Culture-mapping: A framework for understanding international B2b decision-making

Jonathan Fletcher, Managing Director, Illuminas Ltd.

Introduction

We may now live and work in a global economy, but business practice in different cultures is anything but uniform. When UK B2b businesses expand into new overseas markets, they need to develop an understanding of local businesses rapidly and cost-effectively. Often there is neither the time nor the budget available to conduct extensive exploratory research: the business needs to ensure that it orients itself in broadly the right direction as quickly as possible so that it can move on to generate more refined understandings and insights. This paper will present a framework for understanding decision-making in different business cultures that will enable B2b researchers confronted with a new market to ask the right questions quickly and not waste time and money looking in the wrong places for the wrong things.

The framework

Purchase decisions in any national market are influenced by a range of Factors. See Figure 1 below.

Figure 1. Factors influencing business purchase decisions

Cultural

Demographic

Macroeconomic

Geography

Climate

Regulatory

InfrastructuralBusiness peer practice

Anthropological determinants

Habits of . . . Thought

Feeling

Social interaction

Changing/ Controllable

Fixed/ Uncontrollable

Explicit

Implicit

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Culture takes it place amongst a number of other factors, most of which are fairly explicit and easy to measure. Culture represents a particular challenge though. As we shall see, it has a significant influence on economic and industrial behaviour and performance, but a large part of culture is implicit, unconscious and hidden from direct view.

Culture: The Hidden Dimension

Some cultural practices are explicit and easily visible. For example, the differences between the practices of different religions are, on one level, quite easy to see. Mosques, Churches and Buddhist temples look very different and the activities that go on within them - though all fairly easily recognizable as forms of worship - differ in quite obvious ways. But there is an implicit dimension of culture related to social interaction, cognition and perception that is in effect hidden in plain sight. The anthropologist Edward T Hall, one of the pioneers of cross-cultural studies, referred to this implicit culture as the ‘hidden dimension’ (Hall, 1977). Culture at this level has a profound influence on the way people behave but it is hard for people from one culture to even see how other cultures differ from their own because this implicit culture is a series of deeply ingrained habits of thought and feeling which are internalized and largely unconscious. Thus, when we look at another culture we are looking at a human phenomenon which the people in that culture are not wholly aware of themselves. Moreover, we are looking at it through the filter of our own cultural habits of mind, of which we ourselves are not fully aware. Thus it is doubly hidden from direct view.

The key formative period for acculturation at this implicit level appears to be childhood. There are a whole range of cultural traits – from the accent you speak with to your assumptions about what constitutes fairness and your attitudes to authority – which get transmitted in this way. The most complete and detailed theory about how this type of acculturation occurs is Judith Rich Harris’s group socialization theory (Harris, 2007). Her claim is that we acquire these implicit cultural traits – along with about half of our individual personality traits – through interaction with our peer group during the ultra-sociable phase of childhood between the ages of 2 and 15. The culture that is acquired at this stage is largely that of the parents of the children who form the majority of the peer group. Thus, although transmission of the culture occurs through the child’s peer group, it is normally the parents’ culture that gets transmitted –though altered to a degree as children adapt it to the context in which the peer group operates. Harris argues that because in most cases it is the parents’ culture that gets transmitted, it has been assumed that it is the parents who are the mechanism of transmission. But she provides powerful evidence and arguments against the idea that parents transmit culture directly.

Although it tends not to be accessible to direct introspection, implicit cultural differences can be

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read off from behaviour and by the use of subtle forms of questioning. Anthropologists, in particular, have developed a number of ways of probing this hidden dimension. The discipline of cross-cultural psychology has grown out of the work of anthropologists.

The 4 dimensions of hidden culture

The framework is based on 4 implicit cultural dimensions:1. Vertical discipline2. Cultural Dynamism 3. Trust4. Context Dependence

Vertical discipline and Trust are social-emotional dimensions. These influence people’s social judgments and the assumptions they make about social matters such as authority, fairness and group loyalty vs. individual freedom.

Cultural Dynamism and Context Dependence are cognitive-perceptual dimensions. They are related to the way groups see and think about the world and the importance that they attach to coming up with new ideas about the world.

Below we define each dimension in terms of the two ends of the spectrum on which they sit.

Vertical DisciplineHigh vertical discipline cultures – these cultures show a greater capacity for deferred gratification; a preference for saving and investment over spending; a tendency to take a long term view; the close alignment of mutual expectations between manager and managed/ leader and led; and a pronounced ability to adopt, and synchronise with, group goals.Low vertical discipline cultures – cultures at this end of the spectrum demonstrate a preference for immediate gratification; a preference for spending and debt over saving and investment; a tendency to take the short-term view; tension between manager and managed, suspicion of authority and difficulty forming and integrating within cohesive groups.

Cultural DynamismHigh Dynamism cultures – highly dynamic cultures demonstrate more rapid growth in literacy in early phases of industrial development and greater scientific innovation in late phases.Low Dynamism cultures – cultures which are generally less culturally dynamic, have slower growth in literacy rates and show less scientific innovation after industrial take-off.

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TrustHigh trust cultures – have a greater capacity to trust non-relatives/ strangers to keep their promises and in turn to keep the promises made to non-relatives/ strangers; a tendency to readily form associations based on shared interests rather than on family ties and the resulting proliferation of ‘intermediate institutions’ – i.e. institutions between family and state, such as political parties, trade unions, religious organizations, non-family-owned companies, charities etc; the ready acceptance and understanding of the notion that an organization can have an existence, with its own interests and objectives, distinct from the individuals that are currently members of it.Low trust cultures – typically display mistrust of non-relatives/ strangers to keep their promises and a willingness to break promises made to non-relatives/ strangers; a tendency to struggle to form associations based on shared interests rather than on family ties and a resulting lack of ‘intermediate institutions’; difficulty in accepting and understanding the idea that an organization can have an existence distinct from the individuals that are currently members of it and a tendency to view the organization as existing primarily to further the interests of kinship groups.

Context-dependenceHigh context dependence cultures – tend not to differentiate as strongly between context and object, instead accentuating connections or relationships between things rather than focusing on the things themselves. They favour synthesis over analysis and the whole over the part; focus on the group rather than the individual within it; rely on implicit understanding rather than explicit explanations and are guided by holistic intuition of context rather than by salient details isolated from the wider situation. High context dependence cultures are also less prone to the fundamental attribution error – i.e. the tendency to assume that the way an individual acts in one situation can be generalized across all situations – and tend to have a higher external locus of control – i.e. to believe that context, not just individual agency, is important in determining outcomes.Low context dependence cultures – tend to differentiate strongly between context and object and to focus on things themselves rather than on the web of connections or relationships between things. They favour analysis over synthesis and the part over the whole; focus on the individual (and the self) rather than the group of which he/she is a part; rely on explicit explanations rather than implicit understandings and tend to isolate salient details from the wider situation rather than being guided by holistic intuition of the context. Low context dependence cultures are highly prone to the fundamental attribution error, assuming personality is constant across contexts, and tend to have an internal locus of control – i.e. to believe that individual agency is key in determining outcomes.

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Rating countries on the 4 dimensions

The definition of the four dimensions, and the rating of countries in terms of the dimensions are drawn from a range of sources. The vertical discipline, cultural dynamism and trust dimensions are based on the work of the French demographer and anthropologist, Emmanuel Todd (Todd, 1985 and 1987) and the political scientist Francis Fukuyama (Fukuyama, 1995). Context dependence is based on the work of a number of cross-cultural psychologists such as Richard Nisbett (Nisbett et al, 2003) and John Berry (Berry et al 2006) and anthropologists such as Edward T. Hall (Hall 1977).

Emmanuel Todd on the political and cultural effects of family structure

Emmanuel Todd is a rarity in the academic social sciences in that he makes accurate predictions of major social and political events. His biggest coup was his first, his prediction in 1976 that the Soviet Union would collapse within a generation (Todd, 1976). Coming at the issue from a novel perspective, using a range of demographic data (such as a rapid decline in the birth rate in the Soviet Union in the early 1970’s) and ethnographic observations, his prediction was largely dismissed by academic political scientists, foreign affairs experts and Kremlinologists. But in 1989 Todd was proved spectacularly correct. In 2003 he apparently repeated the trick by claiming, at a time when US power seemed virtually unassailable, that America was living dangerously beyond its means and was unlikely to be able to sustain its position as the sole, global superpower in an increasingly multi-polar world (Todd, 2003). The military, economic and political events that followed seem to have confirmed his uncanny ability to see deep, causal structures and trends underlying complex social phenomena.

