Academic journal article International Journal of Management

The Effect of Culture on the Relative Wealth of Countries: An International Study

Academic journal article International Journal of Management

The Effect of Culture on the Relative Wealth of Countries: An International Study

Article excerpt

It is argued that the concept of "wealth" and the social-economic needs of individuals are both culturally determined. In line with this, we examine the extent to which economic success is related to cultural aspects in different countries. Specifically, we measured the dependence of economic success, as measured by an index of globalization, on the cultural dimensions of individuality and uncertainty avoidance. A two-variable regression analysis yielded coefficients of multiple determination (R^sup 2^) that gave the extent of 'dependency' of the measure of economic success on the two cultural dimensions. Data came from World Bank Publications and their Online Databases. The resulting regression equations were statistically significant (R^sup 2^ < 0.05) suggesting that economic success is positively related to cultural dimensions, with highly individual cultures and cultures with low avoidance of uncertainty doing better than those with the opposite cultural characteristics.

The English anthropologist Edward B. Tylor1 said that culture is "that complex whole which includes knowledge, belief, art, law, morals, custom, and any other capabilities and habits acquired by man as a member of society." Culture has been a powerful tool for survival of human being since his inception. Culture is often defined as the complex whole of knowledge, belief, arts, morals, law, custom and habits acquired by humans as members of society. Lots of other definitions exist , but all of those agree on three distinct features of Culture - culture is omnipotent (each society has a culture); culture is a group phenomenon (organizational , social or national); and culture may evolve or may be acquired (enculturation - coming in contact with other cultures). Cultural generalities are widespread and there are some values that are universally espoused by different cultures, but the particularities of culture are seemingly infinitely variable and thus cultural variations would always be there .Thus, there exists no concept of cultural equi-finality.

To date, the most cited work for understanding and classifying cultural patterns is that by Hofstede2 who .derived his cultural dimensions from examining work-related values and behaviors of 1 16,000 employees who worked for IBM and its subsidiaries during the 1970s. The original report published in 1980 provides a relatively general framework for analysis, which can be applied easilyto many everyday intercultural encounters. It is particularly useful, as it reduces the complexities of culture and its interactions into five relatively easily understood cultural dimensions. Hofstede' s Framework talks about five dimensions: Power Distance, Individualism, Masculinity, Uncertainty Avoidance and Long-Term Orientation.

Power Distance (PDI) is defined as "the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally." (Hofstede, 1994, p. 28). It measures, in a given society, the perception prevailing on Power Inequality. It considers the opinions exhibited by the followers rather than leaders. A High Power Distance ranking indicates that inequalities of power and wealth have been allowed to grow within the society. These societies are more likely to follow a caste system that does not allow significant upward mobility of its citizens. A Low Power Distance ranking indicates the society de-emphasizes the differences between citizen's power and wealth. In these societies equality and opportunity for everyone is stressed.

Individualism (IDV): "individualism pertains to societies in which the ties between individuals are loose: everyone is expected to look after himself or herself and his or her immediate family. Collectivism as its opposite pertains to societies in which people from birth onwards are integrated into strong, cohesive in-groups, which throughout people's lifetime continue to protect them in exchange for unquestioning loyalty. …

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