Culture
People’s behavior determined by:• Human Nature - Universal• Personality - Individual• Culture - Local
– View of the world– Habits of action– Emotional response
Hofstede “Cultural Dimensions” Theory
Assess by measuring values through surveys
Care with National Culture
• Avoid stereotypes – Whatever the truth of national cultural tendencies, individual character and human nature important too.
• Avoid lazy thinking – Culture imperfectly understood, tempting to attribute everything not understood to cultural differences.
World Values Survey• WVS conducts international surveys to discover
attitudes and values at country level.
Ex. Link to Example QuestionaireLink
Factor Analysis
• Many questions will be answered in similar ways across questionaires. (i.e. people who answer “Mentioned” to V13 will answer “Mentioned” to V18, etc.)
• Statistical Theory: There are a small number of independent factors which determine systematic correlations in answers to multiple questions. (plants/chlorophyll) .
• Use statistics to construct clusters of questions and related answers which can be predicted by these factors.
• Use theory to interpret the dimensions
LinkCultural Values have two dimensions1. Traditional vs. Secular2. Survival vs. Lifestyle
Atlas ofCulturalValues:Country Averagesof Dimensions
Link
• Show that factors are associated with identifiable social outcomes.
Link
Theory of National Culture
Common Cultural IssuesInkeles & Levinson, 1954
• Relationship to Authority• Conception of Self
– Relationship of Individual to Society
– Conception of Masculinity and Femininity
• Modes of Conflict Resolution
• Used to form theoretical foundation of factors for internal IBM study of values of employees in many countries.
• Additional work develops additional dimensions.
Cultural Dimensions Theory• Business researchers more likely to use Hofstede
“Cultural Dimensions” which looks at 5 dimensions of national culture.
1. Power Distance (PDI)- Society’s comfort with inequality or preference for hierarchy.
2. Individualism versus Collectivism (IDV) Preference for Self-sufficiency vs. Group loyalties.
Cont. 3. Masculinity versus Femininity (MAS)
Value of Assertiveness vs. Nurturing.4. Uncertainty Avoidance (UAI) s
‘threatened by uncertainty and ambiguity and try to avoid these situations’
5. Long-Term Orientation (LTO) Present vs. Future
Link
Culture and Business
• Implications for Human Resources Management.• Implications for Marketing• Implications for Accounting
Power Distance Small Power Distance LargeWorkers Take Responsibility Discipline
Collectivism IndividualismEmployee Commitment Management Mobility
Femininity MasculinityPersonal Services Heavy Industry
Uncertainty Avoidance Weak Uncertainty Avoidance HeavyBasic Innovations Precision
Potential for Competitive Advantages
Setting Job Targets
Set unilaterally, Subject to Renegotiation
Set by Consensus, Subject to Renegotiation
Set unilaterally, No Renegotiation
Set by Consensus, No Renegotiation
Mas
culin
ity v
s. F
emin
inity
High Power Distance vs. Low Power Distance
US,UK
Nordic
France, Italy
Link
Assessment & Management
Direct Feedback perceived as rude, Talent management loyalty/paternalism based
Frank, direct, immediate feedback
Individual assessment, performance based
Indi
vidu
alis
m V
s. C
olle
ctive
High Power Distance vs. Low Power Distance
US,UK
Latin America
Link
Culture and Branding
Successful Brands associations: • In high PDI cultures, “Prestige,”; • in high UA cultures, “Trustworthy,”;
• Individualistic cultures: brands associate with abstract concepts, individual products emphasized.
• Collectivist cultures: brands associate with concrete people, corporate identities emphasize.
Link
Cultural Values and Accounting SystemsAccounting Values• PRO: Professionalism vs. Statutory Control: Judgement
vs. Legal control.• UNI: Uniformity vs. Flexibility• CON: Conservatism vs. Optimism- Prudence• SEC: Secrecy vs. Transparency. S.J. Gray, 1988, Towards a Theory of Cultural Influence on
the Development of Accounting Systems Internationally
PRO UNI CON SEC
PDI - + ? +
UAI - + + +
IDV + - - -
MAS ? ? - -
Link
A. Natural Resources
Income from resource extraction can technically lead to higher GDP per hour…..
Productivity per Hour2010
Luxembourg78.60
Norway 70.52 United States
60.50 Netherlands
59.39 Belgium 59.34 France 56.03
Germany 53.61
Link to CIA Factbook
Oil ReservesLink to BP Statistical Review of World Energy 2012
Resource Curse• Some scholars argue that countries “blessed”
with large endowment of mineral resources suffer slow growth.– Creates social conflict over control of natural
resources.– Leads to unaccountable government.
