Strategic Orientation and Firm Performance

3.0 Cultural Diversity, Strategic Orientation, and Firm Performance

The link between performance and strategic orientation is multidimensional and dependent on a number of factors such as industry characteristics, product characteristics and strategic position. Strategic orientation is a critical part in strategic management which Robbins and Coulter (2005) underscore as important as it results in higher organizational performance and helps in coordinating the various organizational units thereby enabling them to focus on goals and enable managers to examine and adapt to changes within the business environment and is part and parcel of managerial decision-making process, (Racelis 2006, 70). Culture can be defined as values, beliefs and assumptions that are learned early in childhood and that distinguish people in different societies, (Kongsompong 56).  Hofstede (1980; 43) gives a personalized definition of culture as a ‘collective mental programming of the people in an environment.’ Basing our study on the Hofstede’s model, the chapter analyzes the link between cultural diversity, strategic orientation, and firm performance.

3.1. Relationship between Cultural Diversity and Strategic Orientation

Limited literature exists on the relationship between cultural diversity and strategic orientation; nonetheless, they point to the fact that culture plays a critical role on a firm’s strategic orientation, (Robbins and Coulter 2005). Organizational culture is constituted by values, mission, vision, policies, procedures, and norms while strategic orientation describes the organization’s level philosophy towards understanding and managing internal and external forces thereby increasing an organization’s competitiveness, (Venkatraman, 942). Strategic orientation is a reflection of an organization’s focus with regards to the creation of behaviors that aid in achieving superior performance and has been described variably as strategic fit, strategic thrust, strategic choice and strategic predisposition, (Venkatraman, 942). These are the guiding principles that influence both marketing and strategy is making decisions and are characterized by competitive culture besides being comparative based upon multiple dimensions. A firm’s strategic orientation is a reflection of the strategic directions that a firm implements so as to set the proper groundwork for the continuous performance of a business, (Kulkarni, et al 96).

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A study by (Gilder 17) confirmed that similar industries in different countries or even branches of multinationals have responded differently to adverse situations such as economic crises hence performing unequally. In offering an explanation to this phenomenon, studies often focus on specific variables such as gender, ethnicity and cultural diversity, (Robbins and Coulter 2005). Focusing on cultural diversity, varied authors have come up with efficient benchmarks to understand and define how culture affects a firm’s strategic orientation, therefore, affecting performance. According to Gilder (17), it is risky to choose a strategic orientation without due considerations on the influences of a firm’s external and internal environment.

This is because a firm’s long term profitability is dependent on its ability to come up with innovative strategy since its strategic orientation is not only a significant indicator of its performance but also forms the basis of improved performance in future, (Gatignon and Xuereb 79).  Cultural values, beliefs, and attitudes of a given population can influence the way it responds to a firm’s strategic orientation. Exemplifying the case of Asian manufacturing firms, Chow et al (1991) and Gatignon and Xuereb (79)argue that, although many Asian manufacturing firms have remained competitive as a result of producing superior quality products at lower costs, they still face unresolved challenges arising from their management controls on the manufacturing process and their employee’s national culture. The link between country of origin and its effect on products in combination with culture and stereotyping have been discussed by (Carr 2).

Chow, Chan, and Shields (210) document that even though the majority of studies have focused on the link between organizational structure, technology, competition and organizational context variables such as uncertainty, national culture may be a critical factor that drives organizational structure hence a direct determinant of its strategic orientation. Exemplifying the case of Japan, Chow et. Al (211) and Zhou Yim, Tse, (42) affirm that it is characterized by group rather than individual orientation hence the general collective strategic orientation of Japanese organizations. The Japanese, therefore, emphasize on interpersonal orientation and harmony between group members, a culture that has resulted in a management style characterized by teamwork, ‘participative decision making and quality circles, (Chow et. al 211). In contrast, the individualistic culture in the United States has led to the inclusion of idiosyncratic approaches such as responsibility accounting and individual piece-rate pay to a firm’s culture.

Different literature presents varied channels via which cultural diversity affect firm performance, nonetheless, a number of studies assessing the influence of cultural diversity focus on how culture could affect the strategic orientation of the firm thereby affecting its performance, (Schauber and Munduli, 7). Besides researches by both Schauber, (1) and Munduli, (7) confirm that national culture and management control affect the general strategic orientation since it affects employee’s attitudes towards various components in a management system. Study findings by Chatman, Polzer, Barsade and Neale (750) also confirm that, cultural diversity affects both the current path taken by an organization and plans for future development, nonetheless, they note that there are varied outcomes on whether there is ‘value in diversity’ or whether diversity is detrimental to work effectiveness.

According to Chatman, Polzer, Barsade, and Neale (751), researches have shown that individuals from the same nationality, sex or racial background are likely to associate better with one another. Nonetheless, studies by Robbins and Coulter (2005) indicated that co-workers of a different nationality, racial background and sex also form a friendship with one another. This implies that even in a demographically different population, bond formation is inevitable when it comes to problem-solving. Nonetheless, coworkers who are demographically different from others are less likely to interact frequently with one another compared to those who are demographically similar, (Robbins and Coulter 2005).

In terms of the market, cultural diversity is critical to an organization’s marketing structure, (Gatignon and Xuereb 4 and Grover 87). Organizations must be able to identify, analyze and understand the needs of its customers fundamentally inscribed in their culture for them to effectively handle the given market’s technical issues such as its growth rate, possible segments, and consumer’s needs and preferences when developing its strategic orientation, (Gatignon and Xuereb 4 and Grover 87). Besides, an organization’s commercial performance often depends on its strategic orientation which is always a component of the market characteristics facing a firm which still, is directly dependent on both the internal and external cultural characteristics.

3.1.2. Hofstede’s Model and Strategic Orientation

Both Gatignon and Xuereb (4) and Grover (87) note that cultural diversity influences how different firms have adapted cultural features to their strategic orientation. Hofstede (1980, 1983, and 1993) identifies; power distance, individualism versus collectivism, masculinity versus femininity, uncertainty avoidance and long-/short-term orientation as the five dimensions of distinguishing cultures, (Hofstede 2010, 88). All the dimensions relate to the fundamental problems facing any human society hence are practical in explaining; the different motivations of people within organizations (Fey 346), the different issues that people and organizations faces in varied societies and cultures and the different ways of structuring organizations. With regards to Hofstede’s theory, firms should always select appropriate strategic orientation by choosing the best fit between various cultural aspects, their strategy, processes, behavior, structure, performance, and profitability.

