A Critical Assessment: Hofstede vs. Trompenaars Essay

Introduction

Despite cultural differences being an important element of the international business environment, there are organizations that overlook the importance of resolving business-related problems through diversity and adjustments. The number of potential barriers is going to continue to grow because the lines among cultures keep getting blurrier. The models of cultural differences proposed by Geert Hofstede and Fons Trompenaars will be analyzed in detail in order to assess the case of Amazon US trying to expand into the Chinese market. The global business context was a crucial element of discussion that Amazon left out in an attempt to impose its approach to operations on a much more restrained and collectivist community (Kucharska and Bedford, 2019).

Accordingly, every dichotomy from both models was applied to the US-China relationship within the framework of Amazon to gain a better understanding of how cultural differences averted the two countries from a prolonged partnership. With the aid of the case of Amazon China, Hofstede’s and Trompenaars’ models will be utilized to show how culturally-sound strategies can prevent misunderstandings effectively and predict positive relationships among stakeholders.

Hofstede

Geert Hofstede’s cultural dimensions model was published at the end of the 1970s, after almost ten years of complex research on peculiarities of various nations across the globe. According to Economist Intelligence Unit (2012), it quickly became an international standard of recognizing countrywide differences due to Hofstede’s comprehensive efforts. The initial approach to cultural dimensions allowed Hofstede to cover more than 50 countries and come up with the essential four categories. The fifth and the sixth dimension were added later, in cooperation with Michael Minkov and Michael Bond (Lichy and Stokes, 2018).

The six dimensions that are currently included in Hofstede’s model are as follows: power distance index (low vs. high), masculinity vs. femininity, individualism vs. collectivism, long-term orientation vs. short-term orientation, uncertainty avoidance index (low vs. high), and indulgence vs. restraint (KPMG, 1999; Ronen and Shenkar, 2017). Each of the dimensions was analyzed to help Hofstede identify clear patterns and see what kind of national differences might stand out the most. Therefore, Hofstede’s model could benefit company cultures in the case where international relations had to be maintained.

The power distance index stands for the general readiness to follow a hierarchy and respect differences between organizational or societal tiers. According to Beugelsdijk and Welzel (2018), the masculinity vs. femininity dichotomy represents the extent to which society relies on gender-based behaviors. Speaking of individualism vs. collectivism, China is exceptionally low on individualism, meaning that the majority of businesses in the country can be expected to operate under slower decision-making where all stakeholders are going to wait for their opportunity to contribute to the corporate success (Kumar, Giridhar, and Sadarangani, 2019).

The scale of short- and long-term orientation represents a culture’s outlook on loyalty and enduring business relationship. In line with Yerznkyan, Gassner, and Kara (2017), the uncertainty avoidance index is relatively similar for China and the United States, as businesses in both countries prefer to meet challenges face-to-face rather than ignore them. Indulgence and restraint are described by Beugelsdijk, Kostova, and Roth (2017) as a measure of organizational culture, where China is much more restrained than the US. The biggest weakness of Hofstede’s model is that the foundational research can be deemed too inconclusive and lacking insights.

Trompenaars

Fons Trompenaars’ model of national culture differences was released in 1997. Trompenaars and Hampden-Turner took 40 countries and surveyed almost 50 thousand employees and managers to learn more about the values and preferences of different nations (Hampden-Turner, Trompenaars, and Hampden-Turner, 2020). It was found by Trompenaars that there were almost no random differences among specific nations.

According to Trompenaars and Wooliams (2011), the seven essential factors of national culture are universalism vs. particularism (a much more thorough focus on rules and not interpersonal relationships), individualism vs. communitarianism (same as in Hofstede’s), neutrality vs. emotionality (pragmatic decisions with little attention to the emotional background), specific vs. diffused (Chinese culture is much more specific, as employees rarely spend time together outside their workplaces), achievements vs. ascriptions (personal status plays a bigger role than individual achievements), sequential vs. synchronous (synchronous are flexible in terms of scheduling and decision-making), and internal direction vs. external direction (the US scores much higher on the external scale because American employees and managers believe they depend on each other and not the environment itself).

For the most part, Trompenaars’ model of cultural dimensions was criticized by Geert Hofstede, who believed that the research conducted by Trompenaars was founded on Hofstede’s datasets. As stated by Vouillemin (2020), a correlational analysis showed that there were just two realistically researched dimensions in Trompenaars’ work that unfortunately coincided with Hofstede’s individualism vs. collectivism scale.

In 1997, Trompenaars and Hampden-Turner responded to Hofstede’s criticism by proving that the approaches to cultural dimensions were different. Accordingly, the biggest gap between the two models was that Hofstede focused on national culture variables and Trompenaars took on the process of cultural creation (Jasielska et al., 2019). Nevertheless, it is not the only problem with Trompenaars’ model because there are no visible correlations between behaviors and the influence of personal characteristics. While particularities of societies are included in the discussion, Trompenaars leaves out character traits, education, and upbringing, which significantly confines the validity of his findings (Zander, 2020). Trompenaars does not provide any recommendations regarding how to maintain positive relations with different cultures. Combined, these limitations make it impossible to decide which one of the models represents a better instrument for international businesses.

