Tag: uncertainty avoidance

Cultural Values and the Negotiation Table: Unlocking the Impact of Individualism vs. Collectivism, Hierarchy, and Uncertainty Avoidance

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Negotiation, the art of reaching agreements, is not merely a transactional exchange of offers and counteroffers; it’s a complex dialect of cultural values, beliefs, and norms. 

Understanding how cultural values influence negotiation outcomes is essential for achieving results in the global arena. 

So, let’s take a look at the impact of cultural values such as individualism versus collectivism, hierarchy, and uncertainty avoidance on negotiation strategies and outcomes.

Individualism vs. Collectivism

Welcome to the boardroom.

On one side of the table: a U.S. company; on the other: a Japanese firm. 

While discussing a joint venture, their priorities differ, based on their individualist versus collectivist values.

The American negotiators emphasize their company’s strengths and seek to secure the best possible deal for their organization. 

The Japanese negotiators prioritize building trust, fostering mutual respect, and ensuring alignment with their company’s broader goals and values.

One of the most fundamental cultural dimensions impacting negotiation is the degree of individualism versus collectivism within a society. 

In individualistic cultures like the United States, negotiation is often approached from a competitive standpoint, with an emphasis on individual goals, autonomy, and personal achievement. 

Negotiators may prioritize their own interests and seek to maximize their outcomes, even at the expense of others.

Conversely, in collectivistic cultures such as Japan or China, negotiation is viewed through a communal lens, emphasizing harmony, cooperation, and group cohesion. 

Negotiators may focus on building relationships, consensus-building, and ensuring the well-being of the collective. 

In these cultures, concessions may be made to preserve group harmony and maintain long-term relationships.

Hierarchy

The boardroom, round two.

On one side: a German company; on the other: a Brazilian company.

While discussing a partnership agreement, their priorities differ based on their views of hierarchy.

The German negotiators expect a collaborative approach, with decisions made based on merit and expertise rather than hierarchical considerations. 

The Brazilian negotiators defer to senior executives and prioritize building rapport and respect for authority.

Hierarchy, or the degree of social stratification within a society, significantly influences negotiation dynamics. 

In hierarchical cultures like those found in many Asian and Latin American countries, respect for authority, status, and seniority plays a central role in negotiation interactions. 

Negotiators may defer to higher-ranking individuals, and decisions may be made by those in positions of authority.

In contrast, in egalitarian cultures such as those in Northern Europe or Australia, negotiation tends to be more egalitarian, with an emphasis on equality, meritocracy, and consensus-building. 

Negotiators may engage in open dialogue, challenge assumptions, and seek input from all stakeholders, regardless of rank or status.

Uncertainty Avoidance

The boardroom, round three.

On one side: a Swedish company; on the other: a Saudi Arabian company.

While discussing a business partnership, their priorities differ based on their level of uncertainty avoidance.

The Swedish negotiators are more open to exploring creative solutions and adapting to changing circumstances. 

The Saudi negotiators prefer clear agreements, detailed contracts, and a structured approach to minimize uncertainty and risk.

Uncertainty avoidance, or the degree to which a culture tolerates ambiguity and uncertainty, shapes negotiation outcomes. 

In cultures with high uncertainty avoidance, such as those found in many Asian and Middle Eastern countries, negotiators may prefer clear rules, detailed contracts, and predictable outcomes. 

Negotiation strategies may focus on minimizing risk and ensuring stability.

Conversely, in cultures with low uncertainty avoidance, such as those in the United States or Northern Europe, negotiators may be more comfortable with ambiguity and uncertainty. 

Negotiation approaches may be more flexible, adaptive, and open to innovative solutions, with less emphasis on rigid rules or formalities.

Come to the Negotiation Table Prepared

Cultural values – particularly individualism vs collectivism, hierarchy, and uncertainty avoidance – play a profound role in shaping negotiation outcomes, influencing everything from communication styles to decision-making processes. 

By understanding and respecting cultural differences, negotiators can adapt their strategies and approaches to navigate diverse cultural landscapes successfully.