In the mid-eighties Todd published two books which explored the influence of family structure on various aspects of society. In the first, The Explanation of Ideology (Todd, 1985), he drew on the work of C19th French sociologist Frédéric Le Play and C20th Cambridge anthropologist, Peter Laslett (Laslett and Wall, 1972), to explain the global pattern of implantation of the major political ideologies in terms of different family structures. In the second, The Causes of Progress (Todd, 1987), he built on the same family structure hypothesis to make forecasts about the economic and cultural potential of different regions and countries.

The first two dimensions, vertical discipline and trust, are taken from The Explanation of Ideology. In this work, Todd classified family structures along two dimensions: liberty-authority and symmetry-asymmetry. Todd’s classification of family structures is shown in Table 1 below.

Table 1. Attitudes towards liberty and equality according to family type

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   Attitudes to equality

(defined by spouse selection and inheritance system)

Strong horizontal ties (i.e. ties between

brothers)

Weak horizontal ties (i.e. ties between

brothers)

   Equality Indifference Inequality

Attitudes to liberty (defined by type

of spouse selection)

Custom (least free)

Endogamous community family

(e.g. Saudi Arabia, Iran, Pakistan)

 Asymmetrical

community family (Southern India)

ParentsExogamous community

family (e.g. Russia, China)

 

Authoritarian family(e.g. Germany, Japan, Israel, Scandinavian

countries)

Free, with obligatory exogamy

Egalitarian nuclear family

(e.g. Northern France, Spain, Italy, Brazil)

Absolute nuclear family

(e.g. UK, US, Australia)

 

Free, without obligatory exogamy (most free)

 Anomic family(e.g. Thailand,

Indonesia, Malaysia) 

Todd’s hypothesis is that people’s attitudes to liberty and equality are determined by key features of family structure. Specifically, if it is the custom to divide the inheritance equally between sons, then the resulting political culture will tend to emphasise equality (at least, between males). If the custom is for the eldest son to inherit (‘primogeniture’ to give it its technical name), then the resulting political culture will emphasise inequality. If spouse selection is determined by custom or by parents then political freedom will be less important; if an individual is free to select their spouse, then freedom will be more important.

Researching family structure

Anthropologists have determined the family structures in a great many societies using a number of indicators such as rules of inheritance, marriage practices and taboos and patterns of co-habitation. For example, where parents have a strong influence over the eldest son (as in the Authoritarian family structure) the eldest son will be more likely to move in with his parents after he has got married. In the exogamous community family as found in China or Russia, there is a tendency for sons to live together with their parents after marriage. Very often of course, especially in modern industrial and post-industrial societies, such intergenerational households are impractical. But even where such households represent a fairly small proportion of the total, they are still far more common than are found in countries without that family structure and anthropologists find that these household structures remain the ideal to which people in the

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culture revert when they are able to do so.

The value of family structure as an explanatory variable

Family structure has a distinct advantage as an explanatory variable of current social phenomena: it is longstanding and robust in the face of social and political upheavals. Frédéric Le Play, who originated the study of family structures and first noticed the correlation between family structure and political views in his analysis of voting patterns in C19th France, noted that the different family structures in different French regions had remained stable for as long as records existed, going back well before the Industrial Revolution (Le Play, 1877-9). It used to be thought that the nuclear family in England was the result of the Industrial Revolution breaking up the extended family structure that existed in the C18th and earlier. But the work of Peter Laslett (Laslett and Wall, 1972) and social historian Alan MacFarlane showed that the nuclear family was the dominant domestic arrangement in England well before the Industrial Revolution. Indeed, MacFarlane attributes the early onset of industrialization in England to the greater geographical mobility and social adaptability that the nuclear family structure enables (MacFarlane, 1978).

This stability of family structures provides a solution to a problem that haunts the social sciences – the inability in non-experimental settings to identify the sequence in time of two correlated events or variables, and therefore to establish with confidence the direction of cause and effect between them. With family structure, there is seldom any doubt about this as it is almost always clearly the prior and more fundamental variable. That does not mean that there may not be some even more fundamental variable that causes both family structure and the social phenomena that it is correlated with. But even if that is the case, family structure would still be the lead indicator or predictor of the other variables with which it is correlated.

The political effects of family structure

The political effects of these differences in family structure can be readily seen. The Authoritarian family structure found in countries like Germany and Japan, recapitulates the preference for one son over all others in the inheritance of the patrimony in democratic systems in which one party tends to dominate, only very rarely, and briefly yielding power to another party. This is how the family structure manifests itself politically in its stable, democratic form. In less stable circumstances, this unequal division of social space can produce strong, ethnocentric political reactions. In large dominant countries this tends to result in imperialism and fascism, grounded in ideologies of racial purity – Japan and Germany in the 1930’s and 1940’s are the prime examples of this. In smaller countries it tends to produce a strong desire for

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autonomy from surrounding nations: this can take the form of a violent struggle, such as in Ireland or the Basque region; strong independence movements such as in Scotland or Quebec; or political neutrality or non-alignment, as in Switzerland and Norway. All of the countries just mentioned have an authoritarian family structure.

In terms of political economy the authoritarian family produces strong vertical discipline, the tendency to accept and respond to legitimate authority. Thus, authoritarian family societies tend to be fairly statist and corporatist. The state maintains very strong ties with industry and often directs industry in the best direction to take. Unions tend to work closely with management to achieve common goals.

Contrast this with the political culture in the UK and US. In the absolute nuclear family that is found in these (and indeed all Anglo-Saxon) countries, there are no culturally accepted rules about how the inheritance should be divided. Moreover, the lack of influence that parents have over decisions such as choice of spouse, can be seen in the very low incidence of households with grandparents, parents and children co-habiting. The resulting political culture is one where the party in power changes frequently. In the field of political economy, state involvement in industry is viewed with great suspicion and unions and management have an adversarial rather than consensual relationship.

In a similar way, Todd argues that the exogamous community family, with its tension between strong vertical discipline and strong horizontal ties, tends to produce communism (and violent revolution) and the endogamous family with its strong solidarity between male kin and attachment to custom tends to result in Muslim belief systems. (Note: ‘exogamy’ in this context refers to the practice of marrying outside the family group; ‘endogamy’ refers to the practice of marrying within the family group)

Vertical discipline as the inverse of liberty

So the first of our dimensions, vertical discipline, can be read-off fairly straightforwardly as the inverse of Todd’s ‘liberty’ dimension. (This is in effect what Todd himself does in The Causes of Progress). However, there are two exceptions where vertical discipline is not the inverse of the liberty dimension. In the Endogamous community family found in most Muslim societies, because spouse selection is largely a matter of custom, parental influence is relatively weak. Parents may try to ensure conformity with endogamous practice (the ideal being the marriage of a daughter to a first cousin or uncle on the father’s side), but the selection is largely a matter of conforming to accepted practice. As a result, although endogamous community families tend to attach lower importance to liberty, they have relatively low vertical discipline as it is custom,

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rather than parental authority, which is favoured over liberty. The other exception is the asymmetrical family structure. This is found only in Southern India and Todd attributes the Indian caste system to its complex structure.

The influence of horizontal ties on cultural dynamism and trust

Todd notes that equal division of the inheritance between sons engenders strong ties between brothers (or what he terms ‘horizontal’ ties). This is reflected in two ways in the wider social sphere: firstly, it results in cultures with strong male solidarity which tends to reduce cultural dynamism; secondly, it produces familism, an exaggerated tendency to trust members of one’s own family more than non-kin. Both of these have profound economic consequences. Todd himself develops arguments about the economic effects of horizontal ties in The Causes of Progress. Francis Fukuyama has written about the effects of familism on economic performance and industrial structure in his book Trust.

In The Causes of Progress Todd notes an inverse correlation between literacy rates and the strength of ties between brothers. In the nuclear family and authoritarian family structures these ties are weak; in the egalitarian nuclear and exogamous community family type family type, these fraternal ties are fairly strong; and in the endogamous community family type ties between brothers are strong - to the point where the ideal spouse for a son is a daughter of his father’s brother or a daughter of his own brother.

Table 2 below shows the literacy rates in a number of European countries in 1850 and the family structure type prevalent in each.

