Cross cultural management: Hofstede's values for managers in Ukraine

Cross cultural cooperation and trade

Global marketing, national culture and management

Yuriy ROBUL

1Вівторок, 25 червня 13 р.

Globalized environment


Global marketing environment

• Globalized consumption- North America, Western Europe and South-West Asia are drivers

- Globalized standards of living

• Globalized manufacturing- Production facilities are placed in the countries with low priced

labour, from where production is distributed globally in order to reduce costs


The end of history and the last man

• The worldwide spread of liberal democracies and free market capitalism of the West and its lifestyle may signal the end point of humanity's sociocultural evolution and become the final form of human government

- F. Fukuyama «The end of history and the last man» (1992)

Francis Fukuyama


http://en.wikipedia.org/wiki/Liberal_democracies

http://en.wikipedia.org/wiki/Liberal_democracies

Globalized management• Globalized management was initially intended to reflect

the state of «the end of history»- The one and unique form of human government causes the unique form of

government of any kind of organization of humans

- Management would therefor become:

‣ Homogenous: no significant differences persist among different parts of human beings

‣ Standardized: standards and rules are the same for every single organization

‣ Imperative: standards and rules prescribe the way an organization should act and how it should be structured

• Should we pay any particular attention to the differences in origin while all become the same by the end?


Many faces of globalized management

• Global organizations

- Issues, originated from cultural or other societal differences are ignored, overcome or shadowed

- Global consumption and marketing

- Global identity

• Not-global organizations

- Issues, originated from cultural or other societal differences are stressed, and put at the heart of business

- Consumption of local brands

- Local identity


Standardization vs. Adaptation

• Standardization

- Due to technology, communications and transportation the world becomes more and more homogeneous

- Management should be standardized along with best practices

- Global forces

• Adaptation

- Due to a fear of lost of identity people want to preserve their origin, culture, traditions, and particularities thereof

- Global management should be adapted along with such particularities

- Local forces


Standardization

• Due to technology, communications and transportation the world becomes more and more tied and homogeneous

• People are ready to renounce from their particularities in order to get products of the world class

• People benefit from low costs, originated from the global size of the market


Does standardization work (always) well?

• Not all kinds of needs and wish causes the global demand over all segments

- There are globalized and not globalized segments

- Trend for customization

- Trend for tracing back the roots

- Anti-globalization movement

• Globalization does not always mean reduced prices - Louis Vuitton, Hermes, Rolls-Royce...

• Flexible production units and reduction of number of production cycles sometimes reduce the value of globalized size of the market


Adaptation

• People are different in their habits, customs and insights due to inherited national culture and societal issues that may causes- Difference in needs and demands

- Different structure of channels of distribution

- Different forms of government regulation, presence or absence thereof, etc.


Many faces of difference• Consumers

- Language, culture, habits

- Societal structure

- Dominant values and beliefs

- Disposed income

• Marketplace

- Channel structure

- Placement of production units over the territory (logistics, operations, etc.)

- Government regulations (labour, capital, stakes,etc)

- Economical situation (GDP, inflation, wages, etc)


Types of global environment

Globalized Transnational

Calm International

Local forces

Global forces

High impact

High impact

Low impact

Low impact


Types of global environment

Standardization and centralizationHigh-tec products

Standardization on certain levelsBear, autos

Disciplined and rationalized approachConstruction

Adaptation and decentralizationFoods & beverages

Local forces

Global forces

High impact

High impact

Low impact

Low impact


Types of management in global environment

Globalized management

Multi-level management

Routine management

Adapted management

Local forces

Global forces

High impact

High impact

Low impact

Low impact


Many faces of globalized management (2)

Globalized

Routine

Multi-level

Adapted

«The end of history»

«Everybody here does it»

«Think global - do local»Application of standard rules is selective in accordance to local differences

How to teach locals to be fully globalized?

How to understand what is going on?

How to (re)conciliate what is going on on different levels?

How to be properly adapted without lost of goals and vision?

Challenges


Impact of national culture


Hofstede’s cultural insights

• «Culture is the collective programming of the mind distinguishing the members of one group or category of people from others»

Geert Hofstede


Hofstede’s cultural dimensions

• Power Distance (PDI)

• Individualism versus collectivism (IDV)

• Masculinity versus femininity (MAS)

• Uncertainty avoidance (UAI)

• Long-term versus short-term orientation (LTO)

• Indulgence versus Restraint (IVR)


Cultural differences among countries

PDI IDV MAS UAI LTO

Arab world

Europe

World

USA

Germany

Italy

France

Sweden

Russia

Poland

Japan

Chine

80 38 52 68

40 57 55 74

55 53 50 64 45

40 91 62 46 29

35 67 66 65 31

50 76 70 75

68 71 43 86

31 71 5 29 33

93 39 36 95

68 60 64 93 32

54 46 95 92 80

80 20 66 30 118


Cultural dimensions: expected values for Ukraine

0

20

40

60

80

100

120

PDI IDV MAS UAI LTO

0

92

5346

92

38

51

110

52

104

0

90

42

30

90

32

93

646068

0

95

3639

93

Russia Poland Romania SlovakiaUkraine


Comparison US - Ukraine

0

20

40

60

80

100

120

PDI IDV MAS UAI LTO

29

46

62

91

40

0

92

5346

92

Ukraine (Indirect evaluation) USA


Cultural differences of Ukraine

• People accept a hierarchical order in which everybody has a place and which needs no further justification.

- Hierarchy in an organization is seen as reflecting inherent inequalities, centralization is popular, subordinates expect to be told what to do and the ideal boss is a benevolent autocrat

• Ukraine, with an IDV score of 46 is considered a collectivistic society, close to the middle.

- Close long-term commitment to the member 'group', be that a family, extended family, or extended relationships.

