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Does Individualism Drive Economic Development?

It’s the age-old question: do individualist cultures see more economic success than collectivist cultures (e.g. capitalism vs. socialism)?

We’ve mentioned how individualism vs. collectivism is one of the most important (if not the most important) of Hofstede’s cultural dimensions. The degree to which a culture lies along this scale can determine much of the culture’s values and norms.

The West (the US and European countries, in particular) believes that economic development is fueled by individualism.

Is that the case?

The “Spirit of Capitalism”

Adam Smith, the author of The Wealth of Nations (considered “the Bible of capitalism”), wrote that the economic model of the West is rooted in the individual’s aspirations and initiative to earn money, build his career, and elevate his social standing.

He writes:

“The real tragedy of the poor is the poverty of their aspirations. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. Man is an animal that makes bargains: no other animal does this – no dog exchanges bones with another.”

And he wasn’t the only economist to believe so. Economist Max Weber coined the phrase the “spirit of capitalism,” which embodied the entrepreneurial spirit of the West, the desire to climb the social ladder and build a career, all of which was once believed by some to be the sole method of driving economic success.

However, as we discussed in a previous post, Japan disproved this theory by demonstrating that a collectivist culture, with its own values and norms, can boom economically as well.

Apart from the “Japanese Miracle,” business models like Kaizen’s steps to improvement and the quality circle provide positive outcomes and follow collectivist values.

The Lexus

An example of collectivist culture contributing to economic success:

I was invited to a presentation of the Lexus, a luxury Japanese car brand. The production process involved a unique manufacturing method put in place to guarantee top quality.

The car bodies were mounted in a large hall and transported along an assembly line of steps, in which each worker had his/her own task, like welding or screwing parts to the vehicle. A string hung from the ceiling at each step, allowing workers to stop the entire assembly line production if necessary.

Of course, pulling that string costs the company a fortune. But not doing so, if there is a quality issue, could cost them even more…and might even ding their reputation if left unchecked.

So, despite the costliness of pulling that string, when an assembly worker makes that decision, he’s greeted with cheers.

Why?

Because he took a bullet for the team, stepped up and disrupted the workflow, hopefully with reason. Nevertheless, the worker isn’t punished for putting quality over cost, which is why Lexus has a reputation for reliability.

In this way and many more, Japan has demonstrated that an individualist culture is not required for economic development. Both collectivist and individualist cultures have their strengths.

Next week, we’ll talk about the driving factor behind economic success in either type of culture.

Paternal Leadership in Collectivist Cultures: Care in Exchange for Obedience

We talked about directive and supportive leadership styles and behaviors in last week’s blog.

Research has shown that collectivist cultures respond to a hybrid of both these styles called paternal leadership.

What does paternal leadership look like?

Paternal Leadership

Paternal leaders are dominant authority figures (think patriarchs/matriarchs) who exhibit the following behaviors:

  • Treat employees like family members
  • Expect trust, loyalty, and obedience from employees
  • Listen to employees but makes the final decision
  • Promote social skills and education
  • Provide employee training for business and interpersonal skills

Leadership and Team Cohesiveness

A study by Hein Wendt, Martin C. Euwema, and I.J. Hetty van Emmerik, entitled “Leadership and team cohesiveness across cultures” and published in The Leadership Quarterly, asserts that paternal leadership appeals to collectivist cultures.

“The present findings offer interesting insights and support the idea that indeed in collectivistic cultures, compared with individualistic cultures, leaders do behave more directive and more supportive at the same time. This reflects a typical paternalistic way of managing, in which the leader takes care of his employees, and in return demands obedience, which can be seen as representative for many collectivistic cultures.”

The study, which observed 140,000 employees across 615 worldwide companies, also found that directive leadership had a more negative impact on team cohesiveness in individualist cultures than it did in collectivist cultures. Moreover, supportive leadership had a positive moderating effect on team cohesiveness, no matter the culture.

This suggests that while some leadership behaviors are universally appealing, others are influenced by culture.