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Table 2. Literacy in Europe around 1850

Country Literacy rate Family type Horizontal ties

Sweden 90 Authoritarian Very weak (eldest son inherits)

Prussia 80 Authoritarian Very weak (eldest son inherits)

Scotland 80 Authoritarian Very weak (eldest son inherits)

England 65-70 Absolute nuclear Weak (free/ no norm)

Italy 20-25 Egalitarian nuclear Medium-strong (inheritance divided equally between sons)

Spain 25 Egalitarian nuclear Medium-strong (inheritance divided equally between sons)

Russian Empire 5-10 Exogamous community Medium-strong (inheritance divided equally between sons)

Source: Todd, 1987

Todd traces the causal link between fraternal ties and reduced cultural dynamism to anti-feminism. He argues that male solidarity implies a devaluing of women and a reduction of their authority in the home; as mothers are a key influence on children’s attitude to education, this reduction in authority results in a less positive attitude to education and a generally reduced cultural dynamism. Rich Harris’s recent critique of the idea that parental nurture directly influences personality might lead us to question the causal link between maternal authority and cultural dynamism. (Todd himself explicitly rules out the idea of any direct educational effect). It may be for example that greater male solidarity results in reduced competitiveness which because it is expressed in modern society in intellectual terms tends to reduce cultural dynamism. Whatever the precise causal mechanism, the correlation between the strength of ties between brothers on one hand and indicators of cultural dynamism such as the speed of the transition to mass literacy on the other, is strong.

In his book Trust Francis Fukuyama argues that, contrary to the rationalistic assumptions of neo-classical economics, the type of sociability in a society has a strong influence on its economic prosperity. Trust - the ability of individuals in a society to form voluntary associations with non-kin - is a key determinant of industrial success because it enables businesses to form and grow rapidly without the need to be bound together by ties of kinship. By contrast, Fukuyama argues, tight ties to social groups such as the family or clans hinder business growth because it makes it harder for non-kin to trust one another. Fukuyama identifies the US, Germany and Japan as high trust societies and China, France and Italy as low trust societies. The strength of horizontal ties appears to be the key factor in the familism that determines trust in the sense that Fukuyama uses it. Table 1 shows that that Fukuyama’s high trust societies (US,

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Germany and Japan) have weak horizontal ties whilst his three main low trust countries (China, France and Italy) have strong horizontal ties.

The major exception to the equation of weak horizontal ties and high trust is the ‘anomic’ family structure found in countries such as Thailand, Indonesia Cambodia and Singapore. Whilst inheritance rules in such societies are in practice flexible in much the way they are in the nuclear family model, there is also in practice a tolerance of endogamy (‘anomic’ means ‘without laws’). The resulting family structure, which Todd characterises as a ‘faulty nuclear family’ system, tends to result in a highly stratified, almost caste-ridden social system, in which people identify most strongly with a neighbourhood, village or social class. This has a fragmenting effect on civil society resulting in low trust between people from different groups.

Table 3 below summarises the way in which Todd’s classification of family types has been translated into the ratings on the first three dimensions of the framework.

Table 3. summary of conversion from Todd’s family typology into Vertical discipline, Trust and Cultural dynamism dimensions

 Vertical

discipline Trust Cultural dynamism

Absolute nuclear family Non-vertical High High

Authoritarian family Vertical High High

Egalitarian nuclear family Non-vertical Medium Medium

Exogamous community family Vertical Low Low

Endogamous community family Non-vertical Low Low

African Family systems Non-vertical Low Low

Anomic family Non-vertical Low High

Asymmetrical community family Vertical Medium Low

Source: Family types after Todd, 1985.

Hybrid family structures

Family structures do not always fit neatly within country boundaries and it is in the way of things that no typology exists everywhere in an entirely pure form. A number of countries embrace more than one family structure and some exhibit variations on the archetype to which they belong. France, for example, has all four major European family types within its borders, making it the ideal laboratory for Le Play’s original discovery of the influence of family type.

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Table 4 below shows the main hybrid family structure countries identified by Todd and the rating on the three dimensions given to them based on an assessment of their combined family structure characteristics.

Table 4. Countries with hybrid family structures and their ratings on the three dimensions

Country/ region Hybrid family type Vertical discipline Trust Cultural

dynamismDenmark Absolute nuclear /

AuthoritarianVertical High High

Netherlands Vertical High High

UK Absolute nuclear / Authoritarian Non-vertical High High

Poland Egalitarian nuclear/ Authoritarian

Non-vertical Medium MediumSpain Non-vertical Medium Medium

FranceEgalitarian nuclear/ Authoritarian/ Exogamous community / Absolute nuclear

Non-vertical Medium Medium

Italy Egalitarian nuclear/ Exogamous community Non-vertical Low Medium

South Korea Authoritarian family with patrilineal bias Vertical Medium High

Hong Kong Exogamous community with weakened male solidarity

Vertical Medium MediumRussia Vertical Low Medium

Finland Exogamous community/ Authoritarian Vertical Medium High

Lesotho African systems/ Egalitarian nuclear

Non-vertical Low LowSouth Africa Non-vertical Low LowCentral America/ Latin America (except Ven, Bra, Arg, Chi and Uru)

Anomic / Egalitarian nuclear Non-vertical Low Medium

India Asymmetrical community / Exogamous community Vertical Medium Low

Madagascar Anomic / African systems Non-vertical Low High

Source: Family types after Todd, 1985.

In some cases, the hybrid combination alters the overall characteristics of the society. Thus for example Denmark, although largely absolute nuclear, shows the strong influence, especially in urban areas, of the authoritarian German Hanseatic culture. So as a society it tends to exhibit the vertical discipline characteristic of the authoritarian family. The Netherlands, an absolute nuclear family society in the central coastal region around the Randstad, has an authoritarian family structure in the large eastern and southern regions of the country which lends it greater vertical discipline than it would otherwise have. Similarly, the low trust and low dynamism of the exogamous community family type that dominates numerically in Finland, is offset to a by

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the authoritarian influence of nearby Sweden and a significant band of authoritarian family structure on the south west coast of the country itself.

However, in other cases, the secondary family type may be too small or peripheral to influence the overall characteristics of the numerically dominant family type. Thus, whilst Scotland and Northern Ireland have an authoritarian family structure, the absolute nuclear family structure of the far more numerous and historically dominant English characterises the UK as a whole. Neither British industry nor its politics demonstrate vertical discipline to any significant degree.

The French hybrid is very complex. Todd himself treats France overall as primarily an egalitarian nuclear society and I have largely followed that in the ratings on the three dimensions. But clearly with so many family types in play the potential for diverse economic and cultural effects is high. De Gaulle, speaking of France, joked ‘One can't impose unity out of the blue on a country that has 265 different kinds of cheese.’ But the diversity of French society runs deeper than dairy produce, to the very anthropological base of the country.

India is a hybrid between the exogamous community family of the north of the country and the asymmetrical community family of the south. Whilst both have strong vertical discipline, the exogamous community family tends to result in relatively low trust and dynamism, whereas the south tends to result in quite high trust and dynamism. In the asymmetrical family system marriage between the children of two brothers or two sisters is prohibited, but marriage between the children of a brother and sister is held up as the ideal. This favouring of females over males in certain circumstances reduces horizontal ties and male solidarity which as we have seen tend to inhibit trust and dynamism. The dynamism of the south reaches its height in Kerala, one of the few parts of the world which, until the mid-C20th at least, had matrilineal inheritance customs. This has resulted in the remarkable dynamism of what has come to be known as the ‘Kerala Model’ of development. Through high standards of education, welfare programmes, and a comprehensive healthcare system, Kerala has ensured a high quality of life for its population despite low incomes caused by the considerable historical and geographical disadvantages it has suffered. In rating India as a whole on the three dimensions, the political dominance of the north has to be taken into account as does the global mobility of the population in the south (Kerala, for example, suffers from a significant brain drain, not to the north of the country but to oil-rich Middle Eastern countries such as Saudi Arabia). Thus, the exogamous community family is taken as the dominant model in India for the purpose of the ratings.

High and Low Context Dependence

The fourth dimension is context dependence. This is sometimes referred to in the comparative

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psychology literature in terms of the distinction between analytic and holistic cognition. There is no single source for this classification as no comprehensive multi-country study has been conducted. A general correlation has been established between analytic and holistic cognition on the one hand, and independent and interdependent social orientation on the other (see for example, Varnum et al., 2010). (See Tables 5 and 6 below).