K’Obonyo and Dimba (6) argue that value systems of different countries have been crystallized in institutions hence cultural knowledge must be included in today’s business environment. The value systems often affect human thinking, feelings,  actions and behavior within organizations in very predictable ways hence a cross-cultural analysis of values would bring to light different dimensions of viewing similar problems which may need different solutions across different cultures (Hofstede, 1983,  Fang 348, and K’Obonyo and Dimba 6). Hofstede contends that employees, the general population and even organization theorists are a product of a national culture since individuals are reared in families, trained in schools and ‘they absorbed the values prevailing in one particular society,’ (Hofstede 47).

Societies, therefore, differ with regards to the specific cultural characteristics and Hofstede’s model attempts to answer questions such as the perceptions of the organizational regime, perceptions of organizational climate, values within the organizations in terms of the desired and values in terms of the desirables, (Hofstede 47).  The concept of strategic orientation has been operationalized using a variety of approaches hence viewing it from the theoretical definition and operational measures of the Hofstede’s model may still be in an unverifiable way,( Zhou Yim, Tse, 43). Nonetheless, focusing on the relationship between empirical observations and theoretical development of Strategic orientation as a central construct with respect to the variant dimensions will aid in developing and validating the link.  A primary task in conceptualizing a construct lies in delineating its domains and also defining the fundamental principles behind a theory, (Venkatraman 944).

This brings into question the critical concept of the significance of the scope of a particular strategic orientation. While a number of authors see a particular strategic orientation as a means towards achieving the organizational objectives, others view it as an end while still others view it as encompassing goals and means, (Venkatraman 946). The choice of strategic orientation and the general categorization of an organizational strategy such as corporate, business and functional strategies are also brought into play. Other issues of strategic orientation include; the distinction between intended and realized strategies and parts of the strategy and strategic typologies are also considered from the theoretical interpretation. Perspectives of strategic orientation differ, for example as noted by (Venkatraman 949), Buzzell, Gale, and Sultan (1975) and Porter (1980) focus on product-market sector as the overall strategy concept while Friesen (1978), Mintzberg (1978) and Miles and Snow (1978) introduces a much broader perspective.

Hofstede (47) defines individualism/collectivism as ‘people looking after themselves and their immediate family only, versus people belonging to in-groups that look after them in exchange for loyalty.’ In individualistic cultures, people derive identities from self hence people are I conscious and generally motivated towards achieving self-actualization, (Hofstede 2010, 87). Besides these cultures are universalistic and assume that their values are superior and valid throughout the world. Comparatively, collectivistic cultures are characterized by people who are ‘We conscious’ with an identity based on a social system and normally use indirect styles of communication, (Hofstede 2010, 88).

Masculinity/Femininity dimension is interpreted to mean the dominant values of masculinity and femininity within the society are achievement and success and caring for others and quality of life respectively, (Hofstede 2010, 88). Masculine societies, therefore, emphasize performance and achievement which must also be demonstrated hence the need for status brands and products such as luxury goods, (Hofstede 2010, 88). The dimension also brings to question the important issue of role differentiation in which masculine culture emphasizes a lesser role for the husband in terms of household chores.

The power distance dimension is the ‘extent, to which less powerful members of a society accept and expect that power is distributed equally,’ (Hofstede, 2010, 89). This introduces the rightful place concept characteristic of large power distance and which determine significantly influence role global brands play within society. Notably, certain brands such as luxury cars, some alcoholic beverages, and certain fashion items serve the purpose of making an individual’s social status distinct, (Peterson 372). The final dimension, uncertainty avoidance is defined as the extent to which individuals feel threatened by uncertainty and ambiguities hence try to avoid such situations. Cultures which have strong uncertainty avoidance tend to emphasize rules and strict formal structure of life which translates to the search for truth and a tendency to believe in experts and pre-tested ways of living, (Peterson 372). People in highly uncertain societies are less open to innovation and change compared to those in low uncertainty avoidance cultures.

Strategic Orientation and Firm Performance

Porter contends that a basic unit when coming up with a strategy it the consideration of the industry characteristics. Industry characteristics are defined by suppliers, current and potential competitors, substitutes and customers, (Vos and Vos, 70 and Pearce & Robinson 81). A number of studies that examine the link between strategic orientation and actual firm performance tend to use firms from disparate industries, (Vos and Vos, 70). To effectively map out industry characteristics, three key aspects including market turbulence, competitive intensity, and technological turbulence ought to be considered. Likewise, when exploring the direct effects of industry characteristics on performance Pearce & Robinson came up with additional variables including demand uncertainty, competitive concentration, and availability of substitutes as the market defining characteristics in the study of the link between strategic orientation and actual firm performance, (Pearce & Robinson 81). As an implication, it is evident that; industry characteristics may moderate the relationship between strategic orientation and firm performance. Additionally, from the generalization, it is evident that market orientation may be less significant in determining firm performance when hostility and competitive intensity are minimal and technology and customer orientations are more important than competitor orientation in markets in which demand is uncertain, (Robbins and Coulter 2005)..

Secondly, firm performance is also determined by its strategic position which is a function of its business strategy and the scope which is a function of the number of products within the market, the degree of vertical integration and the general culture of its employees and the market at large, (Pearce & Robinson 81). Strategic orientation has been examined using a number of approaches including firm’s differentiation strategies, relative scope inclusive of relative market share, the relative level of resources and the extent of the firm’s differentiation in terms of its product line. Studies by Pearce & Robinson (81) and Racelis (72) both yielded a positive correlation between the strategic position of a firm and market performance although some of its variables have yielded both negative and non-significant results, (Pearce & Robinson 81).

Comparatively, Racelis (72) notes that, nearly all studies aimed at establishing the relationship between strategic orientation and organizational performances have shown a meaningful and positive correlation between technological orientation, entrepreneurial orientation, and financial performance. He further notes analysis of companies that have adhered to a combination of both differentiation and cost strategies have almost always show a positive effect of market orientation on profitability, (Racelis 72). Additionally, firms with higher levels of competitor orientation, better-selling orientation and focus on national brands often have better performance. The studies also indicate that firms that continuously are on the lookout for new markets through innovative mechanism often perform better than those that do not, (Racelis 72).

Hofstede Model and the Corporate Culture

Although Hofstede model was originally based on the national culture, it has been modified to fit the corporate culture. Hofstede (1991) came up with six categories which were referred to as the dimensions of corporate culture. The first category was the process-oriented versus results oriented culture. While the former focused on how things are done within an organization, the later focused on the outcomes that result from the various decisions and actions within the organization, (Guisepe 6). The second category was the Employee-oriented versus job oriented culture where the former relates to workers within an organization and their roles and the later relates to tasks that need to be accomplished. The third category is the Parochial/professional culture, (Guisepe 6).