Insightful Cross-Cultural Analogies: How Hofstede’s Power Distance & Uncertainty Avoidance Aid Understanding

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Power distance. Uncertainty avoidance.

We’ve discussed these two dimensions at length in previous posts.

Not only are they stand-alone aspects that aid cross-cultural understanding, but social psychologist, Geert Hofstede, has applied these two dimensions to create cultural analogies that help simplify foreign workplace environments.

Power Distance and Uncertainty Avoidance Review

These two dimensions relate to workplace behaviors.

Power distance is the degree to which cultures accept and expect the unequal distribution of power amongst members of organizations and institutions.

For instance, those employees in cultures of high power distance will not directly confront a superior; those employees and superiors in cultures of low power distance rely on communication and the consultation of each other, which de-emphasizes the hierarchical nature of status.

Uncertainty avoidance is the measure of acceptance and expectation for unpredictability and chaos in society.

Those cultures with high levels of uncertainty avoidance have a low tolerance for unpredictability and ambiguity, resulting in rule-oriented, law-abiding societies.

Those cultures with low levels of uncertainty avoidance have a high tolerance for the same, resulting in societies willing to take more risks, tolerate a wider variety of opinions, and not follow rules so strictly.

The Analogies

Arranging these two dimensions on the axes of a matrix, Hofstede produced a set of helpful analogies to better understand the work cultures of the United Kingdom, China, Germany, and France.

monkey_charts_CMYK-14

With its low uncertainty avoidance and low power distance, a typical English company is like a village market, in that it combines risk-taking with flat hierarchies, resulting in the classic entrepreneurial spirit.

Germany also shares the flat workplace hierarchies (low power distance) with the British; however, German culture has a high uncertainty avoidance, making typical German companies efficient and inflexible, more like a “well-oiled machine” or a clock. Rules are strictly followed, with decentralized decision-making and each equally important wheel working together.

The typical French company is described as a “royal court” or “pyramid of people.” The culture is one of high power distance, where everyone knows their place and decision-making is centralized. They also share high uncertainty avoidance with the Germans, meaning rules are strictly followed, resulting in a complex network of relationships across the levels of hierarchy. Power and authority are highly valued.

The best analogy for a Chinese company is that of a family with a head patriarch. Like France, China values high power distance and, like England, low uncertainty avoidance. This means that, despite having a typical hierarchical society that values company loyalty, risks and rule-bending are embraced, which has helped to position China as an economic superpower.

Although I can’t stress enough that analogies are never perfect and nothing is one-size-fits-all, they do allow managers to form mental models, aiding understanding in the workplace environments of foreign countries.

How to Cope in Uncertain Times: A Call for Ambiguity Tolerance

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These are uncertain times.

The current climate has everyone spinning, trying to make sense from the senseless and turn the upside-down rightside-up again.

With so much conflicting information, so many question marks and dashed plans, ambiguity tolerance has never been more important.

Last week, we talked a little about uncertainty avoidance and ambiguity tolerance. In this post, we’ll discuss how to develop the latter.

Low Ambiguity Tolerance = Little Room for Relativism

Parental and cultural ideologies teach us right versus wrong and good versus bad.

Racism, for instance, stems from these very distinctions. The concepts of good and evil are clearly defined in such extreme ideologies, leaving little room for relativism or doubt.

When a system has strong rules and norms, ambiguity tolerance is often lower.

Such norms and classifications also exist in cultures with higher ambiguity tolerance; however, there is greater wiggle-room, and classifications are more flexible.

People, situations, and ideas are still labeled and placed in boxes but said boxes are open and cardboard, allowing easier interchangeability, not hard and inflexible under lock and key.

Oftentimes, the more diverse a place is, the higher the ambiguity tolerance – both because there’s need for it in order to keep relative peace and because there’s exposure to others, hence less uncertainty.

No matter where you come from, you can improve your ambiguity tolerance to better adapt to places and situations that are strange to you.

In other words, you can improve your coping mechanisms instead of simply avoiding uncertainty.