National Culture & Team Cohesiveness

One surprising result of this study is that team cohesion was not as influenced by national culture as had been hypothesized. Researchers assumed that collectivist cultures would be much more team-oriented than individualist cultures, but that wasn’t necessarily the case.

This may be because collectivist cultures don’t view the work group as a strong social identity when compared to individualist cultures. Work groups are usually composed of various levels of education, ages, statuses, and social backgrounds, making collectivist societies less prone to loyalty to “the group“.

The study concluded:

“In this group, traditional values of sacrificing for the sake of a group are less applicable compared to other types of referent groups.”

This means that, in a collectivist society, the conditions of loyalty to the group must develop over time before team cohesiveness is established.

On the other hand, individualist cultures saw high group cohesiveness, likely related to the level of importance of work, achievement, and job affiliation in individualist cultures. This made Western employees become more collectivist oriented in terms of teamwork.

Directive vs. Supportive Leadership: Which Style Works in Your Culture?

Say, you believe that the success of the team is more important than personal goals, ambition, and achievements.

If that were the case, what type of management style do you think you’d prefer?

Would you want a supportive, inclusive leader offering you relative autonomy? A work environment where everyone can freely voice their opinions and concerns and stand out from the crowd?

Or would you want a directive, authoritarian leader within a company culture where harmony is more important than self-expression?

We’ve talked about how collectivist cultures view the “group” as more important than self. We’ve also discussed that thegroup” differs across cultures.

The group one most values often directs its workplace norms and preferences, including what motivational factors are effective and what type of leadership is preferred.

As to the latter, two styles of leadership are applied in varying degrees across cultures: directive and supportive leadership. Let’s take a look at both.

Directive Leadership

What makes a directive leader?

Here are some directive leadership behaviors:

  • Being task-oriented
  • Demonstrating control over subordinates
  • Dominating interactions
  • Personally managing the completion of tasks
  • Supervising closely
  • Pressuring employees to complete targets accurately and efficiently
  • Focusing on time management

With a directive leader, employees are placed in a role of dependency – depending on the leader to direct every aspect of their task, including how and when to move forward. Employees under directive leaders often demonstrate little personal initiative.

A number of studies have shown directive leadership often contributes to lesser satisfaction and team cohesion. Moreover, directive leadership unsurprisingly leads to less open communication.

However, directive leadership can also result in higher productivity.

Supportive Leadership

What makes a supportive leader?

Here are some supportive leadership behaviors:

  • Meeting employee needs/preferences
  • Showing concern for employee welfare, individual/group needs, and conflict within the group
  • Encouraging a supportive work environment
  • Providing positive feedback
  • Fostering team cohesion and openness
  • Inviting employees to be part of the decision-making process
  • Promoting positive morale
  • Facilitating discussions (as opposed to dominating them)

With a supportive leader, employees are provided more autonomy and encouraged to demonstrate personal initiative and to be individuals within a cohesive group dynamic.

Studies have shown supportive environments can empower and promote positive dependency among team members, despite being open to more potential conflict as a result of open communication and individual expression.

In his study on “Rights and Responsibilities of Dissent: Cooperative Conflict,” Dean Tjosvold concludes that:

“…asserting the right to self-expression contributes to establishing a conflict-positive climate in which differences and frustrations can be discussed openly.”

The hard part when managing across cultures is finding that fine line between cooperative conflict and just plain conflict.

Next week, we’ll discuss the hybrid leadership style that combines directive and supportive leadership. Stay tuned.

Understanding Cultural Values: With What “Group” Does Your Culture Identify?

Some cultures most identify with their nationality. Others their church. And still others, their family, tribe, or even workplace.

We’ve discussed collectivism in this blog and the mentality of society over self or group over individual.

But of what “group” are we speaking?

In order to better understand the values and norms of a culture, identifying the group with which a culture most closely identifies is essential.

Let’s take a look at some examples.

Who is Your Group?

