Creative leadership elective

< Academy of Management Executive, 1993 Vol. 7 No. 1

Executive Overview

Cultural constraints in management theories

Geert Hofstede, University of Limburg, Maastricht, the Netherlands

Management as the word is presently used is an American invention. In other parts of fhe world not only fhe pracfices but the entire concepf of management may differ, and the theories needed to understand it, may deviate considerably from what is considered normal and desirable in fhe USA, The reader is invited on a trip around the world, and both local management practices and theories are explained from the different contexts and histories of the places visited: Germany, Japan, France. Holland, the countries of the overseas Chinese, South-East Asia. Africa, Russia, and finally mainland China.

A model in which worldwide differences in national cultures are categorized according to five independent dimensions helps in explaining fhe differences in managemenf found: although the sifuafion in each counfiy or region has unique characferisfics fhaf no model can accounf for. One pracficai appiicafion of fhe mode] is in demonstrating the relative position of the U.S. versus other parts of the world. In a global perspective. U.S. management theories contain a number of idiosyncracies not necessarily shared by management elsewhere. Three such idiosyncracies are mentioned: a stress on market processes, a stress on the individual, and a focus on managers rather than on workers. A plea is made for an internationalization not only of business, but also of management theories, as a way of enriching theories at the national level.

Lewis Carroll's Alice in Wonderland contains the famous story of Alice's croquet game with the Queen of Hearts.

Aiice thought she had never seen such a curious croquef-ground in all her life; it was all ridges and furrows; the balls were live hedgehogs, the mallets live flamingoes, and the soldiers had to double themselves up and to stand on their hands and feet, to make the arches.

You probably know how the story goes: Alice's flamingo mallet turns its head whenever she wants to strike with it; her hedgehog ball runs away; and the doubled-up soldier arches walk around all the time. The only rule seems to be that the Queen of Hearts always wins.

Alice's croquet playing problems are good analogies to attempts to build culture-free theories of management. Concepts available for this purpose are themselves alive with culture, having been developed within a particular cultural context. They have a tendency to guide our thinking toward our desired conclusion.

As the same reasoning may also be applied to the arguments in this article, I better tell you my conclusion before I continue—so that the rules of my game are understood. In this article we take a trip around the world to demonstrate that there are no such things as universal management theories.

Diversity in management practices as we go around the world has been recognized in U.S. management literature for more than thirty years. The term "comparative management" has been used since the 1960s. However, it has taken much longer for the U.S. academic community to accept that not only practices but also the validity of theories may stop at national borders, and I wonder whether even today everybody would agree with this statement.

An article I published in Organizational Dynamics in 1980 entitled "Do American Theories Apply Abroad?" created more controversy than I expected. The article argued, with empirical support, that generally accepted U.S. theories like those of Maslow, Herzberg, McClelland, Vroom, McGregor, Likert, Blake and Mouton may not or only very partly apply outside the borders of their country of origin—assuming they do apply within those borders. Among the requests for reprints, a larger number were from Canada than from the United States.

Management Theorists are Human

Employees and managers are human. Employees as humans was "discovered" in the 1930s, with the Human Relations school. Managers as humans, was introduced in the late 40s by Herbert Simon's "bounded rationality" and elaborated in Richard Cyert and James March's Behaviorai Theory of the Firm (1963, and recently re-published in a second edition). My argument is that management scientists, theorists, and writers are human too: they grew up in a particular society in a particular period, and their ideas cannot help but reflect the constraints of their environment.

The idea that the validity of a theory is constrained by national borders is more obvious in Europe, with all its borders, than in a huge borderless country like the U.S. Already in the sixteenth century Michel de Montaigne, a Frenchman, wrote a statement which was made famous by Blaise Pascal about a century later: "Verite en-dega des Pyrenees, erreur au-dela"—There are truths on this side of the Pyrenees which are falsehoods on the other.

From Don Armado's Love to Taylor's Science

According to the comprehensive ten-volume Qxford English Dictionary (1971), the words "manage," "management," and "manager" appeared in the English language in the 16th century. The oldest recorded use of the word "manager" is in Shakespeare's "Love's Labour's Lost," dating from 1588, in which Don Adriano de Armado, "a fantastical Spaniard," exclaims (Act I, scene ii, 188):

"Adieu, valour! rust, rapier! be still, drum! for your manager is in love; yea, he loveth".