Parochial culture is a culture type where employees completely identify with the company they work for and are attached so much to the company to the extent that there is a link between their personal and professional lives. Conversely, in professional culture, employees tend to detach their lives from the company in which they work, (Guisepe 6). The fourth corporate cultural dimension is the closed-system versus open system culture. Members of an open system are receptive towards new employees while in a closed system members are secretive and quite unwelcoming to new employees, (Guisepe 6 and Richard, Barnett, Dwyer, Chadwick, 256). The fifth dimension is the Tight control/loose control culture in which the former has organization’s features being control via very formal and restrictive norms while loose control culture has minimized bureaucracy and high informality.  The last category is the normative/pragmatic culture; in which the former is a culture that emphasizes strict adherence to rules while the latter is result oriented, (Guisepe 6).

3.2. Linking Hofstede’s Model to Empirical Findings

The objective of this analysis is to review the recent empirical literature and examine a possible pattern of association with Hostede’s model with the aim of providing an insight of how firms are susceptible to alter and modify their strategic orientation given specific cultural variables, (Guisepe 6). A number of researchers have investigated how culture could affect the strategic orientation and therefore firm performance. Authors like Zhou and Li (447), Rauch, Wiklund, Lumpkin, Frese, (764) among others agree that the overall firm performance is likely to be affected by cultural features. In a similar context, Richard, Barnett, Dwyer, Chadwick (256) and Chatman, Polzer, Barsade, Neale, (750) found evidence that cultural diversity plays a role in firm performance. These studies emphasize on the demographic composition within firms and tested how cultural diversity affects a given firm’s performance.

On the basis of the five dimensions, Hofstede’s model has a scale of between zero and one hundred for a total of 76 countries for each dimension hence each country has a position on the scale or the index. Despite the country scores being computed in the 1970s recent researches have shown that the country rankings are still valid. As noted by (Hofstede 2001, 6), over 200 external comparative studies and replications of his studies have come to support his indexes. Studies by (De Mooij 2004 and 2010) indicated that the empirical data on product ownership and related behavior in relation to the power distance dimension supported Hofstede’s dimension in even a better way. Studies by De Mooij 2010 and De Mooij & Hofstede 2002 demonstrated that in masculine societies, performance and achievement were critical besides, the study incorporated data from Eurostat (2002) which showed that low masculinity in European nations explained the 52% of variance of the proportion of men who were engaged in shopping activities.

K’Obonyo, Dimba, (6) also further contend that, studies by Shackleton and Ali 1990 and Chow et al 1991 have all supported the application of the Hofstede’s cultural value dimensions because its empirical results have been replicated at national level in more than fifty countries. Chiang and Birtch (2006; 1) also note that Hofstede’s proposition of delineating national cultures into sets of measurable constructs has been widely cited. Besides it has been extensively applied to studies on cultural differences, decision making, strategy formulation, leadership styles, conflict resolution, innovation, motivation and workplace, and even sales and marketing, (Chiang and Birtch, 1 and Schneider, Brief & Guzzo, 12).

Studies by Yaveroglu & Donthu (6), Tellis et al (8) and Venkatraman, (944)showed that people in cultures characterized by high uncertainty avoidance were less inclined to accept change and were less innovative. They also showed that cultures with low uncertainty avoidance tended to have a more active attitude to health and focused on fitness and sports whereas those with high uncertainty avoidance attitudes had a more passive attitude towards health and tended to focus on the consumption of more pure foods and drinks besides using more medication. Additional studies investigating link between culture and the Hofstede model were carried out by Richard, Barnett, Dwyer, Chadwick (256) and Chiang and Birtch (1) whose results indicated that the self hence individual behavior was imperative when interpreting the dynamics within a social context. Comparing the Japanese and the American societies, the study found that, in the latter, feeling good was linked to and associated with interpersonal situations while in the United States, the feeling was associated with interpersonal distance such as feelings of superiority, achievement, and pride, (Richard, Barnett, Dwyer, Chadwick 256).

The studies also revealed that the development of self in both societies are quite different with individualistic cultures having youths who develop identities that enable them to function independently in varieties of social groups other than the family failure to which an identity crisis develops, (Chiang and Birtch, 1 and Schneider, Brief & Guzzo, 13). Comparatively, youth development in collectivistic cultures is based upon a system that encourages dependency in both group and family relationships. A study by Aaker et al. (8) on how cultures affect individual/collectivistic perception of particular brands found that the tendency to attach personalities to particular brands was typical of individualistic culture. This was evident in the labeling of Japanese, American and Spanish brand personalities as ‘ruggedness’, ‘peacefulness’ and ‘passion’ respectively, (Aaker et al. 9).

A study by Sung & Tinkham 2005 also supported the argument since global brands could be categorized into two labels; ‘passive likeableness’ and ‘ascendancy’ from the collectivistic and individual societies. On the existence of commercial cross-cultural brand value, a study by Crocus 2004 and De Mooij 2010  and Jabri (355) found that brands in low power distance cultures and high uncertainty avoidance were generally attributed to the ‘friendly characteristic’ (Hofstede 2010, 92). Comparatively, brands from cultures with low uncertainty avoidance and low power distance were generally considered as ‘innovative’ and ‘different. These studies indicate that consumers tend to project their preferences on the global brands and generally favor brands that fit their cultural values as opposed to those that fit the values of the brand producer, (Hofstede 2010, 93).

3.2.1. Effects of Power Distance on Strategic Orientation and Firm Performance

The concept of power distance was as a result of findings of country level correlation between the decision taken by superior and their effect and perception on both superiors and colleagues, (Hofstede, 1983; 50). It was found that there was a significant distance between the hierarchy and the society’s ways and means of dealing with power relationships hence its conception. Power distance is pronounced in complex work organizations with multiple levels of power. Studies by Hofstede (1983; 50) have indicated that collective dependence reaction in which subordinates tend to move towards dependence or counter dependence tend to be characteristic of organizations with great power distances, (Hofstede, 1983; 50). More specifically, power distance is the extent to which less powerful members within an organization are able to accept and expect the distribution of power to be unequal.

Entrepreneurial orientation

Entrepreneurial orientation has been variably understood as the processes, philosophy, practices and decision-making activities that lead an organizations to innovation hence is critical to a firm’s performance. Both Lumpkin et al. (1057) and Hofstede (93) underscore the importance of the entrepreneurial orientation on both the survival and performance of an organization since it directly leads to innovation which is not only a crucial factor in performance but is the means by which organizations evolve within a competitive environment. Researches by Lyon, Lumpkin & Dess, 1057 and Chiang and Birtch (1), have all found that power distance is critical when considered in the firms’ innovation process. Consideration of the aspect increases an organization’s ability to develop its strategic options more proactively, increase its autonomy, willingness to take risks, its competitive aggressiveness and its ability to innovate.