Most studies in this area have focused on the differences between the West and the Far East and have found that Western societies tend to be more independent and more analytic, whereas East Asian societies tend to be more interdependent and holistic (see for example, Nisbett et al., 2001). Other studies have also shown that Russians are more socially interdependent than Americans and are more holistic in terms of their visual attention, categorization, attribution and reasoning (Grossmann, 2009). Croats have been shown to be more socially interdependent than Americans (Šverko, 1995) and also to be more holistic in their categorization and visual attention (Varnum, Grossmann, Katunar, Nisbett, & Kitayama, 2008). And Russians have been shown to be more socially interdependent than Germans (Naumov, 1996) and to show more contextual patterns of visual attention (Medzheritskaya, 2008).

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Table 5. Analytic and Holistic cognition defined

  Analytic Cognition Holistic cognition     Attention Field independent Field dependent  Narrow Broad  Focus on salient objects with

intent to manipulate themFocus on relationship of

element, background     Categorisation Taxonomic, focus on a single

dimension or shared propertyThematic, focus on functional

relationship or overall similarity

     Attribution Dispositional Situational  Traits and attributes of

individuals determine eventsExternal forces, context & situations determine events

     Reasoning Analytic Dialectical  Use of formal logic Middle way philosophy  Trends continue Trend reversals are likely

Source: Varnum et al., 2010

Table 6. Independent and Interdependent social orientation defined

 Independent Social

OrientationInterdependent Social

Orientation     Values & beliefs Individualism Collectivism  Autonomy Harmony     Self Independent Self Construal Interdependent Self Construal

  Personal social identity Relational social identity  Self as bounded Self as overlapping with close

othersEmotions Higher propensity of socially

disengaging emotionsHigher propensity of socially

engaging emotions  Happiness as a disengaging

emotionHappiness as an engaging

emotion     Motivation Individual achievement Achievement for in-group  Self enhancement Self-criticism  Ego-inflation Self-other interconnection

Source: Varnum et al., 2010

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The link between context dependence and social interdependence allows us to use Todd’s classification as the basis for classifying countries in terms of context dependence, where direct evidence from cross-cultural psychological studies does not exist. Table 7 summarises the allocation showing where it has been based on Todd’s classification and where exceptions have been made based on direct empirical evidence or other considerations.

Table 7. Context dependence classification

Todd's Family type

Context dependence

based on family

structure

Main exceptions based on other factors

Absolute nuclear Low

Authoritarian Low Japan and Korea - 'High' demonstrated by direct evidence

Egalitarian nuclear Medium

African Medium  

Exogamous community MediumFinland - 'Low' due to Authoritarian family influence. China, Vietnam, Hong Kong – ‘High’ demonstrated by direct evidence

Anomic / Egalitarian nuclear Medium  

Anomic High Sri Lanka - 'Medium' due to vertical and matrilineal characteristics

Endogamous community High  

The classification along the four dimensions for the 60 largest economies is shown in Table A1 in the Appendix. In the next section the classification is validated by showing how it predicts and correlates with a variety of economic and business measures.

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Economic and business impact of the cultural dimensions

In this section the four dimensions are profiled in terms of country level data drawn from a range of sources. T-Tests have been applied to the differences between the categories in each typology and for all data shown the differences between at least two classes in each typology are statistically significant at the 0.05 level. Details of the data sources used appear in Appendix 2.

Figure 2 below shows the average GDP per capita for countries of each type within the vertical discipline, dynamism and trust typology together with the correlations between GDP per capita an each typology.

Figure 2. Average GDP per capita (latest available) by Vertical Discipline, Dynamism and Trust

$21,659

$6,301

$27,501

$9,310

$3,058

$39,623

$12,347

$3,808

R = 0.43 R = 0.60 R = 0.76

Base sizes shown in brackets = number of countries in each categorySource: NationMaster

Clearly, the three cultural dimensions correlate strongly with economic prosperity as measured by per capita GDP. As the family structures from which these dimensions are inferred precedes economic development it is likely that these cultural dimensions have a more or less directly causal impact on economic success. There are technical difficulties in producing a definitive regression of GDP per capita against these dimensions, but analyses using a range of different

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regression methods converge on an estimate that about half the variance in GDP per capita can be explained in terms of these three cultural dimensions.

The remainder of this section validates and explores each of the four dimensions using a range of data sources.

Vertical discipline, deferred gratification and the long-term view

Vertically disciplined cultures show a number of very distinctive traits in regard to time. Family structures with strong vertical discipline, such as the authoritarian family type, are very concerned with maintaining the family property intact as it passes down the generations. This tends to give them a very long-term historical view. A prime example of this is the Pentateuch (the first five books of the Bible), which records the Jewish authoritarian family’s obsession with lineage in its long family lines connecting the prophets back to Abraham. But it also tends to give the cultures based on these family structures a long term view going forward.

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Table 8 shows data taken from Turner and Trompenaars (1993) for attitudes and ability to take the long-term view, split by vertical and non-vertical countries.

Table 8. Extent to which firms take a long-term view (Rank order)

Non-vertical Rank   Vertical RankNew Zealand 4   Japan 1Singapore 7   Sweden 2France 12   Germany 3Canada 14   Finland 5Thailand 14   Switzerland 6Malaysia 16   Norway 8Australia 18   Denmark 9United States 19   Netherlands 10Italy 20   Korea, South 11United Kingdom 22   Belgium 17Indonesia 23   Ireland 21Mexico 25   Austria 24Turkey 26   Hong Kong 28Brazil 27   Average rank 11Spain 29      Portugal 30      Greece 31      Average rank 20      

Source: Country ranking from Hampden-Turner and Trompenaar (1993); Table 7.1 Page 135

Eight of the top ten ranked countries for long-term view have vertically disciplined cultures. The average rank for vertical cultures is 11, nearly half the average rank for non-vertical countries.

Taking a long term view also enables a degree of deferment of gratification that non-vertical cultures struggle to match. This can be seen in data for the current account balance and for household savings rates. Figure 3 below shows the current account balance as a percentage of GDP for the largest 35 economies.

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Figure 3. Current Account balance as a percentage of GDP (2005 or latest year)

28.1

16.8

14.7

12.3

11.4

10.9

7.8

6.6

4.9

4.2

3.7

3.3

3.2

2.5

2.4

2.1

1.8

1.4

1.1

0.3

-0.6

-1.6

-1.6

-1.7

-2.1

-2.3

-2.6

-3.8

-5.8

-6.4

-6.4

-7.4

-7.9

-9.3

7.2

Saudi Arabia (NV)

Norway (V)

Switzerland (V)

Iran (NV)

Hong Kong (V)

Russia (V)

Netherlands (V)

China (V)

Sweden (V)

Finland (V)

Germany (V)

Japan (V)

Denmark (V)

Argentina (NV)

Belgium (V)

Canada (NV)

Korea, South (V)

Brazil (NV)

Austria (V)

India (V)

Indonesia (NV)

Mexico (NV)

France (NV)

Italy (NV)

Poland (NV)

Thailand (NV)

United Kingdom (NV)

Ireland (V)

South Africa (NV)

Australia (NV)

United States (NV)

Turkey (NV)

Spain (NV)

Greece (NV)

Portugal (NV)

1

Vertical

Non-vertical

Source: NationMaster

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Current Account surplus countries save more than they invest and export more than they import, whilst Current Account deficit countries invest more than they save and import more than they export. As Figure 3 shows vertically disciplined countries are much more likely to be in Current Account surplus, saving and producing more than they consume. Non-vertically disciplined countries are far more likely to be in Current Account deficit, spending and consuming more than they produce. The only real exceptions to this rule are the oil exporting countries, Saudi Arabia and Iran, whose economies are largely built on the extraction and export of oil which is a naturally occurring resource.

Table 9 below shows data from the IMD Competitiveness database that confirm the commitment of vertically disciplined societies to saving and investment in future

Table 9. Vertical and non-vertical countries compared in terms of saving and investment in R&D and science

  Vertical Non-verticalBase (27) (27)

Gross domestic savings as % of GDP, 2000-2010 28% 22%

Business expenditure on R&D as Percentage of GDP (2000-2009/2008 ) 1.2 0.5

Scientific research (public and private) is high by international standards (2010). 5.7* 4.2*

Source: IMD World Competitiveness Yearbook

* IMD Executive Opinion Survey. 0 to 10 scale, 10 = agree

The data indicate the greater commitment of vertical countries to the long-term. They have a greater propensity to save for the future; businesses invest more in R&D for long-term growth and they sustain generally higher standards of scientific research as perceived by businesses.