The linguistic origin of the word is from Latin manus, hand, via the Italian maneggiare,which is the training of horses in the manege; subsequently its meaning was extended to skillful handling in general, like of arms and musical instruments, as Don Armado illustrates. However, the word also became associated with the French menage, household, as an equivalent of "husbandry" in its sense of the art of running a household. The theatre of present-day management contains elements of both manege and menage and different managers and cultures may use different accents.

The founder of the science of economics, the Scot Adam Smith, in his 1776 book The Wealth of Nations, used "manage," "management" (even "bad management") and "manager" when dealing with the process and the persons involved in operating joint stock companies (Smith, V.i.e.). British economist John Stuart Mill (1806-1873) followed Smith in this use and clearly expressed his distrust of such hired people who were not driven by ownership. Since the 1880s the word "management" appeared occasionally in writings by American engineers, until it

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was canonized as a modern science by Frederick W. Taylor in ShopManagement in 1903 and in The Principles of Scientific Managementin 1911.

While Smith and Mill used "management" to describe a process and "managers" for the persons involved, "management" in the American sense—which has since been taken back by the British—refers not only to the process but also to the managers as a class of people. This class (1) does not own a business but sells its skills to act on behalf of the owners and (2) does not produce personally but is indispensable for making others produce, through motivation. Members of this class carry a high status and many American boys and girls aspire to the role. In the U.S., the manager is a cultural hero.

Let us now turn to other parts of the world. We will look at management in its context in other successful modern economies: Germany, Japan, France, Holland, and among the Qverseas Chinese. Then we will examine management in the much larger part of the world that is still poor, especially South-East Asia and Africa, and in the new political configurations of Eastern Europe, and Russia in particular. We will then return to the U.S. via mainland China.

Germany

The manager is not a cultural hero in Germany. If anybody, it is the engineer who fills the hero role. Frederick Taylor's Scientific Management was conceived in a society of immigrants—where large number of workers with diverse backgrounds and skills had to work together. In Germany this heterogeneity never existed.

Elements of the mediaeval guild system have survived in historical continuity in Germany until the present day. In particular, a very effective apprenticeship system exists both on the shop floor and in the office, which alternates practical work and classroom courses. At the end of the apprenticeship the worker receives a certificate, the Facharbeiterbrief, which is recognized throughout the country. About two thirds of the German worker population holds such a certificate and a corresponding occupational pride. In fact, quite a few German company presidents have worked their way up from the ranks through an apprenticeship. In comparison, two thirds of the worker population in Britain have no occupational qualification at all.

The highly skilled and responsible German workers do not necessarily need a manager, American-style, to "motivate" them. They expect their boss or Meister to assign their tasks and to be the expert in resolving technical problems. Comparisons of similar German, British, and French organizations show the Germans as having the highest rate of personnel in productive roles and the lowest both in leadership and staff roles.

Business schools are virtually unknown in Germany. Native German management theories concentrate on formal systems. The inapplicability of American concepts of management was quite apparent in 1973 when the U.S. consulting firm of Booz, Allen and Hamilton, commissioned by the German Ministry of Economic Affairs, wrote a study of German management from an American view point. The report is highly critical and writes among other things that "Germans simply do not have a very strong concept of management." Since 1973, from my personal experience, the situation has not changed much. However, during this period the German economy has performed in a superior fashion to the U.S. in virtually all respects, so a strong concept of management might have been a liability rather than an asset.

Japan

The American type of manager is also missing in Japan. In the United States, the core of the enterprise is the managerial class. The core of the Japanese enterprise is the permanent worker group; workers who for all practical purposes are

Japanese are to a large extent controlled by their peer group rather than by their manager.

tenured and who aspire at life-long employment. They are distinct from the non-permanent employees—most women and subcontracted teams led by gang bosses, to be laid off in slack periods. University graduates in Japan first join the permanent worker group and subsequently fill various positions, moving from line to staff as the need occurs while paid according to seniority rather than position. They take part in Japanese-style group consultation sessions for important decisions, which extend the decision-making period but guarantee fast implementation afterwards. Japanese are to a large extent controlled by their peer group rather than by their manager.

Three researchers from the East-West Center of the University of Hawaii, Joseph Tobin, David Wu, and Dana Danielson, did an observation study of typical preschools in three countries: China, Japan, and the United States. Their results have been published both as a book and as a video. In the Japanese preschool, one teacher handled twenty-eight four-year olds. The video shows one particularly obnoxious boy, Hiroki, who fights with other children and throws teaching materials down from the balcony. When a little girl tries to alarm the teacher, the latter answers "what are you calling me for? Do something about it!" In the U.S. preschool, there is one adult for every nine children. This class has its problem child too. Glen, who refuses to clear away his toys. Qne of the teachers has a

long talk with him and isolates him in a corner, until he changes his mind. It doesn't take much imagination to realize that managing Hiroki thirty years later will be a different process from managing Glen.

