Introduction
Uncertainty is a typical corporate life that calls for organizations to develop different mechanisms to cope with it. Unfortunately, not all organizations behave similarly to avoid perceived uncertainty. According to Geert Hofstede, this occurs since uncertainty avoidance is a culturally-dependent variable, and not all companies have similar values. The uncertainty-avoidance dimension reflects the degree to which a specific culture embraces future unpredictability.
Cultures with high uncertainty avoidance depend intensely on set rules and strategies. Contrarily, societies with lower uncertainty avoidance tend to be more relaxed about the design of doing things. During this era of greater internationalization and international business, the levels of uncertainty avoidance influence consumers’ purchase decisions and corporate liquidity management.
Relevance of Uncertainty-Avoidance Dimension in International Business
The uncertainty-avoidance dimension is essential in liquidity control in dynamic and static international business environments. The global financial crisis changes the international business environment, increasing corporate management liquidity. According to Tran (2020), firms with a great uncertainty avoidance culture are more intolerant of vagueness and prefer foreseeable outcomes. People from such cultures have higher precautionary motives to avoid uncertainties. Hence, the native culture determines the companies’ decisions and behaviors regarding liquidity management.
The uncertainty-avoidance dimension also influences consumers’ decisions to purchase different goods and services. Due to the recent globalization, internalization, and e-commerce, companies interact with a wide range of consumers from diverse cultures. Tesfom and Lutz (2021) note that consumers with high uncertain-avoidance culture value factors related to uncertainty reduction, such as assessing quality data about the product, trust in the company, and organized corporate structure companies with lower uncertainty-avoidance rates. Therefore, the consumer’s level of uncertainty avoidance influences their consumption trends.
Conclusion
Overall, the uncertainty-avoidance dimension is an essential factor influencing the consumer’s purchasing decisions and corporate liquidity management. The operations of international businesses depend on the nature of their cultures. Hence, global companies need to consider their levels of uncertainty-avoidance to succeed in culturally-diverse international markets.
References
Tesfom, G., & Lutz, C. H. (2021). Consumers’ Advertising Media Use: A Cross-Cultural Study. Services Marketing Quarterly, 1-16. Web.
Tran, Q. T. (2020). Uncertainty avoidance culture, cash holdings, and financial crisis. Multinational Business Review. Web.