Although very limited research exists on the direct link between entrepreneurial orientation and power distance, a number of studies have touched on how both entrepreneurial orientation and power distance affect innovation, (Lyon, Lumpkin & Dess, 1057). While entrepreneurial attitudes facilitate the study and utilization of existing and new knowledge in discovering market opportunities, cultural characteristics provided by power distance better define markets and opportunities within them. Lyon, Lumpkin & Dess, (1057) argue that firms with entrepreneurial orientation tend to depend on the skills and knowledge of their employees when developing a knowledge process hence guiding the process by which new knowledge, opportunities, and ideas are harnessed and managed. Firms with entrepreneurial orientation also tend to focus their attention towards knowledge management and the power dimension analyzes the distribution of knowledge power hence we expect a positive correlation between the power distance dimension and entrepreneurial orientation, (Lyon, Lumpkin & Dess, 1057).

In societies with high power distance levels, a hierarch in existential inequality exists, superiors consider subordinates as different from themselves, power forms a basic fact of society and defines what is good and evil and power-holders are always entitled to privileges, (Lyon, Lumpkin & Dess, 1057). Additionally, in these societies, powerful individuals often try to be and to look as powerful as possible, and stress is based on coercive and referent power, those considered low in the power chain are often blamed for what goes wrong, and other people are often a potential threat to the powers of the boss. Comparatively, in cultures with low power levels, employees feel that the use of power ought to be legitimate besides; powerful people are expected to try and look less powerful than they are. When things go wrong, the system is always to blame and people at both high and low power levels often feel less threatened and are therefore more prepared to trust people, (Lyon, Lumpkin & Dess, 1057).

Additionally, while incorporation among the powerless in cultures high in power distance dimension is difficult to achieve, corporation among the powerless in cultures low in power distance is easier to achieve based on a general feeling of solidarity, (Lyon, Lumpkin & Dess, 1057). Low PDI further has distinct characteristics such as hierarchy means equality of roles established for convenience rather than existential inequality. Besides, superiors are considered similar to those low in rank and there is latent harmony between the powerful and the less powerful within the organization or the society at large, (Hofstede 1983; 60).

Market Orientation

The link between market or strategic orientation and firm performance has been a subject of a number of studies most of which have predicted a positive relationship between the two, (Vos and Vos 67). This is because, market orientation has been found to provide firms with better understanding of both its environment and customers, which leads to enhanced customer satisfaction and better performance. Other researchers also caution against being too customer focused as this can lead to inertia, (Voss and Vos 69). According to Vos and Vos (67), a number of studies such as Jaworski and Kohli 1993, Pelham and Wilson 1996 and Slater and Narver 1994 have suggested a positive relationship between market orientation and; managers perceptions on the overall firm performance, financial performance and sales growth respectively. Nonetheless, a number of studies also do not support a direct positive correlation between market orientation and firm performance, for example, studies by Han, Kin, and Srivastava (1998) which measured performance as a dependent variable found that market orientation was not actually related to both market share and the net income growth of the firm.

The disparity has been harmonized by Han, Kim, and Srivastava (1998) who noted that, a more specific relationship which considers more variables such as distinct customer segments; competitor and product orientations can better define the relationship. Researcher by Noble, Sinha. & Kumar (27) argues that the market orientation of a firm should be guided by factors such as customer oriented behavior hence power distance is critical to developing market oriented strategies. Vos and Vos (67) contend that the link between market orientation and strategic orientation is multidimensional. Empirical researches by Kohli, Jaworski, and Kumar (1993, p. 475) touches on the link between market orientation, power distance as a cultural dimension and firm performance. They note that non-profit art organizations for example which tended to adopt a product orientation that targeted high power culture audiences needed consumer oriented activity in order to maintain fiscal viability, (Cassell and Blake, 1055).

Learning Orientation

Learning orientation is a key component of strategic orientation as firms companies encourage their workers and manages to develop a clearer and deep understanding of business activities and continuously upgrade their skills so as to better understand and respond to the fast changing competitive business environment, (Kanungo, Mendonca, Yu, Deller, Stahl, and Kurshid, 203). Power distance has often been viewed as being about the relationship between bosses and subordinates although it is also about all members of society occupying his or rightful place as opposed to equality. Organizations serve the key role of distributing power hence is charged with the responsibility of manipulating symbols such as orders, rituals, policies, rules, and uniforms. Studies by, Kanungo, Mendonca, Yu, Deller, Stahl, and Kurshid (203) and Carr and Harris (81) have also shown that the knowledge of cross cultural responses to the power distance phenomena enhance the ability to transfer knowledge and management practices more effectively within an organization and to and from different national settings besides national vales with respect to the perception of authority shape cognitive processes across subsidiaries.

Power Distance, Strategic Orientation and Firm Performance

The way different cultures deal with inequality should be fundamental to a country when formulating its policy. Country’s high in power distance often have norms, beliefs, and values which assume that people have a station in life and inequality is natural or even fundamentally acceptable, (Kanungo, Mendonca, Yu, Deller, Stahl, and Kurshid, 203). When operating in such cultures, improved performance will be achieved when hierarchical decision making is encouraged besides it would be beneficial to create a distance between managers and employees.  Organizations in such cultures should limit the delegation of decision making to subordinates. Nonetheless, organizations operating in cultures with low power distance, engaging employees and subordinates in decision making would improve firm performance, (Chatman, Polzer, Barsade and Neale 751).

Organizations operating in cultures high in the power distance dimension may lead increased divergent processes within the workforce since corporation is limited. According to Chatman, Polzer, Barsade, and Neale (751), divergent processes bring different ideas and values into teams which are likely to be recognized in corporative work environment and likely to be unnoticed or ignored within a non-cooperative environment.  If noticed, the diversity would lead to creativity as a wide variety of alternatives ways of building useful ideas and multiple criteria for evaluating alternatives will be taken into account, (Stahl, Maznevski, Voigt and Jonsen, 6).  A downside in low power environment is the likelihood of conflict as a result of differences in opinion and priority. Suppose cultural diversity is not managed properly by a hierarchy, task and personal conflict may arise thereby decreasing performance and weighing negatively on the organization, (Stahl, Maznevski, Voigt and Jonsen, 6).

