Attitudes towards risk is another key concept in Hofstede's theory, understanding the extent to which a business is prepared to take risks is vital in business as it indicates how the organisation or individuals should be approached and their attitudes towards work. This can range in different cultures from lots of set rules and procedures to an extremely relaxed atmosphere with a very laissez-faire approach where individuals will naturally be less anxious about uncertainty, the benefit of this of course is that deals and transactions can be made quickly as agreements can be made on main principles dealing with the fine print later, as opposed to a detailed specification that is signed prior to arrangement. The French culture is generally more averse to risk and uncertainty is very much avoided and despite this method of business being more time consuming it can be beneficial in the future as there is less chance of errors later such as unforeseen hassles and overspending due to more planning.
Hofstede's theory also recognises different attitudes to authority in different cultures in countries such as in South America and Scandinavia for example; where in South America countries there is an expectation that some individuals hold larger amounts of power than others- in other word, managers are thought to be above employees, this therefore may be reflecting in pay, bonuses and privileges such as separate canteens or even specified parking spaces. This attitude to authority differs from a Scandinavian organisation where there is more of an mind-set towards team-work and equality of status regardless of job title.
The ideology of Individualism is another aspect of Hofstede's approach, where cultures vary due to there being an either collectivist society such as in Latin America where individuals act predominantly as members of a group and everyone looks out for one another, this is also reflecting in their approach to making negotiations as there will be lots of 'team members' involved apposed to where an organisation with an individualistic culture would be more inclined to have a one-to-one negotiation. In individualistic societies such as the UK or the USA, everybody is expected to look out for themselves and individual achievements are more recognised and rewarded explaining therefore why one-to-one deals are more common.
The final aspect of Hofstede's theory is the long term or short term orientation of a firm, this focuses on the degree the society embraces, or does not embrace, long-term devotion to traditional, forward thinking values. A culture with a high long-term orientation ranking is China, indicating the country prescribes to the values of long term commitment and respect for tradition; this therefore supports a strong work ethic where long term rewards are as a result of hard work.
This theory facilitates the ease of successful relationships, which is one of the three main sources of competitive advantage. The theory is based upon understanding your associate by appreciating their culture which can act as a barrier to communication in the same way as a foreign language. Hofstede's theory is a guide to translating culture, making good business relationships possible.
One issue with Hofstede's theory is that as with any generalised study, the results may not applicable to specific individuals or events. In addition, although Hofstede's results are categorised by country, often there is more than one cultural group within that country. In these cases there may be significant deviations from the study's results. An example is Canada, where the majority of English speaking population and the minority French speaking population in Quebec has moderate cultural differences.
Hofstede's theory is not the only way to build a competitive advantage for an international company, Michael Porter pales a great emphasises the importance of acquiring and using knowledge. Porter highlights the significance of watching for trends in the market in order to become aware of any regional changes before its competitors do. Porter also proposes that multi-nationals shift production to countries of low exchange-rates as well as using lessons learnt in one country to their advantage.
There are many theory's and models to increase the competitive advantage of international countries and all of which have their individual benefits to different companies, not one theory is wrong. I would think a successful company should not choose one model to follow, but take different ideas, inspirations and proposals from many different models including both Geert Hofstede's and Michael Porters. Hofstede proposes very relevant and practical ways to aid flourishing, international communications, which is not a choice for a company that wants to be a success, it is a necessity, therefore meaning Hofstede's framework for maximising competitiveness is of the highest value to such companies.