Background Information

At the moment when Amazon China was born in 2011, Amazon US expected to conquer the Asian e-commerce market and become a force in all parts of the world. Nevertheless, the company’s willingness to apply an identical business model has led Amazon to a failure despite the evident demands of Chinese customers (Meyer, 2017). Cultural differences were blatantly overlooked by Amazon because e-commerce mogul preferred globalization over autonomy and did not give China operations a chance to interfere and provide relevant feedback. The following two subchapters are going to dwell on two different approaches to cultural differences between US and China to explain why Amazon failed to finalize the expansion and win over the market.

Applying Hofstede’s Model

The difference in the power distance index quickly becomes evident when looking at China and United States. Chinese companies are much more often seen resorting to rigid hierarchies where the acceptance of one’s authority is an essential element of business (Hofstede, 2011). Therefore, power and wealth are not directly interconnected when it comes down to Chinese internal operations, but the role of authority is still much higher than that across American organizations.

The Chinese society is also rather likely to accept the fact that the manager or any other member of the authority is required to decide everything (Ugrin, Pearson, and Nickle, 2018). This shows how Amazon US took an inapt approach from the beginning and decided not to decide over everything while trying to preserve genuine authority over the Chinese partners. At the end of the day, local counterparts were prone to holding back from making decisions, so it made the situation even more confusing.

The next element of Hofstede’s model was the individualism vs. collectivism dichotomy. This particular section is important because American businesses praise individualism while their Chinese counterparts would vote for collectivism almost on every occasion (Kaschula, Mostert, and Wolff, 2019). This happens because Chinese employees and managers are much more willing to display their loyalty to take part in society. On the other hand, Amazon US values the integration of individual characteristics and strengths into the bigger picture, allowing the company to excel through the interface of personal efforts (McSweeney, 2002). American managers would be rather unlikely to integrate Chinese employees into groups, which would reasonably reduce their chances to supervise foreign operations.

One of the two dichotomies where China and the United States display relatively identical results is the index of masculinity. With 66 and 62 points, respectively, the two countries display masculine values. This finding can be interpreted as the ability of managers from both countries to conceal their emotions when necessary and display calm behaviors irrespective of the situation at hand (Martin, 2006). When expanding to China, Amazon US expected to preserve its power and employee assertiveness. Even though it could be a realistic objective, major differences found on other scales made it practically impossible for the American counterpart to show any kind of competitiveness in the Asian region.

Another dichotomy that brings China and United States relatively close is the index of uncertainty avoidance. This particular value means that managers and employees from both countries are much more likely to accept the uncertainty rather than avoid it. In line with Meyer (2014), it could be a positive trait for both sides of negotiations due to the ability to hear each other’s arguments and tolerate opinions that do not go in line with their system of values.

The growing number of risky situations caused Amazon US and its newly established Chinese counterpart to embrace the risk instead of accepting it due to lots of unexpected variables interfering with the partnership (Tocar, 2019). Despite the lessons learned from eBay, Amazon decided to engage in an unsafe strategy and continue deploying its Chinese unit.

The variable of long-term orientation has to be considered when reviewing the partnership between Amazon US and Amazon China due to the fact that the latter is much more traditional in its approaches to business. While loyalty and commitment can be found in American managers and workers, they still place the focus on innovation and the ability to avoid any long-standing issues (Spencer-Oatey and Franklin, 2009).

With Amazon China, the US headquarters decided to overlook the difference in directions and put itself into a situation where a group of short-term oriented individuals had to accept the long-term implications of the Chinese-American partnership. The persistence of Amazon US might have become one of the core contributors to the company’s failure in the Asian market (Sent and Kroese, 2020). Managers failed to adapt to the short-term nature of Chinese business relationships and exerted excessive amounts of perseverance that was not valued by Amazon China.

The last dichotomy in Hofstede’s model of cultural differences is indulgence vs. restraint. As a much more unemotional society, China scores low on indulgence because it prioritizes pessimistic outlooks and suspicion (Warter and Warter, 2017). American counterparts, in turn, pay much more attention to indulgence, as desired gratification and leisure time represent an essential element of their business operations. In the light of these findings, it may be safe to say that Amazon’s expansion also failed because of the varied views on social norms and the need to follow them. Therefore, the contradictory nature of American indulgence could be one of the reasons why Chinese partners stepped down from their partnership with Amazon, even considering the positive worldwide image of the e-commerce mogul.