American theories of leadership are ill-suited for the Japanese group-controlled situation. During the past two decades, the Japanese have developed their own "PM" theory of leadership, in which P stands for performance and M for maintenance. The latter is less a concern for individual employees than for maintaining social stability. In view of the amazing success of the Japanese economy in the past thirty years, many Americans have sought for the secrets of Japanese management hoping to copy them.

Theie aie no secrefs of Japanese management, however; it is even doubtful whether there is such a thing as management, in fhe American sense, in Japan at all. The secret is in Japanese society; and if any group in society should be singled out as carriers of the secret, it is fhe workers, not the managers.

France

The manager, U.S. style, does not exist in France either. In a very enlightening book, unfortunately not yet translated into English, the French researcher Philippe d'Iribarne (1989) describes the results of in-depth observation and interview studies of management methods in three subsidiary plants of the same French multinational: in France, the United States, and Holland. He relates what he finds to information about the three societies in general. Where necessary, he goes back in history to trace the roots of the strikingly different behaviors in the completion of the same tasks. He identifies three kinds of basic principles (iogiques) of management. In the USA, the principle is the fair contract between employer and employee, which gives the manager considerable prerogatives, but within its limits. This is really a labor market in which the worker sells his or her labor for a price. In France, the principle is the honor of each class in a society which has always been and remains extremely stratified, in which superiors behave as superior beings and subordinates accept and expect this, conscious of their own lower level in the national hierarchy but also of the honor of their own class. The French do not think in terms of managers versus nonmanagers but in terms of cadres versus non-cadres; one becomes cadre by attending the proper schools and one remains it forever; regardless of their actual task, cadres have the privileges of a higher social class, and it is very rare for a non-cadre to cross the ranks.

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The conflict between French and American theories of management became apparent in the beginning of the twentieth century, in a criticism by the great French management pioneer Henri Fayol (1841-1925) on his U.S. colleague and contemporary Frederick W. Taylor (1856-1915). The difference in career paths of the two men is striking. Fayol was a French engineer whose career as a cadre superieur culminated in the position of Pr6sident-Directeur-G6n6ral of a mining company. After his retirement he formulated his experiences in a pathbreaking text on organization: Administration industrielle et generale, in which he focussed on the sources of authority. Taylor was an American engineer who started his career in industry as a worker and attained his academic qualifications through evening studies. From chief engineer in a steel company he became one of the first management consultants. Taylor was not really concerned with the issue of authority at all; his focus was on efficiency. He proposed to split the task of the first-line boss into eight specialisms, each exercised by a different person; an idea which eventually led to the idea of a matrix organization.

Taylor's work appeared in a French translation in 1913, and Fayol read it and showed himself generally impressed but shocked by Taylor's "denial of the principle of the Unity of Command" in the case of the eight-boss-system.

Seventy years later Andr6 Laurent, another of Fayol's compatriots, found that French managers in a survey reacted very strongly against a suggestion that one employee could report to two different bosses, while U. S. managers in the same survey showed fewer misgivings. Matrix organization has never become popular in France as it has in the United States.

Holland

In my own country, Holland or as it is officially called, the Netherlands, the study by Philippe d'Iribarne found the management principle to be a need for consensus among all parties, neither predetermined by a contractual relationship nor by class distinctions, but based on an open-ended exchange of views and a balancing of interests. In terms of the different origins of the word "manager," the organization in Holland is more menage (household) while in the United States it is more manege (horse drill).

At my university, the University of Limburg at Maastricht, every semester we receive a class of American business students who take a program in European Studies. We asked both the Americans and a matched group of Dutch students to describe their ideal job after graduation, using a list of twenty-two job characteristics. The Americans attached significantly more importance than the Dutch to earnings, advancement, benefits, a good working relationship with their boss, and security of employment. The Dutch attached more importance to freedom to adopt their own approach to the job, being consulted by their boss in his or her decisions, training opportunities, contributing to the success of their organization, fully using their skills and abilities, and helping others. This list confirms d'Iribarne's findings of a contractual employment relationship in the United States, based on earnings and career opportunities, against a consensual relationship in Holland. The latter has centuries-old roots; the Netherlands were the first republic in Western Europe (1609-1810), and a model for the American republic. "The country has been and still is governed by a careful balancing of interests in a multi-party system.