3.2.2. Effects of Uncertainty Avoidance on Strategic Orientation and Firm Performance

Uncertainty avoidance index (UAI) was created based on a questionnaire that sought to establish how often individuals felt nervous or tense at work, employee’s opinions on whether company’s rules could be broken even when it was in the company’s best interest and how long employees though they would continue working for a given company, (Hofstede, 1983; 53). The resulting uncertainty avoidance index was fundamental in studying the general anxiety levels within a country. For example, respondents with a higher mean anxiety levels indicated that the respondent in the country had high anxiety avoidance attitudes and could engage in behaviors which increased the anxiety, (Hofstede, 1983; 53). Uncertainty avoidance therefore refers to the extent to which culture has predisposed members to either be comfortable or uncomfortable in an uncertain environment. Since uncertain environments are unknown and uncertain, the problem arises on what extent members of a given society are able to control the uncontrollable, (K’Obonyo and Dimba 9).

Entrepreneurial Orientation

In countries with low UAI, uncertainty is inherent in life hence it is more easily accepted in day to day affairs of society, nonetheless, countries with high UAI, uncertainty is felt as a continuous threat that has to be fought and eliminated, (Kulkarni, Hudson, Ramamoorthy, Marchev Georgieva-Kondokava and Gorskov, 95). Additionally, cultures with low UAI tend to have lower stress levels, more free time, do not overwork themselves, have weaker super egos and are often discourage aggressive behavior. Conversely, in cultures with high UAI, stress and anxiety levels tend to be high, people tend to be busy most of the time besides there are stronger superegos, the workforce is more motivated hence they tend to have more inner urge to work harder and aggressive and competitive behavior of self is generally accepted and even encouraged, (Kulkarni, Hudson, Ramamoorthy, Marchev Georgieva-Kondokava and Gorskov, 95).

Societies lows in UAI also favor relativism and empiricism as opposed to the ultimate absolute truths and values that are favored by countries high in UAI. Besides, in countries low in uncertainty avoidance, there are fewer rules which must not always be kept and there is a general belief and trust in generalists and common sense. Cultures high in uncertainty avoidance tend to operate via written rules and regulations, expect members to stick to the written rules and belief in experts and their knowledge beliefs, (Kulkarni, Hudson, Ramamoorthy, Marchev Georgieva-Kondokava and Gorskov, 95). Cultures high in uncertainty avoidance also tend to have a strong need for consensus, high degrees of nationalism, and are more conservative in terms of sticking to law and order. The converse is true for countries low in uncertainty avoidance as dissent is more acceptable, degrees of nationalism are lower and are more willing to take risk in life, (Kulkarni, Hudson, Ramamoorthy, Marchev Georgieva-Kondokava and Gorskov, 95). Additionally, in societies higher in uncertainty avoidance, conflict and competition can result into aggression and therefore are often avoided while in those low in UA, conflict, and competition can always be contained and are often resolved constructively based on fairplay.

Market Orientation

Uncertainty avoidance would affect the market orientation of a given firm thereby having a significant influence on its performance. According to Kohli and Jaworski (1993), market characteristics have a significant impact on the market orientation of a firm. Three market characteristics are identified including competitive hostility, competitive intensity, and industry maturity. Besides, there is a direct effect on market characteristics on actual firm performance; for example a study by (Vos and Vos 70) indicated that there is a direct effect on actual firm performance in terms of market turbulence, competitive concentration, availability of substitutes and demand uncertainty. Uncertainty avoidance has been found to affect market orientation in terms of the objective market share, buyer power and competitive intensity between products. Market characteristics can, therefore, moderate market orientation since factors such as direct competition and uncertain customer demand must be taken into account.

According to Martinsons (5), uncertainty can be avoided using two differing decision styles which include either gathering the support of the people with the aim of achieving a consensus and adopting a behavior pattern favored by all or adopting an analytic approach in which decisions are made based on gathered information. Martinsons (5) notes that uncertainty for countries with a more individualistic mentality can be reduced by gathering and processing more information, while in collectivistic ones, a consensual decision making will be more appropriate. Based on a data from 22 societies, (Martinsons 5) records that there is a strong negative correlation between uncertainty avoidance and the need for achievement indicating that societies with poor tolerance ability are less achievement oriented.

Between East Asian nations and the US, Martinsons (5) note that the former are more comfortable with uncertainty including a lack of quantitative data compared with the Americans. As an implication, the American business leaders may have higher need for achievement compared to both the Japanese and the Chinese hence the decision styles of the American organizations will most certainly be more analytic than their Japanese counterparts, (Martinsons 5 and Tu, Lin, Shean-Yuh and Chang, 177). Strategic decision makers in the East Asian cultures are therefore less analytic, a fact that is attributed to high degrees of both power distance and in group collectivism. Americans on the other hand are associated with high degrees of individualism hence decisions will tend to be vested in designated individuals.

Learning Orientation

Since a strong uncertainty avoidance culture tends to emphasize on order and predictability in addition to rules and regulation, organizations should focus on incorporating a culture’s values into their policy. Research by Hofstede (1980) indicated that multinationals often failed to take traditional values into consideration in their policy. Hofstede exemplifies a case in which a formal application by an employee to attend the funeral of a friend or a family member is denied as unjustified. This, in cultures with strong uncertainty avoidance may be interpreted as lack of concern by management to consider cultural values, (Martinsons 5 and Tu, Lin, Shean-Yuh and Chang, 177).

Additionally, organizations should recognize their employee’s cultures especially with respect to the way they communicate and transfer information. Irrespective of the communication process, effective communication is often associated with good team performance both directly and indirectly, (Earley 21). Although cultural differences may affect or interfere with the communication process, thereby interfering with other aspects such as cohesiveness and conflict resolution, encouraging culturally sensitive communication within the organization will increase work performance. According to Hofstede (1980) different country based cultures have adopted different languages, besides shared languages may not be similarly translated. In terms of negotiations within organizations, Tu, Lin, Shean-Yuh and Chang, (177), different cultures generate distinct negotiation styles and perception. Cultures tend to influence how individuals conceive and function in negotiation scenarios besides differences in negotiating styles tend to originate from multiple factors such as relationship development, decision making methods, spatial and temporal orientation, contracting practices and illicit behaviors such as bribery within the organization, (Tu, Lin, Shean-Yuh and Chang, (177).