Developing Ambiguity Tolerance

The following are some key ways in which to tolerate ambiguity:

  • Do Suspend Judgment – As we’ve spoken about previously, judgment in uncertain times (like now, during this pandemic) or in uncertain environments (like multicultural ones) does nothing but shut done your tolerance. Remaining neutral in your expression of personal opinions about the norms/behaviors of others and other cultures allows room to breathe and grow. When you leave your mind open, you enable yourself to explore the wider world rather than locking into a narrow mindset.
  • Don’t Assume – We all know what assuming does. Instead of assuming certainty about everything going on around you – assuming you know what and why and how things are happening – learn how to ask questions. Listen instead of speaking. Dig deeper, ask “why,” and encourage others to “tell me more.”
  • Do Consciously Relax – Those raised in rule-based cultures like things to be cut and dry. Those raised in low ambiguity tolerance cultures like one Truth as opposed to many truths. Stretching oneself outside of fixed ideologies causes stress, so learning how to deal with that stress takes conscious effort. Use meditation and deep breathing exercises – or any other personal relaxation methods – to help you de-stress and remain calm when you’re stretched. Making these conscious efforts will help you cope in cross-cultural environments and in uncertain times.
  • Don’t Hurry Yourself – Slow down. Now, is not the time to rush things. While you might be of the mantra that “time is money,” it’s important to slow down when the times or the environment calls for it. Taking time to examine, reflect, and give your full attention and care to cultures, people, and situations of uncertainty will ease the additional stress that a time-sensitive nature causes. Don’t be in a hurry to change yourself or to fully understand; allow yourself the time and care to adapt.

Uncertainty Avoidance and Ambiguity Tolerance: Accepting Uncertainty in a Foreign Culture

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For more than half a century, ambiguity tolerance has been a subject of research in various branches of psychology.

One of the premiere studies on the topic analyzed ethnic prejudices in California.

Personality, company culture, and national culture have since been measured by this variable.

One such expression of ambiguity tolerance was identified by social psychologist Geert Hofstede’s research under the umbrella of “uncertainty avoidance.”

Uncertainty avoidance

We’ve discussed Hofstede’s work in this area before.

The four cultural dimensions Hofstede first identified were:

For all intents and purposes, we’ll only be discussing the dimension of uncertainty avoidance in this post.

Hofstede describes this dimension as the idea that:

“What is different is dangerous.”

He anecdotally illustrates an example of this.

An elderly American couple finds themselves babysitting their grandchildren in a small town in Italy, while the parents are temporarily located there. The grandchildren are friends with local Italian children, who all enjoy playing in the central piazza.

So, there the American grandparents are, allowing their grandchildren to run free with little restriction. Accustomed to “free play,” they don’t stand in the way of their grandchildren messing about, even if they fall down and lightly hurt themselves.

The Italian grandparents, on the other hand, are on it. Not only are their grandkids not allowed for a moment out of their sight, but any hurts that befall them are conscientiously dealt with. The child is picked up and brushed off in an instant.

This illustrates the differences in ambiguity tolerance between Americans and Italians.

In general, Americans have higher ambiguity tolerance.

Safe versus dangerous and clean versus dirty are two distinctions that an Italian child learns first during primary socialization.

The American grandparents see nothing to worry about with the dirt and danger in the piazza. In fact, they see no dirt or danger there, whatsoever.

Ambiguity Tolerance Research Evolves

Ambiguity tolerance is directly related to Hofstede’s uncertainty avoidance.

Furnham and Ribchester define it in their research:

“Ambiguity tolerance refers to the way and degree to which an individual or group perceives and processes information about ambiguous situations or stimuli when confronted by an array of unfamiliar, complex, or incongruent clues.”

Ambiguous stimuli cause a person with low ambiguity tolerance to avoid, feel stress, and react hastily.

Someone with high ambiguity tolerance may seek out ambiguous stimuli, as they desire to engage with such interesting and challenging environments. 

As you might assume, entering into a foreign culture is an ambiguous enterprise. You are hit with unknown stimuli, so a high ambiguity tolerance – or your ability to develop it – is an essential attribute for a foreign manager.

We’ll talk more about how to do just that next week.

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

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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

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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.