  • The Irish culture strongly identifies with religion, the Roman Catholic Church.
  • The former Eastern Bloc identifies with Slavic ideals and the party.
  • The French identify with their country, which they call “la grand nation.”
  • The Japanese identify with their company and workplace.

While these are all generalizations (after all, not everyone falls in line with societal values and norms), these broad strokes do highlight the roots of the cultural baobab.

Group identity is flexible. And this is not to say that other groups in said societies are not important.

Family, after all, is important in nearly every culture, and there are other in-groups – like subcultures and company cultures – to which individuals of any society might feel strong ties.

But when trying to understand a culture as a whole and what makes that culture tick, identifying the group that most often defines or impacts the mechanics of society as a whole is essential.

Collectivist vs. Individualist

Group identity, social responsibility, and interdependence are values emphasized in collectivist cultures.

Individuality, self-fulfillment, and independence are those emphasized in individualist cultures.

One wants to fit in.

The other strives to stand out.

One sees conformity as negative.

The other sees singularity as deviant.

As one of Hofstede’s Cultural Dimensions, the scale between collectivist and individualist cultures is just that – a scale. No culture is at the polar extreme, one way or the other.

There are elements of collectivism and individualism in every culture.

And sometimes, these elements are surprising.

We’ll talk about that more next week.

Conformity in Culture: The Colored Pens Study

Say, you’re given a bin of pens.

Most of them are black and a few are blue. Your favorite color to write with is blue.

Which pen would you choose?

This study was conducted by Japanese researcher Toshio Yamagishi and his research team with participants from Japan and the US.

The study involved a default scenario, an initial scenario, a final scenario, and a purchase scenario.

  • Default scenario – participants simply told to choose a pen
  • Initial scenario – participants told they were the first person to choose a pen
  • Final scenario – participants told they were the last person to choose a pen
  • Purchase scenario – participants told they were buying a pen

Considering previous research on the differences between individualist and collectivist cultures, one might think the Japanese would always choose the majority color, due to their preference for conformity, while the American would always choose the minority color, due to their preference to stand out.

The results, however, were a bit more complex.

Preference for Uniqueness

Although the Japanese did choose the majority color and the Americans the minority color in the default scenario, the results between the two cultures were similar in the other three scenarios: the Americans and the Japanese were just as likely to choose either the majority or minority color.

These last three results indicate that both cultures prefer uniqueness in equal measure.

The results also show that each culture, in being the first to choose, is cognizant of other peoples’ desire for uniqueness and, therefore, may be reluctant to offend those who have yet to choose their colored pen.

But when the social situation becomes ambiguous, as in the default scenario, why do the Japanese assume the majority pen, when the results show that they prefer the unique pen just as much as their American counterparts?

This is where the preference for harmony comes in.

Do Not Offend

The default scenario reveals that the Japanese don’t necessarily prefer to conform; after all, they were just as likely to choose unique over conformity in the other three scenarios.

Rather, the Japanese prefer harmony over disharmony.

Yamagishi and his team concluded that the disparity was in the ambiguity: the desire not to offend is stronger in the Japanese than in the Americans, particularly in ambiguous social situations.

And why not offend?

One theory posed by Yamagishi is centered around interpersonal relationships.

Japan is a “closed society” regarding groups and relationships. By this, we mean that it’s considerably more closed to outsiders; if you’re not part of the in-group, you’re not welcome. In this way, it’s harder to replace lost relationships when you’ve offended someone.

The US, on the other hand, is an “open society.” It’s much easier to replace a lost relationship if one has caused offense.

This is why the Japanese avoid offending in ambiguous situations, which may come at the cost of their preferences on occasion. Group loyalty over self-loyalty, as we talked about last week.

The ambiguity of whether your choice of a unique pen may or may not offend someone is balanced against the cost of social rejection.

The result is this strategic and nuanced adaptation under differing scenarios.

How does this apply to the type of management style a culture prefers?

We’ll talk more about that next week.

Society Over Self: Collectivist Cultural Management

The core group in collectivist cultures is family.

And the definition of family differs across cultures, as we’ve previously discussed.