3.2.3. Effects of Individualism-Collectivism on Strategic Orientation and Firm Performance

From  the basic research, individualism is interpreted to mean the relative importance of given job aspects such as personal time, freedom, challenges compared to the relative unimportance of the use of skills, physical conditions, and training. It is, therefore, a measure of the goals in which an individual actively participates versus those that he or she depends on an organization for such as the skills used to carry out a given work, the benefits being provided by the company and the prevailing working conditions, (Hofstede, 1983; 50). Compared to the power distance index which is dependent on the superior, Individualism index is dependent on the organization. Low scores in IDV is often interpreted to mean that the members of a given cultures favor collectivism rather than individualism as opposed to cultures with High IDV scores, (Martinsons 5 and Tu, Lin, Shean-Yuh and Chang, 177). The dimension measures the degree to which individuals are expected to look after themselves or remain integrated within the family or the group. In individualistic societies, therefore, the ties between individuals are loose and all society members are expected to look after him/herself and his/her immediate family. Collectivism on the other hand is interpreted to mean strong integrated and cohesive in-groups, (Martinsons 5 and Tu, Lin, Shean-Yuh and Chang, 177).

Entrepreneurial Orientation

In collectivistic societies, people are often ‘We’ conscious as opposed to ‘I’ consciousness prevalent in individualistic societies. This is because members of the former group are born in extended families and are brought up to respect familial loyalty as opposed to members in the latter culture who are socialized knowing that all members of societies are supposed to take care of themselves and their immediate families, (Quince, & Whittaker, 6 and Martinsons 5 and Tu, Lin, Shean-Yuh and Chang, 177)). Individualistic societies tend to emphasize autonomy, pleasure, variety and individual security as opposed to expertise, duty, order and security provided by the organization that is the focus of collectivistic societies. Entrepreneurial orientation determines the organizational characteristics such as centralization, formalization, control systems, and interfunctional coordination thereby influencing firm performance. Tu, Lin, Shean-Yuh and Chang, (183)argue that while formalization tends to have a direct and positive effect on a new product success, centralization has minimal effect on both market orientation and firm performance.

In terms of thinking which directly affect the learning process, individualistic cultures tend to favor products with added abstract personality traits while collectivistic cultures are interested in concrete product features as opposed to abstract brands.  This is because, in collectivistic cultures, context and situation are important while in individualistic cultures, uniqueness was quite important, (Kobayashi, Kerbo and Sharp, 63). A 2002 survey by Reader’s Digest on Trusted Brands interviewed individuals from 18 different European countries on the probability of buying new unknown and untested brands. The results found that 82% were ‘extremely/quite likely to consider buying a brand which I’ve heard of but haven’t tried before’ which was significantly correlated with individualism, (Hofstede, 2010; 95).

Market Orientation

Kulkarni, Hudson, Ramamoorthy, Marchev Georgieva-Kondokava and Gorskov, (95) argues that individualism-collectivism influence product perception within different cultures hence bringing in the issue of product characteristics.   Specific product characteristics such as product quality and product distinctiveness and fit perform differently in varied culture hence may have either positive or negative effect on the market orientation which depends on the type of market in which the products are being sold. The effect on performance as a result of product quality was found to be more significant in societies having individualistic orientation comparative to those which favor collectivism, (Cardon 401). Nonetheless, collectivism performed better in terms of product advantage besides collectivistic culture, interfunctional coordination was a distinct construct when mediating the effect of market orientation on performance. In collectivistic societies, market orientation provides a common goal orientation which leads to a more enhanced interfunctional teamwork thereby subsequently improving performance, (Cardon 401). Besides, interfunctional coordination facilitates improved communication between multiple functional areas within organizations thereby greatly influencing the strategic orientation on performance, (Cardon 401).

Organizations also rely on the corporation between members in accomplishing the various goals and achieving objectives hence whether it has the individualistic or the collectivistic culture, the spirit of corporation should be enhanced, (Cardon 401). Chatman, Polzer, Barsade and Neale (750) note that, irrespective of the demographic attributes of the workforce or whether the organizational culture emphasizes on collectivism or individualism, one way of enhancing corporation is to identify the factors that cause people to categorize co-workers as either belonging to their groups or not and increase the extent to which workers view one another as part of the group. They also note that an organization’s relative focus on either individualism or collectivism may significantly affect the organization’s memberships leading to a work population that has ‘interchangeable interests and a common fate,’ (749).

In branding, individualism versus collectivism also has a significant position in influencing market orientation. Individualists for example, often want a consistency between their attitudes, behaviors or feelings hence consumer behavior can be predicted by their attitudes towards certain products, services or brands hence their tendency to purchase certain products can be predicted within the marketing structure, (Hofstede, 2010, 93). Conversely, in collectivistic culture, the patter on behavior between attitudes and future behavior may not be predicted hence there is a significant difference in measuring consumer’s beliefs, (Hofstede, 2010, 93). The social norm in collectivistic culture as a result of the Hofstede’s model is live up to the standard or you will be considered as hypocritical.

Societies low in IDV or collectivistic in nature always tend to identify each other based on a social system rather than the individual hence may allow organizations and the clan to which they belong to invade their private lives and even determine their opinions. Members in individualistic societies tend to have personal rights and opinions; besides identity is based on the individual, (Hofstede, 2010, 93). Individuals socialized in cultures low in IDV tend to emphasize on being a part of an organization or a member of a given social group as opposed to collective cultures which emphasize on individual initiative and achievement hence favor leadership and self-actualization ideals, (Hofstede, 2010, 93).

Learning Orientation

Emotions also have a significant influence on the learning outcome within organizations and by extension the general population. According to Wang et al. (2006) East Asian collectivists tend to display only positive emotions while controlling negative emotions hence are less likely to identify expressions of fear and disgust. A similar study to establish information processing and interpretation of emotions also found that, by comparing emotions across 32 countries, there was a significant correlation between individualism and emotion expressivity especially with regards to surprise and happiness emotions, (Matsumoto et al. 2008), (Hofstede 2010, 94). The implications of such studies indicate that differences in emotions and the general transfer of information affects the learning outcomes across cultures since similar expressions may have varied meanings in different cultures.

How various people within a given culture categorize people, objects and situations also affect the learning outcome within an organization. As noted by (Hofstede 2010, 94), a study by (Choi et al. 1997) found that while individualists categorized objects based on rules and properties, collectivists tended to focus on the relationships between objects. This significantly affects individuals’ acceptance of different brands, for example American consumers who are considered individualistic tend to view brand extension of a product as not fitting its parent brand while collectivists will often trust the parent brand which will be viewed in terms of the parent company, (Choi et al. 1997).