Trust; corruption and power distance

The most obvious consequence of low trust for a society is corruption. Where the main focus for sociability is the family and ties to non-kin are weak, nepotism, bribery and corruption flourish, often despite the best efforts of governments to eliminate them. The US struggled with

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corruption and organized crime in the early part of the C20th but its high trust culture meant that when the government made determined efforts to eradicate it, it was largely successful. By contrast, low trust Italy has never really won its battle against corruption despite the constant and often heroic efforts of the authorities (Reuters, 2010). Figure 4 below shows the strong correlation between perceived corruption and the degree of trust in a society.

Figure 4. Perceptions of corruption in low, medium and high trust countries (2005-2010 average)

Source: IMD World Competitiveness Yearbook

IMD Executive Opinion Survey. 0 to 10 scale, 10 = agree

Two exceptions to the inverse correlation between trust and corruption are Singapore and to some extent Malaysia. These anomic family cultures are low trust from a cultural point of view. However, their ratings on the above variable are 8.1 and 4.2 respectively. These demonstrate the potential, under the right circumstances, for vertical discipline to be imposed from above in anomic family cultures and to replicate other virtues such as trust by strong government action. The precise reasons why this has occurred in these two countries but not in other anomic countries such as the Philippines (0.9), Indonesia (1.4) or Thailand (2.0) are not entirely clear. But the fact that the very small country of Singapore has a far higher score than the far more populous Malaysia suggests that the size of the country is a factor. In a very small country desirable fundamental cultural traits can perhaps be replicated by a very strongly promoted national ideology – which Singapore certainly has.

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6.3

3.6

2.4

High Trust (20)Medium Trust (15)Low Trust (19)

Bribery and corruption do not

exist in my country - 0 = disagree 10 =

agree

R = 0.66

Another key factor which varies according to the level of trust in a society is power distance. This dimension was identified by Geert Hofstede (Hofstede, 2003). He derived it from a large scale study of IBM employees in 50 different countries. Hofstede defines power distance as the emotional distance between manager and managed. In high power distance countries employees tend to be afraid to disagree with their superiors, perceive their bosses’ managerial style as being autocratic or paternalistic rather than consultative and prefer their managers to act in this autocratic way (Hofstede, 2003, p25-28). Employees in low power distance cultures are not afraid to disagree with their superiors and prefer to work, in a consultative way with them.

Figure 5 shows the average of Hofstede’s index for the low, medium and high trust countries in his dataset.

Figure 5. Average power distance index in low, medium and high trust countries

Source of index scores for each country: Hofstede, 2003.

As might be expected, there is a strong inverse correlation between trust and power distance. Employees in high trust societies feel far less emotional distance between themselves and their superiors than employees in low trust societies. This relative closesness between manager and managed in high trust cultures has a number of consequences for business structures and practices. Table 10 below shows the views of the business executives from low, medium and high trust countries on a range of managerial practices.

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34.8

64.1

73.3

High Trust (18)Medium Trust (19)Low Trust (36)

Hofstede Power Distance Index

R = 0.71

Table 10. Managerial resources and practices in low, medium and high trust countries (2005-2010 averages)

  Low Trust Medium Trust High Trust

Base - number of countries (19) (15) (20)

Competent senior managers are readily available 4.5 5.2 5.9

Corporate values take into account the values of employees 5.7 5.5 6.7

Employee training is a high priority in companies 4.8 5.3 6.6

SMEs are efficient by international standards 5.0 5.3 6.7

Source: IMD World Competitiveness Yearbook

IMD Executive Opinion Survey. 0 to 10 scale, 10 = agree

Executives in higher trust cultures are more likely to perceive that competent senior managers are available than those from lower trust cultures. This perception is probably to some extent self-fulfilling. Fukuyama notes, for example, that family run businesses in low trust cultures in East Asia such as China are unwilling to hand over the running of the country to professional managers because they find it hard to trust strangers. As a result, the professional manager does not really exist in such countries. By contrast, in Japan, one of the few high trust societies in the East Asia, the role of the professional manager or banto is well-established (Fukuyama, 1995, p 75).

The lower power distance of high trust cultures is reflected in their far higher score for corporate values taking employee values into account. Higher trust economies are also more likely to make training a priority and businesses are more likely to view other businesses in the business base such as SMEs more positively.

A picture emerges of higher trust economies as being more cohesive and well-integrated than lower trust economies. However, this cohesiveness of high trust societies is not born of homogeneity. Rather it is the result of the fluid, spontaneous association of diverse individuals within a framework of objective standards which tend to be assumed to apply universally to individuals, whatever their status or family connections. One of the reasons that employee training is more highly valued in high trust societies is because it is valued by employees. So if employers don’t provide training, they are unlikely to be able to attract and retain staff who are

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able to move relatively fluidly between employers. This ability to move between employers is enabled by the general default position of trust that exists between strangers in high trust societies, and the infrastructure of contractual arrangements that protects both parties from those - generally exceptional - cases when there is a breakdown in this trust.

Table 11 shows the differences between high trust and low-medium trust societies on a range of measures taken from Hampden-Turner and Trompenaars (1993).

Table 11. Organisational structures, individual vs. social and objective norms in low/ medium and high trust societies

    High Trust Medium-Low Trust

Reference in Hampden-Turner & Trompenaars

(1993)   Base - number of countries  (9) (10)

 Box 5.1. (Page 95)1 Hierarchical slope of organisations: means, 1 = Steep, 2 = Moderate, 3 = Flat 2.6 1.2

Base - number of countries  (15) (7)Table 10.3 (page

251)2 Extent to which leaders delegate authority: means, 0 = low; 100 = high 63 51

  Base - number of countries  (9) (3)

 Table 3.1 (P 56)3 New employee judged by personal ability rather than ability to fit in: % respondents 77 53

4 Preference for individual honours to working together: % respondents 87 59 Table 3.2 (P 57)

  Base - number of countries  (6) (4) Table 9.1 (Page

209)5 Responsibility to corporation over responsibility to friend: % respondents 70 49

Base - number of countries  (9) (3)Table 2.2 (P 23)

6 Universal law preferred to friend: % respondents 80 50

Source: Hampden-Turner and Trompenaars (1993)

The scores on measure 1 show that, as their relative power distance index scores would lead us to expect, businesses in high trust cultures tend to have flatter organizational structures than companies in low trust cultures. Measure 2 is a natural corollary of this: in the flatter organizations of high trust cultures, where managers have to cover far wider spans of reports, delegation of authority is more important than in the steeper vertical hierarchies found in low trust cultures.

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Measures 3 to 6 reflect the way high trust societies enable the fluid movement of individuals between and within businesses in a context of objective, universally applicable norms. Measures 3 and 4 show how the focus is on the individual in companies operating in high trust cultures. Measures 5 and 6 are responses to hypothetical moral situations testing loyalty to a friend vs. loyalty to the corporation you work for and testing loyalty to a friend against universally applicable norms of behaviour (in this case, whether general principles of performance evaluation should apply to a colleague who is having trouble at home). These results show how the focus on the individual goes hand-in-hand with a commitment to judge individuals by general and universally applicable standards. Such universal standards can only work where the individual is the main focus of evaluation and the individual can only be disentangled from his various group affiliations if he can be judged on universally applicable standards. High trust is both the solvent that separates individuals from their various group affiliations and the attractive force that allows them to recombine in new groups with non-kin under a set of universal standards which all members of the culture are able to trust will be applied fairly and impartially.

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Cultural dynamism: pure and applied innovation and adaptability

Evidence for cultural dynamism can be found in a number of measures. Table 12 below shows how cultural dynamism is reflected in terms of pure innovation through the number of Nobel prizes that a country has won.

Table 12. Nobel prizes per capita Awarded in physics, chemistry, physiology or medicine and economics since 1950 per million people (as of 2010), by dynamism

High dynamism Nobel prizes per capita

Medium-Low dynamism

Nobel prizes per capita

Switzerland 1.53 Lithuania 0.31Norway 1.24 France 0.26Sweden 0.97 Hong Kong 0.14United Kingdom 0.92 Italy 0.08United States 0.84 Russia 0.07Denmark 0.72 Argentina 0.02Israel 0.66 South Africa 0.02Netherlands 0.48 Average 0.03Germany 0.37Austria 0.36Australia 0.31Belgium 0.28Ireland 0.22Canada 0.18Czech Republic 0.09Japan 0.09Average 0.37

Source: IMD World Competitiveness Yearbook

Countries with zero not shown but included in the averages

Another measure of the cultural dynamism of a country, this time in terms of applied innovation, is the number of patents granted to its residents in proportion to its total population. Data for this are shown in Table 13 below.

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Table 13. Number of patents granted to residents per 100,000 of the adult population, by dynamism (average 2005-2010)

High dynamismNumber of patents

per 100,000 of population

Medium-Low dynamism

Number of patents per 100,000 of

populationKorea, South 163.7 France 19.1Japan 113.5 Russia 16.3United States 34.1 Kazakhstan 12.5Sweden 22.6 Italy 10.5Finland 21.5 Ukraine 9.4Germany 19.3 Spain 5.8New Zealand 14.4 Greece 3.7Austria 13.3 Poland 3.4Netherlands 13.3 Romania 3.2Slovenia 12.9 China 2.4Singapore 12.1 Lithuania 2.1Norway 11.5 Hungary 1.8Ireland 8.4 Portugal 1.3Switzerland 7.4 Bulgaria 1.3Israel 7.2 Estonia 1.2Australia 6.3 Hong Kong 0.9United Kingdom 6.3 Croatia 0.9Canada 5.7 Turkey 0.3Belgium 5.2 Jordan 0.2Luxembourg 4.9 Mexico 0.2Czech Republic 3.2 Chile 0.2Denmark 3.0 Brazil 0.2Malaysia 0.8 India 0.1Thailand 0.2 Average 3.7Average 20.4

Source: IMD World Competitiveness Yearbook

Countries with zero not shown but included in the averages

Comparing the figures in Tables 12 and 13 shows that amongst highly dynamic countries some, such as Japan and South Korea, place rather greater emphasis on applied innovation than on pure innovation, whereas others, such as the UK, place greater emphasis on pure rather than applied innovation. Still others, such as the US and Sweden, excel in both areas.

This cultural dynamism can also be seen in businesses’ perceptions of their own countries. Businesses executives working in high dynamism countries perceive scientific research to be of a high level and are more likely to view knowledge transfer between companies and universities as being highly developed (see Table 14, below).

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Table 14. Number of patents granted to residents per 100,000 of the adult population, by dynamism (average 2005-2010)

  High Dynamism

Medium-low Dynamism

Base - number of countries (25) (29)

Scientific research (public and private) is high by international standards (2010). 6.4 3.6

Knowledge transfer is highly developed between companies and universities (average 2005-2010). 5.6 3.9

Innovative capacity of firms to generate new products, processes and/or services is high in your economy. 2010 6.5 4.6

Adaptability of companies to market changes is high, (average, 2001-2010) 6.3 5.3

The value system in your society supports competitiveness (average, 2005-2010) 6.4 5.2

Source: IMD World Competitiveness Yearbook

IMD Executive Opinion Survey. 0 to 10 scale, 10 = agree

Table 14 also shows that firms in high trust societies have greater ability to innovate and are more adaptable. The higher average rating for a value system that supports competitiveness amongst high trust societies may reflect one of the underlying causes of cultural dynamism – the fact that in non-familial societies competition between individuals is greater, and provides a spur to higher achievement in terms of innovation.

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Context dependence, clarity and confusion

As a result of the underlying social interdependence, context dependence correlates highly with measures of collectivism vs. individualism. For example, the correlation between context dependence and Hofstede’s Individualism dimension = 0.615. Table 15 below highlights a very specific aspect of the social interdependence component of context dependence.

Table 15 . Agreement with statement ‘Manager should have at hand precise answers to most questions his subordinates may raise about their work’ by context dependence

Low Context Dependence

Manager should have all the

answers  Medium Context

Dependence

Manager should have all

the answersSweden 10   France 53

United States 18   Italy 66

Denmark 23   Average 60

United Kingdom 27     Manager should have all

the answersSwitzerland 38   High Context Dependence

Belgium 44   Indonesia 63

Germany 46   Japan 75

Average 29   Average 69

Source: Hampden-Turner and Trompenaars (1993). Table 13.5.1. (Page 361).

What is being measured by the question in Table 15 might be termed the importance of not losing ‘face’. Countries with medium context dependence cultures such as France and Italy score almost as high on this as high context East Asian societies such as Indonesia and Japan.

Witmeyer (1978) conducted an analysis of the language used by delegates to the United Nations Security Council from 31 countries. He classified delegates’ contributions to debates as ‘objective’, ‘co-subjective’ or ’subjective’. This typology maps onto the analytic-holistic (or low context dependence - high context dependence spectrum). Thus, Witmeyer defines the subjective cognitive style as being ‘diffuse’, reflecting a ‘collectivity-orientation’, relying on nonverbal cues and correlating ‘with field-dependence and with global and relational cognitive styles’. At the other end of the spectrum the objective cognitive style tends to be ‘articulated’ and ‘achievement-oriented’ and correlates with high field-independence, and ‘analytical cognitive styles’. Co-subjective cognitive styles fall somewhere between these two poles, but slightly closer to the objective end in terms of field-independence.

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Figure 6. Cognitive dependence rating by Witmeyer’s cognitive classification

5841

20

36

47

34

6 12

46

Low Medium High

Context dependence rating

% Contributions to UN Security

Council debates

Subjective

Co-subjective

Objective

It certainly should not be thought that low context dependence is naturally superior to high context dependence. Low context dependence cultures have a tendency to make serious errors as a result of failing to take context fully into account. Nowhere is this more clearly seen than in the sphere of the social sciences and related areas of business, financial and economic management. For example, Gordon Brown admitted in a recent speech that the regulatory system put in place when he was Chancellor had been devised on the assumption that ‘the problem would come from the failure of an individual institution’. But the real danger was from the interconnectedness of the institutions, the relationships between them. ‘We didn't understand how risk was spread across the system, we didn't understand the entanglements of different institutions’ (BBC News online, 2011). This is exactly the type of error which a low context dependence bias in thinking makes more likely – the focus on single things or phenomena and failing to pay attention to the relationships between them.

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The impact of culture on business decision-making

In this section we look at the consequences of the four dimensions for decision-making styles and summarise how the dimensions combine to shape decision making archetypes for some of the main economies. There is only room here for the broadest of sketches of these archetypes

Models of B2b decision-making

There are four core models with variants on each in terms of context dependence and degree of dynamism and trust.1. Vertical + High Trust + High Dynamism 2. Vertical + Low-Medium Trust + Low-Medium Dynamism 3. Non-Vertical + High Trust + High Dynamism 4. Non-Vertical + Low-Medium Trust

Core model 1 – Vertical + High Trust + High Dynamism,

This group sub-divides into low context-dependence variants found in Northern Europe such as Germany, Switzerland, Sweden, Norway and to a degree the Netherlands plus Israel; and the East Asian high context-dependence variants of Japan and South Korea.

These variants have certain common characteristics. Their vertical orientation gives them a natural tendency to form stable organizational hierarchies and to take the long-term view. Partnerships and networks are very important to economies such as Germany with its bank-centred industrial groups, Japan with its Keiretsu networks of businesses with integrated relationships and shareholdings, and South Korea with its Chaebol conglomerates linking businesses in several industries. These tight partnerships extending over long periods can make it difficult for new suppliers to break into these markets.

Business purchase decisions in these cultures tend to be made on the basis of what is best for the company and vertical discipline enables individuals to identify with their company’s interests to a high degree. The question, ‘How will this decision affect me?’ is not the first one that occurs to a buyer in these cultures as it can be in our own culture. Pitches which work with purchasers in our own culture, such as ‘This will make your working life easier’ or ‘This will make you look good to your boss’, are unlikely to work in these vertical, high trust cultures. Time-saving benefits, for example, have to be couched in terms of the wider benefits to the company – i.e. greater efficiency – or possibly in terms of the wider values of the society in which the company operates – ‘This will help you conform with the EU working-time directive’!

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German decision-making units and processes can at first seem quite chaotic with many people involved whose roles are not always clear to the outsider. But out of this complexity and lively debate, structure and consensus emerges very rapidly because employees tend to have a strong internalized sense of the overall goals of the business as a whole. If the decision sometimes takes longer than it would in a UK company, it is only because a wider range of factors and longer time horizon is being considered.

In high context dependence variants of this model, this identification with the company combines with social interdependence to produce a very collective model of decision-making. Business-to-business respondents in Japan often insist on their immediate superiors being present in order to ensure that ‘they give the correct answer’. To Western eyes this can sometimes seem like evidence of a centralized approach to decision-making. But in fact Japanese companies are highly decentralized. Rather it is the combined effect of vertical discipline, which involves understanding implicitly what is in the business’s best interests, and high context dependence which requires the employee to be seen to be giving due respect to those around him or her. There is seldom much disagreement between respondents in these interviews – that is in a sense the whole point, to display an harmonious level of consent.

Another distinctive characteristic to look out for in purchase decisions in these cultures is the influence of the non-rational or irrational. We tend to view countries such as Japan and Germany as very well-ordered and rational, which by and large they are. But this level of discipline and integration can take its toll psychologically. For example, vertically discipline societies have higher suicide rates than non-vertically disciplined societies. These psychological pressures have resulted in cultures developing pressure valves, areas of life where people are free from internalized discipline. In Germany for example, this can be seen in everyday practices such as the freedom of German autobahns or the relaxed attitudes to public nudity and sex. It can also be seen in the anarchic political culture of Berlin, with its tradition of political protest. At its limit this can result in a quite pronounced dualism in these societies. For example, the split in German culture between the scientific and the Romantic or the division between public and private morality in Japan.

This non-rational influence is more commonly found in consumer and small business decision-making than at the corporate level, at least in our experience. And it can be difficult for outsiders to spot. For example, Germans purchase a great deal of white paint to decorate their homes. But a high proportion of this white paint is used as a base from which consumers hand-mix a variety of colours using home tinting kits - often with quite bizarre and gaudy results. The use of white paint is consistent with the rather stereotypical way we view German culture, as

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being controlled, clinical and clean. But the wild, freehand self-mixed colours express a deeper, non-rational exuberance and self-expressiveness which the stereotypical image obscures.

The high dynamism of these cultures makes them relatively open to novelty and new ideas, but their internal discipline makes them very active in filtering and adapting new ideas. Germans, for example, apply strong filters to ideas coming in from the outside and adopt only those which serve a clear purpose. Japan’s approach is to be less selective but to synthesise and assimilate imported ideas with their own innovations

Core model 2 – Vertical + Low-Medium Trust + Low-Medium Dynamism + Medium- High context-dependence

This group includes China, Russia and India with China sitting at the low trust, low dynamism and high context dependence end of the spectrum, Russia at the medium trust, medium dynamism and medium context-dependence end and India somewhere between the two poles.

The key defining feature of this model is the tension created by strong vertical discipline combined with strong horizontal ties which result in lowered trust and dynamism. This creates complex power dynamics, with those in authority trying to impose vertical discipline which is accepted up to a point by those who are managed but simultaneously resented and sometimes resisted by them. In these circumstances apparently small cultural details can assume great significance as people attempt to preserve small privileges and comforts from otherwise dominant vertical discipline. For example, it has been argued that Gorbachev remains a marginal and unpopular figure in Russia, despite his very high standing in the West, because when he came to power he attempted to reduce vodka consumption by hiking the price and limiting its sale!

Unlike high trust societies like Germany and Japan, in lower trust societies such as China and Russia, vertical discipline is only partly accepted by subordinates, with the result that it has to be exercised more forcefully and explicitly. This leads to far greater centralization at every level of the economy. The state has quite a high, and not always welcome or necessarily beneficial, involvement in determining the direction that industry takes; and senior managers exert far greater control and influence over the decisions of their subordinates. Businesses in these cultures often have quite bureaucratic structures which may be overridden by those at the very top or the organization when they see the necessity for doing so.

This centralisation can make B2b research and marketing quite challenging because it is

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difficult to get far enough up the organization to reach the true source of decision-making power. This problem is compounded by the tendency for subordinates not to want to admit to the level of control which their managers have over them. Status is generally of quite high importance in these societies, so appeals to status are often an important lever in marketing a product or service.

In the high context dependence variants of this model found in East Asia (e.g. China and Vietnam) the opacity of this type of organizational culture is exacerbated by the tight web of implicit, contextual understandings which bind people within the culture together but which are hard for those outside the culture to read and navigate. Access and understanding are the main challenges for B2b researchers in these cultures.

These cultures tend to have lower dynamism than is found in the Core model 1 cultures such as Germany and Japan. This is especially true of China and India. Although both produce very highly educated and creative individuals (as most cultures do) the culture itself tends not to support them, so they end up becoming part of the brain drain to places such as the US. New ideas often don’t sit very comfortably within the culture which means that novel applications or solutions have to be positioned or packaged in a way which minimises the shock of the new. Chinese companies often acquire entire foreign companies primarily for the design capabilities that they offer, because they have learnt that it is important to retain the company surround as an ecosystem to protect the innovation processes within it.

Core model 3 - Non-Vertical + High Trust + High Dynamism + Low Context

This group comprises the English-speaking cultures found in Australia, Canada, New Zealand, United Kingdom and the United States. The difference between the cultures in this group and cultures like Germany and Japan is the relative lack of vertical discipline in the Anglo-Saxon cultures. This single, underlying difference has a number of consequences for the way business gets done in these economies:

Short-termism: focus on the short term, normally the financial quarter or year, is a chronic problem for economies such as the UK and the US. John Maynard Keynes, when trying to convince economists of the need for national governments to intervene more in economies couched it in a way that appealed to the British preference for short-term thinking when he wrote that ‘in the long run we are all dead’ (Keynes, 1923). This could serve as the motto for these economies. The short-termism of business is reinforced by the very frequent changes of ruling party in these democracies, which make it difficult to maintain consistent

35

industrial policies. Atomisation: High trust and high dynamism combined with low vertical discipline make for

very radical decentralization of business structures. Organisations are very flat, spans of control are very wide. In order to maintain order in such organizational structures, accountability often has to be ensured by multiple reports. Aspects of a market structure are often reflected within businesses. For example, we increasingly find something approaching (and often described as) a client-supplier relationship between different parts of the same business.

Objectification: The combination of low context-dependence and atomisation tends to result in highly analytical thinking processes in which phenomena are isolated by stripping away their context. This would not be such a problem were it not for the fact that its relationships with other phenomena tend to then be neglected with the result that analyses fail to engage with reality. Neo-classical economics, with its extreme abstractions and simplifications of real-life economies, is in the dock at the moment because of its perceived role in the recent financial crisis. But business and economic decision-making in countries like the US and UK is shot through with this same decontextualising logic.

Businesses and economies in these cultures are highly fluid. The geographical mobility resulting from the weak ties between generations within a family (that MacFarlane claimed was so important for the early industrialization of the English economy in the C18th) can still be seen in the fluid nature of economic relations in English-speaking countries. Employees move between organisations very regularly; businesses rise and fall or are recombined into completely new entities; even entire regions sink into neglect only to be revived by entrepreneurial activity and gentrification. Nowhere is Marx’s dictum that in capitalist societies ‘all that is solid melts into air’ more obvious than in economies like the UK and US. (For vivid descriptions of these tendencies see for example, Bauman, 2007, and Borgmann, 1992. For a critique of the more extreme claims made for the ‘liquid’ nature of modern life, see Doogan, 2009).

The other strong trend in these cultures is ruthless commoditisation. Other cultures follow but it tends to be the Anglo-Saxon cultures that have lead the way in off-shoring and outsourcing and generally doing everything possible to drive costs down as far as possible. This approach was even adopted in what many take to be the summit of achievement for these cultures, the US space programme. Hence astronaut Alan Shepard’s quote ‘I wasn’t scared, but I was up there looking around, and suddenly I realized I was sitting on top of a rocket built by the lowest bidder.’

The main focus of B2b marketing and research in businesses in these cultures is the individual employee. They are generally fairly easy to get to and when you do get to them your task is to

36

find out what makes them personally tick in their current role. This may be the desire to look good in front of their superiors, an easier working life or the novelty interest of something new. In such an atomized society it could also be something which relieves the loneliness and personal exposure which employees in positions of responsibility often feel.

Core model 4 - Non-Vertical + Low-Medium Trust

This fourth core model covers a very wide range of cultures which differ considerably, especially in regard to their dynamism and context-dependence. What all these cultures share to some degree is that they all need to find a solutions to the problem of coordinating large scale business and economic activities in cultures where horizontal ties (resulting in lowered trust) are stronger than vertical ties. At one end of the spectrum are hybrid cultures such as France, which have sufficient resources of vertical discipline to solve this problem and produce great wealth and prosperity as a result. At the other end of the spectrum are countries such as Pakistan and Bangladesh, where the imbalance between horizontal and vertical ties is very large and is exacerbated by low dynamism, high context-dependence and poor natural resources, resulting in generally low levels of economic development. In between these two extremes are countries such as Italy and Spain, which are closer in kind to France but lack any significant vertical elements in the anthropological base; and countries such as Thailand, Malaysia and Singapore, where the lack of vertical discipline and trust is compensated for to some degree by very high dynamism (and in the case of Singapore, by its small scale enabling a national ideology to substitute for the lack of naturally occurring cohesion).