• Ex 1. Conflict Diamonds Link
• Ex. 2 Nauru (pop. 8000) Link Significant deposits of phosphates and small population made this one of the wealthiest societies in world in 1970’s. But phosphates ran out.. – Country never developed internal
sources of productivity unemployment rate 90%
– National gov’t corrupt and wasteful, bankrupt and completely dependent on multinational aid
Is the resource curse true?
• Recent studies question these results, but findings suggest that positive productivity spillovers to non-resource industries are questionable. (Link Requires registration)
B. Human Capital
• Measures skill, education level of the work force.
• General (broad primary & secondary education & health) or specific skills (technical skills obtained at tertiary level).
By 2005, average in 25-29 cohort was 12.2 yrs compared with 13.4 years in USA
Average Years of Schooling
0
2
4
6
8
10
12
14
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Yea
rs
USA Singapore
http://www.barrolee.com/
Education• Literacy Rates: WDI• Years of Education Barro-Lee Dataset Link • Quality of Education: OECD Programme for
International Student Assessment (PISA) Link Summary Data
Completed Tertiary Education 25-29 Yo
0
5
10
15
20
25
30
35
USA Singapore
%
http://www.barrolee.com/
Aging Population Structure
0 - 4 9-May
14-Oct
15 - 19
20 - 24
25 - 29
30 - 34
35 - 39
40 - 44
45 - 49
50 - 54
55 - 59
60 - 64
65 - 69
70 - 74
75 - 79
80 - 84
85 - 89
90 - 94
95 - 99
100 +
0
2000000
4000000
6000000
8000000
10000000
12000000
Age Distribution Japan
201019901970
Peop
leLink Population by age, sex and urban/rural residence
Population Structure and Employment
19561958
19601962
19641966
19681970
19721974
19761978
19801982
19841986
19881990
19921994
19961998
20002002
20042006
20082010
46.00%
47.00%
48.00%
49.00%
50.00%
51.00%
52.00%
53.00%
54.00%
Japan: Employment to Population Ratio
The Classic Demographic TransitionModel
Stage 1 Stage 2 Stage 3 Stage 4
Time
Naturalincrease
Birth rate
Death rate
Note: Natural increase is produced from the excess of births over deaths.
Link
Stages of Demographic Transition
1. Low Population Growth. High Birth Rates, High Death Rates
2. Population Growth Explosion. Medical Advances slow mortality rates, high population growth.
3. Slowing Population Growth. Educational Advances slow birth rates.
4. Low Population Growth. Low Birth Rates, Low Death Rates
Japan
1950 1960 1980 2000 2005 2010 2015 2020 2040 2060 2080 21000
5
10
15
20
25
Final Stage of Demographic Transition
Birth RatesDeath Rates
per 1
000
World Population Prospects, the 2010 RevisionVolume II – Demographic Profiles Link
Fertility Rates• Age-specific fertility rate: Number of Births to
women of a specific age per women of that age.
• Total Fertility Rates: Sum of Age-specific fertility rates from 15-49
• Longer-term ratio of average number of children
• Replacement Ratio: – 2.1 Developed Economy, – 2.3 Developing Economy
Country 15-19 20-24 25-29 30-34 35-39 40-44 45-49
Japan 1.27 5 36 82 86 38 5 0 1.26795
Total fertility
Age-specific fertility rates
C. Infrastructure
Air transport, freight
4000
5000
6000
7000
8000
9000
10000
11000
12000
13000
14000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
(mill
ion
to
n-k
m)
Singapore Hong Kong SAR, China
http://data.worldbank.org/data-catalog/world-development-indicators
Secure Internet servers
0
100
200
300
400
500
600
2003 2004 2005 2006 2007 2008 2009 2010
(per
1 m
illio
n p
eop
le)
Singapore Hong Kong SAR, China
http://data.worldbank.org/data-catalog/world-development-indicators
D. Technology Capacity
• Capacity for scientific advance measurable along a number of dimensions. UNESCO Data
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100
0.5
1
1.5
2
2.5
3
Expenditure on R&D as % of GDP
Hong Kong Singapore
Link
Technical Workforce
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100
0.2
0.4
0.6
0.8
1
1.2
Technicians per 1000
Hong Kong Singapore
Link
http://www.uspto.gov/web/offices/ac/ido/oeip/taf/reports.htm
Utility Patents by Year
0
100
200
300
400
500
600
700
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
SINGAPORE CHINA,HONG KONG S.A.R.