The West often considers the two-generational core to be “family,” while other cultures include extended relations – or even an entire village – under the umbrella.

Other “groups” in collectivist cultures include in-groups, like the company one works for, or society as a whole.

A group’s success and survival – whether the group is family, the village, the company, or society – ensures individual success and survival.

Because of this, harmony is valued in collectivist cultures, as is interdependence of individual members.

Children are socialized in groups early on in order to become interdependent.

Everyone depends on everyone else, because the group only survives as one.

Being recognized for individual achievement is almost unheard of; rather, collectivists work in tandem and share with group members – both their successes and their failures.

Group Loyalty = Self-Loyalty

In a collectivist culture, group loyalty is self-loyalty.

Think of it this way: society, a company, or a family is like a human body. Each member is a limb or an organ; each member is vital to the body’s function.

So, if one organ fails, the body fails.

If one limb is neglected, then the body isn’t functioning at its most optimal.

It’s with this mentality that collectivist cultures place a higher value on the group than the individual.

An individual’s personal goals and ambitions come second to the group’s overall success and well-being.

To return to our analogy, if a body’s personal goal or ambition was to win an arm-wrestling contest, so it pumped iron every day, focusing only on building up the biceps, but forgot about its legs or its core, then the arms might be able to succeed in meeting their ambition, but the rest of the body would suffer.

This is how collectivist societies view personal goals and ambitions.

Your arm (you, the individual) does not work alone.

A collectivist would sacrifice his own career goals for the sake of the group’s.

Society, First

When society comes first, self comes second.

This is one of the main reasons that in collectivist societies, management differs from individualist cultures.

Last week, we talked about how these differences clash through workplace incentives. “Employee of the Month” is one way in which management in individualist societies incentivize hard work.

But would this work in collectivist cultures? Not so much.

What would then?

We’ll talk about that more next week.

“Employee of the Month”: Self-Realization & Individualist Cultures

What is the “American Dream”?

The Commission on National Goals had the answer for President Eisenhower.

They reported that the primary motivator of American citizens was the possibility of individual self-realization.

What does this mean?

Pull Yourself Up By Your Own Bootstraps

The American Dream doesn’t often include the economic success and overall wellness of one’s neighbor or third cousin.

It’s a dream of one’s own economic success.

In individualist societies – like that of the United States, western Europe, and other Western countries – a person often identifies with themselves above all others and looks to satisfy his own needs before those of the group.

He also sees his path as one of self-determination. “Pull yourself up by your own bootstraps,” so to speak.

Self-reliance, personal freedom, and independence are the values glorified by individualist societies.

The individual is the smallest unit of survival.

Employee of the Month

This is why, at an American company, “employee of the month” is a successful incentive for productivity and improved performance in work culture.

The strong individualist culture means that employees will seek any way in which they can stand out from the pack in a positive light.

When your name and photo are posted on a bulletin board of achievement in the company lobby, recognition is your reward, and it fuels individualist motivation.

As a Swiss manager in the US, I appreciated the effectiveness of this reward system. So, I attempted to bring it back to Switzerland with me.

When I implemented “employee of the month” at the Swiss company I was managing, it fell flat. In fact, not only was it not a motivator, the reward system was met with immediate and breathtaking negativity on the staff’s part.

“This is ‘typical American,’” they said, adding that Swiss workplaces traditionally don’t single out individual successes, as they see success as a result of teamwork.

Although “employee of the month” type of recognition is frowned upon by Swiss companies, they are not so collectivist as to dissuade pay-for-performance or achievement-based promotion, also distinctions. The difference is, these are in-group and colleague-approved.

Collectivist Thought

On the other hand, a collectivist culture, which centers around group betterment, rather than individual development and freedom, would not even humor the idea of “employee of the month.”

An international survey asked managers from Egypt, China, Japan, and the US whether they agreed with the following statement:

“When individuals are continuously taking care of their fellow human beings, the quality of life will improve for everyone, even if it obstructs individual freedom and individual development.”

Who agreed?