In terms of management theories, both motivation and leadership in Holland are different from what they are in the United States. Leadership in Holland presupposes modesty, as opposed to assertiveness in the United States. No U.S. leadership theory has room for that. Working in Holland is not a constant feast, however. There is a built-in premium on mediocrity and jealousy, as well as time-consuming ritual consultations to maintain the apparence of consensus and the pretense of modesty. There is unfortunately another side to every coin.

Ii nothing else, the general lack oi success in economic developmentof other countries should be sufficient argument to doubt the validity of V^esfern management theories in non-Western environments.

The overseas Chinese

Among the champions of economic development in the past thirty years we find three countries mainly populated by Chinese living outside the Chinese mainland: Taiwan, Hong Kong and Singapore. Moreover, overseas Chinese play a very important role in the economies of Indonesia, Malaysia, the Philippines and Thailand, where they form an ethnic minority. If anything, the little dragons—Taiwan, Hong Kong and Singapore—have been more economically successful than Japan, moving from rags to riches and now counted among the world's wealthy industrial countries. Yet very little attention has been paid to the way in which their enterprises have been managed. The Spirit of Chinese Capitalism by Gordon Redding (1990), the British dean of the Hong Kong Business School, is an excellent book about Chinese business. He bases his insights on personal acquaintance and in-depth discussions with a large number of overseas Chinese businesspeople.

Overseas Chinese American enterprises lack almost all characteristics of modern management. They tend to be small, cooperating for essential functions with other small organizations through networks based on personal relations. They are family-owned, without the separation between ownership and management typical in the West, or even in Japan and Korea. They normally focus on one product or market, with growth by opportunistic diversification; in this, they are extremely flexible. Decision making is centralized in the hands of one dominant family member, but other family members may be given new ventures to try their skills on. They are low-profile and extremely cost-conscious, applying Confucian virtues of thrift and persistence. Their size is kept small by the assumed lack of loyalty of non-family employees, who, if they are any good, will just wait and save until they can start their own family business.

Overseas Chinese prefer economic activities in which great gains can be made with little manpower, like commodity trading and real estate. They employ few professional managers, except their sons and sometimes daughters who have been sent to prestigious business schools abroad, but who upon return continue to run the family business the Chinese way.

The origin of this system, or—in the Western view—this lack of system, is found in the history of Chinese society, in which there were no formal laws, only formal networks of powerful people guided by general principles of Confucian virtue. The favors of the authorities could change daily, so nobody could be trusted except one's kinfolk—of whom, fortunately, there used to be many, in an extended family structure. The overseas Chinese way of doing business is also very well adapted to their position in the countries in which they form ethnic minorities, often envied and threatened by ethnic violence.

Overseas Chinese businesses following this unprofessional approach command a collective gross national product of some 200 to 300 billion US dollars, exceeding the GNP of Australia. There is no denying that it works.

Management Transfer to Poor Countries

Four-fifths of the world population live in countries that are not rich but poor. After World War II and decolonization, the stated purpose of the United Nations and the World Bank has been to promote the development of all the world's countries in a war on poverty. After forty years it looks very much like we are losing this war. If one thing has become clear, it is that the export of Western—mostly American— management practices and theories to poor countries has contributed little to nothing to their development. There has been no lack of effort and money spent for this purpose: students from poor countries have been trained in this country, and teachers and Peace Corps workers have been sent to the poor countries. If nothing else, the general lack of success in economic development of other

Assuming that with so-called modem management techniques and theories outsiders can develop a country has proven a deplorable arrogance.

countries should be sufficient argument to doubt the validity of Western management theories in non-Western environments.

If we examine different parts of the world, the development picture is not equally bleak, and history is often a better predictor than economic factors for what happens today. There is a broad regional pecking order with East Asia leading. The little dragons have passed into the camp of the wealthy; then follow South-East Asia (with its overseas Chinese minorities), Latin America (in spite of the debt crisis). South Asia, and Africa always trails behind. Several African countries have only become poorer since decolonization.

Regions of the world with a history of large-scale political integration and civilization generally have done better than regions in which no large-scale political and cultural infrastructure existed, even if the old civilations had decayed or been suppressed by colonizers. It has become painfully clear that development cannot be pressure-cooked; it presumes a cultural infrastructure that takes time to grow. Local management is part of this infrastructure; it cannot be imported in package form. Assuming that with so-called modern management techniques and theories outsiders can develop a country has proven a deplorable arrogance. At best, one can hope for a dialogue between equals with the locals, in which the Western partner acts as the expert in Western technology and the local partner as the expert in local culture, habits, and feelings.