Applying Trompenaars’ Model

There are several important points that transpire upon a thorough analysis of the efforts exerted by Amazon in China when applying Trompenaars’ model of cultural differences. The first point is the huge difference between China and the United States in terms of particularism. The latter scored much higher on the scale where laws and rules are inferior to relationships between individuals and their mutual obligations (Hampden-Turner, Trompenaars, and Hampden-Turner, 2020).

This ultimately shows that the innovative nature of Amazon could be supported by Chinese partners only in the case where they would choose to adhere to flexibility and overlook past stringency of market rules. The lack of any particular strategies to mediate the differences has forced Amazon to act quickly and pull secondary solutions that could not be as effective as their alternatives elicited by particularism and creative organizational freedom.

With the individualism vs. communitarianism scale being identical to Hofstede’s individualism vs. collectivism, it can be safe to jump to the specific vs. diffused scale from Trompenaars’ model. As an American company, Amazon reflected the values of its homeland and scored exceptionally high on the diffused culture scale. This means that Amazon employees are used to sharing their experiences that go beyond the workplace and are comfortable enough to meet with their fellow employees outside their jobs (Lichy and Stokes, 2018).

Their Chinese partners, on the other hand, are not as diffused, so their specific nature holds them back to essentially professional relationships that do not go beyond the workplace. The results on the specific vs. diffused scale do not mean that Chinese employees value work over interpersonal relationships. Instead, it is a clear sign of the fact that business objectives appeal to them much more than teambuilding activities, as they already hold a belief that joint efforts and a friendly atmosphere could significantly improve the state of affairs.

When looking at Trompenaars’ scores for China and US on the neutral vs. affective scale, one may witness the reason why Amazon’s efforts were not as successful as initially expected. Chinese employees and managers are generally much more restrained and do not express their emotions spontaneously (Spencer-Oatey and Franklin, 2009). With limited body language and verbal communication between parties, there was little chance for American and Chinese negotiators to reach a common solution. While appealing to reason, Chinese managers could be prone to concealing their true thoughts on the subject and letting others overpower them. Even though it is not the case with Amazon, Chinese signature neutrality averted the American partner from developing a positive relationship with a potential expansion target. As a much more emotional nation, Americans might expect their Chinese business companions to respond congruently but to no avail, causing unnecessary conflicts and destroying a trustful environment.

Another reason why Amazon US might have failed to ensure a positive expansion was the huge difference in the achievement vs. ascription scale. Chinese are known to be exceptionally dependent on their ascriptions, letting their interpersonal connections and kinship speak for themselves (Kucharska and Bedford, 2019). This was not the case for the American counterpart, as the latter was much more interested in real-life achievements and their implications for the organization. From the point of long-term collaboration, such a huge difference in fundamental assumptions regarding one’s success could not have any positive effect on the outcomes of negotiations (Trompenaars and Wooliams, 2011).

Even though not completely opposite, Amazon US and Amazon US had to cease collaborative action because of the lack of accomplishments on the Eastern side that could be validated by Amazon headquarters in the West. According to Xie, Neill, and Schauster (2018), it was practically impossible for China to keep up with the US due to the need to look past one’s gender, social status, and other alleged privileges.

The sequential vs. synchronous scale is also crucial for a better understanding of why China and the US failed to solidify their collaboration and turn Amazon into an international e-commerce mogul. With Chinese employees being extremely sequential and considering improvisation and flexibility unnecessary, US attempts to expand its business operations into Asian territory were doomed from the start (Hampden-Turner, Trompenaars and Hampden-Turner, 2020).

The lack of connection between the two nations finally transpired into a serious problem because of an incredibly high level of synchronicity shown by Amazon US employees. The issue revolved around the interconnectedness that allowed American partners to maintain a flexible schedule and resort to past experiences to alter organizational strategies (Martin, 2019). Chinese managers would not see that approach as reasonable and ignore any parts that did not go in line with the initial plan.

The ultimate scale of internal vs. external direction is another cause for the US counterpart to fail across the Asian environment due to the huge differences in how the locus of control is set up among American and Chinese employees. Knowing that Amazon US did not provide its Chinese partners with enough autonomy, it was not surprising that the latter did not feel like they had enough control over business operations locally (Trompenaars and Wooliams, 2011). American managers wanted the team to achieve their goals via collaborative efforts that molded the environment to the company’s liking, while their Chinese counterparts expected the environment to guide them in the first place. This huge misinterpretation of intentions could have damaged the potential partnership the most during the first months after the advent of Amazon China.

Conclusion

Even though there are several dimensions where China and the United States show signs of similarity, there are too many differences to consider these two countries as efficient business partners. Based on the findings from the current case study, it can be noted that practically no adaptations were made to accommodate Amazon China because Amazon US only deployed its own business strategy with little to no modifications. The failure experienced by Amazon can be described in rich detail with the help of Hofstede’s and Trompenaars’ models. Global business could benefit from both models, but Hofstede’s approach to cultural differences pays more attention to multiculturality and mainstream trends that are not covered by Trompenaars.

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