Individualism-collectivism also influence how people acquire information for example in collectivistic cultures, people tend to acquire information via more implicit, interpersonal communication whereas in individualistic cultures, individuals will actively acquire information through media and friends in order to prepare for purchase. In collective environment, increased frequency in social interaction stimulates automatic communication between individuals who as therefore tend to consciously acquire information, (De Mooij 2010) in Hofstede (2010, 96). As noted by Hofstede (2010; 96), Cho et al. (1999) argue that in China, which is reflective of a collective culture consumers have a high contact rate within groups hence tend to rely on word of mouth communication. In individualistic cultures, communication tends to be synonymous with information while in collectivistic ones, communication is varied based on roles and relationships and often depends on the place and role of an individual in society, (Hofstede, 2010, 96). According to Chatman, Polzer, Barsade, and Neale (749), in cultures that favor individualism tend to value individual achievement hence there is an increased tendency to categorize members demographically into in-groups. Workers tend to trust members of their in-groups, yet there are key benefits from diversity hence the key option is to get workers to re-group and recategorize into demographically different groups so as to not only increase social interaction, but also to create mutual trust, (Martinsons 3).

Individualistic cultures tend to foster beliefs in individual decision making and emphasize on value standards applying to all, (Chatman, Polzer, Barsade and Neale 751). Collective cultures on the other hand emphasize on group decisions and belief that value standards ought to differ between groups. In most cases, the involvement of individuals to a given group in collectivistic cultures is often primarily moral while the involvement of individuals with organizations in individualistic ones is calculative, (Chatman, Polzer, Barsade and Neale 751).

Individualism vs. collectivism knowledge will by extension be replicated in knowledge acquisition within an organization. Its applicability is varied including staffing and selection, cross cultural training, expatriation, and career development.

According to Kulkarni et al (97), there are differences across cultures with regard to individualism-collectivism. Comparing the Indian, Israeli and the American cultures, he notes that the Indian culture is traditionally collectivistic while the American Culture is highly individualistic. The individualistic orientation is as a result of a strong sense of rights and liberties that have been deeply rooted on the general population. The collectivism in the Indian culture stems from its culture which puts an emphasis on a sense of kinship, community, and family. Nonetheless, some Indians are also quite individualistic on the competitiveness dimensions but collectivist on their orientation towards work. Israel with a rank of 54 out of 100 is moderately collectivistic, besides, the Israeli society emphasize the principles of collective action, social interests and shared responsibility, (Chatman, Polzer, Barsade and Neale 751).

Collectivism vs. Individualism Strategic Orientation and Firm Performance

Employees in collectivistic cultures are more likely to look at organizations as their family members hence the organization’s strategy should focus in defending the employees’ personal interests, (Chatman, Polzer, Barsade and Neale 751). The organization’s in such cultures are expected to defend their employee’s personal interests and its decision making strategies should be based on group decision besides, hiring and promotion should be based on seniority since employees will be more group conscious. Employees in such cultures are also expected to be more emotionally dependent on the organization hence strategic approaches when dealing with employees should differ significantly from those in individualistic cultures, (K’Obonyo and Dimba 10).

Differences are expected between collectivistic and individualistic cultures in terms of an organization’s strategic orientation especially with issues such as community relationship, hiring practices, performance appraisal and training and employee security, (Kulkarni, Hudson, Ramamoorthy, Marchev Georgieva-Kondokava and Gorskov, 95). In collectivistic societies, employees will always tend to pool resources together and to help each other in times of crises. Firms in collectivistic societies should, therefore, come up with strategies that emphasize on collective coping and provide a community for emotional support since an organization which ignores an individual’s community relationships is not likely to improve its performance, (Chatman, Polzer, Barsade and Neale 751).

The strategic approaches towards job security must also vary between firms operating in highly individualistic cultures compared to those in collectivistic societies. Researchers have shown that employees in collectivistic societies tend to attach a lot of importance to job security and will tend to avoid behaviors that threaten this security, (Kulkarni, Hudson, Ramamoorthy, Marchev Georgieva-Kondokava and Gorskov, 95). Nonetheless, a general feeling of job security in both the societies will ensure improved job security as it positively influences employee performance, (Marchev Georgieva, Konodava and Gorskov 95). Chiang and Birtch (2006; 1) also argue that the importance attached both job security and customer relationship are a reflection of the organization’s strategic priorities and corporate values, (K’Obonyo and Dimba 10).

Firm’s practices with regards to performance appraisal must also be put into consideration when operating in either a collectivistic or an individualistic culture. Performance appraisal plays a critical role in the providing of information that determines salary increases, transfers, promotions and the data that helps the management to determine employee training needs, (Kulkarni, Hudson, Ramamoorthy, Marchev Georgieva-Kondokava and Gorskov, 95). In collectivistic societies, it would be more appropriate to evaluate employees in groups, sections or department as opposed to the evaluation of performance individual workers which may be more appropriate in individualistic societies. A strategic orientation which emphasizes a collective as opposed to individual evaluation can be more favorably in collectivistic cultures comparative to individualistic ones.

The organization’s strategic orientation towards training and development is also directly influenced by the Individualism-Collectivism dimension. In collective societies, further training and other education opportunities should be granted to employees based on the organizational need while in individualistic cultures, trainings may be granted based on the employee needs, (Kulkarni, Hudson, Ramamoorthy, Marchev Georgieva-Kondokava and Gorskov, 95).

3.2.4. Effects of Masculinity on Strategic Orientation and Firm Performance

Masculinity is indicative of the importance of a given job in a given country with respect to its earnings, advancement, challenges, and compared to the unimportance of the manager, desirable area of living, employment security and cooperation, (Kulkarni, Hudson, Ramamoorthy, Marchev Georgieva-Kondokava and Gorskov, 95). Preceding studies indicated that there were significant differences in the scores between men and women in all countries thereby indicating that sex roles is prevalent in all societies. Hofstede (1983, 55) reaffirm that boys tend to be socialized towards self reliance and assertiveness while girls tend to be more inclined towards responsibility and nurturance. Researches also showed that men and women in similar jobs tend to emphasize differing aspects of the job although there were differences between countries. Masculinity versus Femininity, therefore, refers to the relative distribution of roles between different genders which forms a fundamental problem in societies, Hofstede (1983, 55).

Surveys have indicated that women tend to attach more significance to social goals such as nurturing a family, engaging in relationship and helping others while men tend to attach more significant to goals such as advancing in their careers and making money, (Hofstede 1991). Since research by Hofstede revealed that there was varied importance attached to the concepts of ‘femininity’ and ‘masculinity’ across cultures, and occupations, it was, therefore, a critical dimension in differentiating cultures. Masculinity, therefore, represents a society in which male gender roles are distinct and are expected to be tough, focused on material success and assertive while women are expected to be tender, modest and concerned with the quality of life, (K’Obonyo and Dimba 10). Conversely, Femininity is representative of a society in which gender roles overlap, where both men and women are expected to be modest and all are expected to be concerned with the quality of life.

Entrepreneurial Orientation

Cultures high in masculinity-Femininity (MAS) (masculine societies) tend to be more money and property oriented besides performance and growth is important aspect. On the other hand, cultures with low MAS are more people oriented and the quality of life and environment are more important, (Hofstede 94). While members of societies low in MAS are more service and interdependence ideal, those high in MAS tend to have achievement ideals and are more independent. In masculine cultures, people tend to live to work, are more decisive, and are more sympathetic for the successful achiever. Conversely, in less masculine societies, people tend to work to live, are more intuitive and are more sympathetic towards the unfortunate among them, (Hofstede 94).

More masculine societies have been found to have more positive interdepartmental dynamics for organizations that are predominantly male and therefore less conflict leading to higher market orientation and subsequent performance. Besides, Hofstede (2010; 94) note that although emotions and consumer motives are universal and fundamental in terms of standardization, they are nonetheless culture bound and masculinity affect how individuals behave in certain circumstances, (Hofstede 2010: 94).  He further argues that many motives such as status motives are category bound hence markets in cultures with strong masculinity will more likely have more established categories in terms of the category of a given brand. In less masculine societies, members do not try to be better than others besides sex roles in society are more fluid and men do not always need to be assertive and can assume nurturing roles. Comparatively, members of societies high in MAS always try to be the best, have clearly differentiated sex roles and men always have to behave assertively while women assume the nurturing roles, (Hofstede 2010: 94).

Learning Orientation

Similarly, an organization with a more centralized, formalized and departmentalized strategy and which tend to employ a specific sex within masculine oriented cultures tend to have lower information generation and dissemination but also tend to have more effective organizational response to the information that is generated and disseminated hence better learning outcomes, (Chatman, Polzer, Barsade and Neale, 749).  In cultures low in MAS, differences in sex roles do not always mean a difference in power besides in such societies; small and slow are considered beautiful. In more masculine societies, men are expected to dominate in all settings besides, for such societies, big and fast are always considered superior and beautiful, (Chatman, Polzer, Barsade and Neale, 749).

Researches have also shown that overt connectedness, harmonious interdependence and attending to others is a characteristic of feminine societies as opposed to masculine ones yet they are neither assumed nor valued in individualistic cultures. This can be explained from the point of view that more masculine societies encourage independence hence individuals tend to maintain independence and the competitive spirit in such societies ensures that they tend to self and focus on expressing inner attributes, (Chatman, Polzer, Barsade and Neale, 749). They, therefore, suggest that organizations create strategies that set boundaries that besides connecting individuals to one another, also set boundaries. This would make it clear so that members from more masculine societies do not ignore the organizational boundaries intentionally.

According to (Lyon, Lumpkin, & Dess, 2000, 6), countries low in Masculinity-Femininity tend to be characterized by increased corporation at work and better relationship with superiors, better group support system, lower job stress and promotion by merit. In more feminine societies, strategic practices should emphasize an improved quality of both interpersonal relations and working life issues, (Lyon, Lumpkin, & Dess, 6). Strategies that favor performance-contingent rewards to produce higher performance may be more effective in masculine national cultures while low stress work place which allows a great deal of freed thereby motivating employees to work and improving job performance is more appropriate in less masculine environments.

The link between the masculinity-femininity dimension and strategic orientation also provides a useful insight on the employee needs and reward preference patterns across different cultures, (Venkatraman 945). Since Masculine societies tend to emphasize on assertiveness, achievement and material success, interest in financial arrangement, material gain and earning more money are highly favored. Individuals in such cultures tend to have high cash mentality hence this may determine the relative remuneration standards and trends across various cultures.  Besides, such information may be used to come up with reward schemes such as promotion and promise for better financial rewards to encourage motivation and productivity, (Venkatraman 945).

Implications and Chapter Summary

Evidently, there are certain cultures where strategic orientation designed based on existing cultural values works best although this is dependent on behavior. Analyzing the cultural values, attitudes, and behaviors of the American in comparison to those of the Japanese, a contrast emerges, (Kulkarni, et al 96). The two nations also have differing strategic orientations at certain levels and forms hence orientations developed in either one of the nations often need to be modified so as to be applicable across cultures. Comparing the two nations, the US’s and Japan’s; Power Distance Uncertainty avoidance, Individualism-Collectivism and Masculinity-Femininity scores are 40 and 54, 46 and 92, 91 and 46 and 95 and 62 respectively, (Kulkarni, et al 96).

It is evident that the US has higher scores on individualism (91) compared to that of the Japan (46)  implying that the high levels of individualism in the American society may encourage a trend in which decision making processes are based on objective analysis and  focus on self interest, (Kulkarni, et al 96). In terms of institutional collectivism, Japan scores higher which suggests that the Japanese puts greater emphasis on group interest and tend to have higher needs for affiliation. Strategic approaches for Japanese organizations should therefore focus on encouraging consensus-building in decision making among their employees. Comparing Japan and the United States, a more directional decision style may be more favored in the Japanese context compared to the American context, (Kulkarni, et al 96).

Although Hofstede’s model has been effective in categorizing various cultures, Kulkarni, et al (96) note that its values may only be valid in mature economies and homogenous societies like Japan. The existence of sub-cultures may present sub-cultural differences which may create discrepancies when analyzing culture, (Kulkarni, et al 96). Taking the case of China as an example; its rapid economic and social development has created a subculture which is in need for further research. In the power Distance dimension for example, the present Chinese society many young and better educated managers and a lot of older people with few years of formal education working under them. This has shifted stage on strategic aspects such as decision making process with critical issues such as handling personnel conflict or managing entrepreneurial venture hence the need for additional research, (Kongsompong 63).

As an implication of the Hofstede’s model, it is evident that theoretical analyses indicate that cultural background is affected by the social influence on decision making, (Kongsompong 63). This implies that managers and practitioners ought to consider cultural background when selecting, recruiting and training the workforce in day to day operations in addition to its strategic operations and orientations. This is supported by Manu (81) who argue that the study of cultural values and beliefs is fundamental to the development of effective management strategy and improvement of the managerial process. Corporations operating across different cultures must also be careful and not have policies that generalize but rather develop ones that consider the cultural background of members.

The Hofstede model should nonetheless not be generalized since as He himself noted ‘the dimensions do not directly predict any phenomena or dynamics’ but applying them to make sense to what happens across the world has to take into account cultural factors such as history, national wealth, personalities and coincidences, (Manu 81). He further notes that there is no quick fix to understanding social life but the dimensions must be well understood and appropriately applied so as to be able to predict what is likely to happen and to be useful in as you analyze varied trends. Besides over time, nations and cultures change and the changes are directly evident in the behavioral patterns of the populations hence organizations must repeatedly modify their strategic orientation to fit. As economic well being of a countries change, certain cultural and behavioral aspects change.

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