Russia and China

The crumbling of the former Eastern bloc has left us with a scattering of states and would-be states of which the political and economic future is extremely uncertain. The best predictions are those based on a knowledge of history, because historical trends have taken revenge on the arrogance of the Soviet rulers who believed they could turn them around by brute power. One obvious fact is that the former bloc is extremely heterogeneous, including countries traditionally closely linked with the West by trade and travel, like Czechia, Hungary, Slovenia, and the Baltic states, as well as others with a Byzantine or Turkish past; some having been prosperous, others always extremely poor.

The industrialized Western world and the World Bank seem committed to helping the ex-Eastern bloc countries develop, but with the same technocratic neglect ior local cultural iactors that proved so unsuccessiul in (he development assistance to other poor countries. Free market capitalism, introduced by Western-style management, is supposed to be the answer irom Albania to Russia.

Let me limit myself to the Russian republic, a huge territory with some 140 million inhabitants, mainly Russians. We know quite a bit about the Russians as their country was a world power for several hundreds of year before communism, and in the nineteenth century it has produced some of the greatest writers in world literature. If I want to understand the Russians—including how they could so long support the Soviet regime—I tend to re-read Lev Nikolayevich Tolstoy. In his most famous novel Anna Karenina (1876) one of the main characters is a landowner. Levin, whom Tolstoy uses to express his own views and convictions about his people. Russian peasants used to be serfs; serfdom had been abolished in 1861, but the peasants, now tenants, remained as passive as before. Levin wanted to break this passivity by dividing the land among his peasants in exchange for a share of the crops; but the peasants only let the land deteriorate further. Here follows a quote:

"(Levin) read political economy and socialistic works . . . but, as he had expected, found nothing in them related to his undertaking. In the political economy

books—in (John Stuart) Mill, for instance, whom he studied first and with great ardour, hoping every minute to find an answer to the questions that were engrossing him—he found only certain laws deduced from the state of agriculture in Europe; but he could not for the life of him see why these laws, which did not apply to Russia, should be considered universal . . . Political economy told him that the laws by which Europe had developed and was developing her wealth were universal and absolute. Socialist teaching told him that development along those lines leads to ruin. And neither of them offered the smallestenlightenment as to what he. Levin, and all the Russian peasants and landowners were to do with their millions of hands and millions of acres, to make them as productive as possible for the common good."

In the summer of 1991, the Russian lands yielded a record harvest, but a large share of it rotted in the fields because no people were to be found for harvesting. The passivity is still there, and not only among the peasants. And the heirs of John Stuart Mill (whom we met before as one of the early analysts of "management") again present their universal recipes which simply do not apply.

Citing Tolstoy, I implicitly suggest that management theorists cannot neglect the great literature of the countries they want their ideas to apply to. The greatest novel in the Chinese literature is considered Cao Xueqin's The Story of the Stone, also known as The Dream of the Red Chamber which appeared around 1760. It describes the rise and fall of two branches of an aristocratic family in Beijing, who live in adjacent plots in the capital. Their plots are joined by a magnificent garden with several pavillions in it, and the young, mostly female members of both families are allowed to live in them. One day the management of the garden is taken over by a young woman, Tan-Chun, who states:

"/ think we ought to pick out a few experienced trust-worthy old women from among the ones who work in the Garden—women who know something about gardening already—and put the upkeep of the Garden into their hands. We needn't ask them to pay us rent; all we need ask them for is an annual share of the produce. There would be four advantages in this arrangement. In the first place, if we have people whose sole occupation is to look after trees and flowers and so on, the condition of the Garden will improve gradually year after year and there will be no more of those long periods of neglect followed by bursts of feverish activity when things have been allowed to ge( out of hand. Secondly there won't be the spoiling and wastage we get at present. Thirdly the women themselves will gain a little extra to add to their incomes which will compensate them for the hard work they put in throughout the year. And fourthly, there's no reason why we shouldn't use the money we should otherwise have spent on nurserymen, rockery specialists, horticultural cleaners and so on for other purposes."

