Introduction Nowadays, the increasing development of the world economy, a lot of company could face different kinds of competitions from foreign companies. Although the situation is not very optimistic during these years, however, some domestic companies are willing to take risk accepted the challenge to achieve their goals and performance.
So, more and more firms were beginning to explore and enlarge their foreign market in order to make huge profits than before and meet their performance. Leader of multinational companies has to set an appropriate global orientation. Therefore, the leaders should comprehend the international cultural difference for working effectively as cultural difference is the common task for multinational company.
This report aims to state how international cultural difference is important. In the report, we are considering hofstede’s cultural dimension study and we are going to compare the cultural dimension difference of Australia and China by two of hofstede’s cultural dimensions. Firstly, the reasons for choosing China and United states as the study targets are they are in frequently trading and immigration and two of top of economic body. Next, we will have a briefly statement for hofstede’s cultural dimension theory. Then, we are starting the comparison.
Culture There are five groups in the integrated framework of Greet Hofstede’s culture dimensions: they are uncertainty avoidance(UAI), individualism vs. collectivism(IDV), power distance(PDI), masculinity vs. femininity(MAS), and long term vs. short term orientation(LTO).
Through mentioned above, Hofestede developed and summaries this kind of culture theory, it also makes distinguished countries clear from each other, and culture differ are found on level of value. This type of culture dimension theory has appropriate solved the question of how the workplace value have influenced by culture. In other words, how the culture affect the people management practices.
The multinational company (MNC) was settled with culture conflict problem, even a one of the top MNC. The following example is one of a typical cultural conflict; A merger of the German automaker Daimler-Benz with Chrysler in 1998. In three years cooperation, the failure of culture difference related the management mode causes the stock prices of Daimler-Chrysler dropped sharply and slashed 26000 jobs. (CNNmoney, 2001)
This probem solved by changing managing director (replaced Jim Holden by Dietz Zetsche) After all; Chrysler was a part of Daimler. (Garsten, 2000) In the case, Daimler and Chrysler were leading the automobile industry but they have different corporate culture which relies on its own national culture and also the reason causes the failure.
Individualism versus collectivism According to Hofstede’s culture theory, it is obvious that the major conflicts are individualism vs. collectivism, which is self-orientation. Based on Hofstede culture dimension, individualism refers to lose social relationship in which everyone is expected to take care of himself or herself and his or her immediate families only. Say in other words, he or she does not care about any other people.
Oppositely, people in collectivism culture are belonging to ‘in groups’. That means take care of group members for exchanging their loyalty. An extremely individualism culture is United States, which is 91 score in this dimension. This statement expects people in US take care themselves and their immediate families which means US is a totally loosely-knit society. Consequently, employees were presumed to be self-reliant, display initiative and achieved self worth.
Therefore, hiring and promotion decisions in US are based on the exchange-based world of work. Also, doing business with or interacting with strangers is common in America and a high degree of geographical mobility is also found in USA. Those indicate that when there is a conflict between self interest and corporate interest, self interest will be the factor to be considering on employees in USA, and they will find their new future actively. Individualism culture causes a lower loyalty on employees to their company in US. The score of china in this dimension is 20, which is one of the lowest in the world.
This can to translate to people in china is with a highly collectivist culture, where people are acting in the interests of the group and not necessarily of themselves. Therefore, personal relationships overbear the task and company. Different to USA, hiring and promotions is not only depending on the working performance, also affecting in-group considerations, like with closer in-groups (such as family) that are getting preferential treatment.
Lower commitment made from employee to the organization. The obvious thing to show the difference of this dimension in two countries is hiring. In USA, employers welcome applications from graduates who have good academic records, demonstrate strong communication skills, and have a real interest in business, which is all about a great personal ability.
In addition, a job interview usually requires. There is no chance through from the back door. On the other hand, the most important factor to get hiring from a firm in china is a good relationship. For example, your family member works on the firm as manager or you are close to the firm’s owner in relationship, you basically get an offer.
Power Distance Power distance is another major conflicts in the Hofstede’s framework for evaluating culture. Power distance can be defines as “the extent to which inequality in power is accepted and considered as normal by less powerful people in a society.”(Hofstede, p. 307, 1986).
Power distance is cultural that it is acceptance of hierarchical power (Bloom et al, 2010). Hence, power distance becomes a faith or belief of inequality distribution of power and authorities in a society. In addition, tolerance of society inequality is measured by power distance, which is power distance between management and subordinates among a society system.
In fact, there is no 100% of equality power in the real life and it is impossible to have no power distance, this can be explained that every person is accurately equal, such as personal skills, actions, job opportunities, genetics and so on. As a result, Hofstede separate this dimension into two parts, which are high power distance and low power distance.
Small power distance: Small power distance means that the extent to which less powerful people accept the social inequality is small, that is members of a society are treated as equal as possible in an unequal society. (Hofstede, p. 307, 1986). Large power distance:
Large power distance means that the less powerful members of a society as normal consider a big inequality in power. (Hofstede, p. 307, 1986) There are three characteristics in high power distance culture. First of all, company’s senior rarely gives the real power to their subordinates and rarely allow them to do very important work in companies. Second，If something goes wrong, or make a mistake or did not achieve the target in advance or complete performance, in this situation, subordinate will be blame.
Last one is that it is acceptable for leaders in company to display their own authority. In terms of power distance, Hill (2011) pointed out, there are the some countries, which had high power distance accepted the inequality of power and structure level. For example, the culture in China has high power distance and the leaders sustain themselves as a good example in companies in order to keep an appropriate relationship and suitable distance with their subordinates.
Power distance in US: Based on Hofstede power distance index, US got low score on power distance; the score in US is only 40, which is lower than China. Hence, US is a country with low power distance. People in US show greater degree of equality and leaders and employees are esteeming to each other. In company, they share all information and help each other. Here, a excellent reward and punishment system plays an important role to judge in US company. As a result, leaders and their subordinates more moderately and equally share rewards and punishments.
Leader of the company's decentralize power to their subordinates and let them do some important assignment or work, if some mistakes occurred or something goes wrong, leader accepted blame very often because it is their responsibility and obligation to manage. US managers may socialize with co-workers and may become good friends after work.
Power distance in China: According to Hofstede power distance index, the score of China is 80. So China is one of the high power distance countries, which is higher than US. Culture in China is much inequality and unfair between leaders and their subordinates. Organizations in China are more hierarchical. Those who are in leading positions in China openly demonstrate their rank. In China power originates from prestige, force and inheritance. The relationship between manager and co-workers is not close in China.
Conclusion As we did mention before, United States and China are one of the biggest economic body.