An organisation does not operate in splendid isolation. Customers and suppliers are often organisations as well. When managers are dealing with customers and suppliers, for example negotiating, selling and buying, consequently they are engaging in other organisational cultures.
Successful negotiations need to be sensitive to the needs and expectations of other cultures. Managers need to be able to operate effectively within this different practices. Globalisation and multi-national cooperation, manufacturing sites in different countries impact the way our behaviours shape.
Studies have concluded that there is four dimensions, where the international cultures need to be considered:
1. Power distance - the extend to which societies accept that the power should be distributed equally. Power distance is the measure of the power between the boss and subordinate.
2. Uncertainly avoidance - the degree to which societies feel frighten by uncertainly. Such cultures rely highly on rules and regulations, embrace formal structures and have a little tolerance for ambiguity of change.
3. Individualism - the extend to which people are integrated into groups. Societies high in individualism value autonomy and and freedom.
4. Masculinity - the extend to which the dominant values are assesses as being 'male', for example assertiveness. Masculinity is often concerned with the level of confidence.
This factors will shape the risk taking and proactiveness in every day decisions. Uncertainly avoidance and power distance are both found to have a significant negative influence on risk taking. Uncertainly avoidance, power distance and individualism are found to negatively influence proactive firm behaviours.
Cultural attributes are found to be one of the primary factors of nation's level of economics. Studies have found that innovativeness, risk taking and proactiveness could assess the overall level of the firms behaviour. The purpose of this article is to explore whether the national culture plays role in the level of risk taking and proactiveness. Mainly because the two dimensions will inform the way to deal with customers and suppliers. Studies have also found that the national culture having a high impact on the strategic behaviours.
Risk Taking and cultural dimensions
The concept of risk taking has frequently been associated with the willingness to engage in calculated business related risks. It is however also try that generally we take a risk of some kind. Since the key decision-makers determine the strategic orientation of their organisations, the impact of culture of key decision makers may provide the important insights into the willingness in participating in risk-taking behaviours.
In terms of the dimension of uncertainly avoidance, there is a string link to risk-taking. It is noted that low uncertainty avoidance would typically encourage managers to develop a greater willingness to take risks. Since it generates a higher level of uncertainly, the managers must be able to deal with difficulties and complexity of strategic decisions. Those managers have been scored highly on need for achievement and being ambitious. Those are also willing to display commitment and responsibility. Therefore it can be expected, that risk-taking will be negatively associated with the level of uncertainly in the culture.
When the dimension of individualism comes to play, managers will tend to be more autonomous and independent. As a consequence of this, they will engage themselves in more risky activities often violating the collective group behaviours. They will often use their own judgement and put higher value into individual achievement. Therefore it can be expected that the risk taking will be positively associated with the level of individuality in the culture.
Managers in masculine cultures have also been known to score high in need for achievement. Therefore they are more interested in engaging in risk-taking activities. Those cultures also value decisiveness and immediate actions, while managers in feminine cultures will be looking at more thought out actions. Managers in feminine cultures spend time to analyse strategic situations and are more likely to resign from actions they determine to be of a high risk-level. While managers in masculine cultures have the characteristics of being more confident and willingness of "showing off". They believe that openly talking about their risk taking they can gain recognition and prestige. Therefore it can be expected that the risk-taking will be positively associated with the level of masculinity.
In high power distance societies, there is an emphasis on maintaining a status. This is the reason, the managers in low power will be trying to higher up on their social power level and more likely engage in risk taking activities. Organisations in high power distance cultures also tend to maintain high control mechanisms. therefore they will have less freedom to make bold decisions. Therefore it is expected, that the risk-taking will be negatively associated with the level of power in those cultures.
Proactiveness and cultural dimensions
Proactiveness has been often associated with positive situations of creating favourable business opportunities.
Researches have suggested that in the dimension of uncertainly avoidance the managers would be more engaged in competitive behaviours. When the high uncertainly is accepted conflict is seen as manageable, while in high uncertainty avoidance cultures it is believed that conflict should be avoided. Therefore the greater level of uncertainly acceptance, the greater level of proactive behaviours. Therefore it is expected that the proclivity will be negatively associated with the level of uncertainly avoidance in the culture.
On the other hand, within the individualistic cultures some researches have argued that managers in those environments are able to gather the resources required to become proactive and see the opportunities. Some researches further suggest, that individualism limit proactive behaviours as there is not enough level of cooperation to gain the resources required. Therefore it is expected, that the proactive activities will be negatively associated with the level of individualism in the culture.
Masculine cultures tend to place emphasis on proactive activities. Managers in those cultures are more willing to open and move into creating opportunities before their competition. On another hand, organisations in feminine cultures are more likely to adopt reactive strategies. Therefore it can be expected, that in those cultures the the proactive strategies are associated with positive outcomes.
In the power distance structures the proactiveness is more visible within the efforts of maintaining the power in an organisations. Managers in low power particularly will try to improve themselves with proactive strategies in order to gain more power. Therefore business are more proactive in their behaviours and at times seeking opportunities means survival. Therefore it can be expected that in those cultures proactivity would be taken as negative activity.
To summarise, it is suggested that uncertainly avoidance and power distance have a negative influence on the risk taking activities. Moreover, uncertainly avoidance, individualism and power distance have a negative effect on firms proactive behaviours. It is also noted that risk taking levels are higher in countries with smaller GDP (gross domestic products), lover levels of technological advancements and political risk.
Resource: Kreiser P.,2010, Cultural Influences on Entrepreneurship Theory and Practice (journal) 34(5) p.959-983.
Comments