What is the Hofstede’s Cultural Dimensions Theory?
The Hofstede’s Cultural Dimensions Theory, developed by Geert Hofstede, is a framework used to understand the differences in culture across countries and to discern the ways that business is done across different cultures. In other words, the framework is used to distinguish between different national cultures, the dimensions of culture, and their impact on a business setting.
The Hofstede’s Cultural Dimensions Theory was created in 1980 by Dutch management researcher Geert Hofstede. The aim of the study was to determine the dimensions in which cultures vary.
Hofstede identified six categories that define culture:
- Power Distance Index
- Collectivism vs. Individualism
- Uncertainty Avoidance Index
- Femininity vs. Masculinity
- Short-Term vs. Long-Term Orientation
- Restraint vs. Indulgence
Power Distance Index
The power distance index considers the extent to which inequality and power are tolerated. In this dimension, inequality and power are viewed from the viewpoint of the followers – the lower level.
- High power distance index indicates that a culture accepts inequity and power differences, encourages bureaucracy and shows high respect for rank and authority.
- Low power distance index indicates that a culture encourages organizational structures that are flat, decentralized decision-making responsibility, participative style of management, and places emphasis on power distribution.
Individualism vs. Collectivism
The individualism vs. collectivism dimension considers the degree to which societies are integrated into groups and their perceived obligation and dependence on groups.
- Individualism indicates that there is greater importance on attaining personal goals. A person’s self-image in this category is defined as “I.”
- Collectivism indicates that there is greater importance on the goals and well-being of the group. A person’s self-image in this category is defined as “We”.
Uncertainty Avoidance Index
The uncertainty avoidance index considers the extent to which uncertainty and ambiguity are tolerated. This dimension considers how unknown situations and unexpected events are dealt with.
- High uncertainty avoidance index indicates a low tolerance for uncertainty, ambiguity, and risk-taking. The unknown is minimized through strict rules, regulations, etc.
- Low uncertainty avoidance index indicates a high tolerance for uncertainty, ambiguity, and risk-taking. The unknown is more openly accepted, and there are lax rules, regulations, etc.
Masculinity vs. Femininity
The masculinity vs. femininity dimension is also referred to as “tough vs. tender,” and considers the preference of society for achievement, attitude towards sexuality equality, behavior, etc.
- Masculinity comes with the following characteristics: distinct gender roles, assertive, and concentrated on material achievements and wealth-building.
- Femininity comes with the following characteristics: fluid gender roles, modest, nurturing, and concerned with the quality of life.
Long-Term Orientation vs. Short-Term Orientation
The long-term orientation vs. short-term orientation dimension considers the extent to which society views its time horizon.
- Long-term orientation shows focus on the future and involves delaying short-term success or gratification in order to achieve long-term success. Long-term orientation emphasizes persistence, perseverance, and long-term growth.
- Short-term orientation shows focus on the near future, involves delivering short-term success or gratification and places a stronger emphasis on the present than the future. Short-term orientation emphasizes quick results and respect for tradition.
Indulgence vs. Restraint
The indulgence vs. restraint dimension considers the extent and tendency for a society to fulfill its desires. In other words, this dimension revolves around how societies can control their impulses and desires.
- Indulgence indicates that a society allows relatively free gratification related to enjoying life and having fun.
- Restraint indicates that a society suppresses gratification of needs and regulates it through social norms.
Country Comparisons: Hofstede Insights
Hofstede Insights is a great resource to understand the impact of culture on work and life. It can be accessed here to understand how the different dimensions differ among countries under the Hofstede’s Cultural Dimensions Theory.
CFI offers the Financial Modeling & Valuation Analyst (FMVA)™ certification program for those looking to take their careers to the next level. To keep learning and advancing your career, the following resources will be helpful: