By looking at these dimensions it gets evident where the common sources of incompatibility in cross-border alliances lie. The first dimension identified by Hofstede (2001) is the power distance, which is the degree to which human inequalities are emphasised. Having a high power distance means accepting the power and authority of superiors simply on the basis of their hierarchical status. This implies that less powerful employees of a firm accept the decisions and mandates of those above them.
In contrast, cultures with a low power distance do not attach much importance to a person’s position in the hierarchy. The employees in these cultures are more willing to question a mandate from someone at a superior level, they might even refuse it. Emphasis is put on shared decision-making. Accordingly it could happen that in negotiations or in the day-to-day management and operation of an international alliance, an executive from a high power-distance country -such as Brazil, Mexico, the Philippines, or one of the Arab countries – will continually be wanting to check with his or her superior.
If the other partner is represented by an executive from a low power-distance culture, such as Germany, New Zealand, Denmark, U. K. or Sweden, he or she will find this frustrating and an unnecessary waste of time. The low power-distance executive may try to pressure the high power-distance partner into making a decision on his or her own without checking with their supervisor, or may even accuse the executive from the high power-distance culture of lacking the necessary courage to make a decision.
The executive from the high power-distance culture, on the other hand, will see the executive from the low power-distance culture as an egotistical businessman. (web7) Another dimension defined by Hofstede (2001) is the dimension of individualism. The dimension of individualism is the degree to which independent initiative is valued relative to collective effort. A culture with a high belief in individualism would emphasise personal achievement. People who believe in this, tend to put their own interests and those of their immediate family ahead of those of others.
A society low in individualism, so-called collectivist countries, believe that the group comes first. These nations have a well-defined social network, including extended families or tribes. People are expected to put the good of the group ahead of thinking on their own welfare or success. Most Asian, Latin American, and West African nations tend to be collective whereas people in the U. S. , the United Kingdom, Australia, Canada, New Zealand and the Netherlands are said to be individualistic. As frequently pointed out, the individualistic character of the U.
S. society makes it difficult for U. S. corporations and executives to feel comfortable with the collaborative behaviour that is a basic element of most Asian countries. Many of the cultural incompatibilities in international business, and especially in international alliances, are a consequence of one partner being from a more individualist society and the other being from a society that is more collectivist. Hofstede identified also a dimension called uncertainty avoidance. This dimension reflects the degree to which ambiguity causes anxiety in a society.
People in cultures characterised by a higher uncertainty avoidance seek to reduce ambiguity and feel uncomfortable in unstructured situations. They prefer a structured and routine, even bureaucratic way of doing things. Hofstede found that many people in Germany, Austria, France, Italy or Japan tend to avoid uncertainty. People in cultures characterised by a low uncertainty avoidance look at ambiguity as a context within which an individual can grow or develop and carve out new opportunities.
Hofstede suggests that many people from the United States, Denmark, Sweden or Hong Kong are uncertainty accepting. Accordingly, Griffin and Pustay (1999) mention that countries like Germany have the emotional need for rules and formalisation at their workplace, whereas American firms mostly dislike rules and standardisation. In this example, two different attitudes on uncertainty avoidance are clashing and it gets evident, that problems might arise within an alliance of which the members are coping with uncertainty in a different manner.
The fourth cultural dimension, masculinity with its opposite part femininity, expresses “[… ]the extend to which the dominant values in society are assertiveness, money, and material things, not caring for others, quality of life and people. ” (Hofstede 2001) A society scoring high on masculinity tends to value decisiveness, assertiveness and competitiveness. These are abilities of mens` values that stress control over events and concern with material possessions. In the opposite, womens` value orientations tend to be linked with nurturing relationships and human interaction.
By looking at the issue of incompatibilities in cross-border alliances it might be, that companies from male-oriented cultures have to deal with companies where the managers might be women. This situation could lead to massive problems since in masculine-oriented societies like Japan, Mexico or Argentina men are expected to hold the primary positions and jobs whereas women are expected to stay at home and raise the children. The last dimension, Hofstede added is the so called long-term orientation, which focuses on the degree, members of a society adopt a long-term versus a short-term outlook on life, work and other aspects of society.
Long-term orientated cultures like Japan, Taiwan or South Korea have a strong focus on future and they value thrift, hard work or perseverance. Other societies like the USA tend to focus on the present and past. Countries which differ extremely in time orientation are Japan and the USA, for instance. Transferring this to international business alliances, problems of incompatibility might arise since Japanese companies are more focusing on long-term projects which entails making decisions carefully, saving money and concentrating on the future.
American firms ,on the other hand, tend to make fast decisions, do not save money and put their focus more on the present situation instead of having a strong future orientation. Besides Hofstede, another cross-cultural research was done by Hall and his wife who examined another issue that could lead to incompatibilities. Edward Hall and his wife (1989, cited by Naylor 1999) identified what they have called low-context and high-context language societies. High-context language societies rely heavily on information that is not in the communication per se, but is already in the person receiving the communication.
In low-context language societies, however, nothing is assumed and everything must be spelled out in the communication. In societies with a high-context communication, the exchange of information usually happens verbally, whereas in countries with a low context communication people do rely on other, paper or electronic, carriers for their information and an agreed code or language aimed at making their messages more easily understood. In the context of cross-border alliances this could lead to incompatibilities when the allied firms belong to different “communication cultures” .
A contract, for example written by an allied partner with a high-context language background, may seem incomplete or unprofessional for an allied firm belonging to a low-context culture. By looking at Hofstede`s five dimensions, as well as at Halli?? s research, it gets obvious that entering into a cross-border alliance also means entering into an intercultural interaction, involving national and organisational cultures of companies from different countries.