Earlier culture was defined by listing its five elements: values, rituals, symbols, beliefs, and thought processes. International marketers must design products, distribution systems, and promotional programs with due consideration of each of the five.
Underlying the cultural diversity that exists among countries are fundamental differences in cultural values. The most useful information on how cultural values influence various types of business and market behavior comes from seminal work by Geert Hofstede. Studying more than 90,000 people in 66 countries, he found that the cultures of the nations studied differed along four primary dimensions. Subsequently, he and hundreds of other researchers have determined that wide variety of business and consumer behavior patterns are associated with three of those four dimensions. The four dimensions are as follows: the Individualism/Collective Index (IDV) which focuses on self-orientation; the Power distance Index (PDI) which focuses on authority orientation; the Uncertainty avoidance Index (UAI), which focuses on risk orientation; and the Masculinity /Femininity Index (MSA) which focuses on assertiveness and achievement. The individualism/collectivism dimension has proven the most useful of the four dimensions, justifying entire books the subject. Because MAS has proven least useful, we will not consider it further here.
Individualism / collectivism Index: The Individualism / Collective index refers to the preference for behavior that promotes one’s self interest. Cultures that score high in IDV reflect mentality and tend to reward an accept individual initiative, whereas those low in individualism reflect a we mentality and generally subjugate the individual to the group. This does not mean that individuals fail to identify with groups when a culture scores high on IDV, but rather that personal initiative and independence are accepted and endorsed. Individualism pertains to societies in which the ties between individuals are loose; everyone is expected to look after himself or herself and his or her immediate family. Collectivism as its opposite pertains to societies in which people from birth onward are integrated into strong, cohesive groups, which throughout people’s lifetimes continue to protect them in exchange for unquestioning loyalty.
Power Distance Index: The Power Distance Index measures the tolerance of social in equality, that is, power inequality between superiors and subordinates within a social system. Cultures with high PDI scores tend to be hierarchical with members citing Social role, manipulation and inheritance as sources of power and social status. Those with low scores, on the other hand, tend to value equality and cite knowledge and respect as sources of power. Thus people from cultures with high PDI scores are more likely to have a general distrust of others (not in their groups) because power is seen to rest with individuals and is coercive rather than legitimate. High PDI scores tend to indicate a perception of differences between superior and subordinate and a belief that those who hold power are entitled to privileges. A low score reflects more egalitarian views.
Uncertainty Avoidance Index: The Uncertainty Avoidance Index measures the tolerance of uncertainty and ambiguity among members of a society. Cultures with high UAI scores are highly intolerant of ambiguity and as a result tend to distrustful of new ideas or behavior. They tend to have a high level of anxiety and stress and a concern with security and rule. Accordingly they dogmatically stick to historically tested patterns of behavior, which in the extreme become inviolable rules. Those with very high UAI scores thus accord a high level of authority to rules as a means of avoiding to rules as a means of avoiding risk. Cultures scoring low in uncertainty avoidance are associated with a low level of anxiety and stress, a tolerance of deviance and dissent, and a willingness to take frisks. Thus, those cultures low in UAI take a more empirical approach to understanding and knowledge, whereas those high in UAI seek absolute truth.