  • 70% of Egyptian managers
  • 59% of Chinese managers
  • 61% of Japanese managers
  • 31% of US managers

We’ll talk more about that difference in mentality next week.

Individualist vs. Collectivist: How Important Am I?

Say, you were given a group project, involving teamwork and cooperation.

Your team includes you (of course), Paul, Lisa, and John.

Some of the tasks are more intensive and time-consuming than others. Some are tedious, some are simple, some require no brainwork at all.

As with most team projects, not all members invest the same amount of time and effort into the group project.

You complete 50% of the work on your own.

Lisa and Paul knock out about 22.5% of the work, each.

And John, who was a complete deadweight, contributes about 5%.

With the successful completion of the project, your group is awarded $20,000.

How should this award be distributed?

Individualists vs. Collectivists

“Distribute the money based on individual contribution. Those who did more work should be awarded more, while those who did less work should be awarded less.”

If this is how you answered, then you are likely from an individualist culture.

“The project was completed together, and a team is only strong as a unit. The fairest distribution would be an even split, in order to benefit everyone in the group equally.”

If this is how you answered, then you are likely from a collectivist culture.

“From each according to his ability…”

Craig Storti asks readers to complete the above exercise in his book, Figuring Foreigners Out.

He argues that each mentality – whether the distribution of the award should be even or based on contribution to the project – is based on what your culture teaches you is fair.

Individualist cultures believe fair distribution means being awarded according to one’s effort.

Collectivist cultures believe that fairness lies in the well-being of the whole group, no matter who contributed what.

Of all of Hofstede’s dimensions, some believe the differences between collectivist and individualist societies are the most important.

Social psychologist, Harry Triandis, is one of them. He stated:

“Perhaps the most important dimension of cultural difference in social behavior, across the diverse cultures of the world, is the relative emphasis on individualism versus collectivism.”

Individualist versus collectivist ideals do not apply only to the distribution of wealth, of course. The deep level thinking of an individualist versus a collectivist fundamentally impacts the way each lives their social life: whether one thinks as an individual or as a member of a group.

Hofstede wrote:

“Some animals, such as wolves, are gregarious; others, such as tigers, are solitary. The human species should no doubt be classified with the gregarious animals, but different human societies show gregariousness to different degrees. Here again then, we have a fundamental dimension on which societies differ: the relationship between the individual and the collectivity.”

Hofstede differentiates the two cultures by defining individualistic ties as “loose,” with each individual expected to look after only himself and those in his inner circle, while collectivist ties are integrated from birth, requiring individuals to be cohesive within a group, exchanging unquestioning loyalty for protection.

We’ll talk more about the differences between individualist versus collectivist cultures next week.

Hofstede’s Cultural Dimensions: Where Does Your Culture Fall Along the Scale?

Cultures differ.

That’s what Hofstede found in his research.

But in what dimensions can we categorize these differences?

And at what value does your culture fall along the scale?

Last week, we talked about how Hofstede’s research led him to designate four cultural dimensions.

With further research, he developed five.

Hofstede’s Five Cultural Dimensions

Hofstede’s five cultural dimensions scale the opposing extremes:

  • Uncertainty avoidance vs. uncertainty tolerance cultures –

We’ve talked extensively about uncertainty avoidance over the past few posts.

When valuing a culture’s uncertainty avoidance versus their uncertainty tolerance, ask yourself: Does the society prefer a stable environment? Is risk-taking avoided? Or does the culture promote innovation and demonstrate risk-taking behaviors and an ability to adapt quickly to uncertain events and changeable environments?

  • Long-term vs. short-term oriented cultures –

Some cultures want satisfaction here and now, while others are programmed to look toward the future.

Is this a culture of instant gratification? Or is the society accepting of delayed material, emotional, and social needs?

  • High-power distance vs. low-power distance cultures

Power distance has to do with a culture’s perception of the fair distribution of power. Some cultures strive for a level playing field, while for others, power is allotted to few.