- Loyalty in a collectivist culture is paramount, and over-rides most other societal rules and regulations.

- In collectivist societies offense leads to shame and loss of face, employer/employee relationships are perceived in moral terms (like a family link),

- hiring and promotion decisions take account of the employee’s in-group, management is the management of groups.


Cultural differences of Ukraine (2)

• Ukraine seems to be a masculine society – highly success oriented and driven. - It is important to be regarded as successful and to reach your

goals.

‣ Status is an important aspect in this, and of course being able to show which status you have.

‣ Status symbols like cars, impressive houses, clothes etc. play a big role.

‣ People work hard to achieve a high living standard and being able to “show their achievements”. Long working hours and dedication to work are needed in order to achieve this.


Cultural differences of Ukraine (3)

• Ukraine’s expected score on UAI is 92 — a very high preference for avoiding uncertainty. - Rigid codes of belief and behavior, and

- Intolerance of unorthodox behavior and ideas.

- Emotional need for rules (even if the rules never seem to work)

‣ people have an inner urge to be busy and work hard,

‣ innovation may be resisted,

‣ security is an important element in individual motivation.

• There has been no LTO estimation for Ukraine


Cultural dimensions of managers and graduates from economical

departments of high schools

0

20

40

60

80

100

120

PDI IDV MAS UAI LTO

50

25

59

18

76

0

92

5346

92

Indirect evaluation Managers (direct evaluation)


Summary• PDI: In general as expected, gradual lowering over years

may be forecasted

• IDV: Surprisingly much lower than expected (IDV=18 out of 100)

- Avoidance of individual responsibility may be one of the component thereof

• MAS: Masculine society as expected in spite of declared value of public wellbeing

• UAI: Surprisingly much lower than expected (UAI = 25 out of 100)

• LTO: Much higher than expected, conservative society, contracted by societal myopia


Cross cultural comparisons

0

20

40

60

80

100

120

PDI IDV MAS UAI LTO

29

46

62

91

4050

25

59

18

76

0

92

5346

92

Ukraine (Indirect evaluation) Ukraine (Managers (direct evaluation))USA


Troubles in cooperation• Sometimes difficult access to (dealing with) persons, who

take final decisions- Formal procedures and rituals

• Individual attribution of tasks and responsibilities- Being sometimes avoided by Ukrainian counterparts

• Very different level of UAI- Resulting sometimes at neglecting of restriction, imposed by law by Ukrainian

counterparts

• Considerable level of LTO- Prevalence of short-time orientation; dominance of traditionalist way of working and

living


Troubles in marketing

• Social responsibility and capital are selling badly in general

• Prestige is over evaluated at the expense of rational values and attributes of an offer

• Consumers do not care of many things, crucial for westerns in order to avoid uncertainty - Failed planning, bad price evaluation and future use of the product

are among the most frequent issues


Values and guidelines for managerial decisions


Splitting out organizations

• Do managers at all levels in an organization behave in the same way?

• Which guidelines they follow taking decisions?


Rokeach Value Survey

• Behavior of humans is defined and guided by their values - Terminals: whom I wish to be

- Instrumentals: how to become whom I wish to be

- Rokeach Value Survey (RVS): 36 universal values, distributed equally by these two sets


• The terminal values 1. True Friendship

2. Mature Love

3. Self-Respect

4. Happiness

5. Inner Harmony

6. Equality

7. Freedom

8. Pleasure

9. Social Recognition

10. Wisdom

11. Salvation

12. Family Security

13. National Security

14. A Sense of Accomplishment

15. A World of Beauty

16. A World at Peace

17. A Comfortable Life

18. An Exciting Life

• The instrumental values1. Cheerfulness

2. Ambition

3. Love

4. Cleanliness

5. Self-Control

6. Capability

7. Courage

8. Politeness

9. Honesty

10. Imagination

11. Independence

12. Intellect

13. Broad-Mindedness

14. Logic

15. Obedience

16. Helpfulness

17. Responsibility

18. Forgiveness


RVS Research in Ukraine 2013

• Is there a common system of dominant values in organizations?

• Which parts constitutes this common system? - IT companies in Ukraine with high globalized profile

- Top, middle and bottom line managers are studied separately


RVS Research in IT business in Ukraine,2013

• Is there a common system of dominant values in organizations?- No, there is no common system

- The difference between values of top and middle level managers is being observed for almost 20 years, the limits are not broken

- Top managers are guided by a different set of dominant values than middle and bottom line managers


Top 4 valuesTerminal Rating Instrumental Rating

Top managersTop managersTop managersTop managersSalvation 4 Honesty 4Freedom 3 Responsibility 3

Happiness 2 Cheerfulness 2A comfortable life 1 Broad-Mindedness 1

Middle level managersMiddle level managersMiddle level managersMiddle level managersSalvation 4 Honesty 4

Happiness 3 Responsibility 3Mature love 2 Forgiveness 2

A comfortable life 1 Broad-Mindedness 1


• The terminal values 1. True Friendship

2. Mature Love

3. Self-Respect

4. Happiness

5. Inner Harmony

6. Equality

7. Freedom

8. Pleasure

9. Social Recognition

10. Wisdom

11. Salvation

12. Family Security

13. National Security

14. A Sense of Accomplishment

15. A World of Beauty

16. A World at Peace

17. A Comfortable Life

18. An Exciting Life

• The instrumental values1. Cheerfulness

2. Ambition

3. Love

4. Cleanliness

5. Self-Control

6. Capability

7. Courage

8. Politeness

9. Honesty

10. Imagination

11. Independence

12. Intellect

13. Broad-Mindedness

14. Logic

15. Obedience

16. Helpfulness

17. Responsibility

18. Forgiveness


Business

Cross cultural management: Hofstede's values for managers in Ukraine