The overarching feature which all these cultures share when it comes to business decision-making is a tendency to consult in all directions and a problem coming to a final decision. In large businesses in Southern Europe, this tendency is not all that marked. The large number of people who attend certain meetings and the slightly lengthy consultation periods in such countries sometimes seem unnecessary from a US or British perspective. And sometimes it can seem as if the consultation is a rubber-stamping exercise, just to ensure ‘political’ buy-in from key power centres in the organization. However, important things are often learned during this process of trawling for consensus, and whilst in rapidly changing or growing markets, the process can result in damaging delays in getting new products or services to market, it can also mean that expensive mistakes due to poorly thought through decisions are avoided.

However, at the extreme end of this spectrum, in endogamous family regions, it can be a problem to get anyone but a senior member of the family who owns the business (and most businesses in these regions are family owned) to make even the smallest decision. The decision-

37

making process in businesses within these cultures can be hugely protracted. The relatively high-dependence nature of these cultures can also make it very difficult for an outsider to work out what stage deliberations have reached, or even whether it makes sense to think in terms of ‘stages’ to the process at all. Patience is an important virtue when dealing with these businesses.

For businesses in these cultures, personal relationships and stable partnerships tend to be highly valued, as they are a means of overcoming issues of low trust and so de-risking purchase decisions. Obtaining the trust of a buyer in these cultures often takes time and it may require a number of face-to-face meetings before people are prepared to start negotiations in earnest. Status can be important as well. Where context-dependence is high the trust problem is compounded by the subtle and often tacit nature of norms of behaviour. You can completely fail to read someone’s intentions or state of mind by overlooking key aspects of the context in which you find yourself. If this seems hard to appreciate, imagine your own feelings as an English person confronted with someone who fails to notice your expressions of discomfort in an embarrassing situation or is unable to defuse such a situation with a joke.

How and when to use the framework

The purpose of this framework is to provide initial hypotheses about how decision-making is structured and carried out in different cultures. Used in this way, it can help as prop to understanding what is going on in a foreign culture. By being grounded at a general and fundamental level, an initial understanding based on the framework can be refined, and in any particular case it is quite possible that the initial hypothesized rating on a dimension is rejected in favour of an alternative rating on that dimension. The framework classifies countries in terms of their central tendencies, and any particular business or sector in a country may differ from the country average. The key point is that these four dimensions appear to be fundamental to the way business is conducted in any culture, and identifying where a decision-making process sits along these dimensions can be very useful in making sense of what is going on with the process.

We’ve found the framework useful in two types of situation: 1) in emerging markets where a client is about to enter (or has just entered) a market and wants to get a good understanding of the fundamentals of the market quickly and without spending a lot of money (returns can often be uncertain for reasons unrelated to the level of commitment a company makes in a market so a light touch approach is often necessary); 2) where previous attempts to understand consumer or buyer behaviour have met with limited success for reasons which no one seems to be able to identify - in this case it is likely that it is a hidden, cultural issue that is to blame and reframing existing data (or reframing the brief for a new project) using the culture map outlined in this

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paper can help to unblock the understanding process.

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APPENDIX 1

Table A1. Largest 60 economies rated on the four variables

Country Vertical Dynamism Trust Context

Algeria Non-vertical Low Low HighArgentina Non-vertical Medium Medium MediumAustralia Non-vertical High High LowAustria Vertical High High LowBangladesh Non-vertical Low Low HighBelgium Vertical High High LowBrazil Non-vertical Medium Medium MediumCanada Non-vertical High High LowChile Non-vertical Medium Medium MediumChina Vertical Low Low HighColombia Non-vertical Medium Low MediumCzech Republic Vertical High High LowDenmark Vertical High High LowEgypt Non-vertical Low Low HighFinland Vertical High Medium MediumFrance Non-vertical Medium Medium MediumGermany Vertical High High LowGreece Non-vertical Medium Medium MediumHong Kong Vertical Medium Medium HighHungary Vertical Medium Medium MediumIndia Vertical Low Medium MediumIndonesia Non-vertical Medium Low HighIran Non-vertical Low Low HighIreland Vertical High High LowIsrael Vertical High High LowItaly Non-vertical Medium Low MediumJapan Vertical High High HighKazakhstan Vertical Low Low MediumKorea, South Vertical High Medium HighKuwait Non-vertical Low Low HighLibya Non-vertical Low Low HighLuxembourg Vertical High High LowMalaysia Non-vertical High Low HighMexico Non-vertical Medium Low MediumMorocco Non-vertical Low Low HighNetherlands Vertical High High LowNew Zealand Non-vertical High High LowNigeria Non-vertical Low Low MediumNorway Vertical High High LowPakistan Non-vertical Low Low HighPeru Non-vertical Medium Low MediumPhilippines Non-vertical High Low HighPoland Non-vertical Medium Medium MediumPortugal Non-vertical Medium Medium MediumRomania Non-vertical Medium Medium MediumRussia Vertical Medium Low MediumSaudi Arabia Non-vertical Low Low HighSingapore Non-vertical High Low HighSlovakia Vertical Medium Medium MediumSouth Africa Non-vertical Low Low LowSpain Non-vertical Medium Medium MediumSweden Vertical High High LowSwitzerland Vertical High High LowThailand Non-vertical High Low HighTurkey Non-vertical Low Low HighUkraine Vertical Low Low MediumUnited Kingdom Non-vertical High High LowUnited States Non-vertical High High LowVenezuela Non-vertical Medium Medium MediumVietnam Vertical Medium Low High

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APPENDIX 2

Countries included in the main data sources

Hofstede (1994)

IMD World Competitive-

ness Yearbook

Hampden-Turner and Trompenaar

(1993)

Witmeyer (1978)

Hofstede (1994)

IMD World Competitive-

ness Yearbook

Hampden-Turner and Trompenaar

(1993)

Witmeyer (1978)

Argentina 1 1 . 1 Lebanon 1 . . .Australia 1 1 1 1 Libya 1 . . .Austria 1 1 . 1 Lithuania . 1 . .Bangladesh 1 . . . Luxembourg 1 1 . .Belgium 1 1 1 . Malaysia 1 1 . .Brazil 1 1 . 1 Mali . . . 1Bulgaria 1 1 . 1 Malta 1 . . .Canada 1 1 1 1 Mexico 1 1 . .Chile 1 1 . . Morocco 1 . . 1China 1 1 . 1 Netherlands 1 1 1 .Colombia 1 1 . . New Zealand 1 1 . .Costa Rica 1 . . . Nigeria 1 . . 1Croatia . 1 . . Norway 1 1 . .Czech Republic 1 1 . . Pakistan 1 . . 1Denmark 1 1 . 1 Panama 1 . . 1Ecuador 1 . . . Peru 1 1 . 1Egypt 1 . . 1 Philippines 1 1 . .El Salvador 1 . . . Poland 1 1 . .Estonia 1 1 . . Portugal 1 1 . .Ethiopia 1 . . 1 Romania 1 1 . .Finland 1 1 . . Russia 1 1 . 1France 1 1 1 1 Saudi Arabia 1 . . 1Germany 1 1 1 . Sierra Leone 1 . . .Ghana 1 . . . Singapore 1 1 1 .Greece 1 1 . . Slovakia 1 . . .Guatemala 1 . . . Slovenia . 1 . .Guinea . . . 1 South Africa 1 1 . .Hong Kong 1 1 . . Spain 1 1 . .Hungary 1 1 . . Sudan . . . 1Iceland . 1 . . Sweden 1 1 1 .India 1 1 . 1 Switzerland 1 1 . .Indonesia 1 1 . 1 Syria . . . 1Iran 1 . . . Tanzania 1 . . .Iraq 1 . . . Thailand 1 1 . .Ireland 1 1 . . Tunisia . . . 1Israel 1 1 . 1 Turkey 1 1 . .Italy 1 1 1 . Ukraine . 1 . .Jamaica 1 . . . United Kingdom 1 1 1 1Japan 1 1 1 1 United States 1 1 1 1Jordan . 1 . . Uruguay 1 . . .Kazakhstan . 1 . . Venezuela 1 1 . .Kenya 1 . . 1 Vietnam 1 . . .Korea, South . 1 . . Zambia 1 . . .Kuwait 1 . . .

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