions; expertise, order,
duty, security provided by organization or clan;
identity is based on the social system”
 High IDV – “Self-orientation; everybody has a right to
a private life and opinion; belief in individual
decisions; identity is based on the individual”
Countries IDV
Country
Individual Collectivism
Index
World Rank
Austria
55
33
Great Britain
89
48
Canada
80
46
United States
91
50
Japan
46
28
Korea
18
11
Chile
23
15
India
48
30
Philippines
32
21
Highly Collective
Low scores
Highly Individual
High scores
Masculine/Feminine
 Masculine is the relative importance of earnings,
recognition, advancement, challenge, assertiveness,
self-reliance
 Feminine is the relative importance of cooperation,
desirable living area, job security, nurturing,
responsibility
 This index shows the degree of the gender gap
Typical Masculinity Statements
 Low MAS – “Service ideal; sex roles in society should
be fluid; small and slow are beautiful; differences in
sex roles should not mean differences in power”
 High MAS – “Money and things orientation;
performance and growth are important; decisiveness;
sex roles should be clearly differentiated; men should
dominate”
Countries MAS
Country
Masculine Feminine Index
World Rank
Austria
79
49
Great Britain
66
41
Canada
52
28
United States
62
36
Japan
95
50
Korea
39
13
Chile
28
8
India
56
30
Philippines
64
39
Highly Feminine
Low scores
Highly Masculine
High MAS scores
Things to Consider
 Don’t make value judgments – it is OK for people to
have different cultural values
 Think about their cultural values before trying to do
business with them
 Go more than half-way to accommodate differences
between cultures
Questions or comments?
Michael Richarme, Ph.D.
Senior Vice President
Decision Analyst, Inc.
604 Avenue H East
Arlington, TX 76011
mrichar@decisionanalyst.com
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