As the story goes on, the capitalist privatization—because that is what it is—of the Garden is carried through, and it works. When in the 1980s Deng Xiaoping allowed privatization in the Chinese villages, it also worked. It worked so well that its effects started to be felt in politics and threatened the existing political order; hence the knockdown at Tienanmen Square of June 1989. But it seems that the forces of privatization are getting the upper hand again in China. If we remember what Chinese entrepreneurs are able to do once they have become Overseas Chinese, we shouldn't be too surprised. But what works in China—and worked two centuries ago—does not have to work in Russia, not in Tolstoy's days and not today. I am not offering a solution; I only protest against a naive universalism that knows only one recipe for development, the one supposed to have worked in the United States.

A Theory of Culture in Management

Our trip around the world is over and we are back in the United States. What have we learned? There is something in all countries called "management," but

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its meaning differs to a larger or smaller extent from one country to the other, and it takes considerable historical and cultural insight into local conditions to understand its processes, philosophies, and problems. If already the word may mean so many different things, how can we expect one country's theories of management to apply abroad? One should be extremely careful in making this assumption, and test it before considering it proven. Management is not a phenomenon that can be isolated from other processes taking place in a society. During our trip around the world we saw that it interacts with what happens in the family, at school, in politics, and government. It is obviously also related to religion and to beliefs about science. Theories of management always had to be interdisciplinary, but if we cross national borders they should become more interdisciplinary than ever.

Cultural differences between nations can be, to some extent, described using first four, and now five, bipolar dimensions. The position of a country on these dimensions allows us to make some predictions on the way their society operates, including their management processes and the kind of theories applicable to their management.

As the word culture plays such an important role in my theory, let me give you my definition, which differs from some other very respectable definitions. Culture to me is the collective programming of the mind which distinguishes one group or category of people from another. In the part of my work I am referring to now, the category of people is the nation.

Culture is a construct, that means it is "not directly accessible to observation but inferable from verbal statements and other behaviors and useful in predicting still other observable a n d measurable verbal a n d nonverbal behavior." It should not be reified; it is a n auxiliary concept that should b e used a s long it proves useful but bypassed where we can predict behaviors without it.

The same applies to the dimensionsI introduced. They are constructs too that should not be reified. They do not "exist"; they are tools for analysis which may or may not clarify a situation. In my statistical analysis of empirical data the first four dimensions together explain forty-nine percent of the variance in the data. The other fifty-one percent remain specific to individual countries.

The first four dimensions were initially detected through a comparison of the values of similar people (employees a n d managers) in sixty-four national subsidiaries of the IBM Corporation. People working for the same multinational, but in different countries, represent very well-matched samples from the populations of their countries, similar in all respects except nationality.

The first dimension is labelled Power Distance, and it can be defined as the degree of inequality among people which the population of a country considers a s normal: from relatively equal (that is, small power distance) to extremely unequal (large power distance). All societies a r e unequal, but some a r e more unequal than others.

The second dimension is labelled Individualism,and it is the degree to which people in a country prefer to act as individuals rather than as members of groups. The opposite of individualism c a n b e called Collectivism,so collectivism is low individualism. The way I use the word it has no political connotations. In coUectivist societies a child learns to respect the group to which it belongs, usually the family, a n d to differentiate between in-group members a n d out-group members (that is, all other people). When children grow up they remain members of their group, and they expect the group to protect them when they are in trouble. In return, they have to remain loyal to their group throughout life. In individualist societies, a child learns very early to think of itself as "I" instead of as part of "we". It expects one day to have to stand on its own feet and not to get protection from its group any more; and therefore it also does not feel a need for strong loyalty.

The third dimension is called Masculinity and its opposite pole Femininity. It is the degree to which tough values like assertiveness, performance, success and competition, which in nearly all societies are associated with the role of men, prevail over tender values like the quality of life, maintaining warm personal relationships, service, care for the weak, and solidarity, which in nearly all societies are more associated with women's roles. Women's roles differ from men's roles in all countries; but in tough societies, the differences are larger than in tender ones.

The fourth dimension is labelled Uncertainty Avoidance, and it can be defined as the degree to which people in a country prefer structured over unstructured situations. Structured situations are those in which there are clear rules as to how one should behave. These rules can be written down, but they can also be unwritten and imposed by tradition. In countries which score high on uncertainty avoidance, people tend to show more nervous energy, while in countries which score low, people are more easy-going. A (national) society with strong uncertainty avoidance can be called rigid; one with weak uncertainty avoidance, flexible. In countries where uncertainty avoidance is strong a feeling prevails of "what is different, is dangerous." In weak uncertainty avoidance societies, the feeling would rather be "what is different, is curious."