Is equality preferred over hierarchy? Are subordinates accepting of their lower positions, or is there a more democratic power structure?

  • Collectivist vs. individualist cultures –

We’ve also discussed collectivist versus individualist cultures in this blog, with individualist cultures championing the success of the individual, while collectivist cultures are geared more toward the prosperity of the group.

Is the culture more family/group-oriented or does it promote individual ambition and achievement?

  • Masculine vs. feminine cultures 

The foundation of a masculine culture is based in more traditionally masculine traits and vice versa.

Does the culture thrive on competition and aggression? Or does it encourage cooperation and the nurturing of its community members?

Additional Cultural Dimensions

Piggybacking off of Hofstede’s research and insights, other researchers have identified further cultural dimensions, including:

  • Rule-based vs. relationship-based cultures –

In rule-based cultures, behavior is governed by rules and laws.

In relationship-based cultures, behavior is governed by one’s relationship with others.

  • Polite vs. rude cultures –

Polite cultures consider the feelings of others, while courtesy takes a backseat to justice in “rude” cultures.

Does the culture “turn the other cheek”? Or is “an eye for an eye” the motto?

  • Shame-based vs. guilt-based cultures –

Guilt-based cultures are primarily motivated by an internalized conscience, while the behaviors of shame-based cultures are motivated by the approval/disapproval of the group.

And the list goes on.

As research into cross-cultural differences progresses, the data discovered will, no doubt, paint a more intricate picture of the many dimensions in which cultures differ.

The data available to us now enables us to understand more clearly what motivates individuals from different cultural backgrounds – and how cultures operate, as a whole.

We’ll delve deeper into these dimensions next week.

The “Japanese Miracle” & “Culture’s Consequences”: Cross-Cultural Research Gains Ground

Imagine your country is number one.

Number one in economic growth.

That’s what Japan was experiencing between the end of WWII and the Cold War.

While the country was still behind the United States, it became the world’s second-largest economy after its defeat in WWII.

Termed the “Japanese Miracle,” Tom Peters and Robert H. Waterman were so interested in this economic boom that they wrote a book about it.

In Search of Excellence was written in the early ‘80s. It concluded that the Japanese outperformance of the Americans in terms of growth was due to differences in culture.

Culture and cultural studies were finally becoming a focal point to more than only those who studied social sciences. Big corporate CEOs were starting to see cross-cultural research as a tool for success in business.

Culture’s Consequence

In walks Hofstede.

As we discussed last week, Hofstede had discovered differences in culture while analyzing the outcomes of a company-wide survey for IBM.

In doing so, he offered the first scientifically-founded analysis of cultural differences in the workplace.

In 1980, he also published a book, Culture’s Consequences. By the turn of the century, Hofstede’s work had been cited more than 2000 times, with no empirical work as influential in the fields of psychology or culture.

According to Hofstede’s research, nations differed in four cultural dimensions.

The dimensions denoted sets of values, scaled from one extreme to the other. After surveying the populous of various cultures, each nation was valued between these two poles.

One dimension involved “Uncertainty Avoidance” – to what degree a culture’s members are comfortable/uncomfortable in unknown, surprising, or situations that differed from their cultural norm.

This dimension suggests which cultures maintain tradition and fear change and which are open to risk-taking and innovation.

The dimension of Uncertainty Avoidance was discovered when Hofstede looked at the survey’s responses to questions about work-related stress.

An example of a work-related question in the survey:

How often do you feel nervous or tense at work?

Answers ranged from “I never feel this way” to “I always feel this way.”

Another correlating question asked whether one should break company rules if doing so was in the best interest of the company.

Further, employees were asked if they had long-term plans to stay with the company.

The Results

The survey found that some cultures appreciated change, and these were the same cultures that were less affected by stress.

Those cultures that avoided change and were more affected by stress were often also more bound by rituals, laws, bureaucracy, and tradition.

For example, Latin American cultures are layered in procedures and rules and are considered “uncertainty avoiding” cultures.

Next week, we’ll talk about more of the dimensions discovered by Hofstede.