Academic journal article Journal of International Business Research

Using the Transparency Index to Categorize European Countries

Academic journal article Journal of International Business Research

Using the Transparency Index to Categorize European Countries

Article excerpt


Corporations operating in diverse geographic areas typically use differing corporate strategies in different countries based on similarities and differences. Usually, efforts are made to clump countries together into sub-markets with common consumer characteristics or similar cultural backgrounds. However, corporations must also acknowledge that while one basis may be used for grouping countries together in order to create marketing efficiencies, different criteria might be necessary to develop strategies that are not directly related to consumer markets. In particular, this may be true in the areas of government relations, lobbying and contracting. Approaches to these activities need to be adapted to different country groupings.

Economic and demographic variables are often the most basic way of comparing and grouping countries. While such variables may identify the economic ability to purchase, by themselves they do an incomplete job of identifying similar and dissimilar markets. Culture based variables may do a better job of defining market opportunities and grouping countries together, where the same strategies may be used.

Possibly the most quoted cross-country cultural comparison is that of Geert Hofstede. Hofstede recognized that a comparison of various cultures could be done based upon five dimensions: power distance, individualism, masculinity, uncertainty avoidance and long-term orientation. These dimensions refer to expected social behavior, "man's search for the Truth," and importance of time (Keegan and Green, 2004).

Hofstede's first dimension, power distance, indicates the degree to which lower level members of society accept an uneven distribution of power. Individuals in some countries expect an unequal power distribution, while people in other cultures would be far less likely to accept this. The higher the power distance, the more hierarchical layers subordinates would have to go through to reach their upper-level supervisor (Keegan and Green, 2004).

Individualism, the second dimension in Hofstede's cultural typology, refers to the extent to which people in a society are individually minded. The people in individualist cultures tend to be primarily concerned with the interests of themselves and their immediate family, while those in a collectivist culture are more readily integrated into groups. The United States is very individualistic, while many Asian cultures fall into the collectivist category. Individualistic societies embrace individual achievements; however, in collectivist cultures groups or teams would be praised for achievements (Keegan and Green, 2004).

The third identified dimension is masculinity. Masculine societies tend to place men in assertive and ambitious roles, while women fulfill a nurturing role. Conversely, men and women's roles overlap in feminine cultures. Men in masculine cultures may have a difficult time respecting a woman in a business meeting (Keegan and Green, 2004).

Uncertainty avoidance refers to the extent of individuals' dislike for unclear or ambiguous situations. Some cultures are much more tolerant of uncertainty, while other countries require more structure and certainty. Low levels of uncertainty avoidance mean a society is more accepting of risk taking. Alternately, high levels would indicate to marketers the need for such things as warranties and no-hassle return policies to provide a higher comfort level of individuals (Keegan and Green, 2004).

Hofstede added the fifth dimension, long-term orientation, because certain dimensions of the Asian culture were not explained by his initial typology using four dimensions. Long-term orientation refers to a culture's sense of immediacy. Cultures with a short-term orientation favor immediate gratification while long-term oriented cultures are satisfied with a deferred gratification, which may also foster a slower pace of conducting business (Keegan and Green, 2004). …

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