The fifth dimension was added on the basis of a study of the values of students in twenty-three countries carried out by Michael Harris Bond, a Canadian working in Hong Kong. He and I had cooperated in another study of students' values which had yielded the same four dimensions as the IBM data. However, we wondered to what extent our common findings in two studies could be the effect of a Western bias introduced by the common Western background of the researchers: remember Alice's croquet game. Michael Bond resolved this dilemma by deliberately introducing an Eastern bias. He used a questionnaire prepared at his request by his Chinese colleagues, the Chinese Value Survey (CVS), which was translated from Chinese into different languages and answered by fifty male and fifty female students in each of twenty-three countries in all five continents. Analysis of the CVS data produced three dimensions significantly correlated with the three IBM dimensions of power distance, individualism, and masculinity.

There was also a fourth dimension, but it did not resemble uncertainty avoidance. It was composed, both on the positive and on the negative side, from items that had not been included in the IBM studies but were present in the Chinese Value Survey because they were rooted in the teachings of Confucius. I labelled this dimension: Long-term versus Short-term Orientation. On the long-term side one finds values oriented towards the future, like thrift (saving) and persistence. On the short-term side one finds values rather oriented towards the past and present, like respect for tradition and fulfilling social obligations.

Table 1 lists the scores on all five dimensions for the United States and for the other countries we just discussed. The table shows that each country has its own configuration on the four dimensions. Some of the values in the table have been estimated based on imperfect replications or personal impressions. The different dimension scores do not "explain" all the differences in management I described earlier. To understand management in a country, one should have both knowledge of and empathy with the entire local scene. However, the scores should make us aware that people in other countries may think, feel, and act very differently from us when confronted with basic problems of society.

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The ideal of control in organizations in fhe market philosophy is competition between individuals.

In comparison to other countries, the U.S. culture profile presents itself as below- average on power distance and uncertainty avoidance, highly individualistic, fairly masculine, and short-term oriented. The Germans show a stronger uncertainty avoidance and less extreme individualism; the Japanese are different on aJl dimensions, least on power distance; the French show larger power distance and uncertainty avoidance, but are less individualistic and somewhat feminine; the Dutch resemble the Americans on the first three dimensions, but score extremely feminine and relatively long-term oriented; Hong Kong Chinese combine large power distance with weak uncertainty avoidance, collectivism, and are very long-term oriented; and so on.

The American culture profile is reflected in American management theories. I will just mention three elements not necessarily present in other countries: the stress on market processes, the stress on the individual, and the focus on managers rather than on workers.

The Stress on Market Processes

During the 1970s and 80s it has become fashionable in the United States to look at organizations from a "transaction costs" viewpoint. Economist Oliver Williamson has opposed "hierarchies" to "markets." The reasoning is that human social life consists of economic transactions between individuals. We found the same in d'Iribarne's description of the U.S. principle of the contract between employer and employee, the labor market in which the worker sells his or her labor for a price. These individuals will form hierarchical organizations when the cost of the economic transactions (such as getting information, finding out whom to trust etc.) is lower in a hierarchy than when all transactions would take place on a free market.

From a cultural perspective the important point is that the "market" is the point of departure or base model, and the organization is explained from market failure. A culture that produces such a theory is likely to prefer organizations that internally resemble markets to organizations that internally resemble more structured models, like those in Germany of France. The ideal principle of control in organizations In the market philosophy is competition between individuals. This philosophy fits a society that combines a not-too-large power distance with a not-too-strong uncertainty avoidance and individualism; besides the USA, it will fit all other Anglo countries.

Idiosyncracies oi American Management Theories

The Stress on the Individual

I find this constantly in the design of research projects and hypotheses; also in the fact that in the U.S. psychology is clearly a more respectable discipline in management circles than sociology. Culture however is a collective phenomenon. Although we may get our information about culture from individuals, we have to interpret it at the level of collectivities. There are snags here known as the "ecological fallacy" and the "reverse ecological fallacy." None of the U.S. college textbooks on methodology I know deals sufficiently with the problem of multilevel analysis.

CuJfure can Jbe compaied to a foiest, while individuals aie tiee. A foiest is not just a bunch of trees: it is a symbiosis of different trees, bushes, plants, insects, animals and micro-organisms, and we miss the essence of the forest if we only describe its most typical trees. In the same way, a culture cannot be satisfactorily described in terms of the characteristics of a typical individual. There is a tendency in the U.S. management literature to overlook the forest for the trees and to ascribe cultural differences to interactions among individuals.

Managers are much more involved in maintaining networks: if anything, it is the rank-and-file worker who can really make decisions on his or her own. albeit on a relatively simple

level.

