Individualism Vs Collctivism

Table of Contents

1        Introduction        

2        Country Culture        

2.1        Cultural Impact on Business        

2.2        Ease of Doing Business        

3        Conclusion        

4        References        

1. Introduction

Culture is an important part of any business strategy. This includes culture internal to the organization and culture external to the organization. Hofstede (1984) defined Culture as “the collective programming of the mind which distinguishes the members of one category of people from another.” Edgar Schein defines culture as the ‘basic assumptions and beliefs that are shared by members of an organization, that operate unconsciously and define in a basic taken for granted fashion of an organization’s view of itself and its environment’ (Schein, 2004, p. 6).. Culture has also been defined as “the shared patterns of behaviors and interactions, cognitive constructs, and affective understanding that are learned through a process of socialization. These shared patterns identify the members of a culture group while also distinguishing those of another group.” (University of Minnesota, 2014). The Oxford dictionary (2016) defines culture as “The ideas, customs, and social behavior of a particular people or society”.

Given these various definitions of culture a key note is that culture is about how a group of people behave, these may be unconscious actions or conscious decisions given what they have learnt as the appropriate way for people to conduct themselves.

This essay will focus on how companies of different cultures have operated and succeeded in the global market facing different cultures. With particular focus taken to a comparison analysis of ease of doing business with countries whose culture is individualistic and countries whose culture is collectivist.

An individualistic culture is broadly defined as the emphasis of personal freedom and achievement (Gorodnichenko & Roland, 2000, p. 2). A collectivist culture is the emphasis of embeddedness of individuals in a larger group (Gorodnichenko & Roland, 2000, p. 2).

1. Country Culture

Over the years the ‘Western’ Culture has normally been termed as individualistic and whilst non-Western cultures have adopted a more Collectivist Culture. Figure 1 below shows this graphically given emphasis by the shades of purple. Of note is the fact that most Western Countries except for Portugal and Spain possess the darkest shade of purple emphasising their Individualism on the other hand the non-Western Countries have a large range for example South Africa’s dark shade compared to China’s very light shade.

Figure 1: Collectivism Vs Individualism

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1. Cultural Impact on Business

Culture can affect how a business operates and how the company chooses its strategy. Based on the earlier definitions, individualistic countries predominantly like to focus more on individual achievements this therefore implies

Collectivism influences organizational culture through the dominant culture of the society in which the organization operates (Vadi, Allik, & Realo, 2002, p. 12). This could be looked at in two levels as the general organizational environment and the individual’s personal actions. Organizations may adopt the general culture of the nation operating whilst on the other hand individuals may continue to behave in a culture closer to their home nation or to a specific group (Vadi, Allik, & Realo, 2002). This difference in culture has largely affected operations of international as described in the Reevers-Ellington’s case study (1998) revealing that differences in values and collectivism-individualism caused the conflict of organizational culture within the American University in Bulgaria. Another example, Fey and Nordahl (1999) studied the organizational culture in Russia and provided several examples of the influence of collectivist attitudes to organizational settings (i.e., Russians prefer to work together rather than individually, they hold regular companywide social events etc.) (Vadi, Allik, & Realo, 2002).

Individualistic cultures in recent times have had ethical issues brought up in the way the business decisions are made as it could lead to unethical decisions (Husted & Allen, 2008) This is because Individualism is attributed to what is best for the individuals needs and not what may be best for the organization or the culture as a whole (Gorodnichenko & Roland, 2000) Implying ‘selfish’ decision making choices.

1. Ease of Doing Business

Given that the Western Economies have been the most successful economies the ease of doing business in said countries is expected to be high according to the World Bank Group the top ranked Country for ease of doing business is Singapore a country low in the Individualism index (20), that is, it is more collectivist than most if not western countries (The World Bank Group, 2013). South Korea another country with an index being collectivist (18) was ranked 4th for ease of doing business.