A striking example is found in the otherwise excellent book Organizational Culture and Leadership by Edgar H. Schein (1985). On the basis of his consulting experience he compares two large companies, nicknamed "Action" and "Multi." He explains the differences in culture between these companies by the group dynamics in their respective boardrooms. Nowhere in the book are any conclusions drawn from the fact that the first company is an American-based computer firm, and the second a Swiss-based pharmaceutics firm. This

information is not even mentioned. A stress on interactions among individuals obviously fits a culture identified as the most individualistic in the world, but it will not be so well understood by the four-fifths of the world population for whom the group prevails over the individual.

One of the conclusions of my own multilevel research has been that culture at the national level and culture at the organizational level—corporate culture—are two very different phenomena and that the use of a common term for both is confusing. If we do use the common term, we should also pay attention to the occupational and the gender level of culture. National cultures differ primarily in the fundamental, invisible values held by a majority of their members, acquired in early childhood, whereas organizational cultures are a much more superficial phenomenon residing mainly in the visible practices of the organization, acquired by socialization of the new members who join as young adults. National cultures change only very slowly if at all; organizational cultures may be consciously changed, although this isn't necessarily easy. This difference between the two types of culture is the secret of the existence of multinational corporations that employ, as I showed in the IBM case, employees with extremely different national cultural values. What keeps them together is a corporate culture based on common practices.

The Stress on Managers Rather than Workers

The core element of a work organization, around the world is the people who do the work. All the rest is superstructure, and I hope to have demonstrated to you that it may take many different shapes. In the U.S. literature on work organization, however, the core element, if not explicitly then implicitly, is considered the manager. This may well be the result of the combination of extreme individualism with fairly strong masculinity, which has turned the manager into a culture hero of almost mythical proportions. For example, he—not really she—is supposed to make decisions all the time. Those of you who are or have been managers must know that this is a fable. Very few management decisions are just "made" as the myth suggests.

About the Author

Geert Hofstede is a professor of organizational anthropology and international management at the University of Limburg at Maastricht, the Netherlands. He holds a M.Sc. degree in Mechanical Engineering from Delft Technical University, and a Ph.D. in Social Psychology from Groningen University, both in his native Netherlands.

He worked in Dutch as well as international business companies in roles varying from production worker to director of Human Resources. From 1965-1971, he founded and managed the Personnel Research department of IBM Europe. Since then, he has been teaching and researching at various international management institutes in four different European countries. In 1991 he held a Visiting Research Fellowship at the East-West Center, Honolulu, while simultaneously teaching at the College of Business Administration, University of Hawaii. He is a honorary professor of the University of Hong Kong.

Geert Hofstede is the founder and first director of the Institute for Research on Intercultural Cooperation (IRIC) at the University of Limburg, and an

myth suggests it. Managers are much more involved in maintaining networks; if anything, it is the rank-and-file worker who can really make decisions on his or her own, albeit on a relatively simple level.

An amusing effect of the U.S. focus on managers is that in at least ten American books and articles on management I have been misquoted as having studied IBM managers in my research, whereas the book clearly describes that the answers were from IBM employees. My observation may be biased, but I get the impression that compared to twenty or thirty years ago less research in this country is done among employees and more on managers. But managers derive their raison d'etre from the people managed: culturally, they are the followers of the people they lead, and their effectiveness depends on the latter. In other parts of the world, this exclusive focus on the manager is less strong, with Japan as the supreme example.

Conclusion

This article started with Aiice in Wonderland. In fact, the management theorist who ventures outside his or her own country into other parts of the world is like Alice in Wonderland. He or she will meet strange beings, customs, ways of organizing or disorganizing and theories that are clearly stupid, oldfashioned or even immoral—yet they may work, or at least they may not fail more frequently than corresponding theories do at home. Then, after the first culture shock, the traveller to Wonderland will feel enlightened, and may be able to take his or her experiences home and use them advantageously. All great ideas in science, politics and management have travelled from one country to another, and been enriched by foreign influences. The roots of American management theories are mainly in Europe: with Adam Smith, John Stuart Mill, Lev Tolstoy, Max Weber, Henri Fayol, Sigmund Freud, Kurt Lewin and many others. These theories were re-planted here and they developed and bore fruit. The same may happen again. The last thing we need is a Monroe doctrine for management

ideas.

The issues explored here were presented by Dr. Hofstede, the Foundation for Administrative Research Distinguished International Scholar,

at the 1992 Annual Meeting of the Academy of Management, Las Vegas, Nevada, August 11, 1992.

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